1 in 5 mortgage borrowers regret their decision

COSTA MESA, Calif. – Nov. 10, 2016 – Overall satisfaction scores have increased year over year, but a high percentage of homebuyers still have regrets about their mortgage lender, according to the J.D. Power 2016 U.S. Primary Mortgage Origination Satisfaction Study.
The study found that 1 in 4 (21 percent) customers purchasing a home express have regrets about their lender, a claim voiced even more by first-time buyers (27 percent).
Among customers who regret their decision, there are two distinct situations:
Customers who have a poor experience. This group cites an above-average incidence of problems, lack of communication and unmet promises. While this group’s responses aren’t unexpected, they are often vocal about their displeasure, making an average of 9.0 negative comments compared with the study average of 0.7.

Satisfied customers who feel they made a decision too quickly. The second situation is more unexpected, according to survey authors. This group tends to be very price-focused and frequently obtains multiple quotes. However, on some level they feel the process itself was too complex, even though they were happy with the lender they finally chose.

Among customers who regret their lender selection, 72 percent say they were pressured to choose a particular mortgage product. Their final lender choice is often linked to financial reasons, such as getting a lower rate because they have a relationship with the firm (e.g., checking account with direct deposit).
“This ‘happy buyer’s remorse’ is in part due to customers feeling that circumstances out of their control drove them to a particular choice and that options weren’t totally clear,” says Craig Martin, director of the mortgage practice at J.D. Power. “Like a lot of consumers, they are happy with a good deal, but they can feel that they have to jump through hoops to get the deal. In the end, they may not fully understand exactly what they got, and the longer-term risk for lenders is that customers’ perceptions of the deal may change in the future.”
One potential contributing factor to this condition could be TRID (TILA RESPA Integrated Disclosure). Over the past two years, much of lenders’ attention has been focused on complying with and minimizing the negative effects of these new requirements, which became effective in October 2015. Lenders feared that the new requirements would extend an already lengthy process and negatively affect satisfaction.
While various sources have reported increases in the total number of days for the lending process, findings of the 2016 U.S. Primary Mortgage Origination Satisfaction Study show little change in the perceived speed of the process. Improved communication and setting expectations appropriately helped prevent negative perceptions.
“Whether it is a new regulation, shifting rates or new technology, lenders will continue to face challenges that require them to change,” Martin says.
Key findings
A higher percentage of customers this year said their loan representative always called back when promised, compared with last year (85% vs. 81%, respectively), and their loan closed on the desired date (81% vs. 79%)

Satisfaction is significantly higher among customers buying a home (840) than among those refinancing (821). In the 2014 and 2015 studies, the levels of satisfaction in these groups were nearly identical

Technology is becoming increasingly important, with 28% of customers saying they completed their detailed application online, up from 22% in 2015 and 18% in 2014

Top lenders by satisfaction
Quicken Loans ranks highest in primary mortgage origination satisfaction for a seventh consecutive year, with a score of 869. Quicken Loans performs particularly well in the application/approval process, interaction, loan closing, loan offerings and onboarding factors.

CitiMortgage moves up three positions from fifth in 2015 to second this year, with a score of 851. Ditech Financial, new to the study in 2016, ranks third with a score of 849.

Wells Fargo Home Mortgage (+52 points) and Nationstar Mortgage (+50 points) post the most significant year-over-year improvements in overall satisfaction.

Consumer advice
Plan ahead when researching mortgages. Satisfaction among customers who waited until they found a home to look for a mortgage is 92 points lower than among those who started before they began a home search.

Get more than one quote. Among the 32% of customers who received just one quote, overall satisfaction is 19 points lower than those who get multiple quotes. Satisfaction is 38 points lower among first-time buyers only getting one quote vs. those who get multiple quotes.

Choose a lender based on merits, not just price or affiliation. Customers who say they chose their lender primarily because of price/rate or based on a recommendation are significantly less satisfied than those whose choice is based on other reasons.

© 2016 Florida Realtors®

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Average 30-year mortgage rate rises to 3.57%

WASHINGTON (AP) – Nov. 10, 2016 – Long-term U.S. mortgage rates rose this week for a second straight week.

