Housing advocates call for halt on foreclosures during government shutdown

It’s only fair the foreclosure process is shut down while the federal government remains on a partial shutdown, housing advocates urged.

Fifteen organizations from across the country urged the U.S. Department of Agriculture (USDA) in a letter to pause all foreclosure proceedings during the shutdown for its home loans where borrowers are behind.

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Though better known as the federal agency that sets farming policies and inspects the nation’s food, the USDA also runs a home loan program focusing on rural homeownership. When borrowers fall behind, the program allows for alternatives to foreclosure. But a servicing center that’s key to helping struggling homeowners has stopped operating while the shutdown grinds on, the letter noted.

“Without access to the process, homeowners will face avoidable foreclosures,” said the letter submitted on the shutdown’s 27th day. The housing advocates insisted a “comprehensive stay” is justified.

The advocates noted the USDA hasn’t publicly said what its current stance is on foreclosure activities — so there’s “no reason to believe that foreclosure filings, motions, and sales have completely stopped at this time.”

The USDA did not immediately respond to a request for comment. Numbers on USDA-issued loans in foreclosure were not immediately available.

Geoffry Walsh, a staff attorney at the National Consumer Law Center, said there were about one million participants in the USDA’s direct home loan program, and another million in its insured loan program.

Some rural homeowners are still seeing foreclosure cases unfold, Walsh said, including one instance where a house sale in the South is still slated for next month. “Nobody told them not to do it,” Walsh told MarketWatch.

A similar servicing centre at the Federal Housing Administration is also shut down, Walsh said.

The federal funding impasse is rooted in President Donald Trump’s demand for a wall along the Mexican border. More ripple effects are accumulating as the now record-setting shutdown wears on.

The White House is saying the shutdown would shave first quarter domestic product by .5 percentage points if the halt goes through the month. Meanwhile, furloughed federal workers are trying to figure out ways to make ends meet — one contractor has resorted to making Star Wars models.

Unpaid federal workers are also getting pinched on their housing costs. Zillow estimates the roughly 380,000 furloughed employees and 420,000 people working without pay could owe about $438 million in mortgage and rent payments this month.

Source: marketwatch.com

AUHF urge African governments to stimulate long-term mortgage

No fewer than 12 commitments were made recently in the Cote d’Ivoire capital, Abidjan, where more than 29 countries including Nigeria met to shape the development of housing finance across the African continent.

The forum – 34th Annual General   Meeting African Union for Housing Finance (AUHF) produced an ‘Abidjan declaration’ that called on governments at the regional, national, state or provincial, and local levels to actively support the vision for adequate, decent and affordable housing for all across the continent, by instituting measures that stimulate long-term finance on affordable housing as an investment target.

Africa is an environment marked by stark mismatches between housing demand and supply in the affordable housing submarkets, which manifest   in   housing backlogs that force the majority of low and middle income dwellers into substandard and informal dwelling conditions; but which also offers insights into innovation as low and middle income residents seek to meet their own housing needs independently outside of the traditional housing delivery channels, and through incremental housing construction.

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It is estimated that half of global population growth between now and 2050 will occur in Africa, with an   estimated   additional 1.3   billion people. At the same time, growing rates of urbanization are shifting  the population of the continent   from   one   that   has   been   predominantly   rural   to one that is increasingly urban. It is expected that by 2035, about half of the Africa’s population will be living in urban areas.

Specifically, the AUHF delegates appreciated the critical function played by housing in the economy, as its own sector and through its contribution   to social and economic growth and development of primary, secondary and tertiary sectors; and the   opportunities presented by this fact. While acknowledging inherent opportunities emerging through innovations in technology, communication and financing and payment systems and their potential for revolutionizing the affordable housing sector; they recommended the automation of deeds registries.

They said governments should strengthen property and collateral   registration   and   foreclosure   mechanisms, improving transaction time frames, and to ensure the transparency of the collateral registry through free access to record-level data. Other demands on governments include ONE: To use incentives to encourage innovation in both mortgage and non-mortgage lending for housing that explicitly targets  lower   income   earners   including   youth   and   women  in   the   affordable   housing   sector.

TWO: To insist, through regulation, on credit information-­‐sharing and the development of an effective and   comprehensive   credit   reference   system   that   covers   all   financially   active   consumers   and   stimulates   market transparency.   THREE: To   assert   the   critical   role   that   macro-economic   policy   and   financial   regulation   play   in   realising   effective housing markets.  Measures that reduce policy interest rates, lower maturity premiums and credit risk premiums,  and  leverage  the  utilization  of  collateral  value  will  all  stimulate  investment  and   the   availability   of affordable   housing   finance.    They   are   fundamentally   driven   by   macro-economic policy and should be a priority of Central Banks.

The three day talks also encouraged and urged international development finance institutions and other development agencies specifically, target   affordable housing   with   capital   that   is   patient   with   time, promoting blended   finance   arrangements   that   manage   risk   sustainably, and explicitly pursue   innovation that shifts investor focus towards affordable housing.

