The housing bust losers portrayed themselves as victims and heroes. Their whining got the attention of opportunistic politicians like California Attorney General Camilla Harris who used this issue to political advantage. When Attorneys General from a number of states reached an agreement with the major banks in early 2012, many housing advocates loudly proclaimed a great victory for homeowners. When I first read through the details of the settlement agreement, i
t was apparent to me that the banks greatly benefit from foreclosure settlement while borrowers were left out in the cold. About a month later, the general public and mainstream media caught on to this fact. By then everyone hated the mortgage settlement, except the banks. A few months later, some industry insiders came forward and admitted the loanowner bailouts were designed to benefit banks. Then to add insult to injury, the relief aid that did make it to the State of California ended up being diverted to other programs. In the end, banks agreed to pay a few pennies in guilt money to former loanowners, but little was done to actually keep them in their homes.
My initial conclusion when the deal was reached was that bankers should be giddy over it. They received good public relations for taking write-offs they were going to take anyway, they insulated themselves from future litigation, and they convinced a few more loan owners to sign up for false hope and make a few more payments. Bankers got everything they wanted from the deal. Politicians grandstanded and “stood up for the little guy” while actually doing little or nothing of substance for them. At the time, proponents of the settlement deal touted that roughly 1 million homeowners who owe more on their homes than their homes are worth were expected to have their mortgage balances lowered through principal reductions and another 750,000 would be able to refinance into loans with lower interest rates. I noted that no relief program actually helps a fraction of what the government says it will help, I estimated the actual number of loan owners impacted by this settlement will be less than 150,000. There will be a few more loan modifications, some principal forgiveness on a few deeply underwater loans that will leave the owners less deeply underwater, but that’s about it.
Many borrowers and misguided advocates were hoping for substantial principal reduction. I pointed out that the real goal is to reduce principal balances as little as possible. Lenders will seek out the sweet spot where borrowers see equity as a hoped-for goal they can reach if they keep paying for a few more years. If borrowers believe they will have equity again, they will keep paying. Lenders need to rekindle hope among the hopeless. Those borrowers who are 50% underwater have no hope. If their principal is reduced so they are only 20% underwater, they may keep paying. The amount of the write off in principal reduction will be far less than the write off in a foreclosure, and the banks might get a few more payments.
By far the biggest farce of the settlement deal was allowing banks to count short sale losses and forgiveness of deeply underwater second mortgage debt toward their settlement payments. In effect, this allowed them to get a credit for losses they were certain to take anyway. It was obvious to me that banks would use this avenue to the maximum degree possible because it didn’t really cost them anything. The mainstream media didn’t pick up on this, and many loanowner advocates actually believed the banks were going to make deep principal reduction write downs to keep people in their homes. When banks count short sale losses toward the settlement amount, the loanowner moves out of their former house. Short sales don’t keep people in their homes, they facilitate their departure. This isn’t at all what loanowner advocates had in mind. Unfortunately, it was exactly what the banks had in mind when they got this loophole put into the settlement agreement.
Just 20% of the aid doled out by five giant banks under last year’s national $25-billion settlement has gone to forgiveness of first-mortgage principal.
By E. Scott Reckard — September 25, 2013, 4:41 p.m.
When five giant mortgage firms signed a landmark $25-billion mortgage settlement last year, officials hailed debt forgiveness as the primary strategy to preserve homeownership.
The banks hoped to avoid further enforcement action over widespread foreclosure abuses; federal regulators and state attorneys general aimed to prevent even more foreclosures.
“This isn’t just about punishing banks for their irresponsible behavior,” Housing and Urban Development Secretary Shaun Donovan said. “It’s also about requiring them … to help homeowners stay in their homes.”
This is a classic example of the public statements from public officials contrasting with reality. This was never about keeping loanowners in their houses. Their statements to the contrary were about manipulating loanowners into making a few more payments while their false hope withered. It was intentional deception by public officials on behalf of their banking overlords.
Advocates for borrowers took such comments to mean that the banks would prioritize debt write-downs on first mortgages, which banks resisted before the settlement.
Anyone who truly believed the banks would do that were embarrassingly naive.
Now, with nearly all the promised relief handed out, it is clear that the banks had other ideas.
Now it is clear? It was clear then to anyone who isn’t blinded by wishful thinking.
The vast majority of the aid to borrowers, it turns out, came in the form of short sales and forgiveness of second mortgages.