Mortgage giant Freddie Mac said Thursday the average for a 30-year fixed-rate mortgage increased to 3.57 percent from 3.54 percent last week. Rates remain near historically low levels, however. The benchmark 30-year rate is down from 3.98 percent a year ago. Its all-time low was 3.31 percent in November 2012.
The 15-year fixed-rate mortgage, popular with homeowners who are refinancing, rose to 2.88 percent from 2.84 percent.

The rates reflect the mortgage market in the week prior to Republican nominee Donald Trump’s election as president. On Wednesday, the day the result became known, bond prices fell sharply. That sent yields higher.

Long-term mortgage rates tend to track the yield on the 10-year Treasury note, which jumped to 2.06 percent from 1.80 percent a week earlier – exceeding 2 percent for the first time since January. Traders have been selling bonds more aggressively to hedge against the possibility that interest rates, which have been extremely low for years, could rise steadily under a Trump administration.

The sell-off in bonds continued Thursday morning, with the yield on the 10-year Treasury note rising to 2.12 percent.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year loan also held steady at 0.5 point.

Rates on adjustable five-year mortgages averaged 2.88 percent, up from 2.87 percent last week. The fee remained at 0.4 point.

AP Logo Copyright © 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

HUD charges Fla. landlord with discrimination

HUD charges Fla. landlord with discrimination
 

WASHINGTON – Nov. 10, 2016 – The U.S. Department of Housing and Urban Development (HUD) is charging landlords in South Florida with discrimination against tenants with disabilities. Rather than a tenant-based allegation, the charge reflects concerns about a visitor who travels with an emotional support animal.

HUD charged three entities in the Florida case: the owner of Hillcrest East Building No. 22, a multifamily development in Hollywood, Florida; the property’s management company, Rhodes Management; and a previous president of the homeowners’ association. The housing discrimination allegation claims they failed to make reasonable accommodations, published discriminatory notices and statements, and attempted to intimidate and retaliate against two family members who filed a housing discrimination complaint.

One individual lives at the subject property, and the other person, who has a disability, was allegedly prevented from visiting her cousin at the property because she requires the use of an emotional support animal.

HUD’s charge also alleges that the owners and managers discriminated against persons with disabilities by requiring personal and unnecessary medical information in order to grant reasonable accommodations, and by prohibiting emotional support animals and their owners from having access to the development.

The complete HUD charge is posted online.

The charge will be heard by a United States Administrative Law Judge. If the administrative law judge finds after a hearing that discrimination has occurred, he may award damages to the complainants to compensate them for the discrimination and may assess a civil penalty

The Fair Housing Act makes it unlawful to discriminate based on disability in the sale, rental, and financing of dwellings, and in other housing-related transactions, including refusing to make reasonable accommodations in rules, policies, practices, or services. In addition, Section 504 of the Rehabilitation Act of 1973 prohibits discrimination on the basis of disability by any program or activity receiving federal financial assistance

“Discrimination against people with disabilities continues to be the most common type of housing discrimination complaint we receive each year,” says Gustavo Velasquez, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “It’s unacceptable and the cases we’re announcing today reflect HUD’s commitment to making sure housing opportunities are available to every American, including those with disabilities.”
© 2016 Florida Realtors®
 

Fla.’s single-family home sales up 13.4% in Sept.

ORLANDO, Fla. – Oct. 22, 2015 – Florida’s housing sector continued its momentum with more sales, rising median prices and a tight inventory of homes for sale in September, according to the latest housing data released by Florida Realtors®. Closed sales of existing single-family homes statewide totaled 23,574 last month, up 13.4 percent over September 2014.
“Florida’s housing sector continues to show strength with more closed sales and an uptick in new listings,” says 2015 Florida Realtors President Andrew Barbar, a broker with Keller Williams Realty Services in Boca Raton. “September marked the 46th month that statewide median sales prices increased year-over-year for both single-family homes and townhouse-condo properties. Sellers received a higher percentage of their original list price, with single-family homes getting on average 94.3 percent and townhome-condos getting 93.2 percent on average. It also took less time to make the sale in September: a median of 46 days for single-family homes and 53 days for townhouse-condos.
“Sellers should take advantage of the strong market conditions with rising median prices, while would-be buyers can benefit from interest rates that currently remain at historically low levels and greater access to mortgage financing.”

