Mortgage apps increased 2.3% from the previous week, largely due to a strong purchase market, according to the Mortgage Bankers Association (MBA) survey for the week ending Jan. 14. We hope you enjoyed last week’s edition where we talked about Purchase Loans Drive Mortgage Applications Higher. This week we’re bringing you:
Regulators slap mortgage LOs with fines for skipping class*
State regulators said there was “no indication” of consumer harm
More than 400 mortgage loan originators will pay penalties after a multi-state investigation alleged they falsely claimed they completed an annual continuing education requirement.
LOs in 42 states who settled with state regulators will pay on average about $2,700 each — $1,000 for each state they are licensed in — for skipping the annual eight-hour course. They must also surrender their licenses for three months and take additional educational programs.
The 26-state investigation, which the California Department of Financial Protection and Innovation led, picked up on the discrepancies using a digital tool to check fulfillment of NMLS requirements. The effort found loan officers failed to fulfill a continuing education requirement, which varies by state, meant to enhance consumer protection and reduce fraud.
The LOs implicated in the investigation all paid for educational programs from Carlsbad, California-based firm Real Estate Educational Services (REES), regulators said. The firm, owned by Danny Yen, was licensed to provide Nationwide Multi-State Licensing System education, but instead orchestrated two education schemes.
For more than 600 loan officers, state regulators allege Yen either took the classes in exchange for compensation, or gave them class credit without requiring the LOs show up to class. State agencies in California, Maryland and Oregon have started separate administrative actions against Yen, and he could face fines of up to $3.4 million, officials from the Conference of State Bank Supervisors and CDFPI said during a briefing Tuesday.
Supply Chain and Inflation Concerns Ding Builder Confidence Index*
Builder confidence stumbled a bit this month, breaking a four-month streak that had pushed moved the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) 8 points higher. The index, which quantifies builder confidence in the market for newly constructed homes, dipped 1 point in January to 83.
Robert Dietz, NAHB’s chief economist said higher materials costs and lack of availability are adding weeks to the construction time of a typical single-family home and the aggregate cost of residential construction materials has increased almost 19 percent in the last month. Policymakers need to take action to fix supply chains and obtaining a new softwood lumber agreement with Canada and reducing tariffs would be an excellent place to start, he said.
The most pressing issue for the housing sector remains a lack of inventory according to the economist. While 2021 single-family starts are expected to end the year about 25 percent higher than the pre-Covid 2019 level, higher interest rates in the coming year will put a damper on housing affordability.
Derived from a monthly survey that NAHB has been conducting for 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Mortgage apps up 2.3% with new record average loan size*
Purchase Index rose 7.9% from the previous week
The seasonally adjusted Purchase Index rose 7.9% from the previous week, while the Refinance Index decreased 3.1% in the same period.
Compared to the same week one year ago, mortgage apps overall dropped 37.3%, with a sharp decline in refinance (-49.2%) compared to purchase (-12.2%).
According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, the 30-year fixed rate reached 3.64%, more than 30 basis points over the past two weeks. Higher rates led to the “slowest pace of refinance activity in over two years,” mainly among FHA and VA loans, Kan said in a statement.
Regarding purchase applications, the average loan size set a record at $418,500. “The continued rise in purchase loan application sizes is driven by high home price appreciation and the lack of housing inventory on the market – especially for entry-level homes,” Kan said.
The economist added that government purchase applications had slower growth, contributing to the larger loan balances and suggesting that prospective first-time buyers are struggling to find homes to buy in their price range.
The refinance share of mortgage activity decreased to 60.3% of total applications last week, from 64.1% the previous week. The VA apps went from 11.4% to 10% in the same period.
The FHA share of total applications decreased from 9.9% to 9.3%. Meanwhile, the adjustable-rate mortgage share of activity increased to 3.8% of total applications. The USDA share of total applications stood unchanged at 0.4%.
Finding highly affordable leads to keep sales coming in
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