03 Feb 10 FHA Credit Improving
The FHA home loans originated last year went towards borrowers with better credit scores than in previous years. These borrowers migrated to FHA when the subprime market disappeared. The average credit score of an FHA borrower is now 690, up from 630 only two years ago, agency officials said.
The agency banned 268 FHA lenders from making FHA mortgage loans last year, more than double the total terminated in the previous eight years. The FHA suspended six other firms. Among them were some of the largest FHA mortgage lenders –Taylor, Bean & Whitaker and Lend America, both of which shut their doors soon thereafter. Consumers taking out FHA mortgage loans will have to pay higher upfront fees, perhaps as early as this spring. Those with especially weak credit scores will also have to put down at least 10% instead of the usual 3.5% down-payment. Read the original article from the FHALoanBlog, > Better Credit FHA Loans Performing Well
27 Jan 10 Mortgage Loan Applications Decreased 11% Last Week
According to Bloomberg, the number of mortgage loan applications in the U.S. dropped last week for the first time in a month, led by a slump in home refinancing. The Mortgage Bankers Association’s index of home loan applications fell 11% to 513 in the week ended Jan. 22 from 575.9 a week earlier. The group’s refinancing gauge decreased 15%, while the purchase gauge fell 3.3%.
Mortgage refinance applications dropped significantly over the period. The mortgage bankers group’s home refinance gauge decreased to 2,260.4 from 2663.8 the prior week. The purchase index fell to 215.6 from 223 the prior week. The group’s refinancing index often turns volatile near year-end, making it difficult to determine the underlying trend. The measure plunged 38% in the last three weeks of 2009 then rose 35% in the first two weeks of January. FHA and VA loan applications followed the trend as well.
| Nationwide Mortgage Loans announces discounted mortgage refinancing for all 50 states! | FHA on board with 1st Time Home Buyers Tax Credit. See more on FHA Loans. |
The looming end of the government’s first-time homebuyer tax credit in November caused sales to slump at the end of last year. According to Russell Price, a senior economist at Ameriprise Financial Inc, “We’re seeing some stabilization in the housing market.” Price continued, “The spring selling season should be fairly positive, especially if we do start to see some positive employment growth and mortgage rates remain fairly low.”
20 Jan 10 Mortgage Lead Generation and Google
Google has entered the mortgage lead generation segment. Just a few months after Google mortgage rate experiment in the business came to light in court papers. Google acknowledged its partnership with Mortech LLC on Tuesday. Moreover, mortgage lenders that have been participating in Google’s tests say the search-engine company is not just testing and the search engine giant is interested in mortgage marketing.
“Google has a history of trying lots and lots of things to see if they work,” said Philip Kneibert, the president of Mortgage Lenders of America in Overland Park, Kansas. The company has been buying mortgage leads generated by Google’s Comparison Ads service and they like what they have seen so far.
08 Jan 10 Will the Fed Let the Mortgage Market Walk?
Many mortgage industry insiders believe the Federal Reserve will take their hands off the housing sector in 2010, when the central bank enables mortgage market to stand on its own two feet. The Fed is unlikely to step in again after its bad credit mortgage buying program devised at the height of the financial meltdown expires. That would take a renewed crisis, like a sudden and destabilizing hike in mortgage interest rates.
Besides conventional and FHA mortgage rates, there are other impediments to a fresh round of mortgage-backed debt purchases, including the Fed’s desire to keep inflation expectations under control. One of the reasons the Fed capped its bond-buying program, which included more than $1.4 trillion in mortgage-related securities and $300 billion in Treasury debt, was the perception that the central bank was “monetizing” federal deficits printing money to keep the government solvent. This latent fear, prevalent in financial markets and reflected in the elevated price of gold, has the potential to turn more than $1 trillion in dormant excess bank reserves into a runaway rise in prices, analysts say.
Barring a double-dip in housing, however, Fed officials are unlikely to meddle. Their reluctance to intervene anew has many roots. For one thing, it would signal a policy about-face that could adversely affect markets as investors reassess what they believed was an improving economic outlook. > Read the original article online.
