Is Mortgage Underwriting Getting More Friendly?

Category: Housing Market

Posted on in Housing Market

Is Mortgage Underwriting Getting More Friendly?

It looks like banks are less scared of mortgage loans these days. In its quarterly survey to member banks, the Federal Reserve asked senior bank loan officers whether “prime” residential mortgage guidelines had tightened in the last 3 months. Just one-fifth of banks said guidelines tightened last quarter, a dramatically lower figure versus last quarter — a signal that mortgage underwriting may get less restrictive in the months ahead. It is worth noting, however, that not a single responding bank said its guidelines had eased.  For now, getting through underwriting is still much tougher than it was 2 years ago.  Some of the changes today’s borrowers face include: Higher minimum FICOs Larger required downpayments and equity ownership Higher income levels versus monthly debts Larger reserve requirements Furthermore, second mortgages are scarce when loan-to-values exceed 80 percent. The underwriting changes of the last 24 months preclude many Americans from getting access to today’s low rates if the Fed’s reported trend continues, that could […]

by jberman
Posted on in Housing Market

Foreclosures Continue To Concentrate Across Just 3 States

Foreclosure-tracker RealtyTrac reports that the number of foreclosures nationwide rose 7 percent on a month-to-month basis last month. However, 3 states dominated the foreclosure list, tallying more foreclosures between them than the rest of the country combined. California : 30.0 percent Florida : 15.7 percent Arizona : 5.4 percent On a per-household basis, the states ranked 2, 3 and 4. Only Nevada’s foreclosure rate was higher. Now, we point out these statistics for two reasons.  The first is to remind you that foreclosures can be highly local.  For all of the foreclosure-related stories that run in the papers and on TV, defaults make a much larger impact on home values in some areas versus others. And, second — foreclosures can represent a terrific buying opportunity.  Not every foreclosed home is in pristine condition, but there is a plethora of affordable housing out there, suitable for first-time buyer, move-up buyers and investors, too. Furthermore, as banks get better at disposing of foreclosed homes, […]

by jberman
Posted on in Housing Market

Mortgage Rates Higher On April’s 539,000 Jobs Lost

The economy shed 539,000 jobs in April, raising the 6-month total to nearly 4 million jobs lost. And while the April data may look bad, it’s actually 10% better than what was expected. As a result, it’s turning into a bad day to be shopping for mortgage rates. After bottoming out early last week, conforming, 30-year fixed rate mortgages have risen in cost by as much as three-quarters of a percent. Today’s good-for-the-economy report may push costs higher still. Now, it may seem odd to categorize 539-thousand lost jobs as “good-for-the-economy”, but it’s important to remember that on Wall Street, expectations are everything.  Investors are constantly buying and selling securities based on what they think will happen in the future.  And, up until this morning, there was an expectation that 600-thousand jobs had been lost in April. As it turns out — relative — the actual job loss data wasn’t so bad. Now, markets are making adjustments and re-forming expectations of […]

by jberman
Posted on in Housing Market

Pending Home Sales Rise In March — Another Sign That Housing Is Recovering

For the second consecutive month, the number of homes under contract to sell increased — further evidence that housing markets may have already bottomed. As reported by an industry trade association, the Pending Home Sales Index rose by 3-plus percent last month. A “pending” home is one that’s under contract but has yet to close.  This is one reason why the Pending Home Sales Index is an imperfect statistic. Just because a home is under contract doesn’t mean it will actually sell.  A lot can go wrong between the date of agreement and the date of closing.  Deals fall apart all the time.  But, when the number of pending contracts rises, we can infer that buy-side demand for homes is strong. It’s likely that the number of homes under contract is being influenced by a combination of low mortgage rates, relatively inexpensive homes, and various tax credits for certain homebuyers.  Overall, it’s spurring demand and that’s part of what’s captured by the Pending […]

by jberman
Posted on in Housing Market

The Decline In Home Values Slowed In February, Says Case-Shiller. Probably in March and April, Too.

The Case-Shiller Index is a popular reporting tool for the nation’s home prices.  Each month, researchers measure home values in 20 large cities, compile their findings, and then publish them to the public. The Case-Shiller Index is not a perfect measurement by any means.  It gives more weight to expensive homes than inexpensive ones, for example, and its sample set includes just 37 states.  But that doesn’t diminish its importance to the housing sector.  Because the Case-Shiller Index comes from the private sector, it’s an excellent counter for the U.S. government’s home value reporting tool — the House Price Index. In this current market, the Case-Shiller Index tends to report housing in a more negative light than does the government.  This doesn’t make either method more accurate, it just provides a helpful point/counter-point.  And that’s why February’s Case-Shiller Index is so important.  Despite reporting falling values in each of its 20 tracked cities, the Case-Shiller Index showed values falling with a lesser speed […]

by jberman
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