The Best Time to Start Saving for Your Child's College Education

Imagine dropping your kid off at college for the first time. It’s bound to be an emotional day for everyone—just ask any parent who has already done it.

Now imagine that same day, and add worrying about whether you can afford all the costs that come with higher education.

SEE ALSO: Kiplinger’s Best College Values

According to the College Board, in the 2015-16 school year, the average cost for tuition and fees at a public four-year college for an in-state student was $9,410. Room and board requires another $10,138. That makes your grand total $19,548 for just one year of college. For an out-of-state student, the cost goes up to $34,031. And that’s not even including books, electronic devices and all the extras young adults are bound to want.

Plus, consider that college costs have marched steadily higher over the past few decades. Back in 1985-86, tuition and fees at a public four-year college for an in-state student was just $2,918. In 1995-96, it was $4,399. And in 2005-06, it popped up to $6,708. So, barring any major disruption to this upward trend, you can expect your little one’s education to cost substantially more than the already high current averages.

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Your imagined college drop-off day just got a lot more stressful, didn’t it?

You might be tempted to deal with this problem by putting it off, as so many of us constantly do with so many other things in life. After all, you have until Junior’s junior year of high school to worry about all this college stuff, right?

Wrong.

The longer you put off planning for college, the bigger a challenge it becomes. The smarter move is to start thinking about it all as soon as possible. The more time you give yourself to save for education, the better off you and your child will be.

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Consider this: Let’s say you get a total of $5,000 in cash gifts at your baby shower. If you put all of that money into a college fund that earns an average return of 8% annually over the next 18 years, you’ll wind up with $19,980 without adding even one more penny yourself. That’s enough to cover a year of state school and then some. Don’t think an 8% return is a reasonable assumption? Even at 6% a year, your total comes to $14,272. Not chump change.

If you can add to your savings over time, all the better. Even if you can only afford to contribute a small amount each month, your efforts will add up over time. Starting with that $5,000, if you put in another $100 a month and earn 8% a year, you’ll reach $66,845 by the time your kid turns 18.

Obviously, the math says that the best time for you to start saving is right now. If you wait until your child is a sophomore in high school to start saving for college, it would be far more difficult for you to accumulate that much in such a short amount of time.

Not sure where you can start saving? A good financial adviser can help you analyze your cash flow and formulate a plan to achieve your goals. That includes identifying specific areas in your budget where you can reduce expenses. You can also develop a cost-effective debt repayment strategy, which can free up plenty of cash for additional saving.

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That said, one word of warning: Do not forgo saving for your own retirement in order to save for your child’s education. It might sound like a heartless piece of advice, but, in this case, you have to put your own needs before those of your child’s. Remember, your kid does have the option to borrow in order to pay for college. It might not be the most desirable option, but it is an option. You won’t find any similar deals for financing your retirement.

Besides, think of it this way: By saving enough to support yourself through retirement, you ensure that your children aren’t forced to financially care for you after you run out of money.

Bottom line: You need to have an education funding review as soon as possible to help you through this financial challenge. By working with a good financial adviser on this goal, you can customize a smart plan to fit your own unique situation and ensure that you reach your goal—providing your child with the education he or she needs to succeed in the future.

Then, when the day comes for you to send your baby off into that next stage of life, you won’t have to worry about money at all. Instead, you’ll be able to focus on all the other things you’ll need to do that day, like say goodbye.

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See Also: 529 Plan FAQs

Scott Vance is a fee-only financial planner and enrolled agent serving the greater Raleigh, N.C., area. He recently retired from the Army and seeks to continue service through financial advising.

Comments are suppressed in compliance with industry guidelines. Our authors value your feedback. To share your thoughts on this column directly with the author, click here.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff.

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The Best Time to Start Saving for Your Child's College Education

It's time to expand the credit box for American homebuyers - The Hill (blog)

The dark, dark days of the mortgage market are far behind us. The early 2000s were marked by a set of practices that can only be described as abusive. Consumers saw teaser interest rates that morphed into unaffordable rates soon thereafter, high fees that were foisted upon borrowers at the closing table and loans packed with unnecessary and costly products like credit insurance.

After the financial crisis hit, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The law included provisions intended to protect both borrowers and lenders from the craziness of the previous decade, when no one was sufficiently focused on whether loans would be repaid or not.

The Consumer Financial Protection Bureau (CFPB) promulgated the rules that Dodd-Frank had called for, like the ability-to-repay and qualified mortgages rules. These rules achieved their desired effect as predatory mortgage loans all but disappeared from the market.

But there were consequences, and they were not wholly unexpected. Mortgage credit became tighter than necessary. People who could reliably make their mortgage payments were not able to get a mortgage in the first place. Perhaps their income was unreliable, but they had a good cushion of savings. Perhaps they had more debts than the rules thought advisable, but were otherwise frugal enough to handle a mortgage.

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These people banged into the reasonable limitations of Dodd-Frank and could not get one of the plain vanilla mortgages that it promoted. But many of those borrowers found out that they could not go elsewhere because lenders avoided making mortgages that were not favored by Dodd-Frank’s rules.

Commentators were of two minds when these rules were promulgated. Some believed that an alternative market for mortgages, so-called non-qualified mortgages, would sprout up beside the plain vanilla market, for good or for ill. Others believed that lenders would avoid that alternative market like the plague, again for good or for ill. Now it looks like the second view is mostly correct and it is mostly for ill.

The Urban Institute Housing Finance Policy Center’s latest credit availability index shows that mortgage availability remains weak. The center concludes that even if underwriting loosened and current default risk doubled, it would remain manageable given past experience.

The CFPB can take steps to increase the credit box from its current size. The “functional credit box” refers to the universe of loans that are available to borrowers. The credit box can be broadened from today’s functional credit box if mortgage market players choose to thoughtfully loosen underwriting standards, or if other structural changes are made within the industry.

The CFPB in particular can take steps to encourage greater non-qualified mortgage lending without needing to amend the ability-to-repay and qualified mortgages rules. CFPB Director Richard Cordray stated earlier this year that “not a single case has been brought against a mortgage lender for making a non-[qualified mortgage] loan.”

But lenders have entered the non-qualified mortgage market very tentatively and apparently need more guidance about how the Dodd-Frank rules will be enforced. Moreover, some commentators have noted that the rules also contain ambiguities that make it difficult for lenders to chart a path to a vibrant non-qualified mortgage line of business. Lenders are being very risk-averse here, but that is pretty reasonable given that some violations of these rules can result in criminal penalties, including jail time.

The mortgage market of the early 2000s provided mortgage credit to too many people who could not make their monthly payments on the terms offered. The pendulum has now swung. Today’s market offers very few unsustainable mortgages, but it fails to provide credit to some who could afford them. That means that the credit box is not at its socially optimal size.

