Real estate housing and economic news round up for March 9 2017…
Could getting a home mortgage under today’s post-housing bust regulations and procedures be even remotely comparable to going to the dentist to get drilled? Or anything like having your annual physical, where every body part potentially is subject to inspection and prodding?
Has the process of applying and qualifying at a time of super strict underwriting standards, record-high credit score requirements and hard-wired debt-to-income cut-offs gone a little over the top?
Many applicants and borrowers who’ve been through it apparently think so. Two new national surveys of consumer perceptions found that significant numbers of borrowers believe the current mortgage process is a major hassle.
There are very few things that are good that come without work or sacrifice. I understand it can be annoying but if you want to buy a home, this is part of it.
A study conducted by mortgage process outsourcing firm MetaSource finds that 12 of the top 15 quality control (QC) issues mortgage lenders faced in 2016 were related to the Consumer Financial Protection Bureau’s (CFPB) TILA-RESPA Integrated Disclosures (TRID) rule. In fact, the six most frequent findings were issues with TRID requirements, the firm says.
While this isn’t good, you have to wonder if it is possible we will see any changes to TRID or even the elimination of the CFPB? The negative impact from these regulations on smaller lenders has been reported as very burdensome.
For this week, total U.S. weekly rail traffic was 521,607 carloads and intermodal units, up 1.8 percent compared with the same week last year.
Total carloads for the week ending March 4 were 262,743 carloads, up 6.3 percent compared with the same week in 2016, while U.S. weekly intermodal volume was 258,864 containers and trailers, down 2.3 percent compared to 2016.
2 out of 3 ain’t bad…
The Dodge Momentum Index rose 1.6% in February from its revised January reading. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.
February’s increase was due to a 4.4% jump in institutional planning, while commercial planning slipped slightly, falling 0.3% for the month. The Momentum Index has now increased for five consecutive months; however, the underlying components continue to be volatile on a month-to-month basis as large projects continue to sway the data.
The overall trend, however, is rising. On a year-over-year basis the Momentum Index is 22% higher, with commercial planning up 28% and institutional planning moving 15% ahead of last year. This suggests that construction activity will continue to see further growth as the year progresses.
The Dodge Momentum Index measure new non-residential Commercial real estate. While this does not directly have to do with home prices or sales, it is certainly an important economic indicator. And we need a healthy economy for a healthy housing market!
CFPB examiners are asking mortgage companies if they are buying Zillow leads then explaining why that is non-compliant. This is a massive moment to pause for Lenders.
A must watch for all mortgage professionals and even for real estate agents. I am not sure why the CFPB is targeting Zillow and not an other real estate websites that collect consumer information and then sell it. I do not like the source being unnamed but I doubt this is “fake news” or “alternative facts”.
Watch the video here
From Ellie Mae:
Fifty-seven percent of homeowners applied for and completed their latest mortgage completely in person, while more than one-quarter of homeowners (28 percent) applied for their most recent mortgage using a combination of online and in-person interaction. Another 11 percent of homeowners applied for their latest mortgage completely online with no in-person interaction.
When asked what factor would have improved the mortgage process, approximately 40 percent of homeowners indicated they would have liked a faster process with fewer delays. Twenty percent indicated that a shorter, easier to understand application would be preferable, while 11 percent asked for more communication with their lender throughout the process.
Millennials were the most likely generation of homebuyers to begin their mortgage application online and finish it with an in-person interaction with their lender (30 percent). Gen X (28 percent) and Baby Boomer (20 percent) borrowers weren’t far behind in using this online and in-person approach.
The Ellie Mae survey found that today’s homebuyers most value speed, security and simplicity when applying for a home loan – all of which are enabled by technology. Millennials and women were the most likely to cite security as the most important factor when they applied for a loan. Gen X and Baby Boomer buyers were more likely to value the speed of the process. All three generations equally valued simplicity.
Interesting stuff and drives home the earlier article that buyers want simplicity and hate the paperwork.
Applying the House Price Index growth from FHFA to the latest housing data from the American Community Survey (ACS), we calculated a median home value for 3,119 counties and county-equivalents in the United States. Home values represent the value of all homes instead of home sales.
Nationwide, we estimated that the price of a typical home was $209,226 in the last quarter of 20161. Based on our estimates, 84 percent of counties had a lower median home value than the national level.
Check out the data for Anderson County and the possible mortgage payments:
In response to Dr. Ben Carson’s remarks during his first address to HUD employees on Monday, March 6, about “conducting a listening tour to learn what works and what doesn’t in the world of housing policy,” Nela Richardson, Chief Economist for Redfin, has something to say about that.
Richardson feels that HUD, under Dr. Carson’s direction, needs to implement these actions. “An across-the-board investment in affordable housing, in combination with sorely needed transit and infrastructure spending, will ensure that no neighborhood in America suffers due to isolation and neglect,” she said. This is necessary, she believes, to ensure that no family is isolated from economic opportunity simply because of where they live.
Strange that neither this article does not mention the very controversial comment regarding slavery that Carson made during this same speech. The shortage of affordable housing and the decline in home ownership is very scary. I hope that Carson surprises me and does a great job running HUD.
From Attom Data Solutions:
193,009 single family homes and condos were flipped — sold in an arms-length transfer for the second time within a 12-month period — in 2016, up 3.1 percent from 2015 to the highest level since 2006, when 276,067 single family homes and condos were flipped.
Home flips in 2016 accounted for 5.7 percent of all single family home and condos sales during the year, up from 5.5 percent in 2015 to a three-year high but still well below the peak in 2005, when 338,207 single family homes and condos were flipped representing 8.2 percent of all sales.
The report also shows that 126,256 entities — including both individuals and institutions — flipped homes in 2016, up less than 1 percent from 2015 to the highest number since 2007, when 143,266 entities flipped properties.
Interesting report. It is great news that people are working to improve communities by taking homes that need work and turning them into much needed homes.
From the MBA:
Mortgage applications increased 3.3 percent from one week earlier. The Market Composite Index, a measure of mortgage loan application volume, increased 3.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 16 percent compared with the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.36% from 4.30%, with points increasing to 0.44 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased to 4.27% from 4.23%, with points increasing to 0.26 from 0.25 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 3.57% from 3.51%, with points remaining unchanged at 0.36 (including the origination fee) for 80 percent LTV loans.
Interesting that both applications and rates increased at the same time. It could be that many home buyers are motivated by the increasing rates and want to take advantage of the situation while rates are still at historically low levels.
In the week ending March 4, the advance figure for seasonally adjusted initial claims was 243,000, an increase of 20,000 from the previous week’s unrevised level of 223,000. The 4-week moving average was 236,500, an increase of 2,250 from the previous week’s unrevised average of 234,250.
This is higher than expectations.
The nationwide negative equity share for Q4 2016 was 6.2 percent of all homes with a mortgage, nearly 20 percentage points lower than the peak negative equity share – 26 percent – recorded in Q4 2009.
Great news! As more and more homes regain value, it means that more people can sell. Which could help with the limited inventory of homes for sale in some areas/price ranges.