Of the 246,406 applications received by the FHA in March, more than two-thirds of the applications are for purchase financing (163,467 applications), while a portion of the remaining one-third (75,541) are for mortgage refinancing and 7,398 applications were for Home Equity Conversion Mortgages (HECMs) or reverse mortgages. February numbers were 97,171; 51,425, and 6,643 respectively.

The mortgage application figures for FHA were released in the monthly report, the FHA Outlook, which is put out by the Department of Housing and Urban Development. The report also revealed that the total number of applications received so far has pushed from 2.01 million to 2.38 million, which is inclusive of the March 2010 figures.

The Mortgage Bankers Association (MBA) reported that the week ending March 26, 2010 experienced an increase in the volume of mortgage application submitted. Mortgage applications increased by 1.3 percent week-over-week. The uptick is expected to be temporary as the two weeks that follow are expected to see a decline in prospective mortgage application borrower submissions.  

MBA reported that the uptick home purchases rose to 6.8 percent for purchases.

The Vice President of MBA, Michael Fratantoni says, “Purchase applications have increased over the past month, and are now at their highest level since last October when many homebuyers were rushing to get loans closed before the expected expiration of the homebuyer tax credit. We may be seeing a similar pattern now, as the extended version of the tax credit ends next month.”

Refinance application submissions fell by 1.3 percent, but the purchases mortgage applications offset this number, creating an overall uptick in the total volume of mortgage application submissions. The refinance applications made up the lowest share of mortgage application submissions since the week of October 23, 2009, according to the MBA.

The Mortgage Maxx survey, which adjusts the gross volume of mortgage applications to determine the number of households that are submitting applications, shows a one percent rise in the number of households that submitted applications, while the previous week saw a 7.8 percent decline. The Mortgage Maxx survey publisher says, “Despite the largess of historically low mortgage rates and federal tax incentives, mortgage activity remains moribund. Realistically, there are only about two or three weeks left for prospective home buyers to draw up executable contracts [for the first-time homebuyer tax credit]. That said, this latest subsidy looks to be a bust.”

MBA reported that the uptick home purchases rose to 6.8 percent for purchases.

The Vice President of MBA, Michael Fratantoni says, “Purchase applications have increased over the past month, and are now at their highest level since last October when many homebuyers were rushing to get loans closed before the expected expiration of the homebuyer tax credit. We may be seeing a similar pattern now, as the extended version of the tax credit ends next month.”

Refinance application submissions fell by 1.3 percent, but the purchases mortgage applications offset this number, creating an overall uptick in the total volume of mortgage application submissions. The refinance applications made up the lowest share of mortgage application submissions since the week of October 23, 2009, according to the MBA.

The Mortgage Maxx survey, which adjusts the gross volume of mortgage applications to determine the number of households that are submitting applications, shows a one percent rise in the number of households that submitted applications, while the previous week saw a 7.8 percent decline. The Mortgage Maxx survey publisher says, “Despite the largess of historically low mortgage rates and federal tax incentives, mortgage activity remains moribund. Realistically, there are only about two or three weeks left for prospective home buyers to draw up executable contracts [for the first-time homebuyer tax credit]. That said, this latest subsidy looks to be a bust.”

Chief executive officer (CEO) of RealtyTrac James J. Saccacio, which is the company that releases the U.S. Foreclosure Market Report, says that the decline month over month may not actually be an indication that less homeowners are experiencing the effects of a distressed housing market. Saccacio says that all of the foreclosure prevention programs, legislation and processing delays may be skewing the figures.

So, while most reviewers of the data may at first glance believe that the number of foreclosures is dropping and that the housing market may soon be out of the woods, Saccacio doesn’t predict that the foreclosure problem will abate anytime in the near future.

While the Fed made announcements and issued statements that its decision to increase the discount rate was a normal process for the lending industry and would not have an impact on monetary policy, investors had a different perception. Investors increased bets that the Fed would continue to tighten policy by the fourth quarter of 2010 and what investors took away from the Fed move caused the U.S. dollar to rise and for U.S. stocks to fall.

The dollar rose to $1.3497 per euro from $1.3527 and the Standard & Poor’s 500 Index decreased 0.2 percent to 1,104.47.