08 Jan 10 Jumbo Loan Market Remains Sluggish
In other mortgage news, jumbo mortgage loan market continues to get hit hard. Jumbo lenders offering jumbo loan products want significant down-payments even if the home loan applicants are earning large salaries. It would stand to reason that if any private label market returns it would be the jumbo sector where presumably the applicants would be in strong shape financially. However, they see nothing on the horizon whatsoever in regard to jumbo loan securitizations returning any time soon…Read more from National Mortgage News
29 Dec 09 Fannie Mae and Freddie Mac Ready to Buy Delinquent Home Mortgage Loans
According to Credit Suisse Group analysts, the U.S. government’s expanded capital backstops and portfolio limits for Fannie Mae and Freddie Mac increase “the prospect of large-scale” purchases by the companies of delinquent mortgages out of the securities they guarantee. The Treasury Department announced Thursday that the two mortgage-finance companies, which were seized by the United States almost 16 months ago, could tap an unlimited amount of capital for three years, up from as much as $200 billion each. It reworked caps on Fannie Mae and Freddie Mac’s mortgage-asset portfolios to require the holdings to fall to $810 billion each by Dec. 31, 2010, rather than about $690 billion. “This announcement increases the prospect of large-scale voluntary buyouts by removing the portfolio cap hurdle and helping funding by potentially increasing debt-investor confidence,” Mahesh Swaminathan and Qumber Hassan, the Credit Suisse debt analysts in New York, wrote in a report Monday.
Analysts including those at Credit Suisse and J.P. Morgan Chase have been predicting a spike in the companies’ buyouts of home mortgage loans from their securities early next year. Aside from more purchases being required by the debt’s contracts as additional home loans get modified under the government’s Making Home Affordable program or fall more than two years past due, accounting-rule changes will force all mortgage loans in their securities onto their balance sheets, limiting the financial impact of actually buying them. The portfolio-limit adjustment will give Fannie Mae and Freddie Mac “enough headroom” to absorb the approximately $220 billion “pipeline” of delinquent FHA home loans in their securities without having to sell other bonds, the Credit Suisse analysts wrote. The home loan buyouts may occur over one or three months, the analysts wrote.
29 Dec 09 Updated Good Faith Estimate for Mortgage Lending
After talking about changing home finance disclosures for the last decade, HUD is finally updating and revising the Good Faith Estimate in the RESPA loan disclosures. They also re-released “Shopping for Your FHA loan: HUD’s Settlement Cost Booklet.” A large share of content in the 49-page publication, which helps consumers comparison-shop mortgages, addresses the standardized Good Faith Estimate (GFE) and HUD-1 settlement statement forms that lenders must start using on Jan. 1, 2010. HUD estimates that borrowers may benefit financially by saving $700 in lending costs and fees per mortgage loan on average as a result of the new requirement, which is one of several changes to the Real Estate Settlement Procedures Act (RESPA).
Here is the location of the .pdf of the booklet that you can save or print out for your reference. http://portal.hud.gov/portal/page/portal/HUD/documents/Settlement Booklet December 15 REVISED.pdf
17 Dec 09 Mortgage Rates Up but Stay Below 5 Percent
Mortgage interest rates crept up for the 2nd consecutive week, but borrowers who applied for mortgage refinancing remained strong. Refinance applications continued to rise, as homeowners are making a last ditch effort to lower their monthly home loan payment before the rates rise.
Freddie Mac reported the average fixed rate on a thirty-year home loan was 4.94% this week, up from 4.81 % last week. Mortgage rates are closely tied to yields on long-term government debt, which have risen since the average fixed rate on thirty-year mortgages hit a record low of 4.7% the week of Dec. 3.
A Federal Reserve program to buy $1.25 trillion in mortgage-backed securities has kept rates on thirty-year mortgages under 5% this year. The government mortgage programs, like FHA and VA were created to make home buying more affordable, is set to end next spring.
The low rates resulted in a wave of refinancing activity: The Mortgage Bankers Association reported that nearly 3 out of 4 home loan applications were for home refinancing during the first few weeks of December, Freddie Mac collects mortgage rates each week from lenders around the country. Home mortgage rates often fluctuate, even within a given day.
The average rate on a fifteen-year fixed mortgage rose to 4.38% from 4.32% last week. Mortgage rates on five-year, adjustable-rate mortgages averaged 4.37%, up from 4.26% last week. Rates on one-year, adjustable-rate mortgages rose to 4.34% from 4.24%.
