Mortgages

A popular government program enabling underwater borrowers who are current on their mortgages to refinance at lower rates will be extended for two more years.  The Obama administration's Home Affordable Refinance Program had been scheduled to expire at the end of this year. HARP now will run through 2015, regulators announced Thursday . More than 2.2 million borrowers with little or no home equity have refinanced using the 4-year-old HARP, and consumer advocates and lenders welcomed the news of the extension.

WASHINGTON - The refinancing boom may be cooling down, but the move to shorter mortgages - especially 10-year loans among pre-retirees - appears to be accelerating. Some community banks say 10-year mortgages, once an insignificant niche option, are accounting for increasingly large chunks of their business. For example, Rockville Bank in South Windsor, Conn., reports that 10-year loans represented a surprising one-fifth of its total residential mortgage originations in dollar terms last year.

Michele and Russell Poland's credit was shot, but they managed to buy their suburban dream home anyway. After a business bankruptcy and a home foreclosure, they turned to a rare option in this era of tightfisted banking - a subprime loan. The Polands paid nearly $10,000 in upfront fees for the privilege of securing a mortgage at 10.9% interest. And they had to raid their retirement account for a 35% down payment. Most borrowers would balk at such stiff terms. But with prices rising, the Polands wanted to snag a four-bedroom home in Temecula near top-rated schools for their 5-year-old son. By later this year, they figure, they'll be able to refinance into a standard loan.

WEESP, Netherlands - The Dutch dream isn't that different from the American one. Nor is the nightmare that many people have woken up to. Hundreds of thousands of residents rushed to buy homes in the Netherlands as property values rocketed in the 1990s and 2000s. Encouraged by American-style tax breaks and by banks eager to shower money on them, borrowers took out huge mortgages, sometimes larger than the value of their homes. The global financial meltdown killed the flow of cheap credit.

The average rate on a 30-year fixed mortgage hit another new low this week, dropping to 3.53% from 3.56% last week, according to Freddie Mac's survey of what lenders are offering to well-qualified borrowers. With the Federal Reserve aggressively pushing rates down and few signs of inflation on the horizon, it was 12th time in 13 weeks that a new record was set, Freddie Mac economist Frank Nothaft said in the report Thursday morning. Freddie Mac said the 15-year fixed loan, which has been a popular part of the recent boom in refinancings, averaged 2.83%, down from 2.86% and also a new record.

The Obama administration's Home Affordable Refinance Program is at last helping legions of American homeowners with upside-down mortgages. Nearly 1.1 million homeowners with little or no equity were able to refinance last year under HARP, which assists borrowers who are current on their monthly payments. That's nearly as many as in the three previous years combined, and the latest figures show that early this year, the pace of these refis abated only slightly. The program has become a success story after a stumbling start with slack lender participation.

WASHINGTON - The refinancing boom may be cooling down, but the move to shorter mortgages - especially 10-year loans among pre-retirees - appears to be accelerating. Some community banks say 10-year mortgages, once an insignificant niche option, are accounting for increasingly large chunks of their business. For example, Rockville Bank in South Windsor, Conn., reports that 10-year loans represented a surprising one-fifth of its total residential mortgage originations in dollar terms last year.

In a push to simplify mortgage modifications, federal regulators announced a streamlined process that doesn't require borrowers to prove a hardship. "This new option gives delinquent borrowers another path to avoid foreclosure," Edward J. DeMarco, acting director of the Federal Housing Finance Agency, said in a statement announcing the modifications Wednesday. The new modifications, however, would not include reducing the loan balance, a move promoted by housing advocates and others but resisted by DeMarco, who says it would end up costing taxpayers money and would encourage defaults.

Bank of America Corp., which handles customer service on about 15% of U.S. home loans, has accounted for 30% of the mortgage complaints logged by the Consumer Financial Protection Bureau, according to a new database made public by the federal watchdog. The level of customer discontent - far greater than at home-lending rivals Wells Fargo & Co. and JPMorgan Chase & Co. - reflects BofA's struggles since its 2008 acquisition of Countrywide Financial Corp. in Calabasas. Countrywide had become the No. 1 mortgage firm by specializing in subprime and other high-risk loans.

Rates on 30-year fixed-rate mortgages averaged 6.13% this week, up from 6.03% last week, according to Freddie Mac, the government-backed mortgage finance company. Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing, rose to 5.60% from 5.47% last week. For five-year adjustable-rate mortgages, rates rose to 5.58% from 5.34%. One-year adjustable-rate mortgages averaged 5.14%, up from 4.94% last week. These rates do not include add-on fees known as points. For 30-year and 15-year mortgages, the nationwide average fee was 0.5 point, while five-year mortgages carried a 0.6-point average fee and one-year mortgages had a 0.7-point average.

