The bank will close tomorrow at 2pm and will reopen at 9am Friday morning, January 2nd.  Happy New Year!

Mortgage Lenders Roll Out 3 Percent-Down Loans at Breakneck Pace

The quickness with which lenders have adopted 3 percent down-payment mortgages has been a nice holiday gift for the mortgage industry as well as home buyers. Lenders are able to get the product out there faster because larger numbers of them are selling loans directly to Fannie Mae and Freddie Mac instead of to aggregators or wholesale lenders that then attach their own extra guidelines -- called overlays -- to loan requirements. Also, the qualified mortgage rule has made it easier for lenders to assess quality control, underwriting, and decisions to bring products to market. Still, the mortgage industry will need to make consumers aware that low-down-payment loan products are available in order to take full advantage of the opportunity. "If you want to push it, market it, and get it out there, I think you should absolutely be able to increase your business if you market it to your clients and real estate agents and everybody else," says Michael Deery, president of San Diego-based mortgage brokerage Citywide Financial.

From "Mortgage Lenders Roll Out 3 Percent-Down Loans at Breakneck Pace"
American Banker (12/26/14) Finkelstein, Brad

Merry Christmas from St Casimirs!   Have a safe and magical holiday.

ABA, ABIA Seek Lender Discretion on Insuring Detached Structures

While ABA and its American Bankers Insurance Association subsidiary welcomed recent legislative and regulatory clarification that flood insurance is not required for garages, sheds and other detached, non-residential structures, they said yesterday that lenders should not be constrained by the loan’s purpose and should retain “broad discretion” to require insurance -- for high-value detached structures, for example.

“Congress clearly sought to address a common complaint of borrowers who use residential property to secure a loan: the requirement to purchase a separate policy to insure garden sheds and detached garages against flood loss,” the associations said in a comment letter. “We encourage the agencies to avoid issuing ‘clarifications’ and definitions that will limit unnecessarily the ability of customers to benefit from this provision.”

ABA and ABIA also sought additional clarifications and changes to the proposed rules on mandatory escrow “to ensure that escrow requirements do not inadvertently increase the cost of credit -- without advancing the congressional goal of ensuring that borrowers maintain flood insurance over the life of their loan.

Shiller Sees Risk in New Push for First-Time Homebuyers

Ultralow down payment programs sound risky to Nobel Prize-winning economist Robert Shiller. Fannie Mae and Freddie Mac plan to offer new programs that will guarantee loans with down payments of as little as 3 percent, but Shiller says this would be risky for the lender and the mortgage insurer. He doubts that the initiatives would be the best course of action. "Because it's only a 3 percent margin, if somebody defaults and they have to sell the house, they might not get all the money back." Most first-time home buyers have remained on the sidelines of the housing market as banks tightened lending standards. The National Association of Realtors recently reported that first-time home buyers account for just 33 percent of all home purchases, the lowest level in nearly three decades.

From "Shiller Sees Risk in New Push for First-Time Homebuyers"
CNBC.com (12/14/14) Gillies, Trent

Friday Rate Update

Mortgage Rates Rise

The rate for a 30-year fixed-rate mortgage averaged 3.93 percent this week, up from last week’s 3.89 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.42 percent. This week’s 15-year FRM rate averaged 3.2 percent, up from last week’s 3.1 percent rate. A year ago, the 15-year FRM rate averaged 3.43 percent

Mortgage Firms Detail Aid Programs

Fannie Mae and Freddie Mac plan to offer new low-down-payment initiatives targeting first-time home buyers, lower-income borrowers, and people who have not owned a home for at least a few years. The companies will back mortgages with down payments of as little as 3 percent. The programs could be available to borrowers with credit scores of as low as 620, the companies' current minimum for other loans. Borrowers would have to meet criteria that offset the increased risk, such as high reserves or lower debt-to-income ratios. Still, the new loans will offer borrowers an alternative to pricey mortgages backed by the Federal Housing Administration. The Fannie Mae program will be available almost immediately, while Freddie Mac expects to roll out its offering by March.

From "Mortgage Firms Detail Aid Programs"
Wall Street Journal (12/09/14) P. A2 Light, Joe

Mortgage Rates Continue to Fall


The rate for a 30-year fixed-rate mortgage averaged 3.89 percent this week, down from last week’s 3.97 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.46 percent. This week’s 15-year FRM averaged 3.1 percent, down from last week’s 3.17 percent rate. A year ago, the 15-year FRM averaged 3.47 percent.

--ABA Daily Newsbytes

HARP Refinances Continue Dropping

Fannie Mae and Freddie Mac mortgage refinances rebounded in the third quarter, while refinances through the GSEs’ Home Affordable Refinance Program continued to slide, the Federal Housing Finance Agency said on Wednesday -- an indication that housing market distress is easing.

 Total refinances rose 13 percent to 389,000 in the third quarter, while HARP refinances dropped 18 percent from the second quarter to 44,100. Fannie and Freddie have refinanced more than 3.2 million loans through HARP since the program was launched in 2009.

