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Published by the National Association of Realtors magazine, 11/18/2019
Overall, mortgage borrowers were a bit less satisfied with the lending process this year, which J.D. Power attributes, in part, to an increase in technology and less customer service.
NEW YORK – Customers were slightly less satisfied with mortgage originators in the second quarter, and too much technology may be the culprit, according to the latest J.D. Power 2019 U.S. Primary Mortgage Origination Satisfaction Study. The study said lenders have added self-service technology to the mortgage process while trimming customer-facing staff, but too much tech may fall short of customers’ expectations for service.
“It is critical that originators get the balance right between tech and staffing to be able to deal with the swings in loan volume that can dramatically change from month to month,” says John Cabell, director of wealth and lending intelligence at J.D. Power.
Researchers found that a bulk of the loan origination process is managed manually via email and phone, despite the industry’s push toward self-service tools and mobile apps. In fact, only 15% of customers surveyed said they used their mortgage originator’s mobile app. Overall, customer satisfaction scores tended to be higher when they had access to their loan’s real-time status via an online portal.
Overall, Quicken Loans ranked highest in J.D. Power’s mortgage origination satisfaction for the 10th consecutive year. Fairway Independent and Guild Mortgage Company followed at second and third, respectively, on the list.
*Navy Federal CU, USAA, and Veterans United are profiled but not rank-eligible because they do not meet the study award criteria.
J.D. Power’s 2019 U.S. Primary Mortgage Origination Satisfaction Study measures customer satisfaction based on the following performance factors: application/approval process; communication; loan closing; and loan offerings. The study is based on responses from 4,602 customers who originated a new mortgage or refinanced over the past 12 months.
COVID-19: FHFA Reminds Lenders About Owner Forbearance
Homeowners unable to work during the pandemic may have trouble making their mortgage payments, but FHA, Fannie and Freddie have ways to offer them help.
Definition of Forbearance; Forbearance, in the context of a mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is “holding back.” When mortgage borrowers are unable to meet their repayment terms, lenders may opt to foreclose.
CHICAGO – Not everyone can work from home, and borrowers who find that they can’t make monthly mortgage payments due to COVID-19, also known as the coronavirus, have options to postpone payments, according to a statement released by the Federal Housing Finance Agency (FHFA).
FHFA Director Mark Calabria reminded mortgage servicers this week that they have forbearance options to offer homeowners as the virus continues its spread through the U.S.
“To meet the needs of borrowers who may be impacted by the coronavirus, last week Fannie Mae and Freddie Mac reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment,” Calabria said in a statement. “For borrowers that may be experiencing a hardship, I encourage you to reach out to your servicer.”
The Federal Housing Administration (FHA) also announced that mortgage payment assistance is available to those impacted by the virus.
“As with any other event that negatively impacts a borrower’s ability to pay their monthly mortgage payment, FHA’s suite of loss mitigation options provides solutions that mortgagees should offer to distressed borrowers – including those that could be impacted by the coronavirus – to help prevent them from going into foreclosure,” FHA said in a statement.
Forbearance options are available not only to those sick from the virus but also owners who may be facing a temporary hardship from it, such as a borrower who is quarantined and unable to work.
The majority of this article is from Inman Headlines.
Realtor.com Chief Economist Danielle Hale believes mortgage rates could go lower this week, but rates and affordability won’t be the only thing impacting the housing market
Photo furnished by Nocatee to Certified Nocatee Realtors
The U.S. Federal Reserve called for an emergency interest rate cut of 25 basis points to a range of 0-0.25 percent and $500 billion round of quantitative easing — including the purchase of $200 billion in mortgage-backed securities.
“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability,” the U.S. Federal Reserve’s Open Market Committee said in a statement. “The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook.”
“In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 0.25 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
“It’s also important to note that a federal funds rate near 0 percent does not dictate a further drop in mortgage rates,” Gonzalez said. “As the perceived risk toward people’s ability to pay increases, we will see the spread between the 10-year Treasury and the 30-year mortgage increase.”
“Meaning that we could see 10-year Treasury rates go down, and mortgage rates go up. The link direct tracking between the two can break when things start to look riskier.”
Danielle Hale, the chief economist at realtor.com, believes the Fed’s move could bring mortgage rates back down to the historic lows they were two weeks ago.
“Lower rates will sustain the higher demand for refinances and may entice home buyers out to shop as well,” Hale said. “By acting swiftly to tamp rates down and pledging ongoing support, the Fed may have ‘flattened the curve’ in the housing market — diminishing some of the urgency households may have felt to buy or refinance now less they miss out and keeping demand strong further into the future.”
