Merry Christmas!

The time is here, I would say finally here, but it just sneaks up on me so quick lately. The house is decorated, the stores are full, and I am trying to tie up any lose ends before we close for the three day weekend. I hope you and your family have a terrific Holiday weekend!

Where are Rates Headed?

Interest rates have been at all time lows for the past 12 months. Even though my crystal ball is a little cloudy right now, my educated opinion is that rates are going to start moving in a higher direction. This is not going to be an overnight spike up, but we are going to see a steady rise until all of the stimulus that the government is propping up this industry with goes away. I would say by July 1, 2010, rates will have moved significantly. Don't delay, if you need to lower your current rate and have equity, now is the time. If you want to purchase but think rates will stay this low forever, don't be mistaken. Move now and take advantage of what your government has done for you.

To refinance or not to refinance

Rates are at all time lows. They have been lower than we ever thought possible for an extended time. But just because rates are low, does that mean it makes sense to refinance?
Every home owner's situation is different. Just because you can save 1% on your interest rate, doesn't necessarily mean the refinance makes sense. You have to look at the big picture. What is the cost of the refinance, how much time are you adding on to your mortgage, etc. If the mortgage professional you are working with doesn't look at the "big picture" maybe they are just in the transaction for the paycheck, and not for the lifetime client.
It is my belief that not making money today because I am honest about a client's financial position, will benefit much more down the road than it does if I push a product for my financial gain. Clients should always come first, and you should treat them how you want to be treated.
This is one of my business philosophies.

Rates will move, they are going to go up!

If you or a family member are considering purchasing, but you are waiting for rates to get to 4%, you are going to be disappointed. Interest rates will start a climb to the higher, and it will start soon. Don't miss out on the most amazing rates we have ever seen, because you think you may get .125% less. Is it worth it, if the rate goes up? A purchase changes if the rate goes from the current 5% to 5.5% which we believe to be right around the corner.
Jump off the fence, the real estate mortgage is now the perfect storm for buyers.

What do we really need?

I always want to be informative when I write on this blog, but sometimes I am just stumped. There is news out today that FHA may be in financial troubles, they do will (may, don't) have the required reserves that the government imposes. This can and may well be a huge problem in the coming months. Some of the insiders believe it will push FHA to requiring a 5% down payment instead of the current 3.5%. There are arguments on both sides of this issue right now. Some say, if you up the down payment requirement, less people will own, others say that if they can't put 5% into the purchase of their home, should someone really be buying? I am not sure where I sit in this debate. I understand both sides. I also realize that Americans are burdened with debt, because of the images we are sold. Rarely are we happy with what we have, we always want more. Credit in general is very easy to get and that just makes getting what we want that much easier, even if it takes us ten years to pay it back.
I think Americans need a new perspective on the "American Dream." We need to re-evaluate our lives and really see what is important. It will be different for all of us, but I am sure all of us could figure out "things" we could live without.

November 9, 2009

Time just seems to disappear right from underneath us. I cannot believe we have 2 1/2 weeks until Thanksgiving and then Christmas...my son said last night, mom I only have 2 months until I am eleven. I told him he was crazy..then I counted. He was right. It seems that we all live by schedules and due dates and before you know it the days, weeks, months and years have gone by. I think I better get going today, so that I don't miss another minute.

Hooray First Time Homebuyers!!!

The government in their infinite wisdom has extended the first time home buyer credit to June 30, 2010. They added a little more with a $6500 credit to current home buyers who purchase. There are restrictions, but more incentives for buyers. Hopefully that will help keep our real estate market from going down any further.

Not just yet...

Though there is much talk about extending the first time buyer credit, nothing has been ironed out or agreed upon yet. So, that being said, you must close by 11/30/09 to qualify. Also remember, that the county recorder's office (at least in San Joaquin County) will be closed the day after Thanksgiving. Monday the 30th will be a crazy day. Try and get your purchases done by the 25th, to have a happy and stress free end of the month.

A Very Blustery Day!