 

 

 

Mortgage Rates Remain Low

The rate for a 30-year fixed-rate mortgage averaged 3.97 percent last week, slightly down from the previous week’s 3.99 percent, Freddie Mac said on Thursday. At this time last year, the 30-year FRM rate averaged 4.29 percent. Last week’s 15-year FRM was unchanged at 3.17 percent. A year ago, the 15-year FRM averaged 3.3 percent


--ABA Daily Newsbytes

Happy Thanksgiving

Happy Thanksgiving from all of us at St Casimirs!  We will be closed Thursday and reopen at 9am Friday morning. Have a safe and blessed holiday

Fannie, Freddie Loan Limits Largely Unchanged in 2015


The maximum conforming loan limits for mortgages Fannie Mae and Freddie Mac purchase in 2015 will remain at current levels, the Federal Housing Finance Agency said yesterday. That means the loan limit in most areas will be $417,000 for one-unit properties.

In high-cost areas, such as Los Angeles and Washington, D.C., the maximum will remain at $625,500. Meanwhile, limits will rise in 46 counties that have experienced rising home prices -- principally in the Baltimore, Boston, Denver, Nashville and Seattle metro areas.

---ABA Daily Newsbytes

Fannie Cuts Mortgage-Rate Outlook, but Home Buyers May Not Bite

Fannie Mae now believes the 30-year fixed-rate mortgage will average about 4.3 percent next year, down two-tenths of a percentage point from its previous forecast. Lower rates will result in smaller monthly loan payments, making homeownership more affordable. However, the latest housing-market forecast from Fannie Mae does not adjust the projection for total home sales in 2015. "The housing market continues to grind its way upward, but we don't expect a breakout performance in 2015 as the fundamentals remain somewhat muted," says Doug Duncan, Fannie Mae chief economist. Mortgage activity next year will likely be very similar to activity this year, adds Duncan.

From "Fannie Cuts Mortgage-Rate Outlook, but Home Buyers May Not Bite"
MarketWatch (11/20/14) Mantell, Ruth

Friday Rate Update

Mortgage Rates Continue to Fall.

The rate for a 30-year fixed-rate mortgage averaged 3.99 percent this week, slightly down from last week’s 4.01 percent, Freddie Mac said yesterday. At this time last year, the 30-year FRM rate averaged 4.22 percent. This week’s 15-year FRM averaged 3.17 percent, down from last week’s 3.2 percent rate. A year ago, the 15-year FRM averaged 3.27 percent---

ABA Daily Newsbytes

TransUnion: Mortgage Delinquencies Fall Nearly 17 Percent

TransUnion's data show mortgage delinquencies down to 3.36 percent for the third quarter -- still above historic norms but improving. The decline of almost 17 percent from a year earlier represents a downward pattern that has stretched out for the last 11 quarters in a row. Major markets like Miami, San Francisco, Phoenix, and Los Angeles were among the areas making the biggest strides. "It's especially heartening to see major declines in areas that were hardest hit by the mortgage crisis," said TransUnion executive Joe Mellman. "In part, it speaks to the broader rebound in the economy. As unemployment continues to decline and home values improve, consumers have both greater wherewithal and motivation to stay current on their housing payments."

From "TransUnion: Mortgage Delinquencies Fall Nearly 17 Percent"
Housing Wire (11/18/14) Swanson, Brena

Small Banks Book More Loans as Slowdown Sets In

Community banks continue to expand their loan portfolios, even as the pace of growth appears to be slowing. An American Banker analysis of 310 institutions shows a 15 percent year-over-year jump in loan portfolios at banks with less than $40 billion in assets in the third quarter, with net interest income up 11 percent. Bankers say they are making more commercial-and-industrial loans, and with bigger banks setting their sights on larger corporate clients, community banks have more opportunities these days to make small-business loans. "Larger banks don't want to do a $50,000 line of credit," says Market Insights CEO Joe Sullivan. "They'd rather do a $5 million loan. So there's a continued realignment where the big banks are pushing the small businesses out the door, and small banks are picking up the slack." The $1.5 billion-asset Needham Bank in Massachusetts reported a 32 percent jump in total loans to $1.3 billion. Executive Vice President Paul Totino attributes the gain to the economic recovery, increased demand for housing, and the addition of experienced lenders, as well as efforts to diversity its loan book.

From "Small Banks Book More Loans as Slowdown Sets In"
American Banker (11/14/14) Stewart, Jackie

Friday Rate Update

Mortgage Rates Slightly Down


The rate for a 30-year fixed-rate mortgage averaged 4.01 percent this week, down from last week’s 4.02 percent, Freddie Mac said yesterday. At this time last year, the FRM rate averaged 4.35 percent--

ABA Daily Newbytes

Alternative Mortgages Making a Comeback

Adjustable-rate mortgages, jumbo mortgages, interest-only home loans, and piggybacks are just some of the products that all but vanished after the economy imploded. Now, they appear to be making a comeback in certain regions. CoreLogic DataQuick reports that ARMs accounted for just 3.5 percent of loans used to purchase Orange County, Calif., homes in the spring of 2009. Since the first of this year, one in five Orange County purchase loans was adjustable. Nationwide, nearly one in 10 loans was adjustable this past spring -- an increase from one in 66 five years earlier, reports Black Knight Financial Services. After bottoming out in 2012, mortgage credit has become increasingly available over the last couple of years, according to the Mortgage Bankers Association's mortgage credit availability index. That measure has climbed 17 percent since February 2012. Nevertheless, credit remains very tight. MBA chief economist Mike Fratantoni says the index shows that it was nine times easier to obtain a loan in 2006 than it is today.

