Friday, December 11, 2009
Clear Capital Reports Gains in Home Prices across the Country
In yet another sign that housing markets are on the mend, Clear Capital reported Wednesday that values of residential properties are posting increases throughout the country, led by a resurgence in the Rust Belt. The company said seasonal softening puts the nation's gains at a modest 1.4 percent for the rolling quarter ending in November. The numbers in the nation's Western region are particularly encouraging, reflecting moderate price gains among even its largest markets with high levels of REOs.
Geithner Extends TARP but Narrows Focus
Treasury Secretary Timothy Geithner has decided to tack on another nine months to the government's controversial $700 billion bailout program. In a letter Wednesday to the heads of the Senate and House, Geithner said he is formally extending the Troubled Asset Relief Program (TARP), which was set to expire at the end of this year, through October 3, 2010. The Treasury secretary assured lawmakers, though, that any new commitments made next year would be limited to housing, small business lending, and the securitization market.
Foreclosure Activity Recedes for Fourth Straight Month
The foreclosure tide appears to be subsiding, according to the latest numbers from RealtyTrac. The company said Thursday that foreclosure activity fell 8 percent in November, compared to October - it's the fourth consecutive month that RealtyTrac's data has shown a decrease in foreclosure filings. November's numbers are 15 percent below the all-time high hit in July, and at their lowest mark since February. At the state level, the same usual suspects are still leading the nation in foreclosure activity, but even these hard-hit housing markets are beginning to show signs of improvement.
RealtyTrac
RealtyTrac
Monday, December 7, 2009
Washington Report: Higher Costs, Tougher Standards
HUD Secretary Shaun Donovan made it official last week: Applicants for FHA insured mortgages in the coming months are going to be hit with higher costs and tougher credit standards.
In congressional testimony, Donovan said some of the changes are likely to include the following:
Number one: Higher downpayments. The current minimum is 3.5 percent. Donovan didn't say how much higher the agency might push it, but congressional critics want to see at least a five percent minimum.
Number two: Look for FHA's generous "seller concessions" to be cut in half -- from the current six percent to three percent of the loan amount -- and maybe even lower.
Under present FHA rules, home sellers can contribute to their buyers' closing costs up to a maximum of six percent of the initial mortgage amount. Critics say that encourages sellers to inflate the prices they want from buyers, and allows marginal purchasers to buy houses they can't really afford.
Number three: Higher mortgage insurance premiums. FHA currently charges what it calls an "upfront" premium of 1.75 percent of the loan amount. That could go a lot higher, maybe even to three percent, according to Donovan.
FHA also charges an "annual" insurance premium, which gets tacked onto borrowers' monthly payments. Currently that premium is set at 0.55 percent of the loan amount, but Donovan wants Congress to raise it.
Finally: Look for tougher credit rules. FHA does not have a minimum credit score for applicants at the moment, preferring instead to evaluate the "total" credit picture of applicants individually.
But now FHA is expected to announce a minimum acceptable FICO score for the first time. It may not be as high as Fannie Mae's or Freddie Mac's, both of which use a 620 FICO minimum, but don't expect it to be much lower either.
Along with tougher rules for loan applicants, Donovan said FHA also plans to crack down hard on lenders who send it poorly-underwritten loans to insure. The agency has already bounced two of its highest-volume producers out of business by withdrawing their approvals to originate FHA mortgages.
Donovan said the agency also plans to post a "Lender Scorecard" on its Website, ranking all its participating mortgage companies according to the delinquency rates on their loans - for all to see - and to raise lender net worth requirements sharply.
Bottom line: Sometime early in 2010, it's going to get pricier and tougher to get financing through FHA. If you or your clients have a home purchase lined up that might be affected, get your loan application in sooner rather than later.
Published: December 7, 2009
Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation.
by Kenneth R. Harney
He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.
In congressional testimony, Donovan said some of the changes are likely to include the following:
Number one: Higher downpayments. The current minimum is 3.5 percent. Donovan didn't say how much higher the agency might push it, but congressional critics want to see at least a five percent minimum.
Number two: Look for FHA's generous "seller concessions" to be cut in half -- from the current six percent to three percent of the loan amount -- and maybe even lower.
Under present FHA rules, home sellers can contribute to their buyers' closing costs up to a maximum of six percent of the initial mortgage amount. Critics say that encourages sellers to inflate the prices they want from buyers, and allows marginal purchasers to buy houses they can't really afford.
Number three: Higher mortgage insurance premiums. FHA currently charges what it calls an "upfront" premium of 1.75 percent of the loan amount. That could go a lot higher, maybe even to three percent, according to Donovan.
FHA also charges an "annual" insurance premium, which gets tacked onto borrowers' monthly payments. Currently that premium is set at 0.55 percent of the loan amount, but Donovan wants Congress to raise it.
