[Rumor] Wells Fargo To Discontinue Propel Cards [Last Week]

According to reddit user LA-and-SF (citing internal document) Wells Fargo will be discontinuing the Propel cards on 4/19/21. It is expected that these cards will no longer be available to new cardholders but existing cardholders will be grandfathered. The Wells Fargo Propel World card is still available for sign up over the phone, it offers a 40,000 point bonus and is ranked one of our top credit card sign up bonuses. I’d recommend you sign up for this card ASAP if you don’t already have it as it could easily be pulled before that 4/19/21 date.

Source: doctorofcredit.com

Wells Fargo Propel Credit Score

Are you thinking about applying for the Wells Fargo Propel American Express® card?

The minimum recommended credit score for this credit card is 700.

How to Increase Your Chances of Getting Approved for Wells Fargo Propel

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Slowing Mortgage Market Could Lead to Looser Lending

The forecast for the 2013 residential mortgage market wasn’t all that optimistic.

Back in December, the Mortgage Bankers Association said it expected refinance volume to slip to $785 billion from $1.2 trillion in 2012, while purchase money mortgage activity was slated to increase only slightly from $503 billion to $585 billion.

After all, there are only so many refinances out there, and many were originated in earlier years. Mortgage rates have pretty much idled over the past year, so the eligible pool probably hasn’t grown much.

Additionally, despite an anticipated increase in purchase activity, it’s clear that inventory constraints continue to make it difficult to purchase a home.

Cash buyers continue to control the market as well, so even if home purchases rise, lenders aren’t necessarily getting a piece of the action.

At the same time, more and more banks and lenders are positioning themselves to take part in the burgeoning mortgage market.

For example, lenders that didn’t even exist prior to the latest mortgage crisis, such as PennyMac (ex-Countrywide execs) or OneWest Bank (IndyMac’s ashes), have entered the fray, and old names, such as Nationstar and Impac, have risen from the dead.

Meanwhile, the big guys, like Bank of America, Capital One, Chase, Discover, and Wells Fargo, continue to compete for market share.

Bad for Lenders, Good for You?

This sounds like a recipe for disappointment if you’re a lender, not to mention possible layoffs, but there may be a silver lining for consumers.

If lender competition continues to increase, and the pool of potential mortgages continues to shrink or remain relatively flat, there’s a good chance lenders will begin to take on more risk.

Assuming they do, there will be plenty more options for homeowners going forward, as opposed to the plain vanilla stuff that has been on offer for years now.

So instead of requiring a credit score north of 720, or a massive amount of home equity to take cash out, homeowners and prospective buyers may be greeted with more reasonable underwriting guidelines.

For those with a property, or able to get their hands on one, it could make life just a little bit easier.

Additionally, as home prices rise, existing homeowners will have more equity to play with, which could lead to an increase in HELOC lending.

The maximum loan-to-value ratios for such loans may also rise if decent home price appreciation is projected to be in the cards.

A Slippery Slope?

The mortgage market is clearly not back to normal just yet. As mentioned, most of the lending is pure vanilla, meaning excellent credit score, full documentation, 20%+ down payment, and so forth.

This has led to criticism from housing market advocates, such as the National Association of Realtors, who have called for looser guidelines to spur lending and home sales.

But market participants will have to be careful not to repeat history in just 5-6 short years.

Sure, lenders aren’t going to return to originating no-doc loans with zero down financing overnight, but the lack of supply could tempt some to dip their toes in those waters again.

If more private capital funnels into the market and competition heats up, it’s only a matter of time before the return of Alt-A lending leads to the arrival of subprime, and then an eventual “situation.”

It will be especially interesting to see how lenders manage the expected uptick in mortgage rates.

Clearly homes will be less affordable if mortgage rates normalize just a little bit, so it’s only a matter of time before creative financing rears its ugly head again.

Let’s just hope it’s more creative, and less destructive this time around.

Read more: Will high quality mortgages prevent another housing bubble?

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

What Is a Lender Overlay?

Mortgage Q&A: “What is a lender overlay?”