The weather in the valley has shifted gears, and I wonder if mortgage backed securities are taking their cue from the weather as they have blown upwards and are having a great day. We needed this day, but we will need to be careful this week as any news could change the upwind to a down wind very quickly.
The senate is debating the positives and negatives of extending the first time home buyers credit. We will see if they make any decisions tonight. All markets are waiting for this tid-bit of juicy news.
Stay tuned for more information.

Rates: They are a Climbing

We may have seen the best of the best when it comes to mortgage rates. As the fed slowly turns off the life support, and the market starts standing on its own two feet again, it is likely that rates will do what is expected, and that is climb. For every action there is a reaction and the market has been artificially stopped from reacting to the real news and real data.
Banks are limiting the numbers of homes on the market to try and inflate values, the government is slowing then stopping their purchases, inflation is going to hit and when it does, rates have to move up.
I had a client tell me that his first home in the 1980's had a rate of 16%. It makes 6 and 7% seem tame doesn't it?

Earnings Reports

The stock market rallied this week on relatively good news from earnings from many sectors. Then Bank of America had their conference call and report. They lost $1 billion last quarter. The stock market did not like that news. I will take it for right now as that will buoy bonds today. We have seen profit taking the last few days in the bond market and that means higher interest rates for borrowers.
Advise for buyers or potential buyers on the fence, jump off!!! Rates will not stay at the 5-5.25% range forever. We have been here much longer than anticipated. I know getting a contract on a house right now is difficult, but perseverance and patience will ultimately pay off. Don't get out of the market, cast a wider net.

Dow Jones hits 10,000

It was a milestone day, as it has been a year since we saw the 10,000 mark. Better this time as we are on our way up and not on our way to 6500 like last year. It is a momentous occasion. The Mortgage Backed Securities market is trading lower, as the Fed notes did not give any good news and with the stock market up, there is money flowing out of bonds and into stocks. It feels almost like a normal market.
I hope that the Stock Market rally continues as there are so many people who will be relying on those funds for retirement in the near future.

35 Day Escrows~A compromise we can live with

In today's limited inventory housing market, having a close of escrow date in the not so distant future always makes a seller (whether a bank or an owner) feel better. But with the changing mortgage market and the disclosures and waiting periods being put into place by the government, accepting a contract with a 35 day escrow may save everyone multiple headaches. The new HERA/MDIA laws require a 4 day disclosure period before an appraisal can be ordered/paid for. If a buyer's agent writes a contract with a 35 day close of escrow, the first four days of the waiting period are no longer a detriment to closing on time. Agents make sure that you write the time frame to begin upon buyer's lender's receipt of fully executed written contract. Everyone is protected, and the 35 days should be a close date that everyone should be able to meet.

Happy Friday!

Mortgage Bonds had a great week and are now giving back some of the gains. That means that the amazing 5% rates we saw on Wednesday are starting to disappear. Now is a great time to purchase a home if you have been considering it. It is also a great time to refinance a FHA loan before the streamline refinance's rules change on Nov. 18. This is how you can take part in the stimulus package if you don't qualify for the other incentives out there. Lock your loan into a low fixed rate and save money, it is a great time to do it all!

$8000 Tax Credit

As of this very minute, the $8,000 tax credit for first time homebuyers expires Nov. 30, 2009. You have to close escrow and have your deed recorded by the 30th, to qualify for this credit. There is talk about extending it, but as of right now, that is not the case. If you are counting on these funds, make sure you are in contract by 10/25/09.

October Already

Really, where does the time go? I have been trying to stay in touch with my social media, but it is amazing how much there is out there; my blog, twitter, facebook, active rain, etc...I get lost in staying in touch. New month, another new commitment to myself and my business.

A New Month

August was a month of mixed emotions. As new laws change our daily lives at work, our kids return to school, and life keeps rolling by, the little tasks that you promise yourself you are going to do fall by the wayside as more important and pressing matters pop up. I am rededicating myself today to make sure I stay on top of my blog. My goal, and please help me stick to it, will be 3 times per week. So at the end of September, we will see how I have done.
In mortgage news, the bond market has had a neutral to positive day. I will take that any day of the week. Some of the economic news that came in today was very positive, but when we have been down for so long, we must remember that the numbers might not be as accurate as we would hope. Rates are still great, there is $8K on the table for a few more months for those first time homebuyers and homes are affordable...GET OUT THERE AND BUY!!!!!

