According to Housing Predictor, Freddie Mac purchased fewer loans in March and reduced its share of the mortgage market. The number of mortgages Freddie Mac bought in March dropped 4.7% to $2.14 trillion. Citing the bills in Congress to abolish, or at least reform, Freddie Mac and Fannie Mae, Freddie Mac is now on a path to reduce the number of mortgages it buys. The unpaid principal balance of Freddie Mac- and Fannie Mae-related home mortgages in their portfolios fell $4.1 billion as lenders were forced to buy back more mortgages that were determined to be underwritten at low quality levels.

Mortgage delinquencies on single-family homes dropped in March, as did first-quarter homeowner vacancies, as reported by Realtor.org. Delinquencies on single-family homes fell to 3.63% last month compared to 3.78% in February, as reported by Freddie Mac. Meanwhile, overall vacancies remain high, even though the percentage of empty homes dropped in the first three months of the year. The South held the highest rates for the first quarter with 2.8%, followed by the Midwest with 2.7%.

MarketWatch recently reported that the average mortgage rates fell again. According to the latest Freddie Mac survey, the average rate for a 30-year fixed-rate mortgage was 4.78% for the week ending April 28, down from 4.8% in the previous week. Meanwhile, the rate for 15-year fixed-rate mortgages fell from 4.02% last week to 3.97% this week. This week’s rate was at its lowest level since early December 2010.

At the peak of the real estate boom, vacation home sales accounted for nearly 40% of the total housing market for previously owned home. In 2010, they were down to only 25%. With fewer sales came a significant drop in price. In 2010, the national median vacation home price was $150,000, which is down 11.2% from a price of $169,000 the year before.

Not only did the sales of these leisure homes drop, but purchases of these homes as investment properties that were used as rentals plunged as well. Recently, all-cash purchases have become the most prevalent in the second-home market. According to the NAR, 59% of investment buyers paid cash in 2010, as did 36% of vacation home buyers. Just four years before, in 2006, only 32% of investment buyers and 25% of vacation home buyers paid in cash.

Luckily for prospective buyers, Affordable Financial Services offers niche products for those with a vacation home. Affordable can cash-out refinance a day after a purchase, as long as it can be proven that improvements to the property were made or the home was purchased below market value. This is great for someone who purchased a steal, or for investors who want to pull some of their cash out. No-doc loans are available on second homes and investment properties and there is no limit on cash-outs.

For more information, call us at (888) 500-0282 or visit www.affordable-financialservices.com.

According to an article in The Wall Street Journal, many who support a government-backed housing finance system are predicting calamity for the housing markets without government mortgage guarantees, yet the Federal Reserve is telling a different story. Reserve data shows that nonbank institutional investors had assets of $28 trillion in the fourth quarter of 2010. The WSJ article went on to explain that about $13 trillion of this amount was invested in fixed income or debt securities, but only $1.8 trillion was invested in U.S. government-backed securities.

Home sales in the Hamptons are dropping. Bloomberg.com reported that the summer playground for wealthy New Yorkers has seen a 22% drop in the first quarter, plunging to 309 transactions from 396 the previous year. This drop was the largest since the second quarter of 2009. The drop isn’t due to lack of demand but, rather, the relentless snow and poor weather that kept Manhattan buyers away from the market.

Reverse Mortgage Daily recently reported that the reverse mortgage market index dropped 18% from peak levels in 2006. The latest data from the Reverse Mortgage Market Index (RMMI) shows that the amount of home equity held by seniors fell to $3.3 trillion at the end of 2010. According to RiskSpan, the growth or decline of the reverse mortgage market largely depends on the senior population growth, housing prices and senior debt levels.

The Home Equity Conversion Mortgage (HECM) is expected to generate $304 million of receipts in 2012, as reported by Reverse Mortgage Daily. This growth is largely due in part to the Federal Housing Administration’s new HECM Saver program, which gives borrowers access to home equity in amounts that are between 10-18% less than it would have been available with the HECM Standard option.

Wednesday’s Newsday article reported that the number of closings on Long Island fell in March. Last month, there were 1,902 sales closings on Long Island, down 9.3% from February, based on data from Multiple Listing Service of Long Island. However, the number of contracts, or pending sales, in the month of March was up 38% from the previous month. MLSLI also reported that the median home closing price fell in Nassau County from $397,000 in February to $390,000 in March. In Suffolk County, prices stayed the same at $300,000.

