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Wednesday, December 30, 2015

Fannie and Freddie Give Birth to New Mortgage Bond

In an effort to avoid billions of dollars in potential taxpayer losses in another mortgage crisis, the federal government is rolling out a new asset class. Next year, Fannie Mae and Freddie Mac plan to increase sales of new types of securities that transfer potential losses in a housing downturn to private investors. The securities -- Connecticut Avenue Securities by Fannie Mae and Structured Agency Credit Risk by Freddie Mac -- essentially are bonds whose performance is tied to a pool of mortgages, with investors losing some or all of their principal if the mortgages default. Earlier this month, the Federal Housing Finance Agency said Fannie and Freddie would transfer the credit risk on 90 percent of the unpaid principal balance on the riskiest mortgages backed by the companies to private investors in 2016. It remains uncertain how much appetite investors have for the new securities, but observers say they currently are the only outlet for investors to get exposure to new residential mortgage credit risk.

From "Fannie and Freddie Give Birth to New Mortgage Bond"
Wall Street Journal (12/29/15) Light, Joe

Friday, December 18, 2015

Friday Rate Update

Mortgage Rates Continue to Tick Up 

​The rate for a 30-year fixed-rate mortgage averaged 3.97 percent this week, up from last week’s 3.95 percent rate, Freddie Mac said yesterday​. At this time last year, the 30-year FRM rate averaged 3.8 percent. This week’s 15-year FRM rate averaged 3.22 percent, up from last week’s rate of 3.19 percent. A year ago, the 15-year FRM rate averaged 3.09 percent.

--ABA Daily Newsbytes

Tuesday, December 15, 2015

Risky Loan Survey

In a report issued Dec. 9, the Office of the Comptroller of the Currency said U.S. banks eased their loan underwriting standards and took on more credit risk this year, with lending trends similar to those in the years leading up to the financial crisis. "Similar to pre-crisis surveys, the 2015 survey reflects that many banks are pursuing portfolio growth and yield by loosening underwriting standards. Credit risk is increasing because of these trends," said the report. Underwriting standards for retail loans eased at 27 percent of the major banks surveyed, marking the highest level since 2006 and the third straight year of banks loosening their standards. The OCC says the less stringent standards were mainly associated with indirect loans and credit cards and could be seen in changes to credit lines, pricing, fees, debt-to-income ratios, scorecard cutoffs, and documentation requirements. Credit risk increased in just 16 percent of retail products. Banks attributed their underwriting of riskier loans to growth in lending along with easing underwriting standards, strong competition, expected changes in interest rates, and other economic factors.

From "U.S. Banks Ease Underwriting Standards, Increase Risky Loans: Federal Survey"
Reuters (12/09/15) Lambert, Lisa

Thursday, December 10, 2015

New FHA Limits

The Federal Housing Administration released its 2016 schedule of loan limits. Maximum loan limits will rise in 188 counties with no decreases. There is no change to the national loan limit ceiling of $625,500 for high-cost areas or the $271,050 floor for low-cost areas. The FHA recalculates its loan limits annually based on 115 percent of the median house price in each area. The new loan limits take effect Jan. 1


Monday, December 7, 2015

More Homeowners Rise From Underwater

In this year's third quarter, almost 1 million fewer homeowners were underwater versus the prior three months. However, some of the areas hardest hit by the housing boom gone bust continue to have a tough go of it. This summer, Zillow says 13.4 percent of U.S. homeowners were underwater, a decrease from 16.9 percent a year earlier. Las Vegas -- which has had the highest percentage of homeowners underwater for more than four years running -- remained on top with a little more than 22 percent of homeowners still owing more than their residences are worth. Not far behind were Chicago (20.6 percent) and Atlanta (18.6 percent). Meanwhile, some of the worst-hit cities logged the biggest improvements. In Atlanta, for example, the share of underwater homeowners fell 8.5 percentage points from the third quarter of 2014. Zillow chief economist Svenja Gudell remarks, "In these markets, there are just so many people that are underwater that if you're blanketing them with home-value appreciation they are much more likely to see larger drops in that negative equity rate."

From "More Homeowners Rise From Underwater"
Wall Street Journal (12/04/15) P. A3 Kusisto, Laura

Monday, November 23, 2015

Survey: 3.4 Billion People Are Financially Illiterate

Two out of three adults worldwide -- an estimated 3.4 billion total -- have low financial literacy, according to a survey released yesterday by Standard & Poor’s. Fifty-seven percent of U.S. adults are financially literate, the survey found, two points above the average for major advanced economies. Two-thirds of U.S. homeowners had high levels of financial literacy.

The survey of 150,000 adults in 148 countries also identified a financial literacy gender gap in virtually every country. In the U.S., the study found that 62 percent of men are financially literate, compared to only 52 percent of women, a gap twice the size of the global average. The study also found that Americans with less education and lower incomes have lower financial literacy levels than their counterparts in other countries

---ABA Daily Newbytes

Wednesday, November 18, 2015

ABA, States Urge Support for QM Portfolio Bill 

ABA and 53 state bankers associations yesterday urged Congress to pass legislation (H.R. 1210) that would deem all mortgage loans that institutions originate and hold in portfolio as “qualified mortgages” for purposes of the ability-to-repay rule’s safe harbor provisions. The House is expected to vote on the bill this week despite the threat of a presidential veto.

“Portfolio lending is among the most traditional and lowest risk lending in which a bank can engage,” the groups wrote, noting that the bank carries all the credit and interest rate risk. They added that existing mortgage rules, especially the QM standards, “are overly restrictive and have made it difficult and in some cases impossible for banks to make these otherwise safe and sound loans to creditworthy borrower.

