MBA Reports Decline in Delinquency, Foreclosure Rates

The health of the housing market, as well as the economy as a whole, continues to be represented in the sharp decline of delinquency rates on mortgages and subsequent foreclosures. The Mortgage Bankers Association reported that one-to-four unit residential property foreclosures decreased to a seasonally adjusted rate of 6.41 percent of all outstanding loans at the end of Q3 this year.

This is the lowest point the delinquency rate has been at for this type of property since the second quarter of 2008. Meanwhile, the delinquency rate fell 55 basis points from the last quarter, and 99 basis points from the same quarter last year. The aforementioned data was culled by the MBA’s National Delinquency Survey.

“The degree to which the mortgage delinquency and foreclosure problem has changed over the last five years is perhaps best illustrated by the fact that last quarter New Jersey led the nation in the increase in the percentage of foreclosure actions filed, followed by Delaware, Maryland and Indiana,” said Jay Brinkmann, MBA’s chief economist and SVP of Research and Education.  “While Florida still leads the nation in the percentage of loans in foreclosure, that percentage is falling.  In contrast, New York and New Jersey were the only two states that saw an increase in the percentages of loans in foreclosure.”

Brinkmann added that states with judicial foreclosure systems represent a majority of the loans in foreclosure, which is even further proof that the latest trend is that delinquency and foreclosure rates are very much on a steep downward slope.

With more home buyers in a better financial state thanks in part to an improving economy, there are fewer delinquencies being seen on loan payments and, thus, fewer foreclosures. This is welcome news for lenders and borrowers, alike. If you’d like to learn more about your Dallas mortgage options, contact our team of professionals today.

 

 

 

CFPB Mortgage Regulations to Go into Effect in January

New home buyers and those planning on making a move in the coming months are encouraged to take note of new mortgage rules that will go into effect starting January 10.

The new rules were put forth by the Consumer Financial Protection Bureau (CFPB) and are designed to protect the home buyer as well as investors from purchasing loans that are considered to be at higher risk of default.  These regulations are also designed to help protect a housing market crash like the one experienced through much of the mid to late 2000’s during the financial crisis.  Enter qualified / non-qualified mortgages.

Qualified Mortgage vs. Non-Qualified Mortgage and the Ability-to-Repay

Qualified mortgages are comprised of your standard loans.  Conventional loans, FHA, VA, and USDA will most often be considered a qualified mortgage.  However, if any of these loans were to be qualified based on a debt-to-income ratio of 43% or have loan fees and costs that fall outside of the CFPB’s 3% tolerance, the loans will likely not be considered a ‘Qualified Mortgage’.  Instead these loans may end up being a ‘Non-Qualified Mortgage’, thus requiring different qualification guidelines, products and terms.

Non-qualified mortgages (non-qm) are considered to be more risky and will be under more scrutiny, having to meet the Ability-to-Repay guidelines.  These guidelines require lenders meet certain criteria to evaluate the financial strength of a potential borrower based on income and assets, employment, monthly mortgage payments, monthly payments of additional debts, monthly payments on other housing costs, child support commitments, credit history and more.  The reality is that most lenders have been required to adhere to these rules for the last 5 years, fully documenting all loan files to make sure that the borrowers are qualified and able to repay their mortgage debt.

Qualified Mortgage and Buying a Home

Potential borrowers can and should do whatever it takes to put themselves in the best position possible for loan approval.  With the new rules and regulations coming in January, it may be time to take the next steps to find out where they stand in their ability to qualify.  This includes moving quickly if their debt load is higher than 43 percent, so securing a loan before January 10 is essential for this type of borrower.  Even if the buying timeline is further out, now is the time to find out the options and next steps to be able to qualify when it’s time to buy.

If you’d like to learn more about qualified mortgage or your Dallas mortgage options, call us today – 972-499-0454.  We know the market and have a full understanding of the various loan offerings available to you and would love to help you have a financial foundation to start your search for a new home.

 

Fed Still Buying Bonds to Help Lower Mortgage Rates

Home buyers have been pleased to see interest rates drop over the last month, with the Federal Reserve still holding strong on its stance to purchase $85 billion in mortgage backed securities.  The goal is continue its downward pressure on long-term mortgage rates to help bolster the housing market and the economy.

