Bankrate: Mortgage Rates Continue to Drop


NEW YORK, April 17, 2014 /PRNewswire/ – Mortgage rates fell further this week, with the benchmark 30-year fixed mortgage rate retreating to 4.43 percent, according to Bankrate.com’s weekly national survey. The average 30-year fixed mortgage has an average of 0.33 discount and origination points.

To see mortgage rates in your area, go to  http://www.bankrate.com/funnel/mortgages/
.

The average 15-year fixed mortgage rate fell to 3.48 percent, while the larger jumbo 30-year fixed mortgage rate dropped to 4.43 percent. Adjustable rate mortgages decreased as well, with the 5-year slipping to 3.32 percent; and the 7-year and 10-year falling to 3.56 percent and 3.84 percent, respectively.

“Mortgage rates dropped for the second week in a row amid mixed economic news abroad and in the United States,” said Polyana da Costa, senior mortgage analyst at Bankrate.com.  “Despite some recent economic news, the United States is still perceived by investors as one of the safest places to park their money.  Whenever investors seek safety in U.S. Treasuries and mortgage bonds, the yields on those investments tend to fall.  Mortgage rates normally follow that trend.”

On May 1, 2013, the average 30-year fixed mortgage rate was 3.52 percent. At that time, a $200,000 loan would have carried a monthly payment of $900.32. Less than a year later, with the average rate at 4.43 percent, the monthly payment for the same size loan would be $1,005.07, a difference of $105 per month for anyone that waited.

SURVEY RESULTS

30-year fixed: 4.43% — down from 4.47% last week (avg. points:0.33)

15-year fixed: 3.48% — down from 3.52% last week (avg. points:0.23)

5/1 ARM: 3.32% — down from 3.34% last week (avg. points:0.22)

Bankrate’s national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week’s move in mortgage rates, go to  http://www.bankrate.com/mortgagerates
.

The survey is complemented by Bankrate’s weekly Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next seven days. The panelists are divided, with 22 percent forecasting an increase in the coming week, and an equal 22 percent predicting rates to fall further. The remaining 56 percent expect mortgage rates to remain more or less unchanged in the next week.

For the full mortgage Rate Trend Index, go to  http://www.bankrate.com/news/rate-trends/mortgage.aspx
.

To download the Bankrate Mortgage Calculator Mortgage Rates iPhone App 2.0 go to
https://itunes.apple.com/us/app/bankrate-mortgage-calculator/id551454062?mt=8
.

About Bankrate, Inc.

Bankrate 

/quotes/zigman/5437527/delayed/quotes/nls/rate RATE
+0.70%


is a leading publisher, aggregator, and distributor of personal finance content on the Internet. Bankrate provides consumers with proprietary, fully researched, comprehensive, independent and objective personal finance editorial content across multiple vertical categories including mortgages, deposits, insurance, credit cards, and other categories, such as retirement, automobile loans, and taxes. The Bankrate network includes Bankrate.com, our flagship website, and other owned and operated personal finance websites, including CreditCards.com, Interest.com, Bankaholic.com, Mortgage-calc.com, CreditCardGuide.com, InsuranceQuotes.com, CarInsuranceQuotes.com, InsureMe.com, and NetQuote.com. Bankrate aggregates rate information from over 4,800 institutions on more than 300 financial products. With coverage of nearly 600 local markets in all 50 U.S. states, Bankrate generates over 172,000 distinct rate tables capturing on average over three million pieces of information daily. Bankrate develops and provides web services to over 80 co-branded websites with online partners, including some of the most trusted and frequently visited personal finance sites on the Internet such as Yahoo!, CNN Money, CNBC, and Comcast. In addition, Bankrate licenses editorial content to over 500 newspapers on a daily basis including The Wall Street Journal, USA Today, The New York Times, The Los Angeles Times, and The Boston Globe.

Logo - http://photos.prnewswire.com/prnh/20130805/FL58072LOGO

For more information contact:
Kayleen Yates
Senior Director, Corporate Communications
kyates@bankrate.com
 
(917) 368-8677     

SOURCE Bankrate, Inc.

