It’s been reported that WMC Mortgage, the wholesale residential subprime and Alt-A mortgage unit of GE Money, laid off the majority of its staff yesterday, per the OC Register.
It is believed that a skeleton crew is sticking around to clear out the remaining pipeline, and that all loan processors, underwriters, and loan officers are now gone.
My understanding is that the lender is still accepting new submissions, though volume is probably extremely light with the reduced staff.
“They’re working the pipeline that is here,” said a customer service operator. “They are taking originations, but we’re down to minimal staff levels as of yesterday afternoon.”
According to the WMC website, the mortgage lender still offers jumbo loans up to $1 million, financing up to 95% loan-to-value, and Fico scores as low as 530.
Most thought WMC had already ceased operations months ago, as GE previously announced that is was exiting the business after the mortgage crisis came to the forefront.
WMC was subsequently put up for sale earlier this summer after a rise in defaults forced the conglomerate to reconsider its position in the subprime mortgage business.
Despite previous reports listing the lender as a discontinued operation, GE spokesman Russell Wilkerson said there is still a “decent number of employees” at the company and that it still had loans on its books.
“We’re in the process of selling it,” says Wilkerson. The question remains whether anyone wants to buy it, and what’s it’s really worth at this point.
Several weeks ago, GE said it expected to take a $300 million to $400 million charge in the third quarter as it exited its WMC Mortgage business.
Back in March, WMC Mortgage cut roughly 20 percent of its staff, or 460 employees, and said it would no longer write mortgages with no down payments.
Since then, the company has cut about 70 percent of its workforce and sold $3.7 billion of its loans, leaving $1.1 billion in mortgages on the books as it seeks a suitor.
GE acquired WMC in 2004 from private equity firm Apollo Management, and analysts estimated that it made up only a small portion of their total income (now losses) over the last few years.
To give you an idea, WMC provided roughly $100 million of its parent company’s $20.8 billion total profit in 2006.
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Update: Here’s a quote from a recent article regarding the matter: “Everybody over there [at WMC] thought it was being sold, but on Monday they were told it was being dismantled instead. A lot of guys were let go Monday, and are now looking for jobs.”
GE denied the dismantling, saying it was a restructuring effort. “We are still trying to sell WMC,” said Richard Jones, spokesman for GE Money. “There were a number of layoffs on Monday at WMC as part of a restructuring.”
In a statement released after market close, Washington Mutual said it will have to set aside far more than expected for loan losses, leading to a fourth quarter loss and massive restructuring.
The Seattle-based thrift and mortgage lender plans to cut more than 3,000 jobs and slash its dividend by 73 percent, while also offering $2.5 billion in convertible preferred stock in a bid to raise capital.
“A substantial infusion of new capital, significant expense reductions, the major change in our home loans business, and our planned dividend reduction all combine to further fortify WaMu’s strong capital and liquidity position,” said WaMu Chairman and Chief Executive Officer Kerry Killinger.
“These actions will also better position us to pursue various initiatives, particularly in our leading retail banking business — which is at the core of our business strategy.”
WaMu will discontinue all lending through it subprime mortgage channel, closing roughly 190 of 336 home loan centers and sales offices, and nine Home Loans processing and call centers.
The layoffs will affect 22 percent of its Home Loans staff, or roughly 2,600 employees, along with 550 corporate jobs and support positions.
The thrift will also close WaMu Capital Corp., its institutional broker-dealer business, as well as its mortgage banker finance warehouse lending operation.
The cost of these so-called “expense reduction measures” will result in approximately $140 million in additional expenses in the fourth quarter.
The restructuring will be accompanied by an increase in retail mortgage lending via its many banking branches nationwide, a route many large banks are leaning towards.
The banking giant will take a fourth quarter after-tax charge of approximately $1.6 billion for the writedown of all the goodwill associated with the Home Loans business, and now expects its fourth quarter provision for loan losses to be between $1.5 and $1.6 billion.
The company currently expects its first quarter 2008 provision for loan losses to range between $1.8 to $2.0 billion, and to remain elevated through 2008.
