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on Fri Mar 24 2017, 4:10 PM
Shortly after this article was released, Speaker of The House Paul Ryan pulled the Healthcare Reform Bill from the House Floor, and postponed the Health Care Reform Vote, as Republicans currently do not have enough votes to "Repeal & Replace" the Affordable Care Act. Mortgage Rates and Stocks are trending down in response, due to Financial Market disappointment. Paul Ryan is scheduled to speak at 4 p.m. ET. You can follow that live at For update mortgage information in AZ contact AZ Mortgage Expert Steve Bernstein (480) 424-7144
Larry Gray
Senior Mortgage Banker, Mason-McDuffie Mortgage Corporation
on Fri Mar 17 2017, 3:00 PM
I too question the rate discrepancy pointed out between most FHA loans and ones that included down payment and sometimes closing costs assistance. In fact the rate could be better in using the Cal HFA State down payment assistance only. The rate was typically half a point higher when receiving closing cost assistance as well. However, that would often only be .250 higher then prevailing FHA rates. My experience and Michael Schwartz' experience based on his comment, covers two States. Nevertheless, I would still be surprised to see many State's in their DPA and closing cost assistance programs showing rates up to 80 BPS higher! The overall maximum debt to income ratio allowed is much lower than the maximum allowable on most standard FHA loans which makes sense since very little money has been risked by the home buyers. What ought to be considered in conjunction with qualifying factors, is how much it means for most of these borrowers to own their own home. I seriously doubt hardly any would end up foreclosing on their home loan unless they absolutely had no choice. Being of low to lower middle class incomes naturally more people will likely be affected by an economic or medical catastrophe than higher income classes. However, so far the FEDs have paid close attention and addressed FHA qualifying standards, needed adjustments to lessen risk to the insurance fund, and FHA insured lending has been successful thus far.
on Fri Mar 17 2017, 2:52 PM
These loans are at premium rates. It's time that OIG did step in to oversee these types of programs, that is a little too late. Although it's intention serves a purpose, the outcome is higher closing costs, higher interest rates and monthly payments. Affordability should not be justified by turning to these programs. The interest rate spreads are significant and I advocate for first time home buyers to look at all loan scenarios with and without the down payment assistance to encourage a longer term approach to these programs. DPA programs are the last resort and a first time homebuyer in California, should be conservative on their approach to purchase a home if down payment assistance is needed.
on Fri Mar 17 2017, 11:51 AM
I have written quite a few loans with community held seconds here in NJ and not one of them had any pricing adjustment whatsoever. The only pricing adjustment that I see for these borrowers is due to credit score but again that adjustment is made without any regard for a second or lack there of. I don't know if the OIG actually peels that layer back. Most community down payment programs that I come across are for first time buyers only and add to that the income caps which are well below the median income. That type of borrower will most typically struggle to maintain a higher credit score. I don't think the OIG realizes that.
Larry Gray
Senior Mortgage Banker, Mason-McDuffie Mortgage Corporation
on Mon Mar 13 2017, 1:17 PM
Sales & marketing that is ok under RESPA may not be ok when it comes to buying any leads from Zillow. Of course, for many years a large dominate real estate property information and education website was nonexistent. It seems if Zillow did not have the real estate licensing then it could only be considered an educational and marketing website that can sell leads in some manner and form. "The statute has always been vague, the regulations are not much better - " In a way maybe companies like Redfin, who have been adapting to maximize proftits in real estate sales while using their own network of real estate agents and real estate agent Assistants gain the edge if deciding Zillow is not allowed to sell leads. To my way of thinking, it seems highly anti-competition to leave out a company like Zillow whose investors decided to continue working with a broad range of independent real estate agents as opposed to hiring and controlling their own. It would be more fair to rewrite regulation to clearly include the right of website educational and marketing companies like Zillow to be able to sell rights to their own company received leads to real estate agents and mortgage loan agents.