Copyright (C) 2014 PR Newswire. All rights reserved

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Article source: http://www.marketwatch.com/story/bankrate-mortgage-rates-continue-to-drop-2014-04-17?reflink=MW_news_stmp

Under new FHA rules, bad credit can still get you a mortgage

Mortgage lenders are students of history.

They’ve learned that when people haven’t paid their bills, it’s likely that practice will continue.

The past is prologue – except when there are extenuating circumstances. The federal government doesn’t want people who’ve missed bills through no fault of their own to be kept from buying a home.

Enter the FHA’s “Back to Work” program, which has begun to allow people with serious dents in their credit history – a foreclosure, bankruptcy, short sale, or deed-in-lieu of foreclosure – to be approved for a new government-backed mortgage just 12 months after the negative event.

“Normally it takes three to five years [after one of the above] to be eligible” for a new FHA mortgage, notes Heather Shanahan, director of program development at Springboard, a housing and credit counseling nonprofit.

But, if you can show that your household income decreased by 20 percent or more because of a loss of a job, or because you own a business that suffered, or you’ve had your hours cut, you may qualify for a FHA mortgage, says Shanahan, provided you’ve paid bills regularly for at least 12 months after one of these credit stains.

“I haven’t heard of a lot of borrowers using this program,” observes Don Frommeyer, president of The Association of Mortgage Professionals. “The financial crisis began several years ago. For many, it’s been years ago when they were laid off.”

But it can take a couple of years of missed payments before a foreclosure actually occurs, counters Shanahan, who says Springboard has seen “a steady stream” of people taking the first step – an hour long phone credit counseling session – from a HUD-approved counseling agency [visit hud.gov for a list of agencies].

Lenders also want to see proof of timely rent payments, Shanahan says. For example, if after the loss of a home people lived with friends or family, it will be difficult to be approved, she explains.

— Marilyn Kennedy Melia

© CTW Features


Article source: http://www.philly.com/philly/classifieds/real_estate/Under_new_FHA_rules_bad_credit_can_still_get_you_a_mortgage.html

A Guide to Reverse Mortgages

In recent years,
questions about reverse mortgages, and whether or not they are a practical way
to supplement retirement income, have become more frequent. I will explain the specifics of reverse mortgages in more detail for those who aren’t familiar with all of the benefits and costs.

What is a reverse mortgage? As you would guess, a lender
makes payments to you based on a percentage of your home’s appraised value.
There are three kinds of reverse mortgages.

  • Proprietary/private:
    where a private company creates and backs the loan.
  • Single purpose: where the loan proceeds can only be used for a specific purpose, stated
    by the lender. For example, money from a
    single purpose reverse mortgage could only be used to cover property expenses, including repairs, energy efficient improvements, taxes and insurance. Single
    purpose loans are not available everywhere, and are usually offered through
    local government agencies or nonprofit organizations. This also makes them the
    least expensive option.
  • The Home
    Equity Conversion Mortgage:
     It is the most popular type of reverse
    mortgage. A HECM is backed by the
    Federal Housing Authority, or FHA, and is federally insured.  

I’ll be focusing on HECMs
for this post. HECMs allow a
homeowner or homeowners, aged 62 and older, who either own their home outright or have a small
existing mortgage, to borrow money against the equity of their home. Only single-family houses, occupied by the borrower
or two to four unit homes, with at least one unit occupied by the borrower, are
eligible. During the application process you’re required to meet
with a government-approved housing counselor who will determine if you’re financially
capable of paying the costs associated with the loan.

Because you’re taking out a loan against your home’s value,
you’re still the property owner until the loan is due. This means you’ll continue
to pay property taxes, homeowners’ insurance, and maintenance costs. The
balance of the loan becomes due when the borrower moves out of the house, or
passes away. The house is then liquidated, and the proceeds are used to pay off
the balance of the loan.

There are limits to how much a person can borrow using a HECM. A person can only take up to the FHA
HECM mortgage limit of $625,500. If
the home’s value is under that cap, then the borrower is able to access a
percentage of home’s appraised value. However, owners with a highly valued home
and little or no mortgage, may qualify for larger loan advances through a propriety-reverse mortgage, though the cost will likely be higher.

