Mortgage Payment

It s important to make your mortgage payments on time but if you re late on a payment, you need to know what certain terms really mean. Mortgage calculators - mortgage bizcalcs.com if you re in the home buying mode, you might be thinking about a bi-weekly mortgage payment plan, wondering if it can help you pay off your mortgage more quickly. The ultimate mortgage calculator to guide you step-by-step guide to making mortgage payments, laws regarding payments, refinancing, and lending. Government mortgage help for americans gmac mortgage payment q what are my options for making my gmac mortgage payment a you can pay your gmac mortgage bill online, by mail, or by phone. Mortgage payment search results.

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Know Your Mortgage

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6 important details you should know about your mortgage search results. Know your mortgage while many real estate agents have a general understanding of the mortgage approval process, there are a few important details that frequently get overlooked. Know your mortgage use our calculator to find out your estimated monthly payment in advance: enter the loan amount, interest rate, and length of mortgage try it now. Know your vacation home mortgage - term papers - gowgau do you want a better mortgage than one you already have you can only imagine the number of inquiries i get because someone wants a better rate than the. Know your mortgage rates and stop unnecessary debt understanding your mortgage loan requirements is an important step in buying a home make sure you know what your mortgage loan terms are before closing on your new home.

Mortgage Market Survey

Find interest only mortgage rates and calculate interest-only mortgage loan payments also view the libor rate, prime rate, cofi, mta index and learn about libor loans. Mortgage applications barely up last week: mba - yahoo news mortgage applications rose last week following the biggest decline of the year, showing housing remains depressed the mortgage bankers association s index climbed. Rem ishares ftse nareit mortgage plus capped index fund etf freddie mac media room mclean, va , oct 27, 2011 /prnewswire/ -- freddie mac (otc: fmcc) today released the results of its primary mortgage market survey. Mortgage applications index up 4 9 last week - finance & commerce ishares ftse nareit mortgage reits index fund (rem): reference guide to the ishares ftse nareit mortgage reits index fund exchange-traded fund (rem) and to the. Mortgage lending portal search results.

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Mortgage Rates at Record Low

One bit of positive fallout from the debt-ceiling deal reached earlier this week: Mortgage rates have fallen to levels that are at or near record lows.

That's a boost for the US housing market, which is still struggling to recover from the after-effects of an epic boom and bust.

Interest costs on a 30-year fixed-rate mortgage averaged just 4.39 percent this week, according to housing-finance giant Freddie Mac. That's the lowest level this year, and down from 4.55 percent a week earlier. (Those interest rates are for loans in which the borrower also pays a "points" fee of about 0.8 percent of the amount to be borrowed.)

Mortgage Rates

Mortgage rates rallied again today and consumer borrowing costs drifted a little lower.

Deciding whether or not to lock a loan between now and the "high-risk" event on Friday is pure speculation (Employment Situation Report). If you know how that's going to turn out ahead of time and how the market will react, or if you just don't mind losing money in exchange for the chance to lower your rate a bit more, power to you! The way we see it though, if yesterday was nuts, today may be time to consider how you'll hoard your nuts.

Length of Employment to Obtain Mortgage

There isn't really a hard and fast answer to this question. It depends on several factors and I'll address them one by one.

1. How is your compensation structured? If you earn 100% salary it's easy for an underwriter to calculate and predict your income in the future. However, if you derive a substantial part of your earnings from bonus or commissions, you'll have to be able to show a history of this kind of income for it to be counted in your debt-to-income ratios. If 25% or more of your income is commission or bonuses, you are pretty much self-employed as far as underwriters are concerned -- like the self-employed, you'll need at least a 2-year history of this compensation to get credit for it (note: that doesn't mean that you have to have been at the same firm but you do have to have worked in the same capacity and the same industry).

2. How long have you worked in that field? Your history with a specific company is less important than your experience in the field. If you have been a CPA for decades it matter less that you are now at Acme Company instead of AAA Industries.

3. How is your contract structured? I got people approved for loans when they had new jobs that they had not even started yet. In one case, the applicant was a new college football coach who had a guaranteed 5-year contract and a ten-year history of coaching college-level sports.

4. What are your prospects? Just out of college and working your first job? That may not be a problem if you are in the right field and with the right credentials -- for example, a med school grad with a hospital job or a new lawyer working for the state government.

5. How's your overall pattern? People with new jobs who demonstrate a pattern of repeated job changes with no advancement have a much harder time getting approved for mortgages. And these days, those in troubled industries will have challenges too. Underwriters are tasked with determining the likelihood of you remaining employed as part of your income analysis.

6. What are your compensating factors? These are items that help overcome a recent job change -- your wife's employment is one of them. others are excellent credit, assets (enough to pay your bills for several months if you were to lose your job), and a solid debt-to-income ratio.

On the other hand, if your employment history is spotty, you have barely enough saved for a down payment, your credit is mediocre, and your income just enough to qualify, your recent job change will be more of an issue. Here is what FHA's underwriting guidelines have to say about income stability:

"We do not impose a minimum length of time a borrower must have held a position of employment to be eligible.  However, the lender must verify the borrower's employment for the most recent two full years.  If a borrower indicates he or she was in school or in the military during any of this time, the borrower must provide evidence supporting this claim, such as college transcripts or discharge papers.  The borrower also must explain any gaps in employment spanning one month or more.  Allowances for seasonal employment, such as is typical in the building trades, etc., may be made if documented by the lender.

To analyze and document the probability of continued employment, lenders must examine the borrower’s past employment record, qualifications for the position, previous training and education, and the employer's confirmation of continued employment.  A borrower who changes jobs frequently within the same line of work, but continues to advance in income or benefits, should be considered favorably.  In this analysis, income stability takes precedence over job stability."

USDA Loan Eligibility and Qualification Criteria

USDA loans confer some special benefits. There is no down payment requirement. In addition, the interest rate may be subsidized for those with very low incomes. The loans are made more affordable because they feature 33 year terms. You qualify for USDA loans by purchasing property in designated rural areas (and that doesn't necessarily mean the boonies. Many neighborhoods just outside larger MSAs are still considered rural by the USDA.

USDA Rural Development administers a couple of  programs: Guarantee and Direct.

Their Direct program is funded directly (hence the name “direct”) through the rural development office. To be eligible, your income can be only 80% of the median income for the area.

The Guarantee program is funded through USDA-approved lenders and brokers. It is a guarantee program (like FHA and VA) with no subsidies, and the income guidelines allow up to 115% of the median income after certain adjustments. A good loan officer who specializes in these products should be able to help you determine how your income would be considered.

The 100% LTV mortgage amount is determined by the appraised value of the property.

Credit underwriting is flexible and the guidelines have no minimum buyer out-of-pocket expense and no maximum for seller concessions. Note: some lender policies may be more restrictive, so if it’s the lender guidelines shooting down your application and not the USDA’s,  another lender may be able to approve you.

Mortgage Hardship Letter Example

Writing hardship letters does not have to be difficult, but you need to know what your lender is looking for. Many homeowners simply do not understand the basics of writing an effective hardship letter and this is costing them their homes.

Below are some highlights for a foreclosure hardship letter:

1. Use a business format.
2. Start with your name, address, city, state, zip and phone number at the top.
3. Two spaces blank.
4. Name of the loss mitigator, lending institution and its address (Find this out by phoning).
5. Two spaces blank
6. Date
7. One space blank
8. Loan number
9. The main part of hardship letter should be about four to six paragraphs with a space between each one.
10. Thank the person for his or her time
11. Your signature
12. Print your name

The best way to get results is to get a sample foreclosure hardship letter and work from it. Nothing succeeds like success so follow the successful people and get your today.

Getting a Mortgage After Retirement

Mortgage financing after retirement is not impossible to come by if the post-retirement income is sufficient. To be counted, your annuity income must be expected to continue for at least three years. Ditto for other sources of income like pensions, IRA and 401(k) distributions, and of course Social Security benefits.

You'll want to get copies of your award letter or other paperwork proving what your income will be when you retire.

Using a mortgage pre-qualification calculator

Next, add up your post-retirement income and your monthly expenses like car payments, credit cards, and other loans. You'll need this information to see how much home you qualify to buy. Prequalification involves running your income, proposed housing, and other obligations through some formulas and determining how much you can afford to spend on housing.

If you know how much you want to spend already, you can input your proposed housing expense and your other expenses into most calculators and find out if you have a good chance of getting approved for a mortgage. Ideally, you want to spend no more than 28% of your gross income on housing and no more than 36% on housing plus other payments.

But what if you don't know how much you want to spend for housing?

