Fannie Mae Boosts Multifamily Housing Sector

Fannie Mae pumped nearly $30 billion into the multifamily housing sector last year, the company says. It cooperated with lenders to finance 507,000 units of housing within the niche. 

About $2.3 billion of the total went to affordable multifamily housing, with an estimated $1.6 billion allocated for senior housing and $454 million funneled into student housing projects. 

Roughly $1 billion was earmarked for manufactured housing communities, a gain from an investment of $912 million in 2012.

Source: "Fannie Mae, Lenders Financed $28.8B in Multifamily Loans Last Year," RISMedia (Feb. 3, 2014)

Copyright © 2014 Information Inc.

JPMorgan to Pay $614M for Faulty FHA, VA Loans

The Department of Justice is accusing lending giant JPMorgan Chase of approving thousands of loans for the Federal Housing Administration and Veterans Affairs that should not have been eligible for federal insurance.

JPMorgan Chase has agreed to pay $614 million for violating the False Claims Act for originating and underwriting non-compliant mortgages submitted for insurance coverage and guarantees by the FHA and VA, The Department of Justice reports.

“The resolution announced today is a product of the Justice Department’s continuing efforts to hold accountable those whose conduct contributed to the financial crisis,” says Associate Attorney General Tony West. "This settlement recovers wrongfully claimed funds for vital government programs that give millions of Americans the opportunity to own a home and sends a clear message that we will take appropriately aggressive action against financial institutions that knowingly engage in improper mortgage lending practices."

In the JPMorgan case, misrepresentations on FHA and VA loans allegedly began in 2002, according to DOJ records. The DOJ says that FHA and VA faced big losses when these loans defaulted.

HUD Acting General Counsel Damon Smith says that JPMorgan will be required to institute “new and tighter controls” to prevent any future abuses of FHA’s automated underwriting system.

Source: The Department of Justice and “JP Morgan Admits it Wrongfully Filed FHA and VA Mortgages,” HousingWire (Feb. 5, 2014)

Wells Fargo Lowers Credit Requirements for FHA Loans

Wells Fargo has announced that it will accept lower credit scores for loans backed by the Federal Housing Administration.

“We have dropped our FICO minimum for FHA from 640 to 600,” says Wells Fargo Executive Vice President Franklin Codel, adding that the move is a way for the bank to start “opening up our credit box more.”

Codel says the bank is looking to expand mortgage-credit availability now that it has significantly reduced its repurchase risk. Wells Fargo was among several banks that had to pay millions to Fannie Mae and Freddie Mac to resolve repurchase claims from loans that were bought by the GSEs and then went sour during the housing bust.

Codel says that Wells Fargo also implemented the qualified mortgage underwriting requirements a month before the Jan. 10 deadline.

Codel says Wells Fargo was “monitoring the production flows” to determine which loans would be rejected under the new QM rules. “We found very, very few,” he adds.

Source: “Wells Fargo Lowers Credit Scores for FHA Loans,” National Mortgage News (Feb. 6, 2014)

9 States With Lowest Foreclosure Inventories

The foreclosure picture is improving across the country. Completed foreclosures fell in December by 14 percent compared to a year earlier, according to new data by CoreLogic. What’s more, the national foreclosure inventory dropped 31 percent year-over-year in December, the 12th consecutive month of declines.

Thirty-six states now have foreclosure inventories that are below the national rate. Here are nine states with the lowest foreclosure inventories in the country, all of which are less than 0.7 percent:

1. Wyoming
2. Alaska
3. North Dakota
4. Nebraska
5. Colorado
6. California
7. Minnesota
8. Montana
9. South Dakota

On the other hand, Florida, New Jersey, and New York have the highest foreclosure inventories, according to CoreLogic.

Source: “Top 12 States With Healthiest Foreclosure Markets,” USA Today (Feb. 2, 2014)

NAHB: Housing Recovery Threatened by Flat Wages

While job growth is picking up across the country, wages remain flat, which is holding back a more robust recovery, the National Association of Home Builders wrote in a recent blog post.

