Gay couples are a lot less likely to be approved for a home loan, and they pay more for the mortgages they do get, according to a new analysis of more than 30 million U.S. home loans from 1990 to 2015.
Same-sex partners were 73% more likely to be denied a loan than male-female couples with the same financial profile, according to the study by Iowa State University’s Ivy College of Business.
The higher fees, an average of 0.2 percentage points, are small for individual borrowers but add up to as much as $86 million a year, according to the research, published by the Proceedings of the National Academy of Sciences.
Although the recovery has been uneven, we are now beginning to see some companies return to top health.
The penalties aren’t limited to LGBTQ borrowers. As more same-sex couples seek loans in a neighborhood, rejection rates and fees rise for other borrowers as well.
Although the U.S. has become far more accepting in recent decades, LGBTQ people are not explicitly protected from discrimination in federal lending laws, and a majority of states don’t prohibit housing and accommodation discrimination against LGBTQ residents.
Back in the Wild, Wild West era of mortgage lending before the housing crisis, NINJA loans (loans given to borrowers with no income, no job, and no assets required) became quite the rage.
NINJA loans have disappeared from the market, likely never to be seen again, but one lender is about to bring back a similar ghost of the mortgage market’s past: the NINA loan.
NINA loans are loans that do not include a requirement for a borrower to prove income or assets. No Income, No Assets = NINA.
And now, NINA loans are back, as 360 Mortgage Group announced this week that it is launching a no-income, no-asset mortgage pilot program.
The loan program, which the Austin, Texas-based mortgage banking firm calls the “Agency NINA,” does not require borrowers to prove their income or assets in order to be approved for the loan.
The loan is also available for borrowers with FICO scores as low as 620, which would firmly put the loan in the subprime range, as Experianconsiders subprime to be borrowers with FICO scores below 670.
According to 360 Mortgage, the Agency NINA mortgage is available for loan-to-value ratios of up to 80%.
It’s important to note that despite the loan carrying the “Agency” name, which would imply that one of the government-sponsored enterprises is backing the loan, neither Fannie Mae nor Freddie Mac is backing these loans.
According to 360 Mortgage, the loans will be backed by private capital with guidelines sourced from Fannie Mae’s seller guide. The loans will then either be held in portfolio or placed into a private securitization.
Another caveat is that the Agency NINA loans will not be available for owner-occupied properties, at least in this initial phase.
Initially, the loan will be available for non-owner-occupied investment properties only.
360 Mortgage said that it plans to issue as much as $1 billion in these loans, at which point the company will evaluate the performance of the loans to determine if additional occupancy options will be added.
In the initial phase, investors can use the loans for purchases, refinances, and cash-out refinances.
“The idea behind this product is to allow a more lenient option for investors to purchase, refinance or cash out of their properties,” the company said in a release.
Given the nature of the loan, the Agency NINA is also well outside of the Qualified Mortgage box, but 360 Mortgage Group Chief Operating Officer Andrew WeissMalik said that the loan is not like the other non-QM options that are increasing in popularity.
“We are excited to be the first lender in the marketplace to offer this unique product,” WeissMalik said. “It isn’t some non-QM bank statement program you see every other lender out there offering. Rather, a no income, no asset common sense FICO and LTV based solution for those that are willing and capable of making timely payments but don’t fit within the highly regulated, ultra conservative, guidelines every other lender offers.”
This isn’t the first time that 360 Mortgage has been near the forefront of the expansion of the credit box.
Just over four years ago, 360 Mortgage was one of the companies to offer Fannie Mae and Freddie Mac 97% LTV products.
Home owners in the UK have reached mortgage freedom day, the date when new borrowers have earned enough money to cover their payments for the rest of the year overall, new research shows.
The data, collected annually by lender the Halifax, is based on the current average annual mortgage repayment cost of £8,729 and the average net annual income of £28,752.
Mortgage Freedom day also fell on the 16 April in 2018 suggesting little change in affordability for home owners across the year. Indeed, since 2014, the date has moved back by just six days as wage growth and house prices remained relatively stable across the period.
But the date varies according to location. For example, it was in February for people with mortgages in Copeland in the North West of England while in the London borough of Brent the day will not come until September.
‘If every penny earned this year went towards their mortgage today would be the day that the average UK borrower could celebrate paying off their mortgage for the year,’ said Andy Bickers, mortgages director at the Halifax.
