Boston Area Mortgage Lenders Receive Grace Period

The House of Representatives recently voted to pass a bipartisan bill to provide a “hold harmless” grace period for Boston area mortgage lenders for the implementation of the Consumer Financial Protection Bureau’s (CFPB’s) TILA-RESPA Integrated Disclosure (TRID) Rule. The new rule went into effect October 3rd.

Boston area mortgage lenders are receiving a grace period on the disclosure rules that went into effect October 3rd.

“Good Faith” From Boston Area Mortgage Lenders

Extending the grace period until February 1, 2016, the Homebuyers Assistance Act ensures mortgage lenders protection from compliance enforcement if they exhibit a food faith effort to adhere to the TRID rules and regulations.

Although the Homebuyers Assistance Act passed win the House Financial Services Committee the White House tried to veto it. Issuing a statement, the White House wrote “The Administration strongly opposes (the Act,) as it would unnecessarily delay implementation of important consumer protections designed to eradicate opaque lending practices that contribute to risky mortgages…”

House leaders commend the bill as a means of facilitating lenders’ ability to provide financing for prospective home owners. One House member said, “There is no reason that CFPB regulations should prevent homebuyers from being able to buy and close on a home.” Other leaders echoed those sentiments by acknowledging the bill would assist Boston area mortgage lenders in avoiding loan closing delays or difficulties — calling them “bureaucratic delays” that should not add to the stress off buying a home.

The move comes as an answer to many mortgage lenders’ requests for additional time to ensure full compliance with the new rules and regulations required by TRID. Allowing a formal hold-harmless period while Boston area mortgage lenders can, in good faith comply with the requirements, will result in minimal impact on consumers and their residential home mortgage loan closings.

The sponsor of the bill, Rep. French Hill (R-Arkansas) noted the legislation was brought about to allow for more clarity on the CFPB’s TRID rule and that “the stories he and his colleagues have heard regarding efforts to comply, and lingering uncertainty on several aspects of the rule.” Extending a grace period will help guarantee access to mortgage credit by enabling Boston area mortgage lenders the opportunity to prepare for full compliance without fear of penalty.

In addition to the recent House action, the Federal Housing Administration (FHA) recently joined the CFPB, Fannie Mae and Freddie Mac in establishing a grace period for the enforcement of the TRID Rule. Unlike the open-ended grace period granted by Fannie Mae and Freddie Mac, the FHA’s grace period expires on April 16, 2016. All three agencies specifically warned the grace period should not be utilized as an excuse by Boston area mortgage lenders or others to ignore the CFPB’s new regulations.

With the actions of Fannie Mae, Freddie Mac and the FHA, an effort is now in process in Congress to finalize a formal grace period for TRID enforcement by the CFPB.

See more articles pertaining to rules Boston area mortgage lenders must adhere to in the Boston Mortgage Info section of our site below Boston Real Estate Categories in the column to your right. Remember, we also post tips daily on Twitter and Facebook, sometimes dealing with mortgage news and factors affecting the mortgage market. Check us out there, too.

Boston Area Mortgage Rules-No More Pay Stubs?

Boston area mortgage rules may be about to take a big change, and the jury is still out as to whether it could be bad for the mortgage industry in the long haul.

If changes announced recently by Fannie Mae catch on, the process of having to fork over your pay stubs could go the way of 8-track tapes and cassettes.

Boston area mortgage rules could be changing like the way we listen to our music has changed

Need a Boston area Mortgage – Fannie Says Forget the Pay Stubs

Fannie Mae announced recently that it would allow lenders to use employment and income information from a database operated by credit bureau Equifax to verify borrowers’ creditworthiness rather than requiring lenders to rely on collecting physical copies of pay stubs and tax data, which has been the time-honored tradition when trying to buy a home.

Other Boston area mortgage rules may also be changing with the intent of broadening mortgage access for some borrowers. Fannie said it will ease the lender process for granting loans to borrowers who don’t have a credit score. Later in mid-2016 Fannie Mae will also require lenders to begin collecting “trended” credit data from Equifax and TransUnion, which includes longer-term borrower credit histories.

The extra information will help Fannie see if borrowers are paying off their credit card bill every month or just making the minimum payment or if they’re letting balances rise. Borrowers who are making the full payment could see perks then.

Some minority groups have had a hard time obtaining loans in recent years, in part because those groups also tend to have lower incomes or less money for a down payment but also because they sometimes don’t have traditional credit histories. The new Boston area mortgage rules are designed to hopefully change all this.

Advocates and industry groups have been pushing the Federal Housing Finance Agency, which regulates Fannie and Freddie, to allow the companies to use alternative credit-score models that take into account utility or rent payments for potential borrowers who may not have a credit score. Borrowers who have a traditional score calculated by Fair Isaac will still need to meet the 620 minimum, on a scale of 300 to 850.

Stay tuned, we’ll keep you up to date on these potential new Boston area mortgage rules and how they may affect the Boston area home buying market.

Boston Area Mortgage Market: ARMs Popular Again?

Once upon a time in the Boston area mortgage market, “adjustable rate mortgages” (ARMs) was a phrase that was shunned. During the Great Recession of just a few short years ago, many consumers experienced their mortgage payments spike to levels of unaffordability. Sadly, some of those homeowners fell victim to foreclosure. But what about now?

The Boston area mortgage market is seeing a potential return in popularity of adjustable rate mortgages (ARMs.)

The Boston Area Mortgage Arena: Are ARMs Making a Comeback?