•Provide targeted technical assistance:  operational development and support towards effective public-private   partnerships, as well as the   development   of   viable   social   enterprises   and   commercial   undertakings that explicitly target affordable housing.
•Engage with and develop financing interventions for the full housing delivery value chain, providing   support for sector development and promoting   effective linkages  between  public, private  and  NGO   sectors along   each   link   in   the   chain   from   land  through  to  infrastructure,   housing construction,   and   financing.

•Invest in strong data and market analytics systems, active market tracking and longitudinal analyses that support a growing understanding of the housing financing dependencies, and which track market growth and progress.
• Recognise and support in their broader efforts, a diversity of   housing   financing   mechanisms   not   limited   to   mortgage finance for end users but also   including   housing   micro   finance, rent‐to-­own schemes,  home-ownership  savings  plans, homeowner led  construction and other   end user finance  products,  the  critical need for construction finance,   affordability supports and risk management interventions, and capital  market development in support of affordable housing, and
•To   support   efforts   to   integrate   the   growing   and   expanding   youthful   population   of   Africa   in   the   affordable housing discourse as a way to breaking the generational housing challenges in Africa.

AUHF pledged to engage with respective governments at the regional, national and sub-national level   on both macro and micro-economic issues,  including  interest  rates,  tax  and  monetary  policy,  and  housing   and  land  policies  as  they  influence  the  growth  and  performance  of  housing  markets.
In it, the Union committed themselves to actively   engage   governments   and   regional   bodies   in   the   pursuit  of  policy, regulatory,   and other interventions  that  support  tthe  growth  of  affordable  housing  markets;  promote  best  practice  in  the  affordable  housing  industry ;  actively  seek  projects  and  investments.

b) develop  products  and  services  that  engage  with  the  particular  needs  and  capacities  of  youth  and   women,   recognising   also   the   important   opportunity   that   the   housing   sector   itself   may   offer   for   their  professional  development  as  participants  in  the  housing  sector,  for  example,  as  small-­‐scale   landlords,  contractors  or  labourers;

c)think   more   carefully   about   risk   and   how   we   price   for   this   in   the   microfinance   and   mortgage   sectors,   engaging   in   our   pricing   and   underwriting   mechanisms   with   the   characteristics   of   low-­‐ income  households,  youth  and  women,  how  they  earn  their  income and  how  they  manage  their   housing  investments;

d)uphold   ethical   business   practices,   championing   sustainable   impact   together   with   financial   return.    In   the   delivery   of   products   and   services   to   our   clients   we   are   committed   to   sound   and   effective  consumer  education  to  support  their  sustainable  entry  into  the  property  market;

e) work  effectively  in  the  development  of  strategic  partnerships  with  each  other,  our  governments,   and  the  wider  housing  sector  in  our  cities,  countries  and  regions;  and

f)tracking   these   commitments   with   clearly   defined   key   performance   indicators,   to   which   we   will   each  contribute,  and  will  report  back  on  these  at  our  next  AGM.

REAL ESTATE Adopting the Singaporean model for Nigeria’s mortgage system

After much motion without movement in its mortgage system, the next best step for Nigeria is to seek what is working in other climes that it can adopt in order to grow that segment of its economy.

The Singapore model readily comes to mind here. This involves creating a pool of funds into which everybody contributes monthly and from which everybody borrows to buy a flat or house.

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Singapore, a once poor island in Southeast Asia, evolved from a third to first world economy between 1965 (when it gained independence from the British) and 2000. Under Lee Kuan Yew, the country’s first Prime Minister, the government transformed huge swathes of urban sprawls and slums into well-planned cities that spurred economic dynamism and growth.

Their mortgage model succeeded not by an act of magic but because the government was determined, through a deliberate policy, to make that model work.

Conversely, the national housing fund (NHF) scheme in Nigeria can only be described as a failure because the vision is not there to drive the scheme. For too long, the mortgage system in Nigeria has failed to grow and the obvious effect is the low home-ownership level in the country and widening gap between housing demand and supply.

The Federal Government’s intervention in the housing sector was the setting up of the Federal Mortgage Bank of Nigeria (FMBN) followed by the establishment of the NHF scheme which was aimed to make mortgage affordable for contributors to the scheme at 6 percent interest rate for upwards of 20 years, depending on the age of the borrower.

This scheme has failed, hence the need for the remodeling of the entire mortgage system in the country. The Federal Government is expected to ‘top up’ contributions into a remodeled NHF with, at least, N10 billion every year to make it affordable.

If the entire system is modeled after that of Singapore, Nigerian citizens will be able to obtain 20 to 30-year low interest mortgage to acquire houses through a pool of funds into which all workers must contribute 20 percent of their salary.