‘While on its own the significance of this date is hard to comprehend, comparing Mortgage Freedom days year to year allows for quick comparisons on affordability. Specifically, how much people are earning against how much they are spending on their mortgage,’ he explained.
‘Therefore, with both house prices and UK average earnings continuing to rise, it makes sense that Mortgage Freedom day this year remains unchanged from 2018,’ he added.
The data shows a definite North/South divide. While all home owners in the North reached their Mortgage Freedom day in March, those in the Midlands and East Anglia will have to wait until the end of the month, and for Southerners it will not be until May at the earliest.
Indeed, while the North of England and Scotland have seen their Mortgage Freedom days move earlier in the year over the past five years, the rest of the UK have slowly seen theirs push further out.
In Copeland it took just 49 days for local residents to reach the milestone and four of the top five earliest Mortgage Freedom days fell in the North West. For Barrow-in-Furness and Burnley it was 27 February alongside West Dunbartonshire in Scotland and in Hyndburn it was 28 February.
Owners in London and the South East have the longest to wait. Brent home owners were last to reach the milestone on 11 August last year and it will be the same again in 2019, having to wait until around 05 September while from Haringey it is 24 August, and Hackney 12 August.
Rental Freedom day will be 26 April. Tenants in Northern Ireland were the first to achieve rental freedom this year on 24 March, followed by the North of England on 01 April and Yorkshire and Humber on 05 April.
Tenants in London have to wait nearly four months longer than those in Northern Ireland, not achieving rental freedom until 30 July, 12 days later than last year, and 40 days after London’s average Mortgage Freedom day.
April 16 is “mortgage freedom day” – the date when new borrowers will typically have earned enough money to cover their home loan payments for the whole year – a report has found.
The research, from Halifax, calculated that after the first 106 days of the year – April 16 – homeowners will have earned enough to pay off the annual cost of their mortgage.
The calculation, which Halifax produces each year, makes several assumptions, including that homeowners have 30% equity in their home and that every penny of earnings after tax is devoted to paying off the mortgage from the start of the year.
The research uses the current average annual mortgage repayment cost of £8,729 and the average net annual income of £28,752, with the calculations based on a single borrower.
With house prices and wages varying across the UK, many areas have already had their mortgage freedom day for 2019, while others are still waiting.
Scotland, Northern Ireland and northern England had mortgage freedom days in March, while mortgage freedom day in London is not until June 20.
Some parts of northern England and Scotland, including Copeland, Burnley and West Dunbartonshire, had mortgage freedom days as early as February.
In Brent in London, mortgage freedom day is not until September 5.
Halifax said last year’s UK mortgage freedom day also fell on April 16 – suggesting little has changed in terms of affordability.
Since 2014, the date has moved back by just six days as wage growth and house prices have remained relatively stable across the period, it said.
Halifax also calculated “rental freedom day” – which it said will fall 10 days later than mortgage freedom day, on April 26.
Andy Bickers, mortgages director at Halifax, said: “If every penny earned this year went towards their mortgage, today would be the day that the average UK borrower could celebrate paying off their mortgage for the year.
“While on its own the significance of this date is hard to comprehend, comparing mortgage freedom days year-to-year allows for quick comparisons on affordability.
“Specifically, how much people are earning against how much they are spending on their mortgage.
“Therefore, with both house prices and UK average earnings continuing to rise, it makes sense that mortgage freedom day this year remains unchanged from 2018.”
Here are the dates for mortgage freedom day in 2019, according to Halifax:
– North East, March 17 – Yorkshire and the Humber, March 24 – North West, March 22 – East Midlands, April 7 – West Midlands, April 14 – East Anglia, April 18 – South West, May 5 – South East, May 22 – London, June 20 – Wales, April 1 – Scotland, March 8 – Northern Ireland, March 12
And here are the local authority areas with the earliest mortgage freedom days in 2019, according to Halifax: 1. Copeland, North West, February 18 =2. West Dunbartonshire, Scotland, February 27 =2. Barrow-in-Furness, North West, February 27 =2. Burnley, North West, February 27 5. Hyndburn, North West, February 28 =6. North Ayrshire, Scotland, March 1 =6. Inverclyde, Scotland, March 1 =6. Pendle, North West, March 1 =9. East Ayrshire, Scotland, March 3 =9. North Lanarkshire, Scotland March 3
Here are the local authority areas with the latest mortgage freedom days in 2019, according to Halifax: 1. Brent, London, September 5 2. Haringey, London, August 24 3. Hackney, London, August 12 4. South Buckinghamshire, South East, August 9 5. Oxford, South East, August 7 6. Chichester, South East, August 6 7. Barnet, London, July 29 8. Hillingdon, London, July 28 9. Harrow, London, July 26 10. Windsor and Maidenhead, South East, July 25
It’s hard to imagine a more boring (and dreaded) word than “mortgage.” But if you know where to look, you might find a mortgage that will save you thousands of dollars a year, or qualify for a loan when you didn’t think you could — and that’s exciting. You might even find free money to help with a down payment.
