Tuesday, October 6, 2015

How the mortgage process just changed

It just got a little easier to navigate the complicated mortgage process.

New disclosure rules went into effect in the mortgage world Saturday that require lenders to provide home buyers two new forms that clearly detail their loan terms.

"For consumers, it's going to be viewed as an improvement in what can be a somewhat scary and intimidating process in the biggest investment of their life," said David Stevens, CEO of the Mortgage Bankers Association.

The rule, formally known as the TILA-RESPA Integrated Disclosure rule, reduces what used to be four forms from two different government agencies to two forms: the Loan Estimate and Closing Disclosure.

Here's what buyers can expect:

read more: http://money.cnn.com/2015/10/05/real_estate/new-mortgage-disclosure-forms/index.html?iid=ob_homepage_money_pool&iid=obnetwork

Wednesday, September 16, 2015

Cathedral Development Group Closes on Refinancing of Seniors Property

 The $44 million refinancing of Westward Ho Apartments, a historic building that once was a premier hotel for the city, includes a Federal Housing Administration (FHA) Sec. 221(d)(4) substantial rehabilitation loan, 9% low-income housing tax credits (LIHTCs), and federal historic tax credits.

Multiple federal, state, and local entities were involved in the loan restructuring, including three Department of Housing and Urban Development offices and the city of Phoenix. The FHA loan was provided through Berkadia Commercial Mortgage, and the LIHTC equity was syndicated through The Richman Group and provided by Bank of the West. Arizona Department of Housing allocated the tax credits.

“What’s unique about this refinancing is that it is for a nationally registered historic structure located in the heart of downtown Phoenix within a quarter of a mile from the nearest light-rail station and close to amenities,” said Robert Gaudreau Jr., president of CDG, in a statement. “Additionally, the facility will offer residents health and social services through a unique partnership with Arizona State University who will occupy the first floor of the Tower building on the property.”

The building opened as a hotel in 1928 and underwent an expansion in 1948 to grow to 600 rooms. The hotel was converted to affordable housing in 1979.

The approximately $14 million rehabilitation will include repairs and upgrades to windows, HVAC equipment, and central plant mechanical and plumbing systems, as well as new cabinets, floors, and fixtures in units.

“Select in-unit improvements will enhance the residents’ living experience and improve the desirability and marketability of the property,” said Gaudreau.

read more: http://www.housingfinance.com/finance/cathedral-development-group-closes-on-refinancing-of-seniors-property_o

Monday, September 7, 2015

A risky type of mortgage, back with a twist

Don’t call it a comeback.

Interest-only mortgages got a bad reputation in the aftermath of the housing bust, but they’ve managed to stick around as an option for homebuyers who can meet stricter lending guidelines enacted by the government in recent years.

The loans can lower monthly mortgage payments by letting borrowers put off paying the principal on their loan for several years. When the interest-only period ends, the borrower’s monthly payment spikes as they begin to pay a combination of principal and interest until the loan is paid off.

That monthly payment shock, often accompanied by a higher interest rate on adjustable-rate interest-only loans, is what got many borrowers in trouble a decade ago.

One reason is that many of those borrowers qualified for their loans on the basis of their ability to repay the lower, interest-only payment. When their monthly payment reset higher, many couldn’t keep up.

That’s no longer the case. Now lenders are required to determine whether borrowers qualify for any interest-only loans, or other adjustable-rate mortgages, based on whether they can afford to make the eventual bigger monthly payments that await them once the initial interest-only period ends.

As a result, such interest-only loans now make up only about 0.2 percent of all adjustable-rate mortgages, or ARMs, which account for about 4 percent of all home loans for purchase and refinancing, according to data from CoreLogic.

Use of interest-only mortgages peaked 10 years ago at the height of the housing bubble at around 10 percent of all ARMs.

“The big difference here is interest-only loans are back to being the niche product that they traditionally had been,” said Greg McBride, chief financial analyst at Bankrate.com. “The go-go days of the housing boom were the exception.”

Still, rising home prices can make interest-only loans a tempting option for borrowers who are interested in a lower mortgage payment and can qualify for such a loan under today’s stricter guidelines.

At least one lender is looking to expand access to interest-only loans to a broader range of homebuyers, not just the affluent buyers who typically take advantage of such loans.

