Housing news dominated the headlines yesterday with positive home price data hitting the wires. First up was CoreLogic reporting that its national Home Price Index on a year-over-year basis in the month ended in June rose by nearly 12% as the sector continues to improve. From May to June, prices rose by almost 2%. In addition, home prices are expected to rise by 12.5% year-over-year basis in July. However, prices are still down 19% from their peak hit back in April 2006. All of the figures include distressed sales.
To further bolster price appreciations in housing, Clear Capital reported that national home prices surged 9.3% in July 2013 from July 2012 and gained 1.6% over the last quarter. Clear Capital did say that prices remain 33.4% below peak values. For the last half of 2013, the firm sees a moderation in home price trends.
President Obama will be in Phoenix, Arizona later today speaking on the housing market and in particular, the future fate of Fannie Mae and Freddie Mac. The government bailed out the two mortgage giants to the tune of nearly $200 billion after the housing market collapsed in 2008 and the plan is for their roles to diminish and let private sector capital take on a bigger role in the mortgage market.
On Monday, there was some good news and bad news reported in the past month if you are a potential homebuyer or looking to refinance your current home. The bad news is that home loan rates on the 30-year fixed conventional mortgage have gone from 3.5% to around 4.5% in the latest survey.
The good news is that mortgage lending standards eased for the fifth consecutive month, reports the Mortgage Bankers Association (MBA). The MBAs Mortgage Credit Availability Index report, which analyzes data from AllRegs Market Clarity product, the MCAI escalated to an index score of 112.3 in July, rising 2.2% from 109.81 in June.
The service sector of the U.S. economy perked up in July expanding more than expected rising to 56.0 from the 52.2 recorded in June. Readings over 50 indicate more companies are expanding instead of contracting. Of the 18 industries that were were surveyed, 16 reported growth last month. However, the employment gauge fell to 53.2 from 54.7.Read More
If you’re looking for a $500,000 home loan, have a 25 percent down payment in hand and a stellar credit rating, most mortgage lenders — including Roy Sperr, founder of Equity Source Mortgage in Rogers — likely will be happy to work with you.
What Sperr said sets him apart, however, is that he might be more interested in your business if another institution has turned you down because of credit challenges, mounting debt or an upside-down mortgage.
Working with consumers who have gotten rejected elsewhere has become a specialty at Equity Source Mortgage since 2008, as the housing market crash hit both homeowners and the mortgage lending industry, Sperr said. Most Equity Source customers are well-qualified borrowers, many of them return customers or referrals.
But Sperr said he will take time — sometimes years, without charge — to figure out why consumers get told no, in some cases incorrectly. He may offer advice on improving a credit score or help find government programs that enable those with negative equity stay in their homes, staying in touch with the consumer month after month until those who can qualify for a loan are able to secure one.
“I’m a sucker for human beings,” Sperr said. “I’m not just going to turn somebody down because I don’t have time. That’s not fair. It might be a legitimate ‘no,’ but they need to know why and how to fix it, how to turn a ‘no’ into a ‘yes.’ ”
Sperr’s focus in launching Equity Source Mortgage in 2000 was offering a high level of service, building long-term customer relationships and making the home loan process more transparent. He believed he could offer better service while operating more efficiently based on his experience as a real estate appraiser and a mortgage-lending officer at other brokerages.
Equity Source Mortgage grew exponentially as the housing market boomed, Sperr said. At its peak in 2004, the company had 20 employees and originated more than $200 million in residential financing. But the business became more transaction-based, with little time to get to know people.
The crash, Sperr said, was a “godsend” and a “great awakening.’’ As loan volume plummeted, the company downsized, sold its building and moved three times to stay in business. Emerging from the market meltdown, Sperr returned to the core values on which he had founded the company and developed his niche of working with customers who were having difficulty getting loans.
Equity Source Mortgage now has four employees, including Vice President Shawn Hunter, an industry veteran who is the only employee besides Sperr who originates loans for the company. Sperr said the company originated $27 million in residential financing last year, an increase of nearly 60 percent from 2011. He’s projecting more than $30 million in loans this year, and plans to grow cautiously. He has capacity to do additional business without hiring.
