Freddie Mac: Mortgage rates fall after three consecutive weeks of climbing

Freddie Mac: Mortgage rates fall after three consecutive weeks of climbing

This week, the average U.S.
fixed rate for a 30-year mortgage rose to 3.69%. That’s 9 basis points below last week’s 3.78%
and still more than a percentage point below the 4.94% of the
year-earlier week, according to the Freddie Mac Primary
Mortgage Market Survey.

“After a year-long slide, mortgage rates hit a cycle low in September 2019 and have risen in six out of the last nine weeks due to modestly better economic data and trade related optimism,” said Sam Khater, Freddie Mac’s chief economist. “The improvement in sentiment has been one of the main drivers behind the surge in equity prices and will provide a halo effect to consumer spending heading into the important holiday shopping season.”

The 15-year FRM averaged
3.13% this week, sliding from last week’s 3.19%. This time last year, the
15-year FRM came in at 4.33%.

The five-year Treasury-indexed hybrid adjustable-rate
mortgage averaged 3.39%, retreating from last week’s rate of 3.44%. The percentage
remains significantly lower than its 2018 rate of 4.14%.

The image below highlights this week’s changes:

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Democratic candidates take a stand on homelessness

Democratic candidates take a stand on homelessness

This week presidential candidate Pete Buttigieg came out against a homeless ordinance in Las Vegas.

The ordinance would criminalize homelessness in the city,
but Buttigieg, mayor of South Bend, Indiana, announced his opposition to it.

“Homelessness is a moral crisis that defies easy solutions, and the best way to address it is with smart investments in housing, supportive services and health,” Buttigieg said in a statement. “I stand with members of the homeless community and advocates in opposing this ordinance.”

Shortly after that, former Secretary of the Department of Housing and Urban Development and presidential candidate Julián Castro voiced his opinion on the bill, sarcastically saying the homeless should be treated like people.

“Former big city mayor, housing secretary and presidential
candidate here,” Castro said in a tweet. He then proceeded to list three things
he could do to help end homelessness, concluding with, “But first you have to
see people without homes as…people. Shocking.”

Castro’s three suggestions are:

1. Increase the stock of affordable housing

2. Make housing vouchers an entitlement

3. End housing discrimination

This isn’t the first time Castro has stood up for housing
matters in this election.

At the October debate, Castro criticized the moderators for closing with a question about comedian Ellen DeGeneres’ controversial friendship with former President George W. Bush without asking any questions about housing and other critical issues.

A week earlier, Castro had challenged the debate moderators via
Twitter to ask a housing question.

And a few days before the debate, at the CNN town hall on LGBT equality, Castro called on HUD Secretary Ben Carson to resign due to his comments on transgender people.

But if you like the stand the former HUD secretary is taking on housing in his campaign, just be careful about getting too attached just yet – his campaign has struggled to keep up on recent weeks. In October, Castro announced he needed $800,000 before the end of the month in order to carry on with his campaign.

While he did meet that goal and was able to stay in the
race, it does leave his campaign on shaky grounds.

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Snapdocs raises $25 million in Series B funding round

Real estate technology company Snapdocs announced Thursday morning that it raised $25 million in its Series B funding.

This funding was led by F-Prime Capital, as well as previous investor Sequoia Capital, who led its Series A funding, and Founders Fund.

Snapdocs, which was founded in 2013, will use the money to continue development on its digital real estate closing platform as well as its artificial intelligence offerings.

According to the company, Snapdocs’ platform currently powers over 10% of all U.S. residential mortgage transactions, equalling about $150 billion in real estate transactions annually.

As part of the funding round, David Jegen of F-Prime Capital will join Snapdocs’ board of directors.

“Residential mortgage is a $2 trillion industry and one of the largest sectors yet to be digitized,” said Jegen, managing partner of F-Prime Capital’s tech fund.

“The entire closing process is cumbersome and in need of a better workflow for collaboration, coordination and transparency,” Jegen added. “Snapdocs has built the leading vertical SaaS solution to this problem and is well-positioned to become the industry’s platform for digital mortgage closings.”

Snpadocs said its different approach to technology adaptation is what led to its growth and success.

“This is a huge milestone for the Snapdocs team and towards delivering on our promise of a seamless digital real estate closing. It’s also a big milestone for our lender and title partners who are now trusting us with over 750,000 real estate closings a year,” said Aaron King, CEO of Snapdocs.

Beyond the fundraising, the San Francisco-based company says it will be expanding offices and opening a branch in Denver.

