Home Loan Wholesale

The number of home loan applications in the U.S. for home purchases fell to a 13 1/2-year low last week, the Mortgage Bankers Association reported Wednesday, in a further sign of the slump in home buying since a federal tax credit concluded at the end of April.  There have been fears for months that the incentive was stealing future sales and would result in a new leg down for the housing market once the support ended. New-home sales sunk to a record in May while pending total sales tumbled 30% from April.

Home loan applications for new homes were down 43% from the Independence Day week last year, said the MBA. The bad news comes even as home mortgage rates sink to new record lows.  Those rate declines have been giving some lift to applications for home refinancing, which hit a 14-month high two weeks ago. But even the MBA refinance mortgage report fell 2.9% last week from a week earlier as its gauge for purchases dropped 3.1%. The share of applications for refinancing was flat at 78.7%.  Read the original Mortgage News

Who would have thought that home mortgage rates would continue to break record with declining rates across the board?  Of course this is great news for homeowners and perspective home buyers looking to leverage the lowest mortgage rates of the century.

Fannie Mae’s current-coupon thirty-year fixed-rate home loans narrowed 0.03 percentage point to about 0.65 percentage point more than 10-year Treasuries as of 9:33 a.m. in New York, according to data compiled by Bloomberg. The gap, which has fallen from 0.82 percentage point on June 30th, touched a low of 0.59 percentage point on March 29th, two days before the Federal Reserve ended its buying of $1.25 trillion of home-loan debt.

Home loan rates may be rising off record lows and bond prepayments reports released July 7th show limited mortgage refinancing, suggesting there will be less supply to meet demand as borrowers move from loans in bonds on the Fed’s balance sheet.  JPMorgan Chase & Co. analyst, Matthew Jozoff wrote in a July 9th report “refinance-driven supply is the fly in the ointment.”  

Yields on the Fannie Mae bonds have advanced to 3.73% from a record low of 3.63% reached July 6th, down from 4.67% on April 5th, Bloomberg data show. The gain has been slower than benchmark Treasuries, whose yields have begun rising as stocks rally, damping demand for the safest assets.

Freddie Mac reported that the average interest rate on a conforming thirty-year fixed-rate home loan fell to a record low 4.57% in the week ended July 8^th.  That was a decline from this year’s high of 5.21% in April.

Government home financing has become a popular choice for home purchase and home refinancing.  The Federal Housing Administration offers consumers affordable home financing and they only require a 3.5% down-payment.  Homeowners that are seeking FHA refinancing may qualify for a rate and term or streamline refinance that also only needs 3.5% home equity.  Today, FHA mortgage rates are available at 4.5% on the 15-year fixed rate option and 4.75% on the 30-year fixed rate mortgage.

VA home loans are guaranteed by the Department of Veterans Affairs.  The VA mortgage is a unique option for first time home buyers, because it has a no-down-payment required for eligible veteran home buying.  VA mortgage rates are available at 4.375 on the 15-year fixed rate option and 4.625% on the 30-year fixed rate loan.  VA refinancing is also available at 100% with both rate and term and streamline refinance options.  Read the original article online at the Nationwide Mortgage Blog > Government Mortgage Solutions with FHA and VA Home Loans.

According to Mortgage News Source, Wells Fargo is laying off nearly 4,000 employees from its’ Consumer Finance Division that was responsible for non-prime mortgage lending.  The company announced that they were ceasing to originate subprime mortgages in an effort to mitigate loan portfolio risks.  Mortgage News indicated that Wells Fargo “had been struggling with delinquencies and loan defaults from their own bad credit home mortgages.”  Acquiring the loan portfolios from the Wachovia merger may have pushed their subprime risks too far. 

