Province Mortgage

Nearly 30 Percent of Refis Shorten Mortgage Term During Q3

In the third quarter of 2012, 29 percent of borrowers who refinanced an existing mortgage chose to shorten their loan term, based on the Freddie Mac Quarterly Product Transition Report. Further, refinancing borrowers clearly preferred fixed-rate loans, regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate. Of borrowers who refinanced during the third quarter of 2012, 29 percent reduced their loan term, while 68 percent of borrowers kept the same term as the loan that they had paid off; three percent chose to lengthen their loan term. More than 95 percent of refinancing borrowers chose a fixed-rate loan. Fixed-rate loans were preferred regardless what the original loan product had been. For example, 82 percent of borrowers who had a hybrid ARM chose a fixed-rate loan during the third quarter, the highest share since the second quarter of 2010, while the remaining 18 percent chose to refinance back into a hybrid ARM.

“Compared to a 30-year fixed-rate mortgage, the interest rate on a 15-year fixed was about 0.7 percentage points lower during the third quarter,” said Frank Nothaft, Freddie Mac vice president and chief economist. “For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term. Further, a shorter-term, fully amortizing loan reduces the loan balance faster and builds home equity sooner.”

Those borrowers who refinanced under the Home Affordable Refinance Program (HARP) were more likely to take out a long-term, fixed-rate mortgage. For example, 25 percent of HARP borrowers shortened their loan term when they refinanced during the third quarter, compared with 31 percent of borrowers who refinanced outside of HARP. Further, of those borrowers who were refinancing out of an ARM, if they refinanced under the HARP program then more than 95 percent chose a fixed-rate mortgage; in contrast, of borrowers that had an ARM, but did not refinance through HARP, about one-half opted for another hybrid ARM.

“Fixed mortgage rates averaged 3.55 percent for 30-year loans and 2.84 percent for 15-year product during the third quarter in Freddie Mac’s Primary Mortgage Market Survey, well below long-term averages and the lowest quarterly averages recorded in our survey,” said Nothaft. “The Bureau of Economic Analysis has estimated the average coupon on single-family loans was about five percent during the third quarter of 2012. It’s no wonder we continue to see strong refinance activity into fixed-rate loans.”

November 30, 2012 by · Leave a Comment

Q3 Negative Equity Drops: Less Than 30 Percent Now Underwater

Negative equity fell in the third quarter, with 28.2 percent of all homeowners with mortgages underwater, down from 30.9 percent in the second quarter, according to the third quarter Zillow® Negative Equity Report. This is the first time negative equity has fallen below 30 percent, and is the biggest quarter-over-quarter drop in negative equity, since Zillow revised its method for determining negative equity in the first quarter of 2011.

Slightly more than 14 million U.S. homeowners with a mortgage were in negative equity, or underwater, in the quarter, owing more on their mortgages than their homes are worth. That was down from 15.3 million in the second quarter. Additionally, the nation’s 30 largest metro areas covered by Zillow’s report experienced quarter-over-quarter declines in negative equity.

Much of the decline in negative equity can be attributed to U.S. home values rising 1.3 percent in the third quarter compared to the second quarter, to a median value of $153,800, according to the Zillow Home Value Index.

“The fall in negative equity rates means homeowners have additional options for refinancing or selling their homes,” said Zillow Chief Economist Dr. Stan Humphries. “But while we’re moving in the right direction, a substantial number of homes are still locked up in negative equity, unable to enter the existing re-sale market despite the desires of their owner. The housing market has found real momentum of its own, but is not immune from shocks to the broader economy. If negotiations centered on resolving the fiscal cliff don’t inspire confidence in investors and consumers alike, recent home value gains–and, as a result, falling negative equity rates–could stall.”

Of the 30 largest metro areas covered by the report, the five experiencing the largest quarterly declines in negative equity were Phoenix (-6.2 percentage points), Las Vegas (-5.5 percentage points), Denver (-4.9 percentage points), Sacramento, Calif. (-4.6 percentage points) and Orlando (-4.2 percentage points).