The CFPB should make it a priority to review the regulatory regime for non-qualified mortgages in order to ensure that the functional credit box is expanded to more closely approximate the universe of borrowers who can pay their mortgage payments month in, month out. That would be good for those individual borrowers kept out of the housing market. It would also be good for society as a whole, as the financial activity of those borrowers has a multiplier effect throughout the economy.

David Reiss is a professor at Brooklyn Law School and director of academic programs at the Center for Urban Business Entrepreneurship. He is the editor of REFinBlog.com, which tracks developments in the changing world of residential real estate finance.

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The views of Contributors are their own and are not the views of The Hill.

It's time to expand the credit box for American homebuyers - The Hill (blog)

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Low Mortgage Rates, High Buyer Demand Push Up Home Prices

U.S. home values have continued to rise, pushing home prices to new, all-time highs, non-adjusted for inflation.

The Home Price Index, which is published by the Federal Housing Finance Agency (FHFA), shows U.S. property values up another 0.4 percent in October.

Home values have risen 64 of the last sixty-seven months, increasing nearly 35% nationwide.

Year-over-year, valuations are up 6.2% — one of the highest readings this decade.

With values rising, homeowners are finding themselves in a good equity position. They are refinancing with a standard conventional refinance when they lacked required equity last year.

Those still approaching positive equity are using the HARP program to refinance immediately.

The rise in home valuation is spurring U.S. home sales, too, with renters worried about “missing out” on today’s active market. Homes are expected to get more expensive into 2017, not only in sticker price but in financing costs, too.

Mortgage rates are on a historic run upward.

This is creating an urgency to buy homes.

Thankfully, there is an abundance of low- and no-down payment mortgages, including a program available from most lenders called HomeReady™.

HomeReady™ allows for just 3% down.

It’s an excellent time to be a buyer. Mortgage rates are low, home values are projected to rise, and banks are approving more mortgage applications than during any period this decade.

Click to see today’s rates (Dec 23rd, 2016)

Home Price Index Reaches New Heights

The FHFA Home Price Index is a product of the Federal Home Finance Agency (FHFA). It tracks changes in the value of a home between subsequent sales. Data is supplied via Fannie Mae and Freddie Mac as part of the mortgage approval process.

The Home Price Index (HPI) is benchmarked to a value of 100, which is meant to represent the U.S. housing market as it existed in 1991, the year in which the index was created.

In October 2016, the Home Price Index climbed to 240.2, a 0.4 percent increase from the month prior and a 6.2% increase from year-ago levels.

It’s also the highest published reading of all-time on a non-adjusted basis, surpassing the April 2007 peak by more than 6%.

The rebound suggests that housing has made a “full recovery” from last decade’s downturn — but today’s active buyers already knew that.

Homes have been selling more rapidly than in prior months and at higher prices.

Bidding wars are common with aggressively-priced homes. In many U.S. markets, it’s not usual to see homes sell above their initial list price.

Additionally, the National Association of Home Builders (NAHB) reports an influx of buyer interest, which has foot traffic through model units near its highest point in a decade. Because of these factors, home values are expected to climb in the coming months.

And in 2017, mortgage rates are unlikely to temper rising prices, as in 2016.

Freddie Mac’s weekly mortgage rate data puts the average 30-year conventional fixed-rate mortgage at 2-year highs. Fortunately, FHA and VA mortgage rates are quoted lower.

FHA mortgage rates typically run 12.5 basis points (0.125%) below rates for a comparable conventional loan, and VA mortgage rates typically out lower by 25 basis points (0.25%).

You can afford “more home” when you find your best mortgage rate.

Click to see today’s rates (Dec 23rd, 2016)

Mountain Region Leads Home Price Growth

The FHFA Home Price Index is up more than six percent from one year ago nationwide. State-by-state, the story’s a little bit different.

Not all areas are expanding at the same growth rate.

What’s happening in California, for example, is not the same as what’s happening in Florida. The Home Price Index doesn’t address state-level activity in this manner.

It does, however, group values by region.

As compared to one year ago, the Mountain region is leading the nation, rising 8.3% from the year prior. The Pacific region is a close second, at a 8.0% increase.

Annually, home price growth has varied by region:

• Pacific : +8.0% (Hawaii, Alaska, Washington, Oregon, California)


• Mountain : +8.3% (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona)


• Middle Atlantic : +3.6% (New York, New Jersey, Pennsylvania)


• East North Central : +5.6% (Michigan, Wisconsin, Illinois, Indiana, Ohio)


• South Atlantic : +7.6% (Delaware, Maryland, District of Columbia, Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida)

New England, an area which includes Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut, has changed +5.0 percent since twelve months ago.

The West North Central, which includes Oklahoma, Arkansas, Texas, and Louisiana, rose +4.9%.

What Are Today’s Mortgage Rates?

Home values are rising sharply, but the cost of homeownership is not. This is because mortgage rates are low, and lenders are approving more loans than during any period this decade.

Take a look at today’s live rates now. Rates are available with no social security number required to get started, and with instant access to your “mortgage credit scores.”

Click to see today’s rates (Dec 23rd, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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New Construction Home Sales Surpass Hot 2015 Levels

Newly-built homes continue to sell quickly.

According to the U.S. Census Bureau, November New Home Sales leaped despite limited home inventory.

A favorable mortgage environment is pushing new home sales ahead.

Current mortgage rates are still historically low, and mortgage lenders have made it simpler for first-time home buyers to get mortgage-approved for a home loan.

Fannie Mae recently added the 3% down HomeReady™ mortgage program to the full complement of low- and no-down payment loans available to today’s buyers; and purchase mortgage applications are getting approved at the highest rate since the start of the decade.

It’s an excellent time to be shopping for a home. The best deals you find in housing may be the ones you find today.

Click to see today’s rates (Dec 23rd, 2016)

New Home Sales Hit 592,000 Sales, Annualized

Each month, in conjunction with the U.S. Census Bureau, the U.S. Department of Housing & Urban Development (HUD) releases its New Home Sales report.

A “new home” is a home which has not been previously occupied; one which can be considered new construction.

For November 2016, HUD reports 592,000 new homes sold on a seasonally-adjusted, annualized basis, marking a five percent increase from the month prior, and a 16% jump from one year ago.

Builders are feeling good about their prospects.

Earlier this month, the National Association of Homebuilders (NAHB) released its Housing Market Index (HMI), a monthly homebuilder confidence survey.

The most recent Housing Market Index shows homebuilder confidence near its highest point in a decade, with home builders projecting new home sales for early-2017 to be near multi-year bests.

Demand for new homes has been strong, too, as evidenced by the high number of buyers requesting tours of model units.

If you’re hoping to buy new construction, there aren’t many homes to left to purchase. At the end of November, there were just 250,000 new homes for sale nationwide, a supply of 5.1 months.

