Mortgage Industry
Top Real Estate and Mortgage Headlines for October 19th
October 19, 2011 by WelcomeHomeNWI · 1 Comment
Although Apple managed to sell more than 4 million iPhone 4S over the weekend and arguably more than any analyst expected, those sales could not satisfy the expectations of investors. US stocks fell today on the heals of disappointing earnings from Apple even amongst all the buzz about Siri and iOS 5.
If you’re amongst the millions who purchased an iPhone 4S or upgraded to iOS 5, take a break from your new found technology and review what the top real estate and mortgage headlines are today according to the National Association of Realtors.
- New-Home Building Soars 15% in September
Last month, homes were built at the fastest pace in 17 months, the Commerce Department reported Wednesday. - What’s the Best Day to List a Home?
A new study pinpoints the day of the week that a home should be listed for the best chance of selling it. - Lenders Are Making More Loans
While the growth has been modest, lenders are finally starting to make more loans. - Court: Owner Never had Legal Ownership of Foreclosure
The Supreme Court in Massachusetts ruled that a home owner who had purchase a home in foreclosure did not have legal ownership of the property because the bank failed to properly process the title during the foreclosure. - Riding for a Cure
Challenging his own limits, Good Neighbor Award finalist LeRoy Bendickson discovered a lifelong mission to help people with multiple sclerosis challenge theirs. - Houston’s Housing Market Posts Big Gains
The Houston market is off to a strong start for the fall buying season posting lower inventories, a record-breaking median home price, and a big jump in home sales.
These are the top real estate and mortgage headlines for Wednesday, October 19, 2011.
Want to know how these national real estate headlines could impact you right here locally in Northwest Indiana? Subscribe to this blog, Today’s Real Estate Reality, and let our collective years of real estate experience in Northwest Indiana guide you to an informed and successful real estate transaction today.
Mortgage Industry
Banks Raise Mortgage Qualification Standards
November 12, 2009 by James K Barath, CMPS · Leave a Comment
Despite the economy’s improvement and prodding from Congress, banks don’t seem ready to open their purse strings just yet.
Nationally, mortgage approval standards are tightening.
The data comes from a quarterly survey the Federal Reserve sends to its member banks. The Fed asks senior bank loan officers around the country whether “prime” residential mortgage guidelines had tightened in the last 3 months.
For the period July-September 2009:
- Roughly 1 in 4 banks said guidelines tightened
- Roughly 3 in 4 banks said guidelines were “basically unchanged”
Just one bank said its guidelines had loosened.
Combine the Fed’s survey with recent underwriting updates from the FHA and from Fannie Mae and it becomes clear that mortgage lenders are much more cautious about their loans than they were, say, 2 years ago.
Today’s borrowers face a host of hurdles including:
- Higher minimum FICO scores
- Larger downpayment requirements for purchases
- Larger equity positions for refinances
- Lower debt-to-income ratios
In other words, mortgage rates may stay low into 2010, but that won’t matter to homeowners that don’t meet minimum eligibility standards. With each passing quarter, that list gets smaller.
Therefore, if you’re on the fence about whether now is a good time to buy a home, remember that, along with an increase in mortgage approval standards, home values are rising, too.
Acting sooner is probably better than acting later.
Need more expert advice? Ask the team of Certified Mortgage Planning Specialists at Benchmark Mortgage.
Mortgage Industry
Is Mortgage Underwriting Getting More Friendly?
August 18, 2009 by James K Barath, CMPS · Leave a Comment
It looks like banks are less scared of mortgage loans these days.
In its quarterly survey to member banks, the Federal Reserve asked senior bank loan officers whether “prime” residential mortgage guidelines had tightened in the last 3 months.
Just one-fifth of banks said guidelines tightened last quarter, a dramatically lower figure versus last quarter — a signal that mortgage underwriting may get less restrictive in the months ahead.
It is worth noting, however, that not a single responding bank said its guidelines had eased. For now, getting through underwriting is still much tougher than it was 2 years ago.
Some of the changes today’s borrowers face include:
* Higher minimum FICOs
* Larger required downpayments and equity ownership
* Higher income levels versus monthly debts
* Larger reserve requirements
Furthermore, second mortgages are scarce when loan-to-values exceed 80 percent.
The underwriting changes of the last 24 months preclude many Americans from getting access to today’s low rates if the Fed’s reported trend continues, that could reverse before the end of the year.
Some analysts claim that credit tightening started the U.S. recession. Credit loosening, therefore, could help end it.
