Mortgage Rates Fall to 4.27 Percent

Rates on 30-year mortgages fell to the lowest level in decades for the ninth time in 12 weeks, pushed down by traders anticipating a move by the Federal Reserve to pump more money into the economy.

The average rate for 30-year fixed loans dropped to 4.27 percent, mortgage buyer Freddie Mac said Thursday. That's the lowest on records dating back to 1971, and down from 4.32 percent the previous week.

The average rate on 15-year fixed loans, a popular choice for refinancing, dropped to 3.72 percent from 3.75 percent. That was lowest on records dating back to 1991.

How to buy a home at a $100,000 discount

With nearly 150,000 foreclosed homes on their books, Fannie Mae and Freddie Mac are trying to reduce their growing inventory of repossessed properties, offering home buyers tremendous purchasing opportunities.

An analysis by SmartMoney magazine found that home buyers could save $100,000 on the price of a home by purchasing a foreclosed home owned by Fannie Mae or Freddie Mac as opposed to a similar fair-market property just a few blocks away.

Fannie Mae’s homebuying program, which requires down payments as low as 3 percent on 30-year mortgages also can help buyers save money. However, buyers should note, smaller down payments generally translate into higher monthly mortgage payments.

Another bonus to purchasing a Fannie Mae-owned home, the company doesn’t require private mortgage insurance, which most lenders require for buyers who put down less than 20 percent.

Unlike many foreclosed properties, which usually require many repairs, Fannie and Freddie generally repair items such as leaky roofs and damaged electrical work, and often handle small projects like replacing appliances that are broken or missing, replacing old carpet, or fixing damages left by the former owners or vandals. Additionally, Fannie Mae’s properties come with an optional mortgage that includes extra financing up to $30,000 for repairs and improvements.

Buyers of Freddie Mac homes who plan to be owner-occupants –those who plan to live in the home and not use it as an investment property—have the advantage of viewing properties 15 days earlier than investors who often pay all cash and buy up foreclosed properties before owner-occupants have a chance to view them.

JPMorgan Chase Stops Foreclosures

A second major mortgage lender, JPMorgan Chase, has stopped foreclosures so it can review the loan documents for errors.

These moves are likely to slow the foreclosure crisis even more, making long-drawn out process drag on for several more years, several foreclosure analysts are saying.

In any case, an increased number of lawsuits are likely. Many foreclosed home owners will be looking to sue their lenders alleging errors in documents.

GMAC Mortgage was the first big lender to pause foreclosures while it reviews past files.

There have been several suits agains mortgage lenders based on whether the MERS clearing house actually transferred the note with the mortgage. A judge in California and another judge in Kansas held that the transfer was invalid and reversed the foreclosures in favor of the homeowners.