Happy New Year!

Merry Christmas and Happy Holidays

from our family to yours....

Existing Home Sales Up


Existing home sales rose 0.7 in November, landing at a seasonally adjusted annual rate of 5.61 million -- the highest sales pace since February 2007 -- the National Association of Realtors said yesterday. The gain was largely attributed to a surge in the Northeast, and marks the third consecutive monthly increase. 

--ABA Daily Newsbytes

FHFA Scorecard Leaves Out Fannie, Freddie Capital

The Federal Housing Finance Agency issued its 2017 scorecard outlining specific conservatorship priorities for Fannie Mae, Freddie Mac and their Common Securitization Platform. The scorecard focuses on maintaining credit availability, reducing taxpayer risk, and further developing the CSP infrastructure. However, ICBA is concerned that the scorecard doesn’t mention rebuilding the government-sponsored enterprises’ capital, which is in violation of the Housing and Economic Recovery Act of 2008. ICBA also is concerned that a Treasury draw by one or both of the GSEs could destabilize the mortgage market.  --ICBA

An Unintended Consequence of Dodd-Frank: Fewer Small Banks

by John Mason

Big banks are now defending the 2010 Dodd-Frank law.

A recent editorial in the The Wall Street Journal said that: "JPMorgan's Jamie Dimon and Lloyd Blankfein of Goldman Sachs have urged against repeal, and other bank CEOs are also suggesting policy small-ball rather than wholesale reform."

Why should these banking leaders want change?

Larger banks adjusted a long time ago to the most recent comprehensive banking legislation in recent history.

As far as bigger banks were concerned, the Dodd-Frank law was out-of-date by the time it was passed.

The bigger banks don't stand still. Of course, they objected to the new laws and made a lot of noise about how the industry was being discriminated against. Yet these bigger banks had the knowledge and resources to leap ahead of the legislation to regulate them.

That said, one byproduct of the legislation was that many smaller banks were hurt by it. Dodd-Frank created 22,000 pages of regulations. A number of the smaller banks had to divert resources to address newly created compliance issues.

In the seven years following the ending of the Great Recession, the FDIC reported that the banking system lost between 100 and 150 commercial banks per year. This does not include the commercial banks that were lost during the Great Recession. From 2010 to 2014, the number of community banks declined 14%.

In addition, tighter regulations prevented new banks from entering into the commercial banking industry.

Read more here.

Friday Rate Update

RATES 

Mortgage Rates Reach 2016 Highs
The rate for a 30-year fixed-rate mortgage averaged 4.13 percent this week, up from the previous week's 4.08 percent rate, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.95 percent.

This week's 15-year FRM averaged 3.36 percent, up from last week's 3.34 percent rate. A year ago, the 15-year FRM averaged 3.19 percent. ---ABA Daily Newsbytes

E-signs of the times: How e-signatures, e-notarization confound mortgage lending

by Jeanne Pinder

You use electronic signatures these days just about everywhere: when you scrawl with your fingernail on a coffee shop tablet, click to accept an online contract, even when you type your PIN at the ATM. So different forms of e-signing are commonly accepted everywhere, right?

Not so fast. In the banking world, e-signatures occupy a dark, mysterious thicket of state and local regulations. Rules on acceptances vary from bank to bank and transaction to transaction. A welter of different methods exist: Click to sign? Type in your name? Or is a full “wet” signature required with a raised notary seal? Which is right when and where? How can I know?

For all the finality signing on the dotted line represents, e-signatures raise a flurry of questions that lack universal answers. And as with so many things involving digital speed, it’s largely an issue of technology outpacing reality.

Electronic signatures came quickly with the rise of the web, but a patchwork of state regulations and company practices led to conflicts and inconsistencies. The Clinton administration regularized the mess, to a certain degree, with two e-signature laws: The federal Electronic Signatures in Global and National Commerce Act (ESIGN) and Uniform Electronic Transactions Act (UETA) both date to 2000.

Read more here.....

MGIC Presents Fun Facts

Loan Limits Raised

Mortgage

FHFA Raises 2017 Conforming Loan Limits for Fannie, Freddie

The Federal Housing Finance Agency increased the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2017. The limit for one-unit properties will rise to $424,100 from $417,000 in most of the country, the first increase in the baseline loan limit since 2006. The Housing and Economic Recovery Act of 2008 (HERA) established the baseline loan limit of $417,000 and requires this limit to be adjusted each year once the average U.S. home price returned to its pre-decline level. The FHFA’s House Price Index for the third quarter rose 1.5 percent from the previous quarter and registered a 1.7 percent rise from the third quarter of 2007. ICBA recognizes that while an increase in the conforming loan amount will help make conforming mortgage financing more widely available, it remains concerned that Fannie and Freddie are severely undercapitalized. The association is calling on FHFA Director Mel Watt to require the GSEs to develop and implement a capital restoration plan as required by HERA.  --ABA Daily Newsbytes

Mortgage Rates Climb Again 

The rate for a 30-year fixed-rate mortgage averaged 3.57 percent this week, up from the previous week's 3.54 percent rate, Freddie Mac said on Thursday. At this time last year, the 30-year FRM rate averaged 3.98 percent.