Mortgage rates and home affordability, however, aren’t the only challenges the market faces, according to Hale.
“A lack of options continues to be the main hurdle for buyers, and the ongoing and developing economic disruptions seem likely to slow down the supply of new homes, a disappointment after their bright start to the year,” Hale said.
In addition to lowering rates, the Fed engaged in a $500 billion round of quantitive easing, which Gonzalez explained is the Federal Reserve outright purchasing assets it doesn’t traditionally buy to pump liquidity into the market. In this case, it was mortgage-backed securities and treasuries of longer maturities.
“We need liquidity in the [mortgage-backed securities] market especially,” Gonzalez said. “If those markets break like they did in 2008 then lending will grind to a halt as will home sales.”
“We should be standing on much sturdier ground in terms of the kind of loans, mortgage-backed securities structures and lending practices,” Gonzalez said. “We are also in a situation where home prices are remaining stable.”
With rates essentially hitting zero, Gonzalez explained that the primary level left to fix the economy is fiscal policy — meaning direct spending enacted by the U.S. Congress, like the paid family leave and paid sick leave bill passed by the U.S. House of Representatives.
“We may also see some general stimulus to encourage spending by everyone once we have addressed the most critically impacted people and businesses,” Gonzalez said. “Hopefully, we see something to help small businesses that may face severe challenges created by the social distancing required to combat the spread of the disease.”
Monetary policy isn’t a quick tool, according to Hale, so it will be some time before the country knows whether this was sufficient action to sustain economic growth.
“It’s a large and coordinated move that will put households, the housing market, businesses, and the financial sector on better footing,” Hale said.
The immediate response from public markets was negative, with the Dow Jones dropping roughly 2,300 points or 10 percent in the first half-hour of trading Monday. The S&P 500 Index also dropped 9 percent as markets opened, triggering the first circuit breaker and a 15-minute halt in trading, less than a minute after markets opened.
Cautionary measures are discretionary however please take serious.
I share this with my readers because the challenges facing all of us and how we conduct business is essential in so many ways, it’s important the public understands our positions and you as buyers and sellers positions.
In response to the growing concerns about COVID-19, commonly referred to as coronavirus, NAR is providing this guidance to help REALTORS® respond to the coronavirus’s potential impact on the real estate industry. As of March 4, 2020, the U.S. Centers for Disease Control and Prevention (CDC) has issued Level 3 Travel Warnings for all of China, South Korea, Italy, and Iran, and a Level 2 Travel Warning for Japan. However, the situation is rapidly evolving. Be sure to refer to the CDC’s website for up-to-date information about travel warnings (link is external), as well as information about the coronavirus’ current impact in the United States (link is external). Daily updates about the coronavirus are also available from the World Health Organization (link is external).
What is Coronavirus?
The CDC is responding to an outbreak of a respiratory illness caused by a novel coronavirus outbreak. While the outbreak started in Wuhan, China, a growing number of cases have been identified in several other countries, including the United States.
What is the risk of exposure to coronavirus?
The CDC reports that most people in the United States do not have an immediate risk of exposure to the virus. However, the situation is rapidly evolving, and the CDC will update its risk assessment as needed. Visit the CDC’s website (link is external) for latest updates.
What preventative measures may be taken to reduce the risk of contracting and spreading coronavirus?
The same preventative measures recommended to prevent influenza are also effective in reducing the risk of contracting or spreading coronavirus. These measures include:
Staying home if you have a fever, cough, shortness of breath or any other cold or flu-like symptom.
Washing your hands frequently with soap and water for at least 20 seconds. If soap and water aren’t available, use an alcohol-based hand sanitizer.
Avoiding touching your eyes, nose, and mouth with unwashed hands.
Avoiding close contact with anyone who is sick.
Cleaning and disinfecting frequently touched objects and surfaces.
Covering your mouth and nose with a tissue when you cough or sneeze, or cough or sneeze into your sleeve.
What unique issues does coronavirus present to the real estate industry?
When an infectious disease, such as coronavirus, is associated with a specific population or nationality, fear and anxiety may lead to social stigma and potential discrimination. REALTORS® must be mindful of their obligations under the Fair Housing Act, and be sure not to discriminate against any particular segment of the population. While the coronavirus outbreak began in Wuhan, China, that does not provide a basis for treating Chinese persons or persons of Asian descent differently.
May we ask clients or others we interact with in our daily real estate business if they have traveled recently, or have any signs of respiratory illness?
Yes, you may ask clients or others about their recent travel, particularly to areas identified as having an increased risk of coronavirus. To avoid potential fair housing issues, be sure to ask all clients the same screening questions based on current, factual information from public health authorities.