Mortgage Industry
Conforming Fixed Rate Mortgages Are Now Priced Better Tan Comparable ARMs
December 11, 2008 by James K Barath, CMPS · Leave a Comment
It’s the age-old question for home buyers in need of a mortgage:
- Get low mortgage payments for better cash flow
- Get long-term payment stability for better budget planning
But because of government intervention and lingering questions about the economy, fixed-rate mortgages are now pricing cheaper than their adjustable-rate counterparts.
Based on today’s mortgage market, therefore, home buyers can get both.
Versus a comparable 5-year ARM, conforming fixed-mortgage rates are priced roughly 0.250 percent lower and have been over the past 19 days. The quarter-percent difference equates to $33 saved per month on a $200,000 home loan.
Mortgage markets are ever-changing so rates we can’t know if this pricing anomaly will last. But, while it does, the decision to choose Fixed over ARM is a lot simpler.
(Image Courtesy: Bankrate.com)
Mortgage Industry
Time is of the Essence
December 2, 2008 by James K Barath, CMPS · Leave a Comment
For real estate agents and attorneys, the phrase “time is of the essence” highlights an unparalleled importance on part of the process that manages the receipt and response to a purchase agreement.Likewise, mortgage professionals also utilize this phrase for emphasizing the critical process of facilitating the loan process within an allotted lock period.
Most banks and consumers commit to a 30-day rate lock so as to minimize the risk of escalating interest rates during the loan process. This is especially true with the historic volatility in the mortgage-backed securities market.
30 days would be ample time to process a loan if we were strictly speaking business days; however, one must remember that the lenders don’t function on weekends and holidays.
Other things that can delay the loan process are stricter lender guidelines which require a greater reliance on the human decision-making process; underwriting departments with insufficient personnel due to a ravaged industry; increase in mortgage applications due to falling interest rates; and seasonal variances on scheduling of all vested parties (i.e. title company, appraiser, survey company, inspector, builder, etc…).
If one would have locked a loan for a refinance prior to Thanksgiving Day, there would only be 12 actual days to process the loan when you account for weekends, holidays and the 3-day Right of Rescission.
Completing the loan process within the 30-day lock expiration is extremely important as lenders are more decisive on declining borrowers who are not committed.
Be proactive and follow the guidance of your qualified mortgage professional so as to minimize and eliminate the risk of costly re-lock and/or extension fees. Time is of the Essence!
If you have been stranded by your loan originator to survive on your own in a maze of changes, The Barath Group gladly accepts stranded clients and their mortgages. Contact us today.
Mortgage Industry
Health Care & Mortgages…Not So Different
November 15, 2008 by James K Barath, CMPS · Leave a Comment
As I was reading the article “Employers Offer Workers Fewer Health Care Plans“ posted in this morning’s NY Times, it occurred to me that the article was very reminiscent of the mortgage industry. If you removed all the health care jargon from the article and replaced with mortgage lingo you would come to the same conclusion.
- Increase in Upfront Deductibles – Increase in Fannie Mae Delivery Fees
- Increase in credit-risked base premiums – Increase in credit-risked base add-ons to mortgage rates
- Increase in restrictions on insurance eligibility – Increase in restrictions for mortgage eligibility
- Reduction of health related issues covered by policies – Reduction of available mortgage programs for non-owner occupied homes
- Reduction in health coverage – Reduction in loan-to-value
- Reduction in offered plans – Reduction in mortgage products
- Socialize health coverage – Nationalize mortgage industry
It should be noted that none of the above would be an issue in a robust economy; unfortunately, this is not that time. This is simply to point out that there are other parts of the economy that are just as problematic as the housing market & mortgages.
Mortgage Industry
The Obama Mortgage Effect
November 13, 2008 by James K Barath, CMPS · Leave a Comment
Whether you like or dislike Barack Obama there has been pre-emptive domino effect with Wall Street banks and government agencies that has the markets running in circles. Everyone knows that the subprime debacle, homeownership, foreclosures and devalued real estate markets have been in the headlines and a primary reason that Democrats did so well in the general election. Now that there is a president-elect the entire world has been carefully listening & dissecting the future agenda of the new administration.
- “Close Bankruptcy Loophole for Mortgage Companies: Obama and Biden will work to eliminate the provision that prevents bankruptcy courts from modifying an individual’s mortgage payments. They believe that the subprime mortgage industry, which has engaged in dangerous and sometimes unscrupulous business practices, should not be shielded by outdated federal law.”