Click to see today’s rates (Dec 23rd, 2016)

Home Supply Tight As Buyers Rush In

New home sales will end the year strong, with buyers snapping up homes at every available price point — faster than builders can build them, even.

At the current pace of sales, the complete stock of new homes for sale would be sold in 5.1 months. This means that all newly-built homes for sale would be “sold out” prior to May of next year.

Builders could have the upper hand on buyers right now — it’s a seller’s market. Home supply of less than six months typically favors sellers over buyers in home negotiations.

Today’s new home buyers, therefore, have little leverage over builders and may be unlikely to receive purchase incentives in 2017, including free upgrades and/or price breaks.

New Home Supply has been south of six months through 60 of the last 61 months. It’s no surprise, then, that home prices have moved markedly higher during that time.

Nationwide, home values are up 35% since 2012.

Click to see today’s rates (Dec 23rd, 2016)

Buy A New Home, Inexpensively

Home prices are rising but, thankfully, mortgage rates remain low.

According to Freddie Mac’s weekly Primary Mortgage Market Survey, the average conventional 30-year mortgage rate is currently 4.30% for prime borrowers; with rates for VA loans, FHA loans and USDA loans even lower.

Low rates help to make homes affordable. Low- and no-down payment mortgages make them easier to purchase.

FHA mortgages, for example, allow a downpayment of just 3.5 percent and require a credit score of 580 or better to get qualified.

Then, there is the HomeReady™ mortgage, which is a 3-percent downpayment program available via Fannie Mae. HomeReady™ is valid for loan sizes up to $417,000 and can be used by multi-generation households with non-documented rental income; and by home buyers in lower-income census tracts.

For buyers with military experience, the VA mortgage can be an attractive option.

VA loans allow for 100% financing and never require mortgage insurance. VA mortgage rates also tend to be the lowest of all commonly-available mortgage rates, based on data from loan software company Ellie Mae.

The USDA Section 502 loan is another no-downpayment mortgage option.

Commonly called the “Rural Housing Loan”, USDA loans provide 100% financing to qualified borrowers in low-density neighborhoods. This can include rural and suburban neighborhoods.

What Are Today’s Mortgage Rates?

Sales of new construction homes are strong and demand for homes remains high. Thankfully, today’s mortgage rates are low. Buyers have purchasing power even as builders hold leverage in negotiation.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today’s rates (Dec 23rd, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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Home Buyers Not Fazed By Rising Rates

Home sales posted a strong increase in November, on a seasonally-adjusted, annualized basis, according to the National Association of REALTORS®.

Rates are rising, but that hasn’t stopped buyers from moving forward with their home buying goals.

The November Existing Home Sales Report is more revealing than any in recent memory: it’s the first that takes into account skyrocketing mortgage rates following the historic U.S. presidential election.

It hints that home buyers are unfazed by rising rates, or that they are moving fast before higher rates take effect in 2017.

5.61 million existing homes sold on a seasonally-adjusted, annualized basis last month, a 0.7% increase from the month prior.

That’s good for the housing market, bad for the buyer.

Ever-increasing sales are eating up home supply, which is at its worst level in 11 months.

Home buyers could have an awfully hard time finding a home to buy in 2017.

Click to see today’s rates (Dec 23rd, 2016)

Supply Utterly Fails To Keep Pace With Buyer Demand

The National Association of REALTORS® (NAR) released its November 2016 Existing Home Sales report, which showed 5.61 million homes sold on a seasonally-adjusted, annualized basis.

An “existing home” is a pre-owned house that is being sold again and does not include newly constructed homes.

November’s reading is stronger than any in nearly 10 years. Only in February 2007 was there a higher rate of sales.

The one factor holding sales back now, though, is ultra-low inventory. As recently as 2012, home supply eclipsed six months, the inflection point between a “buyer’s market” and “seller’s market”.

Existing Home Supply fell to 4.0 months nationwide in November.

There are now under 2 million homes for sale in the U.S. That is down nine percent from a year ago, when inventory was already tight.

Low home supply is driving up prices. NAR reports that year-over-year home values have risen 57 months in a row, up seven percent since last year.

That could be good news. Higher prices could entice homeowners to sell, increasing inventory and tempering prices.

At least, that’s the hope. For now, homes remain scarce.

Click to see today’s rates (Dec 23rd, 2016)

Buyers Scramble To Find Homes

Mortgage rates are rising, and it’s lighting a fire under home buyers.

First-time and repeat buyers alike realize it’s now time to buy before rates price them out of the home they really want.

November’s home supply reading is evidence of the trend.

Supply reached lows seen only twice before in the past 10 years. There is now just a 4-month inventory of homes.

At this rate, homes would be “sold out” by March 2017. Fortunately, prices are rising, which is enticing more homeowners to put their homes on-market.

When they do, buyers snatch them up.

The NAR reports that the average home stays on the market just 43 days, down from 54 days a year ago. Homes are now selling twice as fast as in 2012, when the typical home took more than 80 days to sell.

If you are a buyer, no doubt you’ve noticed the tough competition. Your “ammunition”, then, is to secure a pre-approval from a lender. Sellers often won’t consider an offer without knowing the buyer is approved for financing. And, your real estate agent may require a pre-approval or pre-qualification letter even before you start viewing homes.

A pre-approval is better than a pre-qualification, because it is a complete, finalized approval, minus the property itself. It is based on the lender’s review of your documentation, such as bank statements, pay stubs, and tax returns.

A pre-qualification, though, is only the lender’s best estimate that you will be approved based on information given verbally. It’s not uncommon for mortgage applicants to accidentally overestimate their income when speaking to the lender.

Tax write-offs, a side business, or alimony and child support can diminish, on paper, perceived income. Sometimes buyers are not approved for as much home as they thought.

Prepared buyers are more likely to buy the home they want when it becomes available.

Click to see today’s rates (Dec 23rd, 2016)

First-Time Buyers Return To The Market

First-time home buyers are entering the housing market in waves.

Low mortgage rates and low-downpayment programs — plus skyrocketing rent payments — are enticing “on-the-fence” home buyers.

First-time buyers made up 32 percent of sales in November, one of the highest readings since 2012.

Easing mortgage standards are helping this segment of home buyers.

More than 76% of home buyers get approved, and complete their home purchase within 90 days, according to mortgage software firm Ellie Mae.

That’s up from just sixty-eight percent in 2015.

That’s significant. First-time buyers, once turned down, often think they can’t be approved elsewhere. That’s not the case.

In fact, lender overlays make some applicants ineligible at one lender, but completely acceptable at another.

Overlays are additional rules that specific lenders add to “by-the-book” guidelines. For instance, FHA guidelines state a borrower needs a minimum 580 credit score to qualify, whereas a lender may up its minimum score to 640.

But home buyers often don’t realize that the lender across the street — or online — may accept a much lower FICO.

