Aug 30, 2011

Mortgage rates fall to historic lows.

Fixed mortgage rates have fallen to historic lows. That's good news for the few who can afford to buy a home or are able to refinance. But, at the same time rates have done little to lift the ailing housing market.

Freddie Mac said Thursday that the average rate for the 30-year fixed mortgage fell to 4.32 percent this week from 4.39 percent. The 30-year loan hit a record low of 4.17 percent in mid-November.

Many people can't take advantage of the low mortgage rates. Banks have been insisting on higher credit scores and larger down payments from applicants. Others have too little equity invested in their homes to qualify for loans.

Historically low rates have helped fuel another boom in refinancing. Fast growing contract mortgage processing company, PrivoCorp, expects that refinance volumes will pick up significantly in the short term."We are getting ready to provide services to meet the increased refinancing that are the direct result of low interest rates in 2011" according PrivoCorp CEO. PrivoCorp is a licensed contract processing company providing services across the country to brokers and lenders of various sizes.

Aug 25, 2011

Bank and Nonbank Loan Officers: 459,000 and Counting?

According to a report in Origination news,

Could there really be 459,000 U.S. loan officers plying their trade in residential finance?

The tally comes from the Nationwide Mortgage Licensing System & Registry, whose job it is to count LOs who work at federally insured banks, thrifts and credit unions. Along with nonbank funders, these depositories have registered their LOs on the system.

According to a new head count, banks and their mortgage affiliates employ 350,000 registered LOs. Nonbanks—also known as “state-licensed companies”—have registered 109,000. (Each LO receives a unique identification number with their licensing status available on the NMLS website.) If the totals are correct, that means bank LOs currently outnumber nonbank professionals 3-to-1.

If you think the LO headcount sounds a bit too high, join the club. Figures compiled by the Bureau of Labor Statistics show that the entire residential finance sector employed 239,100 full-time workers as of June 30, but those figures apparently exclude bank LOs. The BLS survey only counts full-time employees on the payrolls of nonbank mortgage firms including companies that both fund and broker loans.

What's more, the BLS numbers include managers, loan officers, back-office staff and even full-time janitors. In other words, it appears that the NMLS tally provides the first true head count of LOs in the entire residential industry.

Still, there are skeptics who believe the 350,000 number is too high for LOs.

These naysayers suspect that banks have registered LOs with little involvement in mortgage lending, particularly since it takes very little effort for bank employees to register.

LOs at state-licensed companies (nonbanks) have to pass competency tests and comply with continuing education requirements. They also have to be licensed in each state where they make loans.

LOs at national or state banks are exempt from those requirements, but must undergo criminal background checks and get fingerprinted like their state-licensed competitors.

Under the 2008 Secure and Fair Enforcement and Mortgage Licensing Act, banks and other depositories are required to register their LOs on the NMLS, which is operated by a subsidiary of the Conference of State Bank Supervisors. (Banks were required to file their registry information with NMLS no later than July 29.)

The registry is now relatively complete, according to Bill Matthews, president of the State Regulatory Registry, the CSBS subsidiary which operates the NMLS on behalf of the American Association of Residential Mortgage Regulators. AARMR is a trade association for the agencies and professionals who oversee the mortgage business within their respective borders. “All the deadlines have passed and now we can start looking at the data and trends,” Matthews told National Mortgage News.

On Aug. 2 regulators “turned on” the consumer portion of the website, which allows homebuyers and other interested parties to check on companies and individual LOs employed in the industry.

The NMLS site was first launched 18 months ago with information on state-licensed (nonbank) companies, branches and individuals, including whether their license status is active. The site even indicates whether a license was denied, withdrawn or revoked. “If someone was denied a license on the state side, the consumer will be able to see that. If they are now working for a depository, they can see that as well,” Matthews said.

In late 2012, the site will start showing disciplinary actions taken against state-licensed individuals. But each state will determine for itself the exact nature of what is displayed. Some jurisdictions may decide to show C&D orders that have been levied against an originator, while others may rule only fully adjudicated enforcements should be disclosed.

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Aug 22, 2011

Mortgage Rates in U.S. Tumble to Lowest in More Than 50 Years

According to a report in Bloomberg,

U.S. mortgage rates fell to the lowest in more than half a century as concern that the global economic recovery is faltering spurred demand for bonds that guide home loans, according to Freddie Mac.

The average rate for a 30-year fixed loan dropped to 4.15 percent in the week ended today from 4.32 percent, the McLean, Virginia-based mortgage financier said in a statement today. That was the lowest in more than 50 years, Freddie Mac said. The average 15-year rate fell to 3.36 percent from 3.5 percent.

The decline followed a slide in yields for 10-year Treasury notes, a benchmark for consumer debt including mortgages. The yield touched a record low today of 1.9735 percent, after Morgan Stanley cut its forecast for global growth and concern grew that Europe’s debt crisis may deepen. Lower mortgage rates have done little to boost home demand as the housing market stagnates.

“Low interest rates are helpful at the margins but it’s indicating a lot of concerns about the economy,” said Scott Brown, chief economist for Raymond James & Associates Inc. in St. Petersburg, Florida. “The move into Treasuries is driven by fear.”

Housing demand is depressed as the U.S. unemployment rate sticks above 9 percent and lenders tighten standards. Sales of previously owned homes unexpectedly dropped in July, according to a report today by the National Association of Realtors. Purchases fell 3.5 percent to a 4.67 million annual pace, the weakest since November. The median forecast of economists surveyed by Bloomberg News called for an increase in sales.

