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Category Archive: ‘Mortgage News’



The old First-Franklin way of qualifying – and a better gauge of actual income and expenses. From HW:

An excerpt:

In fact, CSC does not use the term subprime. According to Will Fisher, SVP of sales and marketing, at CSC “Subprime is offensive.” CSC has coined a more apt descriptive word for of this part of the mortgage world, “non-prime.”

“People have been hesitant to make this kind of loan since 2008 and even wondered how we could even fund them,” said Fisher. “Even now people ask how we are making these loans. The truth is, subprime is not a four-letter word.  And non-prime is an even better description of what is occurring since 2011-12 in this loan type.”

CSC created a loan program four years ago that allows self-employed borrowers to document their income using bank statements instead of tax returns like 1040s or 1099s. The company requires two years of bank statements to validate cash flow and thus extrapolate income. This gives the company critical insight into a borrower’s ability-to-repay (ATR).

“We believe that 24 months of continuous bank statements are a very reliable look into what a person actually lives on per month when compared to tax returns or even a W-2s,” Fisher said. “Because these borrowers are self-employed, they want the benefits that come with the legal ability to write off expenses. That can make the use of tax returns as conventionally underwritten a poor barometer of ability to repay, but we’re able to document income in a different way. And we stay in the spirit of ATR and QM loans by requiring a two-year history.”

CSC offers up to 90% LTV for self-employed borrowers with a 700 credit score and up to 80% LTV for a credit score of 600 or higher (the typical threshold for subprime is 620). This program has huge potential for growth since many of the 14.6 million people who are self-employed may not qualify for a traditional QM loan, even with a high credit score and adequate income.

Posted by on Feb 3, 2016 in Jim's Take on the Market, Mortgage News, Mortgage Qualifying | 5 comments

Big Data and Mortgages


It’s different but improved this time? From the

An excerpt:

Alternative types of credit scoring have been around for years, taking into account factors not always captured by traditional scores, such as whether borrowers pay their cellphone bills promptly. They’ve been used to assess the creditworthiness of consumers with little or no traditional credit history, including those in developing countries.

Now, a new generation of start-ups has developed scoring models that look at such things as what a borrower studied in college and how a restaurant rates on Yelp — and they’re using them on a wider audience, from businesses to individual borrowers with middling or even good credit.

The abundance of digital information, and the rapidly growing storage and computing power able to comb through it all, is changing industries including agriculture and healthcare. It should come as no surprise, then, that it’s shaking up consumer finance.

Proponents say these new methods should help borrowers gain credit, just as it has helped farmers increase their yields.

“In banking, it’s inconceivable that in the future we’ll be making financial decisions in the way we do today. We’re making decisions about people based on less than 5% of the information about them,” said Asim Khwaja, a professor of international finance and development at the Harvard Kennedy School who has studied alternative credit scoring in the developing world. “There’s a lot of excitement in this field.”

But there’s also plenty of skepticism.

Read full article here:

Posted by on Dec 20, 2015 in Jim's Take on the Market, Mortgage News | 1 comment

TRID Delays


We went to the escrow holiday party on Friday, and I just had to sneak in some business talk.

Are the new disclosures causing delays in escrow closings, and messing up the buyers’ plans for moving in?

The answer from an escrow officer that does purchases only (not refinances):

Closing delays prior to TRID:  20% to 30%

Closing delays since TRID: 60% to 70%

Lenders had months to prepare for TRID, and it has been in effect since October 3rd.  Yet the majority of home sales are still being delayed due to disclosure problems.  Why?

It’s mostly because TRID has strict timelines for the sending and receiving of the disclosures.  The buyers cannot sign their loan documents until 3-10 days after the final disclosures are sent, and receipt acknowledged.

The disclosures are sent by loan-processing clerks who tend to be over-worked, and underpaid.  If they work for a lender who does their share of refinances, then timelines become hazy because all that matters is closing before the rate-lock expires (nobody is moving in or out of the house with a refinance).

We had a closing last week where we represented the seller. The buyer had made it clear that they wanted to move in this weekend, and get settled before the holidays, which is understandable.

Donna (wifey) monitors the lender’s progress regardless of who we represent.  It usually amounts to adult babysitting – some clerks don’t effectively manage their desk, they just respond to the requests of those who need them most.

