Determining Whether or Not You Should Refinance Your Mortgage

If you have a fixed-rate mortgage and mortgage rates are falling, it only makes sense to consider trying to refinance at a lower rate. But as with most things in finance, it isn’t always a simple answer. Refinancing can certainly make sense, but it also costs money to refinance a mortgage. Depending on your specific situation, a refinance may actually end up costing you more money instead of saving money.

Adjustable Rate Mortgages

If you have an adjustable rate mortgage and your rate has reset to a higher rate than the initial low rate, it is definitely worth looking into a refinance. The good news is that adjustable rate mortgages can change their interest rates over the term of the loan, and when rates are going down, that can be good. But the real problem is that even so, you’re still likely to find that you’re paying more than you would be with a fixed-rate mortgage.

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The old standard when it comes to home loans, a fixed-rate mortgage can be one of the best ways to finance the purchase of a home. This is because the interest rate doesn’t change over time, which means your payment remains the same. This payment stability is great, but there are times when it can be a drawback.

If mortgage rates fall in the future, you may find yourself paying more interest than what you could get on a current mortgage. This could mean throwing money away towards interest that you could possibly avoid. But the reverse is also true. If you lock in a fixed-rate that’s at a relatively low point, if rates go up in the future, you’re realizing significant savings over others who may be getting current loans at the higher rates.

Consider Costs

When considering whether or not to refinance your mortgage, you want to realistically look at how long you plan on being in the home. Since there are closing costs that may amount to thousands of dollars, you have a look at how long it would take to break even if you were to refinance.

For instance, let’s say a 1% lower interest rate would decrease your monthly mortgage payment by $100. That’s nothing to sneeze at, but let’s also assume your closing costs on the refinance total $3,000. That means you’d need to stay in the house for 30 months just to break even on the refinance. If your plans were to possibly move in three years or less, you can see where a refinance may actually cost you.
Amount of Equity

Another thing to consider is how much equity you have in the home. Most banks will require 20% equity in order to refinance your mortgage. It may still be possible to refinance without that much equity, but you’ll likely get the best deal if you have at least 20% equity.

In addition, if you’ve been living in the house for a while and have built up a decent amount of equity, you can possibly save even more money since you may be able to refinance an amount lower than the original loan amount. This can reduce your monthly payments since you’re now paying back a smaller loan.
Don’t Forget About New Terms

One thing many people forget is that refinancing will also extend the term of the loan again. If you’ve been making payments on your 30-year fixed mortgage for the past 10 years, you only had 20 to go. But if you refinance, if you choose another 30-year mortgage, you’re back to the beginning. But what some people do is actually refinance from a 30-year to a 15-year if they already have a number of years of payments under their belts.

Final Considerations

As you can see, there are a number of things to consider before rushing to the bank. Yes, lower mortgage rates are good, and they can save you money, but it isn’t quite that easy. You need to make sure you’ll actually live in the house long enough to benefit, and determine if possibly changing the loan terms is worth it. Not only that, but your credit history is even more important than ever. If your credit isn’t perfect or you have some negative marks on your report, you may find that you can’t even take advantage of the best rates.

So, if lower rates have you interested in a refinance, it’s worth taking a look at. Just make sure that you’re not being drawn in by the rate alone and that you’re really going to reap the rewards of a refinance.

Kenya: Cash-Rich Buyers Edge Out Mortgage Borrowers

Cash buyers have gained an upper hand in the homes market as banks cut back on loans disbursed to the real estate sector, edging out mortgage borrowers.

Central Bank of Kenya (CBK) data shows that the value of mortgage loans disbursed by Kenyan banks decreased by half a percentage point (-0.5 percent growth) between January and December last year, reflecting a biting credit crunch in the real estate sector that is affecting both developers and buyers of houses.

This is against an 8.7 percent positive growth recorded in 2017 as per CBK data, in an indication of the sharp drop in lending to real estate. The CBK data is reflected in the latest Kenya Bankers Association (KBA) Housing Index, which covers the fourth quarter of 2018.

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The index shows that growth in house prices last year was below two percent as both developers and buyers struggled to get financing. “On the supply side, the market appears to be tilting towards few additional units coming into the market. This is partly attributed to constrained credit to developers. Limited credit is equally binding on the demand side,” said KBA in the fourth quarter Housing Index report released yesterday.

The negative growth in mortgage loans effectively means that repayments exceeded new credit to home buyers and developers, making the housing market a playground of the relatively small segment of cash buyers. Kenyan banks have only about 25,000 outstanding mortgage loans in a population of more than 45 million.

“Buyers show a distinct preference for units in the upper-income segments, but with an observed preference for new units,” says the KBA report, in an indication that rich buyers targeting high-end property are dominating the market.

The choice of location for most buyers is also biased toward the more affluent estates, the KBA report says, with high preference for areas such as Kileleshwa, Westlands, Spring Valley, Runda, Karen and Kitisuru in Nairobi; Nyali in Mombasa and Milimani estates in Kisumu and Nakuru.

Overall private sector credit growth by the end of December stood at 2.4 percent, meaning that real estate was one of five sectors out of 11 that under-performed the average as per CBK classification.

