The basics:
A reverse mortgage is a type of home loan that lets you convert a portion of the equity in your home into cash.
The requirements:
Age: You must be 62 or older.
Living status: The home has to be your primary residence.
Equity: You'll need about 40% equity in your home.
Additional costs: No mortgage, but you'll have to pay the cost of property maintenance, taxes and insurance.
Legacy: Leaving the home to an heir is a less likely option than with a regular mortgage because it can use up the equity in your home. Often, you or your heirs give up the home when the loan comes due (soon after you move out or die).
Is your credit mortgage-ready? Get your free credit score at myBankrate.
You're a candidate for a reverse mortgage if:
You want to live in your home until you die.
There are no heirs to leave your home to.
You can afford to maintain the home.
You want a line of credit or an increase in monthly cash flow.
Choices of accessing your equity:
A lump sum of cash at closing.
Equal monthly payments for as long as you live in the home.
Read more: http://www.bankrate.com/finance/mortgages/reverse-mortgage-cheat-sheet.aspx
Monday, September 21, 2015
Friday, September 11, 2015
Mortgage rates inch higher
Average long-term U.S. mortgage rates inched up this week as financial markets awaited the Federal Reserve's crucial decision next week on interest rates.
The subdued gains followed a sharp drop the previous week, as global markets continued to whipsaw amid economic disruption in China and uncertainty over the Fed's interest-rate policy.
Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage edged up to 3.90 percent from 3.89 percent a week earlier. The rate on 15-year fixed-rate mortgages rose to 3.10 percent from 3.09 percent.
Investors and economists are closely watching whether the Fed moves at its meeting next week to raise a key interest rate, 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 struck seven years ago.
Many observers had hoped for a clear signal from the government's report on U.S. employment in August, issued Friday, the final snapshot of the job market before the Fed's policy-making body meets. The report showed that unemployment fell to a seven-year low of 5.1 percent, but hiring slowed — a mixed bag of news.
The Labor Department report gave a view of an economy growing at a modest but steady pace.
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 percent 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 rose to 0.7 point from 0.6 point.
The average rate on five-year adjustable-rate mortgages fell to 2.91 percent from 2.93 percent; the fee rose to 0.5 point from 0.4 percent. The average rate on one-year ARMs rose to 2.63 percent from 2.62 percent; the fee held steady at 0.3 point.
read more: http://www.chicagotribune.com/business/ct-mortgage-rates-inch-higher-20150910-story.html
The subdued gains followed a sharp drop the previous week, as global markets continued to whipsaw amid economic disruption in China and uncertainty over the Fed's interest-rate policy.
Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage edged up to 3.90 percent from 3.89 percent a week earlier. The rate on 15-year fixed-rate mortgages rose to 3.10 percent from 3.09 percent.
Investors and economists are closely watching whether the Fed moves at its meeting next week to raise a key interest rate, 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 struck seven years ago.
Many observers had hoped for a clear signal from the government's report on U.S. employment in August, issued Friday, the final snapshot of the job market before the Fed's policy-making body meets. The report showed that unemployment fell to a seven-year low of 5.1 percent, but hiring slowed — a mixed bag of news.
The Labor Department report gave a view of an economy growing at a modest but steady pace.
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 percent 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 rose to 0.7 point from 0.6 point.
The average rate on five-year adjustable-rate mortgages fell to 2.91 percent from 2.93 percent; the fee rose to 0.5 point from 0.4 percent. The average rate on one-year ARMs rose to 2.63 percent from 2.62 percent; the fee held steady at 0.3 point.
read more: http://www.chicagotribune.com/business/ct-mortgage-rates-inch-higher-20150910-story.html
Wednesday, September 2, 2015
What NJ county is the best for mortgage approval?
A new report from SmartAsset.com determined the counties in the Garden State where homebuyers are most likely to be approved for a mortgage.
Many NJ mortgages are still in trouble
The rankings are part of a bigger study on the best mortgage markets across the country.
The counties were ranked according to loan funding rate, which is the ratio of mortgage applications to mortgages approved.
Morris County topped the list at 64.9 percent, followed by Somerset (63.8 percent), Hunterdon (63.7 percent), Cape May (63.3 percent), Mercer (61.9 percent), Monmouth (61.6 percent), Bergen (61.3 percent), Burlington (60.7 percent), Gloucester (60.7 percent), and Ocean (60.1 percent).
Hudson County finished among NJ’s counties at 54.8 percent.
Complete New Jersey rankings
“The top 10 for New Jersey all had loan funding rates above 60 percent, which is really a very high number,” said AJ Smith, SmartAsset Managing Editor/VP Content Strategy. “The state average is 59.66 percent, and nationally 58.69 percent of mortgage applications are turning into actual mortgages.”
Smith said several criteria play into the higher loan funding rate.
“Things like higher income, better credit scores,” she explained. “Those types of things can make you more attractive to the mortgage lenders.”
The loan funding rates are one piece of the puzzle that SmartAsset used to find the best mortgage markets in the US.
“We looked at loan funding rate, borrowing cost, property tax, and mortgage payments,” Smith said.
Read More: http://nj1015.com/what-nj-county-is-the-best-for-mortgage-approval/
Many NJ mortgages are still in trouble
The rankings are part of a bigger study on the best mortgage markets across the country.
The counties were ranked according to loan funding rate, which is the ratio of mortgage applications to mortgages approved.
Morris County topped the list at 64.9 percent, followed by Somerset (63.8 percent), Hunterdon (63.7 percent), Cape May (63.3 percent), Mercer (61.9 percent), Monmouth (61.6 percent), Bergen (61.3 percent), Burlington (60.7 percent), Gloucester (60.7 percent), and Ocean (60.1 percent).
Hudson County finished among NJ’s counties at 54.8 percent.
Complete New Jersey rankings
“The top 10 for New Jersey all had loan funding rates above 60 percent, which is really a very high number,” said AJ Smith, SmartAsset Managing Editor/VP Content Strategy. “The state average is 59.66 percent, and nationally 58.69 percent of mortgage applications are turning into actual mortgages.”
Smith said several criteria play into the higher loan funding rate.
“Things like higher income, better credit scores,” she explained. “Those types of things can make you more attractive to the mortgage lenders.”
The loan funding rates are one piece of the puzzle that SmartAsset used to find the best mortgage markets in the US.
“We looked at loan funding rate, borrowing cost, property tax, and mortgage payments,” Smith said.
Read More: http://nj1015.com/what-nj-county-is-the-best-for-mortgage-approval/
Wednesday, August 26, 2015
Fox News Delves into Reverse Mortgage Successes, Changes
Following a column published late last week by Fox News’ Bob Massi, the network also produced a video segment featuring reverse mortgages this week.
In his look into reverse mortgages, “How to Have a Reverse Mortgage Success Story,” Massi interviews two couples who have successfully used reverse mortgages to improve their retirement situations. In one case, a married couple is using the reverse mortgage as a way to delay drawing down on stock market investments, and in the other case, the borrowers have used the reverse mortgage for medical expenses, among other items.
Massi also interviews reverse mortgage professional Josh Shein of Home Point Financial; a lender that acquired Maverick Funding in a deal announced late last year.
The reverse mortgage is “one of the most misunderstood items in real estate,” Massi says in the segment, which covers specific misunderstandings such as the idea that the bank takes the home from the borrowers.
“When it comes down to it, it’s just a loan,” Shein says. “… the balance of that loan grows over time.”
Massi also covers recent reverse mortgage changes, including willingness and capacity requirements that apply through the financial assessment that is now part of the origination process.
source: http://reversemortgagedaily.com/2015/08/25/fox-news-delves-into-reverse-mortgage-successes-changes/
In his look into reverse mortgages, “How to Have a Reverse Mortgage Success Story,” Massi interviews two couples who have successfully used reverse mortgages to improve their retirement situations. In one case, a married couple is using the reverse mortgage as a way to delay drawing down on stock market investments, and in the other case, the borrowers have used the reverse mortgage for medical expenses, among other items.
Massi also interviews reverse mortgage professional Josh Shein of Home Point Financial; a lender that acquired Maverick Funding in a deal announced late last year.
The reverse mortgage is “one of the most misunderstood items in real estate,” Massi says in the segment, which covers specific misunderstandings such as the idea that the bank takes the home from the borrowers.
“When it comes down to it, it’s just a loan,” Shein says. “… the balance of that loan grows over time.”
Massi also covers recent reverse mortgage changes, including willingness and capacity requirements that apply through the financial assessment that is now part of the origination process.
source: http://reversemortgagedaily.com/2015/08/25/fox-news-delves-into-reverse-mortgage-successes-changes/
Friday, August 21, 2015
Fixed Mortgage Rates Dip, Could Fall Further
Average long-term U.S. mortgage rates edged lower this week, with the key 30-year loan rate remaining under 4 percent. The 10/1 Adjustable Rate Mortgages are available starting at 3.71% with an April of 3.585%.
Freddie Mac reported that the 30-year fixed-rate mortgage (FRM) averaged 3.93 percent with an average 0.6 point for the week ending August 20, 2015, down from last week when it averaged 3.94 percent.
15 year fixed rate mortgages start at 3.500% at the bank carrying an April of 3.811% today. 30 year jumbo loan interest rates at the bank are listed at 4.625% and April of 4.777%.
[How borrowers can help make the mortgage application process go smoother].
QuoteAttributed to Sean Becketti, chief economist, Freddie Mac.
The one-year ARM average was unchanged at 2.62 percent with an average 0.3 point.
The typical price on five-year adjustable-rate mortgages rose to 2.94% from 2.93%; the charge remained at zero. The 3 year ARM interest rates have been published at 2.250% today with an April of 3.261%.
Mortgage rates barely moved from last week, with rates once again coming in below 4%, the latest Freddie Mac Primary Mortgage Market Survey found. For 5/1 ARMs, the rate was 2.76 percent.
“Overall inflation grew an underwhelming 0.2 percent year-over-year in July, but core inflation remains steady at 1.8 percent keeping chances alive for a potential rate hike in September”.
The speed on 15-year fixed-rate mortgages eased this week to three.15% from three.17%. One-unit housing starts in July 2015 jumped to 782,000 units, up 12.8 percent from June and up 19 percent from a year ago. “Overall housing markets remain on track for the best year since 2007″.
read more: http://www.tjcnewspaper.com/fixed-mortgage-rates-dip-could-fall-further-16378/
Freddie Mac reported that the 30-year fixed-rate mortgage (FRM) averaged 3.93 percent with an average 0.6 point for the week ending August 20, 2015, down from last week when it averaged 3.94 percent.
15 year fixed rate mortgages start at 3.500% at the bank carrying an April of 3.811% today. 30 year jumbo loan interest rates at the bank are listed at 4.625% and April of 4.777%.
[How borrowers can help make the mortgage application process go smoother].
QuoteAttributed to Sean Becketti, chief economist, Freddie Mac.
The one-year ARM average was unchanged at 2.62 percent with an average 0.3 point.
The typical price on five-year adjustable-rate mortgages rose to 2.94% from 2.93%; the charge remained at zero. The 3 year ARM interest rates have been published at 2.250% today with an April of 3.261%.
Mortgage rates barely moved from last week, with rates once again coming in below 4%, the latest Freddie Mac Primary Mortgage Market Survey found. For 5/1 ARMs, the rate was 2.76 percent.
“Overall inflation grew an underwhelming 0.2 percent year-over-year in July, but core inflation remains steady at 1.8 percent keeping chances alive for a potential rate hike in September”.
The speed on 15-year fixed-rate mortgages eased this week to three.15% from three.17%. One-unit housing starts in July 2015 jumped to 782,000 units, up 12.8 percent from June and up 19 percent from a year ago. “Overall housing markets remain on track for the best year since 2007″.
read more: http://www.tjcnewspaper.com/fixed-mortgage-rates-dip-could-fall-further-16378/
Monday, August 17, 2015
Tech takes paperwork out of home mortgages
Doug Johnson serves as the chief financial officer of two hospitals in the Wisconsin-Minnesota border area but doesn’t consider himself to be especially tech-savvy.
Nevertheless, he was able to complete the entire mortgage-application process for an Arizona vacation home that he and his wife wanted to buy, entirely online. That included shopping for interest rates and terms, inputting personal information and uploading the required supporting documents, including copies of income-tax returns, pay stubs, bank statements and more.
“It went without a hitch,” said Johnson, 47, who admits he was initially concerned about online security. “If you have access to the Internet and a cheap scanner, that’s all you need.”
Johnson did the mortgage-application process through Guaranteed Rate, a national residential mortgage lender based in Chicago. The company’s software guides applicants through the loan-shopping exercise and lets them input personal data, see their credit scores, upload key documents through a private and secure system and receive online approval. Applicants going through the company’s all-digital route currently can qualify for a $250 credit on closing costs.
Guaranteed Rate claims it has the first all-digital mortgage, but many competitors also are going in the same direction, letting customers apply for mortgages, process much of the paperwork and do related tasks day or night, using a desktop computer, tablet or smartphone.
No longer such a slog
Applying for a mortgage and supplying supporting documents — traditionally one of the most time-consuming, paperwork-intensive and frustrating financial exercises around — increasingly is being automated. That means applicants will find the process easier, faster and, possibly, less expensive than before.
Americans already have embraced online interactions for other financial products and services. They pay bills online, check credit card transactions, buy and sell stocks, adjust 401(k) balances and pull up their credit reports. The vast majority of taxpayers file their tax returns online.
Five years from now, digital applications and document submission for home loans might be just as prevalent, though it isn’t quite there yet.
“It’s not as widespread as you might think,” said Rick Hill, vice president of industry technology for the Mortgage Bankers Association. Many people still prefer to meet face to face with a loan officer, especially first-time home buyers.
read more: http://www.usatoday.com/story/money/personalfinance/2015/08/14/digital-breakthroughs-improve-home-mortgage-process/31182619/
Nevertheless, he was able to complete the entire mortgage-application process for an Arizona vacation home that he and his wife wanted to buy, entirely online. That included shopping for interest rates and terms, inputting personal information and uploading the required supporting documents, including copies of income-tax returns, pay stubs, bank statements and more.
“It went without a hitch,” said Johnson, 47, who admits he was initially concerned about online security. “If you have access to the Internet and a cheap scanner, that’s all you need.”
Johnson did the mortgage-application process through Guaranteed Rate, a national residential mortgage lender based in Chicago. The company’s software guides applicants through the loan-shopping exercise and lets them input personal data, see their credit scores, upload key documents through a private and secure system and receive online approval. Applicants going through the company’s all-digital route currently can qualify for a $250 credit on closing costs.
Guaranteed Rate claims it has the first all-digital mortgage, but many competitors also are going in the same direction, letting customers apply for mortgages, process much of the paperwork and do related tasks day or night, using a desktop computer, tablet or smartphone.
No longer such a slog
Applying for a mortgage and supplying supporting documents — traditionally one of the most time-consuming, paperwork-intensive and frustrating financial exercises around — increasingly is being automated. That means applicants will find the process easier, faster and, possibly, less expensive than before.
Americans already have embraced online interactions for other financial products and services. They pay bills online, check credit card transactions, buy and sell stocks, adjust 401(k) balances and pull up their credit reports. The vast majority of taxpayers file their tax returns online.
Five years from now, digital applications and document submission for home loans might be just as prevalent, though it isn’t quite there yet.
“It’s not as widespread as you might think,” said Rick Hill, vice president of industry technology for the Mortgage Bankers Association. Many people still prefer to meet face to face with a loan officer, especially first-time home buyers.
read more: http://www.usatoday.com/story/money/personalfinance/2015/08/14/digital-breakthroughs-improve-home-mortgage-process/31182619/
Tuesday, August 11, 2015
Why Risky Borrowers Still Aren’t Getting Mortgages
Fannie Mae, Freddie Mac, the Federal Housing Finance Agency and the Obama administration over the past year have tried mightily to expand mortgage access for riskier borrowers.
But despite those efforts, there’s little evidence so far of borrowers with weaker credit making a strong return.
On Tuesday and Thursday, Freddie and Fannie released their quarterly earnings reports. Both companies said that the credit scores of loans that they back are actually higher year-to-date than they were last year. Freddie, for example, says that this year through June the weighted average credit score of loans it purchased from lenders was 751–on a scale of 300 to 850–up from 744 in 2014.
To be sure, mortgage rates dropped early this year, causing a boom in refinance activity. Borrowers who are refinancing tend to have higher credit scores and more home equity than people buying homes, which obscures the picture.
The percentage of mortgage borrowers backed by Fannie and Freddie with low credit scores or a low down payment has also risen since mid-2013, even though it has dropped recently with a change in the companies’ business mix.
Still, with such an abundance of anecdotes from lenders who say they’re making it easier to get a mortgage, you would expect there to be a more significant change.
So what’s going on?
Some lenders are still afraid of getting sued or of taking another hit to their reputations.
On Thursday, Fannie Mae CEO Timothy J. Mayopoulos said that Fannie and the FHFA have made great strides toward working with lenders to ease their concerns about being hit with penalties by Fannie years after they’ve made a loan.
Problem is, Fannie isn’t the only entity that lenders have to answer to. In the past few years, lenders have been under scrutiny from the Justice Department, Consumer Financial Protection Bureau and dozens of state attorneys general and lawmakers for alleged mistakes and abuses before, during and after the financial crisis. Some lenders think the scrutiny is overzealous and have pulled back from making certain loans as a result.
“When I meet with lenders, it’s very clear that there’s great concern about the legal and regulatory enforcement from any number of players at the federal and state level. It’s not something that we at Fannie Mae control,” Mr. Mayopoulos said. He said that the actions have had a “substantial effect on the mindsets of lenders, at least as they express it to me.”
