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September 9, 2013

Why Jumbo Mortgage Rates Are Lower than Conforming Interest Rates

Category: Financial News,Published Articles – admin – 4:21 pm

Did you know that rates on jumbo home loans are actually lower than lenders are offering on conforming loan amounts? It’s hard to believe that larger loan amounts that typically have a higher rate of default can be accessed at a lower rate of interest. For the better part of the last decade, conventional interest rates were quite a bit lower than jumbo loan rates.

New Mortgage Financing Posts

Interest on FHA Mortgage Refinance Programs Increases
Jumbo Mortgage Loans Expand Credit for Home Financing

According to the Wall Street Journal, conforming mortgages carry a higher interest rate because of policy changes of the federal reserve and government sponsored enterprises, like Fannie Mae and Freddie Mac.  According to Nick Timiraos, Freddie Mac and Fannie Mae, have increased the fees those companies charge to brokers and mortgage lenders, which has in effect caused interest rates to be higher for popular conforming loans that are backed by Fannie Mae or Freddie Mac.

Meanwhile, interest-rate volatility has driven up yields on mortgage bonds issued by Fannie and Freddie as investors brace for a slowdown in the Federal Reserve’s bond-buying program, which has included those mortgage bonds. That has boosted rates on conforming mortgages . Jumbo house loans, meanwhile, are typically kept on banks’ balance sheets, which means prices aren’t usually set by bond markets. According to Brad Blackwell, the executive V.P. of Wells Fargo, “Banks have more deposits than loans today, so the desire to put that money to work, as well as the fact that it’s at a very low cost, allows us to make non-conforming mortgages at a very good interest rate.

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June 25, 2012

Underwater Homeowners Refinancing with HARP

Category: Financial News,Home Refinance Tips – admin – 10:23 am

American homeowners continue to seek refinancing solutions from the new HARP refinance and the streamline program, but will this help the housing crisis disappear? A recent report issued by the Federal Reserve indicates that U.S. households lost 38.8% of their wealth between 2007 and 2010, the largest drop since 1989. Although the Federal Reserve indicates the losses in financial assets and businesses as contributing to diminished net worth, the central banker targets declining house prices as the primary cause.

The bleak housing news comes as no surprise to borrowers that have been struggling to refinance their underwater loans. One of the few positive opportunities in this era of housing woes is that homeowners are starting taking advantage of the Obama’s foreclosure prevention programs, including the Home Affordable Refinance Program. This is a government relief measure that is sponsored by Fannie Mae and Freddie Mac.

FHA and HARP Refinancing Look to Help Struggling Homeowners

The recently revamped HARP 2.0 enables homeowners to refinance without regard for current home value, which enables qualified “underwater” homeowners refinance to today’s low mortgage rates. According to the Mortgage Bankers Association, the HARP refinances are soaring in popularity.

Meanwhile, he Federal Housing Administration doesn’t want its’ customers to be left out with underwater mortgages so they too have eased their guidelines on the streamline program. The FHA streamline loan program now features reduced upfront mortgage insurance premiums for homeowners that choose to refinance their existing FHA home loans that were originated prior to June 1, 2009.  If you are a homeowner that has been unable to refinance because your home loans are “underwater”, then consider the Streamline or HARP refinance because they may provide the best option to reduce your interest rate and monthly housing payments.

Take a minute and get a free loan quote from lenders that will uncover your refinancing eligibilities today.

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January 11, 2012

Record 30-Year Interest Rates Driving Lenders Business

Category: Financial News,Mortgage Rate Report – – 1:14 am

Zillow Inc. reported today that fixed 30-year home loans dipped once again to another record low last week.  With rates tumbling again, it’s no surprise that refinancing and purchase mortgage activity rebounded as well. Bloomberg reported that mortgage lenders are busier than ever as loan applications volumes have risen as rates have fallen in the first week of the new year.

In reviewing its Mortgage Marketplace, the housing data company said, the fixed 30-year mortgage rate dipped to 3.71%, down from 3.73% a week earlier. Zillow said the 30-year mortgage rates moved between 3.7% and 3.74% for the majority of the last week, falling to 3.67% on yesterday before rising to the current interest rate this morning.  It’s the 2nd week in a row that the Tuesday snapshot rate was the lowest the company has reported since the Zillow Mortgage Marketplace was launched in 2008. Many home mortgage lenders have reported rates at or near historic lows lately. Worries about European debt have been keeping yields on U.S. Treasury bonds low. Keep in mind that the mortgage rate typically follows the yield.

Many consumers are seeking quotes from lenders that offer no cost mortgage refinancing. Since Dodd-Frank has been enacted, we have seen more sources promote no cost lending than in previous years.

Tuesday, Zillow also said that the rate for a 15-year fixed home loan is at 3.03% from 3.07% a week earlier. The rate for a 5-1 adjustable-rate mortgage is 2.59%, down from 2.65%; a 5-1 ARM has an initial rate that applies for the first five years of the loan and then adjusts annually.

