Mortgage Bankers Association Research Articles

The Impact of Mortgage Rates on Mortgage Refinancing

Mortgages loans are vital for the acquisition of housing property and mortgage lending rates play an important role in mortgage market trends, borrowers, and lenders’ decisions. Objective: the aim of this paper is to evaluate the combined effect of current and previous mortgage rates on mortgage refinancing. Prior work: the paper inclines on the ontology of a single reality of the interaction between mortgage rates and mortgage refinancing with attendant epistemology that their interaction is measurable. Method: the paper adopts the positivist paradigm and a quantitative technique. It used data on the U.S. Mortgage Bankers Association (MBA) retrieved from the economic and financial database of Fusion Media. Data were analysed using the OLS technique. Novel Findings show that current-actual and previous mortgage rates have a significant positive effect on mortgage refinancing at p=0.05 and p=0.04 respectively. Significance: the findings have implication for mortgage lending and refinancing decisions for mortgage bankers (lenders), mortgage borrowers and policy makers. It also provides current academic study material for university business schools and for future researchers to apply the model used in this research for related expanded research. Value: The paper contributes a new model with two genres of mortgage rate (current mortgage rate and previous mortgage rate) and how these two types of mortgage rates influence mortgage refinancing.

Practical Applications of eMortgage Adoption: Acceleration through the Pandemic

In <b><i>eMortgage Adoption: Acceleration through the Pandemic</i></b>, from the Spring 2022 issue of <b><i>The Journal of Structured Finance</i></b>, author <b>Mike Fratantoni</b> of the Mortgage Bankers Association explores the significant uptick in eMortgage adoption over the last few years. He outlines the legal and technological advances supporting this growth, including the passage of legislation like the federal ESIGN Act and the development of digital securitization methods. Fratantoni is quick to note, however, that multiple barriers discourage lenders from fully embracing the technology, such as initial costs to consumers versus profitability among early adopters, industry-specific practices like warehouse financing, and reliance on third-party vendors for transactions. Nevertheless, he draws on prior research on fintech adoption in comparable industries to plot the potential progression of eMortgage adoption and utilizes industry data to assess the impact of eMortgages on lender productivity. Fratantoni acknowledges the Covid-19 pandemic as one of the greatest motivators of eMortgage adoption, in part due to the necessity of nonphysical transactions and in part due to the swell of technology, like remote online notarization (RON), that supports eMortgage usage. He says that adoption will likely continue to increase for the foreseeable future due to competitive pressures, a desire to reduce cost, and the realities of operating in a post-Covid world. He urges investors to monitor how adoption will impact productivity in the years to come.

Text and Tradition: Justice Scalia’s Consistent Application of His Original Public Meaning Approach to Separation of Powers

In this article, I argue that Scalia consistently and objectively applied his original public meaning approach to preserve separation of powers, ruling both for and against the legislative, executive, and judicial branches when the text and traditional understanding of the Constitution required it. I focus, in particular, on his opinions in Morrison v. Olson (1988), Printz v. United States (1997), Lujan v. Defenders of Wildlife (1992), and Plaut v. Spendthrift Farms (1995), in which he defended executive power and judicial power from congressional encroachments; NLRB v. Noel Canning (2014) and Zivotofsky v. Kerry (2015), in which he defended congressional power from executive overreach; Young v. United States ex rel. Vuitton (1987) and Hein v. Freedom from Religion Foundation (2007), in which he sought to rein in judicial power; and in Talk America v. Bell Telephone Company (2011) and Perez v. Mortgage Bankers Association (2015), in which he sought to reassert judicial power that the Supreme Court in general and he in particular had previously relinquished.

Comment on Rule 14a-8(i)(9), Securities and Exchange Commission, June 30, 2015

The Securities and Exchange Commission has been analyzing its interpretation under Subsection (i)(9) of Rule 14a-8. This provision allows for the exclusion of shareholder proposals that conflict with those submitted by management. The staff has been examining its interpretation since instructed to do so by the chair of the SEC following a no action appeal in a case involving Whole Foods. A number of letters and memos submitted in connection with the review have analyzed the issue. At least one asserted that any change in interpretation required the Commission to go through the process of notice and comment. This letter asserts that notice and comment is not required, relying extensively on Perez v. Mortgage Bankers Association.

