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May 18, 2010

Merging Fannie Mae and Freddie Mac

Category: Fannie Mae,FHA Mortgage,Financial News,Freddie Mac,Mortgage News,Published Articles – admin – 9:59 am

After several mortgage bailouts a no end to loan defaults insight, it is not unreasonable to ask the question —- Why do we need both Fannie Mae and Freddie Mac?  In a recent article in the Huffington Post, a strong recommendation from the editor arose for Fannie Mae and Freddie Mac to clean up their act and merge the two government mortgage giants. The Huffington blog called for a new strategic plan for Fannie and Freddie to find a common goal and merge. The federal government has gotten tangled too deep in this mortgage mess and many believe if they continue it will significantly prolong the recession.  The FHA mortgage loan programs have been able to recover so why can’t Fannie and Freddie follow suit?

The Post points out that merging Fannie Mae and Freddie Mac to form “Fannie Mac” is a logical step to shift responsibility to new stockholders. The plan will also return the taxpayers’ subsidies to the Treasury.  Both GSEs have similar missions. Most of their loan programs are comparable and the merger is logical. The new Fannie Mac will trim its staff and get rid of highly paid senior and middle management who perform the same functions.   The GSEs have one-to-four family, home-lending divisions that buy home loans from banking institutions. They have separate divisions to purchase multifamily loans for rental properties with five units or more. Some of the programs within each division are similar enough to be combined and further reduce the company’s size.  These government mortgage companies need to dispose of the dispose of their toxic assets like the loan defaults, and bad credit home loans.

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May 14, 2010

Lead Planet Reports Surge in Refinance Lead Volumes

Category: Lead Buying Tips,Lead Generation,Loan Origination News,Mortgage Lender Discussion,Mortgage Lender Tips,Mortgage Marketing,Net Branch News,Published Articles – admin – 5:39 pm

For most of the year, loan companies have been searching for refinance leads with better conversion ratios.   U.S mortgage demand increased again last week, led by a rebound in refinancing applications as mortgage rates hit the lowest levels of 2010.   Bryan Dornan, the founder of  the mortgage lead company, the Lead Planet said, “Mortgage marketing has been difficult in 2010 for lenders and brokers that focus solely onhome  refinancing, because lending guidelines have tightened to a very uncomfortable level.” Finding a homeowner who qualifies for a refinance is ten times more difficult than it was just 3 years ago. 

In the article, Lead Planet indicated that refinance lead volumes surged almost 20% last week.  Apparently their lending partners utilized the increased lead volumes and new loans submitted into process increased tenfold.  A spokesman for the Lead Planet said Purchase lead volumes rose 5.75% even though nationally home loan applications had come to a screeching halt.  

Overall, mortgage demand increased 3.9% on a seasonally adjusted basis. Unadjusted, demand increased 3.4% from the week before.  30-year fixed-rate mortgages dropped from 5.02% to 4.96%, while rates of 15-year fixed-rate mortgages fell to 4.32% from 4.34%.  Interest rates on one-year adjustable-rate mortgages decreased from 7.03% to 6.86%.  Read the original article online > Lead Planet Reports Big Jump in Mortgage Refinance Lead Volumes

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May 12, 2010

Reverse Mortgage Lenders Cut Lender Fees

Category: Financial News,Loan Origination News,Mortgage Lender Discussion – admin – 11:41 am

Several reverse home mortgage lenders eliminated the origination and servicing fees on their senior home loan products, in an effort to re-brand the mortgage industry.  Changes in the Federal Housing Administration Home Equity Conversion Mortgage program, combined with lower home values, resulted in cuts in the amount of proceeds borrowers were eligible for, experts said.   Financial Freedom, now part of OneWest Bank, has created the Financial Freedom Senior Saver product, a fixed-rate home equity conversion mortgage which charges no origination and servicing fees.
The new program, the company said, will give seniors a savings of between $3,500 and $10,000 in loan costs. Borrowers still are responsible for the FHA mortgage insurance premium and third-party costs.

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May 10, 2010

Get Updated on FHA Guidelines

Category: FHA Mortgage,Loan Origination News – admin – 8:16 am

The National Mortgage News reported that because of the increased  risks associated with FHA mortgage loans, the U.S. Department of Housing and Urban Development finalized regulations that will dramatically change the delivery of FHA loans to the public. The key changes announced by HUD eliminate loan correspondent approval, increase net worth requirements for FHA-approved lenders up to ten times what is currently required, and amend principal-agent relationship requirements. FHA mortgage rates have helped stimulate interest because housing has become more affordable than ever.

