The latest on home sales and the growing glut of unsold properties, good mortgage rates and more

Red home for sale sign on lawn

Interest.com's weekly survey of mortgage rates found the average rate for a:

March 26

If you're looking to buy a new home, you should be able to drive a hard bargain this spring.

New home sales fell 3.9% in February to the slowest rate in nearly seven years. Although the median sales price has risen over the past few months, the number of unsold homes is up 26.6% over the past 12 months. The Commerce Department reports:

March 23

Existing home sales increased 3.9% in February as prices rose slightly from last month. But the number of homes on the market still grew. The National Association of Realtors reported that:

March 22

Interest.com's weekly survey of mortgage rates found the average rate for a:

March 20

Consumer advocates and lawmakers are increasingly determined to stop banks and mortgage companies from making loans that borrowers can't afford on homes that have been grossly overvalued.

"We've been talking about our concerns about these predatory loans for a long time," Kathleen Lynch, senior litigation attorney at the Western New York Law Center told the Buffalo News. "There's a whole group of people now whose credit has been harmed forever."

Last week, the chairman of the House Financial Services Committee told more than 500 community activists in Washington, D.C., that Congress would pass legislation by year-end "that would substantially reduce the likelihood of someone being given a loan they shouldn't be given."

Speaking to the National Community Reinvestment Coalition's annual convention, Rep. Barney Frank, D-Mass., said the legislation would hold big banks, Wall Street brokerages and other loan buyers responsible for abuses even if they didn't originate the loan.

"If we have a national standard of lender liability, they can't stop it," he said. "We're going to put together a law that will cover everybody."

He said lenders must return to basic principles. "Please don't lend people more money than they can pay back. Don't lend people more money on a house than it's worth," Frank said.

March 19

Here's an extraordinary example of the ridiculous loans subprime lenders were pushing -- and the terrible price naive borrowers are paying.

Patricia Tamillo is a 42-year-old cerebral palsy patient who's in a wheelchair, living on a $569 a month disability check in a Milwaukee house she inherited from her mother.

A salesman for Ameriquest Mortgage came to her home and convinced her to takeout a $77,000 mortgage, listing herself as a "handy woman" making about $20,000.

"They said I'd save $300 a month (over her old mortgage) and get $3,000 cash out," Tamillo told the Milwaukee Journal Sentinel. "To a person who's broke, that sounds pretty good."

But Tamillo's disability check was less than the $583 monthly payments and now she's battling to save her home from foreclosure.

March 16

"Liar loans" are clearly a big reason so many low- and middle-income families are defaulting on their mortgages.

They were given loans they couldn't hope to repay by unscrupulous mortgage brokers who grossly inflated their income on the application and sought what's called "no doc" or "stated income" loans in which lenders didn't require W2s, income tax returns or any proof that was true.

In one case, a Massachusetts woman on Section 8 rental assistance, who had been paying $200 a month in rent, was loaned $350,000. The Boston Herald says her income was listed as $72,000, when in fact she made half that.

The Oakland Tribune has written about a California construction worker who had been living in a converted garage with his wife and two daughters until he was loaned $534,000. Although he was making $54,000 a year the application claimed he earned almost $100,000 from two jobs, received an additional $16,800 a year in rental income, had $19,700 in the bank and owned a $22,000 Acura. None of that was true.

The mortgage brokers didn't care because they were paid their commission as soon as the loan closed.

Of course, lenders knew brokers were lying on applications, but they didn't care either. They took their fees for making the loan and quickly sold them to investors in what's called the secondary market.

If borrowers defaulted -- as they undoubtedly would -- it was supposed to be someone else's problem. But brokers and lenders conspired to make so many of these tragic loans they literally crashed the subprime mortgage system.

March 13

The number of homeowners behind in their mortgage payments, and in the process of foreclosure, reached their highest levels in more than three years in the final months of 2006.

The Mortgage Bankers Association fourth-quarter survey of 43.5 million loans found:

March 12

The number of lenders making home loans to buyers with bad credit -- especially buyers with bad credit and little or no money for a down payment -- continues to shrink.

New Century Financial Corp. has just acknowledged that its main sources of money are closing down its lines of credit and that it's received default notices from major lenders such as Bank of America Corp., Citigroup Inc. and Goldman Sachs Group.

New Century was the second-largest subprime mortgage lender until last week when a growing number of bad loans forced it to stop taking applications. There is now little reason to suspect it will resume making loans.

WMC Mortgage, another big subprime lender that's owned by General Electric Co., is laying off 20% of its employees and will no longer loan money to buyers with no down payment.

March 9

It's getting more and more difficult for borrowers with low credit scores to get a mortgage.

Several dozen subprime lenders have stopped making subprime loans and those still accepting applications are demanding higher minimum credit scores for many different types of mortgages regardless of the interest rate.

New Century Financial, the nation's second-largest subprime lender, was the latest and largest to drop out of the market because the companies it obtains money from are understandably nervous about the number of subprime loans falling into default.

"The last couple of weeks have been almost catastrophic," Armand Cosenza, a Cleveland mortgage broker told the Wall Street Journal.

Cosenza said he turned down eight applications on Wednesday because he couldn't find a lender willing to make the loans. At least five of them would have qualified six months ago, Cosenza told the Journal.

March 6

Research by the Federal Reserve Bank of Boston says only one-tenth of all the mortgages in Massachusetts are subprime loans. But those high-rate loans to borrowers with poor credit account for more than two-thirds of the state's record foreclosure filings.

That's why the state's Secretary of Housing and Economic Development, Daniel O'Connell, wants lending officers working in a loan broker's office to pay $250 a year for a state license.

The $7 million a year generated by such a fee would be used to hire more state loan-company examiners and create a rescue fund for homeowners struggling to save their property.

March 2

We all know that homeowners with poor credit are having a hard time keeping up with their mortgage payments.

Now The Wall Street Journal reports "there are signs that the pain is spreading upward" to borrowers who fall in the gray area between "prime" (borrowers considered the best credit risks) and "subprime" (borrowers considered the greatest credit risks).

A record $400 billion of these midlevel loans, known as Alt-A mortgages, were made last year, according to Inside Mortgage Finance, an industry trade publication. That's up from just $85 billion in 2003.

Data from UBS AG show that the default rate for these loans doubled in the past 14 months to about 2.4%. The Journal says that's because many of these loans were written:

February 24

Massachusetts ordered a California mortgage company to stop sending misleading letters that imply homeowners have qualified for huge federal subsidies.

"This notification is to inform you that . . . we have prequalified you to receive a combined subsidy/property- appreciation cash return amount of $76,465 (through) the Community Reinvestment Act Program," Lending First Home Loans Inc. wrote a typical homeowner in such a solicitation.

While there really is a federal Community Reinvestment Act, there's no government "Community Reinvestment Act Program" or CRA "subsidies."

Lending First President Blair Eldridge admitted to the Boston Herald that the letters "do mislead," but blamed a marketing firm that, he said, wrote the text.

February 20

According to the New York Times, New York City's housing market is heating up again.

"Since the new year began, a burst of activity has broken out in Manhattan and several Brooklyn neighborhoods," the Times reports, "as New Yorkers frenetically hunt for co-ops, condominiums and town houses, sending prices higher."

Open houses are jammed and bidding wars are back in all price ranges the Times says, "from tiny studios in the East Village to mansions on the Upper East Side."

Real estate experts attributed the surge to buyers who are no longer worried that prices would crash "and they'd end of up like fools who paid too much."

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