The week has been exciting, to say the least. Mortgage rates have been up and down at least 15 times, the prime rate is down to 0.0-0.25% (the lowest EVER), the auto giants are getting bailed out, and the government legislated that credit card companies can no longer raise rates on existing balances when there are on time payments, and a 21 day grace period on late charges. Oh, but the companies have until July 2010 to comply. What a relief!???????
The mortgage rates are the lowest in 50 years. According to where the 10 year treasury is, they should be lower than 4.25%, but no investors on the secondary market are buying these coupons. No buy, no sell. The lenders are gridlocked. Running scared to offer a coupon (rate) they cannot finance as a mortgage backed security. The government has talked of stepping in and buying such coupons, so that lenders will lend. Not official yet, but when they do, who knows? The result would be motivated buyers, and ability to qualify for the dream home they have always wished for. Maybe just in time for all of us to return from the holidays refreshed, and ready to sell some houses! I really do predict that 09 (at least Q1) will be vibrant, and the market will begin to move. Who would not want to buy a home at historic lows?
Have a joyous holiday. This will be my last update of the year. Thank you for your support of Patriot Bank Mortgage. Your referrals are so appreciated, and we look forward to being your trusted mortgage source in 2009!
Saturday, December 20, 2008
Friday, December 12, 2008
Rates to 4.625%, Will builders be the next demise?
Well, on Friday I did receive confirmation from Santa that I have been good….rates were 4.625% on a 30 year fixed. (They were 4.5% for about an hour). This is for purchases. Refinances are a bit higher, so additional quotes apply. My feeling is that this WILL spark the interest of home buyers, and that activity in the new year will be renewed, and that it will spark the activity the government is hoping for. Why are rates so low? Who cares…take it for what it is, if I can be so blunt.
What else can I write about this week? I already hit the climax…the rates! Should I write about the deal that almost didn’t close because the appraisal was almost denied for high land/value ratio, or the builder we had to deny for a construction loan (a well known one at that)….. I better not. It’s too negative! But I will summarize to only say that things are tight. Banks are tight because they can be. But wasn’t it this way 7 or 8 years ago? Yes it was, but who can remember back that far? I surely cannot.
I would like to address builders. I predict that this is the next industry to be really affected by our economic downturn (recession!). In fact they already are. Track builders mostly, who build specs. But custom builders too. They are being squeezed , and in some cases cut off, by banks . The strong builders are surviving, and are being required to put more equity in deals. Gone are the days of 100% cost lending. So, in turn, builders with inventory worried . They cannot get more lines to build more homes. Many will unfortunately go under. Spec lending is on hold with many banks, including ours. The banks just don’t want the risk. So I sit here and think what this could mean for consumers: (a) Good deals on new construction (b) less inventory , and that will cause inventory homes to be more expensive. (c) less new homes, for now. ONLY MY PREDICTION that has no merit other than my own.
hope you are enjoying the holidays! Have a great week, and keep saying your prayers. Its working. Oh, by the way, the 30 and 15 fixed being the SAME is not a typo…….strange, but true.
What else can I write about this week? I already hit the climax…the rates! Should I write about the deal that almost didn’t close because the appraisal was almost denied for high land/value ratio, or the builder we had to deny for a construction loan (a well known one at that)….. I better not. It’s too negative! But I will summarize to only say that things are tight. Banks are tight because they can be. But wasn’t it this way 7 or 8 years ago? Yes it was, but who can remember back that far? I surely cannot.
I would like to address builders. I predict that this is the next industry to be really affected by our economic downturn (recession!). In fact they already are. Track builders mostly, who build specs. But custom builders too. They are being squeezed , and in some cases cut off, by banks . The strong builders are surviving, and are being required to put more equity in deals. Gone are the days of 100% cost lending. So, in turn, builders with inventory worried . They cannot get more lines to build more homes. Many will unfortunately go under. Spec lending is on hold with many banks, including ours. The banks just don’t want the risk. So I sit here and think what this could mean for consumers: (a) Good deals on new construction (b) less inventory , and that will cause inventory homes to be more expensive. (c) less new homes, for now. ONLY MY PREDICTION that has no merit other than my own.
hope you are enjoying the holidays! Have a great week, and keep saying your prayers. Its working. Oh, by the way, the 30 and 15 fixed being the SAME is not a typo…….strange, but true.
Friday, December 5, 2008
Rates down to 4.875%, be careful what you wish for!
Merry Christmas….oh, is it not Christmas yet? I thought the 4.875% 30 Fixed I saw this morning was Santa’s gift to me for being such a good girl this year. Then it vanished into thin air hours later, and we are at 5.25% . We should be careful what we wish for. Rates are extremely low, but the economy is in the tanker. There are so many things making the yields (rates) of bonds go down on a daily basis. Remember that yields/rates down means prices are up. Prices up means that there is more demand for bonds. This happens when investors lose confidence in stocks, and they buy more bonds. For the mortgage coupons these days, no one seems to know what they are buying. The spreads between buying a point are unreal, anywhere from .500% - .750%. Never in 14 years have I seen that much of a spread. So save your money to buy that point down, otherwise, you will be paying dearly in the interest rate.
Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.
But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.
I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?
Some headlines for you, that affect the market in every way: Foreclosures have risen in every state in the nation (out just hours ago), foreclosures are forecasted to double in 09, California is on the verge of literally running out of money (all of Arnolds muscle flexing and charm means nothing now!), car giants are folding, we are officially in a recession (since Dec 07- ya think?), major corporate layoffs, terrorist attacks in Mumbai, changing regime in USA for the presidency, and to top all this off, there are pirates attacking ships off the coast of Somalia. Pirates? Are we living in some fairy tale now? Some days it sure feels like it.
But let’s look at the bright side! Gas is under $2.00/gallon, every consumer product imaginable is on sale, cars prices are rock bottom, and we have a new President that has given hope to the country, and seems like the world. There are right this very minute, 4,000 job openings in the Texas Medical Center that need to be filled. Houston is adding jobs! The Medical Center led us through the 80’s, and it will lead us through this, I can assure you.
I had a thought this week that should solve our country’s problems: why don’t we use part of lottery winnings to finance these bail outs!? The mega jackpot was $146 million! Who needs that kind of money anyway?
Friday, November 21, 2008
Does the new Homeowner Rescue Package encourage default?
Maybe this month I will not make my mortgage payment. Then, skip January and February too, and then I’ll be 90 days late so I can qualify for the homeowner’s assistance that was just passed through Congress. At that point, my mortgage payment will be reduced to 31% of my gross monthly income (good news if I lost my job). My rate will be set as low as 3% for five years, and amortized for as much as 40 years. Apparently there are 2.2 million borrowers that would benefit from this just like me. DO NOT GET ME WRONG here, I am all for helping out those in need. Those that have had the misfortune of a real estate market gone bad, a layoff , etc. Sometimes, however, the consequences are hard to process in my brain. I pay my bills, and , if I get laid off, I would work at Wal Mart if I had to , or wait tables, or something, in order to feed my family. Where does the buck stop between those of us that are ‘taking a bat for the team’, and those that will manipulate the system to benefit themselves? We saw it happen with FEMA assistance after Katrina (remember that?), and we will see it again. How will we be able to differentiate between those people that are really in need, or looking for a handout? Didn’t we all at some point benefit from (a) subprime, (b) stated income (c) high debt to income ratios, etc…………Are the people that foreclosed the ones that had those types of loans? Probably. But we will never know.
In the last couple of weeks, I have advised several people to contact HOPE NOW, the non profit agency that was formed in June 2007, to help persons renegotiate with their lenders. They have helped 2.5 million people avoid foreclosure since then. Even if temporarily. When you do foreclose, your credit will be affected. You will not be able to obtain another conventional loan for 5 years, or an FHA loan for 2 (FHA loans are limited to $270,050, currently). If you do a short sale, you will still fall into the same category. You are settling for less than the owed amount. In leiu of foreclosure. It is like a collection. So where will all these people go? They will be renters….time to buy a rent house! IT is a great time right now to be an investor…….If you can get the loan.
INVESTORS, in my opinion, have been hardest hit by the credit crunch. Maximum 4 properties financed, 20% down (rate is MUCH better if you do 25%), and full documentation of income. There are a lot of investors that do not meet that criteria. Who will buy these homes? The answer is, the investors that have cash, or form investment groups where they have multiple partners to qualify on the application. Or hard money for 14% and 5 points origination. Seriously. Hopefully some smart and savy financier will invent a product to service this segment of the market to allow these homes to be bought. That could be why much of the inventory is sitting there. In the past, the programs available allowed for investors to gobble up properties at a record pace. They balanced the market. Or did they? I have been searching for statistics on how many foreclosures were investment properties. I have not found it yet. But will keep you posted. So would we have been in this situation before now, or ever, had they never been able to get 0% down, stated income on an investment property? It sounds preposterous, doesn’t it?