Sung Won Sohn, a former chief economist at Wells Fargo & Co. who is now an economics professor at California State University-Channel Islands states, “The discount rate historically has always been used as a psychological tool for signaling the future course of monetary policy. The bottom line is the Fed is signaling that in the future rates are more likely to go up, rather than stay stable or go down.”

While Bernanke may have hinted at the increase to investors during his Feb. 10^th testimony to Congress, saying the discount rate would have to be raised “before long” and the Federal Open Market Committee meeting released a similar statement on February 17^th, the increase came sooner than most analysts and investors expected.

Respondents to the survey include over half of the residential mortgage loan applications processed by mortgage bankers, commercial banks and thrifts in the United States. The data collected from the survey helps to give economists a preview into the minds of consumers by revealing what the consumer demand is for mortgage loans. The survey further breaks down the results by separating mortgage purchase applications from applications submitted for refinances.

With falling, or at the very least stable housing prices, and a low mortgage interest rate environment, you may think that purchase mortgage applications are on the rise in this buyer’s market. Last week’s results, however, revealed quite the contrary, showing that refinance mortgage applications increased by 14.6 percent. The low mortgage interest rate environment seems to be encouraging current homeowners to obtain lower monthly mortgage payments, increase their disposable income and spend money on other purchases or utilize the savings to pay off debt.

With the Federal Reserve considering extending and expanding its initiatives to buy assets from Freddie Mac, Fannie Mae and Ginnie Mae, experts expect mortgage interest rates to remain low.

Government initiatives to positively influence the lending market doesn’t stop at the U.S. border either. In England, the Monetary Policy Committee of the Bank of England decided to keep the official bank rate on commercial bank reserves status quo at 0.5%. The official bank rate was originally reduced to the 0.5% level in March of 2009 and has remained at this rate ever since. The Monetary Policy Committee of the Bank of England decided to continue to purchase assets issued by the central bank reserves.

A recent report released by Wells Fargo reveals that more home purchase transactions handled by the mortgage segment of Wells saw the sales price of the homes re-negotiated and increased between the buyer and seller after the appraisal was done on the property. Wells Fargo eluded that the report findings show that the homebuyers want to buy the properties with less money out-of-pocket, so it is possible that money is passing from the buyer to the seller that is not showing on the HUD-1 statement, which explains the re-negotiated sales price agreements.  

This thought process has forced Wells Fargo to reevaluate and re-establish the way they do business. Wells Fargo announced that as of January 25, 2010, it will no longer allow buyers and sellers to re-negotiate an increased sales price and provide a new purchase agreement, after the appraisal is done.

If the appraised value of the home is higher than the sales price on the contract and the new purchase agreement or an addendum to the sales contract is dated for after the appraisal is received by the lender, Wells Fargo will no longer accept the change to the purchase agreement with an increase in sales price. If, however, the purchase agreement is re-negotiated before the appraisal comes in then the amount of the mortgage is based on the original purchase price or the appraised value of the property, whichever of the two values is lower.

The House of Representatives have set into motion a plan that changes the way that mortgage lenders can conduct business with consumers.HR 4173, or better known as The Wall Street Reform and Consumer Protection Act, removes the right to create consumer protection laws from the hands of the Federal Reserve. The act created a new and independent agency, the Consumer Financial Protection Agency (CFPA), now responsible for creating laws to protect consumers against predatory financial practices.  

A law passed earlier in 2009 prohibited certain practices by financial and lending institutions in an effort to reduce the number of issues consumers face, especially in the subprime lending market. The Wall Street Reform and Consumer Protection Act picks up where the previous law left off by using an appointed council to identify lending and financial institutions that are too big. The council is empowered to identify and break up big lending and financial businesses to reduce the risk that these businesses may fail and trigger a need for another government bailout.

Despite the Wall Street firms and banks putting up a fight against the passing of HR 4173, the House approved it. The act still has to pass the Senate, so the opposition is poised to continue its fight, expressing its resistance on the act passing. Whether or not the fight is a success or failure remains to be seen.

This rule, however, does not apply to home equity line of credit (HELOC) lenders, according to a recent memo published by the Office of Thrift Spending (OTS). The OTS memo states that even though HELOC lenders typically fall under the same regulations as credit card companies that this is not the case with this particular regulation. The memo specifically excludes HELOC lenders from this amendment to the TILA.

The OTS memo does, however, state that HELOC lenders are not allowed to assess a late fee to borrowers as long as the payment is received by the lender within 15 days of the payment due date.