“A significant amount of pent-up housing demand exists, but for it to be unlocked more rapidly, additional gains in wages must be realized,” NAHB economists wrote.

During the recession, all age groups saw a decline in incomes, with the exception of the 65-and-older cohort. Since 2000, those under the age of 24 have seen the largest reductions in income, followed by people ages 45 to 54 (the top-earning age group), NAHB’s analysis shows.

First-time home buyers remain a shrinking number in the housing market. They accounted for 27 percent of existing-home purchases in December, down from 30 percent a year earlier, according to the National Association of REALTORS®.

Many young adults are facing high student loan debt that is stifling their wage growth and ability to qualify for a mortgage.

“Student loans are one of the fastest rising sources of debt,” according to a recent post on NAR’s Economists’ Outlook blog. “Student loans are of increasing concern in light of the regulations pertaining to qualified mortgages that require a consumer to have a debt-to-income ratio of no more than 43 percent.”

NAHB says that income growth will be a key metric to watch for the future of new and existing home sales. While home sales are looking up for 2014, NAHB notes that any additional gains in median incomes will help the recovery stretch further.

—By REALTOR® Magazine

Seattle vs. Denver: In Real Estate, Who’s the Champ?

As Seattle and Denver prepare to face off on Sunday in Super Bowl XLVIII, where do these cities score points when it comes to real estate?

ZipRealty Inc. recently compared the housing stats in Denver and Seattle to see which metro is better at “gaining yardage”; has the most “veteran” players; moves the fastest; offers the most expensive “players”; and features the best “coaching” staff, or real estate agents in this case. In other words, ZipRealty analyzed average lot size, new construction versus existing home sales, median days on the market, median sales price, and agent ratings and reviews on ZipRealty.com.

Here's how the two cities stacked up against one another:

1.)  Which metro gains the most yards?
Denver’s average lot size: 74,636 square feet
Seattle’s average lot size: 60,754

2.)  Where are the most veteran players located?
Denver’s percentage of new homes: 5.4%
Seattle’s percentage of new homes: 5.3%

3.)  Whose players move the fastest?
Denver’s median days on the market: 18
Seattle’s median days on the market: 32

4.)  Which metro has the most expensive players?
Denver’s median home sales price: $259,000
Seattle’s median home sales price: $285,849

5.)  Whose coaching staff is the best?
(Based on ZipRealty’s agent ratings and reviews from customers)
Denver’s average agent ratings: 4.91 out of 5
Seattle: 4.84 out of 5

Compare some of the players’ real estate choices at realtor.com®. For example, it’s a duel for the most luxurious wine cellar: Denver’s quarterback Peyton Manning’s 16,600-square-foot mansion home versus Seattle running back Marshawn Lynch’s 7,000-square-foot, $3.6 million waterfront estate.

Source: ZipRealty

FHA Moves to Accept E-Signatures

The Federal Housing Administration announced that it will allow lenders to start accepting electronic signatures on mortgage loan documents. The FHA will accept the e-signatures on third-party documents, such as sales contracts and other documents not controlled by the lender. This also includes REO sales contracts.

The new policy is effective immediately.

“By extending our acceptance of electronic signatures on the majority of single-family documents, we are bringing our requirements into alignment with common industry practices,” says FHA Commissioner Carol Galante. “This extension will not only make it easier for lenders to work with the FHA, it also allows for greater efficiency in the homebuying and loss mitigation process.”

The FHA says it believes the acceptance of e-signatures will help streamline the loan origination process and help reduce document submission time frames for borrowers who are seeking options to avoid foreclosure too.

As part of this new policy, the FHA will not yet accept e-signatures on the mortgage note itself. However, the FHA says it plans to accept e-signatures on mortgage notes by the end of the year.

