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Category Archive: ‘Mortgage News’

‘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 | 1 comment

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

National Housing Policy

Embedded image permalink

I saw these questions from Ed DeMarco on Twitter. My answers:

1. Have the M.I.D. apply towards primary residence only (not second homes), and lower from $1,000,000 to $500,000.  Those buying in hopes of a bigger write off will still buy a house, and take the partial benefit – and be in it for the appreciation and to raise a family (make wifey happy).

2.  Have the mortgage interest deduction be in effect for the first ten years of ownership only.  It would encourage borrowers to pay off mortgages in the ten years, and not refinance every year.

3.  Require that only the buyers can pay for mortgage insurance (sellers can pay in full now).

4.  Redirect the disadvantaged folks to subsidized rentals until they aren’t disadvantaged. Only stable, secure, affluent people should buy a house – it’s too late for the rest, unless they drive to the suburbs/outer edge of town.

5.  There are several loan programs available to help the disadvantaged already.  NACA is still around, helping buyers purchase with no down payment and no closing costs (H/T daytrip):

6.  Lower the capital-gains tax for 1-2 years to incentivize those reluctant-but-motivated possible sellers to unload a rental property or two.  Cut federal rate to 10% for the first year (currently 20%), and then back to 15% in the second year.  The crotchety old guys still won’t sell, so there won’t be a flood.  But more inventory = more sales while stabilizing prices.

7.  Keep Fannie/Freddie the way they are for now. If they can keep operating in the black, let’s allow the mortgage industry to enjoy the fluidity. I attended a seminar today on the new loan disclosures coming on October 3rd, and it is clear that Fannie/Freddie will be extremely strict on compliance. It doesn’t mean tougher credit, it means the mortgage industry needs to submit the cleanest loan packages ever – which is good for the taxpayers.

8.  The new compliance crunch will virtually eliminate mortgage brokers – wholesale lenders won’t want to take a chance on them. Yes, we still have room for you over here to be a realtor – there’s only 11,000 of us chasing 3,500 sales each month.

9.  Encourage a private jumbo-MBS market without subsidizing it.  Eventually, a private MBS marketplace could help shift the burden from Fannie/Freddie.

10. Run a tight ship.  We can handle it.

The powers-that-be have made some great moves to get us this far, now bow out gracefully and let free enterprise take care of the rest.

Posted by on Aug 20, 2015 in Bailout, Housing Tax Credit, Interest Rates/Loan Limits, Loan Mods, Local Government, Mortgage News, Mortgage Qualifying | 0 comments

Off to the Races!


Fannie Mae announced that they have eliminated the Anti-Buy-and-Bail rule, the underwriting guideline that has held back so many move-up buyers.

The previous rule meant that buyers who already owned a property had to have at least 30% equity in it; other wise they would have to qualify using both their existing payment and new proposed payment in the equation.

MND details the change here, along with a few others:

Now a buyer can produce a rental agreement for their existing house, and not have that mortgage payment count in their qualifying equation!

This is the key element that spurred the last few years of the previous boom, as buyers would finance most (if not all) of their non-contingent purchase, and then go back and sell their old house later.

Now they might keep it as a rental, or sell it at some point after they move.

The Anti-Buy-and-Bail rule forced them to sell first, and was probably one of the main reasons we’ve had so many potential sellers be reluctant lately – they couldn’t qualify for both, which forces them to consider selling first and risk the double move!

In an unrelated event, I just re-upped my domain,!

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

Cause of Financial Crisis

subprime vs prime

Hat tip to Wendy for sending in this article on subprime vs. prime mortgages causing the crisis.  The authors probably didn’t catch the fact that prime borrowers were getting neg-am loans based on FICO scores only, and those weren’t considered subprime loans:

An excerpt:

We can draw two conclusions from this data. One is that your chances of being foreclosed upon in the past decade was more a matter of timing than anything else. If you were a subprime borrower in, for instance 2002, who bought a bigger house than a more prudent and creditworthy borrower would have bought, chances are you would have been fine. But a prime borrower who did everything right—bought a house he could easily afford, with a large downpayment—but did so in 2006 would have had a higher chance of defaulting than the subprime borrower with better timing.

Since whether you were hurt by the crisis had more to do with luck than anything else, Ferreira argues we should rethink whether doing more to help underwater homeowners would have been a good idea.

Posted by on Jun 18, 2015 in Foreclosures/REOs, Jim's Take on the Market, Mortgage News, Neg-Am | 1 comment

Debt is Down

mortgage debt

For those who are concerned about another bubble, here is evidence that indicates we’re in a position to handle it better.  Leverage is down, which should mean less government intervention next time (?):

An excerpt:

Bank of America Merrill Lynch economist Michelle Meyer offered some color on this in a recent note to clients.

She discussed the ratio of the total level of mortgage debt to the overall market value of real estate. This adjusts the amount of leverage and debt in the housing market by the total size of the market. Meyer observes that there’s been a huge drop in this measure since the Great Recession:

“[The ratio] shows that 44% of real estate wealth is made up of mortgage debt. This is nearly back to the pre-bubble crisis and compares to a peak of 63% in 2Q09 (Chart 7). A lower aggregate loan-to-value ratio suggests the real estate market should be more susceptible to shocks in the future.”

Meyer then considers some of the causes of the drop in mortgage debt. Debt dropped as a result of the unwinding of the housing bubble:

“Much of the decline in mortgage debt owes to foreclosures which resulted in the liquidation of delinquent debt. However, it also is a function of lower loan sizes given larger down payments and the drop in home prices.”

Liquidation of delinquent debt sounds bad, and it’s certainly unpleasant for people losing their homes.  Nevertheless, it’s reflective of a system clearing out an ugly past.

Posted by on Jun 15, 2015 in Jim's Take on the Market, Mortgage News | 0 comments

HELOC vs. Equity Sharing

We’ve been talking about the re-emergence of creative financing – the first was crowdfunding, now this from the – an excerpt:

One company based in San Diego, EquityKey, says it has completed or has in process appreciation-sharing agreements on homes with an aggregate value of $200 million already this year, and expects to hit $1 billion by the end of the year. Another, FirstREX in San Francisco, says it has completed hundreds of “equity financing” deals tied to future appreciation.

Though the contractual details and payout amounts differ from company to company, here’s the basic concept: Say you have a house that’s valued at $500,000. If you agree to share 45% of future appreciation on the property and you otherwise qualify in terms of your financial ability to handle property taxes and upkeep, EquityKey might give you $51,750 today to help pay for kids’ tuitions. If you wanted to share 40%, it would give you $47,500. When you end the agreement, you’d have to give EquityKey its portion of the appreciation on the house plus its initial investment.

EquityKey ties its appreciation calculations to the Standard & Poor’s Case-Shiller Home Price Index, which measures home prices in markets across the country. FirstREX uses appraisals upfront and at the end.

Say the house appreciated over the next 10 years by $120,000 and you needed to sell. You’d owe EquityKey the original payout amount — $47,500 or $51,750 — plus its appreciation share at 40% ($48,000) or 45% ($54,000). EquityKey’s cut after 10 years: $95,500 or $105,750 depending on the share you agreed on.

Read full article here:

Posted by on Apr 12, 2015 in Mortgage News | 10 comments