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
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.