It should be noted however that the NHF scheme attempted the Singapore model but failed because contributors couldn’t access the loans as they couldn’t afford the deposit for the houses. The scheme also failed because one effect of inflationary policies is high interest rates charged on mortgage loans.

Anywhere in the where, non-inflationary fiscal policy, flexible, sustainable exchange rates and hence, low interest rates, are important for attaining a mortgage system that will also attract foreign investment into mortgage market. Those are the kind of things Nigeria needs at the moment to grow its mortgage sector.

Nigeria’s mortgage system as it stands today is incapable of supporting a housing policy that will deliver houses to Nigerians. This is why the country should imitate other countries with mortgage systems that have delivered housing for both the rich and the poor.

Nigeria needs an efficient housing policy whose aim is for the government to assist millions of citizens to obtain lower-interest mortgages. This is how most citizens are helped to acquire houses in many countries with successful housing policy such as Singapore, South Africa and Malaysia.

The housing sector also has suffered slow growth over the years and this has blamed on high mortgage rates with short tenures, a difficult business environment, high inflation, and unstable policies that have together hampered the growth of the housing sector in Nigeria.

As a result of this, there is an estimated deficit of 17 million housing units. FMBN estimates that the country needs to build 720,000 units per year to bridge this gap.

Housing development experts say there is always a link between transformational housing policy and the economy. They explain that a housing policy that works for all Nigerians, including the rich, the poor, civil servants, small business people, artisans, informal sector workers and entrepreneurs, young graduates, young people with limited formal education, banks, construction companies etc, will boost construction activities and make a significant contribution to economic development.

The need for an efficient mortgage system is critical to providing accommodation for most Nigerians and this is because house is the single biggest investment an overwhelming majority of people will ever make in their life time.

It is on record that less than 3 percent of Nigerians acquire their homes through mortgage. Yet millions of them invest in building houses of different costs and quality without any help whatsoever from the government. This is the reason about 90 percent of the country’s housing stock are described as ‘dead assets’ because they are not in any formal mortgage.

Source: Chuka Uroko


Top 10 reasons why borrowers pursue a jumbo reverse mortgage

American Advisors Group has surveyed borrowers who have chosen its private-label AAG Advantage loan to determine what prompts seniors to pursue a jumbo reverse mortgage.

The results highlight the vast differences between the average reverse mortgage borrower – whose financial situation is often tenuous – and those who pursue a jumbo reverse to access the equity in a higher-value home.

AAG, which currently dominates the reverse mortgage space with 25% of market share, rebranded last year as a provider of home equity solutions and expanded beyond reverses into traditional mortgage products and real estate services.

In addition to the Federal Housing Administration’s HECM, the California-based lender offers borrowers access to up to $4 million in equity in one lump sum through its non-agency jumbo reverse mortgage.

While the loan is billed as the AAG Advantage and sold through the lender’s retail channel, it is actually the HomeSafe Standard loan offered by Finance of America Reverse. In March, the two lenders announced a partnership that would allow AAG to sell the HomeSafe under its own branding on a correspondent basis.

AAG said it has seen significant traction with the loan.

“Consumer response to the jumbo product has exceeded all of our expectations,” said an AAG spokesperson. “There seems to be a real market for reverse mortgages with affluent seniors, especially those seeking to liquidate some of their real estate wealth.”

The lender said the average borrower for its jumbo loan is 77 years old, has a credit score of 729 and owns a home valued at $1.7 million. It pinpointed the average loan amount at $665,000.

AAG explained it surveyed 250 Advantage borrowers to revealed the main reasons why seniors pursue a jumbo reverse, shedding light on how originators can better market the product. Here they are:

Top 10 reasons seniors chose a jumbo reverse mortgage:

  1. To make home modifications or repairs
  2. To buy an investment property or a vacation home
  3. To help children purchase a property
  4. To provide children with an early inheritance
  5. To create college funds for grandchildren
  6. To establish a trust fund
  7. To cover in-home care costs
  8. To have more financial liquidity
  9. To maintain their current lifestyle
  10. To pay off other debts

“Jumbo reverse mortgage loans present an opportunity for older Americans to achieve greater financial comfort and expand their wealth,” said Paul Fiore, chief retail sales and operations officer for AAG. “Products like Advantage have emerged as an optimal option for affluent homeowners who have a desire to diversify their capital and invest in other aspects of life.”

The mortgage industry isn’t ready for a foreclosure crisis created by climate change

A foreclosure crisis spurred by climate change is becoming a real threat to the mortgage industry as extreme storms and other natural disasters increasingly occur in places where borrowers might not have flood or fire insurance.

The industry is not prepared for the effects of such extreme weather and rising sea levels, according to Ed Delgado, CEO of national mortgage trade association the Five Star institute and a former executive at Freddie Mac.

“If we look at the basic foundation of what drives the mortgage market, it is the application of credit risk. What’s missing is the understanding of weather risk and where those weather events can take place,” Delgado said.