If you’ve been studying underwriting guidelines recently to determine if you’re eligible for a mortgage, it’s important to understand that they can vary widely from bank to bank.

Even if you think you qualify based on the guidelines set forth by the FHA, USDA, VA, or Fannie Mae and Freddie Mac, you may be denied by an individual lender.

Let’s learn more about why this can happen and what you can do about it.

Different Mortgage Lenders Assume Varying Levels of Risk

lender overlay

  • Just like any other line of business out there
  • Mortgage lenders have varying risk appetites and specialties
  • Some will accept lots of risk in exchange for higher interest rates
  • While others will stick to more conservative lending even if they lose customers in the process

In a nutshell, mortgage lenders have different appetites for risk, along with different specialties, so what one lender will gladly approve, another may not touch with a 10-foot pole.

One important concept you should familiarize yourself with is the “lender overlay,” which is essentially an expanded guideline (or set of guidelines) on top of what Fannie Mae, Freddie Mac, or the FHA/VA will allow.

Think of it as a second coat of paint, applied after the primer. The primer is the bare minimum necessary, but you don’t see people driving around too often without that second coat.

The same goes for mortgages. Fannie Mae, Freddie Mac, and the FHA/VA all set underwriting guidelines for residential mortgages, but they don’t actually lend directly to consumers.

Their job is to purchase and/or securitize the home loans that fit their guidelines, which is why they exist to begin with. Essentially, to keep the mortgage market liquid.

By doing so, lenders are able to sell their loans more easily, knowing they fit certain pre-determined criteria, which allows them to originate more loans via that increased liquidity.

When it comes down to it, individual banks and lenders are the ones doling out loans, so they impose their own rules on top of those guidelines, known as overlays.

They do this to protect themselves from costly buybacks, assuming the loans sour after being sold, and to remain in good standing with their selling partners.

FHA Says Yes, We Say No!

  • Just because your loan meets FHA underwriting guidelines
  • Doesn’t mean the bank is willing to lend to you
  • They may have their own buffer in place
  • That goes above and beyond what the FHA will accept

You may have read that the FHA will accept credit scores as low as 500 as long as you’re able to put 10% down.

While this is true as far as the FHA goes, the particular lender you may be speaking with could require a minimum FICO score of 640.

What gives? That’s a 140-point difference, which is certainly a significant margin.

Well, this happens to be their comfort zone. Perhaps they’ve looked at default data and found that borrowers with credit scores below 640 miss mortgage payments frequently.

If they want to maintain a good relationship with the FHA, they’ll throw in that credit score overlay to ensure they only make quality loans, even if the FHA doesn’t require them to do so.

This reduces buyback risk and ensures they’ll continue to be able to do business with the FHA in the future.

After all, the last thing a lender wants is to lose its ability to make certain loans, assuming they plan to sell them off to the FHA, or Fannie and Freddie.

The opposite was true for Wells Fargo, which in the past imposed a minimum credit score of 600 for FHA loans, before succumbing to pressure from HUD to lower their minimum credit score to 500, assuming other criteria were met.

Ultimately, it’s tough for lenders because they may need to satisfy affordable housing goals while also ensuring the loans they make aren’t significant default risks.

There Are All Types of Lender Overlays

  • There are a countless number of different lender overlays
  • Banks and lenders impose them to ensure default levels stay in check
  • The most common overlay is for minimum credit score
  • They’re also typical for things like max LTV or max DTI

The credit score example is just one of the many lender overlays you’ll come across – there are literally hundreds of overlays required by individual banks and lenders throughout the country.

They range from credit score (most common), to max loan-to-value, to max debt-to-income ratio, and much more.

For instance, a streamline refinance may have no appraisal or credit score requirement, but a specific lender may still want a certain minimum score and an appraisal.

Additionally, the guidelines may indicate that you can get a new mortgage just days after a short sale if you remained current on payments, but most lenders will impose overlays to deny you.

Lenders may also restrict the type of loan you can select, such as an adjustable-rate mortgage in certain situations.