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Fri Mar 10 2017, 2:21 PM
I don't see today as an indication of a bigger-picture bounce. We're not likely to see major movement until after next week's Fed. Lock/Float thoughts discussed in greater detail on MBS Live as well (take a free trial if you haven't already).
on Fri Mar 10 2017, 2:05 PM
So what are your thoughts on waiting on locks until mid next week?
on Fri Mar 10 2017, 9:15 AM
I have an expression, "every sentence ends with a comma, not a period." Having said that, I believe rising prices would send the message, "Prices are rising, you better buy now".
Dustin McAlister
Mortgage Loan Officer, KS StateBank
on Thu Mar 9 2017, 9:47 AM
Agreed on the IRRRL when it comes to the 3 year ARM. However what about the vets that took a higher rate because when they bought their home they were pushed to a realtor or builder preferred lender who had sub-par VA pricing because they do so few VA loans? You should be able to IRRRL out of a higher 30 year fixed rate into another 30 year fixed if your breakeven point is instant. If all of the costs other than pre-paids were covered with lender rebate there is zero financial harm done to the vet in those situations. This is who really gets hosed on the new rule requiring 6 months of payments.
on Mon Mar 6 2017, 11:46 AM
Rob - Saying appraisers charge $700 per appraisal and do two per day is absurd. What is your source for this info?
Larry Gray
Senior Mortgage Banker, Mason-McDuffie Mortgage Corporation
on Fri Feb 24 2017, 2:53 PM
Late to the comment party, but it is important to say lacking in the discussion is the absence of clarity on what exactly the 17% really was! Yes, the headline of the article states 17% of consumers unaware that mortgages involve closing costs. But if you read just a little further: "...some homebuyers still say their final closing costs caught them by surprise". "Some appear to have been unaware that closing costs were even required." WELL, DOES "SOME" MEAN 17%? Perhaps Jann, you meant to say 17% of respondents were caught by surprise at their closing costs, and some of them didn't even know that had closing costs? No question more loan officers could become educated about doing proper "mortgage planning" which includes keeping borrowers well informed on the numbers throughout the loan process.
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Fri Feb 24 2017, 1:29 PM
Not sure if it's "good," but numbers that low are "common" when it comes to mortgage/housing survey-based data.
Ted Rood
Senior Loan Officer , MB Financial Bank
on Fri Feb 17 2017, 7:46 PM
I'd be totally shocked if half of home buyers picked their title company. In my experience, it's almost universally the buyers' agent, or seller's attorney who picks title company. On another note, what does it say about TRID and "Know Before You Owe" if 17% of home buyers aren't aware of closing costs until they reach the closing table? It is ridiculous that ANYONE would make it through the mortgage process (and attendant multiple sets of LE's) without fully comprehending that loans involve certain costs, but 17%?
Ted Rood
Senior Loan Officer , MB Financial Bank
on Thu Feb 16 2017, 5:20 PM
Obviously, ARMs aren't for everyone, Larry, and I wasn't implying that they are. Not sure how many of us are overly concerned about rates rising to 18% (yes, I remember those days too). If someone was expecting dramatically higher rates in the coming decades, today's ARM adjustment rate caps would certainly provide a measure of comfort.
on Mon Feb 13 2017, 7:08 PM
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on Fri Feb 10 2017, 11:53 AM
I'm closing on a house on March 23rd in Denver, CO. It's a new build and I started the build in Oct '16. As you know, rates shot up and now I'm at the point where I can lock in rates with a 45 day lock. I see rates bounced off resistance, so I'm thinking about waiting until they come down again. What are your thoughts?
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Thu Feb 9 2017, 2:48 PM
Juan, they didn't do it sooner because they adhered to almost the exact same time frame on the MIP cut as they did in 2014/2015. Specifically, the actuarial report came out in November 2014 and the MIP cut was announced in January 2015. Same story this time around, except that the actuarial report is even stronger this time. If Obama admin is to be faulted on a political level, the only case to be made is that they didn't try to include the incoming administration on the changes.