Many borrowers with mortgage-eligible but poor credit don’t know they could qualify.
Even though some lenders have said that they’re expanding mortgage access, some borrowers have had it beaten into their heads over the last few years that it’s hard to get a mortgage. Those perceptions are hard to change, even if the reality has.
read more: http://blogs.wsj.com/economics/2015/08/10/why-risky-borrowers-still-arent-getting-mortgages/
But despite those efforts, there’s little evidence so far of borrowers with weaker credit making a strong return.
On Tuesday and Thursday, Freddie and Fannie released their quarterly earnings reports. Both companies said that the credit scores of loans that they back are actually higher year-to-date than they were last year. Freddie, for example, says that this year through June the weighted average credit score of loans it purchased from lenders was 751–on a scale of 300 to 850–up from 744 in 2014.
To be sure, mortgage rates dropped early this year, causing a boom in refinance activity. Borrowers who are refinancing tend to have higher credit scores and more home equity than people buying homes, which obscures the picture.
The percentage of mortgage borrowers backed by Fannie and Freddie with low credit scores or a low down payment has also risen since mid-2013, even though it has dropped recently with a change in the companies’ business mix.
Still, with such an abundance of anecdotes from lenders who say they’re making it easier to get a mortgage, you would expect there to be a more significant change.
So what’s going on?
Some lenders are still afraid of getting sued or of taking another hit to their reputations.
On Thursday, Fannie Mae CEO Timothy J. Mayopoulos said that Fannie and the FHFA have made great strides toward working with lenders to ease their concerns about being hit with penalties by Fannie years after they’ve made a loan.
Problem is, Fannie isn’t the only entity that lenders have to answer to. In the past few years, lenders have been under scrutiny from the Justice Department, Consumer Financial Protection Bureau and dozens of state attorneys general and lawmakers for alleged mistakes and abuses before, during and after the financial crisis. Some lenders think the scrutiny is overzealous and have pulled back from making certain loans as a result.
“When I meet with lenders, it’s very clear that there’s great concern about the legal and regulatory enforcement from any number of players at the federal and state level. It’s not something that we at Fannie Mae control,” Mr. Mayopoulos said. He said that the actions have had a “substantial effect on the mindsets of lenders, at least as they express it to me.”
Many borrowers with mortgage-eligible but poor credit don’t know they could qualify.
Even though some lenders have said that they’re expanding mortgage access, some borrowers have had it beaten into their heads over the last few years that it’s hard to get a mortgage. Those perceptions are hard to change, even if the reality has.
read more: http://blogs.wsj.com/economics/2015/08/10/why-risky-borrowers-still-arent-getting-mortgages/
Friday, August 7, 2015
Mortgage rates fall again amid economic uncertainty
Eight weeks ago, it appeared that the days of 30-year fixed rate mortgages at less than 4 percent were a thing of the past. But recent economic uncertainty has sent those rates tumbling, which is good news for those looking to purchase a home or refinance a loan.
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average hovered below 4 percent for the second week in a row, falling to 3.91 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.98 percent a week ago and 4.14 percent a year ago.
The 15-year fixed-rate average slipped to 3.13 percent with an average 0.6 point. It was 3.17 percent a week ago and 3.27 percent a year ago.
Hybrid adjustable rate mortgages were mixed. The five-year ARM average held steady at 2.95 percent with an average 0.4 point, same as it was a week ago. It was 3.27 percent a year ago.
The one-year ARM average rose to 2.54 percent with an average 0.3 point. It was 2.52 percent a week ago.
“All eyes are on the upcoming July employment report, as the Fed has made it clear developments in the labor market will affect the timing of any potential rate hike,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“But early signals indicate Friday’s employment report will not look so good. The employment cost index rose 0.2 percent in the second quarter, the lowest quarterly increase in its 33-year history and ADP’s Private Employment Report missed expectations for private jobs in July. Uncertainty about the economy helped drive down Treasury yields early in the week, and thus mortgage rates fell 7 basis points to 3.91 percent, the lowest level since June 4th.”
read more: http://www.washingtonpost.com/blogs/where-we-live/wp/2015/08/06/mortgage-rates-fall-again-amid-economic-uncertainty/
According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average hovered below 4 percent for the second week in a row, falling to 3.91 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 3.98 percent a week ago and 4.14 percent a year ago.
The 15-year fixed-rate average slipped to 3.13 percent with an average 0.6 point. It was 3.17 percent a week ago and 3.27 percent a year ago.
Hybrid adjustable rate mortgages were mixed. The five-year ARM average held steady at 2.95 percent with an average 0.4 point, same as it was a week ago. It was 3.27 percent a year ago.
The one-year ARM average rose to 2.54 percent with an average 0.3 point. It was 2.52 percent a week ago.
“All eyes are on the upcoming July employment report, as the Fed has made it clear developments in the labor market will affect the timing of any potential rate hike,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“But early signals indicate Friday’s employment report will not look so good. The employment cost index rose 0.2 percent in the second quarter, the lowest quarterly increase in its 33-year history and ADP’s Private Employment Report missed expectations for private jobs in July. Uncertainty about the economy helped drive down Treasury yields early in the week, and thus mortgage rates fell 7 basis points to 3.91 percent, the lowest level since June 4th.”
read more: http://www.washingtonpost.com/blogs/where-we-live/wp/2015/08/06/mortgage-rates-fall-again-amid-economic-uncertainty/
Monday, August 3, 2015
Black Knight: Borrowers carry highest level of non-mortgage debt in a decade
Black Knight Financial Services analyzed U.S. mortgage holders’ levels of non-mortgage-related debt and found those levels are at their highest in over 10 years.
As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, non-mortgage debt among U.S. mortgage holders bears close watching due to its potential impact on both the lending and housing industries.
“Mortgage lenders know exactly how much debt borrowers are carrying at the point of origination, but often lose sight from that point forward,” said Graboske. “Non-mortgage debt is another key piece of the home affordability puzzle — the more total debt borrowers are carrying and the higher monthly non-mortgage payments they have, the less money they have to put toward a new home purchase, or potentially even their current mortgage obligations.
“What we’ve found is that mortgage holders today are carrying more non-mortgage debt than at any point in the past 10 years, with an average of $25,000 per borrower. That’s $1,400 more on average than one year ago, and nearly $2,600 more than in 2011,” he said. “The primary driver of this increase is a rise in auto-related debt, which accounted for 81% of the overall non-mortgage debt increase over the past four years. We also noticed a clear correlation between non-mortgage debt and borrowers inquiring about a new mortgage, with those who have recent mortgage inquiries on their credit reports carrying nearly 40% more debt than borrowers who do not.”
Black Knight found that the student loan debt of U.S. mortgage holders is at all-time high: 15% of mortgage holders are carrying student loan debt, with average balances of nearly $35,000. The average student loan debt for all mortgages has more than doubled since 2006, and the share of mortgage holders carrying that debt has increased by 44% over that 9-year span.
While the GSEs hold more than half of all mortgages with accompanying student loan debt, the situation is much more pronounced among FHA borrowers. Roughly one quarter of all active FHA loans carry student loan debt, as compared to just 13 percent of GSE loans.
In fact, FHA’s market share of post-crisis mortgages with student loan debt is nearly twice that of those without, suggesting that borrowers with student loan debt may be willing to trade higher payments in the form of mortgage insurance premiums for reduced down payments.
Leveraging data from the Black Knight Home Price Index, Black Knight also looked at the current state of negative equity among U.S. mortgage holders and found continuing improvement there.
“Over the first five month
read more: http://www.housingwire.com/articles/34655-black-knight-borrowers-carry-highest-level-of-non-mortgage-debt-in-a-decade
As Black Knight Data & Analytics Senior Vice President Ben Graboske explained, non-mortgage debt among U.S. mortgage holders bears close watching due to its potential impact on both the lending and housing industries.
“Mortgage lenders know exactly how much debt borrowers are carrying at the point of origination, but often lose sight from that point forward,” said Graboske. “Non-mortgage debt is another key piece of the home affordability puzzle — the more total debt borrowers are carrying and the higher monthly non-mortgage payments they have, the less money they have to put toward a new home purchase, or potentially even their current mortgage obligations.
“What we’ve found is that mortgage holders today are carrying more non-mortgage debt than at any point in the past 10 years, with an average of $25,000 per borrower. That’s $1,400 more on average than one year ago, and nearly $2,600 more than in 2011,” he said. “The primary driver of this increase is a rise in auto-related debt, which accounted for 81% of the overall non-mortgage debt increase over the past four years. We also noticed a clear correlation between non-mortgage debt and borrowers inquiring about a new mortgage, with those who have recent mortgage inquiries on their credit reports carrying nearly 40% more debt than borrowers who do not.”
Black Knight found that the student loan debt of U.S. mortgage holders is at all-time high: 15% of mortgage holders are carrying student loan debt, with average balances of nearly $35,000. The average student loan debt for all mortgages has more than doubled since 2006, and the share of mortgage holders carrying that debt has increased by 44% over that 9-year span.
While the GSEs hold more than half of all mortgages with accompanying student loan debt, the situation is much more pronounced among FHA borrowers. Roughly one quarter of all active FHA loans carry student loan debt, as compared to just 13 percent of GSE loans.
In fact, FHA’s market share of post-crisis mortgages with student loan debt is nearly twice that of those without, suggesting that borrowers with student loan debt may be willing to trade higher payments in the form of mortgage insurance premiums for reduced down payments.
Leveraging data from the Black Knight Home Price Index, Black Knight also looked at the current state of negative equity among U.S. mortgage holders and found continuing improvement there.
“Over the first five month
read more: http://www.housingwire.com/articles/34655-black-knight-borrowers-carry-highest-level-of-non-mortgage-debt-in-a-decade
Friday, July 31, 2015
Las Vegas Still Struggles With Underwater Mortgages
It’s getting better for mortgages in Las Vegas, as underwater mortgages locally continue to decline from their high two years ago.
New data from RealtyTrac shows 27.9 percent of mortgages in Las Vegas have negative equity compared to 13 percent nationwide. Those numbers placed Las Vegas third in the nation behind Cleveland (28.2 percent) and Lakeland., Fla., (28.5 percent).
Negative equity occurs when homeowners owe more on their mortgage balances than the fair market value of their homes. The 2008 recession caused some 10 million homeowners nationwide to become underwater.
Las Vegas and Lakeland, Fla., have been competing for the number one spot in the highest percentage of seriously underwater properties. The second quarter of 2013 was the worst quarter for Las Vegas with 54.7 percent of properties being seriously underwater.
By comparison Lakeland, Fla., worst quarter was the third quarter of 2013 with 49.8 percent of properties being seriously underwater, according to RealtyTrac's Second Quarter 2015 Housing Equity and Underwater Report.
Daren Blomquist, vice president of RealtyTrac, told KNPR's State of Nevada that the reason so many people still owe more on their homes is that the prices were so inflated.
sourcE: https://knpr.org/knpr/2015-07/las-vegas-still-struggles-underwater-mortgages
New data from RealtyTrac shows 27.9 percent of mortgages in Las Vegas have negative equity compared to 13 percent nationwide. Those numbers placed Las Vegas third in the nation behind Cleveland (28.2 percent) and Lakeland., Fla., (28.5 percent).
Negative equity occurs when homeowners owe more on their mortgage balances than the fair market value of their homes. The 2008 recession caused some 10 million homeowners nationwide to become underwater.
Las Vegas and Lakeland, Fla., have been competing for the number one spot in the highest percentage of seriously underwater properties. The second quarter of 2013 was the worst quarter for Las Vegas with 54.7 percent of properties being seriously underwater.
By comparison Lakeland, Fla., worst quarter was the third quarter of 2013 with 49.8 percent of properties being seriously underwater, according to RealtyTrac's Second Quarter 2015 Housing Equity and Underwater Report.
Daren Blomquist, vice president of RealtyTrac, told KNPR's State of Nevada that the reason so many people still owe more on their homes is that the prices were so inflated.
sourcE: https://knpr.org/knpr/2015-07/las-vegas-still-struggles-underwater-mortgages
Tuesday, July 28, 2015
Mortgages are becoming easier to attain for Americans
The market has begun taking on more mortgage risk, but there is even more room to loosen lending parameters, says one organization.
“In Q1 2015, the market was willing to take 5.7 percent of expected default risk, up slightly from the trough level of 4.6 percent in Q3 2013,” the Urban Institute wrote in its Housing Finance Policy Center’s Credit Availability Index (HCAI), released in late July. “The credit expansion was driven by less restrictive lending in the GSE and government markets, partly as a result of recent efforts by the GSEs, FHFA, and FHA to reduce lender uncertainty.”
According to the Urban Institute, although credit has loosened there is still room for the market to take on even more of the risk.
“Although credit was too lax during the housing bubble years, the pendulum has swung too far in the other direction … although small progress has been made, significant room remains to safely expand the credit box,” the report states. “The mortgage market could have taken twice the default risk it took in the first quarter of 2015 and still have remained well within the cautious standard of 2001–03.”
The American mortgage market is understandably cautious, following an economic recession that was due in large part to lax mortgage underwriting standards and the ease of obtaining subprime loans.
However, it seems that the market has slowly but surely increased its appetite for risk, meaning more Americans will qualify for mortgages and more originations for loan officers to tap into.
“The HCAI’s finding of a slight loosening of the credit box since 2013 is consistent with trends in borrower median credit scores at origination,” the report states. “The median credit scores for both GSE and government loans have been on a steady decline since 2013.
“As of May 2015, the median credit score for GSE loans stood at 758, down from 769 for the same month two years ago,” it continues. “The government market experienced a similar drop, from 691 to 682 in the past two years.”
see more: http://www.mpamag.com/news/mortgages-are-becoming-easier-to-attain-for-americans-23350.aspx
“In Q1 2015, the market was willing to take 5.7 percent of expected default risk, up slightly from the trough level of 4.6 percent in Q3 2013,” the Urban Institute wrote in its Housing Finance Policy Center’s Credit Availability Index (HCAI), released in late July. “The credit expansion was driven by less restrictive lending in the GSE and government markets, partly as a result of recent efforts by the GSEs, FHFA, and FHA to reduce lender uncertainty.”
According to the Urban Institute, although credit has loosened there is still room for the market to take on even more of the risk.
“Although credit was too lax during the housing bubble years, the pendulum has swung too far in the other direction … although small progress has been made, significant room remains to safely expand the credit box,” the report states. “The mortgage market could have taken twice the default risk it took in the first quarter of 2015 and still have remained well within the cautious standard of 2001–03.”
The American mortgage market is understandably cautious, following an economic recession that was due in large part to lax mortgage underwriting standards and the ease of obtaining subprime loans.
However, it seems that the market has slowly but surely increased its appetite for risk, meaning more Americans will qualify for mortgages and more originations for loan officers to tap into.
“The HCAI’s finding of a slight loosening of the credit box since 2013 is consistent with trends in borrower median credit scores at origination,” the report states. “The median credit scores for both GSE and government loans have been on a steady decline since 2013.
“As of May 2015, the median credit score for GSE loans stood at 758, down from 769 for the same month two years ago,” it continues. “The government market experienced a similar drop, from 691 to 682 in the past two years.”
see more: http://www.mpamag.com/news/mortgages-are-becoming-easier-to-attain-for-americans-23350.aspx
Thursday, July 23, 2015
Interest-Only Mortgages Are Back ... Should We Be Afraid?
Even if you don’t know much about home loans, you’ve probably heard of interest-only mortgages, if only because they played a large role in the financial crisis of 2008 and 2009. These loans practically disappeared during the recession but have since started to make a comeback, but that’s not necessarily something to be concerned about. Interest-only mortgages are a risky product with a bad reputation, and the loans available now aren’t like the ones that made a mess of the economy several years ago.
What Is an Interest-Only Mortgage?
With a traditional 30-year fixed-rate mortgage, your monthly payments go toward both the principal balance and the interest accrued on the loan. An interest-only mortgage has a period — commonly 3, 5, 7 or 10 years — during which you’re only paying the interest accrued on that principal. If you take out a $100,000 loan and make payments on the interest accrued for 10 years, you’ll still have $100,000 to repay (plus interest) over the next 20 years of the loan. Instead of spreading that $100,000 over 30 years, you now have to pay it over 20, resulting in higher loan payments (the interest rate also resets at the end of that first period, meaning your interest rate could go up).
Loose underwriting standards allowed consumers with little to contribute to a down payment and less-than-great credit scores obtain interest-only mortgages before the financial crisis, said Scott Sheldon, a senior loan officer in Santa Rosa, Calif. “People tried to squeeze into a house they couldn’t afford, because they could only afford the interest-only payment,” he explained.
Historically, homeowners relied on the ability to refinance their homes at the end of the interest-only period said Tony Sachs, chief lending officer of online mortgage marketplace Sindeo. Home values tanked during the crisis, wiping out home equity and the option to refinance, so when borrowers’ payments increased, they couldn’t afford them and started defaulting on their loans.
Who Can Get an Interest-Only Mortgage?
Interest-only loans aren’t meant to be an affordability tool, Sheldon said. As the economy has improved, lenders started offering them again (within the past year or so), but they’re much different than those pre-2007 loans that everyone associates with the term “interest-only.”
“They’re usually geared toward higher-net-worth individuals who are interested primarily in cash flow and otherwise have a lot of assets,” Sheldon said. The interest-only loans he can originate now have stringent requirements: “We usually want 12 months of mortgage payments in the bank, in addition to the 740 credit score, in addition to the 25% down payment.”
see more: http://www.stltoday.com/business/credit/interest-only-mortgages-are-back-should-we-be-afraid/article_85ca0577-3312-524a-8671-360c2db039d5.html
What Is an Interest-Only Mortgage?