From "Alternative Mortgages Making a Comeback"
Orange County Register (CA) (11/09/14) Collins, Jeff

Election Results Show Community Bank Muscle

ICBA released a special post-election memo for the 2014 midterms outlining the key election results for community banks, the implications on community bank issues and the industry’s position heading into the 114th Congress. ICBA’s bipartisan political action committee contributed $1.7 million to support more than 290 pro-community bank candidates and committees. In a press briefing this week, Senate Republican leader Mitch McConnell (R-Ky.) said the Senate Banking Committee will review the impact of the Dodd-Frank Act on community banks.   ---ICBA

Community Banks Most Trustworthy

More Than Half of America Doesn't Trust Banks, Prefers to Keep Money Local

Half of Americans have lost trust in banks over the last few years, and even more have lost faith in mortgage lenders, according to a new Harris Interactive Poll. Only 9 percent of Americans say they trust banks more than they did several years ago. These changing attitudes are largely due to consumers' experiences, including customer service and the quality of banking products. More consumers are using businesses closer to home, as local options appear to have a better reputation among consumers. The survey results "suggest a financial institution's sphere of influence might inversely relate to Americans' trust in it," researchers reported. Credit unions and community banks were considered the most trustworthy, with more than 75 percent of respondents rating them highly. Customer trust does not seem to impact a bank's bottom line. Even as they lost a lot of public confidence, major banks posted record-breaking profits.

From "More Than Half of America Doesn't Trust Banks, Prefers to Keep Money Local"
MainStreet (11/04/14) Reed, Eric

ABA Analyzes What Midterm Elections Mean for Bankers


ABA’s government relations team has prepared an analysis of how the Republican victory in Tuesday’s election will affect the banking industry. The analysis, which is available on aba.com, reviews the likely impact on such key issues as Dodd-Frank regulatory fixes, the Consumer Financial Protection Bureau, overall regulatory burden, data security, GSE reform and tax reform.

There is cautious optimism about the potential for tweaks to Dodd-Frank and more oversight of financial regulators, the analysis indicates. "Congress can play a critical role ... in terms of both legislation and aggressive oversight of regulatory actions," the analysis found. "The U.S. Senate under current Democratic leadership has been reluctant to take on that role. We anticipate that the incoming leadership will be more active in their oversight responsibilities and will originate and consider some regulatory relief bills in the 114th Congress. Read the analysis.

The election represented the fruit of ABA's electoral engagement efforts. Through BankPac, bankers supported more than 480 candidates with the $3.2 million -- 90 percent of that raised through state bankers associations -- they raised for the 2014 election cycle. Meanwhile, ABA's 501(c)(4), the Financial Education and Advocacy Initiative, was successful in all five of the races where it supported get-out-the-vote efforts: Arkansas, Colorado, Georgia, Iowa and Kentucky.

--ABA Daily Newsbytes

Why Housing Is Dead: First-Time Buyers Collapse To 27-Year Lows

by ZeroHedge • November 3, 2014

From Zero Hedge

 

The Millennials (one of the biggest generations in US history) are just not getting with the status quo program. As we detailed previously, with lower credit scores, less disposable income, and a soaring number of people living with their parents; so it should be no surprise that The National Association of Realtors (NAR) today admitted that first-time homebuyers plunged to the lowest level in 27 years. The blame – of course – rather than low/no-growth fiscal policies, student debt servitude, and inequality-driving cheap-funding monetary policy, is price competition from ‘investors’ and too “stringent credit standards,” perfectly mirroring FHFA’s Mel Watt’s Einsteinian insanity desire to dramatically ease lending standards and slash minimum down-payments (as we noted previously). Perhaps NAR accidentally stumbles on the biggest reason no one is buying in their profiling: the typical first-time buyer was 31-years-old, while the typical repeat buyer was 53 – smack in the middle of the Millennial collapse.

Mortgage Rates Rise

The rate for a 30-year fixed-rate mortgage averaged 3.98 percent this week, up from last week’s 3.92 percent, Freddie Mac said yesterday. At this time last year, the FRM rate averaged 4.10 percent.

---ABA Daily  Newsbytes

CoreLogic: Mortgage Application Fraud Risk Rising


The risk of mortgage application fraud rose 3.2 percent from the second quarter of 2013 to the second quarter of 2014, according to a new report from CoreLogic. However, the fraud risk index is down from the previous three quarters. The index component of fraud when a property’s value is misrepresented rose 3.3 percent year on year.

Other components of risk fell, including risk associated with misrepresentations about occupancy (which fell 1.5 percent), employment application fraud (2 percent) and income application fraud (4 percent). The risk of identity application fraud fell 18.5 percent, CoreLogic said, and the risk that applicants will have undisclosed debts fell by 22.7 percent, which the firm attributed to lender efforts to comply with the Ability to Repay rule.

Fraud risks associated with jumbo and conforming mortgages have fallen to their lowest points since the survey began in 2010, while the risk of fraud from mortgages with a loan-to-value ratio of more than 80 percent has risen to its highest point since 2010. Mortgage fraud risk was highest in Florida, Nevada, New York, Rhode Island and Hawaii, CoreLogic found. Florida and Nevada retain a large stock of foreclosed and vacant properties, which elevates the risk of property valuation fraud.

--ABA Daily Newsbytes

Fed, SEC Approve Risk Retention Rule

The Federal Reserve Board and the Securities and Exchange Commission yesterday voted to finalize the Dodd-Frank Act’s mortgage risk retention rule, aligning the qualified residential mortgage, or QRM, standard with the Consumer Financial Protection Bureau’s Qualified Mortgage rule. Other regulators finalized the joint rule on Tuesday.

The SEC voted 3-2, with both Republican commissioners opposing the final rule, while the Fed board voted unanimously.



