May 7th, 2010 9:10 AM by Richard T. Cirelli
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