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

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.

source: http://www.slate.com/blogs/the_slatest/2015/04/23/quicken_loans_doj_mortgage_suit_dan_gilbert_company_accused_of_improper.html

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

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

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

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

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

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/

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