Building and construction, another sector that ties in with real estate, also under-performed the overall credit growth average, at 1.8 percent in the 12 months to December. The KBA report shows that house price growth in the fourth quarter of 2018 stood at 1.49 percent, up from the 1.35 percent growth recorded in quarter three, but lower than the 2.08 and 1.76 percent growth seen in the first two quarters of the year respectively.

The growth last year was generally higher than in 2017, when the economy was besieged by the twin drags of a charged political environment and drought, which affected food security. Businesses and investors also adopted a wait and see attitude in the election year, drying up investments that would have partly filtered through to the property sector.

Other market dynamics have also exposed the property market to the short-term movements in credit availability. Uptake of mortgage, which is long term in nature, remains low on a per capita basis, meaning that many people prefer to take up loans to build their own houses. Developers also rely on credit to put up units in the capital-intensive sector.

Availability of credit allowed developers to put up numerous units in the past, leading to ample supply. Buyers at the same time had easy access to loans, many buying units as investments looking to generate returns through rent. Over time, however, supply raced past demand especially in the middle and high-end markets (housing for the low-end remains in deficit) which meant rental yields were lagging behind buying prices.

The slowdown in building new units has however reversed this trend, a similar report by HassConsult shows, where rental prices rose faster than house sale prices in the last quarter of last year. The realtors said that in quarter four of 2018, property prices in Nairobi and its environs went up by 1.3 percent, while rental asking prices were up by 2.5 percent in the same period.

The government’s plan to put up 500,000 affordable housing units in the next four years, in collaboration with the private sector, could however offer buyers in the lower segment of the market a chance to get on the property ladder. These houses will offer buyers the option of a tenant purchase scheme, which will let them pay for the homes without having to seek loan financing.


Despite falling rates, U.S. mortgage applications fall again

U.S. mortgage applications declined for a fourth consecutive week even as some home borrowing costs fell to their lowest levels in more than 11 months, the Mortgage Bankers Association said on Wednesday.

The Washington-based industry group’s seasonally-adjusted index on borrower requests to lenders for a loan to buy a home and to refinance one decreased 3.7 percent to 364.8 in the week ended Feb. 8. This was the weakest reading in a month.

“Application activity fell last week – even with rates decreasing – as renewed uncertainty about the domestic and global economy likely held potential homebuyers off the market,” Joel Kan, MBA’s associate vice president of industry surveys and forecasts, said in a statement.

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Home borrowing costs have fallen in step with lower U.S. bond yields as investors have piled into Treasuries in a safe-haven move prompted by concerns about slowing global growth and trade conflicts between China and the United States.

The average interest rate on 30-year fixed-rate mortgages with loan balances of $484,350 or less, fell to 4.65 percent, the lowest level since the week of March 2, 2018. A week ago, “conforming” 30-year mortgage rates averaged, 4.69 percent.

Other mortgage rates MBA tracks were 2 basis points to 7 basis points lower than a week earlier.

MBA’s seasonally adjusted index on purchase loan applications, which is seen as a proxy on future housing activity, declined 6.1 percent to 237.7 last week, the lowest level since the end of 2018.

“Despite the recent decline in applications, we still expect that the continued strength of the job market and lower rates will support more purchase activity in the coming months,” Kan said.

MBA’s seasonally-adjusted barometer on mortgage refinancing dipped 0.1 percent to 1,052.4 in the latest week.

The refinance share of total mortgage applications grew to 43.2 percent from 41.6 percent the week before.

Source: Reuters

FG sets to establish mortgage guarantee company

The Federal Government through the Central Bank of Nigeria is working on a new initiative to deepen the housing finance industry.

The concerned stakeholders are already at the concluding stages of the initiative, known as the Nigeria Mortgage Guarantee Company, expected to be inaugurated at the beginning of the second quarter.

The NMGC is the second major initiative under the CBN’s Nigerian Housing Finance Programme, a Public-Private-Partnership designed to improve access to affordable housing finance in the country.

The NHFP is set up by the Federal Government and implemented by the Central Bank of Nigeria with four components – the Nigeria Mortgage Refinance Company, mortgage guarantee insurance, housing microfinance and technical assistance.

The project is being funded with a $300m procured from the World Bank during the previous administration.

The Head of NHFP, Mr Adedeji Adesemoye, said mortgage banks principally had two challenges of liquidity and credit, adding that the NMGC would solve the credit aspect of the problem.

“For credit risk, commercial and mortgage banks need another company to share with them, which is what the guarantee company is, so they pay the guarantee fee of about three per cent of the mortgage and the guarantee company will provide the guarantee just the way people pay for insurance,” he said.

According to him, the NMGC is expected to be a PPP arrangement, where the private sector holds the equity and the government can lend to them tier-two capital, just like the Nigeria Mortgage Refinance Company.


He added that it would enhance credit to primary mortgage banks as well as commercial banks.

“When there is a default, the guarantee company will pay certain percentage of the money when a foreclosure sets in, while the bank keeps originating mortgages,” he said.

Among the benefits the new company is expected to bring to the mortgage industry are access to housing finance and lower down-payment, access to higher amount of mortgages, better loan terms and conditions, standardisation, consumer protection and financial literacy for borrower while mortgage banks will have lower credit risk of up to 40 per cent protection for the principal, larger business volumes and reduced capital requirements.