And even those nifty solar panels on the roof could present a problem if the lender doesn’t want to deal with the associated solar panel lease.

In every situation, the lender is looking to mitigate risk to ensure loan quality is upheld and maintained.

Look for Lenders Without Overlays

  • Lender overlays are very common in the mortgage world
  • But some lenders advertise the fact that they don’t impose them as a selling point
  • While they may be able to fund your loan, pay attention to pricing to ensure it’s a good deal
  • It might make more sense to improve your borrower profile before applying for a home loan

Now you should have a better concept of the master guidelines issued by Fannie, Freddie, and the FHA/VA versus those imposed by individual lenders.

Ultimately, it’s important to understand that all lenders won’t take on the same risks.

So if one lender denies you, there’s a chance another will approve you, and vice versa.

Unfortunately, it’s difficult to dig through all the guidelines and overlays of each bank and lender out there.

If you have a particularly difficult loan scenario, it may be wise to enlist a mortgage broker who can shop your loan with multiple banks at once to avoid any potential roadblocks.

This will save you spinning your wheels as brokers often know who to call to find a home for your loan.

There’s usually always a lender willing to do what another won’t, though the mortgage rates can and will vary.

Perhaps the best thing you can do as a borrower is minimize situations where overlays may surface.

In other words, keep your credit score in good shape, ensure you maintain a steady job, keep money in the bank, and stay current on your rent or mortgage.

That way it won’t matter what the guidelines are – you’ll be good to go regardless of where you apply.

Source: thetruthaboutmortgage.com

Purchase Applications Grab Majority Share of Mortgage Market in July as Refinances Fade Away

Posted on August 22nd, 2013

There’s been a lot of fuss about the refinance market drying up lately, and we now know it’s not just noise.

Last month, purchase-money mortgages gobbled up the majority share of the overall mortgage market, according to the latest Origination Insight Report from Ellie Mae.

The company noted that purchases accounted for 53% of applications in July, up from 49% in June and 42% a year earlier.

During 2012, the purchase share averaged a paltry 38% as refinances took center stage, helped on by ridiculously low mortgage rates and the expansion of the successful HARP initiative.

The worst month for purchases in recent history occurred during January of this year, when they accounted for just 27% of the mortgage market.

Since then, they’ve steadily climbed higher into the traditional home buying season, while refinances have retreated amid higher rates.

Refinances Peaked in January with 73% Share

purchase share

What a difference half a year makes. Refinances snagged an astonishing 73% of the mortgage market in January, but since then have seen sequential declines just about every month.

The only bright spot for refis was HARP-related, with high loan-to-value loans (95%+) rising three percent from a month earlier.

However, market watchers expect the overall numbers to move in much the same direction for a while, with refinances eventually slipping to a sub-40% share in 2014.

Unfortunately, most homeowners have already taken advantage of the low rates, with only 55% of existing mortgages currently at above-market rates (not all stand to benefit from a refinance).

[When should you refinance a mortgage?]

Then there’s those who procrastinated and missed the boat, with many presumably considering adjustable-rate mortgages as an alternative.

That’s not just speculation – the ARM-share increased to 5.2% of closed loans in July, up from 4% in June and 2.1% back in January.

Meanwhile, the somewhat en vogue 15-year fixed is beginning to lose its luster, with only 15.5% of borrowers opting for a short-term fixed loan, down from 16.5% a month earlier and 16.9% at the start of the year.

This market shift is also obliterating the mortgage industry, with layoffs beginning to make the headlines seemingly every day.

The latest causalities come from top mortgage lender Wells Fargo, which announced another 2,323 job cuts nationwide, including 365 in Birmingham, 330 in offices around Orange County, CA, and another 292 in Phoenix.

These layoffs are on top of additional job cuts announced last month.

Many other banks have been slashing mortgage workforces as well, which is no surprise given the sharp drop-off in origination volume.

It’s so bad that it almost feels like 2007 all over again, with the bad news forcing me to work on my list of layoffs and closures much more these days.