This week's 15-year FRM averaged 2.88 percent, up from last week's 2.84 percent rate. A year ago, the 15-year FRM averaged 3.2 percent.

---ABA Daily Newsbytes

Mortgage Rates Climb Again 

The rate for a 30-year fixed-rate mortgage averaged 3.57 percent this week, up from the previous week's 3.54 percent rate, Freddie Mac said on Thursday. At this time last year, the 30-year FRM rate averaged 3.98 percent.

This week's 15-year FRM averaged 2.88 percent, up from last week's 2.84 percent rate. A year ago, the 15-year FRM averaged 3.2 percent.

---ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Climb

The rate for a 30-year fixed-rate mortgage averaged 3.54 percent this week, up from the previous week's 3.47 percent rate, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.87 percent.

This week's 15-year FRM averaged 2.84 percent, up from last week's 2.78 percent rate. A year ago, the 15-year FRM averaged 3.09 percent. 

---ABA Daily Newbytes

Happy Halloween!

FHFA: GSEs Fall Short of Low-Income Housing Goals 

The Federal Housing Finance Agency in its Annual Housing Report on Friday said that both Fannie Mae and Freddie Mac failed to meet their affordable housing goals for low and very-low income buyers purchasing single-family homes in 2015.

The goal was for 24 percent of loans the GSEs buy to go to households with incomes under 80 percent of their area’s median income and 6 percent to go to households with incomes under 50 percent of AMI. According to the report, Fannie and Freddie hit 23.5 percent and 22.3 percent, respectively, for low-income households (those with incomes under 80 percent of AMI). For very-low income households (those with incomes under 50 percent of AMI), Fannie came in at 5.6 percent, while Freddie hit only 5.4 percent. Read the report. 

--ABA Daily Newsbytes




 The colonial jack o'lanterns are courtesy of Colonial Williamsburg.  Plan a visit there this fall!  

Friday Rate Update

Mortgage Rates Dip Lower 

The rate for a 30-year fixed-rate mortgage averaged 3.47 percent this week, down from the previous week's 3.52 percent rate, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.76 percent.

This week's 15-year FRM averaged 2.78 percent, down from last week's 2.79 percent rate. A year ago, the 15-year FRM averaged 2.98 percent.

--ABA Daily Newsbytes

Economic Bits

FHFA Index: Home Prices Rise in August 

U.S. home prices rose 0.7 percent in August, according to the Federal Housing Finance Agency’s House Price Index released yesterday, following a 0.5 increase the month prior. Prices were up 6.4 percent from a year earlier, marking eight consecutive year-on-year increases of more than 5 percent. The FHFA's monthly index is calculated using the prices of houses bought with mortgages backed by Fannie Mae and Freddie Mac. 

Consumer Confidence Declines
The Consumer Confidence Index decreased in October, landing at 98.6 points following an eight-year high in September, the Conference Board said yesterday.

“Consumers’ assessment of current business and employment conditions softened, while optimism regarding the short-term outlook retreated somewhat,” said the Conference Board’s Lynn Franco. “Overall, sentiment is that 
the economy will continue to expand in the near-term, but at a moderate pace.” 




Home Price Growth Picks Up
Home price growth in 20 major metro areas accelerated in August, with year-over-year growth at 5.3 percent, according to the Standard & Poor’s/Case-Shiller Home Price Index released yesterday. Prices have grown at a rate of 5 percent or higher since early 2015. Ten cities reported year-over-year growth, and 14 cities reported increases in July. Year-on-year growth was highest in Portland, Seattle and Denver.   

---ABA Daily Newsbytes

FDIC: Share of ‘Unbanked’ Continues Downward Trend 

The share of the population that is unbanked continued falling in 2015, reaching 7 percent -- the lowest share yet recorded in the FDIC’s biennial survey of unbanked and underbanked households released yesterday. The reduction in the unbanked was also seen across many population segments and demographics that have historically been less likely to use mainstream financial services, including blacks, Hispanics, the disabled and low-income households.

Half of the ongoing decline in unbanked status can be attributed to economic improvements, the FDIC said. As people become employed or grow their assets, they often enter or return to the banking system. Major contributing factors to unbanked status include not having enough money to justify opening an account -- more than one-third of the unbanked said this was the main reason -- as well as income volatility.

Meanwhile, the share of households that were “underbanked” -- those that have a bank account but have also used nonbank, alternative financial services such as check cashers -- remained steady at 19.9 percent. Continuing a growing trend from previous surveys, more than a quarter of unbanked and 15 percent of underbanked households relied on prepaid cards in 2015, versus about 7 percent of fully banked households.

