Joe Schwarz is sick and tired of being a landlord.
“The property has pretty much been a nightmare since day one,” he said of a home he bought while a student at Arizona State University in 2007 near the height of the housing market in the Phoenix area. “I’ve wanted to be done with it for years but I couldn’t because of the second (mortgage) to be honest … A lot of people shy away from me because of the second.”
Schwarz said he purchased the property for $165,000, thinking he was getting instant equity given that other similar properties nearby were selling for as much as $199,000 at the time. The plan was to rent the property to cover the mortgage while watching the equity increase over time.
He purchased using some money he inherited along with a stated-income loan and a second mortgage to avoid paying private mortgage insurance (PMI).
“I had to go stated because I couldn’t qualify otherwise because I had a part-time job working at a bar while I was in college,” said Schwarz, who has since married and purchased another property where he and his wife live. “I was told if I do a second you don’t have to pay PMI.”
But about a year after Schwarz purchased the investment property, the housing market tanked and he saw the value of the property drop precipitously, falling as low as $65,000. Meanwhile the original plan for renting to a friend fell through, and although he ended up renting the property eventually, the rental income was barely enough to cover his mortgage payments, not to mention maintenance, vacancies and other costs that come with being a landlord.
“I’ve never really made any money on the property. In fact, it’s been a huge money pit for me,” he said, estimating he’s invested about $30,000 in the property that he never expects to see again.
see more at: http://www.inman.com/2015/03/30/second-mortgages-and-home-equity-lines-of-credit-threaten-housing-recovery/?hvid=1JGG2t
Tuesday, March 31, 2015
Friday, March 27, 2015
Sharapova shocked by Gavrilova in Miami
World No 2 Maria Sharapova crashed out of the Miami Open hardcourt tennis tournament on Thursday, ambushed by 97th-ranked Daria Gavrilova 7-6 (7/4), 6-3.
The upset, biggest so far at the combined WTA and ATP Masters event, took one hour, 49 minutes and marked the worst defeat five-time Grand Slam winner Sharapova has endured in Miami since she lost in the first round on her debut in 2003.
"It's sport, and I happened to lose the match," Sharapova said of dropping her second-round opener after a first-round bye. "Of course it's a bit of a surprise ... I'm expected to win.
"But that's one of the reasons why we play the matches – you still have to go out and win it no matter if you're the favourite.
"Today I didn't," added the former world No 1, who has never lifted the trophy in Miami despite five trips to the final.
Gavrilova, who only broke into the top 100 on Monday, let out a squeal of delight upon sealing the win.
"I still can't realise that it's my dream," said Gavrilova, who said she had dreamed of beating Sharapova ever since she saw her countrywoman beat Serena Williams in the Wimbledon final in 2004.
The surprise defeat of the second seed opens the door for a possible move by Romanian Simona Halep from No 3 to No 2 in the world rankings behind Williams.
TOO FAR BEHIND
Sharapova lost the opening set after nearly an hour and quickly found herself trailing the former junior world No 1 4-1 in the second.
Sharapova clawed a break back but was then broken to love as Gavrilova set herself up for the win with a 5-3 lead.
She calmly closed out the biggest win of her career on her first match point.
"I thought I was very composed and just did my best," Gavrilova said. "I was believing. When I sat down with my towel (at the end), I was crying a little bit."
Sharapova said she simply left herself too much to do in the second set.
"I had little times where I did come back, but I was always behind," said Sharapova, who was broken four times in the contest. "I put myself in a situation that was too far behind to come back from."
Gavrilova lives and trains in Australia, where she is coached with funding from the Australian federation and is pursuing Australian citizenship.
The triumph was her first against a top-10 player after four prior chances. She had never before beaten anyone ranked higher than 35th.
Remaining women's seeds fared better, with six of the top 16 making it through to the third round.
No 4 Caroline Wozniacki lost just one game in a 6-0, 6-1 hammering of Madison Brengle, while Polish seventh seed Agnieszka Radwanska defeated Anna Schmiedlova 6-4, 7-5.
Eighth-seeded Russian Ekaterina Makarova, German ninth seed Andrea Petkovic, 12th-seeded Spaniard Carla Suarez Navarro, number 15 Karolina Pliskova of Czech Republic and 16th-seeded Venus Williams all advanced.
