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Borrowers with minor imperfections on their credit applications — like a brief loss of employment or a temporary dip in their credit score — are starting to have better luck at snagging a loan with smaller lenders, Bloomberg reports. At least 15 smaller firms this year are offering slightly riskier mortgages, which in some cases come with higher interest rates and larger down payment requirements and aren’t backed by the government.

“Some lenders became afraid of their own shadows,” RPM Mortgage Inc. Chief Executive Officer Rob Hirt told Bloomberg. The bank started a program this summer for borrowers who have higher debt burdens or who had sold a home for less than the outstanding mortgage. “The market is beginning to realize that if you make smart and sound loans to people who don’t fit in the narrow box, it doesn’t make them a worse risk.”

On the other hand, larger banks, like Bank of America and JPMorgan Chase & Co., have generally tightened their credit standards over the last few years. The average score on mortgages that government-controlled Fannie Mae and Freddie Mac bought now stands at about 740 – well above the 660 level that is considered subprime. Some of the big banks are reluctant to ease their credit standards, concerned that Fannie, Freddie, and the FHA will force them to buy back bad loans with underwriting errors; the banks do not want to take on the risks of loans that the government programs won’t insure, Bloomberg reports. The lending giants from 2006 through 2012 faced more than $200 billion in losses from home loans, according to Moody’s Analytics data.

But where big banks are stepping back, small banks are stepping in. For example, Shellpoint Partners LLC’s New Penn unit began this summer to offer mortgages for home buyers with debt-to-income ratios up to 55 percent and interest-only loans when borrowers have “high disposable income” or “high income potential due to their line of work.” Lone Star Funds’ Caliber Home Loans Inc. also debuted this summer new programs that offer flexibility for foreign nationals and on purchases of condos without approval for government programs. TD Bank’s Right Step program allows borrowers to put 3 percent down and not have to pay mortgage insurance if they have credit scores of 660 or above. Banc of California is providing loans to borrowers who have a foreclosure or late payments on their records, as long as they can make a down payment of at least 20 percent and show other strong assets in their finances.

“To us, it’s common sense,” says Jeff Seabold, chief lending officer at Banc of California. “There’s quite a few people who are boxed out that shouldn’t be.”

source:  Bloomberg Businessweek 


With still low home interest rates, the housing market is still offering “perhaps the best deals of a generation,” notes an article by Bloomberg Businessweek. 

“It’s hard to see the possibility of losing on a home purchase right now, with these mortgage rates,” says economist Dean Baker.

The article notes the following scenario: Buying a $289,000 home with a 4.5 percent mortgage rate and a 20 percent down payment would mean a  monthly mortgage bill of $1,171. 

For those who can qualify for a mortgage, "playing the waiting game" won't result in much gain, Nariman Behravesh, chief economist at IHS in Englewood, Colo., told Bloomberg Businessweek.

source:  Bloomberg Businessweek


It’s still not easy to get a loan these days, say housing experts. Even home buyers with excellent credit are struggling to get approved for a loan, as home lending standards have tightened to some of their strictest level in decades. 

Tightened credit is affecting home sales and hurting the housing industry’s recovery, economists note, as more borrowers face increased scrutiny in qualifying for a loan at the best rates. To get the lowest interest rates, home buyers are having to come with higher credit scores and larger down payments than just a few years ago, as well as having to show steady employment, verify assets, and even explain new credit cards and small bank account deposits, USA Today reports. Banks hope the higher standards will lead to fewer future defaults. 

In an analysis done by Zillow of 3.6 million loan inquiries, it found that prospective borrowers getting the best loan rates had average down payments of 28 percent. Five years ago, prospective borrowers averaged down payments of less than 24 percent, according to Zillow. 

"It used to be anybody with a pulse could get a home loan. Now you have to be an Olympic athlete," Guy Cecala of Inside Mortgage Finance, told USA Today. "The pendulum has swung too far."

source:  USA Today

A study released by Bankrate, Inc. shows that the majority of Americans think wealth is beyond their reach and that it won’t be easier to get rich any time soon.