ABA Applauds Changes to CFPB Points and Fees Cure Provision


The Consumer Financial Protection Bureau yesterday finalized a limited “cure” provision for the Qualified Mortgage rule, allowing a lender that intends to originate a QM but that later finds that points and fees exceeded the 3 percent cap to refund the excess, plus interest, within 210 days and maintain the legal protections afforded to QMs.

The bureau made several ABA-advocated changes to the final rule. It increased the cure period by 90 days and eliminated the “good faith” requirement, which ABA said injected a subjective element that negates a cure provision’s legal protections. However, the bureau limited creditors’ ability to cure after legal action, a 60-day delinquency or when a borrower identifies a points and fees miscalculation.

The cure provision takes effect upon publication in the Federal Register and will last until Jan. 10, 2021, at which point “creditors should become less reliant on points and fees buffers,” the CFPB said.

---ABA Daily Newsbytes

A Second Try at Home-Buying

Borrowers who go through foreclosure or short sale of their home usually are blocked from buying again for two to seven years afterward, depending on their individual situation. RealtyTrac estimates that 3.5 million former homeowners who succumbed to foreclosure and another 757,000 who underwent a short sale during the peak of recession between 2006 and 2010 have now satisfied the time requirement and are slowly returning to the market. "We certainly have heard from a number of lenders that boomerang buyers are coming back," confirms Mortgage Bankers Association chief economist Mike Fratantoni. As of the end of 2013, however, only a tiny fraction of these borrowers had actually gone through with a new home purchase.

From "A Second Try at Home-Buying"
New York Times (10/23/14) P. B1 Bernard, Tara Siegel

S&P/Experian: Mortgage Default Rates Increase Two Months Straight

Slightly more Americans defaulted on their home loans last month, based on the S&P/Experian Consumer Credit Default Indices. September's overall reading was 1.04 percent, a rise of three basis points from July's bottom. Defaults on first-lien mortgages bumped up 0.93 percent, while the default rate for second mortgages rose 0.52 percent. Mortgage default rates remain lower, however, than a year ago -- when they hit 1.28 percent and 0.69 percent, respectively.

From "S&P/Experian: Mortgage Default Rates Increase Two Months Straight"
Housing Wire (10/21/14) Swanson, Brena

Fannie Mae, Freddie Mac Reach Deal to Ease Mortgage Lending

The Federal Housing Finance Agency has crafted new rules in an effort to relax tight mortgage standards that have made it challenging for borrowers with imperfect credit to obtain affordable home loans. The agency oversees Fannie Mae and Freddie Mac, which in recent years have forced banks to buy back loans that turned out to be poorly underwritten. The threat of legal liability has prompted banks, in turn, to cater to consumers with stellar credit. The FHFA's proposed new rules aim to reassure banks by explicitly spelling out what conditions warrant repurchase demands and lowering the minimum down payment for loans sold to Fannie Mae and Freddie Mac to 3 percent from 5 percent.

From "Fannie Mae, Freddie Mac Reach Deal to Ease Mortgage Lending"
Los Angeles Times (10/18/14) Reckard, E. Scott; Logan, Tim

Mortgage Rate Falls Under 4 Percent for 30-Year

Fixed, 30-year mortgage interest dipped to 3.97 percent this week -- the lowest average since June of last year, according to Freddie Mac. The benchmark rate is down from 4.12 percent last week, largely in response to broader economic developments and concerns. If the bargain borrowing costs linger, experts say a refinance boomlet could surface. Many "underwater" homeowners who could not refinance during previous low-rate periods have returned to positive equity and may now be in a position to rework their loan terms.

From "Mortgage Rate Falls Under 4 Percent for 30-Year"
Wall Street Journal (10/17/14) P. C6 Light, Joe

No Need To Be Perfect...

Since the 2008 housing crash, most lenders have refused to give loans to borrowers with minor imperfections on their applications, but that is starting to change. This year, at least 15 smaller lenders have begun offering slightly riskier mortgages that are not government-backed and may come with higher interest rates or require bigger down payments. The mortgages are held on balance sheets or sold to investment funds, given the slow recovery in the securitization market. "Some lenders became afraid of their own shadows," says RPM Mortgage Inc. CEO Rob Hirt, whose company in August began lending to borrowers who have higher debt burdens or had sold a home for less than what they owed on the mortgage. "The market is beginning to realize that if you make smart and sound loans to people who don't fit in the narrow box, it doesn't make them a worse risk." The Mortgage Bankers Association says credit availability has loosened by 4.7 percent this year, but credit remains nearly 90 percent tighter than during the housing bubble.

From "You Don't Need to Be Perfect to Get a U.S. Loan Anymore"
Bloomberg (10/13/14) Shenn, Jody; Leondis, Alexis

Friday Rate Update

Mortgage Rates Decline


The rate for a 30-year fixed-rate mortgage averaged 4.12 percent this week, down from last week’s rate of 4.19 percent, Freddie Mac said yesterday. At this time last year, the FRM rate averaged 4.23 percent--

ABA Daily Newsbytes

Home Equity Lending Surges in U.S. to Five-Year High

Lenders increased their origination of home equity lines of credit by 21 percent in the 12 months ending in June, data firm RealtyTrac Inc. reports. The 797,865 Helocs given in the period represent the highest level since 2009. Bank of America and other lenders are providing more Helocs, often to their existing customers at reduced rates, as rising prices give them more equity in their homes. "This is an opportunity for the banks to offer an additional product to those homeowners they see as already well qualified and have that equity," says Daren Blomquist, vice president of RealtyTrac. "Helocs are a way for them to actually expand their mortgage businesses rather than have to cut back." BofA expanded its Heloc marketing efforts in 2013 with direct mailers, says Matt Potere, a home equity product executive at the lender. In June, the bank began offering interest-rate discounts on Helocs to customers if they have at least $20,000 in deposit or investment accounts. They get 0.13 percentage points off their rate, while those with $50,000 in accounts get a 0.25 percentage point discount.

