Morgan Stanley Housing Report Sees Restrictive Lending Limiting Owner-Occupied Purchases, Rental Costs Rising As Home “Effective Home Ownership Rate” May Drop Below 60%

8 08 2011

http://renovationlendinginstitute.com/

  • There are about 2.2 million vacant homes available for sale in the U.S.
  • 7.5 million homes are facing foreclosure that would add to the excess housing supply
  • This will continue to cause home values to drop further
  • The homeownership rate fell to 65.9 percent as of June 30, the lowest level in 13 years
  • Home ownership peaked at 69.2 percent in June 2004, the Commerce Department reported July 29
  • The effective homeownership rate would drop below 60 percent if delinquent buyers who are expected to lose their houses to foreclosure are removed from the total
  • “Mortgage credit remains tight, making home purchases more difficult, while rental demand is accelerating, causing rents to rise quickly,”
  • “If nothing is done soon, we will find ourselves in a situation where owner-occupied housing becomes unobtainable due to lack of credit, while rental housing becomes unobtainable due to rising costs.”

For more:  http://www.bloomberg.com/news/2011-08-08/bulk-buying-would-ease-u-s-housing-crisis-morgan-stanley-analysts-say.html


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Categories : Delinquencies, Economic Statistics, Home Sales, Home Values, Housing Market, Mortgage Industry, Purchases, Short Sales, Statistics, Underwriting

Mortgage Loan Underwriting: Research Demonstrates That “Sound Underwriting And Dcoumentation”, Not Higher Down Payments, Is Key To Lower Foreclosure Rates

4 08 2011

For more:  http://www.realtor.org/topics/qrm?cid=WR08022011:25814&ed_rid=602394

 


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Categories : Economic Statistics, Fannie Mae, Federal Government, FHA, Financing, Foreclosures, Freddie Mac, Housing Market, Mortgage Industry, Mortgage Insurance, Statistics, Underwriting

30-Year Fixed Mortgage Rates Move Below 4% For First Time As 10-Year Treasury Yields Drop To 2.62% On Weakening Economy

3 08 2011

http://renovationlendinginstitute.com/

  • The yield on the 10-year Treasury note plunged to 2.62% on Tuesday — down from more than 3.7% in February
  • Mortgage rates followed and reached their lowest point since November 2010, according to the real estate website Zillow
  • 30-year fixed-rate loans average 4.5% with no upfront costs
  • The 30-year fixed is 4.125% with 1 point and paying upfront fees
  • For the first time 3.875% on 30-year fixed loans is available for 3 points and paying upfront points and fees

For more:  http://latimesblogs.latimes.com/money_co/2011/08/anyone-want-a-30-year-fixed-rate-mortgage-for-less-than-4-home-loans-at-that-seemingly-hallucinatory-rate-were-out-there-t.html


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Categories : Economic Statistics, Financing, Housing Market, Mortgage Industry, Rates, Statistics

Freddie Mac Reports That “Cash Out Refinances” Fall To 23% Of Total In 2nd Quarter 2011, Down 50% From Historical Average; “Rate-And-Term” Refinances Reduce Note Rates By Average 1%

2 08 2011

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  • In the second quarter of 2011, 77 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table. Of these borrowers, 51 percent maintained about the same loan amount, and 26 percent of refinancing homeowners reduced their principal balance.
  • “Cash-out” borrowers, those that increased their loan balance by at least five percent, represented 23 percent of all refinance loans; the average cash-out share during the 1985 to 2010 period was 46 percent.
  • The median interest rate reduction for a 30-year fixed-rate mortgage was about 1 percentage point, or a savings of about 18 percent in interest rate. Over the first year of the refinance loan life, these borrowers will save over $1,550 in interest payments on a $200,000 loan.
  • The net dollars of home equity converted to cash as part of a refinance of a conventional, prime-credit home mortgage was an estimated $7.5 billion in the U.S. during the second quarter, similar to the first quarter level but substantially less than during the peak cash-out refinance volume of $83.7 billion during the second quarter of 2006. Taken together over the first two quarters of 2011 and adjusting for inflation, the amount of equity cashed-out was at the lowest level in 15 years, since the second half of 1996.
  • Among the refinanced loans in Freddie Mac’s analysis, the median value change of the collateral property was a negative 7 percent over the median prior loan life of five years. In comparison, the Freddie Mac House Price Index shows about a 25 percent decline in its U.S. series between March 2006 and March 2011. Thus, borrowers who refinanced in the second quarter owned homes that had held their value better than the average home, or may reflect value-enhancing improvements that owners had made to their homes during the intervening years.