A reverse mortgage is typically structured so that the total
loan amount, including interest and fees, will not exceed the value of the home
over the life of the loan. However, if the proceeds from your home’s sale
exceed the balance of the loan, then you, your spouse, or your heirs will
receive the difference. Should the sale not cover the loan balance, then, in most
cases, the lenders insurance will cover the difference.

The fact that reverse mortgages allow people to stay in
their own homes is one of its major benefits, but if you’re considering
relocating or renting, then this is not your best option. If you become sick
and have to move into an assisted living facility for 12 consecutive months, then
your home is no longer considered a primary residence, and the bank has the
ability to take control over the house. This can become a major problem if only
one borrower is listed on the mortgage.

The amount of money you can expect to receive from a reverse
mortgage depends on several factors. The major components are your age,
value of the home and the length of the loan. If there are two people listed
on the mortgage, then the age of the youngest borrower is used. The current
interest rate, initial mortgage insurance premium, closing costs and repair
costs can also play a role in determining the monthly amount that you can
expect to receive.

Current interest rates are important to consider, because
they play two very important roles in the reverse mortgage process. First, they
help determine a borrower’s loan advance amounts. Second, they determine the interest
charged on the outstanding balance. It’s important to understand that the interest
accrues over time, increasing the loan amount. This means that interest
payments can take up a decent portion of your reverse mortgage payments,
leaving you with less money than expected.

There are several ways to structure payments from a reverse
mortgage, but the most common are:  

  • Tenure payments: You’ll receive equal monthly payments, as long as at least one
    borrower is living and continues to occupy the property as the principal
    resident. 
  • Term payments: equal monthly payments for a fixed period of selected months.
  • Line of credit: unscheduled payments, in varying amounts, based upon your needs,
    until the loan is exhausted.
  • Single disbursement lump sum: a single payment when the loan is closed. However, recent
    rule changes could see payouts reduced by 10 percent to 18 percent, depending on underwriting
    factors.

Insurance premiums. All FHA backed loans require lenders to collect mortgage
insurance premiums. If you withdraw less than
60 percent of the available loan amount, during the first year, the mortgage insurance premium is 0.5 percent of
the maximum claim amount. If you take over 60 percent, the mortgage insurance premium increases to 2.5 percent. Borrowers
will also pay a 1.25 percent annual premium that based on the maximum claim amount.

Outside of the insurance costs, reverse mortgages also tend
to have high fees, including above average origination costs, closing costs and include numerous service fees. Origination fees can get fairly expensive.
The maximum allowed origination fee on federally insured loans is 2 percent of the
initial $200,000 of a home’s value and 1 percent of the remaining value, with a cap of
$6,000. As you can see, the costs of a reverse mortgage can quickly eat away at
the amount of money available. 

A reverse mortgage isn’t right for everyone. You should
consult a financial professional who is familiar with your situation before you
would take this option. Although being able to access the equity in your house
without having to make monthly payments is attractive, the costs and fees associated
with a reverse mortgage are negatives that must be considered. People should remember they might not be able to bequeath their house to heirs, which could also be a
significant deterrent. 

Seniors with a high credit score should carefully consider
and analyze their options, including traditional mortgages and home equity
loans. If you can comfortably make the monthly payments, then a home equity
loan might be a way to accomplish the same goal, while also avoiding the fees
associated with a reverse mortgage.

Article source: http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/04/17/a-guide-to-reverse-mortgages

Mortgage Rates Drop But Closing Costs Climb; Buyers To Face Higher Costs In …

Loan closing costs rise 6% in 2013

Since the start of the year, U.S. mortgage rates have moved lower in all 50 states.

From California to Florida, the average 30-year fixed rate mortgage rate is down more than one-quarter percentage point. However, loans are necessarily “cheaper”. As mortgage rates today drop, loan closing costs are on the rise.

According to Bankrate.com, closing costs climbed in 2013 for the second straight year, and are likely to rise in 2014, too.

Click here to get today’s mortgage rates.

Mortgage Closing Costs Rise 6 Percent

It’s getting more expensive to get a mortgage.

Once annually, Bankrate.com gathers closing cost data from all 50 states, and compares how those costs have changed from the year prior. Costs are split into (1) lender fees, and (2) non-lender fees, a class which includes fees for third-party services such as appraisals and credit reports.