Credit Is Easing in Mortgage Land

credit quality

Despite that, credit conditions seem to be easing for home loans. Last month, the average FICO score for a closed loan was 737, down from 742 a month earlier and 749 in January. The average FICO score for all of 2012 was a very high 748.

Additionally, only 75% of closed loans in July had FICO scores of 700 or higher, compared to 83% a year ago.

In other words, credit standards seem to be falling as mortgage lenders grapple with lower production numbers, whether that’s correlated or not.

For denied applications, the average FICO score was 702 last month, which probably wasn’t the sole reason the loan was declined.

Lastly, both LTVs and DTI ratios increased in July, signaling credit easing and/or a lower quality borrower. But it certainly helps now that both mortgage rates and home prices are much higher than they once were.

Of course, this shift also kind of reminds me of the previous crisis, though nowhere near that same level…yet.

Read more: A Lack of Qualified Buyers Could Hit the Real Estate Market

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Mortgage Jobs on the Line as Rates Rise

There’s been plenty of debate lately about the potential consequences of rising mortgage rates, with an outright housing recovery derailment topping the list of concerns.

However, most economists have been quick to downplay the risks of rising rates, which have shot up from near-record lows to two-year highs in a matter of months.

In fact, many of these pundits simply expect refinance activity to slow, while the housing market recovery continues on its merry way, in spite of decreased affordability.

Of course, the experts have made some concessions along the way; most recently, Fannie Mae’s Vice President of Applied Economic and Housing Research argued that higher mortgage rates should slow purchase volume and result in a larger adjustable-rate mortgage (ARM) share.

At the same time, Fannie’s researcher didn’t think higher interest rates would lower home prices, but rather only slow the speed of appreciation, which has been on a tear lately.

Then there’s Ara Hovnanian of K. Hovnanian Homes, who argues that higher mortgage rates will just lead to smaller home purchases, and at worst, the purchase of a townhouse if affordability takes a serious dive. Don’t worry, he’s got a smaller home design in the pipeline…

Here Come the Layoffs

All that debate aside, one thing is for certain. There will be fewer mortgage jobs going forward. I anticipated this in my 10 predictions for mortgage and housing in 2013.

It wasn’t hard – I knew mortgage origination forecasts were being slashed going into the year, with refinance volume expected to fall from $1.2 trillion last year to $785 billion in 2013, per the MBA.

Meanwhile, purchase-money mortgage volume was only slated to rise from $503 billion to $585 billion, probably not enough to add many new positions, or offset the fallout in the refinance department.

With volume predicted to be well off recent levels, it didn’t take a genius.

And seeing that rates have increased a lot more than projected, those numbers may turn out to be even worse. For the record, I was wrong about mortgage rates. I expected sideways movement for much of the year. I concede.

Anyway, the mortgage layoffs have already begun, with Wells Fargo announcing late last week that it was cutting 350 employees nationwide as a result of higher home loan rates.

Wells Fargo spokesperson Angie Kaipust said increased demand during the low interest rate environment enjoyed over the past few years meant it could “staff up,” but now that rates are a bit more realistic, headcount must align.

The San Francisco-based bank plans to cut jobs in a number of cities, including Des Moines and Minneapolis.

Then there’s Citi, which reportedly opened a sales facility in Danville, Illinois after demand for mortgage refinances surged. Sadly, the unit is being shuttered, and roughly 120 employees will be laid off.

These are but two examples. Many smaller shops are probably slashing their workforces as well, though such news won’t make the headlines.

2014 Mortgage Origination Forecasts Point to Even Fewer Jobs

The outlook isn’t exactly bright for 2014 either, according to the latest housing forecast from Fannie Mae, so expect more heads to roll as volume continues to dwindle.

Yesterday, the GSE noted that residential lenders are expected to originate just $1.07 trillion in loan volume in 2014, down from $1.65 trillion this year, and about half the $2.03 trillion seen in 2012.

The refinance share, which was 73% in 2012, is expected to fall to 62% this year, and to just 31% in 2014. Only the advent of HARP 3 could make a meaningful impact at this point, and it doesn’t seem likely now.

