Fixed Rate 30-Year Mortgages Accounted for More than Half of U.S. Home Loans Last Year
Fixed rate 30-year mortgages accounted for 52.8% of all mortgages last year, a 5% higher percentage than in 2016. This is based on results from the annual Residential Real Estate Survey Report released recently by the American Bankers Association (ABA).
More than 150 banks participated in the survey this February and March by providing data, primarily about their mortgage lending activities last year.
What?s the Breakdown by Loan Type?
While the longer-term fixed rate mortgages made up a larger percent of all home loans in 2017 than in 2016, the percentage of fixed rate 15-year loans were down. They accounted for 15.4% of all mortgage loans in 2017, compared to 18.6% in 2016.
Other types of fixed rate mortgages accounted for 11.8% of home loans in 2017. Next were one-year adjustable rate mortgages (ARMs), which accounted for 7.7% of mortgage loans last year, followed by interest-only ARMs, 5.9%; 7/1 ARMs, 4.4%; 5/1 ARMs, 1.4%; and 3/1 ARMs, 0.6%,
More First-Time Home Buyers Reported
The percentage of single-family mortgage loans that were for first-time home buyers also reached a record high of 17% in 2017. This percentage has been on the rise for several years now, increasing by 1% every year since 2014.
Predictably the percentage of purchase loans was also up compared to refinance loans. In 2017, for example, 60% of family mortgage loans were for purchases, compared to 45% in 2015 and 53% in 2016.
Regulatory Change Has Hugely Impacted Mortgage Lenders
One thing that was clear in reviewing the ABA report is that U.S. banks have been greatly impacted by recent regulatory reforms. About 96% said they?ve had ?higher mortgage-specific compliance costs? due to regulatory changes, while 97% reported higher consulting costs.
In addition, 74% said they?d had to hire more staff to keep up with the changes, with 69% saying they?d added one-two new staff members. Another 23% had added three-five positions, 4% had added five-10, and another 4% had added more than 10.
We Hope You?ve Enjoyed this Information on Mortgages
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Effective immediately, Fannie Mae is allowing lenders to assist home buyers in paying their closing costs for GSE-backed mortgages. Fannie Mae sent a bulletin to lenders last week informing them about its new rules.
Here?s How it Works
Lenders can begin assisting borrowers with closing costs right away, but the amount of lender contributions cannot exceed the amount of the closing costs and pre-paid fees actually paid by the borrower.
The money must also be in the form of a gift, with no terms of repayment, and cannot be used toward the borrower?s down payment. The closing cost assistance must also come directly from the lender and cannot be passed to the lender from a third party, and cannot in any way affect the loan terms given the borrower receiving assistance.
Fannie Mae?s Chief Credit Officer for Single-Family Carlos Perez stated in the bulletin to lenders: ?We?re making it easier for borrowers to purchase a home by allowing lenders to fund closing costs and prepaid fees.?
According to Fannie Mae, this program was already available on a limited trial basis to some lenders, but is now available to all lenders issuing GSE-backed loans. A similar program, in which lenders were allowed to assist home buyers by paying part of their down payments, was terminated by Fannie Mae last summer.
Why the Rules Changed
According to a release from HousingWire, the down payment assistance program raised some eyebrows at the Federal Housing Finance Agency (FHFA). That?s because some lenders appeared to be providing borrowers with less favorable loan terms, including higher interest rates, in exchange for the upfront proceeds toward their down payments.
Under such programs, lenders gave borrowers up to 2% of the home costs, leaving the borrower with the responsibility for only contributing the remaining 1%, for the total 3% down payment required to qualify for a Fannie Mae or Freddie Mac loan program. However, in exchange for the assistance, many borrowers received less favorable loan terms which would result in the borrower paying more over the life of the loan than what they received in down payment assistance, and in some cases they?d pay much more.
Fannie Mae suspended the down payment assistance programs, except in some cases where the down payment funds were a true gift and didn?t affect loan terms.
Acuity Real Estate Solutions
Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you?re a lender who would like more information, please?contact us?today!

