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11 Dec 17 How Will the Federal Reserve Impact Mortgage Securities in the Future

MBS are a large part of the U.S. bond market, representing about 30% of the Bloomberg Barclays US Aggregate Bond Index (source: Bloomberg, as of 11/30/2017). Chances are if you hold a core bond mutual fund or exchange traded fund (ETF), you have MBS in your portfolios. So should you just sell your MBS since the Fed will be buying less? Not so fast. First, consider the following factors. It’s true that mortgage rates could increase as the Fed continues to reduce their purchases and there is no longer a buyer of the last resort in the market. But mortgage rates have already risen since the U.S. election and the market has since priced in the Fed’s forward guidance on the normalization, as the chart below shows. Read the complete Nasdaq article.

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30 Jul 12 Today’s Mortgage News

It’s hard to believe that interest rates on mortgages could get any lower, but they did. The Mortgage Bankers Association and Freddie Mac both published weekly surveys indicating that the mortgage rate averages dipped to break more records. The thirty-year rates averaged 3.52% and the fifteen-year rates averaged 2.82% respectively.

Note-Worthy Mortgage News for Today

How to Refinance with HARP if You Have a 2nd Mortgage

Texas Bank Sues the CFPB Mortgage News Daily

Bond Investors Say Housing Crisis Not Over

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25 Nov 11 Daily Mortgage News

The Lead Planet offers a new special for new accounts seeking mortgage marketing services. New Free Mortgage Lead Incentives for Purchase and Refinancing Leads (See the LeadPlanet.com for more details.).Freddie Mac says the rate on the 30-year fixed loan fell to 3.98 percent from 4 percent the previous week. Business Week reports that fixed mortgage rates have fallen below 4% on thirty-year terms. -
Higher Loan Limits as FHA extends support with a new role in Government financing. The Daily Herald examines FHA’s elevated loan limits.

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16 Sep 11 New Record Low Rates Spur Refinancing Activity

Rates for home buying and refinancing have broken al-time record lows as the Federal Reserve and the poor economic conditions have cause interest rates to fall once again. Record low Treasury bond yields have driven mortgage rates to new record lows in rate offers set by banks and other mortgage lenders early Tuesday, according to a review of rates. Treasury prices fell in early morning trading in New York as investors focused on today’s 10-year note sale.  The drop in the 30-year fixed rate found the benchmark mortgage at a low of 3.93% on Money Rates, which is well off a new record low average set last Thursday at 4.12% tracked by Freddie Mac. The mortgage refinance rate on shorter term fixed terms and adjustable rate loans were also significantly lower.

The 15-year fixed rate loan reached a low of 3.23% in early morning offers made to home purchasers and those looking for home mortgage refinance options available through Housing Predictor mortgage vendors. The 5-year hybrid mortgage rates fell to 2.69%, the lowest rate ever on record.

High unemployment, averaging 9.1% across the U.S. with much higher levels in many areas especially hard hit by the housing bust and economic uncertainty are troubling financial markets, including bankers who are trying to stir-up more business. The deteriorating debt crisis in Europe is also troubling financial markets.   Stock markets have been on a roller coaster ride for more than a month with wide swings on the New York Stock Exchange industrial average, making 200 point gains one day and then 200 Read the Housing Predictor Article.

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17 Aug 11 Mortgage and Home Loan News

Why Mortgage Leads in Less Popular States Convert Better – The Lead Planet, a mortgage marketing company from San Diego, California discusses why sometimes buying leads in random states makes sense financially.

Freddie Mac and Fannie Mae Default Ratings – Taxpayers have spent about $150 billion to rescue them, the most expensive bailout of the crisis.

Home Loan Applications Increased with Interest Rates Declining – With the Federal Reserve’s commitment last week, interest rates fell once again and mortgage applications soared across the country.

Will Homeownership Rates Revive? – With low mortgage rates and talk of the housing market improving many people anticipate that the rate of consumers becoming homeowners will soar again.  The New York Times says — Not so Fast.