---ABA Daily Newsbytes

Friday, November 13, 2015

Credit Union Mortgage Market Share Rises

In an analysis of 2014 data collected under the Home Mortgage Disclosure Act, the credit union consulting firm Callahan & Associates identified 10 metro areas where credit unions originated over 30 percent of total mortgage loans. According to the report, credit unions in Waterloo and Cedar Rapids, Iowa, originated 44 percent of the area's home loans last year. Also on the list were La Cross, Wis.-Minn.; Pocatello, Idaho; Iowa City, Iowa; Appleton, Wis.; Saginaw-Saginaw Township North, Mich.; Utica-Rome N.Y.; Anchorage, Alaska; and Cumberland, Md.-W.Va. Callahan found that credit unions' overall market share climbed 0.3 percent last year, even as overall mortgage originations declined.

From "Credit Union Mortgage Market Share Rises"
Credit Union Times (11/11/15) Morrison, David

Thursday, November 12, 2015

FHA Closes Loophole for Student Debt in Revamped Lender Handbook

An overhaul of the Federal Housing Administration's Single Family Housing Policy Handbook offers clarity to lenders on acceptable underwriting practices, but closing the loophole for student debt reduces their flexibility to get loans qualified. One change that went into effect on Sept. 14 requires lenders to consider deferred loan payments -- such as student loans not yet in repayment -- when calculating a borrower's debt to income ratio. Such debt previously could be excluded with proper documentation. "Given the rise in student loan debt in the population, that will shut out many young professionals," says Pro Mortgage Branching Solutions President Daniel Jacobs. However, Brian Sullivan, a spokesperson for the U.S. Department of Housing and Urban Development, says, "Deferred student debt is debt all the same and really must be considered when determining a borrower's ability to sustain both student debt payments and a mortgage long term. Our primary interest is to make certain that a first-time homebuyer is put on a path of sustainable homeownership rather than being placed into a financial situation they can no longer tolerate once their student debt deferment expires."

From "FHA Closes Loophole for Student Debt in Revamped Lender Handbook"
National Mortgage News (11/10/15) Sinnock, Bonnie

Thursday, November 5, 2015

Freddie Enlists Faith Groups, Nonprofits to Boost Homeownership

Freddie Mac is partnering with faith-based organizations in hopes of attracting more potential borrowers to its 3 percent down payment mortgage product. In recent years, such groups switched their attention from home buyer outreach to foreclosure prevention due to the financial crisis, but Freddie Mac is once again looking to partner on a homeownership effort. The initiative includes financial education seminars and counseling sessions hosted by faith-based bodies using materials provided by Freddie Mac. The mortgage finance giant also has partnered with Quicken Loans, other lenders, and nonprofits on the 3 percent down payment program. Many consumers are qualified to own a home but may not realize that, says Chris Boyle, a senior vice president at Freddie Mac. "We do think there's a market out there that is not coming to the fore, and Millennials [are] one group," remarks Boyle.

From "Freddie Enlists Faith Groups, Nonprofits to Boost Homeownership"
American Banker (11/03/15) Berry, Kate

Monday, November 2, 2015

FHFA: Freddie Mac Falls Short of Low-Income Housing Goals

The Federal Housing Finance Agency in its Annual Housing Report on Friday said that Freddie Mac failed to meet its affordable housing goals for low and very-low income buyers purchasing single-family homes in 2014.

The goal was for 23 percent of loans the GSEs buy to go to households with incomes under 80 percent of their area’s median income and 7 percent to go to households with incomes under 50 percent of AMI. According to the report, Freddie hit 21 percent for low-income households (those with incomes under 80 percent of AMI) and only 4.9 percent for very-low income households (those with incomes under 50 percent of AMI).

Fannie Mae achieved all of its single and multi-family goals, exceeding or equaling the market for mortgage purchases for both low and very-low income borrowers. --ABA Daily Newsbytes

Friday, October 30, 2015

Friday Rate Update

30-Year Mortgage Rates Slip, 15-Year Hold Steady 

The rate for a 30-year fixed-rate mortgage averaged 3.76 percent this week, down from last week’s 3.79 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.98 percent. This week’s 15-year FRM rate averaged 2.98 percent, unchanged from last week’s rate. A year ago, the 15-year FRM rate averaged 3.13 percent---

ABA Daily Newsbytes

Wednesday, October 28, 2015

ABA On the Economy

Home Price Growth Continues to Rise
Home price growth in 20 major metro areas rose in August, with year-over-year growth landing at 5.1 percent, ahead of July’s 4.9 percent increase, according to yesterday’s Standard & Poor’s/Case-Shiller Home Price Index release. Fifteen cities of the 20-city composite index reported price increases in August, with double-digit increases seen in San Francisco and Denver. Year-on-year growth was highest in Denver, San Francisco and Portland, Ore.

Consumer Confidence Falls
The Consumer Confidence Index declined in October to 97.6, down from 102.6 in September, the Conference Board said yesterday. “Consumers were less positive in their assessment of present-day conditions, in particular the job market, and were moderately less optimistic about the short-term outlook,” said the Conference Board’s Lynn Franco. “Despite the decline, consumers still rate current conditions favorably, but they do not anticipate the economy strengthening much in the near-term

Friday, October 23, 2015

Friday Rate Update

Mortgage Rates Fall 

The rate for a 30-year fixed-rate mortgage averaged 3.79 percent this week, down from last week’s 3.82 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.92 percent. This week’s 15-year FRM rate averaged 2.98 percent compared to last week’s 3.03 percent rate. A year ago, the 15-year FRM rate averaged 3.08 percent. 