The current system is reactive and local and doesn’t include plans for the widespread effects of climate change. That could affect several major housing markets at once.

As it stands, after major natural disasters, mortgage servicers follow guidelines from Fannie Mae, Freddie Mac and the FHA, which own or insure most home loans today.

The guidelines usually involve a temporary moratorium on foreclosures, as well as loan forbearance programs, which allow borrowers to miss a few months of payments but then extend the length of the loan.

This helps borrowers who need to rebuild and may be waiting for insurance payments to repair damage. It also helps people who have lost their salaries temporarily due to a disaster. Again, these are momentary solutions to singular events.

The mortgage market is not factoring the overall risk into its loan underwriting and is not quantifying the amount of potential losses should a wide swath of borrowers walk away from damaged or destroyed homes.

“Whether it’s fires and mudslides in California, flooding in Texas, or tornadoes in the Oklahoma region,” Delgado said. “It’s going to be a problem if the banks don’t start to pay closer attention to what those weather risks are.”

As an example, Hurricane Harvey, which struck in August 2017, flooded close to 100,000 Houston-area homes. In Harvey’s federally declared disaster areas, 80 percent of the homes had no flood insurance, because they weren’t normally prone to flooding. Serious mortgage delinquencies on damaged homes jumped more than 200 percent, according to CoreLogic.


Houston could have seen a massive foreclosure crisis were it not for strong investor demand in the market. Houston’s economy was strong before the storm, and its housing stock was lean. After the storm, investors swarmed the market, offering troubled homeowners an easy way out, largely in cash.

Investor purchases of 10 or more properties jumped nearly 50 percent in the year following Harvey, according to Attom Data Solutions. Some were large-scale buyers, like Cerberus Capital and HomeVestors of America.

Others were smaller home flippers, like JP Patel, who was still buying properties at a crowded auction event in Houston last October. His company, Texas-based Myers, has purchased 80 Harvey-damaged properties.

“As an investor, it was kind of a perfect opportunity,” said Patel. “We literally can avoid the whole problematic nature of the foreclosure process.”

Houston dodged a crisis because it was already a hot housing market, and people still wanted to live there after the storm. But Houston should be a wake-up call to the rest of the nation, according to Delgado, specifically because the damaged homes were largely not in FEMA flood plains, and were therefore not required to have flood insurance.

“You have this tremendous urbanization, population growth. Roads that are being built in the last 10 years. Where does the water go?” Delgado asked. “And is there an underlying risk for us to examine with respect to our portfolio? And then make decisions. Should we be lending in those markets?”

Lenders today, and the federal government that backs most loans, base their risk on FEMA’s flood maps, but even top FEMA officials admit the maps don’t account for increasingly extreme weather.

“We can’t try to determine what’s going to happen in 12 months beyond, because insurance is set up for what your risk is today. And it wouldn’t meet actuarial science to charge you for a future potential,” said David Maurstad, FEMA’s deputy associate administrator for Insurance and Mitigation.

FEMA is required to update its maps every five years. Maurstad says it relies heavily on local communities reporting problems — but some don’t because they don’t want their insurance premiums to go up.

“We know that only one-third of the properties in the high-risk area have flood insurance, so we have a lot of work to do,” he said.

Jennifer and Andy Taylor, who decided to walk away from their Houston home, which was flooded in Hurricane Harvey in 2017, and sell to an investor.

In Houston, flood insurance is now far more expensive because of Harvey. Amanda LeCureux has been running foreclosure auctions for the past two decades, but last October it was the past two years that had her most concerned.

“I have a homeowner, for example, who flooded in 2016 and then promptly flooded again in 2017. And while they did have flood insurance, that flood insurance used to cost them $600 a year. The projected premium for next year is $9,000,” said LeCureux.

“And that particular homeowner was stating that, while they can afford to pay the $9,000 for flood insurance alone, they just don’t know that they’re interested in staying in that home where they’ve already flooded twice in two years and with the increase in insurance,” she added.


And that brings up another problem, said LeCureux.

“Who’s going to buy their home? Which homeowner is going to buy the home that’s been flooded two times and then will be burdened with a $9,000 flood insurance policy?”

Borrowers may simply decide to walk away from homes that they either can’t afford to rebuild or no longer want to live in. As extreme storms and weather events, including drought and wildfires, become more frequent and widespread, the potential for a climate-induced foreclosure crisis increases.

So far, according to Delgado, the mortgage industry has not caught up with the new climate reality and its increasing risk.

“I think it’s only been in the last decade that we’ve started to understand that [Hurricane] Katrina wasn’t a fluke, that there will be ongoing, massive events, weather events, taking place, exposing potentially trillions of dollars of real estate to coastal flooding and damages,” said Delgado.

“It simply can’t be ignored anymore. We’ve been given enough warning signs to take corrective action, and it’s about time you get proactive instead of waiting for these cataclysmic events to take place.”