When the new federal budget was recently passed by Congress, there was a provision pertaining to VA loans that could eventually make it easier for veterans and active duty military personnel to compete in the tight housing market.
Under the provision, the Secretary of Veterans Affairs (VA) is required to come up with some solutions to address the challenges that veterans are having in purchasing homes , especially in a very competitive housing market. The VA must present their proposed policy changes within a 90-day period from the time the budget was passed.
What Problems Are Veterans Reporting?
Many veterans report that their offers are being turned down time and again by sellers because the real estate agents involved just don?t want to deal with the hassles associated with VA loans or because they view other types of loans as being less risky.
According to one mortgage specialist quoted in Tacoma, Washington?s The News Tribune, ?In multiple-offer situations in this housing market, listing agents prioritize most financing above VA loans.? She said that offers are preferred in this order: cash, conventional loans with large down payments, VA loans, and then last, federal loans.
The article said that selling agents, who may advise their sellers on which offers are strongest, may also mistakenly view buyers using VA loans as being less qualified because these loans require no down payments. The agents may also have had past issues with getting real estate appraisals for VA loans performed quickly which can cause closings to take longer.
What Do Appraisals Have to Do with It?
According to an article published in Realtor Magazine last year, there are not only appraiser shortages in general, but many appraisers are also reluctant to work with the VA because of the lower compensation and stricter guidelines. The VA sets limits on both how much an appraisal can cost as well as how long it can take to return the appraisal report.
The VA has since raised the limit on appraisal costs, which can vary by state. In Washington state, for example, the fee that can be charged for an appraisal for a VA loan has increased from $500 to $800. The VA also increased the amount of time for the appraisal to be delivered, from 10 days to 14 days.
But while these changes may make a small difference, the consensus in the nation?s capital seems to be that the VA can do more to change its policies to help veterans and military personnel better compete when they?re trying to buy homes, especially in this tight market.
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Home sellers still have the upper hand in the housing market and there are no signs that this is going to change any time soon.
Inventory is still way down and competition remains stiff for homes that are on the market. January was the 28^th consecutive month that the volume of homes for sale dropped in the U.S., with that number down by 14.4% from January 2017, according to a recent article by Redfin.
Many Home Sellers Getting More than Listing Price
This means home sellers are often getting multiple offers and getting good prices, sometimes more than their asking prices. In January close to 20% of homes sold for more than their what sellers original listed.
Home prices are also continuing to go up in general. They rose this January by 7.8% from the year before, the report said, with the national median sale price at $280,500.
Prices rose the highest in Memphis, Tennessee, increasing by 24.6% over January 2017. Memphis was followed by two California cities: San Francisco (23.8%) and San Jose (21.6%); Baton Rouge, Louisiana (17.8%) and Seattle, Washington (15.4%).
Prices did slightly drop in four metros in January. These included Milwaukee, Wisconsin; Camden, New Jersey; Birmingham, Alabama and Baltimore, Maryland.
Homes Selling Faster than Ever
The average home was only on the market 53 days before a buyer was found, compared to 59 days in January 2017. But homes sold much faster in some markets. In San Jose, deemed the fastest market in the country, about 50% of homes that sold in January were under contract in just 12 days.
Many buyers are reportedly anxious to purchase before interest rates get any higher; however, one Redfin agent from Washington D.C. was quoted in the article as saying that inventory is even a greater driver than rates right now.
Because of the shortage of homes on the market, sales volume was still down for January in most areas of the country. However, 11 metros did see sales growth compared to a year ago. The top three were Salt Lake City, up 11.9%; Greenville, South Carolina, up 11.8%, and Kansas City, Missouri, up 7.5%. The three metros with the biggest declines in sales volume were all in Michigan in Detroit, Grand Rapids and Warren.
Acuity Real Estate Solutions
Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you?re a lender who would like more information, please contact us today!

Ellie Mae has acquired a cloud-based intelligent sales automation system called Velocify in an effort to speed up its delivery of a true digital mortgage solution to lenders of all sizes.

Why Is a True Digital Mortgage Solution a High Priority?

Digital mortgages are a high priority for consumers who want faster mortgage application processing. A recent survey by Ellie Mae of 3,000 Millennials, Gen Xers and Baby Boomers revealed that borrowers of all generations want a mortgage experience that is fast, convenient, and secure with personal interaction.
In 2017, overall satisfaction with mortgage lenders actually declined, primarily due to what consumers view as the slow processing of online mortgage applications, according to the 2017 U.S. Primary Mortgage Origination Satisfaction Survey released by J.D. Power in November. Overall satisfaction declined by 8 points on a 1,000-point scale compared to last year.
The drop in satisfaction seems directly tied to the speed at which mortgage applications were processed. The average purchase process took close to a week longer this year than it did in 2016. The average length of the process in 2017 was 36 days, based on the study.

