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Federal regulators have finalized new guidance on how banks should handle distressed commercial real estate.

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Federal regulators say banks should include short-term accommodations in their toolkits for dealing with distressed commercial real estate loans.

The Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and National Credit Union Administration issued a joint statement on commercial real estate accommodations and workouts on Thursday. The missive updates guidance first released by the regulators in 2009, amid a rash of bank failures driven by — among other things — bad real estate loans.

The statement notes that banks should step in to address distressed loans before lenders default or have to go through a so-called “workout” process, which can entail renewing or extending loan terms, extending additional credit or restructuring credit with or without concessions. The agencies noted that short-term modifications — which suspend, extend or defer repayment terms — can be an effective way to address issues before more significant accommodations are needed.

“These actions can mitigate long-term adverse effects on borrowers by allowing them to address the issues affecting repayment ability and are often in the best interest of financial institutions and their borrowers,” the statement reads.

The new policy statement also updates the 2009 guidance to incorporate accounting changes that have taken place during the intervening years, including requirements that banks estimate current expected credit losses for all their assets. 

It also gives examples for how loans should be classified and accounted for once they have entered a workout process. 

The inclusion of guidance around short-term accommodations and accounting best practices was the result of public commentary fielded by regulators since proposing rule changes last August. In total, the agencies received 22 comments from banking organizations and credit unions, state and national trade associations and individuals.

Otherwise, the finalized guidelines are largely similar to the policy proposed more than a decade ago. The statement urges banks to engage with troubled commercial real estate borrowers early and have policies in place for dealing with accommodations in a safe and sound manner. 

Regulators also note that examiners won’t punish banks for working with borrowers in this way. Similarly, borrowers will not be criticized for engaging in these types of pre-workout remedies. 

The guidelines for handling distressed commercial real estate loans have been in the works for years, but they have taken on a renewed importance in the current market, as rising interest rates and falling occupancy rates squeeze some commercial property owners — especially for offices in central business districts. Last summer, the FDIC said it would more thoroughly scrutinize banks’ commercial real estate loans. 

The issue is acute for smaller and midsize banks, which tend to have higher concentrations of commercial real estate debt on their balance sheets. Analysis by the property advisory firm CBRE suggests that more than 300 banks in these size categories have enough commercial real estate loan exposure to wipe out their tier 1 capital. 

Large banks also have significant commercial real estate exposures, albeit not as concentrated. In its annual stress test report, released this week, the Federal Reserve noted that the 23 large banks examined in this year’s test hold roughly 20% of office and downtown retail debt in the country. Under the Fed’s severe stress scenario, the banks were projected to lose $65 billion on their commercial real estate loans, or 8.8% of average balances. 

“The large projected decline in commercial real estate prices, combined with the substantial increase in office vacancies, contributes to projected loss rates on office properties that are roughly triple the levels reached during the 2008 financial crisis,” the Fed wrote in a statement accompanying the stress-test results.

Despite the forecasted losses, all the banks examined passed this year’s stress test. Still, the scenario demonstrated the magnitude of distress banks could face.

Source: nationalmortgagenews.com

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Mortgage applications jumped 8.5% for the week ending March 4, as mortgage rates dropped for the first time in three months as a result of Russia’s war in Ukraine, the Mortgage Bankers Association (MBA) reported on Wednesday.

Borrowers’ demand for mortgages increased across the board. The MBA‘s seasonally adjusted refi index rose 8.5% from the previous week, with a larger gain in government refinances. Meanwhile, the purchase index was up 8.6% in the same period.

Compared to the same week one year ago, mortgage apps overall dropped 35.8%, with a sharp decline in refi (-49.9%) compared to purchase (-7.4%). The survey, conducted weekly since 1990, covers over 75% of all U.S. retail residential mortgage applications.

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, the “war in Ukraine spurred an investor flight to quality, which pushed U.S. Treasury yields lower.” Consequently, mortgage rates declined for the first time in 12 weeks, he said.  