Wells Fargo announced they were closing 638 Wells Fargo Financial offices, which increased its number of retail branches to 6,600 after the Wachovia merger. The bank also has 2,200 Wells Fargo Home Mortgage offices and will eliminate about 2,800 employees from its Wells Fargo Financial unit and will most likely slash another 1,000 jobs in the next year. Read the original news article, > Almost 4,000 Wells Fargo Mortgage Layoffs

Are you considering home refinancing?  Freddie Mac announced this week saw the lowest home loan rates since 1971.  The number of loan applicant applying for a mortgage loan dropped by 5.9% during the week ended June 18.  Mortgage refinancing activity fell 7.3% compared with the previous week, while purchase volume slipped 1.2%.

Comparing home refinance rates: A year ago, the average home loan rate was 5.22% and 10 years ago, people were refinancing at 8.15%. Today, the average 30-year mortgage rate is 4.675% and the average 10-year mortgage is now at 3.875%.  Lenders continue to extend low interest rates because to the instability in the market and the European debt crisis.  Read the original article > Compare Mortgage Refinance Rates

Mortgage refinance rates have dropped almost two percentage points below their housing boom peak and they remain available at record lows.  Freddie Mac reported that mortgage rate average fell to the lowest point in 2010 4.72% plus 0.7 point for a fixed rate home loan on a thirty-year term.  Clearly this is a great time for a home refinance loan, if you can get approved.  Credit, Lack of Equity and Inability to Document Income are the 3 most common reasons that homeowners have not been able to refinance into these record low rates.  A few years ago if you had good credit, you could pretty much qualify for any mortgage, but things have changed dramatically.  Today even people who have 700+ credit scores are finding it difficult to qualify for a conventional or FHA mortgage and it is frustrating millions of borrowers who need to refinance.  To receive the best mortgage refinance rates, you need good credit scores and the ability to document your income.  Stated and no income verification loans are no longer viable options for home refinance opportunities.   You also need enough home equity to meet the refinance guidelines.  Many California borrowers had sufficient equity a few years ago, but the housing crisis has taken its toll on property values statewide.

The Mortgage Bankers Association released a report recently that outlined borrower problems in its latest report on home refinancing activity, which declined 14% last week after consecutive weeks of increased refinance loan volumes.  The low interest rates and homebuyer tax credit have clearly made a positive impact on the mortgage refinance market in 2010.  However, “despite the record low mortgage rates, many homeowners remain underwater on their home loans.  This means that their mortgage is greater than their property value.  According to MBA’s vice president, Michael Fratantoni, many distressed borrowers have been late on their mortgage payment which significantly damaged their credit and taking them out of contention for mortgage refinancing this year.

Since the pool of qualified borrowers looking to refinance is shrinking many lenders are offering aggressive mortgage specials.  Many reputable mortgage lenders are offering a no point refinance and some are going further with the no cost mortgage that enables borrowers to refinance without coming out of pocket for any lending expenses.  The no cost home loans also help borrowers avoid raising their mortgage balance in an effort to finance the lender fees and closing costs.  According to mortgage marketing executive, Bryan Dornan, “Again qualifying for no cost refinancing is difficult because you need good credit, sufficient income that can be documented and enough equity in your home to qualify for the loan refinance program.”  Dornan continued, “It’s not a motivation factor.  The borrowers who need home refinancing most simply do not qualify under today’s tighter lending guidelines.”

To put it into perspective, interest rates dropped last week, yet refinancing volumes fell.  In most cases, mortgage refinance rates follow the yields of longer-term Treasuries whether they rise or fall.  In recent months it’s been down, as the European debt crisis has led to banks dropping interest rates even further.  The vice president of HSH Associates Keith Gumbinger, “We have not seen mortgage rates lower than this in upwards of 50 years.” Gumbinger believes that the rates will begin trending higher once we get some good news regarding the economy.

Mortgage rates fell to 2010 lows  but did come under a small amount of upward pressure late in the day as the stock market rallied into the close.   As the prices of mortgage backed securities fell, many mortgage lenders saw pricing get worse, but the higher lending costs that were passed on to borrowers were not big.  Mortgage refinance rates continued to hold at the best levels of 2010. 