16 Dec 09 Lend America Banned from FHA Mortgage Lending
According to a recent article from National Mortgage News, mortgage company, Lend America was banned from FHA mortgage lending on Monday. Apparently, the company was refinancing certain customers without paying off their prior existing lien. According to veteran mortgage banking attorney Robert Lotstein, who has clients that did business with Long Island-based Lend America, said this has created a situation where customers received a new loan from the mortgage lender but without their existing lien being paid off.
14 Dec 09 HUD Says FHA Guidelines Changing in 2010
FHA mortgage products have helped support the housing sector for decades, but over the last few years FHA home loans has significantly supported borrowers for home buying and mortgage refinancing. HUD has plans for revising FHA guidelines. Below are at least several revisions HUD is making with FHA loan programs.
1. Upping the minimum required down payment. HUD is looking at whether increasing the required minimum down payment from 3.5% to 5% will help stabilize FHA loan defaults. If home buyers have more “money invested,” HUD officials wonder, will they be less likely to default on their mortgages?
2. Changing mortgage insurance premiums. HUD officials are considering whether changing the way FHA mortgage insurance premiums are structured will keep more buyers from becoming delinquent. Should there be an extra fee up front? Should the amount paid over time change for maximum stabilization?
3. Raising the minimum credit score required for an FHA loan. While credit scores have been lousy at predicting what happens to people with good credit who lose their jobs, they have been more accurate in identifying risky behavior. At the height of the housing boom, FHA approved loans to borrowers with credit scores below 500. Discussions underway wonder whether the minimum acceptable credit score should be 620 or higher.
4. Dialing back how much money sellers can give FHA home buyers. Right now, sellers can give buyers up to 6% to help cover closing costs and fees. Experts recommend reducing that to 3%.
5. Requiring FHA lenders to have more cash on hand. Like borrowers, lenders need to have more “skin in the game.” Right now, lenders need only have $250,000 in cash to cover fraud-related loan originations, but HUD officials want to see that amount rise to $2.5 million. That will reduce the number of lenders that can offer FHA loans, and hopefully cut down on mortgage fraud.
6. Eliminating abusive lenders. HUD is asking Congress for more power to prevent abusive lenders from making FHA loans. According to HUD Secretary Shaun Donovan’s testimony before the House Financial Services Subcommittee on Oversight and Investigations, lenders will be required to “indemnify the FHA fund for their own failures to meet FHA requirements” and will be held accountable nationally for any improper activities. Donovan said that HUD “will also develop a Lender Scorecard that will summarize the performance of lenders who do business with the FHA. This scorecard will be posted on (the department’s) Web site to ensure transparency and accountability for lenders, borrowers and the market.”
HUD officials say the quality of the FHA loan portfolio has improved over the course of 2009. The typical borrower’s debt-to-income ratio has declined, meaning the mortgage payment is a smaller portion of the borrower’s monthly income. While HUD officials are pleased to see borrowers with a stronger personal finance balance sheet, there are two big concerns. First, the number of borrowers who are delinquent in paying their mortgages is growing. If those borrowers don’t figure out a way to make up their missing payments and start paying their mortgage on time, more homes will fall into foreclosure, further depressing housing prices.
The second concern is rising unemployment. “If unemployment continues to track at high levels and goes to 11 or 12%, that’s a real struggle,” the senior HUD official said. “The big risk is a stagnant, slow recovery that keeps unemployment rates high because there is no loss mitigation technique for that. In other words, if homeowners lose their jobs and can’t find replacements that pay enough to cover their monthly expenses, the FHA’s capital reserves fund sinking into the red will be the least of the government’s problems.
08 Dec 09 FHA Mortgage Insurance Premiums Rising
FHA unexpectedly delayed the release of a much-anticipated audit of its capital reserves in November. Of course, the mortgage lending industry feared the worst that the government’s FHA mortgage insurance fund was negative. After the audit was released showing a thin $3.6 billion cash cushion with promises from FHA to keep the fund solvent, a new worry emerged revealing the government could move to raise the FHA mortgage insurance premium it charges borrowers, increasing closing costs for millions of potential customers. At a press conference unveiling the audit, housing secretary Shaun Donovan confirmed that FHA is weighing its options, including a possible hike in the upfront MIP. Mr. Donovan would not rule it out entirely but also said that it was not imminent.
