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Fed Ends Mortgage Purchases, Keeps Rates Low
Wall Street Journal (03/17/10) P. A2; Hilsenrath, Jon; Di Leo, Luca
The Federal Reserve confirmed that it will end its mortgage-backed securities purchase program by March 31. The $1.25 trillion initiative has been credited with stabilizing the financial markets and holding down mortgage rates, and some analysts worry that terminating it could bump rates back up. The central bank added in a statement that short-term interest rates would remain "exceptionally low" for an "extended period," suggesting they will be kept at near-zero levels for at least several more months.
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U.S. Short Sale Plan's Limitations
American Banker (03/17/10) P. 1; Berry, Kate
There is concern that the Home Affordable Foreclosures Alternatives program launching in April will do little to curtail foreclosures because second-lien holders and mortgage insurers may be unwilling to give up the right to order borrowers to pay any debt remaining after a short sale. While the initiative offers incentives of up to $3,000 per home to junior mortgage holders, some say that might not be enough.
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More Homeowners Are Opting for 'Strategic Defaults'
Los Angeles Times (03/17/10) Semuels, Alana
Recent data shows that about 11 million mortgages are "underwater," meaning the houses underlying them are worth less than the balance of the loans. Researchers say that, unlikely to build equity back up for years, a growing number of homeowners are simply walking away. Luigi Zingales, a professor at the University of Chicago's Booth School of Business, reports that "strategic defaults" accounted for nearly 35 percent of defaults by U.S. homeowners in December 2009 -- an increase from 23 percent at the end of last year's first quarter.
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Pilot Project Speeds Loan Modification Applications Through the System
Chicago Tribune (03/17/10) Ellen Podmolik, Mary
Hope Now reports that it is notifying distressed borrowers on the status of their mortgage modifications more quickly now that the alliance of mortgage servicers, lenders, investors and housing counselors has expanded the LoanPort program from an initial nine cities in February. Workout applicants previously had complained about waiting months to get a response; but Hope Now today is confirming that mortgage modifications have been granted on average in 22 days or that they have been denied on average in 17 days.
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U.S. Housing Starts Slowed by Blizzards, As Expected
New York Times (03/17/10) P. B9; Hernandez, Javier C.
The Commerce Department reports that home building slowed last month as historic blizzards halted construction in several of the nation's biggest markets. Housing starts slid 5.9 percent in February to a seasonally adjusted annual rate of 575,000 homes, with much of the weakness concentrated in the Northeast and South. Additionally, building permits -- which signal future activity and are unaffected by weather -- fell 1.6 percent in February following solid gains in recent months.
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