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
Friday, July 31, 2015
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
Subscribe to:
Posts (Atom)