“In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting FHA Commissioner Carol Galante will extend FHA’s temporary waiver of the anti-flipping regulations.” With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days, but this rule is waived through December 31, 2012, unless otherwise extended or withdrawn by FHA. “All other terms of the existing Waiver will remain the same. The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers. The Waiver continues to be limited to sales meeting the following conditions: All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value.
Payroll Tax Extension Funded By New Mortgages in 2012
Get your Mortgage Refi or Purchase Applications in because beginning January 1, 2012, new, mandatory loan fees will make buying a home and refinancing one more expensive.
U.S. Payroll Tax Extension : Funded By New Mortgages
In December 2010, the U.S. government passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The act was meant to stimulate the national economy by lowering taxes, among other plans.
One such stimulus was a one-year FICA payroll tax reduction. FICA stands for Federal Insurance Contributions Act. FICA taxes fund Medicare and Social Security. The act lowered FICA taxes from from 6.2 percent to 4.2 percent for 2011 only.
Last week, the Senate voted to extend the FICA tax holiday through February 29, 2012 at a cost of $33 billion. The House is expected to approve the measure, where it will then await signature by the President. The bill is expected to be signed into law this week.
From Title IV of the bill’s final form, these costs will be recouped via the mortgage market. The section is titled “Mortgage Fees And Premiums”. In it, Congress instructs Fannie Mae and Freddie Mac, and the FHA to take following specific measures :
- Fannie Mae and Freddie Mac : Increase loan guarantee fees by 10 basis points or more versus current levels, and do not decrease other costs to compensate
- FHA : Increase mortgage insurance premiums by 10 basis points
The extra fees amount to roughly $10 per month per $100,000 borrowed.
In places like San Francisco or Arlington, Virginia, therefore where local jumbo loan limits reach as high as $625,500 and $729,750 for conventional and FHA mortgages, respectively, mortgagors should expect to pay as much as $73 more each month.
The lender must forward those monies to the U.S. Treasury.
The U.S. Government Changed Your Mortgage Payment
It’s been tough to shop for a mortgage rate since the economy hit the skids in 2007. Mortgage rates have been in free-fall, plunging from near 7 percent on a 30-year fixed-rate mortgage to today’s levels near 4 percent.
But as rates have dropped, loan costs have increased.
- In 2008, the government introduced loan-level pricing adjustments (LLPAs) on all loans.
- In 2009, the government upped its LLPAs 7 times throughout the course of the year
- In 2010, closing costs jumped 37% as banks met government compliance standards.
- In 2011, the FHA more than doubled monthly mortgage insurance premiums.
Each time loan costs rise, it mutes the effects of falling mortgage rates. Low rates don’t matter if high costs wipe them out.
For 2012, the government’s payroll tax extension’s net effect is to raise mortgage rates by roughly 0.10%. According to Freddie Mac’s weekly mortgage rate survey, this would immediately push conventional mortgage rates to an 8-week high.
For FHA-insured homeowners, the increase in the monthly mortgage insurance premium will render scores of homeowners FHA Streamline Refinance-ineligible. All borrowers must meet a 5% minimum savings requirement per FHA Streamline Refinance guidelines.
Raising mortgage insurance premiums by 10 basis points makes it that much harder to be eligible. If you’re FHA and you want to refinance via the FHA Streamline Refinance, get your application and case number now.
Beat The Increase : Start Your Application Before January 1, 2012
The government’s payroll tax extension would not go into effect until January 1, 2012 which means that loans submitted and in-process prior to January 1, 2012 should not be subject to higher fees and/or higher rates of mortgage insurance.
“Existing” loans are exempt from the new fees.
If you’ve been waiting for mortgage rates to fall, stop it. It won’t matter if mortgage rates fall because loan costs are rising. Get ahead of the change. Get your rate locked and get yourself in-process. It’s extra savings to your mortgage.
Refi IF You Can! Rates Hit New Record Low, Again
The average rate on the 30-year fixed mortgage fell back down to 3.94%, a record low set earlier in the fall.
Low rates offer a great opportunity for those who can afford to buy or refinance. Still, few people are able to take advantage of them.
Freddie Mac said Thursday the rate on the 30-year home loan fell from 3.99% the previous week. The average rate of 3.94% is the lowest rate ever, according to data from the National Bureau of Economic Research.
The average rate on the 15-year fixed mortgage fell to 3.21% from 3.27%. That’s also a new record.
Rates have been below 5% for all but two weeks this year. Yet this year could be the worst for home sales in 14 years.
Low mortgage rates haven’t spurred more home sales. Sales of previously occupied homes are just slightly ahead of last year’s dismal sales figures — the worst in 13 years. New-home sales appear headed to their worst year on records dating back half a century.
Mortgage applications have risen modestly in recent weeks but are up from extremely low levels, according to the Mortgage Bankers Association.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many Americans don’t want to sink money into a home that could lose value over the next three to four years.
Some lenders say they are seeing an increase in applications through the Obama administration’s refinancing program, which was broadened in October to allow up to 1 million more homeowners lower their monthly mortgage payments. But the Mortgage Bankers Association said such government-assisted loans account for only a small portion of refinancing applications.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.
The average fee for the 30-year loan rose to 0.8 from 0.7 and the fee on the 15-year fixed mortgage was unchanged at 0.8.
The average rate on the five-year adjustable loan fell to 2.86% from 2.93%. The average rate on the one-year adjustable loan increased slightly to 2.81% from 2.8%.
The average fee on the five-year loan rose from 0.5 to 0.6 and the fee on the one-year adjustable loan was unchanged at 0.6.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
FHA & VA Max Loan Limits Are Back, But Not Freddie/Fannie
President Barack Obama signed a bill Friday that reinstates the recently expired higher loan limits that were in effect for FHA and VA loans through December 31, 2013 but does not provide this extension to Freddie Mac and Fannie Mae.
This bill returns the limit on FHA loans to the multi-tiered arrangement that existed under the Economic Stimulus Act of 2008, provisions for which expired on October 1. Since that date the FHA and GSE maximum has been at $625,500. Under the restored limits the highest FHA loan available in designated high cost areas will be $729,750. Loans written between October 1 and today’s effective date of the new legislation will not be eligible for the new limits. Limits on VA loans will return to the levels established under the Veterans Benefits Improvement Act of 2008 which are, in some cases, higher than FHA limits.