Lastly, I would like to comment that RATES ARE DOWN THIS WEEK! The mortgage market continues to stay steady, and loans are definitely available. If you have CASH, CREDIT AND INCOME, you will have no problem at all. The key word is proof , proof, proof. Sometimes I wonder how we even deviated from that?
In the last couple of weeks, I have advised several people to contact HOPE NOW, the non profit agency that was formed in June 2007, to help persons renegotiate with their lenders. They have helped 2.5 million people avoid foreclosure since then. Even if temporarily. When you do foreclose, your credit will be affected. You will not be able to obtain another conventional loan for 5 years, or an FHA loan for 2 (FHA loans are limited to $270,050, currently). If you do a short sale, you will still fall into the same category. You are settling for less than the owed amount. In leiu of foreclosure. It is like a collection. So where will all these people go? They will be renters….time to buy a rent house! IT is a great time right now to be an investor…….If you can get the loan.
INVESTORS, in my opinion, have been hardest hit by the credit crunch. Maximum 4 properties financed, 20% down (rate is MUCH better if you do 25%), and full documentation of income. There are a lot of investors that do not meet that criteria. Who will buy these homes? The answer is, the investors that have cash, or form investment groups where they have multiple partners to qualify on the application. Or hard money for 14% and 5 points origination. Seriously. Hopefully some smart and savy financier will invent a product to service this segment of the market to allow these homes to be bought. That could be why much of the inventory is sitting there. In the past, the programs available allowed for investors to gobble up properties at a record pace. They balanced the market. Or did they? I have been searching for statistics on how many foreclosures were investment properties. I have not found it yet. But will keep you posted. So would we have been in this situation before now, or ever, had they never been able to get 0% down, stated income on an investment property? It sounds preposterous, doesn’t it?
Lastly, I would like to comment that RATES ARE DOWN THIS WEEK! The mortgage market continues to stay steady, and loans are definitely available. If you have CASH, CREDIT AND INCOME, you will have no problem at all. The key word is proof , proof, proof. Sometimes I wonder how we even deviated from that?
Friday, November 7, 2008
Last week’s article caused a few dissenters from our recipient list. There were a few comments I made alluding to a particular party, and some found it distasteful. My sincere apologies, and we wish you well. For those of you that have stayed (and are reading now) thank you! It is important for all of us to be able to reach across party lines, regardless of our beliefs, and embrace opinions of others. Also, I would like to say that politics has EVERYTHING to do with interest rates. The markets. All of it is based on feeling, cause and effect, and predicting behavior. Now that the election has passed, I am happy to report that the mystery is over, and the mortgage rate markets settled DOWN .375% in a 24 hour period following the election.
As an optimist, I would like to comment that there seems to be a spirit of renewed hope in the air, and for that I am thankful. Although I did not vote for the Democratic Party, I am encouraged and hopeful that our new President will serve our country with best interests at heart. He has proven that he gave a majority of our country (37 million persons!) the prospect of change. If that is what my peers call for, then I am here to accept that. And it seems the market is too!
ARE WE IN A RECESSION?
Can we just call it a national recession already? The ONLY authority over making this call is the National Bureau Economic Research. Not the Prez, not the Fed Chairman. According to the NBER's Web site, a recession "is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." We lost a total of 1.2 million jobs (October to date), which puts unemployment at 6.5%. National home sales continue to decline. In 2008, hundreds of major banks, 5 of them being large household name banks, have gone capput. (Ex: Wachovia, WAMU, Indy Mac). When will this branch of government stop avoiding the inevitable?
IS MORTGAGE JUSTICE BLIND?
Why do mortgage lenders not rush to rework and renegotiate mortgages with homeowners? It is easier said than done. The world of securitization has changed dramatically. The loans are pooled together, and sold on the secondary market, with minimum rates of return guaranteed to investors. These pools are sold to a ‘master servicer’ which now holds the power to rework the loans. The bad news is, that the master servicers have an obligation to the investors. Should they rework the loans, the investors would suffer major losses on rates of return. Innocent bystanders that invested in these mortgage pools, much like your 401K fund or investment portfolio. Many of us are /were invested in these types of pools, and did not even know it! So my point of this commentary is: Easier said than done.
ARE BANKS LENDING MONEY?
Yes, they are. The mortgage market is running status quo. Tighter requirements, but money is flowing, and steadily. Rates are low (5.75% on a 30 fixed!) . If you have good credit, money for at least 3% down, and can prove your income, you are fine! The markets that have really tightened are commercial /business loans. Regional as well as national banks have severely tightened their guidelines, that has resulted in companies’ ability to do business and grow is drastically impaired.
The largest sector close to our hearts that I have seen affected is builders. Spec loans are becoming a thing of the past, or very difficult to obtain. Smaller spec builders I am not sure how they will survive. The larger ones, are cutting back tremendously. If you have current inventory on the ground, you must sell before starting new projects. There are some deals to be had I imagine, as the end of the year approaches, and builders need these loans off their books. As for Patriot Bank Mortgage, we are stronger than ever. Our conservative approach to lending over the past year has paid off. We do deals that make sense. We are awarded by our investors in the form of reduced rates and streamlined requirements. We are small enough to serve and know our customers each by name, but large enough to serve them with the most rapid, competitive and courteous service in the industry. We hope you will give us an opportunity to earn your business!
As an optimist, I would like to comment that there seems to be a spirit of renewed hope in the air, and for that I am thankful. Although I did not vote for the Democratic Party, I am encouraged and hopeful that our new President will serve our country with best interests at heart. He has proven that he gave a majority of our country (37 million persons!) the prospect of change. If that is what my peers call for, then I am here to accept that. And it seems the market is too!
ARE WE IN A RECESSION?
Can we just call it a national recession already? The ONLY authority over making this call is the National Bureau Economic Research. Not the Prez, not the Fed Chairman. According to the NBER's Web site, a recession "is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." We lost a total of 1.2 million jobs (October to date), which puts unemployment at 6.5%. National home sales continue to decline. In 2008, hundreds of major banks, 5 of them being large household name banks, have gone capput. (Ex: Wachovia, WAMU, Indy Mac). When will this branch of government stop avoiding the inevitable?
IS MORTGAGE JUSTICE BLIND?
Why do mortgage lenders not rush to rework and renegotiate mortgages with homeowners? It is easier said than done. The world of securitization has changed dramatically. The loans are pooled together, and sold on the secondary market, with minimum rates of return guaranteed to investors. These pools are sold to a ‘master servicer’ which now holds the power to rework the loans. The bad news is, that the master servicers have an obligation to the investors. Should they rework the loans, the investors would suffer major losses on rates of return. Innocent bystanders that invested in these mortgage pools, much like your 401K fund or investment portfolio. Many of us are /were invested in these types of pools, and did not even know it! So my point of this commentary is: Easier said than done.
ARE BANKS LENDING MONEY?
Yes, they are. The mortgage market is running status quo. Tighter requirements, but money is flowing, and steadily. Rates are low (5.75% on a 30 fixed!) . If you have good credit, money for at least 3% down, and can prove your income, you are fine! The markets that have really tightened are commercial /business loans. Regional as well as national banks have severely tightened their guidelines, that has resulted in companies’ ability to do business and grow is drastically impaired.
The largest sector close to our hearts that I have seen affected is builders. Spec loans are becoming a thing of the past, or very difficult to obtain. Smaller spec builders I am not sure how they will survive. The larger ones, are cutting back tremendously. If you have current inventory on the ground, you must sell before starting new projects. There are some deals to be had I imagine, as the end of the year approaches, and builders need these loans off their books. As for Patriot Bank Mortgage, we are stronger than ever. Our conservative approach to lending over the past year has paid off. We do deals that make sense. We are awarded by our investors in the form of reduced rates and streamlined requirements. We are small enough to serve and know our customers each by name, but large enough to serve them with the most rapid, competitive and courteous service in the industry. We hope you will give us an opportunity to earn your business!
Wednesday, November 5, 2008
We Close Loans in 2 Days!
Have any of these happened to you lately? ·
Is your buyer getting last minute conditions they can’t satisfy? ·
Are lenders letting your buyer fall through the cracks making you miss close dates? ·
Are processors sitting on conditions causing you to have to push close back?
All of these create fallout! And when fallout occurs, buyers don’t close, AND YOU DON’T GET PAID!!!
Let me tell you a quick story… We had a realtor call yesterday and explain that the lender they were using denied her buyer’s loan last minute due to extra conditions that couldn’t be met. Those buyers were in my office at 10:00 yesterday morning for the first time. We took the application, processed it, underwrote it, and SENT DOCS TO TITLE AT NOON TODAY!!!! That’s right , 26 hours and we had docs!!!
Do you have fallout? SEND IT TO ME NOW!!!
If you know of someone who could benefit from my services, please give me their name and number, and I will be very happy to contact them
Is your buyer getting last minute conditions they can’t satisfy? ·
Are lenders letting your buyer fall through the cracks making you miss close dates? ·
Are processors sitting on conditions causing you to have to push close back?