Williams, playing her first match since February 27, defeated Radwanska's younger sister Urszula 6-3, 6-2 to set up a meeting with Australian Sam Stosur.
see more: http://www.supersport.com/tennis/wta/news/150327/Radwanska_wins_opening_match_at_Miami_Open
The upset, biggest so far at the combined WTA and ATP Masters event, took one hour, 49 minutes and marked the worst defeat five-time Grand Slam winner Sharapova has endured in Miami since she lost in the first round on her debut in 2003.
"It's sport, and I happened to lose the match," Sharapova said of dropping her second-round opener after a first-round bye. "Of course it's a bit of a surprise ... I'm expected to win.
"But that's one of the reasons why we play the matches – you still have to go out and win it no matter if you're the favourite.
"Today I didn't," added the former world No 1, who has never lifted the trophy in Miami despite five trips to the final.
Gavrilova, who only broke into the top 100 on Monday, let out a squeal of delight upon sealing the win.
"I still can't realise that it's my dream," said Gavrilova, who said she had dreamed of beating Sharapova ever since she saw her countrywoman beat Serena Williams in the Wimbledon final in 2004.
The surprise defeat of the second seed opens the door for a possible move by Romanian Simona Halep from No 3 to No 2 in the world rankings behind Williams.
TOO FAR BEHIND
Sharapova lost the opening set after nearly an hour and quickly found herself trailing the former junior world No 1 4-1 in the second.
Sharapova clawed a break back but was then broken to love as Gavrilova set herself up for the win with a 5-3 lead.
She calmly closed out the biggest win of her career on her first match point.
"I thought I was very composed and just did my best," Gavrilova said. "I was believing. When I sat down with my towel (at the end), I was crying a little bit."
Sharapova said she simply left herself too much to do in the second set.
"I had little times where I did come back, but I was always behind," said Sharapova, who was broken four times in the contest. "I put myself in a situation that was too far behind to come back from."
Gavrilova lives and trains in Australia, where she is coached with funding from the Australian federation and is pursuing Australian citizenship.
The triumph was her first against a top-10 player after four prior chances. She had never before beaten anyone ranked higher than 35th.
Remaining women's seeds fared better, with six of the top 16 making it through to the third round.
No 4 Caroline Wozniacki lost just one game in a 6-0, 6-1 hammering of Madison Brengle, while Polish seventh seed Agnieszka Radwanska defeated Anna Schmiedlova 6-4, 7-5.
Eighth-seeded Russian Ekaterina Makarova, German ninth seed Andrea Petkovic, 12th-seeded Spaniard Carla Suarez Navarro, number 15 Karolina Pliskova of Czech Republic and 16th-seeded Venus Williams all advanced.
Williams, playing her first match since February 27, defeated Radwanska's younger sister Urszula 6-3, 6-2 to set up a meeting with Australian Sam Stosur.
see more: http://www.supersport.com/tennis/wta/news/150327/Radwanska_wins_opening_match_at_Miami_Open
Wednesday, March 25, 2015
Mortgage applications jump 9.5% in mid-March
Mortgage applications increased 9.5% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending March 20, 2015.
The Market Composite Index, a measure of mortgage loan application volume, increased 9.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9% compared with the previous week.
The Refinance Index increased 12% from the previous week. The seasonally adjusted Purchase Index increased 5% from one week earlier to its highest level since January 2015. The unadjusted Purchase Index increased 5% compared with the previous week and was 3% higher than the same week one year ago.
The refinance share of mortgage activity increased to 61% of total applications from 59% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.8% of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.90%, its lowest level since February 2015, from 3.99%, with points decreasing to 0.37 from 0.40 (including the origination fee) for 80% loan-to-value ratio loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.89%, its lowest level since January 2015, from 3.94%, with points decreasing to 0.25 from 0.33 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.71%, its lowest level since January 2015, from 3.74%, with points increasing to 0.21 from 0.12 (including the origination fee) for 80% LTV loans. The effective rate remained unchanged from last week.
read more: http://www.housingwire.com/articles/33338-mortgage-applications-jump-95-in-mid-march
The Market Composite Index, a measure of mortgage loan application volume, increased 9.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 9% compared with the previous week.