With a traditional 30-year fixed-rate mortgage, your monthly payments go toward both the principal balance and the interest accrued on the loan. An interest-only mortgage has a period — commonly 3, 5, 7 or 10 years — during which you’re only paying the interest accrued on that principal. If you take out a $100,000 loan and make payments on the interest accrued for 10 years, you’ll still have $100,000 to repay (plus interest) over the next 20 years of the loan. Instead of spreading that $100,000 over 30 years, you now have to pay it over 20, resulting in higher loan payments (the interest rate also resets at the end of that first period, meaning your interest rate could go up).
Loose underwriting standards allowed consumers with little to contribute to a down payment and less-than-great credit scores obtain interest-only mortgages before the financial crisis, said Scott Sheldon, a senior loan officer in Santa Rosa, Calif. “People tried to squeeze into a house they couldn’t afford, because they could only afford the interest-only payment,” he explained.
Historically, homeowners relied on the ability to refinance their homes at the end of the interest-only period said Tony Sachs, chief lending officer of online mortgage marketplace Sindeo. Home values tanked during the crisis, wiping out home equity and the option to refinance, so when borrowers’ payments increased, they couldn’t afford them and started defaulting on their loans.
Who Can Get an Interest-Only Mortgage?
Interest-only loans aren’t meant to be an affordability tool, Sheldon said. As the economy has improved, lenders started offering them again (within the past year or so), but they’re much different than those pre-2007 loans that everyone associates with the term “interest-only.”
“They’re usually geared toward higher-net-worth individuals who are interested primarily in cash flow and otherwise have a lot of assets,” Sheldon said. The interest-only loans he can originate now have stringent requirements: “We usually want 12 months of mortgage payments in the bank, in addition to the 740 credit score, in addition to the 25% down payment.”
see more: http://www.stltoday.com/business/credit/interest-only-mortgages-are-back-should-we-be-afraid/article_85ca0577-3312-524a-8671-360c2db039d5.html
Thursday, July 16, 2015
Don't be suckered into buying a reverse mortgage
Reverse mortgages sound enticing: The advertisements you see on television, in print and online give the impression that these loans are a risk-free way to fill financial gaps in retirement. However, the ads don’t always tell the whole story.
A reverse mortgage is a special type of home equity loan sold to homeowners aged 62 and older. It takes part of the equity in your home and converts it into cash payments. The money you get is usually tax-free and generally won’t affect your Social Security or Medicare benefits. The loan doesn’t have to be repaid until you or your spouse sells the home, moves out, or dies. Also, these loans, usually called Home Equity Conversion Mortgages (HECMs), are federally insured.
But while a reverse mortgage may increase your monthly income, it can also put your entire retirement security at risk. And, according to a report from the Consumer Financial Protection Bureau, many advertisements are incomplete or contain inaccurate information.
To learn about more ways to tap your home equity read, "Reverse Mortgages and Their Alternatives."
The reverse mortgage market makes up approximately one percent of the traditional mortgage market, but this figure is likely to increase as the Baby Boom generation—those born from 1946 to 1964—retires. That’s because an increasing number of Americans are retiring without pensions and, according to the Employee Benefit Research Institute, nearly half of retired Baby Boomers will lack sufficient income to cover basic expenses and uninsured health care costs. Women, in particular, have a greater likelihood of outliving their assets due to lower savings and pensions.
This makes them all the more vulnerable to sales pitches for reverse mortgages from trusted celebrities such as Robert Wagner, Pat Boone, Alex Trebek, former Senator Fred Thompson and Henry Winkler, who played the lovable cut-up “Fonzie” on Happy Days.
Yet, the CFPB study found, many of these ads were characterized by ambiguity about the true nature of reverse mortgages and fine print that is both difficult to read and written in language that is difficult to comprehend. Many ads did not mention information about interest rate or repayment terms. “The incompleteness of reverse mortgage ads raises heightened concerns because reverse mortgages are complicated and often expensive,” the report states.
Here’s what you need to know to avoid being misled by reverse mortgage advertisements:
A reverse mortgage does not guarantee financial security for the rest of your life.
You don’t receive the full value of loan. The face amount will be slashed by higher-than-average closing costs, origination fees, upfront mortgage insurance, appraisal fees and servicing fees over the life of the mortgage. In addition, the interest rate you pay is generally higher than for a traditional mortgage.
Interest is added to the balance you owe each month. That means the amount you owe grows as the interest on your loan adds up over time. And the interest is not tax-deductible until the loan is paid off.
You still have to pay property taxes, insurance, utilities, fuel, maintenance, and other expenses. If you don’t pay your property taxes, keep homeowner’s insurance or maintain your home in good condition, you can trigger a loan default and might lose your home to foreclosure.
Reverse mortgages can use up all the equity in your home, leaving fewer assets for you and your heirs. Borrowing too soon can leave you without resources later in life.
see more: http://www.consumerreports.org/cro/news/2015/07/don-t-be-suckered-into-buying-a-reverse-mortgage/index.htm
Monday, July 13, 2015
Mortgage rates dip amid world economic concerns
With all the chaos in the world these days – Greece, China, Puerto Rico, not to mention falling oil prices – investors have sought safety in bonds, driving yields down. That usually pushes mortgage rates lower. Although home loan rates dipped this week, they didn’t slide very far, according to the latest data released Thursday by Freddie Mac.
2300-Armschart0711
The 30-year fixed-rate average slipped to 4.04 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.08 percent a week ago and 4.15 percent a year ago. The 30-year fixed rate has stayed above 4 percent for the past five weeks.
The 15-year fixed-rate average edged down to 3.2 percent with an average 0.5 point. It was 3.24 percent a week ago and a year ago.
Hybrid adjustable rate mortgages also fell. The five-year ARM average dropped to 2.93 percent with an average 0.4 point. It was 2.99 percent a week ago and a year ago.
The one-year ARM average dipped to 2.5 percent with an average 0.3 point. It was 2.52 percent a week ago.
“Yields on Treasury securities declined this week in response to investor concerns about events in Greece and China. Mortgage rates fell as well, although not by as much as government bond yields,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“Overseas volatility is likely to persist for some time, providing some restraint on potential U.S. rate increases. In addition, the minutes of the June meeting of the Federal Open Market Committee suggest the Federal Reserve will proceed cautiously — monitoring events both overseas and in the United States to ascertain the appropriate moment to begin raising short-term interest rates. As a result, mortgage rates may remain in the neighborhood of 4 percent for a while.”
read more: http://www.washingtonpost.com/blogs/where-we-live/wp/2015/07/09/mortgage-rates-dip-amid-world-economic-concerns/
2300-Armschart0711
The 30-year fixed-rate average slipped to 4.04 percent with an average 0.6 point. (Points are fees paid to a lender equal to 1 percent of the loan amount.) It was 4.08 percent a week ago and 4.15 percent a year ago. The 30-year fixed rate has stayed above 4 percent for the past five weeks.
The 15-year fixed-rate average edged down to 3.2 percent with an average 0.5 point. It was 3.24 percent a week ago and a year ago.
Hybrid adjustable rate mortgages also fell. The five-year ARM average dropped to 2.93 percent with an average 0.4 point. It was 2.99 percent a week ago and a year ago.
The one-year ARM average dipped to 2.5 percent with an average 0.3 point. It was 2.52 percent a week ago.
“Yields on Treasury securities declined this week in response to investor concerns about events in Greece and China. Mortgage rates fell as well, although not by as much as government bond yields,” Sean Becketti, Freddie Mac chief economist, said in a statement.
“Overseas volatility is likely to persist for some time, providing some restraint on potential U.S. rate increases. In addition, the minutes of the June meeting of the Federal Open Market Committee suggest the Federal Reserve will proceed cautiously — monitoring events both overseas and in the United States to ascertain the appropriate moment to begin raising short-term interest rates. As a result, mortgage rates may remain in the neighborhood of 4 percent for a while.”
read more: http://www.washingtonpost.com/blogs/where-we-live/wp/2015/07/09/mortgage-rates-dip-amid-world-economic-concerns/
Wednesday, July 8, 2015
Mortgage Loan Rates Dip, but Remain Volatile
The Mortgage Bankers Association (MBA) released its report on mortgage applications Wednesday morning, noting a week-over-week increase of 4.6% in the group’s seasonally adjusted composite index for the week ending July 3. That followed a decrease of 4.7% for the week ending June 26. The weekly results included an adjustment for the Independence Day holiday. Mortgage loan rates decreased on all five loan types.
On an unadjusted basis, the composite index decreased by 6% week over week. The seasonally adjusted purchase index rose by 7% compared to the week ended June 26. The unadjusted purchase index dropped by 4% for the week and remains 32% higher year over year.
The MBA’s refinance index increased by 3% week over week, and the percentage of all new applications that were seeking refinancing slipped from 48.9% to 48.0%, its lowest level since June of 2009.
Mortgage Daily News reported Tuesday that a majority of lenders were quoting conventional 30-year fixed mortgage loan rates of 4% for their top-tier borrowers earlier in the day, but after European markets closed Tuesday those rates disappeared and the prevailing rate moved back to 4.125% for top-tier borrowers. The report goes on to say:
This type of intraday movement is par the course recently, and it’s not going away any time soon. Whether it’s driven by domestic events such as [Wednesday]’s release of the Minutes from that last Fed meeting, or by several days of negotiations over a new Greek bailout that follow, volatility is the only safe bet. For the past three business days, that volatility has generally left mortgage rates in better shape, but until we see a more stable change in market behavior, it’s safer to treat such days as “lock opportunities” as opposed to promises of further improvement. [Emphasis in original.]
Read more: http://247wallst.com/housing/2015/07/08/mortgage-loan-rates-dip-but-remain-volatile/
Monday, July 6, 2015
Reverse mortgage comes due when borrower dies
As more seniors turn to reverse mortgages, their adult children might be puzzled or concerned about what will happen to that debt when their parents die.
Nearly all reverse mortgages are home equity conversion mortgages, or HECMs, which are insured by the Federal Housing Administration. HECMs are subject to some rules that might not apply to non-HECMs.
The first thing adult children should know about HECMs is that these reverse mortgages technically become due and payable when the borrower dies.
The word “technically” is important because it’s understood that a borrower’s heirs can’t possibly refinance or sell the home on the day of death to satisfy the debt, said Beth Paterson of Reverse Mortgages SIDAC, a division of Greenleaf Financial in St. Paul, Minn.
Instead, what usually happens is that the loan servicer sends a letter that Paterson said might seem insensitive but is intended to inform the heirs of the rules and ascertain their intentions for the loan and property.
“The servicing companies have had issues with people not notifying them and trying to stay in the home, so that’s why it needs to be harsh,” Paterson said.
Servicers use a number of resources to find out that a borrower has died. These include the Social Security death index, proprietary databases and annual occupancy letters that typically are sent to reverse mortgage borrowers.
“If they don’t get the letter of occupancy back or property taxes or insurance aren’t paid, they start doing the next steps: contacting an alternate contact, searching other records or sending someone out to inspect the property and see if someone is living in the house,” Paterson said.
The borrower’s heirs aren’t required to sell the home to pay off the reverse mortgage, said Cara Pierce of ClearPoint Credit Counseling Solutions in Fresno, California.
But if heirs want to keep the home, they’ll have to pay off the loan.
“If they want to get a loan in their own name and pay off the reverse mortgage, they can,” Pierce said. “But if they can’t and there are no other assets, like life insurance, other property or a 401(k), that they could use to pay off the loan, they will have to sell the property.”
When heirs sell, they typically can choose their own real estate broker. The heirs manage the sale and keep any capital gain after the loan and closing costs have been paid.
The borrower’s personal belongings and furnishings can be removed. Fixtures, as defined by state law, can’t.
A tenant living in the home might have certain rights and protections under state law
see more: http://www.detroitnews.com/story/business/personal-finance/2015/07/05/reverse-mortgage-comes-due-borrower-dies/29744861/
Nearly all reverse mortgages are home equity conversion mortgages, or HECMs, which are insured by the Federal Housing Administration. HECMs are subject to some rules that might not apply to non-HECMs.
The first thing adult children should know about HECMs is that these reverse mortgages technically become due and payable when the borrower dies.
The word “technically” is important because it’s understood that a borrower’s heirs can’t possibly refinance or sell the home on the day of death to satisfy the debt, said Beth Paterson of Reverse Mortgages SIDAC, a division of Greenleaf Financial in St. Paul, Minn.
Instead, what usually happens is that the loan servicer sends a letter that Paterson said might seem insensitive but is intended to inform the heirs of the rules and ascertain their intentions for the loan and property.
“The servicing companies have had issues with people not notifying them and trying to stay in the home, so that’s why it needs to be harsh,” Paterson said.
Servicers use a number of resources to find out that a borrower has died. These include the Social Security death index, proprietary databases and annual occupancy letters that typically are sent to reverse mortgage borrowers.
“If they don’t get the letter of occupancy back or property taxes or insurance aren’t paid, they start doing the next steps: contacting an alternate contact, searching other records or sending someone out to inspect the property and see if someone is living in the house,” Paterson said.
The borrower’s heirs aren’t required to sell the home to pay off the reverse mortgage, said Cara Pierce of ClearPoint Credit Counseling Solutions in Fresno, California.
But if heirs want to keep the home, they’ll have to pay off the loan.
“If they want to get a loan in their own name and pay off the reverse mortgage, they can,” Pierce said. “But if they can’t and there are no other assets, like life insurance, other property or a 401(k), that they could use to pay off the loan, they will have to sell the property.”
When heirs sell, they typically can choose their own real estate broker. The heirs manage the sale and keep any capital gain after the loan and closing costs have been paid.
The borrower’s personal belongings and furnishings can be removed. Fixtures, as defined by state law, can’t.
A tenant living in the home might have certain rights and protections under state law
see more: http://www.detroitnews.com/story/business/personal-finance/2015/07/05/reverse-mortgage-comes-due-borrower-dies/29744861/
Wednesday, July 1, 2015
Applications for mortgages continue to bounce around
Up, down, up, down. The volatility in the mortgage application business continues.
After rising last week, applications posted a decline, dipping 4.7% in the week ending June 26, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
The Refinance Index was down 5% to its lowest level since December, with the refinance share of mortgage activity falling to 48.9% of total applications.
The adjustable-rate mortgage (ARM) share of activity was unchanged at 7.0%, the FHA share rose to 14.0% from 13.9%, the VA share of total applications slipped to 10.8% from 10.9%, and the USDA share of total applications edged up to 1.0% from 0.9% the week before.
Contract interest rates
The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) rose 7 basis points, from 4.19% to 4.26%, its highest level since October 2014, with points decreasing to 0.33 from 0.38 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) jumped to 4.21%, its highest level since October 2014, from 4.14%, with points increasing to 0.38 from 0.35 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year FRMs backed by the FHA advanced 8 basis points -- to 4.04%, its highest level since September 2014, with points increasing to 0.18 from 0.14 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year FRMs increased to 3.44%, its highest level since October 2014, from 3.38%, with points falling to 0.31 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs rose 5 basis points to 3.09%, with points decreasing to 0.45 from 0.46 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
read more: http://www.consumeraffairs.com/news/applications-for-mortgages-continue-to-bounce-around-070115.html
After rising last week, applications posted a decline, dipping 4.7% in the week ending June 26, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.
The Refinance Index was down 5% to its lowest level since December, with the refinance share of mortgage activity falling to 48.9% of total applications.
The adjustable-rate mortgage (ARM) share of activity was unchanged at 7.0%, the FHA share rose to 14.0% from 13.9%, the VA share of total applications slipped to 10.8% from 10.9%, and the USDA share of total applications edged up to 1.0% from 0.9% the week before.
Contract interest rates
The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) rose 7 basis points, from 4.19% to 4.26%, its highest level since October 2014, with points decreasing to 0.33 from 0.38 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) jumped to 4.21%, its highest level since October 2014, from 4.14%, with points increasing to 0.38 from 0.35 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 30-year FRMs backed by the FHA advanced 8 basis points -- to 4.04%, its highest level since September 2014, with points increasing to 0.18 from 0.14 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year FRMs increased to 3.44%, its highest level since October 2014, from 3.38%, with points falling to 0.31 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs rose 5 basis points to 3.09%, with points decreasing to 0.45 from 0.46 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
read more: http://www.consumeraffairs.com/news/applications-for-mortgages-continue-to-bounce-around-070115.html
Friday, June 26, 2015
Home Sales on Fire as Mortgage Rates Simmer
First-time homebuyers dove into the market at their highest rate in nearly three years as mortgage rates remained largely unchanged, according to Freddie Mac’s weekly mortgage market survey.
30-year fixed-rate mortgages held steady at 4.02% with an average 0.7 points for the week ending June 25, 2015. A year ago, the rate averaged 4.14%.
15-year fixed rates dipped slightly to 3.21% with an average 0.6 points. The same term priced at 3.22% a year ago.
5-year adjustable-rate mortgages were 2.98% with an average 0.4 points. Last year at this time, an identical ARM averaged the same 2.98%
“Mortgage rates were little changed this week,” said Sean Becketti, chief economist for Freddie Mac, in a news release. “Buyers appear anxious to purchase homes before the expected increase in interest rates later this year. Given the tight inventory of homes for sale, a 5.1-month supply at the current sales pace, home prices are being bid up.”
