The Right Advice,
Right When You Need It

Yard Signs: An Important Part of the REALTOR® Tool Kit® recently published an article titled, “Sorry, Sellers: Your ‘For Sale’ Sign May Be ‘Ugly and Desperate’—Here’s Why.” The article features the Board of REALTORS® in New Canaan, Conn., and their recent vote to ban real estate yard signs. That decision has since been reversed due to possible legal concerns; however, the town council continues to review the matter. The ban would have been in effect for a six-month trial period before possibly becoming permanent. The board’s reasons were explained with words like “clutter,” “obsolete” and “archaic.” I’m going to jump on this train with a counter argument. Real estate signs are alive and well. Yes, real estate yard signs are a very traditional form of marketing; however, they are as impactful today as they were 50 years ago. To be fair, the author of the® article did interview a few real estate sign advocates that disagree with banning signs. These advocates cited sales that would not have been made without the listing staple and their obligation to their clients to move their property quickly. Consider these four essential reasons to use real estate yard signs: Agent Recognition – Real estate agents are paid on commission. Posting real estate signs increases […]

How the U.S. Economy is Driving Housing Demand

A strong economy, that drove the housing demand beyond the availability of supply defined the first half of 2018 for the industry, according to a webinar giving a mid-year snapshot of the housing market in 2018 while delving into the question of whether the market was headed for another bubble, presented by Carrington Mortgage Holdings. Looking at the second half of the year, Rick Sharga, EVP, Carrington Mortgage Holdings, who presented the webinar said that the balance of 2018 looked like a mixed bag. “The triple problems of limited inventory, home price appreciation, and rising interest rates are likely to keep existing home sales from being as strong as they should be,” he said. “Prices are going to continue to rise as are interest rates.” Carrington projected the 30-year fixed-rate loan rates to end 2018 at 5 percent and home prices to rise 5-6 percent by the end of the year. While the forecast projected existing home sales to end the year at around 5.5 million, it said that new home sales would end at around 650,000. Looking at the foreclosure market, Carrington said that the remnants of the foreclosure crisis were concentrated in a few states and fewer foreclosures […]

Housing market remains strong, despite mortgage rate worries

The Federal Reserve is raising interest rates, and that’s led some to worry that mortgage rates will spike and put an end to the housing boom in the United States. Not so fast, according to the head of a big homebuilder. Stuart Miller, executive chairman of Miami-based builder Lennar, said Tuesday that “concerns about rising interest rates and construction costs have been offset by low unemployment and increasing wages.” He added that there is still a “short supply” of houses on the market after “years of underproduction of new homes.” And he said “demand remained strong” and “affordability remained consistent” thanks to rates that remain relatively low. Miller made those remarks in Lennar’s earnings release Tuesday morning. The company reported revenue and profits that topped Wall Street’s forecasts. Shares of Lennar (LEN) surged more than 7% on the news. Rival builders Pulte (PHM), DR Horton (DHI), Toll Brothers (TOL) and KB Home (KBH) all rose too. Lennar’s results are an encouraging sign for the group, which has been hit hard this year on fears that higher interest rates will start to take a bite out of demand for new homes. Builder stocks have been hit hard this year, with many […]

Why Few Millennials Own a Home

It’s not that millennials don’t want to buy houses, it’s just that they have a lot of trouble affording them. That’s according to ValueInsured’s quarterly Modern Homebuyer Survey, which states that 77 percent of millennials want to own a home. Millennial homeownership is barely 35 percent, the lowest level since the U.S. Census began tracking homeownership by age groups in 1982 according to ValueInsured. The problem, ValueInsured reported, is that millennials might not be saving enough money for down payments towards home purchases. Yes, there is a robust economy and strong job market, but, the report stated, this group of homebuyers faces a lot of competition for their money, from needs like cell phones and student loans to lifestyle expenses like Uber rides and live events. According to the report, 72 percent of millennials who wish to become homebuyers save less than $250 a month. In Q4, the national median home down payment was $18,000. “This number includes rural area homes where prices are on average lower, and where millennials are less likely to be looking to buy a home,” the report stated. “So, it will likely take more than six years for most millennials to save for a down […]

Rising Mortgage Rates vs. Consumer Budgets

After declining for two consecutive weeks, mortgage rates surged again rising to their second highest level this year according to the latest weekly Primary Mortgage Market Survey by Freddie Mac. According to the survey, the 30-year fixed-rate mortgage increased eight basis points to 4.62 percent from 4.54 percent last week. At the same time last year the rate was 3.91 percent. “The good news is that the impact on consumer budgets will be smaller than past rate hike cycles,” said Sam Khater, Chief Economist, Freddie Mac while commenting about the rising interest rate environment that continued during the week after the Fed announced a 25 basis points hike on Wednesday. The Fed rate hike though is not the reason for the rise in mortgage rates according to Khater and that’s because “a much smaller segment of mortgage loans in today’s market are pegged to short-term rate movements. The adjustable-rate mortgage (ARM) share of outstanding loans is a lot smaller now, 8 percent versus 31 percent than during the Fed’s last round of tightening between 2004 and 2006,” Khater said. According to Danielle Hale, Chief Economist for, “Today’s mortgage rate does not reflect yesterday’s Fed move because the majority was collected […]

U.S. house prices to rise at twice the speed of inflation and pay: Reuters poll

An acute shortage of affordable homes in the United States will continue over the coming year, according to a majority of property market analysts polled by Reuters, driving prices up faster than inflation and wage growth. After losing over a third of their value a decade ago, which led to the financial crisis and a deep recession, U.S. house prices have regained those losses – led by a robust labor market that has fueled a pickup in economic activity and housing demand. But supply has not been able to keep up with rising demand, making homeownership less affordable. Annual average earnings growth has remained below 3 percent even as house price rises have averaged more than 5 percent over the last few years. The latest poll of nearly 45 analysts taken May 16-June 5 showed the S&P/Case Shiller composite index of home prices in 20 cities is expected to gain a further 5.7 percent this year. That compared to predictions for average earnings growth of 2.8 percent and inflation of 2.5 percent 2018, according to a separate Reuters poll of economists. [ECILT/US] U.S. house prices are then forecast to rise 4.3 percent next year and 3.6 percent in 2020. “We […]

Consumers Increasingly Uncertain Over Home Prices

Consumer uncertainty on the growth of home prices is on the rise according to the latest Survey of Consumer Expectations (SCE) by the Federal Reserve Bank of New York. The survey found that while expectations of median home price changes remained flat at 3.7 percent in May, uncertainty over home price growth rose to its highest level since May 2017. Despite being stable for the month, home price change expectations were also well above their 12-month average of 3.3 percent. The monthly SCE survey contains information about how consumers expect overall inflation and prices for food, gas, housing, and education to behave while providing insights into Americans’ views about job prospects and earnings growth and their expectations about future spending and access to credit. In May, the SCE found that the perceived change in credit availability had improved over a year ago with the proportion of respondents reporting easier credit access increasing to 23.9 percent in May from 22.1 percent during the same period last year. However, consumers expected credit availability to worsen in the second half of 2018, with the “proportion expecting tightening credit access increasing slightly from 29.1 percent last year to 30.4 percent,” the survey indicated. Consumers […]

Is This the Right Time for Non-QM Lending?

Non-QM (Non-qualified mortgage) is rapidly growing as mortgage bankers recognize the benefits of correspondent lending for growth. With refinance volumes drying up, originators are looking for alternative mortgage solutions to achieve their goals. By working with a correspondent investor offering non-QM and jumbo, your lending options will expand and the result is higher margin and additional volume that help provide a competitive edge in a challenging market. Increasing Demand There is increased demand now that the mainstream has embraced non-Agency via correspondent lending and those who are not working with an industry-leading investor are rushing to become aligned. Anyone still considering the idea should recognize that their competitors likely have correspondent lending options and are reaping the rewards of higher volumes, engaged production teams and wider margins that come along with them. Benefits include ever-evolving, quality products such as jumbo loans, self-employed programs, and other alternative options. One of the best practices followed by many lenders is to have delegated and non-delegated underwriting options available through a partner that has years of experience in the non-Agency space. Building Partnerships When considering a correspondent partner, look for one that makes loan-level exceptions, has a distinct corporate structure, years of solid experience […]

Examining Tax Reform’s Impact on Housing

Just about six months after the revamped tax code went into effect, taxes are highest in the Northeast, while loan amounts are highest in California, according to a CoreLogic report on how the tax reform bill is affecting housing decisions. The tax reform bill enacted by Congress in December did four main things that affect housing, CoreLogic reported: It cut marginal tax rates, dropped the mortgage loan limit for interest deduction to $750,000 from $1 million for a new first mortgage, eliminated deductibility for some second liens, and capped the annual tax deduction for property, state, and local income taxes at $10,000. “These changes will likely affect the demand for owner-occupied housing and the type and size of new construction,” the report found, “especially in areas with high property and income taxes, and high mortgage interest expenses.” The company’s look at 500 ZIP codes identified the highest-cost areas to live in. “Predictably,” the report stated, “most of the high-cost areas are heavily concentrated in the Northeast and West Coast.” California had almost half of all high-cost ZIP codes in the study, with 221. The high-cost ZIPs there—heavily weighted by median price—are mostly concentrated in Los Angeles, Santa Clara, and San […]

Mortgage Risk for First-time Homeowners on the Rise

First-time buyer (FTB) mortgage risk rose in February, helping homebuyers looking to purchase a home for the first-time to overcome rising prices, according to the American Enterprise Institute (AEI) Center on Housing Markets and Finance’s latest report on mortgage lending practices. The AEI Center released an update to its indices on mortgage lending practices on Tuesday, which covers home mortgage loans originated between September 2012 and February 2018 and focused on First-time Buyer Mortgage Share (FBMSI) and First-time Buyer Mortgage Risk (FBMSR). According to AEI’s data, the FBMRI for February was up 0.5 percentage points from a year ago was up 2.3 percentage points from February 2013. The FBMRI for FHA loans set a new series high recording a jump of 2.3 percentage points to 27.6 percent in February. First-time homebuyers are also increasing according to the study, which found that FTB volume by count rose 1 percent from last year. The study said that these elevated numbers for FHA loans and the rise in FHB volumes was due to “FHA and Fannie Mae’s outsized monthly risk increases,” which are “making entry-level homes less affordable, since in a seller’s market, prices rise faster than incomes as long as the marginal […]

Housing Demand Declining for First Time in 4 Years

Homes sold to first-time homebuyers declined year-over-year for the first time since 2014 according to the latest edition of Genworth Mortgage Insurance’s First-time Homebuyer Market Report released on Thursday. The report, which aggregates all publicly-available government data and proprietary mortgage data into one dataset for its results, found that in Q1 of 2018, first-time homebuyers purchased 411,000 single-family homes a decline of 2 percent from the first quarter of 2017. This set of buyers also accounted for 37 percent of single-family homes sold and 57 percent of purchase mortgages financed. “This quarter’s decline in first-time homebuyer sales reflects a slowdown in cyclical momentum as the first-time homebuyer market approached its historical norms,” said Tian Liu, Chief Economist at Genworth Mortgage Insurance. “It also reflects a shortage of available homes priced at or below the median first-time homebuyer market price of $250,000.” Pointing to the continued pressure from inventory shortage, Liu said that while homebuyer demand was easing slightly for the first time in four years, “supply pressures will continue to drive price appreciation and freeze out a large percentage of the 2.7 million first-time homebuyers who are still missing from the market.” The report also indicated an increase in home sales […]

The State of the Mortgage Industry

Effective marketing and loan fulfillment programs, coupled with a laser-sharp focus on customer service will drive the mortgage industry to generate solid revenue and profit in a tough year according to a white paper titled “Efficient Collateral Valuation Key to Success in 2018,” published by Veros Real Estate Solutions(Veros) recently. The paper also outlines the important opportunities for mortgage lenders working to be more competitive in a purchase money market and how they can position themselves well for securing additional business when loan volume levels increase in the future. According to the study, “by focusing their efforts on the right products, [lenders] will also have the opportunity to build stronger relationships with existing bank customers and credit union members.” Outlining three keys to success in a tough year, the study said that excellent customer service, good marketing, and efficient operations to ensure good customer experience while reducing costs and increasing profitability would be important for lenders in 2018. “This paper offers lenders a real opportunity during a year that both the MBA and Fannie Mae predict mortgage loan originations will be down, making competition more intense,” said David Rasmussen, SVP, Operations at Veros. Towards the end of 2017, the paper […]

Mortgage Rates Drop, but Borrowers are Not Impressed

·       Total mortgage application volume decreased 2.9 percent for the week, seasonally adjusted, according to the Mortgage Bankers Association. That marked the sixth straight week of losses. ·       Applications to refinance a home loan fell 5 percent for the week to the lowest level since December 2000. ·       The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.84 percent from 4.86 percent. After a sharp rise, mortgage interest rates stepped back a bit last week, but that did nothing to juice borrower demand. Total mortgage application volume decreased 2.9 percent for the week, seasonally adjusted, according to the Mortgage Bankers Association. That marked the sixth straight week of losses. Volume was 10 percent lower compared with the same week one year ago. Refinance volume, which is most rate sensitive and usually rises when rates fall, did just the opposite. Applications to refinance a home loan fell 5 percent for the week to the lowest level since December 2000. Volume was nearly 27 percent lower than a year ago, when rates were lower. The refinance share of total mortgage application volume fell to its lowest level since August, 2008, at just 35.3 percent. The weekly […]

Federally Backed Mortgages Are Vital To Minority Homeownership, Says Government Report

Home ownership is taken for granted as a rite of passage — both of social and financial establishment. Home purchases are part of the American wealth generation process: What would otherwise be short-term and long-term profit creation for landlords work to the benefit of the homeowner often. Given sharply increased profit margins for rental property owners since the recession, home ownership has become even more important in establishing personal and family wealth. (Interestingly, there’s an increasing drone of advice to rent rather than buy these days, which might make one wonder whose interests are at the forefront.) A recent report from the Consumer Financial Protection Bureau looked at mortgage activity last year. The data shows how small a share of mortgages minorities take and the importance of so-called nonconventional loans — those with federal mortgage insurance from the FHA, VA, Farm Service Agency, or Rural Housing Service — are to minority home ownership. And as someone reminded me, these programs generally have options for low down payments. Minorities generally have small percentages of home-purchase loans for “one-to-four-family, owner-occupied, site-built properties,” compared to their representation in the population. Blacks received 6.4% of such loans last year and are 13.3 percent of […]

Construction Jobs Gain Momentum

Unemployment reached 3.8 percent its lowest level since April 2000 and the latest addition of 223,000 jobs in May marked the ninety-second consecutive month of job growths according to the latest data released by the U.S. Bureau of Labor Statistics on Friday. The data indicated that employment in the construction sector is on the rise, increasing by 25,000 during May and by 286,000 on a year-over-year basis. However, the largest number of jobs were added in retail with 31,000 new jobs, of which 6,000 were jobs in building material and garden supply stores. When it came to earnings, the data indicated that wages had trended up, rising 2.7 percent on an annual basis. “The May jobs report portrayed a solid labor market, with strong, broad-based job gains and upward revisions,” said Doug Duncan, Chief Economist at Fannie Mae. “Wage growth also posted the biggest monthly gain since January. However, the annual increase showed no signs of breaking out, staying within the tight range between 2.6 percent and 2.8 percent seen since December.” According to Mark Fleming, Chief Economist at First American the rise in wages needs to be looked at in tandem with prime-age labor force participation to get a […]

Pending Home Sales Fall More than Expected as Costs for Buyers Rise

·       Pending home sales, which measure signed contracts to buy existing homes, fell a wider-than-expected 1.3 percent in April compared to March, according to the National Association of Realtors. ·       It was the third lowest level of the past year. ·       Weakening affordability is going hand-in-hand with short supply, especially on the lower end of the market. Potential homebuyers out shopping in April may have been spooked by a sharp rise in mortgage interest rates. Pending home sales, which measure signed contracts to buy existing homes, fell a wider-than-expected 1.3 percent compared to March, according to the National Association of Realtors. It was the third lowest level of the past year. Pending sales were 2.1 percent lower compared to April of 2017 the fourth straight month showing an annual decline. The Realtors point, again, to the continuing supply crisis in housing today. “Feedback from Realtors, as well as the underlying sales data, reveal that the demand for buying a home is very robust. Listings are typically going under contract in under a month, and instances of multiple offers are increasingly common and pushing prices higher,” said Lawrence Yun, chief economist for the NAR in a release. “The unfortunate reality for many home shoppers […]

Millennials Face Tough Choices This Home Buying Season

As entry-level homes become scarcer, more expensive, and of a worse quality, millennials, one of the largest group of homebuyers looking at these homes, face the most obstacles and most often have to put their plans to purchase a home on hold or make compromises on the homes they buy, according to a recent study by Trulia. The study found that 87 percent of millennials were encountering obstacles that were delaying their home buying plans, more than any other age group. These findings come after Trulia commissioned an online survey of more than 2,000 Americans ages 18 and older, to understand the hard decisions faced by home buyers. Almost 9 in 10 or 86 percent of the millennials surveyed said that they planned to buy a home and of these, 35 percent were planning to purchase a home within the next year, and 57 percent planned to buy their own abode in the next two years. The most common obstacles faced by 98 percent of the millennials who planned to purchase a home in the next year were rising home prices, saving enough for a down payment and poor credit history. Millennials, the study indicated, also had unique problems that […]

The Housing Market Gets Hotter in the West

A study of 16,000 U.S. zip codes by found that, overwhelmingly, the ZIP codes seeing the fastest movement of homes are in the West. Nationally, the report stated, houses are generally on the market for an average of 78 days. But in the 20 markets where homes sold fastest in Q1, they sold after an average 21 days on the market; in the top three ZIP codes, in fact, barely past three weeks. While 12 different states made up the top 20 ZIP codes in the country, California had the most, with seven areas overall. Three—San Ramon, San Diego, and San Jose—were in the top 10. Colorado, which placed the overall hottest zip code in Colorado Springs’ 80922, had two markets in the top 10. The other was Littleton. Fort Worth, Texas, tied with San Ramon for second place on the list. Homes there sold in an average 16 days during the quarter. Colorado Springs saw homes closing in an average 15 days. But those were not the fastest moving markets of the quarter. Homes in San Ramon moved in 14 days and in Littleton, just 11. These latter ZIP codes were not ranked first and second because of […]

