Stated income loans make comeback as mortgage lenders seek clients #boat #mortgage #calculator


#stated income mortgage

#

Stated income loans make comeback as mortgage lenders seek clients

By Michelle Conlin and Peter Rudegeair

n”>Mortgage applicants who can’t provide tax returns or pay stubs to show their income are getting stated income loans again as companies such as Unity West Lending and Westport Mortgage chase customers they can no longer afford to ignore.

Lenders say these aren’t the same products as the so-called “liar loans” that were pervasive before the housing bust. Instead, the loans are going to borrowers such as small business owners or investors buying properties they intend to rent who can demonstrate an ability to repay, verifiable through bank or brokerage statements. Lenders said they look for enough assets to pay six to 12 months of payments, while also demanding high down payments to reduce the chance of default.

“This is not a return to the wild and wooly days of, if you fogged the mirror, you can have a loan,” said Paul Lebowitz, founder of Westport Mortgage. “They have a smarter edge to them now.”

Some rival lenders said the stated income loans on offer could be abused if borrowers fudge bank statements or don’t have enough money to repay the loan. None of the three biggest banks offer them. Sam Gilford, a spokesman for the Consumer Financial Protection Bureau, said the agency is concerned, though he wouldn’t say whether it is investigating them.

The CFPB’s rules don’t give specific minimums for assets required to demonstrate an ability to repay a mortgage, but critics said a year’s worth of payments for a three-decade loan may not be enough.

“It’s easier to falsify bank statements than income tax returns,” said Julia Gordon, director of housing finance and policy at the Center for American progress.

To avoid the housing-bust taint, the new stated income loans are being called such things as “alternative documentation loans,” “portfolio programs,” “alternative-income verification loans” and “asset-based loans.”

Borrowers usually have to have credit scores of about 700, though some lenders, like San Jose, California.-based Western Bancorp, will accept credit scores as low as 620. Credit scores range from 300 to 850, with 640 seen as the line between prime and subprime. Borrowers typically pay one-half to three-quarters of a percentage point above conventional mortgage rates.

Jae Chang, president of Los Angeles-based National Mortgage Service, started offering stated-income loans five months ago. “We are targeting those borrowers who have excellent credit, and a lot of liquid reserves, but who are having difficulties proving their income,” he said. National Mortgage Service is doing $15 million worth of stated-income loans a month.

Compared to the roughly $1 trillion of U.S. home loans anticipated this year, the stated income mortgage volume at National Mortgage Service is tiny. There is no available data about how widespread stated income mortgages are, and experts said that any growth in these products is off a small base.

But the shrinking mortgage market is prompting some lenders to expand their potential pool of customers. The MBA’s forecasts for this year’s mortgage lending volumes are down 30 percent from 2013 levels. Volumes started falling last year as rising rates cut into demand.

SMALL BUSINESS OWNERS

Among the customers that lenders are targeting are small business owners, whose personal income tax returns may not reflect their ability to repay a loan. Many keep income in their business to reduce their personal income tax obligation. Stated income loans are also often geared toward investors, who don’t fall under the same rules imposed by the 2010 Dodd-Frank financial reform legislation.

Other lenders lowering their standards to win new business include Wells Fargo & Co, the biggest home lender in the United States, which said earlier this year it is willing to make loans to borrowers with credit scores as low as 600, down from a previous limit of 640.

The Dodd-Frank law said that, for all owner-occupied mortgages made in the United States, lenders must make sure the borrower has the capacity to repay, or face enforcement from the Consumer Financial Protection Bureau as well as consumer claims in court, where lenders could be liable for up to three years of finance charges and fees.

Ability-to-repay rules apply only to mortgages for people who will live in the house. That means there is potential for abuse if borrowers apply for the mortgages saying they’ll rent out the property when in fact they intend to live there. Because these kinds of loans are not subject to ability-to-repay rules and require less documentation, borrowers could be talked into taking on mortgages they cannot afford, a lender at a large bank said.

The law, and the CFPB’S rules on the matter, will likely prevent lenders from re-embracing the worst varieties of stated income loans during the bubble years, such as so-called “ninja” loans, a near-acronym for “no income, no job or assets.”

While even ninja loans could easily be securitized before the mortgage bubble burst, packaging non-standard home loans into bonds and selling them to investors is much more difficult now. Most stated income loans today are either held in lenders’ portfolios or sold to private investors.

(Reporting by Michelle Conlin and Peter Rudegeair. Editing by Dan Wilchins and John Pickering)


Stated income loans make comeback as mortgage lenders seek clients #online #mortgage #lenders


#stated income mortgage

#

Stated income loans make comeback as mortgage lenders seek clients

By Michelle Conlin and Peter Rudegeair

n”>Mortgage applicants who can’t provide tax returns or pay stubs to show their income are getting stated income loans again as companies such as Unity West Lending and Westport Mortgage chase customers they can no longer afford to ignore.

Lenders say these aren’t the same products as the so-called “liar loans” that were pervasive before the housing bust. Instead, the loans are going to borrowers such as small business owners or investors buying properties they intend to rent who can demonstrate an ability to repay, verifiable through bank or brokerage statements. Lenders said they look for enough assets to pay six to 12 months of payments, while also demanding high down payments to reduce the chance of default.