WaMu believes total U.S. mortgage loan origination will fall to $1.5 trillion in 2008, the lowest level in eight years, from an estimated $2.3 trillion to $2.4 trillion this year.
Shares of Washington Mutual fell $1.59, or 8.00%, to $18.29 in after hours trading.
Update: WaMu upped their preferred stock offering to $3 billion.
An agreement by H&R Block to sell its ailing mortgage unit Option One to Cerberus Capital Management has been severed, according to both parties involved.
Both companies called the termination “fully amicable”, though Option One will wind down operations as a result.
H&R Block will lay off approximately 620 employees, close three offices, and take a $75 million restructuring charge.
Option One will no longer accept loan applications, but will continue to service the existing pipeline totaling about $30 million, most of which are government-backed loans (FHA loans, VA loans).
The defunct mortgage lender also plans to sell its valuable servicing portfolio.
Both parties said they had tried to find a way to save the deal originally conceived in April, but couldn’t find a mutually acceptable agreement.
“The mortgage market today has undergone vast changes since last April when the original Cerberus deal was signed,” H&R Block Chairman Richard Breeden said in a statement.
“Despite the hard work and good faith of both sides we could not find a way to restructure the original transaction to mutual satisfaction.”
Two weeks ago, H&R Block president and CEO Mark Ernst resigned as the prospect of selling its money-losing subprime mortgage unit looked increasingly bleak.
The proposed sale of Option One to private equity firm Cerberus Capital for $800 million (formerly $1 billion) agreed upon earlier this year was largely expected to fizzle as the credit markets continued to breed uncertainty.
Cerberus already backed out of a deal to buy Affiliated Computer Services Inc., and is currently attempting to withdraw its offer for United Rental.
According to National Mortgage News, Option One made $29.8 billion in subprime loans last year.
Shares of H&R Block were down 5 cents, or 0.26%, to $19.41 in midday trading on Wall Street.
Check out the latest list of closed lenders, mortgage layoffs mergers, and rumors.
Treasury Secretary Henry Paulson said today that the Bush administration is working in a number of areas to combat the country’s ongoing mortgage crisis, but added that there is no simple solution to the complex problem.
In remarks prepared for a New York speech scheduled for later today, Paulson said the country is facing a wave of 1.8 million subprime mortgage resets over the next two years, an epidemic which could lead to market failure.
He added that the interest rate freeze plan was devised on these grounds, and would be launched soon.
“By preventing avoidable foreclosures, we will safeguard neighborhoods and communities and fulfill our responsibility of protecting the broader U.S. economy,” Paulson said in excerpts of his speech released by the Treasury.
Paulson said mortgage servicers should be prepared to implement the plan within a few weeks, ideally helping some subprime borrowers avoid foreclosure.
“However, let me be clear: there is no single or simple solution that will undo the excesses of the last few years,” he cautioned.
He called the housing correction inevitable after a five-year boom led to record sales and price appreciation, and said the housing downturn will last for some time.
“After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary,” Paulson said.
“We will likely have further indications of slower growth in the weeks and months ahead,” he warned. “The overhang of unsold houses will contribute to a prolonged adjustment, and poses by far the biggest downside risk.”
Paulson is also expected to warn that there will be no quick announcement of a fiscal stimulus package to solve the current crisis.
“Working through the current situation and getting the policy right is more important than getting the policy announced quickly,” he said.
Paulson also repeated his call for Congress to pass legislation that will allow the FHA and government financiers Fannie Mae and Freddie Mac to purchase more loans.
Baltimore Mayor Sheila Dixon’s administration filed suit today in U.S. District Court alleging that Wells Fargo Bank engaged in predatory lending practices in black neighborhoods within the city.
According to a lawsuit, black neighborhoods in Baltimore were disproportionately affected by the subprime mortgage crisis, with most of the company’s loans that ended in foreclosure made in neighborhoods where the population is more than 80 percent black.
“When you have foreclosures, the property values drop, and you get less tax revenue. There’s fire and police costs that come from abandoned and boarded-up and vacant properties,” said John P. Relman, a Washington-based attorney who is representing the city in the lawsuit. “It leads to crime and drugs and school problems as the community is being destabilized.”