Lenders are constantly loosening their guidelines, and it’s showing up in NAR’s Existing Home Sales report.

There have been few better times than now to be in the market to buy a home.

Click to see today’s rates (Dec 23rd, 2016)

5 Low-Downpayment Programs For First-Time Home Buyers

Mortgage rates alone are not enough to extend an opportunity to buyers. The more important piece is actually available mortgage programs.

Today’s market offers first-time home buyer down payment flexibility, the likes of which hasn’t been seen in nine years.

Even mainstays of affordable housing, such as FHA loans, have made it even easier to buy. Mortgage insurance premiums were reduced last year. And, more lenders are offering these loans at the FHA-suggested 580 minimum score.

Conventional lenders have eased downpayment requirements. The minimum down for loans backed by Fannie Mae and Freddie Mac is now 3%. The Conventional 97 mortgage and the HomeReady^TM loan are both lenient about the amount of money you need upfront.

The USDA home loan goes further than even FHA and conventional loans: it requires zero downpayment. And, closing costs can come from a gift or even a seller contribution.

Another zero-down loan comes from the U.S. Department of Veterans Affairs. The VA loan is a veteran-only mortgage for which current and former military service members earn eligibility with as little as 90 days of active service.

These mortgage programs and others are even more affordable because of today’s record-breaking mortgage rates. Home sales are rising, with little question that today’s home buying environment is one of the best in history.

What Are Today’s Mortgage Rates?

The U.S. housing market is advancing into 2017. It’s an excellent time to buy a home, and the first step is getting a rate quote for your home mortgage.

Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today’s rates (Dec 23rd, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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Qualifying For A Mortgage Is Not Mysterious

As an applicant, qualifying for a mortgage can be an unnerving experience. Before trusting you with their money, lenders seem to probe every corner of your life. What are they looking for?

More importantly, what sort of black mark prompts underwriters to grab their “DECLINED” stamps?

It’s actually a fairly transparent process. Let’s explode some of the myths and uncover what really counts.

Click to see today’s rates (Dec 23rd, 2016)

Race And Color

The standard home loam application asks for your race, color or nation of origin. You don’t have to answer this question. However, the the Home Mortgage Disclosure Act (HMDA) requires lenders to collect this information.

If you don’t provide it yourself, the lender must complete the form. If the lender completes this part of your application, he or she must report how your ethnicity was established — by looking at you or reading your surname.

So why ask? Race has nothing to do with qualifying for a mortgage. The Federal Financial Institutions Examination Council uses this data to detect discrimination. Lenders may audit their own files to prevent bias as well.

National Origin And Religion

Lenders must ask about your citizenship and immigration status. Foreign nationals are allowed to buy property with mortgages, even government-backed FHA loans.

However, you must have an Employment Authorization Document issued by the U.S. Citizenship and Immigration Services. If the EAD will expire within one year , and it has never been previously renewed, the lender will require additional information.

It’s flat-out illegal for lenders to ask about your religion.

Age And Date Of Birth

Lenders always ask your date of birth, because it’s a required input when pulling a credit report. There might be ten John Smiths in your area, but they’re unlikely to share the same birthday.

However, mortgage lenders cannot discriminate by age. Even if you’re 100 years old, if you qualify for a 30-year mortgage, you get a 30-year mortgage.

The main exception involves minors. The minimum age for being able to obligate yourself to a contract ranges between 18 and 21 in most states. In some states, the age of majority depends on whether you’ve graduated from high school.

The Federal Trade Commission (FTC) allows lenders to ask certain age-related questions when underwriting. “For example,” says the FTC, “A creditor could use your age to determine if your income might drop because you’re about to retire.”

Otherwise, lenders can include age in underwriting only if doing so favors those who are 62 years or older.

Gender And Marital Status

Clearly, it’s illegal for mortgage lenders to discriminate by gender.

Marital status is trickier. Mortgage lenders can’t ask if you’re widowed or divorced, though they are allowed to inquire whether you’re married, unmarried, or separated.

Being married (or not) can affect the way you take title to the property.

Your marital status especially matters in a “community property” state — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin.

In these states (and Alaska, if the couple “opts in”), debts taken on during a marriage obligate both spouses. One spouse cannot typically apply for a mortgage or buy property without the knowledge and permission of the other.

When buying with a government-backed loan in community property states, qualifying for a mortgage involves checking both spouses’ credit. Lenders must do this even if only one spouse applies for financing.

Divorce

You don’t have to disclose that you receive spousal or child support.

However, to count support payments as income on a mortgage application, you have to prove that you receive them reliably. You’ll also have to show that support will continue for at least three years.

If you pay or receive support from a former spouse, mortgage lenders are likely to ask for a copy of your divorce decree to verify the terms of the payments. You do have to disclose support you pay as a monthly debt.

Click to see today’s rates (Dec 23rd, 2016)

Number Of Children

The Fair Housing Act outlaws discrimination on the grounds of “familial status.”

Mortgage lenders can’t ask about your family planning. And you cannot ever be asked if you’re pregnant — even if you obviously are.

However, lenders can consider expenses related to your children. For instance, the VA’s residual income calculation is based on household size.

In addition, some programs like USDA or HomeReady set income limits for determining eligibility. For most of those programs, the larger your household, the more income you can have and still qualify.

Disability

It is illegal to discriminate against people with physical or mental disabilities, or those who receive Social Security Disability Income (SSDI).

You can count Social Security payments as income to qualify for a mortgage as long as you’ll be getting it for at least three years. If you don’t need it to qualify, you don’t have to disclose this income.

Other Factors

There’s a whole list of other considerations that don’t generally appear on a loan application, but they may affect your ability to pay your mortgage. Just because lenders don’t ask about these things doesn’t mean you shouldn’t consider them.

• Your health — the Journal of American Medicine reports that 62 percent of bankruptcies are health-related.


• Whether you have health insurance — see above.


• Your utility bills — some programs like FHA do allow you to borrow more if you buy an energy-efficient home.


• How much it costs you to commute to work. Many Americans spend about 15 percent of income on commuting.

Now You Know …

In many ways, qualifying for a mortgage is easier now than it has been for years. Programs that can help you get and stay on the housing ladder with low down payments and other incentives include:

• HomeReady from Fannie Mae — minimum three percent down payment and flexible qualifying criteria


• Home Possible from Freddie Mac — the same three percent minimum down payment


• Good Neighbor Next Door from the S. Department of Housing and Urban Development, which is designed to help law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians with discounts of up to 50 percent off the list price of the home

And those are just a few programs that could get a loan officer inking up her “APPROVED” stamp for your application.

What Are Today’s Mortgage Rates?

To get an accurate mortgage quote, you’ll have to provide some information yourself. The loan amount, your credit rating, purchase price or home value, and other factors all affect what your loan will cost.

