Written By: Joel Palmer, Op-Ed Writer
Potential homebuyers are finding various ways of dealing with the new reality of higher mortgage rates that are closer to historic norms. During the recent pandemic, mortgage rates sank below 3 percent. In January 2021, the average 30-year rate hit an all-time low of 2.65, according to Freddie Mac. By October 2023, however, that rate was nearly at 8 percent.
Written By: Joel Palmer, Op-Ed Writer
Anybody who has bought a home, has tried to buy a home, or is involved in selling or financing real estate knows housing affordability has been an issue for some time. Last week, real estate brokerage Redfin released data showing the extent of how challenging it is for some consumers to buy a home.
Written By: Joel Palmer, Op-Ed Writer
As the first quarter of 2024 draws to a close, the latest news shows an industry in consolidation that may have expanded opportunities to finance this year while still dealing with the rising costs of homeownership. A recent report from Fitch Ratings shows that the largest U.S. non-bank mortgage lenders are gaining market share. This is largely due to consolidation and the exit of smaller lenders.
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) expects to transition to new crediting reporting requirements and new credit score models in the fourth quarter of 2025. “Following extensive stakeholder engagement and input, FHFA is aligning the implementation date of the bi-merge credit reporting requirement with the transition from the Classic FICO credit score model,” the agency said in a statement.
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac reported robust full-year earnings for 2023 due largely in changes to treatments in credit losses and reserves. But steep declines in new business volume demonstrated the challenges of last year’s housing and mortgage markets. Last week, the two government-sponsored enterprises (GSEs) reported their fourth-quarter and full-year financial results for 2023.
Written By: Joel Palmer, Op-Ed Writer
The U.S. Housing and Urban Development (HUD) Department has released a final rule removing the requirement that mortgage lenders register all branch offices where they conduct FHA business. HUD said in the publication of the final rule in the Federal Register that it was adopted without changes to a proposed rule published March 1, 2023. The new rule takes effect March 4, 2024.
Written By: Joel Palmer, Op-Ed Writer
Late-year 2023 developments in the housing market has prompted Fannie Mae to deliver a more optimistic forecast for 2024. “Overall, we expect 2024 to be a better year than 2023 for homebuyer affordability and the mortgage industry,” said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist.
Written By: Joel Palmer, Op-Ed Writer
A number of questions hang over the mortgage industry as 2024 begins. What impact will this year’s presidential election have on the industry’s future? Will mortgage rates and home prices moderate enough to make home buying more amenable to more potential buyers? How will artificial intelligence continue to impact the industry?
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae economists are forecasting a slow recovery in home sales and mortgage originations amid a modern downturn in the economy in 2024. In its December commentary, Fannie’s Economic and Strategic Research Group said that single-family home sales likely bottomed out in the fourth quarter of this year, noting that purchase mortgage applications have so far rebounded 15 percent from a low in November.
Written By: Joel Palmer, Op-Ed Writer
Freddie Mac has announced a change to its Condo Project Advisor program to help streamline mortgage originations involving condominium loans. Freddie said with this enhancement, mortgage underwriters and processors can determine “in just minutes” whether a loan to finance the purchase of a condo unit meet’s the GSE’s guidelines.
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) has published its final rule amending several provisions in the Enterprise Regulatory Capital Framework (ERCF) for Fannie Mae and Freddie Mac. The final rule is effective on April 1, 2024, except for several amendments that won’t take effect until January 1, 2026. The new rule amends the ERCF that was published in December 2020.
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac have moved into the next phase of critical edits for the Uniform Closing Dataset (UCD). Phase 3B, completed on November 6, transitioned the UCD critical edits from “warning” to “critical/fatal.” Fannie and Freddie published revised UCD FAQs to help with questions regarding UCD. The transition to 3B means lenders must address quality issues for “fatal data points” before delivering loans to Fannie or Freddie.
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae released a white paper last week providing details on why it made a pair of key underwriting changes. Meanwhile the U.S. Department of Housing and Urban Development (HUD) announced an initiative it hopes will lead to more conversions of commercial properties into residential uses and mixed-use development. Both announcements continue a trend of agencies and policymakers working to solve an ongoing issue of housing and home financing availability.
