MetLife Inc., the nation’s largest life insurer, is reportedly looking for a buyer for its mortgage business, MetLife Bank.

The company said in a statement that one of the main reasons it wants to exit the mortgage business is because of the increased regulatory environment in lending, which could “divert resources away from MetLife’s primary focus on its global insurance and employee benefits businesses.”

However, MetLife says it plans to continue to operate its reverse-mortgage business, which issues home equity-backed loans to home owners aged 62 or older. It will also continue to originate mortgages and service existing mortgages until a buyer is found.

In the first quarter of 2011, MetLife Bank issued about $4.4 billion in residential home loans. In 2010, it ranked as the 11th largest mortgage servicer in the country.

Source: “MetLife May Sell Mortgage Business to Focus on Insurance,” Bloomberg (Oct. 12, 2011) and “MetLife to Sell Mortgage Business, Citing Excessive Regulation,” HousingWire (Oct. 13, 2011)

For the first time ever, 30-year fixed-rate mortgages fell below 4 percent, Freddie Mac reported in its weekly mortgage market survey.

In the last month mortgage rates have continued to set new weekly record lows, but the 30-year mortgages’ latest drop below 4 percent may be an important threshold for potential buyers. The 30-year mortgage is the most popular financing option of buyers.

Mortgage rates are expected to stay well-below 5 percent through 2013, Fannie Mae economists are projecting. Home buyers taking out loans for purchase is expected to more than double in the next two years too, Inman News reports.

Rates have continued to free-fall as concerns over a global recession grows, Frank Nothaft, Freddie Mac’s chief economist, said in a statement.

Here’s a closer look at rates for the week ending Oct. 6.

• 30-year fixed-rate mortgages: averaged 3.94 percent this week, down from last week’s previous record low of 4.01 percent. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.27 percent.
• 15-year fixed-rate mortgages: averaged 3.26 percent, another all-time low. This is the sixth-consecutive week the 15-year mortgage has posted new average record lows. Last week, 15-year rates averaged 3.28 percent. Last year at this time, 15-year rates averaged 3.72 percent.
• 5-year adjustable-rate mortgages: averaged 2.96 percent this week, dropping from last week’s 3.02 percent. A year ago, the 5-year ARM averaged 3.47 percent.
• 1-year ARMs: averaged 2.95 percent, the only mortgage rate to move up last week. Last week, the 1-year ARM averaged 2.83 percent. A year ago, the 1-year ARM averaged 3.40 percent.

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Starting Saturday, many borrowers in pricey housing markets may find they’ll need a higher down payment or pay higher rates. The size of mortgages that the government will back in several high-priced regions is set to drop on Oct. 1, which some analysts expect will serve as another thorn to the housing market.

In 2008, Fannie Mae and Freddie Mac raised its cap on conforming loans up to $729,750 in some of the most expensive housing markets so that larger mortgages would be available to home buyers. But those caps are set to reset on Oct. 1, scaling back to a maximum of $625,500 in some areas of the country.

Housing analysts say the drop will make it more expensive and harder for some buyers to qualify for home purchases in expensive markets, particularly along the coasts.

“The down-payment issue is the most significant aspect form borrowers standpoint,” says Greg McBride, a senior financial analyst at Bankrate.com. “These changes will price some prospective borrowers out of the market.”

Source: “Big Borrowers Face Larger Down-Payments, Rates,” MarketWatch (Sept. 30, 2011) and “Big Mortgages: Harder to Get and More Expensive With Loan Caps,” CNNMoney (Sept. 30, 2011)

More military service members who are underwater on their homes may now be able to take part in the Home Affordable Foreclosure Alternatives program, allowing them to qualify for short sales and deeds-in-lieu of foreclosure.

The Treasury Department on Thursday clarified its guidelines for HAFA, after many military families had complained that the program failed to consider a permanent change of station as a financial hardship. The omission was preventing many from taking part in the program. Many military members who were underwater on their homes say they were current on their mortgage until receiving orders to move.

"An example of such hardship includes a service member citing a 'Permanent Change of Station' order as the basis for his or her financial hardship when requesting HAFA even if such service member’s income has not been decreased, so long as the service member does not have sufficient liquid assets to make his or her monthly mortgage payments," the Treasury said in a directive sent to mortgage servicers Thursday.

Source: “Treasury Moves to Help More Military Qualify for HAFA,” HousingWire (Sept. 29, 2011)

Short sale transactions are becoming less popular among first-time home buyers. Buying a home in a short sale transaction may offer a huge bargain—sale prices average 27 percent lower than non-distressed properties—but more first-time home buyers say the processing delays aren’t worth the trouble.

Among first-time buyers, their short sale purchase share dropped to 39.7 percent of all short sale transactions in August—posting a three-month drop and reaching its lowest share ever recorded for first-time home buyers, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. In November 2009, first-time home buyers’ share of short sales had reached a peak of 54.1 percent of all short sale transactions.

With bargain deals, why are short sales losing their appeal? Buyers are complaining that short sale transactions take too long to close, with approval times often taking several months after a buyer even submits an offers. Some buyers frustrated at the delays are placing offers on multiple properties, planning to close on whichever one is approved the fastest. The average time on market for short sales is 16.6 weeks, and the majority of that time is spent waiting for short sale approval, the HousingPulse Tracking Survey found.

Source: “First-Time Buyers Losing Interest in Short Sales,” RISMedia (Sept. 26, 2011)

“It’s appealing to people who are concerned about energy costs in the future and the longer-term efficiency of the home,” says John K. McIlwain, senior resident fellow for the Urban Land Institute. “There’s also the advantage that if you buy a home today, that has energy features that will be worth more down the road, when the market recovers.”