--ABA Daily Newsbytes

Wednesday, October 21, 2015

Fannie Mae Expands Eligibility for High-Balance Loans

Fannie Mae recently expanded eligibility for high-balance loans to help lenders serve creditworthy borrowers in high-cost areas. Maximum loan-to-value ratios are now aligned with Fannie’s standard eligibility up to 95 percent. To simplify lender processes, Fannie also removed many policy overlays that applied only to high-balance loans. These updates will be implemented in Desktop Underwriter Version 9.3 the weekend of Dec. 12.   ---ICBA

Monday, October 19, 2015

Home Buyers Pay Price for New Rules

It has barely been a couple of weeks since a nationwide changeover in mortgage and settlement procedures went into effect, but lenders and brokers are already charging that just about everything is taking longer and the costs to home buyers are increasing. As of Oct. 3, lenders and other agents were required to comply with an almost 1,900-page new rule book designed to improve transparency and accuracy in real estate and mortgage transactions for buyers and refinancers. Worry remains that the reformed process will draw out the typical time span between loan application and closing. However, what has received less focus are the impacts of longer timelines on how much consumers pay to close the deal -- increases that are just starting to become more evident. According to Mortgage Bankers Association chief economist Michael Fratantoni, the expenses added by the new settlement rules are in addition to a long series of federal regulatory changes in the last few years that have hiked the cost of originating a typical home loan from $4,500 to $7,000. "A lot of it is personnel, quality control, spending on new technology, and reprogramming systems," he says. As lenders and agents gain more experience in managing deadlines under the new rules, Fratantoni is hopeful that 30-day closings will become more common again.

From "Home Buyers Pay Price for New Rules"
Daily Herald (10/16/2015) Harney, Ken

Friday, October 16, 2015

Mortgage Applications Plummet in Week After TRID Takes Effect 

Applications for new mortgages plummeted 27.6 percent in the week of Oct. 3-9, immediately after the new TILA-RESPA integrated disclosures took effect, according to weekly figures released by the Mortgage Bankers Association yesterday. Refinancing applications dropped by 23 percent.

The drop followed a significant spike of 25.5 percent the week before as lenders moved to process applications before the TRID deadline. TRID took effect for mortgages whose applications were received starting Oct. 3. TRID implementation “caused lenders to significantly revamp their business processes, and as a result dramatically slowed the pace of activity,” said MBA Chief Economist Mike Fratantoni. “The prior week’s results evidently pulled forward much of the volume that would have more naturally taken place into this week.” 

--ABA Daily Newsbytes

Wednesday, October 14, 2015

Survey: Millennials’ Money Stress Affecting Other Areas of Life 

More than four in 10 U.S. millennials -- those aged 18 to 34 -- say they are “chronically stressed” about money, adding that money stress is spilling over into their emotional well-being, leisure activities, personal relationships and physical health, according to a Bank of America/USA Today survey released yesterday.

Of those who worry about money, more than half say they get anxious about it on a weekly basis, and 30 percent say they worry they won’t have enough money to make it through month’s end. More than six in 10 say they worry some or a lot about the cost of living, and 58 percent say that where they live makes them concerned about their ability to save. Taxes are a source of worry for about 43 percent of millennials.

Compared to a similar survey last fall, top financial stress points remain similar but show a longer-term focus in some areas. For example, millennials are six percentage points less likely this year to worry about spending too much, while they are four points more likely to worry about the costs of having children and three points more likely to be concerned about putting aside enough for retirement.

---ABA Daily Newbytes

Friday, October 9, 2015

Friday Rate Update

Mortgage Rates Drop on Weak September Jobs Report 

The rate for a 30-year fixed-rate mortgage averaged 3.76 percent this week, down from last week’s 3.85 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.19 percent. This week’s 15-year FRM rate averaged 2.99 percent compared to last week’s 3.07 percent rate, falling below 3 percent for the first time since April. A year ago, the 15-year FRM rate averaged 3.36 percent

---ABA Daily Newsbytes

Tuesday, October 6, 2015


Fannie, Freddie Q2 Income Surpasses $8 Billion
Fannie Mae’s and Freddie Mac’s combined second-quarter income rose to $8.8 billion from $2.4 billion in the first quarter, the Federal Housing Finance Agency reported yesterday.

The increase was attributed mainly to interest income and gains on derivatives, the agency said, adding that the GSEs also saw a $2.2 billion decrease in loan loss reserves due to rising home prices. National home prices rose 5.4 percent from the second quarter of 2014.

Meanwhile, the Federal Home Loan Banks collectively earned $669 million in the second quarter, down from $1 billion in the first quarter.

--ABA Daily Newsbytes

Wednesday, September 30, 2015

Millennials Prefer the Dentist to the Bank

A three-year study of 10,000 millennials by Viacom indicates that the banking industry is at a higher risk of disruption by millennials than any other industry. The study indicates that 71 percent of respondents would rather go to the dentist than listen to what banks are saying, 53 percent believe their bank's offerings are the same as other banks' offerings, and 33 percent would consider switching banks in the next 90 days. Seventy percent think the way people pay for things will completely change in five years, and 33 percent think they will no longer need a bank at all. Another 73 percent are more excited about financial services offerings from Google, Apple, Amazon, or Square than offerings from their own nationwide bank.

From "Millennials Prefer the Dentist to the Bank"
St. Louis Business Journal (09/28/15) Edwards, Greg

Tuesday, September 29, 2015


Delinquent GSE Mortgages Decline As Economy Improves

The number of home loans backed by Fannie Mae and Freddie Mac that are 60 days or more past due or are in the foreclosure process fell 6 percent in the second quarter of 2015, following a 9 percent drop in the first quarter, according to the Federal Housing Finance Agency’s foreclosure prevention report released yesterday.

Seriously delinquent loans -- those that are 90 days or more past due -- dropped to 1.6 percent of Fannie and Freddie’s mortgage portfolio after the second quarter. By comparison, 5.5 percent of Federal Housing Administration loans were seriously delinquent, and 4 percent of all loans were.

The report also documented the GSEs’ efforts to prevent foreclosures, with 63,593 modifications or other actions in the second quarter and more than 3.54 million since the GSEs have been under U.S. conservatorship.