National housing market continues rebound
Across the nation, the housing market is continuing to solidify, according to Freddie Mac’s market analysis. The mortgage finance company’s Multi-Indicator Market Index, a measure of stability in the housing market in all 50 states, is up 33% from its all-time low in October 2010 — although it’s still in a range that indicates a “weak” market overall.
More than half of the U.S. is in a stable market range, with the states seeing the most improvement month-over-month including Washington, Indiana, Tennessee, Oregon and Mississippi.
“We saw a significant improvement in housing markets nationwide, with 10 more metro areas and nine more states moving within range of their benchmark, stable level of housing activity,” said Len Kiefer, deputy chief economist for Freddie Mac. “The West and Southwest areas of the country continue to lead the way, especially Colorado, Oregon and Utah, and California is right there as well. Unlike a year ago, when the most improving markets were those hardest hit by the Great Recession, we’re now seeing stable markets among the most improving as well.”
Applications and home sales heat up
Home purchases and refinancings are trending up, according to the latest survey by the Mortgage Bankers Association. Mortgage applications were up 1.6% from a week earlier, while refinancings gained 2%, for the week ending June 19.
In another sign of heat in the housing market, new single-family home sales rose 2.2% in May, the fastest pace since February 2008. Tom Woods, chairman of the National Association of Home Builders, says rising builder confidence is tempered only by the challenge of meeting growing demand.
“Our builders are seeing motivated buyers and the release of pent-up housing demand,” Woods said in an NAHB news release. “However, builders are facing supply chain challenges, which is affecting the inventory of new homes.”
Meanwhile, existing home sales, as measured by the National Association of Realtors, increased in May to their highest level since November 2009.
read more: https://www.nerdwallet.com/blog/mortgages/home-sales-fire-mortgage-rates-simmer/
30-year fixed-rate mortgages held steady at 4.02% with an average 0.7 points for the week ending June 25, 2015. A year ago, the rate averaged 4.14%.
15-year fixed rates dipped slightly to 3.21% with an average 0.6 points. The same term priced at 3.22% a year ago.
5-year adjustable-rate mortgages were 2.98% with an average 0.4 points. Last year at this time, an identical ARM averaged the same 2.98%
“Mortgage rates were little changed this week,” said Sean Becketti, chief economist for Freddie Mac, in a news release. “Buyers appear anxious to purchase homes before the expected increase in interest rates later this year. Given the tight inventory of homes for sale, a 5.1-month supply at the current sales pace, home prices are being bid up.”
National housing market continues rebound
Across the nation, the housing market is continuing to solidify, according to Freddie Mac’s market analysis. The mortgage finance company’s Multi-Indicator Market Index, a measure of stability in the housing market in all 50 states, is up 33% from its all-time low in October 2010 — although it’s still in a range that indicates a “weak” market overall.
More than half of the U.S. is in a stable market range, with the states seeing the most improvement month-over-month including Washington, Indiana, Tennessee, Oregon and Mississippi.
“We saw a significant improvement in housing markets nationwide, with 10 more metro areas and nine more states moving within range of their benchmark, stable level of housing activity,” said Len Kiefer, deputy chief economist for Freddie Mac. “The West and Southwest areas of the country continue to lead the way, especially Colorado, Oregon and Utah, and California is right there as well. Unlike a year ago, when the most improving markets were those hardest hit by the Great Recession, we’re now seeing stable markets among the most improving as well.”
Applications and home sales heat up
Home purchases and refinancings are trending up, according to the latest survey by the Mortgage Bankers Association. Mortgage applications were up 1.6% from a week earlier, while refinancings gained 2%, for the week ending June 19.
In another sign of heat in the housing market, new single-family home sales rose 2.2% in May, the fastest pace since February 2008. Tom Woods, chairman of the National Association of Home Builders, says rising builder confidence is tempered only by the challenge of meeting growing demand.
“Our builders are seeing motivated buyers and the release of pent-up housing demand,” Woods said in an NAHB news release. “However, builders are facing supply chain challenges, which is affecting the inventory of new homes.”
Meanwhile, existing home sales, as measured by the National Association of Realtors, increased in May to their highest level since November 2009.
read more: https://www.nerdwallet.com/blog/mortgages/home-sales-fire-mortgage-rates-simmer/
Tuesday, June 23, 2015
'The Fonz' might not be giving all the details about reverse mortgages
No advertisement tells the full story about a product or service.
There are practical reasons for that, such as limited air time or print space. And for obvious reasons, information about costs or risks often is omitted, downplayed or buried in the fine print that flashes quickly across the screen or is in minuscule type.
That's why a recent study critical of reverse mortgage advertisements didn't shock me.
The Consumer Financial Protection Bureau, which seems to be turning up the heat on the reverse mortgage industry, said its research revealed the ads often leave false impressions and don't highlight critical details.
"Perhaps most concerning of all, the ads left the consumers believing that if they purchase a reverse mortgage loan, they will be able to rest assured that they can live in their homes and enjoy financial security for the rest of their lives," bureau Director Richard Cordray told reporters on a conference call. "But a reverse mortgage does not carry such guarantees."
The agency called on potential borrowers to keep their guards up so they aren't misled or confused. While that could happen with any advertisement, the significance here is magnified because these ads target older people who often are vulnerable, on fixed incomes and could be desperate for cash. They may live alone and not have anyone to consult about a reverse mortgage, and not be adept at searching for information online.
You must be at least 62 years old to qualify for a reverse mortgage, which is when the bank or lender pays you, based on the value of the equity in your home, instead of you paying the bank. You still own the home, but the lender holds a lien.
Borrowers are charged fees and interest that accrue monthly, increasing their outstanding balance, but payments aren't required until the loan becomes due. That happens when the borrower sells the home, moves, dies or defaults on the loan by not paying property taxes or homeowners insurance.
Reverse mortgages may be a good fit for some seniors but not a wise move for others, which is why it's important to understand them.
Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, told me people had better get used to reverse mortgages because not only are they here to stay but they also are going to become more common. People are living longer and don't have the savings to fund those golden years but do have equity in their homes, he said.
"It's a product that makes a lot of sense and whose time has come and will be growing," Bell said.
read more: http://www.mcall.com/news/local/investigations/mc-reverse-mortgage-ads-warning-watchdog-20150620-column.html
There are practical reasons for that, such as limited air time or print space. And for obvious reasons, information about costs or risks often is omitted, downplayed or buried in the fine print that flashes quickly across the screen or is in minuscule type.
That's why a recent study critical of reverse mortgage advertisements didn't shock me.
The Consumer Financial Protection Bureau, which seems to be turning up the heat on the reverse mortgage industry, said its research revealed the ads often leave false impressions and don't highlight critical details.
"Perhaps most concerning of all, the ads left the consumers believing that if they purchase a reverse mortgage loan, they will be able to rest assured that they can live in their homes and enjoy financial security for the rest of their lives," bureau Director Richard Cordray told reporters on a conference call. "But a reverse mortgage does not carry such guarantees."
The agency called on potential borrowers to keep their guards up so they aren't misled or confused. While that could happen with any advertisement, the significance here is magnified because these ads target older people who often are vulnerable, on fixed incomes and could be desperate for cash. They may live alone and not have anyone to consult about a reverse mortgage, and not be adept at searching for information online.
You must be at least 62 years old to qualify for a reverse mortgage, which is when the bank or lender pays you, based on the value of the equity in your home, instead of you paying the bank. You still own the home, but the lender holds a lien.
Borrowers are charged fees and interest that accrue monthly, increasing their outstanding balance, but payments aren't required until the loan becomes due. That happens when the borrower sells the home, moves, dies or defaults on the loan by not paying property taxes or homeowners insurance.
Reverse mortgages may be a good fit for some seniors but not a wise move for others, which is why it's important to understand them.
Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, told me people had better get used to reverse mortgages because not only are they here to stay but they also are going to become more common. People are living longer and don't have the savings to fund those golden years but do have equity in their homes, he said.
"It's a product that makes a lot of sense and whose time has come and will be growing," Bell said.
read more: http://www.mcall.com/news/local/investigations/mc-reverse-mortgage-ads-warning-watchdog-20150620-column.html
Saturday, June 20, 2015
Low-Down Mortgages Picking Up—to Chagrin of Some
Many low-down-payment borrowers—including first-time home buyers—are returning to the market, boosting housing but raising concern among skeptics who worry about the risk of such mortgages.
Such borrowers had largely shied away from the market during the past two spring home-buying seasons, discouraged by weak wage growth and higher fees for loans with small down payments.
Now, lower unemployment and early signs of wage growth are boosting consumers’ finances. At the same time, a sharp fee reduction on loans backed by the Federal Housing Administration has cut the cost of a low-down-payment mortgage, stimulating demand.
Low-down-payment mortgages are “becoming part of the water-cooler discussion again,” said Lawrence Yun, chief economist for the National Association of Realtors. “People are hearing that maybe credit is less tight now than before. They’re sensing that the housing market is open to them again.”
Subprime loans—those to borrowers with especially low credit scores—dried up after the recession and are still largely absent from the market. On the other hand, the availability low-down-payment loans to more-creditworthy borrowers, backed by the FHA and U.S. Department of Veterans Affairs, never went away.
Instead, the high costs of such loans, along with low confidence among the consumers who use them, diminished their role in the market.
The return of first-time buyers could help drive prices higher and boost new-home sales. Those trends in turn may spur economic growth.
But there is concern among some who see such mortgages as a hallmark of the housing bubble and fear that a return to easier lending standards could set off a new crash. Many critics also say the government’s role in encouraging homeownership is misplaced and puts taxpayers at risk.
The perception of an easier borrowing environment is pulling in more first-time home buyers, a cohort that until recently has represented a smaller-than-usual share of purchasers. They accounted for 39.5% of purchases in April, up from 35% a year ago, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey of about 2,000 real-estate agents. That was the highest percentage since 42.8% in June 2010, when first-time buyers rushed into the market to take advantage of an expiring tax credit
see more at: http://www.wsj.com/articles/low-down-mortgages-picking-upto-chagrin-of-some-1434752543
Such borrowers had largely shied away from the market during the past two spring home-buying seasons, discouraged by weak wage growth and higher fees for loans with small down payments.
Now, lower unemployment and early signs of wage growth are boosting consumers’ finances. At the same time, a sharp fee reduction on loans backed by the Federal Housing Administration has cut the cost of a low-down-payment mortgage, stimulating demand.
Low-down-payment mortgages are “becoming part of the water-cooler discussion again,” said Lawrence Yun, chief economist for the National Association of Realtors. “People are hearing that maybe credit is less tight now than before. They’re sensing that the housing market is open to them again.”
Subprime loans—those to borrowers with especially low credit scores—dried up after the recession and are still largely absent from the market. On the other hand, the availability low-down-payment loans to more-creditworthy borrowers, backed by the FHA and U.S. Department of Veterans Affairs, never went away.
Instead, the high costs of such loans, along with low confidence among the consumers who use them, diminished their role in the market.
The return of first-time buyers could help drive prices higher and boost new-home sales. Those trends in turn may spur economic growth.
But there is concern among some who see such mortgages as a hallmark of the housing bubble and fear that a return to easier lending standards could set off a new crash. Many critics also say the government’s role in encouraging homeownership is misplaced and puts taxpayers at risk.
The perception of an easier borrowing environment is pulling in more first-time home buyers, a cohort that until recently has represented a smaller-than-usual share of purchasers. They accounted for 39.5% of purchases in April, up from 35% a year ago, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey of about 2,000 real-estate agents. That was the highest percentage since 42.8% in June 2010, when first-time buyers rushed into the market to take advantage of an expiring tax credit
see more at: http://www.wsj.com/articles/low-down-mortgages-picking-upto-chagrin-of-some-1434752543
Wednesday, June 17, 2015
Vallejo area home mortgages regaining equity, still lag behind the nation
The number of home owners in Solano County still underwater with their mortgages continues falling, though it’s still higher than the national average, a new industry report shows. This means rising equity, which experts say can spur economic growth.
The most recent CoreLogic home equity report shows some 15 percent — or 13,305 — of Vallejo-Fairfield area residential properties with a mortgage were in negative equity as of the first quarter of 2015. That’s significantly lower than the 17,473, or 19.7 percent, in the same quarter last year. It’s also lower than the 14,221, or 16 percent, it was in the last quarter of 2014, according to the report.
Another 2,447 — or 2.8 percent — of properties here were in near negative equity for the first quarter of this year. This is unchanged from the end of last year and down from the 2,615 — or 3 percent — in the first quarter of last year.
“Equity recovery is well underway in Vallejo and to locals that means continued real estate market improvement. Local homeowners can feel comfortable in knowing that their values have improved over the last year and the future also looks bright,” Solano Association of Realtors President Rose Hadaway said. “As long as interest rates remain level, buyers too, can take advantage of the improvement. So it’s a win/win situation and now is the time to reap those rewards that were lost in the down market.”
CoreLogic, a leading global property information, analytics and data-enabled services provider, this week released new analysis showing 254,000 properties nationwide regained equity in the first quarter of 2015, bringing the total number of mortgaged residential properties with equity at the end of Q1 to about 44.9 million, or 90 percent of all mortgaged properties.
Nationwide, the total number of mortgaged residential properties with negative equity is now at 5.1 million, or just over 10 percent of all mortgaged properties. This is down slightly from the 5.4 million homes, or nearly 11 percent, that had negative equity in the fourth quarter of last year, a quarter-over-quarter decrease of nearly 5 percent. Compared with 6.3 million homes, or nearly 13 percent, reported for a year ago, the number of underwater homes has decreased by 1.2 million, or just over 19 percent.
Negative equity, often referred to as “underwater” or “upside down,” refers to borrowers who owe more on their mortgages than their homes are worth.
The study shows that of the more than 50 million residential properties with a mortgage nationally, some 9.7 million — or 19.4 percent — have less than 20 percent equity which is called being “under-equitied.” It also shows that 1.3 million, or 2.7 percent, have less than 5 percent equity, which is called near-negative equity. Borrowers who are “under-equitied” may have a harder time refinancing their existing homes or obtaining new financing to sell and buy another home, and those with near-negative equity are considered at risk of moving into negative equity if home prices fall, CoreLogic officials said.
read more: http://www.timesheraldonline.com/general-news/20150616/vallejo-area-home-mortgages-regaining-equity-still-lag-behind-the-nation
The most recent CoreLogic home equity report shows some 15 percent — or 13,305 — of Vallejo-Fairfield area residential properties with a mortgage were in negative equity as of the first quarter of 2015. That’s significantly lower than the 17,473, or 19.7 percent, in the same quarter last year. It’s also lower than the 14,221, or 16 percent, it was in the last quarter of 2014, according to the report.
Another 2,447 — or 2.8 percent — of properties here were in near negative equity for the first quarter of this year. This is unchanged from the end of last year and down from the 2,615 — or 3 percent — in the first quarter of last year.
“Equity recovery is well underway in Vallejo and to locals that means continued real estate market improvement. Local homeowners can feel comfortable in knowing that their values have improved over the last year and the future also looks bright,” Solano Association of Realtors President Rose Hadaway said. “As long as interest rates remain level, buyers too, can take advantage of the improvement. So it’s a win/win situation and now is the time to reap those rewards that were lost in the down market.”
CoreLogic, a leading global property information, analytics and data-enabled services provider, this week released new analysis showing 254,000 properties nationwide regained equity in the first quarter of 2015, bringing the total number of mortgaged residential properties with equity at the end of Q1 to about 44.9 million, or 90 percent of all mortgaged properties.
Nationwide, the total number of mortgaged residential properties with negative equity is now at 5.1 million, or just over 10 percent of all mortgaged properties. This is down slightly from the 5.4 million homes, or nearly 11 percent, that had negative equity in the fourth quarter of last year, a quarter-over-quarter decrease of nearly 5 percent. Compared with 6.3 million homes, or nearly 13 percent, reported for a year ago, the number of underwater homes has decreased by 1.2 million, or just over 19 percent.
Negative equity, often referred to as “underwater” or “upside down,” refers to borrowers who owe more on their mortgages than their homes are worth.
The study shows that of the more than 50 million residential properties with a mortgage nationally, some 9.7 million — or 19.4 percent — have less than 20 percent equity which is called being “under-equitied.” It also shows that 1.3 million, or 2.7 percent, have less than 5 percent equity, which is called near-negative equity. Borrowers who are “under-equitied” may have a harder time refinancing their existing homes or obtaining new financing to sell and buy another home, and those with near-negative equity are considered at risk of moving into negative equity if home prices fall, CoreLogic officials said.
read more: http://www.timesheraldonline.com/general-news/20150616/vallejo-area-home-mortgages-regaining-equity-still-lag-behind-the-nation
Sunday, June 14, 2015
Feds: Beware the Sugar-Coated Reverse Mortgage
If you believe the advertising hype, a reverse mortgage looks like an easy, risk-free way of bridging financial gaps in retirement. But that’s often not the reality, the Consumer Financial Protection Bureau warns.
“While reverse mortgages can help some older homeowners meet financial needs, they can jeopardize retirement security if not used carefully,” the CFPB said in a new report on reverse mortgage advertising.
In a nutshell, a reverse mortgage is a type of loan that allows older homeowners (ages 62 and up) to borrow against the accrued equity in their homes. It’s a way for seniors to convert their home equity into cash, while still keeping their home. It can be a good option for retirees who have a lot of home equity, but little income.
But here’s the deal: Reverse mortgages need to be repaid if the borrower dies, moves or no longer lives in the home. And seniors could lose their homes if they fail to meet the requirements of the loan, such as paying homeowners insurance and property taxes.