All of these create fallout! And when fallout occurs, buyers don’t close, AND YOU DON’T GET PAID!!!
Let me tell you a quick story… We had a realtor call yesterday and explain that the lender they were using denied her buyer’s loan last minute due to extra conditions that couldn’t be met. Those buyers were in my office at 10:00 yesterday morning for the first time. We took the application, processed it, underwrote it, and SENT DOCS TO TITLE AT NOON TODAY!!!! That’s right , 26 hours and we had docs!!!
Do you have fallout? SEND IT TO ME NOW!!!
If you know of someone who could benefit from my services, please give me their name and number, and I will be very happy to contact them
Saturday, November 1, 2008
YOU are going to fix the economy, not some politician
Some days I wish we could just turn back the time to 2003. Life was great. Everyone was prospering. But then again, we learn the most from our failures by hitting bottom, unfortunately.
Recently, I have become somewhat of a Dave Ramsey junkie. He is that off the wall financial guru that has a ‘tell it like it is’ attitude. He is honestly blunt, kind of like my internist. That is why I like both of them! I am not much of a sugar coater either. Just tell me how it is. Well, this week, his blog had some really great thoughts I wanted to share. “ I am here to remind you that YOU are going to fix the economy. Waiting for money to be taken from others and given to you is a spirit of envy, and its wrong”. Wow. That is pretty strong stuff. We do like handouts, don’t we? As a society I mean. The easy money. The 20% annual returns on our home values (for unlimited years in a row), or the 12% annual returns on our stocks, or , how about this one….buying a foreclosure and expecting that you will get 50% of the value just because it is owned by a bank.
Come on fellow Americans. Whatever happened to working hard for our money and embracing the free market philosophy? Isn’t that what our country was built upon over 200 years ago?
Speaking of handouts, there is a presidential candidate who has referred to households earning over $250,000 a year as ‘rich’ and that “they can afford to give up a little of their money so the less fortunate can have more tax breaks and prosper.” SAYS WHO???????????? Just because you work hard and take risk and have made sound decisions for yourself, you should give up some more of what you have earned ? By the way, there are many persons that make $40,000 a year, that have more savings than those earning $500,000. Where will it stop, this sharing of wealth and prosperity? Should we all have equal returns on our investments too? Should college students that have a 4.0 give up 1.0 so that the 2.0 average students can have equal opportunity for their careers? Of course not.
Like Dave Ramsey said, YOU control our destiny. YOU make your choices. YOU will turn this country around by your individual actions. Should the corporations that took the risk to leverage themselves on mortgage backed securities take the handout from the government so they can now prosper? Is it ok for the banks to be relieved, but homeowners still struggle? Shouldn’t we, the people, get some relief too? Or how about digging a little deeper, folks. When a possible Foreclosure Aid package is given (in the works now), where will be the differentiation between those foreclosures that were caught in bad times at no fault of their own (layoffs, sickness, etc) , and those persons that took advantage of the system either by fraud or lying about their income on their loan application?
You see, I am a bit harsh and opinionated on this subject. I agree with Dave Ramsey. Each of us chooses our path. If you can’t pay the mortgage, get a paper route to help pay for it. We have all made choices along the way, that have shaped our lives we live today. We chose the adjustable rate mortgage because the payment was $150 lower than the fixed. We chose not to pay attention at closing when we signed the paperwork (I still do not understand how that one is possible), we chose to take a family trip when things were tight and now cannot pay the mortgage. The list really could go on. Ultimately, we only have ourselves to blame.
How does all this relate to mortgage rates? Well, rates are determined by the sentiment of the economy. Wall Street reflects the feelings of you and I. They react to news, to reports, to indexes. They (traders) get scared and worried just like we do, and that reflects in buying habits. That is what moves the rates up and down. Uncertainty is not good. That is for sure. Yes, things will improve after the uncertainty of the election is gone. Regardless of who wins.
A report came out this week that consumer confidence is at an all time low. Well of course, the media does a great job of blasting it every breath they get! But it really is reality that we as a nation are in a recession. There are pockets of the economy, like Houston for example, that are doing fine. Adding jobs!!!!!!! But for the sectors of our economy that are suffering and affecting us all (like the stock market) did we bring it on ourselves? The small actions of years ago compounded, that brought us here today? The over spending, the ridiculous returns on investment, the choice to turn a blind eye to warning signs. I have always been somewhat of a glutton for punishment. If I deserve something , for my actions or lack thereof, I face the music. Suffer the consequences. Move on. Take control of your destiny. Don’t let the government or anyone for that matter (even your in laws!) tell you how to live your life or spend your money. Do what you think is best for you and your family. If you make sound decisions, the rest will fall into place.
Last but not least, I would like to thank all of you that reply with your comments, your praises, and your material! There are a few of you that send me articles constantly (you know who you are), and for that I am thankful! It really helps me see what topics are important, and helps me decide what you want to hear. Please keep sending them!
Recently, I have become somewhat of a Dave Ramsey junkie. He is that off the wall financial guru that has a ‘tell it like it is’ attitude. He is honestly blunt, kind of like my internist. That is why I like both of them! I am not much of a sugar coater either. Just tell me how it is. Well, this week, his blog had some really great thoughts I wanted to share. “ I am here to remind you that YOU are going to fix the economy. Waiting for money to be taken from others and given to you is a spirit of envy, and its wrong”. Wow. That is pretty strong stuff. We do like handouts, don’t we? As a society I mean. The easy money. The 20% annual returns on our home values (for unlimited years in a row), or the 12% annual returns on our stocks, or , how about this one….buying a foreclosure and expecting that you will get 50% of the value just because it is owned by a bank.
Come on fellow Americans. Whatever happened to working hard for our money and embracing the free market philosophy? Isn’t that what our country was built upon over 200 years ago?
Speaking of handouts, there is a presidential candidate who has referred to households earning over $250,000 a year as ‘rich’ and that “they can afford to give up a little of their money so the less fortunate can have more tax breaks and prosper.” SAYS WHO???????????? Just because you work hard and take risk and have made sound decisions for yourself, you should give up some more of what you have earned ? By the way, there are many persons that make $40,000 a year, that have more savings than those earning $500,000. Where will it stop, this sharing of wealth and prosperity? Should we all have equal returns on our investments too? Should college students that have a 4.0 give up 1.0 so that the 2.0 average students can have equal opportunity for their careers? Of course not.
Like Dave Ramsey said, YOU control our destiny. YOU make your choices. YOU will turn this country around by your individual actions. Should the corporations that took the risk to leverage themselves on mortgage backed securities take the handout from the government so they can now prosper? Is it ok for the banks to be relieved, but homeowners still struggle? Shouldn’t we, the people, get some relief too? Or how about digging a little deeper, folks. When a possible Foreclosure Aid package is given (in the works now), where will be the differentiation between those foreclosures that were caught in bad times at no fault of their own (layoffs, sickness, etc) , and those persons that took advantage of the system either by fraud or lying about their income on their loan application?
You see, I am a bit harsh and opinionated on this subject. I agree with Dave Ramsey. Each of us chooses our path. If you can’t pay the mortgage, get a paper route to help pay for it. We have all made choices along the way, that have shaped our lives we live today. We chose the adjustable rate mortgage because the payment was $150 lower than the fixed. We chose not to pay attention at closing when we signed the paperwork (I still do not understand how that one is possible), we chose to take a family trip when things were tight and now cannot pay the mortgage. The list really could go on. Ultimately, we only have ourselves to blame.
How does all this relate to mortgage rates? Well, rates are determined by the sentiment of the economy. Wall Street reflects the feelings of you and I. They react to news, to reports, to indexes. They (traders) get scared and worried just like we do, and that reflects in buying habits. That is what moves the rates up and down. Uncertainty is not good. That is for sure. Yes, things will improve after the uncertainty of the election is gone. Regardless of who wins.
A report came out this week that consumer confidence is at an all time low. Well of course, the media does a great job of blasting it every breath they get! But it really is reality that we as a nation are in a recession. There are pockets of the economy, like Houston for example, that are doing fine. Adding jobs!!!!!!! But for the sectors of our economy that are suffering and affecting us all (like the stock market) did we bring it on ourselves? The small actions of years ago compounded, that brought us here today? The over spending, the ridiculous returns on investment, the choice to turn a blind eye to warning signs. I have always been somewhat of a glutton for punishment. If I deserve something , for my actions or lack thereof, I face the music. Suffer the consequences. Move on. Take control of your destiny. Don’t let the government or anyone for that matter (even your in laws!) tell you how to live your life or spend your money. Do what you think is best for you and your family. If you make sound decisions, the rest will fall into place.
Last but not least, I would like to thank all of you that reply with your comments, your praises, and your material! There are a few of you that send me articles constantly (you know who you are), and for that I am thankful! It really helps me see what topics are important, and helps me decide what you want to hear. Please keep sending them!
