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”.
As home loan rates continue to fall, the cost for closing a mortgage has risen nationally. The annual survey by Bankrate revealed that rising mortgage closing costs have been on the rise. On average, closing costs such as origination fees and third-party fees were $3,741 on a $200,000 mortgage, a 36.6% increase from last year’s average of $2,739, Bankrate.com reported.
The Bankrate survey considered San Francisco and Los Angeles in California as they ranked fourth and fifth respectively in a national mortgage cost analysis. While Mortgage News found that closing costs for San Diego home loans averaged $3,986. While Orange County home loans reported closing costs of $4,459.
Bankrate.com reported that New York mortgage loans had the highest closing costs at $5,623 and Arkansas had the lowest, at $3,007.
The finance news company also said the financial reform law penalizes companies if they underestimate closing costs, so this year’s survey reporting a 36.6% increase could be a high estimate. Bankrate also reported that fees charged directly by mortgage lenders increased 22.8%. Fees charged by third parties such as title insurance companies and appraisers rose 47%.
The FHA Mortgage Review Board sent a message to FHA lenders across the nation. “If you want to originate FHA loans, then do not commit mortgage fraud.” The government review board yanked its approval stamp from 905 national FHA mortgage lenders for 1 year. An additional 147 FHA lenders were said to have failed to timely meet requirements for annual FHA recertification, but are now in compliance.
The HUD Reform Act of 1989 established the Mortgage Review Board with the goal of to monitoring approved FHA lenders for violations of the agency’s program requirements. The question is — Will the lenders survive for a year without the ability to originate FHA home mortgage loans? Read the original mortgage news post online > FHA Mortgage Lenders Lose Certification.
Much to the surprise of many pundits, the recently signed Financial Reform Bill did not outline guidelines for regulators to begin crafting the future of Fannie Mae, Freddie Mac, and Ginnie Mae. Although this was viewed as an oversight by most, it was the right move because it will allow our political and financial leadership to focus on repairing the mortgage finance system. Remember that the government loan programs Fannie, Freddie, VA and FHA loans maintain nearly 96% of the mortgage market-share yet they are exempt from most of the financial reform repercussions.
In April, Treasury outlined their “Housing Finance Reform” objectives. The administration’s proposals will be designed to achieve four objectives.
Mortgage credit should be available and distributed on an efficient basis to a wide range of borrowers.
A well-functioning housing market should provide affordable housing options, both ownership and rental, for low and moderate-income households.
Consumers should have access to mortgage products that are easily understood.
The system should distribute the credit and interest rate risk in an efficient and transparent manner that minimizes risk to the broader economic system an does not generate excess volatility or instability
Demand for home loan financing has hovered near the 13-year low reached earlier this month, showing the lowest mortgage rates on record have yet to spur sales after the expiration of a government tax credit. It will take gains in employment and in consumer confidence to boost housing. “The housing market is weak,” Paul Anastos, president of Mortgage Master Inc., a Walpole, Massachusetts-based mortgage lender, said in an interview before the report. “There’s good opportunity out there in the housing market, but because consumer confidence is fairly low, people aren’t really shopping. They’re worried about other things, like jobs.”
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.
Will 2010 be remembered for the year of the best mortgage ever? Nationwide published an article today that considers the realty of this new era of record low rates. Many people are baffled that the record low mortgage rates have not sparked a refinance or housing boom. In the past when the Federal Reserve took measures like discounting key interest rates it usually spurred a housing boom that led to a sharp rise in homeownership. In 2010 there is a decrease in homeownership mostly because even though money is cheap it is still not financially feasible for struggling consumers who are experiencing a loss of income and the threat for job loss is the most real it has been since the Great Depression in the 1930’s.
Popular loan programs like cash out second mortgage loans and interest only mortgages have almost completely disappeared. Bad credit mortgage options are few and far between with FHA and VA home loans occasionally taking a risk on a borrower with a poor credit score. Home equity loans were once offered at 125%, but now you can consider yourself truly blessed if you qualify for a 90% equity loan. Even the FHA streamline refinance loan requires borrowers to pay for the closing costs “out of pocket.” Most borrowers are using a FHA loan for cash out refinancing because they do not require a 700 credit score like most home equity lenders demand today.
