TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 38 of 67

Th e M Rep o RT | 37 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ORIGINATION the latest 2014 refinancers expected to save $5 Billion this year Refinances picked up again as mortgage rates dwindled at year-end. t he refinance boom may be losing steam, but near-record low mortgage rates encouraged more borrowers to refinance in Q 4, according to Freddie Mac's 2014 Q 4 Refinance Report. Mortgagors who refinanced their loans in 2014 are projected to save on net a total of about $5 billion in interest over the next year, according to the report. In the final three months of 2014, low mortgage rates drew more borrowers to refinance their mortgage loans, resulting in lower monthly payments and shorter loan terms. According to Freddie Mac, borrowers "overwhelmingly" went for the security of long-term, fixed-rate mortgages when they refinanced. "Our latest refinance report shows the refinance boom con- tinued to wind down as the pool of potential borrowers declined over the course of 2014," said Len Kiefer, Freddie Mac's deputy chief economist. "However, because mortgage rates fell in the fourth quarter of last year, we ac- tually saw the share of refinance originations tick up a bit despite volumes being down, a similar trend we expect to see for the first quarter of 2015 as mortgage rates have moved even lower." Approximately $6.7 billion in net home equity was cashed out as part of mortgage loan refi- nances in Q 4, which was low compared with historical vol- umes, according to Freddie Mac. The Q 4 total is down from Q 3's revised total of $7.6 billion. The Q 4 total brings the amount of net home equi- ty cashed out for the full year of 2014 to $24 billion, a 16 percent de- cline from 2013's total of $28.6 bil- lion and a drop of 71 percent from the cash-out refinance volume cFPB Proposes rule changes for Underserved, rural areas Revised rules to expand protections to more small financial institutions and expand the regions the bureau considers "rural" were met with general praise from industry groups. t he Consumer Financial Protection Bureau (CFPB) unveiled changes to its mortgage rules aimed at expanding credit access to rural and underserved areas. In a release, the bureau detailed a number of proposed revisions it hopes will increase options for community banks and other smaller mortgage lend- ers that may have been adversely impacted by last year's newly implemented rules. "Responsible lending by com- munity banks and credit unions did not cause the financial crisis, and our mortgage rules reflect the fact that small institutions play a vital role in many communi- ties," said CFPB Director Richard Cordray. "Today's proposal will help consumers in rural or under- served areas access the mortgage credit they need, while still maintaining these important new consumer protections." Included in the new rules is a proposal to expand the scope of what the CFPB defines as a "small creditor." Under the pro- posal, the loan origination limit for an institution to have small- creditor status would jump from 500 first-lien mortgages to 2,000, excluding loans held in portfolio by the creditor and its affiliates. Small creditors are granted several protections in last year's rules, including receiving "quali- fied mortgage" status for loans held in their own portfolios and the ability to originate qualified mortgages with balloon payments. The changes would also expand the definition of "rural" areas to include census blocks not in areas designated "urban" by the Census Bureau. The proposal does not include a change in asset limit for small- creditor status, which is currently at $2 billion. It would include as- sets of creditors' mortgage lending affiliates in making calculations. The proposed changes would also provide grace periods for creditors exceeding the origina- tion or asset size limits and a qualifying period for rural or underserved status. While the proposed rule is open for public comment until March 30, industry groups didn't wait to respond. "We applaud the bureau of listening to community bankers who struggle to serve rural and underserved areas. These proposed changes are sensible measures that will make it easier for certain hometown bankers to meet the mortgage credit needs in their com- munities," commented Bob Davis, EVP of mortgage markets for the American Bankers Association. Independent Community Bankers of America (ICBA) was also supportive. "The CFPB's proposed changes to its Qualified Mortgage rules will help ensure community banks can continue to actively and responsively make mortgage loans to their customers," said ICBA Chairman John Buhrmaster. The National Association of Federal Credit Unions (NAFCU) welcomed the news but did find issue with its scope. "CFPB's mortgage rules implement requirements of the Dodd-Frank Act, which provides a specific exemption for small creditors," said Carrie Hunt, NAFCU's SVP of government affairs and general counsel. "NAFCU continues to believe all credit unions should be exempt from rules implemented to address abuses in which credit unions did not participate." Continued on Page 35

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport_March_2015