More About the Ellie Mae Acquisition

According to Jonathan Corr, Ellie Mae president and CEO, the Velocify acquisition will accelerate the company?s delivery of a true digital mortgage solution. ?In the coming months, we will integrate Velocify?s lead management, engagement and distribution capacity with our own CRM and Consumer Connect solutions to help lenders turn consumer interest into applications through a personalized, high-tech and human-touch experience,? he said.
The new expected level of automation will help lenders to reduce time to origination and also reduce origination costs, according to Ellie Mae. However, it will be important for lenders to adjust to lower volumes, higher expectations for fast origination, and tougher scrutiny of profits.
The automation will also provide loan agents with the information they need to keep customers closely updated on loan status, which the recent surveys showed was important to mortgage consumers. In the end, when the new automation is in place, the faster mortgage processing should lead to more satisfied customers, which in turn, should help lenders to achieve better business results.

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Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you?re a lender who would like more information, please contact us today!

Mortgage refinance loans accounted for 38% of all closed loans in September, according to Ellie Mae, the leading cloud-based platform provider for the mortgage finance industry. The increase in refinance loans was most likely because of low interest rates, which dipped to 4.21%, the lowest they?d been this year.
While mortgage refinance loans were up by 3% from August and 1% from six months ago, they were actually still down from last September?s rate of 45%.

More Millennials Took Advantage of Rates

Approximately 14% of all refinance loans in September were taken out by Millennial borrowers, according to the Ellie Mae Millennial Tracker. This was the highest percentage attributed to Millennials since this past February.
The percentage of conventional refinance mortgage loans taken out by Millennials rose by 2% in September from August to 17%, while Millennials taking out FHA refinance loans rose from 4% to 5% in September, and VA refinance loans from 28% to 30% for the month.
?With average interest rates falling to their lowest point in 2017, Millennials are taking advantage of refinance opportunities,? said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. ?While we are also seeing Millennials with more purchase power, the uptick in refinances indicates maturity among those Millennials who previously purchased a home and are looking for an opportunity to lower their monthly interest payments.?
According to Ellie Mae, the majority of the Millennial primary borrower refinancing their homes in September were male; the average age was 31.5 years old. Two-thirds of the Millennials who refinanced their homes were married, while about one-third were single.

What Is the Ellie Mae Millennial Tracker?

The Ellie Mae Millennial Tracker is a free interactive online tool that provides access to up-to-date demographic data about homebuyers in the Millennial generation. Users can complete searches for based on borrower geography, age, gender, marital status, FICO score and amortization type.
The tracker mines data from a robust sampling of approximately 80% of all closed mortgages initiated on Ellie Mae?s Encompass? all-in-one mortgage management solution, dating back to 2014. ?According to Ellie Mae, because of its strong market share and the size of the sample, the data is a strong proxy of Millennial mortgage indicators across the country.

Acuity Real Estate Solutions

Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you?re a lender who would like more information, please contact us today!

Housing markets across the U.S. will remain strong through the end of 2018, with a housing bubble not anticipated, according to the Fall 2017 edition of the The Housing and Mortgage Review?. The report, based on a statistical model that relies on recent housing market indicators, was released this week by the Arch Mortgage Insurance Company.
Some factors keeping the market strong include:

1. Low interest rates
2. Low inventory of homes for sale
3. Overall housing shortage
4. Tightening job market

Housing Prices to Remain High Next 2 Years

The report predicts that housing prices nationwide should remain high over the next 2 years. In fact, the probability that home prices will drop in the nation?s 401 largest cities averages just 4%, the report said.
However, some areas were more susceptible to price declines than others, such as energy-extraction regions which had the highest risk. Alaska topped the list with a 39% chance of a price decline over the next 2 years, followed by North Dakota, 33%; Wyoming, 31%; West Virginia, 26%; Oklahoma, 16%; Louisiana, 15%; New Mexico, 11%; Mississippi, 10%.
The risk for price reductions in the top 50 metros by population was about 33% over the next two years. The two metros with the highest risk at 35% were Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla., and Nashville-Davidson-Murfreesboro-Franklin, Tenn.

Home Prices in Nation Haven?t Peaked

Another interesting revelation in the report is that while home prices nationwide are up and still rising, they haven?t reached their pre-crisis peaks when factoring in inflation, and the fact that the dollar doesn?t buy as much today as it did 10 years ago.
When inflation is considered, home prices nationwide are actually 10% lower now than they were in 2007, rather than 6% higher as calculated using the Home Price Index (HPI), the report said.

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Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you?re a lender who would like more information, please contact us today!