The Refinance Index increased 12% from the previous week. The seasonally adjusted Purchase Index increased 5% from one week earlier to its highest level since January 2015. The unadjusted Purchase Index increased 5% compared with the previous week and was 3% higher than the same week one year ago.
The refinance share of mortgage activity increased to 61% of total applications from 59% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.8% of total applications.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.90%, its lowest level since February 2015, from 3.99%, with points decreasing to 0.37 from 0.40 (including the origination fee) for 80% loan-to-value ratio loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.89%, its lowest level since January 2015, from 3.94%, with points decreasing to 0.25 from 0.33 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.71%, its lowest level since January 2015, from 3.74%, with points increasing to 0.21 from 0.12 (including the origination fee) for 80% LTV loans. The effective rate remained unchanged from last week.
read more: http://www.housingwire.com/articles/33338-mortgage-applications-jump-95-in-mid-march
Monday, March 23, 2015
Study: Adoption of New Credit Scoring Models by Fannie Mae and Freddie Mac Provides Vast Opportunities for Homeownership and Revenues
STAMFORD, Conn.--(BUSINESS WIRE)--VantageScore Solutions, LLC, the company behind the VantageScore® credit scoring model, announced today the results of a study assessing the social and financial impact of revised credit score requirements at Fannie Mae and Freddie Mac.
“The net benefits of the GSEs and FHFA allowing lenders to use more inclusive credit assessment tools include not only expanding homeownership in a safe and sound manner but also creating a more robust and sustainable housing recovery and stronger economy for America.”
Currently, through their seller-service guidelines, Fannie Mae and Freddie Mac “lock in” models based on sample dates from the 1995 - 2000, which ultimately exclude millions of creditworthy borrowers. VantageScore Solutions’ impact assessment estimates that 72,285 creditworthy households would additionally be served annually by more inclusive scoring models if these guidelines were amended. This includes expanding mortgage access to 16 percent more Hispanic and African American households as compared with 2013 levels.
Based on conservative assumptions, the assessment reveals that this could lead to a combined annual revenue opportunity of $272 million for Fannie Mae and Freddie Mac.
The VantageScore 3.0 model is able to generate a score for 98 percent of those consumers with credit files at the three credit reporting companies, including 30-35 million consumers typically not scored by conventional models. Among those within this population, 7.6 million have credit scores of 620 or above, potentially qualifying them for a mortgage.
“The business case for allowing lenders to use updated and more inclusive credit scoring models is perhaps only matched by the impact on the many creditworthy households that are currently all but invisible to mortgage lenders,” said Mike Trapanese, senior vice president of VantageScore Solutions. “As the demographic make-up of homebuyers evolves it’s critical that the current system effectively provides access to sustainable homeownership for all creditworthy borrowers. These findings demonstrate that there is upside for the GSEs and the time to invest in the future is now.”
As part of its 2015 scorecard, the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, has directed the government-sponsored enterprises (GSEs) to “Assess the feasibility of alternate credit score models and credit history in loan-decision models, including the operational and system implications.” This is one of several scorecard items under the category of the GSE’s objective to, “Maintain, in a safe and sound manner, credit availability and foreclosure prevention activities for new and refinanced mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets.”
“Homeownership opportunities for creditworthy borrowers should not be constrained or limited by legacy scoring systems and models,” said Jim Carr, housing finance, banking and urban policy expert. “The net benefits of the GSEs and FHFA allowing lenders to use more inclusive credit assessment tools include not only expanding homeownership in a safe and sound manner but also creating a more robust and sustainable housing recovery and stronger economy for America.”
An infographic that explains study results is available on the VantageScore website.
About VantageScore Solutions
VantageScore Solutions, LLC (www.vantagescore.com) is the independently managed company that owns the intellectual property rights to the VantageScore credit scoring models, including the VantageScore 3.0 model, which provides up to 25 percent predictive improvement over earlier models and has the ability to formulate a score for 30 – 35 million previously unscoreable consumers. Initially developed by America’s three national credit reporting companies (CRCs) — Equifax, Experian and TransUnion — VantageScore Solutions’ highly predictive models use an innovative, patented and patent-pending tri-bureau scoring methodology that provides lenders and consumers with more consistent credit scores across all three national credit reporting companies. Nearly one billion VantageScore credit scores were used in 2014, by over 2,000 lenders and other industry participants, including six of the 10 largest banks.
read more: http://www.businesswire.com/news/home/20150323005105/en/Study-Adoption-Credit-Scoring-Models-Fannie-Mae#.VRAUUOGUL6k
“The net benefits of the GSEs and FHFA allowing lenders to use more inclusive credit assessment tools include not only expanding homeownership in a safe and sound manner but also creating a more robust and sustainable housing recovery and stronger economy for America.”
