It has been somewhat bewildering lately, watching mortgage loan interest rates. They have been higher than they should be, even going on Treasury Notes. Now, however, home mortgage rates are finally coming down. Reuters reports on the latest national home mortgage rates:

U.S. 30-year mortgage rates fell to an average of 5.87 percent from 6.13 percent a week earlier, while 15-year mortgages averaged 5.27 percent compared to 5.60 percent last week.

Several things happened this week to boost confidence. One of them was the recent decision to ease regulations on federally chartered home mortgage lenders Freddie Mac and Fannie Mae. With some of the requirements (such capital requirements and ability to loan more money) eased, additionally liquidity was added to the financing world. This in turn prompted lenders to feel a little better about letting others borrow money.

And, while the Fed rate cut doesn’t directly affect mortgage rates, it did contribute to a stock market rally this week, as well as further liquidity. All of this was designed to boost confidence and encourage lending, and it might be working.

Even though mortgage loan interest rates fell, short term rates did not fare as well. They remained fairly close to the same, with ARMs rising very slightly.

Some have hopes that this could signal that the mortgage market and financial sector problems stemming from last year’s subprime lending crash may be abating. However, it remains to be seen whether these changes will result in a true turnaround, or whether it is just a temporary fix.

Ultimately, though, all this focus on stimulating lending does not fix the problems of a debt based economy. Rather, it encourages us to continue viewing debt in a way that is not necessarily financially healthy.

Tags: home mortgage rates, mortgage loan interest rates, home mortgage loan, mortgage loan blog,
stock market rally, home mortgage lenders, Freddie Mac Fannie Mae

In a move that has me, and many others, scratching our heads, the government is easing regulations on Freddie Mac and Fannie Mae, two home mortgage lenders and servicers with government charters. The regulations, as the New York Times reports, were put in place for very good reason:

Rocked by accounting scandals, Fannie and Freddie had been under tight government regulation. The administration had maintained for years that Congress ought to curtail the companies from expanding their investment portfolios for fear that any significant trouble encountered by the companies could prompt a costly bailout. As part of the agreement, the regulator, the Office of Federal Housing Enterprise Oversight, or OFHEO, said it expected to lift an array of conditions imposed on the two companies as a result of the accounting problems.

Now the view is changing. Despite the general rule that more capital should be on hand for better stability, the government is allowing Freddie Mac and Fannie Mae to “branch out” further, in effect giving them the green light to assume riskier loans in higher amounts and with more “creative” financing methods.

The idea is to stimulate the mortgage market by allowing a greater number of home mortgage loans to be financed. I’m not sure this is a good idea. After all, lax standards and mortgage lenders getting a little crazy with large loans and “creative” financing is why we’re having this problem in the first place.

Continuing to uphold a debt based economy only contributes to long term instability overall. Perpetually sustained growth is a pipe dream. It’s an impossibility. A recession is a natural part of the economic cycle. Perhaps we should allow this correction to do a little more in evening things out. And then, in the end, we may end up with a more stable economy.

Tags: stimulate mortgage market, regulations Freddie Mac Fannie Mae, home mortgage loans, mortgage loan blog,
home mortgage financing, debt based economy, mortgage lenders

With foreclosures on the rise across the country, plenty of people are starting to think that maybe these homes make good real estate opportunities. But how does one go about finding these foreclosures, or real estate owned properties? According to Inman News, they are starting to go on foreclosure tours:

“The response from consumers is tremendous. We have first-time home buyers, people who want to move up, and we have investors — it’s pretty much across the board right now,” she said.

Foreclosure tours are springing up across the country, offering to take interested parties on tours of properties that banks have repossessed. This allows a wide variety of people to see what’s there — and take advantage of real estate opportunities.

Some of those operating tours offer them for free, while others charge a fee ranging from $50 to $200 for a day full of properties that have been foreclosed on. Most tour operators keep paperwork with them so that buyers can fill out contracts on the spot. Some even bring mortgage brokers and lenders along to approve funding.

Foreclosure tours can expose buyers to real estate opportunities

Home prices in many real estate markets are lower than they have been for years. And lenders want to get rid of these real estate owned (REO) properties if they can, recouping some of their foreclosure-related losses. This means that whether buyers are looking for an investment, or just for a place to live, they can find some great bargains.

But it important to be careful when buying foreclosures, whether you find them on a tour or elsewhere. You want to check the neighborhood. In some real estate markets, the homes are unlikely to ever gain significantly in value. Carefully choose REO properties in areas that have a strong likelihood of recovery.

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real estate own properties, REO properties