The survey indicated that prepaid card users often use the cards as a substitute for a bank account; unbanked households that had previously had a bank account were 22 percentage points more likely to use them than those who had never had a bank account. Indeed, 12.6 percent of unbanked households used a prepaid card as an emergency savings vehicle.

The survey, conducted every two years since 2009 by the FDIC and U.S. Census Bureau, found that 46.5 percent of unbanked households were previously served by a bank, consistent with previous survey results. About a quarter of these said they were likely to re-open a bank account in the next year, down 10 points from 2013.

Read the survey here.


--ABA Daily Newsbytes

Housing Starts Plunge 

Housing starts fell 9.9 percent to a seasonally adjusted annual rate of 1.05 million units, the Commerce Department said yesterday. The September figure was 11.9 percent below the September 2015 rate. Permits for new construction, which are considered a gauge of future demand, were 6.3 percent above August’s rate, landing at an annual rate of 1.15 million--   ABA Daily Newsbytes

Millennials Limit Their Spending

65% of Americans Are Concerned With Spending

 In this climate, who knows what lies ahead, so many Americans are choosing to play it safe.

To that end, nearly 2 in 3 Americans are limiting their monthly spending, according to a new report by Bankrate.com.

The majority of those polled cited the need to save more money as the reason behind a more cautious approach to spending, while one-quarter blamed stagnant income, followed by worries about the economy and having too much debt.

Read more here.

Friday Rate Update

Mortgage Rates Edge Up 

The rate for a 30-year fixed-rate mortgage averaged 3.47 percent this week, up from last week’s 3.42 rate, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.82 percent.

This week's 15-year FRM averaged 2.76 percent, up from 2.72 a week prior. A year ago, the 15-year FRM averaged 3.03 percent

---ABA Daily Newsbytes

Friday Rate Update

Fixed Mortgage Rates Tumble to Near Yearly Lows

Freddie Mac reported on Sept. 29 that the average 30-year fixed-rate mortgage fell to 3.42 percent this week from 3.48 percent a week ago and 3.85 percent a year ago. This marks the lowest point for the 30-year fixed rate since it hit a yearly low of 3.41 percent in early July. Meanwhile, the average 15-year fixed-rate mortgage dropped to 2.72 percent from 2.76 percent a week ago and 3.07 percent a year ago, and the five-year adjustable-rate mortgage edged up to 2.81 percent from 2.8 percent a week ago but was down from 2.91 percent a year ago. "Investors flocked to the safety of government bonds causing the 10-year Treasury yield to continue its descent following the [Federal Open Market Committee's] decision to leave rates unchanged," said Freddie Mac chief economist Sean Becketti. "The course of the economy is uncertain, yet consumers continue to be a bright spot. The September consumer confidence index is up 3 percent to 104.1, exceeding forecasts and reaching a new cycle high."

From "Fixed Mortgage Rates Tumble to Near Yearly Lows"
Washington Post (09/29/16) Orton, Kathy

Survey: Bank Customers Seek Mortgage, Auto Loan, College Savings Advice    

September 28, 2016--- ABA Daily Newsbytes

Two in five Americans say they plan to consult their bank for advice in the next year, with the most common topics for advice being auto purchases, mortgages and saving for college, according to a recent ABA/Ipsos survey.

Fifteen percent said they would seek advice on a car loan, while 14 percent said the same about a home mortgage. Eleven percent said they would look for guidance on financing their own education, while one in 10 said they would look for information about their children’s education. Finally, 10 percent said they would seek advice on retirement planning and 9 percent on financing a home remodeling project.

“Banks can be effective partners in helping customers improve their financial well-being and achieve some of life’s biggest milestones,” said ABA SVP Nessa Feddis. “Bank employees pride themselves on listening to their customers, helping them to identify goals and connecting them with the financial solutions they need."

Friday Rate Update

Freddie Mac: Mortgage Rates Decreased in Anticipation of Fed's Decision

Freddie Mac reported on Sept. 22 that mortgage rates fell again in anticipation of the results of the Federal Open Market Committee's meeting. "The 10-year Treasury yield declined after last week's post-Brexit high in anticipation of the [Federal Reserve's] September policy meeting," said Freddie Mac chief economist Sean Becketti. "The 30-year fixed-rate mortgage followed Treasury yields, falling two basis points and settling at 3.48 percent." This is down from 3.5 percent last week and 3.86 percent a year ago. Meanwhile, the 15-year fixed-rate mortgage dropped to 2.76 percent, down from 2.77 percent a week ago and 3.08 percent a year ago, and the five-year Treasury-indexed hybrid adjustable-rate mortgage slipped to 2.8 percent, down from 2.82 percent last week and 2.91 percent last year.

