homesmillbrae.com » Jumbo Mortgages

Mortgage rates same for loans big and small

Thu, 15 Aug 2013 05:21:12 +0000

“It’s a confluence of events, really, and all of them help the spread between jumbo and conventional loans,” said Matthew Graham, COO of Mortgage News Daily.

“Nonagency jumbo lenders began dipping their toes in the water as early as 2011, and even more so into the end of 2012. Strong loan quality due to tight underwriting combined with competition between large banks and securitzers has led to relatively increased demand. Wells and Chase are keen to compete with securitizers like Redwood or Sequoia in order to capture potential income streams from jumbo clients’ bank business.”

(Read more: Higher mortgage rates may mean easier credit)

In addition, Fannie Mae and Freddie Mac, which back and bundle two-thirds of conventional loans, have been raising the fees they charge to banks, so-called guarantee fees, mostly to protect themselves against default. Guarantee fees have nearly doubled in just the past year.

“As G-fees move higher, this increase gets added into conforming mortgage rates,” said Guy Cecala of Inside Mortgage Finance. “It’s a factor, but not the biggest one, allowing portfolio jumbo lenders to match or undercut conforming mortgage rates.”

The bigger factor, said Cecala, is that 92 percent of jumbo mortgages are made by banks that fund the loans with their deposits and then hold them in a portfolio. Given that the interest paid on consumer deposits in banks is still incredibly low, lenders can still make a profit on mortgages priced at 4 percent or less if they want to. In fact, jumbo loans, by some lenders, can actually cost less than conforming.

Article source: http://www.cnbc.com/id/100962728

Rising Rates Scare Borrowers Into Action

Thu, 13 Jun 2013 01:13:11 +0000

Roughly 10 million refinances took place over the past two years, although that may include borrowers who have refinanced more than once, according to Inside Mortgage Finance. From mid-2011 to mid-2012, rates dropped by 100 basis points, making it worthwhile for some to refinance more than once.In addition to low rates, the government’s refinance program, called HARP, for underwater borrowers with Fannie Mae and Freddie Mac loans, helped juice refinances as well.

In the first three months of this year, there were nearly 1.4 million refinances on Fannie Mae and Freddie Mac mortgages alone, according to the Federal Housing Finance Agency. Of those, 22 percent were through HARP, which was recently extended through 2015. More than 2.4 million borrowers so far have taken advantage of that program.

For borrowers who don’t have government-backed loans and therefore don’t qualify for that program, rising home prices have helped allow more of them to qualify for refinances. Among borrowers, 850,000 rose above water on their mortgages, moving into a positive equity position in the first three months of this year, according to a new report from CoreLogic. While nearly 10 million are still underwater, the more that rise above, the more refinances can happen.

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“We are still far below peak home price levels, but tight supplies in many areas coupled with continued demand for single family homes should help us close the gap,” said Anand Nallathambi, the CEO of CoreLogic.

Rising prices, however, are a double-edged sword, especially in a rising interest rate environment. Potential buyers are losing purchasing power every day, just as demand is surging.

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC.

Questions? Comments? RealtyCheck@cnbc.com.

Article source: http://www.cnbc.com/id/100810389

Investors Sue Government Over Fannie, Freddie Stock

Wed, 12 Jun 2013 07:11:52 +0000

The lawsuit, filed in U.S. Court of Federal Claims, comes just as a new bill is being drafted in Congress to reform housing finance and potentially liquidate Fannie and Freddie. Sens. Bob Corker (R-TN) and Mark Warner (D-VA) have been working on the legislation that would prevent the need for a government mortgage backstop.

“I think you’ve got to move away from a situation where when private shareholder gain and government taxpayer losses, and that is what this bill seeks to do, it really transforms how we doing housing finance hopefully we will be able to pass something that puts us on a better course than where we are,” said Sen. Corker in an interview Tuesday on CNBC.

(Read More: Big Banks Bet on Jumbo Mortgages Again)

Some analysts say the lawsuit could actually push Congress to act more quickly on winding down Fannie and Freddie.

“What we just a few days ago saw as only a remote possibility is now a 25 percent chance for action,” wrote Jaret Seiberg of Guggenheim Partners in a note to investors. “This is because we suspect this will anger many on Capitol Hill who believe Fannie and Freddie are only alive and kicking because taxpayers put $187 billion at risk. We see the suit reinforcing the view on Capitol Hill that Fannie and Freddie included too much upside for investors and too much risk for taxpayers.”