Finally: Look for tougher credit rules. FHA does not have a minimum credit score for applicants at the moment, preferring instead to evaluate the "total" credit picture of applicants individually.
But now FHA is expected to announce a minimum acceptable FICO score for the first time. It may not be as high as Fannie Mae's or Freddie Mac's, both of which use a 620 FICO minimum, but don't expect it to be much lower either.
Along with tougher rules for loan applicants, Donovan said FHA also plans to crack down hard on lenders who send it poorly-underwritten loans to insure. The agency has already bounced two of its highest-volume producers out of business by withdrawing their approvals to originate FHA mortgages.
Donovan said the agency also plans to post a "Lender Scorecard" on its Website, ranking all its participating mortgage companies according to the delinquency rates on their loans - for all to see - and to raise lender net worth requirements sharply.
Bottom line: Sometime early in 2010, it's going to get pricier and tougher to get financing through FHA. If you or your clients have a home purchase lined up that might be affected, get your loan application in sooner rather than later.
Published: December 7, 2009
Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation.
by Kenneth R. Harney
He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.
Friday, December 4, 2009
Washington Report: Good Faith Estimate Mortgage Disclosures
HUD has a blunt message for home buyers, lenders, Realtors and anyone else involved in real estate. Despite what you may have heard to the contrary, on January first the federal government expects everyone to be using the new consumer-friendly Good Faith Estimate mortgage disclosures and the new HUD-1 settlement statements.
The only exception, HUD spokesman Brian Sullivan told Realty Times last week, is if a mortgage application was made in 2009 and the transaction is closed in 2010.
The issue here is important to consumers because the new GFE and HUD-1 provide numerous protections the old forms did not.
Tops on the list: They make it extremely difficult for loan officers to “low ball” the estimated fees and charges on the mortgage and then later hit homebuyers with surprise increases at closing.
Under the old rules, if the estimated fees up front from the lender were $2,000 but the total on the settlement sheet came to $3,000, the homebuyer would have to come up with the difference. That was a huge pain … and it was abusive.
But starting January 1, the lender or broker will be subject to what are known as “tolerance” limits for certain types of fees. Any charges over the limits will have to be eaten by the lender or broker.
For example, if a loan officer tells you the origination and processing charges will be $800, he or she won't be allowed to charge you any more than that at settlement. There will be zero tolerance for increases on these fees.
Other types of charges, such as for title insurance and settlement services, generally won't be allowed to come in more than 10 percent above the upfront estimate -- unless you the borrower chooses the title company and it's not on the mortgage company's list of recommended firms.
In response to industry complaints that some mortgage firms will not have their systems up to speed to comply with the new rules as of January 1, HUD Secretary Shaun Donovan issued a statement indicating that the department would show “restraint” in enforcing the regulations during the first 120 days of the new year.
But last week, following mortgage and real estate trade publication reports that the department has postponed the January start date to April 30, HUD's Sullivan told Realty Times that “restraint” doesn't mean that lenders can avoid using the new GFE and HUD-1 forms.
All consumers making loan applications on or after January 1 must receive the new forms at application and at closing.
“It's as simple as that,” said Sullivan.
Published: November 30, 2009
by Kenneth R. Harney
The only exception, HUD spokesman Brian Sullivan told Realty Times last week, is if a mortgage application was made in 2009 and the transaction is closed in 2010.
The issue here is important to consumers because the new GFE and HUD-1 provide numerous protections the old forms did not.
Tops on the list: They make it extremely difficult for loan officers to “low ball” the estimated fees and charges on the mortgage and then later hit homebuyers with surprise increases at closing.
Under the old rules, if the estimated fees up front from the lender were $2,000 but the total on the settlement sheet came to $3,000, the homebuyer would have to come up with the difference. That was a huge pain … and it was abusive.
But starting January 1, the lender or broker will be subject to what are known as “tolerance” limits for certain types of fees. Any charges over the limits will have to be eaten by the lender or broker.
For example, if a loan officer tells you the origination and processing charges will be $800, he or she won't be allowed to charge you any more than that at settlement. There will be zero tolerance for increases on these fees.
Other types of charges, such as for title insurance and settlement services, generally won't be allowed to come in more than 10 percent above the upfront estimate -- unless you the borrower chooses the title company and it's not on the mortgage company's list of recommended firms.
In response to industry complaints that some mortgage firms will not have their systems up to speed to comply with the new rules as of January 1, HUD Secretary Shaun Donovan issued a statement indicating that the department would show “restraint” in enforcing the regulations during the first 120 days of the new year.
But last week, following mortgage and real estate trade publication reports that the department has postponed the January start date to April 30, HUD's Sullivan told Realty Times that “restraint” doesn't mean that lenders can avoid using the new GFE and HUD-1 forms.
All consumers making loan applications on or after January 1 must receive the new forms at application and at closing.
“It's as simple as that,” said Sullivan.
Published: November 30, 2009
by Kenneth R. Harney
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