The lawsuit claims Wells Fargo used a practice known as “reverse redlining”, which instead of denying loans to a certain group or community, exploits that group with higher fees, rates, and penalties, an illegal practice under the federal Fair Housing Act.
For example, it claims that mortgages for homes worth $75,000 or less, most of which happened to be located in black neighborhoods, had inflated mortgage rates that were riddled with fees and surcharges.
“You could be equally well-qualified, but if you happen to buy a house that’s worth $75,000 or less, you’re going to pay more,” Relman said.
San Francisco-based Wells Fargo does not comment on pending litigation, but spokeswoman Debora Blume said in a statement that the bank did not consider race when originating loans.
“We do not tolerate illegal discrimination against, or unfair treatment of, any consumer,” Blume said. “Our loan pricing is based on credit risk. We are committed to serving all customers fairly – our continued growth depends on it.”
Wells Fargo has been one of the two largest mortgage providers in Baltimore since 2004, making 1,285 loans a year totaling more than $600 million from 2004 through 2006.
The lawsuit says more than 33,000 homes in Baltimore have been subjected to foreclosure filings since 2000, and Wells Fargo has more foreclosures than any other mortgage lender.
Bear Stearns CEO James Cayne is expected to resign today amid increasing pressure from investors over record losses and the collapse of two hedge funds last summer.
He will join Citigroup’s Charles Prince and Merrill Lynch’s Stan O’Neal, who now sit on the sidelines.
Cayne will likely be replaced by current President Alan Schwartz, a 57-year-old investment banker known for his strong deal-making ability.
Punk Ziegel analyst Richard Bove believes Schwartz is the “right choice” for the job, but warned that the position wouldn’t be easy.
“The task facing Mr. Schwartz is sizable. Outsiders may now be attempting to take control of the company. He must fight this off,” Bove said.
“I believe, as I have written for about a year, that Mr. Cayne must go. He was the architect of what now appears to have been a failed business strategy,” Bove wrote in a note to clients.
The analyst, who maintained a “sell” rating on the stock, slashed his price target on Bear Stearns to $67 from $94 and again reduced his 2008 earnings estimate.
For fiscal 2008, he cut his estimate to $6.59 a share from a previous $7.96 a share, and lowered his 2009 estimate to $7.10 a share from $8.54 a share.
“Its core businesses like mortgages, credit derivatives, prime brokerage, and investment banking may all be facing contraction while the company is losing market share in these shrinking markets. This firm needs to shrink rapidly and then rebuild on a more solid base,” Bove recommended.
Bear Stearns, the fifth-largest U.S. investment bank, took a $1.9 billion write-down in the quarter ended November 30 related to the falling value of subprime mortgage-related securities, leading to its first quarterly loss ever.
And Bove believes the struggling bank and mortgage lender will likely see further writedowns and post higher loan loss reserves in coming quarters.
Shares of Bear Stearns, which have lost 52 percent of their value over the past year, closed at $76.25 Monday on the New York Stock Exchange.
Mortgage interest rates inched up this week, following nine straight declines totaling a decrease of 118 basis points (1.18%).
The average 30-year fixed rate mortgage (FRM) rose from 6.61% on Dec. 28 to 6.62% on Jan. 4, according to Freddie Mac.
“Given the expectation of rate cuts this year from the Federal Reserve, as well as receding inflationary pressures, we expect mortgage rates will continue to drift downward as the year unfolds,” said Sam Khater, Freddie Mac’s Chief Economist.
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Will mortgage rates go down in January?
Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% on Feb. 2 and as high as 7.79% on Oct. 26, according to Freddie Mac.
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The range can be largely attributed to the Federal Reserve’s ongoing fight against inflation, juxtaposed with uncertainty in the banking sector sparked by Silicon Valley Bank’s collapse. However, with duress permeating the financial market and the fallout from U.S. debt ceiling talks, the Fed may continue making hikes to bring interest rates down.
With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle. Of course, interest rates are notoriously volatile and could tick back up on any given week.
Experts from CoreLogic, Home Qualified, Realtor.com and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in January.