From "Freddie Mac: Mortgage Rates Decreased in Anticipation of Fed's Decision"
HousingWire (09/22/16) Ramírez, Kelsey

TransUnion: Rate Hike Could Cause Payment Shock for 9M Borrowers

A new report from TransUnion indicates that an interest-rate hike of 25 basis points by the Federal Reserve would result in 92 million credit-active consumers experiencing a monthly payment increase, but the average increase would be just $6.45 per month. However, 9.3 million consumers would not be able to absorb the increase. "While it's important to address the 9.3 million consumers who cannot absorb the payment shock, 90 percent of exposed consumers can afford their increased monthly payments," said Nidhi Verma, senior director of research and consulting at TransUnion. "However, if interest rates continue to rise progressively, more consumers might not be able to absorb the payment shock." Borrowers with one or more variable-rate credit products, including credit cards, home equity lines of credit, or certain mortgages and personal loans, are among those at risk. According to Verma, "In theory, 137 million consumers could be exposed to a payment shock, but in fact not all of these consumers will be impacted." Varma noted that some consumers pay their balances in full each month, or their annual percentage rates cannot be further increased.

From "TransUnion: Rate Hike Could Cause Payment Shock for 9M Borrowers"
HousingWire (09/21/16) Ramírez, Kelsey

Mortgage Applications Tank 7.3 Percent Amid Rising Rates

The Mortgage Bankers Association (MBA) reported on Sept. 21 that total mortgage application volume fell 7.3 percent on a seasonally adjusted basis last week from the previous week. Refinance applications fell 8 percent to the lowest level since June, though refinance volume remains 26 percent higher than the same week last year. "Mortgage rates increased to their highest level since June last week as comments by some Fed officials made it appear that the Federal Reserve is closer to raising rates," said MBA chief economist Michael Fratantoni. "The average refi loan size fell to its lowest level in three months as more jumbo borrowers left the market." Meanwhile, purchase application volume dropped 7 percent from the previous week but was up 3 percent from the same week a year ago. "Higher rates appeared to have a bigger impact on entry-level buyers, as the average purchase loan size increased to its highest level since June," said Fratantoni.

From "Mortgage Applications Tank 7.3 Percent Amid Rising Rates"
CNBC (09/21/16) Olick, Diana

ICBA to Congress: Community Banks Are Not Wells Fargo

ICBA urged Congress to keep in mind the differences between community banks and megabanks as lawmakers consider any legislative response to Wells Fargo’s massive consumer fraud. In a letter to members of Congress, ICBA called for targeted regulatory relief for community banks to promote consumer choice in financial services. “Community bankers are gravely concerned that the legislative and regulatory reaction to Wells Fargo will again fail to distinguish between too-big-to-manage banks and community banks,” ICBA President and CEO Cam Fine wrote. “Costly, unnecessary new requirements would only hamper community banks’ ability to serve their customers and further drive consolidation and concentration of the nation’s financial resources.” On the same day that Wells Fargo CEO John Stumpf testified at a fiery Senate Banking Committee hearing, ICBA wrote that community bankers are outraged by the scandal and operate a relationship-based business model at odds with the megabank’s transaction-based approach. ICBA noted that Congress should avoid the kinds of overreaching laws and regulations enacted after the recent financial crisis while continuing to advance tailored regulatory relief for community banks. “Such legislation is before Congress today, and its momentum should not be stalled by the fraud at Wells Fargo,” Fine wrote. “Fix what’s wrong with American financial services by strengthening what’s right with it—community banks.”  ---ICBA News

U.S. Bank Survey: Americans Positive about Life, Anxious about Money 


Most Americans feel positive about their lives but show anxiety about their finances, according to the first U.S. Bank Possibility Index released by Minneapolis-based U.S. Bank yesterday. Three in five Americans feel satisfied with their lives overall, and 65 percent are optimistic about changes over the next year.

However, a majority (52 percent) reported being concerned about their finances. Just under half said they were concerned about paying off their debt and about paying bills, and 55 percent are worried about saving for unexpected life events. Only four in 10 Americans make and follow a budget, the survey found.

At work, this financial stress drives dissatisfaction with salary, with one in three saying they are dissatisfied with their ability to support themselves and their families. However, the survey found that it doesn’t take much more income to be more satisfied with life. The average income difference between those with 25 percent life satisfaction to 89 percent satisfaction was only $12,000 in annual salary.

Financial stress also hinders some home lives, with 42 percent saying their financial situation makes them less satisfied at home and 57 percent saying their finances hinder the personal life they want to enjoy. Only 34 percent of non-homeowners said they will be able to buy a home in the next five years, and four in 10 respondents who valued vacation time and travel said they could not afford it.

