0
0
0

The Predictions Issue: 2014

by Doug Pitorak

Lending

Somewhat good news comes from the Sarasota Herald-Tribune. A recent report claimed that Florida’s foreclosure courts made progress on the backlog, resulting in the lowest number of pending defaults since the start of the housing crisis. The report said, however, that more than 250,000 cases still exist.

Freddie Mac’s most recent Primary Mortgage Market Survey, released Dec. 5, found that mortgage rates on 30-year fixed rate mortgages increased to 4.46 percent for the week ending Dec. 5 from 4.29 percent the prior week. The figure is up from the 3.34 percent reported a year earlier. Rates on 15-year fixed-rate mortgages increased, as well.

These reports suggest the number of foreclosures in Florida is slowly dipping and mortgage rates are slightly increasing. But what does a Miami area lending professional see?

John Loyacono, Vice President, Home Loans Manager, Plantation

 What’s going on with foreclosures/short sales, and what will happen in 2014?

While foreclosures and short sales remain in the market, the number of REO properties is sharply declining. According to recent data, the number of foreclosure filings in October was 28 percent lower than the same time last year.

In Miami, the same data showed that there were 7 percent fewer properties in some stage of foreclosure. With the foreclosure crisis largely in the rearview mirror, the purchase market offers great opportunities – and we have directed our focus to work more directly with customers, sharing information, resources, tools, products and services.

As part of our planning for today’s more purchase-focused market environment, we segmented our operations to allow our people to better focus on purchase loans and the special needs that purchase customers have. We also have product experts focused on certain loan types, for example FHA or jumbo loans.

What’s going on with appraisals/what will happen in 2014?

The most significant standards in the regulatory environment have come from the Consumer Financial Protection Bureau. It finalized several rules impacting the mortgage market that are effective in 2014, including certain guidelines regarding appraisals that become effective on loan applications received on or after Jan. 18.

The Dodd Frank Act requires lenders to promptly send loan applicants a free copy of an appraisal and all other written valuations after valuations are completed. This requirement applies whether the loan application is completed, denied or withdrawn. Within three days of receiving a loan application, lenders must tell consumers they will promptly receive a copy of an appraisal; copies of appraisals or any other type of valuation must be free to consumers; and copies are to be provided no later than three days before loan closing.

What changes, if any, should agents be aware of when it comes to mortgages next year?

One of the most exciting things we’re seeing today is that people are regaining confidence and are buying homes again. Current market dynamics and trends continue to show promising signs of sustained recovery in the housing market, including rising home prices and improved sales compared to previous years. Bank of America has been preparing for this return to a more purchase-dominant market for some time now.

Agents can help clients understand how changes in the industry and regulations will require major systems changes and education for everyone involved. For example, many of the rules regarding mortgage loan originations that were created by the Dodd-Frank Act are being implemented in January 2014.

As the compliance date nears, it is critical to understand the requirements around Qualified Mortgages (QM). New provisions align the Qualified Residential Mortgages (QRM) with the QM rule requiring lenders to underwrite home loans based on the borrower’s ability to repay the loan. Borrowers must provide income documentation that they can repay the loan, and that their debt-to-income ratio does not exceed 43 percent, among other requirements.

Read More Related to This Post

Join the conversation

New Subscribe

  • This field is for validation purposes and should be left unchanged.