The administration and many congressional Democrats had opposed the higher limits for FHA because this might increase FHA’s market share at the same time the government was trying to encourage private lending. Others were opposed to excluding the GSEs from the increase, also because of the potential impact on the FHA share.
The National Association of Home Builders (NAHB) was quick to applaud the bill, issuing a press release from Chairman Bob Nielsen that says in part, “We commend congressional leaders in both parties and each chamber of Congress for taking this action to boost overall mortgage liquidity in the marketplace, create jobs, and provide home owners and home buyers with safe and affordable financing. “Restoring the higher FHA loan limits will help to stabilize home values, provide constancy while private investors re-enter the market, and enable millions of creditworthy consumers to get home loans with the best mortgage rates and lowest fees and downpayment requirements”
Filed under Mortgage
HARP 2.0 Fannie Mae DU REFI PLUS Changes
REFI & DU REFI PLUS (Fannie Mae Bulletin 11/15/11)
Program Extension
The HARP program has been extended. Accordingly, lenders will now be able to originate Refi Plus and DU Refi Plus mortgage loans provided the note date is on or before December 31, 2013.
Maximum LTV Ratios and Eligible Products for Refi Plus
Fannie Mae is removing the maximum LTV ratio limit for Refi Plus mortgage loans secured by fixed-rate mortgages with terms up to 30 years. This includes loans with terms of 15 years, which were previously restricted to a maximum LTV ratio of 105%. There continue to be no limits on the CLTV or HCLTV ratios.
The maximum LTV ratio limits for all occupancy and property types are:
* no maximum for fixed-rate mortgages with terms up to 30 years,
*105% for fixed-rate loans with terms greater than 30 years up to 40 years, and
*105% for ARMs with initial fixed periods greater than or equal to five years and terms up to 40 years (as permitted by the ARM plan).
Effective Date
The expansion of the LTV ratio limits is effective for Refi Plus mortgage loans with application dates on or after December 1, 2011.
DU Implementation of LTV Expansion
The changes to the LTV ratio limits described above will be implemented in DU in March 2012. Until such time as DU is updated, DU loan casefiles that receive an Ineligible recommendation due to an LTV ratio above 125% will not be eligible for delivery.
Changes to Underwriting Requirements for Refi Plus
A number of changes are being made to the manual underwriting requirements for Refi Plus, including:
Mortgage payment history requirements: The lender must determine that the borrower has not had any mortgage delinquencies on the existing mortgage in the most recent six month period, and no more than one 30-day delinquency in months 7 – 12. This is a change from the existing mortgage delinquency policy, which varies based on whether the borrower’s payment is increasing or decreasing.
Requalification requirements for large payment increases: A new policy is being introduced that requires the borrower to be requalified for the new loan if there is a large payment increase. The following requirements must be met when the principal and interest payment increases by more than 20% of the current contractually obligated payment under the note:
*minimum representative credit score of 620;
*maximum DTI ratio of 45%;
*verification of income sources and amounts in accordance with the Selling Guide, Chapter B3-3 Income Assessment; and
*verification of assets to close if the borrower is required to bring funds to closing
In the event that the note provides for more than one payment option, the lender must use the lowest payment option to determine whether the increase exceeds 20%. If the borrower’s payment is increasing by 20% or less, the standard Refi Plus guidelines continue to apply.
Removal of bankruptcy and foreclosure policy: Fannie Mae is removing the requirement that the borrower (on the new loan) meet the standard waiting period and re-establishment of credit criteria in the Selling Guide following a bankruptcy or foreclosure. The requirement that the original loan must have met the bankruptcy and foreclosure policies in effect at the time the loan was originated is also being removed.
Borrower benefit requirement: To be eligible for Refi Plus and DU Refi Plus, the borrower must receive a benefit in the form of either a reduced monthly mortgage payment (principal and interest) or a more stable product, such as a move to a fixed-rate mortgage from an ARM. Fannie Mae is updating the borrower benefit criteria to also include a reduction in the interest rate or a reduction in the loan amortization term as eligible borrower benefits.
Effective Date
The changes to the Refi Plus underwriting requirements are effective for mortgage loans with application dates on or after December 1, 2011.
Loan-Level Price Adjustments for Refi Plus and DU Refi Plus
Fannie Mae is significantly reducing the maximum amount of loan-level price adjustments (LLPAs) that apply to “HARP” mortgage loans – loans secured by principal residences with LTV ratios greater than 80%. The following changes apply:
*The cap applicable to the sum of the LLPAs and the Adverse Market Delivery Charge (AMDC) on HARP mortgage loans with amortization terms less than or equal to 20 years is being reduced to 0.00%. As a result, all delivery fees are effectively eliminated for this category of loans.
*The cap applicable to the sum of the LLPAs and the AMDC on HARP mortgage loans with amortization terms greater than 20 years is reduced to 0.75%.
*LTV ratio ranges in the tables have been updated to reflect the higher LTV ratios that will now be permitted.
Effective Dates
The pricing changes are effective for all Refi Plus and DU Refi Plus whole loans purchased on or after January 3, 2012, and for mortgage loans delivered into MBS with issue dates on or after January 1, 2012.
Clarification of Lender Representations and Warranties
One of the important components of Refi Plus and DU Refi Plus is the waiver of certain representations and warranties that lenders commit to in the origination of these types of mortgage loans. The Selling Guide currently describes the representations and warranties that apply to the original loan being refinanced as well as the new loan being originated.
With this Announcement, Fannie Mae is providing further clarification on certain aspects of the lender’s representations and warranties on the original loan for Refi Plus, including those related to project eligibility, fraud, Fannie Mae’s Charter, and compliance with laws.
Effective Date
The changes to the lender representations and warranties are effective for all Refi Plus mortgage loans with application dates on or after December 1, 2011. (Note: The DU Refi Plus representations and warranties have not changed.)
All data in the loan casefile is complete, accurate, and not fraudulent.
The lender follows the instructions in the DU Underwriting Findings Report regarding income, employment, asset, and fieldwork documentation.