--ABA Daily Newsbytes

Regions Bank Pays $52.4 Million Settlement Over FHA Loans

Regions Bank has agreed to pay a $52.4 million settlement to the government, making it the latest bank to settle alleged abuses from originating mortgage loans insured by the Federal Housing Administration (FHA), the Department of Justice announced Tuesday. Regions, a unit of Birmingham, Ala.-based Regions Financial, admitted that between January 1, 2006, and December 31, 2011, it certified for FHA insurance mortgage loans that did not meet the U.S. Department of Housing and Urban Development's (HUD) standards for borrower creditworthiness.

From "Regions Bank Pays $52.4 Million Settlement Over FHA Loans"
USA Today (09/13/16) Krantz, Matt

Friday Rate Update

Freddie Mac: Mortgage Rates Slip Down

Freddie Mac reported on Sept. 8 that mortgage rates fell slightly this week after rising last week and that low rates continue to fuel refinances. The average 30-year fixed rate mortgage slipped to 3.44 percent from 3.46 percent a week ago and 3.9 percent a year ago. Meanwhile, the average 15-year fixed-rate mortgage fell to 2.76 percent from 2.77 percent a week ago and 3.1 percent a year ago, and the five-year Treasury-indexed hybrid adjustable-rate mortgage dropped to 2.81 percent from 2.83 percent a week ago and 2.91 percent a year ago. "Since the Brexit vote, the refinance share of mortgage activity has remained above 60 percent," said Freddie Mac chief economist Sean Becketti. "As mortgage rates continue to range between 3.41 percent and 3.48 percent, many are taking advantage of the historically low rates by refinancing."

From "Freddie Mac: Mortgage Rates Slip Down"
HousingWire (09/08/16) Ramírez, Kelsey

Meanwhile, at banks *other than* St Casimirs....

Single Women Pay Mortgages More Faithfully Than Men, Yet They Are Charged More

Researchers at the Housing Finance Policy Center of the Urban Institute found that single women default on mortgages less often than men, but they tend to be charged more for their loans and are denied credit more often. Furthermore, the study shows that despite having lower incomes on average than single men, single women tend to make bigger down payments. Researchers found that single women generally present "weaker credit characteristics" at the application stage, so they are more likely to end up with subprime loans. There are concerns about inequity in the system given that single women had statistically lower default rates throughout the study, which encompassed the prime boom years of 2004-2007, the housing bust and global financial crisis from 2008-2010, and the post-recession recovery years of 2011-2014. The researchers wrote, "Given that more than one-third of single women borrowers are minorities and almost half of them live in low-income communities, we need to develop more robust and accurate measures of risk to ensure that we aren't denying mortgages to women who are fully able to make good on their payments."

From "Single Women Pay Mortgages More Faithfully Than Men, Yet They Are Charged More"
Washington Post (09/07/16) Harney, Kenneth R.

Mortgage Rates Wander Higher But Remain Near Yearly Lows

Federal Reserve Chairman Janet Yellen's Aug. 26 speech signaling that the central bank is moving closer to raising its benchmark rate initially caused an increase in mortgage rates, but they have since dropped again to near yearly lows. Freddie Mac reported on Sept. 1 that the average 30-year fixed-rate mortgage was 3.46 percent, up from 3.43 percent a week ago but down from 3.89 percent a year ago. The 30-year fixed rate has been less than 3.5 percent for more than two months. Meanwhile, the average 15-year fixed-rate mortgage was 2.77 percent, up from 2.74 percent a week ago but down from 3.09 percent a year ago, and the average five-year adjustable-rate mortgage was 2.83 percent, up from 2.75 percent a week ago but down from 2.9 percent a year ago. "The 10-year Treasury yield inched up in response to [Yellen's] speech last Friday then settled near last week's average," said Freddie Mac chief economist Sean Becketti. "Mortgage rates have hovered between 3.41 and 3.48 percent for the past 10 weeks."

From "Mortgage Rates Wander Higher But Remain Near Yearly Lows"
Washington Post (09/01/16) Orton, Kathy

Pending home sales expanded in most of the country in July and reached their second highest reading in over a decade, according to the National Association of Realtors®. Only the Midwest saw a dip in contract activity last month.

The Pending Home Sales Index,^* a forward-looking indicator based on contract signings, rose 1.3 percent to 111.3 in July from a downwardly revised 109.9 in June and is now 1.4 percent higher than July 2015 (109.8). The index is now at its second highest reading this year after April (115.0).

Lawrence Yun, NAR chief economist, says a sizable jump in the West lifted pending home sales higher in July. “Amidst tight inventory conditions that have lingered the entire summer, contract activity last month was able to pick up at least modestly in a majority of areas,” he said. “More home shoppers having success is good news for the housing market heading into the fall, but buyers still have few choices and little time before deciding to make an offer on a home available for sale. There’s little doubt there’d be more sales activity right now if there were more affordable listings on the market.”

Read more here at Realtor.org.