Plus, with seniors living longer than ever before, reverse mortgage borrowers risk outliving their loans.
Unfortunately, many ads for reverse mortgages only tout their benefits – cash to help you enjoy your golden years – without mentioning the risks, the CFPB said. What’s worse, some advertising contains inaccurate, incomplete and confusing information about reverse mortgages that misleads consumers and puts them even more at risk.
The CFPB encourages seniors to consider these facts about reverse mortgages:
Reverse mortgages are not a government benefit. A reverse mortgage is essentially a home loan with fees and compounding interest that need to be repaid.
You could lose your home. If you fail to meet the requirements of the reverse mortgage, you could trigger a loan default and potentially lose your home.
You could outlive your loan money. Americans are living longer today than ever before. If you tap into your home equity too early, you risk outliving the loan and draining a potential source of income you may need later in retirement. “It’s important for those considering a reverse mortgage to understand how long their loan proceeds will last them given the loan’s interest rate, their living expenses, home equity balance, and age,” the CFPB said.
“While reverse mortgages can help some older homeowners meet financial needs, they can jeopardize retirement security if not used carefully,” the CFPB said in a new report on reverse mortgage advertising.
In a nutshell, a reverse mortgage is a type of loan that allows older homeowners (ages 62 and up) to borrow against the accrued equity in their homes. It’s a way for seniors to convert their home equity into cash, while still keeping their home. It can be a good option for retirees who have a lot of home equity, but little income.
But here’s the deal: Reverse mortgages need to be repaid if the borrower dies, moves or no longer lives in the home. And seniors could lose their homes if they fail to meet the requirements of the loan, such as paying homeowners insurance and property taxes.
Plus, with seniors living longer than ever before, reverse mortgage borrowers risk outliving their loans.
Unfortunately, many ads for reverse mortgages only tout their benefits – cash to help you enjoy your golden years – without mentioning the risks, the CFPB said. What’s worse, some advertising contains inaccurate, incomplete and confusing information about reverse mortgages that misleads consumers and puts them even more at risk.
The CFPB encourages seniors to consider these facts about reverse mortgages:
Reverse mortgages are not a government benefit. A reverse mortgage is essentially a home loan with fees and compounding interest that need to be repaid.
You could lose your home. If you fail to meet the requirements of the reverse mortgage, you could trigger a loan default and potentially lose your home.
You could outlive your loan money. Americans are living longer today than ever before. If you tap into your home equity too early, you risk outliving the loan and draining a potential source of income you may need later in retirement. “It’s important for those considering a reverse mortgage to understand how long their loan proceeds will last them given the loan’s interest rate, their living expenses, home equity balance, and age,” the CFPB said.
source: http://www.moneytalksnews.com/feds-beware-the-sugar-coated-reverse-mortgage/
Thursday, June 11, 2015
More Options for Mega Mortgages
Super Jumbo—it sounds like an action hero in a summer blockbuster. In fact, the term applies to home loans for colossal amounts—typically $2 million to $20 million and up, depending on the lender. Bigger loans might seem like a bigger risk, but many lenders see them as a sweet spot.
Qualified wealthy home buyers aren’t likely to have trouble finding financing of up to $10 million at the nation’s biggest banks, says Mike McPartland, head of investment finance for Citibank Private Bank North America.
Super-jumbo borrowers usually are already bank customers, typically of the private-bank division, which provides an array of wealth-management services, he adds. “Chances are we know the client, and we know what we are comfortable advancing to that client,” Mr. McPartland says.
The super jumbo’s popularity doesn’t just come down to relationship banking, though. New York-based mortgage bank Guardhill Financial Corp. is finding it significantly easier to finance and sell super jumbos between $4 million and $20 million now than a year ago, says CEO Alan Rosenbaum. Describing the attitude of some of its approximately 50 mortgage investors, “It’s easier to underwrite one loan for $4 million than 10 loans at $400,000 each,” he adds.
What gives lenders confidence is that most high-net-worth borrowers choose, rather than need, to borrow to buy a home or pay for improvements, says Erin Gorman, national director of mortgage sales for BNY Mellon Wealth Management, which has an average mortgage loan size of $1.2 million. With low interest rates, these borrowers calculate they will have a higher yield keeping money invested and avoid capital gains taxes from the sale of a growing asset. “If interest rates were to jump up quickly, they could choose to pay down, pay off or shift to a different loan structure,” Ms. Gorman says.
read more: http://www.wsj.com/articles/more-options-for-mega-mortgages-1433961979
Qualified wealthy home buyers aren’t likely to have trouble finding financing of up to $10 million at the nation’s biggest banks, says Mike McPartland, head of investment finance for Citibank Private Bank North America.
Super-jumbo borrowers usually are already bank customers, typically of the private-bank division, which provides an array of wealth-management services, he adds. “Chances are we know the client, and we know what we are comfortable advancing to that client,” Mr. McPartland says.
The super jumbo’s popularity doesn’t just come down to relationship banking, though. New York-based mortgage bank Guardhill Financial Corp. is finding it significantly easier to finance and sell super jumbos between $4 million and $20 million now than a year ago, says CEO Alan Rosenbaum. Describing the attitude of some of its approximately 50 mortgage investors, “It’s easier to underwrite one loan for $4 million than 10 loans at $400,000 each,” he adds.
What gives lenders confidence is that most high-net-worth borrowers choose, rather than need, to borrow to buy a home or pay for improvements, says Erin Gorman, national director of mortgage sales for BNY Mellon Wealth Management, which has an average mortgage loan size of $1.2 million. With low interest rates, these borrowers calculate they will have a higher yield keeping money invested and avoid capital gains taxes from the sale of a growing asset. “If interest rates were to jump up quickly, they could choose to pay down, pay off or shift to a different loan structure,” Ms. Gorman says.
read more: http://www.wsj.com/articles/more-options-for-mega-mortgages-1433961979
Thursday, June 4, 2015
Why small home mortgage loans are hard to find
Providing small mortgage loans at non-subsidized prices affordable to the borrower has always been a challenge. The core problem is that the high cost of originating and servicing a mortgage loan is no smaller for a small loan than for a large one, but the dollar amounts of interest and origination fees received by the lender are smaller on small loans.
The obvious remedy, charging a higher interest rate or upfront fees on smaller loans, may make it unaffordable -- or could be interpreted as "price-gouging" and invite the attention of regulators.
Home mortgage lenders prefer to avoid these problems by setting minimum loan amounts, which today are generally in the range of $50,000 to $75,000. Below $50,000, mortgage loans are generally not available. This is a problem for isolated communities in which home prices are very low, and also for borrowers anywhere who are looking to refinance small loan balances.
The problem of the small isolated town
"In my town, we need mortgage loans from $5,000 to $30,000, and they just aren't available. Is there anything that can be done?"
The town is Winters, Texas, population about 3,000. There are few jobs there or anywhere very close, and median household income is about $26,000. Houses in Winters sell for less than $60,000.
Mortgage loans are not available in Winters. In part, this is because the town is so isolated and the demand so small that it can't support a lending facility. There are no appraisers, for example; if one is needed the cost will be double the cost in a larger center because of the time it takes for the appraiser to get to Winters and back.
The combination of exceptionally high origination costs and exceptionally small loan amounts is deadly. The best option for residents of Winters who need funding is an unsecured loan, as discussed below.
The problem of refinancing small loans
Another category of borrowers who are potentially vulnerable to the small-loan problem are those who have paid their loans down substantially and would like to take advantage of lower interest rates by refinancing.
source: http://www.dailyherald.com/article/20150516/entlife/150519271/
The obvious remedy, charging a higher interest rate or upfront fees on smaller loans, may make it unaffordable -- or could be interpreted as "price-gouging" and invite the attention of regulators.
Home mortgage lenders prefer to avoid these problems by setting minimum loan amounts, which today are generally in the range of $50,000 to $75,000. Below $50,000, mortgage loans are generally not available. This is a problem for isolated communities in which home prices are very low, and also for borrowers anywhere who are looking to refinance small loan balances.
The problem of the small isolated town
"In my town, we need mortgage loans from $5,000 to $30,000, and they just aren't available. Is there anything that can be done?"
The town is Winters, Texas, population about 3,000. There are few jobs there or anywhere very close, and median household income is about $26,000. Houses in Winters sell for less than $60,000.
Mortgage loans are not available in Winters. In part, this is because the town is so isolated and the demand so small that it can't support a lending facility. There are no appraisers, for example; if one is needed the cost will be double the cost in a larger center because of the time it takes for the appraiser to get to Winters and back.
The combination of exceptionally high origination costs and exceptionally small loan amounts is deadly. The best option for residents of Winters who need funding is an unsecured loan, as discussed below.
The problem of refinancing small loans
Another category of borrowers who are potentially vulnerable to the small-loan problem are those who have paid their loans down substantially and would like to take advantage of lower interest rates by refinancing.
source: http://www.dailyherald.com/article/20150516/entlife/150519271/
Tuesday, June 2, 2015
High Court: Underwater Homeowners Can’t Void Second Mortgage in Bankruptcy
In a win for banks, the U.S.’s top court Monday ruled that underwater homeowners can’t get rid of a second mortgage by filing for bankruptcy protection.
All nine Supreme Court justices agreed that filing for chapter 7 bankruptcy protection doesn’t give homeowners the power to cancel a second mortgage when their properties aren’t even worth the value of the first mortgage.
The case involved two Florida homeowners who tried to cancel their second mortgages from Bank of America, arguing that because a second mortgage gets paid after the first, it is essentially worthless. Lenders, however, fought to keep the second mortgage liens, arguing that the debt could someday be fully paid once property values rise.
In Monday’s opinion, Justice Clarence Thomas said the court’s decision took into consideration “the constantly shifting” value of real estate.
“Sometimes a dollar’s difference will have a significant impact on bankruptcy proceedings,” he wrote in the nine-page decision.
Consumer advocates said the ruling will make it harder for bankrupt homeowners to get a fresh start.
“Some consumers may be forced to catch up on thousands of dollars of [payments] or lose their homes,” said Carol Colliersmith, an Atlanta bankruptcy lawyer.
Bank of America declined to comment Monday on the ruling. But the bank’s lawyers had argued that the dispute “may be the single most important unresolved issue in consumer bankruptcy.”
The 11th U.S. Circuit Court of Appeals upheld bankruptcy court decisions that stripped Bank of America of its liens. The bank appealed.
The dispute pitted homeowners, who saw property values plummet during the housing crisis, against mortgage lenders and their allies. Lending groups, including the Loan Syndications and Trading Association and American Bankers Association, backed Bank of America.
The AARP Inc. fought for loan cancellation, saying in a brief that it is “far more difficult for older people to bounce back from enormous financial setbacks” like bankruptcy or medical problems.”
Monday’s opinion clarifies the rules for bankruptcy judges who have disagreed on this issue. In 1992, Supreme Court justices determined that a bankrupt homeowner doesn’t have the power to cancel the lien on an underwater first mortgage, but it is less clear what power a bank with an underwater second mortgage has in bankruptcy.
Second mortgages were far less common at the time of the U.S. bankruptcy code’s last major overhaul in 1978.
Amid the confusion, some consumer experts argued that despite the sticking power of a lender’s lien after bankruptcy, bankruptcy should also give struggling homeowners a way to fix their housing-related financial problems.
read more: http://www.wsj.com/articles/supreme-court-underwater-homeowners-cant-void-second-mortgages-in-bankruptcy-1433173699
All nine Supreme Court justices agreed that filing for chapter 7 bankruptcy protection doesn’t give homeowners the power to cancel a second mortgage when their properties aren’t even worth the value of the first mortgage.
The case involved two Florida homeowners who tried to cancel their second mortgages from Bank of America, arguing that because a second mortgage gets paid after the first, it is essentially worthless. Lenders, however, fought to keep the second mortgage liens, arguing that the debt could someday be fully paid once property values rise.
In Monday’s opinion, Justice Clarence Thomas said the court’s decision took into consideration “the constantly shifting” value of real estate.
“Sometimes a dollar’s difference will have a significant impact on bankruptcy proceedings,” he wrote in the nine-page decision.
Consumer advocates said the ruling will make it harder for bankrupt homeowners to get a fresh start.
“Some consumers may be forced to catch up on thousands of dollars of [payments] or lose their homes,” said Carol Colliersmith, an Atlanta bankruptcy lawyer.
Bank of America declined to comment Monday on the ruling. But the bank’s lawyers had argued that the dispute “may be the single most important unresolved issue in consumer bankruptcy.”
The 11th U.S. Circuit Court of Appeals upheld bankruptcy court decisions that stripped Bank of America of its liens. The bank appealed.
The dispute pitted homeowners, who saw property values plummet during the housing crisis, against mortgage lenders and their allies. Lending groups, including the Loan Syndications and Trading Association and American Bankers Association, backed Bank of America.
The AARP Inc. fought for loan cancellation, saying in a brief that it is “far more difficult for older people to bounce back from enormous financial setbacks” like bankruptcy or medical problems.”
Monday’s opinion clarifies the rules for bankruptcy judges who have disagreed on this issue. In 1992, Supreme Court justices determined that a bankrupt homeowner doesn’t have the power to cancel the lien on an underwater first mortgage, but it is less clear what power a bank with an underwater second mortgage has in bankruptcy.
Second mortgages were far less common at the time of the U.S. bankruptcy code’s last major overhaul in 1978.
Amid the confusion, some consumer experts argued that despite the sticking power of a lender’s lien after bankruptcy, bankruptcy should also give struggling homeowners a way to fix their housing-related financial problems.
read more: http://www.wsj.com/articles/supreme-court-underwater-homeowners-cant-void-second-mortgages-in-bankruptcy-1433173699
Friday, May 29, 2015
5 Ways Reverse Mortgages Can Serve as Retirement Planning Tool
In today’s world, Americans face a looming retirement crisis — one that has been well-documented over the past several years and which has created a new purpose for the reverse mortgage.
Gone are the days when reverse mortgages were considered a loan of last resort. Now, the product is gaining steam among financial planners as a retirement tool that can hedge against future costs and provide much-needed income during borrowers’ post-career days.
By using a reverse mortgage to tap into home equity and fund retirement expenses, homeowners can effectively defend against the imminent retirement crisis, research shows.
“A lot of times people have not accumulated [savings] in a disciplined way, but at the same time the value of their homes has appreciated dramatically,” said Dennis Channer, principal at Cornerstone Investment Advisors, LLC, during a recent webinar hosted by Reverse Mortgage Funding (RMF) and the Financial Experts Network. “A great deal of their wealth is tied up in that value. [Home equity] becomes another available resource in the long range forecast of being successful [in retirement].”
And that’s just what Wednesday’s webinar, “Standby Reverse Mortgages: A Portfolio Longevity Strategy,” was focused on teaching. Its purpose was to educate financial advisors on how a home equity conversion mortgage (HECM) could be used as a portfolio protection strategy.
“The ideas are endless on the different angles we can take on using the [reverse mortgage],” said Dr. John Salter, an associate professor of financial planning at Texas Tech University, who has educated financial planners on reverse mortgages for years. “There’s nothing wrong with the product.”
While the ways to use a reverse mortgage may be endless, Salter explained five strategies, in particular, for financial planners to keep in mind when clients are approaching retirement.
1. Use Reverse Mortgage Instead of HELOC
There are benefits borrowers can get from using a reverse mortgage that they can’t get from using a HELOC, Salter said. Among those benefits are line of credit growth, no monthly principle or interest payment, and the loan is not cancelable as long as requirements are met.
“If you’re looking for flexibility in repaying [the loan], you get that in a reverse mortgage; you don’t get that in a HELOC,” he added.
A HECM is also non-recourse, meaning the borrower or their estate will never owe more than the value of the home upon sale or death.
The only downside of a reverse mortgage is the age requirement, as there is no restriction on age when using a HELOC.
see more: http://reversemortgagedaily.com/2015/05/28/5-ways-reverse-mortgages-can-serve-as-retirement-planning-tool/
Gone are the days when reverse mortgages were considered a loan of last resort. Now, the product is gaining steam among financial planners as a retirement tool that can hedge against future costs and provide much-needed income during borrowers’ post-career days.
By using a reverse mortgage to tap into home equity and fund retirement expenses, homeowners can effectively defend against the imminent retirement crisis, research shows.
“A lot of times people have not accumulated [savings] in a disciplined way, but at the same time the value of their homes has appreciated dramatically,” said Dennis Channer, principal at Cornerstone Investment Advisors, LLC, during a recent webinar hosted by Reverse Mortgage Funding (RMF) and the Financial Experts Network. “A great deal of their wealth is tied up in that value. [Home equity] becomes another available resource in the long range forecast of being successful [in retirement].”
And that’s just what Wednesday’s webinar, “Standby Reverse Mortgages: A Portfolio Longevity Strategy,” was focused on teaching. Its purpose was to educate financial advisors on how a home equity conversion mortgage (HECM) could be used as a portfolio protection strategy.
“The ideas are endless on the different angles we can take on using the [reverse mortgage],” said Dr. John Salter, an associate professor of financial planning at Texas Tech University, who has educated financial planners on reverse mortgages for years. “There’s nothing wrong with the product.”
While the ways to use a reverse mortgage may be endless, Salter explained five strategies, in particular, for financial planners to keep in mind when clients are approaching retirement.
1. Use Reverse Mortgage Instead of HELOC
There are benefits borrowers can get from using a reverse mortgage that they can’t get from using a HELOC, Salter said. Among those benefits are line of credit growth, no monthly principle or interest payment, and the loan is not cancelable as long as requirements are met.