Expert mortgage rate predictions for January
Craig Berry, branch manager at Acopia Home Loans
Prediction: Rates will moderate
“As inflation is the no. 1 item on the Federal Reserve’s radar right now, the Feds may choose not to lower the federal funds rate until inflation comes down. And, while Fed rate cuts aren’t a must-have in order for mortgage rates to come down, interest rates are affected by the federal funds rate.
The Feds continue to seek a balance between inflation and maximum employment so as not to cause significant damage to the economy which could trigger a recession. Recent momentum has been positive, and as long inflation cooperates, mortgage rates may see a slight decline in January. However, it isn’t likely that we’ll see significant drops to longer-term rates until we get further into 2024.”
Ralph DiBugnara, president at Home Qualified
Prediction: Rates will fall
“Rates finally shifted down some in December and stabilized lower. U.S. payrolls came in lower than anticipated, unemployment was up and building of new homes was down. These are good signs that inflation may have reached its peak and could trigger a lowering of rates. I expect the Fed to stay neutral for the time being and possibly through the first quarter of the year with possible cuts coming only if we see a drastic shift in the economy. For January, I believe the average 30-year fixed will land at 7.125% and the 15-year fixed will be 6.75%.”
Selma Hepp, chief economist at CoreLogic
Prediction: Rates will fall
“Mortgage rates should continue to decline, albeit very gradually and given there are no surprises with inflation. We should see rates fall below 7% mark.”
Hannah Jones, senior economic research analyst at Realtor.com
Prediction: Rates will fall
“If inflation and employment data continue to show signs of slowing, mortgage rates are likely to ease in January, though at a slower clip than in recent weeks. As incoming data confirms that the economy is indeed cooling, the upward pressure on mortgage rates will continue to let up and buyers will enjoy lower rates than in recent months.
However, if inflation or employment data come in stronger than expected, we could see rates pick up steam once again. Investors expect the Fed to hold steady at the current target rate in next week’s meeting, which would signal the Committee’s confidence in the current policy stance to bring inflation down to the target 2%. As inflation reaches the target level, mortgage rates will continue to drift lower.”
Jess Kennedy, COO at Beeline
Prediction: Rates will fall
“We expect rates to continue to ease as we kick off 2024. You can see the signaling of a rate cut from the Fed in many ways. For example, it is harder to find long-term CDs at the higher interest rates we were seeing 45-60 days ago). Publicly traded companies are also seeing their stock prices move higher on the expectation of rate relief in 2024. All these signs signal rates start to tick down even ahead of an official rate cut.”
Odeta Kushi, deputy chief economist at First American
Prediction: Rates will fall
“In light of favorable trends in inflation and labor market data, the Federal Reserve appears to be on a path towards its goals, although achieving its 2% inflation target will take some time. Consequently, the Fed is expected to maintain a restrictive stance, which will keep mortgage rates elevated. However, given slowing inflation and a cooling labor market, and barring any unforeseen developments, modest reductions in mortgage rates are possible in January.”
Rick Sharga, CEO at CJ Patrick Company
Prediction: Rates will fall
“With inflation moving in the right direction, wage growth slowing, and the jobs market softening a bit, it seems likely that the Federal Reserve has finished rate hikes for this cycle. That, coupled with weakening bond yields, should create an environment where mortgage rates can start a gradual, but steady decline throughout 2024. January rates for 30-year fixed-rate loans will probably straddle 7% — ranging from 7.1% to about 6.9% as the market finds its footing to begin the year.”
Mortgage interest rates forecast next 90 days
As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to the average 30-year fixed-rate mortgage spiking in 2023.
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With inflation gradually cooling, the Fed adjusted its policies with smaller and skipped hikes. Additionally, the economy showing signs of slowing has many experts believing mortgage interest rates will gradually descend in 2024.
Of course, rates could rise on any given week or if another global event causes widespread uncertainty in the economy.
Mortgage rate predictions for 2024
The 30-year fixed-rate mortgage averaged 6.62%% as of Jan. 4, according to Freddie Mac. All five major housing authorities we looked at project 2024’s first quarter average to finish above that.
The National Association of Home Builders sits at the low end of the group, predicting the average 30-year fixed interest rate to settle at 7.04% for Q1. Meanwhile, Fannie Mae had the highest forecast of 7.6%.
