The U.S. government has been working frantically to pass mortgage reform that would require loan modification licensing. The U.S. Department of Housing and Urban Development, which oversees compliance with the SAFE Act, has proposed that employees handling loan modifications for struggling homeowners also meet the licensing requirements, a policy opposed by banks. John Courson, CEO of the Mortgage Bankers Association said that mandating licenses for mortgage loan-modification specialists could slow hiring and hinder efforts to cut home foreclosures.” Courson continued, “We say this is not originating a new home loan, because the loan terms are being reduced on their home mortgage to increase the affordability and reduce the likelihood of a foreclosure.”
The housing department hasn’t set a deadline for a decision, said Lemar Wooley, a spokesman. According to Anthony Hsieh, CEO of Loan Depot, a home loan lender based in Irvine, California, the process costs $3,000 to $6,000 to train and pay the fees for each new employee to comply with the mortgage licensing system. “The mortgage reform law is supposed to make sure we kick the bad ones out,” said Hsieh. “It could be the opposite, keeping the good loan officers out.” Read the original article online > Loan Modification Licensing and Mortgage Reform
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
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
Today, most mortgage brokers that have less to spend so it is imperative that they buy leads cautiously. Internet mortgage leads can be a very cost effective form of marketing if you know how to purchase leads from lead generation companies. Be careful of how and where you purchase leads. Ask the account executive at the lead company what their minimums are and be cautious when buying leads in bulk. If a lead company is generating 50 leads a day and 15 leads a day that meet your filters, you have to wonder how a lead company could send you 250 leads in a 3-day span. Clearly these are either old or brokered leads. In a recent article, Bryan Dornan the founder of mortgage lead generation company, the Lead Planet reminded mortgage companies to “Consider more than just the cost per lead.” Dornan suggests that “the cost per funding is the bottom line.” See the original mortgage lead buying post at the Mortgage Lead Vault > Cost to Funding Ratio Matters with Mortgage Leads
In a recent article, Mortgage Refinancing Buzz compares conventional and FHA refinancing in a side by side analysis. The mortgage advisor notes that both types of refinance loans have their pros and cons so it all comes down to selecting a refinance program that best meets you individual needs. In 2010 there were many revisions to underwriting criteria for conventional and FHA loan requirements. MRB recommends finding out what your loan qualifications are with a mortgage lender you trust.
A conventional refinance loan is a traditional mortgage used to refinance an existing mortgage that stays within the conforming loan limits of $417,000. FHA streamline refinance allows FHA customers to refinance anytime the market rate drops into a position that would save them money. During turbulent the FHA refinance loan provides some assurances that if the rates drop, the FHA borrower can reap the benefits.
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 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.
California homeowners have taken quite a hit in home values over the last few years. Many local residents are hoping the record low interest rates will help soften their losses.Just a few weeks ago California mortgage rates hit a new all time record low of 4.375% on a 30 year fixed mortgage. The current California mortgage rates have crept up slightly for conventional, FHA, VA and jumbo home loans. As a result the 10 year treasury yield, used to forecast mortgage rates, has also steadily risen over the past 2 weeks and sits at 3.482% as of close on Thursday afternoon. California home prices have stabilized as pending home sales are at a 2 year high.
Current California Mortgage Rates
FreeRateUpdate.com reported the latest rates for wholesale mortgage lenders in California mortgage rates shows California interest rates are up from record lows but holding at present levels. The buy rate for California thirty-year fixed rate is currently at 4.75%.The current rate for California fifteen-year fixed rate is 4.25%, up from 4.125% last week.
FHA Mortgage Rates
Check the California FHA Loan Limits for restrictions by county.Today’s California jumbo 30 year fixed mortgage rate is 5.875%, up from 5.75% last week. California FHA mortgage rates are near record lows. Today’s California FHA mortgage rates start at 4.75% 30 years fixed, up from 4.375% 2 weeks ago.
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.
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
Mortgage rates in the U.S. fell to the lowest since May as mortgage refinance loans surged on reduced borrowing costs. The average thirty-year rate fell to 5.14% from 5.20%, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement. The fifteen-year mortgage rate was 4.63%.“It’s been stuck in this low-five range for a number of weeks,” Donald Rissmiller, chief economist at New York-based Strategas Research Partners, said. “This is still a good interest rate.”
