Dec 9, 2014

Mortgage Rates Continue to New November Lows

According to Mortgage New daily , Mortgage rates moved moderately lower again today, setting another new low for the month of November.  That said, the movement has been primarily restricted to the upfront costs associated with the same old rates.  In other words, the most prevalent contract rates remain 4.0% or 4.125% for top tier borrowers, but the upfront costs for those rates are a bit lower than they were on Friday.

The bond markets that dictate mortgage rate movement were almost perfectly flat today after some volatility in the morning.  While we didn't end up seeing a meaningful attempt to get to stronger levels, simply holding Friday's ground is a positive change.  It contributes to a trend that is currently more sideways and supportive compared to the trend in the second half of October which was characterized by slow, steady weakness.

Loan Originator Perspective

"Today is a great example of the market being range bound. We started the day testing the lower realm of the recent range, which was quickly rejected and we started trading back to the middle of the range. In my opinion this is good, as long as we don't break above the upper support level of the range, as the range serves as a guide to determine day to day rates. We can put a few numbers on it, but generally I would say 2.30-2.40% (rounded up/down) on the US 10 Treasury yield. Floating is a great scenario within this range to buy time to be within a closer date of closing to reduce the costs associated with your rate. Within 15 days I firmly believe should be closed." -Constantine Floropoulos, Quontic Bank

"Yields were unable to make a big move lower this morning, but they have held at support. The long term trend pointing toward lower mortgage rates continues to hold. I am back to my advice of floating all loans until you are within 15 days of funding and then locking. A 15 day lock will render you the best possible pricing." -Victor Burek, Open Mortgage

While Mortgage bonds opened higher and drifted lower during today's trading session we were able to keep all of Fridays gains and close above key level. It looks to me as if the market is setting its self up for a bond rally. Float for now as things unfold but do stay cautious and check in daily." -Manny Gomes, Branch Manager Norcom Mortgage

Nov 26, 2014

Good News for Housing and Consumers From FHA


Despite dire predictions from many quarters the Federal Housing Administration's (FHA's) Mutual Mortgage Insurance Fund (MMIF) has returned to solvency.  And it did it a full three years ahead of the best estimates back in 2012.  The Department of Housing and Urban Development (HUD) said on Monday that the Fund has gained nearly $6 billion in value over the last year and now stands at $4.8 billion with a capital ratio of .41 percent.  One year ago that ratio was a negative .11 percent.

HUD made the financial announcement as it released its annual report to Congress.  An independent actuarial report shows that the fund has gone from a negative value to a growth of $21 billion within the last two years.

In September 2013 FHA had to draw $1.7 billion against its borrowing authority from the Treasury Department, the first time in its 79 year history it had required such support.  The draw came after the MMI failed to maintain its congressionally mandated capital-to-loan ratio of 2.0 percent for three consecutive years and an independent audit estimated it would not return to that ratio until 2017.  It now appears that it will reach 2.0 percent sometime in FY 2016 after regaining an additional $15.1 billion in value over the remainder of this fiscal year.  As late as December 2013 there were many who predicted the agency would have to return to Treasury to request more support.

HUD credited the improved financial picture to an aggressive set of policy actions.  Delinquency rates in the agency's portfolio of guaranteed loans has dropped by 14 percent and recovery rates improved by 16 percent since last year.  Since the housing crisis began FHA has made significant changes to underwriting standards, loss mitigation policies, and recovery strategies and has raised insurance premiums. 

"This year's report shows that the fundamentals of the Fund are strong," said HUD Secretary Julian Castro. "Over the past five years, FHA has taken a number of prudent actions to restore the Fund's fiscal health. This is positive news for the economy and the millions of American families that count on FHA."

 "Improving the performance of the Fund by $21 billion in two years is good news for the housing market," said Acting FHA Commissioner Biniam Gebre. "FHA will continue to focus on meeting its mission of creating responsible access, investing in our economy and preserving pathways to the middle class. We remain dedicated to giving more hard-working responsible families the chance to buy a home and not a returning to the days of reckless lending that caused so much pain for middle-class families and the economy."

David H. Stevens, President and CEO of the Mortgage Bankers Association (MBA), said following the release of the report that the continued improvement in the value of the MMI Fund was good news for taxpayers and the program, as almost all of the vital metrics, including delinquencies, foreclosures, and recoveries on property disposition, continue to improve.

"Maintaining this trend will require FHA to continue its ongoing work to improve transparency and certainty around its loan quality assessment methodology, as well as to re-examine mortgage insurance premiums, both the amount and the structure. Premiums are currently at an all time high, and FHA needs to find the right balance so it can meet its mission and further grow its reserves by sustainably increasing volumes without being adversely selected should only the highest risk borrowers be willing to pay the high premiums," Stevens said.

Oct 27, 2014

When exactly do mortgage applications start to slow?

Is there any particular date when mortgage applications start to slow? We all know that nothing really (significant) happens in the mortgage market from Thanksgiving through the new year, but we were wondering if there was a certain date this happens ! Welcome thoughts from all our readers. And thank you very much for being part of our lives. Happy Thanksgiving (a month ahead !)