--ABA Daily Newsbytes

Friday, September 25, 2015

Bad Loans Remain Well Above Precrisis Levels

Seven years after the onset of the financial crisis, the banking industry is still sitting on a significant amount of bad loans. FDIC data indicates that nonperforming assets totaled $162 billion as of June 30, which is down 63 percent from mid-2010 but nearly triple the $56 billion reported in mid-2006. This can be attributed to banks' reluctance to offload a number of credits in bulk sales, loss-share agreements forcing banks to keep bad loans on their books, low interest rates, and a lack of better reinvestment options. Observers say this could pose problems if the industry faces another economic downturn. Clark Street Capital CEO Jon Winick says, "The banking system and the economy would have recovered faster if there had been more emphasis on disposing bad assets rather than managing them. It has distracted a lot of organizations." However, Rusty Cloutier, president and CEO of the $1.9 billion-asset MidSouth Bancorp in Lafayette, La., says, "Being more of a community bank, we try to work with customers in good times and in bad times. It is a good tool to have in your arsenal." But Winick notes that banks continue to incur costs associated with carrying bad assets, and reducing them could help banks get out from under regulatory orders.

From "Bad Loans Remain Well Above Precrisis Levels"
American Banker (09/24/15) Stewart, Jackie

Thursday, September 24, 2015

Wednesday, September 23, 2015

Number of New Mortgages in 2014 Plunges 31 Percent From Year Before

A report released Sept. 22 by the Federal Financial Institutions Examination Council shows that nondepository independent mortgage companies accounted for 47 percent of purchase loans for owner-occupants and 42 percent of refinancing loans in 2014, up from 43 percent and 31 percent, respectively, in 2013. The report shows that the total number of mortgages made last year dropped 31 percent from 2013 to 6 million, with refinances down 55 percent and purchase loans up just 4 percent. Nonbank lenders saw their share of the mortgage market rise as large banks like Wells Fargo, JPMorgan Chase, and Bank of America pulled back on lending to all but the most creditworthy borrowers, especially given the large penalties they incurred for mistakes made during the last housing boom. According to the FFIEC, large banks accounted for 32 percent of purchase loans and 38 percent of refinancing loans last year, down from 34 percent and 49 percent, respectively, in 2013. The report also shows that black borrowers accounted for 5.2 percent of purchase loans in 2014, up from 4.8 percent in 2013, while Hispanic-white borrowers accounted for 7.9 percent last year, up from 7.3 percent.

From "Number of New Mortgages in 2014 Plunges 31 Percent From Year Before"
Wall Street Journal (09/22/15) Light, Joe

Monday, September 21, 2015

CFPB Creates Online Tool to Help Homebuyers With Mortgages

The Consumer Financial Protection Bureau has created a virtual tool to help homebuyers navigate the mortgage process. The agency has created an "Owning a Home" page on its website that features an interactive step-by-step overview of the loan process, a monthly mortgage repayment worksheet to help homebuyers figure out how much they will owe, and sample forms for loan estimates and closing disclosures. In January, CFPB finalized changes to its "Know Before You Owe" mortgage rules. Starting Oct. 3, creditors will have three days to give a consumer a revised loan estimate once a consumer locks in a floating interest rate. Previously, the loan estimates were due on the day the rate was locked in. CFPB said the rule change gives creditors more leeway in revising estimates and consumers a chance to shop between loans. The Closing Disclosure, which details the final transaction, must be provided to consumers at least three business days before a closing to give consumers time to confirm whether they are getting what they expected, ask questions and negotiate any changes.

From "CFPB Creates Online Tool to Help Homebuyers With Mortgages"
The Hill (09/18/15) Wheeler, Lydia

Monday, September 14, 2015

Freddie Mac Makes It Easier to Get a Mortgage Modification

Freddie Mac is making several revisions to its guidelines for standard and streamlined mortgage modifications. The changes will "substantially increase" the number of borrowers who qualify for mortgage modifications, according to Freddie Mac. Moreover, the updated standards will make post-modification mortgage payments more affordable for borrowers. Freddie Mac also announced changes to its eligibility rules for its streamlined and MyCity modification programs. The new rules will maximize loan modification options for severely delinquent borrowers and further streamline the review of a borrower for the streamlined modification and the MyCity modification programs. The changes take effect on March 1, 2016.

From "Freddie Mac Makes It Easier to Get a Mortgage Modification"
Housing Wire (09/09/15) Lane, Ben

Tuesday, September 8, 2015

ABA Foundation Announces ‘Safe Banking for Seniors’ Initiative 

The ABA Foundation today announced a new campaign -- Safe Banking for Seniors -- to help bankers educate seniors and their caregivers on the risks of financial fraud.

As with other ABA Foundation financial literacy programs, the foundation will provide bankers with event materials, lesson plans, media outreach tools and best practices. Bankers will be encouraged to use the resources at outreach events throughout the year, and to team up with other organizations and agencies in their communities.

“Bankers are often the first line of defense against elder financial fraud from educating and advising customers to spotting the signs of abuse,” said ABA President and CEO Frank Keating. “We take our role seriously, and the more we can work together as citizens, bankers, and government officials, we can protect our seniors from fraud.”

Tuesday, September 1, 2015

FDIC Examines Changes in Reverse-Mortgage Regulations

Updated rules for reverse mortgages give priority to borrowers' well-being and address unanticipated issues, the FDIC reported in its Summer 2015 newsletter. The agency noted that many senior homeowners seeking a reverse mortgage are unaware of potential problems with this type of loan, especially if they can no longer afford taxes or property insurance. However, recent U.S. Department of Housing and Urban Development regulations protect surviving spouses after the death of a reverse mortgage borrower. Non-borrowing, surviving spouses can remain in the home pending certain conditions. Earlier this year, the Consumer Financial Protection Bureau issued a warning to consumers about the misleading effects of reverse mortgage advertisements. The marketing for this type of loan often leaves consumers confused. Many had the false impression that reverse mortgages are not a loan but a government-issued program that helps consumers stay in their home for the rest of their lives.

