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Wednesday, April 30, 2014

Pending Home Sales Up for First Time in Nine Months
The Pending Home Sales Index rose 3.4 percent in March to 97.4 after dipping in February, the National Association of Realtors said yesterday. The index, which reflects contracts but not closings on existing homes, remains 7.9 percent below its level a year before.

--ABA Daily Newsbytes

Tuesday, April 29, 2014

Refinance Now!

--from WSJ's Market Watch---

By Jonathan Clements

Is the mortgage-refinancing opportunity of a lifetime slipping away? I suspect the answer is “yes”—and it isn’t because I can forecast interest rates. Rather, the Federal Reserve has announced it’s cutting back on its bond purchases, and that will likely mean higher interest rates—including rates on new mortgages.

“Interest rates are no longer at 60-year lows,” notes Keith Gumbinger, a vice president with, a mortgage-information provider. “We got as low as 3.44% for a 30-year conforming loan in December 2012. We’re above those historic lows by almost a full percentage point, but rates are still very favorable.”

To make refinancing worthwhile, you typically need to shave your mortgage rate by at least a full percentage point. With 30-year loans available today at around 4.4%, you may not achieve that sort of savings by swapping your old 30-year fixed-rate mortgage for a new one. But you might get there by refinancing with a 15-year mortgage, which will charge around 3.5%. Or you could opt for a hybrid mortgage that is fixed for, say, the first five years and adjusts every year thereafter. A 5/1 hybrid, with an initial interest rate today of around 3.1%, might appeal to those who plan to move in the next five years or so.
Mr. Gumbinger adds that, if you couldn’t refinance before, you might qualify now. For instance, if you had been out of work but recently found a job, lenders might look more kindly on you. In addition, you might have more home equity, thanks to rising home prices, and that could also help your application.

Read more here.   

Monday, April 28, 2014

Demand for Home Loans Plunges

Inside Mortgage Finance reports that home lending dipped to the lowest level in 14 years during the first three months of this year as borrowers stepped back from refinancing and house hunters showed little desire for new loans. The finding offers more proof that rising interest rates have had a negative impact on the U.S. housing recovery. From January through March, lenders originated $235 billion in mortgages -- a 58 percent decline from the same three months of 2013 and down 23 percent from 2013's fourth quarter. The 30-year fixed mortgage averaged 4.5 percent last week, an increase from 3.6 percent in May 2013. Interest rates have climbed in reaction to the Federal Reserve's stated desire to reduce a bond-buying campaign that was partly designed to keep a lid on long-term rates. The decline in first-quarter mortgage lending stemmed almost entirely from a drop in refinancing activity. Loans for home purchases were essentially flat on a year-over-year basis.

From "Demand for Home Loans Plunges"
Wall Street Journal (04/25/14) P. A1 Timiraos, Nick

Friday, April 25, 2014

CFPB Report on Consumer Frustration With Mortgage Paperwork

Many home buyers are frustrated by the short window they are given to review a massive pile of complex documents when finalizing a mortgage, according to a new report from the Consumer Financial Protection Bureau. A rule requiring two new, simpler mortgage disclosure forms that clearly spell out the terms of a home loan will help address the issue. The first is a Loan Estimate that provides a summary of the key terms and estimated loan and closing costs, and the second is a clearer Closing Disclosure that offers a detailed accounting of the transaction. The CFPB is preparing for the implementation of the rule in August 2015. Additionally, the bureau has released guidelines for its upcoming eClosing pilot project, which will assess how electronic closings can help consumers navigate the mortgage settlement process.

From "CFPB Report on Consumer Frustration With Mortgage Paperwork"
National Mortgage Professional Magazine (04/23/14)

Wednesday, April 23, 2014

Existing Home Sales Slip; Prices Continue Rising

Existing home sales edged down 0.2 percent in March to a seasonally adjusted annual rate of 4.59 million, the National Association of Realtors said yesterday. Sales reached their lowest level since July 2012 and were 7.5 percent below their rate a year before. At $198,500, the median sales price for March was 7.9 percent higher than the year before.

In related news, the Federal Housing Finance Agency House Price Index rose 0.6 percent in February. Prices were up 6.9 percent from a year ago but still 7.6 percent below their April 2007 peak. The FHFA’s monthly index is calculated using the prices of houses bought with mortgages backed by Fannie Mae and Freddie Mac---

ABA Daily Newsbytes

Saturday, April 19, 2014

Tuesday, April 15, 2014

Lending Plunges to 17-Year Low as Rates Curtail Borrowing

U.S. mortgage lending is contracting to levels not seen since 1997 as rising interest rates and home prices drive away borrowers, according to the Mortgage Bankers Association. Wells Fargo and JPMorgan Chase, the two largest U.S. mortgage lenders, posted a January-through-March decrease in loan volumes that is part of an industrywide drop off. Lenders made $226 billion of mortgages in the first three months of the year, the smallest quarterly total since '97 and less than one-third of the 2006 average. Lending has been tumbling since the middle of last year when mortgage rates rose nearly a percentage point after the Federal Reserve announced that it might taper stimulus spending. A surge in all-cash purchases to over 40 percent has bolstered housing prices, but has squeezed more Americans out of the buying pool. That will help push lending down further this year, according to the MBA.