A New Mortgage Credit Availability Index

There is no question that lending standards at the height of the bubble were way too loose and the system took on too much risk. The post-crisis period, however, is often characterized at the other extreme—with credit so tight that it has hampered the recovery. In this article, the authors develop a simple intuitive, transparent measure of credit availability based on the aggregate probability of default of a particular vintage at the time of origination. That is, if mortgage loans made at every point in time were expected to face the same probability of different economic scenarios (with respect to home prices, interest rates, and so on), how would the probability of default compare across origination dates? The article first discusses the limitations of the four most commonly cited indicators of mortgage credit accessibility, the Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending Practices (SLO); the mortgage application denial rates based on annual Home Mortgage Disclosure Act (HMDA) data; the Mortgage Credit Availability Index by the Mortgage Bankers Association (MBA); and the median borrower’s credit score at origination. The article then describes the development of a new index that distills borrower credit profiles, loan products and terms, and macroeconomic conditions into a measurement of the weighted average probability of default for mortgages originated at a given time. The article illustrates the value of this measure by empirically exploring the varying risk appetites of the market as a whole as well as of individual market segments, which directly aids evidence-based policymaking on how to open the tight credit box.

Do Pre-Sale and Post-Sale Foreclosure Statutes Impact Foreclosure Starts?

This paper examines the impact of state laws on foreclosure starts using mortgage, borrower, and economic data at the state level. Several models are studied to capture the impact of state-specific foreclosure laws and statutes, i.e. loss mitigation requirement before foreclosure, right to cure, and right to reinstate before sale. Data sources include Mortgage Bankers Association, Home Mortgage Disclosure Act, US Census, National Consumer Law Center-Survey of State Foreclosure Laws, and Experian. The study shows that statewide pre- and post-sale foreclosure-prevention statutes impact foreclosure starts. The results indicate statutory programs involving housing emergency assistance funds statistically slow foreclosure starts.

Changes in Agenciess Interpretations of Their Own Regulations and Auer Deference

Perez v. Mortgage Bankers Association, a case that is currently pending before the Supreme Court, involves the validity of a D.C. Circuit rule relating to the Administrative Procedure Act notice-and-comment requirements for rulemaking. Under the APA, substantive rules are subject to the notice and comment requirements but interpretative rules are not. Under this D.C. Circuit rule, if an agency has adopted an interpretation of one of its own substantive regulations in a guidance document that would not itself otherwise be a substantive rule, the agency must nevertheless use notice-and-comment procedures to change the interpretation. Although the D.C. Circuit has not done so, this rule can be justified based on the Auer deference principle under which agency interpretations of their own regulations are given deference similar to the deference that is given under Chevron to agency statutory interpretations. Under Auer, an agency interpretation of its own regulation can be viewed as having the force of law, and as a result should be viewed as itself a substantive rule, since a substantive rule is a rule with the force of law. As a substantive rule, notice-and-comment procedures are required.

Amicus Curiae Brief of Administrative Law Scholars in Support of the Petitions Mortgage Bankers Association v. Harris

In Mortgage Bankers Association v. Harris, the D.C. Circuit held that an agency can not change an interpretation of one of its rules without engaging in notice and comment rulemaking. In this amicus brief filed on behalf of 72 professors of administrative law, Professors Pierce, Morrison, and Glicksman argue that the Supreme Court should grant cert. in the case and reverse the D.C. Circuit.

Diversified Mortgage Guarantee Model: Securitizationthrough TBA

s the debate continues around the future of housing finance in general and the role of the government-sponsored enterprises (GSEs) in particular, we have seen a proliferation of thought on how to modify the financing framework to attract private capital and reduce the burden of the risk currently being borne by the GSEs and the Federal Housing Administration (FHA). The broad outlines of change have been addressed by the Treasury white paper, while various industry groups such as the Mortgage Bankers Association (MBA) and the Center for American Progress (CAP) among others, have expressed more specific ideas to replace the GSEs. (Proposals from the MBA, CAP, and others are summarized in Brinkmann et al. [2011]). In this article we step back and start by first identifying the principals and the intermediaries or facilitators among the various participants in the entire spectrum of housing finance, recognizing their interests and then making an attempt to optimize their collective goals. The borrowers, the investors who provide the funding, and the taxpayer or the government that always bears the catastrophic risk, under any system, are considered the principals. The intermediaries are the originators, seller/servicers, guarantors, and regulators. The interests of the principals need to be optimized by designing the most efficient framework for the intermediaries.

