New home mortgage apps break slump, rise on sliding rates
National Mortgage News
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Sliding mortgage rates at the beginning of the year drove applications for new home purchases in January up 42% from the prior month, according to the Mortgage Bankers Association. The application activity is slightly down from the same time last year, dipping 3.5% compared to January 2022, according to the MBA's Builder Application Survey published Friday. The monthly gain in January was also a break from a prolonged slump in new home mortgage applications to close the year. The data is not seasonally adjusted.
Redfin's mortgage business recorded negative gross margins in the fourth quarter, even as the company was able to maintain the 17% cross-sell rate with its real estate division from the prior three month period. Redfin greatly expanded its mortgage capabilities in April following the acquisition of Bay Equity Home Loans for $137.8 million. In the fourth quarter, Redfin had a $12.3 million loss on mortgage alone. While the company reported a $61.9 million net loss, mortgages performed better than real estate services (a loss of $27.6 million); properties (a loss of $26.3 million); and rentals (a loss of $22 million).
A former CrossCountry Mortgage employee claims the lender failed to pay workers as mortgage activity slowed last year, and is illegally forcing him to return a sizable sign-on bonus. Paul Lundholm of Lyndhurst, New Jersey, alleged CCM violated state and federal laws in class action suit filed Tuesday in the U.S. District Court for the Northern District of Ohio. The Cleveland-based company paid personnel on a commission basis and provided no compensation for periods when staff didn't close loans last year, the suit said.The lender also gave sign-on bonuses to employees, known as an "unvested wage advance," which workers had to pay back if they left the company for any reason within a 24-month period, according to court filings.
U.S. mortgage balances increased by almost $1 trillion in 2022, even as new originations slowed considerably throughout the year, according to the Federal Reserve Bank of New York. Home loan balances rose $254 million during the fourth quarter, pushing the overall outstanding total to $11.9 trillion at the end of December, up from $10.9 trillion a year earlier. The quarterly addition was almost 10% lower than the $282 million increase recorded in the prior three months. Despite new-loan activity peaking in 2021, the shift from refinances to purchases in the last year alongside elevated home values helped keep the level of balances up.
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The government corporation, which backs securitizations of loans insured or guaranteed by the Federal Housing Administration and other public entities, reduced the required minimum size of securities pools by 75% from $1 million to $250,000. The new minimum-size guidance for Home Equity Conversion Mortgages securitizations goes into effect on April 1, and a pool must contain at least three participations, with each tied to a particular loan. Ginnie Mae cited the acceleration of interest rates and broader economic challenges facing the U.S. as reasons behind its decision. The combined factors have increased the liquidity risks for issuers, which are responsible both for funding borrowers' home-equity draws and ensuring payments to investors in HECM mortgage-backed securities get made on time.?
Mortgage delinquencies increased in the fourth quarter from their record lows as borrowers became susceptible to a sinking U.S. economy, the Mortgage Bankers Association said. Its National Delinquency Survey reported 3.96% of all outstanding mortgages on a seasonally adjusted basis were not current on their payments in the three months ended Dec. 31, 2022. This was up 51 basis points from the all-time low of 3.45% reported in the third quarter. However, the delinquency rate was 69 basis points lower than that of the fourth quarter of 2021 , 4.65%.
The majority of consumers with late mortgage payments are still citing a national emergency declaration when asked why they can't make good on their monthly obligations, but the share is shrinking as other concerns rise. The percentage, at 58% in November 2022, was down notably in the Federal Housing Finance Agency's latest report, compared to 73% when the year began. The second-leading reason was curtailed income, which rose from 5% to 7% during the same time period. The share of delinquent borrowers with excessive debt, personal or family illness or unemployment has risen one percentage point to 3% in each category.
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