“If you’re looking for flexibility in repaying [the loan], you get that in a reverse mortgage; you don’t get that in a HELOC,” he added.
A HECM is also non-recourse, meaning the borrower or their estate will never owe more than the value of the home upon sale or death.
The only downside of a reverse mortgage is the age requirement, as there is no restriction on age when using a HELOC.
see more: http://reversemortgagedaily.com/2015/05/28/5-ways-reverse-mortgages-can-serve-as-retirement-planning-tool/
Friday, May 22, 2015
30-year mortgage slips to 3.84 percent
WASHINGTON — Average long-term U.S. mortgage rates edged slightly lower this week after rising for three straight weeks.
Mortgage giant Freddie Mac said the average rate on a 30-year fixed-rate mortgage ticked down to 3.84 percent this week from 3.85 percent a week earlier. The rate on 15-year fixed-rate mortgages slipped to 3.05 percent from 3.07 percent. Last week both rates reached their highest level since mid-March, rising along with the yield on 10-year Treasury notes — reflecting some signs of improvement in the U.S. economy.
read more: http://www.news-journal.com/news/2015/may/21/30-year-mortgage-slips-to-384-percent/
Mortgage giant Freddie Mac said the average rate on a 30-year fixed-rate mortgage ticked down to 3.84 percent this week from 3.85 percent a week earlier. The rate on 15-year fixed-rate mortgages slipped to 3.05 percent from 3.07 percent. Last week both rates reached their highest level since mid-March, rising along with the yield on 10-year Treasury notes — reflecting some signs of improvement in the U.S. economy.
read more: http://www.news-journal.com/news/2015/may/21/30-year-mortgage-slips-to-384-percent/
Wednesday, May 20, 2015
How Much Down Payment Do You Need to Buy a Home?
The down payment. Cue the dramatic, fear-filled suspense music. Yeah, it’s scary. Coming up with enough cash to put down when buying a house is the single biggest roadblock for most hopeful homebuyers. But how much do you really need?
A standard down payment
Most lenders are looking for 20% down payments. That’s $60,000 on a $300,000 home. (There’s that scary music again.) With 20% down, lenders will love you more. First off, you’ll have a better chance of getting approved for a loan. And you’ll earn a better mortgage interest rate. There are all sorts of other benefits too:
Lower upfront fees (we’ll talk more about that in a second)
Lower ongoing fees (more on that too)
More equity in your home right off the bat
A lower monthly payment
Of course there is one big, juicy caveat: The down payment is not the only upfront money you have to deal with. There are loan closing costs and earnest money to consider as well. Before the dramatic music returns, let’s explore some lower down payment options.
Getting in for less
You can actually buy a home with as little as 3% down. Why did we wait so long to give you that good news? Well, let’s provide the details first before we weigh the pros and cons.
The Federal Housing Administration is a government agency charged with helping homebuyers — especially first timers — get approved. The FHA assists mortgage lenders to make loans by guaranteeing a portion of the balance. That’s how you can put less money down — in fact, as little as 3.5%.
see more: https://www.nerdwallet.com/blog/mortgages/payment-buy-home/
A standard down payment
Most lenders are looking for 20% down payments. That’s $60,000 on a $300,000 home. (There’s that scary music again.) With 20% down, lenders will love you more. First off, you’ll have a better chance of getting approved for a loan. And you’ll earn a better mortgage interest rate. There are all sorts of other benefits too:
Lower upfront fees (we’ll talk more about that in a second)
Lower ongoing fees (more on that too)
More equity in your home right off the bat
A lower monthly payment
Of course there is one big, juicy caveat: The down payment is not the only upfront money you have to deal with. There are loan closing costs and earnest money to consider as well. Before the dramatic music returns, let’s explore some lower down payment options.
Getting in for less
You can actually buy a home with as little as 3% down. Why did we wait so long to give you that good news? Well, let’s provide the details first before we weigh the pros and cons.
The Federal Housing Administration is a government agency charged with helping homebuyers — especially first timers — get approved. The FHA assists mortgage lenders to make loans by guaranteeing a portion of the balance. That’s how you can put less money down — in fact, as little as 3.5%.
see more: https://www.nerdwallet.com/blog/mortgages/payment-buy-home/
Monday, May 18, 2015
CFPB Considers Mortgage-Like Protections For Student Loan Borrowers
A federal agency that ushered in a number of reforms to fix problems with mortgage servicing after the financial crisis is now weighing similar protections for borrowers of student loans. Next to mortgages, the $1.2 trillion outstanding balance on student loans comprises the second-largest source of consumer debt in the U.S.
The Consumer Financial Protection Bureau estimates that among 40 million student loan borrowers, about 8 million people are in default on more than $100 billion worth of student loans. Student loan servicers are responsible for collecting and processing payments, and for answering borrowers' questions about how to keep up with those bills. But the agency says it is concerned that those companies are a weak link when it comes to assisting borrowers in repaying that debt.
“As a growing share of student loan borrowers reach out to their servicers for help, the problems they encounter bear an uncanny resemblance to the situation where struggling homeowners reached out to their mortgage servicers before, during, and after the financial crisis,” CFPB director Richard Cordray said, according to prepared remarks he will deliver Thursday at a field hearing on student debt in Milwaukee.
Cordray’s agency is launching a public inquiry into student loan servicing to solicit feedback on industry practices that can either help young borrowers stay on track, and build a positive credit history through on-time payments, or create frustrating hurdles that may hasten default.
“Having seen the improper and unnecessary foreclosures experienced by many homeowners, the Consumer Bureau is concerned that inadequate servicing is also contributing to America’s growing student loan default problem,” Cordray stated.
Joining Cordray in Milwaukee will be Department of Education Under Secretary Ted Mitchell. The Education Department contracts with student loan servicers to handle a direct loan portfolio in which 28.5 million borrowers owed about $744 million by the end of 2014. But the department has been criticized for lax oversight of the servicers, and for not doing enough to prevent borrowers from defaulting, including by the department’s own Office of Inspector General.
Effective student loan servicing, however, is fundamental to President Obama’s student debt agenda. Last June, he signed an executive order to expand income-based repayment options, so that more borrowers can take advantage of repayment plans that are pegged to how much they earn. Whether or not a borrower is eligibile for such programs is the type of information a student loan servicer, typically, should be able to convey.
In March, Obama signed a “Student Aid Bill of Rights,” and directed the Education Department, the Treasury Department and the CFPB to assess the need for stronger student loan servicing standards. Currently, for both private and federal student loans, there is no equivalent of uniform federal regulations that govern credit card and mortgage servicing.
see more: http://www.ibtimes.com/cfpb-considers-mortgage-protections-student-loan-borrowers-1921587
The Consumer Financial Protection Bureau estimates that among 40 million student loan borrowers, about 8 million people are in default on more than $100 billion worth of student loans. Student loan servicers are responsible for collecting and processing payments, and for answering borrowers' questions about how to keep up with those bills. But the agency says it is concerned that those companies are a weak link when it comes to assisting borrowers in repaying that debt.
“As a growing share of student loan borrowers reach out to their servicers for help, the problems they encounter bear an uncanny resemblance to the situation where struggling homeowners reached out to their mortgage servicers before, during, and after the financial crisis,” CFPB director Richard Cordray said, according to prepared remarks he will deliver Thursday at a field hearing on student debt in Milwaukee.
Cordray’s agency is launching a public inquiry into student loan servicing to solicit feedback on industry practices that can either help young borrowers stay on track, and build a positive credit history through on-time payments, or create frustrating hurdles that may hasten default.
“Having seen the improper and unnecessary foreclosures experienced by many homeowners, the Consumer Bureau is concerned that inadequate servicing is also contributing to America’s growing student loan default problem,” Cordray stated.
Joining Cordray in Milwaukee will be Department of Education Under Secretary Ted Mitchell. The Education Department contracts with student loan servicers to handle a direct loan portfolio in which 28.5 million borrowers owed about $744 million by the end of 2014. But the department has been criticized for lax oversight of the servicers, and for not doing enough to prevent borrowers from defaulting, including by the department’s own Office of Inspector General.
Effective student loan servicing, however, is fundamental to President Obama’s student debt agenda. Last June, he signed an executive order to expand income-based repayment options, so that more borrowers can take advantage of repayment plans that are pegged to how much they earn. Whether or not a borrower is eligibile for such programs is the type of information a student loan servicer, typically, should be able to convey.
In March, Obama signed a “Student Aid Bill of Rights,” and directed the Education Department, the Treasury Department and the CFPB to assess the need for stronger student loan servicing standards. Currently, for both private and federal student loans, there is no equivalent of uniform federal regulations that govern credit card and mortgage servicing.
see more: http://www.ibtimes.com/cfpb-considers-mortgage-protections-student-loan-borrowers-1921587
Thursday, May 14, 2015
Mortgage Applications Fall with Rate Increases
A reduction in refinancings led to an overall fall in mortgage applications as interest rates rose across the board, according to data released Wednesday by the Mortgage Bankers Association.
The MBA's Weekly Mortgage Applications Survey's market composite reported that the volume of mortgage loan applications plunged 3.5% on a seasonally adjusted basis from the previous week. The refinance index alone dropped by 6%, while the purchase index fell by 0.2%.
As a share of overall mortgage activity, refinance dropped to 51% from 52% a week earlier, its lowest level since May 2014. The FHA share also fell to 13.8% from 14% last week, while the VA share remained stable at 11.9%.
Additionally, the adjustable-rate mortgage and USDA shares rose to 6.3% and 0.9%, respectively. The survey also noted an uptick in loan sizes with the average size for purchase applications increasing to $298,500, a survey high.
A sweeping rise in mortgage rates to the highest levels seen since March fueled the drop in application volume.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4% from 3.93%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances jumped 8 basis points to 3.99%.
Another big increase was seen for 30-year fixed-rate mortgages backed by the FHA, which had an average contract rate jump to 3.76% from 3.7% a week earlier. The average contract interest rates for 15-year fixed-rate mortgages and 5/1 ARMs rose more modestly by 4 and 3 basis points, respectively, to 3.23% for the former and 3% for the latter.
source: http://www.nationalmortgagenews.com/news/origination/mortgage-applications-fall-with-rate-increases-1050761-1.html
The MBA's Weekly Mortgage Applications Survey's market composite reported that the volume of mortgage loan applications plunged 3.5% on a seasonally adjusted basis from the previous week. The refinance index alone dropped by 6%, while the purchase index fell by 0.2%.
As a share of overall mortgage activity, refinance dropped to 51% from 52% a week earlier, its lowest level since May 2014. The FHA share also fell to 13.8% from 14% last week, while the VA share remained stable at 11.9%.
Additionally, the adjustable-rate mortgage and USDA shares rose to 6.3% and 0.9%, respectively. The survey also noted an uptick in loan sizes with the average size for purchase applications increasing to $298,500, a survey high.
A sweeping rise in mortgage rates to the highest levels seen since March fueled the drop in application volume.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4% from 3.93%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances jumped 8 basis points to 3.99%.
Another big increase was seen for 30-year fixed-rate mortgages backed by the FHA, which had an average contract rate jump to 3.76% from 3.7% a week earlier. The average contract interest rates for 15-year fixed-rate mortgages and 5/1 ARMs rose more modestly by 4 and 3 basis points, respectively, to 3.23% for the former and 3% for the latter.
source: http://www.nationalmortgagenews.com/news/origination/mortgage-applications-fall-with-rate-increases-1050761-1.html
Tuesday, May 12, 2015
Federal judge holds 2 banks accountable for selling U.S. fraudulent mortgages
On Monday, U.S. District Judge Denise Cote ruled that two banks — Japan's Nomura Holdings and Britain's Royal Bank of Scotland — fraudulently sold faulty mortgages to Freddie Mac and Fannie Mae leading up to the 2008 housing crash. "The magnitude of falsity, conservatively measured, is enormous," Cote wrote in what The New Times calls her "scathing 361-page decision."
Nomura and RBS were the only two of 18 large banks that didn't settle with the Federal Housing Finance Agency; the other 16 avoided airing their presumably dirty laundry in court by collectively paying almost $18 billion in penalties. In the jury-less trial, Coat heard evidence that two-thirds of the mortgages RBS and Nomura packaged into securities had underwriting defects. The FHFA is expected to ask for $500 million in compensation. Namura says it will appeal the ruling.
In tangentially related news, The Wall Street Journal reports that top executives from seven of the largest U.S. banks met on March 31 to discuss the "anti-Wall Street rhetoric already bubbling up on the 2016 campaign trail" and brainstorm ways to "push back against the prevailing narrative that banks are bad." There won't be "a new ad campaign or lobbying blitz, people familiar with the discussions" told The Journal, in part because "many bank officials are skeptical they can do much to counteract critics without triggering more damaging backlash." Peter Weber
see more: http://theweek.com/speedreads/554539/federal-judge-holds-2-banks-accountable-selling-fraudulent-mortgages
Friday, May 8, 2015
Mortgages rates jump, Freddie Mac survey says
Mortgage rates climbed higher in the past week, with the average rate for the benchmark 30-year fixed-rate mortgage rising to 3.80% from 3.68% in the prior week, according to the latest Freddie Mac survey.
The 15-year fixed rate averaged 3.02%, up from 2.94% a week ago.
The rates rose to their highest levels since March, as a selloff in German bunds helped drive U.S. Treasury yields above 2.2%.
A year ago, the respective 30-year and 15-year rates averaged 4.21% and 3.32%.
source: http://seekingalpha.com/news/2501436-mortgages-rates-jump-freddie-mac-survey-says
Wednesday, May 6, 2015
Mortgages Coming To Google Compare, New Automotive Ads Among AdWords Announcements
Google announced a number of new search advertising format and measurement initiatives in a livestream Tuesday, hosted by Jerry Dischler, Vice President of Product Management for AdWords.
No surprise, many of the announcements focused on improving mobile experiences and giving marketers better tools for measuring what has become a complex path to purchase, what Google refers to as “micro-moments”. The updates came against the backdrop of Google’s first official announcement that smartphone searches are now outpacing those on desktop in ten countries.
Last year’s AdWords livestream focused heavily on app discovery and engagement formats. This year, Google released a study released in partnership with Ipsos that shows heavy usage of search and app stores among smartphone users looking for apps and highlighted. Dischler also mentioned the recent pilot program of showing ads in search results on Google Play, noting that the company would be talking more about ads in Google Play at Google I/O later this month.
Google Compare Expansion
Google Compare in the US will soon expand beyond auto insurance and credit cards to include mortgages, as many in that industry have been speculating. Google is short on details, but says the mortgage product will roll out in the US later this year.
The auto insurance comparison service, which launched in California earlier this year, is also expanding to new states — to Texas, Illinois, Pennsylvania — and will feature agent support. Finally, the credit card comparison product will now include cards from local issuers.
New Automotive Ad Formats
Google debuted a new ad format for automotive manufactures and ad listings for local dealers. The units are rolling out on mobile, with Chrysler as a launch partner, and will eventually be made available on all screens.
see more: http://marketingland.com/mortgages-coming-to-google-compare-new-automotive-ads-among-adwords-livestream-announcements-127561
No surprise, many of the announcements focused on improving mobile experiences and giving marketers better tools for measuring what has become a complex path to purchase, what Google refers to as “micro-moments”. The updates came against the backdrop of Google’s first official announcement that smartphone searches are now outpacing those on desktop in ten countries.
Last year’s AdWords livestream focused heavily on app discovery and engagement formats. This year, Google released a study released in partnership with Ipsos that shows heavy usage of search and app stores among smartphone users looking for apps and highlighted. Dischler also mentioned the recent pilot program of showing ads in search results on Google Play, noting that the company would be talking more about ads in Google Play at Google I/O later this month.
Google Compare Expansion
Google Compare in the US will soon expand beyond auto insurance and credit cards to include mortgages, as many in that industry have been speculating. Google is short on details, but says the mortgage product will roll out in the US later this year.
The auto insurance comparison service, which launched in California earlier this year, is also expanding to new states — to Texas, Illinois, Pennsylvania — and will feature agent support. Finally, the credit card comparison product will now include cards from local issuers.
New Automotive Ad Formats
Google debuted a new ad format for automotive manufactures and ad listings for local dealers. The units are rolling out on mobile, with Chrysler as a launch partner, and will eventually be made available on all screens.
see more: http://marketingland.com/mortgages-coming-to-google-compare-new-automotive-ads-among-adwords-livestream-announcements-127561
Tuesday, May 5, 2015
What Is a Reverse Mortgage?
A reverse mortgage is a type of home loan that doesn't require any payments until after you die, as long as you continue living in your home. If you move out or decide to sell your house while still alive, the reverse mortgage comes due immediately. You can receive the loan proceeds in one lump sum or in monthly income payments.
Who Can Benefit From a Reverse Mortgage?
It's important to be aware of the age restrictions for reverse mortgages: Everyone listed on the deed of the house, even if they don't sign the loan, must be at least 62 years old for the house to qualify for a reverse mortgage. Also, reverse mortgages aren't useful if you still owe a lot on your regular mortgage. For example, if you owe $100,000 on your house, and you get a reverse mortgage for $125,000, you would only receive $25,000. The rest of the reverse mortgage proceeds would be immediately applied to your regular mortgage. Here is a more in-depth explanation of how reverse mortgages work.
The main pros and cons of reverse mortgages are:
Pros of Reverse Mortgage
One big advantage to reverse mortgages is that credit checks are minimal. Since you don't have to make loan payments during your lifetime, your credit score or monthly income are mostly irrelevant. However, new laws require lenders to set aside a certain amount of the loan funds if it looks like you won't be able to afford property taxes, home repairs or mortgage insurance premiums.
