Magazine article Mortgage Banking

Boardroom View

Magazine article Mortgage Banking

Boardroom View

Article excerpt


Conventional wisdom can be wrong and currently is in some headline-grabbing housing markets around the country. Senior executives in Texas, the Northeast and the Midwest told us some things that run counter to the news stories and commonly-held beliefs about the state of housing in these markets.

First off, conventional wisdom would have us believe that the era of the 95 percent loan-to-value (LTV) mortgage anywhere in Texas is long gone. Surprisingly enough that's wrong. As prudent an underwriter as MGIC recently started approving 95 percent loan-to-value mortgages in the Fort Worth market, according to Robert Havran, president, TexSun Mortgage, Inc. Havran said his company recently approved a handful of 95 percent LTV loans, at least one of which involved a borrower who was sufficiently cash-strapped that they could not have handled any larger down payment arrangement. Havran said the general rule until this recent development had been that 95 percent LTVs were considered but only for borrowers who did not need to go that route and had more down payment money available.

The news from his production staff that the 95 percent LTV is coming back even caught Havran somewhat off guard. The 95 percent LTV market had been a dry hole for so long in Texas that his initial reaction to a query as to whether or not a wholesaler was doing any 95 LTV loans under a certain program prompted him to respond, "Are you serious?"

TexSun's president said the interesting thing this development underscores is that now reliable observes of the Texas marketplace are now solidly behind the belief that the market there is getting better, rather than predicting things are still on a downhill slide. A hot product in the Fort Worth market currently further evidences the faith that industry players have in the improving housing market there. NCNB, a significant wholesaler in the Fort Worth/ Dallas market, has a winner on its hands, according to Havran, with a loan program that offers a fixed-rate loan with a 30-year amortization schedule and a 10-year call feature. Havran says the really popular thing about this loan is that the pricing remains the same for this program even above the conforming loan limit. Havran says the loan has "pretty much, in my opinion, captured the non-conforming activity that's out here."

NCNB offers this program featuring conforming pricing on non-conforming loans for very sizeable loan amounts in the Fort Worth area. They will lend up to $600,000 for 70 LTV loans; $500,000 for 80 percent LTVs; $350,000 for 85 percent LTV loans; and $300,000 for loans with 90 percent LTVs.

Another fairly widely held assumption about the mortgage markets is that the days of cut-rate pricing are over. The reports from many markets have shown that thrifts overwhelmingly have backed off of aggressive teaser-rate pricing because of regulatory changes. In several markets that has been enough to dispel the practice of cutthroat pricing. But a report we got from the Southeast shows that even that bit of happy news does not apply to all markets. Dave Houghtlin, senior vice president - operations, Gulf States Mortgage Company Inc., Atlanta, said "Cutthroat pricing is alive and well in the Southeast." His company lends in markets in Florida, Kentucky, Georgia and Virginia Beach, Virginia.

Houghtlin said it hasn't been unusual for them to see lenders pricing at 1 point to 1 1/2 points below the screen price on fixed-rate loans. …

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