The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) decreased to 4.09% from 4.15% the week prior. For jumbo mortgage loans (greater than $647,200), rates dropped to 3.79% from 3.88% the week prior.

The survey showed that the refi share of mortgage activity decreased to 49.5% of total applications last week, from 49.9% the previous week. VA apps rose to 10.4% from 10.2% in the same period.

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The FHA share of total applications increased to 8.7% from 8.6% the prior week. Meanwhile, the adjustable-rate mortgage share of activity rose from 5.3% to 5.2%. The USDA went from 0.4% to 0.5%.

Regarding purchase applications, Kan said prospective buyers acted on lower rates and the early start of the spring buying season. He added: “The average loan size remained close to record highs, with higher-balance loan applications continuing to dominate growth.”

Experts told HousingWire that the turmoil could lower mortgage rates at least in the short-term, because investors often flee to safer options during periods of conflicts, such as U.S. Treasury notes, bonds and mortgage-backed securities.

On Thursday, Freddie Mac PMMS Mortgage Survey showed its rates at 3.76% for the week ending March 3, down from 3.89% in the previous week. Buyers on average bought 0.8 mortgage points.

“Looking ahead, the potential for higher inflation amidst disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other,” Kan said in a statement.

Source: housingwire.com

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Despite the ongoing conflict in Ukraine, Federal Reserve Chair Pro Tempore Jerome Powell plans to raise rates by 25 basis points this month.

The first rate increase is expected in a little less than two weeks, coinciding with the March Federal Open Markets Committee meeting, scheduled for March 15 and 16.

President Joe Biden also outlined a plan to reduce inflation including by reducing prescription drug and childcare costs, and creating affordable housing, at the State of the Union address. Biden said he would “go into more detail later.”

In the short-term, however, the federal government’s primary toolkit to reduce inflation is rate reductions by the Federal Reserve. That was the focus of a marathon House Financial Services Committee hearing Wednesday.

At the three-plus hour hearing, Powell said he would “support a 25 basis point rate hike.” 

He also said that it’s possible the central bank would move even more aggressively, by raising rates more than 25 basis points, if inflation remains elevated. Analysts had previously predicted rate hikes of as much as 50 basis points in March.

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Lawmakers also questioned Powell on how the conflict in Ukraine would impact the Fed’s policy. 

Economists have said that the conflict in Ukraine could bring a short-term reduction in mortgage rates, as investors flock to safe haven assets like mortgage-backed securities and bonds. But longer term inflation brought on by the conflict will cause mortgage rates to rise.

Powell, in his testimony, said the “near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain.”

“Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways,” Powell said.

Powell also took questions from lawmakers about housing affordability. While housing policy is not the realm of the Fed, controlling inflation is part of its dual mandate. Since housing costs make up a large portion of indices measuring inflation, the Federal Reserve is concerned with rising home prices.

Home prices, Powell said, will grow more slowly as the federal funds rate rises, pulling mortgage rates up with it. But he has no expectation that home prices would return to pre-pandemic levels, he said.

“We won’t get back to pre-pandemic levels,” said Powell. “We’re not trying to get prices back down, we’re trying to limit future prices.”

Some members of Congress also commented on the future of Powell’s re-nomination to the Federal Reserve, which hit a snag two weeks ago when Republican Senate Banking Committee members refused to show up for a vote.

Republican members blamed the debacle on Democrats for refusing to split up the slate of nominees, to allow some of the nominees to be confirmed. Republican members have said they will not allow the vote to proceed until Sarah Bloom Raskin answers questions about business dealings.

Biden, in his Tuesday evening address, urged lawmakers to go ahead with the nominations in light of concerns over rising prices.

“And while you’re at it, confirm my nominees for the Federal Reserve, which plays a critical role in fighting inflation,” Biden said.

Powell will also testify before the Senate Banking Committee on Thursday.

Source: housingwire.com

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The Monthly Statistical Update (MSU) keeps agents and brokers current on the market trends affecting California real estate transactions.

