Wells Fargo Scandal, Cash sales for homes declined in June, Mortgage Application fell in latest week
September 28, 2016
Wednesday – September 28
Wells Fargo CEO and Chairman John Stumpf will forfeit $41 million in unvested equity and temporarily forgo his salary as the company launches an investigation in the retail banking unit. The bank was hit with $185 million in penalties for opening fee-generated accounts without the knowledge of customers. The bank fired 5,300 employees who were involved in the scandal.
Cash sales for homes continued to decline in June and have fallen to less than 30% for the first time since the housing crisis began, according to analytics firm CoreLogic. Cash sales peaked at nearly 44% in January of 2011, while before the crisis began in late 2008, cash sales averaged 25% of market sales. From June 2015 to June 2016, cash sales fell 2.5%, down 0.9% from May to June. At the current rate, cash sales could average 25% by mid-2018.
Mortgage application volume fell in the latest week from one week earlier, but are higher than a year ago. The Mortgage Bankers Association reports that its Market Composite Index, a measure of total mortgage application volume, fell 0.7% after the 7.3% decline in the previous week. The refinance index declined 8%, but increased 34% from a year ago, while the purchase index rose 1% and is up 10% from the same week a year ago. The MBA report that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.66% from 3.70%, with points decreasing to 0.33 from 0.38. For jumbo loans, the average contract interest rate for 30-year fixed-rate mortgages (greater than $417,000) increased to 3.69% from 3.64%, with points decreasing to 0.29 from 0.36.