Frank Ceizyk
Producing Branch Manager, Own It Home Loans
on Tue Feb 7 2017, 9:24 AM
Little bit of political spin on this one. The narrative before the election was Trump would be an unmitigated disaster for the market and cause it to plummet—while the kneejerk overnight trading the night of the election certainly seemed to confirm that, by the morning the sentiment changed, and hasn’t stopped as the market breaks record after record. Granted, the rally seems a bit overdone, and hasn’t helped rates. On the flip side, if this administration is successful in cutting back some of the absurd Dodd Frank implementations, we could see low lending costs. And with house prices continuing to rise, negative equity will be less of a problem for more and more borrowers.
on Thu Feb 2 2017, 2:25 PM
Also, FWIW, buyers primarily see active listed properties and submit their offers based upon what's currently available as opposed to what's sold and closed...
on Thu Feb 2 2017, 9:40 AM
After 50 yrs. in the Mortgage business I still marvel at the "greed" that exists. In most instances, those found guilty of these different charges are financially successful. WHY then do they do these things?
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Tue Jan 31 2017, 4:12 PM
Our official stance and our specific assumption for the purpose of this article is that an appraisal is an objective assessment of value--nothing more, nothing less. "Appraisal fails" referenced the "failure of a piece of collateral to appraise at the value agreed upon in the purchase contract." The article refers to "purchase mortgage applications that failed approval." The failure in that case is triggered by the valuation--the appraisal--simply because it serves as the objective verdict on price. It is neither inherently good nor bad. It simply "is." Certainly, the root cause of the failure is more appropriately argued to be overestimation of value on the part of buyer/seller, among other things. The analysis in question concerned itself with instances where the discovery of value triggered the failure of the mortgage approval. Nonetheless, I went ahead and changed the title to reference "valuations" as opposed to "appraisal fails."
on Tue Jan 31 2017, 1:09 PM
Matthew Graham, here is why I take this article as a knock on appraisers: 1) the part of title "appraisal fails still causing issues" is very much blaming appraisals for a "failure" and "issue". The title could easily have been appraisals save borrowers from buying above market value or appraisals save lenders from investing above market value. 2) the article quotes Yanling Mayer stating "appraisals coming in below the contract selling price is common."; however the article fails to point out the fact that the statistics cited in the article prove exactly the opposite. 11.3% is not common in fact it is rather uncommon when you realize that 88.7% were not below contract price. It is not an appraisers charge to match or verify the contract price. The appraiser is providing an opinion of market value as defined. The investors should be grateful when they learn that the amount they are being asked to invest is above market value. Unfortunately this article leaves the impression that the investors just want the deal to go through regardless of market value.
on Tue Jan 31 2017, 11:30 AM
Why doesn't this read "Brokers Fail at Price Negotiations Causing Issues..."
on Tue Jan 31 2017, 11:25 AM
Does this mean 85% or so of people are paying below market value for their homes?
on Mon Jan 30 2017, 4:29 PM
If it was so great, why didn't Obama do this sooner? Before the election? This isn't the only "land-mine" he left the incoming administration... there's more
on Mon Jan 30 2017, 11:51 AM
Maybe it is due to the title of the article. "Appraisal Fails" If one of our reports comes in below the contract price I wouldn't consider it a fail. It's the market speaking. Also keep in mind that, of all the people involved in the transaction, the appraiser is left holding the liability for the life of the loan. This is just even more incentive for appraisers to get it right regardless of a sales contract. I am certain there are instances out there where some appraises are overly cautious when valuing in increasing markets. Perhaps just some, not all, of the liability should be shifted off of the appraiser's shoulders.
Matthew Graham
Chief Operating Officer, Mortgage News Daily / MBS Live
on Mon Jan 30 2017, 9:53 AM
It's interesting that appraisers view this objective reporting as some sort of knock on them. The point of the story is that contract prices are higher than valuations suggest. I'm not sure there was any subjective assessment of the quality/accuracy of those valuations.
