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.

The Holidays are Here!

I cannot believe that it is already December 1. Time is flying by. Last week was a great week for stocks, but it was all lost today as the market is closing after losing over 600 points. The bond market was faring very well this morning, but has since turned neutral. But neutral in this market is actually very good. Interest rates are low, lower than they have been since May 2005. If you have equity left in your property and are paying more than 6.25%, now is the time to refinance that mortgage. Call me, we can see if a refinance will benefit you financially.