Here are a few ways to get started:
1. Don’t just wander into your bank to get a mortgage. Shop around at all kinds of lenders — especially if you’re a first-time home buyer.
Deitra Douglas bought a home in Charlotte, N.C. last year — but only because of a loan program that most people don’t even know exists. Though she had a good job, Douglas had been through a divorce and run up credit card debt, hurting her credit score. Her bank told her she didn’t qualify for a mortgage.
A friend told her about a non-profit homeownership organization called the Neighborhood Assistance Corporation of America (NACA). Under NACA’s mortgage program, Douglas took a homebuyer class, demonstrated over time that she was saving money, and paid off $11,000 of credit card debt. That qualified her for a mortgage with a low down payment with no closing costs or fees.
NACA founder Bruce Marks calls the program character-based lending that looks at individual circumstances that people can control, like paying rent and bills on time. “It’s going back to the old way of doing lending,” he says. “She could afford the payment.”
Even if you aren’t in the same situation as Douglas, shopping around beyond mainstream banks can find you a better deal.
2. Find out if you qualify to for a grant to help with a downpayment.
If you are a first-time home-buyer — or haven’t owned a home for at least a few years — you might qualify for a government grant for what’s called down-payment assistance, which can mean borrowing less on your mortgage.
Bruce Marks, founder and CEO of a nationwide lender called the Neighborhood Assistance Corporation of America (NACA) says check with your state housing finance agency to ask about assistance programs.
“There’s a lot of grant money around for downpayment and closing costs,” Marks says. “You can get up to $20,000 to $25,000 in Boston, and up to $20,00 in California. They’re doing $40,000, $50,000, and sometimes more.”
3. Get preapproved for a mortgage before you start shopping for a house.
Pre-approval will tell you how much a lender is willing to lend to you, and forces realtors to take you seriously.
4. If you can afford it, get a 15-year mortgage. You will build wealth much more quickly than with a 30-year mortgage.
Check out the chart. After 10 years of paying for your house, you could have $121,000 worth of ownership built up — or you could have only $42,000, a huge difference.
A 15-year mortgage also means paying less in interest — $50,000 as opposed to $74,000 — over those 10 years. That means each dollar you pay on the 15-year mortgage is doing about three times more work for your wealth.
5. Remember that adjustable-rate loans are risky.
Payments on an adjustable-rate loan may start out small, but will fluctuate with the market and could cost much more in the long run than a fix-rate loan. Think of a fixed-rate loan as reliable car that will get you where you’re going. An adjustable is more like a used car — cheaper, but breakdowns will cost you more money and worry in the long run.
6. Shop around to see if you can avoid paying for private mortgage insurance, or PMI.
Mortgage insurance protects the bank in case the buyer foreclose on your loan, and it’s often required for buyers who make less than at 20 percent down payment on their home. It can add hundreds to your monthly payments.
If a lender says they have to charge you PMI, you might be able to find a credit union or other lender who will offer the same loan but not charge the mortgage insurance. For example, NACA doesn’t charge mortgage insurance. Marks also suggests something called wealth builder loans, which have a 15 or 20-year term and don’t charge insurance.
“The best mortgage that you’ve never heard of is the wealth builder 15-year mortgage,” Marks says. “If you can afford the payments, you need to do that. Build equity really quickly.”
7. Don’t let the dreaded HELOC monster — home equity line of credit — eat your home equity.
A HELOC is a second loan that uses your home as collateral, once you’ve built up equity in the house. Many people use them to finance home repair or improvements. But too many use them as a piggy bank to pay off credit cards or buy a car, putting their home equity at risk.
As far as investments go, property is one of the safer bets. Buying a house to let out can be a safe and profitable way to put spare cash to use, and a good way of expanding your assets. While some approach letting as a purely commercial exercise, parents may also buy a place for their children, which they then charge them rent for. This can be seen as investment in both your and your family’s future.