Currently, through their seller-service guidelines, Fannie Mae and Freddie Mac “lock in” models based on sample dates from the 1995 - 2000, which ultimately exclude millions of creditworthy borrowers. VantageScore Solutions’ impact assessment estimates that 72,285 creditworthy households would additionally be served annually by more inclusive scoring models if these guidelines were amended. This includes expanding mortgage access to 16 percent more Hispanic and African American households as compared with 2013 levels.
Based on conservative assumptions, the assessment reveals that this could lead to a combined annual revenue opportunity of $272 million for Fannie Mae and Freddie Mac.
The VantageScore 3.0 model is able to generate a score for 98 percent of those consumers with credit files at the three credit reporting companies, including 30-35 million consumers typically not scored by conventional models. Among those within this population, 7.6 million have credit scores of 620 or above, potentially qualifying them for a mortgage.
“The business case for allowing lenders to use updated and more inclusive credit scoring models is perhaps only matched by the impact on the many creditworthy households that are currently all but invisible to mortgage lenders,” said Mike Trapanese, senior vice president of VantageScore Solutions. “As the demographic make-up of homebuyers evolves it’s critical that the current system effectively provides access to sustainable homeownership for all creditworthy borrowers. These findings demonstrate that there is upside for the GSEs and the time to invest in the future is now.”
As part of its 2015 scorecard, the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, has directed the government-sponsored enterprises (GSEs) to “Assess the feasibility of alternate credit score models and credit history in loan-decision models, including the operational and system implications.” This is one of several scorecard items under the category of the GSE’s objective to, “Maintain, in a safe and sound manner, credit availability and foreclosure prevention activities for new and refinanced mortgages to foster liquid, efficient, competitive, and resilient national housing finance markets.”
“Homeownership opportunities for creditworthy borrowers should not be constrained or limited by legacy scoring systems and models,” said Jim Carr, housing finance, banking and urban policy expert. “The net benefits of the GSEs and FHFA allowing lenders to use more inclusive credit assessment tools include not only expanding homeownership in a safe and sound manner but also creating a more robust and sustainable housing recovery and stronger economy for America.”
An infographic that explains study results is available on the VantageScore website.
About VantageScore Solutions
VantageScore Solutions, LLC (www.vantagescore.com) is the independently managed company that owns the intellectual property rights to the VantageScore credit scoring models, including the VantageScore 3.0 model, which provides up to 25 percent predictive improvement over earlier models and has the ability to formulate a score for 30 – 35 million previously unscoreable consumers. Initially developed by America’s three national credit reporting companies (CRCs) — Equifax, Experian and TransUnion — VantageScore Solutions’ highly predictive models use an innovative, patented and patent-pending tri-bureau scoring methodology that provides lenders and consumers with more consistent credit scores across all three national credit reporting companies. Nearly one billion VantageScore credit scores were used in 2014, by over 2,000 lenders and other industry participants, including six of the 10 largest banks.
read more: http://www.businesswire.com/news/home/20150323005105/en/Study-Adoption-Credit-Scoring-Models-Fannie-Mae#.VRAUUOGUL6k
Wednesday, March 18, 2015
Fewer Orlando-area residential properties with mortgages are underwater
In the Orlando-Kissimmee-Sanford metropolitan statistical area, 25.7 percent of all residential properties with a mortgage, or 118,366 homes, were in negative equity as of fourth-quarter 2014, CoreLogic reports.
That compares with 31.4 percent, or 146,187 properties, in fourth-quarter 2013, and 26.3 percent, or 121,096 properties in third-quarter 2014.
Nationwide, 172,000 homes slipped into negative equity in the fourth quarter of 2014 from the third quarter, increasing the number of mortgaged residential properties underwater to 5.4 million, or 10.8 percent of all mortgaged properties. Compared to the year-ago quarter, 6.6 million homes, or 13 percent, were underwater.
