Once again, the responsible borrowers who didn't gamble on real estate values, who acted responsibly, who didn't speculate get the shaft, and the irresponsible, the speculators and the greedy get rewarded ("Md. joins national mortgage settlement," Feb. 9).

And how are the banks going to recover this money? They will pass the cost onto the responsible customers and borrowers. The furor about robo-signing is a joke. Has anyone said that the "victims" did not owe the money? How is it that someone who owes money all of a sudden doesn't owe it because of paperwork irregularities?

Every individual and every family that has lived within its means, honored its debts and lived within its budget should be infuriated by what is nothing more than transfer payments to the irresponsible, the ignorant and the greedy.

Thomas F. McDonough, Towson

I agree with this guy.

Saying he is "completely puzzled by the notion that there was something immoral that went on here," the man at the top of the agency that regulates Freddie Mac has explained why he believes the taxpayer-owned mortgage company did nothing wrong when one of its arms, as NPR and ProPublica have reported, "placed multibillion-dollar bets against American homeowners being able to refinance to cheaper mortgages."

Edward DeMarco told Morning Edition co-host Steve Inskeep in an interview broadcast on today's show that Freddie Mac's actions were "in the class of ordinary business transactions." The "reverse floaters" in Freddie Mac's investment portfolio, which as NPR has reported "brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing," did not affect the agency's efforts to stabilize the mortgage market, DeMarco said.

Instead, DeMarco characterized the investments as part of Freddie Mac's effort to make sure it doesn't lose money. And he said one of his major responsibilities, is to "make sure Fannie Mae and Freddie Mac undertake activities that don't cause further losses to the American taxpayer."

DeMarco is acting director of the Federal Housing Finance Agency (FHFA) — the agency that regulates Freddie Mac and Fannie Mae.

As we reported Thursday, two key senators "who have taken the lead on legislation aimed to help homeowners refinance at historically low interest rates," are critical of FHFA's oversight of Freddie Mac. One of them, Democratic Sen. Barbara Boxer of California, laid much of the blame on DeMarco and accused him of not looking out for American homeowners who want to refinance at today's historically low interest rates.

DeMarco told Steve, though, that "not only I, but my staff think of the average homeowner on a daily basis" and believe that their efforts to stabilize the mortgage market and prevent losses at Freddie Mac and Fannie Mae are good for all Americans in the long run.

Americans will have to wait a few more years for the housing market to return to "normal," an industry expert said Thursday.

"We're five years through a 10-year adjustment cycle," said Doug Duncan, vice president and chief economist at government mortgage giant Fannie Mae, who expects the housing market to stabilize sometime around 2015.

The path to stabilization, however, will be fragmented regionally, Duncan said, primarily along foreclosure and delinquency fault lines. "Two-thirds of households underwater are in 5 states," Duncan said, states which likely face more pain before any gains. "It's a very regional issue going forward."

As the impact of the housing crisis continues to reverberate through the country, the picture has changed. Where local and national housing markets were once virtually identical, they've now begun to diverge as employment prospects have changed in certain parts of the country.

While an oversupply of housing remains an obstacle for a housing market recovery, the lack of demand will be the more immediate issue going forward, Duncan says.

"There's been a focus on the supply side, but no one wants to buy. The level of application activity has been flat," he said. "From our perspective, it's really a demand problem going forward."

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The incremental improvement the market has seen is largely thanks to investors, Duncan said, who can circumvent the mortgage minefield and pay for properties in cash.

Only a significant improvement in the jobs picture—to the tune of 300,000 jobs a month—will help drive lagging household formation, which has been on the decline for decades now, and drum up demand for housing. "We're expecting 150,000 [jobs added] tomorrow," Duncan said of the Labor Department's jobs report. "That's not robust enough to dramatically improve the employment picture."

How will we know we have a "normal" housing market again?

"I define it when construction returns to the level that would see additions to the housing stock to accommodate [demographic] growth," Duncan said.

Until then, the United States will likely remain plagued by too much supply and too little demand for housing.

"The headline on housing is [there will be] a little bit of improvement, but this is not the year in which housing is going to break out," Duncan added.

The U.S. economy is projected to grow 2.3 percent for the year, according to Fannie Mae’s Economics & Mortgage Market Analysis Group.