Housing Authority
30-Year Mortgage Rate Forecast (Q1 2024)
National Association of Home Builders
6.77%
Wells Fargo
6.85%
Fannie Mae
7.00%
Mortgage Bankers Association
7.00%
National Association of Realtors
7.50%
Average Prediction
7.02%
Current mortgage interest rate trends
Mortgage rates came down for the ninth consecutive week.
The average 30-year fixed rate increased from 6.61% on Dec. 28 to 6.62% on Jan. 4 The average 15-year fixed mortgage rate fell, going from 5.93% to 5.89%.
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Month
Average 30-Year Fixed Rate
December 2022
6.36%
January 2023
6.27%
February 2023
6.26%
March 2023
6.54%
April 2023
6.34%
May 2023
6.43%
June 2023
6.71%
July 2023
6.84%
August 2023
7.07%
September 2023
7.20%
October 2023
7.62%
November 2023
7.44%
December 2023
6.82%
Source: Freddie Mac
After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 23-year high in 2023. Many experts and industry authorities believe they will follow a downward trajectory into 2024. Whatever happens, interest rates are still below historical averages.
Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.
Just make sure you shop around to find the best lender and lowest rate for your unique situation.
Mortgage rate trends by loan type
Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.
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Which mortgage loan is best?
The best mortgage for you depends on your financial situation and your goals.
For instance, if you want to buy a high-priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $ in most parts of the U.S.
On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.
Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low-down-payment options.
Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less-than-perfect credit history might not disqualify you.
Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA-eligible.
Mortgage rate strategies for January 2024
Mortgage rates displayed their famous volatility in 2023. Uncertainty in the banking sector led to downtrends, but ongoing inflation battles, Fed hikes and a hot job market drove growth.
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At its September and November meetings, the central bank held off on a rate hike, preferring to see if the economy would keep cooling organically. In December, the FOMC skipped a hike and projected cuts for 2024. As always, the committee said it would adjust its policies as necessary — which could mean additional hikes or possibly none at all.
Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.
Be ready to move quickly
Indecision can lead to failure or missed opportunities. That holds true in home buying as well.
Although the housing market is becoming more balanced than the recent past, it still favors sellers. Prospective borrowers should take the lessons learned from the last few years and apply them now even though conditions are less extreme.
“Taking too long to decide to make an offer can lead to paying more for the home at best and at worst to losing out on it entirely. Buyers should get pre-approved (not pre-qualified) for their mortgage, so that the seller has some certainty about the deal closing. And be ready to close quickly — a long escrow period will put you at a disadvantage.
And it’s definitely not a bad idea to work with a real estate agent who has access to “coming soon” properties, which can give a buyer a little bit of a head start competing for the limited number of homes available,” said Rick Sharga.
Buyer demand is lower than a typical year, but the market usually heats up in spring and summer. Being decisive (and prepared) should only play to your advantage.
Shopping around isn’t only for the holidays
Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.
Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.
“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.
As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.
How to shop for interest rates
Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.
The rate lenders actually offer depends on:
Your credit score and credit history
Your personal finances
Your down payment (if buying a home)
Your home equity (if refinancing)
Your loan-to-value ratio (LTV)
Your debt-to-income ratio (DTI)
To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.
You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.
This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.
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Mortgage interest rate FAQ
What are current mortgage rates?
Current mortgage rates are averaging 6.62% for a 30-year fixed-rate loan and 5.89% for a 15-year fixed-rate loan, according to Freddie Mac’s latest weekly rate survey. Your individual rate could be higher or lower than the average depending on your credit score, down payment, and the lender you choose to work with, among other factors.
Will mortgage rates go down next week?
Mortgage rates could decrease next week (Jan. 8-12, 2024) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders account for the Federal Reserve taking measures to counteract inflation or if a global event brings economic uncertainty.
Will mortgage interest rates go down in 2024?
If inflation continues to dissipate and the economy cools or goes into a recession, it’s likely mortgage rates will decrease in 2024. Although, it’s important to remember that interest rates are notoriously volatile and are driven by many factors, so they can rise during any given week.
Will mortgage interest rates go up in 2024?