Mortgages available for letting property used to be subject to higher rates of interest than standard residential mortgages, but in recent years this has changed. In an active attempt to encourage growth in the private rental sector of the market, interest rates have been lowered and criteria made more flexible. This led to a boost in the amount of properties being bought as income-producing investments.
The rent you charge, as a rule of thumb, should be around 150% of your monthly mortgage repayments. This should cover all the associated expenses – while letting can prove profitable you should take into account the time and cost involved. Not only will you need to find and purchase suitable property, but you will have to manage it well, whether this means maintenance, furnishing or advertising. An agent can take care of some of these tasks, but bear in mind you will have to pay their fees. Generally, you should think of buying to let as a medium or long term investment.
You should always make sure that a professional agent or solicitor draws up leases and agreements. While you can buy ‘readymade’ leases, these are not comprehensive enough to rely on. Remember too to include an inventory of all furnishings and fittings in the property.
Other costs to consider are: Insurance – both buildings and contents, plus you may want to take out rental protection in case a tenant fails to pay. Service charges and maintenance costs – try to ensure the property will require the minimum of upkeep and repairs.
Commercial and multifamily lenders had another banner year in 2018, when closed-loan originations rose 8% to a high of $574 billion.
“Borrowing and lending backed by commercial and multifamily properties hit another new record last year,” Jamie Woodwell, vice president of commercial real estate research at the Mortgage Bankers Association, said in a press release.
“Solid fundamentals, growing property values, low interest rates and strong appetites from both borrowers and lenders all helped drive an 8% increase in recorded multifamily lending from a year ago. Repeat participants in our survey increased their lending by 4% during 2018, with the remaining growth coming from the addition of new firms.”
Commercial bank portfolios provided the most capital to the market, representing $174 billion or nearly one-third of the total. Government-sponsored enterprises Fannie Mae and Freddie Mac were responsible for more than $142 billion or nearly one-fourth of the total.
Digital mortgages”Many capital sources rose to record levels of lending — including bank portfolios, life insurance companies and the GSEs,” Woodwell said. “Among property types, multifamily pulled even further ahead as the dominant lending target, growing to 46% of total mortgage banker lending — a series high.”
Office was the next largest property type after multifamily, representing 18% of the total. Retail, hotel/motel and industrial property types each represented 8% of the market for a combined 24% market share. Health care loans represented 2% of the market.
The previous record for commercial real estate and multifamily loans closed in a year was $530 billion, according to the MBA.
According to new research prepared by the Mortgage Bankers Association, the following firms were the top commercial/multifamily mortgage originators in 2018:
CBRE Capital Markets, Inc.
JP Morgan Chase & Company
Meridian Capital Group
Bank of America Merrill Lynch
PNC Real Estate
The MBA report sthat by dollar volume, the top five originators for third parties in 2018 were:
CBRE Capital Markets, Inc.
Meridian Capital Group
The MBA further states that the top five U.S. lenders in 2018 were:
JP Morgan Chase & Company
Bank of America Merrill Lynch
Capital One Financial Corp
Nine different companies were at the top of the 11 lists reporting total originations by investor groups:
JP Morgan Chase & Company, Citigroup Global Markets, Deutsche Bank Securities, Inc., Eastdil Secured, and Goldman Sachs were the top originators for commercial mortgage-backed securities (CMBS).
Key Bank, Wells Fargo, JP Morgan Chase & Company, PNC Real Estate, and Meridian Capital Group were the top originators for commercial bank loans.
HFF, MetLife Investment Management, Eastdil Secured, PGIM Real Estate Finance, and New York Life Investments were the top originators for life insurance companies.
Wells Fargo, Walker & Dunlop, CBRE Capital Markets, Inc., Berkadia, and Newmark Knight Frank were the top originators for Fannie Mae.
CBRE Capital Markets, Inc., Berkadia, Walker & Dunlop, HFF, and Key Bank were the top originators for Freddie Mac.
Red Mortgage Capital, LLC, Greystone, Berkadia, Walker & Dunlop, and Wells Fargo were the top originators for FHA/Ginnie Mae.
Nuveen Real Estate, Newmark Knight Frank, Barings, CBRE Capital Markets, Inc., and JLL were the top originators for pension funds.
Wells Fargo, CBRE Capital Markets, Inc., Marcus & Millichap Capital Corporation, JLL, and Meridian Capital Group were the top originators for credit companies.
