Home prices rise across the US

According to the S& P Case-Schiller index, home prices have got their first monthly increase in over 3 years - which is definitely a good sign. This is according to a WSJ article this morning.

All other statistics about the mortgage industry rebounding and sales increasing etc, are not as valuable as this particular stat.

The question on most peoples minds is going to be can this be sustained, in the light of poor job growth numbers? Feel free to post your thoughts on the PrivoCorp blog.

Fed Changes to protect consumers

In order to protect consumers and help them make intelligent decisions while taking out mortgages, the Fed is instroducing some changes that seek to bolster its image as the watch dog for the consumer.

Under the proposed rules, mortgage applicants would get:
* A page Q&A document explaining risky features of a loan
* Streamlined early cost disclosures
* A revised annual interest rate that includes most fees and costs
* A graph showing borrowers how their rate compares with rates of borrowers with excellent credit
* In addition, side payments for steering borrowers to higher-cost or riskier loans would be banned.

Home-equity loan applicants would get:

* A one-page document explaining the risks of the loan
* Cost disclosures specific to their loan
(Courtesy: WSJ)

In addition, lenders would have to notify borrowers 45 days before changing terms of a loan.

The other proposals include complete disclosure of the YSP - the amount the broker makes on the loan. While it is very crucial that this disclosure be made, there is some talk about eliminating this or curtailing it in some form. While it is known fact that the higher the interest rate the borrower gets, the higher the payout for the broker, would it not be better to have an informed borrower than to eliminate this channel altogether (or squeeze it out of the market)?

If a consumer uses the broker/wholesale channel effectively, he/she can get rates that beat the retail channel. It is a known fact that the cost to originate is higher in the retail channel due to the overheads, so it remains to be seen what track the lenders take in this matter.

All comments for and against are welcome. The entire article is available on the WSJ

US Dept of Commerce: New home sales up 11%

According to the US Dept of Commerce new home sales are up 11% month on month, which is obviously a positive for the housing market in particular and the economy in general. Of course, these stats have to be seen in the light of various other parameters. For example, YoY numbers still indicate a 21 % drop.

"Green shoots", "positive signs" whatever phrase one wants to use - the best way to really tell is if these types of numbers are sustainable.

For the entire article on Business Courier visit http://cincinnati.bizjournals.com/cincinnati/stories/2009/07/27/daily6.html?ed=2009-07-27&ana=e_du_pap

HVCC

Much of the current controversy around appraisals stems from the May 1 implementation of Fannie Mae’s and Freddie Mac’s new Home Valuation Code of Conduct – a set of standards pushed by the New York Attorney General’s Office as part of a settlement with the Federal Housing Finance Agency.

Critics of this new code are of the opinion that this has greatly elevated the status of Appraisal Management Companies to the detriment of the mortgage and housing markets. Experienced appraisers feel that they have been sidelined by these AMCs in favor of appraisers with little experience, but who sign up with these AMCs to perform appraisals at a low cost in return for large quantities of work. (quantity discounts).

Separately, Fannie and Freddie have moved to tighten their appraisal standards outside the framework of the HVCC and beyond industry rules by mandating a new “market conditions” addendum. According to many this will cause a disturbing rise in failed home sales where appraisals won’t support purchase prices and mortgage loan-to-value requirements.

In another post, PrivoCorp (http://www.privocorp.com)- the fastest processors of home mortgages, will articulate some of the things Congress is considering doing in this regard. We welcome all opinions in this matter.

Update on Underwriting Guidelines (Recently listed FHA/VA Properties)

Properties currently listed for sale are not eligible for FHA or VA refinances, whether fully qualifying rate/term, streamline, or cash out. Properties previously listed and then canceled, are eligible for refinance with the following loan-to-value guidance:

• Refinances, including fully qualifying rate/term and streamline: Maximum loan-to-value allowed.
• Cash out transactions: Maximum 70% loan-to-value if the listing was canceled within six months preceding the application date.

The following evidence must be provided to verify cancellation of the listing:

• The property’s listing history must be shown in the subject section of the appraisal;
• Documentation of canceled listing agreement;
• Evidence a search was made of the Multiple Listing Service (MLS); and
• The borrower’s confirmation of their intent to continue to occupy the subject property as their primary residence and a reasonable explanation for removing the house from the market.

USAToday: Housing starts, building permits jump in June

According to USA Today, construction of new homes rose in June to the highest level in seven months, a sign builders are starting to regain confidence as they emerge from the housing bust.

This is definitely a good sign both for the economy as a whole as well as for those connected to the real estate industry including the mortgage industry. Surely the hope will be that these home starts result in jobs not only in the construction industry but also associated industries as well.

For the entire article check http://www.usatoday.com/money/economy/housing/2009-07-17-housing-starts-june_N.htm

1.5 million homes in foreclosure in '09

According to an article on cnn.com - homeowners fell behind on mortgage payments in record numbers during the first six months of 2009.

To read the full article go to : http://money.cnn.com/2009/07/16/real_estate/RealtyTrac_foreclosure_report/index.htm

Twitter and the mortgage industry

We have been watching twitter and how mortgage professionals have been using the system. Seems like it is being used only to drive website traffic. We have our own twitter page http://www.twitter.com/privo and have about 460 people following us and are following a lot of mortgage professionals ourselves. Most of the people who have gotten in touch with us are those trying to pitch some "get rich quick" schemes or trying to drive traffic to their website.

Would like to know if anyone has some good experience utilizing twitter- particularly on the mortgage banking side. We are working on putting together a white paper on how mortgage banking/broking professionals can benefit from twitter.