Among the findings:

-70% of Americans believe that it is more difficult to get rich today than it was in the past;

-More than half of those surveyed believe it will be even more difficult to get rich in America in the next ten years, while 24% think it will be about as difficult as it is now;

-63% say it’s ‘not too likely’ or ‘not at all likely’ they’ll get rich;

-Only 21% of Americans see traditional investment in stocks and bonds as a feasible route to wealth;

-Family is the primary motivator for Americans to strive for prosperity as 41% of respondents said their reason for wanting wealth is to provide a better life and future for their children;

-Equal numbers of Americans see “job loss or income reduction” or “too many bills and not enough income” as the main obstacles to achieving wealth, with each choice being selected by 27% of respondents. The Credit CARD Act was a bit too late as 11% blamed credit card debt for wealth seeming out of reach;

-In spite of the respondents’ concerns about accumulating wealth, only 52% of those polled say that they save consistently;

-It’s not all bleak news, however: 95% of Americans say they are taking one or more steps to secure their financial future, with 75% saying they have cut back on purchases to save more and 78% saying they are avoiding buying “luxury goods or unnecessary items.”

The poll was conducted by Princeton Survey Research Associates International.



As interest rates have stayed low, home owners are rushing to take advantage of some of the lowest rates of the year. 

"Growing concerns about weak economic growth in Europe caused a flight to quality into U.S. assets, leading to sharp drops in interest rates,” says Mike Fratantoni, the Mortgage Bankers Association's chief economist. “Mortgage rates for most loan products fell to their lowest level since June 2013. Refinance application volume has reached the highest level since June 2014 as a result."

Low rates, however, aren’t spurring greater homebuying activity. Mortgage applications for home purchases, viewed as a gauge of future home buying, have dropped. Purchase applications were 4 percent lower than they were for the same period one year ago, the MBA reports.

"Purchase application volume continues to run behind last year's level, but to a lesser degree,” Fratantoni says. “We continue to expect that the strengthening job market should lead to an increase in purchase activity next year.”

source:  CNBC

Depending on where you live, new single-family homes vary drastically on price, design features, building materials, and even financing, reveals a study from the National Association of Home Builders, using 2013 Census Bureau Survey of Construction data.

The priciest homes built for sale can be found in New England, where the median sales price of newly built single-family homes is $400,000. On the other hand, the least expensive new single-family homes can be found in the East South Central (which includes Alabama and Mississippi) and West South Central (Texas and Oklahoma) divisions, where median sales prices of new-homes are $221,000 and $223,000, respectively.

The price of the home doesn’t always correlate to its size. While New England had the priciest new homes, the median size of new homes in the region was fairly small, at 2,240 square feet.

The largest homes can be found in the South Atlantic division (Georgia and Florida), which has a median size of 2,596 square feet. Nationwide, the median square footage for a new home is 2,469 square feet.

"This recent analysis really illustrates the many different types of homes built throughout the country," says NAHB Chairman Kevin Kelly, a home builder. "It is fascinating to see how newly built homes can vary significantly not only in design features and building materials, but also in terms of lot size, home prices, and financing methods used, simply based on where a home is built."

Here are some additional findings from the report:

  • Outdoor features: Porches ranked as the most popular outdoor feature nationwide, dominating new-home construction in the West South Central and in the West. Decks are declining in popularity nationwide, but remain the most popular choice for single-family homes built in New England, where 63 percent of new-homes include one.
  • Prices per square foot: Per square foot, new homes are most affordable in the South, where the median sales price per square foot (excluding lot value) are $73 in the West South Central division and $84 per square foot in the South Atlantic division.
  • Siding preferences: Vinyl is the most commonly used primary siding material nationwide, with nearly 31 percent of new single-family homes started in 2013 using it, followed by brick (nearly 24 percent). Regionally, vinyl was the most popular in the Northeast and Midwest; brick most commonly used in the South; and stucco the most popular in the West.
  • Foundations and number of stories: Most homes in colder climates, like the Northeast and Midwest, have basements, unlike homes in the South that are usually built on a slab. Fifty-eight percent of new homes nationwide had two or more stories. The majority of homes in the Northeast are two stories; more than half of the homes started in 2013 in the West also have two or more stories. In the Midwest, however, more than half of new homes started have only one story.
  • Lot sizes: The New England region has some of the largest and priciest lots nationwide. The median lot size in New England is 22,863 square feet – more than three times larger than the national median of 8,712 square feet. The lots are also the priciest there, with the median lot value at $100,000 compared to the $40,000 nationwide median for spec-built homes. On the other hand, the East South Central division has the second-largest lots with a median size of 14,520 square feet, as well as the lowest median value at $30,000 per lot.
  • Financing: The majority of single-family homes nationwide are purchased using conventional loans, but regionally, there are differences among various financing options. Cash purchases are the most common in New England, while FHA-insured loans are the most prevalent in the West and South. VA-guaranteed loans are most common in the South Atlantic and Mountain divisions.

source:  National Association of Home Builders


Young, first-time buyers are struggling to purchase a home. Young first-timers are finding themselves competing against other bidders who are willing to pay cash. Meanwhile, many young buyers are having trouble qualifying for a loan, often due to high student loan debt. 

