Tags: mortgage applications | home loan demand | housing | buyers

Mortgage Applications Fall 3.5 Percent as Rates Stabilize

Mortgage Applications Fall 3.5 Percent as Rates Stabilize
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By    |   Wednesday, 28 October 2015 11:11 AM

Mortgage applications decreased 3.5 percent from one week earlier, according to the Mortgage Bankers Association.

Refinance volume fell 4 percent for the week, seasonally adjusted, and applications to purchase a home fell 3 percent. Both purchase and refinance applications were running just below the year-to-date average levels last week, but purchase volume was 23 percent higher than the same week last year.

Mortgage rates have moved slightly higher, which would account for the drop in refinance volume, CNBC reported.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.98 percent from 3.95 percent, with points increasing to 0.44 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio loans.

"Between the recent TILA-RESPA regulatory change and the Columbus Day holiday, mortgage application volume has been more volatile than normal. However, that appears to be settling down somewhat," said Michael Fratantoni, chief economist for the MBA.

Weekly mortgage applications have been volatile amid the implementation of new mortgage disclosure rules (known as TRID), CNBC reported.

Lenders had to make major changes to their loan processing systems, and the fear was that this would slow applications; borrowers, therefore, rushed to get applications in before the rules went into effect on October 3, CNBC reported.

The TRID change is part of a move by federal regulators to further protect borrowers by forcing lenders to disclose all details of a loan at least three days prior to closing, CNBC explained. The program aims to consolidate rules and disclosures in the Truth In Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA), Investors.com explained.

The survey covers over 75% of U.S. retail residential mortgage applications, according to MBA.

But while it might make things easier for homebuyers, TRID will likely complicate things for mortgage lenders as well as realtors, both of whom have been scrambling to learn new rules and adapt to a new system that covers everything from how closing fees can be imposed to when closing documents must be finalized, Investors.com said.

Stringent mortgage rules stemming from Dodd-Frank legislation have created a regulatory minefield for banks and loan brokers, Bloomberg reported.

This year alone, the Consumer Financial Protection Bureau has handed out more than $260 million in fines for residential-mortgage rule violations. Automated processing of home loans, such as the services offered by Black Knight, gives lenders protection by vetting every action for compliance.

Lending rules that rarely changed before the housing crisis are now in constant flux, said Richard Green, sales manager in the mortgage division of Presidential Bank, in Bethesda, Maryland.

“People outside of the industry think last year’s regulations on qualified mortgages were a sea change for the industry, but they weren’t,” Green said. “TRID is bigger because it’s not just about who gets mortgages, it’s about how the mortgages are made and how lenders do business.”

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Total application volume decreased 3.5 percent on a seasonally adjusted basis for the week that ended Friday versus the previous week, according to the Mortgage Bankers Association.
mortgage applications, home loan demand, housing, buyers
Wednesday, 28 October 2015 11:11 AM
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