Mortgage Rate News

In the wake of the passage of Wall Street Reform, which many opponents have criticized Capitol Hill for failing to deal with the future of Fannie Mae and Freddie Mac, the Obama Administration is beginning to present the broad outlines of how the future of the GSEs will be determined. In a letter released Tuesday , David H. Stevens, acting commisioner of the FHA, said that the question of reforming the GSEs is "not if, but when." The Obama administration, he said, has made it clear from the beginning that the current structure of the government's role in the housing finance market is unsustainable and unacceptable, but winding down Freddie and Fannie abruptly would destabilize an already fragile housing industry and put the loans already on the books of these institutions at even...(read more)

As we have pointed out over the last few weeks , America has a homelessness problem; over a million individuals and families are temporarily or chronically homeless. While the statistics don't fully address this aspect, there is at least anecdotal indication that some of these people are in shelters or on the street because their own home or one they were renting was foreclosed. There is also purely anecdotal information that a lot more homeowners are hanging on by their fingernails; savings and unemployment exhausted, legal remedies gone, as lenders churn through a backlog of pending foreclosures and subsequent evictions. In other words, the problem could well get worse. It is also clear that the country is deep into what we are going to abuse poetic license to call a "home problem...(read more)

HUD is preparing to implement a few new policies that will no doubt affect your pipeline/loan application process. Last week, HUD and the FHA invited public comment on three of those policy changes, which are part of FHA's strategy to "strengthen their capital reserves". The proposed changes which are either tweaks to other recent revisions or have been telegraphed by FHA and HUD in earlier Congressional testimony, notices to lenders, or press releases will: Update the combination of credit and down payment requirements for new borrowers Reduce allowable seller concessions from six to three percent. Tighten underwriting standards for manually underwritten loans FHA has been scrambling to strengthen its financial situation since an audit late in 2009 showed that the capital ratio...(read more)

The Federal Reserve has released the Beige Book The Beige Book is a compilation of anecdotal information and data on current economic conditions across the country. The findings are NOT THE VIEWS OF FEDERAL RESERVE OFFICIALS ...instead, each Federal Reserve bank interviews key business contacts, economists, market experts, and other sources in their specific district. This report is published eight times a year. They call it the Beige Book because its Beige . This edition was prepared at the Federal Reserve Bank of St.Louis and is based on information collected on or before July 19, 2010. Below is a summary of the findings and a few excerpts on bank lending and housing. I called attention to some of the more important observations. Economic activity has continued to increase, on balance, since...(read more)

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 23, 2010. The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a low mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out a lower monthly payment. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (creates more consumer spending or allows debtors to pay down personal liabilities like credit cards). A falling trend of purchase...(read more)

The Federal Housing Administration's Mortgagee Review Board (MRB) has revealed a list of over one thousand lenders against whom it has taken action over the last several months for violations of the agency's program requirements. Infractions ranged from failing to notify the Department of Housing and Urban Development of changes in license status or office closures, improperly displaying FHA seals on company websites or advertising materials, and using non-employees to process loans, to failing to properly process or document credit, employment and appraisal information. The actions taken by the Board included permanent withdrawal of FHA lending authority, suspensions, and fines ranging into the high six digits. "Lenders should know by now that FHA will not tolerate fraudulent...(read more)

Much to the surprise of many pundits, the recently signed Financial Reform Bill did not outline guidelines for regulators to begin crafting the future of Fannie Mae, Freddie Mac, and Ginnie Mae. Although this was viewed as an oversight by most, it was the right move because it will allow our political and financial leadership to focus on FIXING THE BROKEN HOUSING FINANCE SYSTEM In April, Treasury outlined their "Housing Finance Reform" objectives . The administration's proposals will be designed to achieve four objectives. Mortgage credit should be available and distributed on an efficient basis to a wide range of borrowers. A well-functioning housing market should provide affordable housing options, both ownership and rental, for low and moderate-income households. Consumers...(read more)

