Following the Fed's and Treasury's purchase of mortgage-backed securities and Treasury notes, mortgage rates dropped significantly after the financial crisis began and have remained at record-low levels. This has been good news for buyers, who have been packing up and moving into homes after obtaining favorable financing.
The low interest rates have also been a boon for homeowners who have been able to refinance a mortgage. Since 2009, about 40 percent of all Prime RMBS borrowers have been able to refinance their mortgages to pay a lower rate loan, but an increasingly majority of borrowers have outstanding adjustable rate mortgages because of negative equity.
The government recently announced plans to enhance the Home Affordable Modification Program by making the guidelines more lenient to qualify more borrowers and increase incentives to lien holders to reduce the principal on borrower's loans that are considered underwater.
According to the Foreclosure Report from CoreLogic, the number of loans in the foreclosure industry decreased 8.4 percent in December 2011 when compared with December 2010.
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