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10 Aug 11 Home Mortgage News

10 Ways to Stimulate the Housing Sector in 2012 – Bryan Dornan wrote an interesting article that promotes ten steps to help eliminate the housing crisis. He makes some aggressive suggestions like eliminating taxes on capital gains and tax credits for 1st time home buying. These may be the types of recommendations needed to get our housing market back on track.

Low Rates from the Federal Reserve Won’t Fix the Economy or Retirees – According to Paul Wiseman, “No matter how much the Fed lower the rates, nervous consumers and wary businesses remain reluctant to spend money or take risks to revive the economy.” The average 30-year fixed rate mortgage declined last week to an annual low of 4.375%.

Is Fannie Mae Buying More Bad Debt from BofA? – According to Origination News, Fannie Mae may be forcing B of A to unload the $73 billion of MSRs because the bank is doing an extremely poor job of managing the receivables.

Measuring the Refinance Demand – The Mortgage Refinance Index jumped 30.4% from the previous week. The four week moving average climbed 13.7%.

Going Online to Find Best Mortgage Lenders – Nationwide offers tips to consumers for shopping lenders on the internet.

Comparing Rates with FHA Lenders – Talk to loan companies that have experience with government lending.

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09 Aug 11 Mortgage News for August 9 2011

The Mortgage News Post has highlighted these worthy financial articles below.

3 Reasons Lower Home Mortgage Rates Are Important – Even cutting 1 or 2% points off of your mortgage rate can significantly lower the total amount of interest expense you pay on your house.

5 Top Home Loans for Refinancing – Nationwide lender publishes an article that highlights the five best loans for mortgage refinancing. See www.bdnationwidemortgage.com

How the Credit Downgrade Could Affect Your Home Loan– CNN-Money reported that the response to Fannie Mae and Freddie Mac being reduced to AA+ from AAA. Mortgage refinance rates were composed to continue to fall.  HSH Associates quoted the average fixed 30-year mortgage rate at 4.44% yesterday. Keith Gumbinger, of HSH Associates said, “We expect to see home mortgage rates drop into the 4.30′s by noon tomorrow.”

Real Estate News: Ripple Effect May Include Higher Mortgage Rates – The downgrade of the U.S. credit rating could have a negative impact on American mortgage markets that remain on government tab.

What do lower credit ratings for Fannie, Freddie mean for you? – Today, the Federal Reserve announced that it would not hike key rates until 2013. So home loan rates should remain at record levels, but there are still many obstacles in housing market like mortgage refinance guidelines.

Fannie Mae Posts Wider Losses:  Fannie posted a net loss of $2.9 billion for the second quarter, up from a year-ago loss of $1.2 billion. The company has now reported losses in 15 of the last 16 quarters and must ask the U.S. for another $2.8 billion in bailout funds after it makes quarterly dividend payments to the Treasury

Federal Reserve extended key interest rates at record lows  – According to Priya Misra, “The market wanted the Fed to acknowledge the weakened outlook, and they did,” said head of U.S. rates strategy at Bank of America Merrill Lynch in New York, one of the 20 primary dealers that trade with the Fed. “The explicit commitment to mid-2013 by the Fed has reaffirmed price action.”

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05 Jul 11 Mortgage Rates Hold Steady

ABC news reported that fixed home mortgage rates remained at 2011 lows.  Freddie Mac said the average interest on the 30-year mortgage rates inched up slightly to 4.51%. It hit its lowest level of the year three weeks ago, at 4.49%.

The average rate on fixed 15-year mortgage rates, a popular refinancing option, stayed at 3.69%. It reached its low point of the year two weeks ago, at 3.67%.  Rates typically track the yield on the 10-year Treasury note, which has been rising in the past week.

That could change this week when the Federal Reserve’s $600 billion bond buying program ends. The Federal Reserve has purchased around $75 billion worth of bonds each month since November. That drove the yield on 10-year mortgage rates lower than 3% this spring. As a result, rates on loans and other home mortgages also fell.

