Entries Tagged 'Mortgage Company' ↓

While this is not surprising, it is a sign of things to come. With housing demand down and the interest rates up, mortgage activity is slowing down.  

U.S. mortgage applications fell last week, reflecting a decline in home refinancing loans as interest rates climbed, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended May 26 decreased 1.9 percent to 541.9 from the previous week’s 552.6.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.66 percent, up 0.05 percentage point from the previous week, and matching a four-year high touched two weeks ago.via  MSNBC.com.

The tightening mortgage environment has forced Liberty Mortgage out of business. The Tampa based lender has been in trouble for the last couple of years and the recent downturn put the final nail in the coffin.

After a 5 year period of low interest rates and prosperous times, the mortgage industry is looking at tough period. Companies that have been marginal successes will most likely wash out during the coming months as they will be unable to withstand the slower times.

Liberty is among a handful of mortgage companies that have gone out of business as the housing market cools and the mortgage industry gets tighter.
MortgageDaily.com, an online news source for the mortgage industry, reported the closing in April and May of three large firms: San Francisco-based Capital Alliance Funding Corp.; QuoteMeARate.com., based in Houston; and Merit Financial Inc. in Kirkland, Wash. Dozens of other mortgage companies are “teetering on which way to go,” said Sam Garcia, editor of MortgageDaily.com.
Ameriquest, one of the nation’s largest subprime mortgage lenders, is restructuring and eliminating retail branch offices. Wachovia Corp.’s (NYSE: WB) planned $25.5 billion purchase of Golden West Financial Corp. (NYSE: GDW), the parent company of World Savings Bank, a major residential mortgage lender, is a sign of consolidation in the industry, Garcia said. via  MSNBC.com.

Golden West Financial will sell out to Wachovia as the US Mortgage industry is poised to see a consolidation as the volume of mortgages slows down after 5 boom years. Golden West Financial is solely focused on mortgages and as such did well during the past few years, but as  Herbert Sandler, co-chairman of Golden West states, We’ve always been aware that being a monoline company had extra positives and extra negatives,” he said Monday. “There were inherent weaknesses in our strategy.”

As the market is turning down, these single play mortgage companies are going to look to be consolidated into the larger banking institutions. Smart business if you ask me.

Mortgage banks have spent the last five years in boom mode, benefiting from historically low interest rates that drove more people to take out first mortgages, refinance existing loans and take out home equity lines. But rising interest rates have threatened to end the party.

The Mortgage Bankers Association estimates that this year, even with interest rates stabilizing, the volume of new mortgage loans will drop 14% from the $2.7 trillion logged last year.

Herbert Sandler, the colorful and blunt co-chairman of Golden West, said his decision to seek a merger partner was in no way meant to signal his view that the mortgage business is going down the drain. Rather than concerns about loan volumes coming off the boom times, Sandler pitched his desire to diversify. via Forbes

Freddie Mac, the 2nd largest mortgage lending company, has just announced they will be offering new mortgage products through the world wide web this summer. The programs include Home Possible, a program that is designed for borrowers who need assistance, and over 20 other mortgage programs.

The company’s Loan Prospector automated underwriting service and its online selling system will include a new array of 40-year mortgages, 20 more adjustable-rate mortgage (ARM) products and federally insured rural housing mortgage products, the company said.

It is also expanding its flagship suite of affordable mortgage products, known as Home Possible, by adding a special 40-year fixed-rate option and providing lenders with more competitive selling options.

The enhancements, to be rolled out this summer, were announced at the Mortgage Bankers Association’s National Secondary Conference and Expo in Chicago.

Trump Mortgage, the newest real estate venture from the  Donald, is looking to Florida to be the first state the company aggressively opens offices. The company is looking to have 6 offices open this year, and partner with other lenders.

If Donald Trumps past history is to be followed, the introduction will be loud and in your face, but also reasonably effective.

Last year, this industry did $3 trillion, so it’s huge and there’s no clear-cut leadership,” he says. “There’s enormous opportunity to help improve and lead on a national level.”
Craig Lane has been tapped to run oversee the Florida offices, the first of which will be in South Florida.
“We should have those rolling out in six months,” Ridings says.
Trump Mortgage will offer financing products from residential to commercial, luxury to construction.
Ridings indicates he has already heard from many small mortgage operations hoping to be considered a partner to the new company.

via the  Orlando Business Journal:.

The number of mortgage brokers in the North Carolina Triad area has shrunk by 10 percent, and I would not be surprised if these numbers are  representative of the industry as a whole. There was a an unprecedented number of refinancing and new mortgages being written as interest rates fell to record lows from 2002 to 2004. Since then rate have risen and consequently mortgage applications have slowed down.

Since mortgage industry employment peaked in 2003, the number of mortgage brokers and lenders in the Piedmont Triad has dropped by 10 percent. There were 1,113 people employed in the industry in September 2005, down from a peak of 1,231 two years ago, according to the Employment Security Commission.

Experts say most of job losses likely came from small mortgage companies that did not have the resources to compete as the industry began to slow down following a sharp decrease in the number of refinancings.

“People have just gotten out of the business or downsized,” said Kate Crawford, branch manager of Corporate Investors Mortgage Group in Burlington and the secretary of the National Association of Mortgage Brokers. “We were in a huge growth mode for a while, and now we’re just getting back to normal.”

As the mortgage business boomed in recent years, more people entered the industry, some opening their own firms. The number of mortgage companies in North Carolina climbed from 674 in 2002 to 1,570 at the end of 2005. Triad specific data was not available. via MSNBC.com.

If you are buying a mortgage, one of the ways a mortgage broker will earn a bonus on writing your mortgage is to use a yield spread premium. Say you will qualify for a mortgage at 6.5 percent. The mortgage broker will quote you 6.75 percent on the loan.

If you agree to the 6.75 percent mortgage loan, the broker will get approximately half of difference in a bonus, or in this instance 1/8th of a point of the loan. So if you are looking at a $400,000 dollar loan, the broker is looking to make a bonus of $2,000 for the deal.

And that is why when negotiating for a mortgage talk to a few brokers and let them know you are shopping the deal. This will take away the incentive to raise the interest rate they are quoting you for your mortgage and you can save thousands over the life of the loan.

It looks like people are trying to get into new mortgages before any further increases are on the horizon. Countrywide saw a significant increase in newly funded mortgages for March, 2006 in year over year numbers. This must have the mortgage companies breathing easier.

Countrywide Financial Corp.  reported mortgage loan fundings for March of $40 billion, up 10% from the year-ago period, and up 29% from last month. For the first quarter, the company stated that mortgage loan fundings were up 13% to $103 billion from the prior year period.
According to the company, the mortgage loan servicing portfolio totaled $1.15 trillion at March 31, 2006, up 29% from March 31, 2005. via Trading Markets.