The nature of these calculations is circular. You want to know how much you qualify to spend, but one of your inputs is your proposed house payment, which you don't yet know because you don't know how much you can spend...

There is one calculator out there that gets around this problem. It's probably the easiest prequalification calculator to use and it's on a site called Calculators4Mortgages.com. I'm not a fan of all of their calculators but this one is good and I recommend it. Get your proposed mortgage rate from Mortgage News Daily's current rates, your local property tax rate, and the amount you have available for a down payment and closing costs. The calculator does the rest.

Once you know how much you qualify to spend on your next house, you're in a great position to shop for your mortgage and then your home.

MBS MID-DAY: Reprice Targets

Gain access to the most accurate real-time back month TBA indications from Thomson Reuters and Tradeweb. LEARN MORE A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard .10:52AM  :  MBS Test Session Lows. Reprice Targets Shared "Rate sheet influential" MBS prices are revisiting session lows as stocks continue to drift higher in a slow trading environment. Fannie Mae 30yr 4.0 MBS coupons are -6/32nds at 100-28 and 4.5s are down 4/32nds at 104-06. While production MBS coupons are indeed at their worst prices of the session, they really haven't ventured too far from these levels so far today. The trading range has been tight, which means most lenders are well-aware of weakness and have already accounted for it in loan pricing. From that perspective we see reprices for the worse as being more of a threat if Fannie 4.0s break 100-24 support and move rapidly down toward a test of 100-20. Making that threat a possibility is the potential for continued pre-3yr note auction weakness. If this scenario plays out we will alert. What's an auction concession? http://www.mortgagenewsdaily.com/mortgage_rates/blog/214560.aspx9:59AM  :  Fed-Speak: Fisher Wants to Focus on Fiscal Issues Richard Fisher is a Fed policy voter. His opinion matters more than a non-FOMC voter. Right now he doesn't support further Quantitative Easing. He is a "hawk". Instead he feels there is plenty of liquidity in the financial system and believes it is time to focus on national budget issues. (Reuters) - Dallas Federal Reserve President Richard Fisher said on Tuesday there was ample liquidity in the U.S. financial system and no need for the U.S. central bank to continue its extremely easy monetary policy. Interviewed on CNBC television, Fisher said U.S. businesses' balance sheets were in good shape and companies were awaiting clearer signs about how the economy will develop before they kick up the pace of hiring. "This is going to be a very slow process, and right now we need to get the fiscal side" lined up, Fisher said. Fisher, a voting member of the Fed's rate-setting Federal Open Market Committee, already is on record saying the central bank should not continue a bond-buying program. Its $600 billion second round of quantitative easing, known as QE2, ends this month. "What would more liquidity do? It's not being used. It's sitting on the sidelines. The gas tanks are full," he said. Fisher said he expects economic growth to accelerate in the second half of this year to an annual rate of about 3 percent to 4 percent and said businesses were poised to hire. "We are lean and mean, our balance sheets are in great shape in America," he said. "There is a lot of liquidity out there. I am eager to see the trigger -- I don't know what it is -- for that money to be spent putting Americans back to work." (Reporting by Glenn Somerville, editing by Jeffrey Benkoe) 9:16AM  :  Fed-Speak: Too Soon to Consider QEIII; Rosengren These comments from non-FOMC monetary policy voter Eric Rosengren call attention to what is becoming a more vocal debate in the marketplace. Will we see another round of Quantitative Easing from the Federal Reserve? Fed Chairman Ben Bernanke speaks this afternoon and although the topic of his speech is TBA, the market is expecting him to share a dovish tone, which is supportive of lower interest rates. However we wouldn't expect him to share too much forward looking guidance as the Fed has set a high-bar on implementing another Quantitative Easing program. Ben should acknowledge a slower than anticipated economic recovery but he will probably reiterate that the Fed "will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery". (Reuters) - U.S. economic growth has been weaker than economists had expected, but it is still too soon for the Federal Reserve to consider additional bond purchases, Boston Fed President Eric Rosengren said on Monday. Rosengren also did not rule out a third round of quantitative easing of monetary policy, or QE3. "I think it's too soon to make that determination," Rosengren told CNBC Television. "It's too soon to determine what the next steps for monetary policy are." Rosengren, considered one of the more dovish members of the Federal Open Market Committee, did suggest the expansion's softness might delay the day when the Fed eventually begins to withdraw stimulus. "The slowdown does change when you think the timing would be for when an exit strategy would be appropriate. Rosengren is not a voter on the FOMC this year. (Reporting by Pedro Nicolaci da Costa, Editing by Gary Crosse)8:41AM  :  ALERT: Loan Pricing Worse as Stocks Bounce from Lows Rate sheets are set weaken once again as benchmark Treasuries get off to another slow start and MBS prices follow the leader into lower price territory. A bounce in stock futures is leading money out of bonds this morning. The 10-year Treasury note is 10/32 lower in price and 3.5bps higher in yield at 3.031%% and the Fannie Mae 30-year 4.0 MBS coupon is -7/32 at 100-27. This behavior is similar to what we witnessed yesterday morning before a modest reversal played out in the afternoon hours as declining stock indexes sparked a reallocation of funds back into risk-free assets. Stock futures are off those afternoon lows after more than five weeks of declines. S&P 500 futures are 6 points higher at 1,291 and Dow futures are 68 points up at 12,126. The federal fundraising process gets underway with $32-billion 3-year notes, results will be announced shortly after 1pm eastern. Although we'd expect Wednesday's $21-billion 10-year note issue to carry more influence over mortgage rates, we can't overlook any auction. If MBS and ultimately, rate sheets, hope to revisit record setting levels, strong demand for all U.S. debt must be exhibited by bond investors. The day is unlikely to end with little fanfare as Fed Chairman Ben Bernanke will take center-stage at the International Monetary Conference in Atlanta at 3:45pm eastern. Because his topic of discussion is "to be announced", we'll be paying close attention for any updates Bernanke shares on monetary policy (QEIII) and the FOMC's economic outlook. While this event takes place in after hours trading, the Fed Chairman always carries enough clout to move the markets. 8:05AM  :  New MBS Commentary Post
Adam Quinones  :  "a break of 3.09% without short covering/new position adding would make us nervous Jeff. But again, if we're repeating history, this happened last year:http://www.mortgagenewsdaily.com/mortgage_rates/blog/214431.aspx" Jason Wilborn  :  "Vindictive defaulters are those who could pay their mortgage but because they are mad at the banks and have little to no equity in the their house, they decide to try and take a free ride for as long as possible with no real thought to the consequences or benefits " Jeff Anderson  :  "At what level should we be concerned about our down elevator? still just a bump in the road on the way down? This QE3 talk has me a bit spooked. Yup, talking out loud again." Andrew Horowitz  :  "Hey JW can you explain Vindictive Defaulters?" Victor Burek  :  "flagstar is .1 worse than yesterday's reprice better" Adam Quinones  :  "they are certainly blocking them out of the market for next 7 years." Aaron Buyside Meyer  :  "I thought F&F were going to go after people who strategically default with judgments?" Jason Wilborn  :  "I am less worried about strategic defaults and more concerned now with vindictive defaults AQ" Adam Quinones  :  "worried about more strategic defaults?" Brett Boyke  :  "CoreLogic -: "10.9 million, or 22.7 percent, of all residential properties with a mortgage were in negative equity at the end of the first quarter of 2011, down slightly from 11.1 million, or 23.1 percent, in the fourth quarter. An additional 2.4 million borrowers had less than five percent equity, referred to as near-negative equity, in the first quarter. Together, negative equity and near-negative equity mortgages accounted for 27.7 percent of all residential properties with a mortgage nationw" Matthew Graham  :  "Stock lever fairly well-connected so far this AM" Matthew Graham  :  "10's retesting again. Long time to go before auction. 3.04 looks to be in jeopardy" Ira Selwin  :  "Andrew Russel - you here? Re: your discussion yesterday about selling to gnma...On the FHA/VA side, GNMA speeds will likelyremain depressed as originators brace for increased put-back risks by theFHA. Late last year, HUD proposed new rules to streamline the process ofindemnifications related to underwriting defects and more recently "theproposed Biggert FHA bill seeks to expand HUD's authority to pursue indemnificationto more lenders (currently, HUD's right is limited to 29% of all FHA lenders,o" Matthew Graham  :  "whether or not we'll be able to say that leading up to the auction remains to be seen." Matthew Graham  :  "Highest yield in 10yr notes so far this AM is the same as yesterday on Thursday's." Adam Quinones  :  "from last night's "The Day Ahead": The federal fundraising process gets underway with $32-billion 3-year notes, results will be announced shortly after 1pm eastern. Although we'd expect Wednesday's $21-billion 10-year note issue to carry more influence over mortgage rates, we can't overlook any auction. If MBS and ultimately, rate sheets, hope to revisit record setting levels, strong demand for all U.S. debt must be exhibited by bond investors." Gus Floropoulos  :  "is todays auction of 3's as relevant as tomorrows 10's, and is the auction of 10s new $$$? holla back" Discuss the MBS and Mortgage Markets on Our Streaming Dashboard

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Refinance home mortgage loan

Refinance home mortgage loan has always been popular among homeowners in periods of low interest rates. Home loan refinancing allows homeowners to replace the existing high interest rate home loan with a low mortgage refinance rate which would reduce monthly mortgage payments and/or shorten mortgage period considerably.

