Big-four lender’s mortgage originations climb 37%

July 20, 2012 by Leave a Comment
From HousingWire.com           By Jon Prior     July 20, 2012

“Mortgage originations at the big-four banks increased 37% in the second quarter from last year because of the expanded Home Affordable Refinance Program.

Wells Fargo, JP Morgan Chase, Bank of America and Citigroup wrote $205.8 billion in new mortgages in the three months ending June 30, according their combined financial filings.  Originations also increased 7% from the first quarter.

Wells continued to dominate. The San Francisco bank wrote $131.9 billion in new loans during the quarter, more than double originations from the same period last year. Wells said 16% of those new loans came through the Home Affordable Refinancing Program.

The Federal Housing Finance Agency expanded HARP last year to eliminate upfront costs, negative equity caps and some repurchase risk on the original loan – pushing more business to the largest banks.

Wells said 69% of its record $208 billion in mortgage applications were from borrowers looking to refinance under HARP.

Legislation lingers in a grid-locked Congress to expand competition in the program by eliminating repurchase risk on the new loan as well. But analysts predict the HARP boom could begin to fade into autumn, well before any new legislation is expected to pass.

Chase wrote $43.9 billion in new mortgages during the quarter, up 29% from last year and 14.3% from the previous quarter. Originations at its retail branches set a bank record at $26.1 billion.

Bank of America continues to feel the drop off from exiting its correspondent lending channel last year. Originations fell 55% from one year ago to roughly $18 billion, the only yearly decline of the big-four lenders.

The bank ceased selling some mortgages to Fannie Mae as well, though executives said in an investor conference call that it regained some lost retail market share.

Citi originations totaled $12.9 billion, up 17% from last year but still down 10% from the previous quarter.” ( End of article.)

If you – or someone you know – are struggling with your mortgage, and the rate is higher than 5 or 6%, and your property is “underwater” ( Worth less than the loan.)  now is the time to look into one of these refinances.  Even if you think you might not qualify, you really should look into it.  It doesn’t necessarily have to be the same lender you presently make your payments to.

Here is a previous blog post with more details on the HARP 2 program:  http://southoc.info/2012/07/increased-interest-in-the-expanded-harp-program.html

If you need help, I have lenders I can recommend who might be able to help you.  Just give me a call, or shoot me an email.

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Filed Under: Adjustable Rate Mortgages, Distressed properties, Foreclosures, Home Values, Loan modifications, Mortgage Principal Reductions, Mortgage Rates, Orange County California real estate

Increased Interest in the Expanded HARP Program

July 15, 2012 by Leave a Comment

From The New York Times,  written by VICKIE ELMER,   published on June 21, 2012

MORE homeowners who are “underwater,” or owe more on their homes than they are worth, have been taking advantage of an expanded Home Affordable Refinance Program to refinance their loans and obtain lower interest rates, according to a recent government report.

Industry experts expect that the numbers will continue to grow now that qualifications have been loosened.

According to the June report , by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, in the first quarter 180,000 mortgages were refinanced through what is known as HARP 2, almost double the 93,000 in the fourth quarter of 2011 and the highest quarterly number since the HARP program started in 2009.

HARP was created by the federal government to help homeowners, whose mortgages are owned or guaranteed by Fannie and Freddie and made before May 31, 2009, refinance into loans with less onerous terms.

The program was expanded last fall with several modifications, including the removal of certain fees and a second appraisal, and an extension of the deadline to Dec. 31, 2013.

In addition, the cap was removed on the loan-to-value ratio. When the program began, there had been a ceiling of 125 percent, meaning loans could not be underwater by more than 25 percent. (Underwater loans are more than 100 percent loan to value.)

“You’ll see an explosion in that above-125-L.T.V. category,” said Andrew BonSalle, a senior vice president of Fannie Mae and the head of its underwriting and pricing.