Mortgage banks are also expected to have viability of mortgage operations and access to ancillary services.

According to the Director, Other Financial Institutions Supervision Department of the CBN, Mrs ‘Tokunbo Martins, the upcoming mortgage guarantee programme is designed as a private sector commercial enterprise.

“It is paid for by the borrower which is expected to generate income – thus creating a commercially viable and sustainable product,” she said.

Martins explained that it would provide a risk-sharing mechanism between the mortgage guarantee provider and participating mortgage lenders, which risk would have been borne by the mortgage lenders alone.

She added that it might also provide reduced capital charge through capital relief for legal mortgages and also produce a much more sustainable product uniquely suited to the Nigerian system.

Martins said, “Mortgage guarantee provides credit default loss protection to mortgage lenders enabling them to increase the loan to value ratio by reducing or removing the necessity for equity contribution by mortgagors.

“Mortgagors can thus access higher value mortgages with lower down payments while the lender can expand into new markets or deepen existing ones.  Mortgage guarantee indemnifies the mortgage lenders at the point of default of the mortgagor unlike mortgage insurance which indemnifies mortgage lenders after foreclosure process has been concluded.”

As at the end of 2018, it was gathered that stakeholders were finalising the business plan for the company, with Martins saying that the consultants, while cautiously optimistic about the viability of the project, had identified multiple constraints to its success, several of which they were familiar with.

She said the biggest constraints were the 1978 Land Use Act as well as cultural biases towards mortgage loans.

She however stated that stakeholders had been encouraged by the interest shown at state government levels, adding that there were also expectations for significant progress in mortgage friendly legislation in future.

Plans ongoing for workers to access mortgage with pension savings – Dahir-Umar

Acting Director-General, National Pension Commission, Mrs Aisha Dahir-Umar

In this interview with NIKE POPOOLA, the acting Director-General, National Pension Commission, Mrs Aisha Dahir-Umar, speaks on the impact of the Contributory Pension Scheme on individuals and the economy

When can workers start to access part of their pension savings as residential mortgage?

The main objective of Section 89 (2) of the Pension Reform Act 2014 is to facilitate access by Retirement Savings Account holders to residential mortgages as well as stimulate the housing/mortgage finance sector. The commission is currently working with the Central Bank of Nigeria and stakeholders in the mortgage sector in developing appropriate guidelines on accessing Retirement Savings Accounts towards payment of equity contribution for residential mortgage by holders of RSAs.

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The guidelines are expected to be issued in 2019, and would achieve the following results: ability of the RSA contributor to access and utilise part of their RSA balances towards equity contribution in respect of home ownership mortgages; and a boost to housing, real estate market and contribute to socio-economic development of Nigeria.

Why did the commission introduce the multi-fund structure in 2018?

The RSA multi-fund structure, which commenced in July 2018, was conceived by the commission to align contributors’ risk appetite with their investment horizon at each stage of their life cycle. The main objectives of the RSA multi-fund structure include achieving optimum returns for contributors by aligning their pension savings with their individual risk/return profiles; providing investment portfolio choices to contributors; and enhancing safety of pension assets through adequate portfolio diversification, through increased investment in equities and alternative assets such as infrastructure and private equity.

What has been achieved so far in its implementation?

As of December 31, 2018, the RSA fund had been successfully split into four funds, while the sensitisation of RSA contributors is still ongoing to create awareness on the features of the RSA multi-fund structure. The RSA contributors now have the opportunity to choose a fund that best suits their risk-return profile.

What are the challenges encountered in its implementation?

There is low public awareness of the workings and benefits of the current Contributory Pension Scheme.

There are also limited investible securities. The bond market is currently dominated by Federal Government of Nigeria bonds, which offer relatively high yields, and thus crowding out non-government bonds. Similarly, there is a dearth of alternative assets such as infrastructure funds, private equity and real estate that meet the investment requirements of pension funds.

The RSA multi-fund structure is still at the very early stages of implementation, with just six months of commencement. A lot of public education and sensitisation is still required; and the commission, in collaboration with pension operators, is already implementing aggressive campaigns through newspaper adverts, editorials, TV and radio appearances as well as maintaining active presence on other alternative platforms such as Twitter and Facebook.

What are the initiatives embarked upon by the commission?

The commission recently embarked on a number of initiatives,  which would impact positively on the Nigerian financial market and economic development in the mid to long-term. These initiatives include the introduction of micro pension and non-interest funds. The commission is in the final stages of preparation for the launch of the Micro Pension Scheme, which aims to provide pensions for Nigerians in the informal sector not covered under the CPS. Similarly, the introduction of the non-interest fund is aimed at enhancing financial inclusion by targeting pension contributors who would prefer access to non-interest financial services.

These initiatives are expected to impact the Nigerian workers and economy by expanding the scope of coverage of the CPS, increasing financial inclusion, additional membership/contributor in the CPS, increasing the pool of pension funds available for investment and economic development, and increasing financial market development for non-interest products.

It is about 10 years since the commission has been trying to capture the informal sector through the Micro Pension Scheme.

What is the motive behind the Micro Pension Scheme?