Refinance mortgage could provide low interest rate and flexible repayment options. If previous loan has been paid timely, homeowner's credit score would improve. This will help to get better refinance mortgage terms. Since new loan offers better rate, mortgage could be paid off faster.

A person with good credit score can easily take advantage of mortgage refinance loan. Those who have bad credit can also get a mortgage refinance. However they will have to pay slightly higher interest rate. Probably the best advice for people with bad credit would be to see if they could improve their credit score first.

Recently, more mortgage refinancing applications have been turned in for approval than ever before. This is due to a struggling economy, low home interest rates, and new stimulus programs that make approval of mortgage refinancing easier. In addition, the lenders and banks do not want to deal with more home foreclosures or defaults. Many new refinancing mortgage options now exist for nearly any homeowner. Eased requirements and restrictions allow more people than ever to get refinance approval.

Mortgage Rates: Seeking Confirmation

Yesterday we witnessed the second stage of a potentially significant shift lower in home loan borrowing costs. While these developments were encouraging, short-term reversals remained a constant threat. Today we were reminded of those short-term threats as investors took interest rate profits ahead of tomorrow's "high-risk" event: The Employment Situation Report. As a result bond prices fell and benchmark interest rates rose, pushing consumer borrowing costs marginally higher. Fortunately loan pricing didn't deteriorate enough to warrant a shift higher in Best Execution mortgage rate quotes, we continue to hover near 6-month lows.

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%.  In some cases, 4.375% can make sense, but will involve increased closing costs in the form of an origination fee.  This could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution"  is 4.25%.  15 year fixed conventional loans are  best priced at 3.75%. Five year ARMs are best priced at 3.125% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:  The tone has been generally positive for mortgage rates since April 11th.  We continue to entertain that it could generally stay that way for even longer, clearly justifying longer term floating strategies.  However, further positive progress can be slow and short term corrections are to be expected.  That means borrowers who are working on a shorter lock/float timeline should remain defensive of new, lower "Best Execution" Mortgage Rate quotes. Your main goal is to protect a lower rate offer from short-term market fluctuations, especially with the high risk event on the horizon in the form of this Friday's Employment Situation Report.  This is the sort of report than can either confirm the recent break lower in borrowing costs, or send them right back to other side of the fence.

CURRENT GUIDANCE: It might seem like it's time to consider "The Wall" as being completely destroyed at this point. Yes, "The Wall" is indeed teetering in its most precarious position this year.  Borrowing costs are certainly low enough to justify that, but the most important confirmation can only be granted by tomorrow's high-risk event: The Employment Situation Report.  If that data confirms the slower than expected economic recovery message that has fueled the two-month bond market rally, new improvements will be much less tenuous.  We'd remain defensive even as rates progress lower, preferring the "sure thing" of the best rates of the year today versus the risk of losing them tomorrow.  That assumes either that your time frame is limited or that rates won't recover from any set-backs on the horizon.  Longer term and more flexible scenarios are still justified in floating.

 What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

You can see a list of all comments on MND by clicking the 'Read the Latest Comments' option under the 'Community' menu.

Rental Demand Brightens Dark Housing Outlook

The gloomy picture painted by The State of the Nation's Housing report released yesterday by Harvard's Joint Center on Housing Studies has but one bright spot - the improving rental housing market. 

On virtually every other level it appears that a housing recovery is still months if not years away. Rather than leading the country out of the recession as it has done in prior downturns, the housing industry is holding back economic growth. The report details a number of housing areas where, rather than the outlook improving as the economy began to pick up, things actually got worse.

First of all, household growth has dropped precipitously since 2007.  In the four years since, an average of 500,000 new households have formed each year compared to the 1.2 million annual pace averaged between 2000 and 2007.  This is even more disheartening as the "echo boomer" generation, those born after 1986, is the largest generation in our history to reach its 20s, peak household formation years.   Instead of forming households, many in this age group have stayed in or returned to their parents' homes.  At the same time, for the first time in decade the rate of immigration as slowed.  From 2004 to 2007 the number of new households headed by foreign born citizens increased by 200,000 per year but since 2007 the number foreign-born non-citizen households have declined by the same amount. 

The rental and the homeowner market have diverged.  There has been a net shift of 1.4 single family homes from owned to rental property between 2-007 and 2009, almost twice as many as in the previous two year period.  Still, rental vacancies are down, dropping from about 3.5 million to less than 2 million between 2009 and 2010, and rents have begun to move up.  At the same time homeowner vacancies, which dropped from over 9.5 million in 2008 to about 7.8 million in 2009 has declined only fractionally since even though new home construction has slowed considerably and banks appear to be holding large numbers of foreclosed homes off of the market.  Still, housing prices, unlike rents, have resumed their decline. Unusually large numbers of households are switching from owner to renter and the ownership rate has fallen from 69 percent in 2004 to 67 percent in 2010.  The report says that the continuing foreclosures and reluctance on the part of owners to buy as long as prices are unstable will cause home ownership to continue its decline through 2011. 

The Harvard report cites a Fannie Mae study showing that while attitudes toward homeownership have become more negative over the last few years, 74 percent of renters and 87 percent of the general population still view homeownership as safe investment.

While many households aspire to homeownership, tightened underwriting standards may stand in their way and the report speculates that the proposed 20 percent down payment requirement for qualified residential mortgages could sharply curtail homeownership unless the borrower obtains a government guarantee.  "Over the longer term, it is unclear how the impending reform of the housing finance system, (...) will influence the cost and availability of mortgage loans.

The number of rental households accelerated in the second half of the last decade, swelling by an estimated 3.9 million between 2004 and 2010 but rental vacancy rates increased and rents fell during the same period as new units were added and homes were converted from ownership to rentals.  In 2010, however, the rental market moved into high gear and the vacancy rate dropped from 10.6 percent to 9.4 percent over the course of the year.  MPF Research reported vacancy rates below 5 percent in almost one third of the 64 markets it studied and more than half had rates below 6 percent.   As vacancies declined, rents rose.  Rents in professional managed apartments were up 2.3 percent last year with most of the growth in metropolitan areas.  As employment grows, especially among younger persons, and homeownership continues to decline there will be pressure on the rental market, pushing rents up and encouraging multi-family construction.   Given the time line for new construction, however, rents are likely to remain tight in the short term and will present increased affordability challenges for low-income renters.

There is much uncertainty in the market regarding access to mortgage credit, home buying attitudes, immigration trends and laws, and household formation, but there is certainty about some factors related to demographics.  It is known that the aging baby boomers will drive up the number of older households by some 8.7 million by 2020.  This tends not to be a mobile population and will provide "ballast" for the owner market, offsetting in part the lower homeownership rates among younger households.

While the senior population is likely to age in place, if boomers follow the pattern of the preceding generation some 3.8 million will downsize their homes over the next ten years, lifting demand for smaller housing units and having a major impact on the housing markets in preferred retirement destinations.  The large pre-boomer population will create a similar demand for assisted and independent living developments.

The echo-boomer generation will have a less predictable impact on housing markets.  There are questions involving their homeownership attitudes and the net impact of immigration.  There is reason to believe that this generation will be large enough to boost household formation and the demand for starter homes and apartments.  The report states that if household formation (headship) rates return to their pre-recession average and if immigration is just half of what the Census Bureau projects, the number of households under age 35 will grow to nearly 26.5 million in the next decade.

Affordability is another challenge facing the housing market.  In 2009 10.1 million renters and 9.3 million owners paid more than half their income for housing.  While this hits low-income households the hardest, households with incomes under $15,000 pay over 80 percent of their incomes for shelter, the cost pressures have been moving up the income scale.  Households earning $30 to $45 thousand increased the proportion of their incomes spent on housing from 30 percent to 40 percent over the ten year period ending in 2010.

The recent crash has wiped out household wealth, ruined credit ratings and devastated communities with foreclosures and has left nearly 15 percent of homeowners in homes that are "under water".  This has reduced the amount that owners can cash out of their homes by selling or refinancing.