“This is not a return to the wild and wooly days of, if you fogged the mirror, you can have a loan,” said Paul Lebowitz, founder of Westport Mortgage. “They have a smarter edge to them now.”

Some rival lenders said the stated income loans on offer could be abused if borrowers fudge bank statements or don’t have enough money to repay the loan. None of the three biggest banks offer them. Sam Gilford, a spokesman for the Consumer Financial Protection Bureau, said the agency is concerned, though he wouldn’t say whether it is investigating them.

The CFPB’s rules don’t give specific minimums for assets required to demonstrate an ability to repay a mortgage, but critics said a year’s worth of payments for a three-decade loan may not be enough.

“It’s easier to falsify bank statements than income tax returns,” said Julia Gordon, director of housing finance and policy at the Center for American progress.

To avoid the housing-bust taint, the new stated income loans are being called such things as “alternative documentation loans,” “portfolio programs,” “alternative-income verification loans” and “asset-based loans.”

Borrowers usually have to have credit scores of about 700, though some lenders, like San Jose, California.-based Western Bancorp, will accept credit scores as low as 620. Credit scores range from 300 to 850, with 640 seen as the line between prime and subprime. Borrowers typically pay one-half to three-quarters of a percentage point above conventional mortgage rates.

Jae Chang, president of Los Angeles-based National Mortgage Service, started offering stated-income loans five months ago. “We are targeting those borrowers who have excellent credit, and a lot of liquid reserves, but who are having difficulties proving their income,” he said. National Mortgage Service is doing $15 million worth of stated-income loans a month.

Compared to the roughly $1 trillion of U.S. home loans anticipated this year, the stated income mortgage volume at National Mortgage Service is tiny. There is no available data about how widespread stated income mortgages are, and experts said that any growth in these products is off a small base.

But the shrinking mortgage market is prompting some lenders to expand their potential pool of customers. The MBA’s forecasts for this year’s mortgage lending volumes are down 30 percent from 2013 levels. Volumes started falling last year as rising rates cut into demand.

SMALL BUSINESS OWNERS

Among the customers that lenders are targeting are small business owners, whose personal income tax returns may not reflect their ability to repay a loan. Many keep income in their business to reduce their personal income tax obligation. Stated income loans are also often geared toward investors, who don’t fall under the same rules imposed by the 2010 Dodd-Frank financial reform legislation.

Other lenders lowering their standards to win new business include Wells Fargo & Co, the biggest home lender in the United States, which said earlier this year it is willing to make loans to borrowers with credit scores as low as 600, down from a previous limit of 640.

The Dodd-Frank law said that, for all owner-occupied mortgages made in the United States, lenders must make sure the borrower has the capacity to repay, or face enforcement from the Consumer Financial Protection Bureau as well as consumer claims in court, where lenders could be liable for up to three years of finance charges and fees.

Ability-to-repay rules apply only to mortgages for people who will live in the house. That means there is potential for abuse if borrowers apply for the mortgages saying they’ll rent out the property when in fact they intend to live there. Because these kinds of loans are not subject to ability-to-repay rules and require less documentation, borrowers could be talked into taking on mortgages they cannot afford, a lender at a large bank said.

The law, and the CFPB’S rules on the matter, will likely prevent lenders from re-embracing the worst varieties of stated income loans during the bubble years, such as so-called “ninja” loans, a near-acronym for “no income, no job or assets.”

While even ninja loans could easily be securitized before the mortgage bubble burst, packaging non-standard home loans into bonds and selling them to investors is much more difficult now. Most stated income loans today are either held in lenders’ portfolios or sold to private investors.

(Reporting by Michelle Conlin and Peter Rudegeair. Editing by Dan Wilchins and John Pickering)


Pawn Your Vehicle – Secure Loans from XCELSIOR #collateral #loan, #vehicle #as #collateral, #short #term


#

HOW CAN WE HELP YOU

XCELSIOR is a privately owned registered credit provider in South Africa – providing short-term loans when you need cash flow fast.

Our private-equity funded business is revolutionising the loans industry, as we do not require credibility from our loan applicants. The only requirement is collateral in the form of motor vehicles (cars, bakkies SUVs, trucks, motorbikes, caravans and even motorised sports vehicles, like jet skis), where the value of your vehicle determines the loan amount you qualify for.

Unlike banks and other credit providers, we do not conduct any affordability assessments. Our unique approach is particularly beneficial to clients who are not considered credible by mainstream financial institutions in South Africa. We thus even welcome clients who are blacklisted.

The application process is quick, easy and paperless. You can have the cash transferred to the bank account of your choice within 45 minutes. There is no lengthy administrative process and no red tape. Loans are available from a minimum of R5 000 to a maximum of R500 000 and only limited to the value of assets offered as security.

XCELSIOR’S unique loan model makes us the preferred short term credit provider in South Africa. We believe in doing well by doing good .