HMDA Data: Loans to Low-Income Borrowers Rose in 2017

A change in Regulation C saw fewer financial institutions reporting Home Mortgage Financial Disclosure Act (HMDA) data in 2017 according to the Federal Financial Institutions Examination Council (FFIEC). The council recently released the data on mortgage lending transactions covered by HMDA for financial institutions. They included data from banks, savings associations, credit unions, and mortgage companies. The FFIEC data covered lending activity submitted by financial institutions on or before April 18, 2018. Data revealed that home loans to low- and middle-income borrowers saw a slight uptick for new properties, rising from 26.2 percent to 26.3 percent in 2017. Refinance loans to this group of borrowers also saw an increase from 16.9 percent in 2016 to 22.9 percent in 2017. In terms of borrower diversity, the report said that the share of home purchase loans for family properties made to black borrowers rose from 6 percent in 2016 to 6.4 percent in 2017. For Hispanic borrowers, this number remained unchanged at 8.8 percent and for Asian borrowers, it rose from 5.5 percent to 5.8 percent. For refinance loans, the share of loans made to black borrowers increased to 6 percent from 5 percent in the earlier year. The share for Hispanic […]

Reverse Mortgage Market Takes a Fall

After a rough March for home equity conversion mortgage originations, April’s numbers became even more dire, according to the latest statistics from Reverse Market Insight. Just how bad did the home equity conversion mortgage (HECM) market get in April 2018? RMI reports a 22.2 percent month-over-month drop in HECM originations in April. That amounted to only 3,345 HECM originations from FHA-approved mortgage lenders in April, according to RMI data. For March, that number was 4,300; for January 2018, it was 6,313. January also marked the highest reverse mortgage volume since 2011. January also saw 48 new lenders enter the reverse mortgage lending field. Now, however, the market has clearly taken a turn for the worse. “HECM volume is seriously hurting after the October 2, 2017, changes from the FHA,” stated RMI’s release. That is referring to changes instituted last fall that lowered principal limits and imposed a new mortgage insurance premium structure. All 10 regions tracked by RMI saw significant monthly declines during April. The New York/New Jersey region suffered a 17 percent drop in HECM originations for the month. The Pacific/Hawaii region fared best with 964 HECM originations, but that’s still down considerably from March’s total of 1,204 (to […]

Mortgage Demand Drops 2.5% on the Highest Rates in Nearly 5 Years

·       Both homeowners and homebuyers took a deep breath as rates continued to rise last week, pulling back a bit from the mortgage market. ·       Total application volume fell 2.5 percent for the week, and was 3.3 percent lower compared with the same week one year ago, according to the Mortgage Bankers Association. ·       The refinance share of mortgage activity decreased to 36.5 percent of total applications, its lowest level since September 2008. Both homeowners and homebuyers took a deep breath as rates continued to rise last week, pulling back a bit from the mortgage market. Total application volume fell 2.5 percent for the week and was 3.3 percent lower than a year ago, according to the Mortgage Bankers Association’s seasonally adjusted report. Refinance volume led the way down, falling 4 percent from the previous week and 15 percent from a year ago, when rates were much lower. Borrowers looking to refinance are extremely rate-sensitive in today’s market because so many people already refinanced to record low rates following the recession. The refinance share of mortgage activity decreased to 36.5 percent of total applications, its lowest level since September 2008. The average contract interest rate for 30-year fixed-rate mortgages with […]

Unemployment Rate Falls Below 4% for First Time Since 2000

As jobs increased in April, the unemployment rate dropped below 4% for the first time since 2000, according to the latest Employment Situation Summary report from the U.S. Bureau of Labor Statistics. The unemployment rate decreased to 3.9% in April, down the previous rate which had remained unchanged for six months at 4.1%, according to the report. The number of unemployed persons edged down from 6.6 million to 6.3 million in April. “With the unemployment rate hitting an 18-year low of only 3.9% in April, the Fed is still going to push ahead and raise interest rates again in June, even though average hourly earnings growth remained at a muted 2.6% year-over-year,” Capital Economics Senior Economist Michael Pearce said. This decrease was driven by the drop in unemployment rate for adult women, which decreased to 3.5% in April. The jobless rates for all other groups including men at 3.7%, teenagers at 12.9%, whites at 3.6%, blacks at 6.6%, Asians at 2.8% and Hispanics at 4.8%, all showed little or no change over the month. “While the unemployment rate dropped to its lowest levels in 17 years, April’s jobs growth failed to meet expectations,” said Yun Cohen, National Association of Federally […]

It’s News to New Agents

You have dreams about becoming a successful real estate professional. You want to be like the big names in the industry, and acquire their polish, experience, and contacts. As you begin your new career, you’ll benefit from knowing how to get where you want to go. Were you recruited? If so, a broker met you and saw potential in you and is willing to sponsor you while you obtain your license. Were you tired of teaching school for pennies or standing on your feet in retail or nursing? No matter what your previous profession, you have valuable assets to bring to the real estate industry — the ability to meet people, make cold calls, overcome objections, inform, empathize, convince, organize, multi-task, and so on. It may be news to you, but the number one ability you’re really going to need is sales. Selling is the process of developing, managing and closing a lead. Your job is to bring business to the broker, not the other way around. It costs a broker real money to sponsor you. There’s office space you can use, adding you to the brokerage’s website, twitter, training you, including you in company advertising, etc. The broker pays […]

Homeowners Are Bullish About Housing—Buyers Not So Much

Inventory and affordability squeeze aside, consumer sentiment about the housing market rose in April going into the home buying season, according to the latest Fannie Mae Home Purchase Sentiment Index (HPSI) on Monday. The HPSI rose 3.4 points in April to 91.7 marking a new all-time high, Fannie Mae said. Out of the six components that make up the survey, only one—the number of respondents who said that now is a good time to buy a home—decreased, falling three percentage points to 29 percent, compared with March. On the other hand, the net share of respondents who said that now was a good time to sell a home increased 6 percentage points on a month-over-month basis, to 45 percent, reaching a new survey high, the report said. Homebuyer sentiment was likely affected by the lack of for-sale inventory as well as rising home prices, that are likely to remain a challenge for home sales for the rest of the year too, according to Doug Duncan, SVP and Chief Economist at Fannie Mae. “High home prices and good economic conditions helped push the share of Americans who think it’s a good time to sell to a fresh record high,” said Duncan. […]

Tapping into Home Equity

Tappable home equity is at the highest it has ever been according to Black Knight Inc.’s latest Mortgage Monitor Report for February, released on Monday. According to the report, the amount available for homeowners with mortgages to borrow against before hitting a maximum cap of 80 percent loan-to-value ratio grew by $735 billion in 2017 alone. By February, the total amount of tappable home equity stood at over $5.4 trillion, 10 percent above its 2005 pre-crisis peak. The report found that over half (55 percent) of all tappable equity was held by borrowers with first lien rates below the prevailing 30-year rate at the beginning of 2018. With interest rates rising in February, 75 percent of all tappable equity was held by borrowers with rates that were lower than those today. “As home prices continued their upward trajectory at the national level, the amount of tappable equity available to homeowners with mortgages continued to rise as well,” said Ben Graboske, EVP, Black Knight Data & Analytics. Despite these numbers, the number of Americans actually tapping into this available resource was very small. “An estimated $262 billion in tappable equity was withdrawn in 2017 via cash-out refinances and home equity lines […]

Weekly Mortgage Applications Rise Even as Rates Increase

·       Interest rates rose again last week – but that didn’t stop mortgage application volume from rising.   ·       Total mortgage application volume jumped 4.8 percent from the previous week, according to the Mortgage Bankers Association.   ·       An increase in refinance and purchase applications drove the rise. After decreasing for the first time this year, interest rates rose again last week – but that didn’t stop mortgage application volume from rising. Applications for mortgages jumped 4.8 percent last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted report. Volume remained unchanged from one year ago. An increase in refinance and purchase applications drove the weekly rise. Refinance applications rose 7.3 percent last week from the previous week but was still down more than 10 percent from a year ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.69 percent from 4.68 percent for 80 percent loan-to-value ratio loans. “Rates slightly rose last week based on fears of trade conflicts with China and other countries but were offset by what we saw as a positive economic outlook from the Fed,” said MBA economist Joel Kan. “Refinance […]

Is Spring Really the ‘Magic Window’ for Home Sellers?

Anyone looking to close a home sale faster and more favorably is entering the right time of the year to do it. According to a new report by Zillow, the first half of May specifically is the best time to list a home for sale in order to maximize sale price and minimize time on the market. The report finds that in at least half the major markets, homes listed between May 1 and 5 can expect to sell almost two weeks sooner and for a $2,400 premium, on average, over listing at other times of the year. Part of the reason, especially this year, Zillow predicts, has to do with so many inventory shortages in the country. “A large number of home buyers will likely be unable to find the right home to buy in the early weeks of spring,” the report states. “As they linger later into the season, these home buyers may end up spending more than they intended as they get wrapped up in competition and/or rush to conclude a deal before the summer months.” In other words, late-spring listings can capture these perhaps frustrated home buyers more quickly and earn an additional premium. Sellers in […]

A Return to ARMs

Since the mortgage domain—and the nation—went into a tailspin a decade ago and tons of borrowers lost their homes, adjustable-rate mortgages (ARMs) have gotten a bad rap. Sordid history aside, the ARMs offered now are head and shoulders above the previous models, says First American in its February 2018 Loan Application Defect Index. “Today’s ARM is not like those of the past,” said Mark Fleming, Chief Economist at First American. “It is essentially the same as the 30-year, fixed-rate mortgage with one difference: Rates adjust after an initial fixed period of usually five or seven years.” Retooled characteristics aside, though, will the comeback of these previously scorned products give rise to surging loan application defect risk? “Adjustable-rate mortgages historically have had more defect, fraud, and misrepresentation risk than the traditional 30-year, fixed-rate mortgage,” First American said. “Interestingly, that has changed recently. Adjustable-rate mortgages, based on our defect, fraud, and misrepresentation index, are modestly less risky.” Now that we’re in a rising interest rate environment—a 30-year, fixed-rate product currently is about 4.5 percent and expected to reach 5 percent by year-end—ARMs are looking more attractive. With a current rate of 4 percent, borrowers wanting to keep their payments lower are likely […]

Why Is Economic Confidence Not Translating to More Homebuyers?

The National Association of Realtors has released the findings for their Housing Opportunities and Market Experience (HOME) survey for the first quarter of 2018. According to the survey, consumers have indicated that, while a growing number of households feel more confident about the economy and their financial situations, these positive feelings are not translating into the homebuying market. While the majority of consumers surveyed do believe that now is a good time to buy a home, the positive response is down four percent from the previous quarter, coming to 68 percent. Renter optimism has also diminished, coming to 55 percent this quarter, a five percent decrease from Q4 2017. Those with the highest levels of optimism are homeowners and older respondents, as well as those living in the more affordable Midwest and South regions. “There’s no question that a majority of homeowners have amassed considerable equity gains since the downturn,” said Lawrence Yun, Chief Economist for NAR. “Home prices have grown a cumulative 48 percent since 2011 and are up 5.9 percent through the first two months of this year. Supply conditions would improve measurably, and ultimately lead to more sales, if a growing number of homeowners finally decide that […]

Homebuyers are not Bothered by Higher Rates or Taxes, but Sellers are

·       A critical shortage of listings is the No. 1 obstacle, not rising mortgage rates or new tax laws that reduce certain homeowner deductions, especially in higher price ranges.   ·       Nationally, sales of homes priced above $750,000 were up nearly 19 percent from a year ago.   ·       New tax laws limit the mortgage deduction to interest paid on up to $750,000 in debt. Home sales rebounded more strongly than expected in February, and the National Association of Realtors says they could have been even higher if there were more homes for sale. A critical shortage of listings is the No. 1 obstacle, especially in higher price ranges — not rising mortgage rates or new tax laws that reduce certain homeowner deductions. In fact, homes sales in the West, where prices are highest, jumped more than 11 percent for the month, and the higher end of the market was very active. Nationally, sales of homes priced above $750,000 were up nearly 19 percent from a year ago. New tax laws limit the mortgage interest deduction. Borrowers can now deduct interest paid on up to $750,000 in mortgage debt. Previously, the limit was $1 million in mortgage debt. Sales at […]

Study Says: Home Sales to Remain Flat

As we get into the home buying season, it’s time to look at some of the trends that began last year and are still defining 2018. The National Housing Market Index (NHMI) for the fourth quarter of 2017, which was released by the AEI Center on Housing Markets and Finance does just that. The quarterly index combines the AEI Center on Housing Markets and Finance’s data on the federal agency market with data provided by First American via for the private side of the market and for cash and non-institutionalized lender sales. The latest data released for NHMI showed that in the fourth quarter of 2017, the national home purchase market continued its rally, ending 2017 with 6.34 million sales with sales transactions increasing 5.4 percent in the fourth quarter marking the 13th consecutive quarter of rising home sales, the data indicated. Home prices have been steadily increasing and by the end of the fourth quarter of 2017, national house prices had jumped 6.7 percent. However, the report said that the growth enjoyed by home sales in 2017 was likely to decelerate in 2018 with the volume remaining flat to slightly increasing. In the last quarter of 2017, the […]

Nearly 100,000 Members of Generation Z Own a Home (They’re 23 and Younger)

Some U.S. homeowners are getting started early. Really early. Benjamin Ulloa, a 19-year-old real estate broker who lives with his parents in Oregon, purchased a home in Hoquiam, Wash., two years ago. He had worked in construction during high school, in the summers and when he wasn’t in class, and saved what he made while living at home. He read the personal-finance book “Rich Dad, Poor Dad,” which inspired him to become a real-estate investor, he said. When he was driving with friends one day, he saw a fixer-upper for sale in Hoquiam for $18,000. His father agreed to finance half the purchase (which Ulloa has now paid back), and Ulloa paid the other half. Now, after a little work, Ulloa rents the home. It has appreciated to be worth between $60,000 and $80,000, he said. “I just bought it because it was the first step, even if I didn’t know what I was going into,” he said. “I figured I would rather learn through experience than just waiting.” He’s one of a growing number of young Americans taking the plunge. More than 99,000 members of Generation Z — those born in 1995 and after, who are now 23 or […]

Homes for Sale: Here Today, Gone Tomorrow

If there’s a home on the market stuffed with to-die-for features, it’s probably not going to last long, according to the latest Nationwide Health of Housing Markets (HoHM) report. What’s precipitating the blink-and-you’ll-miss-it market? Heavy demand and a rock-bottom level of for-sale homes, the report says. “As we head into spring and the traditional season when sales heat up, homebuyers will find that desirable homes won’t be on the market for long,” said David Berson, SVP and Chief Economist at Nationwide. “Today, the average home is on the market almost half the length of time that it was six years ago.” That news, of course, is a sweet elixir for would-be sellers. Just how sweet? In 2017, the typical home sat on the market—meaning from listing to inking a contract—for 67 days, HoHM data shows. Snip that in half for the nation’s hottest markets, like Denver or Colorado Springs, where the average abode was on the market for some 33 to 34 days, Nationwide reports. Other sizzling locales: San Francisco-Redwood City, California (35 days); San Diego-Carlsbad, California (37 days); Portland, Oregon (38 days); Dallas-Plano-Irving, Texas (40 days); and Kansas City (41 days). Despite the challenges confronting buyers, Berson’s outlook on […]

Blockchain’s Real Estate Reality

If you’ve been thinking blockchain is all about Bitcoin, you’re not alone. As a recent study by BuzzSumo shows there were more than 40,000 Bitcoin-related articles published every week in December. With the mainstream media spotlight shining brightly on “Bitcoin Billionaires,” it’s hard not to notice. Of course, Bitcoin and other cryptocurrencies are based on the latest in blockchain technology. But technology is “technical”—which explains why this great, enabling advancement lives in the shadows of the coin crowd. From Crypto to Cash Whether talking about Bitcoin or blockchain, even new technology cannot immediately overcome old thinking. At the Inman Connect New York event, one lucky Miami real estate professional talked about how she had brokered not one, but four cryptocurrency real estate deals. As the interview came to a close, the question was posed, “How did the escrow work?” The answer? The buyer converted their Bitcoin millions to the common U.S. dollar. In the end, the story was about the common “cash deal.” Crypto is coming to real estate, and there are edge cases today, but it is far from mainstream as it is still treated as a simple asset class. With that interview as motivation for a more common-sense […]

Growing Your Real Estate Client Base

Growing a solid client base takes plenty of time, persistence and a little bit of charm, especially if many of your clients come through referrals. The most important way to build your client base is to maintain your relationships with the clients you already have: follow up, call back, and always stay in touch. Do so even with the clients you’ve already closed a deal with—in order to make referrals to their friends, neighbors and family, they need to remember you! Remember the old saying, “out of sight, out of mind?” That applies to real estate, too, so never stay out of sight. Send birthday, holiday, graduation and anniversary cards. Keep notes on every conversation you have with your client, even little personal details that might not seem important. That way, you can send them little notes or give them a call to show your clients you care. Is their son going off to college in the fall? Did their father just have surgery? Remember those tidbits, and use them to stay in touch. Call at least a few potential clients a day. You know those folks—the ones you might fondly refer to as “tire kickers?” The people you meet […]

Should You Give Showing Feedback?

