THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, January 12, 1996 TAG: 9601120479
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 76 lines
With interest rates tumbling, local mortgage lenders are celebrating the resurgence in demand for home loans.
``Compared to a year ago, this is fantastic,'' said Bart D. Auer, vice president and area manager of Norwest Mortgage Inc.
``November, December and January are usually the three worst months for home sales, but we haven't seen much of a downturn in loan applications,'' Auer said.
In contrast to past declines in interest rates, this one has not yet spurred a resurgence in mortgage refinancing.
But that is likely to materialize later this year, said Vicki Stephenson, a mortgage officer with NationsBank Mortgage. ``We're getting a lot of calls,'' she said.
During the past year, rates on 30-year, fixed-rate loans have dropped at least two percentage points to 7 percent. Like Treasury bond rates, rates for home loans have been falling because of investor expectations that inflation will remain subdued.
Enthusiasm among Hampton Roads lenders for falling rates and stronger loan demand has been tempered by the difficulties closing some of their government-guaranteed loans.
Because of recent furloughs of federal workers, the Veterans Administration has been slow to provide lenders with the certificates of eligibility for applicants and other paperwork required for processing VA-guaranteed loans.
It probably will take weeks for the VA's regional office in Roanoke to catch up with the backlog of loan applications, lenders predicted.
Local lenders have been hampered by other bottlenecks. One is the expiration of a program that expedited the appraisal process for VA loans. Another is the expiration of a regulation that provided interest-rate flexi bility for borrowers using VA loans.
The two measures expired on Dec. 31, and congressional efforts to extend them have been delayed.
The appraisal program enabled approved lenders to work on VA loan applications without waiting until the VA had approved the appraisal.
``Instead of 30 days, I expect this to take twice as long,'' said Pat Hillard, senior vice president and manager of CENIT Bank's mortgage department.
Because of these complications, some prospective homebuyers may resort to conventional loans or postpone their purchase plans, lenders said. In many cases, loan applicants have to get their equity out of a home they already own before closing on the purchase of a new one, Hillard said.
The House of Representatives already has passed a bill that would make the VA's accelerated appraisal program and interest-rate regulation permanent. The Senate, however, passed a measure extending these for only two years.
The House and Senate will not be able to resolve their differences until Congress is back in session on Jan. 23.
``As an industry, we anticipate that it will take two to three months for this legislation to move through the system,'' said Louis L. Tourgee III, division vice president in Virginia Beach of CTX Mortgage Co.
``There will be some frustrations and some closing dates missed,'' Tourgee predicted. ILLUSTRATION: Color staff graphics by Robert Voros/The Virginian-Pilot
Research by Tom Shean
Conventional Home Mortgage Rate.
The composite rate for conventional loans has declined steadily
since 1995.
A Rebound in Home Lending
Volume of single-family home loans made nationwide.
For copy of graphic, see microfilm
by CNB