(XCELSIOR Financial Services is a Registered Credit Provider NCRCP4752)

I want to thank you for the wonderful service that you are able to render. It is quick and trouble free, and your interests are amazing. I am going to recommend people to come and get help from you.I received my money within twenty minutes of starting the process and trust me, I was desperate. Now I have a company that I can rely on. What really impressed me most was your warmth and respect for your clients. Keep up the good work!
Reginah

I liked the reception XCELSIOR gave me and I am going to refer friends who are stranded. The other thing is that XCELSIOR showed a lot of patience and one will always feel relaxed. Thank you!
Martha

Hiermee word u firma hartlik bedank vir die korttermynlening wat u vir ons gereël het en die spoedige wyse waarop die fondse oorbetaal is. Wees verseker dat ons, as die geleentheid sou opduik, u firma beslis sal aanbeveel.
Johan

To the staff and members of XCELSIOR, I say keep up the good work and I promise that I am going to send you a lot of referrals and I am already telling people how helpful and friendly you people are. Even during the loan period, I liked the service I received from you. Keep up the good service.
Gladys

I would like to thank XCELSIOR for the short term loan that you arranged for me and for the quick payment that was received. Thank you very much for the professional way in which you dealt with me and the needs I had at that point in time. Please be assured that if the need arise in the future, I will make use of your services again and would gladly recommend you to family and friends.
Cathy


Wells Fargo edges back into subprime as U #mortgage #information


#subprime mortgage lenders

#

Wells Fargo edges back into subprime as U.S. mortgage market thaws

By Peter Rudegeair and Michelle Conlin

n”>Wells Fargo & Co, the largest U.S. mortgage lender, is tiptoeing back into subprime home loans again.

The bank is looking for opportunities to stem its revenue decline as overall mortgage lending volume plunges. It believes it has worked through enough of its crisis-era mortgage problems, particularly with U.S. home loan agencies, to be comfortable extending credit to some borrowers with higher credit risks.

The small steps from Wells Fargo could amount to a big change for the mortgage market. After the subprime mortgage bust brought the banking system to the brink of collapse in the financial crisis, banks have shied away from making home loans to anyone but the safest of consumers.

Any loosening of credit standards could boost housing demand from borrowers who have been forced to sit out the recovery in home prices in the past couple of years, but could also stoke fears that U.S. lenders will make the same mistakes that had triggered the crisis.

So far few other big banks seem poised to follow Wells Fargo’s lead, but some smaller companies outside the banking system, such as Citadel Servicing Corp, are already ramping up their subprime lending. To avoid the taint associated with the word “subprime,” lenders are calling their loans “another chance mortgages” or “alternative mortgage programs.”

And lenders say they are much stricter about the loans than before the crisis, when lending standards were so lax that many borrowers did not have to provide any proof of income. Borrowers must often make high down payments and provide detailed information about income, work histories and bill payments.

Wells Fargo in recent weeks started targeting customers that can meet strict criteria, including demonstrating their ability to repay the loan and having a documented and reasonable explanation for why their credit scores are subprime.

It is looking at customers with credit scores as low as 600. Its prior limit was 640, which is often seen as the cutoff point between prime and subprime borrowers. U.S. credit scores range from 300 to 850.

Lenders remain cautious in part because of financial reform rules. Under the 2010 Dodd-Frank law, mortgage borrowers must meet eight strict criteria including earning enough income and having relatively low debt. If the borrower does not meet those hurdles and later defaults on a mortgage, he or she can sue the lender and argue the loan should never have been made in the first place.

Those kinds of rules have helped build a wall between prime and subprime borrowers. Lenders have been courting consumers who are legally easier to serve, and avoiding those with weaker credit scores and other problems. Subprime borrowers accounted for 0.3 percent of new home loans in October 2013, compared with an average of 29 percent for the 12 months ended February 2004, according to Mark Fleming, the chief economist of CoreLogic.

With Wells Fargo looking at loans to borrowers with weaker credit, “we believe the wall has begun to come down,” wrote Paul Miller, a bank analyst at FBR Capital Markets, in a research note.

Lenders have an ample incentive to try reaching further down the credit spectrum now. Rising mortgage rates since the middle of last year are expected to reduce total U.S. mortgage lending in 2014 by 36 percent to $1.12 trillion, the Mortgage Bankers Association forecasts, due to a big drop in refinancings.

Some subprime lending can help banks, but it may also help the economy. In September 2012, then Federal Reserve Chairman Ben Bernanke said housing had been the missing piston in the U.S. recovery.

A recent report from think tank the Urban Institute and Moody’s Analytics argued that a full recovery in the housing market “will only happen if there is stronger demand from first-time homebuyers. And we will not see the demand needed among this group if access to mortgage credit remains as tight as it is today.”

Subprime mortgages were at the center of the financial crisis, but many lenders believe that done with proper controls, the risks can be managed and the business can generate big profits.

MAKING UP WITH THE AGENCIES

For Wells Fargo, one of the critical factors in the new strategy was its clearing up of disputes with Fannie Mae and Freddie Mac, said Franklin Codel, Wells Fargo’s head of mortgage production in Des Moines, Iowa. The 2013 settlements for $1.3 billion resolved a few battles in a half-decade war between banks and government mortgage agencies over who was responsible for losses from the mortgage crisis.

The bank still has mortgage problems to clear up with the agencies, including a lawsuit linked to the Federal Housing Administration, but Wells Fargo officials believe the worst is over.

Wells Fargo avoided many of the worst loans of the subprime era: It did not offer option adjustable-rate mortgages, for instance. But when it acquired Wachovia in 2008, the bank inherited a $120 billion portfolio of “Pick-A-Pay” mortgages where borrowers could defer payments on their loans. Those loans have suffered big losses.