MBA’s Annual Origination Volumes study is the only one of its kind to present a comprehensive set of listings of 136 different commercial/multifamily mortgage originators, their 2018 volumes and the different roles they play. The report presents origination volumes in more than 140 categories, including by role, investor group, property type, financing structure type, and by the location of the originating office.
Quite a bit, according to new data from iEmergent.
iEmergent, a mortgage forecasting and advisory firm, is projecting a 3.9% jump in total home-loan volume this year. That puts iEmergent at the head of the forecasting pack.
Freddie Mac is expecting a gain of 1.5% for total mortgage lending, according to its March mortgage finance forecast. The Mortgage Bankers Association pegs the increase at 1%, and Fannie Maeexpects a drop of about half a percentage point.
Mark Watson, iEmergent’s director of forecasting, said the difference in outlooks is due to expectations about home sales.
In fact, he’s calling for $1.2 trillion in home purchase lending this year. That would make it the best year for that category since 2005. And the reason? Low interest rates.
“We think the lower mortgage rates will create a huge push, partly from Millennial buyers, that’s going to support strong growth in home sales over the next several years,” Watson said in an interview.
The decline in mortgage rates this year is due to two factors, said Watson. One is Brexit, Britain’s stalled efforts to leave the European Union. British government missteps have caused a “flight to safety” among international investors that increased demand for U.S. dollar-denominated bonds, which translated into lower rates for homebuyers, said Watson.
The second reason for lower rates? The U.S. economy’s “hangover” from federal tax cuts that became law more than a year ago, he said.
“The tax changes were a positive for the economy at first, but a big part of the stimulus from that is over and now it’s going to be more of an economic hangover because deficits are going to be higher,” he said.
At first, many economists thought those deficits would result in higher mortgage rates because the government would have to increase borrowing, Watson said. But, signs of a slowing U.S. economy at 2018’s end caused the Federal Reserve to stop raising rates at its January meeting, and recently signal that it does not plan to raise rates again this year.
Instead, the policy makers pledged to be “patient” before pushing up borrowing costs.
“Before that time, everyone thought they were going to do at least two, or maybe even three, rate-rises this year,” said Watson. “That’s clearly not going to happen, now.”
In March, Fed Chairman Jerome Powell said there will be no rate hikes in 2019. And, because Fed policy makers are loath to look like they are influencing national elections, they may hold steady in 2020 as well, Watson said.
The reason the Fed has the option to hold rates steady is the low rate of inflation, he said.
“It looked for a period of time like inflation was going to go over the Fed’s 2% target,” said Watson. “Then it dipped down and that gave the Fed a lot of cover to say we’re going to slow down on rates rises.”
And because of that, mortgage rates could very well stay low for a while, which could mean good news for those in the housing market.
As mortgage interest rates dropped to their lowest levels in over a year last week, home owners and buyers raced to submit their refinance and other loan applications before rates start going up again.
The number of overall mortgage applications surged 28.4% last week compared with the previous year, according to the Mortgage Bankers Association. They were up 18% over the previous week.
Refinance applications, in which homeowners will typically try to lock in lower rates, shot up the most, an astounding 58% from a year ago. They also jumped 38.5% from the prior week
Meanwhile, purchase applications, for the loans used to buy a home, were up 9.8% from a year ago and rose 4.1% from the previous week.
Folks flooded the offices of lenders across the nation because the average rate for a 30-year, fixed-rate loan fell to just 4.06%, according to Freddie Mac. That’s the lowest it’s been since January 2018—and a significant drop from when rates hovered just under 5% in November.
These may sound like incremental changes, but even a single extra percentage point can add more than a hundred dollars to a monthly mortgage payment for a roughly $300,000 home. And that could tack on thousands, if not tens of thousands, of dollars over the life of a 30-year loan.
“Customers, especially in the refi market, are really interest-rate sensitive,” says Chief Economist Danielle Hale of realtor.com®. “It generally makes sense [for homeowners to refinance their mortgages] if you’re getting a lower interest rate, because that’s what’s really going to save you money.”
The lower rates are also a windfall for cost-sensitive home buyers who worry about struggling to make high monthly mortgage payments.
“Purchase applications have now increased year over year for four weeks, which signals healthy demand entering the busy spring buying season,” Joel Kan, the Mortgage Bankers Association associate vice president of economic and industry forecasting, said in a statement.