From "Home Equity Lending Surges in U.S. to Five-Year High"
Bloomberg Business Week (10/09/14) Leondis, Alexis; Howley, Kathleen

Loan Delinquencies Drop in Nearly All Categories

Delinquencies fell in nine of 11 loan categories in the second quarter, according to the ABA Consumer Credit Delinquency Bulletin that was released today. Delinquencies rose only for mobile home loans and non-card revolving loans.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 6 basis points to 1.57 percent of all accounts -- well below the 15-year average of 2.32 percent. Meanwhile, bank card delinquencies fell one basis point to 2.43 percent of all accounts, also well below their 15-year average of 3.79 percent.

ABA Chief Economist James Chessen attributed the improving delinquencies to strong job growth, which he called the “most important factor behind keeping delinquencies at these historically low rates.” He added that “continued vigilance by consumers in managing their debt is the best protection against rising delinquencies.”

--ABA Daily Newsbytes

Keating Discusses Reg Burden, Housing Market on Bloomberg


The consolidation of community banks is due to excessive regulatory costs, ABA President and CEO Frank Keating said in an appearance on Bloomberg’s “Bottom Line” program yesterday.

Noting that we have lost, on average, one bank per weekday since 2008, he emphasized that “many of them were merged or sold because of the regulatory burden -- 15 to 20 percent of your operating income going to compliance. That’s silly, and I hope the regulators would recognize that to stifle a vital part of the financial services marketplace is not in the country’s best interests.”

Keating also discussed the housing market. He observed that sluggish wage and job growth, as well as student debt, are inhibiting the market, but he also fingered the Dodd-Frank mortgage rules, which he called “pretty strict” in their check-the-box limitations.

--ABA Daily Newsbytes

Home price growth in 20 major metro areas slowed to 0.6 percent in July, with year-over-year growth declining from 13.1 percent in January to 6.7 percent in July, according to yesterday’s Standard & Poor’s/Case-Shiller Home Price Index release.

Nineteen of the 20 cities in the Case-Shiller 20-city composite saw slower growth, and only Las Vegas, Miami and San Francisco reported double-digit increases. The 20-city index remains 16.1 percent below its 2006 peak.---


ABA Daily Newsbytes

When Mortgage Rates Rise

Mortgage rates are likely to remain low for a few more months, according to economists. After predicting that an increase was inevitable this year, they now believe the average 30-year fixed mortgage will not hit 5 percent until mid-2015, partly in response to the Federal Reserve's plans to scale down its purchases of mortgage-backed securities. The 30-year national average was 4.28 percent a week ago, according to HSH.com. Although 5 percent is still low by historical norms, such an increase can reduce buying power more than borrowers may think and can have a substantial effect on demand. Nonetheless, homes remain relatively affordable, with people spending about 15 percent of household median income for the median-priced home, compared to about 22 percent from 1985 to 2000.

From "When Mortgage Rates Rise"
New York Times (09/28/14) P. RE12 Prevost, Lisa

Credit Unions Trail Banks in Serving Minority Borrowers

Banks are almost 40 percent more likely to originate home purchase loans to minority borrowers than credit unions, according to the 2013 Home Mortgage Disclosure Act data released last week. The data showed that 16.3 percent of bank home purchase mortgages and 16.5 percent of bank subsidiary home purchase mortgages went to minority borrowers. Only 11.8 percent of credit union home purchase loans went to minority borrowers.

The same pattern existed for refinance loans as 14.6 percent and 13.9 percent of bank and bank subsidiary loans, respectively, went to minority borrowers, while only 10.9 percent of credit union refinance loans went to minority borrowers.

---ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Down Slightly

The rate for a 30-year fixed-rate mortgage averaged 4.20 percent this week, down from last week’s 4.23 percent, Freddie Mac said yesterday. At this time last year, the FRM averaged 4.32 percent.

ABA Daily Newbytes

Housing Market Hurt By Student Debt


Back in February we reported that student loan debt was preventing some first-time home buyers from entering the housing market. Now a new study aims to put a price tag on those missed opportunities for the real estate world.

The study [PDF] by real estate firm John Burns Consulting found that $83 billion in home sales, or 414,000 homes, won’t happen this year in part because of consumers’ high student loan debt, the Los Angeles Times reports.

The figure works out to be about 8% of all home sales for the year, the firm estimates.
Researchers found that for every $250 per month in student loan debt that consumers owed their home purchasing power decreased by $44,000. With more than 5.9 million consumers under the age of 40 owing more than $250 a month in student debt, that would significantly affect the housing market.

Additionally, the report found that most households paying $750 or more per month in student loans are essentially priced out of the housing market all together.

“We actually think it’s pretty conservative,” said Rick Palacios, director of research at John Burns Consulting, tells the LA Times. “We’re only looking at people age 20 to 40. We know there’s a big chunk of households over age 40 who have student debt, too.”

