2014 Surprising Everyone!

There were 49,000 completed foreclosures in June, down 35 percent nationally from a year ago, while the seriously delinquent rate is at 4.3 percent, the lowest since August 2008 reported CoreLogic this week.  But even with this good news, and mortgage rates remaining stable, the first mortgage market is in the doldrums.

While the top 10 funders of second-lien mortgages wrote $4.6 billion of such loans in the first quarter, up 44% from a year earlier, according to MortgageStats.com.  Incredible!

Community bankers surveyed lately reflect the fact that banking on the local level has not changed, improving the customer’s experience and meeting their customers changing needs is still the priority, according to the advisory firm KPMG.   

Residential Housing Stalled

The housing market is showing mixed signals, in a report recently sent out by Freddie Mac.  The report showed that the low of the residential market was in November of 2010.  Today’s numbers still reflect a weak market, and that market has actually declined recently from April to May. 

What got my attention was when I saw only 13 states out of 50 (plus D.C.) are now in the stable category!

 The states ranking on top are:

  • North Dakota
  • Washington, D.C.
  • Wyoming
  • Alaska
  • Montana

Eight of the 50 metro areas tracked also are in their stable range by historical standards. Ranking in the top five:

Foreclosure Rate by State Varying Widely

Across the country the foreclosure rate has fallen dramatically.  No state has had an increase in its foreclosure rate for the past two years.  This is probably due to the steady improvement in home prices, encouragement in the employment sector, and still great mortgage rates. 

But there has been a wide difference between the states, Florida, Illinois, Ohio, Kentucky, Indiana, and Wisconsin are all states that SAMCO has a significant number of clients and they all had, by comparison to other states, high foreclosure rates and a relatively weak recovery the past two years.  Arizona and California experienced the sharpest declines in their foreclosure rate. 

FANNIE Appraisal Policy Changes for the Good!

Fannie Mae is the leader for Appraisal Standards.  Freddie always follows suit and the Federal Home Loan Bank (FHLB) uses Fannie’s Standards.  So when Fannie changes an appraisal requirement the industry changes. 

On April 15, Fannie changed its Selling Guide to reflect changes in appraisal updates, photo’s and comparable sales.  Significant changes were also made to re-titling and reorganization of content that, hopefully, will make searching for specific information easier.

Some of the changes are:

Think it’s slow? Your right!!

Big banks JP Morgan Chase and Wells Fargo reported a sharp drop in loan volume in the first quarter of this year.  This is important as they are the two largest mortgage lenders in the U.S.  Two factors influencing this drop are a rise in mortgage interest rates and a significant increase in all cash purchases of homes, both over the last 12 months. 

Both Fannie and Freddie have just revised their forecast for new-home construction and total home sales for this year.  “Tight inventory may pose a significant challenge for home buyers in many markets across the country, which may result in higher home prices and sales being lower than expected,” says Frank Nothaft, Freddie Mac’s chief economist.

CFPB Complaints Double!

The Consumer Financial Protection Bureau established a hotline for consumer complaints in 2012.  In 2013 they received 163,700 consumer complaints and mortgages made up 37 percent of those complaints.  Loan modifications, collections, and foreclosures made up most of those mortgage complaints.  When a consumer files a complaint, the CFPB tries to assist by helping borrowers.  THEY ARE NOT THERE for the lender!  Their mission is for the consumer.  The CFPB is just starting being an advocate for the consumer.  They will be advertising and promoting awareness  of being available for complaints, whether about an appraisal, closing issues, or misunderstandings.  

The CFPB and Mortgage Complaints

One of the large changes in the bank regulatory environment is the new focus on customer satisfaction with the mortgage process. Central to the Bureau’s mission is listening and responding to consumers.  The Bureau has made it easy for the consumer, via their website, and encourages consumers to report their experiences with financial institutions.  Just three quarters of the way through last year the CFPB reported that over 139,000 complaints had been registered, and over 50% of those complaints were with the mortgage process!  Not good for the community banker! 

JP Morgan and others are finding a Lean Mortgage Market

Last month JP Morgan Chase announced a pullback from residential mortgage lending and their expectations for 2014

Home lending has been "the most painful business ever," JPMorgan CEO Jamie Dimon said at an investor presentation, when they announced another cut of 6,000 mortgage jobs for this year, on top of 11,000 last year.  With that came a forecast that its mortgage division would not turn a profit this year, though Dimon restated ‘we are here for the long game’. 

The announcement from Chase, the second-largest home lender behind Wells Fargo, is a strong reminder that the housing market has not yet fully recovered from the downturn, with home sales and overall mortgage lending still below prerecession levels—and not expected to turn a corner any time soon.

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