NEW YORK (MarketWatch) — U.S. stocks rose Wednesday, sending the S&P 500 Index to a close above 1,300 for the first time since July 28, on improved sentiment in housing and as Goldman Sachs Group Inc.’s earnings beat expectations.

“We started off on a positive footing because certain financial earnings weren’t as bad as investors had feared, but most of the uptick came from home-builders’ confidence reaching a level not seen since 2007,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

Click to Play

Newmark: Curb your enthusiasm

Mean Street host Evan Newmark urges bankers and traders on Wall Street to lower their expectations when it comes to earnings and prosperity. (Photo: AP)

“Now we have two areas, jobs and housing, which are critical foundations, and both are seeing signs of improvement. Plus, the euro /quotes/zigman/4867933/sampled EURUSD +0.01%  is back above $1.28 — if you’re going to use a barometer for progress in the EU, the euro is as good as any,” Ablin added.

The Dow Jones Industrial Average /quotes/zigman/627449 DJIA +0.78%  rose 96.88 points, or 0.8%, to 12,578.95.

The S&P 500 /quotes/zigman/3870025 SPX +1.11%  added 14.37 points, or 1.1%, to 1,308.04, with the technology sector, and chip manufacturers in particular, gaining after circuit maker Linear Technology Corp. /quotes/zigman/74810/quotes/nls/lltc LLTC -0.06%  said it expects revenue to rise as much as 8% in its third quarter. Read more on Linear Tech’s results leading rally in chip stocks.

Web portal Yahoo Inc. /quotes/zigman/59898/quotes/nls/yhoo YHOO -0.38%  3.2% rose on news that co-founder Jerry Yang is severing all ties to the company he co-founded. Read more about Yahoo.

Microsoft Corp. /quotes/zigman/20493/quotes/nls/msft MSFT +0.32% , International Business Machines Corp. /quotes/zigman/230066/quotes/nls/ibm IBM +0.59% , Intel Corp. /quotes/zigman/20392/quotes/nls/intc INTC +0.12%  and General Electric Co. /quotes/zigman/227468/quotes/nls/ge GE +0.05%  are among the heavyweights still on tap to report this week, and results from any “could give the market a lift or dampen it,” according to Fred Dickson, chief investment strategist at Davidson Cos. in Lake Oswego, Ore.

The Nasdaq Composite Index /quotes/zigman/123127 COMP +1.53%  climbed 41.63 points, or 1.5%, to 2,769.71.

For every stock losing ground about four gained, with less than 800 million shares trading hands on the New York Stock Exchange. NYSE composite volume was about 4 billion.

Building blocks

Investor sentiment and the euro /quotes/zigman/4867933/sampled EURUSD +0.01%  were bolstered by reports the Greek government might reach a deal with its private creditors over a debt swap in coming days. Also, the International Monetary Fund is proposing hiking its lending capability by as much as $500 billion. Read more on the IMF and also read WSJ article on Greek debt talks resuming.

Goldman Sachs /quotes/zigman/188479/quotes/nls/gs GS +0.18%  shares jumped 6.8% after the investment bank reported results that beat Wall Street’s expectations, while Bank of New York Mellon Corp. /quotes/zigman/445224/quotes/nls/bk BK -0.05%  shares slid after its earnings fell 26% Read analysis of Goldman earnings.

“Goldman Sachs broke a trend” of earnings disappointments from the banking sector, said Dickson.

Stock-index futures had retained modest gains after the government reported wholesale prices unexpectedly fell last month, data supportive of the Federal Reserve’s benign view on inflation. Read more on wholesale prices.

A measure of builder confidence in the housing sector rose for a fourth consecutive month in January to hit its highest level since mid-2007, with builder-related shares including PulteGroup Inc. /quotes/zigman/129784/quotes/nls/phm PHM -0.38%   and Lennar Corp. /quotes/zigman/232035/quotes/nls/len LEN +0.22%  advancing more than 4%. Read more on home builders.

Separately, figures from the Federal Reserve had U.S. industrial production rebounding last month, climbing 0.4% after a revised 0.3% drop in November. Read more on industrial output.

“Investors are weighing a combination of some reasonable economic data, and data we saw from overseas looked OK, so no bad European news,” remarked Davidson’s Dickson.

/quotes/zigman/4867933/sampled

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$ 15.86

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Microsoft Corp.

$ 28.32

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Volume: 64.86M

Jan. 18, 2012 7:59p

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International Business Machines Corp.