The commission has been in existence for more than 10 years but the Micro Pension Plan is a fallout of the commission’s corporate strategy of inclusive and expanded coverage of the CPS. It is worth noting that the micro pension initiative of the commission started in accordance with Section 2(3) of the Pension Reform Act, 2014, ,which provides that employees of organisations with less than three employees as well as self-employed persons shall be entitled to participate under the scheme in accordance with the guidelines issued by the commission.

This gave rise to the creation of the micro pension plan with the attendant formulation and development of the framework and guidelines for the plan. The guidelines have been approved by the Federal Government and issued to the operators. The guidelines have also been hosted on the commission’s website for public use. The department has been involved in reaching out to prospective stakeholders as well as collaborating with relevant institutions to create awareness about micro pension plan. Enlightenment materials on the plan are being put together by the commission and both the commission and the operators are working on payment platform for flexible contributions and withdrawals on the plan.

When do you intend to launch the Micro Pension Scheme?

Guidelines on the investment of micro pension fund will soon be issued. Structures are being put in place to ensure effective monitoring and regulation of the plan. PenCom and operators are collaborating to come up with modalities for a hitch-free formal launch and eventual implementation of the micro pension plan. It is expected that the formal launch of the micro pension plan will take place in the first quarter of 2019.

Why are there still backlog of payment, years after the establishment of the CPS?

Please recall that Section 39 (2) of the Pension Reform Act 2014 mandates the Federal Government to pay into the Retirement Benefits Bond Redemption Fund Account an amount not less than five per cent of the total monthly wage bill payable to employees in the public service of the federation towards the redemption of the accrued pension right of FGN retirees. However, in the last five years, budgetary funding/releases had not been regular and adequate for the payment of outstanding accrued pension rights over this period as a result of decline in government revenue.

Also in year 2017, only 44.4 per cent of the total amount requested by the commission was approved and released by the FGN for the payment of accrued pension right. This shortfall has been responsible for the accumulation of several months/backlog of unpaid accrued pension rights.

Does the commission have adequate capacity to monitor the operations of the licensed fund operators?

The commission has sufficient capacity to monitor the activities of all licensed pension fund operators as its key objective is to ensure that every person who worked in either the public service of the federation, state government or the private sector receives his/her retirement benefits as and when due.

In that regards, the commission issued a regulation for the administration of retirement and terminal benefits, which clearly specified period within which operators are to contact intending retirees and notify them on documentation needed, mode of retirement and time frame for the processing and crediting of the RSAs of the beneficiaries.

In addition, operators are mandated to render monthly pension payment returns to the commission as well as all benefit payments made within the period, which include the details of the retiree, RSA number, date of payment and amount paid.

Furthermore, the commission conducts on-site routine examination of all licensed pension fund operators to review the benefit administration of the PFAs including timeliness for benefit payments.

Despite all this monitoring, why does delay in pension payment still occur in some situations?

Sometimes, the delay in payment of benefits by some licensed pension funds operators could be attributed to issues like incomplete documentation from retirees, incorrect bank details and delayed payments/remittance of accrued rights for employees of treasury-funded Ministries, Departments and Agencies of the Federal Government of Nigeria prior to 2004.

What is being done to clear the current backlog?

With the full release of the total amount approved in 2018 FGN budget by the Federal Ministry of Finance, the commission had been able to pay FGN employees who retired up to the month of February 2018 as at 23 January 2019. We are also processing the payment of employees who retired up to the month of May 2018 and 1,079 employees who retired but missed the previous general enrolment exercise. In essence, by the end of January 2019, retirement benefits of FGN employees who retired between June 2018 and January 2019 will still be outstanding due to shortfall in budgetary provisions in year 2017 by the FGN.

What are you doing to get more funding?

The commission has been engaging the relevant authorities to ensure funding of the outstanding accrued right liabilities, especially the shortfall in 2017 budget. A submission had been made to FGN during the inter-ministerial committee meeting in 2017 to consider issuance of bond through the Debt Management Office to fund these arrears as alternative to budgetary allocations.

What is the commission doing to ensure employers remit their workers’ pension savings to their Pension Fund Administrators?

To ensure compliance by employers of labour with respect to remittance of pension contributions, the commission has, in line with the provision of the PRA 2014, developed a framework for recovery of outstanding pension contributions with penalty from defaulting employers. Based on the framework, the commission has engaged recovery agents for continuous enrolment into the CPS and recovery of unremitted pension contributions plus penalty from defaulting employers.

The recovery exercise, which had been largely successful, had boosted the confidence of contributors and by extension encouraged non-participating employees/employers to embrace the scheme. Through this initiative, the sum of N15.31bn, representing principal contribution (N7.85bn) and penalty (N7.46bn), have been recovered from defaulting employers. Both the principal contributions and penalty have been credited into the workers’ RSAs. The penalty is meant to compensate for the income that would have been earned if the contributions were remitted as and when due.

Do you also prosecute the defaulting employers?

Yes, the commission is also prosecuting recalcitrant employers who failed to remit their employees’ pension contribution into their RSAs.  As at today, the commission had instituted legal actions against 167 recalcitrant employers. Out of that number,78 had opted to settle out of court with the commission, 34 Judgments have been obtained while 23 are at different stages in the courts.

