Mortgage Industry Becoming More Healthy

After nearly seizing over the past few months, the mortgage industry is coming back to life.  As a result, we are seeing many of the pricing adjustments that were recently added soften.  For example, most lenders are dropping the extra 1% fee that they were charging on a cash out refinance.  This is good news and very helpful to allow people access to their much needed home equity.  As markets continue to stabilize, we should see pricing improve for investment properties and high balance loans.  Further, we will hopefully see the jumbo and FHA / VA markets begin to soften.  These are all important programs to maintain a stable and healthy housing market.

One of the primary contributors to the melting mortgage market is the forbearance program that lawmakers passed in March.  Since independent mortgage lenders have carried much of the brunt to fund the program, it has created pricing hits for loans that are considered higher risk.  At this point, about 4.2 million mortgages are currently in forbearance.  This represents 8.4% of every home that has a mortgage.  However, there is a silver lining.  Of this massive number of mortgages in forbearance, about 40% of them are still making their required monthly payment.  This is good news and is taking a lot of pressure off of loan servicers who take deep losses for each borrower who is not making their payments.

We will maintain a locking bias.