Credit Unions are for the first time ever, originating more than 8% of the U.S. mortgages in any given three-month period, according to an analyst at Callahan & Associates.  Previously the highest share credit unions earned was slightly more than 5%.

On Thursday, Lydia Cole, director of industry analysis for Callahan & Associates, said that credit unions have hit the new benchmark.  She made these observations at a CU Mortgage Lending Regional Workshop in Orlando, Florida, sponsored by the American Credit Union Mortgage Association.

The boom begins on the heels of yesterday’s news of a massive $2.3 billion loss by JP Morgan Chase.  This should slow NCUA’s plans to deregulate financial derivatives.  This will allow credit unions more power to enter into alternate financing such as interest rate options, swaps, and other creative financing.

One reason for the solidity of the mortgage market in the credit union space is that many (although not all) of the mortgage loans made by credit unions, are held in their own portfolios.  By not needing to be sold to investors this allows credit unions to stay on course and not be as affected by slight changes in the economy says Bill Hampel, chief economist for the Credit Union National Association and Affiliates.

The consumers are realizing the savings from Credit Unions in addition to being able to refinance their mortgage.  For instance, the Credit Union National Association estimates that Indiana Credit Unions provided over $74K in direct financial benefits to the states 2.2 million member population during the twelve months ending December 2011.

Premier Advantage Marketing has seen some impressive response rates, but the HARP program has loan originators phones ringing off the hook.

As efforts are being made to recover the ravaged housing market, the consumers are looking who they can turn to and refinance his/her home.  Administration officials including HUD Secretary Shaun Donovan are pressuring Congress to pass a law enabling the program to be used to help more homeowners.

“There’s a real urgency here because interest rates today are at the lowest level they have ever been,” Donovan testified Tuesday before the Senate Banking Committee. “But as the economy continues to improve, the expectations are this window of record low interest rates many not last for a long time”

Since, Fannie and Freddie are already stuck with the loss if the existing loan defaults, substituting lower-interest new mortgages actually reduces risk for everyone.  The homeowners have more money each month, making them less likely to default. The housing market can make strides to return to a state of equilibrium, and the economy gets a lift when the consumers spend their extra cash.

Direct mail starts a dialogue with the client.  The HARP loan may or may not be the loan product the consumer eventually signs with; however, it is what they are hearing in the news.  When our clients send out mail it puts momentum in the sales transaction that wasn’t there before.

With the new rules loosening restrictions and doing away with the 125% cap, applications are coming across the loan originators desk faster than they can process them.  Applications for these refinances rocketed from less than 5 percent of the mortgage market in December “to close to 25 percent and rising,” Nomura Securities analyst Brian Foran wrote in a recent report.

For information about the HARP mailers that have worked for other loan officers, call Tom Emmerson @ 888-799-3959.

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Today’s seniors have to get creative when it comes to funding their retirement.  One such way those cash-strapped seniors are solving that equation is to take out a reverse mortgage, using their home’s equity.

Data released in January 2012 by the National Reverse Mortgage Lenders Association (NRMLA) shows senior home equity increased $46 billion in the third quarter of 2011.

“The home is, by far, the largest financial asset most families have for use in retirement,” says Peter Bell, President and CEO of the NRMLA. “Reverse mortgages have evolved from a circumstance-based product to an accepted forward looking tool used for financial planning,” he added.

Although reverse mortgages are available to any senior 62 years old and older with significant home equity, the average age of a borrower used to be around 73, according to Sandy Timmerman, director of the MetLife Market Institute.  “But with job losses, higher debt, and living costs, more and more of the ‘younger’ seniors are looking at reverse mortgages as a way to pay their bills and keep their homes,” added Timmerman.

To obtain a reverse mortgage, the borrower needs to go through a counseling process to make sure they are aware how a reverse mortgage operates.  According to the MetLife study, “Among those who received HUD-approved counseling for reverse mortgages in 2010, 67% indicated they wanted to lower household debt, while only 27% were doing so to enhance their lifestyles.”

With an increasing number of seniors every day turning 62, and the financial security that they are looking for, reverse mortgage is a loan product that needs to be marketed.  The reputation of the reverse mortgage industry is also improving and with actors such as Henry Winkler, Fred Thompson, and Robert Wagner touting the benefits, it is growing in popularity.

Where does this leave a marketer for lending institutions offering reverse mortgages?  Looking for direct marketing solutions to reach those interested in the reverse mortgage product. Here is what we know based on our experience in generational marketing as a specialty subject of interest.

• Audience: They were born between 1925 and 1950. They make up 21.5% of the population. They define themselves by their work and what they have accomplished.  They are time starved and low on patience. They are the original “yuppies” (Young Upwardly Mobile Professionals).

• Timing: They are the least patient of the generations and want information immediately. Your marketing needs to be quick and to the point. They are time starved and will make decisions quickly. The mortgage company that gets them what they want in the quickest time will earn their business. They are also less likely to respond to quick and time sensitive offers, but they understand the value of a good deal when they see one.

