The new year started with lower interest rates across the board, according to the Primary Mortgage Market Survey from Freddie Mac.

“Mortgage rates declined to start the new year with the 30-year fixed-rate mortgage dipping to 4.51 percent,” said Sam Khater, Freddie Mac’s chief economist. “Low mortgage rates combined with decelerating home price growth should get prospective homebuyers excited to buy. However, it will be interesting to see how the recent turmoil in the stock market will affect homebuying activity in the coming months.”

Some additional rate information is as follows:

• The 30-year fixed-rate mortgage averaged 4.51 percent with an average 0.5 point for the week ending Jan. 3, 2019, down from last week when it averaged 4.55 percent. A year ago at this time, the 30-year FRM averaged 3.95 percent.
• The 15-year FRM this week averaged 3.99 percent with an average 0.4 point, down from last week when it averaged 4.01 percent. A year ago at this time, the 15-year FRM averaged 3.38 percent.
• The 5-year Treasury indexed hybrid adjustable-rate mortgage  averaged 3.98 percent with an average 0.2 point, down from last week when it averaged 4.00 percent. A year ago at this time, the 5-year ARM averaged 3.45 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage.

Wells Fargo & Co. has reached an agreement with all 50 state Attorneys General and the District of Columbia regarding mortgage interest rate lock issues, under which it will pay $575 million to settle civil claims.

The company has been discussing these issues with federal regulators and is paying back consumers for their losses. Also, Wells faced regulatory scrutiny for its retail sales practices, auto collateral protection insurance and Guaranteed Asset-Auto Protection matters.

“This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank,” said Tim Sloan, chief executive officer and president of Wells Fargo.

Under the terms of the agreement, Wells Fargo will:

• Pay a total of $575 million to resolve civil claims that the state attorneys general otherwise might bring arising out of or related to the covered conduct prior to the effective date of the agreement.
• Maintain designated teams to review and respond to customer inquiries on the covered issues.
• Create and maintain a website that describes the issues and Wells Fargo’s existing remediation efforts and identifies contact information for consumers to use if they have any questions or concerns about the covered issues.

Wells Fargo will also provide periodic reports to the states on the progress of its existing remediation efforts.

As of the end of third quarter 2018 the company had accrued $400 million of the settlement amount and expects to accrue the remaining $175 million in fourth quarter 2018.

Under the terms of the agreement, Wells Fargo will:

• Pay a total of $575 million to resolve civil claims that the state attorneys general otherwise might bring arising out of or related to the covered conduct prior to the effective date of the agreement.
• Maintain designated teams to review and respond to customer inquiries on the covered issues.
• Create and maintain a website that describes the issues and Wells Fargo’s existing remediation efforts and identifies contact information for consumers to use if they have any questions or concerns about the covered issues.

Wells Fargo will also provide periodic reports to the states on the progress of its existing remediation efforts. For a related article, click here.

Home-value growth is slowing, price cuts are more common and for-sale inventory is up. Sounds like relief is imminent for home buyers, right? Not so fast. Mortgage rates have been steadily climbing for the past two years and could approach 6 percent by the end of 2019, dulling those factors.

Rising interest rates bite into buyers' budgets more than they might think. For example, a buyer making the current U.S. median household income could have bought a $393,700 home in January 2018, spending 30 percent of that salary each month on a mortgage payment. That's when rates were at 4.15 percent. Now, with rates at 4.63 percent, that same buyer can only afford a $372,000 home to keep the monthly payment the same. If the mortgage rate hits 6 percent, that buyer will be shopping for a $319,200 home in order to maintain the budget, according to an analysis from Zillow.

Home values have risen steadily this year, and continued appreciation, albeit more slowly, is expected at least through next year.

The result is that many home buyers in 2019 will need to reset their price points, and make some compromises about where they're willing to live or how much space they want. Buyers being pushed toward less-expensive segments of the market, where inventory is often tight could, in turn, push prices more quickly upward, making those homes less affordable. Right now, home shoppers wanting to spend no more than 30 percent of their median U.S. income can afford 56.5 percent of available homes. With rates at 6 percent, they would be looking among 48 percent of available homes, a loss of 49,660 potential homes.

The rise is felt more sharply in some metro areas than others. In San Jose, the nation's most expensive metro, a 6 percent mortgage rate would have buyers making the $118,400 median household income looking at homes $102,100 less expensive than those they might be considering now. In Washington, D.C., they'd be looking at homes $87,200 less expensive. In each of the 35 largest metro areas in the U.S., the drop in buying power is at least $46,500.

Already, rising mortgage payments eclipse home-value gains, a phenomenon that can both encourage homeowners to stay put to hold onto low mortgage rates and discourage would-be first-time home buyers. What prospective home buyers should take away from all this is that there isn't necessarily a "best time" to buy a home. Trying to time the housing market, like trying to time any market, is generally a bad idea.

"While it's certainly important to keep track of home values and interest rates and plan your budget accordingly, buyers shouldn't base their decisions on those moving targets. A home is the most valuable asset that most people will ever own, so it's especially important not to gamble with it," said Zillow senior economist Aaron Terrazas. "In the end, the best time to buy a home is always when the time is right for an individual buyer, often when they're financially ready, when they're relocating to a new area or a major life event requires them to upsize or downsize."

Although rising mortgage rates will affect home buyers first, renters will not be far behind. As higher rates limit the number of homes that potential buyers can afford, some would-be buyers will be too financially stretched to buy and will continue renting. As a result, rent growth is expected to tick upward.

Ellie Mae has upgraded Encompass Consumer Connect that include identity, employment and income verification.

The enhancements feature an integration of Experian’s CrossCore platform, which enables lenders to use a multi-layered approach to establish identity and assess risk.

[caption id="attachment_8712" align="alignright" width="264"] Tyrrell: Partnership with Experian simplifies and speeds the verification process.[/caption]

These enhancements help lenders engage with homebuyers and provide a more streamline application process to help foster interest, engage borrowers and convert opportunities. Mortgage lenders can combine historical data, such as demographic information, and first-party fraud risk assessment with step-up authentication methods to verify an individual during the application process.

Upon submission of the loan application, the data is sent to the identity verification provider and a report is generated and sent to the Encompass eFolder within one hour of submission.

Since the launch in July 2018, Encompass Consumer Connect continues to add key functionality that can now support verification services that enable lenders to automate borrower identity, employment and income verification to achieve Day 1 Certainty from Fannie Mae in a bid to close loans faster.

In addition to providing a seamless digital experience for homebuyers, Encompass Consumer Connect helps lenders close loans faster. Since the launch of Encompass Consumer Connect, Ellie Mae has seen significant momentum including more than 500 clients with more than 2,000 unique sites and more than 140,000 applications in progress. Some lenders are seeing a three-day reduction in turn times from application to underwritten loan.

“At Experian, we are innovating to modernize the mortgage process and support the industry’s evolution,” said Michele Pearson, general manager of Experian Mortgage. In her view, Experian and Ellie Mae are working to optimize the power of data and analytics to authenticate prospective borrowers faster, with more accuracy and ensure organizations make smarter lending decisions.

Encompass Consumer Connect is designed to deliver a consumer web experience that goes beyond a mere online application. It’s an engaging digital-mortgage experience for homebuyers, accessible from any device.

“Lenders are looking for more efficient ways to engage homebuyers and with these updates to Encompass Consumer Connect, we’re making it easier for borrowers to complete their loan applications,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “Our recent enhancements to Encompass Consumer Connect offer identity, employment and income verification and an integration with Experian that simplifies and expedites key verification activities for an improved borrower experience.”