Meanwhile, the commission has a fully functional complaints monitoring and resolution team, which attends to complaints on non/late/under-remittance of pension contributions into employees RSAs. The team has a regime of sanctions, which guide the administrative steps to be taken when complaints are received. The processes followed in the regime of sanctions are letter of advice, caution letter, sanction letter and legal action. Accordingly, we appeal to all stakeholders, including the media and employees to forward to the commission the names and addresses of employers that are not in compliance with the provisions of the PRA 2014.

Source: Punch

Retail mortgage and dearth of wealth-building products

The dawn of each day heightens the fear among mortgage industry stakeholders that the Nigerian Mortgage Refinance Company (NMRC) may end up another great expectations after Charles Dickens’.

Increase in liquidity in the mortgage system which is part of the mission of the refinance company was expected to enable the primary mortgage banks (PMBS) whose mortgages are being refinanced to activate their retail bank units and start churning out wealth-building products for consumers.

A number of these PMBS have their mortgages refinanced and expectation is that they should be originating products, especially consumer products, that can enable home ownership or ownership of house-hold items, or products that can help subscribers raise equity from their homes.

Activities in the mortgage market before the banking sector reform was quite interesting. The foray of many commercial banks into retail mortgage after the banking consolidation and recapitalisation led to the evolution of a competitive business environment, and a culture of efficiency and innovation among the operators.

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Institutions had to develop competitive spirit not only to remain in business, but also to increase and make good returns on shareholders’ investment such that innovative ideas, especially in product origination, became the norm.

The market was awash with products, especially those that would enable consumers have easy access to homeownership. Some of the mortgage institutions took it a step higher with the creation of products that would enable property owners build wealth from their property and yet enjoy the comfort of such property.

Consumers look back to those days in the market and are asking where these products from which they could build wealth and make a difference in their investment or assets. They have not forgotten such products as First City Monument Bank’s (FCMB) ‘Unlock your Cash’ and former Bank PHB’S ‘Home Owner’s Advantage’ which are the kind of products that they need today in the face of the downturn in the economy.

FCMB’S Unlock your Cash, a variant of the bank’s flagship mortgage product, ‘Myhome’ is one of the most popular refinance products in Nigerian mortgage market. This gave opportunity to people who had worked hard to build or buy their homes to let those homes work for them by releasing the funds comparative to the value of the property towards meeting other life needs.

Some customers who had been forced, in the past, to borrow short tenured loans of 3 to 5 years now have the opportunity, through this refinancing option, to access the product where the bank pays off the loan owed the financial institution and provides more manageable repayment amounts that ease the customer’s cash flow through the bank’s longer tenors.

For existing home owners, the bank allowed them to unlock up to 70 percent of the value of the property if they lived in it and 60 percent if they didn’t. It also provided home owners the opportunity of registering their titles making their properties mobile and ensuring that they were working for them just like share certificates made stocks fluid.

Ladi Balogun, then group managing director and chief executive officer of the bank, remarked then that they had been able to impact positively on tenured loans in the market by providing longer tenure.

“We have been able to offer long tenured loans to the Nigerian mortgage market. Our observation before we entered the market was that only short term loans were available, making mortgages very unaffordable to the average salary earner.

“Now, with a longer pay back period, repayments are more manageable, with the option of reducing one’s principal outstanding when his economy improves or even leveraging more funds as the property value appreciates”, he said. This kind of statement is rare in the mortgage market of today.

The Home Owners Advantage floated by the defunct Bank PHB was another wealth building product that, by its name, gave advantage to homeowners to build wealth on such homes.

The product was different from traditional mortgage financing in the sense that it allowed those who own their homes and had valid legal titles to them to raise finance out of their property for a fixed period. The finance they have raised could be used to buy new assets or create new investments, grow their wealth and live better life.

Over all, these are the kind of products that both home owners and those who want to own one are longing for. According to them, mortgage products should be able to meet the needs of its consumers. What obtains in the market presently are generally unaffordable and do not give any advantage to existing or prospective homeowners.

Mortgage operators, however, insist that they have ‘something for somebody’ in the market.

In all these, Resort Savings and Loans’ RIMPLAN, an acronym for Resort Investment Plan, and Trustbond Mortgage Bank’s Homeplan stand out. According to the authorities of these banks, subscribers to the RIMPLAN, they explain, is a well thought out product aimed to encourage savings towards homeownership and it facilitates timely and favourably priced mortgage delivery to the subscribers.

Source: Businessday

Millions of mortgage, loan documents were exposed online in massive security lapse

A massive online data leak reportedly involving more than 24 million mortgage and bank loan documents exposed sensitive consumer information from several major U.S. lenders, according to a tech news website.

The security lapse was first reported by Zack Whittaker of TechCrunch Wednesday afternoon. An unprotected online server that didn’t have a password is the cause of the leak, leaving millions of pages of sensitive documents accessible to anyone online, TechCrunch reported.
The exposed data included mortgage and loan mortgage agreements, amortization schedules and other sensitive financial documents that revealed borrowers’ names, addresses, phone numbers, and Social Security numbers, and birth dates, among other data, according to the TechCrunch report.

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Additionally, TechCrunch found that the data came from loans and mortgages from back to 2008 (or earlier), and included files from CitiFinancial (formerly a lending finance division of Citigroup), HSBC Life Insurance, Wells Fargo, CapitalOne and some federal agencies, including the U.S. Department of Housing and Urban Development.