The Government "Helps" Again...

Yesterday, July 30, marked the beginning of the HERA laws. HERA effects banks and brokers by making sure that rates and fees are disclosed in a timely manner. If the rate and fees change enough to effect the annual percentage rate (APR) by more than .125%, then new disclosures must be sent out. There are to be no fees collected (except a credit report fee) until the initial disclosures have been sent and a waiting period has elapsed.
It sounds so simple and it looks like it makes sense, but in essence between the new HERA laws and the new HVCC appraisal systems a once 30 day escrow may take upwards of 60 days. The current Truth-in-lending laws and RESPA laws required that interest rates and fees be disclosed within three days of application (an application is not complete until a property has been identified-in contract). Usually when this initial disclosure goes out, the rate has not been locked, the escrow company has not yet sent fees, for brokers; a lender may not have been selected yet. So it is very typical for numbers to change.
Here is what happens under the new law. An application is taken and we will assume for this example that a property is in contract. The broker or banker will then register the loan. Initial disclosures of proposed rate and fees will be sent via email or snail mail to the borrower. If done by email, the broker/lender can order the appraisal on the fourth day after receipt of the disclosure. If you don't have email, there is a three day send a three day receipt time, the appraisal cannot be ordered until day 7. Assuming this is a non-government loan, the appraisal can now be ordered. The client will need to provide a credit card as these companies do not allow you to bill escrow for the appraisal. The third party appraisal company then hires an appraiser, the appraiser contacts the agents and clients, an appointment is set and hopefully before 2 weeks have expired you will have your appraisal. Now mind you, if there are any issues on the appraisal, no one is supposed to know until the appraisal is received. Maybe the appraisal comes in $10k less than the contract price, maybe there is dry rot and the appraiser is requiring a pest inspection on an "as is" sale. All issues that can derail the deal. Also, days as counted for disclosures and appraisals do not include Sunday's or holidays for disclosures and appraisals we can't count the weekends or holidays.
Now assuming everything comes back perfect...the loan can be locked (it could have been locked previously, but depending on how quickly the appraisal comes back you may get into an expiring issue, this really comes into effect if the market has worsened since the loan was locked). If everything has stayed exactly the same, the rate is the same, the title and escrow fees are the same, then no more disclosing, the underwriter can underwrite the file, clear for loan documents and the purchase can continue like nothing has changed. But in the volatile market we live in, rates move up or down it doesn't matter. If a change to the APR is more than .125% then a new disclosure has to go out, the same time frame applies, and loan documents cannot be printed until either the fourth or seventh day depending on delivery method. Remember though it is not just rate that effects the APR it is also fees. If the appraisal came in low, the structure of closing cost payment may change (this really doesn't effect credits, it effects when the seller pays certain costs 100% then they are changed to 50% or 0%).
I am not complaining per say about the new laws, I do think they are redundant from what we already had. What I am saying is that in the past two years lending has changed dramatically, especially in the California markets. These laws are going to change it again. Prepare yourself, don't write 30 days escrows until the brokers/lenders have time to get the bugs out. It is much easier to write a 60 day contract and close early, than it is to write a 30 day contract and get extensions. If you have any questions regarding this information, please don't hesitate to call or email me.

We are almost to mid-week and the MBS are having a nice rally. Not sure how long it will last, but it is nice to have some positive days in our market. Be aware if you are in the process of making a purchase or refinancing your home, that guidelines are constantly changing. There are little things as borrowers that you can do to make your loan easier. Don't apply for credit. Letters of explanation will have to be written and proof that no additional credit has been extended.
This is just one little way to make your life easier during the loan process.

Happy 4th of July

This weekend flew by. Even though we had 3 days, my family was as busy as ever on the softball and baseball diamonds. The market may be a little volatile this week as some of the traders have taken an extended holiday. The stock market is sluggish and the MBS market is near a tough ceiling of resistance.
There are many decisions being made on the state and federal level that affect our day to day lives without us even realizing it. I think as a community, state and country, we need to be heard better by those we vote into office. It may be time we all sit down and write letters, emails, make phone calls. Decisions are being made in a knee jerk fashion that are going to cost us Trillions of dollars in the long run. Don't be shy, let our elected officials know what we really think about what is going on.