Reports from competitive mortgage professionals indicate mortgage lender rate sheets to be about the same as yesterday.  The 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified consumers.  There are still FHA lenders offering 4.625% as par.  To secure a par interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point home mortgage. 

If you are not planning on keeping your house for more than 5 years, you should consider a no cost mortgage.  In many cases, in a no cost refinance, you will be forced to accept a higher mortgage rate which pays the lender enough money that they can afford to pay the closing costs for you.  On a no cost mortgage, you are still paying the costs, just paying them in the form of higher interest charges.   We recommend anticipating that a no cost loan to offer a rate of around 5.375% for a 30 year fixed.

Freddie Mac announced today that the current mortgage interest rates are the lowest they have been in 2010. The Wall Street Journal reported that home builder stocks rallied in early trading follow a reported spike in mortgage loan applications last week as homeowners take advantage of some of the lowest home mortgage rates since March. 

The Mortgage Bankers Association’s seasonally adjusted index of home loan applications, which includes both purchase mortgage and refinance loans, rose 3.9% for the week ended May 7th. The four-week moving average of mortgage applications, which removes some of the volatility of weekly changes, was up 4.4%. Mortgage refinancing led the way; the MBA’s seasonally adjusted index of home refinance applications rose 14.8%. A 30-year fixed-rate mortgage, including lending fees, averaged 4.96%, the lowest level since week ended March 12th. Refinance rates were still higher the 4.76% last year and the all-time low of 4.6%.  The demand for mortgage loans for buying new homes dropped following the expiration of the heavily publicized federal home buyer tax credits.

According to data released by the Commerce Department’s Census Bureau and the Department of Housing and Urban Development, the expansion to the homebuyer tax credit, an exceptional government stimulus measure was passed to boost housing activity, new home sales took a 7.6% decline in December. The results come on the heels of National Association of Realtors (NAR) reports of similar December declines in existing home sales.  First time home buyer loans have seen a recent spike in loan application volumes since the tax credit news hit the street.

The homebuyer tax credit extended for first time homebuyers and expanded to include existing homeowners requires buyers have a contract in place by April 30 athnd close by June 30th. The problem, homebuilder insiders and real estate agents tell HousingWire, is that consumers who tried to take advantage of the tax credit too late in the fall before realizing there wasn’t enough time to close a deal by the original November 30th expiration date have yet to reengage themselves in the home loan process.  FHA mortgage lending continues to support a majority of the first time homebuyer loans.  “With new homes, the homebuilders ran out of everything they could close by the end of November,” Burns said. “There were people that wanted to buy in these communities that didn’t because they couldn’t close in time.” 

As HousingWire previously reported, the JBREC December monthly builder survey showed optimism among 264 home building industry executives from public and private companies. The belief that builders will have increased community count, better orders and slightly higher prices has 57% of respondents planning for more revenue in 2010 than in 2009.

Another confidence booster is the tax credit many builders are receiving from the temporary extension of the terms of net operating carry-back laws, which let builder recoup losses from taxes paid in profitable years.  “It’s given them more confidence in their cash balances and they want to start more speculative homes because of the extra cash that they now have,” Burns said.

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 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

Slowly rising mortgage interest rates along with relatively sluggish home sales will have repercussions in the mortgage industry over the next few quarters according to the Mortgage Bankers Associations Mortgage Finance Forecast for the Fourth Quarter of 2009.  “The most important factor driving recent declines in real estate market activity and increases in home loan delinquencies and foreclosures has been the ongoing job losses and rising unemployment rates stemming from the most severe recession the country has experienced in a generation.

Current mortgage interest rates, home prices, and household incomes all impact affordability. Today, mortgage rates remain near record lows, and with the continued decline in home prices, for those with resources, it is a buyers’ market like we haven’t seen in years. Obviously, the problem is that there are not enough potential homebuyers who have the income and down-payment, and who feel confident both that the housing market will recover, and that their job situation is secure, to boost demand despite the improvements in affordability.”