Undoubtedly the pool of borrowers that qualify for mortgage refinancing or home buying has shrunk, but maybe there is a silver lining. In the near future interest rates will likely rise. If you are one of the chosen few who meet today’s home lending requirements you just might qualify for the mortgage loan of a lifetime. If you do qualify – - – Seize the opportunity and lock into the lowest fixed rate ever! Read the original Nationwide article > Mortgage Loan of a Lifetime
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.
Several reports published last week signaled that refinancing is supporting the mortgage business with over 75% of all loans being submitted into process are considered a refinance transaction. According to a recent Mortgage Lead Vault post, the refinance lead activity spiked last week. MBA also released similar statistics in their Weekly Mortgage Application Survey indicating there was 12.6% in home refinancing applications from the previous week. Chief economist for the Lead Planet, Kevin Grant said, “the mortgage lead quality should dramatically increase as the banks and lenders loosen up their refinance guidelines.” See the original news article> Mortgage Refinance Lead Volume Rises.
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. Read the original article > Gulf Coast Borrowers Offered Mortgage Relief From BofA, Freddie Mac, Wells Fargo
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.
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.”
According to the Mortgage Bankers Association, the mortgage loan application volume filed in the U.S. last week decreased by 8.5%, compared with the previous week. Mortgage interest rates increased during the week ended Friday compared with the week before, according to the MBA weekly survey. The survey covers about half of all U.S. retail residential home loan applications.
The share of applications filed for a mortgage refinance dropped again last week. Mortgage marketing executive, Bryan Dornan believes, “the decrease in refinance applications can be directly attributed to homeowners becoming more educated on what is need to qualify for a refinance loan in today’s credit crunch.” Dornan continued, “Borrowers have either been denied recently or they understand that have late payments on their mortgage payment will prevent them from qualifying with traditional lenders. Borrowers continue to seek help refinancing existing mortgages dropped to 68.1% of total loan applications from 69.3% the previous week. The four-week moving average for all home mortgages was up 1.6%.
Adjustable-rate home loans made up 4.7% of total applications, up from 4.4% the previous week. Rates on 30-year fixed-rate mortgages averaged 5.03%, up from 4.94% the previous week, while 15-year fixed-rate mortgages averaged 4.35%, up from 4.33%. The one-year ARMs interest rate grew to 6.8% from 6.67%.
It is very important that you consider the lending costs and benefits when comparing mortgage refinance loans. Charles and Nancy Henson refinanced their home mortgage last year, and Charles Henson says it was not a difficult decision. “The mortgage rates had dropped, and we wanted to do something a little more secure,’’ he said. “Our previous rate was 5.625%. We ended up locking our home loan at 4.875%.’’ The current mortgage rates have spurred many to consider mortgage refinancing – basically replacing one loan with another. Depending on the new loan’s terms, it can save you tens of thousands of dollars.
Each refinance mortgage is its own case, due to many factors: your loan, your credit, your home’s equity, the interest rate, the cost of the refinancing, and so on. Some things to consider:
■ Interest rate. “If you can save half a point or more on your interest rate, that can be a good indicator to refinance,’’ said Kay Sandusky of Citizens National Bank of Southwestern Ohio. Sandusky added: “If it is going to cost you $2,000 to do the refinance and you are saving $200 per month, do the math and consider how long you will be in the home and if that is a savings to you.’’ “How long you’re going to be in the home is a big factor,’’ Penner said. “If someone is going to live in the house three to five years, [refinancing] may not be a great idea.’’
■ Total cost benefit. Kim Penner of Union Savings Bank said you have to consider total costs when considering refinancing. “Your lowest interest rate alone is not always your best deal,’’ Penner said. “You have to see if it makes sense to get a lower rate if your costs are high.’’
■ Short term vs. long term. “Think about what term of loan you want,’’ Penner said. “Is cash flow an issue? Are you looking at retiring?’’ He added that the sooner you pay off a loan, the more you save on interest payments. “The difference in interest could be $40,000, $50,000, $60,000,’’ Penner said. Henson is retired and his wife is self-employed, but he said they chose a 30-year rate because it was a more conservative approach, given the economic climate. They “decided we could make a 30-year into a 15 by paying more on the principal each year,’’ Henson said. “With a 30-year rate, you have the flexibility if you want to pay extra.’’