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04 May 11 BofA Has Mortgage Servicing Rating Downgraded

Moody downgraded Bank of America’s mortgage servicing quality ratings were downgraded yesterday, because of deterioration in the mortgage lender’s collections and loss mitigation on home loans. BofA recently reduced some of the home loan programs in an effort to simplify mortgage originations nationally. Moody, the respected credit rating agency said it downgraded both BAC Home Loans Servicing LP and Bank of America, N.A. to SQ2 from SQ1 as a primary and special servicer for both 1st and 2nd mortgages. Moody’s action moves BofA down one notch from the highest rating on a five-step scale used by the ratings agency for mortgage servicing. Moody’s also said it would maintain a review for possible future ratings cuts, except as a primary servicer of second mortgage loans.

A BofA spokesman Dan Frahm said the downgrade was not a surprise, and the cuts reflected a recent settlement with bank regulators over problems with the industry’s foreclosure practices. Frahm said the bank expected the rating to rise again after the bank complies with the settlement with bank regulators and finishes the overhaul of its foreclosure practices. Bank of America is the largest servicer of home mortgages and its lending operations have been surrounded by controversy recently as the bank temporarily halted foreclosures after critics cited that legal procedures may have been circumvented. Investors have spoken openly about concerns that the bank could be responsible to buy back billions of dollars of mortgages for people with bad credit because of delinquencies and defaults.

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30 Mar 11 New Mortgage Legislation Being Introduced by Republican Law Makers

More than ever before, Congress and the Senate have been introducing new bills to improve and regulate the mortgage and housing industries. Government home financing maintains over 95% of the marketplace between Fannie Mae, Freddie Mac and FHA loans. The House Republicans who will ultimately have the most influence on the decision have come out with a plan for reforming the two government sponsored enterprises Fannie Mae and Freddie Mac. Scott Garrett (R-NJ) Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises released what was actually a summary of eight bills, each covering a different aspect of reform and each introduced by a different member of the parent Financial Services

The GSE Mission Improvement Act, sponsored by Ed Royce (R-CA)

This legislation would permanently abolish the affordable housing goals of Freddie Mac and Fannie Mae. According to Royce’s comments accompanying the bill, these goals were a central cause behind the collapse of the GSEs and the ongoing goal of the GSEs should be to reduce risk to taxpayers rather than expose them to further losses.  “To meet these goals, the GSEs purchased more than $1 trillion in ‘junk loans.’  These home loans accounted for a large portion of the mortgage giants’ losses – losses that were later loaded onto the backs of American taxpayers.”

The Fannie Mae and Freddie Mac Accountability and Transparency for Taxpayers Act (H.R. 31), sponsored by Judy Biggert (R-IL) Chairman of the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity.

This bill would establish an Inspector General (IG) within the Federal Housing Finance Agency (FHFA,) the conservator of the GSEs, provide him/her with additional law enforcement and personnel hiring authority, and require him/her to submit regular reports to Congress on taxpayer liabilities, investment decisions, and management details. These reports would be made publically available.

The GSE Debt Issuance Approval Act, Sponsored by Steve Pearce (R-NM).

Under the requirements of this legislation, the Department of the Treasury would have to formally approve any new debt issued by the GSEs.  Pearce comments that, “This will help protect taxpayers by requiring the formal legal authority of U.S. debt issuance to approve the issuing of agency debt which is roughly the same as U.S. debt.”

GSE Credit Risk Equitable Treatment Act, sponsored by Scott Garrett.

This proposed home loan legislation would apply any of the standards applied to private secondary mortgage market participants to the GSEs. It would, according to Garrett, ensure that the GSEs are not exempt from new risk-retention rules mandated by Dodd-Frank and that they face the same retention standards as private market participants.  Read the complete article from Mortgage News Daily > Republicans Dive Head First into GSE Reform with Eight New Bills 

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30 Mar 11 New Retention Rule to Impact Government Backed Home Loans

April 1st is the date when the Dodd-Frank mortgage rules are set to kick in, but few lenders and brokers really believe that the finance reform act will be enforced. Meanwhile the Obama administration seeks to reduce the government’s role in housing, reliance on Fannie Mae and Freddie Mac may be reinforced by a rule growing out of the Dodd-Frank regulatory overhaul.  The Federal Deposit Insurance Corp. and the Federal Reserve yesterday released for public comment a proposed rule requiring lenders and bond issuers to keep a stake in some mortgage loans they securitize.  The proposal would require loan companies that securitize mortgages to retain as much as 5% of an issue if it is based on mortgages whose borrowers have imperfect credit and make down payments of less than 20%.