Friday Rate Update

Mortgage Rates Unchanged 

The rate for a 30-year fixed-rate mortgage averaged 3.43 percent this week, unchanged from the previous week, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.84 percent.

This week’s 15-year FRM averaged 2.74 percent, unchanged from last week. A year ago, the 15-year FRM averaged 3.06 percent---

ABA Daily Newsbytes

Black Knight: Fewer Homeowners Refinancing

According to a new report from Black Knight Financial Services, homeowners are not refinancing their mortgages despite rates being near all-time lows. The report shows that the number of borrowers eligible to refinance climbed to 8.7 million at the end of June, but prepayment speeds dropped 12 percent in July. Also in July, the national delinquency rate edged up 5 percent, marking the first gain above 4.5 percent since February. However, foreclosure starts were down 12 percent from June to 61,300 in July, which is the second lowest monthly total in a decade. Furthermore, foreclosure inventory declined 20 percent on a year-over-year basis to the lowest level since July 2007.

From "Black Knight: Fewer Homeowners Refinancing"
HousingWire (08/22/16) Ramírez, Kelsey

See it larger here....

Friday Rate Update

Mortgage Rates Down Slightly 

The rate for a 30-year fixed-rate mortgage averaged 3.43 percent this week, down from the previous week’s 3.45 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.93 percent.

This week’s 15-year FRM averaged 2.74 percent, down from 2.76 percent last week. A year ago, the 15-year FRM averaged 3.15 percent.

--ABA Daily Newsbytes

What Dearth of New Banks Means for the Industry's Future

The U.S. House Oversight and Government Reform Committee recently examined the fact that only three banks have been organized since 2009 and what that means for banking in this country. Prior to 2009, between 100 and 200 new banks were formed every year, according to the Federal Reserve Bank of Richmond. The Richmond study analyzed whether this pattern was similar to prior recessions and found it was very unusual. In all prior periods, the quantity of new bank applications dipped during the recession, but quickly rebounded to normal levels during the recovery. Following the last recession, however, the numbers dropped virtually to zero and remain flat-lined today. One outcome will be a lack of sufficient services for small businesses and consumers, with rural areas particularly harmed. Another concern is that a dearth of new banks will lead the industry to become even more concentrated in a few very large banks, eventually undoing the fundamental structure of the U.S. banking system. The Richmond study and other analysis suggest regulatory policies have a significant role in the dearth of new banks, not just economic conditions. Regulators tightened their standards during the recession, but the time may have come to readjust for the good of the economy.

From "What Dearth of New Banks Means for the Industry's Future"
American Banker (08/17/16) Sutton, George

Friday Rate Update

TES
Mortgage Rates Tick Up 

The rate for a 30-year fixed-rate mortgage averaged 3.45 percent this week, up from the previous week’s 3.43 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.94 percent.

This week’s 15-year FRM averaged 2.76 percent, up from 2.74 percent last week. A year ago, the 15-year FRM averaged 3.17 percent.

--ABA Daily Newsbytes

Credit Availability Isn't as Tight as Experts Thought

The Mortgage Bankers Association (MBA) changed its methodology to more accurately determine mortgage credit availability, which led to the finding that mortgage credit availability has actually increased over the past several months. "We expanded our historical series to cover over 10 years of historical data, and followed that with the introduction of four MCAI [Mortgage Credit Availability Index] sub-indices, conventional, government, conforming, and jumbo, to help users better understand what is driving changes in the overall MCAI," said Lynn Fisher, vice president of research and economics at the MBA. "We are excited to announce an updated methodology that responds more effectively to changes in the marketplace and better accounts for the frequent addition and subtraction of investor offerings." The MCAI increased 1 percent to 165.3 in July, with an increase indicating that credit is loosening. The jumbo and government MCAIs saw the greatest increase in availability, both up 1.3 percent monthly, followed by the conventional MCAI, up 0.7 percent, and the conforming MCAI, up 0.1 percent. "The overall credit availability increase in July was driven by an uptick in programs that allow for refinancing among relatively lower credit score borrowers," Fisher said. "We observed this trend in both the conventional and government programs."

From "Credit Availability Isn't as Tight as Experts Thought"
HousingWire (08/04/16) Ramírez, Kelsey

Friday Rate Update

Mortgage Rates Down 

The rate for a 30-year fixed-rate mortgage averaged 3.43 percent this week, down from the previous week’s 3.48 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 3.91 percent.