Just 20% of the aid doled out under the national settlement went to forgiveness of first-mortgage principal, the kind of help most likely to keep troubled borrowers in their homes. In terms of borrowers helped, just 15% of the total received first-mortgage forgiveness.
And those who did recieve first mortgage principal reduction only saw their balanced reduced to a level that still left them deeply underwater. They were less underwater than before, but they were still deeply underwater. As I mentioned above, lenders would only reduce first mortgage principal to the threshold of hope. They wanted borrowers to have hope in order to make a few more payments. Anything more than that, and the bank would lose too much money.
The five banks collectively delivered twice as much aid using short sales, in which owners sell their homes for less than the amount owed and move out, with the shortfall forgiven.
In all, the lenders sought credit for nearly $21 billion related to short sales and $15 billion related to second mortgages. That compares with $10.4 billion in write-downs on first mortgages.
I am surprised the amount of first-mortgage forgiveness was that high.
To put this number in perspective, remember that Banks are still exposed to $1 trillion in unsecured mortgage debt. If they wrote off $10.4 billion of a $1 trillion problem, that only amounts to 1% of the total loanowners are collectively underwater. It really is a drop in the ocean.
This also underscores the silly optimism of housing advocates. Even if the banks had forgiven all $25 billion in underwater first mortgages, that would have only amounted to 2.5% of the total problem. This relief was never going to touch that many people or provide substantial relief.
In California, Atty. Gen. Kamala D. Harris expressed a similar preference for debt forgiveness in announcing the settlement in February 2012.
“We insisted on homeowner relief for Californians,” she said, “that will allow them to stay in their homes.”
But the mortgage relief here followed the same pattern as nationally.
Harris negotiated separate commitments from the three biggest mortgage servicers — Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. — and predicted that short sales would be a relatively small portion of the relief at $3.1 billion.
But a tally released Tuesday by UC Irvine law professor Katherine M. Porter, Harris’ appointed monitor for the program, put the total at $9.24 billion.
That’s roughly equal to the $9.2 billion in aid delivered through principal forgiveness. But more than half that total was applied to second mortgages, Porter said.
So the amount of short sales written off was three-times larger than expected, and the amount of principal forgiveness was much, much smaller? Hmmm… who would have guessed that?
Just 84,102 California families had first- or second-mortgage debt forgiven, compared with the initial prediction from Harris’ office that 250,000 borrowers would get such help.
So less than a third of the estimated number of borrowers were actually helped. Hmmm… who would have guessed that?
Bank officials said the high volume of short sales in part reflected an enormous backlog of borrowers who, before the settlement was announced, already had failed to qualify for various loan modification programs. Other borrowers decided not to keep their homes, they said, for such reasons as divorce or a job offer in another city.
“The decision to pursue a short sale versus a retention option rests with the homeowner and not with the servicer,” Wells Fargo said in a statement released by Tom Goyda, a bank mortgage spokesman.
Is this person suggesting people chose short sale over principal forgiveness? Give me a break.
Some foreclosure-prevention counselors and officials at advocacy groups nonetheless expressed disappointment that more first-mortgage debt was not eliminated.
“We all wish there had been more principal reduction, which is what is most helpful in keeping people in homes,” said Kevin Stein, associate director of the California Reinvestment Coalition, a 300-member alliance that lobbies on behalf of low-income and minority neighborhoods.
And if wishes were horses, we’d all have ponies. I joke about wishful thinking, but it’s rare to actually see someone put their delusions out there for public consumption.
Still, Stein said, the program set a good precedent, demonstrating that debt forgiveness can benefit lenders and borrowers alike without causing a wave of intentional defaults, as critics had warned.
Complete and utter bullshit. There were two reasons this program didn’t create more strategic default. First, house prices went up, so many people chose not to default because they had hope again. And second, the main reason more people didn’t strategically default is because there was so little aid given that it was not motivating. If a widespread principal forgiveness program had been implemented with significant reductions, everyone would have strategically defaulted to take advantage of it.
Bruce Marks, founder of Neighborhood Assistance Corp. of America, a major housing counseling group, had a harsher assessment of the lack of aid to keep people in their homes.
“It just shows you that the banks are running the government,” Marks said. “There’s virtually no benefit to borrowers, and yet you give the banks credit for short sales and getting second liens wiped out — something they were going to have to do anyway.”
Finally, someone with a clear vision of reality.
The housing crash made second liens almost worthless in foreclosure sales. Second-mortgage holders don’t get a dime until first mortgages are paid in full. With housing values deflated, that left banks unlikely ever to collect.