One of the reasons for banks being so cautious in mortgage lending now is that Freddie Mac, Fannie Mae and the FHA have been pressing lenders to buy back home loans that went bad after the crisis. The agencies guaranteed the loans, and argued that the banks overstated the mortgages’ quality, or made mistakes like omitting required documents.

Banks feel that the agencies were using trivial mistakes as a club to pressure banks to buy back loans. But after its settlements, Wells Fargo is more confident about the underwriting flaws the agencies consider material and the quality of the documentation needed to avoid such costly battles.

“As things become clearer and we are more comfortable with our own processes and controls, it gets easier” to extend more credit, Codel said.

Still, Wells Fargo isn’t just opening up the spigots. The bank is looking to lend to borrowers with weaker credit, but only if those mortgages can be guaranteed by the FHA, Codel said. Because the loans are backed by the government, Wells Fargo can package them into bonds and sell them to investors.

The funding of the loans is a key difference between Wells Fargo and other lenders: the big bank is packaging them into bonds and selling them to investors, but many of the smaller, nonbank lenders are making mortgages known as “nonqualified loans” that they are often holding on their books.

Citadel Servicing Corp, the country’s biggest subprime lender, is trying to change that. It plans to package the loans it has made into bonds and sell them to investors.

Citadel has lent money to people with credit scores as low as 490 – though they have to pay interest rates above 10 percent, far above the roughly 4.3 percent that prime borrowers pay now.

A TRAILER PARK IN VEGAS

As conditions ease, borrowers are taking notice. Gary Goldberg, a 63-year-old automotive detailer, was denied loans to buy a house near Rancho Cucamonga, California. Last summer he was forced to move into a trailer park in Las Vegas.

Going from 2,000 square feet to 200 – along with his wife and two German shepherd dogs – was tough. He longed to buy a house. But a post-crash bankruptcy of his detailing business had torched his credit, taking his score from the 800s to the 500s.

“There was no way I was going to get a mortgage,” said Goldberg. “No bank would touch me.”

But in December, he moved into a 1,000-square-foot one-story home that he paid $205,000 for. His lender, Premiere Mortgage Lending, did not care about his bankruptcy or his subprime credit score. That is because Goldberg had a 30 percent down payment and was willing to pay an 8.9 percent interest rate.

To be sure, credit is still only trickling down to subprime borrowers. Jamie Dimon, chief executive of the second-largest U.S. mortgage lender JPMorgan Chase & Co, said on a conference call last month that he did not envision a “dramatic expansion” of mortgage credit because of a continued lack of clarity from the government agencies on their repurchase demands.

But smaller, non-bank lenders are making more loans. One such company, ACC Mortgage in Maryland, is offering a “Low Credit Score Debt Consolidation Program” as well as a “Second Chance Purchase Program.” Low credit scores don’t matter. Neither do bankruptcies, foreclosures or short sales.

“I think that is going to be the wave of the future, basically making non-prime mortgages, carving that out into a profitable niche,” said Guy Cecala, publisher of newsletter Inside Mortgage Finance.

“Right now we’re at the infant stage.”

(Reporting by Peter Rudegeair and Michelle Conlin in New York; Editing by Dan Wilchins, Martin Howell and Richard Chang)


Stated income loans make comeback as mortgage lenders seek clients #how #to #calculate #mortgage #payments


#stated income mortgage

#

Stated income loans make comeback as mortgage lenders seek clients

By Michelle Conlin and Peter Rudegeair

n”>Mortgage applicants who can’t provide tax returns or pay stubs to show their income are getting stated income loans again as companies such as Unity West Lending and Westport Mortgage chase customers they can no longer afford to ignore.

Lenders say these aren’t the same products as the so-called “liar loans” that were pervasive before the housing bust. Instead, the loans are going to borrowers such as small business owners or investors buying properties they intend to rent who can demonstrate an ability to repay, verifiable through bank or brokerage statements. Lenders said they look for enough assets to pay six to 12 months of payments, while also demanding high down payments to reduce the chance of default.

“This is not a return to the wild and wooly days of, if you fogged the mirror, you can have a loan,” said Paul Lebowitz, founder of Westport Mortgage. “They have a smarter edge to them now.”

Some rival lenders said the stated income loans on offer could be abused if borrowers fudge bank statements or don’t have enough money to repay the loan. None of the three biggest banks offer them. Sam Gilford, a spokesman for the Consumer Financial Protection Bureau, said the agency is concerned, though he wouldn’t say whether it is investigating them.

The CFPB’s rules don’t give specific minimums for assets required to demonstrate an ability to repay a mortgage, but critics said a year’s worth of payments for a three-decade loan may not be enough.

“It’s easier to falsify bank statements than income tax returns,” said Julia Gordon, director of housing finance and policy at the Center for American progress.

To avoid the housing-bust taint, the new stated income loans are being called such things as “alternative documentation loans,” “portfolio programs,” “alternative-income verification loans” and “asset-based loans.”

Borrowers usually have to have credit scores of about 700, though some lenders, like San Jose, California.-based Western Bancorp, will accept credit scores as low as 620. Credit scores range from 300 to 850, with 640 seen as the line between prime and subprime. Borrowers typically pay one-half to three-quarters of a percentage point above conventional mortgage rates.

