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06 Nov 12 Mortgage Lenders Poised for Housing Market Recovery

Once a year, the Mortgage Bankers Association holds their annual convention and they reported their largest turn-out since 2007 as over 3,500 mortgage lenders reportedly attended the event. The common beliefs from this MBA event were that home loan origination will increase in 2013, but mortgage refinancing volumes will likely decrease towards the end of next year. 2012 has been an incredible year for record low rates on FHA, VA, conventional and jumbo mortgage products. The housing sector is beginning to see signs of a recovery in many areas across the country and this gives Realtors and home loan lenders hope that 2013 will be a profitable year.

The biggest problem remains qualifying criteria for home loan programs as many of the applicants have issue with credit or equity requirements. There may not be enough subprime mortgage lenders offering programs that meet the needs of distressed homeowners. The Home Affordable Refinance Program has helped many homeowners that have upside down mortgages, but you have to have a mortgage owned by Fannie Mae or Freddie Mac. Not all underwater home loans are owned by these government entities so there is still a need to find an underwater refinance programs for people that do not have a mortgage owned by Fannie or Freddie. The biggest criticism of the FHA streamline refinance is that borrowers must pay for closing costs out of their pocket. FHA will not allow people to finance closing costs under the streamline program. They will also not permit no-cost loans in which the lender fees are paid by the loan company. Not everyone has $4,000 or $5,000 to pay for the streamline refinance.

Economists for the trade group estimated that modest economic growth, more sales to owner-occupants and a small boost in average home prices will drive a 16% increase in home purchase mortgages, to $585 billion. Meanwhile, home refinance transactions are forecasted to decrease $785 billion, down from an estimated $1.2 trillion this year. The American Action Forum, a public policy group, recently estimated that combined all the new regulations would result in 20% fewer mortgages than otherwise would be made, up to 1 million fewer housing starts over a three-year period and 3.9 million fewer jobs. Renting is roaring. Investors are scooping up distressed suburban homes to turn them into rentals, and the majority of multifamily construction now going on is apartments, not condominiums.

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02 Aug 10 Homeownership Rate Forecasted to Drop

The homeownership rate is declining, with some analysts projecting that it will reach 62 % as early as 2010. That rivals the low in 1960 when it was at 61.9%. Homeownership hit a high of 694 % in 2004. “Homeownership fell during the quarter when government was offering a tax credit to first-time home buyers.  

Why is Homeownership Declining if Mortgage Rates Are at Record Lows?

John Burns, CEO of John Burns Real Estate Consulting, a California-based housing market analyst asks, “What do you think is going to happen now that there’s no tax credit?”  Burns believes that 6 million of the 8 million home owners who are behind on their mortgage loans will have their properties repossessed in the next two years, pushing down the homeownership rate quickly, especially among low-income consumers.  Some observers are more optimistic. Arthur C. Nelson, director of the University of Utah’s Metropolitan Research Center, says the rate may not go down as fast or as far as predicted because others will purchase many foreclosed homes

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08 Jul 10 Nationwide Mortgage on the Irony of Wells Fargo Woes

The Nationwide Mortgage Blog posted a fascinating article on the Wells Fargo that connected the dots between company mergers, loan default increases and recent mortgage industry layoffs.  The author, Bryan Dornan wrote an article for Nationwide that underlined the ironic nature of Wells Fargo buying an Option ARM lender after the company would not budge on originating risky loans even in the “hey-day” of the “everyone with a heart beat is approved” lending era.  He notes how interesting it is that a conservative lender like Wells fargo who never took risks with loan programs like the negative amortization, No Income No Asset mortgages, zero down stated income purchase and 125 loans would go out on such a limb financially to buy a toxic asset like Wachovia.

“In 2006 the subprime mortgage crisis exploded when home loan lenders started going out of business as loan defaults started mounting.”  Home values started plummeting nationally and in 2007 the economy took a turn for the worst.  In 2008 employment skyrocketed and mortgage giants like WAMU and Wachovia were on the verge of bankruptcy.  The government stepped in and brokered Chase to take-over WAMU and Wells Fargo to take-over Wachovia.

Don’t you find it interesting that after years of refusing to originate the risky option ARM product that Well Fargo went out and bought, Wachovia who just failed because they bought the biggest option ARM lender, World Savings?  I find it strange that after nearly escaping the mortgage industry debacle because of their wavering from their conservative lending philosophy that Wells Fargo would make this kind of catastrophic investment.  Did they ever think to do a back-ground check on this billion dollar bank they were buying?  This is sad because 4,000 people would still have their job today at Wells if it were not for this impulsive and uncharacteristic transaction.  Maybe they should take a page from Obama and blame their mistake on Bush.  Regardless of this giant financial blunder, Wells Fargo is still a great company that will survive the series of crisis’s and continue to be America’s most trusted mortgage lender.

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