From "FDIC Examines Changes in Reverse-Mortgage Regulations"
The M Report (08/27/15) West, Xhevrije

Monday, August 31, 2015

FBI: Email Scams Cost $750M Since October ’13

The FBI issued an alert warning about the rising use of a social engineering scam targeting businesses that regularly perform wire transfer payments. According to the FBI, criminals used Business Email Compromise to steal nearly $750 million from more than 7,000 U.S. companies from October 2013 to August 2015.

The FBI separately reported that Email Account Compromise, a similar scam in which criminals compromise the email accounts of unsuspecting victims, led to 21 complaints and reported losses of almost $700,000 between April 1 and June 30 of this year. For example, a scammer may compromise a senior bank manager’s account to make it appear to an employee that an email is legitimate. FacebookLinkedInTwitter

ABA Daily Newsbytes AddThis

Wednesday, August 26, 2015

Fannie Mae Loan Product to Consider Family Income

Fannie Mae yesterday announced a new mortgage product called HomeReady, which it said is intended to expand access to affordable home loans for low- and moderate-income families. The loan will allow income from other household members, in addition to the borrower, to be included in the calculation of the loan’s debt-to-income ratio. It will also allow income from non-occupants, such as parents, to be counted, as well as prospective rental income, such as from a basement apartment.

“Fannie Mae’s research indicates that these extended households tend to have incomes that are as stable or more stable than other households at similar income levels, positioning them well for homeownership,” the company said. Borrowers will be required to complete a course on homeownership.

Fannie’s Desktop Underwriter platform will automatically flag borrowers potentially eligible for a HomeReady loan. The new product is expected to be available later this year, and Fannie will provide further details to sellers in the coming weeks.

--ABA Daily Newsbytes

Monday, August 24, 2015

Mortgage Rates Edge Down Slightly 

The rate for a 30-year fixed-rate mortgage averaged 3.93 percent this week, down from last week’s 3.94 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.1 percent. This week’s 15-year FRM rate averaged 3.15 percent, down from last week’s 3.17 percent rate. A year ago, the 15-year FRM rate averaged 3.23 percent.---   ABA Daily Newsbytes

Thursday, August 20, 2015

TransUnion: Mortgage Delinquency Rates Continue Rapid Decline

The rate of borrowers at least 60 days delinquent on their mortgages continues to fall, declining to 2.72 percent in the second quarter of 2015, TransUnion reports. The mortgage delinquency rate fell 20 percent in the last year and by half in the last three years. Consumers under the age of 30 experienced a 26.9 percent decline in delinquencies from 2.32 percent in the second quarter of 2014 to 1.7 percent in the second quarter of 2015. Forty-eight states and the top 10 major metropolitan statistical areas reported double-digit, year-over-year decreases in seriously delinquent balances, with the largest declines in Miami and Los Angeles. "This is largely due to foreclosures and other seriously delinquent accounts continuing to work their way through the foreclosure process, as well as a reflection of the high credit quality of recent originations," says Joe Mellman, vice president and head of TransUnion's mortgage group.

From "TransUnion: Mortgage Delinquency Rates Continue Rapid Decline"
Housing Wire (08/17/15) Garrison, Trey

Wednesday, August 19, 2015

Housing Starts Climb to Seven-Year High

Housing starts were up 0.2 percent in July, rising to a seasonally adjusted annual rate of 1.206 million units, the Commerce Department said yesterday. Starts -- up 10.1 percent from a year ago -- reached the highest level since October 2007. Permits for new construction, which are considered a gauge of future demand, fell 16.3 percent to an annual rate of 1.119 million.

--ABA Daily Newsbytes

Monday, August 17, 2015

Mortgage Lenders Still Shunning Subprime Borrowers

While the foreclosure crisis is nearing an end, it still affects lenders' attitudes toward risk. Only 8 percent of mortgage origination volume in the second quarter went to "subprime" borrowers with credit scores of 660 or lower, researchers at the Federal Reserve Bank of New York found. In comparison, 50 percent of U.S. mortgage origination volume went to borrowers with credit scores of 780 or higher. "Underwriting standards for mortgages have loosened only slightly in the years since the Great Recession," the researchers wrote. The study found that the median Equifax Risk Score of a mortgage borrower in the second quarter of 2015 was 764 but had fallen as low as 707 during the heyday of subprime mortgages in 2006. Many observers believe that credit standards remain too tight.

From "Mortgage Lenders Still Shunning Subprime Borrowers"
American Banker (08/14/15) Wack, Kevin

Monday, August 10, 2015

How Student Loan Debt Hobbles So Many Americans

According to, mounting education debt is resigning borrowers in the Millennial generation to delay major life events, such as buying a home or car, and hold off saving money for retirement as they try to whittle down what they owe in student loans. Based on the new survey of 1,000 adults, 56 percent of Americans between the ages of 18 and 35 are holding off on big-ticket purchases because of current or past student loans, compared to 43 percent of older adults. "Student debt is often portrayed strictly as a Millennial issue, but the truth is that Americans of all ages have put their lives on hold due to student debt," says Bankrate analyst Steve Pounds. "Delaying major life milestones ... doesn't only affect the individual and his or her family, it also has ill effects on the overall economy." The study also found that Millennials were less likely to have ever had student loan debt compared to the previous generation. However, more than half of all respondents felt they were not fully educated on the financial risks of the loans they took
From "How Student Loan Debt Hobbles So Many Americans" (08/05/15) Kennedy, Bruce

Friday, August 7, 2015

Friday Rate Update

Mortgage Rates Fall for Second Straight Week

The rate for a 30-year fixed-rate mortgage averaged 3.91 percent this week, down from last week’s 3.98 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.14 percent. This week’s 15-year FRM rate averaged 3.13 percent, down from last week’s 3.17 percent rate. A year ago, the 15-year FRM rate averaged 3.27 percent. 