“There is a customer service [opportunity] for a small company,” Sperr said. “I can move fast, I don’t have the overhead, I don’t require the same margins. Most importantly, I can stay with the customer from the application all the way to the closing table. They appreciate that immensely.”
Sperr attributed his outlook to his upbringing, growing up on a farm and understanding the feeling of “wanting something but someone’s telling you no.”
“The law says everyone is entitled to equal credit,” Sperr said. “I don’t feel I’m doing my job if I don’t give them just that, an equal opportunity to obtain credit. Will I make a little less money? I will. But that’s the reason that we have this niche.”
Sandi Arvin said she and her husband, Chuck, worked with Equity Source Mortgage for almost two years to improve their credit score before they qualified for a loan and closed on a home in Maplewood. Hunter, the company’s vice president, checked in at least monthly.
“They will help you every step of the way; they’re a partner through the whole process,” Sandi Arvin said. “Anytime I had a question, [Hunter] would answer it, knowing he hadn’t gotten a dime for all the work. I got some advice on bringing up the score and it was clear and easy to follow. We love the house.”
The expert says: Herb Tousley, director of the master’s in real estate program and adjunct faculty member in the finance department at the University of St. Thomas’ Opus College of Business, said he believes there’s a definite market for Sperr’s niche. (Sperr has a mini-MBA in real estate from St. Thomas.)
While model borrowers are easy to finance, Tousley said he wasn’t aware of others pursuing a similar niche.
“There’s a lot of people that got hurt by the recession,” Tousley said. “I haven’t seen anybody that’s willing to spend the time, even over a long period, to help them, like he said, get from a no to a yes.’’
Todd Nelson is a freelance writer in Woodbury. His e-mail address is email@example.com
© 2013 Star Tribune
The highly anticipated jobs report was released showing that employers added 175,000 new jobs in May, above the 159,000 expected signaling that the labor markets are improving, but not at a pace where the Federal Reserve will pull back on its current stimulus program. The Unemployment Rate rose to 7.6% from 7.5% and it was reported that 420,000 people entered the work force. The Bureau of Labor Statistics said that employment rose in professional and business services, food services and drinking places and retail trade.
The Great Recession took a toll on the pockets of Americans across the nation as the middle class saw their personal wealth fall by almost 50% to nearly a 40-year low. In the recent data, households have gained back 62% of what disappeared according to the figures compiled through the first quarter of this year.
Freddie Mac reported yesterday that homeowners who refinanced their mortgages in the first quarter of 2013 will save nearly $7 billion in interest payments in the next 12 months. The categories are broken down as 28% shortened their loan terms, 68% of borrowers kept the same term as the loan that they paid off, 3% chose to lengthen their term loan while more than 95% of refinancing borrowers chose a fixed-rate loan.Read More
There are a few important changes the Federal Government is implementing next year as it relates to Mortgage lending guidelines.
Sometime in January 2014 the maximum debt ratio will most likely be limited to 43%. Knowing that big brother will be watching, I assume that underwriters will want to limit to say 41% for a margin of error to insulate from future liability. This move will take a lot of borrowers out of the market as new buyers will not qualify to purchase homes across the country and in the Twin Cities marketplace.
Get ready for G-fees to go up again. Don’t know what a G-Fee is? It’s a tax on every homeowner in the US that has purchased or re-financed in the last 3 years by using a Fannie Mae or Freddie Mac backed home loan. It’s an additional fee built into the price of the loan collected by your government. We’re not talking about peanuts here either, as the fee represents almost 1% of every dollar borrowed (i.e $200K=$2000.00).
FHA Upfront Funding Fees and monthly Mortgage Insurance Premiums have risen and headed higher. They already are crazy high. Clearly, HUD is trying to discourage or limit new loans by increasing the price.
A 3-day recission period on purchase transactions? That’s the rumor and hopefully this one gets shot down as it would create a logistical nightmare in selling or buying a home.