Fannie expects purchase activity to rise from $619 billion this year to $741 billion in 2014, while refinance activity is forecast to plummet from just over $1 trillion to $331 billion.

Clearly few loan officers will be needed to handle that sharp drop in demand.

Update: It’s starting to feel like 2007 all over again – I’m receiving tips again about branch closures and layoffs. The latest being, “Residential Finance of Columbus Ohio hacked 19 branches yesterday and a regional manager.”

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Don’t Choose a Mortgage Lender for Their Sales Gimmick

Last updated on January 9th, 2018

As competition heats up, banks and lenders will likely ramp up efforts to get their hands on your mortgage, using all types of pitches and gimmicks to separate themselves from the crowd.

But mortgages aren’t cool or exciting, so any funky stuff they come up with to sell you a mortgage is probably just a load of baloney.

For example, you might be offered reduced closing costs, a relationship discount, or a stuffed animal. Okay, that last one may only be a half-truth if you bring your kid with you to sign the paperwork.

You may also be told that certain fees will be waived, or that they’ll lock your mortgage for free. Sadly, most of these “fees” don’t tend to exist in the real world, so you have to question whether you’re actually getting anything at all.

All the major players do it, including Wells Fargo, Capital One, Chase, Citi, Discover, Costco, etc.

The smaller guys probably don’t offer special discounts or fancy marketing, though that doesn’t mean they won’t throw some nonsense your way in a different form.

Look at the Big Picture

When shopping for a mortgage, it’s important to look at the interest rate and the fees you must pay to acquire that rate.

If you’re focused on $500 off closing costs, as opposed to your mortgage APR, you’re missing the point.

The same goes for a relationship discount. If you already do business with the bank that is offering to close your mortgage, and they agree to shave .125% (an eighth) off your mortgage rate, make sure it’s lower than competitors’ straight up rates.

Perhaps a good analogy to put this in perspective is the insurance industry, which is notorious for offering discounts for all types of silly stuff.

These days, the discounts are endless, and the marketing brains seem to be working around the clock to come up with more inane discounts to peddle to consumers.

But even if you receive 100 discounts, if your overall premium is still higher than what some no frills insurer is offering, the discounts mean squat.

It’s the same deal for mortgages – if some lender offers me a relationship discount, $1000 off my closing costs, or a stuffed pony for my niece, it won’t mean a thing if another lender is offering me a lower rate with fewer fees.

Get a Discount If We Screw Up

Perhaps the worst of the “discounts” are the ones that are only applied if the lender screws something up. Seriously?

Do you really want to go with a lender who will offer you money if they can’t get the job done on time?

That sounds like little consolation and a whole lot of stress, not to mention the fact that you’ll probably need to argue with them to get your credit.

So let’s get this straight – they fail to close your loan on time, and then offer you a credit, which will undoubtedly require you to send in even more paperwork and plead your case.

Good luck explaining that it was indeed the lender who was at fault, and not you or a third-party.

At the end of the day, you should do your best to avoid being sucked in by these marketing gimmicks, as enticing as they may sound.

Chances are the discounts are “priced in” somewhere else, whether it’s via a higher mortgage rate or added junk fees.

This is not to say that you should avoid the big banks in favor of a mom and pop broker shop, but you should take a hard look at a variety of offers to cut through the fluff.

Read more: Watch out for the adjustable-rate mortgage pitch.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

[Rumor] Wells Fargo To Discontinue Propel Cards

According to reddit user LA-and-SF (citing internal document) Wells Fargo will be discontinuing the Propel cards on 4/19/21. It is expected that these cards will no longer be available to new cardholders but existing cardholders will be grandfathered. The Wells Fargo Propel World card is still available for sign up over the phone, it offers a 40,000 point bonus and is ranked one of our top credit card sign up bonuses. I’d recommend you sign up for this card ASAP if you don’t already have it as it could easily be pulled before that 4/19/21 date.

Source: doctorofcredit.com