Sep 8, 2014

Existing Home Sales Hit 2014 Peak in July

Existing home sales in July hit their best pace so far this year the National Association of Realtors® (NAR) said today, reflecting a 2.4 percent increase from June to a seasonally adjusted annual rate of 5.15 million units.   June's sales were downgraded slightly to 5.03 million units.  The July rate of sales marked the fourth consecutive monthly increase but was still 4.3 percent under the rate last July the month with the highest sales in all of 2013.
Lawrence Yun, NAR chief economist, credited the slowly increasing sales momentum to stronger job growth and improving inventory conditions. "The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market," he said. "More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise."
Affordability, Yun said, will likely decline in upcoming years. "Although interest rates have fallen in recent months, median family incomes are still lagging behind price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy," he said.
Single-family home sales increased 2.7 percent to a seasonally adjusted annual rate of 4.55 million in July from 4.43 million in June, but were 4.2 percent below the 4.75 million pace a year earlier. Existing condominium and co-op sales were unchanged from June at an annual rate of 600,000 units, 4.8 percent below the 630,000 unit rate in July 2013. 
The median price of existing homes of all types increased 4.9 percent on an annual basis to $222,900, the 29th consecutive month of year-over-year increases.   Single-family homes were priced at a median of $223,900, 5.1 percent higher than a year earlier and the median condo was priced at $215,000, a 3.3 percent annual increase. 

The share of distressed homes - foreclosures and short sales - in July fell below double digits for the first time since NAR first tracked the category in October 2008.  Nine percent of all sales were distressed compared to 15 percent in July 2013.  This is in - line with figures announced on Wednesday by CoreLogic which reported June distressed sales at 11.4 percent, down from 15.8 percent a year earlier. 

NAR said 6 percent of existing home sales were foreclosed property (REO) and 3 percent short sales. Foreclosures sold for an average discount of 20 percent below market value while short sales were discounted 14 percent.

Yun says the deepest housing wounds suffered during the Great Recession are beginning to fully heal. "To put it in perspective, distressed sales represented an average of 36 percent of sales during all of 2009," he said. "Fast-forward to today and rising home values are helping owners recover equity and strong job creation are assisting those who may have fallen behind on their mortgage due to unemployment or underemployment."

Twenty-nine percent of transactions in July were all-cash sales, down from 32 percent in June and the lowest overall share since January 2013 when 28 percent of sales were cash. Individual investors, who account for many cash sales, purchased 16 percent of homes in July, unchanged from both last month and July 2013. Sixty-nine percent of investors paid cash in July.

The percent share of first-time buyers rose slightly from 28 percent in June to 29 percent in July.  This was the second consecutive monthly increase but the share of sales to first-time borrowers remains historically low.

NAR President Steve Brown says the new credit scoring calculation recently announced by Fair Isaac Corp., or FICO, will improve access to homeownership. "NAR supports efforts to broaden access to credit for qualified homebuyers, especially those who have been shut out of the housing market or forced to pay higher interest rates because of flawed credit scores," he said. "A solid credit score is necessary to keep borrowing costs down."

The inventory of available existing homes for sale rose to 2.37 million at the end of the reporting period, up 3.5 percent from the end of June.  This represents a 5.5-month supply at the current sales pace. Unsold inventory is 5.8 percent higher than a year ago when there were 2.24 million existing homes available for sale.

Regionally, July existing-home sales in the Northeast were unchanged from the June annual rate of 640,000, 9.9 percent below a year ago. The median price in the Northeast was $273,600, an increase of 2.4 percent from July 2013.

Existing homes sales in the Midwest increased 1.7 percent to an annual level of 1.22 million in July, but remain 4.7 percent below July 2013. The median price in the Midwest was $175,200, a 4.1 percent annual increase.

In the South sales rose 3.4 percent to an annual rate of 2.12 million, a slight increase (0.5 percent) from July 2013. The median price in the South was $192,000, up 5.0 percent from a year ago.
Sales in the West climbed 2.6 percent to a 1.17 million pace in July, but this was 8.6 percent below a year ago. The median price in the West was $304,100, which is 6.3 percent above July 2013.

The median time on market for all homes was 48 days in July compared to 44 days in June and 42 days in July 2013. Short sales were on the market for a median of 93 days, foreclosures sold in 58 days and non-distressed homes typically took 45 days. Forty percent of homes sold in July were on the market for less than a month.

At Peoples, our constant hope is that the economy improves and that more people realize their dream of home ownership. We would like to play our small part in this process.

Aug 25, 2014

U.S. Mortgage Rates Decline With 30-Year at Lowest Since October

Mortgage rates in the U.S. dropped for a second week, sending 30-year borrowing costs to the lowest point for 2014.
The average rate for a 30-year fixed mortgage was 4.1%, down from 4.12%, Freddie Mac said in a statement today. The average 15-year rate slipped to 3.23% from 3.24%, according to the McLean, Va.-based mortgage-finance company.

The 30-year rate was last this low at the end of October. It has declined from a two-year high of 4.58% last August, helping support home demand. Previously owned houses sold at an annualized rate of 5.15 million in July, up 2.4% from the previous month and the most since September, the National Association of Realtors said today.

"The longer rates are down at these levels, the more activity we're going to get," Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, N.C., said in an interview before the data were released. "They're helping in some way, but that activity may be less than hoped for."

Last month's sales pace was down 4.3% from July 2013, figures from the Realtors group show.

