Fannie follows Freddie, boosts workout incentives
Fannie Mae has boosted incentives for loan servicers who engage in workouts with troubled borrowers that help them avoid foreclosure, including repayment plans, loan modifications, short sales and deeds-in-lieu of foreclosure. The new incentives, which apply only to mortgages in which Fannie Mae assumes the risk of loss from borrower default, apply to workouts completed on or after Aug. 11. Fannie Mae will pay $400 when servicers complete repayment plans on loans that are more than 60 days delinquent. Servicers who arrange for borrowers to get current on their mortgage by taking out a HomeSaver Advance personal loan of up to $15,000 will be eligible for incentive payments of up to $700. Servicers will receive $700 for each successful loan modification, but will be prohibited from charging borrowers a $500 administrative fee. Servicers who are able to facilitate short sales will earn up $1,000 to $1,500, depending on how much of Fannie’s projected losses are covered by the sale. Fannie Mae will pay a $1,000 incentive fee for each successful deed-in-lieu of foreclosure. Freddie Mac introduced similar incentives last month (see story).
Survey shows closing costs on the rise
Average origination and title fees on a $200,000 mortgage are up 14 percent from a year ago, to $3,118, according to an annual survey of online lenders by Bankrate.com. Closing costs ranged from a high of $4,016 in New York City to $2,650 in North Carolina. Bankrate.com’s Holden Lewis said New York topped the rankings of closing costs for the fourth year in a row because of taxes the state levies on lenders, and because lawyers conduct most closings in the state.
Purchase mortgage applications hold steady
Applications to refinance existing mortgages fell 4.2 percent for the week ending Aug. 8, but applications for purchase mortgages held steady, the Mortgage Bankers Association said. The MBA’s weekly Mortgage Applications Survey showed total applications falling a seasonally adjusted 1.5 percent from a week earlier, thanks to the drop in refinance activity.
Interest rates on fixed-rate mortgages were up, while rates on one-year adjustable-rate mortgage (ARM) loans remained essentially unchanged.
The average contract interest rate for 30-year fixed-rate mortgages increased to 6.57 percent from 6.41 percent, with points increasing to 1.14 from 1.13 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 6.17 percent from 6.02 percent, with points increasing to 1.06 from 1.02 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 7.15 percent from 7.17 percent, with points increasing to 0.38 from 0.36 (including the origination fee) for 80 percent LTV loans.
The refinance share of mortgage activity decreased to 35.2 percent of total applications from 35.9 percent the previous week. Applications for ARM loans increased to 7.3 from 6.9 percent of total applications from the previous week. The Conventional Purchase Index decreased 1.2 percent, while the Government Purchase Index (largely FHA) increased 2.9 percent.
Freddie follows Fannie’s lead, hikes fees
Freddie Mac is following the lead of Fannie Mae and doubling a delivery fee assessed on all loans to 50 basis points, which works out to $1,000 on a $200,000 mortgage. Fannie Mae calls its fee, which is going up Oct. 1, an "adverse market delivery charge" (see story). Freddie Mac calls its fee, scheduled to be bumped up on loans with settlement dates on or after Nov. 7 a "market condition delivery fee."
In a bulletin to sellers and servicers, Freddie also announced that it will mirror Fannie in charging higher fees when borrowers make down payments just large enough to avoid mortgage insurance. All borrowers with credit scores above 620 will be charged lower fees when they take out mortgages with loan-to-value (LTV) ratios above 85 percent — savings that will be offset by the need to purchase private mortgage insurance, which Fannie and Freddie require on loans with LTVs above 80 percent. A borrower with a credit score between 640 and 659 will pay Fannie and Freddie loan-level fees of 2.25 percent ($5,000 on a $200,000 mortgage) when putting down a down payment of 20 percent to 25 percent. The same borrower would pay a 1.5 percent LLPA fee — $3,000 — when providing a down payment of 15 percent or less on a $200,000 loan.
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