$ 181.07

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Volume: 4.60M

Jan. 18, 2012 6:11p

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Intel Corp.

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Volume: 62.70M

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General Electric Co.

$ 19.03

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Goldman Sachs Group Inc.

$ 104.50

+0.19 +0.18%

Volume: 17.97M

Jan. 18, 2012 7:59p

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Bank of New York Mellon Corp.

$ 20.29

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Volume: 16.06M

Jan. 18, 2012 4:42p

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PulteGroup Inc.

$ 7.91

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Volume: 22.74M

Jan. 18, 2012 5:25p

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Lennar Corp. Cl A

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Jan. 18, 2012 5:54p

Kate Gibson is a reporter for MarketWatch, based in New York.

Nice to see some good news

A group convened on the steps of the South Carolina State House Thursday to express their support of homeownership and their opposition to policy changes that might threaten American homeownership.

The group – consisting of Realtors, housing industry professionals, politicians, business leaders, and community leaders – assembled to encourage elected officials “to protect homeownership from threats including scaling back or eliminating the mortgage interest deduction, reducing access to affordable mortgages and loans for home buyers and small businesses, and the foreclosure crisis,” according to an announcement on the National Association of Home Builders’ (NAHB) website.

The outlook expressed at the rally mirrors widespread sentiment uncovered in a recent NAHB survey conducted earlier this month.

About three-fourths of American voters said it is “appropriate and reasonable” for the federal government to promote homeownership through tax incentives.

This view was shared by Democrats (84 percent), Republicans (71 percent), and Independents (71 percent) alike.

“Those running for office in November need to understand that voters will not look kindly on any candidates who seek to dismantle the nation’s long-term commitment to homeownership,” said Bob Nielson, president of NAHB.

In fact, while 73 percent of voters object to an elimination of the mortgage interest deduction, 68 percent claim they are less likely to vote for a candidate who proposes an elimination of the deduction, according to the NAHB survey. This assertion was consistent across party lines.

The majority of survey respondents also opposed revisions that would limit the reach of the mortgage interest tax deduction, including a reduction in the deduction amount, deduction limits for households earning more than $250,000 per year, exclusion of second homes and home equity loans, and reductions for homeowners with mortgages loans greater than $500,000.

“With the 2012 election season in full swing, candidates running for the White House and Congress would be wise to heed the will of the American voters, who have expressed broad support for government policies that encourage homeownership and oppose efforts to make it more difficult to get a home loan and to tamper with the mortgage interest deduction,” said Celinda Lake, president of Lake Research Partners, one of the firms that conducted the survey on behalf of NAHB.

While Americans continue to harbor concern for the mortgage interest tax deduction, another mortgage-related tax deduction recently slipped out of existence.

A mortgage insurance premium tax deduction expired at the start of the year, according to Bloomberg Businessweek.

By Alan Zibel

Does the Federal Reserve have good ideas for the housing market? That’s been the question since the Fed published its paper on housing last week.

Critics see the Fed’s foray into housing policy as an irresponsible deviation from the central bank’s mission of managing interest-rate policy. Supporters of more aggressive action to stabilize the housing market argue that the Fed is playing a valuable role in pushing the Obama administration and regulators to do more.

All of this debate ignores something that’s become increasingly clear: Due to practical and political limitations, changes to the government’s response to the foreclosure crisis are likely to involve tweaks on the margins rather than a massive revamp.

The Fed’s paper delved into detail about ways the Obama administration could encourage more “underwater” homeowners who owe more on their loans than their properties are worth to refinance at today’s ultra-low rates. Here are some issues to consider:

So what did the Fed suggest on refinancing?

In their paper, Fed officials suggested ways to further revamp a program launched in February 2009 that allowed homeowners with mortgages backed by government controlled mortgage-finance companies Fannie Mae and Freddie Mac to refinance if their properties have sunk dramatically in value.

The initiative, called Home Affordable Refinance Program, or HARP, is already being expanded under changes rolled out in October that have been dubbed HARP 2.0.

Why aren’t those changes sufficient?

Fed officials have applauded the changes rolled out by the Obama administration and the Federal Housing Finance Agency but say more could be done to both improve HARP and reach borrowers who currently aren’t eligible for the program. They say the program could be expanded to help an additional 1 million to 2.5 million homeowners who don’t have loans backed by Fannie or Freddie.