Aug 7, 2014

Mortgage Applications Escalate as Refinances Increase

Mortgage application volume increased from the previous week due to more refinance activity. The Mortgage Bankers Association's weekly index showed that mortgage loan application volume was 2.4% higher on a seasonally adjusted basis for the period ending July 18, after decreasing the week before.

The refinance index was up 4% week-over-week, while the home purchase index only increased by 0.3% from one week earlier, the Washington-based trade group said on Wednesday.

The refinance share of mortgage activity accounted for 54.4% of total applications, the highest percentage in four months. Meanwhile, the adjustable-rate mortgage share remained unchanged at 8%.

The average contract interest rate for 30-year fixed-rate mortgages held steady at 4.33%. Mortgages backed by the Federal Housing Administration saw average interest rates decline one basis point to 4.03%. 

A 15-year fixed-rate mortgage had its interest rate increase six basis points to 3.47%. The weekly survey covers 75% of all retail residential mortgage applications.

Peoples Privo Processing helps mortgage brokers and lenders close more files across the country with a 50 state footprint.

Jul 31, 2014

Most and least expensive states to close a mortgage

 Mortgage closing costs continue to report bad news as numbers maintain their upward trend, not boding well for lenders.

According to Bankrate, mortgage closing costs rose 6% over the past year and now average $2,539 on a $200,000 loan.

Origination fees increased 9% to $1,877, while third-party fees rose 1% to $662.

“New mortgage regulations are the biggest reasons why closing costs went up over the past year,” said Holden Lewis, senior mortgage analyst with Bankrate.

“The good news is that some lenders have not increased fees. To get the best deal, consumers should compare good faith estimates from at least three different lenders,” Lewis added.

Back in June, HousingWire reported that independent mortgage banks and mortgage subsidiaries of chartered banks posted a net loss of $194 on each loan they originated in the first quarter of 2014, significantly down from $150 in profit per loan in the fourth quarter of 2013.

“The significant overall production volume decline in the first quarter hurt mortgage bankers,” said Marina Walsh, Mortgage Bankers Association’s vice president of industry analysis.

“Purchase volume did not pick up, while refinancing volume dropped and costs continued to rise. Given these conditions, companies that managed to break even in the first quarter should consider that a reasonable outcome,” Walsh added.

These are some of the closing cost Fees

(Lender’s origination fee, third-party fees, origination plus third-party fees)

51. Nevada: Costs $1,570, $695, $2,265
50. Tennessee: $1,746, $620, $2,366
49. Missouri: $1,749, $638, $2,387
48.  Ohio: $1,707, $685, $2,392
47. District o Columbia: $1,791, $612, $2,402

Top 5 most expensive states for closing costs

5. Wisconsin: $2,035, $671, $2,706
4. Hawaii: $2,009, $799, $2,808
3. New York: $2,109, $783, $2,892
2. Alaska: $2,195, $703, $2,897
1. Texas: $2,280, $766, $3,046

Jun 24, 2014

Sales of New Homes Surged in May to Highest Since 2008

Another day, another source, similar news !!! Purchases of new homes in the U.S. rose in May by the most in 22 years, indicating the industry is rebounding from a winter-induced lull at the start of the year.Sales increased 18.6 percent, the biggest one-month gain since January 1992, to a 504,000 annualized pace, figures from the Commerce Department showed today in Washington. The reading exceeded all forecasts in a Bloomberg survey of 74 economists and was the strongest since May 2008.

Today’s report, following data yesterday that showed a pickup in existing home sales, shows housing is gathering momentum as employment improves and borrowing costs stabilize. Builders such as Hovnanian Enterprises Inc. are optimistic the recovery is on track after harsh weather in early 2014 hurt demand.

“Housing is beginning to revive,” said Stephanie Karol, an economist at IHS Global Insight, the top forecaster of new home sales in the past two years, according to data compiled by Bloomberg. “It’s a step in the right direction. The job market is helping, and there was an expansion of supply the past couple of months.”

The job market directly helps push the housing market up ... and we also predict that the uncertainty in the global crude oil prices (reaching high levels due to the Iraq crises) will help propel transportation costs of goods manufactured in China so high that it would make them more attractive to be manufactured in the US itself. That could help the economy considerably.

Peoples Privo Processing supports the American dream by helping lenders and brokers close loans faster. (

Existing home sales up 4.9%; best gain since '11

In what could be exciting news for both loan originators and contract mortgage processing companies, there are reports that existing home sales rose for the second-straight month in May — climbing to their strongest pace since fall — as more homes on the market helped draw buyers.

Sales of single-family homes, townhomes, condos and co-ops hit a seasonally adjusted annual rate of 4.89 million, up 4.9% from April's revised 4.66 million rate, the National Association of Realtors said Monday. The monthly percentage gain was the highest since August 2011. Last month's sales rate also beat economists' median forecast of 4.73 million in Action Economics' survey.

"The long-awaited spring bounce in home sales looks to have finally appeared," said RBS Markets chief U.S. economist Michelle Girard in a research note.

Both sale prices and inventory improved last month, which is a good sign, said Stephanie Karol, of IHS Global Insight.

"As long as sellers feel assured of making a profit, they will feel emboldened to list their homes; and as buyers feel they have a good selection of well-located properties to choose from, they will continue to look and bid," she said in a research note.