After months of speculation in the summer months that the Federal Reserve would halt or ease its purchase program.  This is welcome news to a buyer base that has seen long-term mortgage rate averages rise near the 5 percent mark and stay there for much of the year.   This move is expected to drop these rate averages down to around the 4 percent level into 2014.

“People who were priced out of the market by the jump in rates are getting a do-over,” Joel Naroff, president of Naroff Economic Advisors, told Bloomberg. “Rates aren’t going back down into the low 3s, but we may see the high 3s and we’ll see those rates remain stable through at least February or March. That’s going to restore buyer confidence.”

Diane Swonk, chief economist at Mesirow Financial, told the news source that it’s become apparent the Fed has made the housing market a point of emphasis over the past month, which is why they have devoted themselves so fully to bond buying over this time.

While the Fed continues its commentary to continue the purchase of mortgage backed securities, continued signs of economic recovery will change the sentiment quickly.  As an example, on Nov. 8th, 2013, economists were projecting only 120,000 jobs to be created.  The actual number came in at 204,000, which immediately sent mortgage rates .25% higher.  The more good news that comes to the economy, the more likely we are to see rates go higher.

Interested home buyers have their share of options when it comes to finding affordable financing for their new home purchase.  If conventional loan offerings are too strict for qualifying purposes, then there are FHA loans, USDA loans and VA loans also available with flexible requirements.

If you’d like to learn more about your Dallas mortgage options and want to plan your financial future, contact our team of mortgage planners today or request a home purchase review to better understand your options.

 

Lenders Offering Low Down Payment Home Loans

Buying a home just got a little easier as many lenders are now offering mortgages with down payments of as low as 5 percent, according to a recent report from CNN.

Prospective home buyers on a budget can take advantage of these low down payment offerings, which comes as welcome news in a housing market featuring rising home prices and rampant demand for a low housing inventory.

Over the past several years, first-time home buyers and other prospective buyers on a tight budget and borderline credit would have to turn to the Federal Housing Administration for a government-backed home loan. These come with down payments of as low as 3.5 percent and are geared toward those who might not otherwise have the ability to finance a home. Now, lenders are stepping up and offering conventional loans with similarly attractive rates.

Historically, conventional mortgages came with down payment options of as high as 20 percent, but that trend is changing in order to accommodate an ever-growing buyer base, not all of which can rely on the FHA as an affordable financing option.

“For years, it’s been FHA or nothing,” Guy Cecala, publisher of Inside Mortgage Finance, told USA Today. “This shift is a sign that mortgage origination is loosening up.”

Private mortgage insurance is still required for this type of loan with VA loans being the exception to financing that requires PMI. Generally reserved for former and active duty service members, select Reserves and National Guard members and unremarried surviving spouses, VA loans are also backed by the federal government and if eligible, are an ideal alternative to any other type of financing.

For civilians, however, the news that private lenders are offering low down payment options for conventional loans is very welcome. If you’d like to learn more about your Dallas mortgage options, contact our team today.

 

California Home Owners Receive Massive Settlement

The Texas housing market remains on an upward trajectory, but the Lone Star State can still look to other states when it comes to giving their home owners mortgage relief.

A recent piece from The Fresno Bee reported that Fresno County home owners will benefit from a new agreement between California’s attorney general and several of the nation’s largest banks that will lead to a settlement of more than $235 million in mortgage relief.

The banks in question: JPMorgan Chase, Bank of America and Wells Fargo, have provided $18.4 billion in mortgage relief statewide in a year, which is a 50 percent increase over three years, the news source stated.

“That is a little bit of a surprise,” John Shore, executive director of the Community Housing Council of Fresno, a nonprofit housing counseling agency, told the news source. “I would think the banks would get to their quota and shut the program down. They probably in all honesty didn’t know they were over that quota. This industry is so crazy that it’s hard to keep up with numbers.”

Although the California and Texas mortgage industries are entirely different beasts, it’s important to note that state, as well as federal governments, are looking out for the best interests of borrowers and ensuring that they are not taken advantage of by the larger banks.