The lender complies with all other requirements documented in the Selling Guide, A2-2.1-04, Limited Waiver of Contractual Warranties for Mortgages Submitted to DU.
When a lender exercises a DU Refi Plus property fieldwork waiver, Fannie Mae accepts the property value estimate submitted to DU as the market value for the subject property, and the lender is not required to make any representation or warranty as to value, marketability, or condition of the subject property.
If the lender obtains an appraisal for the subject property, the lender is responsible for the standard representations and warranties related to the value, marketability, and condition of the property as reflected in the property valuation used to support the refinance transaction.
The lender is not responsible for the standard representations and warranties related to project eligibility, with the exception that the lender must represent and warrant that the property is not in a condo or co-op hotel or motel.
HARP 2.0 Freddie Mac Open Access Changes
RELIEF REFINANCE MORTGAGES – OPEN ACCESS (Freddie Mac 11/15/11 Bulletin)
Effective for Mortgages with loan applications dated on or after December 1, 2011 and Freddie Mac Settlement Dates on or after January 3, 2012
■ Adding a Borrower benefit provision allowing the Relief Refinance Mortgage to be originated for the purpose of reducing the monthly P&I payment
■ Extending the expiration date of this offering to December 31, 2013
■ Revising the requirement related to the Mortgage payment history for the Mortgage being refinanced
■ For Mortgages with LTV ratios less than or equal to 80%, requiring maximum TLTV and HTLTV ratios of 105%
■ For Mortgages with LTV ratios less than or equal to 80%, allowing for a more flexible use of refinance proceeds
Effective for Mortgages with loan applications dated on or after December 1, 2011 and Freddie Mac Settlement Dates on or after March 15, 2012
■ We are removing the maximum LTV ratio of 125% for fixed-rate Mortgages sold under fixed-rate Cash (the 105% maximum LTV ratio for ARMs will remain).
■ We are also permitting the use of HVE to determine property value for certain 1- to 2-unit properties.
Effective for Mortgages with loan applications dated on or after December 1, 2011 and Freddie Mac Settlement Dates on or after June 1, 2012
■ We are removing the maximum LTV ratio of 125% for fixed-rate Mortgages sold under fixed-rate Guarantor (the 105% maximum LTV ratio for ARMs will remain). The Guide will be updated with a future Bulletin to reflect this change.
Changes to Loan Prospector®
On or before March 15, 2012, Loan Prospector will be updated to recognize Relief Refinance Mortgages – Open Access with LTV ratios greater than 125%. Until Loan Prospector is updated, Sellers cannot complete loan assessments for Relief Refinance Mortgages – Open Access with LTV ratios greater than 125%. Loan Prospector has not been updated to reflect the maximum 105% TLTV and HTLTV ratios for Relief Refinance Mortgages – Open Access with LTV ratios less than or equal to 80%. Sellers must ensure that this requirement is manually applied. HVE values returned on Loan Prospector Feedback Certificates can be used to determine property value for Relief Refinance Mortgages – Open Access only for Loan Prospector submissions on or after March 15, 2012.
Filed under Mortgage
U.S. Banks Face Significant Risks In Euro Crisis
About one-half of top U.S. banks surveyed by the Federal Reserve reported making loans or extending credit to European banks, which are under massive pressure from an ongoing political crisis.
The findings from a quarterly lending poll suggested that the U.S. banking system faces significant risks from Europe, despite relatively small direct exposure to the troubled sovereign bonds of southern European states like Greece.
“About one-half of domestic bank respondents, mostly large banks, indicated that they make loans or extend credit lines to European banks or their affiliates or subsidiaries, and about two-thirds of the foreign respondents indicated the same,” the U.S. central bank said in its Senior Loan Officer Survey published on Monday.
Of the domestic banks, about two-thirds reported having tightened standards on loans to European financial institutions in the third quarter, many considerably.
The Fed’s report was part of a wider quarterly survey on lending standards in the United States, which found fewer domestic banks loosened terms for corporate and industrial loans, another sign that growth will remain tepid.
Filed under Mortgage
Updated Changes on HARP “Stimulus” Refi Program
(From the FHFA News Release)
The new program enhancements address several other key aspects of HARP including:
*Eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages and lowering fees for other borrowers;
*Removing the current 125 percent LTV ceiling for fixed-rate mortgages backed by Fannie Mae and Freddie Mac;
*Waiving certain representations and warranties that lenders commit to in making loans owned or guaranteed by Fannie Mae and Freddie Mac;
*Eliminating the need for a new property appraisal where there is a reliable AVM (automated valuation model) estimate provided by the Enterprises; and
*Extending the end date for HARP until Dec. 31, 2013 for loans originally sold to the Enterprises on or before May 31, 2009.
Borrower Eligibility
*The existing mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
*Homeowners can determine if they have a Fannie Mae or Freddie Mac loan by going to:
http://www.FannieMae.com/loanlookup
https://ww3.FreddieMac.com/corporate
*The program will continue to be available for loans with LTVs above 80 percent.
*Borrowers must be current on their mortgage payments with no late payment in the past six months and no more than one late payment in the past 12 months.
What about borrowers whose loans are not owned or guaranteed by Freddie Mac or Fannie Mae?
Neither FHFA nor the Enterprises have the legal authority to extend HARP to borrowers whose mortgages are not owned or guaranteed by Fannie Mae or Freddie Mac.
When will these enhancements become available?
Timing will vary by mortgage lender. The Enterprises will be sending operational instructions to lenders by November 15th. Some lenders may be able to accommodate mortgage applications under some of the enhancements by December 1 while it could take other lenders additional time to incorporate the expanded program into their systems. In addition, some of the enhancements such as delivery of loans with LTV greater than 125 should be operational during the first quarter of 2012.
Filed under Mortgage
Shopping for the Best Loan Agent (not rate) Will Save You Money & Headache
Here’s how to shop for a mortgage in this new world.
Shop For Loan Agents, Not Rates
Every consumer shops for mortgages and they should. But this is the critical distinction: you should be shopping for the best mortgage advisor. If you have that, you’ll get the best rate.