This week’s 15-year FRM averaged 2.74 percent, down from 2.78 percent last week. A year ago, the 15-year FRM averaged 3.13 percent

--ABA Daily Newsbytes

1 Million-Plus More Homeowners Can Benefit From Refi Post-Brexit

Black Knight Financial Services says the drop in mortgage rates following the Brexit vote means 1.3 million more borrowers could benefit from refinancing, boosting the total to 8.7 million — the highest number since 2012. Newly eligible borrowers currently have rates at or above 4.25 percent. "Unlike the 66 percent of borrowers Black Knight identified a few months ago, who could have both likely qualified for and had incentive to refinance in the spring of 2015, but for whatever reason didn't do so, the vast majority of these new candidates did not have such incentive last year," said Ben Graboske, data & analytics executive vice president at Black Knight. "This has produced a nearly 50 percent increase in the number of borrowers with new-found incentive to refinance, which may well be creating a more pronounced impact on refinance applications and originations as these borrowers rush to take advantage." However, purchase applications are not getting the same boost from lower mortgage rates, as the savings are offset by higher home prices.

From "1 Million-Plus More Homeowners Can Benefit From Refi Post-Brexit"
CNBC (08/01/16) Olick, Diana

Friday Rate Update

Freddie Mac: Mortgage Rates Continue Upward Trend

Freddie Mac reported on July 28 that the 30-year fixed-rate mortgage rose to 3.48 percent from 3.45 percent a week ago but fell from 3.98 percent a year ago. The 15-year fixed-rate mortgage climbed to 2.78 percent from 2.75 percent a week ago but was down from 3.17 percent a year ago. Meanwhile, the five-year hybrid adjustable-rate mortgage held steady at 2.78 percent for the week but was down from 2.95 percent a year ago. "Home sales continue to benefit from the persistently low mortgage rates with June's new home sales coming in at an annualized rate of 592,000 homes, its fastest pace since 2008," said Freddie Mac chief economist Sean Becketti. "The 10-year Treasury yield remained flat this week in anticipation of the [Federal Reserve's] July policy meeting. Mortgage rates, on the other hand, rose another three basis points to 3.48 percent."

From "Freddie Mac: Mortgage Rates Continue Upward Trend"
HousingWire (07/28/16) Ramírez, Kelsey

Economic Notes from the ABA

Home Price Growth Eases 

Home price growth in 20 major metro areas continued to rise in May, with year-over-year growth at 5.2 percent, according to the Standard & Poor’s/Case-Shiller Home Price Index released yesterday. Home price growth was down from the previous month’s 5.4 percent rate. Prices have grown at a rate of 5 percent or higher since early 2015. Eight cities reported year-over-year growth, and 12 cities reported increases in May. Year-on-year growth was highest in Portland, Seattle and Denver. 

 




New Home Sales Rise 

Sales of new homes were up 3.5 percent in June to a seasonally adjusted annual rate of 592,000 units, the Commerce Department said yesterday. The rise followed a decrease in May, and June’s figure was 25.4 percent above last year’s number. The median new home price for the month was $306,700. 

Friday Rate Update

Mortgage Rates Edge Up 

The rate for a 30-year fixed-rate mortgage averaged 3.45 percent this week, up from the previous week’s 3.42 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.04 percent. 

This week’s 15-year FRM averaged 2.75 percent, up from 2.72 percent last week. A year ago, the 15-year FRM averaged 3.21 percent.

---ABA Daily Newsbytes

Gallup Survey: Majority of Americans Think Cashless Society Will Be Reality

A new Gallup poll reveals that 62 percent of Americans surveyed expect the United States to become a cashless society at some point in their lifetime, with all purchases made electronically or with credit or debit cards. Americans already make payments from an expanding menu of electronic options, fewer make cash transactions, and younger populations are becoming more comfortable without cash in their pockets, said Gallup. Fifty-eight percent of those 65 and older and 63 percent of those between the ages of 18 and 29 foresee a cashless society in the future. Overall, only 25 percent responded that a cashless society was unlikely, and just 11 percent said it was very unlikely.

From "Gallup Survey: Majority of Americans Think Cashless Society Will Be Reality"
AL.com (07/18/16) Dean, Charles J.

Friday Rate Update

Mortgage Rates Barely Budge as Risk Appetite Remains Low

Freddie Mac reported on July 14 that the average 30-year fixed-rate mortgage rose to 3.42 percent, up one basis point from the previous week and 11 basis points from the all-time low set in 2012. Meanwhile, the average 15-year fixed-rate mortgage was 2.72 percent, down from 2.74 percent the previous week, and the average five-year hybrid adjustable-rate mortgage was 2.76 percent, up from 2.68 percent. Freddie Mac indicated that mortgage rates did not fall as much as Treasury yields after the Brexit vote and have not bounced back as much since then, and "this pattern suggests that mortgage rates are likely to remain low throughout the summer."

From "Mortgage Rates Barely Budge as Risk Appetite Remains Low"
MarketWatch (07/14/16) Riquier, Andrea

Study: Financial Literacy Dips Even as Americans’ Finances Recover 

Consistent with overall economic improvement, measures of Americans’ financial stress and fragility continue to improve -- even as financial literacy trends slightly downward -- according to the 2016 Financial Capability in the United States study released yesterday by the FINRA Investor Education Foundation and the Global Financial Literacy Excellence Center. The share of Americans satisfied with their personal financial condition has doubled since 2009 to 31 percent.