The figures are based on a $200,000 purchase price with twenty percent downpayment, and assume that the borrower is of “prime” credit quality with a 740 FICO score or higher.

The survey specifically excludes property-specific fees such as homeowners insurance, real estate taxes, and title search and insurance. It also excludes per diem interest, mortgage insurance (as with an FHA loan, for example), and other prepaid items.

As compared to the year prior, closing costs climbed 6% in 2013; which follows a whopping 37% average increase in 2012.

Consumer costs are rising because lenders face higher compliance costs as compared to recent years. The regulatory changes of last decade’s Dodd-Frank Act have required mortgage lenders to monitor, track, and manage more parts of the mortgage approval process; and many have hired additional personnel to ensure the new rules are followed.

Lenders are passing their higher per-loan costs on to consumers.

Click here to get today’s live mortgage rates.

Where Are Closing Costs Cheapest?

Like mortgage rates, loan closing costs vary by state.

According to the Bankrate.com survey, closing costs are highest in Hawaii, where the average fee per loan amounts $2,920. Second on the list is Alaska, where the closing costs average $2,675.

Next is South Carolina, where closing costs average $2,658, followed by California.

In California, closing costs vary by geography. Buyers in San Francisco, San Jose, Oakland and other northern parts of the state pay different sets of costs than buyers in Los Angeles, San Diego and Orange County.

Overall, however, California residents pay $2,640 on average.

It’s also noteworthy that New York fell from #1 most expensive state for closing cost in 2012 to the 37th most expensive in 2013. Closing a purchase mortgage in New York now averages $2,331.

The five most expensive states for closing costs are:

 

On the other end of the spectrum, closing costs are currently cheapest in Wisconsin. Home buyers pay only about $2,120, on average, in the Badger State.

Click here to get today’s live rates.

Are Closing Costs Negotiable?

For home buyers, lender closing costs are rarely negotiable. This is because, since 2010, lenders are required by law to charge the same fees to all customers for the same services performed.

However, there are several ways to reduce your closing costs and the amount required at your closing. The first method is to use a low-cost or zero-closing cost mortgage.

With a low-cost or zero-closing cost mortgage, your lender will raise your mortgage rate slightly in exchange for a closing cost credit which offsets some or all of your closing costs due at settlement.

In general, a mortgage rate increase of 0.250 percentage points will “erase” costs equal to 1% of your loan size such that a $400,000 loan would receive a $4,000 closing cost credit. Low- and zero-closing cost mortgage options are popular among refinancing households, too. 

A second way to reduce your closing costs is to shop for low title fees. This is your right as a customer. You are not required to use your real estate agent’s recommended title agency.

And, third, you can reduce your amount due at closing via Seller Concessions.

A “Seller Concession” is when the seller agrees to pay a portion of your closing costs at closing so that you don’t have to.

Lenders allow such concessions of up to 3% of the purchase price so long as the Seller Concession is noted in the contract; and the concessions do not exceed the total closing costs of the loan.

Also, concessions must not be labeled “Closing Cost Credit” on the settlement statement. If they’re labeled anything else, the lender will reject them in full.

See Today’s Live Rates And Closing Costs

Closing costs climbed in 2012 and 2013 because of regulatory changes and costs are expected to rise into 2015 as well. Even if mortgage rates drop, the cost of buying a home is expected to increase.

See today’s live mortgage rates. Rates are available online at no cost and with no obligation. Plus, no social security number is required to get started.

Click here to for more closing cost options and a quote.

Article source: http://themortgagereports.com/14793/closing-costs-mortgage-rate-zero-cost

Average US 30-Year Mortgage Rate Falls to 4.27 Pct

Associated Press

Average U.S. rates on fixed mortgages fell this week for the second straight week as the spring home-buying season begins.

Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year loan fell to 4.27 percent from 4.34 percent last week. The average for the 15-year mortgage eased to 3.33 percent from 3.38 percent.

Mortgage rates have risen about a full percentage point since hitting record lows about a year ago.

Many analysts have been expecting an improving economy to lift the housing market, which has been recovering over the past two years. But housing has struggled to maintain momentum. Rising home prices and higher mortgage rates have held back some potential home buyers. Others have had trouble qualifying for mortgages.