Say goodbye to all that paperwork: Digital mortgages have arrived

If you’re a move-up buyer looking to purchase your second home, you might be pleasantly surprised by changes in one aspect of your experience: You can now apply for your mortgage completely online, rather than having to deal with all the onerous paperwork of yesteryear.

In recent years, numerous lenders have streamlined mortgage applications to allow borrowers to have more control of the process, with a lot less hassle. The speed and ease of online and app-based shopping have raised expectations for all consumer transactions, including mortgage approval. Competition is heating up in the digital mortgage arena, as big and small companies refine and expand their offerings.

“There’s a mix of lenders right now,” said Tendayi Kapfidze, chief economist at LendingTree, the nation’s leading online loan marketplace. “There are some lenders that have an almost completely digital process, and some lenders who have a partial digital process. But, ultimately, the industry as a whole, from application to underwriting and processing the application, is moving toward a digital structure.”

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A lot of that, he said, has to do with consumer demand. “Customers are used to doing a lot of other purchases online and doing it digitally,” Kapfidze said. “It also creates for a faster process, so typically with digital mortgages, you get a quicker closing date, which is something that is appealing to a lot of consumers.”

The other side of the equation is creating a user-friendly experience and providing guidance for potential borrowers to make sure they are comfortable with such a huge endeavor.

Sammie Jones of Hampton, Ga., has bought three homes through the long and complicated traditional process. Obtaining a mortgage this year through an online lender has made a believer in digital lending out of him.

After Jones visited his lender’s website in April, he received a call from a representative, who discussed what to expect in the mortgage process. Once Jones was prequalified to see how much he could borrow, he shopped around for a home based on his budget.

“Initially, I was supposed to get my mortgage around April, but I didn’t find any homes I was interested in,” Jones said. “If I had already had the house picked out, I probably could have gone from filling out the documentation with them to closing on the loan in less than two weeks. It was just that fast. It was actually a little frenzied fast.”

Jones decided on a ranch-style home with a basement for his family, and the loan process resumed in May.

From buying his first home 24 years ago to his fourth home this year, Jones said: “I would do digital every time. It was that profound a difference. It made the mortgage process kind of enjoyable.”

Kapfidze said the key is helping borrowers get to a point where they feel that they are well informed and making the best decision.

“We try to create a lot of educational content that helps borrowers understand the various types of mortgages that exist, the way that they can prepare to position themselves as well as possible to make sure that they are getting the appropriate mortgages for themselves, that they are getting the best deal that they can get, and that they are financially prepared for this very significant obligation that they take on when they get a mortgage,” he said.

Not everyone feels comfortable yet applying for a mortgage online.

A recent poll conducted by Branded Research of 7,200 potential new home buyers found that men are more likely than women to contact lenders online. New home buyers younger than 45 are more likely than their older counterparts to start the loan process online.

Moreover, the process has not met expectations that using algorithms to analyze a consumer’s financial picture would make a digital mortgage colorblind. A new study conducted by researchers at the University of California at Berkeley raises questions about statistical discrimination and pricing disparities.

“Our results tell us that lenders have pricing schemes that enable them to charge higher interest, and thus take higher profits from minorities, even if the pricing schemes are not intentionally aimed toward minorities,” said study co-author Adair Morse, a finance professor at the Haas School of Business at the University of California at Berkeley, which published the study. “These pricing schemes instead may target borrowers who are not able to shop around more or who choose not to shop around more. If a seller knows he or she can charge a higher price without the customer shopping around, it is good business practice to do so. But this inadvertently may cause discrimination.”

Indeed, Kapfidze points to a study by the Consumer Finacial Protection Bureau that found more than 30 percent of borrowers do not comparison-shop, and more than 75 percent apply for a mortgage with only one lender.

“In a similar way to ride-hailing services giving riders the option to shop for transportation reduced discrimination by taxi operators, we believe consumer comparison-shopping can reduce discriminatory outcomes in financial services,” Kapfidze said. “While the industry continues to make progress in combating discrimination, the best way for individual consumers to improve their chances of being approved and getting the best rates is to make the lenders compete for their business by shopping around.”

Dan Gilbert, chairman of Quicken Loans, the nation’s largest retail mortgage lender and an early adopter of digital mortgages, said he is skeptical of the study’s conclusions about algorithmic lending, including research that found financial technology companies offering mortgages online charge creditworthy minorities higher interest rates than white applicants.

“FinTech lenders like us are never in front of our clients,” Gilbert said. “We have no clue of applicants’ race or ethnicity unless they tell us. Over a third of our clients do not tell us this information, which is their right. But then we can’t and don’t make the visual observation because we’re not face to face.”

A silver lining in the report is that online lenders do not discriminate in application rejections, instead catering to those discriminated by face-to-face lenders.

Despite digital mortgages’ potential to save time and money, Thomas Hahn, 24, an apartment dweller in West Bloomfield, Mich., is not keen on starting a mortgage process online. He said he would rather talk to a loan officer face to face.

