Refinance Applications Increase

Refinance Applications Increase

Mortgage applications increased 4.1 percent from one week
earlier, according to data from the Mortgage Bankers
Association’s Weekly Mortgage Applications Survey for the week
ending August 12, 2011.  The Market Composite Index, a measure of
mortgage loan application volume, increased 4.1 percent on a
seasonally adjusted basis from one week earlier. On an unadjusted
basis, the Index increased 3.6 percent compared with the previous
week and was 13.5 percent lower than a year ago. The Refinance
Index increased 8.0 percent from the previous week, but was 16.3
percent lower than the same week last year. The seasonally
adjusted Purchase Index decreased 9.1 percent from one week
earlier. The unadjusted Purchase Index decreased 10.1 percent
compared with the previous week and was 1.1 percent lower than
the same week one year ago.

“Unprecedented volatility in the stock market last week amid
additional signs that the economy has slowed led to further drops
in mortgage rates, with the 15-year rate reaching a new low for
the MBA survey,” said Mike Fratantoni, MBA’s Vice President
of Research and Economics.  Fratantoni continued, “The big
differences in refinance volumes were likely driven by the
decisions of some lenders not to drop rates last week, largely
due to the need to manage their pipelines.” The four week
moving average for the seasonally adjusted Market Index is up 6.9
percent. The four week moving average is down 2.2 percent for the
seasonally adjusted Purchase Index, while this average is up 10.1
percent for the Refinance Index.  The adjustable-rate mortgage
(ARM) share of activity decreased to 5.8 percent from 6.1 percent
of total applications from the previous week. The average
contract interest rate for 30-year fixed-rate mortgages decreased
to 4.32 percent from 4.37 percent. The 30-year fixed contract
rate has decreased for three straight weeks and is at a new low
for this year.

US Recession Is Guaranteed: Expert

As the debate rages on about whether the U.S. economy is headed
for a douple-dip, one expert says another recession is all but
guaranteed, and there's nothing that can be done to prevent it.
Paul Gambles, Managing Director of financial advisory and asset
management firm MBMG Group said the bond market, which is the
most reliable indicator, has been pointing to a slowdown since at
least April or May. According to Gambles, the deleveraging
process facing the U.S. is so severe that a recession is
inevitable. "If you've got a $14.5 trillion debt burden, it's
going to be a pretty severe recession," he said. "Recession is
usually linked to the size of the debt (a country) has to clear
up." In fact, Gambles believes the U.S. economy has been in
trouble far longer than most people appreciate and has been
merely using debt to prop up growth. Gambles believes that the
party might end soon because a recession would hurt the
government's ability to raise revenues.

BofA weighs foreclosure deal

Bank of America Corp may settle a state and federal probe of
foreclosure practices in a deal that lets New York proceed with
an inquiry into securitizations.  According to Bloomberg, the
firm may pursue an accord with most of the 50 state attorneys
general, even if it omits New York's attorney general Eric
Schneiderman, said one of the people. BofA did not immediately
respond to an email seeking comment outside regular U.S. business
hours.  In late June, BofA agreed to an $8.5 billion deal to
settle an eight-month dispute with outside investors who bought
Countrywide Financial Corp mortgage bonds. The deal, which must
be approved by a New York court, applies to all investors in
nearly all Countrywide Financial-created mortgage bonds. The
investors -- including Pacific Investment Management Co, or
PIMCO, and BlackRock Inc -- requested the bank repurchase toxic
home loans that comprised a series of mortgage-backed securities.
Negotiations with regulators and the five largest mortgage
servicers including Bank of America, JPMorgan Chase & Co,
Citigroup Inc, Wells Fargo & Co and Ally Financial Inc have been
bogged down over details of the proposed deal, according to
people who have knowledge of the talks.

Diana Olick: Home Builders Face New Hurdles

Builders are on track to construct the fewest single family homes
in history this year. Total housing starts in July were down 1.7
percent, month to month, which may not sound like a lot, but when
you break the number down, you see the problem. Single family
starts were down 4.9 percent, while Multi-family starts rose 6.3
percent. Rental demand continues to rise, as consumer confidence
in homeownership was decimated yet again by the recent debt
turmoil in the economy. I am reporting these numbers today from a
construction site. Mid-Atlantic Builders of Rockville, MD is
putting up the last phase of a large single family development
out in Bowie, MD, which is about 15 minutes outside the DC
Beltway. According to executive VP Stephen Paul, "We started what
we call the spring market in February. We started out very
strong, we had a good February, March, even into April. What
started to cause consumer confidence to wane was the escalation
of gas prices, the debt issue with the government, and what's
going on in Europe."  In other words: Confidence. "We see people
not sure what to do at this moment and a little unsure," adds
Paul, though he is confident that things will pick up this Fall,
but housing analysts aren't so sure.  "The market is continuing
to adjust to a reduction in the national home ownership rate at
the same time the supply of existing single family homes remain
excessive," writes Peter Boockvar at Miller Tabak. Builder
Stephen Paul told me of a new trend I'd heard of only
anecdotally: We're seeing more multi-generational families moving
into our homes, so we're selling in-law suites, with the regular
part of the house, and the parents are moving in and actually
helping pay, funding the mortgage, so that's helping with the
affordability." That's precisely why we are seeing a drop in
household formation. Add that to the surge in renting and it's
pretty clear why the nation's home builders are in for a long
haul back to recovery.

Low Rate Pledge 'Inappropriate': Fed's Plosser

The Fed last week pledged to keep rates low for at least two more
years and said it would consider further steps to help growth. In
response to this announcement, Philadelphia Federal Reserve
President Charles Plosser said he disagreed with the Fed's
decision to promise to keep interest rates low for another two
years because policy should be dictated by the economy rather
than a timeline. "It was inappropriate policy at an inappropriate
time," Plosser told Bloomberg Radio.  "Policy shouldn't be
dependent on the calendar, it should be dependent on the
economy," he later added.  Plosser was among three dissenters
against the Fed's decision who wanted to avoid any specific time
reference on the low-rates pledge.

DSNews.com - Past-Due Mortgages Climb Above 6.5 Million

According to a report from Lender Processing Services, the number
of mortgages that are delinquent or in foreclosure is at
6,538,000. The company’s assessment is based on mortgage
performance statistics derived from its loan-level database of
nearly 40 million mortgage loans through the end of July. LPS
says the national delinquency rate — loans that are at least 30
days past due but not yet in foreclosure – rose to 8.34 percent
as of the end of July. That’s up 2.4 percent from June but down
10.4 percent from July 2010. According to the company’s latest
report, 4.11 percent of the nation’s outstanding mortgages were
part of the foreclosure inventory at July month-end.  The
foreclosure inventory rate – which LPS calculates as loans that
have been referred to an attorney but have not yet reached the
final stage of foreclosure sale – increased 0.4 percent from
June, and is up 9.7 percent from a year earlier. Of the 6,538,000
mortgages going unpaid in July, LPS says 2,156,000 were in the
process of foreclosure.  The remaining 4,382,000 were 30 or more
days past due but the lender had not yet initiated foreclosures.
Of these, 1,899,000 were 90-plus days delinquent