Archive for the 'Mortgage Banker News' Category

Mortgage Applications See Biggest Gain in 3 Months: MBA

June 15th, 2011

Written by Frost Mortgage

Home loan applications rose to the highest level in three months during the week ended June 10, due to pumped-up refinancing demand as the 30-year fixed mortgage rate fell to 4.51 percent. The Mortgage Bankers Association’s index of loan applications rose 13 percent, with refis jumping 16.5 percent and purchase-loan requests advancing 4.5 percent. Refis accounted for 70 percent of mortgage applications.

 

Reuters (06/15/11) Schnurr, Leah

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Mortgage Applications at Highest Level in 3 Months

March 9th, 2011

Written by Frost Mortgage

Thanks largely to an improving job market, the Mortgage Bankers Association’s seasonally adjusted index of loan applications spiked 15.5 percent for the week ended March 4 — marking the highest level in three months and the biggest gain since June 11. MBA’s gauge of purchase-loan demand increased 12.5 percent, while its index of refinancing requests climbed 17.2 percent.

Reuters (03/09/11) Schnurr, Leah

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IT’S THE LOAN PROGRAM, STUPID……

March 8th, 2011

Written by Greg Frost

As I listen to the talking heads and government policy experts in Washington discuss mandating 20% down payments for future mortgage programs I get sick to my stomach.  Aren’t any of these people doing their research before suggesting such a draconian response?  Are they not aware that FHA, VA, and USDA have been insuring high ratio (96.5%, 100%, and103%) loans for over 70 years?  Are they not aware that, barring a short period of time in 2007-2008, when sub prime lenders successfully crammed some of their loan products into the FHA programs, that these government insured loan programs performed admirably?

Please note, on the attached graph, the default rates, during the 10 years preceding 2007, before the wheels came off the economy.  Note how well the Prime Fixed Rate and Prime Arm Mortgages (Fully Documented) performed during that entire decade compared to all other mortgage instruments.

So why doesn’t Washington recognize that it was very specific and easily identifiable loan types that were toxic; eliminate them; and stop trying to make us and our industry out to be outlaws?  Their own Federal Reserve Bank of Kansas City shows, in the attached report, that it is the loan program that was the culprit.

I can’t find any of my counterparts who designed those toxic loan programs.  We just originated them. So who are the culpable “outlaws”?

The government’s attack on our industry is unprecedented.  Why isn’t the government going after the car salesmen who sold all those Toyota’s that wouldn’t stop?   Why aren’t they attacking Standard & Poor’s, Moody’s and Fitch who rated the securities filled with those toxic loans AAA?  Why didn’t they attack the contractors who installed all the asbestos, or the painters who once used lead based paint?  Again, what they are doing to us is patently unfair and unprecedented in scope.

We sell mortgages, we don’t design them.  We sold what the mortgage industry, with congressional oversight, provided us to sell. Remember Barney Frank stumping for relaxed guidelines?

Admittedly, during that period of time, most mortgage brokers did not have access to FHA and VA loan products so they sold what they had, which in many cases was not the best product for their customers.  Therein lies the biggest problem.  The toxic loan programs were so “fast and easy” that mortgage brokers and mortgage bankers alike,  shied away from traditional full documentation products in order to facilitate faster approvals, minimize documentation requirements and increase throughput.

When the smart guys who were designing loan programs for, and within our industry, allowed a W-2 employee to use a ”stated income” loan program, they established a scenario for lying or fraud.  Remember, how we referred to those mortgage products as “liar loans”?

Why on earth were these loans designed and thrust upon our industry?

To facilitate the Executive Branch of our government’s goal of increasing home ownership, that’s why.  The Executive Branch, during the Clinton administration pressured HUD, FNMAE and Freddie Mac to come up with loan programs that would utilize the stated income feature of the Acorn loan, that was being originated by Commercial Bankers, to meet their CRA lending requirements. That Acorn loan program was the magic product that brought sub prime lending into the mortgage mainstream.