The Mortgage Bankers Association’s index of home loan applications rose 4.3% to 514.4 in the week ended July 10. Purchase applications fell 9.4 % while requests to refinance gained 18%, indicating prospective buyers are still wary of falling home prices while property owners are taking advantage of low rates to reduce their monthly payments. Kelly Media Group Founder, Jason Cardiff of the Mortgage Lead Company, said, “The result of lenders cutting fees will trickle down to homeowners and eventually provide a hedge against inflation for the rest of 2009.”
Federal Reserve Chairman Ben S. Bernanke is trying to reduce lending costs with a $1.25 trillion program to purchase securities backed by home loans. According to data compiled by Bloomberg, the worldwide credit crunch spurred by bad credit mortgages has cost the world’s financial firms almost $1.5 trillion in losses and more asset write-downs.
Last month, the Federal Reserve left the size of its buying program intact and kept the benchmark rate for federal funds at between 0 and 0.25 %. The rate will stay at “exceptionally low rate levels” for an “extended period,” the Federal Open Market Committee said in a statement June 24th.“We’re going to see more of the same out of the Fed,” Rissmiller said. “They’ve been happy with what’s happened.”
April’s Record Low
Mortgage rates reached a record low 4.78 % twice in April after the central bank announced its plan to boost buying of both mortgage securities and Treasuries.Those purchases brought down yields on government debt and mortgage-backed bonds issued by Fannie Mae, Freddie Mac and Ginnie Mae, allowing lenders to reduce mortgage rates on new home loans and still sell the securities at a profit. Home loan rates started climbing in May along with Treasury yields on investor concern that ballooning government debt would fuel inflation.
In a recent article, California mortgage broker, Jeff Morris, formerly with GMAC and Ditech estimated that one in ten of homeowners who visit him online are able to get approved for a conventional or FHA refinance.Morris said, “People simply don’t qualify with the mortgage lenders tighter guidelines and lack of home equity.“ Borrowers seeking home refinancing, outside of California, Arizona and Nevada may have a better chance because fewer borrowers in the mid-west and south are under water with their mortgages being greater than their home’s value.Even with mortgage lenders extending 97% FHA and 105% mortgage refinancing, California homeowners have little opportunities to be approved because home values have declined so significantly since they bought their properties years ago.
The goal should be for homeowners to invest in a home that they can afford and if refinancing with a lower mortgage payment is an option, then borrowers would be foolish not to seize the savings opportunity. Morris added that “the demand for loan modifications has not waned and he sees an increase in loan workout requests for borrowers who are stuck in jumbo mortgage loans that have interest rates set to adjust.” The banks just aren’t handing out loan modification agreements to just anyone anymore.Homeowners seeking foreclosure prevention alternatives from their mortgage lender must be able to document that they have the income to support the modified home loan payment.
In Maui, Caleb Palmer, a broker, said “Consumers should stop whining about things they can’t control and focus the affordable home buying opportunities that have become available since the housing market crashed in 2006.” Palmer continued, “Mortgage rates were under 5% for thirty year fixed rate loans and inventories were beginning to open up in neighborhoods that haven’t been available for years.”Palmer believes that 2010 will see more buying opportunities in Hawaii and California before the market shifts back to appreciation mode.
In addition, if you’re older than 40, shortening your mortgage term now could help leave you mortgage-free in retirement, reducing the income you’ll need to generate from your battered 401(k).
But before you jump in, you should know that most single-family home loans today need to fall within Fannie Mae and Freddie Mac limits — up to $417,000 in most places, and up to $729,750 in certain high-cost cities such as San Francisco and New York. “Jumbo” mortgages, or those larger than those limits, are still very hard to find. Then you’ll need two crucial and tough-to-acquire bits of information: your credit score and your home’s current value. Those will determine whether you can refinance at all and how close you can get to the lowest rates available. Even then, you may find the process unusually long and unpleasant; some banks are taking up to 90 days to complete a refinancing.If you got your current mortgage in the past few years, when less documentation was needed, you may be surprised by the financial colonoscopy that awaits you. You need pay stubs, bank statements, brokerage statements and maybe tax returns to convince the lender that you can and will repay the loan. If you’re self-employed, you may be asked for a profit-and-loss statement for this year; if you rely on bonus income, expect the lender to assume this year’s bonus will be a lot less than last year’s.