It came down to the last day to send the disclosures in order to close on time, and the clerk rattled off the usual excuses – holidays, end-of-the-month, etc. – and wouldn’t make any promises about sending.  Donna tactfully persuaded her to find a way, and she did. We closed on time!

It’s not the disclosures that are causing the delays, it’s the people involved!

Get Good Help!

Posted by on Dec 6, 2015 in Jim's Take on the Market, Mortgage News | 4 comments

The New Subprime


The mass defaults haven’t happened yet, but old cronys from Countrywide who are funding loans that are insured by FHA does sound sketchy.

From the

PennyMac, AmeriHome Mortgage and Stearns Lending have several things in common.

All are among the nation’s largest mortgage lenders — and none of them is a bank. They’re part of a growing class of alternative lenders that now extend more than 4 in 10 home loans.

All are headquartered in Southern California, the epicenter of the last decade’s subprime lending industry. And all are run by former executives of Countrywide Financial, the once-giant mortgage lender that made tens of billions of dollars in risky loans that contributed to the 2008 financial crisis.

This time, the executives say, will be different.

Unlike their subprime forebears, the firms maintain that they adhere to strict new lending standards to protect against mass defaults.

Still, some observers worry as housing markets heat up across the country and in Southern California, where prices are up by a third since 2012.

Read full article here:

Posted by on Dec 1, 2015 in Jim's Take on the Market, Mortgage News | 0 comments

‘The Big Short’

The long-time readers of this blog remember back when the financial crisis was imploding, and how we followed the ensuing mortgage-industry collapse.  People from Jim Grant to the FHFA were gathering on-the-street intel from this blog, and we had an audience on Wall Street.

Michael Lewis worked at Solomon Brothers during that time, and he wrote the book called, ‘The Big Short’.  The movie version comes out next month.

Here is the trailer:

Posted by on Nov 24, 2015 in Fraud, Jim's Take on the Market, Mortgage News | 2 comments

Google Mortgages


Google is teaming up with Zillow to provide a mortgage platform for consumer shopping.  How much longer before they do the same thing with realtors? A year? A month?

Excerpts from HW article:

Well, it’s official. Google has come to mortgages.

After first being reported earlier this year, Google is launching its own mortgage comparison tool via its Compare service.

“Google Compare for mortgages provides a seamless, intuitive experience that connects lenders with borrowers online,” Google posted on its website Monday.

“Whether you’re a national lender or one local to California, people searching for mortgages on their smartphone or desktop computer can now find you, along with a real-time, apples-to-apples comparison of rate quotes from other lenders — all in as little as a minute,” Google continued.

“Borrowers can also see ratings and read helpful reviews, and enter relevant information — like loan amount, estimated credit score, or home value — to receive rate quotes that match their needs,” Google said. “They can then visit your website to apply directly online or over the phone through one of your agents or loan officers.”

Powering Google Compare for mortgages will be Zillow Group and LendingTree, both of which announced Monday that they will be partnering with Google to provide mortgage information to the search engine monolith.

According to Zillow, lenders who use Zillow Group Mortgages for their marketing efforts will now have their rates, ratings and reviews prominently displayed on both “the world’s most popular search engine” and “the most visited real estate media network in the country.”

Zillow’s announcement goes on to say that Google has worked with a number of providers to provide a diversity of relevant results and purchasing options to users.

“With today’s launch, borrowers searching for mortgage custom quotes on Google Compare for Mortgages will now have seamless access to Zillow’s industry-leading real-time lender rates, reviews and ratings on both desktop and mobile devices,” Zillow said in a statement.

“The mortgage shopping experience allows borrowers to shop anonymously, browse through more than 200,000 local and national lender reviews published on Zillow and choose to contact the lender best suited to meet their needs.”

Read full article here:

Posted by on Nov 23, 2015 in Jim's Take on the Market, Mortgage News, The Future | 1 comment

Alternative Qualifying


Braoden mortgage access to those who don’t have a credit score?  Counting income from those not on the loan?  Traditionally, the term ‘family member’ has been a loosely-defined concept in mortgage qualifying. From the


Collecting pay stubs for a home-mortgage application has been a time-honored tradition, barring a few ill-fated years running up to the financial crisis. But if changes announced by mortgage-finance company Fannie Mae catch on, that process could go the way of the dodo.

Fannie Mae on Monday said it would allow lenders to use employment and income information from a database maintained by credit bureau Equifax to verify borrowers’ ability to handle a loan, rather than relying on the traditional documentation process of collecting physical copies of pay stubs and tax data. The move is expected to make the mortgage process easier for borrowers and lenders alike.

