The Los Angeles Times

The Consumer Financial Protection Bureau this week will unveil a prototype for a new monthly mortgage statement for consumers designed to clearly show important information from their servicer.

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http://www.latimes.com/business/money/la-fi-mo-mortgage-statement-20120213,0,5870776.story

The New York Times

Interest rates are the lowest in decades, enticing many borrowers to shop for a loan.  Mortgage lenders adjust their rates based on perceptions of risk, so unless the borrower can show they’re a low-risk individual, the borrower is unlikely to qualify for a rate that matches those seen in recent advertisements and headlines.

Making sense of the story

• The rates quoted are averages drawn from a variety of financial institutions, and lenders use varied approaches to set them.  Consumers who want to try for the lowest rates available need to consider basic factors, such as credit score, points, property type, down payment, and length of the loan.
• Credit score: The ideal borrower has a FICO score of 740 or higher, which puts the individual in the best place for pricing.
• Points: The lowest rates usually are decreased by paying a fee called a point, or 1 percent of the loan amount.  Borrowers may buy points in order to get the best rates at many banks.  Points might make sense depending on the borrower’s financial situation and how long they expect to stay in the home.
• Property type: Borrowers planning to buy a duplex or a four-unit build likely will have a higher interest rate.  Condominiums also may have a rate premium rate, especially if they are newer or the down payment is less than 25 percent.  Lenders also may charge more if the borrower is not planning to live in the home.
• Down payment: Borrowers who put down at least 25 percent are more likely to obtain the best interest rates.  Lenders offer different breaks on rates if equity in the property is higher, so borrowers should ask what is available.
• Length of loan: Borrowers who are likely to move in a few years may want to look into an adjustable-rate loan with a low interest rate fixed for a few years, and adjusted afterword.

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http://www.nytimes.com/2012/01/15/realestate/mortgages-shopping-for-the-best-rates.html?_r=1&ref=realestate

San Diego Union-Tribune

The number of loan servicers taking part in a state mortgage-aid program continues to grow roughly one year after its launch.  The Keep Your Home California program now has 55 participating mortgage servicers, up from 21 in June.
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http://utsandiego.com/news/2012/jan/10/more-lenders-added-calif-mortgage-aid-program/

The New York Times

More than 2.6 million households are at least 60 days delinquent on their mortgage payments, according to the nonprofit coalition Hope Now. While those who are delinquent 60-120 days can make back payments to help them become current, those who are more than two months behind may need to employ other means to catch up.

Making sense of the story

• Beyond the obvious threat of foreclosure, falling behind on a mortgage can be costly:  Lenders charge late fees as well as legal and administrative costs, and the borrower’s credit score will suffer.  Experts say the sooner a delinquent borrower deals with the situation, the better the chances are of making a full economic recovery.
• Borrowers who are determined to stay in their home but cannot immediately make back payments need to start by contacting their lender or a credit counselor to discuss available options.  Among them are devising a repayment plan, modifying the loan, doing a short sale, and adding what is owed back into the mortgage balance.
• The first step borrowers should take is to assess their financial situation by looking at the amount of money brought in each month versus what is spent.  Many credit and housing counselors have worksheets on their websites to help with this.
• Next, borrowers should collect pay stubs, documentation on other income, two years’ worth of tax returns, two months of saving and checking account statements, and mortgage records.  If the borrower has experienced a hardship, such as a layoff, a divorce, or an illness, they should gather evidence of that, such as unemployment insurance receipts, medical bills, a copy of a doctor’s letter to their employer, or a divorce decree.
• Finally, borrowers should talk to their lender, servicer, or an adviser.   The federal Dept. of Housing and Urban Development certifies counseling agencies that provide free advice and assistance, and has a list of them on its website.  Counselors can offer alternatives and prepare a budget to see if the homeowner can afford to stay in the house.
• Before agreeing to a repayment schedule, it is important homeowners understand how their lender treats partial payments.  Some credit partial payments toward the balance immediately, while others hold the money in a “suspend account” until the full amount is received.  Some will return the check to the borrower, and some will stop accepting payments after the mortgage is seriously delinquent.

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http://www.nytimes.com/2011/12/25/realestate/getting-back-in-the-black.html?_r=1&ref=realestate

Faced with finicky lenders, would-be home buyers are increasingly turning to family members, friends, and even strangers they meet online.  While this is understandable, given the abundant bargains on the market, they also present significant risks.