Overall, young buyers have been left out of the housing recovery more than any other age group, according to a USA Today analysis. The home ownership rate for 25 to 34 year olds has declined substantially. 

"There's been no situation as devastating as this, and it's probably taken a greater toll on the younger generation," says Budge Huskey, CEO of residential brokerage Coldwell Banker. "They've seen other friends or acquaintances that may have even gone through a foreclosure. There's a psychological aspect of the impact of the recession that goes beyond the mere finances."

First-time home buyers are viewed as critical to a healthy housing market, allowing older Americans to purchase their next home and helping to stimulate new-home construction. 

But the number of first-time home buyers has been steadily falling in recent years. "Giving people the opportunity to buy a home is a way to provide them a vehicle of accumulating wealth," says Chris Hebert, research director for the Joint Center for Housing Studies of Harvard University. "Making sure this next generation has this opportunity will be important for their well-being."

source:  USA Today


More applicants could qualify for a mortgage if lenders took a broader look at an applicant’s credit data, according to a report by CEB TowerGroup, commissioned by CoreLogic.

Alternative credit data or extra credit information -- like an applicant’s unsecured credit, payday lending, and property history -- are good indicators of an applicant’s true credit risk, and taking into account such additional information could help increase the number of people who qualify for mortgages, the study found.

The study evaluated CoreLogic’s newly launched FICO Mortgage Score Powered, which takes into account supplemental credit data, and compared it to the traditional FICO score. The study found that both scores were accurate predictors of credit risk.

"Traditional credit data and analytics continue to be relevant, but are not sufficient to satisfy the consumer credit reformation of today," says Craig Focardi, the CEB TowerGroup's senior research director. "As a result of the changes in consumer behavior, lenders cannot revert back to their prior mortgage underwriting policies. Too much damage has already been done to the market, consumers, shareholders, and investors."

Before the recession, consumers would focus on paying off mortgage debts first, but now consumers focus more on paying other debts, such as credit card bills and car payments, as their chief priority.

The study notes that if lenders adjusted their credit risk evaluation policies, they’d be able to better assess an applicant and determine whether they are a good candidate for a mortgage. Seventy percent of those evaluated in the study saw their credit score improve by taking into account alternative data. What’s more, a separate analysis showed that of 300,000 mortgage applicants, 3,100 of those applicants would receive a qualifying credit score of 700 using the supplemental credit data.

The alternative credit information could particularly help mortgage applicants who have newly established credit files with good credit, those with limited information in their credit files but who have good alternative credit payment histories, as well as long-time renters who have no serious payment issues, according to the study.

source:  CoreLogic

Sales of existing single-family homes in Texas were up 7 percent last month from a year ago, according to the latest Multiple Listing Service (MLS) data. September figures for most Texas MLSs.

About 24,640 homes were sold last month, over 1,600 more than the same month last year, but almost 2,800 less than in August.

So far this year, 217,690 homes have been sold, about 1 percent more than this time last year.

The median price — $185,500 — was up 8 percent over a year ago.

Months inventory was at 3.7 months. Six months is considered normal.

For an in-depth analysis of the latest MLS data go to the Real Estate Center's website.

source:  Texas Real Estate Center
Despite the jump in the latest median single-family home price — $220,600, up from around $160,000 just a few years ago, according to the National Association of REALTORS® — the large price gains are not denting affordability.

Even with home prices climbing, home ownership remains affordable because low mortgage rates have helped to offset the price gains, writes Lawrence Yun, NAR’s chief economist, at NAR’s Economists’ Outlook blog. Also, incomes have risen slightly as the unemployment rate has fallen, which also has helped to improve the affordability picture.

A home buyer buying a median-priced home at the current mortgage rate and having a 20 percent down payment would make a monthly payment of about $867. That is 15.9 percent of monthly gross family income, compared to an average of 21.3 percent over the past 30 years, Yun notes.

source:  National Association of REALTORS® Economists’ Outlook blog