---ABA Daily Newsbytes

Wednesday, August 5, 2015

Freddie Mac Profits Strong in Second Quarter
Freddie Mac yesterday reported a $4.2 billion profit in the second quarter, up significantly from the $1.4 billion the company earned in the second quarter of 2014 and marking Freddie’s 15th consecutive profitable quarter.

The rise in Freddie’s income was largely due to derivatives gains on rising interest rates, which totaled $3.1 billion. The company said it will make a $3.9 billion payment to the U.S. Treasury in September, bringing the total it has returned to taxpayers since being bailed out in 2008 to $96.5 billion.

--ABA Daily Newsbytes 

Monday, August 3, 2015

House Committee Passes TRID Grace Period

Pressure from housing and mortgage groups paid off on Capitol Hill as a House panel agreed to grant lenders temporary reprieve from enforcement of new disclosure rules taking effect this fall. Lenders are supposed to start using the new TILA-RESPA Integrated Disclosure forms on Oct. 3, but the Homebuyers Assistance Act would protect them from enforcement actions through Feb. 1. A similar proposal in the Senate would extend the safe harbor through Dec. 31. However, some Democrats and consumer advocates have challenged the measure. U.S. Rep. Maxine Waters (D-Calif.), ranking member on the House Financial Services Committee, said the grace period is not warranted since the Consumer Financial Protection Bureau has already vowed to take lenders' good-faith efforts to comply with the new rules into consideration if the issue of enforcement arises.

From "House Committee Passes TRID Grace Period"
Scotsman Guide (07/29/2015) Whitman, Victor

Tuesday, July 28, 2015

Conforming Loan Limits Are Too High, ABA Says 

The conforming loan limits for mortgages that Fannie Mae and Freddie Mac will purchase are too high, ABA said in a comment letter yesterday. Given post-crisis house price declines, the average mortgage loan amounted to $294,000 in March 2014 -- well below the GSEs’ $417,000 and $625,500 in high-cost areas.

“As Congress works to develop a consensus on broad reforms, ABA has advocated lowering the conforming loan limits,” the association said. “Such high limits have made it possible for the GSEs to hold too large a share of the housing finance market.” ABA acknowledged that statute prevents the conforming loan limits from being lowered.

--ABA Daily Newbytes

Monday, July 27, 2015

New Home Sales Fall to Seven-Month Low

Sales of new homes fell 6.8 percent in June to a seasonally adjusted annual rate of 482,000 units, the Commerce Department said on Friday. Sales were 18.1 percent above last year’s number and were the lowest in seven months. The median new home price for the month was $281,800. 

--ABA Daily Newsbytes

Thursday, July 23, 2015

Existing Home Sales Surge 

Existing home sales rose 3.2 percent in June to a seasonally adjusted rate of 5.49 million, the National Association of Realtors said yesterday. Sales -- which rose to their highest pace since February 2007 -- have increased year-on-year for nine consecutive months and were 6.5 percent above June 2014’s level. The median home price for the month reached a record high of $236,400, up 6.5 percent from a year ago and surpassing the previous record set in 2006--  ABA Daily Newsbytes

Wednesday, July 22, 2015

Obama Unveils New Military Lending Rules

President Barack Obama on July 21 discussed how the Department of Defense is expanding a law that helps protect active-duty personnel from predatory lending. Congress in 2006 passed the Military Lending Act, which limits rates to 36 percent and applies other protections to payday loans. The new rules expand the type of loans covered by the law as well as certain types of credit cards. They also eliminate charges for most "add-on" products, like credit default insurance, in calculating the military annual percentage rate. All loans subject to the rule would be capped at 36 percent for military members and their families. The rules take effect on Oct. 1, 2015.

From "Obama Unveils New Military Lending Rules"
The Hill (07/21/15) Matishak, Martin

Monday, July 20, 2015

U.S. Banks Prepare for Lending Revival

The 1 percent increase in total second-quarter revenues at Bank of America to $22.1 billion from $21.7 billion a year ago is a sign that the banking industry still has the power to grow, says Richard Hunt, president of the Consumer Bankers Association. Years of tighter regulation and looser monetary policy have combined to squeeze income for all the big U.S. lenders, but if BofA -- which has shed more than $70 billion of assets over the past five years while winding down other lines of business -- can start to improve its top line, then the future suddenly looks brighter. "Anything north is exciting," says Hunt. Analysts say the recent earnings reports from major banking firms seem to indicate that banks are ready to respond to a revival in appetites for borrowing in households across America. Revenues in Citigroup's retail bank were up 11 percent from a year earlier, for example, driven by a 42 percent surge in mortgage originations. Wells Fargo ended the quarter with credit card balances of more than $30 billion, up 15 percent from a year earlier.

From "U.S. Banks Prepare for Lending Revival"
Financial Times (07/17/15) McLannahan, Ben

Friday, July 17, 2015

Senate Dems Introduce Credit Reporting Accuracy Bill

A group of U.S. Senate Democrats are proposing the Consumer Reporting Fairness Act, a bill that would require banks and debt buyers to make sure a consumer's credit report is updated when debt is erased in bankruptcy. Under the legislation, financial institutions and other creditors would be obliged to update credit bureaus when a borrower declares bankruptcy. The measure is part of an effort by lawmakers, state officials, and the Consumer Financial Protection Bureau to improve credit report accuracy. Bill sponsors include U.S. Sens. Sherrod Brown (D-Ohio), Richard Blumenthal (D-Conn.), Dick Durbin (D-Ill.), Al Franken (D-Minn.), and Jeff Merkley (D-Ore.). "This bill would ensure that debts prior to bankruptcy aren't in effect double counted and don't continue to make it difficult for consumers to get a job or secure a loan for a home," Brown remarked.

