Lower Upfront Costs to be the key Feature of New Version of FHA Home Equity Conversion Mortgage

According to the National Reverse Mortgage Lenders Association, the Federal Housing Administration (FHA) announced today that it intends to make modifications to its Home Equity Conversion Mortgage (HECM) product, to make it more attractive and cost effective for older home owners seeking to tap their home equity to cover living expenses and health care costs.

The most frequently heard complaint among people who did not take a reverse mortgage has been that the upfront costs were high.The key feature of the new version FHA Home Equity Conversion Mortgage is lower upfront cost. The new "HECM Saver," will provide seniors with a reverse mortgage option that significantly lowers upfront costs by virtually eliminating the upfront Mortgage Insurance Premium that is required under the standard HECM option.This cost saving in upfront fees is able to be achieved because the amount of money available to a borrower, an amount known as the "principal limit," under a HECM Saver will be reduced, substantially lowering the risk to the FHA insurance fund. Borrowers will receive approximately 10% to 18% less under the HECM saver option, than they would under the HECM Standard option.This new variation, the HECM Saver, presents a sensitive response to the needs of old homeowners. Now more elderly people can take advantage of this new version of HECM; PrivoCorp can get you in touch with brokers who process HECM files. For more details go to www.privocorp.com

Mortgage rates hit a record lows: Freddie Mac

According to a survey released by Freddie Mac on Thursday,Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.42 percent for the week ended August 19, down from the previous week's 4.44 percent and its year-ago level of 5.12 percent. Meanwhile, 15-year fixed-rate mortgages averaged 3.90 percent, down from 3.92 percent last week, the lowest level since Freddie Mac began surveying this loan type in 1991. Fifteen-year mortgage rates have hit fresh lows for six straight weeks.

Low mortgage rates offer a glimmer of hope for a housing market, which has been struggling to gain traction since the expiration of popular home-buyer tax credits.To take advantage of the tax credits, buyers had to sign purchase contracts by April 30. Contracts originally had to close by June 30, but that has been extended by three months.By lowering monthly mortgage payments, lower rates may also help some homeowners avoid default and foreclosure if their credit is good enough.

Bob Walters, chief economist at Quicken Loans in Detroit, Michigan, said home loan demand at his company has jumped 50 percent over the past month."Nearly every person who has a mortgage right now can benefit from refinancing," he said.The Mortgage Bankers Association said on Wednesday U.S. mortgage applications leaped last week as rock-bottom interest rates lifted demand for home refinancing to the highest level in 15 months, a development that could portend stronger economic growth.

This is from a Reuters report.

20% of mortgages underwater???

According to the a report in the real estate website zillow.com, more than 20% of the nation's mortgage borrowers owe more than their homes are worth. At 21.5% for the third quarter, it is a small improvement over the previous quarter, when 23.3% of loans were underwater, according to real estate website Zillow.com. This so-called negative equity is a hotly watched statistic because it is a prime predictor of foreclosures.

To read the entire article go to  cnn.com

Vanguard - Weekly update

According to a Vanguard report citing the  Commerce Department's report on gross domestic product (GDP) for the second quarter; it confirmed what many had expected ... Although the economy has grown for the fourth straight quarter, the rate of growth has slowed. Moreover, the nation's recovery from recession has been tougher than previously thought, based on revised GDP figures indicating that the economy from 2007 to 2009 was weaker than originally estimated. 


The mortgage market continues to hobble along. PrivoCorp lost a good sized client to bad lending practices of the past which seems to continue to haunt the entire industry. The ghosts dont seem to be going away any time soon.


For more information on our processing capabilities visit www.privocorp.com

Mortgage Players Look to Soften Bill !!

As Congress moves to finalize new financial regulations, the mortgage industry is working to soften a series of provisions that reshape how most Americans obtain home loans. This was according to the Wall Street Journal.

The provisions in the legislation seek to eliminate questionable practices that proliferated during the housing boom by outlining clear underwriting standards, holding lenders more responsible for loans, and changing the way loan originators are paid. In addition, consumers would get new rights to seek damages when the mortgage process goes awry, according to The Journal.

Read more at-http://bit.ly/aPVd4g (The Wall Street Journal)