MGM Mortgage Inc. Blog

30-year mortgage rates down to new low
The average interest rate for a 30-year fixed loan in this week’s Freddie Mac survey was 4.57 percent, down from 4.58 percent a week earlier.

Foreclosed homeowners could owe ‘tens thousands of dollars’ to lenders
Facing the possibility of foreclosure, California homeowners may be hit with more than just losing their homes. Due to a loophole in state law, they also can be sued by their lender. To prevent this, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is sponsoring Senate Bill 1178 by State Sen. Ellen Corbett (D-San Leandro), which will extend anti-deficiency protection for consumers who have refinanced their original mortgage loans and now are facing foreclosure.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Currently, if a homeowner defaults on a mortgage used to purchase his or her home -- known as a “purchase money mortgage” -- the homeowner's liability on the mortgage is limited to the property itself. Unfortunately, the original law did not extend the purchase money protection to loans that refinance the original purchase debt, even if the refinance only was to obtain a lower interest rate.
  
  
• Californians who refinance a property currently do not have protection if they default on a mortgage greater than the property’s value. Called a “deficiency” liability, under current California law, the lender can sue the former homeowner for the amount of the deficiency even after taking back the property.
  

The $100 million allocated for California's first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.'s Economics team.  California's Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied.  However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.

C.A.R.'s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters.  It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit.  If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.

The mortgage market is doing well, thank you. After a month of hand wringing over the Fed's ending of MBS buying there is little evidence so far that it has had any impact at all. We held our view that the Fed's exit would not likely send mortgage rates higher; we continue to expect mortgage markets will not be overly influenced by the Fed's removal. Yes. interest rates have increased on mortgages but the relationship between MBSs and treasuries has not changed.

Alan Greenspan is now testifying to the Financial Crisis Inquiry Commission on how the sub prime mortgage markets exploded. Who was responsible, and how it happened within the bowls of Wall Street. CitiGroup is next up to try and explain how it went down on sub prime mortgages. Greenspan's testimony is more a re-hash of the history of the worst Wall Street raping of markets since the Depression. The hearings today and through the rest of the week will not scratch the real reasons as everyone that will testify will dance around the truth; that greed and a complete lack of responsibility led to the sub prime collapse and almost dragged the world down. If you really would like the facts with no pandering we suggest a couple of books to get and read; "And Then The Roof Caved In" by David Faber; "The Big Short" by Michael Lewis; and "Chain of Blame" by Paul Muolo and Mathew Padilla. Those three books lay it all out without the sugar and spice that deflects the way big banks and Wall Street investment firms' greed set it all in motion that dominate hearings and political clap-trap. Presently Greenspan is painting his picture that is designed to hype is reputation. If you don't take the time to read them but rely on testimony and various hearings you won't actually get the full picture.