Mortgage interest rates dropped again today with drastic cuts to the 5/1 adjustable rate mortgages. Jumbo mortgages were quite a bit higher Wednesday. Competition for housing was steep last month as the federal homebuyer tax credit ended, according to data collected by the Mortgage Bankers Association (MBA). While the Refinance Index decreased by 2.1 percent for the week ending April 30, 2010 (compared to the previous week), the seasonally adjusted Purchase Index increased 13.0 percent. The MBA also found that the 30-year fixed rate mortgage fell from 5.08 percent to 5.02 percent that week. Points increased on average from .91 to .92. The rate for a 15-year FRM dropped to 4.43 percent from 4.45 percent on Tuesday. Last week on Wednesday the rate was 4.48 percent. The 5/1 ARM dropped drastically today. The average rate had been 3.54 percent. Today that rate is 3.41 percent. Last Wednesday the rate was 3.58 percent. There is a downward trend in rates even at these historically low levels.

The Obama administration has broadened its mortgage refinancing program to allow more homeowners hit hard by falling home prices. Homeowners whose mortgage loans are now worth up to 125% (as opposed to a previous limit of 105%) of their home's value are now eligible to refinance their mortgage under the Obama foreclosure prevention plan announced in February.

The initiative waives the requirement that homeowners have at least 20% equity in their home, allowing them to take advantage of today's lower rates. Homeowners must still meet other criteria, including being current on their payments and having loans that are owned or backed by Fannie Mae or Freddie Mac. The administration has projected that 4 million to 5 million mortgage borrowers would be helped. A second part of the program lets eligible borrowers who are in default or at risk to lower their monthly payments to no more than 31% of their pre-tax income. This can help those who are not making as much at their jobs or who have monthly payments they can't handle. Homeowners, mortgage lenders and mortgage investors can receive incentives to entice them to participate in the program.

Mortgage rates on 30-year mortgages hit record low this week, spurring refinancing activity as the troubled housing market moves closer to possibly hitting the bottom, Freddie Mac said Thursday. Average rates on 30-year fixed mortgages, the most popular loan among home buyers, slid to 4.78 percent from 4.8 percent last week, Freddie Mac said. Last year at this time, the average rate on a 30-year mortgage was 6.06 percent. The all-time low of 4.78 percent was recorded the week of April 2.

Freddie Mac also said the average rate on a 15-year fixed-rate mortgage was 4.48 percent this week, unchanged for the third straight week. Rates on five-year, adjustable-rate mortgages fell to 4.80 percent from 4.85 percent last week -- the lowest since Freddie Mac began tracking it in January 2005. Average rates on one-year, adjustable-rate mortgages fell to 4.77 percent from 4.82 percent last week. The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for every type of mortgage mentioned in Freddie Mac's survey except for the five-year adjustable rate mortgage, which averaged 0.6 point. Freddie Mac collects mortgage rates from lenders around the country. Rates can fluctuate significantly. Freddie Mac's annual survey dates back to 1971.

Low mortgage rates have led to more refinancing activity since rates first fell dramatically in the winter. Rates continue to slide after the Federal Reserve said last month it would buy $1.2 trillion in mortgage-backed securities and $300 billion in long-term government debt, which traditionally influences rates on 30-year home loans. Frank Nothaft, Freddie Mac's chief economist, said the low rate means that those who refinance a $200,000 loan would save almost $212 in monthly mortgage payments and more than $2,500 per year. Borrowers who refinanced during this year's first quarter reduced their mortgage payments by about $2.5 billion over the coming year, and half of borrowers who refinanced lowered their annual interest rate by at least 20 percent, according to Freddie Mac's quarterly Refinance Report.

President Obama launched the much awaited mortgage rescue plan today to help up to 9 million homeowners. The two-part plan calls for mortgage lenders to reduce monthly payments to no more than 31% of eligible borrowers' pre-tax income or to refinance eligible mortgages even if the homeowner has little or no equity. The government is allocating $75 billion to subsidize part of payment reduction, as well as provide thousands of dollars in incentives for mortgage lenders and borrowers to participate. The Treasury Department said Wednesday it is capping the payments to mortgage lenders to allow more companies to participate. It is allocating $50 billion to the program, with Fannie Mae, Freddie Mac and the Department of Housing and Urban Development providing the rest.

The modification plan calls for the mortgage lenders to reduce interest rates so that the monthly obligation is no more than 38% of a borrower's pre-tax income, and then the government would kick in money to bring payments down to 31% of income. Mortgage lenders can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the mortgage lender would have received if it had reduced the interest rates. Major mortgage loan lenders also recently started accepting applications under the refinance portion of the program.