Negative equity, often referred to as "underwater" or "upside down," means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.
Other highlights from the fourth-quarter report:
read more: http://www.bizjournals.com/orlando/news/2015/03/17/fewer-orlando-area-residential-properties-with.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bizj_orlando+%28Orlando+Business+Journal%29
That compares with 31.4 percent, or 146,187 properties, in fourth-quarter 2013, and 26.3 percent, or 121,096 properties in third-quarter 2014.
Nationwide, 172,000 homes slipped into negative equity in the fourth quarter of 2014 from the third quarter, increasing the number of mortgaged residential properties underwater to 5.4 million, or 10.8 percent of all mortgaged properties. Compared to the year-ago quarter, 6.6 million homes, or 13 percent, were underwater.
Negative equity, often referred to as "underwater" or "upside down," means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.
Other highlights from the fourth-quarter report:
read more: http://www.bizjournals.com/orlando/news/2015/03/17/fewer-orlando-area-residential-properties-with.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bizj_orlando+%28Orlando+Business+Journal%29
Monday, March 16, 2015
Are you a mortgage misfit?
Are you over 45? Self-employed? Divorced and remortgaging late in life? Got your eye on a great ex-council house? Or like the look of that cheap studio flat? If you are in any of these groups, you are likely to be among the growing number of “mortgage misfits” who struggle to find a lender willing to offer a loan.
Tough restrictions imposed by the City regulator to ensure borrowers can really afford a mortgage – and wariness about lending on certain types of properties – mean that many applicants are being turned down.
Eight out of 10 mortgage brokers say they have had to reject customers in the past six months, according to figures from the Intermediary Mortgage Lending Association. Brokers cite interest rate stress tests and tougher evidence of income and spending required by lenders as the reasons why many applicants fail.
The rules were put in place in April 2014 for a good reason: to prevent a repeat of the dodgy lending practices common before the financial crisis. But critics argue that a “computer says no” approach is denying perfectly good applicants a loan.
You are over 40
The majority of lenders will only grant a mortgage to your planned retirement date. So if you are aged 45 and expect to retire at 67, the maximum mortgage term might be just 22 years.
Adrian Anderson, director of mortgage broker Anderson Harris, says: “The ageist attitude being taken by lenders is a result of their interpretation of the MMR [mortgage market review] guidelines. Given that the average age of a first-time buyer is now 37, it is all rather worrying as it doesn’t leave much time to get a mortgage paid off before retirement.”
read more: http://www.theguardian.com/money/2015/mar/14/mortgage-misfit-borrowers-lenders-criteria
Tough restrictions imposed by the City regulator to ensure borrowers can really afford a mortgage – and wariness about lending on certain types of properties – mean that many applicants are being turned down.
Eight out of 10 mortgage brokers say they have had to reject customers in the past six months, according to figures from the Intermediary Mortgage Lending Association. Brokers cite interest rate stress tests and tougher evidence of income and spending required by lenders as the reasons why many applicants fail.
The rules were put in place in April 2014 for a good reason: to prevent a repeat of the dodgy lending practices common before the financial crisis. But critics argue that a “computer says no” approach is denying perfectly good applicants a loan.
You are over 40
The majority of lenders will only grant a mortgage to your planned retirement date. So if you are aged 45 and expect to retire at 67, the maximum mortgage term might be just 22 years.
Adrian Anderson, director of mortgage broker Anderson Harris, says: “The ageist attitude being taken by lenders is a result of their interpretation of the MMR [mortgage market review] guidelines. Given that the average age of a first-time buyer is now 37, it is all rather worrying as it doesn’t leave much time to get a mortgage paid off before retirement.”
read more: http://www.theguardian.com/money/2015/mar/14/mortgage-misfit-borrowers-lenders-criteria
Friday, March 13, 2015
Senators would extend tax breaks for people who renegotiate mortgages
Although most real estate markets have rebounded from their recession lows, this harsh fact remains: About 7 million homeowners continue to be stuck in the tar pit of serious negative equity, with mortgage debt at least 25 percent higher than the value of their property, according to the research firm RealtyTrac.