Doing so, however, is tougher than it sounds. As the Fed paper notes, Congress would need to change the rules by which Fannie and Freddie operate — an unlikely proposition the current environment of hyper-partisan gridlock.

By law, Fannie and Freddie are barred from buying new loans in which borrowers owe more than 80% of their home’s current value — unless the borrower pays for mortgage insurance. The HARP program allows those loans to be refinanced because Fannie or Freddie already guarantee them and are on tap for losses if the borrower defaults. But Fannie and Freddie are unlikely to be able to take on new “underwater” loans that they did not already guarantee.

The Fed paper, however, argues that allowing these borrowers to refinance through HARP would aid the economy and housing market, and therefore benefit Fannie and Freddie. Allowing those homeowners to refinance could reduce borrower’s payments “potentially reducing pressure on the housing market,” the Fed paper said.

What would expanding refinancing further mean for Fannie and Freddie?

Doing so would require a “potentially large” expansion of Fannie and Freddie’s balance sheet. That’s likely to be a tough sell at a time when many policy makers want to deemphasize Fannie and Freddie. “This may be the most politically unpalatable of the recommendations,”” wrote Rob Rowan, an analyst with Fitch Ratings.

Furthermore, a massive refinancing proposal, which has long been rumored, is unlikely to come to pass, largely because it could dry up investment in the market for mortgage-backed securities, which needs to keep humming so Americans can obtain home loans.

What else did the Fed propose?

The Fed paper also suggested some more tweaks. Regulators further reduce fees that Fannie and Freddie charge for higher-risk borrowers who refinance (those fees were already cut in the October announcement).

Fannie and Freddie could also “more comprehensively” waive their right to send back defaulted bad loans to lenders if they are refinanced through HARP. The paper noted that Fannie has taken steps to streamline refinancing by reducing that “putback” risk for all loans — including borrowers who owe less than 80% of their home’s current value. Establishing the same requirements for Fannie and Freddie, the paper said, “could facilitate more refinancing among this group of borrowers.”

Brad German, a Freddie Mac spokesman, defended his company’s policy. “We believe we have struck a balance where we are providing a streamlined refinance opportunity for borrowers while also maintaining our rights as investors to enforce quality,” he said

Tue, 2012-01-10 10:40 — NationalMortgag...

HOPE NOW has released its November 2011 data showing that permanent loan modifications totaled almost 84,000 for the month, bringing the total for 2011 to approximately 969,000. Since HOPE NOW began tracking foreclosure prevention data in 2007, member mortgage servicers have completed 5.13 million total permanent loan modifications for homeowners nationwide. Additionally, HOPE NOW Executive Director Faith Schwartz announced the cities for homeowner outreach in the first quarter of 2012 that include expanded efforts to assist at-risk military homeowners as well. 

“The mortgage industry and its partners have worked hard for homeowners nationwide," said Schwartz. "With almost one million loan modifications completed in the first 11 months of 2011 and over five million since 2007, it is clear that efforts to assist at-risk families via all available channels are bearing some fruit."

Homeowner events are already in the advanced stages of planning for Charlotte, N.C.; Miami, Fla.; Tampa, Fla.; Las Vegas; Sacramento, Calif. and Los Angeles in the first quarter of 2012.

"There are more alternatives to foreclosure than ever before for homeowners through federal programs, proprietary modifications, and state level initiatives such as Hardest Hit Funds," said Schwartz. "Mortgage servicers and non-profit, housing counselors are using all tools at their disposal to find options that fit each individual homeowner’s situation whenever possible. The emphasis continues to be on improving the customer experience through enhanced technology, single point of contact and leveraging all tools available to assist with foreclosure prevention, which in some cases includes graceful exits."

Since HOPE NOW began reporting data in 2007, the mortgage industry has completed 5.13 million loan modifications for homeowners. This includes approximately 4.22 million proprietary modifications and 909,953 completed under the Home Affordable Modification Program (HAMP). From January through November 2011, there were approximately 969,000 modifications, 639,000 proprietary and 330,303 completed under HAMP.

"As we move into the heart of the first quarter of 2012, HOPE NOW, its government, non-profit and state partners have already planned multiple face to face outreach events in key markets," said Schwartz. "Additionally, HOPE NOW has worked with several military partners to implement events geared towards a specialized segment of at-risk military homeowners who have a unique set of mortgage challenges."