■ Credit score. Borrowers who have at least a 740 get the best terms. If your credit score is lower, you can still get a loan, but at a higher interest rate.
■ Know your home’s equity. “You have to have 20% home equity ask for a conventional home loan without private mortgage insurance,’’ Sandusky said, though there are other options. FHA home loans have mortgage insurance, but if your credit is outside of the conventional box or if you have no equity, talk to a FHA mortgage company, because these government loans may be your best option for refinancing.
■ Talk to a professional. “I ask a lot of questions about the borrower and offer options,’’ Penner said. Be careful shopping for a mortgage online. Don’t let banks obtain your credit report each time. “Multiple inquiries on your credit report in a short period of time can harmful to your credit,’’ Sandusky said. “Know your credit and tell the bank.’’
Bankers responding to the January 2010 Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices indicated that home loan standards are still contracting. The report also states that consumer demand for mortgage loans continues to decline. The survey, released on Monday, addresses changes in loan supply and demand over the last three months. It also included three sets of special questions about delinquency rates of loans made to large and middle market firms, changes in bank policies about commercial real estate (CRE) loans over the past year, and a third set of questions about the banks’ outlook over the coming year for the credit quality of a number of categories of loans. 55 domestic banks and 23 U.S. branches and agencies of foreign banks responded to the questionnaire. Banks continued to tighten standards on residential lending, especially on nontraditional residential real estate loans. 17% of banks that make residential loans reported they had tightened standards on prime real estate loans and 30% reported such tightening of mortgage refinance products.
In addition, a moderate net fraction of banks reported weaker demand from prime borrowers for residential real estate loans. Demand from customers seeking nontraditional mortgages also weakened further over the survey period. Only a small net fraction of banks reported having tightened standards on revolving home equity lines of credit over the past three months, but a large net fraction of banks continued to report lower demand for such mortgage loans.
Demand for both businesses and households across all major categories of loans weakened on net over the past three months. 64% of respondents reported that business inquiries about new or increased credit had stayed about the same over the last three months while 13% reported an increase and 25% a decrease. A large proportion of respondents reported that their banks were relatively unchanged in their approach to consumer lending. Over 80% said that their banks policies were unchanged when it came to approving applications for installment, consumer, and credit card loans. However, a substantial net fraction of banks said they had reduced credit limits on credit cards and had become less likely to issue cards to customers who do not meet credit scoring thresholds.
Respondents to the October 2009 survey had indicated that they would tighten many of their credit card policies as a reaction to passage of the Credit CARD Act. Home loan terms were seen as being a little more in flux but the net %ages of respondents who tightened those requirements was lower than in the previous quarter. When considering lending to large firms – those with annual sales of $50 million or more 76 % reported there had been no change in the maximum home equity credit lines, 16% reported a tightening in the maximums and 7% said those terms had eased. Maximum maturity dates were unchanged in 83% of reports. Only 64% of respondents reported no change in the cost of credit lines while over 23% reported that these standards had tightened somewhat or considerably. Close to 26% reported that the spread charged to commercial borrowers had widened over the last three months compared to 58% that reported it unchanged. About 10% reported they had tightened collateral requirements, the remainder reported no change. Figures for lending to smaller companies varied only slightly from those reported for large firms. Read the original article at Mortgage News Daily
The Federal Housing Administration is following through on promises to come down hard on FHA mortgage lenders. The federal mortgage insurer on Monday said it had pulled the licenses of three lenders and was suspending a fourth FHA lender.
The FHA said it would eject Strategic Mortgage Corp., of Oklahoma City, Okla.; ProMortgage Inc., of Claremore, Okla.; and Americare Investment Group Inc., of Arlington, Texas. It suspended Home Mortgage Inc., of Burr Ridge, Ill., for six months. The FHA said it ejected Strategic and ProMortage for failing to uphold FHA loan standards, including charging excessive fees and having poor quality controls. Americare violated terms of a previous settlement, and Home Mortgage failed to disclose the indictment of a part-owner, it said.
Representatives for Strategic and ProMortgage didn’t respond to inquiries seeking comment. Americare and Home Mortgage couldn’t be reached. The FHA, which doesn’t make loans but insures lenders against losses, has seen its capital cushion erode sharply amid rising mortgage defaults. Officials have promised to be vigilant in cracking down on lenders it believes are putting the agency’s reserves at risk.