The Commerce Department reported Wednesday that U.S. home construction rose moderately in March as builders resumed work at the end of a frigid winter. But applications for building permits slid, clouding the outlook for future construction.

The increase in mortgage rates over the year was driven by speculation that the Federal Reserve would reduce its $85 billion-a-month bond purchases, which have helped keep long-term interest rates low. Indeed, the Fed has announced three $10 billion declines in its monthly bond purchases since December. The latest plan is to cut its monthly long-term bond purchases to $55 billion because it thinks the economy is steadily healing.

The Fed also said after its two-day policy meeting last month that even after it raises short-term interest rates, the job market strengthens and inflation rises, the central bank expects its benchmark short-term rate to stay unusually low.

Fed Chair Janet Yellen, in her first major speech on Fed policy, said Wednesday that the U.S. job market still needs help from the central bank and that it must remain intent on adjusting its policy to respond to unforeseen challenges.

Yellen also made clear she believes the still-subpar economic recovery will continue to need the help of low rates for some time. An increase in short-term interest rates would elevate borrowing costs and could hurt stock prices.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan remained at 0.6 point.

The average rate on a one-year adjustable-rate mortgage rose to 2.44 percent from 2.41 percent. The average fee held steady at 0.5 point.

The average rate on a five-year adjustable mortgage fell to 3.03 percent from 3.09 percent. The fee was unchanged at 0.5 point.

Article source: http://abcnews.go.com/Business/wireStory/average-us-30-year-mortgage-rate-falls-427-23361272

Average 30-year mortgage rate falls to 4.27%

WASHINGTON (AP) — Average U.S. rates on fixed mortgages fell this week for the second straight week as the spring home-buying season begins.

Mortgage buyer Freddie Mac said Thursday that the average rate for the 30-year loan fell to 4.27% from 4.34% last week. The average for the 15-year mortgage eased to 3.33% from 3.38%.

Mortgage rates have risen about a full percentage point since hitting record lows about a year ago.

Many analysts have been expecting an improving economy to lift the housing market, which has been recovering over the past two years. But housing has struggled to maintain momentum. Rising home prices and higher mortgage rates have held back some potential home buyers. Others have had trouble qualifying for mortgages.

The Commerce Department reported Wednesday that U.S. home construction rose moderately in March as builders resumed work at the end of a frigid winter. But applications for building permits slid, clouding the outlook for future construction.

The increase in mortgage rates over the year was driven by speculation that the Federal Reserve would reduce its $85 billion-a-month bond purchases, which have helped keep long-term interest rates low. Indeed, the Fed has announced three $10 billion declines in its monthly bond purchases since December. The latest plan is to cut its monthly long-term bond purchases to $55 billion because it thinks the economy is steadily healing.

The Fed also said after its two-day policy meeting last month that even after it raises short-term interest rates, the job market strengthens and inflation rises, the central bank expects its benchmark short-term rate to stay unusually low.

Fed Chair Janet Yellen, in her first major speech on Fed policy, said Wednesday that the U.S. job market still needs help from the central bank and that it must remain intent on adjusting its policy to respond to unforeseen challenges.

Yellen also made clear she believes the still-subpar economic recovery will continue to need the help of low rates for some time. An increase in short-term interest rates would elevate borrowing costs and could hurt stock prices.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan remained at 0.6 point.

The average rate on a one-year adjustable-rate mortgage rose to 2.44% from 2.41%. The average fee held steady at 0.5 point.

The average rate on a five-year adjustable mortgage fell to 3.03% from 3.09%. The fee was unchanged at 0.5 point.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Article source: http://www.usatoday.com/story/money/personalfinance/2014/04/17/mortgage-rates/7823375/

Law firm’s revised debt-collection letter results in $49.5K settlement of …

A New Jersey law firm and a co-defendant have agreed to pay, and a federal judge on Tuesday approved, a $49,500 class action settlement over the language Mattleman, Weinroth Miller used in a collection letter.

