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Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on larger issues.

On Friday, Politico obtained a draft of the proposed Department of Housing and Urban Development budget. Like the reporting from March when the White House initially released its plan, the draft shows a considerable $6 billion in cuts to spending on affordable housing and community development programs for 2018’s fiscal year, a move affordable housing advocates called “immoral” and a hit to some of Trump’s own support base.

Politico reports that “the document puts increased responsibility on state and local governments and calls for the private sector to do more to meet community needs, a key goal of HUD Secretary Ben Carson.”

From the article:

The administration is seeking to cut spending on affordable housing and community development and wants mortgage lenders to fund technology fixes at the Department of Housing and Urban Development, according to a budget draft obtained by POLITICO. The proposal also eliminates the Housing Trust Fund, a program financed by Fannie Mae and Freddie Mac profits.

In all, the request cuts funding by some $6 billion for fiscal year 2018, to about $40 billion. The draft, dated May 4, might not reflect the administration’s final spending request, which is expected next week. A HUD spokesman did not respond to requests for comment.

The budget “recognizes a greater role for state and local governments and the private sector in addressing community development and affordable housing needs,” the document states.

Also on the chopping block for the agency is a giant cut to the $3 billion Community Development Block Grant program, a state and local program that benefits low- and moderate-income communities and supports economic development projects, including roads, sewers and housing.

The budget also eliminates Choice Neighborhoods revitalization grants and the HOME Investment Partnerships Program, which leverages private funds to expand the supply of affordable housing. Rental assistance to tenants would fall $974 million to $19.3 billion, with the elimination of a housing program for veterans and reduced spending on Section 8 and other voucher programs and capital funding for public housing would fall by two-thirds.

Diane Yentel, president of the National Low Income Housing Coalition, said the spending plan is “immoral.”

“The budget reflects a cruel indifference to the millions of low-income seniors, people with disabilities, families with children, veterans, and other vulnerable people who are struggling to keep a roof over their heads,” Yentel told Politico.

But the proposed budget is not all cut, cut, cut… Politico also reports that HUD’s mortgage agencies would get small funding increases and the administration wants to levy $30 million in fees on lenders who sell mortgages through the Federal Housing Administration, money that would be used to upgrade technology and risk-management systems. Also included is a small increase in staffing for FHA loan-seller Ginnie Mae. The proposed budget, in its current form, also maintains funding to support and enforce the Fair Housing Act.

Is non-QM the next emerging market in mortgage lending? Sanjiv Das, the CEO of Caliber Home Loans seems to think so…

In an interview published last night on the newly invigorated Institutional Risk Analyst, Das dishes on MSRs, Ginnie Mae and so much more.

Here’s what he had to say about the non-QM Market:

“There are a large number of customers who were impacted in the 2008 crisis who are on the fringes but want to get back into the mainstream in terms of lending.  The mainstream lenders are not ready for that.  So those of us who are backed by private equity and can be more opportunistic in a responsible way can work with these customers.  If you look at the non-QM and even QM, people who cannot qualify for a Fannie/Freddie loan are a newly emerging market.”

Last week was all about avocados after an Australian millionaire ruffled Millennials’ feathers by saying that the generation should stop buying avocado toast and coffees to be able to afford a home.

35-year-old real estate developer Timothy Gurner told Australia’s 60 Minutes: “When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” he said. “We’re at a point now where the expectations of younger people are very, very high. They want to eat out every day; they want travel to Europe every year.

“The people that own homes today worked very, very hard for it,” he said, adding that they “saved every dollar, did everything they could to get up the property investment ladder.”

Article courtesy of:   Ephraim Vecina  –  Mortgage Broker News


Innovative product features enticingly low 5-year fixed rate

One of Canada’s largest independent mortgage financing companies has introduced an innovative solution to the tighter fiscal climate that ensued in the wake of recent regulatory changes.