In July, United Wholesale Mortgage began making interest-only home loans through its network of mortgage brokers. The loan program covers mortgages as low as $250,000. That’s just above the U.S. median home price of $236,400.

Even with today’s stricter guidelines aimed at ensuring borrowers can handle interest-only loans, they carry potential financial risks. Here are some things to consider when weighing whether such a loan is right for you:


Interest-only mortgages can come with a fixed or variable interest rate and an initial period when the borrower pays only interest on the loan. That’s usually three, five, seven or 10 years. After the interest-only period, the monthly payment can increase sharply as the borrower begins to also pay down the principal.

In addition, the borrower is left with 20 years to pay off the balance of the loan.


To ensure borrowers can afford an interest-only mortgage, lenders often require large down payments compared to what one can find with a traditional 30-year, fixed-rate home loan backed by the government.

read more: http://www.watertowndailytimes.com/curr/a-risky-type-of-mortgage-back-with-a-twist-20150906

Monday, August 31, 2015

Average 30-year mortgage rate drops to 3.84% from 3.93%

WASHINGTON (AP) — Average long-term U.S. mortgage rates dropped this week to their lowest levels since May, in a week marked by turmoil in global markets that was stoked by economic developments in China.

Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage fell to 3.84% from 3.93% a week earlier. The benchmark rate hasn’t been that low since May 21.

The rate on 15-year fixed-rate mortgages declined this week to 3.06% from 3.15%.

The panic selling and extreme gyrations in stock markets sent investors to the safety of U.S. government bonds, raising their prices and dampening their rates. Mortgage rates often track the yield on the 10-year Treasury bond, which dipped below 2% on Monday, a day of epic losses and price swings on Wall Street. The yield recovered to 2.18% Wednesday. That compared with 2.22% last Wednesday.

On Monday, a brief 1,000-point plunge in the Dow Jones industrial average just minutes after stocks opened for trading sent shivers from Wall Street to Main Street. The average ended the day down 3.6%. The market staged a robust recovery Wednesday, clocking its best day in nearly four years as the Dow average gained 4%.

The recent economic jitters and stomach-churning markets have thrown into question whether the Federal Reserve will raise a key interest rate next month, as has been long anticipated. A rate hike by the Fed could bring higher rates for home loans. The Fed has kept its key short-term rate near zero since the financial crisis year 2008.

Steady U.S. job growth and low mortgage rates have improved home sales this year. Data issued Thursday by the National Association of Realtors showed that slightly more Americans signed contracts to buy homes in July, as pending sales edged up after dipping in June.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.6 point. The fee for a 15-year loan also held steady at 0.6 point.

read more at: http://www.usatoday.com/story/money/personalfinance/2015/08/27/mortgage-rates/32477661/

Tuesday, August 25, 2015

Double-Edged Sword for Mortgages as Market Fears Drive Rates Down

The recent global market turmoil could be good news for banks and mortgage lenders if a further drop in long-term interest rates sparks another wave of refinancing.

It also could spell trouble for lenders that have not properly hedged the value of their servicing rights, however, and the benefits of lower rates are far from assured.

U.S. Treasury yields, which mortgage rates are tied to, slumped to a four-month low Monday, as investors remained anxious about China's woes and the slower pace of global growth and sought a safe haven in government bonds. The 10-year Treasury yield fell as low as 1.95% during the session, down six basis points from late Friday.

For now, mortgage rates would have to drop at least 25 basis points or more from recent levels to spark a major wave of refinancings.

"A big chunk of 2013 and 2014 loans are just out of the money to refinance," said Scott Buchta, head of fixed income strategy at Brean Capital.

The stock market plunge has some investors assuming that the U.S. economy is heading into a recession, with the potential for massive layoffs at manufacturing firms that could be crippled by lower commodity prices.

Ivy Zelman, the CEO of Zelman and Associates, a housing analytics firm, said the sell-off hitting homebuilders, mortgage insurers, title companies and financial stocks, is an overreaction. With yields on 10-year Treasury notes falling to 2%, the market is assuming much slower economic growth ahead, she said.

"It's more about slowing economic growth than about rates," Zelman said. "There's a lot of knee-jerk reactions."

The biggest concern is that manufacturers would start laying off employees, resulting in job losses.

"If people lose their jobs, they can't buy a house," Zelman said.

