The Fed Raised Rates Again. Does My Mortgage Payment Go Up?

No, not if your mortgage is a fixed rate. The number that actually moves sits on your credit card and your home equity line, and that’s the one worth watching.

The Federal Open Market Committee met September 15 and 16 and voted 12 to 0 to raise the federal funds rate a quarter point, to a range of 3.75 to 4.00 percent. The minutes came out October 7, and most participants are already pointing at another increase before the year is out. Separately, Freddie Mac’s weekly survey put the 30 year fixed mortgage rate at 7.40 percent as of October 8, up from 7.28 percent the week before.

Does the Fed Control My Mortgage Rate?

No. The federal funds rate is an overnight rate the Fed sets for banks lending to each other. Your 30 year mortgage rate gets set in the bond market and moves on its own schedule. They can move together or apart, and a quarter point from the Fed doesn’t translate into a quarter point on a mortgage note.

What Actually Changes in My Budget?

Not the mortgage, if it’s fixed. That rate is written into the note and stays there no matter what the Fed does this month or next. What moves is the variable side: home equity lines and credit cards are priced off the prime rate, and prime tracks the Fed’s target directly. An adjustable rate mortgage moves too, but on its own index and its own reset date, not the day the Fed meets.

Why Does This Matter If I’m Already Behind?

Because the Fed moving rates usually isn’t a mortgage event for somebody already stretched thin. It’s a minimum payment event. The credit card and the equity line payment go up, and those are often the money quietly covering the mortgage every month. The mortgage tends to go unpaid after the card maxes out, not before. If the Committee follows through on another increase before the year ends, that same pressure lands again on the same household, on the variable side, while the mortgage payment sits unchanged and looks fine on paper.

The Committee meets again October 27 and 28.

In other news, Fannie Mae announced a sale of delinquent loans this week, and the conditions attached to it matter if you’re behind and haven’t heard from anyone yet.

I’m Behind on My Mortgage and Nobody’s Offered Me Anything. Can They Just Foreclose?

Usually no, but it depends on who holds your loan, and there’s a carve-out that catches people who don’t know about it.

Fannie Mae announced on October 8 its latest sale of non-performing loans, roughly 1,217 deeply delinquent loans totaling 259.9 million dollars, plus a smaller Community Impact Pool of loans in the Dallas to Fort Worth area. Bids close October 27 and November 3.

Does the Buyer Have to Offer Me Something First?

Yes, on loans inside this particular sale. Fannie Mae’s release requires whoever buys these loans to offer delinquent borrowers “a waterfall of loss mitigation options, including loan modifications, which may include principal forgiveness, prior to initiating foreclosure.” Principal forgiveness is permitted, not promised, and nothing here guarantees any specific borrower a specific outcome. The buyer also has to honor any loss mitigation already in progress at the time of closing.

What If I’ve Already Moved Out?

Then the protection is gone. The requirement doesn’t apply to a property that’s vacant or condemned at closing. Moving out because it feels like it’s over is exactly what removes the obligation that would have made somebody offer something first.

This only applies to loans inside a sale like this one, not to every delinquent mortgage in the country. Who actually owns a given loan, and whether any of this rides with it, is a question for the servicer and for a lawyer. I’m not either one.

Jacksonville, Florida is my market, and distressed property is the bulk of what crosses my desk. Happy to talk through where either of these lands for you.

JimArmstrong904@gmail.com, or (904) 671-4161 if a call’s easier.

Jim Armstrong, REALTOR® · Momentum Realty · SFR® (Short Sales and Foreclosure Resource) certified. This is general information, not legal, tax, or financial advice.

Momentum Realty is not associated with the government, and our service is not approved by the government or your lender.