Bankrate.com reported that, as of April 13, home equity loans averaged 6.95% nationally, a drop of three basis points from a week earlier. (A basis point is 0.01 of a percentage point.) The typical home equity line of credit had a rate of 5.55%, down one basis point from last week.

Reuters reported that applications for home mortgages fell to their lowest level in three months. The Mortgage Bankers Association released data on Wednesday that the seasonally adjusted index of mortgage application activity — which includes refinancing and home purchasing applications — fell 6.7% in the week ending April 8. It was the third straight week of declines and applications were at their lowest level since the week of January 21. The index of refinancing applications declined by 7.7% and applications for loan requests dropped 4.7%, according to the MBA.

After seeing existing home sales outpace the figures from the previous 12 months in January, the National Association of REALTORS reported on Monday that existing home sales in February fell by 9.6% from the previous month. The NAR reported a seasonally adjusted rate of 4.88 million units in February, compared to the upwardly revised figure of 5.40 million units in January. In addition, last month’s figure was 2.8% lower than the February 2010 figure of 5.02 million units. (Existing-home sales are completed transactions that include single-family homes, townhouses, condominiums and co-ops.)

On Thursday, Freddie Mac reported that mortgage rates were up this week. The average rate on 30-year fixed-rate mortgages went from 4.76% last week to 4.81% this week. Meanwhile, the average rate on 15-year fixed-rate mortgages was 4.04%, compared to 3.97% the previous week. A five-year adjustable rate went from 3.57% last week to 3.62% this week, and the rate for a one-year ARM for this week was 3.21% after finishing last week at 3.17%. Last week’s number was the lowest level in a year for a one-year ARM, according to an article from USA Today.

On Monday, the Treasury Department announced plans to start selling off $142 billion of mortgage-backed securities it purchased during the financial crisis, the Wall Street Journal reported. The Treasury said the securities can be sold with “minimal impact” on mortgage rates, but emphasized the program would be stopped if markets appear unsettled. The plan calls to spread out the sale, selling about $10 billion in securities each month. According to the WSJ article, had Treasury unloaded those securities entirely that day, they would have stood to make a profit of $15-20 billion.

Good news and bad news for the housing market: The good news is that The National Association of REALTORS reported today that existing home sales in January increased 2.7% from the previous month. The NAR reported a seasonally adjusted rate of 5.36 million units in January, compared to the downwardly revised figure of 5.22 million units in December. In addition, last month’s figure was 5.3% higher than the January 2010 figure of 5.09 million units. This is the first time in seven months that existing home sales were higher than the previous year. (Existing-home sales are completed transactions that include single-family homes, townhouses, condominiums and co-ops.)

Now the bad news: The Commerce Department said new home sales in January dropped by 12.6% to a seasonally adjusted rate of 284,000 units, compared to 325,000 units in December. Meanwhile, the pending home sales index also fell, from 91.5 in December to 88.9 in January. The drop in home sales could be attributed to tighter credit, high unemployment and declining consumer confidence, despite the tax cuts that went into effect this year.

Economists in a Reuters poll predict that home prices will fall by 2.3% in 2011 and then begin a slight recovery next year. Many see a rise in distressed home sales and foreclosures as the reasons for the drop in home prices. Distressed home sales hit a one-year high of 37% of all existing home sales, according to the Reuters article.

A recent Bloomberg article quoted Alabama Republican Congressman Spencer Bachus as saying a bill to overhaul Freddie Mac and Fannie Mae should be done “within three to four months.” The bill calls for Fannie and Freddie and the rest of the $11 trillion U.S. mortgage market to be weaned from its reliance on the federal government. However, the Washington Post reported that Treasury Secretary Timothy Geithner said reducing the federal government’s role will adversely affect the housing market as the costs will be passed on to the taxpayers.

Yesterday, Freddie Mac reported that the average rate for a 30-year fixed-rate loan rose to 4.80% this week from 4.78% the previous week. The average rate on a 15-year fixed-rate loan also increased, from 4.05% last week to 4.09% this week. The average rate on a five-year adjustable-rate mortgage rose to 3.70% from 3.69% last week. Last month, the five-year rate was at 3.25%, the lowest rate on record dating back to January 2005. The one-year ARM rate was up slightly from 3.25% to 3.26%.