The statewide median sales price for single-family existing homes last month was $199,900, up 11.1 percent from the previous year, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in August was $150,000, up 5.1 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors®(NAR), thenational median sales price for existing single-family homes in August 2015 was $230,200, up 5.1 percent from the previous yearthe national median existing condo price was $217,400.In California, the statewide median sales price for single-family existing homes in August was $493,420; in Massachusetts, it was $365,000; in Maryland, it was $270,956; and in New York, it was $252,500.

Looking at Florida’s townhouse-condo market, statewide closed sales rose last month with a total of 9,348, up 8.4 percent compared to September 2014. The closed sales data reflected fewer short sales in August: Short sales for townhouse-condo properties declined 43 percent while short sales for single-family homes dropped 36 percent. Closed sales typically occur 30 to 90 days after sales contracts are written.

“The Florida real estate market continues to hum along,” says Florida Realtors Chief Economist Dr. John Tuccillo. “We’re seeing increases in both sales and prices in virtually every metropolitan statistical area (MSA) and in both single-family homes and townhouses and condos. Inventory continues to decline and those declines have now reached homes at the $250,000 level.

“However, with pending sales down, mortgage accessibility increasing and interest rates due to rise, we think the market will even out as we go forward into 2016.”

Inventory continues to tighten, with a 4.4-months’ supply in September for single-family homes and a 5.2-months’ supply for townhouse-condo properties, according to Florida Realtors. Most analysts consider a 6-month supply of inventory as the benchmark for a balanced market between buyers and sellers.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.89 percent in September 2015, down from the 4.16 percent average recorded during the same month a year earlier.

To see the full statewide housing activity reports, go to Florida Realtors’ website under “Research.” Association members (login required) also have access to local data specific to their market.  

More buyers qualify for subprime loans

NEW YORK – Oct. 22, 2015 – “Subprime.” The word holds dramatically different meanings.
Before the housing crisis, the term generally referred to mortgages made to borrowers who didn’t have to prove much – if anything – about their income or financial stability.

Now, the “subprime” mortgages, which the credit bureau Equifax recently reported increased 30.5 percent in the first five months of 2015 from the same period a year earlier, are simply defined as loans to borrowers with a credit score below 620 (the FICO score used in mortgage lending ranges from 300 to 850).

Even though the number of subprime loans jumped by about one-third, they represent just a tiny slice of the mortgage market. Of the 3.26 million mortgages Equifax studied, only 4.6 percent were subprime, growing from less than 4 percent.

Still, the increase means “some lenders will work with a low-score borrower,” notes Keith Gumbinger of HSH.com, a mortgage data firm.

Even government-back Federal Housing Administration mortgages, which before the housing crisis were more forgiving, essentially disappeared for the credit-blemished, says Brian Chappelle of mortgage advisory firm Potomac Partners.

Recently, government changes to the FHA aimed to boost loans to those with scores under 640, says Chappelle. Lenders are still leery, though. “Ask a Realtor if they know of lenders, search the Internet, make calls,” says Chappelle.

In many instances, an FHA mortgage will be more economical because lenders don’t charge a higher interest rate for low scores on these, says Gumbinger. Borrowers can browse a list of FHA lenders at hud.gov.

The business is inching toward a “new normal,” notes Chappelle, finding the middle ground between overly liberal and excessively stringent rules. In the meantime, a low-score borrower has to be prepared for rejection.

“Some will say, ‘Thanks for calling, but we can’t help you,'” concludes Gumbinger.

Copyright © 2015 The Hub, Marilyn Kennedy. All rights reserved, CTW Features.  

Changes coming to Fannie’s credit history analysis

WASHINGTON – Oct. 22, 2015 – Fannie Mae is enhancing its automated underwriting system to improve the analysis of credit histories and the use of nontraditional credit.
Loans underwritten on Desktop Underwriter (DU) will require the utilization of trended credit data provided by Equifax and TransUnion.
According to the secondary lender, by using trended data, a more intelligent and thorough analysis of the borrower’s credit history will be enabled.
Fannie announced the planned update on Monday.
The Washington-based company explained that credit reports currently used in mortgage lending only indicate the outstanding balance and whether a borrower has been on time or delinquent in paying existing accounts like credit cards, mortgages or student loans.
But trended data will indicate monthly payments made over time – enabling lenders to determine if revolving credit lines are paid off each month or if a balance is carried from month-to-month while making minimum or other payments.