Here’s what happens when shoppers focused only on rate get quoted by a good loan agent: Loan agent quotes a rate only after they’ve analyzed the client’s
entire financial profile and analyzed their home’s value and condition—also known as pre-approving them. The client will either tire of the pre-approval
analytics or be unhappy with the rate and go somewhere else. Then 80% of those cases come back to that loan agent because the competing rate quote was
revealed to be incorrect when the other lender actually completed the client’s profile, or the home’s value/condition made the loan ineligible.
Mortgages are extremely competitive so rates and fees are generally the same with most (established, credible) lending firms. What’s not the same lender to lender is the loan agent’s ability to: (1) advise properly, (2) analyze borrower and property profiles, and (3) close with no surprises. So shop to find the lender and loan agent you feel most confident can perform on these three things. Then work with that loan agent to pick a rate target you can’t or won’t go above, and give them a standing order to lock when they see it.
These guidelines are for refinancers. For homebuyers, you can’t lock a rate until you’re in contract to buy a home, but once you’re in contract, the same approach applies.
Rate Targeting
Their are two reasons for the pre-approval and rate targeting tactics discussed above:
(1) A rate quote that flies through the air means nothing. If a loan agent doesn’t issue you written terms after obtaining a full profile on you and your home, then you haven’t received a quote you can count on.
(2) Rate lows are here and gone in minutes each trading day as mortgage bonds rise and fall on economic and technical trading signals. So if you don’t first get pre-approved then set a rate target with a standing lock order, it’s nearly impossible to hit the lows AND close with no surprises.
Your loan agent also must be able to brief you daily or weekly on the market outlook, so if you’re not sensing market competence from your agent, then keep shopping. A loan agent must have a strong read on what’s impacting the rate market ups and downs to deliver you the best terms. And for further reference about the loan process, here’s another must-read: Refi Roadmap: A Locked Rate Isn’t A Closed Loan
*Mainstream media is almost always off the mark on rate data and commentary
Find Out HERE If Your Loan is With Freddie or Fannie
There are amazing refinance opportunities at my fingertips for many clients who would otherwise not qualify for today’s great rates. This is part of the Economic Stimulus plan that is actually helping plenty of my clients to save money at a time when every penny counts. One major factor is to find out if Fannie Mae or Freddie Mac owns your current first mortgage by using these simple online search tools.
To see if FANNIE MAE owns your loan click on this link;
http://loanlookup.fanniemae.com/loanlookup/
To see if FREDDIE MAC owns your loan click on this link;
https://ww3.freddiemac.com/corporate/
Please contact me with the results you find and with any questions you may have. This may be a great opportunity to save plenty of money by using our Government-Sponsored mortgage relief programs.
Filed under Mortgage
Refinancing in 2011: What to Expect
Mortgage rates are once again reaching new historical lows. Be better prepared to take advantage of these low rates by knowing what to expect during the loan process.
About four-fifths of loan applications last week came from homeowners who wanted to refinance their home loans, according to the Mortgage Bankers Association. Those borrowers endure a strict, frustrating, and as some may call it, a slightly demeaning refinancing process.
“Be ready for questions, and be prepared to offer written explanations for recent credit inquiries, abnormal deposits, change of employment or job gaps, etc.,” says Jim Sahnger, mortgage consultant with FBC Mortgage in Stuart, Fla.
They’re called letters of explanation. Michael Becker, mortgage banker with WCS Funding Group in Lutherville, Md., says he is writing more of them than ever before in this wave of refinance applications.
Becker and his clients write letters of explanation “for any credit inquiries in the last 120 days, for any derogatory items such as collections, judgments and even nonmortgage late (payments). Large or out-of-the-ordinary deposits on your bank statements have to be explained.”
The letters of explanation come on top of the normal documents lenders demand. A typical request might include two months’ worth of bank statements, a quarterly asset statement, a month’s worth of paystubs, two years of W-2s, and two years of personal and business tax returns. Becker says he spends a lot of time gathering all the paperwork in advance to make the process go more smoothly. That means the borrower can speed things up by having those documents ready when applying.
Even when paperwork is processed painlessly, there’s often a delay from a pesky appraisal. When looking to refinance, homeowners often consult home-value sites, such as Zillow, to figure out whether the home’s value will support a new loan. Then an appraiser visits the house and values it at less than the estimated value seen online, shooting down the refinance attempt.
“Don’t expect property valuation sites to be completely accurate,” Sahnger says. “Wide swings can exist from what the Zillows of the world see, what you see and what the appraiser sees.”
Sahnger suggests preparing carefully before the appraiser’s visit. At the most mundane, that entails cleaning and decluttering. “Prepare for the appraisal inspection in the same way you would prepare for an open house,” Sahnger says.
But that’s not the only prep needed for the appraiser. To increase the chances of a successful refinance, be ready to tell the appraiser about improvements you’ve made to the home, and have receipts ready to back up your case. Gather information about recent sales of comparable homes in your neighborhood and “have it ready to provide feedback for the appraiser if it can help you,” Sahnger says.
The few hours that a borrower actually contributes to the loan process always pays off when the loan finally closes, saving hundreds of dollars a month, thousands of dollars per year, and tens of thousands of dollars over the life of the loan. Not bad for a few hours of work!
Filed under Mortgage, Rates, StraightForward
FHA Streamline Refi Hurdle (Monthly Mortgage Insurance)
There are a few things you should consider before you decide to move forward with a FHA streamline refinance. A major hurdle in qualifying for this program nowadays is the guideline that requires the total current housing payment (principal, interest, taxes, insurance and monthly mortgage insurance) to be reduced by least 5%. FHA has basically doubled their Monthly Mortgage Insurance (MMI) since October 2010 which makes this 5% savings much more difficult to obtain. Here is some insight to help shed some light on the complexities behind FHA Streamlines.
Before October 2010 the MMI for FHA loans was at .55%. If your Note rate at that time was 5.125% that would mean that your effective rate is 5.125% plus .55% or 5.675%. Since then, FHA has raised the MMI twice. In October 2010 it went to .90% and in April 2011 it went yet higher to 1.15%. If you refinance your current loan down to 4%, your effective rate will be 4% plus 1.15% or 5.15%. Not quite the big savings you expect from a 4% rate..but savings nonetheless. Once the MMI falls off after 5 years and only when you have a loan to value of 78%, then you will happily enjoy your super-low 4% fixed rate for the remaining life of the loan. However, the 5% savings rule will need to be assessed to qualify.