Mortgage rates may continue to rise in 2024. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022 and 2023. However, if the U.S. does indeed enter a recession, mortgage rates could come down.
What is the lowest mortgage rate right now?
Freddie Mac is now citing average 30-year rates in the 7% range. If you can find a rate in the 5s or 6s, you’re in a very good position. Remember that rates vary a lot by borrower. Those with perfect credit and large down payments may get below-average interest rates, while poor-credit borrowers and those with non-QM loans could see much higher rates. You’ll need to get pre-approved for a mortgage to know your exact rate.
Will there be a housing crash?
For the most part, industry experts do not expect the housing market to crash in 2023. Yes, home prices are over-inflated. But many of the risk factors that led to the 2008 crash are not present in today’s market. Low inventory and massive buyer demand should keep the market propped up next year. Plus, mortgage lending practices are much safer than they used to be. That means there’s not a subprime mortgage crisis waiting in the wings.
What is the lowest mortgage rate ever?
At the time of this writing, the lowest 30-year mortgage rate ever was 2.65%. That’s according to Freddie Mac’s Primary Mortgage Market Survey, the most widely used benchmark for current mortgage interest rates.
Should I lock my rate now or wait?
Locking your rate is a personal decision. You should do what’s right for your situation rather than trying to time the market. If you’re buying a home, the right time to lock a rate is after you’ve secured a purchase agreement and shopped for your best mortgage deal. If you’re refinancing, you should make sure you compare offers from at least three to five lenders before locking a rate. That said, rates are rising. So the sooner you can lock in today’s market, the better.
Is now a good time to refinance?
That depends on your situation. It’s a good time to refinance if your current mortgage rate is above market rates and you could lower your monthly mortgage payment. It might also be good to refinance if you can switch from an adjustable-rate mortgage to a low fixed-rate mortgage; refinance to get rid of FHA mortgage insurance; or switch to a short-term 10- or 15-year mortgage to pay off your loan early.
Is it worth refinancing for 1 percent?
It’s often worth refinancing for 1 percentage point, as this can yield significant savings on your mortgage payments and total interest payments. Just make sure your refinance savings justify your closing costs. You can use a mortgage calculator or speak with a loan officer to crunch the numbers.
How do I shop for mortgage rates?
Start by choosing a list of three to five mortgage lenders that you’re interested in. Look for lenders with low advertised rates, great customer service scores, and recommendations from friends, family, or a real estate agent. Then get pre-approved by those lenders to see what rates and fees they can offer you. Compare your offers (Loan Estimates) to find the best overall deal for the loan type you want.
What are today’s mortgage rates?
Mortgage rates are rising, but borrowers can almost always find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.
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1Today’s mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.
Citigroup recorded the worst quarterly loss in its storied history today, chalking up $18.1 billion in writedowns related to subprime related debt and boosting loan-loss reserves by $4.1 billion.
The New York-based bank and mortgage lender reported a net loss of $9.83 billion, or $1.99 per share for the fourth quarter, bringing net income to just $3.62 billion, or 72 cents per share for the whole of 2007.
During the same period a year ago, the company reported earnings of $5.13 billion, or $1.03 per share.
Citigroup’s revenue fell a whopping 70 percent to $7.22 billion, down from $23.83 billion in the fourth quarter of 2006.
Analysts surveyed by Thomson Financial expected the company to report a loss of $1 a share on revenue of $10.64 billion.
In a bid to raise much needed capital, the Board slashed its quarterly dividend 41 percent to 32 cents from 54 cents and will offer $2 billion in preferred securities.
The bank also said it had gathered $12.5 billion in additional capital from investors and shareholders, including $6.88 billion from the Government of Singapore Investment Corporation (GIC).
As of December 31, 2007, direct subprime exposure was $37.3 billion, including roughly $8 billion of gross lending and structuring exposures and around $29.3 billion of net ABS CDO super senior exposures, down from a total of $54.6 billion the prior quarter.
The company reported that 2.56 percent of its first mortgages were 90+ days delinquent, up from 2.09 percent the previous quarter, while second mortgage delinquencies rose 39 basis points, from 0.99 percent to 1.38 percent.