Click to see today’s rates (Dec 23rd, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

Try the Mortgage Calculator

qualifying-for-a-mortgage-what-mortgage-lenders-dont-consider

national-mortgage-rates-for-dec-22-2016

About our Mortgage Rate Tables: The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation from those advertisers (our “Advertisers”). Other lenders’ terms are gathered by Bankrate through its own research of available mortgage loan terms and that information is displayed in our rate table for applicable criteria. In the above table, an Advertiser listing can be identified and distinguished from other listings because it includes a “Next” button that can be used to click-through to the Advertiser’s own website or a phone number for the Advertiser.

Availability of Advertised Terms: Each Advertiser is responsible for the accuracy and availability of its own advertised terms. Bankrate cannot guaranty the accuracy or availability of any loan term shown above. However, Bankrate attempts to verify the accuracy and availability of the advertised terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. Click here for rate criteria by loan product.

Loan Terms for Bankrate.com Customers: Advertisers may have different loan terms on their own website from those advertised through Bankrate.com. To receive the Bankrate.com rate, you must identify yourself to the Advertiser as a Bankrate.com customer. This will typically be done by phone so you should look for the Advertiser’s phone number when you click-through to their website. In addition, credit unions may require membership.

Loans Above $417,000 May Have Different Loan Terms: If you are seeking a loan for more than $417,000, lenders in certain locations may be able to provide terms that are different from those shown in the table above. You should confirm your terms with the lender for your requested loan amount.

Taxes and Insurance Excluded from Loan Terms: The loan terms (APR and Payment examples) shown above do not include amounts for taxes or insurance premiums. Your monthly payment amount will be greater if taxes and insurance premiums are included.

Consumer Satisfaction: If you have used Bankrate.com and have not received the advertised loan terms or otherwise been dissatisfied with your experience with any Advertiser, we want to hear from you. Please click here to provide your comments to Bankrate Quality Control.

national-mortgage-rates-for-dec-22-2016

Touch Bank and Experian announce a successful launch of FraudNet to protect online customers from fraud

Moscow, Russia, 20 December 2016 — Touch Bank, the digital bank of OTP European financial group announces the launch of FraudNet from Experian, the leading global information services company, to protect its customers from fraud.

Experian’s FraudNet is a scalable solution for the prevention of online fraud. The complex platform identifies fraudsters who open fake accounts, take over accounts of existing customers, or make fraudulent online transactions. It helps to minimise the risks of fraud and losses through recognition of devices used to access online services and monitoring of the related activities. Thus, FraudNet makes it possible to significantly increase the security of processing online applications and servicing transactions.

Touch Bank are using the solution for analysis of online credit applications.

Konstantin Guseev, Touch Bank Risk Director says: “All Touch Bank products and services work online in real time and are available remotely. It is critical for us to use the very best of the existing solutions to protect our clients against fraud. The Russian banking market has some peculiarities: in particular, domestic hackers and high-technology fraud are prevalent. This is one of the reasons for the pilot project with Experian. Now we are performing a trial run of FraudNet, using it for all online applications for credit facilities. The technology allows us to recognise, with a high degree of confidence, the device that was used for filling in the application form, and to match it against the black list of electronic devices and assess to what extent this device corresponds to the profile of the potential customer.”

Alexey Butychin, Director of Operational Centre, Experian Russia and CIS, says: “Online fraud is gathering pace and FraudNet has been designed to detect it. Fraudsters are trying to forge more and more internet transactions, from filing a credit application to account takeover and identity theft. The purpose of FraudNet is gathering and analysis of information on the device used by customers, and on the characteristics of the session. FraudNet is used by leading global organisations, including JD.com, a direct e-commerce company that has the largest market share in China by transaction volume, and Alitalia, the main Italian airline. Cooperation with Touch Bank is very important for Experian, and we are happy to provide our solution to a bank that makes digital customer service a priority.”

Konstantin Guseev adds: “We opted for Experian because FraudNet offers a sufficiently high level of customisation and individual settings, ensuring high accuracy at matching suspicious devices against black lists. It is also crucial for us that the speed of assessing each device is just a few seconds. This is particularly relevant for us, since customer expectations with regard to online services are getting higher and higher every day.”

FraudNet holds a firm position in the market: the service is used by eight leading global banks and over 120international companies across five continents. Within a month, FraudNet manages to process more than a trillion devices. During the past year, the system checked more than 20 billion transactions for the total amount of more than USD 25 trillion, and detected USD 500 million suspicious transactions in 2015.

About Touch Bank

Online bank of European financial OTP Group, a leader in the Central and Eastern Europe banking market. Touch Bank operates under the license of Russian JSC OTP Bank, in compliance with the requirements of the banking Russian legislation. https://www.touchbank.com/

About Experian

Experian is the world’s leading global information services company. At life’s big moments – from buying a home or car, to sending a child to college, to growing a business by connecting it with new customers – we empower consumers and our clients to manage their data with confidence. We help individuals take financial control and access financial services, businesses make smarter decisions and thrive, lenders to lend more responsibly, and organizations to prevent identity fraud and crime.

We have 17,000 people operating across 37 countries and every day we’re investing in new technologies, talented people and innovation to help all of our customers maximize every opportunity. Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Learn more at www.experianplc.com or visit our global content hub at our global news hub for the latest news and insights from the company.

Contacts:

Touch Bank

Alexandra Shpakova

+7 (495) 739 20 83 ext. 3653

a.shpakova@touchbank.com

Experian

Nataliya Frolova

Tel. +7 (495) 981-8416 (ext. 125)

Nataliya.Frolova@experian.com

Touch Bank and Experian announce a successful launch of FraudNet to protect online customers from fraud

Morning Briefing: Mortgage loans in third-quarter were lower credit risk - Mortgage Professional America

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  While it is true that a timeshare contract is a binding legal document, it is often mistakenly thought that such a contract cannot only be cancelled. In fact, most timeshare companies maintain that their contracts are non – cancellable. This misconception is perpetuated by timeshare companies and user groups that are funded, maintained and controlled by the timeshare industry.

  
  


• Straight Up with Jocelyn Predovich: The Truth about FHA 203k Loans
  

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Mortgage loans in third-quarter were lower credit risk

The quality of mortgage loans in the third quarter of 2016 continued to improve, CoreLogic says.

Using its new Housing Credit Index, the real estate analysts found that loans originated in the three months that ended in September were among the highest quality in terms of credit risk since 2001.

“Mortgage originations over the past 15 years have exhibited a huge swing in credit tolerance,” said Dr. Frank Nothaft, chief economist of CoreLogic.

The index incorporates six risk attributes, including the three C’s of underwriting—credit, collateral, and capacity. Using 2001 originations as a base year, the HCI shows the significant loosening of credit running up to 2006.

“This was followed by a dramatic tightening of credit in response to the real estate crash and a decline in high-credit-risk applicants beginning with the Great Recession,” Dr Nothaft explained.