If you have a buyer client mulling over whether to make an offer, it may be wise to keep your feedback to the listing agent short and nonspecific. “If I were to state that my client thought the property and price was great, then the seller would know that and most likely counter us in a negotiation,” says Gilbert “Gibby” Kirby, SRES, a broker at Realty Executives Success in Shorewood, Ill. “I have done that exact thing as a listing agent.” Kirby recently sold a home for his seller’s asking price after receiving feedback that the home buyer thought the property was perfect. Knowing the buyer’s stance helped his seller write a counteroffer excluding closing credit and denying half the repairs the buyer requested. The home buyer accepted the counteroffer. Of course, listing agents don’t necessarily seek the information as a bargaining chip. Honest feedback can help sellers understand when they need to reduce their asking price or spring for updates. If your buyer client has no intention of making an offer, you may have more freedom to be frank in sharing their opinions, but err on the side of discretion when necessary and protect your buyer’s information. Create an […]

Move Over Millennials, Gen Z is Already Buying Homes

Who’s afraid of growing up? Apparently not Generation Z. The post-Millennial crops of kids, those born in 1995 and later, are already moving into homeownership. Maria Lamagna, writing for MarketWatch says just shy of 100,000 members of Gen Z, whose ages top out at 23, have a mortgage. Their average loan balance is $140,000. Millennials have been notorious late bloomers, lagging earlier generations in marrying, starting families, and buying homes. For Gen Z it is very early in the traditional homebuying cycle, but TransUnion reports they already held 99,000 mortgages in the 4th quarter of 2017. This was dwarfed of course by the 12 million Millennials, but members of the much smaller Generation X had 24 million mortgages, as did nearly 27 million baby boomers and 5.1 million members of the Silent Generation. Lamagna quotes Rob Dietz, chief economist of the National Association of Home Builders who said he was a little surprised to see the ownership numbers for Gen Z as large as they are. “The traditional life cycle is to rent, especially for younger consumers who might have student loans,” he said. Dietz continued, “It’s all the more impressive given the strong housing market. The existing home inventory […]

Why the 2018 Tax Deadline was Moved to April 17

For three years in a row, Americans are going to get a little extra time to file their taxes, thanks to a holiday that may be completely unknown to you. In 2018, the tax-filing deadline will be April 17 thanks to Emancipation Day. Emancipation Day is a legal holiday in the District of Columbia, held on April 16 to celebrate the DC Compensated Emancipation Act of 1862 that ended slavery in Washington, DC. The tax filing deadline cannot be on a Saturday, Sunday, or a legal holiday. Since Emancipation Day is a legal holiday in DC, closing the IRS offices, it has the same effect on taxes as a national legal holiday. When Emancipation Day and the tax-filing deadline fall on the same day, the tax deadline shifts. For 2018, April 15 falls on a Sunday, and thus the tax deadline would normally be moved to the next Monday, April 16 except that’s Emancipation Day. Thus, the tax-filing deadline is shifted one more day ahead, to Tuesday, April 17. Residents of the states of Maine and Massachusetts sometimes get another extra day to file thanks to the Patriot’s Day holiday, observed there annually on the third Monday of April. When […]

Financial Don’ts When Getting Ready To Buy A Home

If you’re in the process of buying a home, you’ve probably already met with a mortgage lender who advised you on what to do and what not to do during the escrow process. But if you’re just getting ready to buy or plan on doing so in the near future, following a few financial tips can mean the difference between qualifying…and not, and also getting a decent rate. These are a few universal “don’ts” that will help you stay on track, even before you get a lender involved. Don’t take out more credit If you’re thinking you’re going to buy a house in a matter of a few months, forget that new laptop on the Best Buy card, forget that new car, and forget that Old Navy card. Sure, it’s only a $30 pair of pants. But, taking out more credit can harm your debt-to-income ratios, which can make you look like a credit risk. And that’s not worth it, no matter how cute the pants are. Don’t pay off all your current credit cards Your lender will tell you specifically what you should pay down and what you should leave alone, but banks tend to like responsible credit management. […]

Family Over Location for Millennials

They’re the most active generation of homebuyers in the market today, but unlike their Gen X or Baby Boomer parents, millennials prefer to buy homes that are close to their friends and families rather than a convenient location or proximity to a school according to the 2018 Home Buyer and Seller Generation Trends report published by the National Association of Realtors. The report, which evaluates the generational differences of recent homebuyers and sellers found that inventory constraints and higher housing costs kept the overall home buying activity of millennials subdued during the year, even preventing some millennials from leaving the confines of their parents’ homes. Despite these constraints, millennials are the largest share of home buyers at 36 percent, with 65 percent of these buyers being first-time homebuyers. The report also found that greater purchasing power was needed over the past year to buy a home. It found that over the past year, the typical millennial buyer earned a higher household income than a year ago, but purchased the same-sized home at a more expensive price. Millennials also had a higher student debt balance and more millennials found that saving for a down payment was the most difficult aspect of […]

NAR: Debt Forgiveness Should be Permanent Part of Tax Code

Prior to the housing crisis, homeowners who defaulted on their mortgages faced tax consequences if their lender had to write off or write down any part of the outstanding balance. That often happened after the collateral was sold after a foreclosure, deed-in-lieu, or short sale, and write-downs were sometimes included as part of a mortgage modification as well. The deficit amounts were reported to the IRS as forgiven debt and were subject to being taxed as income. In 2007, as the numbers of distressed mortgages was mounting, Congress put a temporary policy in place to exclude forgiven home mortgage debt from any tax obligation. That exclusion has been extended several times. It expired in 2017, but early this year it was extended retroactively to cover the previous year. The National Association of Realtors® (NAR) has long advocated for making the exclusion permanent. They maintain that taxing forgiven debt as income adds an additional burden on an individual or family just as they have actually experienced true economic loss, and when they are unlikely able to pay additional taxes. On Tuesday a representative of the Association testified to that effect before the U.S. House Ways and Means Subcommittee on Tax Policy […]

House Flipping Hits Decade High, but Returns are Shrinking

·       More and more people are flipping houses, but they are reaping smaller rewards. ·       Just more than 207,000 homes were flipped in 2017, the highest in a decade. ·       The number of people or companies flipping homes also hit a decade high. More and more people are flipping houses — the most in 10 years – but they are reaping smaller rewards. High home prices, hot competition and very, very few available homes to buy are combining to make this popular trade ever more risky. Just more than 207,000 homes were flipped in 2017, according to a new report from Attom Data Solutions, which defines a flip as a property bought and sold in the same 12-month period. That is the highest number of flips in a decade. The number of people or companies flipping homes, 138,410, also jumped to a decade high. Today’s flippers, however, are nothing like those of a decade ago, who used cheap and easy money to finance their trades. “The surge in home flipping in the last three years is built on a more fundamentally sound foundation than the flipping frenzy that we witnessed a little more than a decade ago,” said Daren Blomquist, […]

Data Shows Shift in Mortgage Credit

Mortgage credit availability decreased 1.2 percent in February as program offerings in the conventional mortgage space affected the overall availability of credit, bringing the index down to 180.7. The MBA unveiled this data along with other findings in their latest monthly report on the Mortgage Credit Availability Index (MCAI). Declines in index numbers are indicative of a crackdown on lending standards, while increases usually indicate a loosening of credit. Conventional Mortgage Credit Availability Index loans decreased by 2.5 percent, while credit availability for conforming MCAI loans fell 2.1 percent. The month-to-month decline in February made for a continued pattern from September, where investors put out more products one month but pulled back the next month. Lynn Fisher, VP of research and economics for the MBA said a change in program offerings from a single large investor in the conventional space played a big part in the decline. Fisher went on to say that the February decline brought the jumbo component index to year-end levels and the conforming component to levels comparable to last October. In January, MCAI increased 2.1 percent to 182.9. The conventional MCAI rose 3.6 percent, and the Government MCAI rose 0.9 percent. Component indices of the Conventional […]

Blend to Further Digital Mortgage Process With Fannie Mae

Blend, a California-based technology company created to drive the consumer lending industry into the digital age, recently announced it’s the first end-to-end platform will be approved to provide asset verification reports for the Desktop Underwriter (DU) validation service, a component of Day 1 Certainty by Fannie Mae. Fannie Mae’s DU validation service is designed to provide customers with enhanced loan origination controls, improved processes, and certainty around the borrower’s assets, income, and employment information, in addition to relief from representations and warranties on validated loan components. Brian Martin, leader of Blend’s Business Development team said the company’s relationship with Fannie Mae allows Blend to offer mortgage lenders seamless integration with Day 1 Certainty right out of the box—there are no additional borrower or lender actions required to realize the benefits. “Everyone involved will benefit from reduced paperwork, significantly lower risk, and an accelerated mortgage process,” Martin said. “Our work with Fannie Mae will continue to target a more frictionless process that better serves borrowers.” The streamlined account connectivity in Blend’s consumer lending process means lenders, who already see up to 70 percent of their borrowers connecting directly to source data, now have their loans with validated components automatically eligible for […]

The Cascading Effect of Wages on Home Affordability

The rise in jobs and wages reported by the bureau of labor statistics in late January is affecting the housing market in good ways and bad, according to the latest Real House Price Index data released by First American on Monday. The index measures the price changes of single-family housing across the country adjusted for the impact of income and interest rate changes on consumer home-buying power (how much one can buy based on changes in income and interest rates) over time and across the U.S. at a national, state, and city level. The data, which was released for December 2017 showed that homes are 5 percent more expensive than they were a year ago. Real house prices on the index increased 0.4 percent in December 2017 month over month. The index indicated that home buying power of consumers increased 5.6 percent on a year-over-year basis and by 0.1 percent from November 2017 to December 2017. “Household income varies substantially by the housing market, so comparing house-buying power with house prices by the market can provide perspective on housing affordability,” said Mark Fleming, Chief Economist at First American. “Earlier this month, the Bureau of Labor Statistics reported that average hourly […]

How Could Mortgage Rate Upswings Impact Housing?

Freddie Mac has released its February Insight report, which “looks into the effects of higher mortgage rates on home buyers, homeowners wishing to refinance, mortgage lenders, home builders and real estate agents.” For this latest Insight report, Freddie Mac economists have looked at how rising mortgage interest rates could impact the housing market, as well as what ripples past increases have caused. To begin, Freddie’s Insight Report looks back at a historical period when mortgage interest rates were at their highest in recent memory: the years between 1977 and 1981. In 1977, the interest rate for a new 30-year fixed-rate mortgage was 8 percent. Four years later in 1981, that same mortgage would have included an 18 percent interest rate. As the Insight report explains, “This was the most dramatic increase in mortgage rates in the last 50 years.” What impact did this skyrocketing of mortgage interest rates have on the housing sector? Per the Insight report, new mortgage originations fell nearly 40 percent, from $162 billion in 1977 to $98 billion in 1981. Annual single-family home sales dropped 36 percent, from 4.5 million to 2.9 million. Finally, housing starts for single-family homes dropped by over 51 percent, from close […]

Buyers are Bidding on Homes Before Seeing Them

An increasing number of homebuyers are making offers for homes without first seeing them in person, according to an analysis by online brokers Redfin. The study, which surveyed 1503 respondents who purchased a home in the last one year in November and December 2017, found that 35 percent of people who bought a house last year made an offer without seeing it in person, showing an increase from 33 percent in May 2017 and 19 percent in June 2016. It found that millennials were even more likely to make an offer on a home sight-unseen with 45 percent of millennials surveyed saying that they had made an offer on the home before seeing it, reflecting their comfort on relying on online information about homes for sales and neighborhoods. In fact, the study found that many home buyers who can’t get to tour a home right away because they are busy or relocating rely on online tools such as virtual tours, online maps, housing apps, statistics, and online reviews to understand the subtler aspects of the neighborhood where they plan to live. Regionally, homebuyers in Los Angeles were most likely to bid on a home before seeing it, the survey indicated, […]

Refinancing: Seasonal Pattern or Last Chance Surge?

Although the company said it was regular January phenomenon, last month’s surge in refinancing also feels a little like borrowers “headed for the last roundup.” Ellie Mae’s Origination Insight Report noted that the share of refinancing originations shot up by 5 percentage points in January, accounting for 45 percent of all closed loans. The surge coincided with a jump in the average interest rate of closed loans, from 4.28 percent in December to 4.33 percent, making for a 13-basis point increase since October. It was the highest share for refinancing, which dipped to less than a third of closed mortgage loans in early summer, since January. The December 2016 to January 2017 increase was 1 point. “As we ring in 2018, we see refinances rise as a percent of overall loan volume, something that we have seen every January since we began reporting this data,” said Jonathan Corr, president and CEO of Ellie Mae. “This increase in the percentage of refinances is attributed to slower seasonal purchase market carrying over from the end of 2017. Our expectation is percentage of refinances will taper back off to industry projected levels of 25 to 30 percent in the coming months as the […]

Fannie/Freddie Need Your Money Again, But Not Like They Used To

While the prospect of Fannie Mae and Freddie Mac needing taxpayer money conjures up images of a failing mortgage market requiring a government bailout, that’s very far from the case this time around. In fact, taxpayers continue to come out way ahead with respect to the GSEs’ conservatorship agreement, even after the draws that will be needed to cover 4th quarter losses. At issue are one-time write-downs arising from accounting changes in response to the new tax bill. After this, it should be business as usual (a business that has been returning a significant amount of money to US taxpayers). Both Freddie Mae and Fannie Mae posted strong full-year incomes for 2017 despite that both also suffered fourth quarter losses courtesy of the new tax law. Fannie’s comprehensive income was $2.5 billion after a loss of $6.7 billion in the fourth quarter. Freddie Mac’s numbers for the two respective periods were $5.6 billion and a $3.3 billion loss. Fannie Mae said its full-year results were down from $12.3 billion for all of 2016 although its 2017 pre-tax net was higher, $18.4 billion versus 18.3 billion. The $6.5 billion net loss for the quarter was down from net income of $3.0 […]

Average Mortgage Debt on the Rise

The consumer credit market showed an overall strong performance at the end of 2017, according to the Q4 Industry Insights Report published by TransUnion on Tuesday. According to the report, increased access to loans and relatively low delinquency levels were the driving factors that helped the consumer credit industry post positive annual changes at the end of 2017. “For the most part, consumers are paying their debts in a timely fashion, which has been especially evident for mortgages and personal loans,” said Matt Komos, VP of Research and Consulting at TransUnion. This is likely a result of the strong economy, which has helped consumers manage their personal balance sheets and build confidence.” According to the report, TransUnion observed 20.3 million more accounts in 2017 across auto, credit card, mortgage, and unsecured personal loans. During the fourth quarter of 2017, the serious mortgage delinquency rate declined to 1.86 percent compared to 2.28 percent during the same period in 2016. “Mortgage delinquency rates continue to decline, reaching their lowest levels since the recession,” said Joe Mellman, SVP and Mortgage Business Leader at TransUnion. “This largely reflects recession-era defaults having worked their way out of the system and recent originations being underwritten to a […]

Will It Become Harder to Afford a Home? Experts Say Yes

Despite a red-hot real estate market, most aspiring home buyers can still afford to buy a home—if they can find one. But it may not be that way for much longer. Households bringing in at least $68,000 a year, the national median, could afford about 59.6% of all newly constructed and existing (previously lived in) homes sold in the fourth quarter of 2017, according to a recent National Association of Home Builders report. But that doesn’t take into account the most expensive coastal markets such as San Francisco and New York City, where home buyers need six-figure salaries for even the smallest and oldest of residences. The quarterly report looked at three figures: home prices, mortgage interest rates, and the median household income, across the nation and in 238 metropolitan markets. It did not take into consideration down payments, and the struggle that many would-be home buyers face accumulating a lump sum to pay upfront. “Buyers should be prepared,” says the association’s chief economist, Robert Dietz. “It’s going to be more expensive to afford a house over the course of 2018. … Interest rates went up a little bit, and home prices went up as well.” Thank the lack of […]

How Will Home Values Fare in 2018?