Fannie announced other changes it said could broaden mortgage access for some borrowers.

The mortgage giant will ease the lender process for granting loans to borrowers who don’t have a credit score, a key issue for advocates for certain minority groups that are less likely to have traditional credit histories.

Likewise, Fannie in mid-2016 also will require lenders to begin collecting “trended” credit data from Equifax and TransUnion, which includes longer-term borrower credit histories.

In August, Fannie rolled out a new program that let lenders count income from nonborrowers within a household, such as extended family members, toward qualifying for a loan.

But for more than a year, some advocates and industry groups also have pushed the Federal Housing Finance Agency, which regulates Fannie and Freddie, to allow the companies to use alternative credit-score models that take into account utility or rent payments.

Read full article here:

Posted by on Oct 21, 2015 in Jim's Take on the Market, Mortgage News, Mortgage Qualifying | 3 comments



Hat tip to daytrip for sending in this story:

Rebecca Mairone scarcely deserves a mention in the annals of finance, except for this: She’s the only executive of a major U.S. mortgage lender found liable for her part in the 2008 financial crisis.

Mairone was chief operating officer for a division of Countrywide Financial Corp., the California giant that came to symbolize the excesses of the subprime era. While top executives there and elsewhere walked away, Mairone, now 48, was targeted in a civil case by federal prosecutors. In October 2013, a Manhattan jury found her liable for misrepresenting the quality of mortgages her company sold to Fannie Mae and Freddie Mac. U.S. District Judge Jed Rakoff called her testimony “implausible” and slapped her with a $1 million fine. Bloggers said she helped destroy the U.S. economy and should be jailed or worse.

Two years later, Mairone is heading back to court in an attempt to overturn that ruling and restore her reputation. As she has all along, she maintains she did nothing wrong. Years after the housing bust, her case reminds Americans yet again that not a single senior executive has been held accountable for a mortgage meltdown that cost millions of people their homes, livelihoods and savings.

“She’s not uniquely responsible,” said Brad Miller, a Democratic congressman from North Carolina from 2003 to 2013 who served on the House Financial Services Committee. “But the question isn’t whether there should’ve been a claim brought against Rebecca Mairone. It’s why weren’t a lot more brought?”

Read the full article here:

Posted by on Oct 6, 2015 in Jim's Take on the Market, Mortgage Lawsuits, Mortgage News | 2 comments

HELOCs Are Back


Equity is back, so it’s no surprise that homeowners want to tap into it. And little by little, the lenders are happy to oblige:

WASHINGTON — Americans are tapping into their home equity at a pace not seen since the housing bubble aftermath nearly a decade ago, but here’s a key question: Is all this borrowing getting a little too frothy?

Are we headed back to the bad old days when some owners hocked their houses to the hilt to finance autos, vacations and other consumer expenditures?

New data provided by national credit bureau Equifax reveal that between January and June, lenders extended more than 657,000 new home equity lines of credit, popularly known as HELOCs, with a total credit limit of nearly $70 billion.

The number of new lines was up nearly 15 percent over comparable year-earlier levels and was the highest since 2008. The total dollar limit on the lines was 24 percent above the year before and the highest in seven years.

Not all these HELOCs are going to owners with great credit ratings: Through the first half of the year, 9,600 credit lines, with total dollar limits of $338 million, went to borrowers with subprime credit scores, defined as an Equifax Risk Score below 620. That’s a 30-percent increase over the previous year.

New home equity installment loans also are surging. In the first six months of the year, more than 354,000 home equity loans were originated, 23 percent above the same period in 2014.

The total dollar amount of these loans exceeded $12 billion, which is close to a 20 percent increase year-over-year. More than 38,000 new home equity loans went to borrowers with subprime credit scores, 30 percent higher than the year earlier.

Meanwhile, cash-out refinancings are making a comeback, according to new information from giant investor Freddie Mac. During the second quarter of this year, 34 percent of all refinancings resulted in owners adding to their mortgage principal balances and pocketing the extra cash, $11.4 billion worth.

That’s the highest quarterly rate for cash-outs since 2009 and is 35 percent higher than a year earlier.

So what’s going on here? Is there cause for alarm?

Read full article here:

Posted by on Oct 4, 2015 in Jim's Take on the Market, Mortgage News | 1 comment