Before October 2010 the UFMIP (Upfront Mortgage Insurance Premium) was 1.75% of your original loan amount and most borrowers financed this into the loan amount. The UFMIP was lowered in October 2010 from 1.75% to 1%, where it remains today. This was a nice decrease in cost for borrowers..however, it is the recently increased (doubled) Monthly Mortgage Insurance that is getting in the way of millions of people who would’ve otherwise qualified for these lower rates.
A streamline refinance needs to lower your total housing payment, not rate, by 5% in order for you to qualify. The new MMI will cause your effective rate to be lowered much less than you’d expect from a substantially lower rate, but once the MMI falls off then the more substantial savings will be enjoyed.
Home Prices Rise as Rates Fall
This week’s index of home prices from Case-Shiller showed that home prices in 20 metropolitan areas rose 1.1% from May to June. Prices rose a substantial 3.6%, compared with the three months ended March 31.
According to the data released Tuesday, Nineteen of the 20 regions measured by the Case-Shiller index were up in June over May. All of the metro areas in California remained above their April 2009 bottom. This includes San Diego, San Francisco and the Los Angeles region, which also covers Orange
County.
Despite the state’s high unemployment rate, California metro areas are considered healthy because they are markets that are close to job centers. This is true especially for homes near the ocean where overbuilding was relatively constrained and demand remains healthy. The index does not track prices in California’s Central Valley or the Inland Empire, where housing is still soft.
With interest rates at historic lows and California home prices heading up; the time to get into a home is now. I’ll take the time to give you payment options that fit your budget. Don’t miss the best buyers market in two generations.
Filed under Mortgage, Real Estate
Fannie & Freddie, FHA & VA Program Changes
As of October 1st, 2011 (short an act of congress) there will be changes to Fannie Mae, Freddie Mac, FHA and VA.
FHA will be dropping their maximum loan amounts. Los Angeles and Orange County will see a drop from $729,750 to $625,500. San Diego will see a drop of a whopping $151,250 to $546,250. Riverside and San Bernardino maximum FHA loan for a single family home will drop from $500,000 to $355,350.
Fannie Mae and Freddie Mac will be seeing similar drops in Los Angeles, Orange and San Diego Counties as of October 1st. Riverside and San Bernardino will see their Fannie and Freddie maximum loan amounts dropped to $417,000.
There is better news for VA borrowers. VA’s one time funding fee will be dropping for zero down payment first time users of this benefit from 2.15% to 1.4%. The funding fee will also be dropping for subsequent users and veterans who do apply a down payment to the purchase.
But VA will be lowering their maximum loan amounts as well, but not until January 1st, 2012.
In the Mortgage Crisis of 2008 most investors in mortgages above $417,000 left. The federal government stepped in and increased the loan amounts offered by Fannie, Freddie, FHA and VA.
But now the federal government is slowly pulling itself away from direct support of loan amounts above conforming limits. As this occurs, expect rates on lager loan amounts to increase.
Filed under Mortgage
Buying vs. Renting in 2011
Today’s low rates and rock-bottom home prices have created a time when owning a home is cheaper than renting in most of the US (short of New York City and San Francisco).
Interest rates have fallen so dramatically that purchasing a home gives can give you a lower payment than the monthly rent on a comparable home.
For example:
But should you buy or rent?
The numbers are just one part of the decision making. You should also consider how long you plan to stay. If you’re not keeping the home for 5 years or more, transactional costs of buying and selling (commissions, closing costs, etc.) can make buying a home a losing proposition.
Also, is the home you’re thinking of buying large enough to accommodate you and your family over the next few years? Unlike renting, you can’t decide that your home is too small and find a new larger place down the street at the end of your lease.
Filed under Mortgage, Real Estate
Making Sense of Closing Costs
Separating prepaid items from actual loan charges is extremely important when trying to understand how much a new mortgage will actually cost. Sometimes prepaid items will exceed the actual loan charges making it seem as if the loan charges suddenly doubled! Clarifying the difference between these charges is key to making sense of mortgage closing costs.
What are “prepaid items?”
“Prepaid items” are exactly what the name implies–payments made in advance of the monies being due.
With respect to mortgages, there are 10 types of prepaid items, the most common of which are:
- Mortgage interest that will accrue between the closing date and month-end
- Real estate taxes paid into an escrow account
- Homeowners’ insurance paid into an escrow account
It’s clear why the lender collects these items in advance at closing.
Mortgage interest
Mortgage interest is collected as a prepaid item so the lender can apply it to your first mortgage payment. This way, no matter which day of the month you close, the lender has at least 30 days to enter your data into its system, and issue your first statement.
This also gives the feeling of “skipping a payment” when, in reality, no such thing has happened. You’ve paid the first payment at closing, in advance of it actually coming due.
Taxes and insurance
Taxes and insurance, meanwhile, are collected to put into escrow. This is so your new lender can build your reserves and have enough to pay your bills when they come due.
Prepaid items are not closing costs. They are monies that would have been paid anyway–new home loan or not. Prepaid items are figures on your settlement statement unrelated to the process of getting a mortgage (with the single exception of upfront MIP for FHA mortgages).
Better Good Faith Estimate comparisons
Knowing how to separate prepaid items from closing costs can help you shop for better mortgage loans.
Prepaid items will be the same from lender-to-lender–they’re separate from your mortgage terms. You can remove them from your cost comparisons.
Once you separate for closing costs, comparing for mortgage rates gets easy.
And if you’re unsure about whether a certain item is a prepaid item or a closing cost, just ask yourself a simple question: “Is this a charge that I would have if I wasn’t starting a new mortgage?”
If the answer is “yes,” it’s a prepaid item
Filed under Mortgage, StraightForward
S&P Downgrade and Lower Mortgage Rates
Late Friday evening, S&P downgraded the U.S.’s long-term debt rating to AA+ with a negative outlook. Despite the downgrade, US mortgage interest rates hit record lows today.