Potential borrowers are encouraged to know their rights, but they should also understand what it takes to secure a home loan:  Including a satisfactory credit score, reliable income and not too many outstanding debts.  If you’d like to learn more about Texas mortgages and what it takes to secure one in today’s housing market, contact me today.

 

 

Lenders Enjoying Decline in Mortgage Application Fraud

Mortgage fraud risk continues to decline, which is good news for borrowers and lenders alike.  With CoreLogic reporting that residential fraud risk among U.S. mortgage applications dropped 5.6 percent year-over-year between the second quarter of 2012 and the second quarter of 2013.

Core Logic, a leading residential property information, services and analytics provider, shed light on the current situation with its Mortgage Fraud Report, which registered the 5.6 percent drop and equaling a decline from $5.5 billion to $5.3 billion over that year-long span.

“Since the beginning of 2012, mortgage application fraud risk has totaled more than $30 billion nationally,” said Dr. Mark Fleming, chief economist for CoreLogic.  “While the propensity toward application fraud risk has declined based on our index, as the housing market recovers, the volume of mortgage applications is rising and increasing the total amount of fraudulent mortgage loan application dollars.”

Lenders constantly have to be on the lookout for mortgage application fraud, but it is also up to the potential borrower to be as honest and straight forward as possible when reporting their income, debt and other assets.

So as a prospective borrower, do you have to worry about fraud trends affecting your financing status?  Hopefully not!  The good news is the numbers are trending downward, and if you are honest and upfront with the information your potential lender asks of you then you will have nothing to worry about.  While you’re at it, having a satisfactory credit score and sufficient income/assets to qualify goes a long way to securing an affordable rate mortgage both in Texas and elsewhere in the United States.

Although long-term mortgage rates were ticking upward through most of the summer, they have since been trending downward ever-so-slightly, and some economists predict they will continue to drop throughout the remainder of the year, a direction which should further encourage home sales through the typically slower fall/winter seasons.

If you’d like to learn more about Dallas mortgages and home loan opportunities, contact me today.  I can help you get started on the path to pre-approval.

Mortgage Credit Availability Falls Slightly

A recent report from the Mortgage Bankers Association found that mortgage credit availability dropped slightly in August. Here are a few reasons that could indicate why:

Decreases in availability of loans that carry an interest-only feature was a big reason for the drop in the Mortgage Credit Availability Index, or MCAI. Also, lenders are dropping loan offerings in some cases with terms longer than 30 years.

Taking a closer look at the numbers we find that the MCAI dropped 0.7 percent to 111.5 in August, which is the first drop after the past four straight months of growth. This decline could reveal that lending standards are growing more stringent as MCAI increases reveal loosening credit.

“The slight decline in the MCAI in August reflected a reduction in the availability of certain loan features, particularly interest-only and terms exceeding 30 years,” said Mike Fratantoni, MBA’s vice president of Research and Economics. “As these loan features are outside of the qualified mortgage (QM) definition, these changes may reflect the beginning of QM implementation, and the fact that Fannie Mae and Freddie Mac are limited to acquiring loans that meet the QM definition.”

The MCAI was given a benchmark figure of 100 in March 2012, but if the benchmark had been set back in 2007 it would be at about 800.

As a borrower, this news might have zero impact on your ability to obtain a mortgage as this task is built on a number of individualized factors. So it’s best not to be alarmed about rising mortgage rates are tighter lending standards as if your credit is up to par then you’ll find high affordability conditions and attractive mortgage rate offerings are at your disposal.

If you’d like to learn more about your home loan options, which can include VA loans, FHA loans and conventional loans backed by Freddie Mac and Fannie Mae, contact us today.

Mortgage Scams to Avoid

The housing market is ripe for buyers and sellers of all types, and with such high activity in the industry, it’s always best to be on the lookout for potential predators and scams.

ABC News recently revealed five tips for prospective borrowers on how to avoid getting scammed when going through the financing process.

The first and most effective tactic the news source states is to read the fine print and do your research before finalizing a mortgage deal. Scammers know what you want to hear and that is “ultra-low mortgage rates” and “no down payment.” But if it doesn’t add up and it doesn’t make sense then there’s probably a good reason why.

For current home owners, loan modification should be treaded on lightly. One big red flag is an upfront fee requirement. This is a sure fire sign of a scammer and should be avoided at all costs as loan modification does not require upfront fees of any kind.