Source: U.S. Department of Housing and Urban Development

Even Millennia Ago, Home Was Where the Hearth Was

You may have helped clients bat around ideas for a kitchen remodel, but Dr. Ruth Shahack-Gross isn't going to listen to your advice: The kitchen she's working with is 300,000 years old.

Shahack-Gross discovered the site during an archaeological dig that began in 2000 outside Tel Aviv, Israel, and has found artifacts such as teeth, animal bones, and flint tools whose design suggests they were used to cut meat. The site also contained an area that showed signs of high-temperature fire, which suggests that he particular spot was used as a hearth and kitchen.

To confirm her theory, Shahack-Gross extracted a cube of sediment from the hearth and examined it layer by layer. The results confirmed that the site was used for cooking repeatedly over time. 

The placement of other artifacts in other areas of the cave suggests that its residents organized "various 'household' activities into different parts of the cave," much as we have different rooms for different activities, according to a press release by the Weitzmann Institute of Science, which is sponsoring Shahack-Gross' work. 

“These findings help us to fix an important turning point in the development of human culture – that in which humans first began to regularly use fire both for cooking meat and as a focal point — a sort of campfire — for social gatherings,” she says. With the holidays just past and festivities for the Super Bowl imminent, it's a vivid reminder that the desire for a home is a long, deep-seated — even prehistoric — urge.

Source: "300,000-Year-Old Hearth Found," Weitxmsnn Institute of Science

Freddie: Mortgage Rates Move Lower Again

Fixed-rate mortgages inched lower again this week, lowering borrowing costs for home shoppers and refinancers.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 30:

• 30-year fixed-rate mortgages averaged 4.32 percent, with an average 0.7 point, dropping from last week’s 4.39 percent average. Last year at this time, 30-year rates averaged 3.53 percent.
• 15-year fixed-rate mortgages averaged 3.40 percent, with an average 0.6 point, lower than last week’s 3.44 percent average. A year ago at this time, 15-year rates averaged 2.81 percent.
• 5-year hybrid adjustable-rate mortgages averaged 3.12 percent, with an average 0.5 point, dropping from last week’s 3.15 percent average. Last year at this time, 5-year ARMs averaged 2.70 percent.
• 1-year ARMs averaged 2.55 percent, with an average 0.4 point, rising from last week’s 2.54 percent average. A year ago, 1-year ARMs averaged 2.59 percent.

Source: Freddie Mac

Frigid Weather, Rising Prices Cooling Sales Contracts

The record-low weather temperatures freezing parts of the country the past month are hampering pending home sales.

“Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes and making offers,” says Lawrence Yun, chief economist for the National Association of REALTORS®.

Mixed with the cold weather, rising home prices, which are rising faster than incomes, are also giving  “pause to some potential buyers, while at the same a lack of inventory means insufficient choice,” Yun says.

NAR reports that pending home sales dropped across all four regions of the country, falling 8.7 percent nationally in December from the previous month. NAR’s Pending Home Sales Index, a forward-looking indicator based on contracts and not closings, is 8.8 percent below year-ago levels. Pending home sales are at the lowest levels since October 2011, NAR reports.

Still, Yun notes, “although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors.”

Regional Breakdown

Here’s a look at pending home sales in December across the country:

• Northeast: Contracts dropped 10.3 percent in December and are 5.5 percent below year-ago levels;
• Midwest: Contracts fell 6.8 percent in December and are 6.9 percent lower than December 2012;
• South: Contracts fell 8.8 percent in December and are 6.9 percent below a year ago.
• West: Faced with the most constrained inventory levels in the nation, contracts dropped 9.8 percent in December and are 16 percent below December 2012.

By REALTOR® Magazine Daily News

If You Want to Flip, Do It Now

In 2013, home flips snagged sellers a tidy profit. But the trend may not continue.

RealtyTrac's Home Flipping Report for the fourth quarter of 2013  showed single-family home flips were up 16 percent from 2012 and up 114 percent from 2011. The average gross profit for a home flip—defined as a home being purchased and subsequently sold again within six months—was $58,081 for all U.S. homes flipped in 2013, up from an average gross profit of $45,759 in 2012. The average gross profit for homes flipped in the fourth quarter was even greater, at $62,761.