MBA economists expect long term mortgage interest rates to raise slowly from the average of 4.9 % expected for the fourth quarter to 5.2% in the first quarter of 2010 and 5.7% in the fourth quarter.  Rates will climb to 6.0% during the second quarter of 2011.  One year adjustable rates are projected to be almost completely flat over the next year.  At 4.6% this quarter, they will trade between 4.7 and 4.8% throughout 2010 and rise to an average of 5.3% in 2011.  At the same time, sales of existing homes, estimated at nearly 5 million this year will continue at that pace through the first three quarters of 2010 before increasing in the fourth quarter for total of 5.55 million sales for that year.  Sales are expected to reach 6 million in 2011.  New home sales, projected to reach an estimated annualized rate of 442,000 in the fourth quarter and 391,000 for the year will move around in a narrow annualized range of 468,000 to 508,000 during the four quarters of 2010 and finish the year with around 483,000 sales. New home sales will total 609,000 in 2011.  All of the above outlined circumstances are expected to result in a slow year for home mortgage originators with home loan originations increasing but not strongly enough to make up for a plunge in home refinancing.  It is expected that purchase mortgages will total 718,000 for this year; 804,000 in 2010 and 896,000 in 2011.  FHA refinance activity is forecasted to be strong, even though HUD recently announced new FHA mortgage lending revisions.

During the fourth quarter it is expected that 238,000 households will seek refinance loans.  This will be the slowest quarter of the year, down substantially from the 426,000 transactions in the second quarter and 296,000 in the third.  The estimate for the entire year is 1,246,000 mortgage refinance loans.  However, next year with interest rates up and much of the demand for refinancing wrung out of the system the number of refinances is expected to plummet to little more than half the 2009 number; 2010 will be even worse.  Refinancing in the first quarter of 2010 will be 175,000 units compared to 287,000 during the first quarter of this year and the total in Q4 will be 140,000 compared to 238,000 this quarter.  MBA is projecting a total of 693,000 refinances in 2010 is estimated at 693,000 and in 2011 the total will be 591,000.  

Mortgage rates are at record levels and refinance guidelines are beginning to lighten up for homeowners with no equity.  The government announced the HARP program that promotes affordable home refinancing with flexible requirements.  People can refinance from 105 to 125%, but no cash out is allowed with these special government relief loans. These government 125 mortgage loans are not for debt consolidation, rather for loan refinances of Fannie Mae and Freddie Mac backed loans.

According to the Nationwide website, mortgage refinancing is a fundamental way for homeowners to increase cash flow.” The options for home mortgage refinancing vary by borrower, but there are many options out there. Of course, refinancing options are dependent on a borrower’s credit history, home value, home equity and other factors. However, do not let a poor credit history or a home whose value has fallen deter you. There are many refinance programs available through the VA or FHA for some people. Others can take advantage of opportunities provided in the conventional loan market. Even with tightened credit requirements, there are loan options available for people with poor credit. All of these options can be discussed with a mortgage professional.

Fannie Mae provides several refinance options including the Home Affordable Refinance Program.  Fannie Mae refinance solutions are only available eligible borrowers who have a mortgage balance less than $417,000 that is owned by Fannie Mae.  125 mortgage options are available for no equity home refinancing.

Fannie Mae Refinance Plus simplifies the refinancing process for loans that are already in a mortgage lender’s servicing portfolio. This Fannie Mae mortgage program allows refinancing to 125% LTV. The Home Affordable Refinance Programs offers a unique refinance alternative because no equity is required.  Fannie Mae pledges to provide home refinancing with increased efficiencies for the origination and underwriting of Fannie Mae.   Fannie Mae allows limited cash-out refinance transactions up to 125 percent loan to value.