Currently, FHA mortgage lenders charge a borrower roughly 165 basis points at the closing table plus 50 basis points monthly. The points are often financed and the borrower cannot recoup the premium. The 50 bps are part of the monthly payment and can be adjusted up or down, depending on the FHA’s needs and concerns. Today, FHA mortgage loans account for between 25% and 30% of all new originations and have become the program of last resort for homebuyers with both poor credit and low or no down-payments. “If they (FHA) need to raise cash I would rather see them raise the monthly rather than the upfront MIP,” said one mortgage executive following the issue. But Jim Pair, president of the National Association of Mortgage Brokers, wasn’t thrilled with the idea of raising the MIP unless FHA really needs to. “An increase at this time would be detrimental to the housing market,” Mr. Pair told Origination News. The audit found that the Mutual Mortgage Insurance fund actually has $30.7 billion in cash on a total book-of-business approaching $700 billion but $27.1 billion of that amount has been set aside to cover anticipated losses on FHA mortgages, leaving it with a cash cushion of just $3.6 billion.
The new study believes the MMI will stay in the black unless the housing recession deepens significantly. If that happens, the fund would have a negative capital ratio of 0.46%. But if the mortgage market suffers what FHA calls a “downward interest rate shock” the fund could go negative by as much as 2.33%. The actuarial study (audit) of FHA was done by IFE Group of Rockville, Md. Mr. Donovan said the release of its findings were delayed because HUD wanted the firm to conduct “more extreme” stress modeling on the reserve fund. “We felt some of the loss scenarios were not as bad as we expected,” said the HUD secretary.
Commenting on IFE’s findings, Howard Glaser, a former HUD attorney who is now a lobbyist, said FHA is not immune from the laws of economics. “Facing the equivalent of a 500-year flood in the housing market, and having stepped into the void left by reckless lenders who pillaged the mortgage system, FHA now finds itself tight on capital.” To many mortgage bankers, the FHA loan program is the only game in town, and without it originations to cash strapped and low-income borrowers would seize up.
17 Nov 09 Mortgage Rates Decline
Mortgage refinance rates moved down a bit last week. Freddie Mac announced that for the week ending November 5, thirty-year fixed rates averaged 4.98%, down from 5.03% the week before. In response to the rate reductions, FHA refinance activity rose slightly as homeowners made moves to lock in their mortgages to a fixed rate to maximize the affordability.
The average for fifteen-year fixed mortgage rates dropped to 4.40%. Adjustable rate mortgages were also lower with the average for one-year adjustable rates declining to 4.47% and five-year adjustable rates dropping to 4.35%. A year ago 30-year fixed rates were at 6.20%. “Rates fell back this week pulling interest rates on 30-year fixed loans under 5 percent,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Lower FHA mortgage rates should help homeowners reduce their monthly loan payments and feed the ongoing recovery in the housing sector.
The Federal Housing Finance Agency reported that Freddie Mac and Fannie Mae have financed more than 3.5 million refinance loans during the first nine months of 2009. Freddie Mac estimates that borrowers who redid their conventional loan during the third quarter reduced their rate by a median of 1.1 percentage points, which will save these borrowers an aggregate of $3 billion in payments over the next year.
03 Nov 09 Home Mortgage Rates Climb 3 Weeks in a Row
Home mortgage rates for 30-year home loans rose to 5.03 % this week, the third consecutive weekly increase. The average home loan rates rose from 5% a week earlier, mortgage giant Freddie Mac said last week. The last time the average was higher was the week of September 24th, when rates averaged 5.04%. The average rate on a 15-year, fixed-rate mortgage loans rose to 4.46% from 4.4 % last week, Freddie Mac said. Home mortgage rates on five-year, adjustable-rate home loans averaged 4.42%, up from last week’s 4.4%. Mortgage rates on one-year, adjustable-rate mortgages rose to 4.57% from 4.54%.