The Fair Debt Collection Practices Act specifies what must be said in the so-called validation notice that debt collectors, including law firms, are required by the federal statute to send to consumers in their initial notice, points out Joseph Jones, one of the attorneys for the plaintiffs in the case. Although the law firm included what it contended was an equivalent statement to the language required by the FDCPA at 15 U.S.C. §1692g(a)(3), U.S. District Judge Joseph Irenas did not agree, refusing in an earlier ruling to grant a defense motion to dismiss the case, reports the New Jersey Law Journal (sub. req.).

At issue in the Camden, N.J., case was language required by the FDCPA stating that a debt will be presumed valid if it is not disputed by the consumer within 30 days. The firm’s letter, which stated “Should you fail to respond within 30 days, we will recommend that our client commence an action against you to protect its rights,” did not adequately convey the same message to all consumers, the judge ruled.

“The statute tells you what to say,” Jones told the legal publication. “For some reason this firm failed to do it in a series of letters that went out.”

Discovery in the case revealed that the Mattleman firm at one point had a standard debt collection letter including the required FDCPA statement that the debt would be presumed valid if it wasn’t disputed, the article says. However, for some reason the firm revised that language to say only that it would recommend the commencement of an action not long before the letter at issue in the class action was mailed.

The settlement includes $2,500 for the lead plaintiffs, $7,000 for the other plaintiffs (amounting to about $30 each, if none opts out of the settlement) and $40,000 in attorney’s fees.

Lawyers at Mattleman defended the firm in the suit. They did not respond to requests for comment by the New Jersey Law Journal.

Related material:

Federal Trade Commission: Fair Debt Collection Practices Act

Loyola Consumer Law Review: “Documentation? I don’t have to show you any stinkin’
documentation! An evaluation of the verification requirement of 15 USC §1692g(b) “

Article source: http://www.abajournal.com/news/article/judge_oks_49.5k_class_settlement_over_law_firm_collection_letter_that_revis/

BofA Slides After Posting Loss Tied to Mortgage Accords

Bank of America Corp. fell in New York trading after the lender posted a surprise loss driven by $6 billion of costs tied to mortgage disputes.

The shares slid 1.6 percent to $16.13 at 4:15 p.m. as investors assessed the newest batch of legal expenses, which have cost Bank of America more than $50 billion since the financial crisis. The stock slipped as much as 3.7 percent during the session, its worst intraday showing since June.

Bank of America’s $276 million quarterly deficit was the fourth since Chief Executive Officer Brian T. Moynihan took the top job at the start of 2010. His predecessor’s 2008 purchase of Countrywide Financial Corp. left BofA responsible for thousands of bad home loans, and the bank told investors today that more legal costs lay ahead.

“It’s a reminder there’s still a way to go to on litigation expenses for the industry and Bank of America,” said Devin Ryan, an analyst at JMP Securities LLC in New York. “You think you have your arms around what the exposure is to find there’s still room for surprises.”

The first-quarter loss equaled 5 cents a diluted share, compared with a profit of $1.48 billion, or 10 cents, a year earlier. Companywide revenue at the Charlotte, North Carolina-based firm dropped 2.7 percent to $22.6 billion. The bank is the second-largest in the U.S. by assets.




Photographer: Andrew Harrer/Bloomberg

Chief Executive Officer Brian T. Moynihan is in his fifth year of cleaning up after his predecessor’s purchase of Countrywide Financial Corp. left Bank of America responsible for billions of dollars in bad mortgages. Close

Chief Executive Officer Brian T. Moynihan is in his fifth year of cleaning up after his… Read More

Open

Photographer: Andrew Harrer/Bloomberg

Chief Executive Officer Brian T. Moynihan is in his fifth year of cleaning up after his predecessor’s purchase of Countrywide Financial Corp. left Bank of America responsible for billions of dollars in bad mortgages.

“The cost of resolving more of our mortgage issues hurt our earnings this quarter,” Moynihan said in a statement today detailing results. “But the earnings power of our business and customer strategy generated solid results.”

Legal Cases

The $6 billion in legal costs included $3.6 billion tied to a settlement disclosed last month that covered Fannie Mae and Freddie Mac. There was also a $2.4 billion increase in reserves for “previously disclosed legacy mortgage-related matters,” the lender said in a presentation. Chief Financial Officer Bruce Thompson declined to specify which cases triggered the added reserves.