(Read More: Reverse Mortgages Backfiring on Seniors)

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100806300

Big Banks Bet on Jumbo Mortgages Again

Mon, 10 Jun 2013 19:09:44 +0000

As home prices rise, though, the opportunity grows in the jumbo market. Sales of homes priced between $750,000 and $1 million were up 41 percent in April from a year ago, while sales of homes priced below $100,000 were down nearly 10 percent, according to the National Association of Realtors.

“People who weren’t sure about whether they were going to buy a house or not are coming back in, and that’s especially true of the affluent buyers,” said Watters. “I know at Chase at least we’ve also put a lot of emphasis on making sure we’re doing what’s best for those affluent buyers, including adding more bankers and working with our chase private client customers to really focus on opportunities in the jumbo space.”

(Read More: Rising Rates Turn Investors From REITs)

Watters admited that investors are still slow to return, as the private label market tries to figure out what securitization standards should be. The complete lack of standards during the housing boom, when securities were issued with bits and pieces of loans and wide ranges of risk, led to the downfall of both the mortgage and the housing markets.

“We are not slicing and dicing any loans. We’re selling loans as whole loan products,” assured Watters. “These are well-underwritten loans, great documentation, great borrowers with strong fico scores, large down payments, so these are great credit products, great investment for people who are looking to get additional yield.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100802833

Jumbo Mortgage Divide Starts Shrinking

Tue, 12 Mar 2013 21:42:42 +0000

“The jumbo market has heated up, as tight lending guidelines have drastically reduced consumer late payments, strategic defaults, and foreclosures,” wrote Julian Hebron, a mortgage banker in California and author of the blog The Basis Point. “This gives investors confidence to buy jumbos again, which means lower rates for consumer borrowers. These borrowers can count on lending guidelines remaining tight, but all that means is a bit more paperwork when getting a loan.”

(Read More: Housing Recovery Leaves Some Behind)

The jumbo securitization market is tiny, however, as most jumbo loans are still held on bank balance sheets. There are so far just two players in jumbo securitizations, Redwood Trust Inc. and very recently Credit Suisse Group AG, although others, including JPMorgan Chase, are preparing to join them.

There were no jumbo securitizations at all between 2008 and 2010. When Redwood dipped its toes in, securitizations totaled less than $1 billion in 2010-2011. By 2012 they hit $3.5 billion, according to Inside Mortgage Finance, and are already at $2 billion so far for 2013. Hebron believes they could surge dramatically in the very near future.

The rebirth of jumbo securitizations is being driven not just by investor confidence, but by growth in jumbo originations, which increased after the conforming loan limit was lowered. Originations of non-agency jumbo mortgages jumped by over 19 percent in 2012 from 2011, according to Inside Mortgage Finance.

So why is the conforming-jumbo spread shrinking? Not because jumbo rates are falling but because conforming rates are rising due in part to government intervention.

“Congress keeps raiding the guarantee fees (g-fees) Fannie and Freddie charge lenders in the securitization process for other purposes, like funding payroll tax cuts,” noted Hebron. “For each 10 basis point hike in g-fees, we’ve seen consumer rates rise about 0.125 percent.

Article source: http://www.cnbc.com/id/100543189

Pending Home Sales Soar Despite Rough Winter

Thu, 28 Feb 2013 01:11:50 +0000

Banks have been slow to put foreclosed homes up for sale recently, possibly waiting for prices to improve further. While some expected a surge in inventory once home prices began to improve, that so-called “shadow supply,” has yet to emerge. Prices are rising fast, up nearly 7 percent in December from a year ago in the nation’s twenty largest real estate markets, according to the SP/Case Shiller Index. But some would-be sellers may be waiting to see just how high prices move in the coming months, while millions of others are still trapped underwater, owing more on their mortgages than their homes are worth.

Mortgage applications to purchase a home fell 5 percent last week from the previous week and is now at its lowest level since the end of last year, according to a Mortgage Bankers Association weekly survey. Applications historically start to pick up around now, as President’s Day weekend marks the unofficial start of the usually busy spring housing season.

(Read More: Homeowners Rise Above Water on Mortgages)

Regionally, the Realtors’ Pending Home Sales Index in the Northeast rose 8.2 percent in January and is 10.5 percent higher than January 2012. In the Midwest the index increased 4.5 percent and is 17.7 percent above a year ago. Pending home sales in the South rose 5.9 percent and are 11.3 percent higher January 2012. In the West the index edged up 0.1 percent in January but is 1.5 percent below a year ago. Supplies of homes for sale are most limited in the West, where investors have been buying distressed properties in bulk.

(Read More: Jumbo Mortgages Are Back: Should You Be Worried?)

Article source: http://www.cnbc.com/id/100501214