Mortgage Rates Steady, But No Lack of Mortgage News

[Jul 8, 2009.]

 

Rates on 30-year mortgages didn't move much, but it was still an eventful seven days in the mortgage world. Just this week, three major pieces of mortgage news came out and got plenty of attention.

Here's a summary of this week's news, with emphasis on who may be affected by:

Obama Raises the Limits on the HARP Program

The Home Affordable Refinance Program, or HARP, was designed to help up to two million people refinance into affordable mortgages. Turns out, according the the Department of Housing and Urban Development, that the number of people who actually refinanced through this program is merely "in the thousands."

If at first the government does not succeeed...it tries, tries again.

Thus the Obama Administration's raising of the loan-to-value limit on HARP-sponsored refinances to 125 percent. Previously, homeowners could only refinance up to 105 percent of the value of their home.

The raising of this limit means a lot to homeowners who are severely "underwater," meaning they owe more on their mortgages than their house is worth--a group that, according to Zillow.com, amounts to more than 20 percent of all homeowners.

Mortgage Applications Rise Dramatically

For the week ended July 3, mortgage applications jumped 15.2 percent. More and more people, it seems, are interested in exploring their refinance options, even as average 30-year rates remained largely unchanged at 5.34 percent. Perhaps this increased interest is due to the big Obama news, perhaps it's the realization among many borrowers that mortgage interest rates are still low and may go higher someday soon.

Perhaps a little bit of both of those factors is driving the rise in applications.

Mortgage Fraud Also on the Rise

Mortgage fraud is happening with frequency, according to a new FBI report. Overall, mortgage fraud is said to be up 36 percent from 2007 to 2008. Although it seems likely that at least part of this statistical increase could be attributed to increased scrutiny of the mortgage sector, there can be no doubt that desperation among both lenders and borrowers may be contributing to this environment of trickery.

Some major areas of concern were loan modification schemes aimed at exploiting desperate homeowners, reverse mortgage ripoffs, and arson committed so as to claim insurance money.

In New York today, 25 individuals ranging from realtors to appraisers to bankers have been indicted on charges of conducting a mortgage fraud in the $100 million range.

Borrowers hoping to refinance are well-advised to practice the old Ronald Reagan tactic of "trust but verify." Lenders are doing their homework on borrower claims, as well.

 

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.