Written By: Joel Palmer, Op-Ed Writer
The housing and mortgage industries expressed the immediate need to deal with housing affordability in a pair of letters sent to federal officials last week. Both letters addressed the need to reduce mortgage rates to ease the burden for mortgage borrowers and hopefully increase demand.
Written By: Joel Palmer, Op-Ed Writer
The year 2022 for the mortgage industry was one of declining applications and originations and increased fees charged to borrowers. This is according to last week’s release of the 2022 Mortgage Market Activity and Trends report by the Consumer Financial Protection Bureau (CFPB). The report is based on data collected under the 1975 Home Mortgage Disclosure Act (HMDA).
Written By: Joel Palmer, Op-Ed Writer
A number of housing surveys and reports have confirmed what mortgage underwriters and processors already know too well: It is not the best of times to be in mortgage lending. Redfin reported that nearly 60,000 home-purchase agreements were canceled in August, which accounted for 15.7 percent of homes that went under contract that month.
Written By: Joel Palmer, Op-Ed Writer
Industry analysis released this past week by the Federal Housing Finance Agency (FHFA) showed that home prices continue to rise in much of the country. FHFA also released figures showing homeowners equity remains high, which is at least in part the result of the increase in home prices.
Written By: Joel Palmer, Op-Ed Writer
Most of the world, at least those who pay attention to the world, have by now heard of ChatGPT. It stands for Chat Generative Pre-trained Transformer and is the latest software program driven by artificial intelligence (AI) technology. Launched in November 2022, it has become one of, if not the biggest technology story of 2023.
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac reported their second quarter financials last week, with both enterprises performing well despite the continued struggle to add single-family mortgages to their portfolios. For overall net income, Freddie Mac had the better quarter when compared to the same period a year ago. Freddie’s second-quarter profits jumped 20 percent year-over-year to $2.9 billion. Fannie Mae reported a more modest 6.4 percent increase in year-over-year quarterly income, from $4.7 billion in 2022 to $5 billion this year.
Written By: Joel Palmer, Op-Ed Writer
Mortgage industry forecasts and lender sentiment have changed little in the last few years. The main challenge for mortgage processors and underwriters continues to be the inability to sell what doesn’t exist. “The supply of existing homes is near the 2009 crisis low, and it's showing no signs of easing,” said Doug Duncan, Senior Vice President and Chief Economist for Fannie Mae.
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac recently updated their Selling Guides to address new requirements for condominium and co-op project eligibility. In its Selling Guide update announcement, Fannie Mae referred to Lender Letter LL-2021-14 that was released in October 2021, shortly after the collapse of the Champlain South Tower in Surfside, Florida, that resulted in nearly 100 deaths. Freddie Mac addressed the same concerns in Bulletin 2021-38.
Written By: Joel Palmer, Op-Ed Writer
One of the priorities of the Joe Biden Administration since taking office in 2021 has been expanding homeownership opportunities, especially to those who historically struggle to obtain mortgage financing. A major part of this initiative has been an emphasis on increasing the supply of and making it easier to obtain financing for manufactured housing.
Written By: Joel Palmer, Op-Ed Writer
It’s been a busy month for legislation and policy changes that could impact mortgage underwriters and processors. Legislation that was re-introduced in early June aims to expand the supply of affordable homes while helping low to moderate-income buyers and existing owners.
Written By: Joel Palmer, Op-Ed Writer
Freddie Mac launched an enhancement to its automated income assessment tool that enables lenders to use borrowers’ direct deposit digital paystub data to assess their income. This capability is available through Freddie Mac’s Loan Product Advisor® (LPASM) asset and income modeler (AIM).
Written By: Joel Palmer, Op-Ed Writer
A wave of industry consternation about a new upfront mortgage fee led the Federal Housing Finance Agency (FHFA) to rescind it. FHFA will no longer implement a new upfront fee for certain borrowers with a debt-to-income above 40 percent. The additional 0.375 percent fee on home loans that Fannie Mae and Freddie Mac would acquire was set to take effect August 1 after being delayed from its original May 1 implementation date.
Written By: Joel Palmer, Op-Ed Writer
A wave of criticism about updated mortgage fees prompted the director of the Federal Housing Finance Agency (FHFA) to issue a lengthy rebuttal last week. On Monday, May 1, new upfront fees for purchase and rate-term refinance loans went into effect on mortgages secured by Fannie Mae and Freddie Mac.
