Mortgage Applications Fewer, Homebuyer Tax Credit Set to Expire

[Apr 18, 2010.]

 

With mortgage rates a half point higher than they were last month, the Mortgage Bankers Association reports that mortgage applications were down for the week ended April 9 at a clip of 9.6 percent. Purchase applications were down 10.5 percent and refinance applications down an even 9 percent.

Meanwhile, the expiration of the first time homebuyer credit is fast approaching; buyers must be in escrow by April 30 in order to qualify for the $8,000.

Has Everyone Who Can Refinance Already Refinanced?

The downturn in refinance applications--the lowest volume since the start of the year--begs the question of whether or not everyone who can refinance already has refinanced. Certainly, as this ABC story about troubled refinances describes, there is an element of giving up going on among some homeowners.

The government mortgage assistance programs are simply not powerful enough to make banks make more loans that are extremely shaky. When lenders look at a home with negative equity, unemployed borrowers, and foreclosure numbers rising, the appeal of refinance lending drops quickly.

Millions of homeowners are thus making plans to be living elsewhere than their home within the next six months.

Will Government Continue to Withdraw Mortgage Market Support?

As you may have noticed, the U.S. government is in a real pickle in deciding how many programs, how much time, and how much money to spend trying to help people stay in the homes they've purchased and now cannot afford.

On the one hand, another massive wave of foreclosures could lead to more populist outrage--how come all the banks got bailed out, but not all the homeowners?

On the other hand, the sheer size of the debt exposure the government already has taken on, especially with regard to Fannie Mae and Freddie Mac, is enough to make even the most bleeding heart liberal take note that it may be time to put a stop to the bailout mentality.

Will Short Sale and Foreclosure Borrowers Ever Be Able to Buy a Home Again?

One piece of refinance news that we'll be watching for, over the next year, is how the credit reporting agencies and the mortgage lenders deal with homeowners who short saled their home or had their home foreclosed upon, but are now, one year later, in a better position to buy a home that is actually affordable.

The way that these borrowers are treated by the financial system will be one of the most important mortgage finance stories of the next five to ten years. A healthy respect for the American reality that the best people often fail, then get up again and succeed, will be much in demand in the days ahead.

 

About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.