The housing market has been growing at a consistent pace, but it will take another five years for it to emerge from the shadow of the Great Recession, according to experts surveyed by Zillow in its Home Price Expectations Survey. The quarterly survey of more than 100 economists and real estate experts across the U.S. asked them to offer their expectations for growth in the U.S. Zillow Home Value Index over the next five years, as well as to offer their opinions on a series of supplemental questions related to the housing market. The survey found that, according to the S&P/Case-Shiller U.S. National Home Price Index, home values grew at an average annual pace of 3.6 percent between 1987 and 1999. If home values had continued to grow at the same pace year-after-year, the median U.S. home price would have been worth $214,500 at the end of 2017. However, as of December 2017, the median U.S. home was valued at $206,300 despite six years of an average annual home value growth of 5.3 percent during the recovery period after the Great Recession. According to the survey panelists home values were expected to climb 4.8 percent in 2018, with annual appreciation […]

How Two Unexpected Factors Will Drive What’s Next In Cryptocurrency Trends

As the cryptocurrency market prepares for this week’s latest adventures, echoes from key events last week still hang heavy in the air. But what may impact this new financial tech space most in the months ahead still has yet to be revealed and will no doubt provide new jolts and power shifts. Indeed, this is a tech space not for the faint of heart. Just when a bit of a stride seemed to hit for cryptocurrency, a downward spin took place and many were in a state of panic last Friday. Business Insider reported that nearly every major cryptocurrency dropped more than 15 percent. Neil Wilson, a senior market analyst with ETX Capital, told Business Insider via email, “The regulatory crunch appears closer than ever and sooner or later this market could be headed back down to earth.” In fact, all main cryptocurrencies had dropped from close to $500 billion to about $375 billion in that 24 hour period. Reports said that experts in the field felt that decline was based upon impending regulatory moves. And the Facebook banning of cryptocurrency advertisements at nearly the exact same moment didn’t help matters. Certainly, concerns as well as insights around regulations around […]

Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another

The California Association of REALTORS® (CAR) is attempting to qualify a ballot initiative, The Property Tax Fairness Initiative, that will restructure the way property taxes are calculated for home buyers over the age of 55 (and also the disabled and/or natural disaster victims). In many cases REALTORS® are already circulating petitions asking for ballot-placement of the initiative, and, in short order, professional signature-gathering organizations will be engaged as well. CAR’s approximately 200,000 members have been assessed $100 each in support of the effort; and there are expectations that the Association’s substantial reserves will also be tapped in efforts to support the initiative’s passage. What would this accomplish and why is it needed? In what follows I will seek to summarize CAR’s answer to those questions. First: the why? As is well-known, California is currently experiencing a shrinking inventory of housing available for sale. This lack of supply has driven up prices, which makes it extremely difficult — in many cases, impossible — for first-time home  buyers to enter the market. In many cases, it also makes it difficult for move-up home buyers to find replacement property. There are, no doubt, multiple causes for this, but, no doubt, a major one […]

How to Sell a House in 2018: 5 Tips to Get the Edge This Year

If you want to know how to sell a house in 2018, face the facts: It’s a new year, and that brings a new breed of home buyers to your front door. Knowing who these home buyers are—as well as what they love and loathe in a home—is critical to fielding a great offer. Today’s home buyers have very particular tastes and turnoffs that could mean your home gets snapped up fast, or sits on the sidelines. If you want your home sale to succeed, heed these tips. 1. Market to millennials Those darn millennials are growing up! In fact, people in this age group (who are basically in their mid-20s to mid-30s) could make up 43% of home buyers taking out a mortgage by the end of 2018. “Millennials are the largest purchasing group in the country right now,” notes Jeff Nelson of IXL Real Estate Eastern Shore in Daphne, AL. So what do millennials want? For one, they’re settling in the suburbs. About 57% of home buyers aged 36 and under bought homes in the burbs in 2016, while just 15% of the same age group bought urban pads. Yet millennials still crave walkable neighborhoods, so if your […]

Although Pending Sales Up, NAR Warns of Tax Law Implications

Pending home sales finished off the year in a more upbeat tune. Although the December gain in sales, reported on Wednesday by the National Association of Realtors® (NAR) was a slim one, it made three consecutive monthly gains for the leading indicator. NAR warned however that it expects existing home sales and price growth to moderate, primarily because of the expected impact of the new tax laws in high cost housing markets. NAR’s Pending Home Sales Index (PHSI) rose 0.5 percent to 110.1 in December, from an upwardly revised (from 109.5) 109.6 in November. The index is now 0.5 percent higher than in December 2016. It was the highest level for the PHSI since it hit 111.3 last March. Analysts nailed the number with their forecasts. Those polled by Econoday predicted increases in the range of a negative 0.3 percent loss to a gain of 1.0 percent with a consensus of an 0.5 percent increase. Lawrence Yun, NAR chief economist, says “Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018. Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates […]

The Economy is Great—Why Is Housing a Problem?

The American housing market is constrained. Not by price so much as by the continuing lack of houses on the market; and this, according to’s “State of the Housing Union” report, released Thursday, is “pressuring potential home buyers striving to attain the American Dream,” despite a strong U.S. economy. “Strong demand and weak supply continue to set the tone for the industry,” said Joe Kirchner, Senior Economist for “The new tax law that caps the mortgage interest deduction and the deductibility of state and local taxes can be expected to impact the upper-end market in 2018. Precisely how and the extent of which remain to be seen.” While the economy overall is encouraging‒‒consumer confidence and the stock market are high, unemployment in 2017 was at its lowest level since 2000, and the economy added jobs for a record 86th consecutive month, according to November data from the U.S. Labor Department‒‒sales growth of existing U.S. homes actually cooled. Housing sales grew a mere 1.1 percent in 2017, compared to the 3.8 percent growth that occurred in 2016. At the same time, inventory fell 8.8 percent nationally in 2017, versus a 10.7 percent dip during the comparable period a year earlier. Tight […]

Living it Up: High Demand Fuels Luxury Home Prices

Life’s a beach for the luxury homes market which ended December with a year over year increase of 7.4 percent to an average of 1.76 million in the fourth quarter of 2017 according to an analysis by online real estate brokers, Redfin. The analysis tracks home sales in more than 1,000 cities across the country and defines the luxury market as the top 5 percent most expensive homes sold in the city in each quarter. The high demand with a shortage of availability of luxury homes led to the rising prices. The report indicated that the number of homes for sale priced at or above $1 million fell 23.8 percent compared to the same period last year, marking three consecutive quarters of declines in luxury supply. The supply of homes priced at or above $5 million followed suit and were down 23.4 percent. Despite the shortage of supply the sale of homes priced at or above $1 million were up 15.2 percent from a year ago, and sales of homes priced at or above $5 million were up 13.7 percent. “The stock market hit all-time highs with gains in nearly every sector last quarter, instilling confidence among the wealthiest homebuyers […]

Realtors, Licking Their Wounds, Get Ready for Their Next Battle

The National Association of Realtors, one of the largest and wealthiest lobby groups in the U.S., emerged from the recent tax overhaul hobbled and humbled. Now, the coming debate over the government’s role in backing mortgages for most Americans will test whether it can regain some of its clout in Washington politics. The NAR has about 1.3 million members and spent more than $32 million on lobbying in 2017 through Dec. 8, second only to the U.S. Chamber of Commerce, according to the Center for Responsive Politics, a nonpartisan research group. The NAR’s sway was perceived in Washington to be even greater than its financial resources because it claimed to represent the American dream of homeownership. The group’s top issue, the mortgage-interest deduction, has been considered a third rail in American politics. Yet, the tax overhaul signed into law in late December significantly diminished the incentives for homeownership, leaving little distinction for most Americans between being a home buyer and renting. NAR President Elizabeth Mendenhall said the group “achieved major improvements to the tax legislation passed in Congress, and from here, our work continues to improve that law and ensure, as Congress turns to housing finance reform, that there are no […]

Data Shows Mortgage Applications on the Rise

The MBA recently released its Weekly Mortgage Applications Survey for the week ending January 19, finding that mortgage applications increased by 4.5 percent week-over-week—the data factored an adjustment for the Dr. Martin Luther King Jr., holiday. Unadjusted, it decreased 4 percent compared to last week. Let’s take a look at the latest breakdown of mortgage applications . . . · The seasonally adjusted Purchase Index increased 6 percent. · The unadjusted Purchase Index increased 2 percent compared with the previous week and was 7 percent higher than the same week last year. · The refinance share of mortgage activity decreased to 49.4 percent of total applications from 52.2 percent the previous week. · The adjustable-rate mortgage (ARM) share of activity remained unchanged at 5.2 percent of total applications. In terms of FHA loans, total FHA applications decreased to 11.4 percent, a week-over-week drop from 11.7 percent. The VA share of total applications increased to 10.9 percent from 10.7 percent the week prior, while the USDA share of total applications remained unchanged at 0.8 percent. A look at 30- and 15-year fixed-rate mortgages: ·  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased […]

Home Equity Hits Record High, and Here’s How Homeowners Are Spending It

·  Home remodeling spending topped $152 billion in 2017, and is forecast to increase in 2018. ·  Homeowners are using home equity cash to pay down other debt in order to lower monthly payments. ·  But homeowners are increasingly taking the cash out to make more cash. Homeowners are racking up record amounts of home equity, thanks to fast-rising values in today’s competitive housing market. No surprise, more people are now starting to tap that cash. What are they spending it on? Mostly making their homes even more valuable. Renovation spending is soaring, and 80 percent of borrowers taking out home equity lines of credit say they would consider using that money to renovate, according to a survey released in December by TD Bank. “We’re not only seeing more requests for proposals, but more committed projects from homeowners,” said Steve Cunningham, a remodeler from Williamsburg, Virginia, in a report from the National Association of Home Builders. “In addition to regular updates and repairs, there’s been an uptick in more ambitious large remodel requests.” Remodeling spending topped $152 billion in 2017, and renovations for owner-occupied single-family homes will increase 4.9 percent in 2018 over 2017, according to the NAHB. That does […]

HUD Grants Put Housing First

The Department of Housing and Urban Development on Thursday announced an award of $2 billion in support of thousands of local housing and service programs across the U.S. This year’s installment of the annual HUD Continuum of Care grants will assist more than 7,300 local programs working to house and serve individuals and families experiencing homelessness in their communities. According to a HUD media statement, “HUD’s Continuum of Care grants provide critically needed support to local programs on the front lines of serving individuals and families experiencing homelessness.” HUD Secretary Ben Carson said, “HUD stands with our local partners who are working each and every day to house and serve our most vulnerable neighbors. We know how to end homelessness and it starts with embracing a housing-first approach that relies upon proven strategies that offer permanent housing solutions to those who may otherwise be living in our shelters and on our streets.” Secretary Carson added that working to house the homeless is both the “human thing to do” and “good public policy.” Matthew Doherty, Executive Director of the U.S. Interagency Council on Homelessness, said, “Continuums of Care are critical leaders in the work to end homelessness nationwide. When communities marshal these—and other […]

New Home Sales Defy Holiday Lull, Rising in December

Despite the usual holiday lull in overall mortgage applications, the demand for newly constructed homes increased in December. The Mortgage Bankers Association (MBA) said its Builder Applications Survey (BAS) found those applications were up 18 percent from November. The change does not include any adjustment for typical seasonal patterns. The applications were 7.8 percent higher than in December 2016. Based on data from the BAS, conducted among mortgage subsidiaries of new home builders, augmented by assumptions about market coverage and other factors, MBA estimates new single-family home sales were running at a seasonally adjusted annual rate of 554,000 units in December. This is a decline of 16.4 percent from the November pace of 663,000 units. On an unadjusted basis, there were an estimated 40,000 units sold, down 14.9 percent from 47,000 new home sales in November. “After playing catch-up for 2 months following the slowdown caused by hurricanes Harvey, Irma and Maria, mortgage applications for new homes declined in December to a more normal growth rate of 7.8% on a year over year basis,” said Lynn Fisher, MBA Vice President of Research and Economics. “Looking at all of 2017, applications increased by 7.1 percent compared to 2016. Based on December […]

Growing Concerns Over VA Loan Churning

A Ginnie Mae official told Congress this week that his agency has growing concerns over the incidence of “loan churning” in the VA mortgage program. Michel R. Bright, Ginnie Mae’s Executive Vice President and COO was among four mortgage industry experts testifying about the issue to the House Committee on Veterans Affairs on Wednesday. Bright said since the loan churn problem became evident, Ginnie Mae has realized it could ultimately harm borrowers in the form of higher interest rates and has the potential to cause problems with investors that could spill over into FHA and USDA loan programs as well. Starting in early 2016, the agency and its investors noted loan prepayment rates were increasing and serial refinances were occurring with greater frequency in the VA mortgages Ginnie Mae guarantees and securitizes than in loans secured by other agencies. Some of the prepayments were at speeds that could not be justified by economic factors. Other alerts, especially a weakening of Ginnie MBS prices versus other MBS, pointed to the growth of anomalous refinancing behaviors. Internal analysis, showed that some mortgage lenders had apparently found an opportunity for quick profits by aggressively pushing a series of loan refinances. There appear to […]

10 Hottest Housing Markets of 2018

The U.S. housing market is getting hotter in 2018 with 52.6 percent of all homes across the country worth as much or more than they were at the peak of the national housing boom in April 2007, according to a survey on the 10 hottest housing markets of the US released by Zillow on Tuesday. The survey says that U.S. housing markets with healthy income growth, abundant job opportunities and above-average housing appreciation are likely to get hotter in 2018. These include technology hubs like the silicon valley markets of San Jose and San Francisco and markets in the Southeastern part of the U.S such as Raleigh and Charlotte in North Carolina and Nashville, Tennessee. With a median household income of $110,000 and a Zillow Home Value Forecast of 8.9 percent, San Jose tops Zillow’s list as the hottest housing market in the U.S. The survey said that home values in this Silicon Valley hub gained 17.4 percent over the past year, showing the fastest growth among the 50 largest metro areas as high-paying tech jobs continued to keep pace with climbing housing costs. The survey also ranked two North Carolina markets – Raleigh and Charlotte, second and fourth respectively. […]

Freddie Mac Expands Credit Risk Transfer Program

Freddie Mac recently announced the expansion of its Agency Credit Insurance Structure (ACIS) program with ACIS Forward Risk Mitigation (AFRM), a front end credit risk transfer offering. This latest credit risk transfer (CRT) offering enables Freddie Mac to transfer mortgage credit risk simultaneously with the acquisition of loans by securing committed private capital and providing stable pricing over a two-year horizon through the end of 2019. “AFRM is the first CRT product to secure private capital from investors committed to providing coverage on loans funded over the next two years and represents an important milestone in the expansion of the ACIS program,” said Gina Subramonian Healy, VP of Credit Risk Transfer. “We’ll continue to explore ways to evolve our front-end CRT offerings to transfer more credit risk away from taxpayers and provide investors new ways to invest in the U.S residential housing market.” AFRM shifts a portion of the mortgage credit risk on pools of single-family loans with a combined unpaid principal balance of approximately $21 billion to a diverse panel of reinsurers, providing insurance coverage with a maximum limit of approximately $650 million, according to the release. This covered pool will consist of 30-year fixed-rate mortgage loans with loan […]

Homeowners are Sitting on Trillions in Cash

A growing number of homeowners are in the money — big money. The amount of home equity borrowers now have at their disposal reached an all-time high in the third quarter of last year. The 42 million homeowners with mortgages have a collective $5.5 trillion in “tappable” equity, according to Black Knight Data & Analytics, which studies the mortgage industry. This is $3 trillion more than they had when the housing market last bottomed in 2012, after the financial crisis. Black Knight defines tappable equity as the amount available for homeowners to borrow before reaching 80 percent of debt to value against their home. Following the housing crash, millions of borrowers fell underwater on their mortgages, owing more than their homes were worth. Fast-rising home prices over the last two years have brought borrowers above water and beyond. Approximately 80 percent of homeowners now have equity they can use, cash which could fuel the economy. Just 2.7 percent of borrowers, or about 1.36 million, still owe more on their mortgages than their homes are worth. Generally, there are two ways to take cash out of an equity-rich home. One is to refinance the original mortgage to a larger home loan. […]

Home Prices are Set to Soar in 2018

· Sales prices jumped 7 percent annually in November, according to a new report from CoreLogic. · Low supply and high demand are fueling the gains and neither of those is expected to ease up anytime soon. The temperature may be frigid across much of the nation, yet home prices are sizzling and sellers are in the hot seat. Sales prices jumped 7 percent annually in November, according to a new report from CoreLogic. That is the third straight month at that pace, far higher than the price gains in the first half of 2017. Low supply and high demand are fueling the spurt and neither of those is expected to ease up anytime soon. Supply is actually falling even more now, and a strengthening economy is pushing demand. This will have potential buyers out early this year, trying to get a jump on the spring market. “Rising home prices are good news for home sellers, but add to the challenges that home buyers face,” said Frank Nothaft, chief economist at CoreLogic, in the report. Nothaft said the limited supply is the worst at the lower end, and will hit the growing number of first-time buyers hardest. Half the homes […]

Lenders Unenthusiastic About Mortgage Profit Margins in 2018

Continuing a trend that began in Q4 2016, mortgage lenders reported a negative profit margin outlook for the next three months according to Fannie Mae’s Q4 2017 Mortgage Lender Sentiment Survey. This quarterly survey of 224 senior executives from the mortgage lending industry is used not only to track mortgage lenders’ current impressions of the mortgage industry, but also their insights into the future. This outlook has persisted for the last five quarters with lenders expressing negative sentiment, primarily due to competition with three-fourths of respondents who saw deteriorating profits, citing competition as the most important reason compared with only one-third two years ago. “This is not surprising given that refinance volume continues to shrink. More mortgage lenders reported a pullback in refinance demand from the prior quarter than those who saw an increase, continuing the trend that started at the beginning of the year,” said Doug Duncan, SVP and Chief Economist at Fannie Mae. Other reported factors include consumer demand, staffing, and market trend changes. Additionally, the net share of lenders who expect to see growth in refinance mortgage demand over the next three months fell to the lowest reading in a year across all loan types (GSE eligible, […]

Good News for Sellers as Home Prices Rise

2018 might see first-time homebuyers facing higher rates of price growth for starter homes and further erosion of affordability according to the Home Price Index (HPI) for November 2017 and released on Tuesday by property analytics firm CoreLogic. The HPI report for November indicated home prices across the U.S. increasing year over year by 7 percent from November 2016 to November 2017. Month over month, they increased by 1 percent in November 2017, compared to October 2017. CoreLogic also released its HPI forecast, which is a projection of home prices using the CoreLogic HPI and other economic variables. Values are derived from state-level forecasts by weighing indices according to the number of owner-occupied households for each state. The forecast projected a decrease of 0.4 percent in home prices from November 2017 to December 2017. However, it indicated that the increase in home prices is set to remain through 2018 with a projected increase of prices by 4.2 percent by November 2018 on a year-over-year basis. “Rising home prices are good news for home sellers, but add to the challenges that homebuyers face,” Dr. Frank Nothaft, Chief Economist at CoreLogic said. “Without a significant surge in new building and affordable housing […]

Mortgage Applications End 2017 Lower as Rates Rose

·  Optimism over the tax bill resulted in higher interest rates, sending total mortgage application volume down 2.8 percent in the last two weeks of 2017. · Applications to refinance a home loan, which are most rate-sensitive, fell 7 percent during the two-week period. Economic policy can be a double-edged sword, and that was abundantly clear with respect to mortgage rates at the end of the year. Optimism over the tax bill resulted in higher interest rates, and that caused total mortgage application volume to drop 2.8 percent in the last two weeks of 2017. The Mortgage Bankers Association included an adjustment for the Christmas holiday. Applications to refinance a home loan, which are most rate-sensitive, fell 7 percent during the period but ended the year 1.8 percent higher than at the end of 2016. Interest rates were also higher at the end of 2016 due to a spike following the presidential election. After jumping 9 basis points during the third week of December, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $424,100 or less remained unchanged for the last week of the year at 4.25 percent, with points increasing to 0.36 from 0.35, […]

