Today's Rates

Conforming (to $417,000) Jumbo ($417,000 - $1MM)
30 Year Fixed 6.000% 6.250%
15 Year Fixed 5.625% 5.750%
3/1 ARM 5.250% 5.250%
5/1 ARM 5.375% 5.375%
All rates quoted at “0” points and a 30-day rate lock. Subject to mid-day changes.

Lisa Nicholas & Michelle Connor
Licensed Mortgage Banker CT Banking Department
CTX Mortgage Company
(203) 944-9805

Low down payment programs Fast and Free Approvals
Range of fixed and ARM loans No Income Verification
Commercial/Investor Loans No Asset Verification
Professional and Full Service Staff
Rates are as of 5/01/2008 for CT properties and are subject to change due to market conditions.

Number of Foreclosed Homes Keeps Rising
Lenders Cut Prices to Jump-Start Sales as Inventory Grows
By JAMES R. HAGERTY

The number of foreclosed homes owned by lenders continues to rise despite signs that they are increasingly willing to slash prices to sell those properties.

Lenders and investors in mortgages owned about 660,000 foreclosed homes in April, up from 493,000 in January and 231,000 in January 2007, according to First American CoreLogic, a research firm based in Santa Ana, Calif., that collects data from lenders and county clerks. The April total works out to about one in seven previously occupied homes available for sale nationwide.

A surge in defaults has increased the inventory of bank-owned homes, known in the trade as REO, for "real estate owned." By cutting prices, lenders have managed to increase sales of such homes sharply in recent months in some cities hit hard by foreclosures, including Las Vegas, Detroit and Sacramento, Calif., local real-estate brokers say.

With home prices falling, "holding the assets means further losses," said Mark Fleming, chief economist for First American CoreLogic. Some lenders now are cutting prices as often as every 20 days on homes that aren't selling, said David McCarthy, chief executive officer of Integrated Asset Services LLC, a Denver-based company that helps banks value and sell REO homes.

But lenders haven't yet managed to catch up with the inflow of foreclosed homes. Mark Zandi, chief economist at Moody's Economy.com, forecasts that the inventory of REO homes won't peak before the end of 2009.

In dollar terms, foreclosed one- to four-family homes owned by lenders whose deposits are insured by the Federal Deposit Insurance Corp. more than doubled to $8.56 billion at the end of the first quarter from $3.59 billion a year earlier.

The REO glut is weighing on house prices in many areas, as banks tend to cut prices faster than other sellers. A new set of local home-price indexes, to be introduced this week by Integrated Asset Services, shows that the median price of homes sold in Riverside County, Calif., in April was down about 29% from a year earlier. The median price fell about 13% in Clark County, Nev., and 12% in Arizona's Maricopa and Pima counties. Median-price comparisons can be skewed by shifts in the proportions of high- and lower-priced homes sold from one year to the next but provide a broad indication of market trends.

To avoid or at least delay losses, many lenders are trying to avert foreclosures by easing loan terms or giving struggling borrowers more time to catch up. Hope Now, an alliance of mortgage companies and investors, said last week that mortgage companies completed loan workouts for 183,000 households in April, up from 160,000 in March.

Meanwhile, long-term interest rates rose last week, marking another potential drag on the housing market. The average rate on 30-year fixed rate loans eligible for sale to government-sponsored investors Fannie Mae and Freddie Mac was 6.17%, up from 6.02% a week earlier, according to HSH Associates, a financial publisher in Pompton Plains, N.J.
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State Sues Option One


Massachusetts' attorney general filed a lawsuit alleging that subprime lender Option One Mortgage Corp. and its parent company, H&R Block Inc., discriminated against black and Latino borrowers.

The suit, filed by Attorney General Martha Coakley in Suffolk Superior Court, also alleges that Option One engaged in "unfair and deceptive lending practices" by selling extremely risky mortgages that were destined to fail and that it "continues to engage in additional and unfair and deceptive acts and practices as the servicer of these same loans."

The attorney general is seeking a preliminary injunction that would restrict the company's ability to foreclose on Massachusetts borrowers, as well as civil penalties and restitution.

"We are trying to provide some relief to homeowners, many of whom could, if they were able to get the attention of mortgage servicers and investors, restructure their loans," Ms. Coakley said in an interview. In a separate case filed against subprime lender Fremont Investment & Loan, the attorney general's office in March obtained a preliminary injunction saying that the Fremont General Corp. unit couldn't foreclose on mortgages in the state without checking with the attorney general.

An H&R Block spokeswoman said the complaint is being reviewed by counsel. H&R Block stopped making mortgage loans in December and in April sold Option One's loan-servicing unit to investor Wilbur Ross. A spokeswoman for the unit referred calls to H&R Block. Option One was the seventh-largest subprime lender in 2007 in terms of dollars of loans originated, according to Inside Mortgage Finance.

In Massachusetts, Option One "has been very active in the minority community making high-rate loans with subprime terms," said Gary Klein, an attorney in Boston who has filed two lawsuits seeking class-action status against Option One that allege discriminatory lending practices.

In its lawsuit, the attorney general's office alleged that Option One charged black and Latino borrowers higher points and fees at closing and targeted them with special marketing campaigns promoting predatory lending products. The company gave employees and mortgage brokers written materials explaining that the limited choices available to black and Latino borrowers made them good candidates for its subprime loans, the lawsuit said, and encouraged them to partner with minority real-estate brokers and work with "trusted groups in the community" to gain the confidence of minority borrowers.

More generally, it said, Option One "steered even prime borrowers into more costly subprime loans." Between 2004 and 2007, Option One made more than 3,000 subprime loans to Massachusetts borrowers with what were considered solid credit scores of 700 to 850 and stable debt-to-income ratios and who were financing 75% or less of their home's value, it added.

Under one pay plan, loan officers were paid a $750 commission for each completed subprime mortgage loan versus $375 for a prime mortgage. They could also receive a bonus, known as a "Volume Override Incentive," for exceeding certain targets, according to the complaint.

The lawsuit also charges Option One with "recklessly facilitating the foreclosure of borrowers' homes." In negotiating with distressed borrowers, Option One often proposed terms "that are as unfair and unsustainable as the original loans," the complaint said, and offers forbearance agreements with "oppressive terms" that allow the lender to foreclose if the borrower missed a payment "for even one day."

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Mortgage Short Sale - An Exit Strategy or an Investment Opportunity?
Friday, December 28, 2007
Archived
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Why is this “Credit Crisis” Affecting Mortgage Rates?
Archived