From "Senate Dems Introduce Credit Reporting Accuracy Bill"
American Banker (07/16/15) Finkle, Victoria

Tuesday, July 14, 2015

ABA Addresses Elder Financial Abuse at White House Conference 

Financial institutions are "well-positioned" to take a proactive stance on preventing fraud and financial exploitation of seniors, ABA Board Member F. Scott Dueser -- who is chairman, president and CEO of First Financial Bankshares Inc., Abilene, Texas -- told White House Conference on Aging participants yesterday. "The more we can talk about it, the less we'll have," said Dueser, who represented ABA at the conference.

Dueser called upon financial institutions to educate employees and consumers alike on identifying these crimes against the elderly and talked about the importance of banks’ partnerships with law enforcement and social service organizations to help prevent fraud and financial abuse. “If people know what is happening to them, it makes a big difference. We have got to get out and educate our communities,” said Dueser, who is also a member of ABA's Bank Community Engagement Council.

ABA yesterday unveiled a new online tool to showcase banks' corporate social responsibility programs. The interactive map compiles entries in ABA's Community Commitment Awards since 2012, and is searchable by state, asset size and category -- including a "Protecting Older Americans" category.

---ABA Daily Newsbytes

Monday, July 13, 2015

Yellen: Interest Rate Hike to Come Later This Year

During a speech in Cleveland, Federal Reserve Chair Janet Yellen provided an outlook for the U.S. economy. She said the economy is improving, unemployment is dropping and an interest rate hike is likely to come later this year.

“Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen said. Read Full Speech.

Yellen will deliver the Federal Reserve’s semiannual report on monetary policy and answer questions from members of Congress at public hearings this week. FacebookLinkedInTwitterAddThis


Friday, July 10, 2015

Friday Rate Update

Mortgage Rates Dip in Response to Global Unrest

The rate for a 30-year fixed-rate mortgage averaged 4.04 percent this week, down from last week’s 4.08 percent, Freddie Mac said today. At this time last year, the 30-year FRM rate averaged 4.15 percent. This week’s 15-year FRM rate averaged 3.20 percent, down from last week’s 3.24 percent rate. A year ago, the 15-year FRM rate averaged 3.24 percent. 

--ABA Daily Newbytes

Thursday, July 9, 2015

Consumer Delinquencies Dip in First Quarter

Delinquencies in closed-end loans and bank cards edged down in the first quarter, driven by large declines in home loan-related delinquencies, according to the ABA Consumer Credit Delinquency Bulletin that was released today. Delinquencies fell in five of the 11 loan categories and remained unchanged in two others.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, dipped by one basis point to 1.53 percent of all accounts -- well under the 15-year average of 2.28 percent. Bank card delinquencies fell by three basis points to 2.49 percent of all accounts, also well below their 15-year average of 3.76 percent. ABA Chief Economist James Chessen remarked that credit card delinquencies have remained “remarkably stable at historically low rates.”

Delinquencies in all three home-related categories -- home equity loans, HELOCs and property improvement loans -- trended downward, with HELOC delinquencies dropping by 11 basis points. “Home equity loan and line delinquencies are tracking the slow and steady improvements in the housing market,” said Chessen. “Greater household wealth and income gives consumers more breathing room to meet their financial obligations.” 

--ABA Daily Newsbytes

Monday, July 6, 2015

Mortgage Rates Rise

The rate for a 30-year fixed-rate mortgage averaged 4.08 percent last week, up from the previous week’s 4.02 percent, Freddie Mac said Thursday. At this time last year, the 30-year FRM rate averaged 4.12 percent. Last week’s 15-year FRM rate averaged 3.24 percent, up from the previous week’s 3.21 percent rate. A year ago, the 15-year FRM rate averaged 3.22 percent.

--ABA Daily Newbytes 

Wednesday, July 1, 2015

Smaller Lenders Take Growing Share of Fannie, Freddie Business

The percentage of loans that Fannie Mae and Freddie Mac purchased from small lenders in 2014 rose substantially, according to a report yesterday from the Federal Housing Finance Agency. The share of Fannie and Freddie single-family mortgage acquisitions from the GSEs’ top five sellers fell from 49 percent to 39 percent, while the share sold by lenders not in the GSEs’ top 100 rose from 19 percent to 28 percent.

The report also showed that the guarantee fees lenders pay Fannie and Freddie rose from 22 to 58 basis points from 2009 to 2014. They rose 7 basis points between 2013 and 2014. FHFA suspended a planned G-fee increase in 2014.

--ABA Daily Newsbytes 

Friday, June 26, 2015

Friday Rate Update

Mortgage Rates Little Changed as Home Sales Improve

The rate for a 30-year fixed-rate mortgage averaged 4.02 percent this week, up from last week’s 4 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.14 percent. This week’s 15-year FRM rate averaged 3.21 percent, down from last week’s 3.23 percent rate. A year ago, the 15-year FRM rate averaged 3.22 percent--ABA Daily Newsbytes

Wednesday, June 24, 2015

Delinquent GSE Mortgages Continue to Decline

The number of home loans backed by Fannie Mae and Freddie Mac that are 60 days or more past due or are in the foreclosure process fell 9 percent in the first quarter, following a 3 percent drop in the fourth quarter of 2014, according to the Federal Housing Finance Agency’s foreclosure prevention report released yesterday.

Seriously delinquent loans -- those that are 90 days or more past due -- dropped to 1.8 percent of Fannie and Freddie’s mortgage portfolio after the first quarter. By comparison, 5.7 percent of Federal Housing Administration loans were seriously delinquent, and 4.2 percent of all loans were.

The report also documented the GSEs’ efforts to prevent foreclosures, with 65,960 modifications or other actions in the first quarter and more than 3.47 million since the GSEs have been under U.S. conservatorship.

