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/
Showing posts with label mortgages. Show all posts
Showing posts with label mortgages. Show all posts
Monday, August 17, 2015
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/
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
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
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
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/
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/
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
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
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
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
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
Monday, February 23, 2015
Requirements for mortgages are easing
Nation’s Housing
WASHINGTON — A closely watched index that tracks mortgage credit availability — lender requirements on credit scores, down payments and other key loan terms — has some good news for potential homebuyers: Things are finally loosening up.
After years of progressively tighter rules on borrower eligibility in the wake of the housing bust, banks and mortgage companies have begun modestly easing their requirements and even expanding the types of mortgages they offer.
The Mortgage Bankers Association’s latest credit availability index reported improvements in all four of its loan categories during January.
The improvements mainly reflect positive lender responses to government efforts to ease regulations and improve affordability in the housing market — all of which means an improved environment for mortgage shoppers.
Among the initiatives: giant investor Fannie Mae’s resumption of purchases of conventional mortgages with as little as 3 percent down. Freddie Mac, another major investor, is planning to begin similar 3 percent down loan purchases for mortgages closed on or after March 23.
According to Mike Fratantoni, chief economist for the mortgage banker’s group, “roughly 40 percent of investors” already have begun offering the Fannie 3-percent-down program. The guidelines for the Freddie Mac program are in lenders’ hands and there’s likely to be a strong rollout for it as well.
Also contributing to better affordability: the Federal Housing Administration’s reduction late last month of its costly upfront mortgage insurance premiums, a move that could expand eligibility for home purchases to thousands of buyers, according to industry estimates.
Virtually all lenders who work with the FHA program began offering the lower mortgage insurance premiums when the reduction took effect in late January. FHA insures loans with down payments as low as 3.5 percent.
read more: http://www.seattletimes.com/business/requirements-for-mortgages-are-easing/
WASHINGTON — A closely watched index that tracks mortgage credit availability — lender requirements on credit scores, down payments and other key loan terms — has some good news for potential homebuyers: Things are finally loosening up.
After years of progressively tighter rules on borrower eligibility in the wake of the housing bust, banks and mortgage companies have begun modestly easing their requirements and even expanding the types of mortgages they offer.
The Mortgage Bankers Association’s latest credit availability index reported improvements in all four of its loan categories during January.
The improvements mainly reflect positive lender responses to government efforts to ease regulations and improve affordability in the housing market — all of which means an improved environment for mortgage shoppers.
Among the initiatives: giant investor Fannie Mae’s resumption of purchases of conventional mortgages with as little as 3 percent down. Freddie Mac, another major investor, is planning to begin similar 3 percent down loan purchases for mortgages closed on or after March 23.
According to Mike Fratantoni, chief economist for the mortgage banker’s group, “roughly 40 percent of investors” already have begun offering the Fannie 3-percent-down program. The guidelines for the Freddie Mac program are in lenders’ hands and there’s likely to be a strong rollout for it as well.
Also contributing to better affordability: the Federal Housing Administration’s reduction late last month of its costly upfront mortgage insurance premiums, a move that could expand eligibility for home purchases to thousands of buyers, according to industry estimates.
Virtually all lenders who work with the FHA program began offering the lower mortgage insurance premiums when the reduction took effect in late January. FHA insures loans with down payments as low as 3.5 percent.
read more: http://www.seattletimes.com/business/requirements-for-mortgages-are-easing/
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