Mortgage credit availability was already tight before this recent wave of massive settlements over mortgage-backed securities and misrepresentations of toxic loans that fueled the financial crisis.
JPMorgan Chase will pay $4 billion to settle allegations that it sold billions of dollars worth of bottom-quality mortgages to state housing finance companies, the Wall Street Journal said Friday.
There is little doubt that the shutdown has had an affect on the mortgage industry as purchase applications for government-sponsored programs dropped by more than 7 percent last week to their lowest level since December 2007, according to the Mortgage Bankers Association.
Fannie and Freddie’s 60-day-plus delinquent borrowers declined 7 percent during the quarter to the lowest level since the start of conservatorship, when the U.S. government took over the then-failing entities at the height of the financial crisis five years ago.
The government agency, which guarantees loans with as low as 3.5 percent down, said it needs $1.7 billion to cover potential losses on the volume of low-down-payment mortgages it insured from 2007 to 2009.
The key 30-year fixed-rate mortgage dropped to 4.32 percent this week, a nine-week low that followed the Federal Reserve’s surprise decision last week to hold off on its tapering of bond purchases, Freddie Mac said Thursday.
The Federal Housing Finance Agency (FHFA), the independent regulator over Fannie Mae and Freddie Mac, Monday launched a nationwide campaign to inform homeowners about the Home Affordable Refinance Program (HARP).
The refinance component of the index shot up a healthy 18 percent from the previous week. Moreover, the refinance share of mortgage activity increased to 61 percent of total applications from 57 percent the previous week.
Interest rates on jumbo mortgages — loans over $417,000 in most areas and over $625,500 in higher-priced areas — are now lower than — or close to the same — as rates for “conforming loans” below those price levels.
Freddie Mac said Thursday that the average 30-year fixed rate this week jumped to 4.58 percent from 4.40 last week. That’s a two-year high.