The Mortgage Bankers Association’s index of refinance applications increased 7.2% in the week that ended last Friday as the average interest rate on 30-year fixed-rate loans fell 19 basis points, to 5.17%.

The climb during the week lifted the refinance index to about 35% over a recent low at the end of June.

The trade group said Wednesday that its index of purchase applications, which has not moved much for three weeks, also increased, by 0.9%.

The MBA’s overall index increased 4.4% and was 18% higher than a year earlier. The share of the total made up of refinance applications increased 16 basis points from the week before, to 54.2%.

Meanwhile, an index of applications in key markets maintained by Mortgage Maxx LLC fell 8.5% in the week that ended last Friday.

The company said Monday that homeowners are “still playing defense” in part because of stiff underwriting terms and predicted a further decrease in the index of more than 10% by Labor Day, reflecting “just how poorly government intervention has assisted to date.”

source: American Banker

Among mortgage types, the new-foreclosure rate worsened the most for prime fixed-rate loans in the second quarter, indicating that unemployment has replaced product category as the biggest driver of defaults, the Mortgage Bankers Association said Thursday.

The foreclosure start rate rose 33 basis points from a year earlier and 6 basis points from the first quarter to 0.67%, the trade group said. By contrast, for subprime adjustable-rate mortgages, the figure fell 52 basis points from the second quarter and 13 basis points from a year earlier, to 4.13%.

In another dismal quarterly report, the MBA said the percentage of all loans that were in foreclosure or at least one payment past due soared to 13.16% in the period, the highest since the survey began in 1979.

The share of loans at least 90 days past due rose 12 basis points from the first quarter and 283 points from a year earlier, to 9.24%.

The percentage of loans in the foreclosure process at the end of the second quarter was 4.3%, up 45 basis points from the first quarter and 155 points from a year earlier.

Jay Brinkmann, the MBA’s chief economist and senior vice president, said he was “a little surprised” that prime fixed-rate loans now account for one in three foreclosures, compared with one in five a year ago.

“It is unlikely we will see meaningful reductions in the foreclosure and delinquency rates until the employment situation improves,” he said. “It’s certainly a problem with employment, but it’s also a function of how far home prices have fallen.”

Four states — Arizona, California, Florida and Nevada — continue to have a disproportionately high share of foreclosure starts at 44% of the all new foreclosures in the second quarter.

Federal Housing Administration-insured loans, a category that had been a bright spot in past surveys, are showing signs of trouble, with record increases in foreclosures started, the percentage of loans in foreclosure and loans 90 days or more past due.

The percentage of FHA loans in the foreclosure process rose 22 basis points from the first quarter and 74 points from a year earlier to 2.98%.

A state-by-state breakdown shows that Florida remained a standout for the worst mortgage performance, with 12% of all mortgages in the second quarter somewhere in the process of foreclosure and another 5% that were 90 days or more past due at the end of June.

But other states are showing signs of weakness.

After being spared somewhat from problems, both Maryland and Washington stood out for having high foreclosure start rates in the second quarter, with Maryland at 1.31% and Washington at 1.09% because of increased defaults in pay-option adjustable-rate mortgages, Brinkmann said.

He cautioned that the problems are far greater in states that had the biggest price increases during the housing boom. “We’re seeing that in those states that now have huge price declines, when a loan goes delinquent, it’s almost going straight to foreclosure,” he said.

Brinkmann said he expected foreclosures to peak at the end of 2010, or roughly six months after unemployment.

He also emphasized that only seven states had foreclosure start rates higher than the national average of 1.36% in the second quarter. “It’s a big country and we have multiple bottoms, with some markets recovering faster than others, so it’s problematic to look only at the national numbers.”

source: American Banker

Although delinquencies for residential properties continued to climb in the second quarter of 2009, the rate of new foreclosures started was essentially unchanged from last quarter’s record high, according to the Mortgage Bankers Association’s national delinquency survey.

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a rate of 9.24% of all loans outstanding at the end of the second quarter of 2009, up 12 basis points from the first quarter of this year and up 283 basis points from the second quarter one year ago. According to the MBA, the percentages of loans 90 days or more past due and loans in foreclosure both set new record highs, breaking records set last quarter.

The percentage of loans 30 days past due is still well below the record set in the second quarter of 1985.

The percentage of loans in the foreclosure process at the end of the second quarter was 4.3%, up 45 basis points from the first quarter of 2009 and 155 basis points from one year ago. The combined percentage of loans in foreclosure and at least one payment past due was 13.16% on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.

The percentage of loans where foreclosure actions were started during the second quarter was 1.36%, down one basis point from last quarter and up 28 basis points from one year ago. “There was a major drop in foreclosures on subprime ARM loans,” said MBA’s chief economist Jay Brinkmann. “The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase.”

California, Florida, Arizona and Nevada continue to have a disproportionately high share of foreclosure starts, although the share has fallen slightly from last quarter. Those states had 44% of all new foreclosures in the U.S. during the second quarter 2009, down from 46% in the first quarter 2009.

A man from Mesa Arizona, Jake David Abegg Whitman, recently pleaded guilty to federal fraud charges related to his participation in a cash-back mortgage fraud scheme involving 19 unimproved residential properties in the greater Phoenix area.

According to John J. Tuchi, U.S. attorney for the District of Arizona, Whitman played a leadership role in a conspiracy to obtain mortgage loans that were substantially larger than the actual value of the properties. Whitman owned 10 of the properties and served as branch manager of the mortgage broker Academy Mortgage that processed the loans.

