Fed Renews Vow to Keep Rates Low

ratesThe Federal Reserve acknowledged Wednesday that segments of the economy are looking up, particularly housing and household spending. However, the Fed said it will continue to press forward with its stimulus campaign — which includes a move that is lowering mortgage rates — until the economy shows more growth.

At its latest meeting, the Fed renewed its vow to keep rates near zero until mid-2015. It will also continue to buy $40 billion in mortgage-backed debt each month, a program known as “QE3,” which has helped to push mortgage rates into record-low territory in recent weeks.

"The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the Fed said in a statement.

The Fed said that unemployment still remains high at 7.8 percent, the “fiscal cliff” looms at the end of the year, the global economy is struggling, and the U.S. gross domestic product grew at an annual rate of only 1.3 percent in the second quarter.

Source: “Fed Pledges to Maintain Stimulus,” The New York Times

Negative Equity: How Many Loans are Underwater in Your State?


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Home equity has become a thing of the past for millions of homeowners. Nearly 11 million, to be precise. That’s the number of properties nationwide that had negative equity at the end of the second quarter of 2011, according to market research firm CoreLogic. Using their data, we’ve illustrated the number and percentage of “underwater” properties (a common term for those with mortgage loans that are larger than what the property is currently worth) in the United States. Hover over each state for the details.


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Only two thirds of America could get a home loan

Denied stampObtaining financing is frequently cited as one of the most difficult obstacles in the modern real estate transaction and the numbers now show that it is not a problem with perception, rather a reality. The WSJ analyzed the 10 largest mortgage originators’ data to reveal a national average of 27% of all mortgage applications in 2010 experiencing a denial. The denial rate is up nearly 15% in the last year alone and it is likely denials will increase in 2011.

We’ve spoken for years about the pendulum swinging away from the Barney Frank’s push for homeownership for all back in the day (that led to risky loans) to today’s reality of increasingly difficult lending for any and all applicants.

Only two in three Americans who applied for a mortgage last year were able to move forward, but the data does not make clear whether or not all of those actually made it to purchase without a last minute lending issue (another commonly cited obstacle in getting a deal done).

“Although lenders were expected to pull back from the freewheeling conditions that helped inflate the housing bubble, some economists argue they are now too conservative, and say that with the U.S. economy still wobbly, mortgages need to be easier to obtain for qualified borrowers, not harder,” the WSJ reports.

Mississippi, Vermont & Texas have denial rates over 35%

In order of lowest denial rates to highest:

  • 19.9%   Minnesota
  • 20.3%   Virginia
  • 21.0%   South Dakota
  • 21.0%   Kansas
  • 21.1%   North Dakota
  • 21.6%   Iowa
  • 21.8%   Nebraska
  • 22.4%   Maryland
  • 22.8%   Colorado
  • 22.8%   District of Columbia
  • 23.0%   Wisconsin
  • 23.1%   North Carolina
  • 23.3%   Washington
  • 23.6%   California
  • 23.7%   Massachusetts
  • 23.8%   Alaska
  • 24.4%   Delaware
  • 25.1%   Missouri
  • 25.1%   Pennsylvania
  • 25.2%   Montana
  • 25.5%   Illinois
  • 26.0%   Connecticut
  • 26.4%   New Hampshire
  • 26.5%   Oregon
  • 26.6%   New Jersey
  • 26.8%   Wyoming
  • 27.2%   South Carolina
  • 27.4%   Arizona
  • 27.5%   Hawaii
  • 28.2%   Indiana
  • 29.0%   Idaho
  • 29.1%   Rhode Island
  • 29.2%   Nevada
  • 29.5%   Georgia
  • 29.8%   Maine
  • 29.9%   Tennessee
  • 30.0%   West Virginia
  • 31.1%   Kentucky
  • 31.6%   Michigan
  • 32.2%   Florida
  • 32.8%   Oklahoma
  • 33.0%   Arkansas
  • 33.1%   Alabama
  • 33.5%   Ohio
  • 33.7%   New Mexico
  • 34.1%   Louisiana
  • 34.8%   New York
  • 35.1%   Texas
  • 36.6%   Vermont
  • 38.9%   Mississippi

All of this highlights the importance of working with a team. Everyone on our team, starting with our Mortgage Broker, work to make sure our clients are well taken care of.

What Do People Think About Walking Away From a Mortgage?

If you have already formed an opinion about whether it’s OK to ditch a mortgage or not, you’re not alone in being opinionated. Everyone has an opinion on this, from renters to homeowners and from the young to the old. In total, 25 percent of renters think it’s okay to walk away from a mortgage. Homeowners aren’t as hip to ditching, though. Among those who own homes, only 17 percent think it’s OK to stop paying.

Is It a Moral Issue?

Some homeowners believe that whether or not to pay is a moral issue. Their own ethics come into play, telling them that someone who signed a contract should see it through, regardless of how home prices have fallen. The mortgage industry loves that—they are really playing up the idea that paying is a moral obligation.

What people believe about this issue often comes down to their age and gender. To see what age groups and genders believe it’s OK to walk away, click on the graphic. Men and women aren’t as far apart on this issue as you may think. Many people of both genders believe that if your financial circumstances are dire, it may be OK to ditch that mortgage. Do you agree with your peers? Click on the graphic to see.


If you or someone you know would like a professional consultation in regards to a short sale or mortgage concerns. Please let me know. emmanuel@emmanuelfonte.com