New Home Sales Approach a 10-Year High

Tight inventory continued to boost home prices as housing activity remained upbeat towards the end of 2017, according to the Economic and Housing outlook released by Fannie Mae’s Economic & Strategic Research (ESR) Group on Monday. The monthly forecast, which details interest rate movements, the housing market, mortgage market, and the overall economic climate, noted that total housing starts rose in October to the highest level in a year, even as new home sales approached a decade high. ESR said that existing home sales posted the first back-to-back gains this year, and contract signings to close on existing homes increased for the first time in four months, as sales rebounded from hurricane disruptions. “The housing market continues its upward grind, as it struggles to balance strong demand and house price appreciation with inventory shortages and affordability concerns,” Doug Duncan, Chief Economist at Fannie Mae, said. As a percent of real estate value, homeowner equity rose to 58.6 percent, only 1.2 percentage points below the most recent peak at the end of 2005, ESR noted, adding that the yield on 30-year fixed-rate mortgages is expected to average 4 percent this year. ESR said that, while they had expected shortages of skilled labor […]

Debt Consolidation Mortgage: Do it Safely, or Don’t Do it

Get debt under control in 2018 – maybe With a debt consolidation mortgage, now may be the time to refinance your home and pay off other accounts. Depending on your equity, it’s goodbye credit card balances, car loans, and even student debt. Do it right and your monthly costs can fall significantly. Home equity up nationwide The Federal Reserve reports that at the end of the second quarter, homeowners accumulated real estate equity worth $13.9 trillion. That’s a lot more than it used to be, in part because home values in most areas have been rising. According to the National Association of Realtors, in October, existing home prices nationwide rose for the 68th straight month of year-over-year gains. Debt consolidation mortgage advantages Not only have homeowners generally gained a large amount of equity, they can also access that money. Today’s mortgage rates are around 4 percent, a rate generally below the cost to finance cars, student debt, and especially credit cards. If you’re repaying a mortgage at 4 percent and a credit card at 16 percent, the rate difference is obvious. And pitfalls While a lower mortgage rate is what you want, it’s not the only consideration. If you have […]

Freddie and Fannie May Get Another Jumpstart

There has been a flurry of news about the two GSEs, Fannie Mae and Freddie Mac, in the last few weeks. The House Financial Services Committee recently advanced H.R. 4560, the GSE Jumpstart Reauthorization Act of 2017 to the full house for consideration. The proposed bill extends the GSE Jumpstart Act through January 1, 2019, and was approved 33-27. The Jumpstart Act prohibits the sale of the GSE preferred shares owned by the Treasury Department without congressional approval. The bill also permits the GSEs to suspend their payments into the Housing Trust Fund for any period when it is unable to make its full dividend payment to Treasury. We take that to mean the bill will not be a precursor to allowing the GSEs to retain any part of their net profits which are currently swept in their entirety into the Treasury. The discussion over that dividend and the related matter of whether the GSE will be allowed to begin building some capital reserves takes on more significance in light of a brief note from Bloomberg’s Felice Maranz this week. If the GOP tax bill passes in its current form, it may push the GSEs into a Treasury draw in the […]

Does Mortgage Loan Officer Age Impact Borrower Confidence?

A report released on 12/21/2017 from mortgage industry consultant STRATMOR Group debunks the myth that loan officers (LO) are too old to meet the needs of the younger borrowers—millennials in particular—who looking to buy a home. In the report, STRATMOR Senior Partner Jim Cameron draws upon the company’s four-year consensus survey to disprove the notion held by some in the mortgage industry that borrowers of any age group aren’t being satisfied by the LOs as a group because they’re too “old.” Cameron states that many lender CEOs have lately been concerned with the idea that LOs are getting too “old” for the borrowers they serve, and that age does make a difference in being able to satisfy younger borrowers. “Many believe that the average LO is 52-55 years old, that the LO’s age makes a difference in his or her productivity and that younger borrowers—like millennials—would prefer dealing with an LO closer to their own age. The data just doesn’t support this view,” Cameron said. According to the results from STRATMOR’s Originator Consensus Survey, which covers thousands of LOs working at both independent and bank-owned lenders, states the average and median age of LOs is 46 and 47 years old—four […]

Mortgage Origination Report Shows FICO Scores Dropping Across Loan Products

FICO scores dipped across most loan types in November according to the Origination Insight Report released by Ellie Mae, a cloud-based platform provider for mortgage providers, on Wednesday. The report focuses on mortgage loans that closed in a specific month and compares their characteristics to similar loans that closed three and six months earlier. The report noted that the percentage of refinances held steady at 39 percent of total loans. Average FICO scores on all loans dropped to 722 in November from 724 in October. According to the report, refinances saw FICO scores dip across loan products with the FHA refinance scores dropping from 650 in October to 645 in November. Conventional refinance FICO scores dropped to 730 in November from 732 in the month prior and VA refinance scores also dropped to 700 from 702 in October. “We saw FICO scores drop modestly, especially across refinances, indicating that lenders may be loosening credit standards to attract the dwindling refinance market. This is certainly a trend we will continue to watch into the winter months,” Jonathan Corr, president and CEO of Ellie Mae said. The report also noted that in November the percentage breakdown of all closed loans remained steady […]

Realtors Examine Impact of Tax Bill

Buying a home might become an expensive proposition after the new tax bill, according to a nationwide survey conducted, a website that offers information and resources on buying and selling properties. The survey, which was released on Thursday, found that 29.2 percent of potential homebuyers said they would buy a home faster after the Tax Cuts and Jobs Act, citing concerns about home prices possibly increasing. Only around 18.5 percent of respondents said that they would buy slower, and 12 percent said they would postpone purchasing a home. The survey reported that the tax bill made 36.2 percent of the respondents concerned about being a homeowner. In contrast, only 15 percent said that the bill made them feel positive. Around 22.9 percent respondents said that the tax bill would not change their plans to purchase a home, while 57.1 percent who said that the bill would not change their plans to sell. “The bill will have a significant impact on the housing market and overall economy, so it makes sense that people are wondering what it means to them,” Joseph Kirchner, Senior Economist at, said.’s report also suggests the tax bill is expected to provide many people with […]

What To Expect From the U.S. Economy in 2018

The end of the year is a good time to look back at the economy for 2017 and, more importantly, to look ahead to 2018. In a conversation on NPR, I took a look back at the economy in 2017, what we learned, and what to expect economically in 2018. Here’s a summary of the discussion: The U.S. economy is ending 2017 in pretty good shape The U.S economy got off to a soft start in 2017, but it’s been growing at a reasonably healthy pace lately. Third-quarter growth came in at a 3.2 percent inflation-adjusted annual rate; fourth quarter growth looks to be somewhere between 2.5 percent and 3 percent. The unemployment rate has fallen from 4.7 percent at the end of last year to 4.1 percent at last count. The last time it was this low Bill Clinton was president; that was 17 years ago. The U.S. has added 2 million jobs in the past year, all of that in the private sector. Government employment has fallen a bit. We’ve drawn a lot of people into the job market who had been on the sidelines. Inflation is low. The stock market has risen 19 percent over the past […]

Economists Agree: Tax Reform Will Bring Substantial Economic Growth

A group of top U.S. economists sent a letter earlier this week to U.S. Department of the Treasury Secretary Steven Mnuchin, claiming the tax reform bills being considered in the Senate will significantly boost the economy. These economists, who range from Harvard University and other professors to a former director of the Congressional Budget Office and economists who served under former President George W. Bush, said that reducing the corporate tax rates will increase economic activity. “Expensing, which allows firms to deduct the full cost of investment at the time it is made, lowers the user cost of capital relative to depreciation over time,” the economists wrote in their letter. “A lower corporate tax rate also lowers the user cost of capital, which not only induces U.S. firms to invest more, but also makes it more attractive for both U.S. and foreign multinational corporations to locate investment in the United States.” The Senate version of the Republicans’ tax plan, the Tax Cuts and Jobs Act, moved one step closer to becoming a reality on Tuesdaywhen the Senate Budget Committee approved the bill. And earlier in November, House of Representatives passed its major tax reform, sending it to the Senate, but […]

Mortgage Rates Recover After Flynn Headlines

Mortgage rates were at their highest levels in roughly 1 month as of yesterday afternoon. That ran counter to many of the mortgage rate news stories that came out throughout the day due to said stories using Freddie Mac’s Primary Mortgage Market Survey as source material (a longstanding survey that accurately tracks rates over time, but often fails to account for near-term volatility). Accounting for near-term volatility is tricky business for mortgage lenders this week–especially over the past 3 days. Wednesday and Thursday saw interest rates spike quickly higher as the Senate’s version of the tax bill looked increasingly likely to pass. In general, the tax bill is good for stocks and bad for bonds. By far and away, the week’s biggest market mover landed today in the form of headlines regarding former Security Advisor Flynn pleading guilty to charges that he lied to the FBI about conversations with a Russian ambassador. This led financial markets to entertain the possibility that Flynn struck a plea deal in order to implicate Trump in the case. While that hasn’t happened yet (and it may never happen), it resulted in a massive move lower in bond yields in the middle of the day–one […]

Can Scoring Trended Data Help Lenders Expand Credit Access?

And what’s keeping 50 million credit invisible in the U.S. Americans who don’t have a FICO score present both an opportunity and a challenge for mortgage lenders. Lenders are keen to extend credit to consumers in new market segments, but need to ensure they’re making risk-aware decisions. Some lenders are asking can scoring trended data, or more accurately trended credit bureau data, as some credit score companies claim, actually help expand credit access to these consumers? The short answer is no and let’s discuss why. First, it’s important to understand two key terms: 1.Trended data is a historical view of a consumer’s traditional credit bureau file. 2.Alternative data, according to the Consumer Finance Protection Bureau, refers to any credit data that is not found in the traditional credit bureau file. Therefore, the important question to ask is whether a credit scoring model is using traditional credit bureau data or alternative data, as defined above. Traditional credit bureau data contains the most recently reported information on consumers’ monthly balances, payment amounts and limits. Trended data consists of this exact same traditional credit bureau data going back 24 to 30 months, depending on the source credit reporting agency. Trended data can be […]

Journey Mapping Improves the Mortgage Customer Experience

Design thinking is enabling mortgage lenders and servicers an opportunity to revolutionize the mortgage customer experience. Companies around the globe are leveraging design thinking to stay relevant and meet expectations of today’s consumers. While mortgage lenders often re-engineer processes, bolt-on technology to systems, and even integrate new rules or requirements, it is critical to consider the customer experience. Customers are demanding that we think about processes from their perspective, and as consumers, we demand the same thing. Now is the time for mortgage lenders to incorporate design thinking as a part of the customer experience strategy and use as a means for understanding and exceeding customer expectations. Whether you’re a processor, loan officer, realtor, or operational executive, you have the ability to positively transform the mortgage customer experience by taking an outside-in view of the entire process. Customer Experience Design is a Key Market Differentiator Design thinking is a way of engineering business processes to work smarter. It’s also the methodology that underpins customer experience (CX) design, which is fast becoming a key market differentiator for successful brands. Studies show companies that invest in CX record up to five times faster revenue growth than CX laggards, and that differential in […]

Treasury Calls for HUD to “Reconsider” Use of Disparate Impact Rule

Third financial reform report questions rule’s effect on insurance industry On October 26, 2017, the Department of the Treasury released its third of four reports that call for sweeping financial reform. The reports come at the direction of President Donald Trump, who signed an executive order in February directing Treasury Secretary Steven Mnuchin to examine the nation’s financial laws.  The first Treasury report was released in June and dealt with banks and credit unions. The second report, released earlier this month, focused on capital markets.  The third report, released Thursday evening October 27, 2017, focuses on asset management and insurance, and while most of the report deals with issues outside of housing, there is one piece that touches on an item of note for the housing industry – disparate impact.  In the Obama administration, the Department of Housing and Urban Development began using disparate impact theory as a way to enforce the Fair Housing Act.  A 2015 ruling by the Supreme Court established that the Fair Housing Act allows lawsuits based on disparate impact, meaning a law or practice has a discriminatory effect even if it wasn’t based on a discriminatory purpose.  In layman’s terms, that means that a mortgage lender’s practices […]

Housing Demand, Home Prices to Increase as Families Relocate from Recent Hurricanes

The recent hurricanes will cause surrounding areas to see an increase in home prices and an uptick in housing demand as residents evacuate the disaster areas in Florida and South Texas, according to Freddie Mac’s latest monthly Outlook for October.  The report analyzed the effects of the recent hurricanes, saying it could create a tighter inventory squeeze along with an increase in mortgage delinquencies.  “Texas and Florida together represent 24% of the total housing starts in the U.S. housing units impacted by the hurricanes are a fraction of the total starts in Texas and Florida, so we do not expect a huge national impact,” Freddie Mac Chief Economist Sean Becketti said. “However, the hurricanes won’t help with tight inventories. Building activities in the hurricane-affected areas may slow down as labor and capital gets drawn into rebuilding.”  In the beginning stages of the recovery process, Black Knight Financial Services predicted the mortgage industry could see up to 300,000 new delinquencies as a result of Hurricane Harvey, with 160,000 borrowers becoming seriously past due.  Later, the first numbers from Black Knight started to roll in as mortgage delinquencies rose 16%, and according to the report, the hurricane’s impact on mortgages will likely […]

Luxury Homes Can’t Keep Up with High Demand

·       The top 5 percent of homes by price sold in the third quarter saw their values increase 4.9 percent compared with a year ago, hitting an average of $1.71 million, according to Redfin. ·       The number of homes for sale priced at or above $1 million fell just over 18 percent compared with the same period last year. The top 5 percent of homes by price sold in the third quarter saw their values increase 4.9 percent compared with a year ago, hitting an average of $1.71 million, according to Redfin, a real estate brokerage.  The higher home prices are the result of a sharp decline in listings in the luxury sector. The number of homes for sale priced at or above $1 million fell just over 18 percent compared with the same period last year.  “There is still strong home buyer demand for high-end homes,” said Redfin’s chief economist, Nela Richardson. “Despite declining inventory, luxury sales soared in the third quarter.”  Sales of homes priced at or above $1 million were up 11 percent from a year ago, while sales of homes priced at or above $5 million were up almost as much at 10 percent, Richardson explained.  At the […]

New home sales surge 18.9 percent in September, highest level in 10 years

·       New home sales soared 18.9 percent in September. ·       Economists surveyed by Thomson Reuters anticipated new home sales falling 0.9 percent for the month. ·       New home sales unexpectedly fell 3.4 percent in August. Sales of new U.S. single-family homes unexpectedly rose in September, hitting their highest level in nearly 10 years, offering hope that the housing market was regaining speed after appearing to stall in recent months.  The Commerce Department said on Wednesday new home sales surged 18.9 percent to a seasonally adjusted annual rate of 667,000 units last month amid an increase in all four regions. That was the highest level since October 2007 and followed August’s upwardly revised sales pace of 561,000 units.  The percent gain was the largest since January 1992. August’s sales pace was previously reported at 560,000 units.  Economists polled by Reuters had forecast new home sales, which account for 11 percent of overall home sales, falling 0.9 percent to a pace of 555,000 units last month.  New home sales, which are drawn from permits, are volatile on a month-to-month basis. Home sales soared 17.0 percent on a year-on-year basis in September. The housing market has trod water for much of this year, amid shortages of […]

Mortgage Technology and Three Money Losing Myths

In about two and a half months, Santa will come to town, and his elves will deliver presents. All that lenders in the mortgage industry have asked for is a technological solution that will solve their problems, and meet their needs; instead, they’re getting headaches and disgruntled phone calls.  The relationship between mortgage lenders and technology is often one of love and hate – and that’s frequently the result of lenders who believe three common misrepresentations about mortgage technology. Listed below are ways to steer clear of these myths.  1. Implementation will go smoothly. Technological implementation almost never goes smoothly. In fact, according to, “in a recent Stratmor Group survey of lenders, it still takes everyone 12 months to completely convert to a new loan origination system. As well, only 28% of mortgage lenders claimed they were “very satisfied” with their LOS.” Oftentimes, when the implementation does not go as expected, the results are often costly, time-consuming, and require more work for the loan originators. HousingWire suggests that, before a lender decides one way or another about mortgage technologies, they should “evaluate the architecture of innovative technology vendors to understand what the solution can or cannot do. For example, do they have flexible […]

To Have, or Not to Have? Confident Licensed Lenders

As the ever-changing, confusing, and convoluted real estate business grows, those in the mortgage industry know the importance of having a license. Quite simply, with a license, loan officers are more confident in their work, skill, and performance. Not only does each state have their own rules, laws, and policies regulating what a loan officer can, and can’t do, but each state has different requirements for mortgage licensing as well. Licensed loan officers are professionals who are formally trained, and educated in the policies, and procedures that govern real estate financing. Confident, licensed lenders focus on two essential priorities while working with borrowers: protection and security. In July of 2008, the SAFE Act was enacted to establish common national criterion for residential mortgage originators. Although effective, it only works for those originators who have to be registered, as opposed to licensed. For example, Mortgage Porter states that the requirements for Licensed Mortgage Originators in Washington State, per the Safe Act, include: Submit fingerprints for a federal and state background check Have a unique identifier number Demonstrate financial responsibility Pass 20 hours of approved pre-licensing education Score 75% or higher on the state and national mortgage exam Enroll in 8 hours of continuing education every […]

Mortgage Resources versus a Personal Touch

While in our digital age online home purchasing is, in fact, becoming more of a reality, homebuyers much prefer the personal touch of interacting with real estate agents and loan officers. Personal interactions with real estate professionals are still of upmost importance to homebuyers in today’s real estate market, despite the options that the digital age offers them. According to, “A new report from the Fannie Mae Economic and Strategic Research Group shows buyers do, indeed want more online resources during their mortgage-shopping experience. A survey showed respondents want to use mobile devices nearly twice as often in the future…however, that does not mean they place less value on real estate professionals and other person-to-person interactions, the survey showed.” The research revealed that homebuyers viewed personal interactions – not online resources – as most influential. Mortgage lenders, real estate agents, and sometimes family and friends were all considered more reliable and dependable than online sources. Even though homebuyers value their personal interactions more than they do online information, that does not mean they neglect online information altogether. The survey above revealed that 77% sought out information from their real estate agent, 75% asked mortgage lenders and 69% researched the […]

Answers from a Loan Officer

When mortgage industry veteran Joe Parsons, a senior loan officer in California, was asked his opinion on the most essential things that homebuyers need to know, he shared very simple, factual information about the loan officer’s job duties. Parsons stated that a loan officer at a bank or a credit union accepts an applicant’s completed form, and forwards it to the underwriting department. An independent loan officer provides more services to the borrower by way of advising them of the best loans, collecting documentation, ordering appraisals, and directly communicating with the underwriter for guaranteed loan approval. But what happens if a borrower chooses not to use a loan officer? Parsons said, “A large bank or credit union relies on the underwriting department to handle all of the above tasks—and these departments aren’t working as representatives for the borrower. The takeaway for the consumer: Mortgage rates available at an independent loan originator, whether it’s a broker or a small banker, won’t be higher than those offered through a big bank.” When asked why the mortgage rates constantly change, Parson’s answer was technical, mathematical, and financially complex. From Freddie Mac to Fannie Mae, and from Mortgage Backed Security to fluctuating percentages, Parsons […]

A House with a Sea View?