Monday of a Short Week

Where does the weekend go? It seems if you blink, you miss it. For me, it goes to softball and baseball tournaments. Which really is a great way to spend a weekend, if the weather isn't hit record high heat. Our pool was the most inviting I think it has ever been, when we came home from Sunday's softball outing.
Bonds have done well over the last week, but are facing a strong ceiling of resistance. The floor of support is over 50 bp below, so any volatility could see big swings in value. It is a holiday week and for some reason with less trading comes more volatility. So we will need to watch the MBS market and see where we are headed.

Nice Reaction

The Federal Reserve Board decided to leave the Fed Funds rate unchanged. The comments released by the Board also made deflation less of an issue and put inflation out at a safe distance. The Mortgage Backed Securities (MBS) market ended Wednesday neutral and actually that was a very nice way to end a day with that much information. Thursday the market decided that the Fed had it right and MBS got a nice little lift above the 200 day moving average. Today we are watching the markets very carefully as much of the reports came in neutral. If the stock market decides to re-test and surpass the 200 day moving average for them, then bonds may pay the price. Volatility is still the name of the game and constant monitoring is all we can do.

Fed Starts Meeting Today

The Federal Reserve Board begins its first of a two day meeting today. They will make their announcements as to what they see the market doing and how they are going to continue to "help" the American Economy. The consensus is that the fed funds rate will be un-moved, but that the Fed will begin to buy more long term Treasuries. If that happens, it has the potential to move Mortgage rates down.
There are still other factors at work here, that we must remember. The Treasury auctions that start today at 1pm EST flood the market with investments that may look more attractive than bonds. This competition in the market can drive mortgage rates higher. Also remember if rates drop, more refinances will hit the market and then there is added supply there also. This added supply usually accounts for worse mortgage backed security trading and higher interest rates.
This will truly be a wait and see environment.

It's Friday

Happy Friday! This weekend should be pretty good, the weather is starting to feel like summer, families will get together to celebrate father's day, and I will hopefully have enough time to wash my windows. Glamorous I know. After the week we have had with Mortgage Backed Securities (MBS) , I will take window washing. Everyday was a learning experience as even the best days turned into down days. Interest rates are going to take awhile to recover from the hit that the MBS are taking. There is just too much supply and not enough demand. Even with the Treasury purchasing MBS, the supply is too great.
But let us put interest rates into perspective. A 30 year fixed conventional loan for a purchase with 20% down and credit over 740, we are still at 5.5%. This is not a rate to snub your nose at. There was a time (less than a year ago) that same mortgage would have been 6.5%. Since I started doing loans 12 years ago I have seen that rate as high as 9%. Talk to anyone in the mortgage market in the 70s and early 80s and they will quote you anywhere from 12-18%.
That being said if you are considering refinancing and have a rate of 6.5% or more JUMP off the fence now and do it! If you are a buyer, no one knows where the rates are going to go, but can you really justify not purchasing a home at 5.5%? Your landlord is probably paying more than that on his mortgage. There is no more time to sit on the fence, it is time for action.
One last rant before I log out...a moratorium on foreclosures just prolongs the inevitable. If someone hasn't made a payment in 6-12 months another 3 months isn't going to help. Let's move forward, help those who are not so far behind keep their homes and be done with this heinous market.

Government Regulation

I understand that there are times that the government needs to regulate an industry. I also understand that the mortgage industry has been riddled with issues but the latest "blueprint" for regulatory changes places the blame on mortgage brokers and does not look to: investor greed, credit rating agency mistakes, Wall Street GREED, consumer negligence, Bond fund propagation of exotic mortgage products, not to mention that bank originators are encouraged (pushed) to sell the product that will make the bank the most money.
I am a trustworthy mortgage originator, I follow the rules, I care about my clients and I rely on my relationships to further my business. I don't think any originator needs to make 4 points on a loan, but I also think an originator making that kind of money will not stay in business very long. If the government would actually make all mortgage originators comply to the same rules and not have two sets for mortgage brokers and mortgage bankers, that would be a huge step in the right direction. Second step, utilize the current rules that protect consumers and don't make new ones that just make consumers pay more in the long run.
On a rate note, mortgage backed securities have hit another ceiling of resistance and with the Treasury issuing another round of supply next week, it would be prudent to lock now if you are currently in contract.