The report concludes by saying that the strength of the housing recovery, when it does finally occur, will depend on how fully employment bounces back, and then local markets will revive in proportion to the increase in jobs, the depths housing fell during the recession, and the amount of overbuilding that occurred before the downturn.  But the most critical factor for housing recovery in the resumption of household growth and it may be that the unemployment rates on top of the long-term housing affordability issues may have lowered the baseline trend of household growth itself.  "To match the 1.12 million annual rate average in the 2000s, household formation rates must return to their 2007-2009 average and net immigration must reach at least half of Census Bureau projections," the report says.

In the near term it will be rental markets that are likely to lead the housing recovery, but once consumers decide that a floor has formed under house prices, their reentry into the market could quickly burn through the lean inventory of unsold new homes and reduce the excess supply of existing homes on the market.  There is also the danger that government programs to address rent affordability and assisting distressed neighborhoods will feel the budget axe just as affordability problems are escalating.

Related MND comments....

From: HUD Focused on Rebuilding America's Dilapidated Housing Inventory

"Take note of HUD-sponsored initiatives aimed at rebuilding America's dilapidated housing stock." says MND's Managing Editor Adam Quinones. "This is where housing professionals will find the most opportunity in years ahead.  The FHA should reopen the 203(k) program to investors if they want to encourage private investment in the U.S. housing market."

From: Home Remodeling a Forward Indicator of Housing Bottom?

"With so many foreclosed properties sitting empty on the market we can expect remodeling and rehabbing to be a leading indicator of a bottom in the housing market", says MND's Managing Editor Adam Quinones. "We already know there is dearth of affordable rental housing available to low income renters. From that perspective, FHA should open its 203(k) program to investors if they want to accomplish their affordable housing goals."

READ MORE: Affordable Housing Units Needed for Low Income Renters

Mortgage Rates: Debt Auctions Slow Rally

"The Wall" was seen wavering last Wednesday, teetering in its most precarious position this year. But we needed more proof that it was ready to be toppled before declaring it had been torn down.  That confirmation was granted by an unexpectedly weak Employment Situation Report on Friday.  This data validated fears that the economy is not recovering at the pace previously thought. As a result, "The Wall" has fallen, paving a path for a potentially significant shift lower in home loan borrowing costs as we head into the summer months. FULL REPORT RECAP

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%.  In some cases, 4.375% can make sense, but will involve increased closing costs in the form of origination fees.  This could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution"  is 4.25%.  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.125% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

THE WEEK AHEAD: If deteriorating investor sentiment turns a corner this week, it's unlikely to be a function of new optimism found in economic data. The calendar of events is simply too light to drive a sustainable directional reversal in the stock market, which would be a catalyst for higher mortgage rates. While the schedule in the week ahead includes several speakers from the Federal Reserve and an anecdotal review of economic developments, the main driver of home loan borrowing costs will likely be debt auctions. The Treasury Department is set to sell $66 billion in 3-year, 10-year and 30-year debt on Tuesday, Wednesday, and Thursday.  

READ MORE: MND's ECONOMIC EVENTS CALENDAR

CURRENT GUIDANCE:  With "The Wall" now torn down a path has been paved for mortgage rates to continue on the path toward more improvements. An extended rally will not come without setbacks though. Short-term corrections are to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations. This guidance has already proven accurate as borrowing costs rose slightly today, driven by a "pre-auction price concession" ahead of tomorrow's 3-year debt auction.   Although loan pricing did in fact deteriorate, the overall bullish trend is still very much in tact.  Intermediate to longer-term scenarios are more than justified in floating. READ MORE:  What's an auction concession?

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
2. WHEN DO YOU NEED IT BY? Rates might ot rally as fast as you want/need.
3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Another View of the Bond Market Repeating History

The bond market has been building toward today for some time-weeks, maybe months.

The most recent stage of the MBS rally has been in motion since April 11th when underlying benchmarks were able to hold onto ultra long-term support that stretched back to a bullish trend which began BEFORE the financial crisis even unfolded.   With the two exceptions of the initial crash itself in 2008 and its encore performance into the fall of 2010, this trend has contained ALL of the movement in the 10yr yield.  It looks like this:

We'll be focusing exclusively on the 10yr Treasury note tonight due to its ideal role as a benchmark of the general "bond market."  While it's true that loan pricing is derived from MBS, our goal tonight is to examine long-term, big-picture movements.  After all, we know where we've been.  These 10yr charts are better places to look if we want to understand more about where we might be going.

Now!  That sounds dangerous!  Predicting the future?  That's not exactly the best idea at this particular point in economic history. But even though we're not willing or perhaps even able to feed you the answers to questions about what the future holds, we can certainly provide you with some food for thought.  Seeing as how we've made so much of "history repeating itself" recently, tonight's menu offering is for those who hunger for the ongoing bullish perspective. 

MUST READ: Bond Market Repeating History. False Start Fuels Rally

Could things happen in the same way that our view of "repeating history" suggests?  It's certainly possible, but we want to warn you up front that this is only one of the possibilities and history obviously can't repeat itself forever.  That said, it has done a fairly good job so far!

The chart above shows 10yr yields from 2006 to present.   The two squares indicate the two stretches of time in which history can be thought of as repeating itself in terms of how yields are moving.  Take a moment to match up the various color-coded peaks and valleys between the two sections.  Here's a play by play from left to right:

A massive "double top" is seen over the course of two years with similar dips early in the cycle (orange), similar false bounces in the middle (teal) and the 2nd of the two tops in the blue squareFrom there, 3 consecutive red areas highlight the various stages of consolidation and confirmation experienced by yields as they fall rapidly.Then, in the lowest section (white), the long term bounce takes almost exactly the same shape.  Uncanny similarities here!The three small teal sections that follow show how in each case, the most prominent peaks and valleys that followed the white section were strikingly similar in proportion.The 2 time periods culminate in the light purple area at the far right where yields move decisively lower once they break past the previous low in the adjacent teal circle.

Pretty fascinating stuff, right? And while it could turn out to mean absolutely nothing about the rest of 2011, what's the implication were history to keep repeating itself?  It's fair to at least entertain this eventuality with the impending conclusion of QE2, the gathering storm of progressively weaker economic data, and what many consider a central component to the ultimate recovery-the housing market-still very far from being even on its way to a healthy state. AQ has described housing as "stagnating in a pool of its own filth" actually.

Given the somewhat lower amplitude of the more recent stage (that would be the big grey square on the right, in case I've lost you), if history does indeed continue to repeat itself, then the suggestion is that we could see movement something like this...our first target is a 2.85% 10yr note yield. But first, NOTICE THE NEXT MOVE IN REPEATING HISTORY IS YIELDS MOVE HIGHER.

The intense volatility that could be just around the corner would logically coincide with the termination of QE2, and yields would once again move lower to test all time lows in the 2's.  Possible?  Yes....  Probable?  No way to know, but we've talked enough about history repeating itself that we wanted to give you one of the frameworks for looking at and thinking about it, as well as some context as to what it might mean if it continues to happen.

For now, today's Employment situation report amounts to the best piece of confirmation so far for the validity of the 2 month rally that began in early April.  Volumes have been astonishing in Treasuries this week and have finally reached levels where secondary managers have begun hedging with 4.0 MBS in greater numbers than 4.5's.  That means that 4.25 Best-Execution rates are a real possibility in the near future, to whatever extent that something unforeseen doesn't reverse the present trends in the market.

This is the guidance we shared with consumers today...

From Mortgage Rates: Tear Down This Wall!

CURRENT GUIDANCE:  With "The Wall" now torn down a path has been paved for mortgage rates to continue improving. An extended rally will not come without setbacks though. Short-term corrections are to be expected along the way.  That means borrowers who are working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations,which could happen as early as Monday and last all week. The overall bullish trend is very much in tact though. Intermediate to longer-term scenarios are more than justified in floating.

Have a good weekend folks.

MG&AQ

Mortgage Rates: Rally Takes a Breather

Mortgage rate watchers were reminded once again today of the threats they face when floating a loan on a shortened timeline.

Although consumer rate quotes were able to recover from early morning weakness, just like they did yesterday,  home loan borrowing costs have failed to make positive progress since "The Wall" came crashing down last Friday. The positive big picture tone in the bond market has been put on pause. We believe this stubborn behavior is factor of "debt auction concessions".