Mortgage rates improved a few basis points yesterday. Home loan applications have decreased across the country over the last few weeks. Home lenders were somewhat subdued in passing along mortgage rate improvements though. This is a function of a few reasons. First, mortgage-backed securities prices have held to a tight range over the course of the week. The second reason is a bit more obvious, the FOMC meeting ended today at 2:15pm. This was a major market event, so it makes sense that mortgage lenders would be defensive ahead of a scheduled event that had the potential to move interest rates in either direction. Before getting to the impact of the FOMC on mortgage rates, allow me to recap the day’s economic data releases.
Early this morning, the Mortgage Bankers’ Association released their weekly applications index. The MBA survey covers over 50 % of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, such a trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt.
Finance Home Rehabilitation! Check your eligibility for FHA 203K Loans.
The report indicated a 3.3% decline in purchase application activity and a 15.1% decline in refinances. Of note, the MBA issued a rare comment: “Although rates remain low, there appears to be a smaller pool of borrowers who are willing and able to refinance at today’s rates.” I agree, mortgage rates in the low 5% range are still extremely aggressive when you look back at the history of mortgage rates, but I think a more accurate statement would have been “many borrowers want to refinance to take advantage of near record low mortgage rates, but the tightening of lender guidelines has made it too difficult for borrowers to qualify.” Maybe that’s what the MBA was really trying to say? What is your opinion?
For more on the MBA Applications Index and the potential impact on the Fed’s intentions to exit the MBS market, check out the other mortgage news stories. We also received another look into the strength of housing: the New Home Sales survey. This survey is primarily based on a sample of houses selected from building permits. Since a “sale” is defined as a deposit taken or sales agreement signed, this can occur prior to a permit being issued. Changes in sales price data reflect changes in the distribution of houses by region, size, etc., as well as changes in the prices of houses with identical characteristics. It takes four months to establish a trend of new home purchases.
The National Mortgage News reported that there may be a bit of a revolution happening with small to medium-sized mortgage loan originators that have been selling their servicing rights on a “released” basis in the secondary market. The revolution is this: more firms are thinking of keeping their SRPs with either in-house or assigning them to a sub-servicer. Why are they keeping the SRP? The short answer is that the price being paid by the mortgage cartel for SRPs bites.
Mortgage industry insiders continue to talk about the new underwriting guidelines and credit rules offering several new alternatives, but mortgage lenders are likely to extend consumers with notices including their credit scores, a bar graph allowing them to see where their scores rank against other consumers, the name and contact information for the credit bureau that provided the information, key factors that might have lowered the score, and guidance on how to correct mistakes in credit files.
During the coming months, mortgage loan shoppers should ask competing lenders how they handle pricing when scores come in low. Ask whether the lender will inform you if something in your files is dragging down your scores and raising your fees and rates. We recommend that you request a free credit report in advance to submitting home loan applications. Start by visiting annualcreditreport.com and requesting a free credit report. It is more important than ever, because in 2010 because virtually all major mortgage sources including Fannie Mae and Freddie Mac have raised their credit-score cutoffs for the best rate quotes and lowest fees. > Go online and read the complete credit repair article.
HUD announced they were making changes to the guidelines for with FHA mortgage products. The Federal Housing Administration still has money, but its loan reserves are depleting to dangerously low levels. FHA’s capital reserves are supposed to be 2% of outstanding loans. According to the actuarial review for fiscal year 2009, the reserves are a mere 0.5%. By the time you read this, FHA loan reserves might have disappeared entirely, thanks to the increasing number of FHA home foreclosures. All FHA borrowers pay a mortgage insurance premium. These premiums go into the FHA’s capital reserves fund and are used to pay for home loans that are foreclosed upon. As FHA refinance loans and purchase mortgages have become much more popular, and the unemployment numbers have risen, more of these loans have gone bad, requiring more payments from the capital reserves.
