This Weeks Mortgage Market News
All the Latest News on Mortgages, Loans, and Finance
By: Valerie Middleton
This week’s mortgage and loan market shows no signs of following any general trends or patterns. In fact, it appears that the market this week will show a variety of faces. Here is a taste of the Good, the Bad, and the Ugly that the market has brought us so far this week:
The Good: Uncle Sam came to rescue in June when the Federal Housing Administration endorsed a record high of 186,000 mortgages. The FHA, a 75 year old agency that insures lenders against losses, has increased in popularity due to the fact that it is one of the only suppliers of low down payment mortgages. The Government National Mortgage Association, or Ginnie Mae, also broke a record in June when it issued $43 billion worth of mortgage-backed securities. During the first six months of 2009 Ginnie Mae issued approximately $207 billion worth of liquidity to the secondary market, surpassing the $107 billion issued during the first half of 2008.
The Bad: With mortgage interest rates dwindling downward, now is a great time to refinance. Those who wish to eliminate excess expenses may opt to refinance their home, but those who are not employed will need a No Doc loan program. When evidence of a steady source of income is required, those who are unemployed, with few exceptions, will not be given the option to refinance. Lending standards are high, which means lenders want to see sources of flow when it comes to a potential borrower’s finances. Thus, verification of employment, such as income documentation, acts as proof that the borrower will be able to repay the lender. During these times of strict lending requirements and high levels of employment, those who seek refinancing and are out of the job may be out of luck as well.
The Ugly: Commercial mortgages issued by U.S. banks used to finance commercial property, including retail malls, hotels, and offices, could result in a $30 billion loss by the end of this year. Many will pour over the devastating results that will be released during the next two weeks as thousands of banks report their second-quarter results.