Uncertainty about whether the Federal Reserve will raise short-term rates in September or delay a rate hike until December or early next year has contributed to the market volatility.

Some nonbank mortgage servicers will be aggressive at soliciting borrowers to refinance. Since most banks and mortgage lenders are seeing a steady flow of home purchase and refinance volume, they may be loath to lower mortgage rates much further, since doing so would cut into profits.

read more: http://www.nationalmortgagenews.com/news/origination/double-edged-sword-for-mortgages-as-market-fears-drive-rates-down-1059696-1.html

Tuesday, August 18, 2015

MBA: Mortgage Delinquencies, Foreclosures Continued To Fall In Q2

The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 5.30% of all loans outstanding at the end of the second quarter - down 24 basis points from the first quarter and down 74 basis points from the second quarter of 2014, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.

It was the lowest delinquency rate since the second quarter of 2007.

Meanwhile, about 2.09% of all loans were in some stage of foreclosure as of the end of the second quarter. That's down 13 basis points compared to the first quarter and down 40 basis points compared to the second quarter of 2014, the MBA reports.

It was the lowest foreclosure inventory rate since the fourth quarter of 2007.

The percentage of loans on which foreclosure actions were started during the second quarter was 0.40%, a decrease of five basis points compared to the first quarter but basically unchanged relative to the second quarter of 2014.

The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 3.95%, a decrease of 29 basis points from the previous quarter, and a decrease of 85 basis points from the second quarter of 2014. This was the lowest level since the fourth quarter of 2007.

Marina Walsh, vice president of industry analysis for the MBA, says "nearly every state in the nation reported declining foreclosure inventory rates over the second quarter."

"The overall delinquency rate for Federal Housing Administration [FHA] loans dropped to 9.01 percent in the second quarter from 9.10 percent, as the 90 day or more delinquent category declined," Walsh says in a statement. "However, the 30-day and 60-day delinquency rate was up by a combined 10 basis points from the previous quarter. In addition, the FHA foreclosure inventory rate rose to 2.68 percent in the second quarter, four basis points higher than the previous quarter but still 13 basis points lower than a year ago. As more recent loan vintages begin to age and as older vintages enter the foreclosure process, we may see volatility in FHA delinquency and foreclosure rates."

Walsh points out that although only 40% of all mortgage loans serviced are in judicial states, "these states account for a growing majority of loans in foreclosure."

"For states where the judicial process is more frequently used, 3.41 percent of loans serviced were in the foreclosure process, compared to 1.15 percent in non-judicial states," she says. "States that utilize both judicial and non-judicial foreclosure processes had a foreclosure inventory rate closer that of the non-judicial states at 1.36 percent."

New Jersey, New York, and Florida had the highest percentage of loans in foreclosure in the second quarter.

"Despite a 36 basis point decline in foreclosure inventory over the first quarter, New Jersey's foreclosure inventory rate was still 7.31 percent, while New York, which had a 20 basis point decline over the first quarter had the second highest foreclosure inventory rate at 5.31 percent," Walsh says. "Both states primarily use a judicial foreclosure process."

Although it is still lingering, the foreclosure inventory is shrinking faster than it was in a majority of the judicial states.

see more: http://www.mortgageorb.com/e107_plugins/content/content.php?content.17101

Thursday, August 13, 2015

Mortgage applications land flat for week

Mortgage applications increased 0.1% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending August 7, 2015.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.1% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1% compared with the previous week. The Refinance Index increased 3% from the previous week to its highest level since May 2015. The seasonally adjusted Purchase Index decreased 4% from one week earlier. The unadjusted Purchase Index decreased 4% compared with the previous week and was 20% higher than the same week one year ago.

The refinance share of mortgage activity increased to 53.1% of total applications from 51.3% the previous week. This is the highest refinance share since April 2015. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 6.8% of total applications.

The FHA share of total applications decreased to 13.3% from 13.8% the week prior. The VA share of total applications increased to 11.3% from 10.5% the week prior. The USDA share of total applications decreased to 0.7% from 0.8% the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) remained unchanged at 4.13%, with points decreasing to 0.31 from 0.34 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) remained unchanged at 4.08%, with points increasing to 0.34 from 0.27 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

read more: http://www.housingwire.com/articles/34741-mortgage-applications-land-flat-for-week