Builders are eyeing the next wave of potential home buyers - the so-called millennials - but whether this rising generation will embrace big mortgage debt remains an open question. These 95 million people ages 10 to 32 outnumber their baby-boomer parents by 10 million. The young adults among them, sobered by the recession, have relatively modest material expectations; many say they'd be happy with smaller living spaces. The housing industry will have to convince the next generation that home loans are as necessary and prudent as the student debt so many of them already carry.

WASHINGTON - Pressured by consumer protection regulators, the Federal Housing Administration is expected to end one of its most controversial practices: charging borrowers interest on their home mortgages for weeks after they've paid off the entire principal balance. FHA officials declined to discuss the agency's long-standing policy of collecting a full month's worth of interest - hundreds of dollars extra in many cases - even when borrowers terminate their loans earlier. For instance, if you pay off your FHA loan July 3 to buy a new house with a conventional mortgage, the FHA will demand interest charges on your mortgage through July 31, collecting it out of the settlement proceeds.

Mortgage rates have risen half a percentage point since setting record lows last fall, and many economists expect them to continue rising for the foreseeable future. The increase, a reaction to the improving economy and housing markets, could fuel already hot housing markets as potential home buyers look to seal a deal before rates rise any further. "I think rates will drift slowly higher," said economist Christopher Thornberg, head of the West L.A. consulting firm Beacon Economics.

Federal regulators have eased the definition of a qualified mortgage - a presumably safe and affordable home loan - to enable small banks and credit unions to help more marginal borrowers. The changes, announced this week, help fine-tune Consumer Financial Protection Bureau regulations proposed in January to crack down on loose lending. Community lenders generally welcomed the revisions, although one credit union leader said it would still overly restrict lending. At the heart of the new rules was spelling out what constitutes a qualified mortgage - one that shields lenders from lawsuits by borrowers claiming they were stuck with unaffordable loans.

Even as federal regulators recently cracked down on loose mortgage lending, they hoped that credit unions and community banks would serve as a haven for marginal borrowers. Such neighborhood institutions know their customers, the theory goes, so they could better judge the risk in lending outside new rules for a so-called qualified mortgage. But smaller lenders are pushing back, saying they'll just scale back their mortgage business instead. They fear that lending at the margins will make them targets for bank regulators and plaintiffs' attorneys in cases of default.

WASHINGTON - Here's a heads-up for the growing ranks of seniors whose post-retirement monthly incomes aren't sufficient to qualify for a mortgage under today's tough underwriting standards: Thanks to a rule change by the largest players in the home loan business, you may be able to use imputed income from your 401(k), IRA and other retirement assets to qualify for the loan you want. That, in turn, could open the door to a money-saving refinancing to a lower-rate loan or a downsizing purchase of a new house or condo.

Rates on 30-year fixed-rate mortgages averaged 6.04% this week, down from 6.46% last week and the lowest since the week of Sept. 18. Rates on 15-year fixed-rate mortgages, popular with people who are refinancing, fell to 5.72% from 6.14%. Five-year adjustable-rate mortgages fell to 6.06% from 6.14%. One-year adjustable-rate mortgages rose to 5.23% from 5.16%. These rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year and five-year mortgages averaged 0.6 point.

Bank of America Corp. and JPMorgan Chase & Co. say they have satisfied their obligations to help troubled borrowers under last year's landmark mortgage settlement with state and federal officials. Another bank that signed the settlement, Wells Fargo & Co. said it is "90% of the way" to meeting its obligations, while Citigroup Inc. said it "remains committed to fulfilling the terms" while declining to characterize its progress. The self-reported information will not be credited officially until Joseph J. Smith Jr., the national monitor for the settlement, reviews the data.

WASHINGTON - Are large numbers of homeowners who have negotiated short sales with lenders at risk because of a startling omission in the American credit system? Do their credit reports and scores indicate that they were foreclosed upon, rather than having negotiated a mutually agreeable resolution with their lender? The answer appears to be yes, and recently two federal agencies - the Federal Trade Commission and the Consumer Financial Protection Bureau - were asked to investigate why. The reality is this: The credit reporting system now in place does not have a separate code that distinguishes a short sale from a foreclosure.