Home buyers can reduce their payments and mortgage rates by buying points, which amount to 1 % of the loan total. The average for home loans in Freddie Mac’s survey was 0.7 points for 30-year home mortgages and 0.6 points for 15-year, five-year and one-year loans. “It’s still a very low rate by longer-term historical standards,” said George Mokrzan, senior economist at Huntington National Bank in Columbus, Ohio. “It’s still very supportive of the housing market and recovery.”
The Federal Reserve last year pledged to buy bonds backed by home loans in order to encourage lower mortgage rates. It increased the size of that program to $1.25 trillion in March. The bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae brought down yields on mortgage-backed securities and allowed lenders to reduce rates on new loans while still selling the securities backed by them at a profit. The plan helped drive mortgage rates to a record low of 4.78 % twice in April. The central bank’s purchasing program is scheduled to end in the first quarter next year, the Federal Open Market Committee said in a statement September 23rd.
Rising borrowing costs and uncertainty over whether Congress will extend a government tax credit for first-time home buyers may have contributed to a drop in mortgage applications last week. The Mortgage Bankers Association’s index of applications to purchase a home or refinance fell 12%, and sales of new homes declined in September, the Commerce Department said Wednesday.
According to the Mortgage Bankers Association, home loan applications dipped 5.2% in the week ended October 23rd and mortgage refinancing volumes declined 16%. New-home purchases in September dropped 3% to a 402,000 annual pace, lower than even the most pessimistic economist’s forecast. It was the first month-to-month decline in sales since March.
13 Oct 09 Uncertainty in Mortgage News with Predatory Lending Reform
Uncertainty highlights the mortgage news as the fate of government-sponsored mortgage agencies Fannie Mae and Freddie Mac, pending regulatory changes that are still under debate and a growing unease over the soundness of the FHA, which has come to dominate the mortgage-origination market in the wake of the financial crisis. “It’s going to be a couple of years of a really tough environment.” The more significant concern may be unemployment, which Brinkmann predicts will hit 10.2% by mid-2010. The continued bad news on the job front is sure to push loan delinquencies and foreclosures to new records next year. “We’re just getting into a lot of prime-mortgage adjustments, so we’re a long way from the bottom. Bad credit home mortgage opportunities continue to dwindle as FHA loans remain some of the only options for borrowers with less than perfect credit.
08 Oct 09 Low Rates Driving Refinance Boom
More than 16 million homeowners owe more on their mortgage than their properties would be valued at. To many distresses homeowners, mortgage refinancing represents lower loan payments and more money in their pockets. Many phone calls mortgage brokers received last week came from borrowers who couldn’t qualify for a refinance loan because of lower incomes, stricter credit standards or declining home values. Les Berman of EB Financial said the new guidelines were designed to reduce the conflicts of interest for home appraisals but the stricter guidelines have hindered refinance loan approvals applications because appraisals are coming in too low. The FHA streamline refinance requires at least six months of payments before a borrower can take advantage of the program, and verification of assets, job and income.
Mortgage brokers say a refinancing is worthwhile if you can shave off at least $100 from your monthly payment or get a full percentage point rate reduction. That’s why mortgage rates below 5% are so appealing. Refinance rates hit a record low of 4.75% in the spring. Read the rest of the article online> Mortgage Refinance Boom
01 Oct 09 Low Mortgage Rates Stablizing Home Values
In a recent article, Freddie Mac chief economist, Frank Nothaft said, “Low mortgage rates are helping to stabilize home sales.” “New home sales in August spiked to the highest annualized pace since September 2008 and the inventory of unsold homes fell to the lowest level since February 1983.”
The 30-year fixed-rate mortgage averaged 4.94% for the week ending Oct. 1, down from 5.04% last week and 6.10% a year ago. The mortgage interest rates haven’t been below 5% since the week ending May 28, when it averaged 4.91%.
The 15-year fixed-rate mortgage averaged 4.36% this week, down from last week’s 4.46% average. The home loans averaged 5.78% a year ago. It hasn’t been lower since Freddie Mac started tracking it in 1991.
To obtain these low mortgage rates, the 30-year fixed-rate mortgages require a payment with a cost of 0.7 point, the 15-year fixed-rate mortgage and the 5-year ARM required an average 0.6 point and the 1-year ARM required an average 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.
Bad credit mortgage rates may be possible with the obama loan relief or the new FHA loan modification that enables borrowers with delinquent loan payments refinance their home if there is a documented hardship.