November 30, 2012 by · Leave a Comment

Province Mortgage Earns Top Ranking for ‘Best Places to Work in RI’ by the PBN

On Thursday, June 14th several of the Province employees joined their company president, Dave Currie at the “Best Places to Work in RI” banquet held each year at the Crown Plaza Hotel in Warwick, RI.  The enormous outdoor tent was lavishly decorated and buzzing with excitement as over 500 people from some of the most successful and prominent companies in the state anticipated their company ranking.  Three giant screens sported images of employees loving their work as the host for the evening shared the many hi-lights as to why each company deserved to be in attendance this special night.

            The employees at the Province table were already gleaming with pride as their company had earned this prestigious honor given annually by the Providence Business News for the fourth straight year.  The “four-peat” in and of itself was worth celebrating and exciting enough, as 2012 marks only the seventh year in business for Province since opening it’s doors in 2005.   As the emcee read on through the rankings for the Small Companies category, it became gradually apparent to the group that Province was in the top 5 out of 12.  With Province not being one of the next three companies the team began to celebrate being one of the top two!  Could it be that a mortgage company like Province can in fact weather the storm known as the US economy as well as the nastiest mortgage market we’ve seen in decades?  Finally, the emcee made the announcement…

 

PROVINCE MORTGAGE ASSOCIATES, INC: Rank #1

Small Companies Category as voted by the Providence Business News

Best Places to Work in Rhode Island!

 

            In 2005, Province Mortgage Associates was just another mortgage broker in a sea of mortgage companies, banks, and credit unions based in the state of RI.  Let’s just say it: a mortgage is a mortgage and anyone will give you a rate quote these days that hovers in a familiar ball park.  Now, seven years later, how has Province survived to the point of now being almost 40 employees with multiple locations and the distinction of being the #1 ranked small company to work for in RI?  With 100% of their business coming by referral, one word still remains as the buzz around the Province water cooler: SERVICE! 

            Province has built its reputation one quality individual at a time.  President, Dave Currie does enjoy his corner office, but he earns it through his commitment to creating something special at Province, not only for their mortgage clientele, but for their valued employees as well.  People who tend to refer their mortgage professional remember the experience they had during the mortgage process.  That quality experience has always been the focus of the Province Team, but the same also applies to the experience of being a part of this team on a daily basis.  They work hard, and they play hard.

            Province still remains one of hundreds of options for local mortgage originators, however its employees feel that Province is definitely more than just another mortgage company.  They are truly humbled by this distinction by the PBN Best Companies Group, and they will continue to rally around their collective effort to personify what it really means to love their work, their company, and their special approach to the mortgage business that is shared and valued throughout our local community. 

November 30, 2012 by · Leave a Comment

What Does a Healthy National Housing Market Look Like?

Freddie Mac’s economists today used the analogy of a patient with a high fever to talk about the recent course of the housing market. In the November 2012 Economic & Housing Market Outlook, Freddie Mac likened that patient’s 103° temperature to the height of the housing boom in 2006. The patient collapsed, the Outlook reported and “after a difficult period of convalescence, how seems to be getting better.” Indicators such as housing starts, sales, and prices are rising while the negatives of delinquencies and foreclosures inventories are trending down. Freddie Mac’s Chief Economist Frank E. Nothaft asks “What does a national housing market look like at a healthy 98.6 degrees?”

The answer to the question requires a comparison with the market today to that in the years before the peak itself. Today we are looking at:
•The S&P/Case-Shiller 20-city and Federal Housing Finance Agency’s purchase-only house price indexes have both shown seven consecutive months of seasonally adjusted positive gains through August.
•Freddie Mac’s own house price index was up 4 percent in September over the same month in 2011 and other geographically broad based increases in 44 states and the District of Columbia.
•Residential construction was up 26 percent in the first nine months of this year compared to the same time last year.
•Home sales were at a rate of almost five million units for the first nine months of 2012, a 9 percent increase from the same period a year ago.
•Homeowner and rental vacancy rates have declined to 1.9 percent and 8.6 percent, respectively.

On the downside, unemployment remains in the high 7-percent area and family-income growth is modest. Housing demand has remained subdued, and the pace of household formations was running at an annual rate of 0.5 percent over 2007- 2011, less than one-half the 1990-2006 average of 1.2 percent per year. Over the past four quarters however it has returned to a 1 percent growth rate which translates into about 1.15 million new households over the past year.

