nmp news flash
DECEMBER 2012 IDAHO
MORTGAGE PROFESSIONAL MAGAZINE
properties and a seven percent decrease for industrial properties. Among investor types, year-to-date 2012 versus the same time period in 2011, loans for commercial bank portfolios saw an increase in loan volume of 44 percent, loans for GSEs saw an increase in loan volume of 39 percent, originations for conduits for CMBS increased seven percent and loans for life insurance companies decreased by six percent.
greater transparency and efficiency to the mortgage lending markets and help reduce risk. The FICO Mortgage Score Powered by CoreLogic is more accurate than the prior FICO Score in identifying the riskiest loans improving lenders ability to discern consumer credit risk at origination. For applicants identified as the riskiest 10 percent of the lending population (those most likely to become past due on their mortgage loan), it identified 10 percent more seriously delinquent mortgage loans—loans 90 days or more past due.
Study Finds Alternative Credit Data Could Increase Homeownership
Ginnie Mae Reports More Than a Half-Billion in 2012 Net Income
CoreLogic has announced the results of a report by CEB TowerGroup analysts that indicates using alternative data, such as unsecured credit, payday lending and property history in consumer credit report analysis, can help safely increase mortgage lending. The report finds that this new data is relevant as consumers have changed their debt payment behavior. As a result, lenders can adjust their credit risk evaluation policies to better assess each applicant. The report, titled “Enhanced Credit Data and Scoring: Deeper Insight into Mortgage Applicants,” notes that consumers used to pay mortgage debts first, but because of the recent financial crisis some consumers now treat paying other debts, such as credit card bills and car payments, as a higher priority to maintain personal financial liquidity. “Traditional credit data and analytics continue to be relevant, but are not sufficient to satisfy the consumer credit reformation of today,” said Craig Focardi, CEB TowerGroup’s senior research director. “As a result of the changes in consumer behavior, lenders cannot revert back to their prior mortgage underwriting policies. Too much damage has already been done to the market, consumers, shareholders and investors.” CEB TowerGroup evaluated data from a joint analysis conducted by CoreLogic and FICO that compares the FICO Score used by most lenders today with the FICO Mortgage Score Powered by CoreLogic, a new score launched in July. The FICO Mortgage Score Powered by CoreLogic evaluates the traditional credit data from national credit data repositories and the unique alternative credit data contained in the recently launched CoreScore credit report. Key findings in the report include: Alternative credit information can support loan applicants with newly established credit files with good credit, those with minimal information in their traditional credit files but with good alternative credit payment histories, and long-time renters with no serious payment issues. More complete loan applicant, property and related information will bring
Ginnie Mae has reported Fiscal (FY) 2012 revenues of $1.246 billion, up from $1.064 billion in 2011. Net income reached $609.6 million in FY 2012, down from FY 2011 net income of $1.184 billion. Retained earnings continue to grow, rising to $16.4 billion from $15.7 billion. Ginnie Mae guaranteed $388 billion in mortgage-backed securities (MBS) in FY 2012 and $110 billion are multi-class securities. The corporation has an outstanding MBS balance of $1.34 trillion. “Ginnie Mae has once again had a successful year, generating a profit for the U.S. Government for more than 20 consecutive years, clearly proving that our business model and securitization platform work effectively for American taxpayers,” said Ginnie Mae President Ted Tozer. “Our lower net income in FY 2012 is attributed to an increase in provisions for losses, which is part of our risk management approach and demonstrates another way that we protect the American taxpayer.” Ginnie Mae has been instrumental in maintaining the flow of capital from global financial markets to the nation’s housing markets in the wake of the economic downturn. In FY 2012, Ginnie Mae financed nearly half of all homes purchased in America. “Ginnie Mae’s unique securitization platform has allowed us to deliver nearly $1.7 trillion of liquidity into the U.S. housing mortgage finance market since the crisis began, providing homeownership and housing opportunities for more than 6.3 million households,” said Executive Vice President Mary Kinney. “This success also clearly demonstrates the importance of the countercyclical nature of our business, allowing Ginnie Mae to step up when the private market retreats.”