Unlike the Federal Deposit Insurance Corporation , which recently proposed that banks pay three years of insurance premiums at once in order to replenish the FDIC’s reserves, FHA can’t require current borrowers to pay more. But it can change the rules going forward that will make it more difficult to qualify for an FHA loan. According to a senior official at the Department of Housing and Urban Development , conversations are ongoing to determine what will make the most sense. “Nothing will be taken off table,” the official said. “Everything needs to be assessed through the lens of the FHA core mission as well as the broad economic policies of the Administration with regard to stabilizing housing.”
AmTrust Bank of Cleveland, which until recently was the nation’s third largest residential mortgage wholesaler, was seized by the government late Friday with a majority of its assets sold to New York Community Bank, Westbury, N.Y., a top ranked player in multifamily lending. According to Home Loan Wholesale, the government actually took bids on AmTrust’s operations two weeks ago, saying interested investors included BB&T, EverBank, Fifth Third Bancorp, Key Bank and others. Its failure is expected to cost the government roughly $2 billion. The lender’s demise is yet another blow for loan brokers in search of wholesalers willing to table fund their customers. At press time, it was unclear whether NYCB would keep AmTrust’s wholesale division intact. A thrift, AmTrust had $12 billion in assets and until a few years ago was called Ohio Savings and Loan. The thrift was a national correspondent originator, selling its conventional mortgage loans to Fannie Mae and Freddie Mac. NYCB paid no premium to assume all of AmTrust’s $8 billion in deposits, and also agreed to take over $9 billion of the failed thrift’s assets. New York Community and the FDIC will share losses on $6 billion of those assets. The nation’s largest privately owned thrift, AmTrust had been stung by a string of losing quarters and mounting losses from construction and development home loans. Last Monday its holding company, AmTrust Financial Corp., filed for Chapter 11 bankruptcy protection.
The Mortgage Bankers Association said Wednesday Mortgage refinancing applications rose last week as home mortgage rates declined. Refinance loan applications increased 18.2 % last week, the MBA said, following the third straight week where rates on 30-year home loans stayed below 5%. This brings mortgage refinance applications to their highest level since May. “Such low refinance rates are spurring mortgage loan demand,” said Frank Northaft, Freddie Mac vice president and chief economist. On Thursday, Freddie Mac said the average rate on 30-year home loans stood at 4.87 %, down 4.94 % from last week. This is the lowest rate since the week of May 21, when they averaged 4.82 %. The record low on mortgage rates is 4.78 %, set last spring. Average rates on 30-year fixed rate mortgages stood at 5.94 % this time last year. Homeowners who are considering home refinancing their mortgage may want act soon. Mortgage rates could inch back up as the home purchases diminish.
Applications for home mortgages dropped to a seasonally adjusted 2.8% for the week ending September 25, compared with the week before. The Mortgage Bankers Association announced yesterday that VA mortgage rates were better, as were FHA mortgage rates. Many borrowers are excited for the low rate refinancing with FHA customers rushing to qualify for FHA streamline refinance loans that are seeing interest rates below 5% for the first time in a while. The average fifteen mortgage rates declined to 4.46% last week which is down significantly from last year when rates were at 5.78%.
The average mortgage rate on a typical 30-year fixed-rate mortgage dropped to 5.07 % in the latest week, McLean, Virginia based Freddie Mac told mortgage lenders last week. That’s down from as high as 5.59% in June, and up from the record low of 4.78% in April. While mortgage refinance applications rose to the highest since late May in the latest week, they remained 64% below the high this year set in January, according to a Mortgage Bankers Association index. Read the complete article at Mortgage Related News > Bonds for Mortgage Loans Yields Decline.
Three mortgage lenders approved to originate loans insured by the Federal Housing Administration were suspended by the U.S. Department of Housing and Urban Development over “serious” violations.HUD recently announced their Mortgagee Review Board had suspended Golden First Mortgage Corp. The Great Neck, N.Y., company allegedly neglected to notify HUD of an Office of Thrift Supervision investigation into the activities of its president or his involvement in an OTS civil money penalty.Suspended FHA lenders are not allowed to sell new FHA-insured loans while HUD investigates their FHA lending practices, the statement said.
FHA mortgage rates remain low and the Federal Reserve has ensured FHA lenders and banks offering HUD loans his commitment to making affordable home financing available to Americans.When shopping for a FHA lender, Lenders Nationwide recommends that consumers consider FHA mortgage companies that have a clean HUD record.
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