Despite sales' improving trend the past two months, they are still weaker than last year. In May 2013, the annualized sales rate was 5.15 million.Through May, sales are down 8.2% from the first five months of last year.

The market also continues to be difficult for buyers with modest financial resources, such as first-time buyers. Their share of sales declined to 27% in May, down 2 percentage points from April and from April 2013.

Although single-family home sales rose 5.7% from April, they're also down 5.7% from a year ago.
Compared with last year, the lower-priced end of the market looks weakest. Sales of homes under $100,000 and from $100,000 to $250,000 fell in every region of the country last month compared with May 2013. But sales of homes priced at $1 million and above rose everywhere but the Midwest.

The median existing home price was $213,400 in May, up 5.1% from a year earlier.
Still, more homes on the market, prices that are rising more slowly than in 2013 and recent declines in mortgage rates should create better conditions for more buyers, said Lawrence Yun, chief economist of the National Association of Realtors.

Freddie Mac reported last week that the U.S. average for a 30-year mortgage was 4.17%. That compares with an average 4.48% last December and 3.93% a year ago.

This year's declines in interest rates are likely to be temporary. Rates are expected to tick up as the Federal Reserve pares the monthly bond purchases it launched in 2012 to hold down long-term interest rates.

The Realtors group said total housing inventory at the end of May rose 2.2% to 2.28 million existing homes available for sale. That's 6% higher than a year ago.

At May's sales rate, there's a 5.6-month supply of homes for sale, which is still below the 6-month inventory that's considered a balanced market between buyers and sellers.

More data on the housing market is due Tuesday when Standard & Poor's releases the Case-Shiller Index of home prices for April, and the government reports on new home sales for May.

Any positive news is always welcomed by LO's and mortgage processing companies - like Peoples Privo Processing (

May 29, 2014

Mortgage Rates Drop Abruptly; Now Approaching 4%

After tying the record for most consecutive days with no change, mortgage rates moved significantly lower today.  The significance isn't due to the size of the move--as far as day to day changes go, there have been bigger.  Rather, the impressive part of today's rally is that it occurred while rates were already effectively at the lowest levels in 11 months, further extending an already strong move lower over the past two months. 

Through yesterday, rates had been giving the impression that the string of recent improvements was leveling-off and waiting for more important information on the horizon.  In that context, today was an utter blindside.  It wouldn't have been as surprising if rates merely began drifting lower ahead of those key events.  They sometimes do that after leveling-off in such a manner, but today was anything but a drift.
The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) is already close to 4.0%.  Some lenders are there already while others are offering substantially lower costs at 4.125%.  After today's move, few lenders remain competitively-priced at 4.25%.  For imperfect loan files, however, 4.25% is still a sweet-spot in terms of up-front cost vs contract interest rate.

While today's drop in rates is encouraging, markets will now be more sensitive to data and events that suggest a move in the other direction (such as a stronger-than-expected GDP revision tomorrow).  Despite that sensitivity, the first move higher in rate after this rally runs its course isn't likely to be the biggest one.  That affords some decision-making time to those inclined to float (but who also accept that they might be faced with the decision to lock at slightly higher rates than the previous day.  

May 26, 2014

Fixed rates hit low for year

According to Mortgage Professionals America...Fixed mortgage rates hit new lows for the year this week, according to data released by Freddie Mac.

“Mortgage rates continued to decline this week as industrial production slipped by 0.6 percent in April, below the market consensus forecast,” said Frank Nothaft, vice president and chief economist for Freddie Mac. “Meanwhile, housing starts jumped 13 percent in April to a seasonally adjusted annual rate of 1,072,000 units, well above expectations. Permits rose to a seasonally adjusted annual rate of 1,080,000 in April, also above expectations.”

The average rate for the 30-year fixed-rate mortgage dropped to 4.14% this week from last week’s average of 4.20%. The 15-year FRM averaged 3.25% this week, down from last week’s 3.29%.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.96% this week, down from last week’s average of 3.01%. The 1-year ARM held steady at 2.43%.

May 13, 2014

Wells Fargo Joins TD Bank in Easing Credit Standards

Wells Fargo & Co., the biggest U.S. home lender, two weeks ago cut its minimum credit score for borrowers of Fannie Mae- and Freddie Mac-backed loans to 620 from 660. The step followed moves by smaller lenders, such as the U.S. unit of Canada's Toronto-Dominion Bank, which lowered down payments to 3% without requiring mortgage insurance for some loans. The impact of these moves points to a couple of factors in the market - one, that banks like Wells Fargo are looking to broaden their portfolio horizon; the other is that these banks might have increased confidence in the economy.

Banks ratcheted up borrowing requirements after the most severe housing crash since the Great Depression, preventing as many as 1.2 million loans from being made in 2012, according to an Urban Institute paper. Lenders rode a wave of refinancing until a spike in borrowing costs last year gutted demand, forcing the biggest banks to cut more than 25,000 mortgage jobs. Now they're removing barriers to mortgages for some borrowers in hopes of reviving a shrinking market.

"We threw the baby out with the bathwater because we had to," said Rick Soukoulis, chief executive officer of San Jose, Calif.-based lender Western Bancorp. "From there, you start to inch back. If you keep selling only what isn't selling, you're just dead."