Making sense of the story

• So-called peer-to-peer lending sites, such as Prosper and Lending Club, say demand for home-related financing is on the rise.  In September, Weemba, a social-networking site, launched a platform to connect lenders directly with prospective home buyers and other borrowers.
• Despite historically low mortgage rates, traditional lenders remain reluctant to provide mortgages to anyone with less than stellar credit.  And, in certain markets, lenders are requiring down payments of more than 20 percent of the home’s purchase price.
• Borrowers taking loans from family members – so-called intrafamily loans – save on interest since family members are likely to charge less than the banks.  Additionally, parent lenders can earn a higher return from their child’s interest payments than they would on a certificate of deposit or money-market fund.  Under federal law, on a loan of more than nine years, parents must charge at least roughly 2.8 percent, in most cases.
• Consumers who prefer to look for loans beyond the family can apply at peer-to-peer lending sites.  If approved for a loan after a screening by the companies, applicants may then receive money from investors.
• However, these alternative routes to financing can be expensive for borrowers.  Rates at Lending Club run from around 7 percent to 28 percent.  At Prosper, rates run roughly 7 percent to 35 percent.  The companies say these rates, which are fixed, are higher than traditional mortgage rates in part because their loans are unsecured.

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http://online.wsj.com/article/SB10001424052970203518404577094371355763672.html?mod=WSJ_RealEstate_LeftTopNews

Applications for home purchase loans dropped by 20 percent in October from September, even though mortgage rates in October held close to their lowest levels of the year.  Compared with one year ago, applications for home purchases were unchanged.

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http://blogs.wsj.com/developments/2011/11/11/applications-for-purchase-mortgages-declined-in-october/?mod=WSJBlog&mod=WSJ_Real Estate_BLOGSDEVELOPMENTSFEED

The government is changing its Home Affordable Refinance Program (HARP), making it easier for homeowners to refinance their underwater, high-interest mortgages.

Making sense of the story

• Although HARP has helped more than 890,000 homeowners nationwide by reducing their monthly mortgage payments, there are still millions of homeowners who are too far underwater to participate.
• Under the new rules, homeowners who owe more than 125 percent of the market value of their homes will be allowed to refinance into new loans.
• The program also streamlines the refinancing process for homeowners who are current on their mortgage payments and reduces or removes fees that previously hindered them from refinancing.
• Fannie Mae and Freddie Mac also will reduce the fees they charged in the past to enable borrowers to better afford the new loans.  Among the fees that will be reduced or eliminated are those for appraisals, title insurance, and closing costs.
• Fees also will be waived for some underwater borrowers who are refinancing into 20-year or shorter-term loans.
• HARP is only open to borrowers who are current on their payments for the past six months with no more than one missed payment in the past 12 months.  The loans must have been originally issued before May 31, 2009, and purchased by Fannie Mae or Freddie Mac.

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http://money.cnn.com/2011/10/24/real_estate/housing_refinance/index.htm?hpt=hp_t2

CoreLogic recently announced the introduction of the CoreScore Credit Report containing fully decisionable, Fair Credit Reporting Act (FCRA) compliant consumer credit risk information.  The CoreScore Credit Report helps lenders mitigate risk by uncovering additional debt obligations, and increase new lending opportunities by identifying previously hidden credit behavior that could improve a consumer’s credit profile. With applications across a broad range of lending verticals, the CoreScore Credit Report is designed to provide timely consumer credit information to enhance existing credit bureau reports, helping lenders make more informed lending decisions that can improve overall loan portfolio value and performance.

The aggregation of consumer data by CoreLogic includes consumer property ownership and mortgage obligation records, property legal filings and tax payment status, rental applications and evictions, inquiries and charge-offs from pay-day and online lenders, and consumer-specific bankruptcies, liens, judgments and child support obligations. Data of this kind has not been generally available from traditional credit reporting agencies at the time of historical credit inquiries. Additionally, CoreLogic adds new tradelines and other public record transactions in an average of just 23 days, which can be up to two months sooner than traditional credit report updates.

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In the second quarter of 2011, 77 percent of homeowners who refinanced their first-lien home mortgage either maintained about the same loan amount or lowered their principal balance by paying-in additional money at the closing table, Freddie Mac recently reported. Of these borrowers, 51 percent maintained about the same loan amount, and 26 percent of refinancing homeowners reduced their principal balance.
“Cash-out” borrowers, those who increased their loan balance by at least five percent, represented 23 percent of all refinance loans; the average cash-out share during the 1985 to 2010 period was 46 percent.
The median interest rate reduction for a 30-year fixed-rate mortgage was approximately 1 percentage point, or a savings of nearly 18 percent in interest. Over the first year of the refinance loan life, these borrowers will save more than $1,550 in interest payments on a $200,000 loan.
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Wells Fargo & Co. was hit with a cease-and-desist order and a record civil money penalty over allegations that employees at its former subprime unit committed mortgage fraud and unnecessarily put borrowers into more expensive loans.  The lender also is required to compensate impacted borrowers, which likely will cost between $4 million and $200 million.