“I definitely think that for the first time buying a home, I would prefer to sit down with somebody, because I handle things visually,” he said. “If you’re not familiar with something, it really helps having a professional walk you through it.”

Hahn said he thinks home buyers might overlook important details in an online mortgage origination.

“A person guiding you through the loan process can point you to the things that really matter and sort out the fluff,” he said.

In 2015, Quicken Loans launched Rocket Mortgage as an online-only mortgage process. Quicken Loans chief executive Jay Farner said that although technology has automated the loan process, human interaction remains a robust feature of transactions.

“We try to take the best of both worlds, not only the technology that has been developed, but also the human touch that we’ve been doing for 34 years,” he said. “A lot of people try to do one or the other, and what we’ve done is both: leveraged technology when it makes sense, and applied that human touch when that’s needed, as well.”

Now another paperwork-heavy aspect of home buying is moving to the Internet — the closing or settlement. Technology is automating the day when all involved parties gather around a table to make the transaction official by signing stacks of paper.

Digital brokerage Redfin and online notary platform Notarize have teamed up to let customers close a property purchase entirely online.

In November, Redfin real estate agent Art Cisneros and a California couple who were moving to Austin, were involved in the brokerage’s first digital closing.

“Traditionally, we close at title companies here in Texas and sign the documentation at the title company,” Cisneros said.

“For our clients who were in California at the time, the closing seemed pretty seamless. This was a situation where they could handle the closing from home before heading off to work,” Cisneros said. “It took about 30 minutes. They were just happy with the convenience of it all.”

Source: washingtonpost.com

Average mortgage rates hold steady as housing outlook improves

Mortgage rates remained flat after dropping for six consecutive weeks as negative economic news was balanced with a more positive outlook on housing, according to Freddie Mac.

30-Year FRM 15-Year FRM 5/1-Year ARM
Average Rates 4.45% 3.88% 3.87%
Fees & Points 0.4 0.4 0.3
Margin N/A N/A 2.77

The federal government shutdown is likely to keep rates moving sideways in the next few weeks, a Zillow economist added.

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“Weaker manufacturing data and a more dovish tone from the Federal Reserve left mortgage rates unchanged relative to last week,” Sam Khater, Freddie Mac’s chief economist, said in a press release. “However, interest rate-sensitive sectors of the economy — such as consumer mortgage demand and homebuilder construction sentiment — are on the mend, which indicates that lower interest rates are beginning to have a positive impact on some segments of the economy.”

The 30-year fixed-rate mortgage averaged 4.45% for the week ending Jan. 17,unchanged from last week. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.04%.

The 15-year fixed-rate mortgage this week averaged 3.88%, down from last week when it averaged 3.89%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.49%.

Rates hold steady

The five-year Treasury-indexed hybrid adjustable-rate mortgage adjustable-rate mortgage averaged 3.87% with an average 0.3 point, up from last week when it averaged 3.83%. A year ago at this time, the five-year ARM averaged 3.46%.

“Mortgage rates were flat this week, standing pat near their lowest levels since spring 2018 despite signs of market weakness and ongoing uncertainty at home and abroad,” Aaron Terrazas, Zillow’s senior economist, said in a press release. “As the U.S. government shutdown entered its fourth week, markets have had to navigate a period of heightened economic uncertainty without the usual insights that government data typically provide. More than ever, financial markets must decipher private-sector and international data to gauge the temperature of the U.S. economy. Rates slipped earlier this week on disappointing Chinese trade figures as well as a significant decline in factory output in the Eurozone.”

As investors feared a global slowdown, they put money into the U.S. bond market which kept mortgage rates down, Terrazas said. But any outlook going forward is clouded by the federal government shutdown.

“Inflation pressure in the U.S. remains subdued, even with historically low unemployment, which could put expected Federal Reserve rate hikes on ice in 2019. Monetary policymakers have been very clear that they will be closely watching incoming economic data in making interest rate decisions, but with several of these data releases on hold until the federal government reopens, it has become particularly difficult to set expectations. Until the announcement of a government re-opening, higher volatility but a net sideways trend in rates is likely to continue,” he said.

Source: Glenn McCullom


How long do Nigerians have to wait for affordable mortgage?

Edward Okon is a middle-aged man who left higher school 26 years ago at the age of 24. Okon’s immediate plans on leaving school were to work for six years and marry at the age of 30. Thereafter, he would start processes leading to owning a home he would call his home before his 40th birthday.

That was a long term plan because he reasoned that the only easy, simple and convenient way for him to own a home from his not-too-big salary was to take a mortgage loan and pay back by installments.

Because of its low-interest rate and long repayment period of 6 percent and 20-30 years respectively, Okon decided for the National Housing Fund (NHF). He approached one of the primary mortgage banks (PMBs) to subscribe for the fund. His experience there was anything but cheering.