We typically drive clients to showings. May we refuse to drive potential clients to see homes?
Yes. However, be sure that any change to your business practices is applied equally to all clients. You may refuse to drive clients who show signs of illness or reveal recent travel to areas of increased risk of coronavirus, or you may instead decide to stop driving clients in your car altogether, and simply arrange to meet clients at a property. If you do continue to drive clients in your car, it is a good idea to frequently clean and disinfect surfaces like door handles and seat belt latches, and to ask clients to use hand sanitizer when getting in and out of the car.
Should we still conduct open houses for our listed properties?
Speak openly and honestly with your seller about the pros and cons of holding an open house. Assess the risk based on your specific location, and direct your clients to local and state health authorities for specific information about the severity of the risk in your area. We suggest for propose alternative marketing opportunities for your seller’s consideration, such as video tours “These are standard in my marketing materials, and other methods to virtually tour a property.” If its strongly suggested by our sellers to hold an open house, consider requiring all visitors to disinfect their hands upon entering the home, and provide alcohol-based hand sanitizers at the entryway, as well as soap and disposable towels in bathrooms. If you decide to do any cleaning at the home, be sure to check with your client in advance about any products you plan to use. After the open house, recommend that your client clean and disinfect their home, especially commonly touched areas like doorknobs and faucet handles.
As a long time experienced Realtor, and held in high recognition for my professional performance and sales abilities, I felt this is at the very least challenges we must share with our buyers and sellers so they understand the potential risks we all are obligated to perform and share with each other.
My prayers are with all of us! May a meaningful and successful end to this Pandemic virus come quickly and successfully for the entire world sooner than later.
How many times have we explored this option? All those solicitors, yikes! All those deals soliciting you to refinance your mortgage at today’s low interest rates may sound great, but when you really dig into the numbers, that’s often not the case. Here’s why…….
“Consolidate your credit card debt into one low monthly payment!” “Refinance and take advantage of today’s low rates!”
Homeowners are constantly bombarded with refinance and debt consolidation offers because it’s a great deal for lenders. In most cases, it’s a very costly deal for homeowners.
The real cost of credit is much greater than most people realize. According to MarketWatch.com if you’re carrying $2,000 of debt on a credit card at 18 percent (and some cards are as high as 28 percent,) it will take you 370 months (nearly 31 years) to pay off that debt. In addition to the $2,000 of charges you made, the amount of interest you will pay is $4,931. Does it really make sense to be paying for your Starbucks and pizza for over 30 years?
Refinancing and consolidating credit card debt can be a smart idea, but …
When homeowners need money to remodel their home, to pay off credit card debt, or to use for unexpected medical bills, it’s tempting to borrow against the equity in their home. The question is whether it’s smart to refinance your existing first mortgage to do so. In almost all cases, the answer is “no!”
Why lenders love it when you refinance your first mortgage
Did you know that during the first 10 years of a 30-year fully amortized mortgage, that you pay close to 50 percent of the entire interest due on the loan? If you go ahead and refinance your mortgage, you’re going to be going through that whole process again — this is why refinancing your mortgage is a better deal for lenders than for the borrowers.
A case study: How the numbers stack up
Assume that you purchased your current home in March 2010 for $250,000 and obtained a fully amortized 30-year $200,000 mortgage at five percent interest. The total interest due over the life of your loan is $186,512.
As of March 2020, you will have already paid $91,521 of the interest due on this loan — that’s 49 percent of the total interest in only 10 years!
Assume that you now need $37,000 to consolidate your credit card debt, and you have no plans to ever sell your home. Your choices are to:
Roll your current loan balance of $163,000 and the $37,000 you need to pay off your credit card debt into a $200,000 refinance at a lower interest rate.
Leave your existing $163,000 first mortgage in place and obtain a home equity loan for $37,000.
Option 1: Obtain a new 30-year, fully amortized loan of $200,000 at 3.5 percent interest and you stay in your home until March 2040 when the loan is paid in full.
Over the life of your new first mortgage, you will pay $123,312.18 in interest.
When you refinance your existing mortgage, you will have already paid $91,521 in interest on that loan.
Total interest paid: $214,833.
Option 2: Home equity loan
You leave your existing mortgage in place and obtain a home equity loan of $37,000 at five percent, fully amortized for 10 years.
You will pay $10,093 in additional interest for the home equity loan.
You will have also paid $186,512 in total interest from your existing mortgage.
Total interest paid: $196,605.