Many of these owners are also hurting financially. They are behind on mortgage payments, often in negotiations with their lenders on ways to modify their loan terms or write off a portion of their debt. Or they may be discussing a short sale to avoid foreclosure — selling the house for less than the mortgage amount owed to a new buyer with the lender forgiving the unpaid balance. Improvements in housing prices have largely bypassed these folks, as has the overall economic recovery in the past several years.
All of which underlines the significance of a legislative effort now getting underway in Congress to spare these people from punitive federal taxes on any amounts forgiven.
see more: http://www.washingtonpost.com/realestate/senators-would-extend-tax-breaks-for-people-who-renegotiate-mortgages/2015/03/12/dda4a16a-c679-11e4-a199-6cb5e63819d2_story.html
Many of these owners are also hurting financially. They are behind on mortgage payments, often in negotiations with their lenders on ways to modify their loan terms or write off a portion of their debt. Or they may be discussing a short sale to avoid foreclosure — selling the house for less than the mortgage amount owed to a new buyer with the lender forgiving the unpaid balance. Improvements in housing prices have largely bypassed these folks, as has the overall economic recovery in the past several years.
All of which underlines the significance of a legislative effort now getting underway in Congress to spare these people from punitive federal taxes on any amounts forgiven.
see more: http://www.washingtonpost.com/realestate/senators-would-extend-tax-breaks-for-people-who-renegotiate-mortgages/2015/03/12/dda4a16a-c679-11e4-a199-6cb5e63819d2_story.html
Wednesday, March 11, 2015
MBA: Mortgage Application Volume Down Slightly
Mortgage application volume dipped 1.3% on an adjusted basis during the week ended March 6, compared to the previous week, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
On an unadjusted basis, volume decreased 1% compared with the previous week.
Applications for refinances decreased 3% while applications for purchases increased 2%.
On an unadjusted basis, applications for purchases increased 3% compared with the previous week and were 2% higher compared to the same week one year ago.
The refinance share of mortgage activity decreased to 60% of total applications from 62% the previous week.
The slowdown in applications for refinances came as mortgage interest rates increased slightly. The average rate for a 30-year fixed-rate mortgage (FRM) with conforming loan balance ($417,000 or less) was 4.01%, up from 3.96% the previous week.
The average rate for a 30-year FRM with jumbo loan balance (greater than $417,000) was 4.02%, up from 3.95%.
read more: http://www.mortgageorb.com/e107_plugins/content/content.php?content.16536
On an unadjusted basis, volume decreased 1% compared with the previous week.
Applications for refinances decreased 3% while applications for purchases increased 2%.
On an unadjusted basis, applications for purchases increased 3% compared with the previous week and were 2% higher compared to the same week one year ago.
The refinance share of mortgage activity decreased to 60% of total applications from 62% the previous week.
The slowdown in applications for refinances came as mortgage interest rates increased slightly. The average rate for a 30-year fixed-rate mortgage (FRM) with conforming loan balance ($417,000 or less) was 4.01%, up from 3.96% the previous week.
The average rate for a 30-year FRM with jumbo loan balance (greater than $417,000) was 4.02%, up from 3.95%.
read more: http://www.mortgageorb.com/e107_plugins/content/content.php?content.16536
Monday, March 9, 2015
Terms of reverse mortgages continue to be misunderstood
A new government report shows many seniors are taking out reverse mortgages on their homes without fully understanding the ramifications, leading to foreclosures among borrowers and a tangle of problems for heirs after the borrower dies.
“Consumer complaints tell us that the complex terms of reverse mortgages continue to be misunderstood,” said Richard Cordray, director of the Consumer Financial Protection Bureau, which last week released a report highlighting the top complaints the agency received about reverse mortgages over the last three years.
A reverse mortgage is a type of loan that allows homeowners age 62 and older to tap a portion of the equity in their homes. The money typically is paid out in a lump sum or in regular fixed payments, with fees and interest added to the balance each month. Unlike a home equity loan, the money does not have to be repaid until the borrower dies, moves out or sells the home.
The loans can be a life line for house-rich, cash-poor seniors struggling with daily living expenses. Reverse mortgages also have been used to help retirees improve their lifestyles, allowing them to buy the summer home they had always dreamed about, for example.
But problems and confusion are expected to continue as more baby boomers retiring with little or no savings turn to the loans for help getting by.