The rule includes a key exemption from those standards: Lenders could avoid keeping a share in more challenging conventional and FHA home loans if they get them insured by federal agencies or sell them to Fannie Mae and Freddie Mac, the government-sponsored enterprises now under U.S. conservatorship.  The GSEs and the Federal Housing Administration own or insure more than 96% of mortgages now being originated. Making their home loans exempt from the rule would maintain the government as the main holder of mortgage-market risk, said Karen Shaw Petrou, managing partner of Federal Financial Analytics in Washington.  “If finalized as proposed, which we doubt, the regulation would memorialize U.S. home financing in the hands of FHA, Fannie Mae and Freddie Mac” Petrou said.

If the housing market recovers and private capital becomes available for mortgages, the rule’s biggest beneficiaries could be the largest lenders, including Wells Fargo Home Mortgage and JPMorgan Chase Mortgage Large institutions can more easily afford to hold loans on their books. Community banks, which generally need to sell their home loans in order to keep originating new mortgages, would find it harder to meet the new standard if they couldn’t get government backing for riskier loans. The risk-retention rule is mandated by the Dodd-Frank mortgage reform and is designed to prevent the shoddy underwriting practices that fueled the housing bubble.  During the debate on the Dodd-Frank bill last year, some housing interest groups applauded the amendment allowing exceptions for qualified residential mortgages, or QRMs, assuming that regulators would carve out many if not most home loans.

“We’re very glad to see that the regulators are proposing to exempt loans sold to Fannie and Freddie,” said Ann M. Grochala, vice president of lending and accounting policy at the Independent Community Bankers of America. “In that regard, it should have a minimal impact on community banks.”  Jerry Howard, president of the Washington-based National Association of Homebuilders, questioned whether Fannie Mae and Freddie Mac would have the capacity to finance any more mortgages. FHA loan limits are set to be reduced in October and the administration and congressional Republicans are seeking to cut the companies’ portfolios, meaning they won’t be able to hold as much debt.  “The ability of the GSEs to continue to do their jobs is going to be greatly impeded,” he said.  Many mortgages now being originated don’t meet the 20% down-payment standard. According to Corelogic Inc, over a fifth of the nearly 464,000 home mortgages issued in 2010 had down payments of less than 15%.  Read the complete Bloomberg article online > Dodd-Frank Mortgage Risk-Retention Rule May Reinforce Role of Fannie Mae

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25 Feb 11 Questioning the Loan Officer Compensation Rule from the Federal Reserve

Is the Federal Reserve way off in their attempt to limit loan officer’s compensation?  Even if it’s a good idea to curb loan costs, should the Fed be capping income for an industry? The mortgage loan origination sector will affect thousands of people in each state. Of course every borrower wants a clearer path towards more no cost loan options, but if it deteriorates the industry is it worth it?

In a new letter industry trade groups are urging the Federal Reserve to reject a recent staff interpretation regarding its loan officer compensation rule that would restrict payments between mortgage companies and “affiliated” real estate brokerages and title agencies. The compensation rule becomes operative April 1st, 2011.

Trade group officials recently learned that the Fed staff believes fees paid to affiliated title or real estate brokerage servicers could run afoul of the rule. “This would, in effect, prohibit — for no justifiable reason — a successful and long-established business model that offers consumers one-stop loan services through a network of affiliated companies,” the letter says.   The signers to the letter are urging Fed governors “not to adopt” the staff interpretation and consider two possible solutions.

One solution would be to exempt “bona fide and reasonable” fees paid for third-party title, appraisal and real estate brokerage services from the scope of the loan compensation rule. “A second solution might be to limit the definition of ‘affiliate’ to include mortgage lending and mortgage brokering businesses as specifically stated in the rule but not to include ancillary providers in that definition,” the letter says. Some of the signers to the letter include the Real Estate Providers Council, the National Association of Realtors, and Consumer Mortgage Coalition.  Read the original article was written by Brian Collins for the National Mortgage News.