“As those in the mortgage business are painfully aware, Department of Finance rule changes have made low-ratio mortgage insurance far more expensive—well over 200% more expensive in some cases. For mortgage finance companies who rely on insurance for securitization, that’s a serious problem,” markets observer and founder Robert McLister wrote in a recent piece for CMT.

With over $61 billion in assets under administration, MCAPhas launched its new “MCAP 79” mortgage last week, deemed a “more inventive solution” that “comes with an eye-catchingly low 5-year fixed rate (as low as 2.29% at 65% LTV). There’s also a 1% fee, which can be capitalized into the mortgage. MCAP uses the 1% upfront fee to offset its insurance and capital costs.”

“Given a 65% LTV, equal payments, and a mortgage held to maturity, the effective rate of the MCAP 79 beats virtually all competing rates above 2.52,” McLister explained.

“Assuming the mortgage is not broken early, the MCAP 79 is currently the best low-ratio 5-year deal from any broker lender. Albeit, breaking the mortgage early can change that because the 1% fee is non-refundable and there’s a $300 to $500 reinvestment charge in the first three years.”

The offering features MCAP’s standard high-quality loadout, including a 120-day rate hold, reasonable prepayment charges, 20 per cent prepayment privileges, and availability on ‘insurable owner-occupied purchases with LTVs up to 79%.”

Qualified applicants require credit scores greater than 720. The maximum property value is $1 million.

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Prospective home buyers view a kitchen while touring a house for sale in Helotes, Texas.

If you’re out shopping for a home this weekend, bring your checkbook.

There may still be ice on the ground in much of the nation, but the spring housing market is the hottest it’s been in a decade. Consumer sentiment in both the economy and the housing market is rising and that is translating into strong demand from homebuyers. The trouble is, the supply of homes for sale is incredibly weak and getting weaker. What is for sale is selling fast.

The typical home that sold last month went under contract in 60 days, eight days faster than one year ago, according to a new report from Redfin, a real estate brokerage. Nearly 15 percent of all homes listed for sale in February were off the market within two weeks, up from 11.7 percent last year. This is the fastest February market Redfin has recorded since it began tracking in 2010.

The speed and the competition are combining to push home prices higher. Redfin recorded a 7 percent annual jump in median sale prices in February. Homeowners now have a lot of equity. In fact, total home equity hit a new peak at the end of last year, according to research by the Federal Reserve.

“While great for homeowners, continuously strong price growth across the U.S. since 2012 has posed significant challenges for first-time buyers, especially given such low supply in affordable price-tiers,” said Nela Richardson, Redfin’s chief economist. “There is a silver lining on the horizon, however. Rising prices and increased equity may tip the scales for homeowners who have been delaying their decision to move up, which could add much-needed starter-home inventory to the market.”

More homeowners think now is a good time to sell, according to the latest housing sentiment survey from Fannie Mae. More also consider now to be a good time to buy as well, but the same is not true for renters. Confidence in home buying is slipping among renters as affordability sinks.

“Inventory conditions are even worse than a year ago, and home prices and mortgage rates are on an uphill climb,” said Lawrence Yun, chief economist for the National Association of Realtors. “These factors are giving many renter households a pause about it being a good time to buy, even as their job prospects improve and wages grow. Unless there’s a significant boost in supply levels this spring, these constraints will, unfortunately, slow or delay some prospective buyers’ pursuit of purchasing a home.”

Construction workers building a new home in Miami, Florida.

Home builder sentiment rises to highest level in 12 years  

Regionally, Seattle was the fastest market in February, according to Redfin, with nearly half of all homes going under contract in just 12 days. Oakland, California, and Denver followed with 15 and 18 days on the market, followed by San Jose, California, (21) and San Francisco (28). The majority of those homes sold above list price.

As for supplies, Rochester, New York, had the largest decrease in inventory, down 42 percent compared to a year ago. Buffalo, New York, down 38 percent; Seattle, down 35 percent; and Omaha, Nebraska, down 35 percent; also saw far fewer homes available on the market than a year ago.