President Obama urges Americans to take advantage of lower mortgage rates. At an economic round table this morning, President Obama touted strides made by his housing recovery plan, calling the effort "good news" for American families in the midst of a dire economy and problems in the financial markets. Surrounded at the White House by a handful of families who he said have already lowered their bills, Obama pointed to the "extraordinary actions by the Federal Reserve" to reduce mortgage interest rates to historic lows -- currently the 30-year fixed mortgage rate stands at around 4.78%, an all-time low -- and to Treasury Secretary Timothy F. Geithner's housing plan as the reason for the surge.

"So the main message that we want to send today is there are 7 to 9 million people across the country who, right now, could be taking advantage of lower mortgage rates. That is money in their pocket," Obama said. "And we estimate that the average family can get anywhere from $1,600 to $2,000 a year in savings by taking advantage of the various mortgage programs that have been put in place." In the last month, Obama said refinancing increased 88% while mortgage giant Fannie Mae's refinancing volume rose to $77 billion in March, the largest one-month gain since 2003.

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS® ) in which the 30-year fixed-rate mortgage (FRM) averaged 4.85 percent with an average 0.7 point for the week ending March 26, 2009, down from last week when it averaged 4.98 percent. Last year at this time, the 30-year FRM averaged 5.85 percent. The 30-year FRM has not been lower in the life of Freddie Mac's weekly survey, which dates back to 1971 for the 30-year FRM. The 15-year FRM this week averaged 4.58 percent with an average 0.7 point, down from last week when it averaged 4.61 percent. A year ago at this time, the 15-year FRM averaged 5.34 percent. The 15-year FRM has never been lower in the life of Freddie Mac's weekly survey, which dates back to 1991 for the 15-year FRM.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.96 percent this week, with an average 0.7 point, down from last week when it averaged 4.98 percent. A year ago, the 5-year ARM averaged 5.67 percent. The 5-year ARM has never been lower in the life of Freddie Mac's weekly survey, which dates back to 2005 for the 5-year ARM. One-year Treasury-indexed ARMs averaged 4.85 percent this week with an average 0.6 point, down from last week when it averaged 4.91 percent. At this time last year, the 1-year ARM averaged 5.24 percent.

Rates on 30-year mortgages fell this week to the lowest level on record after the Federal Reserve launched a new effort to assist the staggering U.S. housing market. Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages dropped to 4.85 percent this week, from 4.98 percent last week. It was the lowest in the history of Freddie Mac's survey, which dates back to 1971 and was down a full percentage point from a year ago. The previous record low of 4.96 percent was set in the week of Jan. 15. Rates fell after the Fed last week said it will pump $1.2 trillion into the economy in an effort to lower rates on mortgages and loosen credit.

Though the yield on the benchmark 10-year Treasury note initially plunged by about 0.5 percentage points after the Fed's move, lenders did not pass the entire drop on to borrowers. Bond yields rose after worries about what some saw as lackluster demand at a government debt auction Wednesday. In Freddie Mac's survey, the average rate on a 15-year fixed-rate mortgage dropped to 4.58 percent this week, down from 4.61 percent last week. Rates on five-year, adjustable-rate mortgages fell to 4.96 percent, compared with 4.98 percent last week. Rates on one-year, adjustable-rate mortgages rose fell to 4.85 percent, from 4.91 percent.

The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for all mortgages in Freddie Mac's survey except for one-year adjustable mortgages, which had an average fee of 0.6 point.

Home mortgage rates dropped to a 52-year low this week, according to a report released Thursday, in the wake of the government's announcement that it will buy more than $1 trillion in debt. The average 30-year fixed mortgage rate fell to 5.19% this week, down from 5.29% in the week prior, according to Bankrate.com's weekly national survey. The previous low was 5.28%, hit this January and in June 2003; the last time rates dipped lower than 5.19% was in 1956, according to Bankrate.com. To put the plunge in mortgage rates into perspective, 30-year fixed home mortgage rates averaged 6.77% in late October. At that time, a $200,000 home loan would have meant a monthly payment of $1,299.86. Now, with the mortgage rates down at 5.19%, the monthly payment for the same loan would be $1,096.99. That works out to a savings of more than $200 per month.

U.S. Secretary of Housing and Urban Development Secretary Shaun Donovan released the following statement today in response to new data suggesting improvements in the housing market. Today, the U.S. Census Bureau and HUD announced an increase in residential home sales in February 2009.