Three “Brutal Facts” That Provide Strategic Direction for Healthcare Delivery Systems: Preparing for the End of the Healthcare Bubble

I n August 2005, David Lereah, then chief economist of the National Association of REALTORS, stated, “All of the doom-and-gloom forecasts of a housing debacle are not only irresponsible, but downright wrong” (Shilling 2010). Lereah was not alone; economists from Goldman Sachs, the National Association of Home Builders, and the Mortgage Bankers Association all expressed similar opinions. Wall Street firms such as Lehman Brothers and Bear Stearns bet their companies on the strength of the housing market. Eventually the lack of financial sustainability inherent in subprime mortgages burst the housing bubble and the industry collapsed. The lack of acceptance of the housing bubble by industry leaders is a clear case of cognitive dissonance, in which “the more we are committed to believe something is true, the less likely we are to believe its opposite is true, even in the face of clear evidence that shows that we are wrong” (Goldsmith 2011). Refusal to recognize new market realities is a fundamental strategic flaw that has led to the demise of many organizations. As Admiral James Stockdale noted in his discussion with Jim Collins (Collins 2001, 85):

Converging Crises: Reality, Fear and Hope

Click to increase image sizeClick to decrease image size Notes Total foreclosures in 2008 were 2.3 million, rising to 2.8 million in the first three quarters of 2009. The 2009 total is expected to reach 3.5 million. Because of mounting unemployment, according to the American Mortgage Bankers Association (http://www.mbaa.org), about four million more home-owner loans are ‘delinquent’ (no payments for 90 days) or in the first stages of foreclosure. See also the site of http://www.realtytrac.com for a commercial source on foreclosed properties for sale. In the 1950s, outstanding loans in the United States were evenly divided between the financial sector and the real economy. By 2007, over 80% of loans from US banks were going to the US financial sector. See Dirk Bezemer (2009) Bezemer, D. 2009. Lending must support the real economy. Financial Times, 5 November [Google Scholar], Fellow at the Research School, Economics and Business Department, University of Groningen. Worldwide bailouts are notoriously difficult to quantify. Factors to consider are whether sums have been committed or actually invested by governments; the great number of government agencies undertaking the disbursements; whether or not recipient banks are paying them back or intend to do so; differences in national reporting systems and the like. The CNN Money Page ‘Bailout Tracker’ (http://www.cnnmoney.com) in November 2009 gave for the United States alone the figures of three trillion dollars invested and 11 trillion committed. At the Treasury Department, the Special Inspector General for the government rescue ‘Troubled Assets Relief Program’, or SIGTARP, Neil Barofsky, caused a stir when he published his office's July 2009 quarterly report announcing total US government guarantees to financial institutions of $23.7 trillion. Secretary Geithner was not amused; the SIGTARP replied that all his office had done was to add up the numbers (http://www.sigtarp.gov). From Percy Bysshe Shelley's poem Ozymandias: I met a traveller from an antique land Who said: ‘Two vast and trunkless legs of stone Stand in the desert. Near them on the sand, Half sunk, a shattered visage lies, whose frown And wrinkled lip and sneer of cold command Tell that its sculptor well those passions read Which yet survive, stamped on these lifeless things, The hand that mocked them and the heart that fed. And on the pedestal these words appear: ‘My name is Ozymandias, King of Kings: Look on my works, ye mighty, and despair!’ Nothing beside remains. Round the decay Of that colossal wreck, boundless and bare, The lone and level sands stretch far away.