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25 Feb 11 Higher FHA Loan Fees Coming

According to recent data released, FHA loan applications for refinancing and home buying were lower in January than in the previous month or in January 2010. Many mortgage professionals believe the loan demand has dropped as the interest rates have risen. According to the Department of Housing and Urban Development FHA loan applications reached 103,991 in January compared to 112,500 in December and 126,043 a year earlier.  The year-over-year figure reflects a drop of 17.5%.  There were 55,417 applications for home purchase and 41,178 for mortgage refinancing.

Will borrowers rush to lock into a FHA loan before HUD hikes the FHA Fees?

Year-to-date figures also show a substantial decrease in activity between FY 2010 and FY 2011.  Total applications are 26.7% lower with purchase mortgages down 34.3% and refinancing off 22.1%.  Total endorsements are 24.1 % off of the 2010 pace with most of the fall-off accounted for by the purchase sector which was down 34 %.  FHA refinancing endorsements fell8.1 % and HECM endorsements are at -23.3 % the 2010 level.  The total unpaid principal balance amount is $947.8 billion.  The portfolio has a current delinquency rate of 8.9 % with 612,443 loans over 90 days delinquent.   In December the rate was 8.8% and one year earlier it was 9.2%. The weighted average FICO score for FHA loans was 703, one point higher than the previous month and nine points above the score a year earlier.   Many industry insiders have signaled that HUD is tightening guidelines and elevating the FHA credit requirements in 2011.

According to the Lead Planet, in January there were 5,735 FHA loan applications a day.  The Department of Housing and Urban Development indicated that the average processing time from application to funding was slightly over 2 months. These figures are from the Single-Family Operations Report for January issued this week by HUD.  Even as FHA mortgage rates have increased in 2011, the popularity has been raised since the beginning of the foreclosure crisis but the agency has also raised upfront and annual premiums in the past year. Thirty-year home loan rates have risen more than half a point since the record lows in December of 2010.  Declining loan demand in January is no surprise given the uptick in mortgage rates we witnessed. FHA rates are now off those highs but loan production has yet to pick-up.  We are curious to see how the FHA’s decision to raise the annual mortgage insurance premium will impact loan demand before the new fee structure goes into effect on April 18th.

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08 Feb 11 Impact of New FHA Rules

Many FHA lenders have been deeply impacted by the new rules that HUD enacted in January for FHA lending.  Last year, HUD announced that FHA lenders will see increased liability from additional responsibility that comes with originating FHA refinance and purchase mortgages.  HUD continued, “Lenders, brokers or other third-party originators, already approved by FHA, will be authorized to continue to originate FHA mortgage loan programs through the end of the calendar year without sponsorship of an approved FHA lender.

The other concerns FHA lenders have is implementation of the Dodd-Frank Mortgage Reform Act this summer is bound to make originating loans more difficult as the government mandates tougher loan restrictions with tighter underwriting guidelines for conforming and FHA guidelines.   Read the original article, Approved FHA Lenders and New Rules.

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07 Feb 11 BofA Bails Out of Reverse Mortgage Market

Last week, Bank of America Home Loans announced the sale of its Balboa Insurance organization to the QBE Insurance Group Ltd.  BofA maintains they are shifting away from the reverse mortgage loan market.  A BofA spokesman said they exiting of reverse loan program underline the bank’s additional step to focus on its core mortgage loan operations.  The division employed 600 people and if they’re not moved to another area in the company, they will have the opportunity to apply for other job openings at the bank. BofA made new last month because of having to buy back more bad mortgages than previously anticipated.

After operating a small retail operation, BofA made a big splash into the senior home loan market, when they purchased Seattle Mortgage’s reverse mortgage business for $220 million in 2007. The latest data from Reverse Market Insight shows the bank’s retail channel decreased 29.4% during the year.  Yet, BofA was the second largest reverse mortgage lender in the country, behind only Wells Fargo.

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