The survey showed improvements in several indicators, such as ability to pay bills, saving more than one spends, paying credit card balances in full and calculating retirement needs. Forty-six percent have three months’ worth of expenses set aside in an emergency fund, up 11 points from 2009. The share of recent homebuyers who put down at least 20 percent rose 9 points to 33 percent.

However, even as overall finances improved, Americans’ financial literacy continued a downward trend. In 2009, 42 percent answered four out of five basic financial questions correctly; in 2015, only 37 percent did. The questions cover everyday situations relating to interest rates, inflation, bond prices, mortgages and risk. Middle-income respondents showed the biggest drops in knowledge relative to both poorer and wealthier respondents. Despite these results, 76 percent rated their own financial knowledge as “high” -- up 9 points from 2009.

Student loans remain an area of stress for the quarter of respondents with outstanding student debt. More than half of those with student debt said they did not calculate their monthly payments before taking on the debt and that they would have changed their approach to financing their education if they had to do it again. Large shares of student loan borrowers are having a hard time managing their debt. Nearly half said they are concerned they will be unable to pay off their debt, and 37 percent have been late with a payment at least once in the previous year.

--ABA Daily Newsbytes

Millions of Spenders Are Ready to Come Back From the Mortgage Crisis

The number of people who lost their homes to foreclosure peaked seven years ago, and many are once again applying for loans as their credit scores begin to improve. These credit score improvements, combined with gains in both employment and income, could bolster consumer spending over the next couple of years. According to data from the Federal Reserve Bank of New York, the number of consumers with a new foreclosure added to their credit report totaled 6.8 million from 2007 to 2010. Negative events like short sales and foreclosures typically roll off a borrower's credit report after seven years, and for many, that anniversary is fast approaching. This could boost demand for homes, increase spending on durable goods like appliances and furnishings, and even prompt consumers to apply for new credit cards or auto loans. "Banks are awash in reserves, so it's a backdrop that's ripe for further extension and further growth in consumer credit," said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York. However, many people who experienced foreclosure also had trouble paying other bills, resulting in a bigger hit to their credit scores, which could stay lower for longer.

From "Millions of Spenders Are Ready to Come Back From the Mortgage Crisis"
Bloomberg (07/07/16) Stilwell, Victoria

Friday Rate Update

Mortgage Rates Fall 

The rate for a 30-year fixed-rate mortgage averaged 3.41 percent this week, down from the previous week’s 3.48 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.04 percent.

This week’s 15-year FRM averaged 2.74 percent, down from 2.78 percent last week. A year ago, the 15-year FRM averaged 3.2 percent.

--ABA Daily Newsbytes

FHFA Report Highlights Results of GSEs' Nonperforming Loan Sales

The Federal Housing Finance Agency's first report on the sales of nonperforming loans (NPL) owned by Fannie Mae and Freddie Mac shows that only 24 percent of the 8,849 loans sold before June 30, 2015, were resolved, about half through foreclosures. However, the report also reveals that a significant percentage of loans sold to investors had better outcomes than nonperforming loans in the portfolios of Fannie and Freddie. Eight months after the loans were sold, 21 percent of the borrowers avoided foreclosure while 16 percent went into foreclosure, compared with 14 percent of borrowers of loans held in government-sponsored enterprise (GSE) portfolios who avoided foreclosure and 20 percent who went into foreclosure, according to the report. "What that says is the NPL sales are better at avoiding foreclosure and resolving loans more quickly than leaving the severely delinquent loans in GSE portfolios," says Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute. Goodman notes that investors buying nonperforming loans have incentives to offer principal reductions and more flexibility in modifying loans than GSE servicers.

From "FHFA Report Highlights Results of GSEs' Nonperforming Loan Sales"
American Banker (07/05/16) Collins, Brian

Jumbo Mortgages Play Larger Role at U.S. Banks

Some lenders continue to increase jumbo mortgage lending in response to regulatory pressure and other challenges since the mortgage crisis. High-dollar home loans rose to 24 percent of mortgage approvals at six of the largest U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, PNC Financial Services Group, and SunTrust Banks — in 2015 from 21 percent the year before, according to an analysis of federal home loan data. In 2012, jumbo loans accounted for just 12 percent of all mortgage approvals at the six banks. Jumbos are attractive to lenders because they typically go to borrowers who have high credit scores, big down payments, and low default rates. Moreover, jumbos are not linked to government programs that help back home loans — programs that cost banks tens of billions of dollars in fines after the financial crisis. The focus on jumbos has contributed to a decline in lending to black and Hispanic borrowers because people in those groups rarely receive jumbos.

From "Jumbo Mortgages Play Larger Role at U.S. Banks"
Wall Street Journal (07/05/16) P. C1 Ensign, Rachel Louise