“These are ongoing discussions that we obviously have with people we’re in litigation with, and I just don’t think it’s going to be productive to give a breakout,” Thompson told reporters.

The bank also announced a $950 million accord today that extinguished claims from bond insurer Financial Guaranty Insurance Co. The deal includes $584 million for the bond insurer plus cash payments to trusts for mortgage-backed securities, according to the firm. The cost was already covered by Bank of America’s reserves.

Being Realistic

Last month, the bank said it may have to pay penalties tied to probes from government entities including the Justice Department and state attorneys general and that it faces civil lawsuits from the DOJ regarding its sales of mortgage bonds.

Remaining litigation costs could vary greatly from quarter to quarter, Thompson, 49, said during a conference call with analysts.

“I think we need to be realistic in your thoughts this quarter as it relates to the remaining couple of matters that we disclosed,” Thompson said. “It can be lumpy and it’s just very hard to predict.”

Earnings before taxes and loan-loss provisions fell to $500 million in the first quarter, compared with $3.9 billion a year ago. The measure is watched by analysts as a means to gauge a firm’s profitability without some of the distortions caused by one-time items.

Global Markets

Global markets, the trading operations overseen by co-Chief Operating Officer Thomas K. Montag, posted a 3.1 percent increase in quarterly profit to $1.24 billion excluding accounting adjustments tied to credit. Revenue in the division slipped 0.4 percent to $4.9 billion on declines in rates and currencies.

Revenue in the fixed-income, currency and commodities sales and trading division decreased 15 percent to about $2.95 billion, excluding the impact of a $450 million writedown a year ago. Equities sales and trading revenue was $1.2 billion, similar to a year earlier.

Income at the global banking unit fell 3.5 percent to $1.24 billion on a higher provision for credit losses. The consumer and business banking unit’s profit rose 15 percent to $1.66 billion as expenses fell 4 percent. The companywide staff was reduced by more than 3,500 people to 238,560 during the quarter.

Pending Cases

Resolving the Fannie Mae and Freddie Mac cases, which date from 2011, ended one of the biggest legal disputes facing Bank of America. The settlement covered $57.5 billion in mortgage bonds.

Bank of America also said in a February regulatory filing that authorities in North America, Europe and Asia are examining participants in foreign-exchange markets for misconduct that spanned several years. The lender said it’s cooperating.

Last month, the lender won Federal Reserve approval for a higher dividend after lowering the amount of its initial request for returning capital to shareholders. The 5-cent quarterly payout, rising from a penny, will be accompanied by a $4 billion stock repurchase program.

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

To contact the editors responsible for this story: Peter Eichenbaum at peichenbaum@bloomberg.net Rick Green, Dan Kraut

Article source: http://www.bloomberg.com/news/2014-04-16/bofa-posts-quarterly-loss-on-mortgage-bond-settlement-with-fgic.html

How Reverse Mortgages Work in 2014

Dear Savvy Senior,
What can you tell me about reverse mortgages? I was considering one last year, but now I hear they are more difficult to get.

–Ready to Reverse

Dear Ready,
That’s correct. Tighter rules on reverse mortgages that have recently gone into affect have made them harder to get, especially for seniors with heavy debt problems.

The reason the Federal Housing Administration (FHA) made these changes was to strengthen the product, which has suffered from a struggling housing market and a growing number of defaults by borrowers. Here’s a rundown of how reverse mortgages now work in 2014.

Overview: The basics are still the same. A reverse mortgage is a loan that allows senior homeowners to borrow money against the equity in their house. The loan doesn’t have to be repaid until the homeowner dies, sells the house or moves out for at least 12 months. It’s also important to know that with a reverse mortgage, you, not the bank, own the house, so you’re still responsible for property taxes, insurance and repairs.

Eligibility: To be eligible for a reverse mortgage you must be at least 62 years old, own your own home (or owe only a small balance) and currently be living there. You will also need to undergo a financial assessment to determine whether you can afford to make all the necessary tax and insurance payments over the projected life of the loan.

Lenders will look at your sources of income, assets and credit history. Depending on your financial situation, you may be required to put part of your loan into an escrow account to pay future bills.

If the financial assessment finds that you cannot pay your insurance and taxes and have enough cash left to live on, you will be denied.