Friday, October 24, 2008
Even Qualified Borrowers are Holding Back......
Did you know that in Houston, sales are down, yes, but the average home price is up? That is economics at its best. Who would have expected that? I do not even pay attention to national stats anymore. Do they matter? Each housing market is in of itself, a statistic. Locally, I can report that for the first time in my entire career (14 years) I have noticed recently (this month) people holding back not sure what to do . Qualified borrowers. Maybe they are unsure about their job, or the down payment was coming from their stock that was losing money.
However, This week things did begin to pick back up for us. I reported last week that my desk was clean, well, it is dirty again, with papers disheveled and stacked. The phones have been ringing. I had 3 calls just this week to ‘save’ deals that were falling out with other lenders could not approve them. We are glad to assist! For you to know, we can close files in 48 hours if needed. But each of our realtors is only allowed 1 of those favors a month! That was, of course, a joke. Foreclosure filings have spiked 71%, nationally. In September, 81,312 homes were lost to foreclosure. Since a year ago, 851,000 have been repossessed by lenders.
This brings up a point I would like to share. Fannie and Freddie have of recent come up with some guidelines regarding homes that are being financed in areas with high foreclosures as a percent of the total sales in the last 12 months. If that number is greater than 15%, there is a problem. I had to turn down a borrower for that reason 3 months ago. He was purchasing a property in a neighborhood that had 27% foreclosures (as a % of total listings sold) in the last 12 months. I was mad, frustrated and quite frankly, baffled. How will we as a society ever get OUT of this mess, if the lenders will not even loan on properties they are foreclosing on? I understand that this ‘guideline’ is in place to avoid the lenders investing in areas that are on the decline, but when the homes are selling that should amount to something? There has to be a solution. But I have not been able to think of one, so stay tuned on that subject.
RATES ARE DOWN THIS WEEK! (.25%). The stock market took some heavy losses, and in anticipation of the Fed Funds rate possibly coming down another .500%, investors are pricing that into the market. Its about time we have some relief in rates. Now if we can convince Fannie/Freddie (aka the government, right?) to increase the conforming limit to $650,000 or so, we will be fine. It would be about time! There is a show on MSNBC called Mad Money. Cramer (the host) is just beside himself today. He is on right now, waiving his arms and screaming. Today’s headline is :‘The Dow is down 15 of the last 19 weeks. Down 36% total.’ MORE REASON TO PUT YOUR MONEY INTO REAL ESTATE! In my opinion, it is still the best investment there is.
However, This week things did begin to pick back up for us. I reported last week that my desk was clean, well, it is dirty again, with papers disheveled and stacked. The phones have been ringing. I had 3 calls just this week to ‘save’ deals that were falling out with other lenders could not approve them. We are glad to assist! For you to know, we can close files in 48 hours if needed. But each of our realtors is only allowed 1 of those favors a month! That was, of course, a joke. Foreclosure filings have spiked 71%, nationally. In September, 81,312 homes were lost to foreclosure. Since a year ago, 851,000 have been repossessed by lenders.
This brings up a point I would like to share. Fannie and Freddie have of recent come up with some guidelines regarding homes that are being financed in areas with high foreclosures as a percent of the total sales in the last 12 months. If that number is greater than 15%, there is a problem. I had to turn down a borrower for that reason 3 months ago. He was purchasing a property in a neighborhood that had 27% foreclosures (as a % of total listings sold) in the last 12 months. I was mad, frustrated and quite frankly, baffled. How will we as a society ever get OUT of this mess, if the lenders will not even loan on properties they are foreclosing on? I understand that this ‘guideline’ is in place to avoid the lenders investing in areas that are on the decline, but when the homes are selling that should amount to something? There has to be a solution. But I have not been able to think of one, so stay tuned on that subject.
RATES ARE DOWN THIS WEEK! (.25%). The stock market took some heavy losses, and in anticipation of the Fed Funds rate possibly coming down another .500%, investors are pricing that into the market. Its about time we have some relief in rates. Now if we can convince Fannie/Freddie (aka the government, right?) to increase the conforming limit to $650,000 or so, we will be fine. It would be about time! There is a show on MSNBC called Mad Money. Cramer (the host) is just beside himself today. He is on right now, waiving his arms and screaming. Today’s headline is :‘The Dow is down 15 of the last 19 weeks. Down 36% total.’ MORE REASON TO PUT YOUR MONEY INTO REAL ESTATE! In my opinion, it is still the best investment there is.
Sunday, October 19, 2008
Smart people are buying
Well, my desk is organized, I have worked out 6 times this week, AND been on time to pick up my son from school five days in a row. While these methods sound ideal, I function better with my chaotic life of running around with not a moment to spare and my cell phone ringing off the wall. It’s productive and energizing. My point here is that things are a bit slow. Since the hurricane, phones are ringing less, understandably, as people are putting lives back together. One thing I am hearing a lot of, is comments from prospective buyers that the stock market turmoil are making them consider twice before buying a home. I could not disagree more on their decision. For any buyer (in the nation) that has funds for down payment, good credit, and have debt to income ratios that are in line, it is an EXCELLENT time to buy! Good credit and down payment knows no boundaries, my friends. There is plenty of lending going on, believe me. What we do not have are buyers. They are holding off, during the most opportune time in perhaps history when inventories are high (meaning there are deals to be had), and rates are still historically low! 30 Year Fixed for 6.0% ? Come on….. you cannot get much better than that.
This week we did have quite a scare as the mortgage rates shot up ½% in a matter of days. But today we are exactly where we were a week ago. No banks went bankrupt this week, that is encouraging. As I visit with friends in the industry, I try to gather details you can use to support your business. To give you words that are encouraging in these troubled times. How about : (1) MSNBC.com wrote that Texas topped the list for job creation. Houston-Dallas-Fort Worth are 1-2-3 in the latest rankings of the 100 largest metropolitan areas. (2) Houston is forecasted have added 50,000-70,000 jobs total this year – that means that 33,000 new homes will be needed (1.5 homes for every job added) (3) That job creation number will be similar in 2009! (4) Patriot Bank STILL is offering their 4.0% high yield money market, and (5) The elections are almost over!!!!!
The uncertainty in the political leadership is touching every aspect of our economy. People naturally want to know what to expect. Then we can deal with it. Make a plan! In my opinion, that is why Wall Street has been so volatile, the mortgage rates are unpredictable, and buyers are adopting a wait and see approach. The smart folks are buying. They know opportunity when they see it.
Rates as of Friday, October 17, 2008 (net down for the week)
The following assumptions apply:
20% Down Payment
1% Origination Fee
Escrows Required (if no escrow, higher fees may apply)
Purchase Transactions,
Primary Residence
30 day closingCredit Score
720 +Full Documentation of Income/AssetsLoans
> 1 mm require 30% down for these terms Conforming
($250,000* - $417,000) Jumbo ($417,001- $1,500,000*)
30 year (fixed) 6.000% APR 6.130% 30 year ( fixed ) 7.005% APR 7.177% 15 year (fixed) 5.750% APR 5.966% 15 year ( fixed ) 6.350% APR 6.551% 3/1 ARM 5.600% APR 5.728% 3/1 ARM 5.600% APR 5.716% 5/1 ARM 5.375% APR 5.501% 5/1 ARM 5.500% APR 5.620%
7/1 ARM 5.625% APR 5.752% 7/1 ARM 5.750% APR 5.872%FHA/VA call for quote (max loan $270,000)
We do originate loans below $250,000. These amounts are chosen to show the most favorable rates. For other product options or for loan amounts less than $250,000 or above $1,500,000 please call for quote.We also do VA and FHA loans! Call for details! If you know of someone who would appreciate my services, please contact me with their name and number and I will be happy to help them!
Jennifer Hernandez
Vice President/Mortgage ConsultantPatriot Bank Mortgage
Office: 713-337-8400
Mobile: 713-446-7791
E-mail: jennifer@patriotbankusa.com
Web: www.loanwithjennifer.com
Information provided in this e-mail is intended as a tool for Real Estate Agents to be informed of the approximate rates available for home mortgages. It is intended for their sole use and purpose only and is not for distribution to the general public. Depending on the borrower's actual circumstances, such as credit, debt ratios, etc., rates may vary. Special niche products may also be available.
This email and any files transmitted with it are confidential and are intended solely for the use of the individual or entity to whom it is addressed. This communication may contain protected or privileged material and should only be viewed by the intended recipient(s). If you are not the intended recipient or the person responsible for delivering the email to the intended recipient(s), be advised that you have received this email in error and that any use, dissemination, forwarding, printing or copying of this email is strictly prohibited.