New home sales reached 329,000 units in December — a 17.5% increase over the previous month at 280,000 units, the Commerce Department reported. The December figure was at its highest level in eight months, but it is 7.6% off the mark from December 2009 figures.

The Mortgage Bankers Association’s index of loan applications fell 13% the week of January 21; both refinancing and purchase applications fell. Refinancing applications dropped 15% to the lowest in 12 months, while purchase applications fell 8.7% to the lowest level since October, the MBA said.

This week, the average contract interest rate for the 30-fixed rate loan was 4.77%, down slightly from 4.78% last week. Meanwhile, the average rate for a 15-year mortgage saw a small increase, from 4.15% last week to 4.16% this week According to an Associated Press article, interest rates have risen half a percentage point over the past two months; during that time, investors sold off Treasury bonds, driving yields lower. Mortgage rates tend to track the yield on the 10-year Treasury note.

The Mortgage Bankers Association said mortgage applications rose 5% this week, compared to the previous week. The MBA added that the refinance index rose 7.7% this week, the third straight week of increase in refinances, but the number of purchase applications fell by 1.9%.

Next to 2009, the year 2010 was the worst year for new home starts. The AP reported on Wednesday that builders broke ground on a total of 587,600 homes in 2010, compared to 554,000 housing starts in 2009. The 2010 figures mark the second worst year for new homes since 1959. In December, builders started work at a seasonally adjusted rate of 529,000, according to the Commerce Department. That is a 4.3% decrease from November.

In a December 23, 2010 memo sent to lenders in its network, Fannie Mae announced that it has decided to impose a new schedule of higher add-on fees, similar to what Freddie Mac did just before Thanksgiving. The fee hikes are slated to go into effect this spring. Some potential buyers who have high credit scores and large down payments may be surprised to learn that they are also being targeted for higher “risk-based” fees, according to the Post article.

Let’s say someone wants to buy a house with a $300,000 first mortgage has a FICO score above 800 and just less than 25% cash for a down payment. In 2010, that person would not have to pay a loan fee because their down payment and credit score signified no risk of default. This year, Fannie Mae will tack on an extra quarter of a percentage point of the loan amount (in this case, $750).

If someone has a FICO score of 679 and can put down less than 20% for a down payment, that person would be assessed an add-on fee of 2.75%, or $8,250. Last year, that fee would have been $1,500 less.

In addition, Fannie and Freddie tack on what they call “adverse-market fees” of 0.75% of the loan, just for the privilege of sitting down with the lender. Using the $300,000 example, the cost would be $750. All the fees can be paid up front as part of the transaction costs or financed with a higher interest rate on the mortgage itself.

These fees are part of a multi-layered cumulative risk-based pricing system employed by Freddie and Fannie. Every perceived risk factor in a loan transaction receives its own separate add-on fee, and some fees are based on which type of real estate that is being financed. Condominiums are assessed higher fees than standalone houses (at 0.75% when the down payment is less than 25%). Rental investment properties, manufactured homes and loans with interest-only payment features all get separate fees, all of which mean significantly higher costs.

While Fannie Mae officials declined to comment on the reason for the fee hikes, Edward J. DeMarco, acting director of the agency overseeing Fannie and Freddie, said the add-ons were “necessary” to protect both lenders from “the costs and risks” inherent in the mortgages they buy or guarantee. The Post also reported that DeMarco said Fannie and Freddie “underpriced mortgage risks” during the housing market’s boom years.

This “shadow inventory” has increased by 10% during the past year to an eight-month supply at the current rate of home sales, according to the CNNMoney.com article. Based on data from CoreLogic, the total housing market supply went from 6.1 million units in August 2009 to 6.3 million units in August of this year. At the current sales rate, it would take 23 months to go through the entire visible and shadow inventory of homes. That’s 3-4 times the normal rate of 6-7 months.

Mark Fleming, CoreLogic’s chief economist, said the additional supply raises the risk of further declines in home prices. In addition, many banks have been delaying the foreclosure process because they already own so many homes as it is. Realty Trac spokesperson Rick Sharpa said banks aren’t pushing borrowers too quickly to foreclosure so they don’t have to repossess homes that will take a long time to sell. It’s better for banks to allow borrowers to stay in these homes, maintaining the property and protecting them from vandalism rather than leaving them vacant in a weakened market for months.