Market Changes Have Been “Dazzling”- Jonathan Burdick-Executive Vice President – Sales/Lending Capstone Mortgage

Market Changes Have Been “Dazzling”

The “dazzling changes” in the mortgage market over the last decade were the topic of address last week by Richard Cordray to the National Association of Realtors (NAR). Cordray, Director of the Consumer Financial Protection Bureau, said the market has gone from an overheated, increasingly irresponsible one that “blew up the largest economy in the world, to retrenching dramatically into an overly tight and restrictive market where many good, creditworthy applicants could not qualify for reasonable loans.”

The lack of effective regulation before the crash, he said, has now led to strong new regulations designed to protect and support both consumers and responsible businesses. The result is a mortgage market that is steadily recovering, with home values increasing in many areas and millions of homes emerging from their previous underwater status. He commended NAR and its members for “hanging tough” through all of the bewildering changes that have led to this new regime.

The Ability to Repay Rule, he said, requires lenders to make sure borrowers have the capacity to actually pay back their loan. Some, he said, called this rule, which is also known at the Qualified Mortgage or QM rule the “Quitting Mortgages” rule, predicting that it would cause mortgage prices to double while cutting the volume in half and would lead to the demise of banks and credit unions as mortgage originators.

Instead, with the rules now in place for almost two years, he said, recent data confirms the very opposite of the hyperbole and fears expressed in advance. In 2014, the first year of the new rules, mortgage originations for owner-occupied home purchases increased between 4 and 5 percent, an upward trend that appears to have accelerated in the first half of 2015. While there was minor consolidation in some parts of the mortgage market, there is no evidence of any mass exodus. In fact, after adjusting for merger activity, he said, the number of lenders that reported having originated mortgages showed an increase in 2014.

He called most of the new regulations “common sense” and said there had been special attention paid to community banks and small lenders which had the lowest default rates during the mortgage crisis. The number of these smaller lenders originating mortgages in 2014 was higher than in 2013 which he called great news. “It means more opportunity for more consumers, and a renewed pathway to the American dream in a mortgage market that has been strengthened by the changes we have made.”

By taking on and rooting out unfair competition that gobbled up market share by driving down sound underwriting standards, the Consumer Bureau is supporting responsible lenders, Cordray said. The market leaders of today are those that have remained focused on providing sustainable homeownership rather than just making a quick buck, no matter how.

At the same time this sensible regulation that includes substantial consumer protections should foster greater trust among consumers. “If people believe they will be treated fairly rather than becoming victims of predatory lending, they can develop a renewed sense of consumer confidence. And in the past few years, as consumers have improved their own financial health and seen their home values stabilize in many parts of the country, those sentiments are gradually returning.”

Cordray noted that the new Truth-In-Lending-RESPA Integrated Disclosure Rule (TRID) will go into effect on October 3, with its two associated disclosure forms replacing four older overlapping ones. The Loan Estimate and the Closing Disclosure show people what they are getting into in plain language in in an easy to understand format and with the information they most want – loan amount, monthly payments, taxes, insurance, other property costs, and the total cash required to close the loan – right up front. Not only will this make understanding the loan easier but will do the same for comparison shopping as the forms reduce the information gap between lenders, who understand mortgage pricing inside and out, and consumers, to whom the process can often feel like a mystery.

Cordray explained the timing under which homebuyers must obtain the forms from lenders but said there has been misinformation spread about what happens what loan changes will affect the Closing Disclosure. Should this form become inaccurate before the closing a new version must be given the borrower three days before closing, but there are only three very limited sets of changes that will trigger this; changing the loan product (for example fixed to adjustable rate), increasing the APR beyond certain limits, or adding a prepayment penalty. Last minute changes based on walk-through and other changes to seller credits and the like will never require a new Closing Disclosure that delays the closing date Cordray said.

He concluded by pointing to a recent pilot study CFPB did where borrowers went through a mortgage closing using an electronic platform. Those borrowers, he said, “Showed higher measures of understanding, efficiency, and feeling empowered than borrowers who used only paper forms.” Based on those results, he said the Bureau is strongly encouraging further industry action and innovation around “e-closings.

Reference Market News Daily

Jonathan Burdick-Executive Vice President – Sales/Lending

Capstone Mortgage
6900 East Camelback Road, Suite 570
Scottsdale, Arizona 85251
480-336-2828 Extension 115 (Office)
480-326-1982 (Mobile)
480-696-7607 (Fax)
NMLS# 1045837 /MBL# BK0926018

Home Prices Rose More Than Expected in July —-Jonathan Burdick-Executive Vice President – Sales/Lending Capstone Mortgage

Home Prices Rose More Than Expected in July -FHFA

Sep 22 2015

Home prices made an unexpected surge in July the Federal Housing Finance Agency said today. The month-over-month change was +0.6 percent while, according to Econoday,analysts had been looking for an increase of 0.4 percent.  It was the largest month-over-month change in the index since January’s 0.7 percent rise.  The increase from May to June had been a mere 0.2 percent.