The downgrade should come as no surprise. After all, S& P was telegraphing that it would downgrade the U.S. for weeks when it said it would do so unless it saw a plan to cut the deficit by $4 trillion. Late last month it became quite clear that there would be no plan that big. So investors’ only uncertainty regarding S& P was whether it would follow through on its threat — and it did.
Behind S& P’s downgrade is an economic model of the U.S.’s fiscal state over the next decade. That S&P model uses a Congressional Budget Office projection of $2.1 trillion in budget reductions over 10 years from the recently passed debt ceiling deal to forecast a rise in the U.S.’s debt.
The treasury takes umbrage with S& P’s numbers. The Treasury rightly points out that S& P is not considering the effect a resurgent US economy would have on its tax revenues. This is a 2.1 trillion dollar error!
All the same, why is this not having an effect on mortgage rates? Because there is still no place to put your money that is safer than US. If you are a large investor and you don’t want to have your money in the stock market; what are your options? Euros? Not with the Greece, Italy and others in the middle of their own debt crisis. Yen? Japan is still in a decade plus recession. The Chinese Yuan? The Chinese have this tied to the US dollar to keep their exports cheap.
The US is still the economic engine for the world, and compared to any other country the US is in every respect the safest place to invest.
Are Rates Really at Historic Lows? YES!
There can be a fair amount of hype associated with products like mortgages, so when you hear a phrase like “current mortgage rates are historically low,” how seriously should you take it? It turns out that there are at least three reasons you should take it very seriously indeed.
Current mortgage rates are historically low in three distinct ways:
1. Current mortgage rates are barely half of their historical average. Since the early 1970s, 30-year mortgage rates have averaged 8.86 percent. Current mortgage rates, at 4.50 percent for 30 years, are just over half that average, and barely above the all-time low of 4.23 percent.
2. Current mortgage rates are low compared to inflation. Like any interest rate, mortgage rates have to be considered in the context of inflation. There are, after all, two components to an interest rate: an inflation assumption, which is merely an attempt by the lender to get the same purchasing power back when the loan is repaid, and a premium over the inflation assumption, which is the real (i.e., after inflation) profit the lender hopes to earn. Historically, that premium over inflation has averaged 4.42 percent. Given the 3.6 percent inflation rate over the past year, at 4.50 percent current mortgage rates represent a premium over inflation of under 1 percent, or less than one-fourth the historical average.
3. Current mortgage rates are even low relative to themselves. You have a choice between a 30-year and a 15-year mortgage. As low as current 30-year rates are, 15-year rates represent an even better bargain. Since the early 1990s, 15-year mortgages have typically been 0.46 percent lower than 30-year mortgages. Now, they are 0.83 percent lower. In no year has the discount for a 15-year mortgage exceeded an average of 0.66 percent, so 15-year mortgages are in especially rare territory right now.
If you are thinking of buying a house or refinancing a mortgage, there are many factors to consider. One thing you can be sure of, though, is that current mortgage rates really do offer an exceptional opportunity.
New CA Law Ensures No Collections After ShortSale
SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.
Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.
“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”
SB 458 contains an urgency clause making it effective upon signing.
Filed under Real Estate
CA Median Home Price is Down 47.7% from 2007 Peak
California’s sluggish housing market showed some signs of life in June, with both Southern California and the Bay Area notching sales increases from May to June.
June sales in the state increased 9.7% from May, with 38,975 newly built and previously owned houses and condominiums bought by shoppers, according to San Diego research firm DataQuick. That figure was down 11.3% from June 2010, the last month to experience a surge of deals fueled by the now-expired popular federal tax credit for buyers.
The median price paid for a home in California last month — the point at which half the homes sold for more and half for less — was $253,000, up 1.6% from May and down 6.3% from a year earlier.
The median home price in the state bottomed at $221,000 in April 2009. The statewide median is 47.7% off its 2007 peak.
“June likely benefited from a combination of factors, such as price reductions, low mortgage rates and perhaps a batch of short-sale transactions from spring that took months to close,” DataQuick President John Walsh said in a statement. “Bargain hunters, mainly investors and first-time buyers, remain very active.”
So-called distressed sales made up more than half the Golden State’s resale market. Of the previously owned homes sold in June, 35% were foreclosures and an estimated 17.6% were short sales, in which a bank accepts less than the outstanding value of the debt on the property.
In the San Francisco Bay Area, home sales rose 14.5% from May to June, reaching the highest level for any month since June 2010. The median price rose 1.5% from May to $377,750, but that was down 7.9% from June 2010.
In Southern California, sales rose 11.6% last month from May, nearly twice what is typical for June, with a total of 20,532 newly built and previously owned homes changing hands.
The median sales price was $285,000 last month, a 1.8% increase from May but a 5% decline from June 2010.
Filed under Real Estate
Jumbos Are Back! And Cheap!
Low interest rates are driving high-end home buyers to supersized mortgages at a pace unseen since the housing boom. But the deals may have a limited shelf life.
Jumbo loans—generally those bigger than $417,000 that are not backed by Fannie Mae or Freddie Mac—are a better bargain now than they have been in years. The average rate on a 30-year jumbo mortgage is 5.15%, down from 6.41% two years ago, according to mortgage data firm HSH Associates. That means the monthly payment on a 30-year $600,000 home loan is now about $3,280, some $480 less than the cost of the same loan two years ago, for an annual savings of nearly $5,800.
Not only are jumbo loans cheap relative to historical rates, they are cheap relative to smaller “conforming” loans, which are backed by Fannie Mae, Freddie Mac and federal agencies. The difference between the rates on a jumbo mortgage and a conforming loan is just 0.43 percentage point, the narrowest spread since 2007. That makes borrowing bigger amounts more attractive than it has been in recent years, and also presents opportunities for buyers who might have been previously locked out of pricey markets due to higher rates. Buyers already have taken advantage. Jumbo loans accounted for almost one in every six new mortgages, including new-home purchases and refinances, in the first quarter of 2011, according to Inside Mortgage Finance.
At that pace, the number of jumbo loans issued in 2011 could be the highest in five years, when the housing market was near its peak. That is in part because people are trying to lock in a government-backed jumbo loan now ahead of a planned limit reduction. Starting in October, the federal government will start easing its support of jumbo loans as large as $729,750, which it began as an emergency measure three years ago. The new limits will vary by location, but will drop to $625,500 in top-tier markets such asNew York,Los AngelesandWashington,D.C.