15 Sep 09 Mortgage Backed Securities
The Fed’s next key decision is how to wind down its program to buy home mortgage securities and to assess its effect on mortgage rates as that occurs. The central bank now accounts for all but a sliver of the market for mortgage-backed securities, crowding out private activity and raising doubts about how the market would function without government involvement. At their August gathering, some Fed policy makers believed that a “tapering” of those purchases beyond their scheduled conclusion in December “could be helpful in the future as those programs approach completion,” according to minutes of the meeting. Two weeks later, Richmond Fed President Jeffrey Lacker said in a speech that he “will be evaluating carefully whether we need or want the additional stimulus” that purchasing the full announced amount would provide. But another policy maker, Chicago Fed President Charles Evans, said he expects the Fed to carry out the entire amount of purchases. Other Fed officials share that view, worrying about the Fed breaking from a commitment the market is counting on. The central bank’s program has pushed mortgage rates down substantially over the past year, helping to spur the housing market and support the overall economic recovery. How much mortgage loan yields rise when the central bank ends its purchases will depend in part on how the Fed communicates its plans and how private investors respond. Policy makers are considering two main views of how the central bank’s involvement influences mortgage rates: by its total stock of mortgage-backed securities, or by the flow of its purchases.
10 Sep 09 Bonds for Mortgage Loans Yields Decline
Bloomberg reported that yields on Fannie Mae and Freddie Mac mortgage securities declined to the lowest in more than three months, signaling that mortgage rates on home loans will drop more and bolster the U.S. housing market. Yields on Washington-based Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds fell 0.1of a percentage point to 4.29% as of 3 p.m. in New York, the lowest since May 26, according to data compiled by Bloomberg. The drop followed benchmark Treasury yields lower after stronger-than-forecast demand at the last of three government debt auctions this week. “If Treasury auctions are oversubscribed day after day, it is only natural that mortgages shouldn’t be far behind,” Tae Park, a portfolio manager in New York who oversees mortgage-bond investments at Societe Generale, said.
Lower mortgage rates may help the housing market offset a forecasted further flood of foreclosure sales to build on recent signs of strength, including the first month-over-month increases in property prices since 2006 registered in an S&P/Case-Shiller index in May and June. The drop in mortgage-bond yields also suggests home-loan rates may reach the levels below 5% that analysts including Credit Suisse Group AG’s Mahesh Swaminathan say are needed to send refinancing to elevated levels, bolstering consumer finances and spending. The average rate on a typical thirty-year fixed-rate mortgage dropped to 5.07 % in the latest week, McLean, Virginia based Freddie Mac said today in a statement. That’s down from as high as 5.59% in June, and up from the record low of 4.78% in April. While mortgage refinance applications rose to the highest since late May in the latest week, they remained 64% below the high this year set in January, according to a Mortgage Bankers Association index.
Yields on so-called agency mortgage bonds, the type of debt being bought by the Federal Reserve under a $1.25 trillion program as well as by the Treasury Department, are now guiding rates on almost all new U.S. home lending, following the collapse of the non-agency market in 2007 and retreats by banks. The almost $5 trillion market includes securities guaranteed by government- controlled Fannie Mae and Freddie Mac and bonds of U.S.-insured, low-down-payment loans backed by federal agency Ginnie Mae. While “after four years of decline, the housing market is showing signs of turning,” sizable challenges remain, including more than 2 million foreclosures over the year ahead, Deutsche Bank AG analysts Peter Hooper and Torsten Slok in New York wrote in a report yesterday. “The question is how strong the bounce,” they said. “Recent movements in sales, prices and builder expectations looked quite promising, but there are good reasons to expect that home building and prices will remain relatively depressed well into next year despite the recent bounce.” Article was written by Jody Shenn.
09 Sep 09 New FHA Requirements for Condominiums
HUD announced new FHA rules for condos with ineligible properties include condotels, timeshares, houseboat projects, multi-dwelling unit condominiums, and all projects not deemed to be used primarily as residential. Project approval is no longer required for FHA. FHA streamline refinance loans for HUD Real Estate Owned sales.
See the HUD revised FHA loan standards for condo properties:
ü FHA will allow a minimum owner occupancy amount equal to 50% of the number of presold units.