As reported previously, consumers with student loan debt face an uphill battle when it comes to purchasing a home thanks in part to a new federal rules that went into effect last month. The new rule gives mortgage lenders broad legal protections as long as they do not approve loans for buyers whose total months debt exceeds 43% of their monthly gross income.

Additionally, the Federal Housing Administration is looking to scrap a waiver that helped many first-time home buyers in the past. Currently, the agency allows mortgage lenders it works with to ignore student loans debt that’s been deferred a year or more when assessing a borrower’s eligibility for a loan.

Read more here:

Study: Housing Market Poised To Lose $83B This Year Because Of Consumers’ Student Loan Debt

By Ashlee Kieler  September 22, 2014

Mom-and-Dad Banks Step Up Aid to First-Time Home Buyers

Last year, 27 percent of those purchasing a home for the first time received a cash gift from relatives or friends to come up with a down payment, according to data from the National Association of Realtors (NAR). That’s up from 24 percent in 2012 and matches the highest share since the group began keeping records in 2009. The inability to come up with the down payment was the top reason for renting rather than buying property, according to the Federal Reserve’s report on the 2013 economic well-being of households issued in July. The report also showed 10 percent of those leasing apartments last year were looking to buy a house. Fifty-four percent of first-time buyers in 2013 said their purchases were delayed because the burden of student loans prevented them from saving enough for a down payment, according to the NAR survey. First-time buyers accounted for 29 percent of previously-owned home purchases in July, compared with about 40 percent historically, data from the agents’ group show.

From "Mom-and-Dad Banks Step Up Aid to First-Time Home Buyers"
Bloomberg (09/19/14) Jamrisko, Michelle

Friday Rate Update

Mortgage Rates Climb


The rate for a 30-year fixed-rate mortgage averaged 4.23 percent this week, up from last week’s 4.12 percent and marking the largest one-week gain since the week ending May 1, Freddie Mac reported yesterday. At this time last year, the FRM rate averaged 4.5 percent.

--ABA Daily Newsbytes

Plagge: Community Banks Face ‘Avalanche of Regulation’


An avalanche of regulation is harming community banks, ABA Chairman Jeff Plagge told the Senate Banking Committee yesterday. Plagge, president and CEO of Northwest Financial Corp., Arnolds Park, Iowa, stressed that the imbalanced “one-size-fits-all” regulatory climate has directly hurt the operations of smaller banks and, by extension, raised the costs of credit for bank customers.

“The impact goes beyond just dealing with new compliance obligations -- it means fewer products are offered to customers,” he said. “This means less credit in our communities. Less credit means, fewer jobs, lower income for workers and less economic growth,” For example, he added, 58 percent of banks have canceled or delayed a new product because of regulatory burden, and 44 percent have ended an existing product or service.

Plagge urged senators to pass several relief bills that would reduce unnecessary notice requirements, mandate cost-benefit analysis for accounting rules, expand the safe harbor for mortgage lending, allow more banks to qualify as rural if appropriate. Meanwhile, he added, prudential regulators should adopt a customized examination approach that would give credit to well-run banks that know their customers.

---ABA Daily Newbytes

The Best in Baltimore!

The Baltimore area was shut out of a list of the top 200 healthiest banks in America, although a small community bank based in the city was among the healthiest in the state of Maryland.

St. Casimir's Savings Bank, a four-branch bank based in Canton, was one of the healthiest in the state by the measure of a key ratio called the Texas Ratio, according to data compiled by online rater DepositAccounts.com. The bank was one of only three in Maryland to post a Texas Ratio of 0 percent.

The Texas Ratio alone wasn't enough to push St. Casimir's onto a Deposit Accounts list of the 200 healthiest banks in 2014. Only one bank in Maryland, OBA Bank of Germantown, made that list at No. 42. OBA is being acquired by First National Bank Corp. of Pittsburgh.

Deposit Accounts did give Baltimore's St. Casimir's an overall rating of B+ thanks in part to a strong Texas Ratio buoyed by no non-current loans as of June 30. The bank was hurt by deposits that decreased $3.04 million, or 3.88 percent in the last year. The rater listed the bank's total assets at $97.1 million.

Read more at Baltimore Business Journal.

Mortgage Applications Plunge to 14-Year Low

Mortgage interest rose for the first time in four weeks, creeping up to 4.27 percent last week from 4.25 percent, and even the slight uptick proved a setback for home borrowers. The Mortgage Bankers Association reported that total loan application activity declined 7.2 percent, sinking the group's index to its lowest point in almost 14 years. Refinancing volume fell 11 percent week-to-week on a seasonally adjusted basis, landing at a bottom not seen since November 2008. Requests for purchase loans, meanwhile, were down 3 percent from the previous week to the lowest level since February of this year.

From "Mortgage Applications Plunge to 14-Year Low"
CNBC.com (09/10/14) Olick, Diana

Small Lenders Seek to Thrive in Tough Era

Despite the difficult environment for small banks, characterized by tightening regulations and historically low interest rates, Pat McCune, president and CEO of the $546 million-asset Community Bank in Carmichaels, Pa., wants them to succeed. "Local independent banks provide a valuable service to our community," he says. "They can make decisions and direct the resources of the bank in a way that best helps the local community." Even when Community Bank's merger with Monessen-based First Federal Savings Bank is completed in October, boosting its assets to almost $870 million, McCune says the bank will remain small and focused on the needs of local residents. McCune says Community Bank is concerned about the competition posed by regional banks, as they benefit from their larger size but remain small enough to target Community Bank's customers. However, he expects prudent, measured growth for his bank down the road. "We're not empire builders," he says. "We're trying to gather together the resources to do the most effective job we can at servicing our customer."