A six-foot rise in sea levels could result in the loss of $900 billion worth of U.S. residential real estate. Coastal homes are threatened by the prospect of rising sea levels, projected to be a reality by 2100, could destroy nearly 2 million homes. Zillow, a leading real estate and rental marketplace, studied what kinds of homes would be flooded. Svenja Gudell, Zillow’s chief economist stated, “Living near the water is incredibly appealing for people around the country, but it also comes with additional considerations for buyers and homeowners…Homes in low-lying areas are…more susceptible to storm flooding and these risks could be realized on a much shorter timeline as we have seen time and time again.” By 2100, an estimated 29% of homes in the highly valuable category are expected to be underwater, with the rest of the homes listed around the median price of $220,000 or lower. Only 25% are among the least valuable homes. Making matters worse is that lower-priced homes are owned by families unlikely to have the resources to take preventative measures against the rising tides. These measures include putting in sea walls or making changes to foundations that could withstand intermittent flooding. The majority of […]

No More: The Shock of a Natural Event in the Housing Market

It’s clear. The housing market can’t take the shock of a natural event. While the exact numbers are still too difficult to determine, an estimated 10,000 homes and other structures have been demolished by floods, winds, or fires sometime during the last three months. Another disaster lies at the threshold of residential real estate as one considers the construction labor shortage that was already present prior to these disasters; thus making reconstructions and its repercussions severely problematic. According to, “’The housing market can’t take the shock of a natural event,’ said Nela Richardson, chief economist at a real estate company. ‘It can’t take any shock because we are so tightly wound with inventory. Any change is a big change, and you’ll see that play out across the South.’” According to the National Association of Realtors, available home inventory is acutely low across the nation. It continues to fall, resulting in the drop of home sales during the past 3 months and causing entry-level home buyers to step aside. Even before Hurricane Harvey, Houston was the most active U.S. market for home construction, and yet, the number of homes destroyed by the storm “…surpassed the total number of single-family building […]

Five Strategies to Grow Your Business during the Holidays

In our personal lives, the holidays can be a fun, exciting, and memorable time, but in our professional lives – especially within the mortgage industry – the holidays may cause a sense of dread as traffic dies down, and businesses cease to grow. So, what strategies can you implement to grow your business during the holidays? First, explore the effective strategies that work year round; then, tweak those strategies to accommodate the societal mindset that most individuals have between Thanksgiving and the New Year. According to loanofficerhub, there are five strategies that professionals in the mortgage industry use throughout the year to consistently attract more business. Strategy Number 1: Spread the Word. It’s so important within the mortgage industry to connect, and reach out to other people. A good place to start is by building your network with other industry professionals, and establishing relationships so that you can enhance your business. For example, you can connect with these types of professionals: Accountants CPA Firms Appraisers Real Estate Agents Real Estate Attorneys Relocation Specialists Listing Agents Strategy Number 2: Sell Yourself. Promoting your services on your own website is a great tool to sell yourself. By providing your contact information, showing […]

Halted Home Purchase Prices

More affordable real estate is on the horizon for fortunate future homeowners. According to CoreLogic’s most recent U.S. Home Price Insights report, home prices are stalling, and only grew 0.9 percent during July and August. The firm suspected that growth would slow down even more with prices rising just 0.1 percent for the month of September. From August 2017 to August 2018, CoreLogic forecasts a price growth of just 4.7 percent. That’s the lowest annual growth rateCoreLogic’s Chief Economist, Frank Nothaft, has seen in three years. “While growth in home sales has stalled due to a lack of inventory during the last few months, the tight inventory has actually helped stabilize price growth,” he said. “Over the last three years, price growth in the CoreLogic national index has been between 5 percent and 7 percent per year, and CoreLogic expects home prices to increase about 5 percent by this time next year.” After analyzing 100 of the country’s largest metropolitan areas based on housing stock as of August 2017, an overvalued housing stock was discovered in 34 of cities in the nation. As of August 2017, after CoreLogic Marketing Conditions Indicators (MCI) categorized home prices in individual markets as undervalued, […]

The Housing Market during the Next Recession

According to some news outlets and to the opinions of certain economists, at any moment the U.S. is on the brink of recession. But, over and over again for the last few years, the economy has remained steady. Technically speaking, the Great Recession began in December 2007 and ended in July 2009, but many Americans continued to deal with the effects – particularly from the housing market crash – into 2012 and 2013. With approximately 5 million homeowners owing more on their home than what they were worth, some homeowners still haven’t fully recovered. That’s down from the nearly one-third of homeowners sinking in their mortgages in 2012 when negative equity was at its peak. According to Zillow, home values continue to rise in most major markets and are expected to increase to a total of nearly 5.1% nationally this year. Even though the economy continues to grow, as it has for the last few years, people are nervous about a slow-down. Many wonder how negatively they’ll be affected if there is another downturn. In spite of the recession, and current issues that could potentially harm the economy, many don’t believe the housing market crash will reoccur in a future […]

5 Benefits of Applying for a Mortgage during the Holidays

Year after year, as early as the first day of school in autumn, many of us see holiday merchandise advertised on television or online – we may even see holiday items already for sale at local retailers. And what do we usually say? Probably something to the equivalent of: “It’s not even Halloween yet!” Many of us experience the stress that’s exacerbated by increased activity during the holiday season, but imagine how much more overwhelmed we would feel if we bought a home during that time, as well. Home buyers have a lot to do before they can close on a home. They must: search for the right house, interview different real estate agents, research interest rates, get credit checks, monitor their finances – the list goes on and on. So, is there any real advantage to buying a house during the holidays, or is waiting until spring a better idea? Unbelievably, there are 5 primary benefits to purchasing a house during the holiday season: 1. Less competition in the market. During the holidays, most people are too busy trying to complete a slew of tasks on their “to-do” lists, but looking for a new home is generally not one […]

Wildfires, and California’s Housing Market

In Northern California, over 170,000 acres – an area larger than the island of Manhattan – were ravaged by 22 wildfires that spread through seven counties, and destroyed 3,500 homes, and incinerated countless buildings. The cause of the fire that spread through San Francisco’s northern region – an area recognized as one of California’s economic powerhouses – has not yet been established. However, the damage, wreckage, and destruction it caused in this usually highly prosperous region, will result in slashed home prices, scarce availability, and wrecked infrastructure – all factors that need to be considered as displaced homeowners decide whether or not they should return and rebuild, or start somewhere fresh as homebuyers. As a multibillion-dollar tourist industry, the jobs it provides and the services it offers, will take a long time to recover. Rebuilding the homes, businesses, and schools will likely take up to a decade to complete should residents choose to return. The average home price for a residence in Napa County alone was $876,200, while the average home price for a residence in neighboring Sonoma County was $750,000. But after the fires, and with more than 172,000 homes gone in the blaze, it will cost an estimated […]

How do the Holidays Effect the Economy?

Turkey. Mistletoe. A ten-second countdown. That’s right. The holidays are just around the corner, and corporations throughout the country have already been preparing for the effects the celebratory time will have on their business operations. Are you prepared? What effect are you anticipating the holidays to have on your growth, your revenue, and your overall success? According to the National Retail Federation (NFR), 2017 holiday sales are expected to grow between 3.6 and 4 percent. According to their website, “NRF expects holiday retail sales in November and December – excluding automobiles, gasoline and restaurants – to increase between 3.6 and 4 percent for a total of $678.75 billion to $682 billion, up from $655.8 billion last year.” NFR President and CEO Matthew Shay says that although 2017 hasn’t been “perfect, especially with the recent devastating hurricanes,” he believes NFR’s forecast reflects the economy’s “realistic, steady momentum, and overall strength of the industry.” “We believe that a longer shopping season and strong consumer confidence will deliver retailers a strong holiday season,” he said. But when it comes to the sectors related to the housing and/or mortgage industries, NFR reports the following: “Consumers continue to do the heavy lifting in supporting our […]

Student Debt Delays Homeownership Longer than Anticipated

Month after month, college graduates slowly pay off their student loan debt. These loans represent the four to five years students studied for an array of classes and pulled all-nighters to cram for exams. Now that their education is complete students also have outstanding student loan debt in the tens (or even hundreds) of thousands of dollars. So how does student loan debt affect a college graduate’s ability to purchase their first home? According to a recent study by the National Association of Realtors, and the nonprofit group American Student Assistance, millennials attributed their student loan debt for the delay of their first home purchase by approximately 7 years. The results of the above study are based on a 41-question survey answered by more than 2,200 people aged 22 to 35 who are currently repaying their student loans. Saving for a down payment for a home or qualifying for a mortgage is difficult due to the student loan bills that can add up to hundreds of dollars per month. A potential borrower’s debt–to–income ratio increases due to their loan balances, a circumstance often thoroughly analyzed by loan officers before they issue a mortgage. According to®’s chief economist, Danielle Hale, […]

Riskier Mortgages, Higher Home Prices

Potential homebuyers are seeking out ways to afford their monthly mortgage payments. While the number of adjustable-rate mortgage (ARM) originations rose just over 40 percent from the first quarter to the second quarter of this year, ARM’s have lower interest rates than fixed-rate loans, as well as have a fixed period of at least five years. So after years, the rate can change, and still ARM’s are considered riskier than the classic 30-year fixed mortgage. By definition, an adjustable-rate loan’s rate will be different after the fixed period, either increasing or decreasing depending on the broader market rate. According to, “ARM demand usually rises from the first quarter to the second quarter, because spring is the busiest season for home buying, and it’s when families dominate the market, searching for bigger, higher-priced homes. Still, the jump in ARMs in the spring of 2016 was 15 percent compared with this year’s 40 percent jump. This makes the case that buyers this year are struggling with affordability and opting for a lower-rate product. While mortgage rates remain very low, historically speaking, they have been inching up. The vast majority of homebuyers favored the safety of the 30-year-fixed rate mortgage since the […]

Housing, Holidays, and Interest Rates

Housing, holidays, and interest rates are an intriguing concoction when it comes to the mortgage industry. Consumers, who are caught up in the excitement of the holidays while in the process of purchasing a home, may neglect to consider the effect the season may have on the mortgage industry’s ever-changing interest rates. So, what are the effects of this concoction, and how do they affect home buyers in today’s market? As people wait for the Fed’s next move, speculation about a change in housing interest rates lingers. CNBC reported in December of 2016, that “mortgage rates [were] sitting solidly at the highest level in two years, and could move even higher…”. But, CNBC goes on to report that perhaps interest rates don’t affect housing as much as we thought they did. CNBC states that “…there is great debate over whether rising rates really matter to housing. After all, increasing rates are indicative of a stronger economy, and a stronger economy favors housing.” Chief economist at Fannie Mae, Doug Duncan, told National Mortgage News that, “…[if] interest rates are rising because the economy is growing more rapidly, then, typically, incomes also rise, and the rise in incomes offset the increase in […]

Mortgage Applications Rebuild Foundation

The volume of mortgage applications increased last week for the first time since early September. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, rose 3.6% on a seasonally adjusted basis during the week ended October 13. It did decline 7% on an unadjusted basis from the week ended October 6, a week was shortened by the Columbus Day holiday. The week’s results included an adjustment to account for that event. The increase in the Composite Index was the result of gains in both refinance and purchase mortgage applications. The seasonally adjusted Purchase Index was up 4% compared to the previous week although the unadjusted version fell 6%. The Purchase Index was 9% higher than during the same week in 2016. Refinancing also gained ground, ending a four-week slide. That index rose 3% although the share of total applications that were for refinancing ticked down to 48.6% from 49.0%. FHA mortgage applications made up 10.4% of the total, compared to 10.3% the prior week, while the VA share ticked down to 10.5% from 10.6%. USDA loans applications increased their share from 0.7% to 0.8%. Mortgage interest rates showed little movement from the previous week. […]

Ways the Holidays Affect the Mortgage Industry

As the holidays approach, (only to end up shocking us with their fast arrival), home buyers, loan officers, and real estate agents continue to work through their home buying processes. But when the Fed changes things up, homeowners may face increased rates, affecting both the borrowing costs and the price tags on homes across the nation. But the looming increase doesn’t necessarily mean people need to expedite buying or selling a house. The most common loan that people generally apply for is a 30-year mortgage with an average interest rate of 3.9%. So, if a home buyer borrowed $200,000 at that rate, their monthly payment would be approximately $944. Money articles found in Time magazine, often address the mortgage industry. Time states that, “…[low] rates have helped the housing market in other ways. After all, the less you pay to borrow, the more you can afford to spend, so cheap money has enabled home prices…to climb at a steady pace… the Federal Reserve is likely to continue raising rates as long as the economy improves. So, mortgage rates may be set to rise a lot further. But that process is likely to take years.” Time states that in the event […]

Home Prices Surged 7.7 Percent in August as Inventory Fell 12.4 Percent

Home prices in August surged 7.7 percent, the largest year-over-year price gain since May 2015. The national median sale price was $293,000, flat from July. None of the metro areas Redfin tracks saw prices decline in August. The median value of off-market homes in August was $251,000, as measured by the Redfin Estimate, up 0.7 percent from July. Sales in August fell 5.5 percent compared to last year, the largest decline posted since July 2016. This follows the 5 percent decline posted in July by the Redfin Housing Demand Index. The number of homes for sale plunged 12.4 percent, the largest year-over-year decline in a 23-month streak of declining inventory. The number of new listings in August was down 1 percent from a year ago, leaving just 2.8 months of supply. Less than six months of supply signals the real estate market is tilted in favor of home sellers. In the San Jose, Calif. metro area, inventory plummeted 50 percent in August compared to a year ago, leaving less than a one-month supply, the lowest of all markets Redfin tracks. Nearly a quarter (24.9%) of homes sold above their list price. The average sale-to-list ratio was 98.5 percent. The typical […]

CFPB Proposes Changes to Publicly Available HMDA Data

The CFPB today issued policy guidance on the loan-level Home Mortgage Disclosure Act data it will make available to the public under the revised HMDA data collection rules, which take effect in 2018. Noting concerns over consumer identity protection—which ABA raised several times to the bureau in previous comments—the CFPB is proposing to not publicly disclose a number of data points, including the universal loan identifier, the application date, the date of action taken by the bank on a covered loan or application, the address of the property securing the loan and the credit score or scores relied on in making the credit decision. The bureau also proposed changes that would reduce the precision of values reported for several data fields, such as the amount of the covered loan applied for, the age of an applicant or borrower, or a borrower’s debt-to-income ratio.

The Evolution of Real Estate Marketing

The Internet has changed the way the real estate market and real estate marketing operate. The traditional mainstays and methods of advertising and promotions no longer function as effectively. Who has a phonebook? How are you going to cold call an e-retailer? You can buy an ad in the newspaper, but the only customers it will attract are the kind of customers who still have a newspaper subscription. Our Internet habits are also leading to the fragmentation of the digital universe, where no two people are seeing the same combination of information sources. The world is also more media savvy than ever. This means advertising simply does not work as well as it used to. People are less likely to see your ad, no matter where you put it, and are inclined to view it with suspicion when they do. People are intolerant of solicitation in general. Most people won’t open up for a door-to-door salesperson, viewing them as an anachronism at best and a nuisance at worst. Cold calls are practically useless, especially now that so many people have cell phones and unlisted numbers. Most cities do not even print home phonebooks anymore, and the commercial phonebooks are usually […]

You’re married: Is it okay to buy a house without your spouse?

Buy a house without your spouse: sensible or sleazy? Can you (or should you) buy a house without your spouse? Yes; you can take title in many ways, and one of those ways is “a married man / woman as his / her sole and separate property.” But what does that mean? And just because you can, does it mean you should? Why would you buy a house on your own? There a several reasons you might want to purchase a house in your name only: to protect your interests, to plan your estate, to save money, or to qualify for a mortgage. To get a mortgage Many mortgage programs have minimum FICO scores that would get a couple declined if one spouse’s score is too low. Whether it’s bad credit or just a too-short credit history, if the result is a FICO under 620, you’ll be disqualified under many mortgage programs. So it would make sense to put the mortgage in your own name if you can qualify without your significant other’s income. To save money A few years ago, the Federal Reserve studied mortgage costs and found something startling. Of over 600,000 loans studied, ten percent could have […]

Fed’s George pushes for more rate hikes despite low inflation

Fed’s George pushes for more rate hikes despite low inflation ·       Kansas City Fed President Esther George tells CNBC that inflation running below 2 percent shouldn’t prevent more interest rate hikes. ·       George made the remarks from the annual Fed conference in Jackson Hole, Wyoming. ·       While Fed officials have indicated a desire to hike interest rates once more this year, traders in the funds market are expressing doubt. Low inflation shouldn’t stop the Federal Reserve from continuing to hike interest rates, Kansas City Fed President Esther George said Thursday. Inflation has been running persistently below the 2 percent target the central bank likes to see as indicative of healthy economic growth. Some officials have expressed caution about the Fed’s collective desire to keep raising rates in that climate. However, George said she feels confident enough in where things stand to keep advocating for tighter policy. “I think we should continue with the gradual rate path,” she told CNBC in a live interview from the annual symposium in Jackson Hole, Wyoming, that the Kansas City Fed hosts. “While we haven’t hit 2 percent, I’m reminded that 2 percent is a target over the long term, and in the context of […]

My Home Didn’t Appraise For Its Purchase Price. Now What?