On an annual basis the HPI was up 5.8 percent and is now 1.1 percent below its March 2007 peak.  The year-over-year change was the largest since April 2014.  The index itself stands at 224.5, roughly the same as in November 2006.

FHFA’s HPI is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.  The purchase-only indexes are normalized to 100 in the first quarter of 1991.

Seven of the nine census divisions posted positive seasonally adjusted monthly price changes from June 2015 to July 2015.  These ranged from -1.2 percent in the New England division to +1.6 percent in the Mountain division. The other negative result was in the East North Central division which was down 0.1 percent.   The 12-month changes were positive in every region, ranging from +2.1 percent in the New England division to +9.4 percent in the Mountain division.

Reference Mortgage News Daily

Jonathan Burdick-Executive Vice President – Sales/Lending

Capstone Mortgage
6900 East Camelback Road, Suite 570
Scottsdale, Arizona 85251
480-336-2828 Extension 115 (Office)
480-326-1982 (Mobile)
480-696-7607 (Fax)
NMLS# 1045837 /MBL# BK0926018

Mortgage Rates Avoiding Drama Ahead of Fed Week-Jonathan Burdick EVP Capstone Mortgage-Arizona

Mortgage Rates Avoiding Drama Ahead of Fed WeekSep 11 2015,

Mortgage rates are doing absolutely everything in their power to avoid making any sudden movements ahead of next week’s potential volatility.  It’s not mortgage rates per se, but rather, multiple market sectors have been trading in increasingly narrow ranges this week.

As we’ve discussed, next week’s Fed Announcement is the big deal on the near term horizon because it’s the first real opportunity for the Fed to lift its policy rate from 6 years at all-time lows.  While this sort of rate hike doesn’t necessarily translate to mortgage rates, any major changes in Fed policy can cause volatility across markets.  Historical examples of Fed rate hikes following longer stints at longer-term lows show multiple outcomes.  That means there are indeed examples of Fed rate hikes followed byfalling mortgage rates.  In other words, we’re talking more about the volatility potential and less about the likely direction.

With markets simply trying to bide their time until next Wednesday, trading levels didn’t change much today in the mortgage-backed-securities (MBS) that underlie mortgage rates.  There was some slight improvement, which translated to modestly lower closing costs for the same old 4.0% that most lenders continue to quote on top tier conventional 30yr fixed scenarios.  3.875% is still available among some of the more aggressive lenders, while 4.125% is far less common.

Reference Market News Daily

Jonathan Burdick-Executive Vice President – Sales/Lending

Capstone Mortgage
6900 East Camelback Road, Suite 570
Scottsdale, Arizona 85251
480-336-2828 Extension 115 (Office)
480-326-1982 (Mobile)
480-696-7607 (Fax)
NMLS# 1045837 /MBL# BK0926018

Decline in New Home Mortgage Apps “Seasonally Driven”-Jonathan Burdick Exec VP Capstone Mortgage

Decline in New Home Mortgage Apps “Seasonally Driven”

Applications for mortgages to purchase newly constructed homes dropped by 6 percent in August according to the Mortgage Bankers Association (MBA).  The data, compiled from MBA’s Builder Application Survey (BAS) is not adjusted to account for seasonal patterns.

MBA estimates that new home sales in August were running at a seasonally adjusted annual rate of 524,000 units, down 1.9 percent from the July rate of 534,000 units.  On an unadjusted estimate MBA estimates there were 41,000 new homes sold in August, a 3,000 unit decrease, or 6.8 percent, from July. The average loan size of new homes increased from $316,995 in July to $317,035 in August. The new home sales estimate is derived using mortgage application information from the BAS, as well as assumptions regarding market coverage and other factors.

MBA’s Vice President of Research and Economics Lynn Fisher said new home purchase applications still were 19 percent higher than a year earlier, consistent with patterns seen throughout 2015.  He called the July to August decrease “seasonally-driven.”

Conventional loans composed 68.5 percent of new home purchase mortgage applications and FHA loans accounted for 19.0 percent.  VA loans made up 11.6 percent of the total and RHS/USDA loans 0.9 percent.

MBA’s Builder Application Survey tracks application volume from mortgage subsidiaries of home builders across the country.  Utilizing this data, as well as data from other sources, MBA gives an early estimate of new home sales volumes at the national, state, and metro level.  Official new home sales estimates are conducted by the Census Bureau on a monthly basis.  In that data, new home sales are recorded at contract signing, which is typically coincident with the mortgage application.

Reference Mortgage News Daily

Jonathan Burdick-Executive Vice President – Sales/Lending

Capstone Mortgage
6900 East Camelback Road, Suite 570
Scottsdale, Arizona 85251
480-336-2828 Extension 115 (Office)
480-326-1982 (Mobile)
480-696-7607 (Fax)
NMLS# 1045837 /MBL# BK0926018