Mortgage rates rise slightly

Since March, mortgage rates have held fairly steady. That streak didn't end this week, when mortgage rates moved modestly in both directions.

The benchmark 30-year fixed-rate mortgage rose 3 basis points, to 5.24 percent, according to the Bankrate.com national survey of large lenders.

A basis point is one-hundredth of 1 percentage point.

The mortgages in this week's survey had an average total of 0.43 discount and origination points.

One year ago, the mortgage index was 6.02 percent; four weeks ago, it was 5.23 percent.

The benchmark 15-year fixed-rate mortgage fell 2 basis points, to 4.74 percent.

The benchmark 5/1 adjustable-rate mortgage rose 15 basis points, to 4.96 percent.

The 30-year jumbo mortgage fell 19 basis points, to 6.37 percent, and has fallen to its lowest level since December 2006.

Purchase first, then refi

While mortgage rates remain steady, wait times keep stretching longer -- specifically, the time that elapses between applying for a mortgage and closing on it.

Only an optimist would count on getting a loan funded within 30 days of application. Lenders and brokers point to several explanations.

First, there's the matter of priorities.

Purchase loans take precedence over mortgage refinances.

When someone buys a home, the transaction often is one link in a chain of purchases and sales.

Delay one closing and suddenly there can be a bunch of stuffed moving vans with no place to unload.

Then there are priorities that have something to do with the mortgage crisis.

Foreclosure prevention is the top priority for some lenders.

For example, JP Morgan Chase is "adding hundreds of people to work through our pile of applications for modifications," spokesman Thomas A. Kelly says.

With refinances under the Obama administration's Making Home Affordable plan, there are priorities.

A lot of lenders (including the biggest, Bank of America Home Loans) are refinancing loans without mortgage insurance first.

At Equity Now, a mortgage bank based in New York City, mortgage insurance is a big issue when it comes to refinances under the Obama plan, underwriting manager Matt Hackett says. "For our perspective, at least, we're going to be able to help more of the people who purchased or refinanced their last loan and were under 80 percent (loan to value), so they don't need mortgage insurance," Hackett says.

With other lenders, there are even different priorities for loans with mortgage insurance.

If your loan has mortgage insurance, you'll probably get faster help by applying for a refinance with your current servicer, even if you have the ability to apply elsewhere.

At Chase, "the ones that we were able to do sooner than others were our own loans," Kelly says, because the mortgage insurance companies' rules are more clearly laid out for situations in which the borrower refinances with the same lender.

Human beings are doing the underwriting today

Whether you're buying a home, doing a regular refinance or refinancing under the Obama plan, the process is likely to go slower because lenders are pulling back from automation.

"Human beings have returned to underwriting," says Christopher Cruise, senior loan officer with GOTeHomeLoans.com.

In the years leading up to the mortgage boom, and during it, a lot of loans passed through automated underwriting systems: The borrower's information was fed into a computer and the program spat out an approval for a plain-vanilla loan or a referral to a more exotic instrument.

If the computer approved the application, a clerk checked to see if all the paperwork was there. Otherwise, it was barely touched by human hands. "Manual underwriting went away a long time ago. And now it's back, baby, with a vengeance," Cruise says.

That explains why a borrower might be asked to submit fresh pay stubs a few weeks after supplying pay stubs at application.

And then there are "letters of explanation," which Cruise says are making a comeback after more than a decade's absence.

With a letter of explanation, the borrower has to explain why he or she applied for any type of credit -- overdraft protection, credit card, another mortgage -- in the 90 days leading up to the mortgage application.

"It's only a couple of sentences, but it's very petty, and borrowers deeply resent it," Cruise says.

On top of these delays and annoyances, borrowers find themselves frustrated by backlogs for appraisals.

That's the subject of another story, to come.