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Aug 19, 2011

IL Homes Sales Pick up Nicely

According to a report in National mortgage news,

Existing home sales in Illinois in July were up 18% over the previous year but median prices were down by 4%, the Illinois Association of Realtors reported. The data includes both single-family properties and condominiums.

Even though conditions are good for the home purchase market, until the job situation clears up, a recovery will be difficult, an economist warned.

Geoffrey J.D. Hewings, director of the Regional Economics Applications Laboratory of the University of Illinois, said, "It would seem that until the economy signals a clear rebound—with sustained employment growth of the order of 200,000 jobs added per month—can we expect to see a sustained up tick in housing sales and some modest recovery in prices. Since April, the unemployment rate has not shown any definitive movement."

In the Chicagoland metropolitan area, home sales (single family and condominiums) totaled 6,625 homes, up 19.2% from July 2010 sales of 5,560 homes. The median price in July was $182,500 in the area, down 5.4% from the previous year.

Statewide sales totaled 9,708 homes sold while the median price was $153,000.

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Aug 9, 2011

NMLS Update: Bank LOs Outnumber Nonbank LOs Almost 3 to 1

According to a report in National mortgage news,

Federally insured banks, thrifts and credit unions have three times as many loan officers engaged in mortgage lending as state-licensed companies, according to new figures submitted to the Nationwide Mortgage Licensing System and Registry.

The nearly completed system shows depository institutions and their mortgage subsidiaries employ 350,000 LOs, compared to state-licensed firms which have 109,000 LOs, according to the Conference of State Bank Supervisors.

State chartered firms include nonbank mortgage lenders and loan brokerage companies.

Banking institutions were required to file their registry information with CSBS by July 29.

The registry is now relatively complete, according to Bill Matthews, president of State Regulatory Registry, which is a CSBS subsidiary that operates the NMLS for the states. "All the deadlines have passed and now we can start looking at data and trends," Matthews told National Mortgage News.

The NMLS deadline for the last two states, Florida and California, was March 31.

In 2Q state (nonbank) LOs numbered 109,000 compared to 100,100 in the first quarter.

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Mortgage Rates: Regaining Some Ground

According to a report in mortgage news daily,

( Aug/ 8 /2011)
Last week the intense rally in bond markets helped mortgage rates reach their best levels of the year, but the rally came to an end on Friday. Then on Friday evening, news the S&P downgraded the US Sovereign Debt Rating set a chain of events in motion that completely rocked the markets. Despite steep losses in stocks and insane rallies in Treasuries, the Secondary Mortgage Market has been more of a bystander today, leaving Home Loan Borrowing Costs slightly better than Friday, but not as good as Thursday.

CURRENT MARKET*: The BestExecution 30-year fixed mortgage rate is 4.250%. Not many lenders are willing to offer 4.00% but 4.125% is available if you're willing to pay additional closing costs. On FHA/VA 30 year fixed BestExecution is 4.00%. Fewer lenders willing to quote 3.875% (includes additional closing costs). 15 year fixed conventional loans are still best priced at 3.75% and we're still seeing aggressive quotes at 3.625%. Five year ARMs are still best priced at 3.25. ARMs and 15 year quotes seem to have bottomed out.

It's important that we point out an increased amount of variation in what individual lenders are quoting as their BestExecution rates. This is a factor of price volatility in the secondary mortgage market. Unfortunately when volatility picks up in the secondary mortgage market, the cost of doing business gets more expensive for lenders (hedging costs go up). Those added costs are usually passed down to consumers via extra margin in rate sheets.

GUIDANCE: We've realized a good portion of the rates rally we'd been holding out for. And while things could still improve, it's an especially volatile time for the broader markets, meaning lenders have been slow to pass along gains. Mortgage rates DO NOT like volatility and uncertainty. Relative to various market levels, rate sheets are conservative yes, but there's no telling when things will get better, and sadly, always a chance that they won't get better at all. Incidentally, we lean toward the possibility of them getting better, but the timing and flexibility required to capitalize on that possibility makes floating a less attractive choice for most scenarios right now, especially when what's on the table is already so much better than everything else 2011 has to offer and fairly darn close to all time low rates.

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Aug 1, 2011

LPS Posts Large Decline in 2Q Earnings

According to a report in National Mortgage News,

Mortgage technology and service provider Lender Processing Services earned $21.4 million in the second quarter, a 73% decline from the same period a year earlier, citing restructuring charges and lower revenue.

In a statement LPS said “in light of current market conditions” the firm is evaluating its cost structure and “potentially underperforming assets.”

The Jacksonville, Fla.-based firm booked a pre-tax restructuring charge of $7.9 million during the quarter primarily due to continued personnel reductions. It also recognized a $31.8 million pre-tax asset impairment charge tied to the writedown of investments it is evaluating for sale or wind down.

Although its earnings fell by 73%, revenue declined by just 13% to $517.5 million.

"LPS continues to perform well despite very challenging conditions in the default and origination markets, as well as an ongoing difficult macro-economic environment,” said company CEO Lee A. Kennedy. “LPS, with its strong market presence and unique set of end-to-end solutions for the mortgage and real estate marketplace, remains well-positioned for the years ahead.”

Still, LPS’s second-quarter profit beat market expectations helped by lower cost of revenue. The firm manages more than half of U.S. mortgage foreclosures, but faces various legal and regulatory challenges tied to its alleged role in wrongful foreclosure practices.

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