Quotes

Attributed to Frank Nothaft, Freddie Mac vice president and chief economist:

  • “This is primarily a ‘rate-and-term’ market, meaning that the typical homeowner is looking to cut their interest rate or shorten their loan term. More than three-in-four borrowers are keeping their loan balance about the same or reducing their loan balance when they refinance.
  • “Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 50 years to lock in interest savings. Over the first half of 2011, fixed-rate mortgage rates hit a low during June, with 30-year product averaging 4.50 percent and 15-year averaging 3.68 percent over the last four weeks of June, according to our Primary Mortgage Market Survey.”

For more:  http://freddiemac.mediaroom.com/index.php?s=12329&item=48719


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Categories : Financing, Freddie Mac, Housing Market, Mortgage Industry, Refinance

Mortgage Industry Credit Reports: 2nd Quarter 2011 Survey Of Credit Risk Managers Expects Mortgage And Home Equity Delinquencies To Rise Along With Interest Rates In The Next Six Months

13 07 2011

CLICK ON "SECOND QUARTER 2011" TO VIEW SURVEY


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Categories : Credit Reports, Delinquencies, FICO's, Financing, Mortgage Industry, Statistics, Underwriting

Mortgage Loan Limits Are Set To Move Lower After Sept. 30, 2011 As Several National Lenders Stop Accepting Applications Exceeding New Limits; California (60%) Is Most Affected Market

8 07 2011

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Had the lower limits been in place last year, Fannie and Freddie would have backed 50,000 fewer loans, according to the Federal Housing Finance Agency. The bulk of the affected loans —about 60%—are in California, with another 20% in Massachusetts, New York and New Jersey.

Parts of the country with less expensive homes also would be affected; their limits are scheduled to fall as low as $417,000 for Fannie and Freddie loans and as low as $271,050 for FHA loans.

In anticipation of the expiration of current loan limits on Sept. 30, 2011, Bank of America has decided to stop accepting conventional and government applications for loan amounts that will exceed the permanent loan amounts.  The deadline to submit loan applications was July 1.

According to an email from Bank of America, conventional loans that exceed the permanent loan limits will now be required to use non-conforming programs.

Barring Congressional action, the maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum.  The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee.  Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.

For more:  www.car.org


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Categories : California, Fannie Mae, Federal Government, FHA, Financing, Freddie Mac, Housing Market, Mortgage Industry, Purchases, Refinance, Underwriting

Mortgage Rates Have Moved Lower Over Last Four Months With 30-Year Fixed At 4.58%; Purchase Loan Application Volume Remains At Lowest Levels In 10 Years

2 06 2011

The latest data is showing that the average rate for a 30 year fixed rate mortgage declined 11 basis points to 4.58% since last week while the purchase application volume went flat and the refinance application volume declined 5.7% over the same period. Rates now appear to be trending down having, more of less, declined continually for the last four months.

Purchase application volume remains near the lowest level seen in well over a decade while refinance activity continues to slow.


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Categories : Financing, Mortgage Industry, Purchases, Rates

Freddie Mac Reports That 30-Year Fixed Mortgage Rates Average 4.60% For Week Ending May 26, A New Low For 2011

27 05 2011

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  • 30-year fixed-rate mortgage (FRM) averaged 4.60 percent with an average 0.7 point for the week ending May 26, 2011, down from last week when it averaged 4.61 percent. Last year at this time, the 30-year FRM averaged 4.84 percent.  
  • 15-year FRM this week averaged 3.78 percent with an average 0.7 point, down from last week when it averaged 3.80 percent. A year ago at this time, the 15-year FRM averaged 4.21 percent.  
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage(ARM) averaged 3.41 percent this week, with an average 0.5 point, down from last week when it averaged 3.48 percent. A year ago, the 5-year ARM averaged 3.97 percent.
  • 1-year Treasury-indexed ARM averaged 3.11 percent this week with an average 0.5 point, down from last week when it averaged 3.15 percent. At this time last year, the 1-year ARM averaged 3.95 percent.  

 Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

  • “Fixed mortgage rates eased slightly for the sixth consecutive week amid reports of slower economic activity. The index of leading indicators fell 0.3 percent in April and represented the first monthly decline since June 2010. In addition, the Federal Reserve banks reported less business and manufacturing activity in Philadelphia, Chicago and Richmond.
  • “U.S. house prices indexes may be nearing a bottom soon. On a national basis, prices fell 0.3 percent between February and March, which was the smallest decline since November 2009, according to the Federal Housing Finance Agency. In addition, four of the nine Census Regions exhibited positive growth, compared to none in February. Separately, the Mortgage Bankers Association reported a further reduction in the serious delinquency rate (90 or more days plus foreclosures) in the first quarter, which stood at the lowest reading since the second quarter of 2009.”

For more:  http://freddiemac.mediaroom.com/index.php?s=12329&item=40283


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Freddie Mac Report On Home Mortgages Finds 95% Of Refinance Loans Are Fixed-Rate Loans With 34% Choosing 15- Or 20-Year Programs

18 05 2011

 

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  • Fixed-rate loans accounted for more than 95 percent of refinance loans in 1st Quarter 2011
  • 34% chose a 15- or 20-year loan, the highest such share since the first quarter of 2004
  • 84% of borrowers who had a hybrid ARM chose to refinance into a fixed-rate product during the 1st Quarter
  • “Fixed mortgage rates averaged 4.85% for 30-year loans and 4.12% for 15-year loans, well below long-term averages
  • The Bureau of Economic Analysis has estimated that 6% was the average rate for SFR’s at the end of 2010

For more:  http://freddiemac.mediaroom.com/index.php?s=12329&item=39019


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Categories : Freddie Mac, Mortgage Industry, Rates, Refinance, Statistics, Underwriting

FHA Underwriting Standards Will See Renewed Focus On The “3 C’s Of Mortgage Lending”: A Borrower’s Credit, Collateral And Capacity

24 04 2011

http://renovationlendinginstitute.com/

“…Steps taken to hone our underwriting standards in the past year have allowed FHA to materially strengthen its balance sheet and to further strengthen its capital reserves…” 

 Written Testimony of Bob Ryan, Acting Assistant Secretary for Housing and FHA Commissioner
U.S. Department of Housing and Urban Development (HUD)

  • The importance of strong underwriting standards and heightened due diligence will remain paramount
  • FHA will continue to focus on the “3 C’s” of lending: credit, collateral and capacity
  • A borrower’s capacity to repay a loan, a buyer’s credit experience, the value of the property being financed, and the type of mortgage
  • The borrower’s credit history includes scanning for foreclosures, bankruptcies, liens and/or judgments, mortgage delinquencies, credit delinquencies, repossessions, collections, or charge-offs. It means verifying credit accounts, their type, age, limits, usage and the status of revolving accounts
  •  The collateral means an accurate and objective appraisal of the property and assessing the down payment structure (LTV)
  • The borrower’s capacity means verifying monthly housing expense-to-income ratio or monthly debt payment-to-income ratio, confirming employment and income, identifying cash reserves and weighing that against the characteristics and purpose of the loan type considered
  •  The above-mentioned items will allow a lender to properly identify responsible borrowers that can achieve sustainable mortgages
  • Strong underwriting has been at the core of FHA’s success. Because FHA insures lenders against losses that may result in the event of a borrower default, that commitment is made under the condition that lenders are required to abide by extensive documentation and underwriting guidelines to originate sustainable mortgages
  • Lenders are also required to provide loss mitigation opportunities to help borrowers avoid default or foreclosure

For more:  http://portal.hud.gov/hudportal/HUD?src=/press/testimonies/2011/2011-04-14


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Categories : 203k, Federal Government, FHA, HUD, Mortgage Industry, Purchases, Underwriting

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