Larry Gray
Senior Mortgage Banker, Mason-McDuffie Mortgage Corporation
on Fri Jan 27 2017, 1:20 PM
I had read this very informative news report from Jann Swanson when it came out, and after seeing both comments decided I had something to say to the appraisers. I have much respect for the vast majority of appraisers. It is not an easy job by any means and there is much education and a long learning curve involved. When values were gradually coming back, I thought some appraisers were rather cautious in appraising property, and sometimes that was a reflection of appraising in an area generally out of their usual geographical areas. In instances where the appraised value was too low to do the refinance loan I would search for comps to justify value. On the appraisals I was able to submit at least 3 comps I thought should justify a higher value I actually came out about 50-50: half they increased the value usually enough to do the loan and half they did not. They are human and will work with you to see if any of the comps. can work to help increase value. In regards to purchase loans I have not had as many come in lower as the averages in this news report show but must say this. I have always felt appraisers, for the most part, bend over backwards to try and find the comps. that justify a sales price. I know this to be true in so many instances. So I really think that most of the high percentage of appraisals coming in lower than the sales price are likely justified. I think most of the appraisers try to justify a sales price when they can. They know how much it means to all parties involved. They also know there is an important reason they are relied on so much by the lender in justifying value. It is so vital to the lending process such that money can continue to be accessed to meet buyer demand and help boost all the businesses with some connection to the construction and real estate process. I would hope more people in the industry realize the value of encouraging new appraisers and maintaining a sufficient number of educated and experienced appraisers. More communication needs to be made as to their value and to make sure it is understood what just compensation ought to be, as I know appraisers unhappy with some AMC's in what portion they pay to the appraiser.
on Mon Jan 23 2017, 4:51 PM
Perhaps a better title for this article would be: Despite Realtors' Optimism & Seller Greed, states hard hit by the Great Recession continue to show conservative value increases. Not too long ago appraisers were being threatened by lack of future work if we didn't tweak up an appraised value, push values, overlook all but the very highest incomparable sales as buyers, terrified by galloping price increases, feared if they didn't buy RIGHT NOW at whatever price they could get accepted, they would be priced out of the market forever. I recall one L/O telling a fellow appraiser that she required "$XXX" value and would continue calling appraisers until some appraiser agreed to come in at that value. All those buyers who overpaid back in 2004 -2005, well they are mostly among the masses of The Great Foreclosed whose credit was damaged, equity gone, and payments down the drain. Seems to me, appraisers are doing exactly what they are SUPPOSED to do, which is to discover the value in the marketplace for a piece of property. In a purchase transaction, we typically find market value for lending purposes. A Buyer can certainly pay a higher price than the appraised value... if he has the cash...and that can become a higher priced sale comp. Lenders are expecting to have confidence in their collateral decisions, and a realistic appraisal is at the core of that. Real estate agents and Sellers alike should be cautioned about overly optimistic pricing, because not every place has completely and firmly recovered from the Crash. We should be cautious about fueling another housing recession and provide realistic supportable comparable sales. Slow and steady beats reaching for the moon, then feeling the pain of crash and burn of broken dreams, homelessness, recession and economic pain. We suffer from short memory sometimes.
on Mon Jan 23 2017, 2:55 PM
The Federal budget is a mess. Now it turns out that the student loan program is going to cost us billions. I am an originator of FHA loans but the FHA program is just 16% above the 'minimum' allowable reserves. It is fiscally prudent to keep the fee higher for a time so that we can return to a robust FHA program.......if we have another housing downturn - that 16% will evaporate over night. What is wrong with being prudent??
on Fri Jan 20 2017, 5:50 PM
Middle America gets its first taste of a Trump presidency.
on Wed Jan 18 2017, 2:43 PM
Good post - I have seen deals fail due to each of these examples and then some! I think the main thing is making sure the LO & Client are in constant communication and everything is transparent. Sometimes you cannot control what the client is doing - in those cases you shake your head and move on to the next closing!