--ABA Daily Newsbytes

Monday, June 22, 2015

How Do You Market to Millennials? Answer: You Don't

Kevin Tynan, senior vice president of marketing at Chicago-based Liberty Bank, says marketing to millennials remains a hot topic, but community banks have not been very successful in attracting young consumers. He believes articles offering advice on how to reach millennials or detailing what bankers need to know about millennials suggest a one-dimensionality about the demographic. "Most advice is based on viewing millennials as one homogeneous group -- an inherently flawed approach," says Tynan. "That's ludicrous. It's tantamount to saying everyone born between 1980 and 2000 acts, responds, and can be marketed to the same way. There is simply too much economic, geographic, and demographic diversity within the group to make meaningful generalizations." He emphasizes that individuals are shaped mainly by parental values and community and that millennials are not necessarily more technically proficient than other groups. Tynan adds that not all millennials are drawn to the newest app or digital product, but instead look for apps that simplify tasks and increase convenience. "Millennial marketing may be a trendy buzz phrase but it's never a substitute for a carefully developed marketing plan," says Tynan.

From "How Do You Market to Millennials? Answer: You Don't"
American Banker (06/19/15) Tynan, Kevin

Friday, June 19, 2015

Friday Rate Update

Mortgage Rates Take Downward Turn

The rate for a 30-year fixed-rate mortgage averaged 4 percent this week, down from last week’s 4.04 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.17 percent. This week’s 15-year FRM rate averaged 3.23 percent, down from last week’s 3.25 percent rate. A year ago, the 15-year FRM rate averaged 3.3 percent.

--ABA Daily Newsbytes

Thursday, June 18, 2015

CFPB to Delay TRID Effective Date to Oct. 1

As reported in a Newsbytes special edition last night, Consumer Financial Protection Bureau Director Richard Cordray announced that the bureau is proposing to push back the effective date of the TILA-RESPA integrated disclosures by two months, from Aug. 1 to Oct. 1, in an effort to avoid closing headaches as the busy fall homebuying season kicks off. The CFPB will issue a proposed rule making the change shortly.

"We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks," Cordray said. "We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time."

ABA welcomed the news. "This extension will help protect consumers from disruptions during a traditionally busy period for home purchases," said ABA President and CEO Frank Keating. "It will also help to ensure new loan origination systems and compliance software under development by lenders and the vendors on whom they rely will be adequately installed and debugged, and staff training completed, before the effective date."

ABA has engaged in a months-long advocacy effort to persuade the CFPB to delay the rule or provide a hold-harmless period after the rule takes effect for lenders that make good-faith efforts to comply. In a survey shared with the bureau, ABA found that a large majority of banks did not expect to receive their new TRID-compliant systems from vendors until July or later, leaving little to no time to test systems and train staff. By extending the effective date, the CFPB will provide additional time to install and test new systems while removing the risk of civil litigation during the two-month window.

Keating also thanked the CFPB for its announced intent to take good-faith compliance efforts into account in its initial supervisory and enforcement approach. "The TRID rules remain among the most complex with which the banking industry has had to comply, and the quality of compliance should be expected to improve based on the industry's learning curve once systems go live," he said.

--ABA Daily Newbytes

Tuesday, June 16, 2015

ABA, Trade Group CEOs Call for Support of Data Security Act

Retailers and other firms involved in the payments process should be subject to the same data security requirements as banks, ABA President and CEO Frank Keating and other trade group CEOs said in an op-ed published yesterday in The Hill newspaper.

The CEOs expressed their support of the Data Security Act, legislation introduced by Sens. Roy Blunt (R-Mo.)and Tom Carper (D-Del.) and Reps. Randy Neugebauer (R-Texas) and John Carney (R-Del.) that provides “a reasonable, flexible and scalable solution” for protecting consumers against data breaches.

The act -- modeled on the rigorous standards already in place in the financial industry under the Gramm-Leach-Bliley Act -- would replace state data protection laws with a single set of national requirements and establish a national data security and breach notification standard for financial institutions and retailers.

“As is often the case, technology and innovation have far outpaced the existing body of laws and regulations designed to keep consumers safe,” the CEOs said. “Expectations that sensitive personal and financial data is being kept safe are not being met, and Congress needs to act.” ABA recently wrote to Congress in support of the bills, whose objectives are part of the association’s Agenda for America’s Hometown Banks.  Read the op-ed.

---ABA Daily Newbytes

Friday, June 12, 2015

Friday Rate Update

30-Year Mortgage Rate Tops 4 Percent 

The rate for a 30-year fixed-rate mortgage averaged 4.04 percent this week, up from last week’s 3.87 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.2 percent. This week’s 15-year FRM rate averaged 3.25 percent, up from last week’s 3.08 percent rate. A year ago, the 15-year FRM rate averaged 3.31 percent.

--ABA Daily Newbytes

Tuesday, June 9, 2015

Survey: QM Rules Continue to Tighten Credit Availability

Eighty percent of bankers expect that the Consumer Financial Protection Bureau’s mortgage rules will continue to constrict mortgage credit, according to the results of ABA’s latest Real Estate Lending Survey released today. Of those 80 percent, nearly one-fifth characterized the impact as severe.

“As expected, the ability-to-repay and QM rules have dampened the housing market recovery,” said ABA EVP Bob Davis. “Combine that with new mortgage disclosures, which are just around the corner, and we’ll continue to see a slowdown in what should be the ideal time to buy a home.”

In more positive news, the survey found that the foreclosure rate dropped from 0.78 percent in 2013 to 0.57 percent in 2013, while the single-family home delinquency rate fell from 2.16 percent to 1.76 percent. The percentage of single family mortgage loans made to first time homebuyers increased in 2014 to 14 percent -- its highest since the survey’s inception -- from 13 percent in 2013. The 30-year fixed-rate mortgage dominated the housing market, remaining over the 50 percent mark for 2014.

---ABA Daily Newsbytes