Whitman worked with an appraiser to obtain inflated appraisals for the properties and recruited buyers to purchase the properties at the inflated prices. To overcome the buyers’ inability to provide the down payment, Whitman secretly supplied the down payment to the buyers and also provided cash back to the buyers at closing.

The properties eventually went into foreclosure and cost lending institutions nearly $1 million in losses. Whitman is cooperating with authorities in the prosecution of others. U.S. District Judge G. Murray Snow has scheduled sentencing for Oct. 26.

In Indianapolis, Robert Andrew Penn and Keven M. Lafavers, were indicted for federal mortgage fraud charges and have a trial date set for this fall.

According to Timothy M. Morrison, U.S. attorney for the Southern District of Indiana, Mr. Penn and his numerous business entities, with the assistance of Mr. Lafavers and others, allegedly obtained at least 112 fraudulent loans, totaling $12.6 million.

Participants in the schemes allegedly located straw purchasers who invested their good credit, but no money, to be the purchasers of properties at a much higher price than that negotiated with the seller. Seven other individuals were charged earlier this year with allegedly participating with Mr. Penn and Mr. Lafavers in their mortgage fraud crimes. The investigation is continuing. Trial is currently set for both defendants, who were unavailable for comment, before U.S. District Court Judge David F. Hamilton on Sept. 21.

__________________

Mortgage Loan Compliance

www.ml-compliance.com

Forensic Audits, Demand Letters, and Rapid Reports – Get The Facts On Your Loan and Protect Your Rights!

Feldman Law Center – News by Feldman Law Center — Part of Obama’s plan to overhaul regulation of the mortgage industry, unveiled last week, would create a Consumer Financial Protection Agency to monitor consumer financial products and change the entire process of getting a mortgage. With a stated goal of developing a mortgage process that is as simple as signing up for a retirement plan, the President’s proposal centers on an automatic offering of a “plain vanilla loan” to potential homebuyers. These loans would offer fixed interest rates and 30 year maturities, unless the borrower opts for a loan with riskier terms such as interest only or adjustable rates.
The plan has received vehement opposition from the mortgage and banking industries who say that government-approved mortgages would restrict borrowers’ options, make loans harder to get, and make them potentially more expensive. Powerful trade groups like the American Bankers Association, for example, oppose creating a consumer financial protection agency. Even lobbying groups open to the idea of a consumer-products regulator question whether the government should suggest which mortgages are best for consumers. “We don’t want to stifle innovation, and we don’t want to stifle competition,” said John Courson, president of the Mortgage Bankers Association.
One thing that would definitely be restricted, and one of the main factors behind these groups’ opposition to the plan, will be the potential commissions that mortgage brokers can charge when they sell a mortgage. For example, administration officials want to curb the fees that brokers and lenders receive tied to inflated mortgage rates. Brokers argue the incorporating those fees are a way for borrowers to amortize the costs of a loan without having to come up with thousands of dollars in closing costs. Another aspect of the plan would link compensation to whether the borrower ends up defaulting on the mortgage. “There’s no reason that we should have to assume that risk,” said Marc Savitt, president of the National Association of Mortgage Brokers. The group’s stance is that while a mortgage broker can facilitate a loan, the ultimate approval for the mortgage comes from the lender.
Mortgage brokers’ fees were typically highest on the most creative and dangerous of the mortgage varieties. With those mortgages a thing of the past, volume, commissions, and their share of new business has dwindled. Mortgage brokers’ share of new loans has dropped from a high of 60% to the current 20%, on much lower volume. Fixed rate mortgages have increased from a low of 50% of the total of new loans originated in 2004-05 to 95% today.
As the plan stands now, the newly created agency would approve a set of mortgages including fixed and adjustable rate mortgages. Approval for vanilla mortgages would be similar to the “prime mortgage” approval process. Potential home buyers could still get mortgages outside of the government approved versions but disclosure of risks and dire warnings will accompany them.
Supporters of the new regulatory agency say that it is needed as much to protect borrowers from themselves as from predatory lending practices. Many borrowers went through the process of getting their mortgage without ever taking the time to understand exactly how the loans they were applying for worked and where the risks were. Still, previous Congressional efforts to regulate the mortgage industry have consistently broken down over the years, even on simple issues such paperwork reduction, so the fight could be long, drawn out, and years in the making.

About Feldman Law Center
The Feldman Law Center is one of California’s top loan modification companies, providing excellent service to our clients and is completely focused on keeping everyone one of our clients in their homes.  Our loan modification experts work tirelessly to provide every homeowner we work with the information, guidance and support they need to modify their mortgages and keep the homes they’ve worked to buy.
About Loan Modifications
If you’re unfamiliar with what a loan modification is, a mortgage loan modification is quite possibly the most effective tool you can utilize if you are behind on your mortgage, and are in the midst of a financial  hardship, in order to save your home from interesting foreclosure.  A loan modification is literally is a process where the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and borrower (i.e mortgagor and mortgagee). In general, any loan can be modified.  The Feldman Law Center knows every law in California (and the country) that may be able to keep you in your home.  Lenders would rather renegotiate the terms of your loan, and possibly even negotiate a principle reduction, than let the house go into foreclosure.
With years of experience negotiating with lenders, as well as years of experience keeping people in their homes, the Feldman Law Center is one of the most experienced loan modification firms in all of California. To learn more about loan modification programs and loan modification process visit Feldman Law Center at www.feldmanlawcenter.com or call 800-588-0425.