New Federal Reserve Proposal Seeks To Tighted Mortgage Underwriting Standards To Insure Borrowers “Have The Ability To Repay Their Mortgages” With Legal Recourse Against Lenders If Compliance Not Met

19 04 2011

 

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  • A Federal Reserve proposal released today would require lenders to insure that borrowers have the ability to repay their mortgages
  • The rule will tighten lending standards and combat home lending abuses
  • Minimum underwriting standards for most mortgages will be established with lenders open to lawsuits if compliance isn’t met
  • If mortgages are “Qalified Mortgages” the law would provide protections from this type of liability
  • The Fed is seeking comment on two possible ways of defining a qualified mortgage:
  1. The first scenario the loan could not include interest-only payments, a balloon payment and regular payments could not result in the principle of the loan increasing
  2. The second scenario would have the loans meet all the standards laid out under the first option and meet additional requirements:
  • The lender would verify a borrower’s employment status and debt obligations
  • Mortgage originators who serve rural and underserved areas would be allowed to give out loans with balloon payments

For more:  http://finance.yahoo.com/news/Fed-unveils-proposal-on-rb-3706242456.html?x=0&sec=topStories&pos=main&asset=&ccode=


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Categories : Federal Government, FHA, Financing, Mortgage Industry, Underwriting

Lower Down Payment Mortgage Programs Face Uncertainty With “20% Down Rule” Proposed By Regulators As Obama Administration Looks To Phase-Out Fannie Mae And Freddie Mac And Shrink FHA; Senators Object To New Rule

12 04 2011

 

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  • Legislation enacted last year required banks that pool mortgages and sell them as securities to retain at least a 5 percent
  • The banks were to have some “skin in the game” instead of selling off the loans and hence avoiding losses should the loans go bad
  • A group of senators, led by Sens. Johnny Isakson (R-Ga.), Mary Landrieu (D-La.) and Kay Hagan (D-N.C.), successfully pushed to carve out exceptions for certain types of relatively safe mortgages
  • Regulators were to determine which loans should be exempt
  • Proposals that regulators unveiled last month surprised these lawmakers
  • Under the plan, mortgages with a 20 percent down payment were deemed safe
  • Loans with smaller down payments would become more expensive to borrowers in the form of higher interest rates and fees
  • But lawmakers debated but intentionally rejected imposing a minimum down payment requirement for fear of locking millions of creditworthy borrowers out of the housing market
  • Congress instructed the regulators to consider other factors such as a borrower’s debt, his or her ability to repay the loan, and the features of the loan itself when deciding which loans to exclude from the risk-retention provision
  • The 20-percent-down issue proposed by regulators strayed from the intent of the law said Sen. Hagan
  • Private mortgage insurance is required if borrowers put down less than 20 percent
  • The senators said loans with that kind of insurance result in lower losses for lenders and fewer foreclosures than similar loans that lack insurance
  • “I was definitely surprised and disappointed,” said Hagan, who passed the message along to Treasury Department officials in a recent meeting
  • Last year, six out of 10 borrowers in the United States put less than 20 percent down, according to LPS Applied Analytics
  • The agencies will be collecting public comment on the proposal through June
  • Low-down-payment loans would still be available without the higher rates and fees through Fannie Mae, Freddie Mac and FHA
  • But the Obama administration has said it wants to eliminate Fannie and Freddie eventually and to shrink the FHA’s role

For more:  http://www.washingtonpost.com/business/economy/senators-say-down-payment-requirement-not-their-intent-for-housing-finance-law/2011/04/11/AFzPU1MD_story.html


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Categories : 203k, Fannie Mae, Federal Government, Financing, First-Time Homebuyer, Freddie Mac, Homes, Housing Market, HUD, Mortgage Industry, Mortgage Insurance, Purchases, Underwriting

