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Aug 1- Mortgage Terms Will Be Simpler for Home Buyers

Posted on April 16, 2015 | Leave a comment

Mortgage terms will be simpler for home buyers to read and understand come Aug. 1. Borrowers will receive one disclosure, the Loan Estimate, detailing the terms and projected closing costs shortly after application, and another, the Closing Disclosure, just before signing off.

The new forms, mandated by the Consumer Financial Protection Bureau, will likely seem to consumers a relatively minor, if welcome, change. But for the lending industry, and all the other parties involved with mortgage transactions, preparing for the switch is a massive undertaking.

The new forms are part of a nearly 1,900-page rule created by the bureau to fulfill its obligation under the Dodd-Frank Act to integrate and simplify the four different mortgage disclosures currently required under the Truth in Lending and Real Estate Settlement Procedures acts. Commonly referred to as the TILA-RESPA rule, it became final back in November 2013. With the Aug. 1 effective date looming, the lending industry is still scrambling to comply.

“I think it was an ‘out of sight, out of mind’ thing, and maybe people were hoping it would get delayed,” said Grace Currid, a senior vice president and chief credit officer for HomeBridge Financial Services, a nonbank lender. “Now the reality of the change is hitting the lending industry and everyone is just starting to understand the magnitude.”

The rule doesn’t just streamline the disclosure forms, making the features and costs of the mortgage more plain. It rewrites long-established rules about the timing and method of disclosing, what triggers a disclosure requirement, and under what conditions you might need to re-disclose, said Jonathan Corr, the chief executive of Ellie Mae, a provider of loan origination and other software systems for the mortgage industry.

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Negative Equity A Drag On Home Sales

Posted on April 14, 2015 | Leave a comment

While existing home sales are up nearly 5 percent from last year, economists say activity would likely be more brisk if it weren’t for the negative equity overhang that has lately worsened in many markets.

Completed sales on existing homes rose 4.7 percent in February compared with a year ago, reaching an annual rate of 4.88 million, according to the National Association of Realtors, a 1.2 percent increase over January. But Mark Fleming, the chief economist at First American Financial Corporation, a national provider of title insurance and settlement services, says his research tells him that home sales ought to be even higher. The labor market has improved considerably. And home prices are higher, which, though it may sound counterintuitive, have historically correlated with rising home sales, he said.

Zillow’s 2014 fourth-quarter negative equity report even shows rising negative equity levels in 21 of the top 50 housing markets, compared with the third quarter. The reason is that the bottom 10 percent of homes in these markets, where negative equity is highly concentrated, are declining in value, Mr. Humphries said.

Homeowners in the bottom one-third of housing stock by price are three times as likely to be underwater than homeowners in the top third, Mr. Humphries said. What’s more, the Zillow report found, they are also far more likely to be deeply underwater, or owing at least twice what their home is worth.

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Subprime Loans new names: Nonprime, non-QM, Alternative and are still available

Posted on April 12, 2015 | Leave a comment

“Subprime” has been a dirty word since the freewheeling mortgage lending spree that ultimately brought down the economy and propelled millions of homeowners into foreclosure.

The term simply refers to loans made to borrowers who do not fit the standards for a prime mortgage loan, as defined by Fannie Mae and Freddie Mac. But after the housing market crash, subprime became almost synonymous in some people’s minds with the insidious loan products of the previous decade — those that didn’t require proof of income, or with negative amortization, or that allowed the borrower to decide how much to pay each month.

It is not surprising that the lenders who are now dealing in the subprime area are choosing different terminology to describe their products. The preferred adjectives these days are nonprime, non-QM (for qualifying mortgage) or “alternative.”

disclaimer: for information and entertainment purposes only

Aug 1- Mortgage Terms Will Be Simpler for Home Buyers

Negative Equity A Drag On Home Sales

Subprime Loans new names: Nonprime, non-QM, Alternative and are still available

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