He added that mortgage lenders are approving a high proportion of loans but that many consumers may believe they are unable to get a loan, as the bulk of applications are from those with higher credit profiles.

Average credit score in the third quarter of 2016 was 739, up 5 points from a year earlier; debt-to-income slipped from 35.7 to 35.4 per cent; and loan-to-value was down from 86.8 to 85.6 per cent.

Housing market looking good for 2017 says Nationwide

The outlook for the US housing market for 2017 is generally positive according to a new report from mortgage lender and insurer Nationwide.

Its Heath of Housing Markets report shows that the most sustainable housing markets are east of the Mississippi and have sustainable house price growth, affordability, solid job growth and falling delinquency rates.

“Despite rising home prices and interest rates, an increase in household formations, solid job growth, continued declines in delinquency rates and a still-low level of mortgage rates are all contributing to a sustainable housing market that should continue over the next year,” said David Berson, Nationwide senior vice president and chief economist.

Berson added that there is improvement for the first-time buyers market as millennials move out of their parents’ homes, boosted by improved job and income prospects and the decision to start their own families.

The 10 top metro areas in the index, which reflects the health of housing, are:

• NewBern,N.C

• Cleveland,Tenn.

• Syracuse,N.Y.

• Goldsboro,N.C.

• Baltimore-Columbia,Md.

• Fayetteville,N.C.

• Valdosta,Ga.

• Cumberland,M.D.-WVa.

• Columbia, S.C.

• Augusta-Richmond, Ga.-S.C.

Energy sector slowdowns continue to depress the housing outlooks in several MSAs, especially in North Dakota, Wyoming, Texas, and Louisiana.

Stabilizing oil prices and employment readings, however, are likely to improve the housing metrics in these regions, the report suggests.

These will be New York City’s hotspots in 2017

Brooklyn will be the dominant borough in New York City in 2017 although it will be affected by a general slowdown in the pace of sales across the region.

The StreetEasy Hot Market Index ranks the Bronx as the city’s hottest neighborhood of 2017 but six of the top 10 neighborhoods are in Brooklyn with one in Manhattan and two in Queens.

“This year’s list of hot neighborhoods is all about trade-offs New Yorkers are willing to make,” explained StreetEasy economist Krishna Rao. “Whether that means extending your search by one neighborhood in exchange for a nearby park or waterfront views, or extending your commute to find a relatively affordable single-family home.”

The Bronx will see renewed interest due to a fall in median price by 1.4 per cent while the other major neighborhoods will increase in price, albeit at a slower pace.

As rents continue to rise citywide, StreetEasy expects an increase in New Yorkers choosing to become homeowners in 2017.

Morning Briefing: Mortgage loans in third-quarter were lower credit risk - Mortgage Professional America

la-area-port-traffic-increases-year-over-year-in-november

Special note: Now that the expansion to the Panama Canal has been completed, some of the traffic that used the ports of Los Angeles and Long Beach will eventually go through the canal. This could impact TEUs on the West Coast in the future.

Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, inbound traffic was up 0.5% compared to the rolling 12 months ending in October. Outbound traffic was up 1.1% compared to 12 months ending in October.

The downturn in exports last year was probably due to the slowdown in China and the stronger dollar. Now exports are picking up a little.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March (depending on the timing of the Chinese New Year).

In general exports have started increasing, and imports have been gradually increasing.

la-area-port-traffic-increases-year-over-year-in-november

A-B InBev Sells Assets From Miller Merger Deals

Brewing giant Anheuser-Busch InBev (NYSE: BUD) is in the midst of selling the assets it agreed to shed in order to convince regulators to sign off on its $100 billion acquisition of SABMiller. The brewer said Thursday it was selling its ownership stake in Distell Group, a South African distiller of wine, spirits, and ciders, to the state-owned pension fund Public Investment for $645 million.

On Tuesday, A-B InBev sold a portfolio of Central and Eastern European brands to Japan’s Asahi Group for $7.8 billion. Among the brands included were Pilsner Urquell, Kozel, and Tyskie. In February, Asahi agreed to buy Italy’s Peroni and The Netherlands’ Grolsch from A-B for $2.9 billion, as well as some European Miller operations.

Other agreements made by the brewer to get its merger over the antitrust hurdles of various countries included selling Miller’s 59% stake in MillerCoors to Molson Coors (NYSE: TAP) for $12 billion, and Miller’s 49% position in the world’s best-selling beer Snow to its former joint venture partner, China Resources Beers, for $1.6 billion.

Even after all of the divestitures, the combined brewer remains a beer industry behemoth accounting for almost 30% of global beer sales, and 46% of global beer profits. Runner up Heineken will be a distant second place with an 11% share of the market.

In the U.S. A-B InBev will retain its 44% share of the beer market, but Molson Coors now has a 25% slice of the market.

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A-B InBev Sells Assets From Miller Merger Deals

Home Mortgage Loans Are Being Approved in Record Numbers - Financialbuzz.com

Anyone in real estate can gladly tell you that if you are considering buying a home, now is the time to do so. Home mortgages are being approved in record numbers and it doesn’t look as though this trend will end any time in the near future. While it would be nice to say that a booming economy is responsible for lenders’ willingness to write loans, that is only a part of the reason, and truly a very small one at that. According to statistics released by the Federal Reserve, the number of mortgage loans being written have increased for 9 consecutive quarters, indicating that lenders are making it easier for borrowers to qualify and be approved for a home loan.

Restrictions Are Being Eased

One of the reasons why so many home loans are being written is that restrictions are being eased both on a federal level and by lenders themselves. While some banks do set their own policies, make their own rules as it were, they usually follow standards and guidelines established by the federal government agencies such as the FHA, USDA, VA and of course by Freddie Mac and Fannie Mae.

Even so, banks often find those guidelines to be a bit restrictive so they write their own standards in what is called an “investor overlay.” This is where the lender’s own guidelines differ from those established by the government and these are actually the official guidelines the lender uses to make their decision. One example would be the minimum credit score required by Fannie Mae which is typically around 500. If a bank so chooses they can lower that number to 480 which would then qualify a person for a home mortgage loan with a score of 490.

How Lenders Advertise Softer Guidelines

If you hear a bank saying they are relaxing their overlay, this is exactly what they are referring to. They are probably making things easier for potential borrowers in a number of ways. Not only is that credit score going to be a bit less important but so are other qualifiers as well. Documentation on self-employment is going to be a bit easier to provide as are such things as having been denied a mortgage within the past couple years because those guidelines that kept you from getting a loan are now easier.

Some Guidelines Need to Remain Intact

While there are some guidelines that are being relaxed, others cannot be changed because of the type of mortgage loan being issued. A VA loan for example is one that is only available to veterans who served in the military and that will not change. However, veterans already have benefits which other borrowers don’t get such as the fact that a VA loan does not need to carry mortgage insurance and this loan doesn’t need a down payment as this loan is financed 100 percent.