Since the beginning of the year, 4,400 loans with L.T.V.’s greater than 125 percent were refinanced, according to the Federal Housing Finance Agency report. And of the 180,000 total HARP refinancings in the first quarter, 41,000 were to New Jersey homeowners and 32,000 to New York.

“There’s a lot of borrowers who don’t believe they’re eligible,” Mr. BonSalle said, adding that lenders need to keep reaching out to underwater homeowners so they know they can participate.

He noted, however, that because of the boom in HARP 2 refinancing combined with other refinancing, thanks to historically low interest rates, some lenders have been facing large application backlogs. Underwater homeowners will, therefore, need to be patient with their lenders.

“HARP business is very strong,” said Kevin Watters, a senior vice president and the head of mortgage originations at JPMorgan Chase.

“Homeowners should refinance while interest rates are still low,” Mr. Watters added, explaining that customers can supply much of the necessary information through a secure Web site in addition to personal interviews.

Like many other lenders, JPMorgan Chase has been focused on offering HARP refinancing to current customers whose mortgages are serviced by the bank. Borrowers can also contact any participating lender, though finding one that accepts HARP applications from new customers may be challenging.

Mr. Watters said that Chase was mailing letters to customers who prequalified for a HARP 2 refinancing. The letters offer borrowers reduced rates with no closing costs and closing in 30 days, assuming homeowners can show verification of employment.

Under the federal guidelines, HARP borrowers must also be current on their monthly mortgage payments, though they may have had one late payment, provided it occurred at least six months before they applied to the HARP program.

Homeowners with private mortgage insurance will generally be allowed to carry that over to the new refinanced HARP loan, Mr. BonSalle said.

But borrowers with a second mortgage must get the lender of that loan to agree to the HARP refinancing.”  ( End of article.)

If you’re interested to see if you qualify for this program, contact your favorite lender.  If you need a recommendation of one, I have a couple great lenders I can whole-heartedly put you in touch with.

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Filed Under: Adjustable Rate Mortgages, Foreclosures, Household Finances, Loan modifications, Mortgage Rates, Personal Finance

Adjustable Rate Mortgages Adjusting To 3.000 Percent Right Now

February 8, 2011 by Leave a Comment

ARM adjustment rates for 2011

If your ARM is due to adjust this spring, your best move may be to allow it. Don’t rush to refinance — your rate may be adjusting lower.

It’s because of how adjusted mortgage rates are calculated.

First, let’s look at the lifecycle of a conventional, adjustable rate mortgage:

  1. There’s a “starter period” of several years in which the interest rate remains fixed.
  2. There’s an initial adjustment to rate after the starter period. This is called the “first adjustment”.
  3. There’s a subsequent adjustment until the loan’s term expires. The adjustment is usually annual.

The starter period will vary from 1 to 10 years, but once that timeframe ends, and the first adjustment occurs, conventional ARMs enter a lifecycle phase that is common among all ARMs — regular rate adjustments based on some pre-set formula until the loan is paid in full, and retired.

For conventional ARMs adjusting in 2011, that formula is most commonly defined as:

(12-Month LIBOR) + (2.250 Percent) = (Adjusted Mortgage Rate)

LIBOR is an acronym for London Interbank Offered Rate. It’s the rate at which banks borrow money from each other. It’s also the variable portion of the adjustable mortgage rate equation. The corresponding constant is typically 2.25%.

Since March 2010, LIBOR has been low and, as a result, adjusting mortgage rates have been low, too.

In 2009, 5-year ARMs adjusted to 6 percent or higher. Today, they’re adjusting near 3.000 percent.

That’s a big shift. 

Therefore, strictly based on mathematics, letting your ARM adjust this year could be smarter than refinancing it. You may get yourself a lower rate.

Either way, talk to your loan officer. With mortgage rates still near historical lows, Coto de Caza homeowners have interesting options. Just don’t wait too long. LIBOR — and mortgage rates in general — are known to change quickly.

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Your ARM Is Adjusting Lower. Is There A Downside To Letting It?