After subscribing and contributing for one year instead of the statutory six months requirement, Okon’s long trek to obtaining a loan via his contribution began. His PMB made impossible demands from him, leading to his anger and decision to suspend his application for the elusive loan.

That was how Okon’s faith in his country’s mortgage system almost died and his dream of owning a home through mortgage was deferred.

Though, through frugal living and co-operatives, Okon has been able to build his housing, a modest three bedroom bungalow in a Lagos suburb, his interest and hope in the Nigerian mortgage system came alive again when the Federal Government, in another round of intervention, set up the Nigerian mortgage refinance company (NMRC) in 2014.

NMRC was launched into the Nigerian mortgage market as a secondary mortgage institution aimed to raise liquidity in the mortgage system and drag down the interest rate on mortgage loan to an upper single digit or a spread of double digits. Its operation was also expected to catalyze the development and delivery of affordable housing to Nigerians within the low-income bracket.

It is a private sector-driven company with the public purpose of developing the primary and secondary mortgage markets by raising long‐term funds from the domestic capital market as well as foreign markets for providing accessible and affordable housing in Nigeria.

The company whose mandate is mainly to increase liquidity in the mortgage system by refinancing mortgages originated by the primary mortgage banks (PMBs) came on a very high pedestal of providing cheap and long term funds, reducing interest rate to single digit, increasing the country’s housing stock by 720,000 annually, and creating 300,000 indirect jobs.

To Okon and many other Nigerians, particularly the mortgage operators, this was a new dawn because the company would issue long term bonds in the capital market as efficiently as possible and channel the proceeds to refinance member-institutions at a competitive rate, bringing to an end, or reducing to the barest minimum, the huddles posed to mortgage lending to real estate.

True to this expectation, NMRC has visited the capital market from where it raised N8 billion with which it has refinanced mortgages originated by six mortgage institutions including Stanbic IBTC, Imperial Homes, Sterling Bank, Sun Trust Mortgage Bank, Trustbond Mortgage Bank, and Homebase Mortgage Bank which got N1.8 billion, N1.7 billion, N1.6 billion, N1.3 billion, N700 million and N500 million respectively.

It has gone back to the market and raised more capital. By the end of last December, the company announced to the world that it has raised N18 billion from the market.

But it remains to be seen by Okon and his brothers and sisters what purpose this refinancing function has served Nigerians, four years after. The effect of the refinancing of the six mortgage institutions is yet to be felt in the housing sector as there is no news anywhere of any mortgage loan applicant, especially NHF contributors, that have been given loans to buy, build or renovate houses as a result of this.

The second capital raise by the company raised expectations that more mortgage institutions, especially the PMBs, will be refinanced and more mortgage applicants will be able to access mortgage to buy or build their homes.

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Officials of the company assured that when they raised another capital, it would come at a lower interest rate and PMBs will be able to access the funds at a lower interest rate, if not at single digit, at least, at lower double-digit.

However, Femi Johnson, MD/CEO, Homebase Mortgage, explained in an interview that it took the company this long to return to the capital market because the Securities and Exchange Commission (SEC) requires it to have expended about 70 percent of the earlier capital before returning to raise more capital.

The high-interest rate has been the bane of mortgage access for home ownership in Nigeria as many mortgage applicants and home seekers cannot afford the commercial interest rate of between 20 percent and 25 percent charged on mortgage loans with very short repayment period.

The role NMRC is expected to play in this direction is to provide liquidity for the mortgage market and, consistent with its mandate to promote wider spread of home ownership, accessibility, and affordability, the company has come with some initiatives that have also failed to show impact.

The ‘Housing/Mortgage Market Information Portal (MMIP)’ is one of such initiatives aimed to enable it to gather data for intelligence and profiling of federal, states civil servants and informal sectors (off-takers) for affordable housing.

Another initiative is the Mortgage Market System (MMS) which is a transformational change that integrates the entire housing market, covering construction finance, primary and secondary mortgage. The system which is available to all players in the housing industry has the benefit of removing duplications of effort in gathering data and documents; improving the turnaround time, reducing the cycle time of transactions and helping in making homes more affordable.

But, affordable housing is made possible more by an affordable mortgage which is not available at the moment. And Okon wants to know how long he has wait to see and access an affordable mortgage.

Source:  Chuka Uroko


Mortgage rates drop below 4.5%. Homeowners scramble to refinance

Lowest rates in 9 months

There is a quiet refinance boom brewing, as mortgage rates sink to 9-month lows.

Not since April 2018 have rates been this low.

Freddie Mac, in its weekly mortgage rates survey, reported that the average 30-year mortgage rate hit 4.45%, sinking below the psychologically important 4.5% mark.

What’s more, rates have come down from highs near 5% seen as recently as November.

That drop represents a savings of $90 per month on a $300,000 mortgage.

Consumers a flocking to refinance. No one knows how long this good fortune can last.