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Administration (FHA) is seeking feedback not a requirements update it proposes for insuring mortgages on single family homes with Accessory Dwelling Units (ADUs). The proposal released last week would enable mortgage borrowers to use rental income from the property’s ADU to qualify for FHA-insured financing. This would include 203(k) renovation loans.
Written By: Joel Palmer, Op-Ed Writer
While recent bank failures have created economic uncertainty, they have had little effect on the outlook for the housing and mortgage industries. In its latest Economic and Housing Outlook, Fannie Mae’s economists said they already expected economic contraction in 2023 prior to failures of Silicon Vally Bank and others.
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) announced last week that it is delaying the implementation of a new upfront fee for certain borrowers with a debt-to-income ratio above 40 percent. FHFA said the decision to delay was made because of feedback from the mortgage industry about operational challenges of implementing the ratio-based fee.
Written By: Joel Palmer, Op-Ed Writer
Several new rules and proposed rules affecting mortgage processors and underwriters were announced in the past several weeks. The most significant of these was the recent announcement by the Federal Housing Administration (FHA) to reduce mortgage insurance premiums (MIP) by 30 basis points on FHA-insured mortgages.
Written By: NAMP® Staff Writer
2016 has seen numerous changes in guidelines for reviewing student loan qualifying payments. In this two part series, N.A.M.P. and N.A.M.U. will provide tools for processors and underwriters to use when determining which calculation should be used for qualifying student loan payments. Part I reviewed Fannie Mae and Freddie Mac’s guidelines. We continue this series by exploring USDA, FHA and VA rules.
Written By: NAMP® Op-Ed Ghost Writer
2016 has seen numerous changes in guidelines for reviewing student loan qualifying payments. In this two part series, N.A.M.P. and N.A.M.U. will provide tools for processors and underwriters to use when determining which calculation should be used for qualifying student loan payments. We will begin with Fannie Mae and Freddie Mac’s rules on this topic. Part II will explore USDA, FHA, and VA rules.
Written By: Carlette Emperator
There’s been several times that reimbursement from employee business expenses have been used against the borrower for mortgage qualification. This has caused the borrowers monthly income to be reduced based on the information noted in the two most current tax returns on schedule A or form 2106.
Written By: Carlotta Emperator, Op-Ed Writer
In recent year, FHA has published updates to the rules that affect how to process a FHA Reverse Mortgage or Home Equity Conversation Mortgage. This process is completed through what is a “Financial Assessment” that was added to the Reverse Mortgage effective date April 27, 2015. FHA required each lender to process a prospective mortgagor on all HECM transaction type.
Written By: Angelique Jackson, Op-Ed Ghost Writer
On March 29, 2016 Fannie Mae issued an updated regarding DU 10.0 and Multiple Financed Properties. Previously, we lenders had to manually calculate the reserve requirements because DU did not provide that information. Well, that will all change the weekend of June 25, 2016. DU will now calculate the number of financed properties the borrower has and calculate the reserves for both the subject property and the “Other financed properties.” But before we get into the calculations for the total number of financed properties and reserves, let’s talk about the multiple finance property rule and when it applies.
Written By: NAMP® Op-Ed Ghost Writer
Although the automated underwriting system provides guidance on loan analysis, it is critical to hone your guideline reviewing skills. Underwriting guidelines contain critical definitions, clarifications, and rules that must be applied on all loans. In some cases, the AUS will refer to the guidelines for the full list of requirements to address a particular loan characteristic. As a result, let’s review some best practices for using guidelines.
Written By: NAMP® Op-Ed Writer
In the age of green technology the mortgage industry is beginning to see more properties with Solar Photovoltaic (SPV) systems, more commonly known as Solar Panels. In this 2-part article we will cover what solar energy is, how it works, the types of financing available and the documentation requirements. What are some of the benefits of using solar energy? It helps conserve our fossil fuel resources and reduces our reliance on imported fuels.
Written By: Angelique Jackson, Op-Ed Writer
Last week we covered the different types of financing available for solar panels such as a Solar Lease, Power Purchase Agreement (PPA), a Solar Loan and the Property Assessed Clean Energy (PACE) program. With a Solar Lease or Solar Loan, the lease/loan payments are included in the DTI (a solar loan payment is added to the PITI as subordinate financing),while payments for a PPA are excluded from the DTI since the homeowner only pays for the energy that was produced.