Contract Mortgage Processing in all 50 states
Lowering standards - good for home buyers. Hope it does not go to new lows !! 

In March, credit standards were the loosest in at least two years, according to a Mortgage Bankers Association index. The measure, based on underwriting guidelines, rose to 114 from 100 when it started in 2012. The index would have been at about 800 in 2007, meaning credit was eight times looser that year, before standards were tightened.

Home buyers with higher debt and lower FICO credit scores are now a growing minority among borrowers of loans backed by Fannie Mae and Freddie Mac, the government-owned mortgage giants.
Almost 16% of the mortgages for home purchases in March went to borrowers with monthly debt obligations exceeding 43% of their pay, according to data compiled by Morgan Stanley. That's up from 13.4% in mid-2012. Federal rules deployed in January expose lenders to liabilities if their mortgages without government backing require payments that, when combined with other debts, exceed 43% of the borrower's income, without proof they can be repaid.

More than 23% of the mortgages in March went to property buyers with credit scores less than 720, an above-average measure on Fair Isaac Corp.'s scale that ranges from 300 to 850. That's an increase from 15.6% in mid-2012, according to Morgan Stanley.

After housing values collapsed in 2008, banks raised their credit standards to the highest level in more than two decades. By 2011, the average credit score of an approved mortgage reached 750, according to mortgage processor Ellie Mae. Fannie Mae required only a score of 620 after raising its minimum from 580 in 2009.

"The pendulum swung too far," said John Taylor, CEO of the National Community Reinvestment Coalition, a Washington-based organization that brings credit and banking services to middle- and low-income consumers. "They over-tightened the standards to the point where qualified borrowers couldn't get access to credit."

The banks boosted requirements partly to stem the costs of having to repurchase soured mortgages. As defaults soared, Fannie Mae and Freddie Mac used a clause in their purchase agreements that let them return loans to lenders if they went bad after faulty underwriting.

In 2009, Fannie Mae asked lenders to buy back $12.4 billion of mortgages, according to a regulatory filing. The number soared to $23.8 billion in 2012, eating into banks' earnings, before dropping to $18.5 billion last year, according to filings.

Franklin Codel, head of production for San Francisco-based Wells Fargo, said clearer communication with Fannie Mae and Freddie Mac about underwriting rules is now allowing the bank to widen credit availability.

"We have more confidence that should the loans go into default we've done our job properly and we aren't going to get a repurchase," Codel said.

While Fannie Mae and Freddie Mac borrowers with lower credit scores must prove the ability to sustain homeownership, Wells Fargo will look for "compensating factors" to close the loan, Codel said. That may include requesting an explanation of a credit history event, reviewing the strength of income and the stability of employment, he said.

Lenders are also relaxing requirements in response to a drop in demand for mortgages. In 2013, a surge in borrowing costs undercut the refinancing boom. Interest rates on 30-year fixed-rate mortgages rose from a record low of 3.31% in November 2012 to 4.58% in late August, according to Freddie Mac surveys. Rates fell last week to 4.33%.

Home prices that have risen 28% since a 10-year low in 2012 have also stymied lending, particularly to first-time buyers. Cash purchases mostly by investors have filled the void, accounting for 33% of sales in March compared with 12% in mid-2009, according to the National Association of Realtors.
In April, Mortgage Bankers Association Chief Economist Mike Fratantoni lowered his forecast for home-purchase loans in 2014 to $626 billion. That compares with $652 billion last year. He also reduced his forecast for total originations this year by $100 billion to $1.07 trillion. In 2013, lenders originated $1.76 trillion in mortgage credit.

As mortgage volumes decline, lenders are suffering losses. Only 58% of independent mortgage banks and bank home-loan units were profitable in the final quarter of 2013, according to a Mortgage Bankers Association survey. JPMorgan Chase & Co., the second-biggest U.S. mortgage lender, said in April that its origination business lost money last quarter and would again do so in the second period.

To increase lending, Wells Fargo has made it easier for borrowers who would have limited equity to include gifts from relatives as part of a downpayment, Codel said. In January, the bank began to accept borrowers with credit scores of 600, down from 640, for FHA loans.
Wells Fargo also will increase its loan-to-value ratios, permitting larger mortgages relative to the worth of the property, in several states this month, Codel said, declining to provide more details. Raising maximum LTVs lowers the requirements for downpayments or minimum home equity that must be maintained in refinances, measures meant to protect lenders or insurers in the case of defaults.

Western Bancorp started offering mortgages with "alternative income verification" at the beginning of the year. So far, the loans are only available to borrowers putting down at least 35%, though the lender hopes to lower that to 30% soon, CEO Soukoulis said.

The lender, which sells the mortgages to community banks, skips the examination of tax returns and pay stubs by using software to vet the income of a self-employed applicant. The technology turns information on their bank statements into data, and then analyzes what it says about their cash flow. The process boils down to "rational" old-school underwriting, Soukoulis said.

The TD Bank unit, which mostly holds mortgages on its balance sheet, in April lowered the downpayment requirement for some loans to 3% from 5%. These mortgages don't force borrowers to take out private or FHA insurance, a typical requirement for loans that account for more than 80% of a home's value. The downpayment can be covered by gifts from family, a government program or a nonprofit.