This week we did have quite a scare as the mortgage rates shot up ½% in a matter of days. But today we are exactly where we were a week ago. No banks went bankrupt this week, that is encouraging. As I visit with friends in the industry, I try to gather details you can use to support your business. To give you words that are encouraging in these troubled times. How about : (1) MSNBC.com wrote that Texas topped the list for job creation. Houston-Dallas-Fort Worth are 1-2-3 in the latest rankings of the 100 largest metropolitan areas. (2) Houston is forecasted have added 50,000-70,000 jobs total this year – that means that 33,000 new homes will be needed (1.5 homes for every job added) (3) That job creation number will be similar in 2009! (4) Patriot Bank STILL is offering their 4.0% high yield money market, and (5) The elections are almost over!!!!!
The uncertainty in the political leadership is touching every aspect of our economy. People naturally want to know what to expect. Then we can deal with it. Make a plan! In my opinion, that is why Wall Street has been so volatile, the mortgage rates are unpredictable, and buyers are adopting a wait and see approach. The smart folks are buying. They know opportunity when they see it.
Rates as of Friday, October 17, 2008 (net down for the week)
The following assumptions apply:
20% Down Payment
1% Origination Fee
Escrows Required (if no escrow, higher fees may apply)
Purchase Transactions,
Primary Residence
30 day closingCredit Score
720 +Full Documentation of Income/AssetsLoans
> 1 mm require 30% down for these terms Conforming
($250,000* - $417,000) Jumbo ($417,001- $1,500,000*)
30 year (fixed) 6.000% APR 6.130% 30 year ( fixed ) 7.005% APR 7.177% 15 year (fixed) 5.750% APR 5.966% 15 year ( fixed ) 6.350% APR 6.551% 3/1 ARM 5.600% APR 5.728% 3/1 ARM 5.600% APR 5.716% 5/1 ARM 5.375% APR 5.501% 5/1 ARM 5.500% APR 5.620%
7/1 ARM 5.625% APR 5.752% 7/1 ARM 5.750% APR 5.872%FHA/VA call for quote (max loan $270,000)
We do originate loans below $250,000. These amounts are chosen to show the most favorable rates. For other product options or for loan amounts less than $250,000 or above $1,500,000 please call for quote.We also do VA and FHA loans! Call for details! If you know of someone who would appreciate my services, please contact me with their name and number and I will be happy to help them!
Jennifer Hernandez
Vice President/Mortgage ConsultantPatriot Bank Mortgage
Office: 713-337-8400
Mobile: 713-446-7791
E-mail: jennifer@patriotbankusa.com
Web: www.loanwithjennifer.com
Information provided in this e-mail is intended as a tool for Real Estate Agents to be informed of the approximate rates available for home mortgages. It is intended for their sole use and purpose only and is not for distribution to the general public. Depending on the borrower's actual circumstances, such as credit, debt ratios, etc., rates may vary. Special niche products may also be available.
This email and any files transmitted with it are confidential and are intended solely for the use of the individual or entity to whom it is addressed. This communication may contain protected or privileged material and should only be viewed by the intended recipient(s). If you are not the intended recipient or the person responsible for delivering the email to the intended recipient(s), be advised that you have received this email in error and that any use, dissemination, forwarding, printing or copying of this email is strictly prohibited.
Friday, October 10, 2008
Don’t look at your stocks today!
The stock market is depressing, I know. Most of you are not retiring tomorrow, right? Let’s joke so we can feel better…that we will now retire at 97. I certainly do not mean to make light of any of the losses we are all suffering in the markets. But lets us take a step back, and keep things in perspective. (1) You signed up for this the day you bought the stock- you knew the risk. It can go up, and go down (2) You have not complained at the gains you have made before 2007, certainly (3) TAKE A BREATH, stop ‘micro’ trading, and ride out the storm. Now for those of you that need the money now, I can certainly understand the wig factor you are experiencing. Talk to your advisor, put money in cash for a while. Take a break. But if you have a few months…sit it out. The market will rebound. The elections will pass, there will be confidence restored. History has shown us that.
Several clients this week were calling me about pulling out of contracts, or waiting until things calm in the markets. My question was ‘ Why?’ Real estate is the BEST investment there is. It is tangible. Furthermore, rates are still historically low, or at least average. By historically low, I mean in the last 20 years, not the last 5! Our problem is that we still remember the 3 month period back in 2003 when the 30 year fixed reached 5.0%. Those of us that really wanted to roll the dice, got a 7/1 ARM at 4.375%. As sexy as that may be, we know the end result, it was a pipe dream to think that would last. What has this thinking taught us? We as a society have a false sense of comfort in thinking that rates can stay low indefinitely, or that gains in stock will be there forever. Again, we have to step back and let things ride. Budget, spend wisely, save for a rainy day, or a down payment on a house or that matter.
As for mortgage rates, this week, the FED lowered the federal funds rate .50% . This is the overnight lending rate to banks – or the fed window as it is commonly named. Rock on! That means my mortgage rate on my pending purchase just went down! NOT THE CASE. In fact, mortgage rates went up at the news. Logical? Not to the average person. But economically, when the fed rate goes down, it is cheaper for banks to borrow, which increases profits, which translates to them spending hard dollars on things like wages, goods and capital expenditures. So the news on Wed made the stock market go up, confidence restored (temporarily, I know) and the investors took money out of bonds to purchase more stock. When this happens, the bond prices are pushed down..to attract more buyers back over, and the yields then go up…to attract more buyers. When bond yields go up, mortgage rates go up. There you have it, that is exactly what has happened. We are up .25% from last week.
Enjoy your weekend, and stay away from CNN. Go to the park instead, or go to the movies, just don’t buy the concessions, since we are now budgeting and all.
Several clients this week were calling me about pulling out of contracts, or waiting until things calm in the markets. My question was ‘ Why?’ Real estate is the BEST investment there is. It is tangible. Furthermore, rates are still historically low, or at least average. By historically low, I mean in the last 20 years, not the last 5! Our problem is that we still remember the 3 month period back in 2003 when the 30 year fixed reached 5.0%. Those of us that really wanted to roll the dice, got a 7/1 ARM at 4.375%. As sexy as that may be, we know the end result, it was a pipe dream to think that would last. What has this thinking taught us? We as a society have a false sense of comfort in thinking that rates can stay low indefinitely, or that gains in stock will be there forever. Again, we have to step back and let things ride. Budget, spend wisely, save for a rainy day, or a down payment on a house or that matter.
As for mortgage rates, this week, the FED lowered the federal funds rate .50% . This is the overnight lending rate to banks – or the fed window as it is commonly named. Rock on! That means my mortgage rate on my pending purchase just went down! NOT THE CASE. In fact, mortgage rates went up at the news. Logical? Not to the average person. But economically, when the fed rate goes down, it is cheaper for banks to borrow, which increases profits, which translates to them spending hard dollars on things like wages, goods and capital expenditures. So the news on Wed made the stock market go up, confidence restored (temporarily, I know) and the investors took money out of bonds to purchase more stock. When this happens, the bond prices are pushed down..to attract more buyers back over, and the yields then go up…to attract more buyers. When bond yields go up, mortgage rates go up. There you have it, that is exactly what has happened. We are up .25% from last week.
Enjoy your weekend, and stay away from CNN. Go to the park instead, or go to the movies, just don’t buy the concessions, since we are now budgeting and all.
September 26, 2008
What a week ! We ended the week with a bang when news last night of Washington Mutual was seized by federal authorities as JP Morgan Chase takes over. There was a flee of deposits as customers worried about the banks solidity, and their capital base was eroded, making operations impossible. Buyout at a rock bottom 1.9 billion. That is a bargain for the buyer. The rest of the week has been consumed with the news of the ‘bail out’ and the looming debate. CNN even has a countdown until showtime.
Rates this week are UP. That is because there is uncertainty. BAD news for the market. We need warm fuzzies, reassurance everything will be ok. Reading the paper this morning did not help. I had flashbacks of my childhood days when I used to pride myself on tattling my older sister, or my baby brother. I am the middle child, the know it all, the perfect angel (I really was). I would not stop until I got my way. I WAS SEVEN! Our elected members of Congress are grown men and women. Are these discussions /arguments about a bail out really about what is best for America, or which party will look better on the eve of election day?
My final commentary is this: I am an optimist, always looking on the bright side of things. These days, that has been hard, where bad news looms everywhere. But there will be good that comes from these historically troubling times. Imagine a society that saves first, then spends. Taxpayers that actually pay the taxes on income they earned and not what they cannot hide. Or even homeowners that have property taxes based on the true value of their home, not a deflated, unrealistic amount. DON’T SHOOT YOUR BULLETS AT ME YET! You see, I am a firm believer that things will come back to haunt you. Why is it that rules apply to everyone else except us? We want full price for our homes, yet we have fudged about our values for years to the county? I myself am guilty of all of the above too! But there has to be balance. It is high time that our society owns up to the fact that we have to practice what we preach to our children: Always tell the truth, save ½ your allowance in the piggy bank, share, don’t hit and say please and thank you. Hang in there. We will get through this together.
