Integrated Technology company Black Knight says that the total mortgages in forbearance have shot up after three successive weeks of decline. The update on June 23 divulges that the number of mortgages under forbearance ran up to 4.68 million, a clean 83,000 above its tally a week before that. The Government-sponsored Enterprise (GSE) mortgage (Conforming) forbearance numbers rose to 1.925 million, representing a 1.3% hike. The Federal Administration and Veteran Affairs numbers shot by 3% to 1.509 million. The uncleared forbearance principal balance shot up by 1.28% to $1,025 trillion for June 23.…
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CFPB Proposes Amending the 43% DTI Cap for QM
According to the Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage (QM) rule, all the mortgages that can be eligibly bought by Fannie Mae or Freddie Mac are exempt from the 43% debt-to-income cap. This exemption is referred to as the GSE patch (GSE stands for government-sponsored enterprises). The GSE patch is slated to expire on 10th January 2021. Convinced that both Freddie Mac and Fannie Mae benefit from a competitive advantage in underwriting, CFPB now proposes to extend the GSE patch and also make changes to the definition of QM. Loans that have…
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Inventory Shortage May Obstruct Corona-rebound Sales
Aspiring homeowners are likely to come hard once the Coronavirus scare recedes but real estate marketplace Zillow feels that housing inventory shortage may obstruct any possible sales rebound. Its Weekly Market Report reveals a drop of 17.1% in inventory compared to the same time last year. Over the week, it has fallen by 0.4%. Houses which are on for-sale supply also took a beating in many of the top 35 metros. The figures show a 35% dip in Cleveland, 36% in Seattle, and 34.4% in Philadelphia. To paraphrase Skylar Olsen, Zillow’s senior principal…
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Covid-19 Comes Down Heavily on California House Sales
The California Association of Realtors (CAR) reveals that house sales in California have come down by 41.4% in May ‘20’, compared to the same time last year. Over a year, such a drop hasn’t been seen since November ‘07’. CAR President Jeanne Radsick Bakersfield feels that the worst is past us and things will improve, come June. It is a relief that at least the house prices have shot up from year-ago levels for each county in Southern California (barring the Orange county). According to CAR, if the whole year runs at May’s…
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Housing Supply Shortage Hurts May Home Sales
May ‘20’ is not as encouraging for home purchases as May ‘19’ had been and we needn’t be told the reason for it. Closed transactions dropped by 3.9% compared to April and a mammoth 33.7% on the Year-over-Year chart. Each housing market in the country has reported an annual drop in double figures (Iowa cutting the best picture with a 14.3% drop while Detroit the sorriest picture with a 64.8% drop). Inventory constraint hasn’t helped one bit. Housing supply in May is lowest since 2008. It has come down by 25% compared to…
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Purchase Mortgage Applications at a Level Untouched Since 2009
The Mortgage Bankers Association informs that aspiring homeowners are putting behind the Coronavirus scare and filing purchase mortgage applications at a level not seen over the previous decade. It comes as a bonus that the 30-year fixed loan rates are at their lowest since the MBA’s Weekly Mortgage Applications Survey began. Purchase mortgage applications have risen for the 9th week straight. It is partly the result of soaring consumer confidence and partly due to the demand kept in leash since spring, believes Joel Kan, the Associate VP of Economic and Industry Forecasting, MBA. …
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While the Economy is Falling, Home Prices Keep Rising. Here’s why.
National Association of Realtor's (NAR) existing home sales report for April 2020 reported that the Median Sales Price rose a staggering 7.4% year-on-year. April's increase marks 98 straight months of year-on-year increase. Even a more recent data (for the week ending May 15, 2020) from Altos Research shows that the Median Sales Price is still increasing. This, when 38 million Americans have lost their jobs and the unemployment rate is at the highest levels since the Great Depression of 1933, mostly due to Covid-19 pandemic (see chart below). It seems that all the…
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As Lending Standards Tighten, Mortgage Credit Availability Index Drops to a 5-year Low
Mortgage Bankers Association (MBA) after analyzing data from Ellie Mae's AllRegs® Market Clarity® business information tool reported that the Mortgage Credit Availability Index (MCAI) in April dropped to the lowest level since December 2014. The decline is MCAI shows the tightening of lending standards showing decreased availability of mortgages for potential borrowers. The MCAI index fell by 12.2% to an index of 133.5. The rate of decline in the last 2 months is the sharpest in over a decade. As evidenced by the chart below, the MCAI fell for every product category. The…
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Getting a Mortgage has suddenly become Hard (and about to get even Harder)
Mortgage credit supply decreased 16 percent in March to the lowest level since June 2015, with declines in availability across all loan types. There was a reduction in the availability of loans with lower credit scores and higher LTV ratios, and the largest pullback came from the jumbo and non-QM space. With the mortgage market shaken badly by the Coronavirus pandemic, both purchasing and refinance loans have become harder to get. JP Morgan believes that at 10% unemployment, we may be looking at 2 million new mortgage delinquencies. The number could go up…
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How does the Mortgage Payment Forbearance Plan work?
The CARES Act is a law now. In place of a series of whack-a-mole moves, the administration has come up with the Mjolnir this soon in the battle. Instant aggression! Good approach! To prevent the Coronavirus pandemic genie from coming out of the bottle, the $2 trillion stimulus bill from the government sounds like a plan. The big headline for the home mortgage industry is the loan forbearance plan made available to the borrowers on all the government-backed mortgages. By uttering nearly as little as I CAN’T PAY, borrowers can forgo mortgage payments…
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