Although the information was online for just two weeks, independent infosecurity researcher Bob Diachenko was able to find the stockpile. In a blog post about his discovery, Diachenko writes that he found the exposed data on Jan. 10 in random parts (not in single reports), and immediately alerted one of the lenders to investigate. By Jan. 15, the database had been secured, Diachenko writes.

“These documents contained highly sensitive data, such as Social Security numbers, names, phones, addresses, credit history, and other details which are usually part of a mortgage or credit report,” Diachenko writes on his blog. “This information would be a gold mine for cyber criminals who would have everything they need to steal identities, file false tax returns, get loans or credit cards.”
TechCrunch assisted Diachenko in tracing the security lapse to Ascension, a data and analytics firm for the mortgage servicing industry based in Fort Worth, Texas. In addition to custom data analysis, Ascension converts paper documents into electronic files, which is where Diachenko said the leak originated.

“Sandy Campbell, general counsel at Ascension’s parent company, Rocktop Partners, which owns more than 46,000 loans worth $4.4 billion, confirmed the security incident to TechCrunch, but said its systems were unaffected.

“On January 15, this vendor learned of a server configuration error that may have led to exposure of some mortgage-related documents,” he said in a statement. “The vendor immediately shut down the server in question, and we are working with third-party forensics experts to investigate the situation. We are also in regular contact with law enforcement investigators and technology partners as this investigation proceeds.”

An unspecified portion of the loans were shared with the contractor for analysis, the statement added, but couldn’t immediately confirm how many loan documents were exposed.”

What to do if you suspect your personal info has been exposed

Data breaches can become a major financial and personal headache. To protect your finances, take these five steps if you think your information has been compromised.

1. Don’t hesitate: Freeze your credit

A credit freeze may protect you if someone tries to apply for credit in your name using information that they accessed during a breach. Every data breach is another reminder that you should take advantage of this free service. Each the three major credit bureaus has procedures for freezing your credit.

2. Monitor accounts and your credit

Being proactive about monitoring your credit and your financial accounts allows you to see if there is any unusual activity. You can get a free credit report from Bankrate.

Because some credit card numbers and expiration dates may have been compromised, you may want to talk to your financial institution about getting a new credit or debit card number issued. At the very least, it’s smart to have text, email or mobile notifications of purchases and to monitor your accounts on a daily basis for potential fraudulent activity.

3. Add new layers of security

Safeguard your accounts by enrolling in two-factor authentication, which would require you to log on using both a password and a one-time code sent to your smartphone. That would make it more difficult for a criminal to gain access.

You’ll also want to set up a PIN code with your wireless provider, so a customer service agent wouldn’t be tricked into allowing a hacker to commandeer your phone. Establish a system with financial advisers who have  access to your investment accounts so it would take more than just a simple email from you to get them to wire money from your funds.

4. Be careful with your taxes

Identity thieves don’t stop with credit cards. In 2017, the IRS received 242,000 reports from taxpayers of identity theft. One way to remain vigilant when it comes to protecting yourself from identity theft is to file your return as early as possible, and change your withholding to lower a potential refund.

If you think you’re the victim of fraud, file the identity-theft affidavit, Form 14039, with the IRS.

5. Watch your emails and snail mail

Hackers also may use stolen information to send you a phishing email – a note that looks legitimate but contains links to malware. It’s usually better to go right to the website and type in the address in your browser, rather than clicking on a link – if possible.

Fraudsters can use these emails to get you to click on encryption ransomware, which can block you out of your photos and sensitive files until you agree to pay a ransom to regain access. Backing up your data on a hard drive is key.

Read your email carefully before responding, paying special attention to the sender. A scammer might hide behind a name that looks familiar, but the spelling will be off by a letter or two.

Source: Deborah Kearns

How Mortgage Brokers Can Win More Business in 2019

The end of the year is a good time to reflect on the success you experienced in 2018 and game plan for how 2019 can be even better. Figure out your goals and determine what you’ll do to grow your business–whether that’s doing a couple more loans in a month, growing your team, and so on.
As the purchase market continues to thrive, competition between lenders is strong for every loan. Mortgage Brokers are in a great position to win more loans because of the loan options, service, and technology they can provide. The wholesale channel is growing, and every Mortgage Broker should have the mindset that they can dominate their market next year. Brokers need to figure out how they’re going to use their advantages to take their business to another level in 2019.
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Win over real estate agents, win business
In a purchase market, building and strengthening relationships with real estate professionals is essential. Real Estate Agents are actually very aligned with Mortgage Brokers–they serve the client, not a lender.

The first step to building those relationships is recognizing what’s most important to real estate professionals. Hitting a contract date is at the top of the list. This is a huge competitive advantage for Mortgage Brokers because they have wholesale partners with faster turn times than retail banks. Real Estate Agents can be confident that when they write a 30-day purchase agreement, their loan will close on time–and that means they get paid faster.
Brokers can also offer real estate professionals an advantage at the closing table by working with a lender who funds instantly. Funds are available before a closing takes place so a borrower can get their keys and a Real Estate Agent can get paid once they sign with no further waiting. This takes a lot of the stress out of the closing process and makes a real estate agent look like a hero to their clients.