The attached Federal Reserve Bank of Kansas City chart is so important because it shows how things were, prior to the economic melt down.  It categorically shows that the full doc, 30 year mortgage (Prime ARM & Prime FRM) were loan programs that lenders, bankers, investors, along with domestic and international investors could count on to perform.

We were enticed, by our industry leaders and regulators, and enabled by the securitization efforts of Wall Street, to substitute the loan programs that we prime lenders had originated for our entire careers, with the “fast and easy” loan programs that were now considered to be “main stream”, and thus replace the exceptionally well performing industry standard loan programs that clients demanded and we originated in order to remain competitive in our markets.

We all participated.  We all were drawn into the mess in order to be competitive.  And now we’re all suffering, as our industry is targeted by our government and made the scapegoat for most all that went wrong with the national financial system and our economy.

If I, with my insignificant B.S. in Business from a mid major university can see what happened, why can’t those learned leaders of ours?  There is an old saying….”don’t throw the baby out with the bath water”.  I find, as I grow older, that those old sayings are around for a reason….they are forever relevant.

This baby is tired of the bath, the bath water and the mis-guided and unfair efforts of my government officials, many of whom I helped elect, all of whom I support with my tax dollars, who are trying to make me and my industry the fall guy for a political agenda  that was ill conceived, short sighted and mismanaged.

The toxic loan programs are gone.  The investors got rid of them, not the government.  The investors realized, after poor performance, that they were not good investments.  We don’t need the politicians to show us the folly of deviating from the previous industry accepted risk assessment standards.  We all did what we were encouraged to do, and we all have suffered, as a result.

I implore my government to get back to what we elected you to do.  Stop the wars and balance the budget. And for God’s sake, stop trying to tell me how I can or can’t pay one of my employees for the services he or she renders my company.  My company is not trillions of dollars in debt.  I know what I’m doing.

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Mortgage Applications Rose Last Week

January 19th, 2011

Written by Frost Mortgage

As interest rates declined to their lowest level in a month during the week ended January 14, the Mortgage Bankers Association reports, home-loan application activity rose 5 percent. Fixed 30-year mortgage rates averaged 4.77 percent for the week, down a notch from 4.78 percent the week before. The rate has fallen from 4.93 percent late last month.
(More)

WXEL (01/19/11) Yoon, Al

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Greg Frost’s thoughts on the future of Mortgage Banking

December 30th, 2010

Written by Greg Frost

You know I just heard a quote from a long time mortgage man that we Mortgage Bankers were toast and that after April, 2011 we would all be out of business.  That perspective was credited to my long time, friendly competitor, Jason Pike. Jason has been a top mortgage originator for many years.  He currently works at Bank of America.  Jason didn’t choose to go to work for Bank of America, as a matter of fact, once upon a time, Jason shared his very dim view of that particular bank’s ability to compete in the mortgage space.  He chose to work for Countrywide Home Loans, and we all know what happened there and we all know that the bank bought Countrywide and, I guess, Jason along with it.

Let me say that I don’t agree with Jason at all.  I am confident that the Mortgage Banking industry, is so vital to the ethical distribution of mortgage credit to the American public, that no set of industry circumstances, natural or legislated, will depose it from its position as the nations #1 mortgage resource.  We Mortgage Bankers are the entrepreneurs of the Mortgage industry.  We are licensed by our states and by the National Mortgage Licensing Agency. We take mandated continuing education, which by the way, the exemption of which, Jason’s bank lobbied congress to gain.  As a result our Loan Originators are eminently more educated and regulated than those working for the banks.   Every day, we put our cash, credit, and net worth where our mouths are, as we fund billions of dollars of loans and then sell them to bank investors, many to the Bank of America.

It’s funny to hear Jason’s perspective, because his opinions are not shared by the officers of his own bank.  Certainly not by the Bank of America officers who manage that banks correspondent lending division.  The Bank of America is either the largest or second largest purchasers of Mortgage Banker originated mortgages every year. These bank officers have told me, over and over again, that the bank relies on the production capacity of the Mortgage Banking industry to help the bank replace its mortgage pay downs every month.