This month, we’re covering:

  • adjustable rate mortgages (ARMs), which continue to eclipse FRM rates, eliminating their usefulness for buyers seeking to extend their purchasing power;
  • the average rate on the 30-year fixed rate mortgage (FRM), which increased to 6.7% in June 2023, putting additional pressure on home sales; and
  • spiraling construction starts, which have plunged following mortgage rate hikes and tightening credit.

Download the Monthly Statistical Update

Download the customizable PDF version of the July 2023 MSU to share the latest market stats with your office and clients.

Plus, download Adobe Acrobat Reader to personalize this MSU with your image/logo and contact info — free!

Source: journal.firsttuesday.us

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If you’ve been shopping mortgage rates online, you may have stumbled upon a lender by the name of Lending.com, which is apparently both a lender and a domain name.

Indeed, they decided to brand themselves as a website address because they are a direct-to-consumer mortgage lender that lives exclusively online.

It turns out Lending.com is actually a division of a much larger mortgage company called Finance of America Mortgage, which recently went public.

And that seems to be an emerging trend; larger financial companies creating smaller tech-oriented brands that are highly focused on a particular niche, such as online mortgage lending.

Lending.com Fast Facts

  • Direct-to-consumer mortgage lender based in Charlotte, North Carolina
  • Appear to only be a few years old (formerly known as eRates Mortgage)
  • Owned by a much larger lender called Finance of America Mortgage LLC
  • Licensed in 49 states and the District of Columbia (not available in NY state)
  • Offer all types of consumer mortgages including purchase loans, refis, renovation loans, HELOCs, and reverse mortgages

As noted, Lending.com is a dba of Finance of America Mortgage, which means they’ve got the backing of a very large, publicly traded company.

While being big isn’t necessarily a good or a bad thing, it at least gives you an idea of who you’re dealing with – they’re not a small shop.

If you happen to be a homeowner or home buyer in California, they actually do business as Finance of America Mortgage LLC.

And if you live or want to live in New York state, you won’t be able to use Lending.com to get a home loan, at least not at the moment.

However, they appear to be licensed in the other 49 states and DC, which is a good thing for the rest of us.

In terms of their company history, I wasn’t able to track down all the details, but Lending.com was a B2R company as recently as 2017 before the domain name was ostensibly sold to Finance of America.

Simply put, they appear to the online mortgage lender division of FOA, with the valuable domain name the crown jewel here.

Getting a Mortgage from Lending.com

  • You can call them up directly, apply online, or request a rate quote on their website
  • They allow you to apply for a home loan digitally with the help of a human lending team
  • Operate completely online and remotely so you can’t visit a physical branch
  • Processing, underwriting, and funding all done in-house to streamline and simplify loan process

Lending.com is all about making lending easy, so you can apply by phone or via the website.

If using their website, you simply click on “Apply Now” to get started, at which point you’ll be prompted to create an account.

This will allow you to fill out the loan application at your own speed, save you progress, and revisit it if needed.

Assuming you apply yourself, you’ll be automatically partnered with a loan officer, whose contact information will be listed on the right side of the application screen.

You can email or call that individual to discuss loan options if you want some input, or if you need someone to walk you through the process.

A loan processor will also help you with things like documentation retrieval, satisfying loan conditions, and so on.

Alternatively, you can fill out the rate quote form on their website if you select “buy a home” or “refinance,” at which point someone will reach out to you directly.

You could argue for the second option (or to call directly) if you just want to get pricing first, before diving in and applying.

Regardless, you’ve got plenty of options, whether you’re a DIYer or someone new to the mortgage world.

Loan Types Offered by Lending.com

  • Home purchase loans
  • Refinance loans (rate and term, cash out, streamline)
  • Home renovation loans
  • Home equity lines of credit (HELOCs)
  • Reverse mortgages
  • Conforming loans backed by Fannie Mae and Freddie Mac
  • Jumbo home loans
  • Government-backed loans: FHA, USDA, and VA
  • Fixed-rate and adjustable-rate mortgages in varying loan terms available

While they don’t actually list the types of loans they offer on their website, my assumption is they offer everything (or most things) that Finance of America Mortgage offers.