Of the 84,000 loan modifications for the month of November, approximately 57,000 were proprietary and 26,877 were HAMP modifications. According to the survey data, the inventory of 60 day plus delinquencies is 2.77 million for November 2011, up from the 2.65 million reported in October. Foreclosure starts for November 2011 decreased from the previous month—166,000 compared to 209,000. Completed foreclosure sales increased for the month—71,000 compared to 64,000.

Key loan modification data points for November 2011:

All loan modifications
Total modifications were approximately 84,000:
►57,000 were proprietary.
►26,877 were completed under HAMP.

Total permanent loan modifications for homeowners in 2011 are approximately 969,000:
►639,000 were proprietary
►330,303 were completed under HAMP

Proprietary loan modification characteristics (November 2011):
►Loan modifications with reduced principal and interest payments accounted for approximately 68 percent (39,000) of all proprietary modifications.
►Loan modifications with reduced principal and interest payments by 10 percent or greater accounted for approximately 66 percent (38,000) of all proprietary modifications.
►Fixed-rate modifications (initial fixed period of five years or more) accounted for approximately 83 percent (47,000) of all proprietary modifications.

By Nick Timiraos

Trying to figure out where the housing market is headed in 2012 offers a strong sense of déjà vu: The market feels just as it did at the beginning of 2011, when many pundits optimistically predicted that housing would finally hit bottom. The housing market didn’t deteriorate in 2011, but it didn’t firm up either amid an economic recovery that struggled to find its footing.

So what does 2012 hold? For one, the story will be local. While many housing markets rose together during the boom and fell together during the bust, they’re exiting the downturn at different speeds, and so it’s not very useful to talk about a “national” housing market.

With that caveat in mind, here’s a look at five key issues that will help determine whether prices stabilize and sales improve in the coming year:

1. Confidence and jobs: The housing market badly needs the economy to add more jobs to stimulate demand for home purchases and to prevent mortgage delinquencies from rising. The good news is that with prices down by 30% from their peak and mortgage rates at their lowest recorded levels, housing is more affordable than it has been in decades. But many would-be buyers are worried about buying today if prices are going to be lower tomorrow. Others don’t want to buy a house until they have more evidence that they’re not going to get laid off or see their hours cut back.

2. Foreclosures: Whether home prices hit a floor this year also relies on how banks manage a huge overhang of foreclosed homes that they haven’t yet taken back and resold. Banks and other mortgage investors own around 440,000 foreclosed properties, but there’s another 3.4 million loans in foreclosure or serious delinquency, according to estimates by Barclays Capital. Because banks are faster to cut prices to unload inventory than are mom-and-pop sellers, home values can fall further as the share of distressed sales rises.

This is one by reason why policymakers at the Federal Reserve and elsewhere are talking about converting some of those foreclosed homes into rental properties. Look for some pilot programs where government entities test the concept in 2012.

3. Rents: Apartment rents are rising as vacancy rates drop to levels that are already lower than the low point in 2006 during the previous economic cycle. If low mortgage rates aren’t enough to give urgency to would-be buyers, rent hikes could accelerate buyers’ decisions to take the plunge.

4. Mortgage credit and rates: Federal policymakers have taken extraordinary steps to keep mortgage rates low and federal-backed entities are responsible for backing nearly nine in 10 new mortgages. But it’s still hard for many buyers to get a loan because banks are demanding lots of documentation of borrowers’ incomes, and appraisals are tanking some deals. When appraisals come in below agreed upon sales prices, sellers must drop prices or buyers must put down more cash. Banks will need to put their legacy-loan problems behind them before there’s much easing in lending standards.

Other wildcards remain on the lending and rates front: will the Federal Reserve initiate another round of buying mortgage-backed securities—a step known to some as “quantitative easing”—to lift the economy? Will continued litigation and demands that banks buy back defaulted loans from mortgage titans Fannie Mae and Freddie Mac lead them to be more stingy with mortgage credit? And will other lenders move in to fill that void? Will the government do more to juice up refinancing programs? Will rates rise as the government attempts to draw back private capital by raising the fees that Fannie and Freddie charge to lenders?

5. Regulation: Many analysts don’t expect Congress to make major changes to Fannie Mae and Freddie Mac during the election year, but several major regulatory changes could significantly reshape the future of the lending landscape in 2012. Dodd-Frank Act lending rules that have yet to be spelled out by regulators will influence how banks price loans that are bundled and sold into securities. Another set of rules will determine how banks must satisfy provisions for them to determine that a borrower has the ability to repay a mortgage.