Rates this week are UP. That is because there is uncertainty. BAD news for the market. We need warm fuzzies, reassurance everything will be ok. Reading the paper this morning did not help. I had flashbacks of my childhood days when I used to pride myself on tattling my older sister, or my baby brother. I am the middle child, the know it all, the perfect angel (I really was). I would not stop until I got my way. I WAS SEVEN! Our elected members of Congress are grown men and women. Are these discussions /arguments about a bail out really about what is best for America, or which party will look better on the eve of election day?
My final commentary is this: I am an optimist, always looking on the bright side of things. These days, that has been hard, where bad news looms everywhere. But there will be good that comes from these historically troubling times. Imagine a society that saves first, then spends. Taxpayers that actually pay the taxes on income they earned and not what they cannot hide. Or even homeowners that have property taxes based on the true value of their home, not a deflated, unrealistic amount. DON’T SHOOT YOUR BULLETS AT ME YET! You see, I am a firm believer that things will come back to haunt you. Why is it that rules apply to everyone else except us? We want full price for our homes, yet we have fudged about our values for years to the county? I myself am guilty of all of the above too! But there has to be balance. It is high time that our society owns up to the fact that we have to practice what we preach to our children: Always tell the truth, save ½ your allowance in the piggy bank, share, don’t hit and say please and thank you. Hang in there. We will get through this together.
Friday, October 3, 2008
Show me the money!
Just as I am writing this, the House passed the Bailout Plan. No One has published details yet....but you can turn on any news channel this weekend, and I am sure, get the details. As this week was consumed with news of a bailout, no bailout, economic crisis if no bailout, our interest rates were holding steady, but higher than last week. Uncertainty kills the market. Both in bonds and in stocks. This next week will be interesting for sure as we see how the markets react to this (false?) sense of security. This decision to pass the bailout plan, whatever that means, is just a short term means to resolve the crisis. Long term effects are yet to come. Wells Fargo announced it will buy Wachovia for 15.1 Billion - or will they? Wachovia entered into an earlier agreement with Citgroup, or so they thought. That will be next weeks’ big newsline: Battle of the Banks. Another one bites the dust.
This week, I had a realtor friend forward me an article that a client sent her. The article focused on why it is better to rent than to buy. How does one respond to their client about this article written by an MBA graduate that has credibility and a title? (should I be scared?). NO WAY! You tell your client the truth. That if they google long enough, they will find many articles telling them what they want to hear. Well, this article did have some points to ponder, if you are a single person, no kids, no pets, travel 75% of the time, and have no life. That is about 1% of our population. In my honest opinion, this 'money' guru was trying to do one thing. Shake things up. Have a fresh point of view.
Homeownership is a choice. Personally, I did not buy my gorgeous (and best landscaping in the neighborhood) home in order to make a profit. This is where I raise my child, welcome my friends and family, and where I find peace and serenity after a long days work. So when a 'guru' writes an article about the fact that we should all become tennants and leave our 'investing' to the stock market, I say BLAH. I will play the 'Pride of Homeownership ' card any day. He can take his parque floors and brady bunch curtains and ....I don't know, take a hike into the real world.
Furthermore, while we are on the topic of buyer beware, another question I get often is: Should we wait to buy a house? Its hard to get a loan right now? My answer as an insider would be NO. Our business is running status quo. Sure, guidelines are tightening, and it is harder to obtain a loan (if you have no savings, and adverse credit). There are some borrowers that do get caught in the middle that would normally qualify. My answer to this is: If you feel that you fit in this category (you know who you are), call a lender 3-6 months before buying. This gives us enough time to plan, and advise of any credit changes/corrections you need before you fit into a program. Gone are the days you can call around for financing the day your earnest money becomes hard. In my experience, everyone, and I do mean everyone, has a special circumstance we need to accommodate for closing. We just need to plan ahead.
Also note, MONEY IS AVAILABLE! There are plenty of investors that are financing mortgage backed securities. Just look at the rates below! I can assure you that home loans will not disappear from the earth. Will rates go up a little? Maybe. Will they go down? It’s anybody’s guess. Act now. Times are good for buyers. SMART people are buying now and taking advantage of the buyers market mixed with low interest rates.
This week, I had a realtor friend forward me an article that a client sent her. The article focused on why it is better to rent than to buy. How does one respond to their client about this article written by an MBA graduate that has credibility and a title? (should I be scared?). NO WAY! You tell your client the truth. That if they google long enough, they will find many articles telling them what they want to hear. Well, this article did have some points to ponder, if you are a single person, no kids, no pets, travel 75% of the time, and have no life. That is about 1% of our population. In my honest opinion, this 'money' guru was trying to do one thing. Shake things up. Have a fresh point of view.
Homeownership is a choice. Personally, I did not buy my gorgeous (and best landscaping in the neighborhood) home in order to make a profit. This is where I raise my child, welcome my friends and family, and where I find peace and serenity after a long days work. So when a 'guru' writes an article about the fact that we should all become tennants and leave our 'investing' to the stock market, I say BLAH. I will play the 'Pride of Homeownership ' card any day. He can take his parque floors and brady bunch curtains and ....I don't know, take a hike into the real world.
Furthermore, while we are on the topic of buyer beware, another question I get often is: Should we wait to buy a house? Its hard to get a loan right now? My answer as an insider would be NO. Our business is running status quo. Sure, guidelines are tightening, and it is harder to obtain a loan (if you have no savings, and adverse credit). There are some borrowers that do get caught in the middle that would normally qualify. My answer to this is: If you feel that you fit in this category (you know who you are), call a lender 3-6 months before buying. This gives us enough time to plan, and advise of any credit changes/corrections you need before you fit into a program. Gone are the days you can call around for financing the day your earnest money becomes hard. In my experience, everyone, and I do mean everyone, has a special circumstance we need to accommodate for closing. We just need to plan ahead.
Also note, MONEY IS AVAILABLE! There are plenty of investors that are financing mortgage backed securities. Just look at the rates below! I can assure you that home loans will not disappear from the earth. Will rates go up a little? Maybe. Will they go down? It’s anybody’s guess. Act now. Times are good for buyers. SMART people are buying now and taking advantage of the buyers market mixed with low interest rates.
Thursday, September 25, 2008
September 19, 2008
Our sincerest thoughts go out to you and your families that may be affected by Hurricane Ike. We are here for any questions you may have about your current mortgage, or remodeling loan options as you navigate this complicated road to recovery.
Last Friday, I was all geared up to inform you about the details of the Fannie/Freddie bailout. Then the ‘evacuation’ news came. So although stale at this point, I will still recap, and move on to this weeks’ news, making last week look like baby steps. We all know by now that the government (now affectionately called Sugar Daddy) came to Fannie/Freddie’s rescue by placing them into conservatorship. The US Treasury bought their stock, fired the executives (and did not award them in 24 million in bonus’ due- boo hoo!) , assumed control of the Board and management, and then resumed the company to normal operations. It is thought that this ‘rescue’ will be great for emerging markets abroad (it renews confidence in the markets, and frees up their balance sheets to loan more money in their domestic countries), and kill us here at home, where we have yet to even conceptualize the tax burden all tax payers will have to pay at some future point in time.
The deal has added $5 TRILLION in debt to an already stressed balance sheet, therefore doubling the national debt. The US government will have to sell more US Treasury bonds in order to cover its new debt. This new debt will lead to higher yields (affecting rates on mortgages to go HIGHER). True, after the Fannie /Freddie news, we did see an immediate drop in rates. Then the honeymoon sizzled, and rates rose again. Now a new drama has hit the news line- the Bankruptcy filing of Lehman Bros this week, the failing of AIG, and the sale of Merrill Lynch to Bank of America. Wow……can it get any better than this? This is even better than Judge Judy or the OJ Simpson Trial. The news rooms are just beside themselves with excitement.
This Monday, after all this new news (Lehman, AIG, Merrill), the rates did go down. The past 2 days we have seen them inch up as the stock market has recovered from rebuilt confidence in the market. Will they go down again? We hope so. We think so. Does anyone really know? Not a chance. There is so much uncertainty out there, the slightest news could change the course of rates in an instant. If you are waiting to refinance it, lock it, and get with a lender that will float you down if rates drop (Patriot Bank Mortgage will!). If you are purchasing, do the same.
In Summary:
Lehman Brothers, one of the top brokerage firms in the nation, was DENIED a government rescue this week. The Fed said they finally have had enough. The banking industry needs to come up with its own solutions to its problems. They owe more than $157 billion to their 10 largest creditors, and no way of paying up anytime soon. They declared bankruptcy on Saturday, while we were suffering 110 mile /hr winds in Houston.