Also, while mortgages can be transferred to different hosts through the life of the loan, the borrower should be wary of just giving up mortgage payments to a new party just because. Under federal law, when the servicer of a loan changes they must be properly handed off with full visibility to the borrower. This entails a formal “goodbye” letter from the original servicer followed by a “greetings” letter from the new servicer.

Another tip, geared mostly toward the elderly, is staying away from reverse mortgage scams. Reverse mortgages are generally offered to home owners age 62 or older who want to put the remaining equity in their home to use while saving for retirement. Chris Moessner, former president of Moessner & Associates in Washington, D.C., states that these scammers use eye-popping marketing campaigns, generally, and offer empty promises galore.

Lastly, the news source states that borrowers should avoid lease/buy-back agreements at all costs. This is a popular breeding ground for scammers as most states make foreclosures public record.

Contact us today to learn more about your rights as a borrower.

 

Regulator Could Reduce Maximum Loan Amounts for Freddie Mac, Fannie Mae Mortgages

Those who look to mortgages insured by Fannie Mae and Freddie Mac may have less to work with in the future, if a recent report holds true.

The Los Angeles times reports that regulators could cut the maximum amount for mortgages backed by the financing giants, which is currently at $417,000 for the majority of the country and $625,500 for higher-end communities featuring luxury homes.

“FHFA has been analyzing approaches for reducing Fannie Mae and Freddie Mac loan limits across the country, and any such change would be announced with adequate advance notice for implementation on Jan. 1,” the agency said in a statement on Sept. 9.

So there’s still plenty of time to secure a mortgage backed by Fannie Mae and Freddie Mac, under the original loan limits, before any reductions could be made.

Part of the reason for keeping the limits where they currently are at is to further bolster the recovering housing market. Although increasing home sales and prices over the past year throughout much of the country has signaled somewhat of a return to normalcy for the U.S. housing market, there is still some speculating that it isn’t all the way there yet. Reducing the loan limits could lead to the housing market regressing, some analysts predict.

Jumbo mortgages also an option
Even if the loan limit reduction passes, prospective borrowers can still benefit from jumbo mortgages, which are designed to pick up the slack where standard loan limits fall short. In fact, the news source reports that jumbo mortgage applications are already increasing, as loan guarantees from Freddie Mac and Fannie Mae are no longer cutting it on some instances.

With mortgage rate averages ticking upward, interested home buyers need to do everything in their power to give themselves the best chance at a low rate mortgage. Having a satisfactory credit score goes a long way, and can make the cost of a home inconsequential as a low rate mortgage leads to affordable payment options.

Contact us today to learn more about your financing choices when buying a new home.

 

Mortgage Borrowers Finding More Equity in Their Homes

Citing new data from CoreLogic, CNN Money reports that the rise in home prices over the last quarter has led to an increase in mortgage borrowers no longer owing more than their homes are worth.

Taking a closer look at the data, we find that as of the end of June 2013, $14.5 percent, or 7.1 million of mortgage borrowers were still underwater on their loans. But these figures, compared to the 19.7 percent or 9.6 million borrowers who were in this situation at the end of the first quarter, shows significant quarterly growth in this area.

Further putting these numbers in perspective, the news source cites data from late 2009 when 26 percent of all U.S. home owners were underwater on their mortgages.

Rising prices contribute to mortgage borrowers’ success

One of the prevailing factors in homes coming from out of underwater is rising home prices. This is fueled in part, by increased buyer demand ramping up asking prices and leading to heightened competition among prospective buyers.

With high affordability conditions due to low mortgage rate averages, buyers are upping the ante when it comes to how much they’ willing to settle on asking price from a seller. Also helping matters is investor influence.

The news source cited the Chinese as a major contributor to the resurgence in the U.S. housing market over the past several years. It doesn’t matter who is buying the houses as long as they are being sold and at competitive prices. These factors are helping to level off the once struggling housing market.

Despite mortgage rates trending upward in recent month, affordability conditions remain high and long-term mortgage rate averages don’t have the same effect on borrowers with strong credit when compared to borrowers with less than ideal credit. If you’d like to learn more about your financing options, contact us today.