What is home equity? Having some equity in your house is essential to qualifying for a new mortgage loan. If your current mortgage is less than 80% of the value of your home or less than 75% of your condominium, you should have refinancing options as long as you don’t have late mortgage payments and bad credit scores.Subprime refinancing and bad credit mortgage options have disappeared with the exception of VA and FHA loans.VA home loans are only offered to military veterans and FHA mortgage guidelines require full income documentation and most bad credit home loan applicants need a stated income program.
If your mortgage is between 80% and 105% of your home value, you’re current on your payments and your loan was bought by Fannie Mae or Freddie Mac, you may be able to refinance under a two-month-old government program called “Making Home Affordable.” Some kinks are still being ironed out, and Fannie and Freddie have different requirements, so go to the program’s Web site at MakingHomeAffordable.gov or contact your mortgage servicer to see if you qualify.
Sometimes under this program, Fannie and Freddie will waive appraisals and other underwriting steps. And if you’re refinancing a Veterans Administration or Federal Housing Administration loan, a new appraisal isn’t needed.
Record low interest rates on mortgage refinance loans have been drawing more buyers to the stalled housing market, new figures suggest. Data from the Mortgage Bankers Association reveals that total home financing applications that includes refinancing and new home purchase loans jumped by nearly 33 % last week.
Existing homeowners looking for a better mortgage payment with a home loan revision made up the most significant proportion of the mortgage applications, at 79 %. With the average mortgage rate on a fixed interest rate 30-year home loanhovering near 4.6 %, it is not difficult to see why people may be looking for a change. However, not everyone who applies for a mortgage these days can expect to be successful as mortgage lenders are seeking higher fico scores and theyr are charging more loan fees on those who do not measure up. Meanwhile, there are also signs that first-time buyers could be coming out of the woodwork as well.
In other mortgage news from the U.S. Census Bureau indicate new home sales increased by 4.7 % in February. That was the first rise in housing sales since July 2008. FHA mortgage applications continued to rise as brokers and wholesale lenders expressed more confidence with 2009 FHA refinance guidelines in underwriting and closings.
Reuters reported a widening stress in the U.S. housing market, Moody’s Investors Service said on Thursday it may downgrade $240.7 billion of securities backed by prime-quality “jumbo” U.S. residential mortgages because defaults will be higher than expected.Jumbo mortgage loans are typically larger than $417,000, and go to borrowers with good credit. But Moody’s said in the last six months, there have been “substantial increases in serious delinquencies and decreases in prepayment rates, levels that are unprecedented in this asset class.”The securities under review are backed by U.S. home loans issued between 2005 and 2008. Moody’s had late last year downgraded $110 billion of securities issued in 2006 and 2007, almost all of which had originally been rated “Aaa.”
Moody’s on Thursday said it may downgrade 4,988 classes of jumbo residential mortgage loan securities with a current outstanding balance of $173.3 billion, and the original $240.7 billion balance.It said it now expects cumulative losses of 1.7 % for 2005 securitizations, 3.55 % for 2006, 5.05 % for 2007 and 6.20 % for 2008.Downgrades can force some investors to sell the debt, and can increase capital strains on banks and insurance companies that own it.Bad credit mortgages have already been downgraded when the subprime mortgage market crashed a few years back.
The top fifty U.S. banks added $109 billion of mortgage-backed debt in the fourth quarter, although most was not jumbo home loans, Barclays Capital said. Falling mortgage interest rates could spur an increased supply of jumbo mortgage securities, it said.
A new report from First American Core Logic suggested that more than 8.3 million U.S. home mortgages had negative equity as of year-end, compared with 7.6 million just a few months prior.Another 2.2 million owner-occupied properties have homes worth only about 5% more than their debt, so they are approaching negative equity as home values slide. More than 20% of all properties carrying a mortgage nationwide have negative equity, with more owed on their home loans than the homes are worth, according to a report being released today.Borrowers are having a difficult time qualifying for a refinance loans or cash refinancing for debt consolidation.
