Yael Shanee's Blog

July 6, 2012 -- Given the increasingly bleak economic data, no one should be very surprised that mortgage and other interest rates are finding some additional space to fall, even if that fall is measured in only hundredths of a percentage point.

With each report, it becomes clearer that the US economy is close to stall speed, and that the slowdown in the economies of our trading partners is having a considerable effect. Several central banks took action this week to lower interest rates, which may ultimately help, but there is little immediate benefit to be seen.

HSH.com's broad-market mortgage tracker -- our weekly Fixed-Rate Mortgage Indicator (FRMI) -- found that the overall average rate for 30-year fixed-rate mortgages declined by two basis points (.02%), easing to a new record low of 3.96%. The FRMI's 15-year companion also managed a decline of two basis points, landing at 3.25%, just a lone basis point above a record low. Important to homebuyers and low-equity-stake refinancers, already-low FHA-backed 30-year mortgages shed eight basis points to slide to an incredible 3.58%, while the overall average rate for 5/1 Hybrid ARMs finished at 2.88%, a decline of a just 0.01% but enough to set a new low.

HSH National Interest Rate BenchmarkFor Week Ending 07/06/2012   This Week Month Ago Year Ago Loan Types
(click for graph)Average
Combined RateAverage
PointsAverage
Combined RateAverage
PointsAverage
Combined RateAverage
Points 30 Yr FRM 3.96% 0.29 3.99% 0.29 4.77% 0.30 15 Yr FRM 3.25% 0.25 3.27% 0.24 4.00% 0.29 1/1 Yr ARM 3.06% 0.14 3.17% 0.15 3.50% 0.27 3/1 Yr ARM 3.06% 0.11 3.07% 0.09 3.26% 0.18 5/1 Yr ARM 2.88% 0.28 2.90% 0.25 3.39% 0.26 7/1 Yr ARM 3.13% 0.30 3.16% 0.32 3.79% 0.30 10/1 Yr ARM 3.53% 0.30 3.54% 0.36 4.31% 0.31 For information on obtaining conforming and jumbo averages, click here

The days of waiting sixty or ninety days for loan approval just might be over. A new type of cooperative short sale program is gaining momentum in the financial industry. While the bank determines the property value and list price, homeowners will be evaluated for the short sale and approved prior to offering the home for sale.

Once placed on the market, the short sale programs take over. With a guaranteed response time of 10 days, the cooperative short sale option is an enticing program overall. Depending on the quality of the offer, buyers would forgo the typical two to three month approval process associated with home sales.  Completing the underlying approval process prior to listing the property for sale maximizes these results. 

 With the US Treasury and FHA implementing varied short sale programs, more and more financial institutions are apt to follow suit.

LENDERS FOCUS ON SHORT SALES

 The new proactive short sale approach encourages cooperation between the homeowner, realtor, and servicer. To avoid adding to the already flooded list of bank-owned properties, financial institutions are embracing the new short sale programs.

Borrowers are falling out of escrow at an alarming rate, due to lack of qualifying, and the short sale was designed to limit such occurrences. When the servicer sets a value for a short sale, the borrower and realtor then search for a qualified buyer, eliminating the wasted time and effort spent on the pre-approval process.

Short sale properties move quickly, lessening the chance of foreclosures. Lenders have taken notice and shifted their focus because of the benefits of short sales.