• Offer:  Convenience is the key to marketing to this generation. Saving them time on loan application, saving them on closing costs, or saving them from comparative shopping will earn the trust and respect of this generation client.

• Response:  They are underestimated in the technological experience as they are the largest on-line consumer base.  Their call to action can be either phone or email because they want quick responses to their questions.

As the population ages, there will be more and more opportunity to market to these individuals who are looking to pay bills, and fund a life that is now filled with higher costs, more medical bills, and less wages. Direct mail marketing can be the direct marketing workhorse tool that can reach this prospect as they are looking for ways to make their life more comfortable.

In a press release by the Federal Reserve about the Federal Open Market Committee  (FOMC) they released further information about the status of long-term interest rates.  The FOMC meets 8 times a year in the months of January, March, April, June, July, September, October, and December.

According to the committee, “Labor market conditions have improved further; the unemployment rate has declined notably in recent months but remains elevated”.  The housing market has not rebounded like they had hoped and strains in this area of economic growth will continue to slow until situations improve.

According to the report, they feel that the strains in the global financial markets have eased, though they continue to pose significant downside risks to the economic outlook.  While it seems to appear that the Fed is more concerned with the economy getting worse again and where inflation will be, they are taking measures to keep federal funds rate low through 2014.

“The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.”  In essence, they are buying bonds that have longer maturities and buying them in greater numbers.  It is their policy to reinvest payments from his holdings and rolling over maturing Treasury securities at auction.

Their plans include a regular review, as announced in September, of the size and composition of where they have their holdings and adjust those as appropriate to promote a stronger economic recovery to help price stability.

Voting for the FOMC monetary policy actions were: Ben S. Bernanke, William C. Dudley, Elizabeth A. Duke, Dennis P. Lockhart, Sandra Pianalto, Sarah Bloom Ranskin, Daniel K. Tarullo, John C. Williams, and Janet L. Yellen.  Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.

Mass Refinance Plan For Non-Conventional Mortgages Proposal in Congress

There are several programs being considered as the Obama administration rolls out what was mentioned in the State of the Union address as another recovery program.

The criteria to meet the new loan would be refinanced through the Federal Housing Administration even if the FHA doesn’t already insure their existing mortgage. Other criteria about the new streamlined refinance program include:

• Eligible borrowers that have mortgages not already owned by Fannie Mae or Freddie Mac (as those are already covered by the recent expanded HARP – Home Affordable Refinance Program)
• No more than one missed payment during the past year
• No tax returns or appraisals would be required, though employment must be verified.  Unemployed borrowers will only be considered if they meet the other underwriting requirement.
• The minimum FICO score will be 580 – a requirement that administration says 9 out of 10 borrowers meet.
• Maximum loan amounts would be based on existing FHA loan limits, which range from $271,050 to $729,750.
• Loan-to-Value ratios would be limited to 140 percent.

The administration expects borrowers to save an average of $3000 a year from the refinance initiative, while lenders will pick up the estimated $5 billion to $10 billion for program costs.

The savings to homeowners will be through choosing shorter loan terms.  If the borrower chooses a shorter 20-year term, then Fannie, Freddie, or FHA will pay the closing costs.

The president also outlined a proposal for legislation that would further streamline the refinance process for borrowers whose loans are owned or guaranteed by Fannie or Freddie.  This plan will eliminate the appraisal costs on HARP loans through mark-to-market accounting and other alternative when automated-valuation models won’t work.

Other initiatives outlined cover-converting real estate owned properties into rentals and a homeowner’s bill of rights.  This bill of rights will provide simplified mortgage disclosure form, prohibit hidden fees and provide guidelines that prevent conflicts of interest.  The Consumer Mortgage Coalition is scrutinizing this document.  They released a statement indicating that they are “very pleased that the president is so committed to simplifying mortgage disclosures.” The scrutiny comes with the Consumer Financial Protection Bureau (CFPB), which provided drafts of a new disclosure that does not work with existing disclosure rules.

In a statement, Mortgage Bankers Association President and CEO, David H. Stevens, said that they support at nation single set of standards.  He noted that such standards could help provide confidence and certainty in the real estate market for borrowers, lenders, and services alike.

As promised in the State of the Union address, the Obama administration announced on Friday it would significantly broaden the pool of persons eligible for mortgage modifications to owners of rental properties and homeowners with medical, credit card bills, and second mortgages.

With HAMP (Home Affordable Modification Program) investors were included in the ability to refinance because the foreclosed rental properties were having a detrimental effect on low and moderate-income renters.  “The whole purpose of HAMP is to try and prevent foreclosures,” said Treasury Assistant Secretary Tim Massad in a conference call with reporters Friday afternoon. He also said that this would affect roughly 700,000 rental properties nationally.

