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WASHINGTON (Reuters) – The regulator for Fannie Mae and Freddie Mac is actively considering a proposal that would allow for a reduction in the outstanding mortgage debt of homeowners in Chapter 13 bankruptcy, Financial Times reported on Tuesday http://radiologydegreeonline.net/radiology-diagnosing-efficiency/.
The plan under review by the Federal Housing Finance Agency would call for the mortgage financing companies to allow bankrupt homeowners who owe more on their housing debt than their homes are worth to pay zero per cent interest for five years, the report said.
Participation in the debt reduction program would be subject to approval by bankruptcy judges, the FT said.
Details of the proposal were laid out in a letter to Congress dated Monday, the newspaper reported.
Fannie Mae and Freddie Mac, combined with the Federal Housing Administration support, about 90 percent of all U.S. mortgages.
An FHFA spokeswoman confirmed the proposal to assist underwater homeowners was under discussion, but declined to provide additional details, the FT said.
But the White House said the proposal was not under consideration.
"While we continue to talk to the FHFA and other market participants about ways to help borrowers and support the housing market, the administration is not at this time considering this particular idea," White House spokeswoman Amy Brundage told FT.
Spokesmen for the White House and FHFA were not immediately available for comment on the FT report late on Tuesday.
(Reporting By JoAnne Allen; Editing by Muralikumar Anantharaman)
Regulator considers mortgage debt reduction for bankrupt: report
WASHINGTON – The average rate on the 30-year fixed mortgage fell to a record 3.91 percent this week, the third time this year that rates have hit new lows.
Freddie Mac said Thursday that the average on the 30-year home loan fell from 3.94 percent the previous week. The 3.91 percent rate is the lowest average for long-term fixed mortgages on records dating to the 1950s
The average on the 15-year fixed mortgage was unchanged this week at 3.21 percent. That’s also a record.
Low rates offer a historic opportunity for those who can afford to buy a home or refinance. But many Americans either can’t take advantage of the rates or have already done so.
Rates have been below 5 percent for all but two weeks in 2011. Even so, this year is shaping up to be one of the worst ever for home sales.
Rates could fall further still. Many economists think the yield on the 10-year Treasury note could creep lower in 2012. Long-term mortgage rates tend to track the 10-year Treasury yield.
Should the Federal Reserve launch a new program of bond purchases in the coming months to try to help the economy, it could further drive down mortgage rates.
Frank Nothaft, Freddie Mac’s chief economist, has said that despite the super-low loan rates, foreclosures and falling home values have created obstacles for would-be buyers.
But builders could see more interest from buyers in the coming months if mortgage rates stay low. The low rates contributed to a modest 2-point increase in builder sentiment in the latest National Association of Home Builders survey released this month, said Yelena Shulyatyeva, an analyst at BNP Paribas. Those rates, coupled with falling prices, could draw more people into the market, she said.
Sales of previously occupied homes are just slightly ahead of last year’s dismal sales figures. New-home sales appear headed for their worst year on records going back half a century.
Mortgage applications fell about 2.6 percent last week, according to the Mortgage Bankers Association. Refinancing fell 1.6 percent. And loan applications to buy homes fell nearly 5 percent. Over the past four weeks, the level of mortgage applications has been relatively unchanged.
Some lenders have reported an increase in applications through the Obama administration’s refinancing program. That program was broadened in October to allow up to 1 million more homeowners lower their mortgage payments. But the MBA said such government-assisted loans account for just a small portion of refinancing.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many Americans don’t want to sink money into a home that they fear could lose value over the next few years.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week. The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan fell to 0.7 from 0.8; the average on the 15-year fixed mortgage was unchanged at 0.8.
For the five-year adjustable loan, the average rate fell to 2.85 percent from 2.86 percent. The average on the one-year adjustable loan declined to 2.77 percent from 2.81 percent.
The average fees on the five- and one-year adjustable-rate loans were unchanged at 0.6.
WASHINGTON – JPMorgan Chase & Co., one of the nation’s largest mortgage lenders, is not doing enough to help Americans avoid foreclosures, the Obama administration said.
The Treasury Department said Wednesday that JPMorgan Chase is still doing a poor job helping people permanently lower their mortgage payments as part of the government’s foreclosure-prevention program 70 000 BTU heaters. The lender has been cited for rejecting people who were eligible for mortgage modifications three separate times since June.
JPMorgan said in a statement that it was “disappointed with our rating” and that it “will continue to work hard to improve our processes and controls.”
The government first criticized four lenders — JPMorgan Chase, Bank of America Corp., Wells Fargo & Co. and Ocwen Loan Servicing — in June, and began withholding financial incentives of up to $1,000 per modification.
Wells Fargo and Ocwen, a division of Ocwen Financial Corp., were removed from the list of companies needing “substantial improvement” in September. Bank of America got off the list in December.
The mortgage-aid program was launched in 2009 and was intended to help those at risk of foreclosure by lowering their monthly payments. Borrowers start with lower payments on a trial basis. But the program has struggled to convert them into permanent loan modifications. Homeowners have complained that the program is a bureaucratic mess. Many say they were disqualified after banks lost their documents and failed to return their phone calls. Banks have blamed homeowners for failing to submit needed paperwork.
More than 1.7 million troubled homeowners received trial modifications over the past two years. But as of October, more than half of them — about 880,000