Industry News Updates
Your Source for the Latest Industry News
Topics: Lenders Getting Creative, FHA Appraisal Portal, HAMP, Fifth Third, FICO Scoring, Homeowners Renting, Student Debt, JP Morgan, HARP Refinancing, Mortgage Servicing, Home Equity Growth, Markets at Pre-Recession Levels, HMDA Changes, Mortgage Rates, Home Flipping
March 24, 2014
Lenders Must Get Creative to Increase Business
Mortgage lenders are facing a challenging environment and some are getting creative to keep business flowing. Many are accepting more risk in order to stay afloat, with some lowering the minimum FICO scores to draw in borrowers, and others making loans to foreign nationals, neither of which adhere to QM guidelines.
National Mortgage News – Loan Shortages
National Mortgage News – Mortgage Doldrums
FHA Launches Appraisal Portal
The Federal Housing Authority’s Office of Single Family Housing is working on a new web portal for appraisal and data submission. Right now it is called EAD – Electronic Appraisal Delivery and it is much like the Uniform Collateral Data Portal. It is hoped that this new portal will make the delivery of FHA appraisals more efficient and consistent.
March 17, 2014
HAMP Rates Rise, More Defaults Expected
Since 2009, 28% of HAMP (Home Affordable Modification Program) recipients have defaulted a second time and are no longer in the program. With interest rates set to rise on 800,000 who took advantage of the foreclosure prevention program in the coming years, more defaults are expected.
Fifth Third Mortgage Will Close Wholesale Division
A memo from Fifth Third’s President Bob Lewis announced that the company will shutter its wholesale division. The letter cites changes within the mortgage industry and shifting regulation as reasons to leave wholesale behind and refocus on third-party correspondent lending.
National Mortgage News (Subscription)
March 10, 2014
Homeowners Choosing to Rent Rather than Sell
Inventories of homes are expected to remain tight this spring as survey results from Redfin point to homeowners choosing to rent out their existing homes after buying new ones. A poll of over 1,900 homeowners found that 39% plan to rent out their current properties when they purchase a new home, limiting the amount of properties coming to the market.
New FICO Scoring Model Coming
FICO says this summer it will release a new scoring model that aims to help lenders more accurately analyze a consumer’s credit risk. These will be the first changes to FICO’s scoring model in six years. The new models will analyze data to show how a consumer’s credit and spending habits have changed compared to six years ago. In addition to the broad-based scores, FICO also plans to begin offering industry-specific scores later this year.
National Mortgage News (Subscription)
March 2, 2014
Student Debt Holding Back Potential First Time Home Owners
Student loan debt has tripled over the last decade, preventing many would-be home buyers from entering the market. Last year, first time home buyers accounted for only a third of homes purchased. Redfin’s survey of almost 2,000 home buyers found that 16% of first time buyers have had to put home ownership on the back burner because of student loan debt. About a third of all survey respondents said they had waited for one or two years while a bit less than that said they waited four years or more.
JP Morgan Ending Many Mortgage Products and Cutting Jobs
Mortgage industry giant JP Morgan has announced plans to cut 22 of the 37 mortgage products they currently offer as well as 8,000 jobs, mostly from the mortgage banking division during 2014. A big slowdown in refinancing led to the cuts. Mortgage products set to be cut include second-lien home equity loans, a partnership rewards program, some interest-only mortgages and certain home equity loans with fixed payments.
National Mortgage News (Subscription)
February 24, 2014
HARP Refinances Reach 3 Million
The Home Affordable Refinance Program (HARP) has surpassed 3 million refinances. Though the program began in April 2009, nearly 2 million of the refinances took place in 2012 and 2013. HARP helps homeowners with mortgages guaranteed by one of the GSEs, Fannie Mae or Freddie Mac, who have little or no equity in their homes. Those who have refinanced with HARP show much lower loan dleiquency rates than those who are HARP eligible but did not refinance.
CFPB Deputy Director Aims to Get Serious About Mortgage Servicing Practices
At a mortgage industry servicers conference, CFPB Deputy Director Steven Antonakes said that services have had ample time to prepare for reformed rules and suggested that the CFPB will soon start to go after violators. The rules, which went into effect in January, govern foreclosure procedures,consumer communication, payment applications and interest rate changes.
February 17, 2014
US Homeowner Equity Grows $3.4 Trillion
Overall since 2012, American homeowners’ equity has grown by $3.4 trillion. The US Department of Housing & Urban Development (HUD) data shows 2013 home sales were the strongest in several years and that foreclosure starts were the lowest since 2005. These figures point to slow and steady growth in the housing market after many tough years.
Growing Equity a Boon for Older Homeowners, a Hindrance for Young Buyers
Rising home prices and equity are helping current homeowners whose loans went underwater during the recession, allowing them the breathing room to purchase new homes. However, this boon to current homeowners is pricing many young, first-time buyers out of the market especially in light of home price growth outstripping income growth.
February 10, 2014
Housing Markets Climbing Back to Pre-Recession Levels
The National Association of Homebuilders (NAHB) Chairman Rick Judson reported that almost one of every six markets across America have returned to pre-recession levels of housing activity. This continues a steady buildup of activity as pent-up demand grows due to better employment figures and higher consumer confidence.
Mortgage News Daily
CFPB Mulls Changes to HMDA Reporting
The CFPB has rolled out a mortgage tool for consumers to search loan data collected from lenders so that they will have a more informed understanding of credit access in their area. The Consumer Financial Protection Bureau will begin asking small lenders to suggest changes to the reporting requirements of the Home Mortgage Disclosure Act (HDMA) including what new data should be collected in addition to that on points and fees, teaser rates and property values. The new data collection might cover denial of loan reasons, Qualified Mortgage status of a loan and combined loan-to-value ratio. The CFPB is also requesting suggestions on ways to streamline reporting and improve data entry.
Mortgage Rates Continue Downward Trend
The rates for a 30-year mortgage fell for the fifth straight week last week. The average rate on a fixed rate 30-year loan fell to 4.23 percent from 4.32 percent the previous week. Stock market uncertainty, weak economic reports and a falling pending home index were all contributors to the ongoing trend. Rates are still expected to rise in 2014, despite the slow start to the year.
Hot Home Flipping Numbers May Cool in 2014
RealtyTrac reports that the average gross profit for investors who flipped a home, meaning bought and resold it in less than six months, grew $10,000 dollars in 2013. With home prices expected to stabilize in 2014, flipping houses is on track to become less profitable. The FHA has put more stringent requirements on home flippers in the last few years such as requiring a second appraisal to validate the changes to a property’s value. Large increases in home values coupled with a large inventory of distressed properties in 2013 made flipping an attractive prospect. However, home prices are not expected to continue to rise at similar rates in 2014. This trend may have a silver lining for buyers who have been facing stiff competition from flippers and institutional buyers recently.
National Mortgage News (subscription)