A Look at What Fannie Mae Is Reporting

Then there is Fannie Mae, one of the two government loan processing entities that reports an amazing 77 percent of loans being closed. It has been a very long time since those numbers have been realized and why there is no doubt about the fact that loans are simply easier to get. Also, FHA government backed loans are being written in greater numbers and the down payment required here is as low as 3.5 percent, an extremely low amount totally unheard of with any other kind of loan.

With Mortgages Easier to Get – 2017 Promises to Be a Very Good Year

With mortgages easier to get approved for, analysts are saying that 2017 may be a record setting year in residential real estate, unlike any seen since the downturn in the economy in 2009. It has been a long time in coming and although the economy has been steadily improving, lenders have been unwilling to loosen some of their policies simply because of what happened at the end of the last decade. They had been afraid to witness a repeat of that horrific time when the bottom literally dropped out of the economy here and abroad.

With home mortgage loans easier to be approved for and an economy that continues to get stronger, analysts predict another record setting year in 2017. Many believe that it is actually a good thing that standards are easing a bit because prices are on the rise. It’s truly a seller’s market and that means that buyers will be held to the asking price in most cases but with the availability of mortgage loans, everyone’s a winner.

Home Mortgage Loans Are Being Approved in Record Numbers - Financialbuzz.com

Honeywell shares dip after weak fourth-quarter earnings forecast

Aerospace parts maker Honeywell International son Friday forecast 2017 organic sales growth rate to improve for the first time in three years, partly helped by the stabilizing oil and gas market.

The company’s shares, which fell as much as 2.4 percent in morning trading, pared losses and were up nearly 1 percent in the afternoon. The stock ended the day about flat.

Honeywell — which makes parts for business-jet makers Bombardier , Textron and General Dynamics — said a higher tax rate in the current quarter led to fourth-quarter earnings being forecast at the lowest end of its previous range.

The company expects 2017 organic sales to grow in a range of 1 to 3 percent. The growth rate was up 3 percent in 2014, 1 percent in 2015 and is expected to be down 1 to 2 percent in 2016.

Honeywell forecast higher overall demand in 2017, particularly in the oil and gas market and high-growth regions including China and India.

Oil prices have rise nearly 48 percent this year to about $55 a barrel, boosted by the Organization of the Petroleum Exporting Countries’ decision to curb oil output.

“In oil and gas, we’re seeing more positive sentiment from our customers and signs of a slight recovery…which is freeing up projects that had been delayed,” CFO Thomas Szlosek, said on a conference call.

The Morris Plains, New Jersey-based company gets about 12 to 14 percent of its revenue from the oil and gas industry.

Honeywell said organic sales at its performance materials and technologies unit, which makes catalysts and adsorbents used in petroleum refining, are expected to be up 2 to 4 percent in 2017.

The diversified industrial conglomerate’s revenue has been hurt in 2016 due to lower capital spending by oil and gas customers and slowing business jet sales.

The company said on Friday it expects the business jet market to remain weak in 2017, but expected higher defense spending by the United States.

Honeywell’s sales in the overall aerospace business, its biggest, are expected to be down 1 to 4 percent at $14.2 billion to $14.6 billion in 2017.

The company said it expects fourth-quarter earnings of about $1.74 per share, compared with its previous forecast of $1.74 to $1.78.

Honeywell forecast 2017 earnings per share of $6.85 to $7.10, compared with the average analysts’ estimate of $7.08 per share, according to Thomson Reuters.

Up to Thursday’s close, Honeywell’s stock had risen about 13 percent this year, compared with a 10.2 percent rise in the S&P 500 index.

Honeywell shares dip after weak fourth-quarter earnings forecast

post-election-surge-in-mortgage-rates-paints-gloomy-picture

December 16, 2016

Post-Election Surge in Mortgage Rates Paints Gloomy Picture for Lenders

Katie Penote

202-752-2261

WASHINGTON, DC – Mortgage lender expectations for near-term mortgage demand plummeted amid the rapid rise in interest rates following the U.S. presidential election, according to Fannie Mae’s fourth quarter 2016 Mortgage Lender Sentiment Survey®. Conducted after the election, the survey results show that the net share of lenders expecting an increase in purchase mortgage demand over the next three months was at or near survey lows across the different loan types – with a majority of lenders citing “mortgage rates are not favorable” for their worsening near-term outlook. Additionally, for refinance mortgage demand, the net share of lenders reporting growth expectations over the next three months fell to a survey low across all loan types. On net, after three straight quarters of a positive profit margin outlook, lenders reported a significant negative profit margin outlook, reaching a new survey low.

“The survey captured lenders’ bearish sentiment driven by the recent surge in mortgage rates – a level of bearishness last seen in the summer of 2013 during the taper tantrum,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The sudden surge in mortgage rates weighed on expected future purchase and refinance volume. Downbeat production expectations suppressed lenders’ profit margin outlook to the worst showing in the survey’s short history. Rates could slowly unwind in coming quarters, reversing some of the expected decline in volume. However, the potential normalization of interest rates after a sustained period of strong refinancing volumes presents the biggest business challenge facing mortgage lenders in some time.”

MORTGAGE LENDER SENTIMENT SURVEY HIGHLIGHTS

Purchase mortgage demand

• Purchase mortgage demand over the prior three months remained similar to the same time last year.


• However, on net, demand expectations for the next three months were at or near survey lows across the different loan types (GSE eligible, non-GSE eligible, government).


• The top reason for worsening near-term outlook across all mortgage types was “Mortgage rates are not favorable,” cited by two-thirds of lenders for conventional loans and slightly more than half of those for government loans – a survey high.

Refinance mortgage demand

• For refinance mortgages, the net share of lenders reporting rising demand over the prior three months rose significantly compared with the same period a year ago across all loan types.


• On net, lenders reporting demand growth expectations for the next three months dipped to a survey low across all loan types.

Easing of credit standards

• Lenders continued to report modest net easing of credit standards across all loan types for the prior three months, and continued to report expectations to modestly ease credit standards over the next three months, with the majority of lenders expecting their credit standards to stay about the same.

Mortgage execution

• Lenders continued reporting expectations to grow GSE (Fannie Mae and Freddie Mac) and Ginnie Mae shares and reduce portfolio retention shares.

Mortgage servicing rights execution

• Consistent with last quarter (Q3 2016) and a year ago (Q4 2015), lenders continued to report expectations to slightly decrease their share of MSR sold and MSR retained (serviced in-house); and slightly increase the share of MSR retained that is serviced by a sub-servicer.
  
  

Profit margin

• Lenders reported a significant net negative profit margin outlook after three straight quarters of net positive profit margin outlook, reaching a survey low but in line with a year ago when lenders focused on TRID implementation, likely reflecting their lower mortgage demand expectations.