These Bank of America officers have repeatedly told me, at various meetings throughout the US, that we Mortgage Bankers play an integral and important role in their banks budgeted growth. A point of view that is in total contrast with Jason’s claims.

I was called by another friend and fellow mortgage banking entrepreneur today, as some of his people were being recruited by Jason.  He was concerned that Jason had shared his….”you’re all going to be toast after April, 2011” perspective with his employees and successfully hired one of his team.  I shared with him what I now share with you……”Capitalism and the entrepreneurial spirit that made this country great will not be stifled by a few banks, who themselves needed a government bail out, an infusion of your tax dollars, in order to survive.  I think that we should just “consider the source” and focus on continuing to provide our fellow Americans with the best choices in mortgage credit, at the fairest prices, that are available in the marketplace today.”

Thank you and have a great day!

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Existing Homes Sales Rise; GDP Holds Steady; Home Prices Predicted to Rise

December 23rd, 2010

Written by Frost Mortgage

Existing home sales showed a healthy rise in November, the National Association of Realtors reported yesterday. In separate reports, the Bureau of Economic Analysis said third quarter gross domestic product rose by 2.7 percent; the Federal Housing Finance Agency said home prices rose in October; and Veros Solutions said many major markets should see home price appreciation in 2011.

NAR reported total existing home sales of single-family, townhomes, condominiums and co-ops rose to a seasonally adjusted annual rate of 4.68 million in November, an increase of 5.6 percent from a 4.43 million-unit pace in October. This was still 27.9 percent below the pace of November 2009, which was the deadline month for the first phase of the home buyer tax credit program. The sales pace for November is the highest since June.

Single-family home sales drove the overall increase in home sales, and were at a seasonally adjusted annual rate of 4.15 million units in November, a 6.7 percent increase from 3.89 million units in October. This was 27.3 percent below the pace of November 2009. The current pace of single-family home sales is also the highest since June. Existing condominium and co-op sales declined 1.9 percent to a seasonally adjusted annual rate of 530,000 units in November from 540,000 units in October, 32.2 percent below the same month one year ago.

Total housing inventory in November decreased by 4.0 percent to 3.71 million units available for sale; this represents a 9.5 months’ supply at the current sales pace, a decrease from the 10.5-month pace in October. This was the third straight monthly decline in the housing inventory number and the lowest inventory level since March. The months’ supply decreased for the fourth straight month and is the lowest since June.

The report also noted that distressed homes accounted for 33 percent of sales in November, compared to 34 percent in October and 33 percent in November 2009. Foreclosure sales accounted for two-thirds of distressed sales share and sold at a median discount of 15 percent in November relative to “traditional” home sales, while short sales were discounted 10 percent.

A parallel NAR practitioner survey showed that first-time buyers purchased 32 percent of homes in November, unchanged from October and well below the 51 percent share in November 2009, which was attributed to the rush from trying to meet the deadline for the first-time home buyer tax credit. Investors accounted for 19 percent of transactions in November, also unchanged from October, but this was an increase from a 12 percent share in November 2009. The remainder of sales went to repeat buyers. All-cash sales were at 31 percent in November, an increase from 29 percent in October and 19 percent a year ago.

Existing home sales increased in all regions in November. The West had the largest monthly increase, up by 11.7 percent from the previous month, followed by the Midwest with 6.4 percent, the South with 2.9 percent and the Northeast with 2.7 percent. On a year over year basis, the West was 19.0 percent lower, the Midwest 35.1 percent lower, the South 26.1 percent lower and the Northeast 33.0 percent lower.

While the November numbers were stronger than our forecasted 4.5 million-unit pace for the fourth quarter, we still expect that despite somewhat healthier economic growth, the housing recovery will be slow as mortgage rates rise. We estimate that existing home sales will total around 4.8 million units each for 2010 and 2011 before climbing to around 5.6 million units in 2012.