The Consumer Financial Protection Bureau cited a 2010 Federal Reserve report concluding that in the 55-to-64 age group, 41 percent had no retirement savings. Even among those who had a nest egg, the average balance was only $103,200, the report said. Many complaints that the protection bureau received showed people were confused about the way reverse mortgages work.
“Many consumers struggle with understanding how quickly their loan balance will go up and their home equity will fall,” the report said. As a result, many borrowers who wanted to refinance their loans were frustrated because there wasn’t enough remaining equity in their homes.
One of the most common types of complaints involved the inability of a borrower’s family members to assume the loan in order to keep the house when the borrower died, according to the report.
Reverse mortgages prohibit loan assumptions because actuarial tables are used to help determine the loan amounts. Adult children may keep the home only by paying off the loan or by paying 95 percent of the current appraised value of the house.
Those rules can present problems for multigenerational households when family members are living in the home at the time of the borrower’s death.
Heirs also complained about what they believed were inflated appraisals that required them to pay more than they expected, the report said.
Another common complaint involved the shock of having to sell a home or face foreclosure when a spouse died because the surviving spouse’s name was not on the reverse mortgage. Some couples were advised to take a reverse mortgage in the older spouse’s name to qualify for a bigger loan.
“Some consumers report that their loan originator falsely assured them they would be able to add the other spouse to the loan at a later date,” the report said.
To help more seniors stay in their homes, the U.S. Department of Housing and Urban Development — which insures most reverse mortgages through its Home Equity Conversion Mortgage program — implemented a new rule allowing surviving spouses who meet certain conditions to remain in the home regardless of their borrowing status.
The rule only applies to reverse mortgages originated through HUD’s program after Aug. 4, 2014.
see more: http://www.detroitnews.com/story/business/personal-finance/2015/03/09/terms-reverse-mortgages-continue-misunderstood/24619519/
“Consumer complaints tell us that the complex terms of reverse mortgages continue to be misunderstood,” said Richard Cordray, director of the Consumer Financial Protection Bureau, which last week released a report highlighting the top complaints the agency received about reverse mortgages over the last three years.
A reverse mortgage is a type of loan that allows homeowners age 62 and older to tap a portion of the equity in their homes. The money typically is paid out in a lump sum or in regular fixed payments, with fees and interest added to the balance each month. Unlike a home equity loan, the money does not have to be repaid until the borrower dies, moves out or sells the home.
The loans can be a life line for house-rich, cash-poor seniors struggling with daily living expenses. Reverse mortgages also have been used to help retirees improve their lifestyles, allowing them to buy the summer home they had always dreamed about, for example.
But problems and confusion are expected to continue as more baby boomers retiring with little or no savings turn to the loans for help getting by.
The Consumer Financial Protection Bureau cited a 2010 Federal Reserve report concluding that in the 55-to-64 age group, 41 percent had no retirement savings. Even among those who had a nest egg, the average balance was only $103,200, the report said. Many complaints that the protection bureau received showed people were confused about the way reverse mortgages work.
“Many consumers struggle with understanding how quickly their loan balance will go up and their home equity will fall,” the report said. As a result, many borrowers who wanted to refinance their loans were frustrated because there wasn’t enough remaining equity in their homes.
One of the most common types of complaints involved the inability of a borrower’s family members to assume the loan in order to keep the house when the borrower died, according to the report.
Reverse mortgages prohibit loan assumptions because actuarial tables are used to help determine the loan amounts. Adult children may keep the home only by paying off the loan or by paying 95 percent of the current appraised value of the house.
Those rules can present problems for multigenerational households when family members are living in the home at the time of the borrower’s death.
Heirs also complained about what they believed were inflated appraisals that required them to pay more than they expected, the report said.
Another common complaint involved the shock of having to sell a home or face foreclosure when a spouse died because the surviving spouse’s name was not on the reverse mortgage. Some couples were advised to take a reverse mortgage in the older spouse’s name to qualify for a bigger loan.
“Some consumers report that their loan originator falsely assured them they would be able to add the other spouse to the loan at a later date,” the report said.
To help more seniors stay in their homes, the U.S. Department of Housing and Urban Development — which insures most reverse mortgages through its Home Equity Conversion Mortgage program — implemented a new rule allowing surviving spouses who meet certain conditions to remain in the home regardless of their borrowing status.