Freddie Mac said today that a diagnosis of a healthy market must take into account demographic shifts. “Generation Y” appears to be delaying household formation and home purchase by remaining in their parent’s home longer while the “Baby Boomers” are now looking at not only the younger generation living with them, but also their own retirement. Consequently fewer are likely to be move-up buyers and may delay a move to a retirement home. There is also the declining rate of both foreclosures and delinquencies. “If we put these additional factors into play,” the Outlook says, “what a healthy housing market should look like will dismay those who keep comparing housing to its peak years of 2004-2006.” Looking at long-term trends here’s what a healthy housing market should look like in the next five years:
•Housing starts increasing to about 1.7 to 1.8 million dwellings per year (compared with 2.1 million in 2005)
•Home sales increasing to about 5 percent of the housing stock, or about 6.5 to 7.0 million homes per year (compared with sales of 7 percent of the stock in 2005)
•U.S. house price appreciation rising gradually to about 3 percent per year (compared to 11 percent of 2005).
•Vacancy rates easing further to about 1.7 percent on for-sale homes and 8 percent for rental homes (down from peaks of about 3 percent in 2008 and 11 percent in 2009, respectively).
•Serious delinquency rates nearing 2 percent (down from a peak of 9.5 percent in early 2010)

To sum up: taking into account recent trends, key housing indicators and the shifting demographic patterns that will define a new and realistic trajectory toward a healthy housing market, the long- term prognosis is promising. In the immediate future, however, the market’s recovery will be tempered by continued high unemployment, modest income growth, and a subdued pace of household formations. In other words, the patient is on the way back to health, but don’t expect the housing market to wake up at 98.6 degrees tomorrow morning.”

November 30, 2012 by · Leave a Comment

Coffee Cup Salute

Province Mortgage Associates is featured in the WJAR Channel 10 Coffee Cup Salute. This video feature discusses our steady growth during the mortgage market bust and economic downturn of the last several years as well as honors us as being voted one of the Best Places to Work by the Providence Business News in 2011 for the third year in a row!

Original Article: http://www2.turnto10.com/lifestyles/2011/may/17/coffee-cup-salute-province-ar-492239/

July 8, 2012 by · Leave a Comment

Making Home Affordable — The US Government’s various efforts to keep homeowners homeowners

Making Home Affordable

Government’s various efforts to keep homeowners homeowners

 The original Making Home Affordable program was enacted by the US Government by means of the Financial Stability act of 2009, with the intention of blunting the blow foreclosures were causing to the housing market. It contained two components that have had mixed success and was the subject of a recent announcement of additional support.

Here is a brief review of the two original components and the recent news.

 Home Affordable Modification Program

This program was released with the intent of assisting homeowners delinquent on their mortgages and those in imminent danger of default by modifying the terms of the original loan to achieve sustainable monthly payments. The program has been widely criticized for the difficulty of successfully completing the documentation process, and for the perception that many homeowners re-default. As of September, of 3.9 million estimated homeowners who could be helped, 850,000 had received a permanent modification.

Home Affordable Refinance Program

 This program was designed to help homeowners on time with their payments to refinance in spite of reduced home equity caused by the crisis. Provided the original lien was 80% or less of the original appraised value of the home, the program offers to refinance existing balances even if a new appraisal reveals borrowing as high as 125% of the current value without mortgage insurance. It was also intended to provide assistance to homeowners with mortgage insurance, however, that has been very difficult to access, as it is available only to the current servicer of the loan, and many are not participating in the program. Province Mortgage has closed a substantial number of these transactions.

 2011 Changes to HARP

 An announcement on October 24th, 2011 previewed several meaningful changes to HARP, which may improve eligibility options. While an announcement of actual specifications isn’t due until November 15th, some enhancements that have been suggested include:

  • Reduced appraisal requirements
  • Higher maximum loan-to-value ratio (over 125%)
  • Reduced pricing surcharges for various associated risks
  • Extended program duration to December, 2013

While many details remain uncertain, the hope is that this will expand eligibility to more borrowers helping more homeowners remain in their homes and, hopefully, providing a bit of economic stimulus with the extra cash those homeowners will have to spend.

