June 12th, 2015 4:48 PM by Richard T. Cirelli
Originations Up Sharply
Residential lenders originated an estimated $70.0 billion of jumbo loans in the
first quarter of 2015 nationwide, a 59% increase from first quarter 2014.
Moreover, a number of jumbo lenders more than doubled their production during
that time. “Our jumbo pipelines are near record high, as the demand for jumbo
mortgages remains healthy,” said an official from a leading jumbo lender.
Jumbos accounted for 19.4 percent of total mortgage originations in the first
quarter of 2015, consistent with the peak of 19.7 percent in the previous
quarter. For all of 2014, jumbos accounted for 19.0 percent of total
production. Keep in mind these are national figures. In our local, high-priced
market I’m sure that the numbers are even higher.
As an independent mortgage broker, I am seeing continued interest in jumbo
loans from new and old lenders, some with creative financing including stated
income loans, lower down payment requirements, larger loan limits and more
creative underwriting methods. As the market has slowed down a bit due to
slightly higher interest rates, competition among lenders for jumbo loans has
increased. In many cases, jumbo loans have lower rates than conforming loans.
Call me for any conforming and jumbo needs.
Review of Lender Appraisal Regulations:
The appraisal regulations
continue to be a point of confusion for borrowers and real estate agents. For
that reason I thought I would review the procedure here and mention a new rule
The most important thing
for all to understand about appraisals is that no party to the transaction can
choose the appraiser. Therefore, the appraiser is not chosen by the lender, the
mortgage broker, buyer, seller, real estate agent or any other person or entity
involved in the transaction.
Appraisals are ordered
through Appraisal Management Companies (AMC’s). These are companies responsible
for managing a panel of qualified appraisers and for randomly assigning an
appraiser for each order. Once the appraisal is complete, the appraiser turns
it in to the AMC where it is reviewed for accuracy and compliance before it is
released to the lender.
One more important requirement is that the borrower cannot be charged for an
appraisal until they have acknowledged the lender’s loan disclosures. Lenders
and mortgage brokers have 3 business days by law to disclose once a loan
application has been taken or received. To be legally compliant, appraisals
cannot be ordered in advance or at the same time that a loan application is
received. Disclosures must come first if the borrower is paying for the
New Appraisal Rule:
New rules on appraisal management companies (AMCs) requires every state to have
laws regulating AMCs or lose the ability to appraise FHA, Fannie Mae or Freddie
Mac loans in the state. If the AMC has more than 15 appraisers in the state or
25 total that provide services for them, they must register. The real meat of
this is that now both the appraiser and the AMC are required to abide by the Uniform Standards of Professional Appraisal Practice
(USPAP). The rule also creates a national registry of AMCs that
comes with a fee, of course. This will probably result in appraisals becoming
more expensive again.
IRS Breach Causes Mortgage Delays:
You probably heard that the IRS last week disclosed a massive security breach
that allowed hackers to obtain detailed tax-return information on 104,000