Sept. 9, 2009
Written 10:45 a.m. EDT
RATE GUESS: On Wednesdays, Bankrate's research department conducts the weekly mortgage rate survey. Last week the average rate on a 30-year fixed was 5.41 percent. Today, I'll guess that it will average 5.45 percent.
Mortgage rates are holding fairly steady despite a sharp rise in the yields of 10-year Treasury notes. Treasury yields are rising because the dollar's value is falling in relation to other currencies. In this climate, you normally would expect mortgage rates to rise, too -- not only because of the dollar's weakening, but also because mortgages seem riskier when the employment picture remains so stubbornly bad.
My conclusion is that the Federal Reserve is buying enough mortgage-backed securities to keep rates down. But the Fed's mortgage-buying era will end this fall. I think rates will be higher toward year's end. Over the next month or so, I expect them to remain fairly unchanged.
TAYLOR, BEAN UPDATE: Taylor, Bean & Whitaker was the 12th-largest mortgage lender when it went belly-up last month. In the weeks before TBW's demise, it sent escrow refund checks to an unknown number of former TBW borrowers who had paid off their loans by refinancing or selling their homes. Then the escrow refund checks bounced.
A reader says she waited on hold a long time and finally got through to a customer service rep who said that her bounced escrow refund check will be replaced by another check, to be mailed in the next few weeks.
Meanwhile, there's the matter of current borrowers who had mortgages with TBW. Their loans are now being serviced by either Bank of America or Cenlar or Saxon or Ocwen. I wondered what will happen to the escrow money of those current borrowers. If the escrow money is tied up, will the new servicers make sure that their new borrowers' taxes and insurance are paid?
It turns out that the servicers have been instructed (by Ginnie Mae and Freddie Mac) to pay the taxes and insurance. So even if a borrower's escrow money is locked away in one of TBW's frozen bank accounts, the new servicer is supposed to behave as if the money were transferred over to the new servicer.
TBW is based in Ocala, Fla., and has sought bankruptcy protection under Chapter 11. Among the state and federal regulatory agencies, Florida's Office of Financial Regulation is the lead investigator. A spokeswoman says the agency is trying to sort out what happened in the run-up to TBW's sudden implosion. The OFR isn't ready yet to decide whether it will recommend the filing of criminal charges against TBW executives.
The FBI is investigating, too.