Many potential buyers are trying to take advantage of substantial price declines of expensive homes over recent years. That includes people who bought well before the housing bubble and who are still significantly above water now and want to trade up while prices are low. Other prospective buyers who sat out the boom but stayed employed and saved money during the downturn now have money for pricier houses, and the jumbo loan is their ticket in.
Depending on location, jumbo loans typically require a down payment of 20% to 30%, double or triple the typical 10% down payment for a smaller loan. Buyers also need to be able to document their income, assets and net worth, including two years of tax returns and recent brokerage and bank statements. They also will need high credit scores, at least 740 to 760 on the FICO-score range.
But borrowers should act quickly. Since lenders won’t be able to sell as many jumbo loans to government-backed agencies—thereby unloading risk—they may not originate as many. What’s more, the added risk means they likely will raise their interest rates. The upshot: buyers could have fewer choices and face pricier loans.
Many lenders will have to stop originating mortgages over the $625,500 limit by the end of July for home purchases and by mid-August for refinances. All of this could make it harder for home buyers to get financing, possibly leading to fewer home sales and pushing down prices.
Still, some housing analysts say that with the government out of the way, more lenders will eventually start competing against one another—perhaps as early as next year. The renewed competition could result in easier lending standards over time.
Filed under Mortgage, Real Estate
A Break For Responsible Homeowners?!?
I’ll be keeping a close eye on these developments that may help those good borrowers “stuck” in a mortgage situation that could drastically improve if these changes get implemented.
Yesterday officials held a conference call promoting the “Helping Responsible Homeowners Act of 2011.” Originally introduced in January, the bill aims to remove the barriers that keep non-delinquent, existing borrowers from refinancing. Those in the mortgage business should be interested to know that they are proposing to eliminate the higher risk-based charges for these loans. This beneficial proposal would also remove Loan-to-Value limits for underwater borrowers so mortgage refinancing would not be limited by the LTV of the borrower. (Currently, borrowers in the HARP program can have a maximum LTV of 125%) It would also remove the second-lien barrier to refinancing so that servicers and creditors that refuse to have their second liens “resubordinated” in the refinanced mortgage would be prevented from originating new GSE loans. And it would ensure that higher LTV borrowers receive a much more fair interest rate.
This could help a portion of the millions of borrowers who are severely underwater and would be a great help in improving the stability of our housing market. I will keep you posted with any new developments.
Filed under Mortgage
Good News/Bad News: Rates & Economic Outlook Lower
We have good news and bad news…but for most Americans it will just be bad news. The bad news is the U.S. labor market isn’t producing jobs quick enough to boost the broader economic recovery. This weighs on housing, especially the purchase market and home prices. The good news is that a slow economic recovery supports continuing lower interest rates, and after last week’s spike in interest rates the mortgage market is recovering some of its losses after today’s disastrous employment report. Now here’s more on the bad news;
Wall Street was expecting nonfarm payroll employment to grow by 90,000 jobs. Instead it grew by only 18,000 jobs and 34,000 in negative revisions to previous months’ data, which totally erases June’s lackluster improvement gains more. Private industry, the main driver of job creation, put up 57,000 new positions in June vs. forecasts for 110,000 while government trimmed payrolls by 39,000 heads (57,000 – 39,000 = 18,000 total). Employment in both state government and local government has been falling since the second half of 2008. For the working folk in private industry, hourly earnings barely budged (22.99 vs. 23.00 in May) but the work-week shortened up by 0.1 hours, which ultimately eats away at paychecks when the cost of living isn’t improving quite fast enough to motivate splurge spending (thanks to food prices).
Now for the really uninspiring statistics, the household survey. The unemployment rate rose slightly from 9.1% to 9.2% but would have risen much more if 272,000 had said they were “unemployed” instead of leaving the labor force. Interesting observation here, the labor force shrinking by 272,000 is the exact of opposite of the 272,000 expansion seen in May. So anyone who thought now was a good time to get a job quickly found out that is not the case! HERE IS THE UGLIEST STAT OF ‘EM ALL: The number of people who’ve been jobless for longer than 27 weeks increased by 89,000 to 6.29 million, which equates to 44.4% of the unemployed. Don’t focus on the month over month changes though, what’s important is the number of Americans, over 6 million, who have lost their job and haven’t found another one. These workers are being left behind and are weighing on the broader recovery, something we fully expect the Republican party to focus on in their 2012 election campaign.
It’s tough to find positive news in this jobs report. Following gains averaging 215,000 per month from February through April, employment has been essentially flat for the past 2 months. At least we’re still adding jobs…not losing them, albeit at a frustratingly slow pace. This is an indication that our economic recovery is facing stronger headwinds than anticipated as we cross into the 2nd half of the year.
CA Pending Home Sales Up While National Averages Drop
California pending home sales in May increased 12% from one year ago, the first such gain in 18 months, according to the California Association Realtors.
Existing home sales dropped 15.3% across the nation. But in California, May pending home sales — an indicator of the future performance of a market — marked the first yearly increase since November 2009 and the largest since August 2009. CAR President Beth Peerce said May numbers show home sales could be higher in the second half of the year.
“May’s increase in pending sales is consistent with our expectation that home sales in the second half of 2011 should be higher compared with the second half of 2010, and as a result, annual sales for all of 2011 should match or exceed last year’s annual pace,” Peerce said.
The sale of distressed properties in California neared half of the market, accounting for 48% of all transactions up from 46% one year before. Of the distressed property sales, 29% were REO, and 19% were short sales.
Filed under Real Estate
Fed Meeting: Recovery Disappointingly Weak
Two years after the “end” of the U.S. recession, the recovery looks disappointingly weak. While Fed officials have persistently said they expect growth to accelerate, reports since the Fed’s April meeting show a clear loss of momentum in the world’s largest economy. Employers have been reluctant to hire and the jobless rate remains stubbornly high, climbing to 9.1 percent in May.
The Fed downgraded its view of the labor market, saying it had been “weaker than anticipated” and pushed its forecast for unemployment higher. It said the jobless rate would likely average 8.6 to 8.9 percent in the fourth quarter, down a bit from a May reading of 9.1 percent but up from the Fed’s April projections. Even in 2013, the Fed said joblessness would still be significantly above what it considers to be consistent with full employment.