Over 30% of homes nationally are owned outright, and they were not included in the statistics. The near-negative equity homes, combined with the underwater homes, account for a full quarter of all U.S. mortgaged properties, the research company said. The numbers are ominous because negative equity is half of the formula that usually leads to foreclosure.“Being underwater is a necessary but not sufficient condition for home loan default and foreclosure,” said Mark Fleming, chief economist for First American in Washington, D.C. “The other necessary but insufficient condition is inability to make your mortgage payment due to job loss, divorce, a significant change in the payment because of an adjustable interest rate mortgage. The new loan modification plans are more aggressive with incentives for lenders to renegotiate the principal amount owed on the property.
Over the past year, the total value of U.S. homes has fallen $2.4 trillion, going from $21.5 trillion in December 2007 to $19.1 trillion at the end of 2008. California, where more than $1.2 trillion of housing value evaporated last year, accounted for half that decline. That’s vastly disproportionate to California’s share of the mortgage market, estimated to be 16% to 20%, Fleming said.However, despite the steep declines, California overall is in better shape than some neighboring states because it still has a stock of mortgages taken out over two decades ago on homes that now have accumulated significant equity. On average, Californians with mortgage loans have 30% equity in their homes. By comparison, the average equity for all homes that still have mortgages in Nevada is just 3% – the worst in the nation. “Las Vegas is a city that exploded over the past 10 years,” Fleming said. Now that values have tumbled, “the last 10 years is a do-over.”
Congressman Al Green has introduced H.R. 600, a bill that would reinstate the controversial seller-funded down payment assistance banned last October despite being credited with helping over one million families become homeowners. Scott Syphax, president and CEO of the Nehemiah Corp. of America, Sacramento, CA, a DPA pioneer and supporters applauded the home loan bill that helps broaden homeownership opportunities for borrowers who qualify for FHA loans without using government or taxpayer dollars. “With foreclosure news continuing to report home loan defaults on the rise and banks maintaining their stranglehold on credit, we commend Congressman Green for recognizing the important role down payment assistance can play in the market’s recovery,” he said in a release. FHA home loan programs can’t be expected to carry the complete load for American home financing.
“Through H.R. 600, DPA offers a simple solution that can empower thousands of worthy families to take advantage of depressed home prices therefore reducing the glut of homes on the market. Further, it does so without spending a single government or taxpayer dime, according to the Congressional Budget Office.” Mr. Syphax said DPA is a source of opportunity for responsible, sustainable homeownership in times when the housing market is crumbling. Down-payment assistance supporters hope President Obama’s Administration will help reinstate the program.
The Associated Press Mortgage financier has Freddie Mac has reported an $821 million second-quarter loss. The AP’s David Melendy reports on that and the rest of Wednesday’s business headlines. The mortgage financier has Freddie Mac has reported an $821 million second-quarter loss. The decrease of one dollar and sixty-three cents per share was more than three-times larger than Wall Street expected. The dismal results come just weeks after the government threw a financial lifeline to Freddie and its sister company Fannie Mae to ward off fears the pair could collapse and take down the U.S. mortgage market.
Connecticut is suing Countrywide Financial, alleging it misled borrowers into taking on risky home loans they could not afford. The state alleges the mortgage giant violated its consumer protection laws and charged unjustified fees to homeowners who defaulted. Many mortgage lenders believe that Countrywide wrote more bad credit mortgages because they were the top originator in the country.People seem to forget that Countrywide also wrote more good loans than any other mortgage company for many years.
The National Association of Mortgage Brokers took the RESPA fight to a new level.It’s bad enough that the banks and lenders have gotten away with slandering brokers for predatory lending.HUD should be comparing home loans to home loans…The fact that HUD thinks it’s ok for mortgage lenders and banks no to disclose the yield spread premium paid by the investors, yet mortgage brokers should have be required to disclose the YSP, is nothing short of astonishing!
NAMB’s argument is that HUD has overlooked the rights of mortgage brokers and bankers in helping the consumer at the closing table. The lawsuit against HUD states that the Final Rule is “arbitrary and capricious,” contrary to the intent of Congress, and fails to offer any rational reasons for its rejection of alternative approaches. NAMB says the Final Rule discriminates against mortgage brokers with the required broker-only disclosure of yield spread premium (YSP), placing them at a permanent disadvantage in the marketplace.Read the complete article > NAMB Sues HUD Over RESPA