Peoples Privo Processing is looking to increase its share of the contract mortgage processing business as a direct result of these moves by large banks.

May 9, 2014

Purchase Apps Exceed Refis for First Time Since '09

According to Mortgage News ..Mortgage applications increased 5.3% for the week ending May 2, according to data released today by the Mortgage Bankers Association.

"It's official: we are in a majority purchase market for the first time since 2009," says MBA Chief Economist Mike Fratantoni in a press release. He attributes the jump in purchase applications to lower mortgage rates and job market growth, but notes the volume of applications is down 16% from last year.

The MBA Weekly Mortgage Applications Survey showed that the average rate for 30-year fixed-rate mortgages of $417,000 or less fell from the previous week to 4.43% from 4.49%. Rates for 30-year fixed-rate mortgages of more than $417,000 decreased to 4.29% from 4.37%, their lowest levels since last June.
Refinances accounted for 49% of mortgage activity, down slightly from 50% in the previous week. Adjustable-rate mortgages accounted for 9% of all activity.

Mortgage Rates Drop to 3-Month Lows Ahead of Important Data

Mortgage rates fell at the fastest pace in over a month today bringing them to their lowest levels since early February.  The motivation for a move of this size isn't readily apparent, but tomorrow's Employment Situation Report is likely a factor.  The underlying reasons for that are complex, but the gist of it can be explained with an analogy. 

The financial market participants that trade the securities that end up affecting mortgage rates are like attendees at a sporting event.  They may be out of their seats, moving around the stadium, getting a drink or what have you in the time leading up to the start of the game, but there's some sense of urgency to take one's seat and pay attention to the opening pitch, kick-off, jump-ball, etc.

In this metaphorical stadium, there are no assigned seats either, so there can be jockeying for position right at the start of the game and the moments leading up to it.  The same is true for the jockeying of trading positions in financial markets.  Simply put, everyone is trying to find their best seat before the game starts--their best balance of trading positions before the big employment data.

This frequently leads to the sort of faster-paced movement we're seeing in bond markets today.  Unfortunately, that's tended to go against us on most instances of the big jobs report, but this time, it's been in our favor.  The important thing to understand about it is that it's NOT necessarily indicative of where rates want to go tomorrow.  It just happens to be the easiest spot from which to approach and digest the first play of the big game.  With no assigned seats in this stadium, if that play moves to the other end of the stadium, traders will follow in an even more frantic manner.

What does that mean for you?  Essentially, "lock if you got em."  It could be the case that the jobs data is much weaker than expected and rates continue to improve.  But the fact remains that we have the best rates in 3 months today and a report tomorrow that is more than capable of causing this welcome move lower to turn around and head higher.  To be clear, tomorrow is ultimately all about how the jobs report comes in, but from a risk/reward standpoint, there are few clearer locking opportunities.  In fact the riskiest aspect of locking today is that it seems like such an obvious choice.
The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) moved down to 4.25% in most cases, but 4.375% is still close.

220K jobs created in April 2014

ADP said there were 220K private jobs created in April and they revised the March number from 191K to 209K. A little better than 210K expected but didn’t cause a lot of reaction because fifteen minutes later Commerce released the advance GDP report for Q1, it was expected to have slipped from +2.6% in Q4 to +1.1%, as reported the advance GDP was a feeble 0.1%. Prior to the ASDP data the 10 yr note traded -2/32 to 2.70% after the two reports in fifteen minutes the 10 was unchanged. The very weak GDP, while scary on its surface, the weather in Q1 likely had more negative impact on the economy than what had been thought. Keep in mind that this is the advance report and always is revised a month later when the preliminary report includes more data from the third month of the quarter. We believe when we see the preliminary report in a month the revision will be higher. Since the end of Q1 and the end of weather issues, gains in retail sales, employment and manufacturing at the end of the quarter indicate the setback will be temporary. Within 30 minutes of the releases of the data the stock and bond markets were essentially unchanged. In 2013 GDP was up 1.9%, falling from +2.8% in 2012.  
The weekly MBA mortgage applications as on Wednesday were released early this morning and the data wasn’t good. The Market Composite Index, a measure of mortgage loan application volume, decreased 5.9% on a seasonally adjusted basis from one week earlier.  The Refinance Index decreased 7% from the previous week.  The seasonally adjusted Purchase Index decreased 4% from one week earlier. The unadjusted Purchase Index was 21% lower than the same week one year ago. The refinance share of mortgage activity decreased to 50% of total applications from 51% the previous week. The refinance share is at its lowest level since July 2009.  The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8% of total applications. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.49 percent, with points decreasing to 0.38 from  0.50 (including the origination fee) for 80% loans. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.37 percent from 4.41 percent, with points decreasing to 0.14 from 0.34 (including the origination fee) for 80% loans.  The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.17 percent from 4.20 percent, with points decreasing to 0.10 from 0.41 (including the origination fee) for 80% loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.53 percent from 3.55 percent, with points decreasing to 0.31 from 0.33 (including the origination fee) for 80% loans.