Federal officials said that HAMP will begin to evaluate borrowers who were previously ineligible for mortgage modifications because their debt-to-income ratio on their first mortgages was below 31 percent.  HAMP was previously set to expire in December, now is extended to December 31, 2013. There will be no additional cost to taxpayers for the expanded program.  It will be funded by the $29 billion already set aside for mortgage modification efforts.

Officials have declined Friday to estimate how many additional homeowners would be helped as a result of the program changes, because HAMP has been previously criticized of falling short of helping 3 to 4 million homeowners as promised.

Writing down mortgage balances have been long sought by consumers, who question why they continue to pay mortgages on properties when there is little chance of regaining any equity in their homes due to the housing crash. Homeowners “shouldn’t have to sit and wait for the housing market to hit bottom” before finding some relief, said Shaun Donovan, current secretary of the U.S. Department of Housing and Urban Development.

The Federal Reserve said Wednesday that unemployment is projected to remain high over the next three years.  This is a year longer than previously expected. Policymakers project that the unemployment rate will remain at 8.5 percent for much of this year and only fall to between 6.7 and 7.6 percent by the end of 2014.

“We’re certainly prepared to look for different ways to provide support to the economy if, in fact, we have this unsatisfactory situation,” said Fed Chairman Ben S. Bernanke after a policymaking session.  This means the central bank will probably keep interest rates near zero through 2014 if the unemployment rate trends as indicated.

Bernanke made it clear that these are projections only, and that predicting the future path of the economy is a difficult thing to do.  In its policy statement the Fed said that the economy has been growing only moderately.  After being criticized by economists for repeatedly underestimating the depth of economic challenges facing the county, Fed officials do not want to be accused again not addressing the situation.

To make the most of its low-interest-rate-policies, Fed officials have urged Congress and the Obama administration to relax standard for refinancing mortgages so more Americans can do so.  This would be a huge boost to the mortgage industry and having consumers who have re-financed possibly having the opportunity to do so again.

Obama announced such a policy – a large expansion of mortgage financing in his State of the Union address, but the proposal requires Congressional approval.  In this election year that could prove very interesting if and when those policies are passed.

Bernanke wants to send a message, as a kind of confidence-building gesture, to business and consumers that they can expect cheap credit for an extended period of time. He also noted that the Fed is ready to step up efforts to pump money into the economy also by buying long-term securities if the Fed thinks it’s appropriate.

Effective this week, businesses mailing First–Class Mail automation, presort letters using “2^nd Ounce Free” pricing can mail letters weighing up to 2 ounces at the 1-ounce postage rate. First-class Mail automation, pre-sort letters are primarily generated by commercial mailers of bills and statements or transaction mail.

This program does NOT apply to single-piece letters mailed by consumers.

Facts from the USPS:

• Allows mailers to effectively reach and target customers
• With 2^nd Ounce Free, mailers can look at the envelope and paper quality without worrying about extra postage costs.
• The post office calls this ability to integrate mail TransPromo.  It is the combination of Transacting Business combined with Promoting Business. This means a statement or invoice can also include promotional material for the next purchase or transaction.

According to the Post Office, bills and statements delivered via First-Class Mail are opened more than 95 percent of the time, and on average, the receiver spends 2 to 3 minutes with each piece. “This makes transaction mail a highly effective medium for target marketing,” says Gary Reblin, vice president Domestic Products.

This comes on the heels of the January 22, change in regular First-Class Postage. Postal rates increased by 2.1 percent, on average, across each class of mail.  Because the Postal Accountability and Enhancement Act of 2006, mailing services prices can increase no more than the rate of inflation based on the Consumer Price Index (CPI).

Single-piece, one-ounce First-Class letters increased to $.45 with additional ounces remaining at $.20. The prices for postcards went up as well to $.32 and single-piece large envelopes (flats) increased to $.90 maintaining a 2-to-1 ratio with single-piece letters.

This is the first change in the First-Class rate the Post Office has made since the May 11, 2009 increase from 42 cents to 44.

In addition to the elimination of maximum LTVs on both 15- and 30-year mortgages, there are no limits on the maximum CLTV or HCLTV. Fixed-rate mortgages with amortizations up to 40 years will be limited to 105 percent LTVs as will ARMs with initial fixed periods greater than or equal to five years and terms up to 40 years.

Fannie Mae HARP extension is detailed in the Fannie Mae Selling Guide Announcement SEL-2011-12.

Freddie Mac HARP guidelines are outlined in Freddie Mac Bulletin 2011-22.

The Federal Housing Finance Authority continues to require no 30-day lates in the past six months with one 30-day late allowed in the past year.

Lenders that opt to reach out to borrowers are required to include specific language about HARP enhancements and how to determine whether the borrowers’ loans are owned by Fannie or Freddie Mac.

Premier Advantage Marketing is prepared to help you with your mortgage direct mail marketing to fill your lending pipeline. Your lending success is our first priority.

888-799-3959