CURRENT MARKET: The "Best Execution" conventional 30-year fixed mortgage rate is 4.50%.  In some cases, 4.375% can make sense, but will involve increased closing costs in the form of origination fees.  This could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.  On FHA/VA 30 year fixed "Best Execution"  is 4.25%.  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.125% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:  With "The Wall" now torn down a path has been paved for mortgage rates to continue on the path toward more improvements. An extended rally will not come without setbacks though. Short-term corrections are to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations. This guidance has already proven accurate as borrowing costs rose slightly today, driven by a "pre-auction price concession" ahead of tomorrow's 3-year debt auction.   Although loan pricing did in fact deteriorate, the overall bullish trend is still very much in tact.  Intermediate to longer-term scenarios are more than justified in floating. READ MORE:  What's an auction concession?

CURRENT GUIDANCE:   With  "The Wall" now torn down a path has been paved for mortgage rates to continue on the path toward more improvements. An extended rally will not come without setbacks though. Short-term corrections are to be expected along the way.  That means borrowers working on a shorter lock/float timeline should remain defensive. Your main goal is to protect new, lower rate quotes from short-term market fluctuations.  The overall bullish trend is still very much in tact though.  Intermediate to longer-term scenarios are more than justified in floating. READ MORE: The Day Ahead

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
2. WHEN DO YOU NEED IT BY? Rates might ot rally as fast as you want/need.
3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Guest Comment: PPI was mis-sold but isn't bad

The widespread mis-selling of payment protection insurance (PPI) is well-known but Shane Craig (right), managing director of independent provider?Paymentcare.co.uk, says the product shouldn't be demonised.

PPI has featured heavily in the national media in recent weeks as several high street banks and building societies have put their hands up to mis-selling.

They sold the insurance on loans, credit cards and mortgages ? to cover people when they couldn't work due to redundancy, accident or illness ? knowing many they sold it to probably didn't need it, or did not qualify for payouts under the terms of the small print.

But that doesn't mean the product itself is bad, and the bad press should not put people off PPI even though the way it was sold by many was wrong.

These major lenders were caught bang to rights. But it was a long journey, and they were only properly rumbled following an investigation which took many years.

So what's the future for PPI? Is it still relevant? Who needs it?

In the current economic climate, we hear almost daily of major job cuts, so PPI serves as a useful back-up for those with mortgages and the usual domestic outgoings to cover.

Assuming you fit the following criteria you are probably eligible for cover: over 18, below the statutory retirement age of 65, in permanent employment, work a minimum of 16 hours per week and have done so for at least 6 months, and you are not aware of any impending redundancies where you work.

The self-employed ? which make up around 4 million of the 20 million-strong work-force ? are unlikely to qualify for unemployment cover but may benefit from accident and sickness insurance.

The first rule is to be really forensic when considering taking out cover. Think how the product works, what it covers and don't just focus on how much it costs.

PPI is not for everyone but if the terms and conditions are properly understood, and all areas of the policy are completely transparent, it can serve as an effective financial back-up should your employment circumstances change, and the ability to protect your income and repay your loans/mortgages become compromised.

Some companies ? and we like to count ourselves among them ? have treated consumers fairly and transparently, offering appropriate products which do what they claim to do on the tin.

Banks aren't helping themselves

It's not just PPI where banks have been guilty of poor selling practices.

When you think about it, high street lenders have been accused of being involved in some instances of encouraging customers to buy products which are not suitable, from inappropriate mortgages to questionable investments.

The galling thing is with PPI, that rather than lenders rummaging through their war chests to settle the claims which are now pouring in, some have indicated they intend to challenge claims.

People who have lost out, therefore, may yet have to wait while these culpable lenders consult their legal teams and see if they have to pay out compensation claims.

To be fair, Lloyds Banking Group has said it has set aside around ?3.2 billion to settle claims ? but the many other lenders who have been active in this market for so many years are not, it seems, being so forthcoming.

This will do little to enhance reputations which have already been badly scarred by repeated incidences of mis-sold financial products.

There are further incidences ? widely reported ? where some companies who are alleged to have mis-sold PPI were also successful in selling what is known as single premium PPI.

Now banned, this was a lump sum covering the cost of the insurance, which was added to the amount borrowed, so the customer ended up paying interest on both the insurance premium and the loan.

The product was expensive and of dubious use to policyholders, but mainstream lenders continued to sell it up until recently.

Hopefully, the reclaiming process will ensure those who are eligible for compensation will get back every penny.

Views expressed are not necessarily those of MoneySavingExpert.com.

Comment/Discuss

Discuss this MSE news story: PPI was mis-sold but isn't bad

Home ownership dream dwindles for young renters

Half of younger people think Britain will become a nation of renters within a generation as many give up on the dream of home ownership, a study suggests today.

Around 77% of of 20 to 45-year-olds who have not yet got onto the property ladder still aspire to buying their own home, but 64% think they have no prospect of ever doing so, according to high street bank Halifax.

Instead, 46% said think the country is becoming more like Europe, where renting is seen as the norm, and Britain will be a nation of renters within a generation.

The perception that banks are not lending is seen as one of the biggest problems, with 84% of potential first-time buyers saying banks do not want to advance them money and will find excuses to turn them down.

At the same time, 92% say they think it is hard for first-time buyers to get a mortgage, 60% of whom think it is either very hard or virtually impossible.

The large deposits currently required were seen as a further barrier, with only 5% of people saying they were making sacrifices to save for a deposit, while 95% say they either do not have enough spare cash, were not interested in setting aside money or had tried but failed.

What does this mean for future home buyers?

Alison Blackwell, of the National Centre for Social Research, which compiled the report for Halifax, says: "The phenomenon of Generation Rent could have major socio-economic implications.

"It would mean fewer homeowners being able to buy and therefore fund the construction of the new homes required in the UK to meet demand, resulting in a slowing-down in the housing market.

"It could open up a widening of the wealth gap that already exists between homeowners and non homeowners. And people in Generation Rent risk insufficient finances at retirement."

Halifax says it plans to launch a first-time buyer pledge in July in response to the problems people face getting onto the housing ladder.

This will involve it publishing a detailed overview of its lending criteria, as well as a personalised promise on how much it will advance people, without it leaving a lasting record on their credit file.

If an application is rejected, it will give customers information on why this happened and it will provide them with a plan on how to move forward regardless of whether they are successful or unsuccessful with their application.

Tough mortgage criteria should stay

Meanwhile, a think-tank today says that banks should keep their tough mortgage lending criteria in place to help prevent another house price bubble in future.

Mortgages should be capped at 90% of a property's value, while people should also be prevented from borrowing more than 3.5 times their income, according to the Institute for Public Policy Research (IPPR).

The group says the UK has had four housing bubbles in the past 40 years, with these causing widespread damage to the economy.

The IPPR is calling on the Government and the Financial Services Authority not to give in to lobbying from the banking industry and to recommend caps on mortgage lending, both on the amount advanced as a proportion of the value of a property and the amount lent relative to a borrower's salary, as part of its Mortgage Market Review.

It is also calling for the deposits lenders require for buy-to-let properties to rise to ensure the rental income covers mortgage repayments.

Tens of thousands can cancel gym contracts

Tens of thousands of gym-goers can cancel their contracts after the High Court ruled they are unfair.

It stated the minimum contract length and a number of other key terms in 300,000 gym contracts are now unenforceable.

Deals declared unfair are those enforced by Ashbourne Management Services Limited. It draws up membership agreements and collects payments for over 700 local, independent gyms.

They were deemed unjust last week primarily because of a combination of huge contract lengths that exceeded 12-months, and hefty fees for cancelling early, which totalled the membership cost for the remainder of a deal. This could run into hundreds of pounds

It is not known what proportion of these contracts are active or expired.

Where a contract is still active, the consumer can wriggle out of it without penalty and opt for a better deal. Where expired, there is a slim chance of compensation.

How do I know if I'm affected?

Contracts drawn up by Ashbourne Management Services Limited will have that name on the paperwork. In some cases, the name won't be prominent, so check carefully.

What if I still have a contract?

Where a contract term was deemed unfair by the judge, it is now not binding on the user's part, according to the Office of Fair Trading (OFT), which launched the case, though users can still continue to use the gym if they wish.

The OFT says if a customer wishes to cancel their contract, they can do so immediately as long as they have one of the contracts numbered between one and ten as listed on the OFT website.

If a customer wishes to cancel their deal and they had a contract numbered between 11 and 13 (see the OFT website), they can do so provided they give 30 days' notice, and they have had that contract for more than 12 months.

John Clayton-Wright, managing director of Ashbourne, says the maximum contract length it now offers is 12 months, as opposed to 24 or 36 month contracts, which it previously offered.

What if my contact's over?

The OFT says where previous customers have paid a penalty to cancel their contract early, they have no automatic right to claim a refund.

Its advice is: "If you have paid money and do not believe it was owed, you should seek legal advice as to the circumstances of your case, and whether you would be able to get a refund."