From "Lending Plunges to 17-Year Low as Rates Curtail Borrowing"
Bloomberg (04/14/14) Howley, Kathleen M.; Tracer, Zachary; Perlberg, Heather

Friday, April 11, 2014

Friday Rate Update

Mortgage Rates Slip

The average rate for a 30-year fixed-rate mortgage slipped slightly to 4.34 percent from last week’s 4.41 percent, Freddie Mac said yesterday. At this time in 2013, the 30-year FRM rate averaged 3.43 percent.

Thursday, April 10, 2014

New Legislation Aims To Ensure Accurate Credit Reports, Provide Free Credit Scores

Even a small inaccuracy on a consumer’s credit report can have long-lasting negative affects. From the most simple computer error to mixing up individual’s data, credit reporting agencies have been known to be hard to work with when trying to fix incorrect data. But that could all change under legislation introduced today that aims to ensure issues like these don’t happen.

Today, Senators Brian Schatz of Hawaii and Sherrod Brown of Ohio introduced the Stop Errors in

Credit Use and Reporting (SECURE) Act of 2014, which would require credit bureaus to follow tighter rules for ensuring credit reports are accurate and give consumers free access to reliable credit scores each year.

Credit reports and credit scores are often used by bankers, lenders, and others to determine a consumers’ creditworthiness and the rates they will pay for services. Today, the scores and reports are even used to determine a consumer’s employability.

A Federal Trade Commission study found that nearly one in five, or 40 million consumers, have had an error on one of their credit reports. Of those, nearly 5% or 10 million consumers had errors that would likely lead them to paying more for interest on a loan.

Read more here.

Wednesday, April 9, 2014

Consumer Credit in U.S. Rose More Than Forecast in February

Consumer borrowing in the U.S. rose more than forecast in February, reflecting the biggest gain in non-revolving loans in a year. The $16.5 billion advance in credit exceeded all estimates in a Bloomberg survey of economists and followed a revised $13.8 billion gain in the previous month, Federal Reserve figures show. The gain in non-revolving loans came at the expense of a second straight decline in credit-card use. Revolving debt decreased by $2.4 billion in February after dropping $241 million the month before. Banks have been loosening the reins of credit, according to the Fed's quarterly survey of senior loan officers published in February. About 20 percent to 40 percent of banks said they expect delinquencies on most types of business loans to decline this year. About 40 percent expect mortgage delinquencies and write-offs to fall, and 15 percent to 20 percent expect credit-card loans and other consumer loans to improve.

From "Consumer Credit in U.S. Rose More Than Forecast in February"
Bloomberg (04/07/14) Stilwell, Victoria

Monday, April 7, 2014

QM Restricting mortgage credit?

More than 80 percent of bankers expect that the Consumer Financial Protection Bureau’s new mortgage rules will constrict mortgage credit, according to the results of ABA’s latest Real Estate Lending Survey released today. Two-thirds of survey respondents said they would restrict their mortgage lending to Qualified Mortgages or to non-QM loans in targeted markets only.

“The new mortgage rules are a speed bump for mortgage lending,” ABA EVP Bob Davis said. “The problem will last at least as long as bankers calibrate their compliance systems, and perhaps much longer.”

In more positive news, the survey found that the foreclosure rate dropped from 0.98 percent in 2012 to 0.73 percent in 2013, while the single-family home delinquency rate fell from 2.4 percent to 1.87 percent. The 30-year fixed-rate mortgage extended its dominance of the housing market, growing to 50.3 percent of all loans from 46.3 percent in 2012.

Commercial real estate loan demand remained stagnant at 51 percent, and the CRE delinquency rate remained little changed at 3.3 percent in 2013. A total of 208 banks responded to the survey, 76 percent from institutions with less than $1 billion in assets.

---ABA Daily Newsbytes

Friday, April 4, 2014

Bank Lending Starts to Bloom

The Federal Reserve reports that through the third week of March, overall bank loans grew at an average of 2.5 percent year-over-year. However, this figure reflects a January growth rate that was the lowest monthly growth rate since 2011, concealing a trend of rising growth that is better shown through the monthly averages. By month, bank loans rose 2 percent in January, 2.5 percent in February, and 3.4 percent for the first three weeks of March. Moreover, business lending climbed for 10 of the first 12 weeks of the year and, by the third week of March, was up 9.7 percent from the first quarter of 2013. Although business loans alone will not ensure recovery in banks' revenue growth, their sudden reversal of six quarters of decelerating growth indicates better economic prospects than displayed in the first-quarter data.

From "Bank Lending Starts to Bloom"
Wall Street Journal (04/03/14) Carney, John

Wednesday, April 2, 2014

CFPB Issues TILA-RESPA Compliance Guide

The Consumer Financial Protection Bureau has put together a manual to help lenders comply with the Integrated Disclosure Rule, which consolidates the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The new TILA-RESPA disclosure forms include a loan estimate, provided to borrowers within three business days of submitting a mortgage application, that is designed to help consumers understand the terms and risks of their financing, and another disclosure, given to borrowers within three business days of closing on a loan, that aims to provide information "that will be helpful to consumers in understanding all of the costs of the transaction." The rule goes into effect in August of next year.

From "CFPB Issues TILA-RESPA Compliance Guide"
Housing Wire (03/31/14) Lane, Ben