With jobs uncertain and home values falling, consumer spending, which makes up around 70 percent of U.S. GDP, has lagged. Factory activity has been sluggish as well. The economy grew at just a 1.8 percent annualized rate in the first three months of the year. Analysts expect growth in the second quarter to log a rate of around 2 percent, still not sufficient to generate a big uptick in hiring.
The Fed cut interest rates to near zero in December 2008 and is on track to buy $2.3 trillion worth of longer-term securities by the end of June. The latest buying program — purchases of $600 billion worth of Treasuries — ends June 30. By committing to reinvest proceeds from maturing debt it holds, the Fed will keep its balance sheet — and support for the economy — from dwindling.
Analysts have begun to speculate that the Fed might begin to consider further steps to spur growth, although officials have made clear the bar to a further easing of monetary policy is high. Bill Gross, co-chief investment officer of PIMCO, the world’s top bond manager, said on Wednesday that the central bank would likely hint at further steps to help the economy at an annual conference in August in Jackson Hole, Wyoming.
Filed under Economy
Your Mortgage Checklist
Whether you are interested in buying a home or getting a lower interest rate on your current mortgage, the following items will be required by all lenders for a new mortgage loan. With underwriting guidelines being more conservative than ever it is essential to provide all documentation upon the initial loan submission if you wish to acquire a new mortgage as easily and efficiently as possible.
Here is the Checklist:
Provide clear, legible copies of the following for each borrower:
- driver’s license
- social security card (or passport)
- 2 most recent paystubs
- all 2009 & 2010 W2s
- 2009 & 2010 Federal Tax Returns (all pages, all schedules, CA Returns not needed)
- a recent statement (all pages) for your 401K, IRA, Stocks, Funds, etc.
- 2 months’ most recent Checking Account statements (all pages, not internet summary, primary account)
(these additional items are required for refinance transactions)
- recent homeowner’s insurance bill
- property tax statement
- recent HOA bill (if applicable)
- copy of your most recent payment coupon for your 1st mortgage
- copy of your most recent payment coupon for your 2nd mortgage (if applicable)
- copy of a recent statement for any account you wish for us to payoff through this transaction (if applicable)
Filed under Mortgage
Fannie & Freddie Recovering with Fed Help
Conservatorship has been good for Fannie Mae and Freddie Mac, but the companies continue to drain federal resources away from other government operations, according to the regulator of the mortgage giants.
In its third annual letter to Congress, the Federal Housing Finance Agency said stronger loan underwriting standards enabled the companies to narrow losses in 2010 to $28 billion from $93.6 billion a year earlier. The companies have received more than $160 billion funding from the Treasury Department the past few years.
“Since being placed under conservatorship in 2008, Fannie Mae and Freddie Mac remain critical supervisory concerns,” said Edward DeMarco, acting director of the FHFA. This is a “result of continuing credit losses in 2010 from loans originated during 2005 through 2007 as well as forecasted losses from loans originated during that time.”
Still, DeMarco said governmental control allowed the companies to “accomplish their statutory mission of facilitating stability and liquidity for single-family and multifamily housing finance.”
The FHFA said Fannie and Freddie remain plagued by “credit risk, operational risk, modeling risks and retention of qualified leadership and personnel.” The companies hold a 60% share of single-family loan production.
As conservator, the FHFA is tasked with minimizing credit losses at the GSEs, and DeMarco said more stringent underwriting standards and a stronger price structure have helped.
“Although past business decisions leading to these losses cannot be undone, each enterprise, under the oversight and guidance of FHFA as conservator and regulator, has improved underwriting standards for loan purchases in the past two years.,” he said. “Another way FHFA minimized losses was to require the enterprises to enforce existing contractual representation and warranty loan repurchase agreements with lenders.”
The FHFA also oversees the dozen Federal Home Loan Banks and said all 12 reported profits in 2010. Loans to the banks dropped to $479 billion last year from $631 billion at the end 2009.
The regulator said the banks’ financial condition and performance stabilized in 2010, but several continue “to be negatively affected by their exposure to private-label mortgage-backed securities.”
Housing Recovering, But Tight Credit Guidelines Slowing Process
Lawrence Yun, National Association of Realtors chief economist, expects the improving home sales pattern to continue. “Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain –primarily because some buyers are finding it too difficult to obtain a mortgage. For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows.”
Data from Freddie Mac and Fannie Mae show requirements to obtain conventional mortgages have been tightened, with the average credit score rising to about 760 in the current market from nearly 720 in 2007; for FHA loans the average credit score is around 700, up from just over 630 in 2007.
“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago – before the loose lending practices that created the unprecedented boom and bust cycle,” Yun explained.
Plain and Simple: Existing Home Sales were better than expected and improved from February. 40% of sales were distressed inventory though and home prices fell 5.9% year over year. Realtors continue to blame tight underwriting regs for unsustainable positive progress in the housing market….as evidenced by this statistic: All-cash sales were at a record market share of 35 percent in March.
Filed under Mortgage, Real Estate
Mortgage Industry Workforce Drops 50% in 5yrs
According to data from the Bureau of Labor Statistics, sliced and diced by the MBA, the mortgage industry hit a peak in early 2006 at 505,000, but is now at 248,000. Granted, many who shouldn’t have been in the business have left, and there was excess manpower 5 years ago, but still it is really a sign of the times.
The news peg for the story was mortgage goliath Wells Fargo & Co. saying it had eliminated 1,900 home-lending jobs, mostly workers hired temporarily to deal with last year’s mini-boom in refinancings.
The numbers probably overstate mortgage employment slightly, because the trade group combined the BLS categories “real estate credit” and “mortgage and nonmortgage loan brokers.” But the lion’s share of the jobs are related to mortgages and the downturn is dramatic.
Mortgage employment also may have been affected by new licensing requirements for employees of nonbank lenders, adopted as part of regulations cleaning up the mess from the financial crisis. The licensing has made it more expensive for these independent brokers and mortgage bankers to maintain their payrolls, people in the industry say.
Filed under Mortgage
Paul Wickstrom