Alternatively, you can seek advice from Consumer Direct.

Jason Freeman, a director of the OFT Goods and Consumer Group, says: "We have received many complaints about Ashbourne's contracts, and many consumers have felt pressured into paying sums they believed they did not owe.

"We are pleased that the court has confirmed these practices are unlawful, and this should bring peace of mind to many people who have fallen into the trap of signing up to these lengthy gym contracts."

The judge also ruled that where the consumer has fallen behind on payments, it was unfair to demand the full sum in many cases.

He also said most of Ashbourne's contracts did not make it clear that the consumer was contracted with the gym club, and not with Ashbourne.

Crackdown on loan broker fees

Firms that charge fees for finding hard-up consumers a loan will have their activities curbed, after the Office of Fair Trading (OFT) found some pocket cash without carrying out the service.

Consumers may now have the right to their money back where no loan is offered, while the OFT also wants the Government to consider banning up-front fees in the sub-prime market ? for people with credit problems.

Meanwhile, the watchdog will also publish guidance later this month to tackle other unacceptable practices in the debt management industry.

The action comes after a 'super complaint' launched by charity Citizens Advice in March that the OFT is duty-bound to respond to.

The complaint was specifically about credit brokers and debt management firms following concerns about their negative impact on vulnerable consumers.

The OFT issued warnings to 129 debt management businesses in September 2010 as part of its crackdown on dodgy practices.

Fees curbed

The OFT estimates 270,000 consumers paid an up-front fee to a sub-prime credit broker in the last 12 months, typically between ?50 and ?70, on the expectation of being offered an unsecured loan.

Complaints to Consumer Direct about these up-front fees more than doubled between 2008 and 2010.

In addition, in the 2010/11 financial year, the independent Financial Ombudsman Service received over 5,000 initial enquiries and complaints to its helpline about credit brokers, more than double the 2,000 in 2009/10.

The Ombudsman upheld around 70% of credit broking complaints in favour of the consumer in 2010/11.

In the worst cases, firms take the money without finding any lender, the OFT says. In others, they find borrowers a completely unsuitable loan.

The OFT today says:

Consumers may have a right to a refund of the up-front fee, under contract law, where no introduction to a lender is made. The OFT says it cannot be more definite as it is not judge and jury on matters of contract law.Where an introduction is made but no loan is taken out, the OFT expects brokers, six months after introducing a consumer to a lender, to advise them of their right to a refund of the fee. The OFT says in these cases the law is clearer and borrowers are entitled to their money back.

John Fingleton, OFT chief executive, says: "Our evidence suggests some businesses are deliberately taking people's money up-front with no realistic expectation of finding them the type of loan they need.

"We will continue to take robust action against businesses using unfair practices and we are providing new guidance making very clear the kind of behaviour we expect. We are also asking the Government to look at the impact of a ban on up-front fees."

Lenders expect to sell more mortgages this year

Mortgage lending is expected to increase this year for the first time since the credit crunch struck, a trade body predicted today.

The Council of Mortgage Lenders (CML) has raised its forecast for net lending ? the amount lent minus repayments ? by 50% from just ?6 billion in 2010 to ?9 billion for 2011, increasing to ?12 billion in 2012 as the recovery continues.

But mortgages will still be very hard to get, it warns, especially when you consider the figures are still well down on the ?108 billion of net lending in 2007.

Consumers need a virtually spotless credit rating to get a home loan as well as generally needing a deposit worth 10% of the property value, or 25% to get a decent rate. On a typical ?200,000 home, that's a ?20,000 or ?50,000 down payment.

The CML says that although the availability of credit to back mortgage lending remains constrained, conditions have eased a little.

Lenders cautious

Total advances are also expected to be higher than previously thought at ?140 billion, compared with a predicted ?135 billion, while they should rise to ?150 billion next year.

The group also warns that conservative lending practices are being entrenched by the Financial Services Authority's mortgage market review, which calls for tighter checks on borrowers' ability to repay.

Property transactions are likely to remain subdued as household confidence remains low in the face of falling incomes in real terms, the CML adds.

It expects just 840,000 homes to change hands this year, down on both last year's figure and its previous forecast, and the lowest level since records began in 2000.

It says lenders had reported weak demand for housing for several quarters, and this is expected to continue.

Despite the pressures on household incomes, the CML has not increased its forecasts for arrears and repossessions, as it expects the bank of England base rate to remain at its current record low of 0.5% for most of 2011, which is leading to lower monthly repayments.

But, at 40,000, the number of people who are expected to lose their home this year is still higher than the 36,300 properties seized in 2010, and the figure is expected to climb further to 45,000 next year, although this is still below 2009 levels which stood at 46,000.

Claimants protected under insurance overhaul

Insurers will no longer be able to refuse a claim where they have failed to ask the right questions, under government plans.

In some cases, insurers reject complaints where a consumer has not declared a fact completely irrelevant to the claim because it simply was not asked for.

The news is a massive victory for MoneySavingExpert.com and many other consumer groups.

Figures including this site's founder Martin Lewis and a director of lobby group Which? signed a letter last year urging the Government to implement Law Commission proposals to loosen rules on what consumers must declare, which are over 100 years old.

The letter cited the example of a woman denied a critical illness payout for leukaemia following a failure to declare unrelated ear infections.

Insurance application forms often only state deep in the small print that criminal convictions and unrelated medical conditions must be declared.

The Consumer Insurance (Disclosure and Representations) Bill, introduced into Parliament on this week, which contains the plans, is likely to become law in 2013.

Martin Lewis, MoneySavingExpert.com creator, says: "It's good to see the system working for once with a piece of non-contentious legislation being enacted that'll help huge numbers, even though it may not make huge headlines.

"The ridiculously antiquated insurance laws needed an urgent update as a few less scrupulous players in the insurance market have used the current laws as a get out of jail free card."

Professor Hector MacQueen, the commissioner leading the project at the Scottish Law Commission, says: "We are delighted to see this Bill introduced into Parliament. As the law stands, consumers are expected to predict what information an insurer might consider relevant.

"Under the reforms, the rights, duties and expectations of both parties are clearly established."

The Association of British Insurers, which represents insurance companies, insists most of its members already adopt less onerous disclosure requirements.

A spokesman says: "The insurance industry is committed to ensuring customers understand their rights and obligations, and have their genuine claims paid quickly. The Commission's proposals give legal status to existing best practices."

Now you must have car insurance

If you?ve got an uninsured vehicle you are breaking the law whether you drive it or not, under rules that came into force this week, unless you declare it off-road.

The Continuous Insurance Enforcement scheme makes it an offence to keep an active, uninsured vehicle. Under the previous law, you only needed insurance if you were driving.

The new law came into effect on Monday but the Government has declared an amnesty until late June during which time it will not be enforced, giving drivers the chance to get insured.

Sources close to the Government say the likely enforcement regime will begin on 20 June.

The aim of the new rule is to cut down on the number of uninsured vehicles, which currently stands at 1.4 million. It'll allow the Government to use databases to match-up owners with insured vehicles.

Cars, motorbikes and motor homes must be now continually insured. A lapse of even a few days could see you falling foul ? meaning it's no longer possible to remain uninsured while in hospital or on holiday.

If the owner fails to insure a vehicle they could be given a ?100 fine. If it remains uninsured, the vehicle could be clamped, seized or destroyed.

The law will apply in England, Scotland and Wales but not in Northern Ireland.

If you have a vehicle you do not drive, the only way to avoid paying insurance is with a valid Statutory Off Road Notice (Sorn), declaring your vehicle is not in use.

This could play into insurers' hands

This is a more efficient system to cut down on uninsured drivers ? who typically add ?30 to every motor insurance premium ? but you could end up paying far too much if you simply allow insurers to auto-renew your cover.

Instead, a few minutes' work in advance can cut costs by hundreds of pounds a year as new customers tend to get far cheaper insurance premiums.

Figures from the AA show the average car insurance premium at ?1,416, though this falls to ?892 for those who shop around before buying.

MoneySavingExpert.com creator Martin Lewis says: "Anything that cracks down on uninsured drivers is good news for motorists.

"Yet it's important any savings for insurers are passed onto customers, who've already seen 40% hikes in car insurance in the last year alone.?

"However, there is a worry that many people will simply auto-renew with their existing insurer to avoid fines ? and that allows insurers to hike prices knowing they've no competition.?

"To avoid this, everyone should diarise six weeks before their renewal is due to start the comparison process, as if you wait until your insurer reminds you it's often too late."

How do I declare a vehicle Sorn?

To do this, see the Direct.gov website.

To fulfil these requirements, your vehicle must be kept off the road.