But while profits are strong in flipping right now, according to Housingwire, "the market may be peaking." Flips accounted for 3.8 percent of all sales in the fourth quarter, down slightly from the third quarter and down from 7.1 percent year-over-year. Housingwire reports that the diminishing availability of foreclosures may make it difficult for investors to find properties to flip in the coming year.

Major markets with big year-over-year decreases in home flipping included Philadelphia (down 43 percent) and Phoenix (down 32 percent).

Source: "Flip now if you plan to flip that house at all," Housingwire (Jan. 30, 2014)

Foreclosure Pipeline Gradually Being Cleaned Out

As the foreclosure crisis continues to recede, some parts of the country remain at elevated levels. Five states now account for nearly half of all the completed foreclosures in the nation —Florida, Michigan, California, Texas, and Georgia, according to CoreLogic’s latest foreclosure report.

Foreclosures made up 10 percent of sales in December, while short sales comprised 4 percent of sales, according to the National Association of REALTORS®’ existing-home sales report for December. 

On average, foreclosures sold for an average discount of 18 percent below market value in December, while short sales were discounted 13 percent, NAR reports.

CoreLogic reported this week that completed foreclosures fell 14 percent in December year-over-year.

Inventories are also falling. About 837,000 homes in the United States in December were in some state of foreclosure or known as foreclosure inventory, compared with 1.2 million in December 2012 – a 31 percent year-over-year decrease, CoreLogic notes.

The five states with the highest foreclosure inventories as percentage of all homes with a mortgage are Florida (6.7%), New Jersey (6.5%), New York (4.9%), Connecticut (3.6%), and Maine (3.6%).

Meanwhile, the two states with the lowest foreclosure inventories as percentage of all homes with a mortgage were Wyoming (0.4%) and Alaska (0.5%).

“Clearly, 2013 was a transitional year for residential property in the United States,” says Anand Nallathambi, president and CEO of CoreLogic. “Higher home prices and lower shadow inventory levels, together with a slowly improving economy, are hopeful signals that we are turning a long-awaited corner. The housing market should continue to heal in 2014, but we expect progress to remain very slow.”

By REALTOR® Magazine Daily News

Vacancy Rates Remain Above Pre-Bubble Levels

The number of homes sitting empty across the country remains high. The year-round vacancy rate reached 10.2 percent of total housing units, the Department of Commerce’s Census Bureau data shows.

In the fourth quarter, the national vacancy rate for rental housing was at 8.2 percent, while 2.1 percent for home-owner housing. Vacancy rates are highest in Detroit, Las Vegas, several Florida metros, and other Sunbelt markets.

The Census Bureau also reported the home ownership rate reached 65.2 percent in the fourth quarter of 2013 – 0.2 percentage points lower than year-ago levels.

The home ownership rate is rising in the Midwest and South; both regions have home ownership rates above the national average. For example, the Midwest saw its home ownership rate grow the most, increasing by 2.2 percent in the fourth quarter of 2013. That follows a 1.8 percent increase in the fourth quarter of 2012.

Meanwhile, the West is seeing home ownership rates fall and the Northeast is seeing its home ownership rate fluctuate greatly from quarter to quarter.

Source: “America Still Has Plenty of Vacant Homes,” HousingWire (Jan. 31, 2014) and “U.S. Home Ownership Rate,” Economists’ Outlook blog (Jan. 31, 2014)

Foreclosure Contractors Face Greater Scrutiny

Banks are calling for more thorough background checks of workers who are hired to watch over homes in default or foreclosure, following hundreds of consumer lawsuits and thousands of complaints over alleged break-ins.

Complaints and lawsuits accuse some handymen and home inspectors who are hired by banks to look after the properties of breaking into still-occupied homes and stealing valuables. Many of the homes involved are in some stage of default, but the home owners are still in possession of the home.