AIG – Their credit was downgraded this week from AAA status to almost the lowest possible level. This forces them to raise billions in new capital to cover its debt exposure, which they could not do. AIG is the worlds’ largest insurance company. They insure everything from trips, to cars, to bonds. They cover every sector of the economy. The traders and stocks/bonds that are sold/bought every day rely on them to insure. The government is on the verge of placing them in conservatorship as well. Why would they bail them out and not Lehman, is my question? The affect of AIG failing is far more widespread than Lehman. AIG probably insures Lehman. They cannot fail. No way. That would be beyond words.
Merrill Lynch sold to Bank of America for $50 billion. B of A stated that ML was attractive because its wealth management is the best in the world and would complement their existing operations.
Washington Mutual is rumored of a potential acquisition by JP Morgan Chase
So, let me get this straight, the banks take massive risks in credit and equity deals, pay themselves like kings, and then rely on the US government to bail them out when they have had enough? What kind of legacy are we leaving for future generations? Is this how we want to be remembered? The US politicians talk about family, and core values, and then we do the opposite. Our children are learning that there is no sense of responsibility or consequence. The culprits seem to always get away somehow with a slap on the hand. So the Fannie CEO got fired, big deal! He will make thousands by writing a book that will be gobbled up by the Americans dying to know how he did it. BUT……We have to maintain the façade of the most powerful country in the nation. Are we really that good? That smart? That savvy? Does anyone know what they are doing? It seems to me like one large ‘puff’ of smoke. Except when the taxpayers have to foot the bill, will it seem like play money then?
Last Friday, I was all geared up to inform you about the details of the Fannie/Freddie bailout. Then the ‘evacuation’ news came. So although stale at this point, I will still recap, and move on to this weeks’ news, making last week look like baby steps. We all know by now that the government (now affectionately called Sugar Daddy) came to Fannie/Freddie’s rescue by placing them into conservatorship. The US Treasury bought their stock, fired the executives (and did not award them in 24 million in bonus’ due- boo hoo!) , assumed control of the Board and management, and then resumed the company to normal operations. It is thought that this ‘rescue’ will be great for emerging markets abroad (it renews confidence in the markets, and frees up their balance sheets to loan more money in their domestic countries), and kill us here at home, where we have yet to even conceptualize the tax burden all tax payers will have to pay at some future point in time.
The deal has added $5 TRILLION in debt to an already stressed balance sheet, therefore doubling the national debt. The US government will have to sell more US Treasury bonds in order to cover its new debt. This new debt will lead to higher yields (affecting rates on mortgages to go HIGHER). True, after the Fannie /Freddie news, we did see an immediate drop in rates. Then the honeymoon sizzled, and rates rose again. Now a new drama has hit the news line- the Bankruptcy filing of Lehman Bros this week, the failing of AIG, and the sale of Merrill Lynch to Bank of America. Wow……can it get any better than this? This is even better than Judge Judy or the OJ Simpson Trial. The news rooms are just beside themselves with excitement.
This Monday, after all this new news (Lehman, AIG, Merrill), the rates did go down. The past 2 days we have seen them inch up as the stock market has recovered from rebuilt confidence in the market. Will they go down again? We hope so. We think so. Does anyone really know? Not a chance. There is so much uncertainty out there, the slightest news could change the course of rates in an instant. If you are waiting to refinance it, lock it, and get with a lender that will float you down if rates drop (Patriot Bank Mortgage will!). If you are purchasing, do the same.
In Summary:
Lehman Brothers, one of the top brokerage firms in the nation, was DENIED a government rescue this week. The Fed said they finally have had enough. The banking industry needs to come up with its own solutions to its problems. They owe more than $157 billion to their 10 largest creditors, and no way of paying up anytime soon. They declared bankruptcy on Saturday, while we were suffering 110 mile /hr winds in Houston.
AIG – Their credit was downgraded this week from AAA status to almost the lowest possible level. This forces them to raise billions in new capital to cover its debt exposure, which they could not do. AIG is the worlds’ largest insurance company. They insure everything from trips, to cars, to bonds. They cover every sector of the economy. The traders and stocks/bonds that are sold/bought every day rely on them to insure. The government is on the verge of placing them in conservatorship as well. Why would they bail them out and not Lehman, is my question? The affect of AIG failing is far more widespread than Lehman. AIG probably insures Lehman. They cannot fail. No way. That would be beyond words.
Merrill Lynch sold to Bank of America for $50 billion. B of A stated that ML was attractive because its wealth management is the best in the world and would complement their existing operations.
Washington Mutual is rumored of a potential acquisition by JP Morgan Chase
So, let me get this straight, the banks take massive risks in credit and equity deals, pay themselves like kings, and then rely on the US government to bail them out when they have had enough? What kind of legacy are we leaving for future generations? Is this how we want to be remembered? The US politicians talk about family, and core values, and then we do the opposite. Our children are learning that there is no sense of responsibility or consequence. The culprits seem to always get away somehow with a slap on the hand. So the Fannie CEO got fired, big deal! He will make thousands by writing a book that will be gobbled up by the Americans dying to know how he did it. BUT……We have to maintain the façade of the most powerful country in the nation. Are we really that good? That smart? That savvy? Does anyone know what they are doing? It seems to me like one large ‘puff’ of smoke. Except when the taxpayers have to foot the bill, will it seem like play money then?
September 5, 2008
Just when I thought the week would go by with no program changes ……….
Investors have pulled back on FHA and Conventional on the use of ‘alternate credit’. This means that if a consumer does not have 12 months of established history in the US, to generate credit scores, then they potentially will not be able to get a loan. This is potentially huge for relocating employees from overseas. Mind you, there may be no problem if the employee goes through some of the larger relocation companies. Just be sure they are pre-approved before you get under contract. One of our larger 2nd lien lenders made a new guideline that borrowers have to have 1 year with the same company to get approved. That was a new one. I have not seen that in about 11 years. Usually, as long as you are in the same industry for 2 years, but employed , it shows you are employable. And finally, our biggest issue continues to be that our investors are implementing policies ‘retroactive’. Gone are the glorious days of 30 days notice. Time to absorb. Gone Gone Gone. Once again, sign of the times. Do I sound like a broken record yet?
Foreclosures. We are sick of hearing about them, I know. But lets talk about reality. 39% of the foreclosures in the US are in CA/FL. Whew! 6.4% of Americans are behind on their mortgage payments, and 2 million homes are currently in foreclosure. Lets just all agree that it is not over yet, and do whatever you can to make your payments on time.
Rates are lower this week. Trending downward. Why? Recession fears due to a 5 year low in the unemployment numbers. Oil prices are down. Merrill Lynch is expected to post a larger than expected 3rd and 4th quarter loss. This is making the stock market go nuts! Good news for bonds, who love bad news. Remember bonds are the safe haven for investors that pull out of the stock market when ‘uncertainty and doom/gloom’ exist.GMAC, one of the top 10 US mortgage lenders, announced that 5,000 layoffs will come by year end. They will continue to originate loans directly to the consumer, but will cease all operations to the wholesale /broker market. Mike Larson, a real estate analyst for Weiss Research quoted to CNN Money this week that “We’re not confronting a credit crisis anymore. We are dealing with broad economic problems that are contributing to delinquency rates”.
Positive News…..yes there really is some! Patriot Bank has one of the most competitive local high yield savings accounts- 4.0% for deposits over $50,000! Call our main branch for details! 713.400.7100
Investors have pulled back on FHA and Conventional on the use of ‘alternate credit’. This means that if a consumer does not have 12 months of established history in the US, to generate credit scores, then they potentially will not be able to get a loan. This is potentially huge for relocating employees from overseas. Mind you, there may be no problem if the employee goes through some of the larger relocation companies. Just be sure they are pre-approved before you get under contract. One of our larger 2nd lien lenders made a new guideline that borrowers have to have 1 year with the same company to get approved. That was a new one. I have not seen that in about 11 years. Usually, as long as you are in the same industry for 2 years, but employed , it shows you are employable. And finally, our biggest issue continues to be that our investors are implementing policies ‘retroactive’. Gone are the glorious days of 30 days notice. Time to absorb. Gone Gone Gone. Once again, sign of the times. Do I sound like a broken record yet?
Foreclosures. We are sick of hearing about them, I know. But lets talk about reality. 39% of the foreclosures in the US are in CA/FL. Whew! 6.4% of Americans are behind on their mortgage payments, and 2 million homes are currently in foreclosure. Lets just all agree that it is not over yet, and do whatever you can to make your payments on time.
Rates are lower this week. Trending downward. Why? Recession fears due to a 5 year low in the unemployment numbers. Oil prices are down. Merrill Lynch is expected to post a larger than expected 3rd and 4th quarter loss. This is making the stock market go nuts! Good news for bonds, who love bad news. Remember bonds are the safe haven for investors that pull out of the stock market when ‘uncertainty and doom/gloom’ exist.GMAC, one of the top 10 US mortgage lenders, announced that 5,000 layoffs will come by year end. They will continue to originate loans directly to the consumer, but will cease all operations to the wholesale /broker market. Mike Larson, a real estate analyst for Weiss Research quoted to CNN Money this week that “We’re not confronting a credit crisis anymore. We are dealing with broad economic problems that are contributing to delinquency rates”.