What counts as off-road?

Typically, off-road means garages and driveways. It does not apply to simply leaving your car parked on the side of the road.

Any part of a public road, including grass verges and ground adjoining the road, is deemed on-road.

The DVLA says you should contact your local authority if you have any doubt.

Anyone who has not used their vehicle and not had it taxed since the Sorn regulations came into force in January 1998 is also exempt from buying insurance, if they don't drive the vehicle.

PPI complaints hit record high

A record number of consumers complained about mis-sold payment protection insurance (PPI) during the past financial year, despite the banks' attempt to block reclaiming.

A mammoth 104,597 consumers made a complaint to the independent Financial Ombudsman Service on PPI in the year to 31 March ? over 2,000 a week (see the PPI reclaiming guide for template letters).

That is more than double the 2009/10 figure and is the highest-ever recorded on a single product, eclipsing the previous record of 69,737 on mortgage endowments in 2004/05.

PPI ? to cover credit card or loan payments if you cannot work ? represented 51% of all claims to the Ombudsman in 2010/11, with 66% upheld, against an industry average of 51%.

As a result, the Ombudsman has become swamped by PPI complaints leading to huge backlogs meaning cases can take well over a year to resolve.

The record numbers are in spite of banks' unilateral hold on claims during their disastrous attempt to outlaw Financial Services Authority (FSA) rules that force them to proactively contact mis-selling victims.

The British Bankers' Association trade body lost its key Judicial Review last month and threw in the towel last week, when it announced it would not appeal the decision after key members, Lloyds Banking Group and Barclays, pulled out. As a result, the hold is now over.

The capitulation opens the floodgates for an estimated three million victims to reclaim a combined ?9 billion in mis-sold cover.

The Ombudsman figures only account for complaints to it, not overall protests. Before reaching the independent arbitrator, consumers must first raise their concern with the firm that sold the policy.

Close to two million have made a complaint since the FSA began regulating PPI in 2005.

Non-PPI complaints

In total, the Ombudsman handled over a million front-line enquiries and complaints from consumers ? around 4,000 each working day.

Around 1 in 5 of the initial consumer enquiries ? a record 206,121 new cases ? become a formal dispute. This is up 26% on the previous year.

There was an increase in the number of complaints about mobile phone insurance where many questioned the value of the policies sold.

Complaints about loans from smaller lenders rose considerably, as did gripes about travel and motor insurance. Meanwhile, investment complaints fell by 30% and banking complaints were down 9%.

Natalie Ceeney, chief ombudsman, says: "Aside from PPI, over the year we've seen encouraging signs of improvements in the way that some businesses are handling complaints."

Treasury: Credit Constraint Is Not Reform's Focus

Secondary and primary market representatives at an industry conference Wednesday morning said their concerns about governmental changes like GSE reform and Dodd-Frank largely center on their potential to tighten mortgage credit availability and exacerbate a still-struggling housing market.

“The focus…is not to constrain credit,” Jeff Foster, the Treasury’s senior policy advisor-capital markets, told attendees at the Mortgage Bankers Association’s secondary market conference.

Foster said the government wants to hear industry concerns as it proceeds at a deliberate pace on big moves like GSE reform.

Tom Deutsch, executive director of the American Securitization Forum, told this publication it might be best for there not to be a rush to reform because of the pressure it could put on mortgage rates and housing. Removing the effective subsidy the agencies’ guarantee fees put on rates and adding to secondary market costs by, for example, adding loan-level transparency, means rates will inevitably rise as reform occurs, he said. This could cause housing demand to continue to decline.

“Mortgage rates will go up. There is no doubt in my mind,” Deutsche said during a panel discussion at the conference.

Government controlled mortgage giant Freddie Mac posted its first true net profit in almost two years, earning $676 million in the first quarter — even after paying the U.S. Treasury a $1.6 billion dividend on the preferred stock it owns.

The city of Los Angeles filed a civil lawsuit Wednesday against Deutsche Bank, claiming the German bank failed to maintain foreclosed properties and illegally evicted hundreds of low-income renters.

A House Financial Services subcommittee Wednesday approved a bill that creates a five-member commission to steer the new Consumer Financial Protection Bureau instead of a single director.

Thanks to lower interest rates, mortgage applications increased 4% on a seasonally adjusted basis for the week ending April 29, according to new figures released by the Mortgage Bankers Association.

Genworth Financial earned $82 million in the first quarter, a 54% drop from the year ago, as continued losses at its mortgage insurance unit held back the company’s financial recovery.

Some mortgage vulture funds may be heading for the exits, but not the publicly traded PennyMac Mortgage Investment Trust, the brainchild of former Countrywide Financial Corp. president Stanford Kurland.

The House Capital Markets and GSE subcommittee late Tuesday advanced a bill to create a U.S. covered bond market but major issues need to be worked out first before the measure is ready for a full committee markup.

PHH Corp., Mt. Laurel, N.J., earned $49 million in the first quarter, up from $8 million in the same period last year, driven in part by a 77% increase in mortgage closings and a $68 million pre-tax gain on the sale of 50.1% of its appraisal business to CoreLogic.

Moody's Investors Service late Tuesday downgraded Bank of America’s residential servicing ratings, citing continuing challenges the nation’s largest servicer faces with its 2008 purchase of Countrywide Financial Corp.

Investigators keep finding skeletons in the closets of companies that participated in the mortgage boom. In a case the government filed against Deutsche Bank AG on Tuesday, the “closet” part is literally true.

After three consecutive months where the national commercial mortgage-backed securities delinquency rate was leveling off, the latest report from Trepp signaled the recovery is nowhere in sight.

Residential Finance Corp., Columbus, Ohio, has hired Daniel Jacobs, former 1st Metropolitan CEO, to head up its new retail branching operation, ProLending Network.

Frank Keating, the head of the American Bankers Association, late Tuesday reneged on his endorsement of Elizabeth Warren as director for the Consumer Financial Protection Bureau within hours of saying the trade group would "be fully supportive" of her nomination.

CRIF, the Italian financial services provider, this week continued its buying spree of credit union lending software companies with the acquisition of Cypress Software Systems.

MBA Declares Refi Binge Officially Laid to Rest

The surge in refinancing, now down to a virtual trickle, was officially pronounced dead and gone at the Mortgage Bankers Association's annual secondary market conference in New York.

"We've lost borrowers who have the ability (to refinance) and those who have the ability no longer have the incentive," Michael Fratantoni, the MBA's director of research and economics, told the meeting.

While the market is "close to the turnaround point" in purchase mortgage volumes, Fratantoni said, "the refi portion is essentially over."

The share of borrowers with loans at rates above 5.5% either don't have jobs, have lost too much equity or have poor credit, the MBA economist explained. Or they simply don't want to refinance for some unknown reason.

While the loss of easy loans is a blow to lenders, it is good news to servicers who are impacted by the loan runoff. But servicers also received a bit of bad news from the MBA's chief economist, Jay Brinkman, who pointed out that mortgage debt outstanding is continuing to fall. Worse, he said, the "likelihood of a turnaround is not good." And the anticipated increase in purchase volumes "may not be enough" to replace the loss.

According to data gleaned from the group's weekly applications survey, the mortgage business has settled down into a "plain vanilla market." But the pattern of refinances indicates that the composition of those loans is changing, as borrowers opt to "de-leverage" with shorter payback periods, leading to the decline in debt outstanding, Fratantoni pointed out.

Nearly 24% of those who refied went with a 15-year amortization period, and almost 12% more took loans with durations of 10 years or less.

Government controlled mortgage giant Freddie Mac posted its first true net profit in almost two years, earning $676 million in the first quarter — even after paying the U.S. Treasury a $1.6 billion dividend on the preferred stock it owns.

The city of Los Angeles filed a civil lawsuit Wednesday against Deutsche Bank, claiming the German bank failed to maintain foreclosed properties and illegally evicted hundreds of low-income renters.

A House Financial Services subcommittee Wednesday approved a bill that creates a five-member commission to steer the new Consumer Financial Protection Bureau instead of a single director.

Thanks to lower interest rates, mortgage applications increased 4% on a seasonally adjusted basis for the week ending April 29, according to new figures released by the Mortgage Bankers Association.

Genworth Financial earned $82 million in the first quarter, a 54% drop from the year ago, as continued losses at its mortgage insurance unit held back the company’s financial recovery.

Some mortgage vulture funds may be heading for the exits, but not the publicly traded PennyMac Mortgage Investment Trust, the brainchild of former Countrywide Financial Corp. president Stanford Kurland.