Mortgage Originations: 2000-2006

Views expressed do not necessarily reflect official positions of the Federal Reserve System. The Freddie Mac Primary Mortgage Market Survey indicates that the interest rate on commitments for 30-year fixed-rate mortgages declined from a peak of 8.52 percent in May 2000 to 5.23 percent in June 2003 (Figure 1). A sharp decline in interest rates typically leads to increased demand for mortgage originations: First, potential homeowners seek to take advantage of the low rate to purchase a home. Second, existing mortgage holders are keen to refinance their mortgages at the lower interest rate. Mortgage lenders were able to meet this increased demand because of a low cost of funds during this time period, thereby resulting in a steady increase in total mortgage originations. According to the Mortgage Bankers Association, the dollar value of total mortgage originations for 1to 4-family homes steadily increased from $238 billion in 2000:Q1 to roughly $1,200 billion in 2003:Q3 (Figure 1). If this growth in originations reflects the decline in the interest rate, then mortgage originations might be expected to decline when the contract rate increases. Indeed, mortgage originations did decline when contract rates rose after 2003. However, as Figure 1 shows, the level of originations continued to remain higher on average than pre-2003 levels. Why? Two reasons: First, interest rates in the post-2003 period remain below the high levels attained in the pre2003 era. Second, there was a change in the composition of originations, with substantial growth in the nonprime segment affecting the overall market. Figure 2 shows the breakdown of mortgage originations by market segment. Prime mortgages include loans securitized by an “agency”—namely, Freddie Mac, Fannie Mae, and Ginnie Mae. Jumbo loans are prime mortgages but are for amounts exceeding agency-conforming limits. Non prime mortgages include both subprime and Alt-A markets. Subprime mortgages generally include loans to borrowers with incomplete or impaired credit histories, while Alt-A mortgages include loans to borrowers who usually have high credit scores but are unable or unwilling to document a stable income history or are buying second homes or properties for investment purposes.1 Figure 2 shows that an increase in agency mortgages is the major factor behind the growth in total mortgage originations between 2000 and 2003. However, prime originations declined sharply after 2003. The growth of originations after 2003 was sustained by the subprime and Alt-A segments of the mortgage market. —Rajdeep Sengupta and Yu Man Tam

Demystifying the Refi-Share Mystery

The refinance shares reported by Freddie Mac's Primary Mortgage Market Survey (PMMS), the Mortgage Bankers Association (MBA), the Home Mortgage Disclosure Act (HMDA), and the National Mortgage News (NMN) have differed by up to 21 percentage points between 1990 and 2005. If a lender's refinance share varies with loan volume, then weighting by origination volume could explain the observed discrepancies. Based on HMDA data for 2000 (a low refinance year) and 2003 (a refinance boom), lender size was positively related to refinance share, after controlling for institution type, cultural affinity, and location. HMDA provides the best national measure of refinance share, and weighting by lender volume explains most of the difference among the four measures.

An interview with James Murphy, Chairman of the Mortgage Bankers Association of America

An interview with James Murphy, Chairman of the Mortgage Bankers Association of America

Accurate job descriptions: First things first

Performance + InstructionVolume 27, Issue 2 p. 15-18 Article Accurate job descriptions: First things first Helen Bishop, Helen Bishop 14247 Kendra Court, Poway, CA 92064 Helen Bishop is a training specialist for Guild Mortgage Company. She has a Master's degree in Educational Technology from San Diego State University, and serves as a member of the Training Subcommittee for the Mortgage Bankers Association and as a consultant for mortgage banking and traditional financial institutions.Search for more papers by this author Helen Bishop, Helen Bishop 14247 Kendra Court, Poway, CA 92064 Helen Bishop is a training specialist for Guild Mortgage Company. She has a Master's degree in Educational Technology from San Diego State University, and serves as a member of the Training Subcommittee for the Mortgage Bankers Association and as a consultant for mortgage banking and traditional financial institutions.Search for more papers by this author First published: February 1988 https://doi.org/10.1002/pfi.4170270205 AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Volume27, Issue2February 1988Pages 15-18 RelatedInformation

Black-Owned Banks: Issues and Recommendations

A number of suggestions have been made here which could be used to advantage by black banks. Several are already being used on a limited scale. In addition to instances cited previously, there are several other black or “interracial” banks which have located in white areas. Among these are the Universal Bank located in the Wall Street area of New York City; the interracial Vanguard National Bank in Hempstead, New York, a Long Island suburban area; and the American State Bank of Tulsa, Oklahoma, with a reported 30 percent white customers. Similarly, the black United Mortgage Bankers Association (UMBA) is in the process of using the device of pooling of mortgages.

The politics of housing: Introduction

The politics of housing: Introduction

The Mortgage Market

The Journal of FinanceVolume 19, Issue 2 p. 411-416 The Outlook for the Money and Capital Markets THE MORTGAGE MARKET Oliver H. Jones, Oliver H. Jones Mortgage Bankers Association of America.Search for more papers by this author Oliver H. Jones, Oliver H. Jones Mortgage Bankers Association of America.Search for more papers by this author First published: May 1964 https://doi.org/10.1111/j.1540-6261.1964.tb00780.x Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Volume19, Issue2May 1964Pages 411-416 RelatedInformation