Meanwhile, the regulator that oversees Fannie and Freddie is revamping the way that mortgage companies are paid for collecting loan payments. This could lead to a broader shakeup in the mortgage industry that ultimately influences how much borrowers are charged for mortgages and how banks handle loans that fall into delinquency.

Readers, what issues do you think are most worth watching in the coming year?

Follow Nick @NickTimiraos

Applications for U.S. home mortgages fell 4.1 percent in the week ended December 30, weighed down by a 9.6 percent drop in purchase loan requests and a 2.5 percent decline in refinancing requests, seasonally adjusted data from the Mortgage Bankers Association showed.

Average 30-year conforming mortgage rates dipped to the year's low of 4.07 percent from 4.10 percent the prior week, and well below 4.82 percent at the end of 2010.

The slide to near-record-low borrowing rates has spurred more homeowners to seek refinancing, propelling that index up more than 60 percent in 2011.

But demand for loans to buy homes fell in the year, as borrowers struggled to come up with enough cash for down payments or stayed on the sidelines due to worries about unemployment. Some buyers had also leapt into the market in 2010 to take advantage of a first-time buyer tax credit.

The MBA said it does not expect any quick rebound in the mortgage market.

"As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase," Michael Fratantoni, MBA's vice president of research and economics, said in a statement. "Given the announced implementation of this change, we do not expect to see an impact on mortgage rates and application activity until at least February."

Bob Moulton, president of Americana Mortgage Group in Manhasset, New York, said the company's pipeline of loan requests is off to a better start in 2012 than the same time a year ago, boosted by refinancing.

But caution prevails with a big overhang of unsold homes and the presidential election looming, he said.

Refinancing applications represented about 82 percent of total mortgage activity in the latest week, the highest share of the year.

"It's going to be another couple of years until these short sales and foreclosures are flushed out of the system, so you might see a little weakness in prices this year," Moulton added. "We're feeling a little better about 2012 than 2011, but you're always waiting for the next shoe to drop."

The MBA released data for two weeks on Wednesday, rather than one, because of the Christmas and New Year holidays.

In the week ended December 23, total mortgage demand climbed 0.3 percent, with refinancing up 0.5 percent and purchase applications down 0.1 percent.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Refis Comprise 82 Percent of Overall Apps in Final Week of 2011

Wed, 2012-01-04 11:54 — NationalMortgag...

The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the weeks ending Dec. 23, 2011 and Dec. 30, 2011, finding that mortgage apps for the week ending Dec. 30, 2011 decreased 3.7 percent from the week ending Dec. 16, 2011 (two weeks prior), according to data from the MBA. The results include adjustments to account for the Christmas and New Year's Day holidays.

The Refinance Index decreased 1.9 percent compared to the week ending Dec. 16. The seasonally adjusted Purchase Index decreased 9.7 percent compared with levels reported two weeks ago. The Market Composite Index, a measure of total mortgage loan application volume was 39 percent higher in the last two weeks of 2011 than in the last two weeks of 2010, on a seasonally adjusted basis.

The refinance share of mortgage activity for the week ending Dec. 30, 2011 increased to 81.9 percent of total applications. This is the highest refinance share in 2011.

"Mortgage application activity declined over the last two weeks, even after adjusting for the typical seasonal decline in activity," said Michael Fratantoni, MBA's vice president of research and economics. "Refinance applications continue to account for the vast majority of total application volume, with the refinance share reaching its highest level in 2011."

►For the week ending Dec. 30, the average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,500 or less) was 4.07 percent, with points at 0.53 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This was the lowest 30-year fixed rate in 2011.

►The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,500) was 4.41 percent, with points at 0.44 (including the origination fee) for 80 percent LTVs.

►The average contract interest rate for 30-year FRMs backed by the FHA was 3.96 percent, with points at 0.71 (including the origination fee) for 80 percent LTVs.

►The average contract interest rate for 15-year FRMs was 3.37 percent, with points at 0.50 (including the origination fee) for 80 percent LTVs.

►The average contract interest rate for 5/1 ARMs was 2.91 percent, with points at 0.48 (including the origination fee) for 80 percent LTVs.

"As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase," said Fratantoni. "Given the announced implementation of this change, we do not expect to see an impact on mortgage rates and application activity until at least February."