Mortgage rates are beginning to show some positive results for rebuilding the mortgage industry. Record low mortgage rates have spurred a surge in homeowners wanting to refinance. According to a report from Mortgage Bankers Association, over 85% of new home loan activity involved refinancing applications.
Mortgage lenders are swamped by the giant wave of mortgage refinancing requests.Many have shed staff the past couple of years as the housing market slumped. Now they lack the manpower to quickly process refinancing requests.“Lenders aren’t prepared for the surge,” says Mark Zandi of Moody’s Economy.com.Some mortgage lenders are even hiring more people to accommodate the growing demand for refinancing.Read the complete article online. Mortgage Refinancing Activity Skyrockets.
Option ARMs Banking Backdrop of 2009After the subprime mortgage debacle continues as the asset securitization crisis unfolds, another chapter up its sleeves with added melancholy, called the Option ARMs. With billions of Option ARMs due for recast in 2009 and 2010 another crisis is on the making. But this time problems are expected to be more pronounced than the subprime crisis since the economy is already nearing its trough, the consumer confidence has slumped to an all time recent history low and financial markets are in a gridlock. Making the matters worse is the unrelenting fall in the US housing market which is showing no signs of stabilization.Get the Mortgage News as it happens>
Lenders made Option ARMs with ‘teaser’ features to borrowers, which included making lower minimum payments for initial years and then loan being reset to higher payment schedule thereafter. If that was not enough, these loans had another feature called “negative amortization”.With US housing prices declining and the burgeoning loan-to-value skyrocketing, Option ARMs delinquencies are set to increase dramatically.Article was written by Reggie Middleton. Read the complete home financing article>
Wells Fargo & Co. announced Thursday the completion of its merger with Wachovia Corp., resulting in a monstrous distribution system for financial services with 1.4 trillion in assets and 11,000 stores nationwide servicing 48 million banking households and employing 276,000 employees.
The Board of Governors of the Federal Reserve approved the merger in mid-October following a debacle between Citigroup Inc. and Wells Fargo over which suitor would acquire Wachovia’s banking operations — Citi pulled out of talks after four days of discussion on splitting Wachovia’s assets.Get the Mortgage News as it happens>
As of Thursday, customers of Wells Fargo and Wachovia were granted access to use all the company’s 12,260 combined automated teller machines.Pat Callahan, an executive vice president and head of the Company’s merger transition, said Wachovia customers will continue to see the Wachovia brand in their banking stores and communities for the near future. “The key to a successful integration will be our ability to provide outstanding customer service throughout the integration,” said Callahan. “So we’re going to take our time and do this right. Wells Fargo and Wachovia customers should continue banking as they do today…”Wells Fargo continues to be one the most respected mortgage lenders nationwide.
At closing, Wells Fargo acquired all outstanding shares of common stock of Wachovia in a stock-for-stock transaction. Wachovia shareholders received 0.1991 shares of Wells Fargo common stock in exchange for each share of Wachovia common stock they owned. Shares of each outstanding series of Wachovia preferred stock were converted into shares or fractional shares of a corresponding series Wells Fargo preferred stock, having substantially the same rights and preferences, Wells Fargo said in a press statement.Read the Complete Bank Merger Article >
In a recent article, Aleshia Howe considers the impact of low interest rates and the lack of home financing in recent weeks.Mortgage lenders and consumers alike have watched home mortgage rates tumble to near mid-4 % range before quickly rising above than 5%. As home mortgage rates continue to flirt with 30-year lows, local mortgage lenders say they’re seeing a noticeable spike in refinancing inquiries, but the historic low rates have done little to convince “looky-lue” homebuyers to re-enter the market.
Is now a good time for New Homebuyers to Jump in Because Home Mortgage Rates are low?
The volatility in the market is expected to hang around. However, with mortgage rates approaching record lows, applications for the week ended Dec. 26, 2008, ran 155% ahead of the mortgage activity seen during the same week in 2007, according to the Mortgage Bankers Association’s weekly survey. Many mortgage lenders say the rise in applications coincided with another drop in mortgage rates, as the federal government’s efforts to throw a lifeline to the residential mortgage market begin to manifest.FHA home loan rates remain low and most of the new home loan applications reflect some type of FHA loan product.
According to the MBA’s survey, rates on thirty-year fixed-rate mortgage loans averaged 5.03% last week, down from 5.04 % the previous week.Mortgage refinancing applications for refinancing made up 82.9% of all applications filed for the week ending Dec. 26, 2008, while the share of applications for adjustable rate mortgages, or ARMs, averaged 0.8%.Not unlike the refinance boom that occurred during the last economic downturn in 2003, local lenders say their phones are continuously ringing and home refinancing is on most borrower’ minds. The difference between 2003 and now, however, rests in the guidelines.“Mortgage rates have gone down; they’re not the lowest they’ve ever been, but they are definitely the lowest they’ve been in a while. Of course, these days are tougher than in the old days because of what’s gone on in the past year or so,” said Bob Neville, lender at Franklin Financial Mortgage in Southlake and board member with the Dallas-Fort Worth Association of Mortgage Brokers, or DFWMBA. “Things have tightened up considerably and it’s a whole new ball game, but people with good credit and a little equity are able to get some very nice rates.”
Scott Burdette, managing director of the Dallas-Fort Worth offices of IRR–Residential Valuation Consultants, said his firm also has seen a drastic uptick in refinancing applications for local properties.“You’ve got willing people, but not all are capable because of new rules,” he said. “But there’s a definite spike and that means at least people are trying to be smart and make sure they’re in the best situation they can be in.”Read the complete home financing article >