Elevator UP!

The recent climb of mortgage rates has everyone clamoring. Why though in a three week span can rates go from 4.75% to 5.75%? The reason is too much supply and not enough demand. The mortgage backed security market is made up of just that "mortgages." Rates have been so good for an unbelievable amount of time, that many of you who have owned for just 6 months, have been able to benefit from the new lower rates. That puts more supply because refinance loans become the mortgages in the mortgage backed security market. Figures came out yesterday stating that 70% of all transactions are refinances. That is up so much from this time last year. The government is also auctioning t-bills what seems like every other day. These factors have investors, wall street, main street, and the world now worried about inflationary risks.
What do we do? Maybe that is the problem, maybe everyone is doing too much to try and fix the problems instead of letting them correct themselves.
The past 4 years brought much to the forefront on laxed loan guidelines and interpretation of those guidelines. The government has made laws, to fix everything. They have said there shall be no more stated loans...the market got rid of stated loans six months prior to the ruling. The government, "to protect consumers and banks" has placed the HVCC into effect. It is a law that governs how appraisals can be ordered and who can speak to the appraiser. It is to help decrease pressure on appraisers to deliver appraisals that are above value or not disclosing certain issues with properties. Every lender I work with has a black ball list. If an appraiser is found to be fraudulent in any manner, they will no longer accept that appraiser's reports. The banks were self policing. Now we have this new rule, that is more expensive for consumers, and takes about 4 times as long to complete. If the government would let free enterprise do its jobs, the banks would have fixed it, because it is their bottom lines getting desimated, not the governments. But now that the government is in the business of big banking, I guess they want a safety net.
I am done ranting for today. Until the next new issue...or wave of crazy changes.

Roller Coaster Ride!

Mortgage Backed Securities started off mildly down today, then the bottom fell out and we were on the Tower of Terror. Can anyone say elevator DOWN! The market lost 207 basis points today. In the time I have been monitoring the market, I have never seen this kind of drop. What does that mean to everyone out there? It means that interest rates are going to be on an elevator UP! We have already seen rates move from 4.75% this morning to 5.5% this afternoon. Don't let this information scare you, though. 5.5% on a 30 year fixed rate is phenomenal. This is still a great time to buy and take advantage of all the government incentives and programs available. Call me or email with any questions.

Mortgage Scams

Alert - Don’t Become a Victim of Mortgage Scams

The Obama Administration recently announced the Making Home Affordable
Program, designed to assist up to nine million American families
refinance or modify their loans to a monthly mortgage payment that is
more affordable. Due to the over­whelming interest in the plan,
homeowners are increasingly becoming the target of scammers trying to
take advantage of families with false promises and steep fees to provide
foreclosure assistance. With Presi­dent Obama’s plan, a homeowner NEVER
has to pay to participate in the program. If you wish to obtain
counseling assistance, HUD urges you to contact a local HUD-approved
housing counseling agency to en­sure they are receiving legitimate
information. www.hud.gov

Mortgage Changes

The mortgage industry is changing daily. New rules are always being added. If you are looking to purchase a home, it is imperative that you speak to a mortgage professional and get pre-qualified if not pre-approved. A 600 credit score doesn't even cut it for FHA any more. You need a 620 middle credit score to purchase a home. That doesn't mean all hope is lost, it just means that you need someone that knows what they are doing to look at your credit and help you improve your position before you go out looking at properties. If your credit is good, then you can start shopping right away, but if you need to work on it, isn't it better to know now rather than later. For those of you wanting to use conventional financing 680 is your new number.
On the Obama Mortgage Plan front: last week saw the government roll out their new plan. Along with it all of the skepticism, there was everyone weighing in. There is a great website http://www.financialstability.gov/. This website has a lot of information on who to contact and what you will need in order to do so.
Please feel free to call or email me if you have any questions as I would like to help everyone either purchase a home or stay in their home.