Savings with the home equity loan vs. refinance of your current first mortgage: $18,228
You can play around the numbers to fit your own scenario using any online mortgage amortization schedule calculator, but you get the idea. Really dig into the numbers, think about when you might move in the future, how much that move might cost or save you, and then figure out what makes the most sense for you.
(There’s an excellent article from The Mortgage Reports that discusses other options besides home equity loans and compares the costs of those other options.)
Key takeaways
First and foremost, get your credit card spending under control. If you’re making minimum payments on your card each month, is that pair of shoes, pizza dinner, or other purchase worth paying up to five times what the cost of the item or service is?
Pay cash or use your debit card. Only use your credit cards for emergencies or if you have enough money to pay off your charges at the end of the month.
Avoid paying off your first mortgage unless you have a very compelling reason to do so. In most cases, it’s simply not worth it.
Because individual financial situations and creditworthiness vary dramatically, review your situation with a financial planner or CPA before deciding which options will work best for you.
A great deal of my material comes from Inman Headlines, National Association of Realtors, and Florida Association of Realtors.
The Federal Reserve issued an emergency rate cut on Tuesday amid growing fears over a U.S. outbreak of the COVID-19 disease. The 10-year Treasury note, which mortgage rates follow, plunged to a record low last week. Mortgage rates are already hovering at 2016 lows, but some financial experts say rates should be much lower.
Last week, Freddie Mac reported the 30-year fixed-rate mortgage averaged 3.45%, down from 4.35% a year earlier.
Mortgage rates are trending down, but they aren’t as low as the 10-year Treasury indicates, Bankrate reports. Factoring in 10-year Treasury rates, mortgage rates should be averaging around 3.2% or 3.1%, Lawrence Yun, chief economist for the National Association of REALTORS® told Bankrate.com.
“There are a few possible reasons rates aren’t lower,” Yun explains. “Lenders might think this is a good profit opportunity, assuming borrowers don’t care about a few basis points. Another reason would be for lenders to close the gates on customers as more people want to refinance and they don’t have the resources to manage an influx of new loans. And the third possible reason is the future of Fannie and Freddie’s government guarantee.”
Other financial experts also suggest the larger spread between the 10-year Treasury and mortgage rates is that lenders could be fearing that an outbreak of the disease could lead to a slowdown in the world economy or make mortgage-backed securities riskier (if more people then become late on paying their mortgage or default).
Nevertheless, “the fear gripping markets is driving bond yields sharply lower, with mortgage rates dropping, though not in lockstep,” says Greg McBride, Bankrate’s chief financial analyst. “Home buyers and those looking to refinance will find this an opportune time to lock in a rate at one of the lowest levels we’ve ever seen.”
The stock market plummeted last week at a historic rate before rebounding Monday
The U.S. Federal Reserve announced Tuesday an emergency interest rate cut, lowering the target range for federal funds by 50 basis points to a range of 1-1.25 percent. The move comes amid global market uncertainty surrounding the spread of the Coronavirus.
“The fundamentals of the U.S. economy remain strong,” the U.S. Federal Reserve’s open market committee said in a statement. “However, the coronavirus poses evolving risks to economic activity.”
“The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy,” the statement continues.
The rate cut is the biggest since 2008, In the statement, the Fed said its stated goal is to achieve maximum employment and price stability goals, so the rate cut could provide the U.S. markets a shot in the arm amid recent struggles. It’s the fourth rate cut since the start of 2019.
The Dow Jones began the morning falling but rose sharply after the rate cut was announced. Real estate stocks were mostly level at 10:45 a.m., with Realogy up about 4 percent, Zillow down about 2 percent, RE/MAX up slightly less than 1 percent and eXp Realty up slightly less than 1 percent.
Danielle Hale, realtor.com’s chief economist, believes the move means we could see a new record low for mortgage rates.
Lending tree is offering 2.86% for a 15 yr fixed rate
“The surprise rate cut, the largest since December 2008, is a strong move by the Fed to shore up economic activity even though most economic data has not yet shown major slowing,” Hale said. “With last week’s mortgage rates hovering just 14 basis points above all-time lows even before the large Fed rate cut, a new low in mortgage rates seems almost inevitable.”
Historically low mortgage rates will likely drive mortgage refinance activity and could increase homebuyer activity — altough there could be fears about home shopping to avoid contact with others, which could dampen sales.
“Additionally, mortgage rates and affordability are not the biggest challenge in today’s housing market,” Hale added. “A lack of options continues to be the largest hurdle. If sick-days impede construction work or builder-supply chains, slowing down the supply of new homes, this could dampen home sales, too.”
Source from Patrick Kearns, Staff Writer for Inman Headlines.
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