From "Small Lenders Seek to Thrive in Tough Era"
Pittsburgh Tribune-Review (09/10/14) Fleisher, Chris

ABA Hits Credit Unions in New Radio Ad

With federal credit unions gathering in Washington, D.C., this week to lobby for their agenda on Capitol Hill, ABA is running a radio ad emphasizing the need to end the credit unions’ outdated tax subsidy. ABA President and CEO Frank Keating will be heard during drive time on WTOP, the most-listened-to station in the D.C. metropolitan area.

“Government data show that just one percent of [credit union] home loans went to low-income borrowers,” Keating says. “For that, credit unions avoided $2 billion in taxes. Ask Congress why taxpayers should give credit unions $2 billion for doing just one percent of their job."--- ABA Daily Newsbytes

5 Million Borrowers Face Imminent Payment Shock

By Black Knight Financial's estimate, 2.5 million Americans will see an average $250 more tacked onto their monthly mortgage payment as interest rates on home equity lines of credit reset over the coming three years. Should borrowers tap into more of their available credit during that time, however, the payment increases could be even more drastic. Kostya Gradushy of Black Knight notes that HELOC borrowers whose rates are coming up for reset currently are using slightly less than 60 percent of their available credit. But if they access more of those funds, the monthly increase in their mortgage payments likely will exceed the $250 estimate. For those who are looking at a rate reset in 2019 -- a group that is using about 40 percent of their available credit -- the monthly hike in their mortgage payments is expected to be about $200.

From "2.5 Million Borrowers Face Imminent Payment Shock"
Housing Wire (09/02/14) Swanson, Brena

Share    

Home Equity Lines of Credit Surge as Banks Approve Loans to More and More Owners

Homeowners nationwide are accessing home equity credit lines at an increasingly faster clip. New data from Experian and researchers at the Oliver Wyman consulting organization shows that owners have extracted approximately $120 billion in new home equity credit lines in the last year -- 27 percent more than in the 12 months prior. In some states, new home equity line borrowing is mushrooming: up 169 percent in Wyoming, 53 percent in Florida, and 52 percent in Ohio. Dollar volumes of new lines are highest in areas with the priciest residences, particularly in the Northeast and along the West Coast. In California alone, almost $6 billion in new equity credit lines have been originated over the last 12 months, researchers report. For owners with high credit scores, the average amount that can be drawn down on new lines is just under $120,000. Banks even appear to be lending to applicants with poor credit. New credit lines to "deep subprime" owners -- those with the worst credit files -- topped out above $30,000 in the three-month period ended June 30.

From "Home Equity Lines of Credit Surge as Banks Approve Loans to More and More Owners"
Washington Post (08/30/14) P. 6 Harney, Kenneth R.

Mortgage Rates Stay at 52-Week Low

Freddie Mac reports that the 30-year fixed mortgage rate came in at 4.10 percent this week, unchanged from last week. The average represents the lowest level in 52 weeks and is down from 4.53 percent at the beginning of 2014. Meanwhile, the average rate for 15-year loans, which are popular for refinancing, bumped up to 3.25 percent from 3.23 percent.

From "Mortgage Rates Stay at 52-Week Low"
Associated Press (08/29/14)

An Unfinished Chapter at Countrywide

Reports indicate that the U.S. Department of Justice could file a civil lawsuit against Countrywide Financial co-founder and former CEO Angelo Mozilo, who has largely avoided accountability for his role in the mortgage crisis. It remains to be seen whether the department actually will file the lawsuit, as it dropped a criminal case against Mozilo in 2011 following a two-year investigation. The lawsuit would come seven years after the company reported that it was drawing down its entire $11.5 billion revolving credit line, which marked the beginning of the end for the subprime mortgage lender, which was acquired by Bank of America in 2008. If the department does file a civil suit, it remains uncertain whether it would also pursue former Countrywide directors, who should have known about the company's abuses and were paid between $345,000 to $539,000 in 2007 -- a year that was not an anomaly -- for their service.

From "An Unfinished Chapter at Countrywide"
New York Times (08/24/14) P. BU1 Morgenson, Gretchen

Home Buyers Overwhelmed by Loan Info

A Discover Home Loans survey of 1,037 home buyers reveals that many struggle to determine how much they will owe on their mortgages. Eighty-seven percent of those polled determined the type of property they could afford, but just 52 percent had calculated their projected monthly payment. Additionally, 41 percent of borrowers had not determined their down payment, and 48 percent were unaware of how much their mortgage payments would increase or decrease based on the cost of the home. To better understand the mortgage process, 59 percent of buyers sought help from mortgage bankers, 42 percent from real estate agents, 38 percent from financial advisers, 37 percent from family or friends, and 30 percent from online financial tools or calculators. "Regardless of whether you're an experienced or inexperienced home buyer, there's a lot of information out there, and it's difficult to discern what's important," says Cameron Findlay, chief economist at Discover Home Loans.

From "Home Buyers Overwhelmed by Loan Info"
Wall Street Journal (08/21/14) Martin, Anya

Mortgage Applications Increase

Mortgage applications increased 1.4 percent from one week earlier, according to the Mortgage Credit Availability Index. The Market Composite Index, which is a measure of the mortgage loan application volume, increased for the week ending Aug. 15. The refinance share of mortgage activity increased from 54 percent to 55 percent and the adjustable-rate mortgage share of activity increased to 7.8 percent of total applications.

