According to an analysis of more than 25,000 loan quotes and purchase request on Zillow Mortgage Marketplace during the first half of September; almost 1/3 of Americans are unlikely to qualify for a mortgage because their credit scores are too low.
They found that 29.3% of borrowers have a credit score less than 620. The lowest rates went to 47% of borrowers with excellent credit scores of 720 or above.
Zillow Mortgage Marketplace quoted that during this period, borrowers with excellent scores got an average rate of 4.3% for conventional 30 year mortgages. Mid range borrowers with credit scores between 620 and 719 received rates between 4.73% and 4.44%. Those with credit scores below 620 received too few loans to calculate the interest rates received.
For each 20-point credit score increase, the average annual percentage rate (APR) declines 0.12%.
Image by TheTruthAbout… via Flickr
New data was released on 9/22/10 by Treasury and HUD on the Home Affordable Modification Program (HAMP). Just over 33,000 homeowners received a PERMANENT HAMP modification in August, 2010. This figure is down 27% below the number of PERMANENT HAMP modifications in July, 2010.
The borrowers whom received the PERMANENT HAMP modifications have seen their mortgage payments drop by a median of 36%, or more than $500 per month. Homeowner’s who received these modifications saw their housing expenses fall from 45% to 31% of their monthly income.
In August, 2010, 26,628 TRIAL HAMP modifications were added to the HAMP roster. Currently there are 202,521 active trial modifications. Federal officials are pushing the loan servicers to make decisions for borrowers who have completed the trial phase and either drop them from the program or make them permanent modifications.
The Treasury stated that the most of the cancellations are due to insufficient documents received or missed or late trial payments. In addition, if their principal housing expenses are already less than 31% they do not qualify for the program.
Nearly 31,000 borrowers with Fannie Mae (FNMA) and Freddie Mac (FMCC) loans forfeited their homes through a short sale or deed-in-lieu of foreclosure during the 2nd quarter of 2010. This is a 27% increase over the 24,000 transactions completed during the 1st quarter of 2010.
During the same period last year there were 11,700 transactions up from 3,000 the year before.
Federal Housing Finance Agency (FHFA) also reported that loan modification and refinancing by FNMA and FMCC were up in the second quarter. The Home Affordable Modification Program (HAMP) increased 65% while refinancing under the Home Affordable Refinance Program (HARP) increased by 30%. Loan servicers completed 171,200 permanent loan modifications on these types of loans thru HAMP and nearly 88,600 borrowers in HAMP trials transitioned to permanent modifications bringing the two companies HAMP numbers to nearly 225,000. FHFA’s report also stated that approximately 202,000 of the borrowers were in a HAMP trial period at the end of the 2nd quarter, compared to nearly 448,100 at the end of the first quarter. That means minus the 88,600 permanent modifications 157,500 homeowners’ HAMP trials were cancelled as a result of missed payments or inadequate documentation.
FHFA also noted that more than ½ of the modifications completed in the 2nd quarter lowered borrowers’ monthly payments by more then 30%. During this same period the two companies initiated 275,100 new foreclosures, an increase of 12%. Completed foreclosure sales and 3rd party sales totaled 112,400, up 15% from the previous quarter.
The U.S. Treasury released statistics the end of July, 2010 for the Home Affordable Modification Program (HAMP) program. The statistics showed that loans that have been permanently modified had a re-default rate to be around 2% – 5.9% 60 or more days past due after modification and 1.7% 90 or more days delinquent. When those statistics came out, they received a huge outcry from analysts questioning the validity of these statistics.
The Treasury pulled the numbers and re-evaluated the statistics after retaining a third-party consultant to provide independent validation. A few weeks later, they corrected the re-default assessments as follows: 10% of six month old permanent modifications are 60+ days delinquent and 6% are 90+ days delinquent.
Analysts say that’s still too low and the rates will surely go higher the longer the program is in place. Up until six months ago, permanent modifications had been offered to only about 434,716 borrowers. The Treasury has cancelled the temporary modifications of 616,839 borrowers.
The analysts at Barclays are predicting a 60% re-default rate and Fitch Ratings projects 55-75%.
http://www.dsnews.com/articles/print-view/treasury-corrects-its-math-for-hamp-redefaults-2010-08-12
Are you still on the fence trying to decide whether to keep on renting or take the leap into home ownership? You may never again experience these low home prices combined with the lowest interest rates ever again. Check out this handy calculator to help you see the advantages of home ownership. (CLICK HERE)
If you are still unsure, you should contact a REALTOR to discuss the advantages of purchasing a home and find out how much of a loan you can qualify for.
Don’t be left sitting on the fence saying should’ve…..would’ve…..could’ve Act now and contact your Real Estate specialist.
In the past 32 years working in the real estate industry, I have not experienced a 4-1/2 % interest rate on a 30-year fixed rate loan. It is time to give a lot of thought to purchasing a home in this market.
Are you concerned that home values may decline?
Sure, it is possible but will you ever see 4-1/2% again? That equates to $450 for every $100,000 in the purchase price of your home. Can you rent for that monthly payment? I doubt it. Lets also not forget the tax benefits of owning your own home and the freedom of making your house a home for you and family.
According to an analysis of more than 25,000 loan quotes and purchase request on Zillow Mortgage Marketplace during the first half of September; almost 1/3 of Americans are unlikely to qualify for a mortgage because their credit scores are too low. 
Realty World A+ Facebook Page