The Effects Of Strict Mortgage Underwriting Standards Reveal 25% Of Mortgage Applicants Are Turned Down; 30% Of Potential Homebuyers Have Stayed Out Of The Market

6 04 2011

 

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  • 25% of applicants for mortgages are turned down, according to the Federal Reserve
  • The average credit score on Fannie Mae and Freddie Mac loans have risen to 760 from 720 a few years ago
  • FHA loans have seen the average credit score rise from 660 to 700
  • Loans made to borrowers with sub-620 scores are almost nonexistent
  • The median down payment for purchases is has risen to about 15% from almost zero during the housing boom
  • Industry insiders say all these factors have reduced the pool of buyers, lowering demand for homes and hurting prices
  • Anthony Sanders, director of Real Estate Entrepreneurship at George Mason University, speculates the tougher credit standards may have stripped as much as 30% of the buyers off the market, compared with normal times
  • Lawrence Yun, chief economist for the National Association of Realtors, has stated that many potential buyers don’t even apply for mortgage loans assuming they can’t get one
  • Experts fear the long-term impact of abandoning the field to mostly private companies will lower demand for new and existing homes for many years 

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Categories : 203k, Fannie Mae, Federal Government, FHA, Financing, Freddie Mac, Mortgage Industry, Purchases, Underwriting

Skip Schenker Of The Renovation Lending Institute Talks About The Gradual Elimination Of 30-Year Fixed Rate Mortgages (Video)

28 03 2011

CLICK ON PICTURE TO WATCH VIDEO

Skip Schenker of the Renovation Lending Institute and iMortgage talks about the future of the 30-year fixed rate mortgage. Within three years, with the phasing out of Fannie Mae and Freddie Mac, the 30-year loan may be replaced by Adjustable Rate Mortgages (ARMs). This is an additional reason to consider purchasing or refinancing now to lock in a low, long-term rate.


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Categories : 203k, Fannie Mae, FHA, Financing, First-Time Homebuyer, Freddie Mac, Mortgage Industry, Purchases, The 203k Guy, Videos

Adjustable Rate Mortgages (ARM) Will Become Mortgage Of Choice If 30-Year Fixed Rate Mortgages Become Less Competitive

22 03 2011

 

  • 70% of all mortgages issued during the boom were ARMs
  • ARMs totalled just 3% of the market in 2009; currently they make up 5%
  • Freddie Mac predicts 10% by December
  • ARMs are a great bargain right now with the most common ARM loan currently having a rate of 3.5%
  • A $200,000 mortgage would have monthly ARM payment at 3.5% of $898 compared with $1,074 for a 30-year fixed-rate loan at 5%
  • That’s a $10,560 difference after five years, when the ARM would adjust

For more:  http://finance.yahoo.com/news/Adjustable-rate-mortgages-are-cnnm-4055253383.html?x=0&sec=topStories&pos=5&asset=&ccode=


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Categories : Fannie Mae, FHA, First-Time Homebuyer, Freddie Mac, Jumbo Loans, Mortgage Industry, Rates

Total # Of US Mortgages In Foreclosure “Pre-Sale Inventory” Increased 7.4% In Past Year Ending February 28, 2011 To 2,196,000 Loans (4.15% Of Total Loans)

21 03 2011

Lender Processing Services released a “first look” at February 2011 month-end mortgage performance statistics derived from its loan-level database of nearly 40 million mortgage loans.