What Is A Home Appraisal? A home appraisal is the process by which a licensed person assigns a “fair market value” to a property. Appraisals are performed by professionals known as appraisers and, with photos, research, and analysis, home appraisal reports can sometimes stretch to 30 pages of more. The home appraisal process helps to determine whether a home buyer is over-paying for a home relative to similar for-sale homes. This protects the home buyer, refinance applicant, and the mortgage lender providing financing on the home. Home appraisals are used for refinance loans, too. Depending on a home’s appraised value, a borrower will get access to different mortgage rates and options; and, may even get to submit less documentation as part of the mortgage approval process. However, home appraisals don’t always come in “at-value”, which is to say that — sometimes — home appraisals assign a home value that is less than for what you hoped or planned. What do you do then? What Happens When A Home Appraises For Less Than Its Purchase Price? When your home appraises for less than its purchase price, it affects your mortgage, and can affect your contract, too. Remember that mortgage lenders use […]

HARP Extended through 2018 as Changes Made to High-LTV Refi Program

The Federal Housing Finance Agency today extended the Home Affordable Refinance Program through Dec. 31, 2018. The program was scheduled to phase out in September upon the launch of Fannie Mae and Freddie Mac’s new streamlined refinance program for borrowers with high loan-to-value ratios. However, the agency today announced that the new high loan-to-value refi program would only be available for borrowers who originate their loans on or after Oct. 1, 2017; as a result, FHFA determined that HARP remained necessary to serve eligible existing borrowers. More than 143,000 homeowners may still be able to benefit from HARP, the agency added. Since its inception in 2009, more than 3.47 million refinances have been done through HARP. The eligibility date for the new high loan-to-value refi program was necessary to support the GSEs’ credit risk transfer programs, which since March have seen $54.2 billion worth of risk transferred. Fannie and Freddie will modify future credit risk transfers to accommodate the new streamlined refi program. Meanwhile, FHFA today announced that nearly 357,000 refinances of Fannie or Freddie loans were completed in the second quarter, with 9,700 of them coming through HARP. HARP refinances dropped by one third since the prior quarter. Fourteen […]

Interest Income Boosts Bank Profits in Second Quarter

FDIC-insured banks and savings institutions earned $48.3 billion in the second quarter, up 10.7 percent from the industry’s earnings a year before, the FDIC said today. The rise in net earnings was largely driven by a 9.1 percent increase in net interest income as the Federal Reserve continues the process of normalizing interest rates, the agency said. Return on assets, a benchmark for industry performance, hit 1.14 percent — a level not seen since 2007. “America’s banks continue to finance the businesses that drive growth and create jobs,” said ABA Chief Economist James Chessen. “Small business lending was particularly strong in the second quarter, showing confidence by entrepreneurs that our eight-year expansion will continue well into 2018.” With interest rates slowly rising, net interest margin improved to 3.22 percent, up from 3.08 percent the year before and the highest level since 2013. Higher net interest margins were reported at larger institutions, which have a greater share of assets that reprice or mature in the short term. Noninterest income was 1 percent higher compared to the same point in 2016. Total loans and leases increased by 1.7 percent, or $161.2 billion, during the second quarter. While loan growth remains strong — […]

Fed should be cautious in face of weak inflation: Brainard

Inflation is falling “well short” of target so the Federal Reserve should be cautious about raising interest rates until it is confident of a rebound, an influential Fed policymaker said on Tuesday in making the dovish case ahead of a key policy meeting. In a speech highlighting months of weak data that has pushed core U.S. inflation down to 1.4 percent, Fed Governor Lael Brainard said the central bank should go so far as to make clear it is comfortable pushing prices modestly above a 2-percent target. Brainard, a permanent voting member on the Fed’s monetary policy committee who has in the past convinced colleagues to delay tightening, noted that the U.S. economy is on a “solid footing” and benefiting from two years of an “extremely welcome” rebound in global peers. Yet she seized on the fact that core U.S. price readings have sagged for five straight years. “We should be cautious about tightening policy further until we are confident inflation is on track to achieve our target,” Brainard lends in a speech at the Economic Club of New York. “There is a high premium on guiding inflation back up to target so as to retain space to buffer adverse […]

Lenders Optimistic on DTI Change

Fannie Mae recently raised the cap on its maximum debt-to-income (DTI) ratio to 50 percent. Will it help? NAR Research queried lenders about this change in the Survey of Mortgage Originators for the 2nd quarter of 2017. Mortgage lenders were optimistic about the change, but some will maintain overlays to mitigate potential risks. In July, Fannie Mae began buying and insuring loans with DTIs up to 50 percent. This change was an increase from the DTI cap of 45 percent maintained by Fannie Mae in recent years. Some analysts pointed to this change as a potential expansion of the credit box which would result in more home sales in the face of rising home prices and student debt. Others have panned it as simply taking mortgage loans from the Federal Housing Administration (FHA) or other channels. 57.1 percent of lenders in the survey indicated that the change would result in a modest increase in total originations as more borrowers take advantage of the change. Only 21.4 percent felt that this market segment was already served by the FHA, while 7.1 percent felt that the risk was too great to originate. When asked whether they or the investor/aggregator with whom they […]

What Hurricane Harvey means for real estate and mortgage rates

Natural disasters affect real estate and mortgage rates If you’re searching for a modern American nightmare, you don’t have to look much further than the damage done by Hurricane Harvey. The late-summer storm tore through Eastern Texas, displaced millions of people, created more than $100 billion in damage — and perhaps increased mortgage rates? Mortgage rates and Hurricane Harvey The worldwide supply and demand for money determines what we pay for all kinds of financing, including mortgages. As much as Hurricane Harvey was a huge event, its impact on mortgage rates has been minimal. Freddie Mac reports that prime mortgage rates were 3.86 percent for the week of August 24th just before the storm. They actually fell to 3.82 percent for the week of August 31st. Today’s mortgage rates are remarkably low by historic standards, and did not spike as a result of Harvey. This is good news for mortgage borrowers nationwide, and it’s also good news for Harvey victims because it means cheap funding will be available as they re-build. New home construction At this early point, it’s difficult to know just how many homes Harvey destroyed and damaged. Experts estimate above 100,000 units, but it’s likely that the […]

156,000 Jobs Added in August

Total nonfarm payroll employment rose by 156,000 in August, a decrease from July’s downwardly revised figure of 189,000, according to the Bureau of Labor Statistics. The national unemployment rate ticked up to 4.4%, staying within a 10 basis point range in the last five months. Private service-providing industries added a net 95,000 jobs, led by gains in professional and business services, which added 40,000 jobs during the month, and by the health care and social assistance sector, which added 17,000. Goods-producing employment rose by 70,000 jobs during the month, as gains in durable goods manufacturing and construction led by both adding 28,000 jobs in August. The civilian labor force participation rate was 62.9%, the same as in July. Workers unemployed for less than 14 weeks increased by 87,000, while the number of long-term unemployed, those jobless for 27 weeks or more, was essentially unchanged and accounted for 24.7% of the unemployed. The number of discouraged workers was 448,000, a 128,000 decrease from a year earlier. Average hourly earnings increased by 3 cents to $26.39, after a 9-cent increase in July. Over the past year, average hourly earnings have risen by 65 cents, or 2.5%.

Century Mortgage

House Considering Many Dodd-Frank Provisions for the Chopping Block

The Financial Choice Act, which is sponsored by FSC Chairman, Jeb Hensarling, would modify or repeal many of the modifications made by the Dodd-Frank Wall Street Reform and Consumer Protection Act, including wide-ranging changes in financial regulations, revising the structure of the Consumer Financial Protection Bureau, and restraining much of its power. It also contains provisions that will touch the home mortgage industry. In fact, if passed, the bill would incorporate over two dozen proposed regulatory relief bills for local and community financial institutions, which we include for reader’s reference; H.R. 2896, H.R. 1210, and H.R. 766. House Majority Leader, Kevin McCarthy, has stated that he anticipates a full House vote shortly on H.R. 10, The Financial Choice Act, which was voted out of the Financial Services Committee (FSC) on May 4. Information provided by associates at the Ballard and Spahr law firm, Richard J. Andreano, Pavitra Bacon and Barbara Mishkin has been used to explain some of the impact the passage of the law could bring to the mortgage industry, as well as shed light on the impact on CFPB and other regulatory agencies. H.R. 10 would create a safe harbor under the Regulation Z ability to repay requirements […]

Century Mortgage

Homeownership Still Eludes Many Millennials

According to the Census Bureau, the homeownership rate for those under the age of 35 is currently at 34.3%. That’s significantly lower than the pre-recession level of 43%. A new study conducted by Apartment List revealed that 80% of apartment-dwelling millennials (those born between 1982-2004) would, given the right circumstances, become first-time home buyers instead of making monthly rent payments. Whether they can afford to do that, however, is another question completely. With housing inventories as tight as they are today, prices continue to escalate and leave out would-be millennial homebuyers. Researchers surveyed 24,000 renting millennials across the country and discovered that close to 70% of them have saved less than $1,000 for a down payment. Only 15% have put away $5,000 and only 29% are regularly saving a minimum of $200 each month to eventually put towards a down payment for purchasing a home or condo. Researchers further uncovered that millennials significantly underestimate how much it will actually cost to be in the position to make a 20% down payment. At their current pace of saving, millennials who intend to put 20% down for an average condo would need to save for at least 19 years in high-priced real […]

Century Mortgage

Harker Says 3 Rate Increases Still Likely After May Payroll Numbers

Patrick Harker, Philadelphia Federal Reserve Bank President and voting member of the Fed’s rate-setting committee for 2017, has stated that the U.S. central bank continues to be on track to reach the Fed’s 2% goal near the end of the current year. In light of his forecast, Harker once again stated his support for two additional interest rate increases this year. “Turning to inflation, things are still on track, despite a couple of months trending in the wrong direction,” Harker said in prepared remarks for a speech to an economics conference in Reading, Pennsylvania. Within the last 6 months, the US central bank raised its benchmark interest rate twice – both in December, 2016 and March, 2017 FOMC meetings. Despite concerns from some Fed officers regarding inflation, expert analysts anticipate the US central bank will raise rates again at its June 13-14 policy meeting. Harker also remarked that he believes the U.S. economy is now “essentially at normal.” He added that he feels there is very little “slack” remaining in the labor market and that he expects the national unemployment rate to fall to 4.2% by the close of 2018. He showed confidence regarding wages, estimating they would escalate between […]

Century Mortgage

Days on Market Plummets below 30 Days; Existing-Home Sales Slip Slightly in April

Persistently depleted supply levels restrained existing-home sales in April and pushed the average number of days on the market for homes to a new low of 29 days, according to the National Association of Realtors®. Total existing-home sales, which include completed transactions of single-family homes, condominiums, co-ops and townhomes, decreased 2.3% to a seasonally adjusted annual rate of 5.57 million in April. Despite last month’s decrease, sales remain at 1.6% above the same period 12 months ago. NAR Chief Economist, Lawrence Yun, commented that the decrease in real estate closings was “somewhat expected”. He added that “a strong sales increase in March at 4.2% and [the fact that] new and existing inventory is not keeping up with the fast pace homes are coming off the market, demand is easily outstripping supply in most of the country and it’s stymieing many prospective home buyers from finding a home to purchase.” Properties sat on the market for 29 days in April, which is down from 34 days in March and 39 days 12 months ago. It also surpasses last May’s low of 32 days as the shortest timeframe since NAR started tracking the data in May of 2011. Fifty-two percent of homes […]

Century Mortgage

Trump Budget Changes Direction for Fannie and Freddie

President Trump’s $4.1 trillion spending plan contains a stark shift in language regarding government-sponsored enterprises. Specifically, the President’s proposed budget calls for improvements in the housing finance system, yet it makes no mention of the elimination of Fannie Mae or Freddie Mac. According to Dick Bove, Vice President of equity research at Rafferty Capital Markets, this language is notably an important position change and clearly differs from the course that the former administration intended. In essence, President Donald Trump’s budget appears to reverse previous calls to “wind down” Fannie Mae and Freddie Mac. Bove noted that Obama made it clear he intended to eliminate the entities while “President Trump makes no such statement,” Bove said in a research note. “This is a major change in policy,” he added. As former cornerstones of the US mortgage industry, Fannie and Freddie played important roles before the financial crisis. However, when the agencies ran into financial trouble, mortgage loans to less-qualified buyers defaulted and the government bailout that ensued triggered a great deal of public outrage. As a result, Fannie and Freddie then were effectively nationalized during the crisis. In a recent interview with CNBC, Bank of America CEO, Brian Moynihan, expressed his […]

Century Mortgage

Refi Apps on the Rise Purchase Apps Drop Slightly

Mortgage applications rose 4.4% from the previous week, according to reporting from the most recent Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey. The Market Composite Index, which measures mortgage loan application volume, rose 4.4% on a seasonally adjusted basis over one week ago. On an unadjusted basis, the Index showed growth of 3% compared with the week prior. The Refinance Index increased 11% from the previous week to its highest level since March 2017. The refinance share of mortgage activity increased to 43.9% of total loan applications from 41.1% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.2% of total loan applications. The seasonally adjusted Purchase Index dipped slightly, 1% from the previous week. The unadjusted Purchase Index fell 2% compared with the week prior, which was 3% above the same week 12 months ago. National Association of Realtors® Chief Economist, Lawrence Yun, in a recent NAR report commented, “With [housing] price growth showing little sign of slowing, prospective first-time home buyers will be the most sensitive to any sudden uptick in rates in the months ahead.”* The FHA loan share of total mortgage loan applications grew to 10.8% from 10.6% the previous week. The […]

Century Mortgage Calculator

Economists Predict Minimal Impact from Fed Balance Sheet Reduction

While the financial world watches with baited breath each time the Federal Open Market Committee meets, constant debate arises amongst analysts and economists regarding whether the Federal Reserve will keep conditions the same or raise interest rates. The Fed has indeed increased the interest rate on three separate occasions since December of 2015 and more of them are anticipated before the end of this year. Obviously, the ultimate objective is to maintain a healthy economy for all Americans. Many discussions omit the important topic of what the Fed intends to do with its immense portfolio of bonds. Currently valued at $4.5 trillion, economists believe that the central bank will reduce its portfolio in further efforts to support the economy’s health. The question remains: what impact will reducing the Fed’s portfolio have on monetary policy and rates? According to economists, nothing more than a modest one. Approximately 55% of economists in a Wall Street Journal poll believe that the Fed reducing its balance sheet by allowing assets to mature will raise the yield on 10-year Treasury notes no more than 0.2%. Another 40% thought the impact would be practically negligible, increasing the yield up 0.1% or less. Correspondingly, speaking to what […]

Century Mortgage

NAR Midyear Forecast: Existing-Home Sales Still on the Rise; Inventory Still Too Low

The first quarter of 2017 displayed the best quarterly current sales in precisely a decade, with sales of 5.62 million, with expectations of finishing at nearly 5.64 million – the best since 2006 (6.47 million) – which is a full 3.5% above 2016 sales figures. As a result of substantial price increases in several metro areas, the national median existing-home price is forecast to jump nearly 5% this year. “The housing market has exceeded expectations…despite depressed inventory and higher mortgage rates,” stated Lawrence Yun, Chief Economist for the National Association of Realtors® (NAR). Yun accredited healthy job gains over several years as well as “improving household confidence” to the quickened sales pace and added expectations that sales will hit a decade-high in 2017. Said Yun, “The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation and rising consumer confidence are giving more households the assurance and ability to be homebuyers.” Despite the good news that sales are at a decade high level, inventory supply and home price affordability along with modest economic growth threaten to suppress the homeownership dream. The culprits? Listings in the lower- and mid-market price range are […]

Century Mortgage

MBA Survey Reveals Delinquency Decline

The Mortgage Bankers Association (MBA) released its National Delinquency Survey, revealing that delinquency is down on mortgage loans for the first quarter of 2017, specifically on 1-4 unit residential properties. The delinquency rate was reduced by nine basis points from the prior quarter, and was six basis points lower than the previous year. The survey showed a seasonally adjusted rate of 4.71% of all outstanding mortgage loans. “Employment growth started 2017 on strong footing, with the economy adding 216,000 jobs in January 2017 and 232,000 jobs in February. Average hourly wage growth increased 2.8% over the year, and has maintained a generally increasing trend since late 2015. These fundamentals have helped to support the performance of all loan types – whether FHA loans, VA loans or conventional loans,” commented MBA’s Vice President of Industry Analysis, Marina Walsh. There was a slight increase in the percentage of loans on which foreclosure actions were started during the first quarter, coming in at 0.30%. This was a rise of two basis points over last quarter yet still an optimistic reduction of five basis points over one year ago. Loans in the foreclosure process at the end of the first quarter were lower, having […]

Century Mortgage

Consumers Optimistic About Decreasing Rates in 2018

The most recent National Housing Survey from Fannie Mae reveals a slight yet significant decrease in the number of consumers who believe mortgage rates will increase in the next twelve months. Following a record-high 64% last month, the number dropped to 62%. What makes this dip noteworthy is that it indicates that consumers are rapidly gaining hope for more affordable mortgage rates in 2018. After mortgage rates fell below 4% for the first time in 2017, homebuyers and refinancing homeowners indicated hope that the trend will continue into the next year. To put things into perspective, Freddie Mac reports that mortgage rates have averaged about 8.25% over the past 45 years, making today’s rates nothing to grumble about as they linger in the low 4’s. While consumer concerns over mortgage rates decrease, their worries increase about housing availability. Fears are mounting particularly for renters who are getting priced out of their rented spaces. The latest Fannie Mae survey showed consumers fully anticipate rent increases of 4.0% over the next year. Rising rental prices – along with fees associated with a move into a rental unit – are lowering the relative cost of homeowner ownership every day. In addition, savvy renters […]

