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August 2019
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Low Rates and Mortgage Friendly Guidelines

Let’s be honest, low interest rates and mortgage friendly guidelines drive the housing market. Mortgage lenders and banks continue to ask borrowers for more loan documentation. The streamline refinance is the one exception for tighter guidelines. This unique refinance loan does not require income documentation and in some cases no appraisals.

Having record low mortgage rates with tight lending guidelines will not help the housing sector rebound. We have had record low rates for 3 straight years and the home sales remain sluggish. Historically low home loan rates are a crucial component of record affordability for home buyers, but lack of confidence in the market and fear of further price declines are challenges that are outweighing that factor, Credit Suisse analysts wrote Wednesday. Record low interest rates have dominated mortgage news for most of 2012. The fact is that lenders stopped approving bad credit equity loans. Many consumers are hoping that lenders ease some of the lending requirements in the year to come.

Existing home sales were down in all 50 states in the 3rd quarter with double-digit year-over-year declines in 47 states, the result of weakened demand after the homebuyer tax credit. In new construction, housing starts in October were at a seasonally adjusted annual rate of 519,000, down 1.9% from the October 2009 rate and 11.7% below September’s rate, the Census Bureau and Department of Housing and Urban Development reported Wednesday.

Are Mortgage Rate Modifications Fair to Borrowers Who Aren’t Delinquent?

California borrowers have been requesting loan modifications in high volumes. Even when homeowners are able to pay their mortgage and they have a good fixed interest rate, below 6%, they want to restructure their mortgage for a better rate. What will this do to mortgage rates? According to Jeff Morris, a former mortgage executive with Ditech, “If everyone wants to modify their home loan… Eventually it will affect home interest rates negatively because the lenders would be taking a big hit with all of the loan workouts.” Morris continued, “However, the banks need to do something quickly, because too many people are losing their homes to foreclosure.”

New York Times Reporter David Streitfeld considered these home financing issues in an article published Friday. What is the method for determining hardships for homeowners?

Who deserves help and who does not deserve a mortgage rate reduction from their mortgage lender? This is a slippery slope that threatens the mortgage industry and the credibility of our current home loan system. Is it fair to provide mortgage and debt relief to some borrowers and not others? San Diego homeowner and music promoter, Brett Matson shared his thoughts, “Who said life is fair?…We need to be grateful for what we have and if your neighbor needs help with their mortgage and their lender wants to revise their mortgage for them – We should be happy for them. Americans need to embrace each other and getting jealousy because your co-worker was able to negotiate a lower rate than you have is a waste of time and energy.” It is a controversial issue for homeowners, but you have to applaud Matson’s attitude and declaration for being content.

The LA Times Peter Viles quoted economist Peter Schiff, who suggested that homeowners who are upside down will have a motivation to default on their mortgage if the government provides aid: “If the government says, ‘Prove that you can’t afford your house and we’ll redo your mortgage,’ then people are going to try to qualify,” Mr. Schiff said. - Article written by Bryan Dornan