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FHA-to-Conventional Refinance: How to Drop Mortgage Insurance Once and For All

While refinance applications seem to be slowing, there are still some good reasons to refinance your mortgage, even if interest rates aren’t currently at their best. First off, let me preface this with the fact that mortgage rates are spectacular. Yes, the 30-year fixed used to be in the mid-2% range, but a rate of… Read More »FHA-to-Conventional Refinance: How to Drop Mortgage Insurance Once and For All

The post FHA-to-Conventional Refinance: How to Drop Mortgage Insurance Once and For All appeared first on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

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Wells Fargo Hired 5,000 Employees to Handle Mortgage Workload

Last updated on August 9th, 2013

opportunity

San Francisco-based bank and mortgage lender Wells Fargo reportedly hired 5,000 employees to handle its ever-increasing mortgage workload, according to Bloomberg.

Wells Fargo CFO Howard Atkins said in an interview that the bank increased staff over the past couple of months to process its record haul of mortgage applications, which made it the top mortgage lender over Bank of America/Countrywide.

The company originated $101 billion in first mortgages during the first quarter, more than double the $50 billion in the fourth quarter and nearly half the $230 billion for all of 2008.

The correspondent/wholesale channel contributed $49 billion to that, practically double the levels seen in earlier quarters; home equity lines and loans, however, totaled just $1 billion.

All those applications led to the best mortgage origination quarter since 2003, contributing to the company’s record $3.05 billion net income in the first quarter.

But what happens once mortgage rates rise and refinance dries up, pushing volume back to more historical levels?

Sure it’s great that the bank took on thousands looking for work, but it seems to be only temporary employment.

And it’s wonderful that they’re upping their fulfillment areas, but what about staff in the company’s loss mitigation department?

“We remain focused on proactively identifying problem credits, moving them to nonperforming status and recording the loss content in a timely manner,” said Chief Credit Officer Mike Loughlin in a release.

“We’ve increased and will continue to increase staffing in our workout and collection organizations to ensure these troubled borrowers receive the attention and help they need.”

I doubt they’ve hired many employees in their workout and collection units, as they seem pretty focused on bringing in all those new mortgages with the low mortgage rates.

Shares of Wells Fargo were up $1.24, or 6.59%, to $20.05 in midday trading on Wall Street.

(photo: jasontester)

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

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Medical Collections Killing Refinance Frenzy?

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Everyone knows mortgage rates have plummeted in recent weeks, but what does that actually mean for those looking to refinance?

With tough guidelines in place and flagging property values, it could equate to a lot of spinning wheels and paperwork.

And one mortgage banker is arguing that erroneous medical collections showing up on potential borrowers’ credit reports are throwing another wrench in the deal.

“The tragedy is that the collection accounts, even those that have been paid in full, are lowering these individuals’ credit scores, often to the point that they either can’t qualify for a loan, or will have to pay higher interest rates if they do,” said Rodney Anderson of Rodney Anderson Lending Services.

According to Anderson, 45 percent of the 1,701 loan applications his company received between June and September involved borrowers with at least one medical collection.

And these collections can kill an applicant’s credit score (whether legitimate or not), even if the remainder of their credit profile is sound, eliminating the possibility of any mortgage rate relief.

Anderson noted that medical billing is “notoriously error-prone,” and as a result, has launched a petition to lessen the severity of medical collection-related credit dings, which he says can lower credit scores more than 100 points.

The petition essentially calls for a new federal law mandating the removal of a medical collection from a borrower’s credit report within 30 days of it being paid or settled, instead of it kicking around for seven years.

Medical billing is certainly an area that needs to be looked at, but the whole credit reporting industry is in need of some serious revamping, and could easily be blamed for a share of the mess were in now.

(photo: paulkeleher)

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

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Senator McCain Unveils Mortgage Refinance Plan

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U.S. Senator and presidential hopeful John McCain delivered a speech today at a small business roundtable in Brooklyn, unveiling his so-called “HOME” plan to tackle the ongoing housing crisis.

McCain applauded recent bipartisan efforts aimed at easing the mortgage crisis, but offered up his own solution that seems to be an amalgam of suggestions conjured up by the likes of the Senators Frank and Dodd and the Treasury.

It essentially allows good borrowers who fell behind on their mortgage payments to refinance into more affordable, federally guaranteed 30-year fixed mortgages while restructuring any debts if they’re upside down.

So mortgage lenders would need to voluntarily write down principal if borrowers were underwater, and any profit from a subsequent sale would be split amongst the lender, the borrower, and the government.

McCain also called on financial institutions to follow suit and get their balance sheets in order while shoring up capital, and said the DOJ must crack down on alleged abusers and bring justice to those who contributed to the housing mess.

That said, it’s likely the HOME loan program will only be available for those borrowers who filled out loan applications honestly, without fudging income and asset numbers (debt-to-income ratio) to get more house than they could afford.

It’s not really a new concept, but McCain’s version could be less of a “bailout” if he chooses to focus solely on those who were led astray by mortgage brokers, loan officers, banks, and lenders.