Government and banking officials say borrowers nonetheless benefit when second mortgages are wiped out, which removes a major blemish from credit reports and clears away a common obstacle to first-mortgage principal reduction or short sales. What’s more, they said, forgiving second liens makes borrowers more likely to continue paying first mortgages because they believe that they can recover their home equity.
Eliminating second mortgages gets many borrowers to the threshold of hope. Government and banking officials readily admit that this was the goal of their principal reduction programs.
Bank of America alone has forgiven nearly $10 billion in second liens, winning praise from Porter, California’s settlement monitor, and other observers. The BofA program automatically wiped out 150,000 underwater second mortgages that had gone delinquent unless the borrowers, for tax reasons, opted out.
More than a third of those customers had equity in the homes restored, BofA mortgage spokesman Rick Simon said, and more than half wound up with a loan-to-value ratio of less than 120%. …
Banks have realized that 20% underwater is the threshold of hope. That’s why so many mortgage balances were reduced to this level. Who knows, if the rally keeps going, these people might have equity soon.
In any case, the banks appear to have fulfilled their pledges of relief, although that won’t be official until Smith, a former North Carolina banking commissioner, has finished auditing the banks’ reports, expected by year’s end. His next report is due out by the end of this month.
Even if the banks haven’t quite written off enough yet, they still have plenty of additional losses from short sales coming up to meet their quotas. And none of those short sales will help borrowers keep their homes.
[raw_html_snippet id=”newsletter”]
[idx-listing mlsnumber=”PW13193694″ showpricehistory=”true”]
25462 MORNINGSTAR Rd Lake Forest, CA 92630
$575,000 …….. Asking Price
$375,000 ………. Purchase Price
5/13/2002 ………. Purchase Date
$200,000 ………. Gross Gain (Loss)
($46,000) ………… Commissions and Costs at 8%
============================================
$154,000 ………. Net Gain (Loss)
============================================
53.3% ………. Gross Percent Change
41.1% ………. Net Percent Change
3.7% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$575,000 …….. Asking Price
$115,000 ………… 20% Down Conventional
4.28% …………. Mortgage Interest Rate
30 ……………… Number of Years
$460,000 …….. Mortgage
$114,663 ………. Income Requirement
$2,271 ………… Monthly Mortgage Payment
$498 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$120 ………… Homeowners Insurance at 0.25%
$0 ………… Private Mortgage Insurance
$73 ………… Homeowners Association Fees
============================================
$2,962 ………. Monthly Cash Outlays
($420) ………. Tax Savings
($630) ………. Principal Amortization
$178 ………….. Opportunity Cost of Down Payment
$92 ………….. Maintenance and Replacement Reserves
============================================
$2,181 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,250 ………… Furnishing and Move-In Costs at 1% + $1,500
$7,250 ………… Closing Costs at 1% + $1,500
$4,600 ………… Interest Points at 1%
$115,000 ………… Down Payment
============================================
$134,100 ………. Total Cash Costs
$33,400 ………. Emergency Cash Reserves
============================================
$167,500 ………. Total Savings Needed
[raw_html_snippet id=”property”]
Do you want to know what I have a problem with? People that obtained so called mortgage balance reductions just before housing prices jumped. It is possible some obtained these reductions in south coastal orange county where prices are not far from the last peak. That is not the America we all knew. These people need to give the money back.
One of the many unfairnesses of a bailout program. It’s even worse in markets like Phoenix or Las Vegas where prices are up 40% from the bottom. Many people who got principal reductions there likely have equity today — equity courtesy of a bailout.
Banks are pushing back on Short Sales, however that’s just very recent. But I know what you mean. There were a lot of people that “won” the lottery.
The main reason the banks are pushing back on short sales now is because they approved all they needed to in order to meet their obligations under the settlement agreement. Denying short sales now helps them keep inventory off the MLS and drive prices up.
[…] – Economist Beware complacency over a slowly improving UK housing market – Telegraph Bank settlement agreement facilitated borrowers losing their homes – OC Housing News The Fed has become a creature of politics – Will, Washington Post A […]
FHA-backed mortgages will be halted in a shutdown
If the government shuts down, what happens to all the Uncle Sam-backed mortgages that are in the pipeline? They account for about 90% of U.S. home loans, so reducing that flow could hurt the housing recovery.