Kan, Joel; Sorohan, Mike
(Joel Kan is director of research and business development with the Mortgage Bankers Association. He can be reached at jkan@mortgagebankers.org)

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Private Mortgage Insurers About to Go Back on Offensive

September 16th, 2010

Written by Frost Mortgage

With the FHA set to hike premiums on Oct. 4, experts expect more competition in the private mortgage insurance market, enabling those players to recoup market share and pad reserves.

Competition would benefit lenders in terms of price, service and product diversity. Lenders likely will choose carriers based less on capital reserves and more on other factors, including their policies governing rescissions.
American Banker (09/16/10) Horwitz, Jeff; Berry, Kate

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Latest Housing Scorecard shows continued affordability in U.S. market

July 21st, 2010

Written by Frost Mortgage

The U.S. Department of Housing & Urban Development (HUD) and the U.S. Department of the Treasury have jointly released the second edition of the Administration’s Housing Scorecard showing that, thanks in part to interest rates continuing at all-time lows, home affordability in the U.S. remains near the most attractive levels in 10 years. In addition, for the first time, the report now tracks the impact of HUD’s Neighborhood Stabilization Program (NSP), which has spurred local investment and is beginning to make affordably-priced homes available to consumers. The Housing Scorecard is the Administration’s comprehensive report on the nation’s housing market.

http://nationalmortgageprofessional.com

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Great news for FHA lenders from Congress

June 29th, 2010

Written by Frost Mortgage

Federal Housing Administration (FHA) lenders will be exempted from new “risk retention” rules, which is great news for companies who issue loans insured by the government.

National Mortgage News reports that

[t]he legislation finalized by the conference committee late last week would require originators to retain at least 5% of the credit risk in loans they securitize unless the assets meet a “qualified mortgage” test. All loans backed by the FHA, the Department of Veterans Affairs or the Rural Housing Service will automatically meet that test.

This is a complex time to be in the FHA-backed mortgage business, but the opportunities are huge for those who are eager to learn to succeed as branch partners or loan officers.

Frost Mortgage has been a leader in FHA lending since 1991. If you’re looking to step up, take a look at our mortgage partner offering–we think you’ll find it’s the best in the business.

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Greg Frost Sr.: Learn to succeed

June 28th, 2010

Written by Greg Frost

The great breakthroughs in your life will come when you realize that you can learn anything you need to learn to accomplish any goal that you set for yourself.  This means that there are no limits on what you can be, on what you can have, or on what you can accomplish.

Goals are nothing more than dreams, to which you have attached a time limit.  Set your goal and then seek out all information that you can to learn all that you can about your chosen endeavor.  Then you will be ready to go out and achieve it.

Start by finding out all you can about what the most successful people in your arena did to become successful. Do what they did, over and over again, and you will eventually enjoy the same results.  Emulate the best and you will become one of them.

I was noted as the 1^st Billion Dollar mortgage originator back in 2000.  I had been originating since 1985.  I built my business in a full doc business environment before FICO scores, AUS systems, slim doc, no doc, fast and easy, stated income etc.  My personal origination expertise was gained originating the same products that we are all originating today.  I was able to distinguish myself, in my market, by putting a recognizable face on the word “service”.  I did this by succinctly defining my service with daily, weekly, monthly and quarterly activities that my clients (Realtor Referral Partners) and our mutual business (Borrowers) could readily recognize and appreciate.  This strategy will work for you today.

Do you feel challenged by your current environment?  Are you struggling with your business model?  Are you concerned that you will not be able to function in this new era of massive regulation changes and their inherent risk?  Are you struggling with redirecting your sales and marketing efforts to a more productive opportunity pool?

I am President of a production Division of Primary Residential Mortgage, Inc.  In addition, I am their VP of National Training.  I think that I am uniquely qualified to offer you a dynamically profitable business model along with market tested production mentoring, the combination of which should give you every advantage.

Go to www.frostmortgage.com and let’s get acquainted.

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