November 11, 2011 by · Leave a Comment

Employment Situation Prediction for August 5th, 2011

Non-farms payrolls expected up 90,000; Unemployment rate believed steady at 9.2%; Weak GDP growth seen as a major obstacle

A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

Economic data has gradually worsened as the months of 2011 have passed, and at no time was that more apparent than last Friday, when total Gross Domestic Product growth since January 2012 was announced at less than 0.5%. This figure was far lower than expected, especially considering the downward revision of 1st quarter growth from 1.9% annual to 0.4% annual growth. While the 2nd quarter slowdown earlier believed to have been principally driven by supply interruptions precipitated by natural disasters, it now appears that the problems were farther reaching.

Another recent concern in the economy has been energy prices, which attracted significant attention in earlier months as the price of oil surged over $100 per barrel. This afternoon, oil sold off sharply, ending below $90 for the first time since February, as the US dollar was strengthened by the announcement that Japan will take action to weaken its currency versus the dollar. The Euro remains under significant pressure due to the continued concerns about its member nations’ sovereign debt. Worries have proliferated since July, as previously stable countries Spain and Italy have seven yields on their sovereign debt rise by hundreds of basis points in the last few weeks.

ADP released the results of its July survey of employers, saying that it believed private companies had added 114,000 positions to their payrolls in the most recent month. This is somewhat consistent with that company’s announced results last month, when it announced 157,000 jobs had been added. Last month, though, the Bureau of Labor Statistics announced only 18,000 jobs had been added, though, significantly off the figure announced by ADP. It is unlikely that 114,000 jobs is enough to meaningfully impact the current 9.2% unemployment rate.

Based on this data, my models have developed statistically significant predictions ranging from 82,000 to 93,000 jobs added by private employers. The correlation between ADP and BLS data again failed to achieve significance over the short term, and last month’s miss worsened the situation. As a result, the data derived from that method have been given reduced consideration. Last month, I believed that the ADP results might be anomalous, and I was later proven correct, although I underestimated the size of the error. That ADP shows 100,000 jobs added 2 months in a row suggests that there may be a trend starting. I have developed a prediction that tomorrow’s report will show 90,000 jobs added to private payrolls in July.

Governments are continuing to reduce employment. The most recent visible episode is the recent shutdown of the Federal Aviation Administration, which resulted in the layoff of tens of thousands of employees. Because of the reductions in government employment, the total number of jobs added in tomorrow’s report will be reduced by 25,000 positions, bringing the total to 65,000 jobs added.

The official unemployment rate climbed to 9.2% in July, and the situation hasn’t changed significantly since then. If anything, the barrage of negative news may have caused more of the long-term unemployed to give up their search for unemployment. I don’t believe this phenomenon has accelerated to the point where it will affect the unemployment rate in July. I expect the unemployment rate to hold at 9.2%.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

August 4, 2011 by · Leave a Comment

Employment Situation Prediction for July 8th, 2011

Non-farms payrolls expected up 110,000; Unemployment rate expected steady at 9.1% as manufacturing growth slows

A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

2011 has been characterized by a gradual worsening in the character of released economic data. While growth in 2010 was at its strongest in several years, GDP growth in the 1st quarter of 2011 declined to 1.9%. Economic growth was further questioned as that quarter drew to a close with the natural disasters in Japan and New Zealand, and the resultant interruption in supply of intermediate goods and raw materials. A spike in petroleum prices further threatened growth. It was thus unsurprising that manufacturing data, especially, retreated as May arrived. No where was this more noticed than in the Philadelphia and Empire State Manufacturing Indexes.

Oil prices have declined since then, principally driven by recent strength in the dollar relative to other currencies, especially the Euro. Still, at over $98 per barrel, oil prices have risen faster than nominal inflation, and the dollar is under pressure from the Euro again. While the immediate situation in Greece has been resolved, and while. if not so large,Portugal’s situation is at least as dire, threats on the stability of the currency remain, which have made the dollar more attractive. Threats against the dollar have not been completely eliminated, though, due to the ongoing debate regarding the US Treasury’s borrowing limit, which could severely damage the dollar’s strength.

