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 […]
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 […]
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 […]
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 […]
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. […]
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 […]
Fannie Mae’s Q1 2017 Mortgage Lender Sentiment Survey reveals that mortgage lenders are more confident in the economy than ever. Learn why in this article.
The recently published April Mortgage Monitor revealed that mortgage servicers are having difficulty retaining customers post-refinancing.
The Market Composite Index, which tracks mortgage loan application volume, increased 3.3%, taking into account a seasonally adjusted basis from the previous week.
FHA’s mortgage share is on the decline. However, that may turn out to be the good news, FHA’s portion has decreased to 20% as of the most recent reports.