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August 17, 2010

Lender Fees and Closing Costs Rise

Category: Loan Origination News,Mortgage News – admin – 3:20 pm

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%.

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August 2, 2010

HUD Suspends 905 FHA Mortgage Lenders

Category: FHA Mortgage,Loan Origination News,Mortgage News – admin – 10:26 am

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.

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July 28, 2010

Financial Reform Bill Flawed

Category: Mortgage Lender Discussion,Mortgage News,Mortgage Reform News,Published Articles – admin – 1:44 pm

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.   

httpv://www.youtube.com/watch?v=IeREpKxIYhY

In April, Treasury outlined their “Housing Finance Reform” objectives. The administration’s proposals will be designed to achieve four objectives.

  1. Mortgage credit should be available and distributed on an efficient basis to a wide range of borrowers.
  2. A well-functioning housing market should provide affordable housing options, both ownership and rental, for low and moderate-income households.
  3. Consumers should have access to mortgage products that are easily understood.
  4. 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.”

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July 21, 2010

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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Best Mortgage Ever?

Category: Mortgage Lending Stories,Mortgage News,Published Articles – admin – 3:19 pm

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

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July 8, 2010

Home Mortgage Lender Eliminates 3800 Mortgage Industry Jobs

Category: Financial News,Loan Origination News,Mortgage Lending Stories,Mortgage News,Wells Fargo Home Mortgage,Wholesale Broker Discussion – admin – 8:24 am

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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July 6, 2010

More Homeowners Refinancing

Category: Lead Buying Tips,Lead Generation,Mortgage Marketing,Mortgage News,Published Articles – Jenny King – 7:57 am

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.

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June 20, 2010

Loan Relief Available for Gulf Coast Homeowners

Category: BofA,Financial News,Freddie Mac,Mortgage News,Mortgage Relief News,Wells Fargo Home Mortgage – Jenny King – 1:37 am

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

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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 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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February 24, 2010

Mortgage Loan Applications Drop 8.5 Percent

Category: Financial News,Loan Origination News,Mortgage News,Mortgage Rate Report,mortgage rates – admin – 9:47 am

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%.

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February 9, 2010

Saving Money When Refinancing Your Mortgage

Category: FHA Mortgage,Mortgage Lender Discussion,Mortgage News,Published Articles – admin – 5:54 pm

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.’’

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