In the cases reported, contractors have been accused of ignoring “obvious signs of habitation, kicking down doors and crawling through basement windows in order to gain access, then changing the locks,” Huffington Post reports. “In some cases, they are also accused of helping themselves to valuables found inside.”

A new screening system that banks are planning to implement is aimed at checking contractors for past criminal convictions, such as theft or fraud. In several of the consumer lawsuits, a background search of the contractors who were accused of the alleged break-ins and thefts revealed lengthy criminal pasts.

"The intent is to give communities a high level of confidence that the people walking around in homes are not going to cause problems," says Eric Miller, the executive director of the National Association of Mortgage Field Services, the trade association that is helping to create the new standards. Miller says the purpose of the new guidelines will be to prevent contractors with recent criminal convictions from entering such properties. The same guideline would apply to all foreclosure contractors, even those who are hired to mow the lawn.

Source: “Foreclosure Industry Says It’ll Do a Better Job of Screening Its Workers After Widespread Break-Ins,” Huffington Post (Jan. 30, 2014)

Prediction: 2014 the 'Year of the Big Move'

Charlie Young, president and CEO of ERA Real Estate, says that several factors in the housing market point to a growing trend of relocation in the new year. More people may be prompted to relocate to areas that offer better costs of living, making 2014 the “year of the big move,” he says. 

Here are some factors he points to: 

• Rising mortgage rates: Mortgage rates are expected to nudge higher this year from their historical lows as the Federal Reserve starts tapering its bond-buying stimulus program. “For many would-be homebuyers, an increase of 1 percentage point could make monthly mortgage and interest payments in their current area beyond their reach,” Young says. 
• Dropping affordability: Incomes are not keeping pace with the rises in home prices. “That means homes are getting more expensive faster than our wages can keep up,” Young says. With higher mortgage rates and higher home prices, affordability is falling in many higher-priced markets, he notes. 
• Returning equity: As home prices have risen, many home owners have seen equity return and are finally in a position where they can move again. More home owners may look at other states for a lower cost of living, better job opportunities, and better weather, too, Young says. 
• Rebuilding personal wealth: Many people faced a big hit to personal wealth during the recession and as they rebuild it, they may find that their current area has too high of a cost of living to rebuild comfortably. 

Source: “What’s on Tap for Real Estate in 2014: Relocation,” ERA Real Estate Blog Owning the Fencing (Dec. 23, 2014)

4 Short-Sale Myths Dispelled

Several myths persist about short sales. Tracy Mooney, senior vice president at Freddie Mac, dispels some of the following common myths on the mortgage giant’s blog, including: 

Myth 1: “A short sale is not an option for me because I’m current on my mortgage payments.”

Freddie Mac Fact: Even if home owners are current on their mortgage payments, they may still qualify for a short sale. They must meet general eligibility requirements, the home must be their primary residence, and their debt-to-income ratio must be more than 55 percent.

Myth 2: “I will be responsible for the entire amount owed on the mortgage.”

Freddie Mac Fact:  Home owners won’t necessarily be responsible for the entire amount owed on the mortgage under the Freddie Mac Standard Short Sale program, Mooney notes. Borrowers who complete a short sale in good faith and are in compliance with all laws and Freddie Mac policies will not be pursued by Freddie Mac for the entire amount owed under the mortgage. However, home owners who have the financial means may be asked to make a one-time payment or sign a new promissory note for a portion of the unpaid balance after the short sale closes, Mooney says.

Myth 3: “I can’t get a short sale on an investment property or second home.”

Freddie Mac Fact: Mooney says that investment properties and second homes are eligible for a Freddie Mac short sale. However, borrowers must meet eligibility requirements. 

Myth 4: “A short sale will affect my eligibility for a new mortgage.”

