Lending News

The following is a round-up of recent news affecting mortgage interest rates and lending guidelines for 2015.

Mortgage interest rates have dropped dramatically to start off the new year. In some areas, 30 year fixed rate mortgages are available at 3.75% and 15 year fixed rate mortgages are as low as 3%. Falling oil prices and concerns over Europe's economy have driven the 10 year treasury rate below 2% and mortage interest rates have fallen accordingly.

Fannie Mae and Freddie Mac will now allow 3% down payments for conventional fixed rate loans. Both entities have specific guidelines for using this program. Check with your lender for the specific details and criteria required.

The conforming mortgage loan limit between regular mortgages and jumbo…

Bankrate has released its annual survey on home loan closing costs* again. In Florida, the news was actually better than expected. For 2013, the closing costs on a $200,000 home purchase averaged $2,517, a fall of $323 over last year's cost of $2,840. And, while still expensive, Florida's number dropped it from No. 4 in 2012 to No. 9 on last year's list.

The survey found that the national average for origination and third-party fees this year totaled $2,402, up 6% ($138) from $2,264 in 2012. The results indicated the fees charged directly by lenders went up 8.4%, while fees charged by third parties for things such as appraisals and title insurance and title closing fees rose 3.2%.

Most interesting was the main reason given by the lenders for the cost…

On January 10, 2014, the Consumer Financial Protection Bureau (CFPB) implemented their new guidelines for mortgage loans. You may have heard the term Qualified Mortgage (QM) being used by your lender or loan officer, or heard something about them in the news lately. A qualified mortgage is one that offers the lender protections, so long as they comply with all of the CFPB guidelines. Lenders who make loans that are outside of the QM guidelines lose protection against the borrower suing them on the basis that the loan they obtained was unfair.

However, these new guidelines may make mortgages harder for borrowers to obtain and that has consequences for both Buyers and Sellers to consider when purchasing a home.

In order to qualify for a QM, lenders…

Fannie Mae and Freddie Mac announced plans last week to extend their mortgage relief programs for unemployed borrowers while they are out of work. According to Fannie's guidance letter, banks can offer unemployed borrowers up to six months of lowered or skipped payments without seeking prior approval and up to 12 months with a formal approval.

Fannie Mae will start its program extension on March, 1st. Freddie Mac will begin its offering of the extended forbearance period starting on February, 1st. To be eligible, the banks must determine if the "borrower" has less than 12 months worth of mortgage payments in savings and has monthly housing expenses above 31% of their incomes. After the extension period expires, if the borrower is still unemployed or…

Fair Isaac Corporation and data provider CoreLogic announced last week they are collaborating on another new credit score that will focus on sharing more personal consumer information with mortgage lenders next year. FICO scores are the industry standard for determining credit risk on mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration and this move is intended to provide a separate score that will incorporate information from sources like payday loans, evictions and child support payments. Future additions will likely include information on things like the status of utility accounts, rental payment histories and even cell phone account payments.

Separately, last month, the big three credit reporting agencies, Experian,…

You had to know this was coming after Fannie and Freddie announced their home loan fee increases.

Beginning April 18th, 2011, FHA will raise its monthly Mortgage Insurance Premium (MIP) by 25 basis points. For the average FHA borrower, the increase will equate to about an additional $30 per month.

According to HUD's spokesman, the increase was necessary for the following two reasons. First, FHA's capital reserves are currently below a mandated minimum set by the legislature, and the fee increase will help the agency comply with the law. Second, HUD hopes to steer more buyers away from FHA loans and into the private sector by making an FHA loan less desirable.

How commendable on their part.

And so it goes in the mortgage industry. More costs,…

The cost of getting a home mortgage (loan fees) from Fannie Mae or Freddie Mac are set to increase and will affect more borrowers, including those with stellar FICO credit scores. The fee changes actually were announced last year and they are now scheduled to go into effect on March 1 for Freddie Mac and April 1 for Fannie Mae.

According to the two mortgage giants, it is the first time since 2009 that they are raising risk fees and broadening the scope of borrower that will be affected. To avoid the new fees or to get a discount, most borrowers will need FICO scores of 740 or better and down payments of 25% or more. Lenders could absorb the cost, but most are expected to add it to their consumer loan costs immediately upon enactment.

While the…

Federal lawmakers recently voted to keep the maximum size of loans guaranteed by Fannie Mae, Freddie Mac and FHA for high-cost areas at their current levels ($729,750 and $625,000). President Obama finally signed the legislation, thereby extending the loan limit through 2011.

The provision means homebuyers and homeowners in expensive housing markets like California, New York, Alaska and Hawaii will continue to get a break on interest rates when they purchase or refinance. Conforming loans come with cheaper interest rates versus non-conforming or so called "jumbo"  mortgages, because they are backed by the government lending entities.

While most areas will remain at the $417,000 maximum loan amount, it will continue to make a huge difference in the…

Fair Isaac and Company (FICO) announced the release of a new credit scoring product called the FICO 8 Mortgage Score. It was specifically designed to help lenders make better credit decisions in predicting mortgage performance risk and is now available from all three major U.S. credit reporting agencies - Experian, Equifax and TransUnion.

According to FICO, the FICO 8 Mortgage Score will analyze a borrower's full credit history on file to deliver a better assessment of mortgage repayment risk and hopefully help cut down on the number of future foreclosures. FICO claims a 15% performance improvement over the standard credit scores currently available and says the new product includes additional score reason codes to help lenders understand and explain…

Congress has voted to keep the maximum size of loans guaranteed by Fannie Mae, Freddie Mac and FHA at their current levels through the end of 2011. For buyers in high cost areas, the maximum mortgage amount will remain at $730,000 for Fannie/Freddie loans and at $625,000 for FHA mortgages.

Anything above these limits set by Congress falls into a category known as “Jumbo”  loans. During the financial crisis, mortgage lenders became far less willing to make these types of loans and thus Congress had to act. A typical level for Jumbo loans used to be around 18% annually. This year, they've made up roughly 5% of the overall mortgage market. However, this is likely to change as the premium gap for borrowers who receive jumbo loans has fallen to about a 0.8…