Jae Chang, president of Los Angeles-based National Mortgage Service, started offering stated-income loans five months ago. “We are targeting those borrowers who have excellent credit, and a lot of liquid reserves, but who are having difficulties proving their income,” he said. National Mortgage Service is doing $15 million worth of stated-income loans a month.

Compared to the roughly $1 trillion of U.S. home loans anticipated this year, the stated income mortgage volume at National Mortgage Service is tiny. There is no available data about how widespread stated income mortgages are, and experts said that any growth in these products is off a small base.

But the shrinking mortgage market is prompting some lenders to expand their potential pool of customers. The MBA’s forecasts for this year’s mortgage lending volumes are down 30 percent from 2013 levels. Volumes started falling last year as rising rates cut into demand.

SMALL BUSINESS OWNERS

Among the customers that lenders are targeting are small business owners, whose personal income tax returns may not reflect their ability to repay a loan. Many keep income in their business to reduce their personal income tax obligation. Stated income loans are also often geared toward investors, who don’t fall under the same rules imposed by the 2010 Dodd-Frank financial reform legislation.

Other lenders lowering their standards to win new business include Wells Fargo & Co, the biggest home lender in the United States, which said earlier this year it is willing to make loans to borrowers with credit scores as low as 600, down from a previous limit of 640.

The Dodd-Frank law said that, for all owner-occupied mortgages made in the United States, lenders must make sure the borrower has the capacity to repay, or face enforcement from the Consumer Financial Protection Bureau as well as consumer claims in court, where lenders could be liable for up to three years of finance charges and fees.

Ability-to-repay rules apply only to mortgages for people who will live in the house. That means there is potential for abuse if borrowers apply for the mortgages saying they’ll rent out the property when in fact they intend to live there. Because these kinds of loans are not subject to ability-to-repay rules and require less documentation, borrowers could be talked into taking on mortgages they cannot afford, a lender at a large bank said.

The law, and the CFPB’S rules on the matter, will likely prevent lenders from re-embracing the worst varieties of stated income loans during the bubble years, such as so-called “ninja” loans, a near-acronym for “no income, no job or assets.”

While even ninja loans could easily be securitized before the mortgage bubble burst, packaging non-standard home loans into bonds and selling them to investors is much more difficult now. Most stated income loans today are either held in lenders’ portfolios or sold to private investors.

(Reporting by Michelle Conlin and Peter Rudegeair. Editing by Dan Wilchins and John Pickering)


IT Help Desk #help #desk #software #as #a #service, #it #internet #technology #help #desk #security


Welcome to the Northern Virginia Community College Website

IT Help Desk

Prior to Contacting the IT Help Desk

Need to reset your myNOVA password? You can often reset it yourself, and avoid waiting on hold for an agent by clicking on the “Forgot Password ” link on the myNOVA login page .

If you are unable to reset your password using the “Forgot Password ” link, you can call the IT Help Desk for assistance. Please have the following information available:

  • Your StudentID or EmplID
  • Your SSN if you do not know your StudentID or EmplID
  • Your myNOVA username if available

The IT Help Desk is operational 24/7 including nights, weekends and holidays (service is limited on nights and weekends).

Local Telephone: 703.426.4141 Toll-Free: 855.259.1019 (outside of Northern Virginia)

When calling the IT Help Desk, please listen carefully as the options have recently changed.

IT Support

The IT Help Desk provides front-line technical support to all students, faculty and staff at NOVA. We are advocates committed to resolving the technology issues affecting students and employees and providing detailed resolutions and general systems information.

Check out the NOVA IT Support Portal for news, outages, knowledge-base and self-help tools.

Security Awareness

The state of Virginia requires that all employees participate in IT security awareness training every year.

Important Links

Technology Policies


Wells Fargo edges back into subprime as U #home #mortgage #loans


#subprime mortgage lenders

#

Wells Fargo edges back into subprime as U.S. mortgage market thaws

By Peter Rudegeair and Michelle Conlin

n”>Wells Fargo & Co, the largest U.S. mortgage lender, is tiptoeing back into subprime home loans again.

The bank is looking for opportunities to stem its revenue decline as overall mortgage lending volume plunges. It believes it has worked through enough of its crisis-era mortgage problems, particularly with U.S. home loan agencies, to be comfortable extending credit to some borrowers with higher credit risks.

The small steps from Wells Fargo could amount to a big change for the mortgage market. After the subprime mortgage bust brought the banking system to the brink of collapse in the financial crisis, banks have shied away from making home loans to anyone but the safest of consumers.

Any loosening of credit standards could boost housing demand from borrowers who have been forced to sit out the recovery in home prices in the past couple of years, but could also stoke fears that U.S. lenders will make the same mistakes that had triggered the crisis.

So far few other big banks seem poised to follow Wells Fargo’s lead, but some smaller companies outside the banking system, such as Citadel Servicing Corp, are already ramping up their subprime lending. To avoid the taint associated with the word “subprime,” lenders are calling their loans “another chance mortgages” or “alternative mortgage programs.”