The good news is that most government-backed home loans – those purchased and securitized by Fannie Mae and Freddie Mac – will be unaffected by a shutdown. Those companies pay for their operations out of the fees that they charge lenders
The bad news is that loans guaranteed by the Federal Housing Administration, the Veteran’s Administration and the rural development loans of the United States Department of Agriculture, won’t be processed. If an application for an FHA-insured loan has not been approved by the time of the shutdown, it will have to wait until after the shutdown ends.
FHA-backed loans accounted for 45% of all mortgages used to purchase homes issued in 2012, according to the Federal Reserve. The FHA alone insures about 60,000 loans a month.
“FHA will be unable to endorse any single-family loans and FHA staff will be unavailable to underwrite and approve new loans,” in the event of a shutdown, according to the contingency plan from the Department of Housing and Urban Development, the FHA’s parent agency.
Of the 9,300 employees who work for HUD, only 350 (3.8%) will be able to work, according to a HUD release.
I was about to post that one.
I just heard analysis on NBC noting that Democrats are united while Republicans are not. This suggests to the analyst that the Republicans will cave in again.
There seem to be conflicting reports from HUD about what will happen if the government shuts down. One contingency plan says they won’t endorse new loans, another contingency plan says they will based on prior budget allocations. If they do continue to endorse new loans, it’s going to be a log jam with only 350 employees doing the work of 9,300 people.
I had no idea that so many people worked for FHA.
With a 95%+ reduction in staff, they will effectively stop all FHA loan production.
HUD Delays Dual Agency Restrictions
HUD has delayed its prohibition of dual agency listings on short sale properties according to a statement made this week by the National Association of Realtors (NAR).
The HUD prohibition had first been outlined in a July letter to mortgage servicers describing new anti-fraud requirements for short sales and deed-in-lieu of foreclosure transactions. The original policy was slated to go into effect October 1, 2013.
In response, NAR President Gary Thomas wrote a letter to HUD outlining NAR’s concern with both the reasoning behind the prohibition and the possible consequences of it.
“NAR has been told that the policy was implemented because the HUD Inspector General detected fraud and abuse in the pre-foreclosure sales process; however, no
statistics or reports were provided to NAR detailing short sale fraud by real estate agents,” the letter said. “NAR takes fraud very seriously…If there is evidence of fraud by our membership, we would like to be part of an effort to develop policies that effectively address these issues.”
Thomas’s letter also raised concerns about how a prohibition on dual listing would affect agents’ and brokers’ ability to effectively serve their clients.
How much analysis can an underwriter do in 13 minutes?
The 13-minute close?
13 minutes.
That’s how long a former official at Countrywide — now at Fannie Mae — alleges it took the former lender to approve loans in the industry-infamous “High Speed Swim Lane.”
Of course, Countrywide’s business practices, and the loans they spawned, are now a problem Bank of America (BAC) gets to deal with.
Which I’m sure they’re just thrilled about over there these days.
Per Bloomberg, which reported on the testimony in the ongoing case between the U.S. government and Bank of America:
… in mid-2007, some Countrywide officials became concerned after a “loan processor” employee at the lender’s NCA unit concluded the “cleared-to-close” approval process of reviewing and approving paperwork for a home loan in just 13 minutes.
Assistant U.S. Attorney Jaimie Nawaday showed jurors an e-mail that indicating that the review process began at 3:53 p.m. and the loan was “cleared-to-close” at 4:06 p.m.
“It would not be enough time,” O’Donnell said, listing the raft of paperwork an employee would have to review including title searches, deeds, taxes, a review of the credit and employment history of the borrower, a determination of whether the home was located in a flood zone, property appraisals and a comparison with similar properties.
The below reaction from a Twitter user named Shnaps, whose Twitter bio says s/he is in a “love/hate relationship with the mortgage banking industry,” pretty much says it all.
S/he rattled off a rapid-fire series of tweets on the topic of whether a 13-minute close made any sense or not.
And the best part is that s/he did it over the course of — what else — just a few short minutes.
Having standards is the whole point of loss mitigation. It’s also one of the cure for the long term health of the housing market.
How Tighter Mortgage Standards Are Holding Back the Recovery
The housing recovery faces headwinds because it’s too hard to get a mortgage today, which in turn is restraining economic growth, and the government is partly to blame, according to a paper from a top economist and a former White House policy adviser.
The authors are quick to note that they aren’t advocating a return to the anything-goes school of lending that prevailed from 2004 until 2007, but they argue that the pendulum has swung from too far in the other direction. The paper was written by Jim Parrott, a former housing advisor in the Obama White House who is now a senior fellow at the Urban Institute, a left-leaning think tank, and Mark Zandi, chief economist of Moody’s Analytics.