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last year’s year-to-date levels, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. “Commercial and multifamily mortgage borrowing slowed in the third quarter,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Even though low interest rates continue to make borrowing extremely attractive, a moderate pace of commercial property sales transactions and a continued drop in the volume of commercial mortgages maturing limited the overall amount of commercial mortgage loans originated.” The seven percent overall decrease in commercial/multifamily lending volume, when compared to the third quarter of 2011, was driven by decreases in originations for retail and office properties. The decrease included a 35 percent decrease in the dollar volume of loans for retail properties, a 24 percent decrease for office properties, a four percent increase for hotel properties, a 19 percent increase for industrial properties, a 19 percent increase in health care property loans and a 30 percent increase in multifamily loans. Among investor types, the dollar volume of loans for life insurance companies decreased by 32 percent over last year’s third quarter. There was an eight percent increase for commercial bank portfolios and a 30 percent increase for Government-Sponsored Enterprises (GSEs). There was no change in volume of loans originated for conduits for CMBS. Third quarter 2012 commercial and multifamily mortgage originations were 17 percent lower than originations in the second quarter of 2012. Compared to the second quarter, third quarter originations for retail properties saw a 43 percent decrease. There was a 29 percent decrease for office properties, a 25 percent decrease for health care properties, a 12 percent decrease for hotel properties, a seven percent increase for multifamily properties and an eight percent increase for industrial properties. Among investor types, between the second and third quarters of 2012, loans for conduits for CMBS saw a decrease in loan volume of 55 percent, loans for life insurance companies saw a decrease in loan volume of 37 percent, originations for commercial bank portfolios increased six percent and loans for GSEs increased by 14 percent. Year-to-date 2012 commercial and multifamily mortgage originations were 15 percent higher than originations during the same time period of 2011. Compared to 2011, year-to-date originations for health care properties saw a 33 percent increase. There was a 30 percent increase for multifamily properties, a 24 percent increase for retail properties, an eight percent increase for hotel properties, a seven percent decrease for office
Nearly 30 Percent of Refis Shorten Mortgage Term During Q3 In the third quarter of 2012, 29 percent of borrowers who refinanced an existing mortgage chose to shorten their loan term, based on the Freddie Mac Quarterly Product Transition Report. Further, refinancing borrowers
clearly preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixedrate. Of borrowers who refinanced during the third quarter of 2012, 29 percent reduced their loan term, while 68 percent of borrowers kept the same term as the loan that they had paid off; three percent chose to lengthen their loan term. More than 95 percent of refinancing borrowers chose a fixed-rate loan. Fixed-rate loans were preferred regardless what the original loan product had been. For example, 82 percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the third quarter, the highest share since the second quarter of 2010, while the remaining 18 percent chose to refinance back into a hybrid ARM. “Compared to a 30-year fixed-rate mortgage, the interest rate on a 15-year fixed was about 0.7 percentage points lower during the third quarter,” said Frank Nothaft, Freddie Mac vice president and chief economist. “For borrowers motivated to refinance by low fixedrates, they could obtain even lower rates by shortening their term. Further, a shorter-term, fully amortizing loan reduces the loan balance faster and builds home equity sooner.” Those borrowers who refinanced under the Home Affordable Refinance Program (HARP) were more likely to take out a long-term, fixed-rate mortgage. For example, 25 percent of HARP borrowers shortened their loan term when they refinanced during the third quarter, compared with 31 percent of borrowers who refinanced outside of HARP. Further, of those borrowers who were refinancing out of an ARM, if they refinanced under the HARP program then more than 95 percent chose a fixed-rate mortgage; in contrast, of borrowers that had an ARM, but did not refinance through HARP, about one-half opted for another hybrid ARM. “Fixed mortgage rates averaged 3.55 percent for 30-year loans and 2.84 percent for 15-year product during the third quarter in Freddie Mac’s Primary Mortgage Market Survey, well below long-term averages and the lowest quarterly averages recorded in our survey,” said Nothaft. “The Bureau of Economic Analysis has estimated the average coupon on singlefamily loans was about five percent during the third quarter of 2012. It’s no wonder we continue to see strong refinance activity into fixed-rate loans.”
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Published on Dec 20, 2012