Loans: Nearly all reverse mortgages offered today are Home Equity Conversion Mortgages (HECM), which are FHA insured and offered through private mortgage lenders and banks. HECM’s also have home value limits that vary by county, but cannot exceed $625,500. See hud.gov/ll/code/llslcrit.cfm for a list of HUD approved lenders.

Loan amounts: The amount you get through a reverse mortgage depends on your age, your home’s value and the prevailing interest rates. Generally, the older you are, the more your house is worth, and the lower the interest rates are, the more you can borrow. A 70-year-old, for example, with a home worth $300,000 could borrow around $170,000 with a fixed-rate HECM. To calculate how much you can borrow, visit reversemortgage.org.

Loan costs: Reverse mortgages have a number of up-front fees including a 2 percent lender origination fee for the first $200,000 of the home’s value and 1 percent of the remaining value, with a cap of $6,000; a 0.5 percent initial mortgage insurance premium fee; along with an appraisal fee, closing costs and other miscellaneous expenses. Most fees can be deducted for the loan amount to reduce your out-of-pocket cost at closing.

In addition, you’ll also have to pay an annual mortgage insurance premium of 1.25 percent of the loan amount.

Payment options: You can receive the money in a lump sum, a line of credit, regular monthly checks or a combination of these. But in most cases, you cannot withdraw more than 60 percent of the loan during the first year. If you do, you’ll pay a 2.5 percent upfront insurance premium fee.

Counseling: All borrowers are required to get face-to-face or telephone counseling through a HUD approved independent counseling agency before taking out a reverse mortgage. Some agencies are awarded grants that enable them to offer counseling for free, but most charge around $125 to $250. To locate a counseling agency near you, visit hud.gov or call 800-569-4287.

Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of “The Savvy Senior” book.

Article source: http://www.huffingtonpost.com/jim-t-miller/how-reverse-mortgages-wor_b_5145807.html

Wells Fargo Home Mortgage cutting 323 more workers

The largest U.S. mortgage lender and servicer announced Wednesday that it’s laying off another 323 employees nationwide, including 30 in the Des Moines area.

The positions are being eliminated at Wells Fargo Home Mortgage, which is headquartered in West Des Moines, according to company spokesperson Angela Kaipust.

“We announced staffing changes in Des Moines today as the result of continuing market changes, including reduced demand for mortgage financing and improvements in delinquency and foreclosure rates,” Kaipust said Wednesday. “After carefully evaluating market conditions and consumer needs, we are reducing staff by 30 positions locally and 323 nationally to better align with current volumes.”

The new round of layoffs means Wells Fargo, the world’s largest bank by market value, has now announced more than 10,300 layoffs since July 1. The bank is the largest employer in the Des Moines area, with more than 13,000 employees. It has a global workforce in the 265,300 range.

Falling refinancing activity is driving the reductions, which have helped the San Francisco-based bank continue to post record profits despite falling revenue. Wells Fargo Home Mortgage is its mortgage arm.

Wells Fargo had net income of $5.6 billion, or $1.05 a share, in the first three months of this year. That represents a 14 percent gain from the same period in 2013. It was the 17th consecutive quarter of profit growth for the bank.

The bank trimmed $452 million from its noninterest expenses – which include wages and benefits – to lower them to $11.9 billion in the first quarter. Wells Fargo’s spending on salaries fell to $3.73 billion in the first quarter from $3.81 billion in the final three months of last year, but was up slightly from a year earlier. Spending on commissions and incentives was down 6.2 percent to $2.42 billion in the first quarter from the same period a year earlier and employee benefit spending declined 13 percent to $1.37 billion.

Revenue declined 3 percent to $20.6 billion in the first quarter from $21.3 billion a year earlier.

Refinancing applications continued to account for a smaller share of all of the bank’s mortgage applications in the first quarter, dropping to 39 percent from a year-earlier 65 percent.

Mortgage rates have moderated so far this year, with the average interest rate on a 30-year fixed rate mortgage falling to 2.41 percent the week ended April 10 from 2.56 percent the week ended Jan. 9, according to Freddie Mac.

Article source: http://www.desmoinesregister.com/story/money/business/2014/04/16/wells-fargo-layoffs/7797119/