The phrase, "Historically Low" has been thrown around quite a bit in the past year in regards to mortgage rates.  I was curious to see a concrete history of mortgage rates.  Thankfully, we have the Internet to guide us with such queries.  Below is a chart showing just how 'Historically Low" the current rates are since 1983.

The figures I used are yearly averages, based on a 30 year conventional rate with zero points.

It's Tuesday again which means it's time to see what qualifies as a deficient condition in regards to items that stem from a home inspection.  often the back breaker for many deals, the items negotiated from the inspection must qualify as deficient (explained here) and not just home maintenance or upgrades.

Being handy is great.  I wouldn't know, but my handy friends tell me it is.  This repair to the hot water heater seems simple enough.  The homeowner installed PVC replacement piping with more than enough bonding material.  The problem is that the PVC piping is touching the vent pipe which gets awfully hot, so this section of pipe will not have a very long life span.

Rather than going back to the home improvement store and buying another $1.75 worth of pipe to make an elbow, Bob Villa just slid a piece of cardboard in between the flue and PVC.

Breaking news! Cardboard is flammable too.  The fix would be to call a licensed plumber and have the piping redone (perhaps in copper) and promise to never ever pick up a tool belt again.

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More Funds to Go To Homeowners in Trouble

This is either a tremendous insulation / winterizing fail or the most clever use of Cheez Whiz in a can EVER.

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Real Estate Insight Airs Every Sunday Morning at 10:00 on Talk Radio 920 WHJJ

Comparing the effectiveness of the Homebuyer Tax Credit to Cash for Clunkers.

1st Step in the Home Buying Process from Tom Flanagan on Vimeo.

The FBI, Justice Department, Secret Service and Postal Service will get a combined half a billion dollars to investigate and prosecute those who engage in mortgage fraud.  President Obama signed the legislation May 20.  Important to remember; Rhode Island leads the nation in mortgage fraud.

The targets range from people who lie about their incomes on home mortgage applications to highly organized roving networks of “foreclosure relief” scammers who bilk money out of homeowners seeking mortgage modifications.  More on these gems of humanity in future posts.

Known as the Fraud Enforcement and Recovery Act of 2009, the legislation will fund new SWAT teams of fraud-busters and broaden federal legal powers to go after individuals and mortgage operations that currently get attention — if at all — only at the state or local levels.

The law also creates a Financial Crisis Inquiry Commission with broad powers to investigate who and what got us into the real estate mess, starting with the subprime boom, Wall Street hanky- panky and more recent bank failures.
How bad is mortgage fraud? The Treasury Department estimates it causes losses to consumers and the mortgage industry of anywhere from $15 billion to $25 billion a year. FBI Director Robert S. Mueller III told Congress his agency’s mortgage fraud caseload has tripled in the last three years.

Reports of potential fraud filed with the Financial Crimes Enforcement Network exceeded 65,000 in 2008 — up from about 25,000 in 2005 and just 5,400 in 2002. Officials say the recession and the end of the housing boom have actually stimulated more fraud rather than the reverse.

What do these frauds look like and where are they occurring? The Mortgage Asset Research Institute performs an annual study of the problem for the Mortgage Bankers Assn., and its 2009 report found:

* Roughly two-thirds of all frauds involve deceptions at the application stage. For example, some borrowers tell the lender they plan to occupy and use the property as their main residence, but they really plan to turn it into a rental unit. That ruse often gets the applicant a lower rate on the loan, but it’s a violation of federal law.

* About 28% of frauds last year involved deliberate misinformation about tax returns or financial statements. Fake IRS filings can be created with readily available software programs, and documentation of financial assets can be manipulated as well. Around 21% of fraudulent applications contained faked deposit verifications last year.

* Appraisal shenanigans rank high as well and were involved in about 22% of fraud cases in 2008. Appraisal fraud — typically inflated valuations intended to squeeze more mortgage money out of the lender — may well be more commonplace than the official statistics. That’s because many overvaluations are modest enough to avoid detection, but large enough to get the loan closed, thereby increasing subsequent risk of loss to the lender.

* Other widespread forms of home loan fraud include faked employment verifications, misinformation on closing or escrow documents, and credit reports or scores that have been manipulated in some way to get unqualified borrowers approved, or lower interest rates, or both.

The new housing rescue bill signed Wednesday takes aim to bolster Fannie Mae and Freddie Mac.  In a late additon to the bill, the law allows authority for the Treasury to lend a financial hand to Fannie Mae and Freddie Mac if it deems it necessary to help stabilize markets.

The law includes provisions that let Treasury offer Fannie and Freddie an unlimited line of credit and buy stock in the companies. The provisions expire in 18 months.

The riskier loans (enter any synonym for sub-prime here) went to Wall Street for investors.  And here’s where it hit the fan.  Take a company like Countrywide who’se modus operandi was sell a loan at any cost with no regard for the client. (watch video here)  Well, investors were well fed right up until many of the loans turned sour and they became less than a great investment – ask Bear Stearns how that worked out, and the money dried up.

So, if the sub-prime as we knew it is gonzo and Fannie and Freddie can’t write the prime loans…that doesn’t leave many mortgage options for most Americans.  And if we think this current little “hiccup” has torched the economy, wait until that happens.

So, no, the Treasury will never let Fannie & Freddie fall, hence the unlimited lines of credit, etc.