Secondary and primary market representatives at an industry conference Wednesday morning said their concerns about governmental changes like GSE reform and Dodd-Frank largely center on their potential to tighten mortgage credit availability and exacerbate a still-struggling housing market.

The House Capital Markets and GSE subcommittee late Tuesday advanced a bill to create a U.S. covered bond market but major issues need to be worked out first before the measure is ready for a full committee markup.

PHH Corp., Mt. Laurel, N.J., earned $49 million in the first quarter, up from $8 million in the same period last year, driven in part by a 77% increase in mortgage closings and a $68 million pre-tax gain on the sale of 50.1% of its appraisal business to CoreLogic.

Moody's Investors Service late Tuesday downgraded Bank of America’s residential servicing ratings, citing continuing challenges the nation’s largest servicer faces with its 2008 purchase of Countrywide Financial Corp.

Investigators keep finding skeletons in the closets of companies that participated in the mortgage boom. In a case the government filed against Deutsche Bank AG on Tuesday, the “closet” part is literally true.

After three consecutive months where the national commercial mortgage-backed securities delinquency rate was leveling off, the latest report from Trepp signaled the recovery is nowhere in sight.

Residential Finance Corp., Columbus, Ohio, has hired Daniel Jacobs, former 1st Metropolitan CEO, to head up its new retail branching operation, ProLending Network.

Frank Keating, the head of the American Bankers Association, late Tuesday reneged on his endorsement of Elizabeth Warren as director for the Consumer Financial Protection Bureau within hours of saying the trade group would "be fully supportive" of her nomination.

CRIF, the Italian financial services provider, this week continued its buying spree of credit union lending software companies with the acquisition of Cypress Software Systems.

California Lender Launches Correspondent Effort

Pacific Union Financial LLC, Walnut Creek, Calif., has launched a new correspondent division to purchase already funded residential loans from mortgage bankers, community banks, and credit unions.

In an interview with National Mortgage News, company president Evan Stone said that Pacific Union is requiring sellers to have a minimum net worth of at least $1 million and a “HUD Eagle.”

Company chief operating officer Vicki Bondi is heading the new effort.

A nonbank lender, Pacific Union originated $1 billion in home mortgages last year, with about three-fourths of that coming through the wholesale channel. “The rest came through retail,” said Stone.

With the new correspondent launch, PUF will have three channels, allowing it to compete against some of the nation’s largest funders, said Stone. “I think we can handle $100 million a month, no problem,” he added.

The company’s warehouse backers include First Tennessee Bank, among others. “Warehouse credit is not a problem these days,” said Stone.

Government controlled mortgage giant Freddie Mac posted its first true net profit in almost two years, earning $676 million in the first quarter — even after paying the U.S. Treasury a $1.6 billion dividend on the preferred stock it owns.

The city of Los Angeles filed a civil lawsuit Wednesday against Deutsche Bank, claiming the German bank failed to maintain foreclosed properties and illegally evicted hundreds of low-income renters.

A House Financial Services subcommittee Wednesday approved a bill that creates a five-member commission to steer the new Consumer Financial Protection Bureau instead of a single director.

Thanks to lower interest rates, mortgage applications increased 4% on a seasonally adjusted basis for the week ending April 29, according to new figures released by the Mortgage Bankers Association.

Genworth Financial earned $82 million in the first quarter, a 54% drop from the year ago, as continued losses at its mortgage insurance unit held back the company’s financial recovery.

Some mortgage vulture funds may be heading for the exits, but not the publicly traded PennyMac Mortgage Investment Trust, the brainchild of former Countrywide Financial Corp. president Stanford Kurland.

Secondary and primary market representatives at an industry conference Wednesday morning said their concerns about governmental changes like GSE reform and Dodd-Frank largely center on their potential to tighten mortgage credit availability and exacerbate a still-struggling housing market.

The House Capital Markets and GSE subcommittee late Tuesday advanced a bill to create a U.S. covered bond market but major issues need to be worked out first before the measure is ready for a full committee markup.

PHH Corp., Mt. Laurel, N.J., earned $49 million in the first quarter, up from $8 million in the same period last year, driven in part by a 77% increase in mortgage closings and a $68 million pre-tax gain on the sale of 50.1% of its appraisal business to CoreLogic.

Moody's Investors Service late Tuesday downgraded Bank of America’s residential servicing ratings, citing continuing challenges the nation’s largest servicer faces with its 2008 purchase of Countrywide Financial Corp.

Investigators keep finding skeletons in the closets of companies that participated in the mortgage boom. In a case the government filed against Deutsche Bank AG on Tuesday, the “closet” part is literally true.

After three consecutive months where the national commercial mortgage-backed securities delinquency rate was leveling off, the latest report from Trepp signaled the recovery is nowhere in sight.

Residential Finance Corp., Columbus, Ohio, has hired Daniel Jacobs, former 1st Metropolitan CEO, to head up its new retail branching operation, ProLending Network.

Frank Keating, the head of the American Bankers Association, late Tuesday reneged on his endorsement of Elizabeth Warren as director for the Consumer Financial Protection Bureau within hours of saying the trade group would "be fully supportive" of her nomination.

CRIF, the Italian financial services provider, this week continued its buying spree of credit union lending software companies with the acquisition of Cypress Software Systems.

CRIF Moves Deeper Into CU Market With Deal For Cypress Software

CRIF, the Italian financial services provider, this week continued its buying spree of credit union lending software companies with the acquisition of Cypress Software Systems.  

No purchase price was disclosed.

CRIF will add the North Richland Hills, Texas provider of loan origination systems to its growing stable of lending software, which includes the APPRO, Aimbridge, Teres, FLS and Magnum systems it acquired over the past two years. The systems are used by 650 U.S. credit unions and banks.

Cypress Software provides a variety of software and services that help credit unions and banks automate their loan application, underwriting and decisioning processes. The company serves more than 100 clients in the U.S. and 16 other countries.

“CRIF has assembled one of the most powerful suites of financial services technology available in the marketplace,” said Stephen Sargent, co-founder and president of Cypress Software. “We look forward to working with CRIF Lending Solutions to help banks, credit unions and other financial institutions succeed in this changing lending landscape.”

CRIF’s U.S. headquarters is based in Atlanta.

Government controlled mortgage giant Freddie Mac posted its first true net profit in almost two years, earning $676 million in the first quarter — even after paying the U.S. Treasury a $1.6 billion dividend on the preferred stock it owns.

The city of Los Angeles filed a civil lawsuit Wednesday against Deutsche Bank, claiming the German bank failed to maintain foreclosed properties and illegally evicted hundreds of low-income renters.

A House Financial Services subcommittee Wednesday approved a bill that creates a five-member commission to steer the new Consumer Financial Protection Bureau instead of a single director.

Thanks to lower interest rates, mortgage applications increased 4% on a seasonally adjusted basis for the week ending April 29, according to new figures released by the Mortgage Bankers Association.

Genworth Financial earned $82 million in the first quarter, a 54% drop from the year ago, as continued losses at its mortgage insurance unit held back the company’s financial recovery.

Some mortgage vulture funds may be heading for the exits, but not the publicly traded PennyMac Mortgage Investment Trust, the brainchild of former Countrywide Financial Corp. president Stanford Kurland.

Secondary and primary market representatives at an industry conference Wednesday morning said their concerns about governmental changes like GSE reform and Dodd-Frank largely center on their potential to tighten mortgage credit availability and exacerbate a still-struggling housing market.

The House Capital Markets and GSE subcommittee late Tuesday advanced a bill to create a U.S. covered bond market but major issues need to be worked out first before the measure is ready for a full committee markup.

PHH Corp., Mt. Laurel, N.J., earned $49 million in the first quarter, up from $8 million in the same period last year, driven in part by a 77% increase in mortgage closings and a $68 million pre-tax gain on the sale of 50.1% of its appraisal business to CoreLogic.

Moody's Investors Service late Tuesday downgraded Bank of America’s residential servicing ratings, citing continuing challenges the nation’s largest servicer faces with its 2008 purchase of Countrywide Financial Corp.

Investigators keep finding skeletons in the closets of companies that participated in the mortgage boom. In a case the government filed against Deutsche Bank AG on Tuesday, the “closet” part is literally true.

After three consecutive months where the national commercial mortgage-backed securities delinquency rate was leveling off, the latest report from Trepp signaled the recovery is nowhere in sight.

Residential Finance Corp., Columbus, Ohio, has hired Daniel Jacobs, former 1st Metropolitan CEO, to head up its new retail branching operation, ProLending Network.

Frank Keating, the head of the American Bankers Association, late Tuesday reneged on his endorsement of Elizabeth Warren as director for the Consumer Financial Protection Bureau within hours of saying the trade group would "be fully supportive" of her nomination.