Mortgage Financing in 2010


Published on

What are the regulatory changes that will affect mortgage lending in 2010? How will the mortgage rates move and what are the loan production forecasts?

  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Mortgage Financing in 2010

  1. 1. Lending in 2010 Another roller-coaster year? Shashank Shekhar, MBA CEO – Arcus Lending
  2. 2. Shashank Shekhar <ul><li>9+ Years of lending experience </li></ul><ul><li>Featured on TV & Radio shows </li></ul><ul><li>Author of 2 books, co-authoring next book with Carole Rodoni </li></ul><ul><li>Author of Bay Area’s leading mortgage blog </li></ul><ul><li>Specialize in First Time Home Buyer and FHA Loans </li></ul>
  3. 3. Agenda <ul><li>Loan Limits </li></ul><ul><li>New Home Buyer Tax Credit </li></ul><ul><li>Mortgage Rates </li></ul><ul><li>GFE 2010 </li></ul><ul><li>FHA Changes </li></ul><ul><ul><li>Condo Approval </li></ul></ul><ul><ul><li>HVCC Implementation </li></ul></ul><ul><ul><li>2 nd appraisal requirements </li></ul></ul><ul><ul><li>Min Score/Downpayment? </li></ul></ul>
  4. 4. MBA Mortgage Finance Forecast 46 43 41 48 54 63 Refi share (%) 693 140 167 212 175 1247 Refinance 804 185 241 230 149 719 Purchase 1497 325 408 441 323 1966 Total 1-4 ($ bil) Total 2010 2010 Q4 2010 Q3 2010 Q2 2010 Q1 2009 Total
  5. 5. Loan Limits for 2010 <ul><li>One-Unit - $ 729,750 </li></ul><ul><li>Two-Unit - $ 934,200 </li></ul><ul><li>Three-Unit - $ 1,129,250 </li></ul><ul><li>Four-Unit - $ 1,403,400 </li></ul>
  6. 6. New & Improved Tax Credit <ul><li>$8000 for FTHB & $6500 for move up/down buyer </li></ul><ul><li>Max Purchase Price of $800,000 </li></ul><ul><li>Income Caps - $125,000 and $225,000 </li></ul><ul><li>Deadlines </li></ul><ul><ul><li>Contract Date : April 30 th </li></ul></ul><ul><ul><li>COE : June 30th </li></ul></ul>
  7. 7. Mortgage Rates <ul><li>Have gone up 43 bps in 4 weeks – Now at 5.14% </li></ul><ul><li>Fed plans to stop buying MBS in March 2010 </li></ul><ul><li>Rates could go up 25 bps – 50 bps overnight </li></ul><ul><li>How far are we from 6% - Not very! </li></ul>
  8. 8. GFE 2010 - Background <ul><li>In 2005, HUD conducted a series of roundtable discussions </li></ul><ul><li>2.5 years later, HUD published its proposed RESPA rule in March, 2008. HUD received approx. 12,000 public comments. </li></ul><ul><li>New GFE went into effect on 01/01/2010 </li></ul><ul><li>Goal was greater clarity and transparency </li></ul><ul><li>HUD’s timing for a new rule could not have been worse </li></ul>
  9. 9. GFE Particulars <ul><li>Must be provided to Borrower within 3 business days of application </li></ul><ul><li>Quotes good for 10 business days, unless “Changed Circumstances” </li></ul><ul><li>Lender may not charge Borrower for preparation of the GFE </li></ul>
  10. 10. Delivery of the GFE <ul><li>The initial GFE distributed by any loan originator in a transaction becomes the binding GFE </li></ul><ul><li>Lenders will be accountable for mortgage broker’s GFE </li></ul><ul><li>If lenders prefer to generate the GFE, they must do so within 3 days of the broker’s application date </li></ul>
  11. 11. Changed Circumstances <ul><li>Only those fees can change that are impacted by the changed circumstances </li></ul><ul><ul><li>Loan terms or conditions change </li></ul></ul><ul><ul><li>Property Value Changes </li></ul></ul><ul><ul><li>Borrower changes the deal </li></ul></ul><ul><li>New GFE </li></ul><ul><ul><li>Within 3 business days of change </li></ul></ul><ul><ul><li>10 day shopping period starts over </li></ul></ul><ul><ul><li>Borrower can waive </li></ul></ul>
  12. 12. Good Things about the new GFE <ul><li>All origination charges lumped together </li></ul><ul><li>Is more detailed & Explains all the fees </li></ul><ul><li>Tradeoff Table </li></ul><ul><li>Gives a snapshot of loan with important dates </li></ul><ul><li>Easier comparing of loan offers (closing cost missing as a factor) </li></ul>
  13. 13. And Not So Good Things <ul><li>Cash to Close missing </li></ul><ul><li>Charges typically paid by the buyer have to be listed, even if the seller pays them </li></ul><ul><li>At least 1 provider per service required even if the lender permits borrower to shop </li></ul><ul><li>What happens if you exceed tolerances? </li></ul><ul><li>No signature </li></ul><ul><li>3 Pages from 1 </li></ul>
  14. 14. FHA Changes - Background <ul><li>Supplementary reserves fell below mandatory 2% of the loans it insures. </li></ul><ul><li>The extra capital cushion last year was about 3%, down from 6.4% in 2007. </li></ul><ul><li>Higher claims because of more defaults. </li></ul><ul><li>7.8% of the single-family mortgages 90 days or more overdue, up from 6.6% a year earlier. </li></ul>
  15. 15. FHA Condo Changes <ul><li>Spot approvals to be eliminated on Feb 1 st </li></ul><ul><li>50% Owner Occupied requirements </li></ul><ul><li><15% of the owners can be delinquent on HOA dues </li></ul><ul><li>Reserve study for capital expenditure and maintenance </li></ul><ul><li>Did I say – 90 days escrows? </li></ul>
  16. 16. Other FHA Changes <ul><li>HVCC Implementation on 2/15 </li></ul><ul><li>2 nd appraisal requirement waived </li></ul><ul><li>FHA Loan after a Short-Sale – 3 year waiting period </li></ul><ul><li>Min Credit Score – May go up to 640 from current 620 </li></ul><ul><li>Downpayment – Will it go up to 5% from 3.5%? </li></ul>
  17. 17. Underwriting Guidelines <ul><li>Better Portfolio vs Lending More </li></ul><ul><li>If Housing Prices stabilize </li></ul><ul><ul><li>Mortgage Insurance requirements could get easier </li></ul></ul><ul><ul><li>Down payment requirement could be reduced </li></ul></ul><ul><ul><li>Credit Score at the top end could be reduced </li></ul></ul>
  18. 18. Let’s connect <ul><li>Shashank Shekhar </li></ul><ul><li>Broker/CEO – Arcus Lending </li></ul><ul><li>[email_address] </li></ul><ul><li>Phone: 408.905.6261 </li></ul><ul><li>Blog: </li></ul><ul><li> </li></ul><ul><li>Twitter: @ShashankTweets </li></ul>