  • Total U.S foreclosure pre-sale inventory rate: 4.15%

  • Month-over-month change in foreclosure presale inventory rate: -0.2%

  • Year-over-year change in foreclosure presale inventory rate: 7.4%

  • Number of properties in foreclosure pre-sale inventory: (B)  2,196,000

  • Number of properties that are 30 or more days delinquent or in foreclosure:  (A+B)  6,856,000

For more:  http://www.lpsvcs.com/NewsRoom/Pages/20110321.aspx


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Categories : Defaults, Delinquencies, Financing, Foreclosures, Homes, Mortgage Industry, The 203k Guy

Mortgage Industry Might See Gradual Elimination Of “30-Year Fixed Rate” Mortgages In Favor Of “Adjustable-Rate Mortgages” Under Current Proposals

16 03 2011

 

  • Experts predict a three percentage point rate rise in the 30-year fixed rate mortgage
  • The 30-year fixed conforming rate averages about 5% and would move to  8% increasing the monthly payment for every $100,000 borrowed from $537 to $733
  • Adjustable-rate loans would be much more competitive
  • Down payments would increase to a minumum 20% throughout the marketplace
  • This would decrease the risk of defaults 
  • FHA would continue to offer low-down payment loans to certain First-Time Buyers

For more: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2737


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Categories : Fannie Mae, Financing, Mortgage Industry, Purchases

Jumbo Mortgages In The Future Will Require Higher Down Payments And Credit Scores With Loan Terms Of Five And Seven Years Becoming The Norm

8 03 2011

 

  • Jumbo loans represent about 11% of the housing market (more than $45 billion in the 3rd quarter of 2010)
  • This is up from a low of 7% in 2008
  • They average about 12% all mortgage historically
  • Fannie Mae, Freddie Mac and FHA secure more than 50% of Jumbo Mortgages
  • Homebuyers wanting Jumbo Loans need larger down-payments of 20-40%  and higher credit scores, at or near 740
  • Five- to seven-year mortgages, amortized over 30 years, will become the preferred Jumbo program
  • The Fannie, Freddie and FHA limit will fall to $625,000 in October 2011
  • But expect the limit to fall further to $417,000 in next 2 years for most of the country

For more:  http://www.marketwatch.com/story/fannie-should-leave-jumbo-loans-alone-2011-03-07


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Categories : Fannie Mae, FHA, Financing, Freddie Mac, Jumbo Loans, Mortgage Industry, Purchases

FHA-Insured Mortgages Financed Almost 56% Of Home Purchases In 2009 And Reports Suggest Down Payment Requirement May Be Raised To 5%

6 03 2011

 

  • FHA-insured about 56% of mortgages for home purchases in 2009
  • This was up from 6% in 2007 according to a report from the George Washington University School of Business
  • First-time buyers are a major beneficiary of FHA loans because of  the low 3.5% down payment requirement
  • The FHA currently can insure loans of up to $729,750 in high-cost markets
  • That maximum loan amount is due to  expire in October 2011
  • The top limit would then be reduced to $625,500, shrinking the pool of eligible properties
  • And they may be reduced even further
  • On April 18 the annual mortgage-insurance premium on new FHA loans rose by a quarter of a percentage point on 30- and 15-year mortgages
  • That change will mean an average increase of $30 to a borrower’s payment each month
  • FHA down payment requirement may rise from 3.5% to 5%

For more:  http://online.wsj.com/article/SB10001424052748703867704576183003307736130.html


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Categories : 203k, Federal Government, FHA, Financing, First-Time Homebuyer, Homes, Purchases

The Future Of The Mortgage Industry Could Involve Fewer “30-Year Fixed Rate Loans, Higher Rates For Urban Homebuyers And More Fees

4 03 2011

 

  • 30-year fixed-rate mortgages could become more difficult to obtain
  • Interest rates would rise for most borrowers, but urban and rural homebuyers would see higher mortgage rates
  • Fees would be charged for features like an advance “lock in” for an interest rate weeks or months before funding
  • Fannie Mae and FreddieMac increased the availability of mortgage loans lowered rates and fees
  • But they misused the government’s support to enrich shareholders and executives by backing millions of shoddy loans
  • Taxpayers have spent more than $135 billion on the cleanup

For more:  http://www.nytimes.com/2011/03/04/business/04housing.html


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Categories : Fannie Mae, Federal Government, FHA, Financing, First-Time Homebuyer, Freddie Mac, Mortgage Industry

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