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October 20, 2010

Bank of America Home Loans Posts Profits

Category: BofA,Financial News – admin – 11:24 am

Bank of America Home Loans  offers a variety of loan programs, conventional, conforming, FHA and VA mortgage loans.  Recently Bank of America closed down their wholesale mortgage division, but the bank continues to originate loans from a retail level. B of A said its mortgage banking income rose 95% in the 3rd quarter to $1.75 billion, as production margins widened and expenses on representations and warranties declined.  Bank of America originated $72 billion in 3rd quarter, flat compared to the second quarter.  According to a company spokesman, the FHA streamline has been more popular than ever as interest rates fell to 50-year lows.

B of A officials are forecasting roughly $72 billion in mortgage loan production for the fourth quarter.  “Loan origination volumes have been strong,” said B of A president and chief executive Brian Moynihan. B of AAccording to figures  National Mortgage News, Bank of America is the country’s 2nd largest residential funder but ranks first among servicers. A few weeks ago it announced that it would close its wholesale division. During the bank’s 3rd quarter conference call, Moynihan noted that delinquencies and charge-offs in the mortgage area have stabilized.  The CEO expects foreclosures to peak in the next three to four quarters, but remain elevated for some time.

Wednesday afternoon the bank said it would move ahead with foreclosures in 23 states where it had temporarily suspended such actions. “We have to get on with it because it will restore the health of the market,” Moynihan said. In 3rd quarter the megabank booked a $872 million ‘rep and warranty’ charge, a $376 million decline from the 2nd quarter.

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October 4, 2010

Mortgage Reform from Dodd & Frank Will Be Interesting

Category: Financial News,Mortgage Reform News – admin – 4:32 pm

It’s pretty amazing that the government officially that played a major role in the housing crisis are now roll out a financial reform bill that is supposed to protect consumers and ensure that the mortgage industry stays on the up and up. The bottom line is that these guys passed laws that pushed the limits of mortgage lending in an effort to expand homeownership to the under-privileged Americans. These guys lobbied hard for Fannie Mae, Freddie Mac and FHA loan programs to accept borrowers with low income and poor credit.

  Apparently this bill exempts Non-Accelerated Filers from SOX Auditor Attestation Requirement Dodd-Frank Act Governance and Compensation Requirements: A “Punch List” of Action ItemsThe provisions of Dodd-Frank are wide-ranging, as noted by the impact of the law on employee complaints discussed in this alert.  Sign up for up to the minute mortgage news alerts.

Who Does It Protect? While the Sarbanes-Oxley Act, in its 2002-2010 form, covered only employees of publicly-traded companies, Dodd-Frank makes an enormous expansion of that coverage: almost every employee in the financial services industry – whether the employer is publicly or privately held – is accorded whistleblower protection of one sort or another.

How Are Claims Made? The Sarbanes-Oxley complaint process contemplated a system in which complaints to regulators, followed by an administrative hearing procedure, were the norm and resort to the full litigation avenue was a narrow exception. Dodd-Frank changes this dramatically, allowing direct access to the courts – what some industry representatives refer to as an “end run,” but what is termed a “private right of action” in the statute – under Section 922 of Dodd-Frank.

Dodd-Frank whistleblower complaints normally go to the Secretary of Labor, just as has been the case with those under Sarbanes-Oxley, and must be filed within 180 days of the action challenged in the complaint. From this point forward, however, the process changes: a Labor Department investigation results in preliminary findings which may include reinstatement “with full back pay,” compensatory damages and costs. However, if the complaint is deemed to be frivolous or filed in bad faith, the employee can recover his “reasonable attorneys’ fees” of up to $1000.

What Steps Should Be Taken? The first step in any action plan should be an assessment of current practices compared to the new legal and practical requirements an employer faces. Depending upon the staffing and sophistication of your organization, you should identify the individuals who should have input into the process and determine whether advice of counsel should be a Based on an underwriting-related portion of Dodd-Frank alone it sounds like home loans and second mortgages on the secondary market are probably going to continue to be underwritten within relatively narrow parameters for some time.

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August 17, 2010

Fed Prohibits Bonuses Paid from Lender to Broker for Higher Rates

Category: Financial News,Mortgage News,Mortgage Reform News – admin – 6:47 pm

The Federal Reserve issued the final mortgage rules are effective April 1, 2011, to provide mortgage lenders and loan originators time to develop new originating models and implement necessary changes to their loan originating systems.  The final rules, which apply to closed-end mortgage loans secured by a consumer’s dwelling, will:

 
  • Prohibit payments to the loan originator that are based on the loan’s interest rate or other terms. Compensation that is based on a fixed percentage of the loan amount is permitted.
  • Prohibit a broker or loan officer from receiving payments directly from a consumer while also receiving compensation from the creditor or another person.
  • Prohibit a broker or loan officer from “steering” a consumer to a mortgage lender offering less favorable terms in order to increase the broker’s or loan officer’s compensation.
  • Provide a safe harbor to facilitate compliance with the anti-steering rule.