Freddie Mac Fact: Home owners who go through a short sale may be eligible for a new mortgage sooner if the short sale was caused from financial difficulties due to income loss, medical emergencies, or other extenuating circumstances beyond their control. Former home owners in those circumstances may be eligible for a new Freddie Mac mortgage once they’ve established acceptable credit for at least 24 months after completing the short sale. Former home owners who underwent a short sale due to “personal financial mismanagement,” however, will need to re-establish acceptable credit for at least 48 months to become eligible for a mortgage backed by Freddie Mac. “You should start speaking to a lender about a new mortgage two years after your short sale closed,” Mooney notes. 

Source: “Short Sales: Dispelling the Myths,” Freddie Mac (Jan. 13, 2014)

Don't Return That Call!

Forbes warns consumers about a scam that involves calls from certain area codes, such as 473 and 809.

The scam works like this: A call comes through from an area code such as 473, but the phone only rings once and then disconnects. Some recipients may be curious enough to call back, in which case the caller’s robocaller system emits a groaning noise that makes it sound like the person on the other end is in distress, and then hangs up. The phone call recipient may be tempted to call back yet again.

But Forbes.com warns that, while area codes such as 473 may appear domestic, they are from the islands of Grenada, Carriacou, and Petite Martinque, which use country code 1 like the United States. That makes these calls international, meaning they can quickly add up on your phone bill. And it's not just the rate; the scammers can sometimes establish the number which the victim sees on his or her caller ID as a "premium service" number, which means the rate can exceed $20 for the first minute.

Forbes.com warns businesses to be cautious about calls coming from some of the following area codes, which are international calls and have a high incidence of “one ring,” “ring and run,” or “dial and disconnect” scams:

• 242
• 441
• 784
• 246
• 473
• 809
• 829
• 849
• 264
• 649
• 868
• 268
• 664
• 876
• 284
• 758
• 869
• 345
• 767

“Ring and run” scams were a hot topic years ago before the proliferation of the Internet and cell phones when scammers would try to get people to return a phone number with a “900” area code, Forbes.com notes. When in doubt, let the call go to voicemail and let the caller leave a message identifying himself or herself.

Source: “Don’t Return Calls From These Area Codes. It’s a Scam,” Forbes.com (Feb. 1, 2014)

Read more

Google-Controlled Homes?

Search-engine giant Google wants to help make homes smarter and more connected, and took another step at that by by announcing its acquisition of connected device maker Nest Labs. 

Google announced it will pay $3.2 billion in cash to acquire Nest Labs, a company that develops “smart” home appliances such as thermostats and smoke detectors that can program themselves and be controlled and monitored over smartphones. 

"This allows us to accelerate and stay in front of the coming wave of products for what we like to call the ‘conscious home,’" says Nest leader Tony Fadell. 

Google’s acquisition follows several previous efforts by Google to get into the connected home business. For example, the company’s Android @Home platform was created to allow users control home appliances from their Android smartphones and tablets. However, the device failed to catch on, CNN reports. 

At the International Consumer Electronics Show last week in Las Vegas, the “connected home” garnered a lot of attention as several companies touted new technologies to allow home owners to better monitor and control their homes from anywhere. The market for connected homes is expected to reach $10 billion this year and bloom to $44 billion by 2017, according to GSMA, a wireless industry group. 

Source: “Google Buys Nest Labs for $3.2 Billion,” CNNMoney (Jan. 14, 2014)

2 Bank Giants See Shrinking Mortgage Business

With rising mortgage rates, fewer people are refinancing their mortgages, which means big banks are seeing a dip in mortgage lending. 

Wells Fargo funded $50 billion in residential mortgages during the fourth quarter, a 60 percent drop from $125 billion a year earlier. Wells Fargo, the largest mortgage lender in the country, is also losing some of its market share. It controls about 19 percent of the U.S. mortgage market, which is a decrease from 30 percent a year ago, according to Mortgage Finance.  The last time the bank issued such few home loans was during 2008 in the midst of the financial crisis. 