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HomeStreet Bank fined for kickbacks to real estate agents, homebuilders

Over the course of this year, HomeStreet Bank moved away from the mortgage business, selling off much of its retail mortgage origination business, along with nearly all of the mortgage servicing rights associated with the loans originated in those retail outlets.

At the time, the bank said that it still planned to originate mortgages, albeit a smaller operation with loans sourced through its bank branches, online banking services, and other relationships.

But, some of those relationships have gotten the bank in
trouble with the Federal Deposit
Insurance Corp

The FDIC announced Wednesday that it reached a settlement
with HomeStreet Bank after an investigation found that HomeStreet had paid
kickbacks to real estate agents and homebuilders in exchange for their mortgage

According to the FDIC, HomeStreet will pay a fine of $1.35
million for violations of the Real Estate Settlement Procedures Act.

As the FDIF states, RESPA “prohibits giving or accepting a
thing of value for the referral of settlement service involving a federally
related mortgage loan.”

And in the case of HomeStreet, the company was providing
payment to real estate brokers and homebuilders for referrals of their mortgage

According to the FDIC, the issue stemmed from HomeStreet’s standalone home loan centers, many of which were sold off this year to Homebridge Financial Services.

The FDIC said Wednesday that an investigation found that
HomeStreet’s home loan centers entered into certain co-marketing arrangements with
real estate brokers in which the bank and brokers marketed their services
together using online platforms.

The FDIC’s investigation also determined that the bank entered
into desk rental agreements where the bank rented space in the offices of real
estate brokers and homebuilders.

According to the FDIC, these arrangements led to the bank
paying fees to the real estate brokers and homebuilders for their referrals of
mortgage business, a violation of RESPA.

“While co-marketing arrangements and desk rental agreements
are permissible where the fees paid bear a reasonable relationship to the fair
market value of marketing or rental costs, such arrangements and agreements
violate RESPA when the amounts paid exceed fair market value and the excess is
for referrals of mortgage business,” the FDIC said in a statement.

As part of the settlement, HomeStreet will pay a fine of
$1.35 million and has terminated all of its co-marketing and desk rental

According to the FDIC, HomeStreet agreed to the settlement without
admitting or denying the violations.

HousingWire attempted to contact HomeStreet for comment on
the FDIC settlement, but as of publication time, the bank had not responded.
This article will be updated should the bank respond.

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Are homes under $250,000 nearing extinction?

A recent report by economic research consultancy Capital Economics shared a stunning statistic: The number of vacant single-family homes for sale priced under $250,000 has halved since 2012.

According to the report, at the start of the third quarter of 2019, there were only 550,000 vacant homes on the market priced under $250,000. That’s half as many as there were just seven years ago.

Capital Economics attributes part of this to lower housing inventory, in general, stating that the overall number of vacant single-family homes for sale has dropped 25% in the last seven years. 

“The homeowner vacancy rate, that is the number of vacant homes for sale (which account for just over half of all homes for sale) as a share of all owner-occupied homes did see a marginal rise to 1.45% in the third quarter,” the report stated, citing the latest U.S. Census Housing Vacancies and Homeownership survey.

“But that was up from a 40-year low in the second quarter,” the report continued. “Sales are therefore being held back by a lack of homes on the market, and in particular a shortage of cheaper homes.”

As Millennials increasingly enter the housing market and Gen Z begins to join, the lack of affordable homes could hamper their homebuying prospects. With both generations taking on historical amounts of student loan debt, increasing home prices are not a welcome reality. 

“That suggests the tick-up in the homeownership rate for under-35s in the third quarter, to 37%, is not the start of an upward trend,” the report states.

“Rather, we expect young homeownership will hold its ground over the next couple of the years. But new households have to live somewhere and, if they are not buying a home, they will rent one,” the report continued. “That suggests rental vacancy rates will stay relatively low, preventing a sharp fall in rental growth as the economy slows.”

The report does point to one bright side: “the strong labor market over the past couple of years has supported household formation.”

Capital Economics cites that in the past two years since this year’s Q3, 2.9 million new households were formed. For comparison, only about 1.9 million households were formed in the two years to the third quarter of 2017.

Household formation could lead to more people being ready to buy a home, but the report issues a warning there as well. 

“New households will have found it increasingly hard to find an affordable home to buy,” the report states. “The share of vacant single-family homes for sale priced under $250,000 has been on a steady downward trend since 2014, and averaged just 57% in the year to Q3 2019.”

“Moreover, with credit conditions relatively tight, and getting tighter, potential homebuyers will not be able to stretch their budgets to buy a more expensive home,” the report continued. “…until homebuilders ramp up production of cheaper properties, home sales, and in particular sales to first-time buyers, will see only minimal growth.”

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