The more they know, the more successful they’ll be
A recent survey showed that once a Real Estate Agent uses a Mortgage Broker, 90 percent would recommend that Broker to other homebuying clients. The same survey showed that, once a Real Estate Agent worked with a Mortgage Broker, they were 35 percent less likely to recommend a national bank to future clients.

The two biggest reasons why real estate professionals use Mortgage Brokers are their ability to shop around and the high level of service they provide. If a Mortgage Broker has access to five lenders, they have the ability to pick the best of the five. It’s a no-brainer. And because a Broker’s reputation is on the line with every loan, they have to deliver great service or they won’t get more business.
The survey also revealed that only three percent of real estate professionals recommend Brokers because of their speed. This is a misconception Brokers need to educate their real estate partners on and could be a contributing factor as to why they’re having a tough time building those relationships.
Real estate professionals need to understand that Brokers can close loans just as fast, if not faster, than online lenders because of all the technology they have access to through their wholesale lending partners. It’s up to Brokers to educate real estate professionals on the benefits they provide, and why those advantages are important.

Embrace technology
Technology will continue to be the biggest disruptor in the mortgage business. It makes closing loans a faster, easier and more seamless process. A Mortgage Broker can now close a loan without ever having to pick up a pen or print a sheet of paper. As 100 percent virtual e-closings have become available in roughly half the country, borrowers are able to complete a closing anywhere that has Wi-Fi access.

Brokers have the opportunity to deliver a fully digital mortgage experience, from application to closing, to their real estate partners and borrowers alike. You don’t have to use all the tools that are out there, but having access to them is a nice selling point.
Of course, as valuable as technology is, it’s only as good as the people behind it. Brokers should know their clients and remember that, without great service, technology is simply a tool. With it, technology is a true game-changer.

Enhance your online presence
Mortgage Brokers need to be where their audience is. Having a presence on social media and engaging in conversation with your followers is something you can do that doesn’t take much time, but can help you get an edge. One study found that 77 percent of Millennials use social media during the homebuying process. Posting valuable content on Facebook and LinkedIn is an opportunity to get in front of potential clients. If you need help, work with a lender who can teach you how to use social media to your advantage.

It’s also important to pay attention to online reviews. Eighty-nine percent of Millennial borrowers rely on online reviews and recommendations. If you’re going to a new restaurant, you’re probably going to look it up online beforehand to see what people are saying about the food. It’s no different when it comes to getting a mortgage–especially when you’re talking about one of the biggest financial transactions of someone’s life.
Mortgage Brokers should use online reviews to their advantage. Ask borrowers who had a good experience to post a positive online review. That should be done soon after a closing while it’s still fresh in a client’s mind. Having a strong online presence can help brokers build their brand and get more business.

Dominate by being different
Mortgage Brokers should always be thinking about ways they can differentiate themselves. Offer something different than the competition. When the market shifts, Brokers know there’s a lender out there that fits, whereas a retail lender has to fit a certain product set.

Brokers need to leverage the wholesale lenders they work with and the different options they can offer their borrowers. Maybe it’s different choices on mortgage insurance, a great jumbo program or reliably fast closings. Know your lenders and take advantage of their strengths.
Brokers can also make themselves stand out by not giving into the mindset that higher rates means business is going to slow down. We are still in a historically low period for interest rates. Refinance opportunities will still be out there and brokers can find them by staying in touch with past clients. Mortgage Broker market share is actually up to 16 percent and is continuing to grow because Brokers don’t use the market as an excuse. Business is out there. Opportunity is out there. Brokers can control their own destiny by taking advantage of it.

Mortgage Brokers aren’t just making a comeback–they are back! Every day, more loan originators are realizing that an independent mortgage company is the best place to work because it’s the best place for a consumer to get a loan. The wholesale channel will continue to grow in 2019 and Brokers need to find new ways to compete for loans. As the New Year approaches, Brokers should be thinking about how they grow their business long-term, not just short-term. What you do this year will lay the groundwork for 2020, 2021 and beyond.

Source:  Mat Ishbia

Here’s what some mortgage lenders are doing to help Americans affected by shutdown

As the government shutdown stretches on, mortgage lenders and others in the housing industry are beginning to step up to help those most affected by the inability of the president and Congress to agree on a budget to fund the government.

More than one month ago, President Donald Trump and Democrats in Congress disagreed over funding for a border wall between the U.S. and Mexico – Trump wants $5.7 billion for the wall and the Democrats don’t want to give him anything.

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There are approximately 800,000 federal workers who are either furloughed or working without pay due to the shutdown. The Federal Housing Administration has already asked the mortgage industry to help those workers with their mortgages, but a group of nearly two dozen congressional Democrats want more protection than that.

Earlier this month, a group of 22 Democrats introduced legislation in both the Senate and the House of Representatives that would protect federal workers and their families from foreclosures, evictions, and loan defaults during a government shutdown.

And now, some lenders in the mortgage industry are responding to the FHA’s call for help.

Ally Financial,announced it is expanding its assistance program to provide aid and resources for customers affected by the shutdown. Some of these assistance programs include transaction refunds, waivers and payment deferrals, and are used during critical times such as natural disasters and economic crises.