It was Obama’s renewed vigor for this portion of his platform that forced the hands of the Federal Housing Finance Agency, Department of Treasury, FHA, Fannie Mae, Freddie Mac, FDIC, HOPE Now participants and major banking institutions to swiftly change the dynamics of their approaches and programs to assist distressed homeowners. These modifications appear to be beneficial to consumers on the surface in the short-term.
Unfortunately, it will be investor appetite for the underlying securities that create the capital to lend that will dictate the long-term effect of this Obama effect. Judicial loan modifications would create an asset that would carry greater risk than equities because a judge could modify the term, interest rate and principal balance. If investors have no guarantee that the assets they are buying have legal terms, they will either leave the market and/or require greater returns for their cash. This would ultimately cost consumers more and not less.
Mortgage Industry
Word of the Day – Modify
November 12, 2008 by James K Barath, CMPS · Leave a Comment
It seems as if every news item surrounding the housing market entrenches the word modify. Therefore, what does modify mean. According to Dictionary.com Unabridged (v1.1) the word modify is defined as:
- to change somewhat the form or qualities of; alter partially; amend: to modify a contract.
- to reduce or lessen in degree or extent; moderate; soften; to modify one’s demands.
Every piece of legislation has been modified in the last 24 hours to buoy the housing industry and frustrated homeowners on the brink of foreclosures. Let’s take a look at some of the prominent headlines.
- HOPE for Homeowners Program of the Home Economic Recovery Act 2008, which became effective October 1st has had minimal participation. It was noted that only 42 applications out of the 400,000 the program was targeted were received in the first 2 weeks. Accordingly, the program is in the process of being modified to be more friendly to banks to want to move forward. NY Times, Nov. 12, 2008
- Henry Paulson announced today that the $700 Billion TARP Program was being modified to be more accommodating to the changing needs of the financial market. Paulson stated “Over these past weeks we have continued to examine the relative benefits of purchasing illiquid mortgage-related assets. Our assessment at this time is that this is not the most effective way to use TARP funds, but we will continue to examine whether targeted forms of asset purchase can play a useful role, relative to other potential uses of TARP resources, in helping to strengthen our financial system and support lending. But other strategies I will outline will help to alleviate the pressure of illiquid assets.” CNBC, Nov 12, 2008
- Streamlined Modification Program was announced yesterday by the Federal Housing Finance Agency in conjunction with the efforts of major banks. The objective is for servicers to take a proactive approach to assisting homeowners who are in risk of losing their homes. The main purpose of the program is to create a managable housing payment no greater than 38% of total debt to income. MarketWatch, Nov. 11, 2008
- The Department of Housing and Urban Development today New Mortgage Rules to curb costs and provide greater clarity of fees. Not only is the Good Faith Estimate and the HUD-1 Settlement Statement getting a modified look, but also a 10% cap on the adjustment of certain fees from the initial estimate. The new rules go into affect January 1, 2010. HUD No. 08-175
With all of the changes throughout the legislation landscape, you must wonder if the consumer is really being serviced. It is tough enough for professionals to absorb and comprehend the impacts of all the changes. Does Congress and Capitol Hill honestly believe that consumers have a clue on how they can initiate and benefit from all of the legal modifications?
Mortgage Industry
Streamlined Modifications – Will it Help?
November 11, 2008 by James K Barath, CMPS · Leave a Comment
The Federal Housing Finance Agency (FHFA) announced today that a major program designed to simplify and streamline loan modifications for struggling homeowners to prevent foreclosures had been established. The collaboration between Fannie Mae (FNM), Freddie Mac (FRM), Federal Home Loan Banks, HOPE NOW (and it’s 27 service partners), Department of Treasury, Federal Housing Administration and FHFA would be implemented by December 15th.
Who will be eligible?
- Owner Occupied Primary Residences ONLY
- Three or more missed payments (90 day late)
- Has NOT Filed for Bankruptcy
- Loan is FNM, FRM or Portfolio with Participating Investors
- Certify economic hardship/change in financial circumstances
- DID NOT Purposely Default to Obtain Modification
The primary objective of the new program is to make mortgage payments affordable to those who can qualify. The allowable housing debt ratio for the program is 38%. This can be achieved by the reduction in interest rate, extending the term (30 years to 40 years) and restructuring the principle balance payment structure…or any combination.
It must be noted that the main difference between the new program and the HOPE for Homeownership provision in the Home Economic Recovery Act 2008 is that it is not intended for principal balances to be forgiven. This should be more appealing to lenders; however, less incentive to homeowners that have negative equity.
Therefore, who will really benefit from the streamline modification program?