In related news, the Senate voted 84-12 in approval of the controversial bipartisan housing bill.

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

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MBA Ups 2009 Mortgage Forecast by $800 Billion

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More good news…for loan originators.  The Mortgage Bankers Association increased its 2009 mortgage lending forecast by $800 billion to $2.78 trillion thanks to the expected refinance bonanza.

The group now expects refinancing to total $1.96 trillion in 2009 and purchase originations to ring in at $821 billion.

The refinance figure is up from an estimated $765 billion in 2008, while purchase money mortgage originations were actually revised downward from $851 billion, below the 2008 estimate of $854 billion.

Total originations could rise to the fourth-highest level on record (behind only 2002, 2003, 2005), thanks to an unprecedented drop in interest rates, spurred by the Fed’s move to scoop up mortgage-backed securities and treasuries.

“While the Fed has not announced that it is targeting specific rates for either 10-year Treasury rates or rates on 30-year fixed-rate mortgages, the effect of having the Fed bid in the market for a sustained period is enough to create a refinance incentive for a tremendous number of homeowners,” said Jay Brinkmann, the MBA’s chief economist.

“The vast majority of mortgages originated before the latter part of 2008 are probably going to have at least a 50 basis point refinance incentive for at least the next several months, with mortgage rates hitting lows not seen since the early 1950s and late 1940s.”

Of course, only borrowers with home equity, solid credit scores, and verifiable income will be be able to take advantage of the low, low mortgage rates.

Underwater borrowers will still be left out in the cold, and jumbo loan-holders will have a more difficult time securing financing, though Bank of America is reportedly rolling out a new program to facilitate such deals.

Another concern is the capacity to deal with the increase in refinance transactions, as staff levels were cut to match soft demand last year, coupled with the fact that many warehouse lenders have pulled out.

Loan originations this year will be “almost entirely” backed by Fannie Mae, Freddie Mac or the FHA, in contrast to previous record origination years dominated by jumbo and subprime loans.

(photo: mattmcgee)

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

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Bank of America Refinancing Under Making Home Affordable Program

Last updated on February 2nd, 2018

bankofamericarates

Bank of America said today it has begun processing refinance applications under the Treasury’s “Making Home Affordable” program, with nearly 200,000 customers contacting the company to determine eligibility.

“Combined with historically low interest rates, this program has generated significant interest from borrowers seeking the benefit of lower mortgage payments,” said Barbara Desoer, president of Bank of America Mortgage, Home Equity and Insurance Services, in a release.

“We are proud to be one of the first lenders to take loans from application to closing under the Treasury’s plan, providing the opportunity for more Americans to save money on their monthly mortgage payments and supporting efforts to stabilize the nation’s housing market.”

However, the bank seems to be focused on specific applicants, namely those with Bank of America or Countrywide serviced loans and no mortgage insurance on their current loans.

The bank said additional customers will be served “as systems become operational.”

In the next two weeks, the company expects to begin offering trial loan modifications under the Treasury Department’s “Home Affordable Modification” program, and has extended its foreclosure moratorium on potentially eligible loans until April 30.

Bank of America, since snatching up former top mortgage lender Countrywide Financial, services roughly one out of five mortgages in the United States.

I’ve been told by my friends in the industry that Bank of America has been offering mortgage rates much lower than the competition, effectively pricing out them out in the process.

The company is also planning to roll out a jumbo mortgage program focused on loan amounts between $730,000 and $1.5 million, with 30-year fixed mortgage rates beginning in the upper five-percent range.

Apparently there are profits to be made in mortgage.

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

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Obama Urges Americans to Refinance Mortgages

refinance now

During a Housing Refinance Roundtable today, President Obama urged homeowners to take advantage of the record low mortgage rates currently on offer.

He made the remarks while sitting with a number of families who were able to refinance their mortgages after struggling with unaffordable mortgage payments (what about all those who are too far underwater or hold jumbo loans?).

“What you’ve seen now is rates are as low as they’ve been since 1971,” Obama said. “Three-quarters of the American people get their mortgages through a Fannie Mae-Freddie Mac qualified loan.”

“And as a consequence of us being able to reduce the interest rates that are available, we have now seen some extraordinary jumps in the rate of mortgage refinancings.”

“We’ve already seen a substantial jump — 88 percent increase in refinancings over the last month. We’ve seen Fannie Mae refinance $77 billion of mortgages in March, which is their highest volume in one month since 2003. And rates on 30-year mortgages have dropped to an all-time low of 4.78 percent.”

He noted that the families who accompanied him at the event were able to achieve more sustainable monthly mortgage payments via refinancing, and estimated that the average family could save $1,600 to $2,000 a year if they took advantage of the offers currently on the table.

“So the main message that we want to send today is, there are 7 to 9 million people across the country who right now could be taking advantage of lower mortgage rates.”

He added that the Administration is also working to implement some “additional phases of the program,” such as its loan modification program for “responsible homeowners who made their payments” but fell behind because of job loss, sickness, etc.