Already this morning the MBS market has shown high levels of volatility. It is the same story, the 10 yr note is coiling like a pissed off rattler, the narrowing trading range is something to follow carefully; the bulls and bears are balanced now. Once the balance shifts the move will be rapid in the direction of the breakout, the deeper look remains the same; the overwhelming consensus is for rates to increase. So far that view has remained but real money in the real market caps any of the near term comments. We believe rates will eventually increase but price action over the last four months doesn’t agree at the moment. 

Apr 28, 2014

Price Growth Slows in Once Hot Markets

As per Mortgage News Daily, Sales of residential properties were marginally higher in March than in February and the median price of both distressed and non-distressed properties also increased slightly RealtyTrac said today.  Sales of single-family homes, condominiums, and townhomes were at an annual rate of 5,253,464 units in March, up 0.4 percent from February.  The sales pace was 8 percent higher than in March 2013.

The median price of all residential properties was $164,500, a 1 percent increase from the previous month and 10 percent above the median price one year earlier.   RealtyTrac said this was the 24th consecutive month that median house prices posted annual growth and the 10 percent March to March change was the largest of those increases.

"The housing market showed signs of coming out of hibernation in March after a sluggish fall and winter," said Daren Blomquist, vice president at RealtyTrac. "Median home prices increased on a monthly basis following six consecutive months where they were flat or declining, and increased on an annual basis by the biggest percentage since hitting bottom in March 2012.

"Sales volume also increased slightly from March to February following four consecutive monthly decreases, but both annual sales volume and median prices are still below their recent peaks in October and August respectively," Blomquist continued. "Meanwhile, the distressed share of sales increased from the fourth quarter to the first quarter nationwide and in 38 states, which - along with many non-distressed homeowners regaining enough equity to list their homes for sale - is helping to ease low inventory conditions in some markets."

Investor interest in the residential market remained strong.  Based on buyer mailing addresses more than one-third (34 percent) of March sales appeared to involve non-owner occupants, most likely investors or second home buyers.  In addition, 7 percent of March sales were multi-parcel transactions where several properties were sold on the same date and recorded on the same sales document.

Despite the annual increase in residential sales volume nationwide, sales were down from a year earlier in six states, Massachusetts, Rhode Island, California, Connecticut, Nevada, and Arizona.  Sales were also down in 21 of the 50 largest metropolitan areas including some which were notable hot spots a few months ago.  San Jose saw sales fall 18 percent from a year earlier, San Francisco was down 15 percent, and Las Vegas and Phoenix decreased by 12 percent and 11 percent respectively. 

Likewise many metro areas that have seen massive price appreciation since reaching their respective troughs are now seeing more moderate price growth.  The median price of a home in San Francisco has risen 94 percent after bottoming out in March 2009 and posted an annual increase of 39 percent in June of last year but by last month the appreciation had slowed to 26 percent.  The median price in Detroit is 92 percent above the May 2009 trough and the area had a 38 percent annual increase in October but now the annual increase is 29 percent.  RealtyTrac reports a similar pattern in Fort Myers, Phoenix, and Atlanta.

Short sales and distressed sales - in foreclosure or bank-owned - accounted for 16.4 percent of all sales in the first quarter, up from 14.5 percent in the previous quarter but still down from 18.5 percent in the first quarter of 2013.  Short sales alone accounted for 5.6 percent and an additional 1.2 percent of sales nationwide took place at public foreclosure auctions. 

Some metro areas are still experiencing high levels of non-equity sales. In Las Vegas, Stockton, California, Detroit, Cleveland, and Dayton combined short sales and distressed sales exceeded one third of the March total.

Apr 23, 2014

Economists: U.S. will see better growth in '14

The U.S. economy is headed for stronger growth in 2014 that will steadily chip away at the unemployment rate, top economists predict in a largely optimistic USA TODAY quarterly survey. The jobless rate, which dipped to a five-year low of 6.6% in January, will fall to 6.3% by the end of the year, their median forecast indicates.

Job gains, which averaged 194,000 a month last year, will reach a monthly average of 200,000 this year, they predict. Employers added 113,000 jobs in January, well under many economists' forecasts, the government reported last week.

The economy got off to a slow start in January as a result of financial turmoil in emerging markets, a stomach-churning drop in stock prices and extreme winter weather that kept many shoppers at home. But the economists surveyed expect growth to accelerate after a weak first quarter, reaching a solid 2.8% rate for the year.

"I think we will regain momentum and not fall on our face," says Diane Swonk, chief economist of Mesirow Financial, drawing a contrast with previous ups and downs in the five-year-old recovery.
Many of the 40 economists surveyed Feb 5-6 recently cut their first-quarter forecasts. Most of the change is due to the adverse January weather and an expected pull-back in business stockpiling after firms aggressively replenished shelves in the second half of 2013.
While growth late last year was driven largely by the stockpiling, this year's expansion will be fueled by higher consumer and business spending, says Dean Maki, chief U.S. economist of Barclays Capital. "It's more durable," he says.

Many were anticipating a breakout year in 2014, signaling a new course for a generally sluggish recovery. Households have shed much of the debt they amassed during the mid-2000s real estate bubble. A stock run-up and rising home prices have made consumers feel wealthier. And the effects of federal spending cuts and tax increases are fading, while state and local governments are poised to increase outlays after years of austerity.

