Rate Buydown Gains Traction

An effort by the National Association of REALTORS  to spur home sales through a mortgage-interest rate buydown appears to be gaining traction. Reports in major news media like the Washington Post and Wall Street Journal today quote sources familiar with a meeting between U.S. Treasury officials and NAR in November in which the buydown proposal was discussed.

Under the Treasury plan, lenders would sell newly issued mortgage-backed securities to the government provided the interest-rate on the loans collateralizing the securities was no higher than 4.5 percent. Although NAR supports a buydown , it does not take a position on how low interest rates should go.

To pay for the plan, Treasury would issue bonds at 3 percent, creating a 1.5-percent spread that it could use for buying the securities. Those securities would then be purchased by secondary mortgage market companies Fannie Mae and Freddie Mac, which are under federal conservatorship.

 

Treasury Alerts REALTORS to Fraud Scheme

If a buyer tries to use a "personal promissory note" or "private offset bond" to buy a home, the matter might be an attempt at fraud and you should let the U.S. Treasury Department know, a notice from the Treasury's Office of Inspector General says. 

Click here to read the notice in full, with contact information