Mortgage Pros, Inc.

The MBA Weekly Mortgage Applications Survey: The Market Composite Index increased 8.8%, Refinance Index increased 12.6%, and Purchase Index decreased 3.3%. “Amid continuing financial market volatility, mortgage rates dropped again last week, with rates on 15-year loans reaching a record low for the MBA survey. Refinance applications jumped in response, but remain at about half the level seen in the spring of 2009,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase applications declined for the seventh time in the last eight weeks, keeping the purchase index near 13-year lows.” The refinance share of mortgage activity increased to 76.8% of total applications from 73.8%, the highest refinance share since April 2009, and the ARM share of activity decreased to 4.7% from 4.9%. The average 30-year rate decreased to 4.67% from 4.75%, and the average 15-year rate decreased to 4.06% from 4.19%.

ADP Employment Report: Private-sector jobs in the U.S. increased by 13,000 in June, the fifth consecutive monthly gain. However, over these five months the increases have averaged a modest 34,000. Recent ADP Report data suggest that, following steady improvement through April, private employment may have decelerated heading into the summer. The BLS Friday will probably report June total payrolls dropped by 110,000, following a jump of 431,000 in May, and the unemployment rate is projected to edge up to 9.8% from 9.7%, according to economists surveyed.
Institute for Supply Management-Chicago Inc. Business Barometer fell to 59.1 in June, the Ninth Month in expansion territory above 50. The employment index climbed to 54.2 from 49.2 in May, and the production gauge rose to 64.2, the highest level since February, from 61. The gauge of new orders decreased to 59.1 from 62.7. The index of backlogs fell to 50.7 from 52.7. The gauge of inventories dropped to 46.5 from 56.4, which was the highest level since November 2006.
Treasury Two-Year Yield Advances From Record Low on European Bank Optimism Treasury two-year note yields rose from a record low as banks sought less cash from the European Central Bank than economists forecast in a sign the financial institutions are stronger than investors had estimated. Yesterday, fears about the pace of global growth hit financial markets hard, with stocks sliding and investors rushing to the safety of the dollar and U.S. government bonds. The Dow industrials fell 265.87 points, or 2.62%, and the S&P 500 fell 33.20 points, or 3.1%, to its lowest closing level of the year. The benchmark 10-year Treasury yield fell to its lowest level since April 2009, while the 30-year bond’s yield fell below 4% to its lowest point since October 2009 and the two-year yield fell to a record low.
Realty Trac: Foreclosure Sales Account for 31% of All Residential Sales and Sell at 27% Discount as Supply Grows. A total of 232,959 homes sold in 1Q10 had received a default or auction notice or were seized by banks, down 14% from the fourth quarter and 33%. The average price of a distressed property was $171,971. As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”
Mortgages Face New Rules. Some Worry About Higher Costs, Fewer Choices for Borrowers. The Dodd-Frank financial-regulatory overhaul bill is expected to pass the House this week, Another key provision of the bill tries to make compensation of mortgage brokers and loan officers more transparent. It bans any sort of payment based on steering the consumer to a particular type of loan or rate. Appraisers may get some help too as the bill stipulates that lenders must compensate appraisers “at a rate that is customary and reasonable.” The legislation includes $1 billion to establish a program that would offer short-term loans to unemployed homeowners at risk of foreclosure. The bill also provides an additional $1 billion in funding for the Neighborhood Stabilization Program, which helps local organizations buy and repair foreclosed and vacant homes.
House votes to extend homebuyer credit 3 months, which would only apply to people who signed purchase agreements by April 30, and now It now goes to the Senate.
What Finance Reform Means for Mortgage Pay. Originators can be paid only by base salary or by percentage of the loan amount, or from a bonus if the employer chooses, and can’t be paid based on the type of loan. Origination fees may be capped at 3%, and consumers can decide to pay those fees up front or have them built into the interest rate. Before, borrowers sometimes had to pay both upfront and the fees embedded into the interest rate. The bill will also require lenders to retain a 5% stake in risky loans, and will be exempt from retention requirement for require rigorous verification.
MBA’s 2009 Mortgage Bankers Production Survey: Production Profits Rebounded in 2009. Independent mortgage bankers and subsidiaries made an average profit of $1,135 on each loan they originated in 2009, compared to $305 per loan in 2008. The survey said the increase was driven by a drop in total loan production expenses to $3,685 per loan in 2009 from $4,717 per loan in 2008. Total loan production income dropped slightly to $4,820 per loan in 2009 from $5,023 per loan in 2008. The average profit rose to 61.3 basis points in 2009 from 15.4 basis points in 2008, but differed widely by company type. Profits for mortgage subsidiaries of banks and thrifts averaged 79.5 basis points, but only 54.9 basis points for independent mortgage companies.

This entry was posted on Wednesday, June 30th, 2010 at 9:54 am and is filed under MORTGAGE NEWS, THE FED. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.