“Our hearts go out to any individual experiencing financial challenges and, given the extended duration of the partial shutdown, we want to assist our customers who are burdened by this as best as we can,” said Diane Morais, Ally Bank president of consumer and commercial banking products. “Our focus is on truly being an ally in these uncertain times and providing relief that, if needed, can help.”

Some of the assistance those affected by the shutdown can utilize include refunds of transaction fees, refunds of non-sufficient funds fees, CD early withdrawal penalty waivers, expedited check fee waivers, wire fee waivers, late charge waivers and payment extensions.

Homesnap, a multiple listing site, announced it is launching a program to pay the mortgage or rent payment in February of 10 government workers or contractors affected by the shutdown.

Those affected by the shutdown can take a photo or video or write a few words about what their home means to them through social media using the hashtags #MyHomeMeans and #ShutdownStories. The company will be accepting submissions through Jan. 31, 2019.

First Financial Northwest, the holding company for First Financial Northwest Bank, announced it will also help its customers who have been affected by the shutdown.

The bank announced that its customers who are current federal employees who have been furloughed may be eligible for help with payments on existing loans or may qualify for temporary relief loans in an amount up to twice their net monthly pay direct deposited to a First Financial Northwest Bank checking account, interest free for 90 days. Customers currently in the process of obtaining a loan may be eligible to receive an additional 30-day rate lock at no additional cost.

“We are proud to step in and help our hardworking, dedicated customers affected by the federal government shutdown,” said Joseph Kiley, First Financial president and CEO.

“We are committed to supporting our customers in any way we can to find solutions to ease their financial burdens during these uncertain times and encourage them to reach out so we can get them assistance as soon as possible,” Kiley said. “We are grateful for the opportunity to serve our communities every day.”


Minority Mortgage Seekers Pay More Fees To White Brokers

Mortgage seekers from minority groups may pay more in fees than similarly qualified white borrowers, report researchers.

In a study, the researchers found that when minorities seek mortgages they pay about 8 percent more—or $400 more—than white borrowers when they seek loans from white mortgage agents. Mortgage agents can assess fees, such as the broker origination fee, which are negotiable, or can even be waived.

Earlier studies had tended to focus on the race of the borrower, not the broker, according to Brent Ambrose, professor of real estate and of risk management at Penn State, and an associate of the university’s Institute for CyberScience (ICS).

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However, because the dataset, which contained information from more than 25,000 different mortgage brokers, included broker last names, the researchers were able to use a statistical method to infer the broker’s race based on their last names and give them a better understanding of the role race played on both sides of the mortgage-buying process. By matching the brokers’ surnames with a list of last names from the US Census Bureau, the researchers were able to infer race and ethnicity. The method is similar to the ways that regulators and courts infer race and ethnicity.

“All the previous studies that have looked at race and mortgage lending have only been able to observe the race of the borrower, so it’s never really clear what’s driving the results,” says Ambrose, who worked with James K. Conklin, assistant professor of real estate at the University of Georgia, and Luis A. Lopez, doctoral student in business administration at Penn State.

The researchers, who presented their findings at Singapore Management University’s Conference on Urban and Regional Economics in December, also found that minority borrowers do not receive preferential treatment when they seek loans from minority brokers. Whites working with minority brokers pay about the same fee as their minority counterparts.

To determine whether there was a correlation between race and the fees borrowers paid, the researchers controlled for several other factors using data in the mortgage data, including financial literacy, fee transparency, and the selection process of both borrowers and brokers. None of these factors had a significant impact on pricing the fees.


The researchers also investigated what was causing the discrimination. They tested whether the white brokers demonstrated overt racism—or animus—toward minority groups, or whether it is the result of statistical discrimination, a form of racial profiling.

In a first test, the researchers examined whether fees minorities paid varied across credit scores, which would be a sign of statistical discrimination. In the second test, they investigated whether the use of Google search terms with racially charged language in specific areas correlated with preferential loan treatment in those areas. The results from both tests were inconsistent with the hypothesis that the observed differences in fees arose from animus on part of the white brokers.

According to Ambrose, the results suggest that statistical discrimination is behind the higher mortgage fees, rather than actual animosity toward minorities.

Brokers have a high degree of discretion on the fees they assess, which can cause borrowers to pay more or less for their mortgages, says Ambrose, who also serves as the director of the Institute for Real Estate Studies. For example, they can assess front-end fees, such as application fee, underwriter fee, mortgage brokerage firm fee, and points. Borrowers usually pay these fees at closing. There are also back-end fees, including yield spread premium and correspondence premium.


The researchers also examined how recent regulations of the mortgage industry may affect the ability of brokers to charge different fees. The results suggest that regulations put in place following the Great Financial Crisis did reduce the ability of brokers to vary fees across borrowers. However, the researchers also found that this outcome comes at a cost in the form of reduced access to credit.

“There’s a cost and benefit to regulation, which is the point we’re trying to make,” says Ambrose. “The good side is you reduce disparities, but the bad side is you generate potential credit rationing.”

The researchers used data from applications for brokered, first-lien, residential loans that New Century, a subprime lender, approved between January 2003 and March 2007. Researchers performed computations for this research on the Penn State Institute for CyberScience Advanced CyberInfrastructure (ICS-ACI).


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