Refinance applications surge 35% on low rates

The Mortgage Bankers Association (MBA) probably had to check numbers twice when they saw the results of this week’s mortgage applications index.

The data showed that refinance applications spiked 35% in one week.

Falling rates snuck up on the American consumer. While everyone was enjoying the holidays, mortgage rates fell precipitously starting the week before Thanksgiving.

Rates continued dropping through Christmas and New Year’s Day until, on January 10, they hit levels not seen since last spring.

Joel Kan, the associate VP of economic industry forecasting for MBA, said, “Mortgage rates fell across the board last week and applications rebounded sharply, after what was a slower than usual holiday period.”

Now, it appears, consumers are hearing about low rates and finally acting.

Those who have been priced out of a refinance or home purchase are finding out that a new mortgage finally makes sense.

15-year fixed and 5-year ARMs drop into the 3s

The 30-year fixed rate gets all the attention, but other types of mortgages should be making headlines, too.

Rates for 15-year fixed and 5-year ARM loans are now in the 3s according to Freddie Mac.

  • 15-year fixed: 3.89%
  • 5-year ARM: 3.83%

These alternatives to the 30-year give homeowners the opportunity to secure pre-2018 rates — before rates started spiking in earnest.

For instance, someone buying a home may have found they could no longer afford monthly payments at today’s 30-year fixed rate.

But they choose a 5-year ARM rate instead and shave more than $100 per month from today’s 30-year payment.

Five-year ARMs are fixed for five years, then start adjusting based on the market. These loans are perfect for homeowners who plan to stay in their homes only 5-7 years.

Those who are impressed at today’s dropping 30-year rate will find short-term rates even more enticing.

How do I check my rate?

Mortgage rates suddenly turned low again, sparking a new interest for home buyers and refinance applicants alike.

Each applicant, though, needs a personalized rate quote. Average rates are only that — an average. Your rate might be higher or lower depending on credit score, down payment, home equity, or other factors.

Source: themortgagereports.com

Data Reveals New Mortgage Lending Declining In South Africa

Third quarter 2018 new mortgage lending data from the South Africa Reserve Bank(SARB) showed a significant deterioration in year-on-year growth in the value of new mortgage loans granted compared to the previous quarter – the rate moving strongly into negative territory.

This increasingly suggests that the mortgage market ended 2018 and started 2019 on a very weak footing, said property strategist at FNB, John Loos.

The quarterly bulletin published by the Reserve Bank showed the value of new mortgage loans granted – residential, commercial and farms – to have declined at a year-on-year rate of -15.91% in the third quarter of 2018, down from +6.08% registered in the previous quarter.

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The large residential mortgage sub-component slowed into negative territory in the third quarter of 2018, decelerating from +7.45% year-on-year in the second quarter, to a -3.01% decline, FNB said.

However, the second major sub-sector, ie. the commercial mortgage loans segment, appears to have become the greatest “growth drag” in the mortgage lending sector, its year-on-year growth having dropped from a positive +3.17% year-on-year in the second quarter of 2018 to a negative -32.02%.

Viewing new mortgage loans granted “by application”, ie. on existing buildings vs vacant land vs for new construction, the lender highlighted a recent slowdowns in all three applications.

Growth in mortgage loans granted for vacant land declined by -11.4% year-on-year in the third quarter.

“This category’s move into decline is probably one indication of a scaling back in the level of new building activity planned in the near term, reflective of a lack of demand growth for new space in a low growth economy, and rising vacancy rates in existing space,” said Loos.

“Also supporting our expectation that 2019 will be a very weak year for building space completions was a sharp year-on-year decline in the value of new mortgages granted for construction purposes, to the tune of -28.12%.”

New mortgage loans paid out also saw a third quarter growth deceleration, from a positive +4.38% year-on-year rate in the second quarter, to a negative -7.25% in the third quarter, beginning to follow the trend in new loans granted, FNB said.

The trend in the value of capital repayments, which would be driven significantly by loan settlement upon sale of a property, was also in the doldrums, with only slightly positive growth of +1.49% in the third quarter, said Loos.

Looking into 2019, the decline as at the third quarter of 2018 suggests that 2019 is likely starting off a low base, the weakness in new mortgage lending late last year reflecting what appears to have been a weaker economic growth year in 2018 compared to 2017.

Will new lending growth improve?

“Possibly later in the year, given that the base of which growth will comes at the end of 2018 looks to have been very low,” Loos said.

“But any year-on-year growth strengthening is expected to be mild, constrained by expectation of only limited real economic growth improvement from an estimated 0.7% in 2018 to 1.4% in 2019, growth that remains weak and not likely to meaningfully increase the demand for space.

“In addition, 2019 starts with weak business and consumer sentiment, concerns over future policy direction abundant and likely to persist until at least after the 2019 elections, and of course we go into 2019 having just had the first interest rate hike in the current cycle late in November last year.”


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