“The main message we want to send today is, is that the programs that have been put in place can help responsible folks who have been making their payments, who are not looking for a handout, but this allows them make some changes that will leave money in their pockets and leave them more secure in their homes.”

Obama plugged the MakingHomeAffordable.gov website several times throughout his address to ensure homeowners actually knew where to go to get help.

He also warned against loan modification scams, urging homeowners to steer clear of companies that demand money for services upfront.

I’m somewhat curious if we’re helping the banks/mortgage lenders more than the homeowners here because private label mortgages seem to be at the root of the problem, not Fannie/Freddie loans.

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

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Rate and Term Refis Reduce Mortgage Payments by Billions

Last updated on November 30th, 2011

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Cash out refinancing hit its lowest point since late 2003 last quarter, but that’s not necessarily bad news.

During the second quarter, just 38 percent of refinances resulted in loan sizes five percent or higher than the previous balance, while 16 percent resulted in a lower loan amount, according to Freddie Mac.

That compares to 43 percent and 13 percent, respectively, a quarter earlier, meaning more borrowers are obtaining lower mortgage rates without sucking out home equity (that’s a good thing).

“A big part of the benefit of refinancing is the lower monthly payment that borrowers enjoy – the payment savings from ‘rate-and-term’ refinancing done during the quarter is about $160 a month on a $200,000 loan,” said Freddie Mac chief economist Frank Nothaft, in a statement.

“But these borrowers also accumulate principal faster than they would have with a higher-rate loan even after taking into account the longer terms of the new loans. In aggregate, second-quarter refinancers will have about $200 million additional principal paydown after a year than they would have under their old loans.”

In total, refinances carried out during the second quarter will reduce mortgage payments by $3.4 billion over the coming year, providing relief for many on the brink.

Half of the borrowers who refinanced their loan over the past three months lowered their mortgage rate by at least 20 percent, with the new rate about 1.25 percentage points below the old rate.

The lack of cash out refinancing was attributed to both stricter guidelines for such lending and a lack of available equity to draw from.

Rates are still historically low, but not at the record low levels seen back in April.

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

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Home Affordable Refinance Program Extended

refinance

Despite ongoing criticism and a number of recent bills aimed at ending several government mortgage assistance programs, the Home Affordable Refinance Program (HARP) has been extended by one year, per the Federal Housing Finance Agency.

The FHFA announced Friday that HARP’s original expiration date of June 30 of this year would be pushed back to June 30, 2012.

Additionally, Freddie Mac will exempt HARP mortgages from their recently announced pricing adjustments and Fannie Mae will conform their eligibility date to May 2009.

Through 2010, government mortgage financiers Fannie Mae and Freddie Mac purchased or guaranteed more than 6.8 million refinanced mortgages.

Of these, 621,803 were HARP refinances with loan-to-value ratios between 80 percent and 125 percent.

This total is up from 190,180 in 2009, when HARP first began.

HARP allows those with underwater mortgages (up to 125% loan-to-value) owned or guaranteed by Fannie Mae and Freddie Mac to refinance to take advantage of the historically low mortgage rates on offer.

The loan program actually seems pretty worthwhile, given the fact homeowners must be current on their mortgage payments and demonstrate the ability to repay their mortgages.

The Home Affordable Modification Program, which makes up the other half of the Making Home Affordable Program, is expected to be on the chopping block later this week, mainly because of poor performance (HAMP will only prevent 700,000 foreclosures) and high costs.

Of course, such bills to halt the program are likely just political, as President Obama has already noted that bills to end similar programs would be vetoed if they happened to make it to his desk.

The only possibility could be some fine-tuning to the existing programs, but even that is doubtful.

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

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Is the Refinance Boom Finally Over?

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Refinance demand fell for the sixth straight week, indicating an end to the boom that began in early 2009, according to the latest survey from the Mortgage Bankers Association.

Overall, mortgage application volume was off 18.6 percent on a seasonally adjusted basis during the week ending December 17.

On an unadjusted basis, it was 20.0 percent lower than one week earlier.

The refinance index plummeted 24.6 percent to its lowest level since April 30, while the seasonally adjusted purchase mortgage index decreased 2.5 percent.

The unadjusted purchase index was off 4.9 percent compared with the previous week and 8.4 percent lower than the same week a year ago.

“Refinance application volume dropped sharply this week as mortgage rates held near six month highs,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.

“Purchase applications fell for a second week, with the level of applications little changed over the past month, indicating that home sales are likely to remain relatively weak over the next few months.”

Meanwhile, mortgage rates were little changed, with the popular 30-year fixed-rate mortgage averaging 4.85 percent, up from 4.84 percent a week earlier.

The 15-year fixed climbed to 4.22 percent from 4.21 percent, and the MBA no longer tracks the one-year adjustable-rate mortgage, which fell out of favor with borrowers long ago.

The mortgage rates above are good for mortgages at 80 percent loan-to-value – but pricing adjustments can lower or raise your actual interest rate.

Keep in mind the MBA’s weekly survey covers more than half of all retail, residential loan applications, but does not factor out duplicate or rejected apps, which have surely risen since the mortgage crisis got underway a few years back.

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