Home Loans – The New Rules
Home Loans – It’s not your father’s mortgage
New federal regulations require mortgage lenders to verify that prospective borrowers can meet the repayment terms of their mortgage loans.
- Under the Dodd-Frank Act, the rules prohibit the “no-doc” loans commons during the housing bubble. Before making a loan, lenders must document the borrower’s job status, income and assets, debt, and credit history.
- Lenders must calculate a borrower’s ability to pay the principal and interest over the length of the loan, and they may not base their calculation solely on the payment due when an introductory “teaser rate” is in effect.
Home Loan Refinancing -Terms – Rates
Home Loan Refinancing
In a Freddie Mac Quarterly Product Transition Report just released, nearly 30 percent of refinancing borrowers shorten mortgage terms in Q3
In the third quarter of 2012, 29 percent of borrowers who refinanced an existing mortgage chose to shorten their loan term. Refinancing borrowers also preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate, according to the report. Read more 
Home Mortgage Applications Drop to 15-year low
home mortgage loans
The Mortgage Bankers Association said today that an index measuring mortgage applications, which are adjusted for seasonal factors, fell 2.4 percent last week from the previous week. Home mortgage applications plunged 5.7 percent to its lowest level since December 1996.
Also, sales of new and previously occupied homes both fell in July. Sales of new homes are on pace to finish the year as the lowest on records dating back to 1963.
The pace of re-sales is shaping up to be the worst in 14 years.
San Diego California real estate
Home Mortgage Applications Fall
Home mortgage applications drop
The Mortgage Bankers Association recently reported that after experiencing a 13% surge in mortgage applications, the mortgage market lost steam with applications dropping 5.9%. While homeowners rushed to refinance earlier in the month, that trend reversed itself, with the refinance index and purchase index falling 7.2% and 2.8%, respectively,
The four-week moving averages for the market index and the refinance index are up 0.4% and 0.8%, respectively, while the seasonally adjusted purchase index is down 0.7%. Refinancing activity cooled as the refinance share of mortgage activity fell to 69.2% of total applications from 70% the previous week. In addition, the adjustable-rate mortgage share of activity fell to 5.9% from 6.1% the prior week.
The “man behind the curtain” is the “big banks”
How the big banks are fueling legislation that is hurting the housing market but will benefit them in the long run.
When we look back at the crazy housing market in the mid 2000’s, there were a lot of things that fueled crazy loans and crazy home prices. However, the dominant factor was rating agencies were lax or in on the profit. Brokerage houses were packaging MBS (Mortgage Backed Securities) and making large profits on the transactions. Legislation that was in place was not adhered to. In the end, there were products available that should not have been. Originators (like me) tried to advise people (I can’t tell you how many times I had a conversation where I told a client “I can get you approved for a larger loan than you are probably comfortable with. Let’s work to find something that you can afford within your budget”) but the lure of skyrocketing housing prices caused home buyers to pass on logic and bet on the come. There were poorly conceived loan products available. No one disputes that fact. However, the response to that fact has created a far worse outcome. Read more
San Diego Home Loans
Homebuyers spend twice as much time researching a new car purchase as they do investigating a home loan and they are soliciting fewer mortgage quotes than they did two years ago, according to a recent Zillow survey.
Borrowers who obtained a home loan in the past five years typically spent five hours researching their home financing options, which is unchanged from two years ago when Zillow first conducted this survey. Nearly one-third of borrowers say they spent less than two hours. However, consumers spent an average of 10 hours researching a new car purchase. Those who obtained a mortgage loan in the past five years solicited an average of three quotes, compared with four quotes reported in 2008. Read more
Taxpayers Supporting Foolish Homeowners
San Diego housing
No rational private firm would bankroll the current mortgage market. Government propping merely means using coercion to extract money from renters and other taxpayers to support foolish homeowners who bought during bubble times and craven banks who didn’t man up, admit their insolvency, and close their doors.
Push down the price of housing and more Americans will actually qualify for a home-loan without blind support from the government. Home-purchasing is not a right in America. If you can’t afford to buy a house, rent!
Get Government Out Of The Housing Market
Housing Market
I’m all for removing government intervention in the housing market. But I also understand the pain we might have to endure if we did it all overnight. Perhaps instead of constantly looking for new ways of intervening, the government ought to start down the road of reducing future intervention by making the future purchase of new homes (those that haven’t gone beyond the planning stage) not eligible for any type of government backed loans. If buyers can come up with enough down payment to satisfy lenders to provide a loan free of government support, fine. Otherwise, let buyers seek already built homes. This is critical to removing more new supply from a market stock full of foreclosures. This might have a positive effect on home values, while also starting us down the road of less government intervention. Read more
Home Mortgage Scandal
home foreclosures
Revelations about the sloppy home mortgage re-sale paperwork are emboldening homeowners and law enforcement officials in many states to question whether lenders rightfully hold the mortgage notes underlying foreclosed properties.
Distressed properties, many of which are in foreclosure, make up about a third of all home sales. Foreclosures are now going to slow to a crawl.
Now, Fannie Mae has been sending e-mails to real estate agents about putting off deals and removing houses from the market.
Home Mortgage Loan Demand Drops
home mortgage loans
The Mortgage Bankers Association just reported that its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended September 10 decreased 8.9 percent.
Mortgage applications for home loan refinancing fell for a second straight week, dropping to its lowest level since early August.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.47 percent, down 0.03 percentage point from the previous week.