CitiMortgage, a division of CitiBank has suspended new registrations from correspondents this week because of ongoing quality control issues. They expect to begin accepting new registrations on Monday, July 6th. They are concerned with valuation issues, income documentation, and credit quality. They will use the 10 day suspension to re-engineer their lending process to assess the quality of loans being purchased. This will include reviewing the appraisal process, income documentation, and inaccurate credit reports. CitiMortgage has been one of the most agressive purchasers of mortgages this spring, often having the best rates in the secondary market.
The economy continues sputtering, with new home sales in May up slightly to an annualized 342,000 units. Last week new home starts were up 17% to an annualized rate of 532,000, up from 455,000 units in April. While this looks like good news on the surface, we must remember that in December 2005 housing starts were 2.2 million on an annual basis, so we are still down 75% from the high. More disturbing is the continuing trend of declining prices, which were down over 3% from May 2008.
New claims for unemployment insurance rose to 617,000 this week, reversing a month long decline.
Numbers like these dash the hopes for a near term recovery, which is good news for the bond market and mortgage rates. Today prime borrowers (740+ credit score) can get a a no point low fee thirty year fixed rate loan at 5.375%. Paying one point reduces the rate to 5.125%.
Guest Author Randy Kelly is a Mortgage Banker and Finance Author with Boulder West Financial Services. He can be reached on-line at http://www.boulderwest.com/.
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