The clearest sign of tighter credit standards are seen in average credit scores, which in June stood nearly 50 points above their pre-housing bubble levels. Credit scores are not only higher, but they also understate the quality of recent borrowers, who have earned these scores during a much tougher environment. In the early 2000s, borrowers had an easier time building their credit because unemployment was low and home prices were rising. In other words, a 750 credit score coming out of the financial crisis counts for more it did ten years ago.
Easing lending standards to return credit scores to pre-bubble levels would boost home sales by around 450,000 units and new single-family home construction by around 275,000 units, according to estimates from Zandi. The increased construction and the benefit of higher home prices, he forecasts, would over time reduce the unemployment rate by 0.4 percentage points.
The best form of loss mitigation is simply not to make the bad loan in the first place.
The headline should read:
Prudent Loan Standards Are Holding Back Efforts to Reflate the Housing Bubble
Rising Rates, Prices Lead to Waning Competition on Housing Market
Rising prices and interest rates are contributing to less competition in the housing market, but tight inventories leave a majority of home buyers in bidding wars still, according to a recent survey by Redfin, a national real estate broker and technology provider.
While the percentage of bids encountering competition remains a majority at 60.5 percent in August, the rate is down both monthly and annually. The share of bids facing competition in July was 63.3 percent. The year-ago level was 63.5 percent.
August’s year-over-year decline in competition is the first on record for Redfin’s survey, which initiated in 2011. Redfin surveys its agents working in 22 markets across the country.
Only three markets experienced increased competition year-over-year in August, including San Francisco, Los Angeles, and Boston.
As competition declined, the difference between winning bid prices and asking prices fell just below 0, coming in at an average of -0.3 percent for the month, according to Redfin.
Redfin noted only two of the 22 markets it surveyed posted winning bids above asking prices. Those markets were San Francisco, where winning bids were on average 7.2 percent higher than asking prices; and Seattle, where winning bids were 0.2 percent higher than asking prices.
Rising home prices and mortgage rates are contributing to the waning bidding wars across the country, according to Redfin.
In a survey of homebuyers, Redfin found 63 percent of home-seekers said mortgage rates affected their ability to purchase a home.
Twenty percent of buyers said they slowed their home search due to rising rates.
50 dma has crossed over the 200 dma on $index
Come’n back..
today:
2yr perspective:
This headline is ridiculous. It isn’t reverse mortgages that’s causing problems at the FHA, it’s their 10%+ mortgage delinquency rate.
Retiree loans lead to FHA cash crunch
The Federal Housing Administration is about to tap the U.S. Treasury for financial help for the first time in its 79-year history – and so-called reverse-mortgage loans to older people appear to be a big reason why.
The FHA insures mortgage lenders against losses, and it plays a particularly big role in backing up mortgages that involve relatively small down payments (loans involving as little as 3.5% down can qualify for FHA insurance). When borrowers on the loans default, the FHA makes payments to lenders. The agency announced back in April that it was likely to need an infusion of cash this year to shore up its insurance-reserve fund; it announced today that the amount it would be drawing was $1.7 billion.
So why are you reading about this in Encore? Because the FHA says that its cash shortfall is largely due to problems with its role as a backstop for reverse mortgages – loans that let people over age 62 tap their home equity for cash. Unlike traditional home-equity loans, reverse-mortgage loans don’t have to be repaid until the homeowner sells the house, moves out or dies. But default rates on those loans have been unexpectedly high in recent years, and the government has been tightening restrictions on the loans as a result. As Nick Timaraos of The Wall Street Journal noted this week, the FHA’s reverse-mortgage portfolio is expected to run a deficit of $5.2 billion this year, wiping out the $4.3 billion surplus the agency expects from its standard mortgage portfolio.
The FHA said today that none of the money it was taking from the Treasury would actually be disbursed, but that it was required to hold the cash to maintain an adequate cushion in its insurance reserves. The transfer of funds doesn’t require approval from Congress.
9-30 August New (Builder) Home Sales…”Misreporting”, the theme of the month
————————
The divergence between the depression level weakness in New Home Sales volume and sentiment, consensus opinion, Existing Sales volume, and especially last year’s consensus estimates of 500k to 600k is absolutely shocking. This is more evidence we have come full-circle and now believe that 2007 to 2010 was the anomaly in the sector and housing can’t go down. At least the builder stock prices are seeing through the macro euphoric sentiment fog. Instead of emotion and anecdotes, look at the data; the data are the data, plain and simple.