Century Mortgage

Steady Albeit Slow Growth for Home Building Equals Same for Economy

Nine years after the housing crisis, housing construction as an industry hasn’t yet fully healed. The slow but steady growth, however, might be a positive factor in boosting new home construction – and the economy. As a reaction to the slow pace of recovery, housing construction will likely continue to add significantly to economic growth for some time. Recent data illustrates the strength of the residential construction sector. With inventory of previously-owned homes persisting at long-time lows, housing analysts and economists turn to home builders for relief from the supply pressures in the housing market. That’s good news for housing and, at the same time, good news for the economy. Aside from providing more units for homebuyers to choose from, housing construction – especially single-family homes that need furniture, appliances, flooring and more – helps improves economic growth that could lengthen the business cycle in the process. The National Association of Home Builders (NAHB) estimates that building the average single-family home generates about three jobs. For a construction industry that lost 1.5 million jobs in the wake of the financial crisis, this explains why the rate of recovery for home construction has been so slow to some extent. Builders are […]

Century Mortgage

Mortgage Apps Increase amid Boost in Home Purchaser Confidence

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey showed that the Market Composite Index (MCI) – which measures mortgage loan application volume – increased 2.4% on a seasonally adjusted basis from the previous week. The seasonally adjusted Purchase Index rose 2% from the previous week, reaching its highest level since October of 2015. On an unadjusted basis, the Index climbed 3%. The seasonally adjusted Conventional Purchase Index rose 2% from one week ago, hitting its highest level since April of 2009. The adjustable-rate mortgage (ARM) share of activity fell to 8.2% of total mortgage applications. The FHA loan portion of total applications rose scantily to 10.5% from 10.4% the previous week. The VA loan portion and USDA portion of total loan applications both remained unchanged at 10.8% and 0.8% respectively, from one week ago. The Refinance Index rose 3% from the previous week. The unadjusted Purchase Index rose 2% compared with the prior week and was 6% higher than the same week one year ago. The refinance share of mortgage activity rose slightly to 41.9% of total loan applications from 41.6% the previous week. On the heels of industry gains illustrated by the Weekly Mortgage Survey, the Fannie Mae […]

Century Mortgage

Home Shopper Confidence in Housing Steady Yet Cautious

Americans are still as confident in the U.S. housing market as has been recently reported, yet they are decidedly more cautious. The quarterly Modern Homebuyer Survey*, released by ValueInsured, revealed the Q1 index finished at 67.7 out of 100. Sixty-three percent of Americans said they are hopeful that 2017 will be a better year for housing opportunities than in 2016. This is a slight dip from the 69% that felt the same optimism in January. The survey was conducted following the most recent Federal Reserve interest rate increase. Despite assuaged confidence, Americans still have a strong desire to buy and still value owning a home in America. In fact: 76% of Americans said owning home is an important part of their American Dream. 77% of Americans believe buying a home is one of the best financial investments they can make. 79% believe buying a home is more financially favorable than renting. 79% of non-homeowners said they would like to purchase a home. Guarded sentiment came mostly as a result of prospective first-time homebuyers and upgrading homeowners, who reported a sense of increasing risk when it comes to escalating home prices and rising interest rates. Sixty-one percent of interested homebuyers expressed […]

Century Mortgage

Fed Rejects Rate Hike Following Dreary Q1

The Federal Reserve announced it had decided against raising its benchmark interest rate following central bankers’ two-day summit recently in Washington. Citing the fact that economic progress had “slowed” at the start of 2017 and that household spending “rose only modestly,” the Federal Open Market Committee (FOMC) declared in a statement that it would “maintain” nationwide interest rates for the moment. “The committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2% over the medium term,” according to the statement . The decision was largely anticipated following the FOMC’s third meeting of this year, with the Fed having already increased rates in March. “The outcome of the meeting is not a surprise. However, the Fed should continue raising rates at a modestly faster pace than previous years – two to three rate hikes total this year,” Jason Pride, Director of Investment Strategy at Glenmede, commented. Fed officials seemed willing to overlook the 2017 Q1 relaxed growth rate, under the presumptions […]

Century Mortgage

Fed’s Go-Slow Approach is Reinforced by Economic Conditions

The economic case for a Federal Reserve interest-rate hike at their next meeting in June just lost its footing. Two recent U.S. government reports revealed that inflation showed a slight setback in March while at the same time retail sales decreased sharply for a second consecutive month. Labor Department data showed the consumer-price index (CPI) dropped 0.3%, while a measure that excludes energy and food decreased by the most since 1982. “Both reports would be arguments in a case that a dove would make for why the Fed needs to be more patient,” commented Stephen Stanley, Chief Economist at Amherst Pierpont Securities LLC. “It’s a relatively soft consumer performance in the first quarter, and you couple that with a pretty abrupt halt in the gradual uptrend in inflation.” Retail sales were down 0.2% last month after a 0.3% drop in February that had previously been reported as a gain, Commerce Department data showed. Six of 13 major retail categories recorded lower receipts for the month of March. Auto purchases dipped 1.2% following a 1.5% slip in the previous month. While the pullback at retailers highlights a weak first quarter for consumer spending – one that economic experts had already accounted […]

Century Mortgage

Existing Home Sales Highest Since 2007

March marked the best month for real estate sales since February of 2007, with sales increases of 5.9% over the previous month. The amount of home buyers for existing homes boomed in March after stumbling unexpectedly in February for various speculated reasons. The National Association of Realtors® (NAR) said sales of existing single-family houses, townhouses, condominiums, and cooperative apartments were at a seasonally adjusted annual rate of 5.71 million, an increase of 4.4% from the adjusted February number of 5.47 million. NAR Chief Economist Lawrence Yun attributed the solid sales during the month to strong gains in the Northeast and Midwest. “Although finding available properties to buy continues to be a strenuous task for many home buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does.” Sales of single-family homes rose 4.3% to a seasonally adjusted annual rate of 5.08 million from 4.87 in February, marking 6.1% higher sales over the same month in 2016. Condo sales also increased, growing 5.0% to a seasonally adjusted annual rate of 630,000 units, a 5.0% annual gain. The median existing-home price for all housing types […]

Century Mortgage

Home Seller Profitability Highest Since 2007

The Q1 2017 U.S. Home Sales Report released by ATTOM Data Solutions reveals that the typical U.S. home seller earns 24% return on their investment (about $44,000 per sale), which is the highest profit for home sellers since the middle of 2007. According to Daren Blomquist, Senior Vice President for ATTOM Data Solutions, many homeowners aren’t ready to sell to home buyers despite the increased ROI, which is causing the market’s ever-worsening inventory problem. “The first quarter of 2017 was the most profitable time to be a home seller in nearly a decade, and yet homeowners are [staying] in their homes longer before selling,” Blomquist commented. “This counterintuitive combination is in part the result of the low inventory of move-up homes available for current homeowners, while also perpetuating the scarcity of starter homes available for first-time homebuyers.” Nonetheless, Blomquist reports some promising signs that inventory may be loosening up. “There are some early signs this inventory logjam may be loosening up in some markets,” Blomquist said, “with the average homeownership tenure down from a year ago in nine of the 66 markets we analyzed, including Memphis, Dallas, Boston, Portland, and Tampa. Sky-high potential price gains may be finally prompting more […]

Fannie Mae Makes it Easier to Buy Even with Student Loan Debt

In a surprising move, Fannie Mae announced its new programs to make it easier for consumers to qualify to be first time home buyers, or pay off their student loans via a refinance. The new program is called Student Loan Solutions. This is undoubtedly fantastic news for Americans who hold some of the $1.4 trillion in student loan debt. Effective immediately, Fannie Mae is easing the home loan process with three major changes so that becoming home buyers or reducing student loan debt may become a reality. Change #1: Student Loan Payment Calculation Fannie Mae has changed how lenders calculate student loan payments. Whereas before the change, mortgage lenders had to use 1% of the outstanding balance or the fully amortizing repayment amount, now lenders can calculate debt to income ratio (DTI) based on the student loan payment just as it appears in the credit report. This is good news for borrowers on an income-driven repayment (IDR) plan such as PAYE and REPAYE. Change #2: Student Debt Paid By Others In the case that a parent or other third party pays the bill, Fannie Mae is disregarding the payment altogether. That applies not only to student loans, but payments for […]

Century Mortgage

US Economy Stronger Than It Appears

The most recent GDP numbers report a meager 0.3% increase in consumer spending for the first quarter of 2017 – the smallest amount since 2009. But economists are counting this as good news. While it may seem contrary, a closer look at what consumers spent less money on tells the real story. For example, they spent less on things like gasoline, winter heating bills, and out-of-season clothing- all things consumers would prefer to spend less money on in the grand scheme of things. It’s true that the scant jump in GDP is far below the 3.5% increase reported at the end of 2016 and leaves the increase in growth at a low 0.7%. However, a close look at the details reveals that the drops in spending are in the “right” places. Americans cut spending on gasoline by $6 billion in the first three months of this year, which is a result of lower prices at the pump – a good thing for U.S. citizens. An atypical warm weather trend allowed households to use less fuel to heat their homes. February was unusually the second hottest on U.S. record. The result was lowered spending on “housing and utilities”, with a drop […]

Century Mortgage

Fannie and Freddie Profitable Once Again

The U.S. Treasury has received billions in profit from post-crisis Fannie Mae and Freddie Mac revenues – and investors are suing for it. For decades, Fannie Mae and Freddie Mac helped in causing a steady rise in home buyers—until the subprime crisis hit and Fannie and Freddie were on the hook for billions in losses. Legislators swore to reorganize the two companies and some planned to phase them out entirely. However, over eight years later, Fannie and Freddie still operate under government control—and they’re now a bigger part of the system, guaranteeing payment on nearly 50% of all U.S. mortgages, an increase from 38% before the crisis. There is one crucial difference: Any profits the companies generate go to the government instead of investors. In 2012 the government altered the terms to say that every quarter Fannie and Freddie would send Treasury all their profits except for a certain amount of money kept in reserve. That reserve started at $3 billion in 2013 and was scheduled to fall by $600 million every subsequent year, until hitting zero in 2018. The latest payment, a combined $9.9 billion to the U.S. Treasury at the end of March, made the total amount of […]

MBA Proposes Reform for Secondary Market

The proposal, GSE Reform: Creating a Sustainable, More Vibrant, Secondary Mortgage Market, was released by the Mortgage Bankers Association (MBA), offering a detailed outline of a secondary mortgage market that MBA believes could emerge reformed and revitalized if changes are instituted. In the spotlight are two critical areas: the appropriate transition to the reformed system, and the role of the secondary mortgage market in advancing an affordable housing strategy. Anxious to create a sustainable solution regarding the government’s role in the housing industry that doesn’t create a reprise of the errors that led to the financial crisis, MBA Chairman Rodrigo Lopez CMB, Executive Chairman of NorthMarq Capital, stated that the paper “…not only lays out a detailed end state solution that will work for the residential and multifamily markets, but also the transition steps to accomplish this goal.” MBA’s proposed approach to GSE Reform includes specific changes that will: Introduce considerably higher levels of risk-bearing private capital into the mortgage system, aiming to drastically reduce the system’s reliance on government support.   Heighten the stability of the mortgage system with numerous Guarantors that will function as privately-owned utilities.   Better the level of service and performance in the secondary mortgage […]

Century Mortgage

March New Home Purchase Mortgage Applications Shot Up 6.7%

Mortgage applications for new home purchases rose 6.7% in comparison to March of 2016 according to the recently released Builder Application Survey (BAS) for March 2017. Compared to February of this year, mortgage applications soared by 23% relative to the previous month. These changes do not include any adjustments for usual seasonal patterns. Based on data from the BAS, the Mortgage Bankers Association (MBA), which conducts the survey, estimates new single-family home sales hit a seasonally adjusted annual rate of 670,000 units in March 2017. The seasonally adjusted estimate for March marks an increase of 14.3% from February’s pace of 586,000 units. On an unadjusted basis, the MBA estimates that there were 62,000 new home sales in March 2017, an upsurge of 21.6% from 51,000 new home sales in February. “Mortgage applications for new homes accelerated in March, with the Builder Application Survey Index reaching its highest point since the series began in August 2012,” commented MBA’s Vice President of Research and Economics Lynn Fisher. “The pick up from a fairly modest February showing suggests that developers are finding ways to bring new product on line to help supplement otherwise low inventories of existing homes for sale in the US. […]

Century Mortgage

Vacation Home Sales Tumble; Investment Property Sales Increase

Despite 2016’s strong pace of home sales – the highest in a decade – there was a marked drop in activity from vacation home buyers, according to an annual second-home survey released by the National Association of Realtors® (NAR). NAR’s 2017 Investment and Vacation Home Buyers Survey revealed that vacation home purchases last year decreased to an estimated 721,000, down 21.6% from 2015 (920,000) while investment-home sales in 2016 rose 4.5% to 1.14 million. Owner-occupied purchases bounded upward 12.5% to 4.21 million last year – the highest level since 2006 (4.82 million). The two highest cited reasons for buying a vacation home were a) vacations or as a family retreat (42%) and b) future retirement (18%). Investors, on the other hand, purchased to generate income through renting (42%) and for potential price appreciation (16%). “The ability to generate rental income or remodel a home to put back on a market with tight inventory is giving investors increased confidence in their ability to see strong returns in their home purchase,” commented Lawrence Yun, NAR Chief Economist. The NAR survey additionally implicated that vacation and investment buyers were more inclined to use their property as a short-term rental in 2016. Forty-four percent […]

Century Mortgage

CFPB Seeks to Reduce Complications from Information Collection Requirements

The Consumer Financial Protection Bureau just released its proposal intended to make the adoption of mortgage data reporting requirements – set to take effect in January, 2018 – less complicated. While it does add more data points to be reported, the CFPB’s new HMDA rule will make reporting data online easier. “The Home Mortgage Disclosure Act (HMDA) shines a much-needed spotlight on the mortgage market, which is the largest consumer financial market in the world,” CFPB Director Richard Cordray said in a statement. “Today’s proposal reflects the bureau’s ongoing and substantive engagement with stakeholders in the marketplace, and will help [the] industry meet its new reporting obligations.” Under the 1974 Home Mortgage Disclosure Act (HMDA), the CFPB introduced new data reporting requirements in the fall of 2015 In it, the CFPB updated existing rules which will force mortgage lenders to provide information on the subject property’s value, loan terms, prepayment penalty terms and the duration of teaser (or introductory) interest rates. The HMDA was intended to speak to problems minorities faced in gaining access to a mortgage. It requires lenders to collect data from the purchase, home improvements and refinancing as well as report that data to federal regulators. However, […]

Century Mortgage

Borrowers Ready to Take Risks

With home prices that are rising faster than incomes and mortgage rates nearly three-quarters of a point higher than just a few months ago, new borrowers are on the hunt for the best deal they can get on home loans.

Gen Xers Better off while Boomers and Millennials Moving with their Kids

Generation X is finally on the mend and on the move. Young Boomers are buying homes with enough room for their adult children to live with them. Millennials are heading to the suburbs with their kids. All this was revealed in a recent study by the National Association of Realtors® (NAR), the 2017 Home Buyer and Seller Generational Trends, which evaluates the generational differences of recent home buyers and sellers.

Reduced Consumer Spending Under Close Watch

Consumer spending fell short of January’s projections as rising prices hit Americans where they feel it most – the wallet. As a result, leading inflation-adjusted purchases dropped by the largest margin since September of 2009 when it sank a full 1%. The 0.2% advance in spending followed a 0.5% increase in the prior month, the Commerce Department reported on Wednesday in Washington.

Recent New Home Sales Surge

Despite persistently low inventories of homes for sale and recently increased mortgage rates, new construction sales rose 6.1% on the month and increased an impressive 12.8% on the year, according to the Census Bureau. The Midwest led the charge, with sales increases of close to 31% month over month and more than 50% on the year. Transactions in the Northeast fell just over 21% in February from January but were still up.

Savvy Clients Want Sustainability

Mounting consumer consciousness and demand for sustainable, green properties is spurring an exchange of ideas between Realtors® and homebuyers and sellers. Over 50% of Realtors® find that consumers are interested in real estate sustainability issues and practices, according to the National Association of Realtors®’ (NAR) recent REALTORS® and Sustainability report.

Housing Industry Welcomes Ben Carson

Ben Carson has officially been awarded the title of the 17th secretary of the Department of Housing and Urban Development after a majority Senate vote of 58-41 and will begin immediately serving his term with the housing agency.Securing one of the few remaining cabinet members left to be approved, Carson’s inaugural first day is scant more than a month after President Donald Trump was sworn into office.

FHA Loans on the Rise Thanks to Millennial Buyers

The most recent Millennial Tracker report released from Ellie Mae indicates that the mortgage market FHA loans are on the rise – and will likely continue to be – as increasing numbers of Millennials take on the rite of homeownership. Millennials, who make up a growing number of homebuyers in the U.S., are leveraging FHA loans to maximize the advantages of lower down payments and lower average FICO score requirements.

Job Report Expected to Cement Rate Hike

Markets are more confident that there is a 94% likelihood of a rate hike this month, up from 40% a week ago. Much talk has been had about the possibility of a rate spike in March and as the time looms closer, evidence shows that the probability is ever more likely. Janet Yellen, Chairman of the U.S. Federal Reserve, has given the strongest indication to date that policymakers will indeed raise interest rates this month.

Contact Us We Really Do Want to Hear From You
Interested in getting a mortgage? Have a general question for our Loan Officers? Just want to say hello? Send us an email and we will get back with you as soon as possible!