The value of your home may have risen dramatically since you bought it. Reverse mortgages give you access to this profit while allowing you to remain in your home.
If you have limited income, a reverse mortgage can provide you with greater self-sufficiency and comfort.
Cons of Reverse Mortgage
You (or your spouse, if he or she also signed the loan) must be living in your home to keep the reverse mortgage in place. You can't be absent for longer than 12 months, even if you have to go into a long-term care facility or move away to care for a family member. Longer absences result in the termination of the loan, and any money you received must be repaid immediately, with interest.
You must commit to maintaining your home and to keeping property tax and insurance payments up to date. Before the loan closes, the house is inspected, and you must sign a binding agreement to complete all recommended repairs by a specified date. The bank inspects your home to certify that you have completed these repairs as agreed.
A reverse mortgage usually makes it impossible to leave your house to your children. When all borrowers have passed away, the reverse mortgage must be repaid in full. In most cases, this requires the sale of the house. The only way to avoid this is if your heirs have enough personal wealth to pay off the reverse mortgage without needing to sell the house.
read more: http://www.huffingtonpost.com/simple-thrifty-living/what-is-a-reverse-mortgag_b_7200038.html
Who Can Benefit From a Reverse Mortgage?
It's important to be aware of the age restrictions for reverse mortgages: Everyone listed on the deed of the house, even if they don't sign the loan, must be at least 62 years old for the house to qualify for a reverse mortgage. Also, reverse mortgages aren't useful if you still owe a lot on your regular mortgage. For example, if you owe $100,000 on your house, and you get a reverse mortgage for $125,000, you would only receive $25,000. The rest of the reverse mortgage proceeds would be immediately applied to your regular mortgage. Here is a more in-depth explanation of how reverse mortgages work.
The main pros and cons of reverse mortgages are:
Pros of Reverse Mortgage
One big advantage to reverse mortgages is that credit checks are minimal. Since you don't have to make loan payments during your lifetime, your credit score or monthly income are mostly irrelevant. However, new laws require lenders to set aside a certain amount of the loan funds if it looks like you won't be able to afford property taxes, home repairs or mortgage insurance premiums.
The value of your home may have risen dramatically since you bought it. Reverse mortgages give you access to this profit while allowing you to remain in your home.
If you have limited income, a reverse mortgage can provide you with greater self-sufficiency and comfort.
Cons of Reverse Mortgage
You (or your spouse, if he or she also signed the loan) must be living in your home to keep the reverse mortgage in place. You can't be absent for longer than 12 months, even if you have to go into a long-term care facility or move away to care for a family member. Longer absences result in the termination of the loan, and any money you received must be repaid immediately, with interest.
You must commit to maintaining your home and to keeping property tax and insurance payments up to date. Before the loan closes, the house is inspected, and you must sign a binding agreement to complete all recommended repairs by a specified date. The bank inspects your home to certify that you have completed these repairs as agreed.
A reverse mortgage usually makes it impossible to leave your house to your children. When all borrowers have passed away, the reverse mortgage must be repaid in full. In most cases, this requires the sale of the house. The only way to avoid this is if your heirs have enough personal wealth to pay off the reverse mortgage without needing to sell the house.
read more: http://www.huffingtonpost.com/simple-thrifty-living/what-is-a-reverse-mortgag_b_7200038.html
Thursday, April 30, 2015
LendingHome offers investor mortgages at steep rates
The San Jose residence had housed hoarders, its rooms crammed floor to ceiling with junk.
“It was in horrible condition, which is the way we like ’em,” said Jon Condrey, a house flipper. When Condrey bought the California rancher for $620,000 about 10 weeks ago, he used a new Internet marketplace called LendingHome.com to secure a $496,000 mortgage. He paid a steep interest rate: 10 percent.
But Condrey considered that decent for “hard money lending,” short-term loans where the value of the collateral outranks the borrower’s ability to repay. Condrey got the loan within days of filling out an online questionnaire and having his information verified. He’s now applying for LendingHome mortgages for two more fix-and-flip houses.
“Time is the enemy in our business,” said Condrey, who’s hustling to get the San Jose house on the market this week for $799,000. “LendingHome can move very, very quickly to get things done. They’ve automated a lot of the process.”
San Francisco’s LendingHome, which has raised $109.3 million in venture backing, including a $70 million round this month, says setting up shop on the Internet will make issuing home loans simpler, faster and more transparent.
Its target population is investors who can’t get regular mortgages — and therefore it charges a premium. Right now it lends to only investors in single-family homes. LendingHome offers two options: fix-and-flip bridge loans at rates ranging from 7 to 17 percent for terms of six months or one year, or rental-property loans with rates ranging from 5 to 9 percent for 30-year fixed loans or 5/1 adjustable rate mortgages. Borrowers generally must put down 30 percent.
“If you qualify for a traditional bank loan, we recommend that,” said CEO and co-founder Matt Humphrey. “But there aren’t a lot of options for investment properties; it’s very challenging to get a loan. And there are a lot of folks who can’t qualify: Maybe they haven’t had the same job for two years, or they had a short sale six years ago. We think they should have access to the (mortgage) market.”
Humphrey said they are not the type of risky subprime loans that caused the mortgage meltdown. “Subprime was folks who should not have been extended credit,” he said. “That’s not the case. We make sure the rental properties can cash-flow” (meaning they bring in enough rent to cover mortgage, taxes, insurance and other expenses).
After a financial crisis, lending always tightens up, said Guy Cecala, publisher of Inside Mortgage Finance. “We’ve just gone through the biggest crisis in a lifetime, so underwriting is very tight right now,” he said. “It’s hard to get investor loans or loans for people who have credit issues, so there is an opportunity for private lenders to step in.” He named California’s Citadel Servicing Corp., which is lending around $100 million a month (12 times more than LendingHome), as a leading example. Citadel’s lending is called “non-prime” rather than “subprime.”
see more: http://www.sfchronicle.com/business/article/LendingHome-offers-investor-mortgages-at-steep-6227248.php
“It was in horrible condition, which is the way we like ’em,” said Jon Condrey, a house flipper. When Condrey bought the California rancher for $620,000 about 10 weeks ago, he used a new Internet marketplace called LendingHome.com to secure a $496,000 mortgage. He paid a steep interest rate: 10 percent.
But Condrey considered that decent for “hard money lending,” short-term loans where the value of the collateral outranks the borrower’s ability to repay. Condrey got the loan within days of filling out an online questionnaire and having his information verified. He’s now applying for LendingHome mortgages for two more fix-and-flip houses.
“Time is the enemy in our business,” said Condrey, who’s hustling to get the San Jose house on the market this week for $799,000. “LendingHome can move very, very quickly to get things done. They’ve automated a lot of the process.”
San Francisco’s LendingHome, which has raised $109.3 million in venture backing, including a $70 million round this month, says setting up shop on the Internet will make issuing home loans simpler, faster and more transparent.
Its target population is investors who can’t get regular mortgages — and therefore it charges a premium. Right now it lends to only investors in single-family homes. LendingHome offers two options: fix-and-flip bridge loans at rates ranging from 7 to 17 percent for terms of six months or one year, or rental-property loans with rates ranging from 5 to 9 percent for 30-year fixed loans or 5/1 adjustable rate mortgages. Borrowers generally must put down 30 percent.
“If you qualify for a traditional bank loan, we recommend that,” said CEO and co-founder Matt Humphrey. “But there aren’t a lot of options for investment properties; it’s very challenging to get a loan. And there are a lot of folks who can’t qualify: Maybe they haven’t had the same job for two years, or they had a short sale six years ago. We think they should have access to the (mortgage) market.”
Humphrey said they are not the type of risky subprime loans that caused the mortgage meltdown. “Subprime was folks who should not have been extended credit,” he said. “That’s not the case. We make sure the rental properties can cash-flow” (meaning they bring in enough rent to cover mortgage, taxes, insurance and other expenses).
After a financial crisis, lending always tightens up, said Guy Cecala, publisher of Inside Mortgage Finance. “We’ve just gone through the biggest crisis in a lifetime, so underwriting is very tight right now,” he said. “It’s hard to get investor loans or loans for people who have credit issues, so there is an opportunity for private lenders to step in.” He named California’s Citadel Servicing Corp., which is lending around $100 million a month (12 times more than LendingHome), as a leading example. Citadel’s lending is called “non-prime” rather than “subprime.”
see more: http://www.sfchronicle.com/business/article/LendingHome-offers-investor-mortgages-at-steep-6227248.php
Sunday, April 26, 2015
Department of Justice Sues Quicken Loans for Mortgage Improprieties
Last Friday the Detroit-based Quicken Loans sued the Department of Justice, alleging that the DOJ was pressuring it to pay a settlement for fraud the company says it didn’t commit. The feds have now made their suspicions official, charging Quicken with “improperly originating and underwriting mortgages” that the government ending up paying for after unqualified borrowers defaulted. Quicken founder Dan Gilbert is a major civic figure in Detroit who argues that his ventures—he also owns the city’s Greektown Casino—are helping rejuvenate the city. He also owns the Cleveland Cavaliers, through which he’s had a high-profile on-again-off-again relationship with NBA superstar LeBron James. From a Detroit News reporter:
Per the Wall Street Journal, the DOJ alleges that “Quicken pushed back on appraisals when a home received too low a valuation to qualify for a loan, and that Quicken’s own management team was concerned about some of its loan-underwriting practices.”
Quicken’s own lawsuit against the government, which mentions that the federal investigation began almost three years ago, charges that the DOJ’s claims are based on a small number of minor errors.
Per the Wall Street Journal, the DOJ alleges that “Quicken pushed back on appraisals when a home received too low a valuation to qualify for a loan, and that Quicken’s own management team was concerned about some of its loan-underwriting practices.”
Quicken’s own lawsuit against the government, which mentions that the federal investigation began almost three years ago, charges that the DOJ’s claims are based on a small number of minor errors.
source: http://www.slate.com/blogs/the_slatest/2015/04/23/quicken_loans_doj_mortgage_suit_dan_gilbert_company_accused_of_improper.html
Wednesday, April 22, 2015
Mortgage applications tick up in latest MBA survey
Mortgage applications increased 2.3% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending April 17, 2015.
The Market Composite Index, a measure of mortgage loan application volume, increased 2.3% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3% compared with the previous week. The Refinance Index increased 1% from the previous week. The seasonally adjusted Purchase Index increased 5% from one week earlier to its highest level since June 2013. The unadjusted Purchase Index increased 6% compared with the previous week and was 16% higher than the same week one year ago.
“Purchase applications increased for the fourth time in five weeks as we proceed further into the spring home buying season. Despite mortgage rates below four percent, refinance activity increased less than one% from the previous week,” said Mike Fratantoni, MBA’s Chief Economist.
The refinance share of mortgage activity decreased to 56% of total applications, its lowest level since October 2014, from 58% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.5% of total applications.
The FHA share of total applications increased to 13.6% from 13.5% the week prior. The VA share of total applications decreased to 11.0% from 11.1% the week prior. The USDA share of total applications remained unchanged at 0.8% from the week prior.
read more http://www.housingwire.com/articles/33637-mortgage-applications-tick-up-in-latest-mba-survey
The Market Composite Index, a measure of mortgage loan application volume, increased 2.3% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3% compared with the previous week. The Refinance Index increased 1% from the previous week. The seasonally adjusted Purchase Index increased 5% from one week earlier to its highest level since June 2013. The unadjusted Purchase Index increased 6% compared with the previous week and was 16% higher than the same week one year ago.
“Purchase applications increased for the fourth time in five weeks as we proceed further into the spring home buying season. Despite mortgage rates below four percent, refinance activity increased less than one% from the previous week,” said Mike Fratantoni, MBA’s Chief Economist.
The refinance share of mortgage activity decreased to 56% of total applications, its lowest level since October 2014, from 58% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.5% of total applications.
The FHA share of total applications increased to 13.6% from 13.5% the week prior. The VA share of total applications decreased to 11.0% from 11.1% the week prior. The USDA share of total applications remained unchanged at 0.8% from the week prior.
read more http://www.housingwire.com/articles/33637-mortgage-applications-tick-up-in-latest-mba-survey
Friday, April 17, 2015
It's about to get easier to buy a home in Detroit
A zero-down mortgage without closing costs, fees or a credit check probably sounds too good to be true, but it's about to become a reality for some Detroit home buyers.
Mayor Mike Duggan Thursday announced a new mortgage program to make it easier to finance a home in the city.
This comes a year after the city launched an online auction site to help fill Detroit's vacant homes.
Duggan said mortgages have been an obstacle to the site's success.
"Last year, 4,000 people in Detroit bought a single-family home, and only 400 were able to get a mortgage," he said. "For 90 percent of the houses sold in the city, the buyer had to pay cash."
The city is teaming up with the Neighborhood Assistance Corporation of America (NACA) and Bank of America to create the Detroit Neighborhood Initiative.
Through the program, potential homebuyers can apply for mortgages with rates between 2.75 and 3.5 percent, including funding for renovations.
Bruce Marks, founder and CEO of NACA, said the Detroit-exclusive program is "historic."
"Where else can you have a fully renovated house, paying less than $400 [per month]? It doesn't happen." Marks said. "Except it's going to happen for many, many Detroit homeowners."
Marks said anyone who has a steady income and doesn't already own a property can apply for the loans.
"This is one of those things that may sound too good to be true, but it's reality," he said. "[NACA] has a track record of getting this done in 40 different cities across the country."
see more: http://michiganradio.org/post/its-about-get-easier-buy-home-detroit
Mayor Mike Duggan Thursday announced a new mortgage program to make it easier to finance a home in the city.
This comes a year after the city launched an online auction site to help fill Detroit's vacant homes.
Duggan said mortgages have been an obstacle to the site's success.
"Last year, 4,000 people in Detroit bought a single-family home, and only 400 were able to get a mortgage," he said. "For 90 percent of the houses sold in the city, the buyer had to pay cash."
The city is teaming up with the Neighborhood Assistance Corporation of America (NACA) and Bank of America to create the Detroit Neighborhood Initiative.
Through the program, potential homebuyers can apply for mortgages with rates between 2.75 and 3.5 percent, including funding for renovations.
Bruce Marks, founder and CEO of NACA, said the Detroit-exclusive program is "historic."
"Where else can you have a fully renovated house, paying less than $400 [per month]? It doesn't happen." Marks said. "Except it's going to happen for many, many Detroit homeowners."
Marks said anyone who has a steady income and doesn't already own a property can apply for the loans.
"This is one of those things that may sound too good to be true, but it's reality," he said. "[NACA] has a track record of getting this done in 40 different cities across the country."
see more: http://michiganradio.org/post/its-about-get-easier-buy-home-detroit
Thursday, April 16, 2015
Mortgages become bright spot in big banks’ earnings report
Some of the nation’s biggest banks have received a lift from mortgage lending during the first quarter after sharply cutting back on production over the last few years.
JPMorgan Chase not only reported earnings of $5.9 billion but it also saw a spike in net income from mortgage banking during the first quarter. The company’s mortgage banking income rose to $326 million from $132 million in the first quarter of 2014.
JPMorgan’s mortgage banking net revenue was $1.7 billion, an increase of $151 million compared to the previous year, driven by lower mortgage servicing rights risk management losses, partially offset by lower servicing revenue, according to its earnings report.
One of the main drivers of the increase was a 45% year-over-year increase in mortgage originations. According to Chase, its’ mortgage originations rose from $17 million in 2014’s first quarter to $24.7 billion in 2015’s first quarter, which was also a 7% increase over 2014’s fourth quarter, which saw mortgage originations of $23 billion.
JPMorgan is the second biggest mortgage lender with 7% of 2014 loans, according to Inside Mortgage Finance. The bank announced in February that it had reduced its mortgage staffing in 2014 by 12,000 people. Additionally, JPMorgan’s annual mortgage business expenses have declined by $2.3 billion, or 30%.
see more at: http://www.mpamag.com/mortgage-originator/mortgages-become-bright-spot-in-big-banks-earnings-report-22099.aspx
Tuesday, April 14, 2015
What to do about mortgages as retirement draws near
Many people approaching retirement face choices on what to do about their home mortgages, especially if they are nearing a payoff or need to tap the equity for living expenses.
This story can be found in our Extra special edition about retirement in the April 18 edition of the StarNews.
Should I pay off the loan, or refinance at a lower rate, for instance? Is a reverse mortgage for me?
"One of the keys to a successful retirement is reducing your expense," said Ed Taylor of Taylor Financial in Wilmington. "If possible I like to see clients be near the end of their mortgage right around retirement."
If your mortgage balance is relatively low, paying it off may be the best choice.
"With a low mortgage balance the tax benefit is minimal, if any," he said. Toward the end of a mortgage's term most of the payment is toward principal, so there's little interest to claim as a deduction on tax returns.
But, Taylor points out, it depends on what assets you have and what sources of income you have available in retirement.
It might be tempting to tap into your home equity to help fund retirement, and one way to do that is a reverse mortgage.
A reverse mortgage is a loan that is available to people at least 62 years old who live in their home, and is used to release the equity in the property to the homeowner, in the form of monthly payments, a lump sum or a line of credit, according to National Association of Personal Financial Advisors. Repayment is deferred until the owner dies or leaves, or the home is sold.
In a reverse mortgage, the homeowner makes no payments and the debt on the property increases up to a pre-determined maximum amount.
see more at: http://www.starnewsonline.com/article/20150414/ARTICLES/150409837
Wednesday, April 8, 2015
Low mortgage rates could ensnare some Montrealers
“For Sale” signs are popping up around Quebec as the prime listing season for residential real estate gets under way.