Several economists say those improving fundamentals remain intact. Some see financial troubles in emerging markets such as Turkey and Brazil as risks to the USA's outlook. Chris Varvares of Macroeconomic Advisers has trimmed his growth forecast, saying the turmoil could curtail U.S. exports and stock prices, crimping business investment and consumer spending.

But more than eight in 10 of those surveyed said January's stock sell-off and emerging markets' woes have not caused them to be less optimistic about growth this year. Sixty-four percent said their 2014 forecasts are more likely to prove too conservative than too rosy.

Maki says the recent stock swoon pales compared to last year's market gains and is unlikely to hurt consumer spending this year. Rising interest rates may cause Americans to buy smaller homes, but they shouldn't deter purchases, he says.

Measures of Housing Distress at 7+ Year Lows

Black Knight Financial Services said today that the mortgage delinquency rate in March was the lowest in the U.S. since October 2007 and the foreclosure rate was the lowest since October 2008.  September 2008 is the date most commonly used to mark the beginning of the foreclosure crisis.  Foreclosure starts in March also hit a 7.5 year low.

In its monthly "First Look" report the company said that the rate of loans that were 30 or more days past due in March but not in foreclosure was 5.52 percent or 2.77 million housing units.  This was a -7.57 percent change (-221,000 units) from February and 16.29 percent lower than in March 2013 when total delinquencies were approximately 3.31 million. 

Of those delinquent mortgages 1.2 million were more than 90 days past due but not yet in foreclosure.  That was a decline of 43,000 loans month-over-month and 267,000 on an annual basis.
Loans in foreclosure, often called the foreclosure inventory, numbered 1,070,000 in March, down 45,000 from February and 619,000 compared to March 2013.  The foreclosure inventory represented 2.13 percent of mortgaged homes in the U.S., a decline of 4.23 percent for the month and 36.69 percent from the year before.

Black Knight says the total of loans past due or in foreclosure has slipped below 4 million units for the first time since November 2007 with a total of 3.84 million homes in those combined categories.  This is a month-over-month change of -266,000 and a decline year-over-year of 1,156,000.

The states with the highest rates of non-current loans in March were Mississippi (13.39 percent), New Jersey (12.93 percent), Florida (12.10 percent), New York (11.09 percent), and Maine (10.58 percent).

Several states have shown substantial improvement in their non-current loan percentages over the last six months.  States with declines in those percentages ranging from 19.22 to 21.42 percent over that period were California, Arizona, Illinois, Florida, and Nevada.  At the same time there were five states in which the non-current rate deteriorated by approximately 10 percent, Oklahoma, New York, New Mexico, Alabama, and Louisiana.

There were 88,100 foreclosure starts nationally in March compared to 91,993 in February.  This was a 4.24 percent decrease and starts were down 27.19 percent from one year earlier.  Foreclosure sales as a percentage of seriously delinquent loans ticked up 9.15 percent to a rate of 1.83 percent, a rate 6.37 percent below that of March 2013.

Black Knight said that loan prepayment rates, while still down nearly 60 percent from levels in March 2013, rose in March by 20.84 percent to 0.80 percent.

The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, scheduled for release in early May.

Feb 3, 2014

Home Prices Flat in November after Long Climb

The S&P Case-Shiller house price index edged down a bit in the month of November but prices are up nearly 14% from a year ago.Despite the 0.1% decline in November, the Case-Shiller 20 cities index showed its “best November performance since 2005,” according to S&P’s index committee chairman David Blitzer.
House prices usually decline in November as winter approaches and home buying slows.

Nine of the 20 cities in the Case-Shiller HPI posted price declines in November. At the same time, five of the 20 cities posted consecutive monthly price declines in November and October. They are Atlanta, Chicago, Denver, Seattle and Washington. Chicago experienced the largest percentage drop as prices fell by 1.2% in November and 0.5% in October.

“Home prices may be leveling off,” Quicken Loans vice president Bill Banfield says. But the 14% increase in the prices over the past 12 months will encourage more homeowners to list their homes for sale this year, he says. executive vice president Rick Sharga noted the much of rebound in house prices in 2013 occurred in the hardest hit markets where investors bid up the prices of distressed properties. But that will change this year.
“With less distressed inventory coming to market, and being less discounted when it does come to market, that factor will play much less of a role in 2014 home prices, which suggests that we shouldn’t see nearly as much appreciation this year as we did in 2013," Sharga says.

This article can be reviewed at nationalmortgagenews dot com.

Jan 12, 2014

2014 - a new beginning

Wishing all our readers, customers, partners and associates a very happy new Year in 2014. Hope the year brings the best out of each and every one of you. 

The mortgage industry has been going through its ups and downs over the course of the past several months, and in typical fashion, the holiday season - from after Thanksgiving to January - has been slow. This is nothing new - and the contract processing business has experienced this slowdown every year. The big picture is however based on the following trends

* Interest rate hike: the fed has firmly decided to increase rates once unemployment hits 6.5%. 

* QE: Here again the fed has decided to scale back on its bond buying program from the current $85 B level in stages in anticipation of a better economy.

* The Mortgage Bankers association has predicted that the number of Purchases is set to increase as a percentage of all mortgages in the country and this is reflected in their projections (data upto Oct 2013)

Here's wishing that the new year brings new jobs and better employment prospects to those that already have them. We are here to support you all ! Visit for more information.