ü No more than 15% of the total units can be in arrears of their condominium association fee payment.
ü Projects consisting of four or more units will have no more than 30% of the total units encumbered with FHA insurance
See the original article> New FHA Condo Guidelines Could Limit Mortgage Refinancing online.
01 Sep 09 Mortech Responding to LendingTree with Legal Challenge
Mortgage technology software provider Mortech, Lincoln, Nebraska, said it has plans to address a legal challenge by Lending Tree, Charlotte, N.C. Mortech said in an e-mailed statement that it would deal with the issue in a “timely fashion,” and noted it has a good track record and reputation when it comes to its dealings with industry partners and customers.
According to a New York Times press report, the suit alleges that Lending Tree feels that Mortech, as its business partner, is in violation of its contract because it is planning to make its pricing engine services available for another online provider’s use Google and those services would compete with Lending Tree’s lead generation system that promotes mortgage loan shopping for consumers online.
01 Sep 09 Freddie Mac Compliant for NYSE Listing
Mortgage rates are low and the home financing industry looks like it’s getting back on track. Is Freddie Mac poised to gain their NYSE listing back on the stock market? Mortgage giant, Freddie Mac soon may be receiving a notice from the New York Stock Exchange, saying it is back in compliance with the NYSE’s listing requirements. As of yesterday, Freddie Mac’s common stock was trading at $2.22, which means that its average share price will have been north of $1 for the past 30 days – that is, as long as its stock price doesn’t collapse by close of business Monday. Under NYSE rules, the exchange can initiate delisting proceedings for companies whose 30-day average price falls below $1. “We’re waiting for official notification from the NYSE,” a company spokeswoman said Monday. In a week it will mark the one-year anniversary since Freddie Mac and its sister company, Fannie Mae, were taken over the government and placed into conservatorship. The share price of both GSEs has been rising over the past month. Some stock analysts attribute the price increase to bottom fishing and speculation by short sellers. Freddie’s 52-week low is 25 cents, its high $5.52. In the second quarter Freddie actually posted a profit while Fannie lost money.
31 Aug 09 Closing Cost Rules and Mortgage Disclosure Changes Confusing
Mortgage lenders, bankers and loan officers are never excited about changes to RESPA or Reg Z. Essentially, expanding and adding new rules for home loan disclosure and mortgage settlement practices is a growing concern for mortgage professionals nationally.
According to a July industry survey by Wolters Kluwer Financial Services, the new disclosure and mortgage settlement rules are a big worry for compliance officers. Sixty percent said Truth-in-Lending compliance was a top concern; 58 percent also expressed anxiety with RESPA. “There are so many different mortgage regulations that are changing in the next 18 months or so, it’s kind of an overwhelming task,” said James Barber, the chairman and chief executive at the $1.4 billion-asset Acacia Federal Savings Bank in Falls Church, Vrginia.
Just a month ago, amendments to the Federal Reserve’s Regulation Z went into effect to enforce speedy cost disclosures for consumers. This coming January, banks are bracing for the compliance deadline for related Real Estate Settlement Procedures Act (RESPA) changes, finalized last year by the Department of Housing and Urban Development to help consumers shop around for mortgage terms with easy-to-understand, good-faith estimates and limits on pre-closing fees.
For community bankers ramping up for more mortgage origination activity, working under these new rules is already proving to be a cumbersome exercise. RESPA and Reg Z (the Fed’s Truth-in-Lending Act regulations) are forcing banks into costly upgrades of originations systems to accommodate compliance needs-processes, which many larger banks already have in place. Banks also must refocus their business-line and customer-service activities to meet with the inherent delays and confusion as part of new disclosure procedures. “We are handing our customers a letter at the time of the application spelling this out,” said Tom Myers, executive vice president and chief lending officer at the $1.5 billion-asset Monroe Bank & Trust in Michigan. “In the past, if you were expecting to close this loan in 35 to 40 days, it’s now 60 days.”