New homes also are maximizing usability space and offering modern amenities, such as big closets, that can be a lure to buyers.

Buying new “has become a deep part of American culture,” McIlwain said. “We built an economy around having to replace everything every two to three years.”

However, new-homes have become a tough sell. The median sales price of a new home in July was $222,000. On the other hand, the median sales price of an existing home in July was $171,200, according to the National Association of REALTORS®.

Besides price, appraisals are also a big issue hurting the new-home market. In many cases, appraisals are coming in lower than the cost of construction. Appraisals may come in low particularly when there aren’t very many new homes selling in an area, which then means appraisers must look at similar sales in the area. Low appraisals are causing many deals to fall apart, experts say.

Source: “Why Would You Buy a New Home?” MarketWatch (Sept. 26, 2011)

Lack of a down payment proved to be the biggest obstacle for young adults (18-34 year olds), as 62 percent cite it as the reason they have been unable to buy a home. Among those aged 35-54, the bigger concern was qualifying for a loan and having a poor credit history, the survey found.

“From saving enough for a down payment to qualifying for a mortgage and having a poor credit history, today’s aspiring home owners face many financial obstacles in order achieve their American Dream of home ownership,” says Jed Kolko, Trulia’s chief economist. “These obstacles keep some would-be home owners from taking advantage of low mortgage rates. On the other hand, they prevent some people from buying homes they can’t really afford. Government home ownership policies can target some of these obstacles to home ownership, but only stronger economic recovery will help households facing multiple obstacles become better able to buy homes.”

Home Ownership Still Ranks High

Despite the sluggish real estate market, Americans aren’t turned off to home ownership. In fact, 70 percent of Americans say home ownership is part of achieving the American Dream, according to Trulia’s survey. Fifty-seven percent of current home owners say owning a home is among the best long-term investments they could make, and 80 percent of home owners said they plan to buy another home in the future.

By REALTOR® Magazine Daily News

The weak U.S. economy will likely dampen the housing market until 2015, according to a new survey of economists, analysts, and real estate professionals.

Home prices are expected to grow only slightly at 1.1 percent annually through 2015, the survey by MacroMarkets LLC and Pulsenomics notes. Yet, some local markets may see — or already are seeing — larger home price growth.

The report also notes that home price expectations for 2011 are not as dismal as once forecasted. Home prices haven’t fallen anywhere near the pace of 2008. Still, "average projection is somewhat more negative for each of the following four years," according to the report. More home owners continue to be underwater on their mortgage and foreclosures continue to grow.

Meanwhile, lawmakers are trying to come up with ways to stimulate the housing market, including urging banks to write down loan balances for borrowers seriously underwater or loosening standards to allow more home owners to refinance at current low mortgage rates. Recovery would also involve working with federal regulators on ways to rent out or clear the high inventory of foreclosed homes plaguing many markets.

Source: “Home Forecast Calls for Pain,” The Wall Street Journal (Sept. 21, 2011) and “Five More Years of Housing Problems, With Some Stability in Local Markets,” HousingWire (Sept. 21, 2011)

With home prices falling, buyers are looking for a neighborhood that has a greater likelihood of holding its value over the long term. But how do you know what neighborhood is doomed and which will appreciate over time?

A recent article at Bankrate.com says judging a neighborhood’s worth over the long haul comes down to two main factors: Jobs and access to amenities.

For example, Andrew Schiller, creator of NeighborhoodScout.com, says signs of long-term opportunities for jobs in an area would be low unemployment, high household income, large or prominent colleges and universities, and seats of federal or state government. He says the Bureau of Labor Statistics is a good resource, particularly its Local Area Unemployment Statistics map, which provides unemployment information by metro area and county, as well as its Current Employment Statistics, which tells you how many people are employed in different sectors of the economy in a certain area.

As for judging a neighborhood's amenities that can generate long-term value, Schiller cites characteristics like a neighborhood that offers a variety of nearby retail stores, low crime rates, parks, distinctive architecture, and good public schools.

Source: “How a Neighborhood Holds Property Value,” Bankrate.com (September 2011)

In overhauling Fannie Mae and Freddie Mac, the government may require more private mortgage insurance from borrowers and charge lenders higher fees to guarantee loans--moves that could increase borrowing costs, Edward DeMarco, acting director of the Federal Housing Finance Agency, said this week at a mortgage conference in Raleigh, N.C.

Such steps are aimed at making the mortgage market more competitive and trim costs to the federal government by $28 billion over 10 years.

The government-sponsored enterprises buy loans from lenders and package them into securities that are then sold to investors. The GSEs charge a “guarantee fee” when they buy mortgages, a fee likely to be raised in 2012.

The increase could lead to a modest increase to mortgage borrowers. “Increasing the guarantee fees by 0.1 percentage point, as the White House proposed, would raise the monthly cost of a $220,000 mortgage by about $15,” The Wall Street Journal article notes.

Fannie and Freddie may also require borrowers to hold more private mortgage insurance to lessen the risks on taxpayers. The federal government took over the GSEs in 2008.

Any changes would be made “gradually” to avoid harming the already fragile housing market, DeMarco said.

Source: “Fannie, Freddie to Raise Fees,” The Wall Street Journal (Sept. 19, 2011) and “Mortgage Finance Head: Shift Risk From Treasury,” Associated Press (Sept. 19. 2011)