Written By: NAMP® SOp-Ed Ghost Writer
Underwriters and processors that work for non-delegated lenders must submit loan packages for review. Those packages are subsequently reviewed by the MI or investor underwriting team. These packages may also be reviewed by management, sales professionals, and auditors. As a result, it is important to put your best foot forward and present as clean and transparent a package as possible.
Written By: NAMP® Op-Ed Ghost Writer
We have seen frequent changes in the requirements for including student loans over the last year. There was a time where student loans could be excluded from the qualifying ratios if the borrower was able to verify certain terms of deferment. In addition, income-based repayment plans and other temporary reduction plans were permitted. However, the agencies have recently released lender updates that are changing the student loan game.
SOURCE: Mortgage News Feed
GUS, or Guaranteed Underwriting System, is USDA’s automated underwriting engine. GUS can take some getting used to if you are most familiar with Desktop Underwriter or Loan Prospector. Here are some tips to help you navigate GUS and get the most accurate findings for submission to USDA.
Written By: NAMP® Op-Ed Ghost Writer
As the weather warms and the housing market gains steam, volume will increase. Production standards will be revisited by management and rush requests will become the new normal. The pressure to get loans out of the underwriting queue will increase. As a result, we must tighten up our process flow and put some best practices in place. One of the most fundamentally important best practices is the validation of the findings.
Written By: Angelique Jackson
On March 9, 2016 the final rule published in the Federal Register in February is now in effect. We have been working under the interim final rule since December 1, 2014. There are a few new items in the handbook along with the restructuring of the handbook similar to FHA’s 4000.1 where all information is gathered in one single source and divided in sections for Manual Underwriting and GUS Accept. Chapters 5-16 were updated with new guidance and/or clarifications to old guidance. I am not going to go over all of the changes but I will talk about some of the more pertinent changes and clarifications that were done.
Written By: NAMP® Op-Ed Ghost Writer
USDA introduced several changes on December 1, 2014. These were the interim rules that became effective with the introduction of the new guaranteed loan program regulations 7 CFR Part 3555. Since then, USDA has finalized these rules. Those final changes became effective March 9, 2016.The first highly anticipated change is that discount points may now be financed for all applicants.
Written By: NAMP® Op-Ed Ghost Writer
Recently Fannie Mae has issued communication regarding some upcoming changes with Desktop Underwriter (DU), the Single Family Selling Guide, and Collateral Underwriter (CU).
Written By: NAMP® Op-Ed Ghost Writer
The busy season in the mortgage industry is fast approaching! Soon, the weather will break and homebuyers will come out of hibernation to begin searching for their next home. As a result, this is a good time to think about some best practices for maximizing productivity and efficiency. Time management is one of the most critical of these practices.
Written By: NAMP® Op-Ed Ghost Writer
Most underwriters and processors have the basics of calculating income down to a science. The hourly, bi-weekly, semi-monthly, and annual calculations are second nature to those of us who calculate income every day. As a result, many processors and underwriters will manually execute their calculations on an underwriting or processing worksheet. Many underwriters will also type their calculation on their underwriting transmittal. However, there are some drawbacks to manual calculations that an income calculation worksheet can overcome.
Written By: NAMP® Op-Ed Ghost Writer
The past year has seen sweeping changes in almost every area of loan origination, underwriting guidelines, and loan disclosures. USDA and FHA have both created new handbooks that came with completely new guidelines. The CFPB introduced the Loan Estimate and Closing Disclosures which replaced the Good Faith Estimate, TIL, and HUD-1. Fannie Mae and Freddie Mac introduced new guidelines for many topics including review of Schedule-A Unreimbursed Expenses and required reserves for borrowers retaining their home as a secondary or rental property.
Written By: Carlotta Emperator, Op-Ed Writer
Many borrowers have deferred student loans. A deferment, like forbearance is a temporary suspension of the obligation to repay a federal student or parent education loan. In order to qualify for a home mortgage, these obligations were being “omitted” or calculated incorrectly. Therefore, the borrower’s ratio would be affected based on the mortgage product.