Still, No. 2 J.P. Morgan did about half of Wells Fargo’s business, funding $23.3 billion in mortgage loans in the fourth quarter, a 54 percent drop from a year earlier. That is also the bank’s lowest amount in originations since before the financial crisis. 

“This is something we expected,” says Tim Sloan, Wells Fargo’s chief financial officer. “Originating $50 billion of mortgages in a quarter is a good feat. It just happens to be a little less than it was in the prior quarter.”

Wells Fargo says that about two-thirds of its loan volume was coming from refinancing and now two-third of its business is being driven by applications for home purchases instead. 

With a shrinking refi business, however, some lenders may look to generate extra mortgage revenue by easing up credit standards to try to attract more loan applicants, The Wall Street Journal reports. 

Source: “The End of the Mortgage Party? Home Lending Plummets at Wells Fargo, JP Morgan Chase,” The Wall Street Journal (Jan. 15, 2014)

Storm Brewing Over New Mortgage Rules?

The Consumer Financial Protection Bureau’s Qualified Mortgage rule, which took effect last week, could greatly restrict mortgage credit and stall the housing recovery, lawmakers and mortgage industry leaders said during the House Financial Service Committee’s subcommittee hearing Tuesday.  

Subcommittee Chair Rep. Shelley Moore Capito, R-W.Va., said that lawmakers will closely monitor what is happening over the next few months to see the full effect of the new mortgage rules. 

"Initially I thought we’d have a great picture of what the effect will be in six months, but bankers I’ve talked to say in two or three months we’ll know what the effect will be," Capito told HousingWire. 

She says that she is most concerned that lenders will be hesitant to issue mortgages for borrowers who fall outside of the QM rules, particularly those in the “low middle-income” range.

The Consumer Financial Protection Bureau defines “qualified mortgages” as loans that meet the ability-to-repay rule and in which borrowers spend no more than 43 percent of their income on debt. Furthermore, fees and other charges may make up no more than 3 percent of the loan. 

Daniel Weickenand, CEO of Orion FCU, testified Tuesday on behalf of the National Association of Federal Credit Unions, saying that the association supports efforts to ensure consumers aren’t placed into mortgages they can’t afford, but it is concerned that the rule could “reduce access to credit and hamper the ability of credit unions to meet their members’ needs.

“Unfortunately, a number of mortgage products sought by credit union members, and offered by credit unions, may disappear from the market as they are non-QM loans,” Weickenand testified. “For example, a forty-year mortgage loan cannot be a QM because it exceeds the maximum loan term for QMs. This has been a product sought by credit union members in high-cost areas as it can help lower the monthly mortgage payment. While credit unions can still originate forty-year mortgages, since the special legal protections for meeting the ability-to-repay requirements will not be extended, many may cease to do so."

Source: “QM storm could hit in weeks,” HousingWire (Jan. 14, 2014)

Lower Rates Trigger Jump in Mortgage Applications

Mortgage applications surged 12 percent last week on lower interest rates, the Mortgage Bankers Association reports. 

The refinance index grew 11 percent last week, according to the MBA’s seasonally adjusted index. 

Applications for home purchases -- viewed as a leading gauge of future home buying -- edged up 12 percent for the week.

Meanwhile, mortgage rates fell last week, with the 30-year fixed-rate mortgage dropping from 4.72 percent to 4.66 percent last week. 

"The drop in rates was large enough to trigger a pickup in refinance volume," says Michael Fratantoni, the association's chief economist. "The increase in purchase volume is more likely reflecting an increase coming out of the holidays, beyond what our seasonal adjustment model anticipated."

Purchase applications are back to last November’s level, and applications are 10 percent below where they were a year ago, Fratantoni says. Mortgage applications to refinance have fallen more than 65 percent from year-ago levels. 

Source: “Mortgage Applications Surge on Lower Rates,” CNBC (Jan. 15, 2014) and “U.S. Mortgage Applications Volume Jumped Last Week,” The Wall Street Journal (Jan. 15, 2014)