Home Loan Wholesale

The average mortgage rate on a 30-year home loan with fixed rates climbed to 5.02% last week from 5%, MBA said.  The mortgage rate reached 4.61% at the end of March, the lowest since the group’s records began in 1990.  At the current thirty-year mortgage rate, monthly borrowing costs for each $100,000 of a home loan would be $538.04 which is about $12 less than a year ago when the rate was 5.22%.

A report later today may show sales of new homes rose 3% in December to a 366,000 annual rate, according to the median projection in a Bloomberg News survey.   Sales of existing U.S. homes plunged last month, reflecting the expected expiration of the government’s first-time buyer tax credit on November 30th.

The average rate on a 15-year fixed mortgage rose to 4.34% from 4.33 % a week earlier. The rate on a one-year adjustable mortgage increased to 6.84% last week.   The share of applicants seeking to refinance a loan dropped to 67.6% last week, the lowest level in almost three months, from 71.7% the prior week.

Mortgage lenders continue to see muted demand for financing.   “The residential mortgage and home equity line portfolios also continued their downward trend,” SunTrust Banks Inc. Chief Financial Officer Mark Chancy said on a conference call January 22nd. The Atlanta-based lender said it lost $248.1 million in the fourth quarter as loans soured in the Southeast real estate market.  The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail mortgage loan originations.

FHA announced they will continue to allow borrowers to finance the upfront mortgage insurance premiums.  FHA will pursue legislative authority to allow flexibility to bring the annual premium, which borrowers pay on a monthly basis, higher. Also, seller concessions will be reduced to 3% from 6%.  In a recent blog post, the FHA Mortgage Lending Blog stated that the Administration will expand mortgage refinance guidelines sometime in 2010.

Frank Black, who managed a Wells Fargo branch in California said, “After reviewing the changes to the FHA requirements, I believe FHA mortgage lenders will agree that the new rules make sense and are needed to keep the government financing alive. A few years ago, many brokers and lenders took advantage of FHA underwriting by pushing the envelope with risky home loans.”  See the original article > FHA Loan Guidelines Require 10% Down for Low Fico.

The home mortgage industry added 200 full-time employees to their payrolls in November, the first jump in industry employment since July. The U.S. Bureau of Labor Statistics reported that employment in the mortgage broker/ bankersector rose to 255,700, compared to 255,500 in October. The BLS data shows the increase is entirely due to more mortgage brokers having jobs. Employment at mortgage broker and banking firms was flat in November. Overall, the home loan industry experienced a 10% drop in its workforce over the past 12 months. Major mortgage lenders have relied on outsourcing and temporary workers to deal with fluctuating demand. Meanwhile, the nation’s unemployment rate held steady at 10% in December, but 85,000 workers were laid off, according to the new jobs report. This disappointed analysts who were looking for a sign that the job market had finally turned the corner.

The struggling mortgage giant, Residential Capital more than halved and its bonds surged on Monday after the company last week benefited from new government funds from its parent company GMAC . A still weak capital position and the risks of further home mortgage loan losses and lessened government support, however, may still weigh on the mortgage company’s debt. GMAC, which converted into a bank holding company last year to benefit from government mortgage refinancing programs, said on Wednesday it would receive another $3.8 billion from the U.S. Treasury, and would inject $2.7 billion into ResCap.

The cost of insuring ResCap’s debt in the credit and home loan default swap market on Monday plunged to a spread equivalent of around 887 basis points, or $887,000 per year for five years to insure $10 million in debt, from more than 2,200 basis points, indicating significantly lower expectations of a default, according to Markit Intraday. ResCap’s 8.375 percent bond due 2010 jumped to 94 cents on the dollar from 61 cents in mid-December, when it was last actively traded, according to MarketAxess.  “Treasury pumped in another $3.8 billion into GMAC largely so that GMAC could support ResCap, which is ring-fenced off from GMAC and lacks a compelling ongoing business model,” CreditSights analysts Adam Steer and David Hendler said in a report. “We are at a loss for words over the complete lack of logic behind using tax dollars to support ResCap,” they added.  

The continuing support for ResCap is likely to reflect political efforts to improve housing markets by encouraging lenders to offer FHA refinance or loan modification options to homeowners struggling to make payments.  “You don’t want to put a mortgage servicing company under because they are important now in the restructuring of mortgage loans … you don’t want that kind of disruption,” said Ricardo Kleinbaum, trading sector specialist at BNP Paribas in New York.  The move nonetheless came as a surprise as most had thought government support for GMAC had been targeted at helping shore up mortgage lending to the troubled auto industry