Standard and Poor's has released the Case-Shiller Home Price Index .... 09:00 27Jul10 RTRS -US MAY HOME PRICES IN 20 METRO AREAS RISE 0.5 PCT SEASONALLY ADJ (CONSENSUS 0.2 PCT) VS 0.6 PCT IN APRIL - S&P/CASE-SHILLER 09:00 27Jul10 RTRS -US MAY 20-METRO AREA HOME PRICES RISE 1.3 PCT (CONSENSUS 0.3 PCT) VS 0.9 PCT IN APRIL - S&P/CASE-SHILLER 09:00 27Jul10 RTRS -US MAY 20-METRO AREA HOME PRICES RISE 4.6 PCT (CONSENSUS 4.0 PCT) FROM YEAR AGO - CASE-SHILLER 09:00 27Jul10 RTRS -US MAY HOME PRICES IN 10 METRO AREAS UP 0.5 PCT SEASONALLY ADJUSTED VS APRIL - CASE-SHILLER 09:00 27Jul10 RTRS -US HOME PRICES IN 10 METRO AREAS RISE 1.2 PCT IN MAY VS 0.7 PCT IN APRIL - S&P/CASE-SHILLER 09:00 27Jul10 RTRS -US MAY HOME PRICES IN 10 METROPOLITAN AREAS UP 5.4 PCT FROM YEAR AGO - S&P/CASE-SHILLER...(read more)

The Census Bureau and the Department of Housing and Urban Development have released New Residential Sales data for June 2010. Excerpts from the Release... Sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000 . This is 23.6 percent above the revised May rate of 267,000, but is 16.7 percent below the June 2009 estimate of 396,000 . The median sales price of new houses sold in June 2010 was $213,400.... The average sales price of new houses sold in June was $242,900.... The seasonally adjusted estimate of new houses for sale at the end of June was 210,000. This represents a supply of 7.6 months at the current sales rate. Plain and Simple : New Home Sales in June rebounded from historic lows in May. Attention should be given to the fact that May survey...(read more)

The National Association of Realtors today released Existing Home Sales data for June 2010. HERE is the methodology for data collection Excerpts from the release.... With the scheduled closing deadline for the home buyer tax credits, existing-home sales slowed in June but remained at relatively elevated levels, according to the National Association of Realtors®. Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009 . In addition, existing single-family home sales rose in 12 of the 19 areas from a year ago while two were unchanged. Single-family...(read more)

The second edition of the new Obama Administration Housing Scorecard issued yesterday shows that borrowers continue to enter into both trial and permanent modifications under the Treasury Department's Home Affordable Modification Program (HAMP), but they are also continuing to drop out of the program in high numbers after failing to meet program terms. The Scorecard, first issued last month , is an adjunct to the monthly report on HAMP and is intended to reflect the overall state of the nation's housing market. In addition to a summary of statistics on HAMP, the scorecard incorporates key housing market indicators and highlights of housing recovery efforts. The heart of the report, however, continues to be the operations of HAMP . Since the last scorecard was issued in June, 38,700...(read more)

The Mortgage Bankers Association today released its Weekly Mortgage Applications Survey for the week ending July 16, 2010. The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a low mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out a lower monthly payment. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (creates more consumer spending or allows debtors to pay down personal liabilities like credit cards). A falling trend of purchase...(read more)

The U.S. Census Bureau and the Department of Housing and Urban Development today jointly released New Residential Construction survey statistics for June 2010. Housing Starts data estimates how much new residential real estate construction occurred in the previous month. New construction means digging has begun. Adding rooms or renovating old ones does not count, the builder must be constructing a new home (can be on old foundation if re-building). Although the report offers up single family housing, 2-4 unit housing, and 5 unit and above housing data, single family housing is by far the most important as it accounts for 70-80% of total home building. Building Permits data provides an estimate on the number of homes planning on being built. This indicator basically tracks how much future construction...(read more)

Independent mortgage bankers and subsidiaries saw a sharp drop in their profits in the first quarter of 2010 according to data released today by the Mortgage Bankers Association (MBA). The average profit made on each loan was $606, a decrease of 32 percent from the $890 that was earned in the fourth quarter of 2009 and a 44 percent decline from the $1,088 that was reported in the first quarter of 2009. 75 percent of the firms in the study posted pre-tax net financial profits in the first quarter 2010, compared to 76 percent in the fourth quarter of 2009. Survey respondents reported a drop in the average production volume to $157.8 million from $216.5 million in the previous quarter. MBA reported that the v olume decrease was the main driver behind the decline in profitability . As volume dropped...(read more)

FHA Commissioner David Stevens wrote to the industry today . He discusses over exuberant underwriting standards, lender accountability, and sustainable homeownership. Below are his comments. I called attention to specific points of interest... ------------------------------- After touring the country and talking to lenders over the past few weeks, I think it is important to take a moment and emphasize to all lenders the important role they play in this housing market, particularly in their role as responsible stewards of underwriting quality loans that will perform sustainably over time . In some cases I am seeing activities that reflect an over exuberance in the marketplace to find ways to increase loan origination revenues . Some may say it’s only “a few opportunistic lenders...(read more)