And lenders say they are much stricter about the loans than before the crisis, when lending standards were so lax that many borrowers did not have to provide any proof of income. Borrowers must often make high down payments and provide detailed information about income, work histories and bill payments.

Wells Fargo in recent weeks started targeting customers that can meet strict criteria, including demonstrating their ability to repay the loan and having a documented and reasonable explanation for why their credit scores are subprime.

It is looking at customers with credit scores as low as 600. Its prior limit was 640, which is often seen as the cutoff point between prime and subprime borrowers. U.S. credit scores range from 300 to 850.

Lenders remain cautious in part because of financial reform rules. Under the 2010 Dodd-Frank law, mortgage borrowers must meet eight strict criteria including earning enough income and having relatively low debt. If the borrower does not meet those hurdles and later defaults on a mortgage, he or she can sue the lender and argue the loan should never have been made in the first place.

Those kinds of rules have helped build a wall between prime and subprime borrowers. Lenders have been courting consumers who are legally easier to serve, and avoiding those with weaker credit scores and other problems. Subprime borrowers accounted for 0.3 percent of new home loans in October 2013, compared with an average of 29 percent for the 12 months ended February 2004, according to Mark Fleming, the chief economist of CoreLogic.

With Wells Fargo looking at loans to borrowers with weaker credit, “we believe the wall has begun to come down,” wrote Paul Miller, a bank analyst at FBR Capital Markets, in a research note.

Lenders have an ample incentive to try reaching further down the credit spectrum now. Rising mortgage rates since the middle of last year are expected to reduce total U.S. mortgage lending in 2014 by 36 percent to $1.12 trillion, the Mortgage Bankers Association forecasts, due to a big drop in refinancings.

Some subprime lending can help banks, but it may also help the economy. In September 2012, then Federal Reserve Chairman Ben Bernanke said housing had been the missing piston in the U.S. recovery.

A recent report from think tank the Urban Institute and Moody’s Analytics argued that a full recovery in the housing market “will only happen if there is stronger demand from first-time homebuyers. And we will not see the demand needed among this group if access to mortgage credit remains as tight as it is today.”

Subprime mortgages were at the center of the financial crisis, but many lenders believe that done with proper controls, the risks can be managed and the business can generate big profits.

MAKING UP WITH THE AGENCIES

For Wells Fargo, one of the critical factors in the new strategy was its clearing up of disputes with Fannie Mae and Freddie Mac, said Franklin Codel, Wells Fargo’s head of mortgage production in Des Moines, Iowa. The 2013 settlements for $1.3 billion resolved a few battles in a half-decade war between banks and government mortgage agencies over who was responsible for losses from the mortgage crisis.

The bank still has mortgage problems to clear up with the agencies, including a lawsuit linked to the Federal Housing Administration, but Wells Fargo officials believe the worst is over.

Wells Fargo avoided many of the worst loans of the subprime era: It did not offer option adjustable-rate mortgages, for instance. But when it acquired Wachovia in 2008, the bank inherited a $120 billion portfolio of “Pick-A-Pay” mortgages where borrowers could defer payments on their loans. Those loans have suffered big losses.

One of the reasons for banks being so cautious in mortgage lending now is that Freddie Mac, Fannie Mae and the FHA have been pressing lenders to buy back home loans that went bad after the crisis. The agencies guaranteed the loans, and argued that the banks overstated the mortgages’ quality, or made mistakes like omitting required documents.

Banks feel that the agencies were using trivial mistakes as a club to pressure banks to buy back loans. But after its settlements, Wells Fargo is more confident about the underwriting flaws the agencies consider material and the quality of the documentation needed to avoid such costly battles.

“As things become clearer and we are more comfortable with our own processes and controls, it gets easier” to extend more credit, Codel said.

Still, Wells Fargo isn’t just opening up the spigots. The bank is looking to lend to borrowers with weaker credit, but only if those mortgages can be guaranteed by the FHA, Codel said. Because the loans are backed by the government, Wells Fargo can package them into bonds and sell them to investors.

The funding of the loans is a key difference between Wells Fargo and other lenders: the big bank is packaging them into bonds and selling them to investors, but many of the smaller, nonbank lenders are making mortgages known as “nonqualified loans” that they are often holding on their books.

Citadel Servicing Corp, the country’s biggest subprime lender, is trying to change that. It plans to package the loans it has made into bonds and sell them to investors.

Citadel has lent money to people with credit scores as low as 490 – though they have to pay interest rates above 10 percent, far above the roughly 4.3 percent that prime borrowers pay now.

A TRAILER PARK IN VEGAS

As conditions ease, borrowers are taking notice. Gary Goldberg, a 63-year-old automotive detailer, was denied loans to buy a house near Rancho Cucamonga, California. Last summer he was forced to move into a trailer park in Las Vegas.

Going from 2,000 square feet to 200 – along with his wife and two German shepherd dogs – was tough. He longed to buy a house. But a post-crash bankruptcy of his detailing business had torched his credit, taking his score from the 800s to the 500s.

“There was no way I was going to get a mortgage,” said Goldberg. “No bank would touch me.”

But in December, he moved into a 1,000-square-foot one-story home that he paid $205,000 for. His lender, Premiere Mortgage Lending, did not care about his bankruptcy or his subprime credit score. That is because Goldberg had a 30 percent down payment and was willing to pay an 8.9 percent interest rate.