This means you can get either a home purchase loan, a refinance loan, a cash out refinance, a home renovation loan, a HELOC, or a reverse mortgage.

And the expectation is that you can take out either a fixed-rate mortgage and an adjustable-rate mortgage in varying loan terms.

It is a bit disappointing that they don’t have a page dedicated to available loan programs, but they appear to be keeping things super simple on their website.

Lending.com Mortgage Rates

While their website says, “Low Rates. 24/7,” they don’t actually list their mortgage rates anywhere on their website.

In fact, their website is pretty basic, with no mention of rates or loan programs. The same goes for lender fees, which makes it difficult to assess a lot of things.

However, they do advertise a fair bit on Zillow, so if you’re comparing rates on Zillow, you might come across Lending.com’s rates.

I did a test search on Zillow and found that they offered mortgage rates in line with other online mortgage lenders like Sebonic Financial, which are generally the cheapest around relative to big banks and brand name mortgage lenders.

Additionally, they advertise with $1 lender fees, so if it’s a refinance there’s a good chance you’ll be able to go the no cost refinance route and avoid expensive closing costs, while still securing a relatively low rate.

But it would be nice if they listed their rates and fees on their own website.

Lending.com Reviews

On Zillow, they have a 4.62-star rating out of 5 based on nearly 3,000 customer reviews, which is generally considered great, though perhaps just shy of excellent.

A good portion of borrowers from those reviews indicated that the interest rate was lower than expected, which gives us another clue about their pricing.

You can also filter by loan officer on Zillow, so if you want to fine-tune and pick a specific individual to work with first, this could be one way of going about it. Then simply call that person directly or ask for them by name.

On Bankrate, Lending.com has a 4.3-star rating out of 5 on about 300 reviews, with an 83% recommendation rate.

While Lending.com is not Better Business Bureau accredited, they do have an A+ rating at the moment, which is based on customer complaint history.

All in all, they appear to have good to great reviews from most past customers, though there appears to be some room for improvement.

One nagging issue for me is the brand ambiguity between Finance of America Mortgage and Lending.com, which at times seem to be one in the same.

This could confuse consumers who are unsure of who exactly they’re working with. It kind of reminds me of Quicken Loans and Rocket Mortgage, which are the same company as well.

Lending.com Pros and Cons

The Pros

  • Can apply for a mortgage digitally online
  • Lots of different loan programs to choose from including HELOCs
  • Great reviews from past customers
  • Free mortgage calculators on site
  • A+ BBB rating
  • Backed by a large, publicly-traded company

The Cons

  • Not licensed in the state of New York
  • Do not publicize their mortgage rates or lender fees
  • Website is a little bare-bones (could use more information)
  • Some brand confusion regarding FOA Mortgage and Lending.com being affiliated companies

Source: thetruthaboutmortgage.com

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If you haven’t heard of LoanFlight Lending, things are going according to plan.

The mortgage company, which prides itself on not spending a lot of money on advertising, likes to keep things simple (and costs low).

That means not splurging on “expensive ads, sponsorships, or even putting our logo on sports stadiums.” The result is ideally lower mortgage rates for its customers without lender fees.

The logic is they’re spending less, so you should have access to better rates, all else being equal, unlike some of the big guys who spend so much they might not be as competitive.

And remember, a mortgage is a commodity; they’re all basically the same, at least once they fund. There’s nothing special about a name-brand mortgage.

Now let’s learn more about LoanFlight to determine if you should buy a ticket.

LoanFlight Lending Quick Facts

  • Retail direct-to-consumer mortgage lender founded in 2016
  • Headquartered in Tampa, Florida
  • Currently licensed to lend in 12 states nationwide
  • Funded more than $200 million in home loans during 2019
  • More than 90% of their overall volume was mortgage refinancing

While LoanFlight might not be the oldest or largest mortgage lender out there, they still manage to fund hundreds of millions in home loans annually.