For many people, that means taking on a mortgage at a time when households are carrying record levels of debt.
Household indebtedness in Canada has reached an all-time high of 163.3 per cent of after-tax income, with about two-thirds of that borrowing in the form of mortgage loans.
Rock-bottom interest rates are pushing many buyers into the market and helping to make home purchases more affordable than they’ve been in a decade.
With more potential buyers out there, lending institutions are competing fiercely for business, advertising a wide variety of deals such as introductory rate specials, cash-back offers and “employee pricing.” The presence of online lenders like First National Financial has added a new element of competition.
But there’s a downside to the story. Analysts warn that mortgage debt could be the next flashpoint for a recession in Canada, leaving consumers dangerously exposed to a downturn in the economy or to a rise in interest rates. Bank of Canada governor Steven Poloz calls it the single biggest risk to the economy.
Low rates have helped push up housing prices, potentially setting up consumers for a fall.
The Bank of Canada estimates that residential real estate is overvalued by anywhere between 10 and 30 per cent, depending on the local market. The International Monetary Fund chimed in with a recent call for the government to rein in the financial sector and spread mortgage risk more widely by reducing federal insurance coverage, thereby forcing private lenders to shoulder more of the risk.
It’s not all bad news. Canadians owe more but they’re also worth more. To the extent that house prices remain firm and there’s no crash landing, home prices have helped improve household balance sheets.
see more: http://montrealgazette.com/news/local-news/are-low-mortgage-rates-setting-us-up-for-a-fall?__lsa=1e28-257f
For many people, that means taking on a mortgage at a time when households are carrying record levels of debt.
Household indebtedness in Canada has reached an all-time high of 163.3 per cent of after-tax income, with about two-thirds of that borrowing in the form of mortgage loans.
Rock-bottom interest rates are pushing many buyers into the market and helping to make home purchases more affordable than they’ve been in a decade.
With more potential buyers out there, lending institutions are competing fiercely for business, advertising a wide variety of deals such as introductory rate specials, cash-back offers and “employee pricing.” The presence of online lenders like First National Financial has added a new element of competition.
But there’s a downside to the story. Analysts warn that mortgage debt could be the next flashpoint for a recession in Canada, leaving consumers dangerously exposed to a downturn in the economy or to a rise in interest rates. Bank of Canada governor Steven Poloz calls it the single biggest risk to the economy.
Low rates have helped push up housing prices, potentially setting up consumers for a fall.
The Bank of Canada estimates that residential real estate is overvalued by anywhere between 10 and 30 per cent, depending on the local market. The International Monetary Fund chimed in with a recent call for the government to rein in the financial sector and spread mortgage risk more widely by reducing federal insurance coverage, thereby forcing private lenders to shoulder more of the risk.
It’s not all bad news. Canadians owe more but they’re also worth more. To the extent that house prices remain firm and there’s no crash landing, home prices have helped improve household balance sheets.
see more: http://montrealgazette.com/news/local-news/are-low-mortgage-rates-setting-us-up-for-a-fall?__lsa=1e28-257f
Monday, April 6, 2015
Is now the time to refinance your mortgage?
Interest rates on home loans are historically low. That means now is the time to dig out your mortgage loan paperwork and consider whether refinancing is right for you.
Five years ago, the government started injecting trillions of dollars into the U.S. economy. Conventional wisdom suggested that rising interest rates were soon to follow. Some even predicted the collapse of the dollar and hyper-inflation. Instead, inflation is down, the dollar is the strongest it's been in 10 years, and interest rates have fallen to the lowest levels in decades.
When refinancing, you take out a new, lower-interest loan to pay off the old one. Here's how to find out whether it's a good option:
First, check the current interest rate on your mortgage loan. Let's assume you have a balance of $200,000, with monthly principal and interest payments of $1,013 at a rate of 4.5%.
Next, shop around. Call two or three mortgage brokers and find out the interest rate you can obtain on a new loan. They'll ask for your household income, the value of your house and the current balance on your mortgage. If you don't know how much your home is worth, contact your local property tax office for an assessed value.
Ask the brokers to give you the interest rate and payments on a mortgage similar to the number of years left on your current loan. Also ask about a shorter-term loan, which usually has a lower interest rate.
When shopping for a new mortgage, you may be tempted to reduce your payments even more by lengthening the term of your new loan. While the benefit is more spending money per month, you can end up paying more in interest. I strongly suggest obtaining a new mortgage that is equal to or less than the number of years remaining on your current loan.
Then, get an estimate of all other costs, including title insurance, an appraisal and a closing fee. Lenders sometimes charge "points," or origination fees, which are also part of your closing costs. One point equals 1% of the loan's value. Mortgages described as "no-cost" or "zero points" do not carry this cost, but the interest rate may be higher.
Now, calculate how long it will take to recover your refinancing costs. Getting a new loan makes financial sense if you are able to break even soon.
Let's assume you find out you can obtain a new loan with a similar term at 3.65%. The monthly payments are $915, and the closing costs are $1,900. The new payment is $98 less than your current $1,013. Divide the $1,900 closing cost by the $98 monthly savings. The answer, 19, is your break-even point, the number of months you need to keep the house to recoup the costs.
If your break-even point is 24 months or more, or if you intend to sell your home in the next two years, refinancing may not make sense. No one knows what curves life may toss us, and looking two years ahead is my comfort level.
read more: http://www.usatoday.com/story/money/personalfinance/2015/04/05/adviceiq-should-you-refinance/70851860/
Five years ago, the government started injecting trillions of dollars into the U.S. economy. Conventional wisdom suggested that rising interest rates were soon to follow. Some even predicted the collapse of the dollar and hyper-inflation. Instead, inflation is down, the dollar is the strongest it's been in 10 years, and interest rates have fallen to the lowest levels in decades.
When refinancing, you take out a new, lower-interest loan to pay off the old one. Here's how to find out whether it's a good option:
First, check the current interest rate on your mortgage loan. Let's assume you have a balance of $200,000, with monthly principal and interest payments of $1,013 at a rate of 4.5%.
Next, shop around. Call two or three mortgage brokers and find out the interest rate you can obtain on a new loan. They'll ask for your household income, the value of your house and the current balance on your mortgage. If you don't know how much your home is worth, contact your local property tax office for an assessed value.
Ask the brokers to give you the interest rate and payments on a mortgage similar to the number of years left on your current loan. Also ask about a shorter-term loan, which usually has a lower interest rate.
When shopping for a new mortgage, you may be tempted to reduce your payments even more by lengthening the term of your new loan. While the benefit is more spending money per month, you can end up paying more in interest. I strongly suggest obtaining a new mortgage that is equal to or less than the number of years remaining on your current loan.
Then, get an estimate of all other costs, including title insurance, an appraisal and a closing fee. Lenders sometimes charge "points," or origination fees, which are also part of your closing costs. One point equals 1% of the loan's value. Mortgages described as "no-cost" or "zero points" do not carry this cost, but the interest rate may be higher.
Now, calculate how long it will take to recover your refinancing costs. Getting a new loan makes financial sense if you are able to break even soon.
Let's assume you find out you can obtain a new loan with a similar term at 3.65%. The monthly payments are $915, and the closing costs are $1,900. The new payment is $98 less than your current $1,013. Divide the $1,900 closing cost by the $98 monthly savings. The answer, 19, is your break-even point, the number of months you need to keep the house to recoup the costs.
If your break-even point is 24 months or more, or if you intend to sell your home in the next two years, refinancing may not make sense. No one knows what curves life may toss us, and looking two years ahead is my comfort level.
read more: http://www.usatoday.com/story/money/personalfinance/2015/04/05/adviceiq-should-you-refinance/70851860/
Thursday, April 2, 2015
Mortgage rates nudge slightly higher
Mortgage rates barely increased this week. That did not dissuade borrowers from filling out purchase and refinance applications. The uptick may not last, though. Recent economic data may persuade the Federal Reserve to hold off on rate increases even longer.
"There is no fear of the Fed right now. There is no real worry that rates should be rising in any meaningful way," says Joel Naroff, president of Naroff Economic Advisors. "But if, on Friday, we get better-than-expected job growth and more importantly, a rebound in wage gains, that will put everyone on notice."
Borrowers at the door
The slight increase in mortgage rates this week comes as more borrowers shop for mortgages in hopes of buying homes or refinancing their current loans. The volume of mortgage applications last week rose 4.6 percent from the previous week, according to the Mortgage Bankers Association. Purchase applications were up 6 percent, and refinances grew 4 percent. That was the second straight week of big increases.
"We have been so busy and I expect it to get busier with the warmer weather as we head into April," says John Stearns, a senior mortgage banker with American Fidelity Mortgage in Wisconsin.
Mortgage rates this week
2015%30-year fixedJanFebMar3.703.803.904.00
30 year fixed rate mortgage -- 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 3.82 percent from 3.8 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.54 percent. Four weeks ago, it was 3.93 percent. The mortgages in this week's survey had an average total of 0.27 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.14 percent. This week's rate is 0.32 percentage points lower than that 52-week average.
The benchmark 15-year fixed-rate mortgage rose to 3.06 percent from 3.04 percent.
The benchmark 5/1 adjustable-rate mortgage fell to 3.1 percent from 3.14 percent.
The benchmark 30-year fixed-rate jumbo rose to 3.93 percent from 3.92 percent.
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-040215.aspx
"There is no fear of the Fed right now. There is no real worry that rates should be rising in any meaningful way," says Joel Naroff, president of Naroff Economic Advisors. "But if, on Friday, we get better-than-expected job growth and more importantly, a rebound in wage gains, that will put everyone on notice."
Borrowers at the door
The slight increase in mortgage rates this week comes as more borrowers shop for mortgages in hopes of buying homes or refinancing their current loans. The volume of mortgage applications last week rose 4.6 percent from the previous week, according to the Mortgage Bankers Association. Purchase applications were up 6 percent, and refinances grew 4 percent. That was the second straight week of big increases.
"We have been so busy and I expect it to get busier with the warmer weather as we head into April," says John Stearns, a senior mortgage banker with American Fidelity Mortgage in Wisconsin.
Mortgage rates this week
2015%30-year fixedJanFebMar3.703.803.904.00
30 year fixed rate mortgage -- 3 month trend
The benchmark 30-year fixed-rate mortgage rose to 3.82 percent from 3.8 percent last week, according to the Bankrate.com national survey of large lenders. One year ago, that rate was 4.54 percent. Four weeks ago, it was 3.93 percent. The mortgages in this week's survey had an average total of 0.27 discount and origination points. Over the past 52 weeks, the 30-year fixed has averaged 4.14 percent. This week's rate is 0.32 percentage points lower than that 52-week average.
The benchmark 15-year fixed-rate mortgage rose to 3.06 percent from 3.04 percent.
The benchmark 5/1 adjustable-rate mortgage fell to 3.1 percent from 3.14 percent.
The benchmark 30-year fixed-rate jumbo rose to 3.93 percent from 3.92 percent.
Read more: http://www.bankrate.com/finance/mortgages/mortgage-analysis-040215.aspx
Tuesday, March 31, 2015
Prepay Your Mortgage
The pressure of debt repayment lies heavily on Americans in midlife and later. Surprisingly, it's not consumer debt. What's squeezing the budget as families enter retirement today is primarily mortgage debt.
Payments on home loans chewed up 7 percent of income on average in 2013 for people 55 and older, the Employee Benefit Research Institute (EBRI) reports. That's up 35 percent since 1992, when the boomers' grandparents retired. Back then, only 24 percent of this age group still carried mortgages, EBRI's Craig Copeland says. Today 39 percent do, and in much higher amounts.
Having a high level of mortgage debt, relative to the size of your income, gets especially risky when your paycheck stops and you have to make monthly payments out of the money you've saved. That's why so many preretirees try to pay off their mortgages in advance. How easy that is to do depends not only on the size of your income but also on the type of loan you have.
Prepaying a fixed-rate mortgage is pretty simple. All you have to do is add enough extra money to each monthly payment to wipe out the loan by the year that you want to retire. As an example, say that you took a $300,000 loan for 30 years at a fixed interest rate of 4 percent. The loan has 20 more years to run. If you want to retire mortgage free 13 years from now, you can do it by paying an extra $500 a month. To test various prepayment schedules, use AARP's mortgage payoff calculator or ones at mtgprofessor.com or bankrate.com.
When your mortgage carries an adjustable interest rate, however, your prepayments have to be adjusted, too, says Jack Guttentag, founder of mtgprofessor.com. A fixed amount, such as $500 a month, will reduce the size of your loan. But every time the interest rate changes, the lender will stretch out your remaining payments over the loan's original, 30-year term. Your monthly payments will go down but you'll still be in debt when you retire. To burn the mortgage earlier, you will have to increase your prepayments after every rate adjustment. Pay the $500 you planned on plus enough to make up for the amount by which your scheduled mortgage payments dropped.
see more at: http://www.aarp.org/money/credit-loans-debt/info-2015/prepay-mortgage-for-retirement.html
Payments on home loans chewed up 7 percent of income on average in 2013 for people 55 and older, the Employee Benefit Research Institute (EBRI) reports. That's up 35 percent since 1992, when the boomers' grandparents retired. Back then, only 24 percent of this age group still carried mortgages, EBRI's Craig Copeland says. Today 39 percent do, and in much higher amounts.
Having a high level of mortgage debt, relative to the size of your income, gets especially risky when your paycheck stops and you have to make monthly payments out of the money you've saved. That's why so many preretirees try to pay off their mortgages in advance. How easy that is to do depends not only on the size of your income but also on the type of loan you have.
Prepaying a fixed-rate mortgage is pretty simple. All you have to do is add enough extra money to each monthly payment to wipe out the loan by the year that you want to retire. As an example, say that you took a $300,000 loan for 30 years at a fixed interest rate of 4 percent. The loan has 20 more years to run. If you want to retire mortgage free 13 years from now, you can do it by paying an extra $500 a month. To test various prepayment schedules, use AARP's mortgage payoff calculator or ones at mtgprofessor.com or bankrate.com.
When your mortgage carries an adjustable interest rate, however, your prepayments have to be adjusted, too, says Jack Guttentag, founder of mtgprofessor.com. A fixed amount, such as $500 a month, will reduce the size of your loan. But every time the interest rate changes, the lender will stretch out your remaining payments over the loan's original, 30-year term. Your monthly payments will go down but you'll still be in debt when you retire. To burn the mortgage earlier, you will have to increase your prepayments after every rate adjustment. Pay the $500 you planned on plus enough to make up for the amount by which your scheduled mortgage payments dropped.
see more at: http://www.aarp.org/money/credit-loans-debt/info-2015/prepay-mortgage-for-retirement.html
Friday, March 27, 2015
Serena to fight through knee pain at Miami
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Agence France Presse
MIAMI: World No. 1 Serena Williams is prepared to fight through pain to get onto the court Friday and begin defending her title at the ATP and WTA Miami Open.
The 19-time Grand Slam singles champion, forced out before her Indian Wells semifinal last week against eventual champion Simona Halep, said Wednesday that she expects to “manage pain” when she opens in the second round against Romanian Monica Niculescu.
“I’m just managing where I am right now,” Williams said. “Just trying to stay out of as much pain as possible and see what happens. I know I’m going to have to manage the pain.
“I think if I’m in that mental state, OK, you might be in a little pain. You just have to figure out the best way around it.”
The Niculescu match is a repeat of the second round a fortnight ago in Indian Wells, which Williams won in two difficult sets, and will probably bring her big pain test.
“I don’t want to put too much pressure on it before,” she said. “I’m just here in Miami, so I’m just going to go for it and see what happens.”
The top seed will be bidding for a record eighth trophy at her home event, capturing her seventh last year when she beat China’s Li Na in the final.
“I definitely don’t have low expectations,” Williams said. “I just definitely expect to do the best that I can.
“Whether that’s winning or just stepping out on the court, that’s what I’m going to have to do. I don’t feel any pressure because I have won this title a few times, so I feel good about being here.
“When I hit on the court today, I just feel so good out here in Miami. I’m just looking forward to just enjoying myself this year more than anything,” she said.
The 33-year-old American admitted that she had not imagined being able to play Miami after her knee problem, but added: “It takes a tremendous amount for me to stop. I don’t know if that’s a good thing or that’s a bad thing, but I think I will be OK.”
With all seeds on the men’s and women’s draws given byes, first round matches for the remainder continued, with two-time winner Victoria Azarenka strengthening her 2015 injury comeback with a defeat of Spain’s Silvia Soler-Espinosa 6-1, 6-3.
Azaranka missed almost all of 2014 with foot injuries but made this year’s Doha final.
“It has been unfortunate the last couple of years for me, but I love this tournament,” said the 2009 and 2011 champion. “I’m just happy to play anywhere I can.
“Obviously coming back to a place where I have a lot of great memories, it’s always nice. I’m just looking forward to building my momentum here again and try to play as many matches as possible, but really to improve my level.”
Swiss teenager Belinda Bencic advanced over veteran Daniela Hantuchova 6-1, 7-6 (7/5) and Briton Heather Watson defeated Russian Evgeniya Rodina 3-6, 6-1, 7-5.
Americans Christine McHale and Alison Riske both advanced, joining Pauline Parmentier in the second round after the French player beat Kiki Bertens 4-6, 6-2, 6-3.
read more: http://www.dailystar.com.lb/Sports/Tennis/2015/Mar-27/292262-serena-to-fight-through-knee-pain-at-miami.ashx
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