Thanks for posting. I may use that one.
No surprise here, but still interesting.
Part-time earnings may not count when seeking a mortgage
WASHINGTON — It’s an issue that hasn’t gotten much attention but should be a red alert for first-time buyers and others who supplement their incomes with part-time work: Though part-time earnings are playing an increasingly important role in the post-recession American economy, the income you earn part time may not count when you buy a house.
Isn’t income always income? If you make $42,000 from your regular full-time job and $18,000 more by working part time at a second job, isn’t your gross income $60,000?
The IRS would tell you it is. But mortgage lenders may disregard the $18,000 unless you can document that you’ve been receiving the extra money steadily for two years and the pay is likely to continue.
There might be some wiggle room on this depending on your specific circumstances, but under rules established by the dominant players in the home loan market — Fannie Mae, Freddie Mac and the Federal Housing Administration — part-time income generally isn’t “qualifying income” for mortgage purposes until it has been flowing for a couple of years.
The problem can be especially severe for borrowers with moderate incomes who have solid credit histories and have taken on second jobs to support their families. Robert Montalbo, a loan officer in San Antonio with Premier Nationwide Lending, a mortgage banking firm, says he sees many creditworthy applicants who “get a [part-time] second job to make ends meet” and who simply want a piece of the American dream — to buy a home of their own.
Is the primary driver of the ‘wealth effect’ (equities) about to get whacked??
Fed Withdraws Whopping $58 Billion In Liquidity In Latest Reverse Repo Test
It appears there is just a little excess liquidity sloshing around out there. Moments ago the Fed announced that as part of its most recent overnight reverse repo “liquidity withdrawal preparedness test”, some 87 entities provided the Fed with a whopping $58.2 billion in overnight liquidity in exchange for Treasury collateral at a 0.01% stop out rate. This was the largest amount in liquidity soaked up (or, alternatively, collateral provided) by the Fed in its recent history of Temporary Open Market operations going back to 2012.
http://www.zerohedge.com/news/2013-09-30/fed-withdraws-whopping-58-billion-liquidity-latest-reverse-repo-test
I doubt that was done as a result of excess liquidity as much as a desperate need for colateral for the member banks. The Fed is between a rock and a hard place and it is starting to show.
HUD Proposes New Definition of Qualified Mortgage
HUD proposed a new definition of “qualified mortgage” (QM) in a statement released Monday. To meet the new QM requirements, a mortgage will have to require periodic payments, have terms not exceeding 30 years, limit upfront points and fees to no more than three percent with adjustments to facilitate smaller loans, and be insured or guaranteed by FHA or HUD.
The Dodd–Frank Act required HUD to propose a QM definition that is aligned with the ability-to-repay criteria set out in the Truth-in-Lending Act (TILA) as well as the department’s historic mission to promote affordable mortgage financing options for qualified lower income borrowers.
“The new limit on upfront points and fees for all Title II FHA-insured single family mortgages is consistent with the private sector and conventional mortgages guaranteed by Fannie Mae and Freddie Mac to attain qualified mortgage status under CFPB’s final rule.” HUD said in a statement. “Currently, HUD does not insure, guarantee oradminister mortgages with risky features such as loans with excessively long terms (greater than 30 years), interest-only payments, or negative-amortization payments where the principal amount increases. Moreover, HUD’s existing underwriting standards require lenders to assess a borrower’s ability to repay their mortgage debt.”
The proposed rule establishes two categories of QMs that have different protective features for consumers and different legal consequences for lenders. HUD’s proposed Qualified Mortgage categories are determined by the relation of the Annual Percentage Rate (APR) of the loan to the Average Prime Offer Rate (APOR).
Anyone here attend the Great Park grand opening this past weekend? Must say, I was impressed. We’ll be renting for a year after our sale is complete, but if Rosemist is still selling then, it will be tempting…
I walked through with my son on Saturday (we live next door in Portola Springs.) It was a madhouse.
The models were all done up well, and they did a tremendous job of getting people to come see it. We went back on Sunday, and it was so busy we couldn’t find a place to park. Finally, we went back again this afternoon and looked through most of the models. There were so many we got fatigued. From what I saw, nearly all of the offerings are to move-up buyers at price points requiring jumbo loans. It will be interesting to see how well they sell after the initial push.