Economy: Mortgage Lenders

The results of a Fannie Mae poll reflect strong belief among home lenders that new underwriting rules will impact their costs and processes. About 80 percent of survey respondents said they would avoid making loans that fall short of post-crisis regulations. Roughly 84 percent, however, expect nearly all of their dollar volume to fall into the "qualified" category. Credit criteria will have to tighten to satisfy the new standards, according to 36 percent of those polled.

From "Economy: Mortgage Lenders"
Investor's Business Daily (08/15/14) P. A2

How the New FICO Score Model Will Affect Banks

It remains to be seen how much Fair Isaac Corp.'s recent change to its credit score model to exclude paid and unpaid medical debt will affect banks, as some bankers say they already exclude medical debt if the consumer has a strong credit background otherwise. Barry Harvey, chief credit officer and executive vice president at the $12.8 billion-asset Trustmark Corp. in Jackson, Miss., says, "This change of how FICO is viewing unpaid medical bills really doesn't change the actual decisions that are being made by underwriters when it comes to evaluating consumer credit requests. However, for those institutions operating in an automated credit decisioning environment, the new score may result in more automatic approvals and less automatic declines due to the higher score." Additionally, bankers note that it will take at least a year to implement the new model, as it first must be adopted by the three main credit bureaus. Meanwhile, Fannie Mae and Freddie Mac continue to use a FICO scoring model that is two systems behind the new one, and banks generally follow their lead.

From "How the New FICO Score Model Will Affect Banks"
American Banker (08/14/14) Witkowski, Rachel

The Refi Boom Is Officially Over -- And Won't Return Soon

A year after other economists made the same call, Freddie Mac has declared an official end to the refinancing boom that kicked off in the third quarter of 2008. The company determines the termination of a refi boom based on when purchase loans make up 50 percent or more of all mortgage applications. The threshold was reached the week of May 8 this year. Although refi volume has since crept back up, Freddie Mac chief economist Frank Nothaft acknowledges, "Even with recent home price gains and rock-bottom interest rates, American households are not cashing out equity at rates we've seen historically."

From "The Refi Boom Is Officially Over -- And Won't Return Soon"
American Banker (08/13/14) Finkelstein, Brad

Fewer Loans Falling Into Foreclosure, Delinquency

Lenders initiated foreclosure proceedings on just 0.4 percent of home loans in the second quarter, down from 0.45 percent in the previous three months, according to the Mortgage Bankers Association. The rate of so-called foreclosure starts is far below the 1.42 percent pace seen at the peak of the financial crisis in the third quarter of 2009. The second quarter of 2006 was the last time the rate was this low. The mortgage delinquency rate was a seasonally adjusted 6.04 percent, the lowest since the end of 2007 and down from 6.11 percent in the first quarter. Home price appreciation and the rebounding job market helped drive down delinquencies, says MBA chief economist Mike Fratantoni. Still, banks must work though more than 1 million loans already in the foreclosure process, which will likely take two to three more years, estimates Moody's chief economist Mark Zandi. "Ten years later, the already-painful foreclosure crisis is finally coming down to an end," he says.

From "Fewer Loans Falling Into Foreclosure, Delinquency"
Wall Street Journal (08/08/14) Light, Joe

Friday Rate Update

Mortgage Rates Edge Up Slightly

The rate for a 30-year fixed-rate mortgage edged up slightly to 4.14 percent from the previous week’s 4.12 percent, and the 15-year FRM rate rose from 3.23 percent to 3.27 percent, Freddie Mac said yesterday. At this time in 2013, the 30-year rate averaged 4.40 percent and the 15-year rate averaged 3.43 percent.

--ABA Daily Newsbytes

Mortgage Closing Costs on the Rise, National Survey Says

Based on survey responses from lenders in all 50 states and the District of Columbia, Bankrate.com reports that the expense of closing on a home loan has climbed from last year. U.S. mortgage closing costs rose 6 percent to $2,539 in June from $2,402 a year earlier, assuming a $200,000 loan and a 20 percent down payment. While third-party fees for appraisals and other services inched up 1 percent, origination fees charged by the lenders themselves increased 9 percent. The highest closing costs were documented in Texas, at an average of $3,046.

From "Mortgage Closing Costs on the Rise, National Survey Says"
Los Angeles Times (08/04/14) Khouri, Andrew

Fed Survey: ATR/QM Rule Lowers Mortgage Approvals

About half of the banks participating in the Federal Reserve’s latest senior loan officers survey reported that the CFPB’s ability-to-repay/qualified mortgage rule had reduced approval rates on applications for prime jumbo home-purchase loans and for nontraditional mortgages.

A majority of large banks but only about half of all other banks said the rule has had no effect on approvals of prime conforming mortgages, in part because they qualify for the safe harbor for mortgages that pass the GSEs' automated underwriting models.

The survey also found that banks continued to ease lending standards and terms for many types of loan categories amid a broad-based pickup in loan demand. A small percentage of respondents reported having eased standards on commercial and industrial loans over the past three months, while moderate to large fractions of banks reported having eased various terms on such loans.

On the demand side, a significant fraction of banks reported stronger demand for C&I loans from firms of all sizes. They attributed the increased demand to customers' need to finance investments in plant or equipment, accounts receivable, inventories, or mergers or acquisitions.

---ABA Daily Newsbytes