September 10, 2010 by Leave a Comment

Pending ARM adjustment based on LIBOR

When adjustable-rate mortgages are on the verge of adjusting, a common concern among homeowners is that their mortgage rates will adjust higher.

Well, this year, because of the math of how ARMs adjust, homeowners in Coto de Caza and around the country are seeing that mortgage rates on ARMs can sometimes adjust lower, too.

Adjusting conforming mortgages are adjusting to as low as 3 percent.

As a quick review, here’s the timeline for most conforming adjustable-rate mortgages:

  1. There’s a “starter period” in which the interest rate remains fixed. This can range from 1-10 years.
  2. There’s a rate change after the starter period. It’s called the “first adjustment”.
  3. Subsequent, annual adjustments follow until the loan “ends”. This is usually after Year 30.

The adjustments each year are based on a math formula that’s included in the contract with your lender. It’s surprisingly basic.  Each year, your new, adjusted mortgage rate is equal to the sum of some constant — usually 2.25 percent — and some variable.  The variable is most commonly equal to the 12-month LIBOR.

As a formula, the math looks like this:

(Adjusted Mortgage Rates) = (12-Month LIBOR) + (2.250 Percent)

LIBOR is an acronym standing for London Interbank Offered Rate. It’s an interest rate at which banks borrow money from each other — very similar to our Fed Funds Rate here in the United States. And also like our Fed Funds Rate, LIBOR has been low lately.

As a result, adjusting mortgage rates have been low, too.

In 2009, 5-year ARMs adjusted to 6 percent or higher. Today, ARMs are adjusting to 3.000%.

Based on the math, you may want to let your ARM adjust with the market year. Or, if you plan to keep your home long-term and have concerns about adjustments in 2011 and beyond, it may be a good time to open a new ARM.  The same forces that are driving down LIBOR and helping to keep mortgage rates low overall, too.

Consider talking to your loan officer and making a plan. With mortgage rates as low as they’ve been in history, most homeowners have options.  Just don’t wait too long. LIBOR — and mortgage rates in general — are known to change quickly.

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Should You Refinance Your ARM, Or Let It Adjust Lower?

July 13, 2010 by

ARM adjustment schedule 2008-2010

If your adjustable rate mortgage is due to adjust this year, don’t go rushing to replace it just yet. Your soon-to-adjust mortgage rate may actually go lower. It’s related to the math behind the ARM.

Conventional, adjustable-rate mortgages share a common life cycle:

  1. There’s a “starter period” in which the interest rate remains fixed
  2. There’s an initial adjustment period after the starter period called the “first adjustment”
  3. There’s a subsequent annual adjustment until the loan’s term expires — usually at Year 30.

The starter period will vary from 1 to 10 years, but at the point of first adjustment, conventional ARMs become the same. A homeowner’s new, adjusted mortgage rate is determined by the sum of some constant, and a variable. The constant is most often 2.25% and the variable is most often the 12-month LIBOR.

As a formula, the math looks like this:

(Adjusted Mortgage Rates) = (12-Month LIBOR) + (2.250 Percent)

LIBOR is an acronym standing for London Interbank Offered Rate. It’s the rate at which banks borrow money from each other and, lately, LIBOR has been low. As a result, adjusting mortgage rates have been low, too.

Last year, 5-year ARMs were adjusting to 6 percent or higher. Today, they’re adjusting to 3.375%.

Based on the math, it may be wise to just let your ARM adjust this year. Or, depending on how long you plan to stay in your home, consider a refinance to a new ARM.  Starter rates on today’s adjustable rate mortgages are exceptionally low in Rancho Santa Margarita , as are the rates for fixed rate loans.

Either way, talk to your loan officer about making a plan. With mortgage rates as low as they’ve ever been in history, homeowners have some interesting options. Just don’t wait too long. LIBOR — and mortgage rates in general — are known to change quickly.

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Filed Under: Adjustable Rate Mortgages Tagged With: ,