• Lenders expecting a lower profit margin outlook pointed primarily to market trend changes (e.g., shift from refinance to purchase) as the top reason.
  
  • While government regulatory compliance has historically been one of the top two reasons for lenders’ decreased profit margin outlook, in Q4 2016 it fell significantly from the prior quarter’s (Q3 2016) survey low and from this time last year (Q4 2015), reaching a new survey low.
  
  
  • “Changes in market trends” is now the top reason for lenders’ decreased profit margin outlook, reaching a new survey high.
  
  

The Mortgage Lender Sentiment Survey by Fannie Mae polls senior executives of its lending institution customers on a quarterly basis to assess their views and outlook across varied dimensions of the mortgage market. The Fannie Mae fourth quarter 2016 Mortgage Lender Sentiment Survey was conducted between November 10, 2016 and November 20, 2016 by Penn Schoen Berland in coordination with Fannie Mae. For detailed findings from the fourth quarter 2016 survey, as well as survey questionnaires and other supporting documents, please visit the Fannie Mae Mortgage Lender Sentiment Survey page on fanniemae.com. Also available on the site are special topic analyses, which focus on findings and analyses of important industry topics.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Economic & Strategic Research (ESR) group or survey respondents included in these materials should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/FannieMae.

post-election-surge-in-mortgage-rates-paints-gloomy-picture

federal-reserve-board-adopts-final-rule-to-strengthen-the-ability-of-government-authorities-to-resolve-in-orderly-way-largest-domestic-and-foreign-banks-operating-in-the-united-states

Release Date: December 15, 2016

For immediate release

The Federal Reserve Board on Thursday adopted a final rule to strengthen the ability of government authorities to resolve in an orderly way the largest domestic and foreign banks operating in the United States without any support from taxpayer-provided capital.

These institutions will be required to meet a new long-term debt requirement and a new “total loss-absorbing capacity,” or TLAC, requirement. The final rule applies to domestic firms identified by the Board as global systemically important banks (GSIBs) and to the U.S. operations of foreign GSIBs.

To reduce the systemic impact of the failure of a GSIB, a bankruptcy or statutory orderly resolution process imposes the losses of a failed GSIB on investors rather than taxpayers as the critical operations of the firm continue to function. Requiring a GSIB to maintain sufficient amounts of long-term debt, which can be converted to equity during resolution, would help achieve this objective by providing a source of private capital to support the firm’s critical operations during resolution.

“The rule is guided by common sense principles: bank shareholders and debt investors should place their own money at risk so depositors and taxpayers are well protected, and the biggest banks must bear the costs that come with their size,” Chair Janet L. Yellen said.

Like the proposal issued in October 2015, the final rule will set a minimum level of long-term debt for domestic GSIBs and the U.S. operations of foreign GSIBs that could be used to recapitalize the critical operations of the firms upon failure. The complementary TLAC requirement will set a new minimum level of total loss-absorbing capacity, which can be met with both regulatory capital and long-term debt. These requirements will improve the prospects for the orderly resolution of a failed GSIB and will strengthen the resiliency of all GSIBs.

“While equity is far and away the best form of capital to ensure the resilience of a firm,

the whole point of resolution planning is to prepare for the eventuality, no matter how unlikely, that the firm might become insolvent in some circumstances,” Governor Daniel K. Tarullo said. “By definition, at that point equity capital will either be totally lost, or at least below the level markets have historically required for a financial intermediary to be credible. The long-term debt required by this proposal would survive the disappearance of a bank’s equity and resultant failure, and would be available for conversion into new equity.”

The final rule also will require the parent holding company of a domestic GSIB to avoid entering into certain financial arrangements that would create obstacles to an orderly resolution. These “clean holding company” requirements will include bans on issuance of short-term debt to external investors and on entering into derivatives and certain other types of financial contracts with external counterparties.

In response to comments received on the proposed rule, the Board made several notable changes:

• The final rule will grandfather long-term debt issued on or before December 31, 2016, by allowing it to count toward a firm’s long-term debt requirement even if the debt has certain contractual clauses not allowed by the rule. To count toward a firm’s long-term debt requirements, debt issued after that date will need to fully comply with the rule;


• While foreign firms’ U.S. operations will generally be required to issue long-term debt to their foreign parent, the U.S. operations of certain foreign firms will be permitted to issue long-term debt to external parties, rather than solely to their parent companies, consistent with their resolution strategy; and


• The long-term debt requirements of foreign firms were slightly reduced to be consistent with the treatment of domestic firms, reflecting the expectation that the losses of those firms would slightly reduce their balance sheets and the capital needed for recapitalization.

All firms will be required to comply with the rule by January 1, 2019.

For media inquiries, call 202-452-2955.

Federal Register Notice (PDF)

Opening Statement by Chair Janet L. Yellen

Opening Statement by Governor Daniel K. Tarullo

Statement by Governor Lael Brainard

Board Votes

Related Information

Meeting Memoranda

Open Board Meeting on December 15, 2016

2016 Banking and Consumer Regulatory Policy

federal-reserve-board-adopts-final-rule-to-strengthen-the-ability-of-government-authorities-to-resolve-in-orderly-way-largest-domestic-and-foreign-banks-operating-in-the-united-states

comments-on-november-housing-starts

Earlier: Housing Starts decreased to 1.090 Million Annual Rate in November

The housing starts report this morning was well below consensus because of the sharp decline in multi-family starts. However multi-family permits were decent in November, so multi-family starts will probably rebound in December.

Meanwhile single family starts were decent, and there were upward revisions to the prior two months combined. Just remember that multi-family can be very volatile … no worries.

This first graph shows the month to month comparison between 2015 (blue) and 2016 (red).

Click on graph for larger image.

Year-to-date starts are up 4.8% compared to the same period in 2015. My guess was starts would increase 4% to 8% in 2016, and that looks right.

Multi-family starts are down 4.1% year-to-date, and single-family starts are up 9.6% year-to-date.

Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).

These graphs use a 12 month rolling total for NSA starts and completions.

The blue line is for multifamily starts and the red line is for multifamily completions.

The rolling 12 month total for starts (blue line) increased steadily over the last few years – but has started to decline. Completions (red line) have lagged behind – but completions have been generally catching up (more deliveries, although this has dipped lately). Completions lag starts by about 12 months.

I think most of the growth in multi-family starts is probably behind us – in fact multi-family starts probably peaked in June 2015 (at 510 thousand SAAR) – although I expect solid multi-family starts for a few more years (based on demographics).

The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion – so the lines are much closer. The blue line is for single family starts and the red line is for single family completions.

Note the exceptionally low level of single family starts and completions. The “wide bottom” was what I was forecasting several years ago, and now I expect several years of increasing single family starts and completions.

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