On the bright side, Provo, Utah, saw the biggest jump in listings, up 31 percent from a year ago, followed by Knoxville, Tennessee, up 22 percent; and New Orleans, up 16 percent.

Commercial mortgage loan originations in 2017 are expected to increase 3% over last year to a record high, as market fundamentals and property prices remain strong, according to the Mortgage Bankers Association.

It projects total volume of $515 billion, with multifamily lending making up $267 billion. For 2016, the MBA estimated that there was $502 billion of commercial real estate loans originated, down from 2015’s $504 billion. Final numbers are expected to be released in March.

The current record year for CRE volume is $508 billion, set in 2007.

“Nationally, commercial real estate fundamentals and prices remain strong. That overall strength is expected to continue to support active sales and mortgage markets.

“Rising interest rates are likely to take a bit of wind out of the market, but even so, modest increases in originations should bring 2017 to record levels of borrowing and lending for commercial, and particularly multifamily, properties,” Jamie Woodwell, MBA’s vice president of commercial real estate research, said in a press release issued Monday.

By investor type, loans originated last year to support commercial mortgage-backed securities fell 15% compared with 2015, originations for life insurance companies were flat, commercial bank portfolio originations were up 6% and there was a 10% increase in loans originated for Fannie Mae and Freddie Mac.

Fannie Mae had $55.3 billion of multifamily loans originated through its Delegated Underwriting and Servicing program in 2016, which is the most that program has ever done, it said in a separate press release. It also issued $54.9 billion of CMBS in 2016.

Freddie Mac also set a record, with $56.8 billion of multifamily mortgages originated in 2016, it said in its own press release.

In the fourth quarter, there was a 7% year-over-year decline in CRE loan volume as there was a decrease in originations for hotel, health care and retail properties, the MBA said.

HARP is blessing homeowners with an extra $4,264 each year. Here’s how it works.

A forgotten mortgage stimulus program that was passed by Obama to help the middle class Americans reduce their monthly payments by as much as $4,264 each year.1

The government has announced that this program will expire this year and is making a final push urging homeowners to take advantage of this program. If lowering your payments, paying off your mortgage faster, and even taking some cash out would help you, it is vital you act now.

HARP is a free government program and there is no cost & no obligation to See if you qualify »

A Stimulus Plan for American Homeowners

If your mortgage is less than $625,000, your chances of qualifying for HARP could be high. The Government wants the banks to cut your rates, which puts more money in your pocket, ultimately boosting the economy.

However, the banks are not happy about this. Here’s why:

  1. The program makes it easier to qualify for lower mortgage rates
  2. You have the option to shop lenders other than your current mortgage holder

You think banks like the above? Rest assured, they do not. They would rather make more money by keeping you at the higher rate you financed at years ago. The middle class seems to miss out on everything, and jumping on this benefit is a no-brainer.

VETERANS & ACTIVE MILITARY: Take Advantage Of Your 2016 VA Loan Benefits and Save even more with the VA Loan Program!
See How Much You Qualify For »

Why Should You Care?

  • The average monthly savings is $250. Could you use an extra $250/month?2
  • On top of the savings, many homeowners could pay off their mortgage faster.
  • Homeowners can even take cash out for home improvements, pay off debt, or pay for their children’s education.

Where Do I Start?

With hundreds of mortgage lenders and brokers available, it can take consumers hours to contact each one separately and request a quote. The good news is that there are services that could help you save time and money by comparing multiple lenders at once. One such service is The Easy Loan Site, which is one of the biggest HARP lender networks in the nation providing consumers with a comprehensive set of mortgage options.

There’s no obligation to homeowners, and The Easy Loan Site offers easy and fast comparisons. It takes about two minutes, and the service is 100% free. Find out what you qualify for today!

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