Some mortgage industry experts say that adjustable rate mortgages are returning to popularity among some borrowers who consider them as a potential way to save money and more easily qualify for a mortgage loan. The Wall Street Journal recently reported that in 2013 roughly 22% of all mortgage amounts between $417,000 and $1 million were ARMs. In 2014 the percentage increased to 31% and appears to be climbing.

In the Boston area mortgage landscape it appears that most borrowers interested in adjustable rate mortgages plan to be in their home for a relatively short time period. And, if their employers transfer employees every few years, for example, an ARM may be a better fit than a traditional fixed rate mortgage. Consider this: a 30-year fixed rate mortgage may be higher than a five year ARM at a lower rate, saving the homeowner a considerable amount of money during those five years.

In addition, Boston area mortgage lenders have improved their ARM products through “hybrid” loans that can offer important features to some borrowers. Not only can borrowers save money during the first five years until their first rate adjustment, if there is one, but the adjustments are limited to how much the rate can increase.

For borrowers that have the financial wherewithal to take necessary action if their rate rises, ARMs may be a preference. However, some Boston area mortgage lenders caution average homeowners and recommend against getting “backed into a corner” with an ARM in which they have no control over a rise in interest rates. They also warn that the simple answer of refinancing if the rate increases is somewhat risky. Conventional rates may have also risen by that time and, of course, there are always closing costs associated with refinances.

So, ARMs may be worth a second look depending on your particular employment situation and risk tolerance. As usual, there’s not a “one size fits all” Boston area mortgage.

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HMDA Data Helps Boston Area Mortgage Market

In addition to other favorable signs, the Boston area mortgage market is expected to be one of the positive features in the recovery of the housing market. Experts say Home Mortgage Disclosure Act (HMDA) information indicates the housing improvement continues.

Continued Improvement in Boston Area Mortgage Market Expected

The Boston area mortgage market has received revised projections by the Home Mortgage Disclosure Act.

Because of the data trends, lending projections are expected to rise. And that could be even better for the real estate economy as it may stem any expected interest rate hikes by the Federal Reserve for awhile.

Mortgage lending dropped 27% last year to slightly over $1.25 trillion, but many economists had projected decreases of 40% compared to the previous year. The improvement was fueled in part by a larger percentage of purchases versus refinances at 51% compared to 49%. The trend has continued into this year, as well.

Refinances have increased to higher than expected levels as lower interest rates have held steady. Boston area mortgage market insiders say the refinancing spike is also due to the Federal Reserve’s recent hints at what was originally expected to be a slight increase in the federal funds rate.

The Mortgage Bankers Association has also improved its earlier forecast regarding loan originations, expecting them to rise 23%, citing a 25% spike in home purchases totaling more than $800 billion.

The resulting economy has given mortgage lenders a renewed optimism. A combination of lower down payment requirements that appeal to first-time homebuyers, and low interest rates for those seeking to refinance are reasons for the improvement in the Boston area mortgage market.

The HMDA information is compiled from reports from more than 7,000 lending institutions throughout the country. The data is utilized by state and federal compliance officials and bank regulators to — among other things — ensure that lenders make mortgages available to people living in minority neighborhoods.

Because the mortgage market can be volatile, economists and industry experts have historically projected conservative numbers. This is due in no small measure to interest rate fluctuations and the lag time inherent in obtaining disseminating public records data. Some lenders say that lag time can often be as long as nine months.

The improvement that’s been on the Boston area mortgage market horizon, however, isn’t universally expected to continue. Some industry experts say stagnant wage growth and higher home prices causing the current seller’s market will dissuade some buyers in premium-priced markets.

As one real estate economist put it, perhaps the real value of the HMDA data will be to reinforce the feeling that the market is sustainable and the “Chicken Little” concept of “the sky is falling” is not the current market condition.

For more articles pertaining to the Boston area mortgage market, check out other articles in the Boston Mortgage Info section of our site below our Boston Real Estate Categories in the column to your right. Remember, we also post tips daily on Twitter and Facebook. Check us out there too.

Delinquent Boston Area Mortgages Continue to Fall

The number of delinquent Boston area mortgages continues to fall, but the foreclosure crisis is still taking its toll on thousands of borrowers locally, and hundreds of thousands nationwide.

Nationally, of the approximately 952,000 borrowers who are 90 or more days past due on their monthly payments but not yet in foreclosure, 62 percent have already been through some form of home retention program, according to Black Knight Financial Services. They are, it seems, beyond help. Home retention programs were established by lenders and the government to work with borrowers to enable them to keep their homes.

In 2010, homeowners on average could have received a $530 monthly payment reduction. That has dropped to a $450 range today. Larger payments are now looming for many people who participated in federal mortgage relief programs and for many who took out home equity lines of credit before the housing crisis.

Banks are getting more aggressive with delinquent Boston area mortgages

Banks More Aggressive With Delinquent Boston Area Mortgages

Banks are getting more aggressive in pushing delinquent Boston area mortgages through the foreclosure process, rather than offering more modifications. As home prices rise and demand surges, banks can sell the homes more easily in today’s market than they could during the height of the foreclosure crisis. Retention actions are down 42 percent over past two years, but of the new modifications or payment plans, 70 percent have already been through one or even more modifications that failed.

Banks are also favoring short sales more, rather than taking the home to final foreclosure and selling it. A short sale is when the bank allows the home to be sold for less than the value of the mortgage.

The ongoing shift away from final foreclosure sales is a driver of improving home prices since bank-owned properties typically sell at a larger discount than short sales. Distressed homes accounted for 12 percent of March home sales, down from 39 percent at the peak of the foreclosure crisis.

Although the number of both delinquent Boston area mortgages and those in active foreclosure is down dramatically, they are still two and three times their precrisis norms, respectively,

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