Trended data requirements will be implemented around the middle of next year, while more details will be provided in the coming months.

DU is also being enhanced to more efficiently address borrowers without a traditional credit history. More information will be available in the coming months, and the functionality is expected to go live sometime next year.

One other change outlined in the announcement is the integration of The Work Number from Equifax into DU. As a result of the enhancement, which will also happen sometime next year, lenders won’t have to provide copies of pay stubs or other documents to verify income.

“In addition to efficiency for borrowers and lenders, this could reduce the frequency of mortgage fraud,” the notice said. “Going forward, Fannie Mae will determine if validation services can be offered for additional borrower data, such as bank statements, and additional income documents, such as tax returns.”

Copyright © 2015 Mortgage Daily. Distributed by Tribune Content Agency, LLC.  

What do today’s buyers want in a home?

NEW YORK – Aug. 5, 2015 – What building materials are trending in new-home construction? The latest Annual Builder Practices Survey, conducted by Home Innovation, reveals what buyers can expect to see in the new-home market.

1. Garages: The garage door is getting more enhancements, including windows, insulated doors, and doors made of composite or plastic materials. In 2014, 32 percent of all new single-family homes had bays for three or more cars – the most ever recorded in this study’s history.

2. Flooring: Carpeting continues to be the most popular flooring option for new construction, included in about 83 percent of all new-home bedroom installations. However, only about 40 percent of living rooms now have carpet. Hardwood flooring – both solid and engineered– is the second most popular type of flooring included in 27 percent of all new-home installations. Ceramic tile (which appears in 72 percent of all bathroom floor installation) follows in third place, making up 20 percent of all new-home floor installations.

3. Countertops: For kitchen countertops, granite continues to reign in two out of three homes (64 percent of new-home installations). Quartz/engineered stone is gaining popularity while laminate, solid surfacing and ceramic tile are losing appeal.

4. Appliances: Cooktops and wall oven combinations are gaining in popularity and make up about 24 percent of the market, compared to freestanding ovens (45 percent). Freezer-on-bottom refrigerators are gaining in popularity at 19 percent, while side-by-side has fallen to 28 percent of the share.

5. Kitchen sinks: More buyers are paying attention to their kitchen sink, with the single basin kitchen sink making a comeback, growing from 5 percent to 20 percent of all new single-family homes in the past decade. Also growing in popularity are granite/stone kitchen sinks (at 8 percent). One-piece cultured marble lavatories are continuing to decline in demand.

Source: “Material World: The Hottest Trends From the 2015 Builder Practices Survey,” BUILDER Online (July 29, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

Homeownership rate drops but probably hit bottom

 WASHINGTON – Aug. 3, 2015 – The U.S. homeownership rate continued to fall in the second quarter, reaching a 35-year low, according to a new Commerce Department report.
The seasonally adjusted homeownership rate dropped to 63.5 percent, falling from its 2004 peak at 69.4 percent.
However, economists are upbeat that change is on the horizon.
“The trend (of fewer and fewer homeowners) is not going to continue,” says Andres Carbacho-Burgos, a senior economist at Moody’s Analytics. “We think that the homeownership rate is close to bottoming out, but we don’t expect it to start rising substantially before 2017.”
Carbacho-Burgos credits a tightened labor market as one major reason for optimism, with the unemployment rate at a seven-year low of 5.3 percent and nearing the 5 percent range that most economists consider full employment.
The improvement in the job market will help boost wages, which will then have the trickle effect of bringing more first-time buyers into the housing market.
The job market has already helped to lift household formation, but most of that has been centered in the rental market. The residential rental vacancy rate dropped to 6.8 percent in the second quarter, the lowest since 1985.
The homeownership rate in the second quarter rose among Americans aged 35 years and younger. However, the rate fell for every other age group.
“As the millennials age, it’s expected they will start buying more homes and hopefully this is a sign that this trend is beginning,” says Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pa.
Source: “U.S. Home Ownership Hits 35-Year Low, Renting in Vogue,” Reuters (July 28, 2015)
© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

4 Florida cities tops for seriously underwater homes

IRVINE, Calif. — July 30, 2015 — RealtyTrac released its second quarter (Q2) 2015 U.S. Home Equity & Underwater Report, which listed four Florida cities at the top of the list for homes seriously underwater – properties where the homeowners owe at least 25 percent more than the home’s current market worth.