The most immediate impact on these bankers has been the TIL rules, which were enacted by the 2008 Mortgage Disclosure Improvement Act. Mortgage lenders must now wait at least seven days after an early good-faith estimate disclosure before closing on a loan. If the APR at close varies by more than .125 percent from the early disclosure, a “re-disclosure,” or new good-faith-estimate, is then required-which restarts the clock on the pre-close waiting period. That includes actions by consumers who decide at closing to buy down points or change terms themselves. “The customer can’t make a change at the last minute,” without delaying the close, said Monroe’s Pat Williams. “If he wanted a $100,000 mortgage and now wants $102,000, he has to go back and have a seven-day waiting period.”
The major RESPA changes included a new standardized good-faith-estimate form that gives more transparency on fees, settlement procedures and closing costs. But critics say consumers could potentially be perplexed by dual TIL and RESPA forms, since both estimates are derived from different numbers. RESPA calculates from the actual loan rates, while Reg Z is based from the annual percentage rate. “One relates to interest rates and one relates to fees,” said Rod Alba, the senior regulatory counsel with the American Bankers Association. Both the ABA and the Mortgage Bankers Association are seeking a delay in the implementation of RESPA regulations until the two agencies can match up disclosure rules. The ABA “is not saying pull back the rule,” said Alba. “We’re saying delay the rule so you can work out the kinks with your sister agency.” — Article was written by Glen Fest who is an executive editor of US Banker.
28 Aug 09 Fastest Growing Mortgage Companies
Even after a few difficult years, some mortgage companies made the list of the fastest growing private companies. Among the top 500 were two home loan origination companies, a default service provider and a mortgage lead generation company. Revenues at the highest-ranking mortgage-related company soared from less than $0.5 million in 2005 to $22 million last year.
The 28th annual Inc. 500 ranking was released earlier this month. Companies qualified to participate in the ranking must have been founded and generating revenue by the first week of 2005. Revenues generated by the 500 companies that made the latest list were $18.4 billion, jumping from $13.7 billion in the prior report. Inc. editor Jane Berentson called the companies “the most dynamic, fast-growth companies in the nation.”
Tags: Mortgage Lending News
26 Aug 09 US Mortgage Rates Remain Low
Mortgage interest rates fell in the latest week to their lowest levels since the end of May, following a drop in Treasury yields on concerns over the pace of economic recovery, Freddie Mac said on Thursday. In a recent article, mortgage executive, Scott Deal reported that “The Fed and US government were doing everything in their efforts to ensure American consumers had access to low mortgage rates.
FHA mortgage rates remianed at 5.25% for thirty year home mortgages and jumbo mortgage loans continued to see higher interest rates as the insurance companies continue to voice concerns over delinquencies and loan modifications plans.
The average 30-year fixed home loan rate fell to 5.12 percent from 5.29 percent in the prior week. The 30-year rate was 6.47 percent a year ago. 15-year mortgage loans averaged 4.56 percent, down from 4.68 percent in the previous week and 6.00 percent a year earlier.
17 Aug 09 Mortgage Delinquency Rate Climbs to All Time High
The delinquency rate on U.S. home loans reached an all-time high in the second quarter. However the pace of growth for the mortgage delinquency rate slowed and some industry analysts see this as a possible sign the mortgage crisis may be beginning to turn the corner. Data provided by credit reporting agency Trans Union shows the ratio of mortgage holders who are 60 days or more behind on their payments increased for the 10th straight quarter, to 5.81% nationwide for the three months ended June 30. That’s up 65%, from 3.53%, in the 2008 second quarter. Delinquency of 60 days is considered a forecasting sign to foreclosure, because of the difficulty homeowners would have coming up with two back payments to bring themselves current.
While the delinquency rate hit a new high, however, the increase from the 1st quarter to the 2nd was 11.3%. In the two prior quarters, the delinquency rate spiked almost 16%. That slowdown may be a good sign, said FJ Guarrera, vice president of Trans Union’s financial services division. “We have reason to be cautiously optimistic,” he said. While there’s no way to know exactly why the pace of growth is slowing, Guarrera said, it appears that loan modification programs aimed at helping distressed homeowners from both the FHA mortgage and conventional lenders are beginning to help. In addition, he said, consumers are being more careful with their spending. Read the original article written by EILEEN AJ CONNELLY >
Tags: FHA mortgage, foreclosure, home loans, loan modification programs, mortgage crisis, Mortgage Delinquency, Trans Union