ADP today released the results of its survey of employers, saying that it believed 157,000 positions had been added to private employer payrolls in June of 2011. This represents a quick reversal in employment, and is nearly high enough to be sufficient to lower the unemployment rate from its current 9.1% level. June’s growth, though is still well below the level of improvement seen in the first few months of this year.

Based on this ADP data, my models have produced reliable predictions ranging from 134,000 to 165,000, with most indicating highest confidence at approximately 140,000. The correlation between ADP and BLS data still failed to hold over the short term, although it has shows signs of improvement. As a result, data obtained using this method have been given reduced consideration. In spite of these figures, I believe that the ADP results may be anomalous, and have thus tempered my own predictions. I have developed a prediction that tomorrow’s report will show 130,000 total jobs added to private payrolls in June.

Governments are continuing to reduce employment, with no greater evidence of this the shutdown of the state of Minnesota that is currently in its 6th day.  Because of the impact of government employment reductions, government employment will reduce total employment gains by 20,000 positions to 110,000 jobs added total.

The official unemployment rate rose to 9.1% in May, as, in spite of meaningful increases in employed residents, even more previously discouraged workers returned to the labor force. I believe that the opposite effect will be seen in June, as the volume of negative news likely caused more workers to give up their searches. Due to this decrease in the labor force, the unemployment rate is expected to decrease to 8.9%.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

July 7, 2011 by · Leave a Comment

PBN names Province Mortgage one of the Best Places to Work in RI

Providence Business News has honored Province Mortgage Associates for the third consecutive year as being one of the annual Best Places to Work.

The recipients of this award are chosen based on responses to a management questionnaire as well as a confidential employee survey. You can click below to read the original article on the Providence Business News website and see the entire list of companies honored.

Original Article: http://www.pbn.com/PBN-names-Best-Places-To-Work-for-2011,57996

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July 1, 2011 by · Leave a Comment

Employment Situation Prediction for June 3rd, 2011

Non-farms payrolls expected up 115,000; Increase in discouraged workers to continue driving unemployment rate

A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

While economic data in January and February suggested continued strong economic growth, the direction of that data began to turn in March, as war and natural disasters pressured commodity prices and interrupted material supplies. This trend continued in April, as elevated oil prices raised questions the cost of oil would itself impact economic growth. Those concerns began to play out in May, as several significant economic activity surveys, including the important Philadelphia and New York Fed surveys, showed a sharp decline in underlying economic growth. In addition, weekly claims for unemployment benefits have climbed significantly, a disturbing trend as it could eventually impact hiring.

While oil prices have moderated slightly, the price of oil, currently $100 per barrel, remains at a high enough level that it could continue to impair economic growth. A significant contributing factor in high oil prices is the weakness experienced by the US dollar in currency markets, which directly impacts oil prices because most oil is paid for and purchased in dollars. The dollar is not expected to strengthen in the immediate future given questions about the level of US Treasury debt and the significant supply of currency that has come about due to recent Federal Reserve stimulative measures.

ADP released the results of its survey of employers, saying that it believed 38,000 private payroll jobs were added in May, 2011. This represented a sharp decline in employment growth, and is a low enough gain that it could likely result in a meaningful increase in the unemployment rate, especially if discouraged workers resume their employment search. It also interrupts a period of over 5 months of greater than 170,000 jobs added.

My models produced reliable predictions ranging from 35,000 to 161,000 private payroll jobs added in May, with a higher confidence range between 100,000 and 130,000. The correlation between ADP and BLS private payroll data still failed to hold true in the short term, but it did continue to move closer to signficance. As a result, data derived from that method were given reduced consideration.  I have developed a prediction that tomorrows report will show 130,000 private payroll jobs added in May.

Governments are continuing to cut employment, which is dragging on overall jobs creation. These cuts will lower total job additions to 115,000 for May.

The official unemployment rate rose to 9.0% in April, as some discouraged workers did return to the labor force. I had previously predicted the unemployment rate would be moving higher because of returning workers. That will not be a meaningful contributor to tomorrow’s unemployment rate; rather the decline in jobs growth will be a more important factor, and that will cause the official unemployment rate to increase to 9.1% for May.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

June 2, 2011 by · Leave a Comment

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