To be sure, credit is still only trickling down to subprime borrowers. Jamie Dimon, chief executive of the second-largest U.S. mortgage lender JPMorgan Chase & Co, said on a conference call last month that he did not envision a “dramatic expansion” of mortgage credit because of a continued lack of clarity from the government agencies on their repurchase demands.

But smaller, non-bank lenders are making more loans. One such company, ACC Mortgage in Maryland, is offering a “Low Credit Score Debt Consolidation Program” as well as a “Second Chance Purchase Program.” Low credit scores don’t matter. Neither do bankruptcies, foreclosures or short sales.

“I think that is going to be the wave of the future, basically making non-prime mortgages, carving that out into a profitable niche,” said Guy Cecala, publisher of newsletter Inside Mortgage Finance.

“Right now we’re at the infant stage.”

(Reporting by Peter Rudegeair and Michelle Conlin in New York; Editing by Dan Wilchins, Martin Howell and Richard Chang)


Supply Chain Management Review #supply #chain, #supply #chain #24/7, #supply #chain #management, #global #logistics #


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Maersk Line has introduced a new service for supply chain managers seeking to finance their global trade while optimizing carrier service.

Posted on 06/08 at 01:00 PM

This announcement follows Scout’s release of Harvard Business Review Analytic Services procurement industry research, which explores the critical roles that sourcing, procurement, and supply chain management play in enterprise success.

Posted on 06/07 at 10:46 AM

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.9 in May, down 0.6% from April’s 57.5, which was its highest level since February 2015, while still growing for the 89th consecutive month. The May NMI is 1% higher than the 12-month average of 55.9.

Posted on 06/05 at 12:14 PM


Mortgage Applications Increase as Rates Continue to Drop in Latest MBA Weekly Survey #home #mortgage


#mortgage applications

#

Mortgage Applications Increase as Rates Continue to Drop in Latest MBA Weekly Survey

WASHINGTON, D.C. (January 27, 2015)Mortgage applications increased 8.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 22, 2016. This week’s results include an adjustment to account for the Martin Luther King holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 8.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.3 percent compared with the previous week. The Refinance Index increased 11 percent from the previous week. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 0.4 percent compared with the previous week and was 22 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 59.0 percent of total applications from 59.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.9 percent of total applications.

The FHA share of total applications decreased to 12.7 percent from 13.7 percent the week prior. The VA share of total applications increased to 11.1 percent from 10.8 percent the week prior. The USDA share of total applications remained unchanged from 0.7 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since October 2015, 4.02 percent, from 4.06 percent, with points decreasing to 0.40 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 3.89 percent from 3.93 percent, with points decreasing to 0.25 from 0.31 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.83 percent from 3.86 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.28 percent from 3.29 percent, with points decreasing to 0.37 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.09 percent from 3.20 percent, with points increasing to 0.34 from 0.18 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.

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Wells Fargo edges back into subprime as U #home #mortgage #loan #calculator


#subprime mortgage lenders

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Wells Fargo edges back into subprime as U.S. mortgage market thaws

By Peter Rudegeair and Michelle Conlin

n”>Wells Fargo & Co, the largest U.S. mortgage lender, is tiptoeing back into subprime home loans again.

The bank is looking for opportunities to stem its revenue decline as overall mortgage lending volume plunges. It believes it has worked through enough of its crisis-era mortgage problems, particularly with U.S. home loan agencies, to be comfortable extending credit to some borrowers with higher credit risks.

The small steps from Wells Fargo could amount to a big change for the mortgage market. After the subprime mortgage bust brought the banking system to the brink of collapse in the financial crisis, banks have shied away from making home loans to anyone but the safest of consumers.

Any loosening of credit standards could boost housing demand from borrowers who have been forced to sit out the recovery in home prices in the past couple of years, but could also stoke fears that U.S. lenders will make the same mistakes that had triggered the crisis.

So far few other big banks seem poised to follow Wells Fargo’s lead, but some smaller companies outside the banking system, such as Citadel Servicing Corp, are already ramping up their subprime lending. To avoid the taint associated with the word “subprime,” lenders are calling their loans “another chance mortgages” or “alternative mortgage programs.”

And lenders say they are much stricter about the loans than before the crisis, when lending standards were so lax that many borrowers did not have to provide any proof of income. Borrowers must often make high down payments and provide detailed information about income, work histories and bill payments.

Wells Fargo in recent weeks started targeting customers that can meet strict criteria, including demonstrating their ability to repay the loan and having a documented and reasonable explanation for why their credit scores are subprime.

It is looking at customers with credit scores as low as 600. Its prior limit was 640, which is often seen as the cutoff point between prime and subprime borrowers. U.S. credit scores range from 300 to 850.

Lenders remain cautious in part because of financial reform rules. Under the 2010 Dodd-Frank law, mortgage borrowers must meet eight strict criteria including earning enough income and having relatively low debt. If the borrower does not meet those hurdles and later defaults on a mortgage, he or she can sue the lender and argue the loan should never have been made in the first place.

Those kinds of rules have helped build a wall between prime and subprime borrowers. Lenders have been courting consumers who are legally easier to serve, and avoiding those with weaker credit scores and other problems. Subprime borrowers accounted for 0.3 percent of new home loans in October 2013, compared with an average of 29 percent for the 12 months ended February 2004, according to Mark Fleming, the chief economist of CoreLogic.