"This week we have seen some encouraging news on housing. Sales of both new and existing homes rose in February for the first time in more than six months while home prices are starting to stabilize. Although there will be many ups and downs in the coming months, this news should reinforce the importance of the steps we have already taken to stabilize the housing market and strengthen our economy, including measures that have contributed to the nearly lowest mortgage rates in decades and the $8,000 tax credit for new homebuyers included in the American Recovery & Reinvestment Act (ARRA). Stabilizing the housing market will help address the problems at the root of our overall economic weakness, eventually starting to contribute to economic growth and job creation."

The Treasury Department has implemented a series of initiatives as part of its Financial Stability Plan that – alongside the American Recovery and Reinvestment Act – lay the foundations for economic recovery:

• Efforts to Improve Affordability for Responsible Homeowners: Treasury has implemented programs to allow families to save on their mortgage payments by refinancing, assist responsible homeowners in avoiding foreclosure through a loan modification plan, and, alongside the Federal Reserve, help bring mortgage interest rates down to near historic lows. This past month, the 30% increase in mortgage refinancing demonstrated that working families are benefiting from the savings due to these lower rates.
• Consumer and Business Lending Initiative to Unlock Frozen Credit Markets: Treasury and the Federal Reserve are expanding the TALF in conjunction with the Federal Reserve to jumpstart the secondary markets that support consumer and business lending. Last week, Treasury announced its plans to purchase up to $15 billion in securities backed by Small Business Administration loans.
• Capital Assistance Program: Treasury has also launched a new capital program, including a forward-looking capital assessment undertaken by bank supervisors to ensure that banks have the capital they need in the event of a worse-than-expected recession. If banks are confident that they will have sufficient capital to weather a severe economic storm, they are more likely to lend now – making it less likely that a more serious downturn will occur.

The U.S. Department of the Treasury and the Department of Housing and Urban Development has launched a new website for consumers seeking information about the Obama Administration's Making Home Affordable loan modification and refinancing program. MakingHomeAffordable.gov offers features including interactive self-assessment tools that will empower borrowers to determine if they're eligible to participate and calculate the monthly mortgage payment reductions they could stand to realize under the Making Home Affordable program.

First announced by President Barack Obama in February, Making Home Affordable will offer assistance to as many as 7 to 9 million homeowners making a good-faith effort to make their mortgage payments, while attempting to prevent the destructive impact of the housing crisis on families and communities. MakingHomeAffordable.gov is a joint effort of the Department of the Treasury and HUD.

"Education and outreach is central to the success of our Making Home Affordable program," said Treasury Secretary Tim Geithner. "Putting resources and tools directly in the hands of homeowners will expedite the process of delivering relief to responsible borrowers, and stabilizing the housing market is central to our overall economic recovery."

• Refinancing: Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today's lower mortgage rates perhaps due to a decrease in the value of their home.
• Modification: Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income.

A HUD-approved housing counselor will talk to you about your situation and help you decide what mortgage options are best for you. A counselor will explain what documents you will need to provide to your mortgage company and may be able to contact the mortgage company on your behalf.

A housing counselor can also help you make a budget so that you can meet your monthly mortgage payment and other expenses. The counselor will have information about local resources that may be helpful to you.

There is no charge to work with a HUD-approved counseling agency.

Free counseling help

HUD sponsors housing counseling agencies throughout the country that can provide advice on buying a home, renting, defaults, foreclosures, credit issues, and reverse mortgages.

If you are delinquent on you loan payments and need immediate assistance call 1-888-995-HOPE (4673).

The American Recovery and Reinvestment Act of 2009 expands the first-time homebuyer credit to include purchases made before Dec. 1, 2009.

The IRS announced Feb. 25 that for first-time homebuyers who purchase in 2009, the maximum credit is $8,000 and can be claimed on a buyer's 2008 federal tax return. If the home purchase closes after April 15, a taxpayer can still claim the credit on a 2008 tax return by requesting an extension of time to file or filing an amended return. News release 2009-27 has more details on these options.

For first-time homebuyers who bought in 2008, the maximum credit is $7,500 and must be paid back over a period of 15 years.

Trial loan modifications consistent with these Guidelines may be offered to homeowners beginning on this date, March 4, 2009, and may be considered for acceptance into the Home Affordable Modification Program upon completion of the trial period and other conditions. These Guidelines, however, do not constitute a contract offer binding on the Department of the Treasury.