The new regulations bring huge changes to the FHA mortgage program, which will be upon us by May 20th. It is critical that all FHA-approved lenders, as well as those mortgage lenders and brokers interested in participating in FHA programs, understand how these regulatory changes will affect their FHA lending activities.
This one-hour webinar will help you learn more about these new regulations FHA guidelines and how they will impact your business. There will be time at the end of the webinar for questions.  Registration closes at 5 p.m. EDT on May 11th.  To get signed up, visit http://www.klgates.com/events/Detail.aspx?event=2291

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May 3, 2010

Cash Out Refinancing Activity Drops to Record Low

Category: Freddie Mac,Mortgage News,Mortgage Rate Report – admin – 10:25 pm

Cash refinancing plummeted once again as borrowers found it difficult to get approved.  30-year mortgage interest rates remain at a record low, but people who can get approved for home equity or cash out refinance loans are few and far between.  Freddie Mac’s report indicated that the total mortgage portfolio declined significantly in March, dropping 9.1% on an annualized basis from February figures.  This was the 3rd straight month that the portfolio decreased in size.  The portfolio at the end of March was valued at $2.225 trillion.  The annualized growth rate for the entire year is -4.4%.  In February, Freddie Mac announced it would begin purchasing substantially all 120 days or more delinquent mortgages from its related fixed-rate and adjustable rate PCs, which totaled approximately $73 billion. 

However, according to the Monthly Volume Summary issued by Freddie Mac, the mortgage related investment portfolio skyrocketed, increasing by an annualized rate of 35.5%.  In February the portfolio was contracting at an annualized rate of 18.5.  The surge in the size of the retained portfolio was partially a result of government sponsored enterprise’s purchase of single family mortgage loans that were 120 days or more delinquent from its PCs.

Home loan delinquencies in all of Freddie Mac’s categories dropped for the first time in the past year.  4.13% of single family mortgages were delinquent at the end of March compared to 4.20% in February and 2.41% in February 2009. The delinquency rate for the non-credit enhanced portion of the portfolio decreased from 3.20% in February to 3.18% in March and the credit enhanced portion dropped from 9.12% to 8.87%.  Multi-family vacancies were also down slightly from 0.25% to 0.24%.

Freddie Mac also announced that, during the 1st quarter of 2010, one-half of borrowers who refinanced their conventional loans benefited from an interest rate reduction of at least 16 %.  The Enterprise’s first quarter Refinance Report stated that the average borrower moved into a loan with a rate 0.9 percentage points lower than their old loan.

The majority of mortgage refinance activity during the period either kept their outstanding loan balance the same or reduced it as a result of the refinancing.  18% of borrowers were involved in cash out refinance transactions that put cash in to the transaction to reduce the balance.  “Cash-out” borrowers, those who increased the home loan balance by at least 5%, represented 28% of new home loans.  This is the second lowest percentage of cash-out mortgages in a quarter since Freddie Mac began tracking the data in 1985.  The fourth quarter of 2009 had the lowest cash out figure at 24%. Through most of 2006 and 2007 over 80% of homeowners who refinanced increased the principal balance of their mortgages. The home equity cashed out in the first quarter of 2010 totaled $9 billion, the smallest quarterly inflation-adjusted amount since the third quarter of 2000. During the 2006-2007 period referenced above the cash-out numbers each quarter were in the $70-85 billion range.  Freddie Mac attributed the decline in cash-out numbers to reduced home prices and tighter underwriting standards for loan-to-value ratios.  The median appreciation of the collateral property was a negative 4% over the median prior loan life of 4.0 years.

Date is collected from a sample of properties on which Freddie Mac has funded two successive loans, and the latest loan is for refinance rather than for purchase. The analysis does not track the use of funds made available from these mortgage refinance loans.  “Rates on thirty-year fixed-rate mortgages during the first quarter remained low, averaging 5.0% in Freddie Mac’s Primary Mortgage Market Survey®,” noted Frank Nothaft, Freddie Mac vice president and chief economist. “The median interest-rate savings for borrowers who refinanced their conventional loan in the first quarter was 0.9 percentage points. Refinances were about three-fourths of originations during the first quarter. In total, the lower rate translates into about $2 billion in interest savings for these borrowers over the first 12 months of the new loan.”

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