With Wells Fargo looking at loans to borrowers with weaker credit, “we believe the wall has begun to come down,” wrote Paul Miller, a bank analyst at FBR Capital Markets, in a research note.

Lenders have an ample incentive to try reaching further down the credit spectrum now. Rising mortgage rates since the middle of last year are expected to reduce total U.S. mortgage lending in 2014 by 36 percent to $1.12 trillion, the Mortgage Bankers Association forecasts, due to a big drop in refinancings.

Some subprime lending can help banks, but it may also help the economy. In September 2012, then Federal Reserve Chairman Ben Bernanke said housing had been the missing piston in the U.S. recovery.

A recent report from think tank the Urban Institute and Moody’s Analytics argued that a full recovery in the housing market “will only happen if there is stronger demand from first-time homebuyers. And we will not see the demand needed among this group if access to mortgage credit remains as tight as it is today.”

Subprime mortgages were at the center of the financial crisis, but many lenders believe that done with proper controls, the risks can be managed and the business can generate big profits.

MAKING UP WITH THE AGENCIES

For Wells Fargo, one of the critical factors in the new strategy was its clearing up of disputes with Fannie Mae and Freddie Mac, said Franklin Codel, Wells Fargo’s head of mortgage production in Des Moines, Iowa. The 2013 settlements for $1.3 billion resolved a few battles in a half-decade war between banks and government mortgage agencies over who was responsible for losses from the mortgage crisis.

The bank still has mortgage problems to clear up with the agencies, including a lawsuit linked to the Federal Housing Administration, but Wells Fargo officials believe the worst is over.

Wells Fargo avoided many of the worst loans of the subprime era: It did not offer option adjustable-rate mortgages, for instance. But when it acquired Wachovia in 2008, the bank inherited a $120 billion portfolio of “Pick-A-Pay” mortgages where borrowers could defer payments on their loans. Those loans have suffered big losses.

One of the reasons for banks being so cautious in mortgage lending now is that Freddie Mac, Fannie Mae and the FHA have been pressing lenders to buy back home loans that went bad after the crisis. The agencies guaranteed the loans, and argued that the banks overstated the mortgages’ quality, or made mistakes like omitting required documents.

Banks feel that the agencies were using trivial mistakes as a club to pressure banks to buy back loans. But after its settlements, Wells Fargo is more confident about the underwriting flaws the agencies consider material and the quality of the documentation needed to avoid such costly battles.

“As things become clearer and we are more comfortable with our own processes and controls, it gets easier” to extend more credit, Codel said.

Still, Wells Fargo isn’t just opening up the spigots. The bank is looking to lend to borrowers with weaker credit, but only if those mortgages can be guaranteed by the FHA, Codel said. Because the loans are backed by the government, Wells Fargo can package them into bonds and sell them to investors.

The funding of the loans is a key difference between Wells Fargo and other lenders: the big bank is packaging them into bonds and selling them to investors, but many of the smaller, nonbank lenders are making mortgages known as “nonqualified loans” that they are often holding on their books.

Citadel Servicing Corp, the country’s biggest subprime lender, is trying to change that. It plans to package the loans it has made into bonds and sell them to investors.

Citadel has lent money to people with credit scores as low as 490 – though they have to pay interest rates above 10 percent, far above the roughly 4.3 percent that prime borrowers pay now.

A TRAILER PARK IN VEGAS

As conditions ease, borrowers are taking notice. Gary Goldberg, a 63-year-old automotive detailer, was denied loans to buy a house near Rancho Cucamonga, California. Last summer he was forced to move into a trailer park in Las Vegas.

Going from 2,000 square feet to 200 – along with his wife and two German shepherd dogs – was tough. He longed to buy a house. But a post-crash bankruptcy of his detailing business had torched his credit, taking his score from the 800s to the 500s.

“There was no way I was going to get a mortgage,” said Goldberg. “No bank would touch me.”

But in December, he moved into a 1,000-square-foot one-story home that he paid $205,000 for. His lender, Premiere Mortgage Lending, did not care about his bankruptcy or his subprime credit score. That is because Goldberg had a 30 percent down payment and was willing to pay an 8.9 percent interest rate.

To be sure, credit is still only trickling down to subprime borrowers. Jamie Dimon, chief executive of the second-largest U.S. mortgage lender JPMorgan Chase & Co, said on a conference call last month that he did not envision a “dramatic expansion” of mortgage credit because of a continued lack of clarity from the government agencies on their repurchase demands.

But smaller, non-bank lenders are making more loans. One such company, ACC Mortgage in Maryland, is offering a “Low Credit Score Debt Consolidation Program” as well as a “Second Chance Purchase Program.” Low credit scores don’t matter. Neither do bankruptcies, foreclosures or short sales.

“I think that is going to be the wave of the future, basically making non-prime mortgages, carving that out into a profitable niche,” said Guy Cecala, publisher of newsletter Inside Mortgage Finance.

“Right now we’re at the infant stage.”

(Reporting by Peter Rudegeair and Michelle Conlin in New York; Editing by Dan Wilchins, Martin Howell and Richard Chang)