Among other provisions, Section 1403 of the Reform Act creates new TILA Section 129B(c). The Board intends to implement Section 129B(c) in a future rulemaking after notice and opportunity for further public comment. Here are a few discrepancies…

  • The Reform Bill gets a bit more specific with the definition of “steering, but the final rules issued today already impose restrictions preventing the originator from steering borrower into loans that are not in their best interest.
  • The final rule issued today does not include a provision in the Reform Bill (TILA Section 129B(c)(2)) that says the borrower may not make any upfront payment to the lender for points or fees on the loan other than certain bona fide third-party charges.  Make sure you read that closely, it says UPFRONT.  Some mortgage lenders charge an appraisal fee disguised an “application fee” and will not refund it if the borrower goes with another lender before the home inspection is completed. This regulation eliminates the borrower paying an “application fee” right after they are issued the GFE.
  • It is unclear whether or not the Reform Bill’s revisions will affect a home equity credit line as well because they are not considered “Closed End Credit”.

The Lead Planet posted an interesting take on the YSP banning > Fed Bans Lenders from Paying YSP to Mortgage brokers

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August 2, 2010

Motivating First Time Homebuyers Beyond Low Mortgage Rates

There are several factors that contribute to lack luster home loan activity in the summer of 2010.  Yes the tax credit for first time homebuyers expired on April 30th.  Sure that was a good incentive to drive first time homebuyers, but this is not the primary reason that home loan application volumes have been faltering the last few months.  If Forrest Gump was hear, he might say, “It’ the loan guidelines stupid.”  Read the original Nationwide Lender article > First Time Homebuyers Beyond Low Mortgage Rates.

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July 21, 2010

MBA Report Concerning with Mortgage Origination Costs Soaring

A recent survey from the Mortgage Bankers Association indicated that the cost of mortgage loan origination was soaring.  In their report MBA stated that independent mortgage bankers and their subsidiaries reported a significant decline in their profits in the 1st quarter of 2010.  The average profit made on each loan was $606, a decrease of 32% from the $890 that was earned in the 4th quarter of 2009 and a 44% decline from the $1,088 that was reported in the 1st quarter of 2009.  75% of the firms in the study posted pre-tax net financial profits in the 1st quarter 2010, compared to 76% in the 4th quarter of 2009.

Survey respondents reported a drop in the average production volume to $157.8 million from $216.5 million in the previous quarter.  MBA reported that the home loan rates remained low but as closing costs rose the volume decline was the main driver behind the decline in profitability.   As home loan volume fell, operating expenses increased to $5,147 per home loan compared to $4,402 in the 4th quarter, an increase of 17%.  The “net cost to originate” rose to $2,945 per loan in the 1st quarter of 2010, from $2,345 per loan in the 4th quarter of 2009.  This figure includes all production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.

Despite this challenge as originations declined in the first quarter, the independents and bank subsidiaries still produced an average of thirty two basis points of production profit, primarily resulting from higher secondary marketing gains.”  MBA’s 1st Quarter 2010 Mortgage Bankers Production Survey covers 295 companies, 70% of which are independent mortgage companies.

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Declining Mortgage Profits for Banks

Category: Financial News,Mortgage News – admin – 3:21 pm

Bloomberg reported that profits by independent mortgage bankers shrank to an average of $606 per home loan in the first quarter, down from $1,088 a year earlier, the Washington-based mortgage bankers group reported yesterday.

An index of home loan applications in the U.S. rose to the highest level in nine months last week as record-low borrowing costs boosted refinancing, the Mortgage Bankers Association said today. Originations probably will decline to $1.48 trillion this year from $2.1 trillion in 2009, according to a July 14 forecast by the group.

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July 8, 2010

Home Mortgage Lender Eliminates 3800 Mortgage Industry Jobs

Mortgage Giant, Wells Fargo & Co. announced the lender would no longer make subprime mortgage loans and they were closing their consumer finance division that originated bad credit home mortgages.  The closing of this Wells Fargo division will result in 3,800 layoffs and the eliminated future subprime mortgage lending. The mortgage giant said the consumer finance division originated less than 2% of its home loan volume in the first quarter of 2010.

According to Wells Fargo chief executive Dave Kvamme “Credit losses in the Wells portfolio that rose in the current economic environment could not continue.”  The bank indicated in their quarterly filing, that overall loss rates were at 4.62%.  However Wells’ portfolio’s performance was very similar to prime loan portfolios across the board for the mortgage industry.  Wells Fargo has been one of the largest home mortgage lenders in the United States for decades and some times the company is forced to make tough decisions that impact the entire industry.  A spokesman for Wells Fargo & Co. said they would record charges of about $185 million in total related to the closings. The unit reportedly originated less than 2% of Wells Fargo & Co.’s $76 billion in residential production during the first quarter.  A company spokesman for Wells said the company was poised to originate more FHA home loans going forward.

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June 20, 2010

Loan Relief Available for Gulf Coast Homeowners

Homeowners residing in the Gulf Coast finally got some good news.  Bank of America, Freddie Mac and Wells Fargo announced they were extending mortgage relief to distressed borrowers in the region.  Freddie Mac forbearance policies allow its servicers to suspend a borrower’s loan payments for up to three months or reduce payments for up to six months. BofA and Wells Fargo company policies also call for an initial 90-day forbearance of payments in a disaster situation.

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May 18, 2010

Merging Fannie Mae and Freddie Mac

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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