Areas (population greater than 500,000) with the highest percentage of seriously underwater properties included Florida markets such as Lakeland (28.5 percent), Cleveland, Ohio (28.2 percent), Las Vegas (27.9 percent), Akron, Ohio (27.3 percent), Orlando (26.1 percent), Tampa (24.8 percent), Chicago (24.8 percent), Palm Bay(24.4 percent) and Toledo, Ohio (24.3 percent).

In addition, RealtyTrac looked at underwater homes that are also in the foreclosure process.

In the same Florida cities, over half of the homeowners going through foreclosure were seriously underwater:Lakeland (54.8 percent of foreclosures seriously underwater), Tampa (51.7 percent), Palm Bay (51.5 percent) and Orlando (51.2 percent).

Statewide, 23.6 percent Florida of homeowners with a mortgage were seriously underwater in the Q2 2015 – a drop from 23.8 percent in the first quarter and 30.3 percent year-to-year.

On the flipside, RealtyTrac found that 17.6 percent of Florida owners with a mortgage were “equity rich” with at least 50 percent equity. That’s a slight drop for the first quarter’s 17.8 percent but an increase from 15.9 percent year-to-year.

Looking only at homes in foreclosure, 62.8 percent in Florida were seriously underwater, while 18.6 percent, even though going through foreclosure, were equity rich.

“Strong South Florida price increases over the past few years have moved many homeowners from negative to positive equity. We would encourage the remaining distressed homeowners to ask for a Broker Price Opinion (BPO) regarding the value of their property – many may be surprised at their improving value,” says Mike Pappas, CEO and president of Keyes Company in South Florida.

National numbers

Nationwide, 13.3 percent of all properties with a mortgage were seriously underwater in Q2, an increase from 13.2 percent of all homes in the first quarter. However, they dropped from 17.2 percent year-to-year. At the peak of the foreclosure crisis in 2012, the percentage was 28.6 percent.

“Slowing home price appreciation in 2015 has resulted in the share of seriously underwater properties plateauing at about 13 percent of all properties with a mortgage,” says Daren Blomquist, vice president at RealtyTrac.

“However, the share of homeowners with the double-whammy of seriously underwater properties also in foreclosure is continuing to decrease and is now at the lowest level we’ve seen since we began tracking that metric in the first quarter of 2012,” he adds.

© 2015 Florida Realtors®

No-money-down green upgrades paid via property taxes

TALLAHASSEE, Fla. – July 23, 2015 – Under the Florida Property Assessed Clean Energy (PACE) program, homeowners can pay for energy-efficient upgrades with no money down and relatively low interest rates, currently 6.5 to 7.5 percent. Homeowners then pay off the loan in installments as part of their personal property tax bill.

The Florida Legislature created the program in 2010 to help owners make the move to energy efficient products, such as solar energy, windows, doors, air-conditioning units or wind mitigation improvements, such as new roofs. The product must be attached to the house, so appliances don’t qualify.

To date, 13 counties have signed onto the program along with a number of cities.

In general, an energy-efficient upgrade can be paid off over its expected life, but the owner could opt for a shorter timeframe if preferred.

Since the loan is paid through a homeowner’s property tax bill, any remaining payments for the energy upgrade can be passed off to the next homebuyer, though a seller has the option to pay it off at the time of sale. Under the Florida PACE law, a seller must disclose the existence of any remaining debt, though a record of it will also appear in county tax records.

The program works for both residential homeowners and commercial projects, but some of the details, such as interest rates, vary.

“The program comes at no cost to local governments,” says Jonathan Schaefer, program manager for the Florida PACE Funding Agency. He says it can be adopted by either county or city governments.

While authorized by the Florida Legislature, the PACE program doesn’t rely on tax money. It’s funded and operated privately by agencies, such as the Orlando-based Florida PACE Funding Agency.

Florida PACE Funding Agency Contractor Kirk Francis told The Orlando Sentinel that he sees one big benefit to the program: “A lot of folks don’t have the money laying around to make these (energy upgrades). If it’s secured by the property, even people who don’t have strong credit can possibly qualify.”

For more information or see if a Florida county or city participates in the program, visit the consumer-facing PACE website.

Information for local governments about the program can be found at the Florida PACE Funding Agency website.

© 2015 Florida Realtors®