The rule only applies to reverse mortgages originated through HUD’s program after Aug. 4, 2014.
see more: http://www.detroitnews.com/story/business/personal-finance/2015/03/09/terms-reverse-mortgages-continue-misunderstood/24619519/
Tuesday, March 3, 2015
Bank of America drops to 4th place for mortgage originations
Bank of America has dropped to fourth place on a widely watched ranking of mortgage market share, as the Charlotte-based bank experiences a decline in home loan dollar volume being felt across the mortgage industry.
The bank’s U.S. market share fell to 4.4 percent last year from 4.8 percent the year before, as the total amount of home loans it made sank to $54.5 billion from $89.8 billion, according to the report released earlier this year by industry publication Inside Mortgage Finance.
Bank of America lost its third-place position to Detroit-based Quicken Loans, underscoring the increasingly formidable competition banks are facing from nonbank lenders.
Guy Cecala, publisher of Inside Mortgage Finance, said nonbanks are picking up business as big banks pull back from mortgage lending and focus more on the profitability of their home lending operations rather than loan volume.
Quicken is among nonbank lenders boosting their market share. The online lender is now the top nonbank mortgage lender in the U.S.
Eight years ago, before the mortgage and financial crises, Quicken wasn’t even among the top 25 mortgage lenders, according to Inside Mortgage Finance. Last year, Quicken’s market share rose to 4.8 percent from 4.2 percent a year earlier.
“They’re definitely picking up business,” Cecala said. “If you ask Wells and Bank of America who they’re watching most closely in terms of competitors, they’ll say Quicken.”
Wells Fargo remains the nation’s biggest mortgage lender, while JPMorgan Chase & Co. remains the second-largest. The Inside Mortgage Finance report is based on loans made to buy homes and refinance existing home loans.
While Bank of America’s overall mortgage origination volume fell in 2014, bank spokesman Terry Francisco said the lender has grown its market share for mortgages used to buy homes by 40 percent since 2013. That year, the bank restructured its mortgage operations to put more emphasis on loans for home purchases, he said.
Over the past two years or so, lenders have struggled to grow mortgage originations after rising interest rates sent demand to refinance mortgages plummeting. That has cost lenders a sizable amount of revenue as mortgages to buy homes have not been enough to offset the drop in refinance activity.
Read more here: http://www.charlotteobserver.com/news/business/banking/bank-watch-blog/article11952503.html
The bank’s U.S. market share fell to 4.4 percent last year from 4.8 percent the year before, as the total amount of home loans it made sank to $54.5 billion from $89.8 billion, according to the report released earlier this year by industry publication Inside Mortgage Finance.
Bank of America lost its third-place position to Detroit-based Quicken Loans, underscoring the increasingly formidable competition banks are facing from nonbank lenders.
Guy Cecala, publisher of Inside Mortgage Finance, said nonbanks are picking up business as big banks pull back from mortgage lending and focus more on the profitability of their home lending operations rather than loan volume.
Quicken is among nonbank lenders boosting their market share. The online lender is now the top nonbank mortgage lender in the U.S.
Eight years ago, before the mortgage and financial crises, Quicken wasn’t even among the top 25 mortgage lenders, according to Inside Mortgage Finance. Last year, Quicken’s market share rose to 4.8 percent from 4.2 percent a year earlier.
“They’re definitely picking up business,” Cecala said. “If you ask Wells and Bank of America who they’re watching most closely in terms of competitors, they’ll say Quicken.”
Wells Fargo remains the nation’s biggest mortgage lender, while JPMorgan Chase & Co. remains the second-largest. The Inside Mortgage Finance report is based on loans made to buy homes and refinance existing home loans.
While Bank of America’s overall mortgage origination volume fell in 2014, bank spokesman Terry Francisco said the lender has grown its market share for mortgages used to buy homes by 40 percent since 2013. That year, the bank restructured its mortgage operations to put more emphasis on loans for home purchases, he said.
Over the past two years or so, lenders have struggled to grow mortgage originations after rising interest rates sent demand to refinance mortgages plummeting. That has cost lenders a sizable amount of revenue as mortgages to buy homes have not been enough to offset the drop in refinance activity.
Read more here: http://www.charlotteobserver.com/news/business/banking/bank-watch-blog/article11952503.html
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