In its new ?Looking Ahead to 2018? report on the economy and housing, Freddie Mac predicts that the moderate economic growth that we?ve experienced this year, as well as job gains and low mortgage rates, will continue into next year.
If these conditions do continue as expected, Freddie Mac predicts three housing trends for the upcoming year. These include 1) purchase mortgage volume increases, 2) a reduction in rate refinance activity, and 3) more borrowers tapping into their home equity. Here are more details about these expected mortgage trends.

Purchase Mortgage Volume to Increase

Growth in home sales is expected to be driven by new homes sales, not by the sale of existing homes. New construction of single-family homes is expected to rise by approximately 2% next year. Meanwhile, existing homes sales will continue to be stifled by limited inventory and an aging population with declining mobility that is staying put.

Rate Refinance Activity to Drop

The report indicated there?s been a shift from a refinance-oriented market to a purchase-oriented market that will likely continue through 2018. In fact, it said that refinance loans will account for less than one-fourth of mortgage activity next year, the lowest this share of the market has been since 1990.
Slightly higher interest rates are one reason the market share will drop, as fewer homeowners are expected to refinance for the purpose of getting better rates.

More Homeowners to Take Advantage of Home Equity

More homeowners are expected to refinance or to take out second mortgages to pull cash out of their home equity. In fact, as long as home prices continue to rise, this activity should rise as well, Freddie Mac said. What will homeowners do with the cash? The report predicts they will invest in home improvements, consolidate existing debt, or pay student loans debt.

Acuity Real Estate Solutions

Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you?re a lender who would like more information, please contact us today!

The Mortgage Industry Standards Maintenance Organization (MISMO) wants industry leaders to work together to develop electronic notary standards and best practices to be followed for the notarization of documents related to the mortgage closing process.
MISMO says there?s a need for standards for consistent practices across state lines in regard to electronic and online notarizations used for mortgages, according to a recent article in Mortgage Professional America Magazine. Set standards would also help lenders and others in the mortgage industry to develop new practices and services to address the growing consumer demand for convenience and better customer experiences.
Some states already have laws to allow online notarization of important documents, including mortgage documents, while many states are considering similar laws. While initially such laws were aimed at making it easier to get documents notarized when participants are unable to be at the same location together; for example, when a service member is on duty overseas, in some states, a broader appeal for such services has resulted in expanded use.

The Notary Standards Would Cover Three Main Topics

MISMO has asked that a group of mortgage industry professionals meet and collaborate to develop the new standards for electronic notarization of mortgage-related documents. It is also recommending that the standards include guidelines for implementing the standards, and educational materials.

MISMO indicated that the notary standards should address the following three topics:

• Credential analysis
• Borrower identification
• Capturing and maintaining a recording of the notary process electronically

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Home prices were up by close to 7% in July, and are considered to be overvalued in many top U.S. cities, according to the latest CoreLogic US Home Price Report. CoreLogic is a leading global property information, analytics and data-enabled solutions provider.
The new report, based on data from July 2017, showed home prices were up slightly by 0.9% nationally from June, but by 6.7% over last July. They are expected to continue to rise in the upcoming year, by another 5% by July of 2018.
?Home prices in July continued to rise at a solid pace with no signs of slowing down,? said Frank Martell, president and CEO of CoreLogic. ?The combination of steadily rising purchase demand along with very tight inventory of unsold homes should keep upward pressure on home prices for the remainder of this year. While mortgage interest rates remain low, affordability cracks are emerging as over a third of U.S. top cities are now overvalued.?

Western States Take Lead in Price Growth

The Western and Mountain states led price growth in the nation, some seeing double-digit growth since last year.
?In July, home price growth in the Pacific Northwest and mountain states led the nation with the highest appreciation rates,? said Dr. Frank Nothaft, CoreLogic?s chief economist. ?The sharp increase in prices in Washington and Utah has been especially striking, with home price growth in both states accelerating by 3 percentage points since the beginning of this year.?

Homes in One-Third of Top Cities Over-Priced

Based on housing stock in the 100 largest metropolitan areas, 34%? were deemed overvalued, 28% undervalued, and 38% at value, based on the CoreLogic Market Conditions Indicators (MCI) data.
However, when looking only at the top 50 markets, almost half?46%–were considered to be overvalued. The MCI defines an overvalued housing market as one in which home prices are at least 10% higher than the long-term, sustainable level.
The MCI analysis categorizes home prices as undervalued, overvalued or at value in individual markets by comparing the prices to their long-run, sustainable levels, which are supported by local market fundamentals like disposable income.

Acuity Real Estate Solutions

Acuity National Real Estate Solutions is a national title agency offering cutting-edge tools to help lenders reduce costs, streamline closings and increase compliance. If you?re a lender who would like more information, please contact us today!