Ted Rood
Senior Loan Officer , MB Financial Bank
on Tue Jan 17 2017, 1:20 PM
Danged consumers! First they borrowed recklessly, igniting the mortgage meltdown, and now they're being far too responsible with their regained equity, and not consuming enough! When will they ever get it right?? ;)
on Fri Jan 13 2017, 11:10 AM
and this is why our owner Casey Crawford and Toby Harris at Movement Mortgage pioneered the upfront UW,. I get 80% of my approvals during the option period. So if any credit issues we have time to resolve. Now nothing we can do for a bad home that has too many repairs.
Larry Gray
Senior Mortgage Banker, Mason-McDuffie Mortgage Corporation
on Thu Jan 12 2017, 12:23 PM
Looking at the top 10 Metros for change in starter homes sales failures, all I can say is "ouch!" Ok, maybe I have a little something to say on the subject. At least in part there is a lack on the part of the some loan officers and their banks to better qualify the buyers. Pricing on housing may be getting into the stratosphere where fewer and fewer borrowers qualify and sometimes loan officers may qualify them to a maximum that later was found to be unrealistic. Those kinds of issues have to frustrate realtors, sellers, and buyers to no end! Otherwise, even though still remaining qualified buyers, many buyers, at current home prices, may be scrutinizing the home inspection more than ever and not able to negotiate an acceptable new agreement with the sellers. I suspect as we are hitting prices in many places that are close to those of the real estate market peak in 2006, a factor is that salaries have not risen nearly as quickly as home prices; consequently more borrowers are being qualified at maximum debt to income ratios and of course more money is required for them to come in with. I have had a borrower who tried to at least meet a seller half way on how much lower an appraisal came in, and the seller stuck to the sales price! So many sellers may still be holding onto unrealistic price expectations. Fortunately, the next home bid was successful, and for a home that was even nicer and for $10,000 less. For the first time buyer, 2017 could be the year was see prices even out in some markets, and drop in others.
on Mon Jan 9 2017, 3:10 PM
Ted, a great piece! Thanks for sharing!
on Fri Jan 6 2017, 10:24 AM
sorry, I meant Schedule E, not A
on Fri Jan 6 2017, 10:15 AM
@Sarah: that is an overlay by your Investor/s. I am a Direct Fannie Mae Seller, and they do NOT require a 2 year history on Schedule A. Does seem odd to me to put 15-20% down to get a loan.
on Thu Jan 5 2017, 12:18 PM
I have not yet felt credit loosening in the conforming realm. Borrowers continue to feel like criminals during the loan process due to all the needs for where a small deposit outside of normal payroll is coming from and over justification of how they spend their money. Over qualified borrowers continue to be scrutinized where a FHA borrower with a low credit score seems to have a better chance at qualifying. Underwriting requirements still have a long way to go before a borrower can experience an easier loan process.
on Wed Jan 4 2017, 4:08 PM
Fraud is common in any industry and it takes two to tangle. Hopefully, there will be a system to track these things and not allowing it to happen.
Craig Markhardt
Mortgage Banker NMLS.7026, Frontier Bank
on Wed Jan 4 2017, 2:35 PM
Thanks for the reporting. It is always good to learn new, sophisticated schemes.
Ted Rood
Senior Loan Officer , MB Financial Bank
on Thu Dec 29 2016, 10:08 PM
I agree that this "rally" has to be viewed with a high degree of skepticism. While it's encouraging to not lose further ground, there's no conviction or commitment here.
Ted Rood
Senior Loan Officer , MB Financial Bank
on Thu Dec 29 2016, 9:41 PM
So Trulia's economist says rates would have to double before renting would "beat" buying a home? Love to see the parameters he based that conclusion on. The payment on a 250K loan at 4.25% is nearly $700 less than at 8.5%, hard to believe rents are that far above ownership costs now.
on Thu Dec 29 2016, 2:11 PM
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