Loan Applications Seen Processed in Two Weeks

Home buyers should soon be able to have their mortgage applications processed in two weeks rather than the currently typical four to six weeks, the president of the Mortgage Bankers Assn. said here.

Efforts by the housing industry to streamline the process that began last August should be completed this summer and be seen in the market this fall, said John M. Teutsch Jr., who also is president of CompuFund Network Funding Corp., Seattle.

Common loan application and home appraisal forms already have been approved by representatives of mortgage banking, savings and loan, home builders, title insurers, mortgage insurers and realtor organizations and the various housing and secondary-market agencies, he said, adding, “We’re working on standardizing documentation now.”

More than four-fifths of home buyers who obtain their loans from mortgage bankers and are now choosing fixed-rate mortgages, and more than half of the rest of the loan applicants are selecting adjustable-rate loans that can be converted to fixed-rate mortgages, the MBA’s latest survey has revealed, Teutsch said.

“Americans prefer the security of stable monthly mortgage payments available with fixed-rate loans when interest rates are low and vary little between adjustable-rate and fixed-rate mortgages,” he said.

Lower interest rates also have brought more first-time buyers into the market, with 26% of mortgage bankers reporting such an increase, Teutsch said at the MBA’s National Secondary Market Conference here.

Lower rates also have caused an increase in refinancings, which accounted for 16% of mortgage activity in March, compared to only 12% late last year.

When home buyers return to adjustable-rate mortgages, they may find interest rates pegged to a new index--LIBOR of London Inter-Bank Offered Rate for U.S. dollars, popular with foreign investors. Thirty-six percent of mortgage bankers said they are considering offering ARMs tied to LIBOR.