The House of Representatives has approved legislation authorizing the Secretary of Housing and Urban Development to substantially increase the FHA mortgage limits for elevator-type multifamily projects and for projects in New York and other high-cost areas.

The Federal Reserve, which meets next week to discuss their interest rate policy, is likely to stay the course to buy $1.45 trillion in mortgage loan securities despite potential resistance from a few regional Fed presidents.  Central-bank officials plan to discuss winding down those purchases over the coming months to limit disruption to the market when the buying comes to an end.  Some regional Fed policy makers have suggested the Fed might halt the program before it finishes its purchases of $1.25 trillion in mortgage-backed securities and $200 billion in bad credit mortgage debt from Fannie Mae and Freddie Mac announced in the past year. But they are a small minority across the Fed system.  Top Fed officials believe such a move would tighten overall monetary policy at a time when they still worry about the durability of the economic recovery. The Fed has completed about two-thirds of its purchases, almost $1 trillion worth, and is likely to complete the rest unless prospects for the economy improve radically in the coming months.

At the Federal Open Market Committee’s September 22-23 meeting, the central bank’s policy makers including the 12 regional Federal Reserve presidents will assess the early signs of improvement now taking shape across the economy. Officials are encouraged by the rebound in financial-market conditions and initial indications that the housing market is coming out of its recession.  But they are hesitant to bank on a strong recovery. The sizable growth expected in the third quarter is due in part to short-term effects such as companies replenishing inventories and the government’s “cash for clunkers” auto-rebate program. Higher saving by households is casting doubt on consumer spending. And even the moderate growth that Fed officials expect next year wouldn’t be enough to bring down the unemployment rate substantially.  “The economy seems to be brushing itself off and beginning its climb out of the deep hole it’s been in,” San Francisco Fed President Janet Yellen said in a speech Monday. “But I regret to say that I expect the recovery to be tepid. What’s more, the gradual expansion gathering steam will remain vulnerable to shocks.”  The economy has so much slack that officials expect core inflation — excluding food and energy — to drift lower next year. Barring a surge in commodity prices or inflation expectations, most Federal Reserve officials see little reason to raise mortgage interest rates from near zero in the first half of next year as futures markets have forecast recently.

Steve Park of Mortgage Brokers Network was asked about Encompass and this is what he had to say. “Encompass certainly has made a dent in the loan origination software market that Calyx’s Point has dominated for so long.”  Lead Planet, a mortgage lead generation company have confirmed a surge in Encompass users with their lead buying clients.  “We’ve been using Encompass very successfully for quite some time, and this integration has made it exponentially easier for us to access what we feel is the most accurate product and pricing information available on the market,” says Craig Willis, chief technology officer for Amerifirst Financial, an Encompass and Mortgage Pricing Systems user. Read the complete article > Mortgage Lead Companies See Rise Encompass Use for Mortgage Management Solutions

New hirings at mortgage companies in the United States outpaced layoffs by more than 8,000 in 2^nd Quarter according to a recent report outlining employment analysis. One mortgage company had more impact on mortgage employment than any other.

Mortgage lenders laid off 3,229 employees between April 1 and June 30, according to the analysis. Layoffs were about 71 percent fewer than in the first quarter and 31 below the same period last year. “The latest period reflected consolidation as a result of several high-profile mergers during the past year,” MortgageDaily.com Founder and Publisher Sam Garcia explained. “Much of the layoff activity was concentrated at financial institutions.”

Taylor, Bean & Whitaker Mortgage Corp. lost its Freddie Mac approval and immediately halted their wholesale home loans operations. The company hopes a business restructuring will remedy its situation. The loss of Taylor, Bean and Whitaker as a wholesale lender is a major blow to U.S. mortgage brokers who say it means home loan applicants who were in process at the wholesaler will need to purchase new appraisals and potentially sit through new waiting periods. The action follows Taylor Bean’s suspension yesterday by the Federal Housing Administration and the Government National Mortgage Association or Ginnie Mae.