And they do so in just a dozen states, which is all the more impressive.

At the moment, they’re operating in Alabama, Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Kentucky, Maryland, Minnesota, and Texas.

Last year, they seemed to do the most volume in the state of California, with Florida and Texas not far behind.

While they may not be big on advertising, you can catch them in the wild on the Zillow mortgage marketplace, which is where you may have first seen them.

Simply put, they are a no-frills lender that is all about low rates with no lender fees. To that end, they say you’ll see $0 in Section A of their Loan Estimate (LO) if you choose to apply with them.

They’re also big on refinancing, though they offer home purchase financing as well. But more than 90% of their loans were refis last year, if that’s any indication of their niche.

How to Apply with LoanFlight Lending

  • You can apply directly from their website using their digital mortgage application powered by Blend
  • They rely on technology and a streamlined process to keep costs low and pass savings onto you
  • Once you apply you’ll receive an email whenever a new task (additional paperwork) must be completed
  • Easily track loan progress at any time by logging into the loan portal

As noted, LoanFlight keeps things super simple and straightforward. While you can call them up if you prefer to speak to a human, they let you apply directly from their website as well.

With no human interaction necessary, you can simply click “Apply” and you’ll be sent to their digital mortgage application powered by Blend.

It allows you to complete your loan application from any device, save your progress, link financial accounts, scan and upload paperwork, and eSign documents.

You’ll also receive personalized loan rates once you complete the application to see what you’re eligible for.

And remember, LoanFlight doesn’t charge lender fees, so the rates should be listed without a cost.

Once your loan is submitted, you’ll receive an email any time a task becomes due, and you can check loan progress at any time via the online loan portal.

LoanFlight says it uses technology and relies on fewer people to ensure your mortgage loan process goes as smooth as possible.

Loan Programs Offered by LoanFlight Lending

LoanFlight Lending Mortgage Rates

They say “low rates” right on their website, but then don’t list them for us. That’s fine, but it’d be nice to get an idea, right?

Like a lot of mortgage companies, they keep their mortgage rates to themselves, but at least they tell us they’re low, and give us a reason to believe them.

Remember, they don’t spend lots of money on fancy advertisements and run a tight ship, so there’s reason to expect a low mortgage rate.

In terms of lender fees, they say they charge $0, so that should be pretty cut and dry.

This means their interest rates should be viewed as even more attractive relative to any other lenders that charge points and fees.

As always, take the time to shop around if you want to ensure that their rates beat out the competition.

LoanFlight Lending Reviews

On Zillow, they have a 4.76-star rating out of 5 based on about 150 reviews from past customers. Not a ton of data, but overwhelmingly positive for what it is.

On LendingTree, they’ve got a 4.7-star rating out of 5 from 65 reviews, with a 91% recommendation rate.

And on Bankrate, a 4.9-star rating based on nearly 100 customer reviews. So while the reviews aren’t plentiful, which is understandable given their young age as a company, they’re consistently excellent.

While they aren’t Better Business Bureau accredited, they do currently enjoy an ‘A’ rating with the company.

All in all, LoanFlight might be a good fit for a homeowner looking to refinance an existing home loan that is pretty straightforward.

By that, I mean a salaried employee with good credit who needs to refinance an owner-occupied single-family home, without much hand-holding.

For example, if you’ve refinanced in the past and/or have no problem going through the process without a lot of guidance.

These low-cost mortgage lenders tend to excel when it comes to vanilla loan scenarios like the one mentioned above since they’re generally easy to close without much work or hoops to jump through.

LoanFlight Lending Pros and Cons

The Good

  • Do not charge lender fees
  • Say they offer low rates because they don’t spend a lot of money on advertising
  • Offer a variety of popular home loan programs
  • Excellent reviews from past customers
  • ‘A’ rating from the Better Business Bureau

The Maybe Not Good

  • Only licensed in a dozen states at the moment
  • Do not publicize mortgage rates
  • Do not service their own loans (transferred shortly after closing)

Source: thetruthaboutmortgage.com

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Looking for the most up-to-date mortgage rates to empower your purchasing or refinancing decisions? We’ve got you covered.

