My New Blog

Better Jumbo Pricing - More Choices Coming

It's almost every daily now that I read articles in the various mortgage-related trade publications that speak about various entities gearing up to buy jumbo loans and issue Securities backed by these loans. Some of the big banks have been sticking their toes in the water (B of A, Wells Fargo, Chase and Citibank) but so far they have not been too attractive. I also hear horror stories about borrowers not being able to qualify after their loan is in process for a month or two.

If the rumors are true we will see more private equity funds securitizing mortgage loans making them available through mortgage brokers and lenders. With common sense underwriting and rates not much higher than Conforming Loans, this could be a huge boon to the high price markets in California. I'll keep you posted as this develops.

Lowest Jumbo Rates in 3 Years - Now!

You don't have to wait for this one. My favorite Conforming lender has just drastically lowered their rates on Jumbo Loans to $1.0M and $1.5M.

A 30-Year fixed rate loan is now priced at just 5.375% with 1 point to $1M!!!

Loans to $1.5m are slightly higher. No- point options are also available at slightly higher rates. There are many variables involved so I can't cover all the details here. Call for details and accurate pricing.

Fannie Wants Second Credit Report Pulled

Beginning June 1, lenders originating mortgages being sold to Fannie Mae will have to pull a second credit report just before the loan closes. Until now, we have been able to use credit reports that are up to 60 days old. It's too early to predict the impact but interest rates are partially based on credit scores. What happens if the new credit report drops shows a lower score that precludes the borrower form qualifying for the loan? If we find that out at the last minute it could kill a lot of deals. Hopefully it won't be that restrictive. I'll let you know as the details emerge.

Help for the Self Employed?

Changes in mortgage lending has been have probably impacted the Self-Employed borrower more than any other. Lending guidelines all require documentation of income and borrowers must meet certain Debt-to-Income ratios to qualify. In the past there were "Stated Income' Loans and "Negative Amortization" loans to help the self-employed. Since the mortgage meltdown these programs have been completely eliminated. I'm not saying we should go back to No Doc and Neg Am loans for all but, I do see instances many where the Self-Employed is unintentionally unable to qualify under the guidelines that work best for salaried workers.

Now, Senate leaders late Tuesday cleared the way for Sen. Olympia Snowe, R-Maine, to offer an amendment allowing mortgage bankers to originate residential loans to small business owners with flexible payment schedules that reflect seasonal changes in cash flows.

It will be interesting to see how this will play out. I have no details on the proposal and I suspect it might take some time for it to be implemented but at least its progress in the right direction.

Mortgage Rate Update - Greece is the Word

THE IMPACT OF THE TAX CREDIT:

On a national level, Purchase applications plummeted 27 percent last week and have declined almost 20 percent over the past month, despite relatively low interest rates.  The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season.  In fact, this drop occurred even as rates on 30-year fixed-rate mortgages continued to fall, and are at their lowest level since November 2009....However, refinance borrowers did react to these lower rates, with refi applications up almost 15 percent, hitting their highest level in nine weeks."

On a more local level.......

The data seems to suggest that our local housing market is hotter than the rest of the country. The number of home sales has steadily increased over the past several months and home prices have risen in may local markets too. My own observation is that the purchase market is getting stronger, based on the number of pre-approval letters that I write for clients making offers. Realtors and Title Company friends are also telling me that their business has increased too. I am seeing the higher priced markets moving.

What's Hot!

·         JUMBO's are Back! Fixed rate loans to $1.5M starting at 5.375% are very attractive. Larger loans are slightly higher. Jumbo ARM's start in the mid 4.0%'s.

·         ARM's: The yield curve has steepened making the spread or difference between Adjustable and Fixed rate loans greater. Conforming ARM's are priced in the 3.25% - 4.0%.

·         Buydowns: As if rates are low enough, the 2-1 buydown allows the first year rate to be 2% below the going rate for a fixed rate loan. Example: An interest rate of 3% in the first year, 4% in year 2 and then 5% thereafter for the next 28 years. Other variations are available.

·         Reverse Mortgages: Can be used for purchase or refinance transactions. Perfect for Senior borrowers - particularly those that can't qualify for a traditional mortgage. Qualifying is based on age and equity - not income.

·         Cash-in refinances: According to Freddie Mac, One-third of all refinances now of the "cash-in" variety- where the homeowner pays down the principal balance in order to refinance. Many of the refinances that I have handled over the past year have been cash-in. The reason's are: Homebuyers trying to avoid to mortgage insurance, avoiding jumbo loan limits, low appraisals, or they just can't qualify for a larger loan but want to take as much advantage as possible of today's low rates.

Mortgage Rate Update:

Mortgage Rates continued their slow descent this week as the situation in Greece and other European countries forces investors to the safety of U.S. Treasuries and Mortgage-Backed Securities. Low inflation and continued concern over employment has kept a lid on rates this week. This is all good news for homebuyers and homeowners looking to refinance. We can't expect the slide in rates to continue and when a solution emerges for Europe the rise in rates will be rapid.

Trigger Leads: Don't Be Exploited by the Credit Bureaus

Certain mortgage companies will pay top dollar to know exactly who is in the market for new financing. What's more, the major credit agencies not only allow files to be flagged whenever someone applies for a home loan, they actually sell this private information as leads to the highest bidders!

For a price tag of $25 to $100, names, addresses, phone numbers, mortgage histories, and even FICO score ranges are sold by the credit bureaus to mortgage companies, which then blindly solicit business.

Unfortunately, no legislation exists to prevent credit companies from profiting from this practice. As trigger leads, consumers are simply at the mercy of any number of solicitations designed specifically to discredit the mortgage professionals they've come to know and trust.

Remember, a limited number of sources exist for lenders to obtain mortgage money, and it's unlikely that a borrower will find an unbelievably low rate without an unbelievably high cost.

How To Opt Out:

Prior to applying for any loan program or even right now, anyone can visit www.optoutprescreen.com to opt-out of credit bureau solicitations and avoid the problem altogether. While you are at it you may also want to put yourself on the "Do Not Call List" and cut down on your junk mail too. Below is a link to each of these websites. Let's keep ourselves, our clients and our colleagues from receiving unwanted solicitation.

To Opt Out of Credit Bureau Trigger Leads: www.optoutprescreen.com

To get on the "Do Not Call" list:                  www.donotcall.gov

To cut down on junk mail:                          www.directmail.com/directory/mail_preference/

As consumers embark on what could be the largest financial transaction of their lives, it's important to work with a mortgage professional who clearly explains all available options and provides comprehensive solutions.

Mortgage Rate Update:

Why should what happens in Greece impact the mortgage rate that Joe Blow pays in California? US mortgage markets have been helped in two ways: the uncertainty in Europe has led to a flight to quality in safer investments, including US Treasuries and mortgage-backed securities (MBS), and  investors expect that continued economic turmoil in Europe will reduce US exports to the region, slowing US economic growth and reducing inflationary pressures. The United States does not have extensive trade and financial ties with Greece, and banks in this country own few Greek bonds. But other countries do, and the U.S. financial system could be adversely affected indirectly by the heavy exposure of other European countries to Greece. So, bad economic news is good news for interest rates.