A hefty 7.83 percent of first mortgages with a Fico score below 620 (subprime mortgage) were similarly delinquent, along with 2.48 percent of second mortgages greater than 90% loan-to-value.
Additionally, the banking giant said it cut 4,200 jobs during the quarter and noted during the conference call that there would be more to come.
Shares of Citi were down $1.83, or 6.31%, to $27.23 in late morning trade on Wall Street, hovering above their 52-week low of $26.50.
JPMorgan Chase said today that fourth-quarter profit fell 34 percent largely due to subprime exposure and higher delinquencies tied to home equity loans.
Fourth-quarter earnings fell to $2.97 billion, or 86 cents a share, compared to $4.53 billion, or $1.26 a share, in the same period a year ago.
Despite falling short of the analyst-anticipated 93 cents a share, revenue climbed to $17.38 billion from $16.19 billion the year prior, beating analyst expectations of $17.05 billion.
For the entire year, net income rose to a record $15.4 billion, or $4.38 a share, on record revenue of $71.4 billion.
JPMorgan upped its provisions for loan losses by $2.54 billion during the quarter, and wrote down $1.3 billion on subprime positions, including subprime CDO’s.
The company saw an increase of $395 million for losses tied to home equity loans and an $124 million increase for subprime mortgage loan losses.
Home equity net charge-offs were $248 million (1.05% net charge-off rate), compared to $51 million (0.24% net charge-off rate) a year ago.
Subprime mortgage net charge-offs were $71 million (2.08% net charge-off rate), compared to $17 million (0.65% net charge-off rate) a year ago.
Total mortgage loan originations were $40 billion in the fourth quarter, up two percent from the third quarter and 34 percent from the prior year, while total third-party mortgage loans serviced increased 17% from the prior year to $614.7 billion.
In regard to a possible acquisition, Dimon seemed to hint that a purchase could be on the horizon.
“I think in terms of either buying assets or buying companies, we’re very open minded and we figure we can do the right kind of due diligence and understand the values and that we’re giving the value that we’re getting, we would be very happy to do it,” Dimon said during the conference call. “This environment doesn’t change that at all. It just may make it more likely.”
Shares of Chase rose $2.88, or 7.35%, to $42.05 in afternoon trading on Wall Street.
Attorney General Marc Dann filed a lawsuit on behalf of the Ohio Public Employees Retirement System (OPERS) and common shareholders against mortgage financier Freddie Mac for the company’s investment in securities backed by subprime mortgage loans.
The suit, which was filed in a federal court in Youngtown, Ohio, alleges that Freddie and its top executives “secretly and intentionally participated in one of the largest housing investment deceptions in modern U.S. economic times.”
Specifically, it says the government-sponsored entity intentionally hid the fact that it had invested billion of dollars in subprime-based securities, failed to establish checks and balance to manage the risk, and failed to disclose its inability to determine its exposure to the harmful securities.
And claims its officers artificially inflated the company’s stock price through false public financial statements and other public misstatements.
“I would like to commend the trustees and staff at OPERS for supporting my effort to hold Freddie Mac accountable for the role the company and its top executives played in bilking investors and fueling the foreclosure crisis that is destroying neighborhoods across our state and the entire nation,” Dann said in a statement.
“By authorizing me to bring this suit on their behalf they are protecting the interests of the pension plan, the workers and retirees who depend upon it, and the taxpayers whose hard-earned dollars fund it. And they are also sending a loud and clear message to Wall Street that this type of fraud and manipulation will not be tolerated by the people who live on the Main Streets that are being devastated by what Freddie Mac has done.”
OPERS stands to lose as much as $27.2 million as a result of the alleged fraud, according to the Attorney General.
The news isn’t all that surprising, as Dann mentioned two weeks ago that he was considering a state lawsuit against investment banks and other entities for their involvement in the mortgage crisis, felt particularly hard in Ohio where foreclosures have soared.
In a previous case, the Ohio pension fund won a $410 million settlement in which it was the lead plaintiff against Freddie Mac.
Shares of Freddie Mac rose $3.84, or 13.39%, to $32.52, but remain more than 50% lower than their 52-week high of $68.12.