• Monthly Payment Reduction Cost Share: Treasury will partner with financial institutions to reduce homeowners' monthly mortgage payments. The lender will have to first reduce payments on mortgages to no greater than 38% Front-End Debt-to-Income (DTI) ratio. Treasury will match further reductions in monthly payments dollar–for–dollar with the lender/investor, down to a 31% Front–End DTI ratio for the borrower.
• Servicer Incentive Payments and Pay for Success Fees: Servicers will receive an up–front Servicer Incentive Payment of $1,000 for each eligible modification meeting guidelines established under this initiative. Servicers will also receive Pay for Success payments –as long as the borrower stays in the program – of up to $1,000 each year for up to three years. Similar incentives will be paid for Hope for Homeowner refinances.
• Borrower Pay–for–Performance Success Payments: Borrowers are eligible to receive a Pay–for–Performance Success Payment that goes straight towards reducing the principal balance on the mortgage loan as long as the borrower is current on his or her monthly payments. Borrowers can receive up to $1,000 of Pay–for–Performance Success Payments each year for up to five years.
• Current Borrower One–Time Bonus Incentive: One–time bonus incentive payments of $1,500 to lender/investors and $500 to servicers will be provided for modifications made while a borrower is still current on mortgage payments. The servicer will be required to maintain records and documentation evidencing that the Trial Period payment arrangements were agreed to while the borrower was less than 30 days delinquent. The servicer must comply with any express pooling and servicing contractual restrictions for modifying current loans.

As outlined by President Obama's Mortgage Bailout plan for American Homeowners, there are really two tiers of people that government is seeking to help here. There are two parts of the program - loan modification and loan refinancing. On loan modification, this is aimed at folks that are in dire straits. Their monthly mortgage payment far exceeds 31 percent of their pre-tax monthly income. It might be 50, 60, 70 percent of their income; it's not sustainable to keep paying that. This provides government subsidies and incentives to financial institutions to chop down their interest rate, possibly lower their principal, even stretch out the mortgage to bring the monthly payment down to 31 percent of their pre-tax income.

The other tier that is being helped are all those folks who are going under water. This is folks who are current on their payment. Their monthly payment is 31 percent or less of their pre-tax income. They'd like to refinance to take advantage of a 5 percent interest rate, but they can't because the value of their home is at or slightly below what their mortgage is. So, the mortgage might be 105 percent of the value of the home and shrinking. They'd like to refinance, but for that obstacle, now those with underwater loans, slightly underwater or significant size loans can refinance and get that out of way.

U.S. mortgage rates fell in the latest week supporting government efforts to bring them down to levels that will spur demand and help the hard-hit housing market begin to recover. Interest rates on U.S. 30-year fixed-rate mortgages fell to 4.96 percent from the previous week's 5.15 percent, according to a survey released on Thursday by home funding company Freddie Mac.

Thirty-year mortgage rates had mostly been on a downward trend since the Federal Reserve unveiled a plan in late November to buy as much as $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac and Ginnie Mae.

The program also entails buying up to $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
,br> Low mortgage rates in recent weeks have spurred a surge in demand for home refinancing loans, and refinancing to lower monthly payments should provide a bit of relief to strapped consumers amid rising unemployment and a shrinking economy.

Low mortgage rates, however, have had only a marginal impact on demand for loans to purchase homes, igniting calls to bring rates down to much lower levels.

The 15-year, fixed-rate mortgage averaged 4.64 percent in the latest week, down from 4.72 the prior week. One-year adjustable-rate mortgages, or ARMs, fell to an average of 4.80 percent from 4.86 percent last week.

Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, averaged 4.99 percent, compared with 5.08 percent a week earlier.

A year ago, 30-year mortgage rates averaged 6.13 percent, 15-year mortgages were at 5.60 percent and the one-year ARM was at 5.14 percent. A year ago, the 5/1 ARM averaged 5.58 percent.

Lenders charged an average of 0.7 percent in fees and points on 30-year mortgages, unchanged from the previous week, while they charged an average 0.7 percent in fees and points on 15-year mortgages, unchanged from the previous week.

The 5/1 ARM fees and points were 0.6 percent, unchanged from the previous week. The one-year ARM fees and points were 0.5 percent, unchanged the previous week.

Freddie Mac and its larger sibling, Fannie Mae, were placed under government conservatorship in early September.

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio.

• Special Forbearance: Your lender may be able to arrange a repayment plan that would be based upon your current financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you've recently experienced an involuntary reduction in income or an increase in living expenses.
• Mortgage Modification: You may be able to refinance the debt and extend the term of your mortgage loan. This will help you catch up by possibly reducing the monthly payments to a more affordable level. You may qualify if you've recovered from a financial problem but your net income is less than it was before the default.
• Partial Claim: Your lender may be able to work with you to obtain an interest-free loan from HUD to bring your mortgage current, if you qualify.
• Pre-Foreclosure Sale: This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. If you're unable to afford the house long-term, you may sell the house yourself before the foreclosure sale and save some of your equity.
• Deed-in-lieu of foreclosure: As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but may help your chances of getting another mortgage loan in the future.