Here, you can view today’s mortgage interest rates, updated daily according to data from Bankrate, so you can have the most current data when purchasing or refinancing your home.

30-year fixed rate mortgages

The average mortgage interest rate for a standard 30-year fixed mortgage is 7.17%, an increase of 0.09 percentage points from last week’s 7.08%.

Thirty-year fixed mortgages are the most commonly sought out loan term. A 30-year fixed rate mortgage has a lower monthly payment than a 15-year one, but usually has a higher interest rate.

15-year fixed rate mortgages

The average mortgage interest rate for a standard 15-year fixed mortgage is 6.50%, an increase of 0.02 percentage points from last week’s 6.48%.

Fifteen-year fixed rate mortgages come with a higher monthly payment compared to its 30-year counterpart. However, usually interest rates are lower and you will pay less total interest because you are paying off your loan at a faster rate.

5/1 adjustable rate mortgages

The average rate on a 5/1 adjustable rate mortgage (ARM) is 6.07%, a decrease of 0.02 percentage points from last week’s 6.09%. With an ARM, you will most often get a lower interest rate than a fixed mortgage for say, the first five years.

But you could end up paying more or less after that time depending on your loan terms and how that rate follows the market.

What is the best term for a loan?

When picking a mortgage, it is important to pick out a loan term or payment schedule. Usually you will be offered a 15 or 30-year loan term, but it is not uncommon to see 10, 20, or 40-year mortgages, according to CNET.

Mortgages can be fixed-rate or adjustable-rate. Interest rates in fixed-rate mortgages are set in stone for the duration of the loan.

Adjustable-rate mortgages only have interest rates set for a certain period of time before the rate adjusts annually based on the market.

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Source: nj.com

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Chicago-based Guaranteed Rate, a top 10 U.S. mortgage lender, acquired Sirva’s shares at Premia Relocation Mortgage and now has full ownership of the business, the companies announced on Friday. The financial terms of the transaction were not disclosed. 

Premia, which provides a relocation mortgage service for employees moving across the country or to other countries, has a digital platform called DigitalMove. According to the mortgage data company Modex, Michigan-based Premia has three branches, 21 active loan officers, and originated about $670 million in mortgages in the last 12 months. 

“With this change in place, we can provide our customers with an even wider range of products and specialized services,” Victor Ciardelli, Guaranteed Rate’s founder and CEO, said in a statement. “The increased investment in technology and additional resources GRI brings will enhance and strengthen an already established foundation.”

Premia‘s production represents a small share of G-Rate’s origination volume, which reached $7 billion in the first three months of 2023. It fell 58.8% compared to the same period of last year but was enough to give Guaranteed Rate the sixth position among the largest mortgage lenders in the country, according to Inside Mortgage Finance (IMF). 

Guaranteed Rate inherited Premia, a joint venture with Sirva, when it acquired multi-channel lender Stearns Holdings for an undisclosed sum in January 2021, bringing in a $20 billion lender that gave the company direct access to the wholesale channel, a network of talented underwriters and compliance specialists and several highly profitable joint ventures.

One year after the acquisition, G-Rate closed Stearns wholesale channel and laid off hundreds of employees. In a letter to brokers about shutting down the Stearns wholesale channel, Ciardelli wrote that the company had decided to focus on leveraging its “industry-leading purchase platform augmented by the best loan officers in the business.”

In May 2023, G-Rate adopted the technology company Gateless‘s Smart Underwrite solution, which aims to significantly reduce the time and effort involved in the origination process, potentially leading to faster, if not instant, borrower approvals.

Before that, the company expanded its program to approve loans within 24 hours nationwide. Dubbed the “Same Day Mortgage,” it aimed at giving a competitive edge to first-time buyers who are competing against the all-cash buyers who make up 28% of home purchases, the lender said. 

Source: housingwire.com