Positive News…..yes there really is some! Patriot Bank has one of the most competitive local high yield savings accounts- 4.0% for deposits over $50,000! Call our main branch for details! 713.400.7100
Friday, August 29, 2008
We Are All In This Together
Ahhh. Friday on the eve of a 3 day weekend, AND the end of the month. This week I had 4 closings, which normally is a cakewalk for us. My record is 12 (back in 2003 when rates were so low!). But this week, I must say, the 4 closings were brutal. By that I mean tough to close. ALL had perfect borrowers, perfect credit, normal income…it was just the documentation of any special circumstances, this/that, the appraisal had the picture of exposed concrete we had to explain, the borrower got a bridge loan from employer and we needed a special letter of it being customary for their employees. The list goes on and on and on. I have to literally stop, breathe, and then remind myself that we are in trying times. Remind myself that my underwriters are on my team, they are not out to get me. They are asking me for these (silly?) things because they are being pounded, and I do mean pounded, by the investors that are buying these loans from us on the secondary market. You see, everyone is covering their tracks. From the investors, to the underwriters, down to us. Even the realtors. No one wants to get caught holding the smoking gun. This rationalization allows me to get through the day. Through the week . Through the very tough times. Wednesday I was living up to my nickname (Wiggie), and today, Friday, I am calm. All loans closed, all borrowers happy. That is a very good thing. So the next time your borrowers lender asks for ‘unreasonable’ things, stop a moment, take that breath, and trace backwards. Try to remember that we are all in this together, on the same team. Wading through the storm.
As for the FBI…they say they saw it coming. There was an article in this week’s Chronicle (Aug 26, Business) that disclosed top FBI officials saying they predicted this time of crisis resulting from loan fraud. But then they only had 100 agents for the entire country. Not enough man power. My take on this article, is that how could anyone have known? There are so many threads (like the Enron scandal…do we still really know where all the scams led?) The FBI only goes after the BIG guys. Losses of 1 mm or more. The large groups of fraud rings that are consciously engaging in fraud. What about the guy who is average, looking out for his family, and just wants to get in a home? His loan officer tells him he can state his income and be done with it. What about the borrowers that had a bankruptcy after losing their job? They have 4 kids and a dog, need a house because renting is not in the cards, so they take an ARM at 8.5% instead of fixed at 10.0% to save $100 a month so they can pay for school lunches? The FBI never could have gone after those people, or even imagined the number of people that would take advantage of the holes in our system that allowed for such things to happen.
Moving forward, I see good changes: Fixed rates mandatory for low down payment loans, tax/insurance escrow mandatory if the credit is adverse, full documentation of income in every case, stringent credit requirements, higher rates for those with lower credit scores. All of these changes are good. We do not realize it now, but it is changing the face of homeownership. Reaffirming the commitment and importance of owning a home. Ensuring your neighbors are as committed to homeownership as you are. If we just try to look past the details, and remind ourselves of the big picture, we can survive the day, and the year as well. Things will get better. Hang in there, and keep smiling. Godspeed to you all, and have a safe holiday weekend!
As for the FBI…they say they saw it coming. There was an article in this week’s Chronicle (Aug 26, Business) that disclosed top FBI officials saying they predicted this time of crisis resulting from loan fraud. But then they only had 100 agents for the entire country. Not enough man power. My take on this article, is that how could anyone have known? There are so many threads (like the Enron scandal…do we still really know where all the scams led?) The FBI only goes after the BIG guys. Losses of 1 mm or more. The large groups of fraud rings that are consciously engaging in fraud. What about the guy who is average, looking out for his family, and just wants to get in a home? His loan officer tells him he can state his income and be done with it. What about the borrowers that had a bankruptcy after losing their job? They have 4 kids and a dog, need a house because renting is not in the cards, so they take an ARM at 8.5% instead of fixed at 10.0% to save $100 a month so they can pay for school lunches? The FBI never could have gone after those people, or even imagined the number of people that would take advantage of the holes in our system that allowed for such things to happen.
Moving forward, I see good changes: Fixed rates mandatory for low down payment loans, tax/insurance escrow mandatory if the credit is adverse, full documentation of income in every case, stringent credit requirements, higher rates for those with lower credit scores. All of these changes are good. We do not realize it now, but it is changing the face of homeownership. Reaffirming the commitment and importance of owning a home. Ensuring your neighbors are as committed to homeownership as you are. If we just try to look past the details, and remind ourselves of the big picture, we can survive the day, and the year as well. Things will get better. Hang in there, and keep smiling. Godspeed to you all, and have a safe holiday weekend!
Friday, August 22, 2008
Whistling Dixie
Do you feel like someone has seriously moved our cheese? Do you ever feel like we are living in a dream world with news of multi billion dollar losses and bail outs and declining values, and foreclosures? Is this real? My question is: are these losses from companies truly actual dollar losses? Or are they just on paper? Maybe just some imaginary accounting number of a value that was not there to begin with? Kind of like the 2 Mercedes my husband lost for us in the stock market when he thought he was a day trader in 2000? Well , really, he only started out with a Chevy, but the values inflated so rapidly...before we knew it we thought our $400/share gain in yahoo was actually ours. Anyway...the point is, I DO feel in a daze sometimes. There are days that are calm, and then others that spirall out of control and you cannot stop it.
THIS WEEK several large lenders came out with lock extension fees that are abusively high. This means that if we lock in a client, and do not meet that close date, and have to extend the lock, they will charge heavily to extend the rate. The reason this is important, is to know just how serious rate locks are, especially in times when rates are increasing. Not to be taken lightly, a rate 'lock' is where we (the lender) actually go out onto the secondary market and reserve the right to a mortgage backed security with a coupon rate on it. Hence, the interest rate. If we do not honor those rates, and have high % of fallout with our investors, they charge us, or just cancel our contracts all together. What has happened now, is that borrowers need so many lock extensions (delayed closings from short sales, etc....) that someone gets left out hung to dry. So they are merely passing that risk on. And now we will have to pass on to our borrowers in some way. It is so easy to think those rate locks are for free, like air! They just appear! Not so.
Will the mortgage market be destroyed with a bailout of Fannie Mae or Freddie Mac? This week both their stocks tumbled 4 days straight, amidst worries that a government bailout would effectively wipe out common shareholders, and maybe preferred shareholders as well. The government says they do not want to own these companies. But will they have to? Don't bet on it before the elections at least. Fannie Mae chief Dan Mudd says that they are seeing record profits on their new business, and they are selling Treasury debts at auctions very successfully. Fannie Mae issued a new 'Return Policy' to lenders saying that they will 'ramp up' their loan reviews from 900/mo to 4,000/mo by the end of the year. They are expanding quality control products and practices, and are on track to double their anti-fraud investigations. Why should you care? This will be passed on to our customers in the form of increased paperwork, and lots of questions. We are already seeing it. Most customers understand, and say ' oh that darn sub prime crisis really messed us up'. But it really is not all about sub prime. It was all loans, even the conventional ones. It was the borrowers we let borrow 100%, roll in closing costs, do interest only with 5% down. These were normal people with great income, just no assets. Remember, we are a negative saving loving country! I just hope lenders don't regress back to 20% down minimum. That would be hard to digest.
I had several questions this week about the TAX REFUND of $7500 to first time homebuyers. But wait...you only qualify if you make less than $75,000 (individual) or $150,000 household. Do you think it is fair for those people to be left out? My opinion is no. They deserve a break too. They are the ones that are spending extra money on goods and services, even luxury items that trickle down to the rest of the population. Anyway..back to the program. A direct credit on your tax return, $7500 . But wait...you have to pay it back over the next 15 years. So really, should we call it a credit? Or an interest free loan? I think the latter. Either way, it will help people now, so they can prosper later.
Have you had any friends or family get their home equity line of credit reduced or cancelled? Its the new craze. Banks are assessing that values are dropping, and they are reducing credit lines everywhere. Another reason glad we live in Texas where we are capped at 80% equity on cash out lines of credit. Aren't we whistling dixie now?
THIS WEEK several large lenders came out with lock extension fees that are abusively high. This means that if we lock in a client, and do not meet that close date, and have to extend the lock, they will charge heavily to extend the rate. The reason this is important, is to know just how serious rate locks are, especially in times when rates are increasing. Not to be taken lightly, a rate 'lock' is where we (the lender) actually go out onto the secondary market and reserve the right to a mortgage backed security with a coupon rate on it. Hence, the interest rate. If we do not honor those rates, and have high % of fallout with our investors, they charge us, or just cancel our contracts all together. What has happened now, is that borrowers need so many lock extensions (delayed closings from short sales, etc....) that someone gets left out hung to dry. So they are merely passing that risk on. And now we will have to pass on to our borrowers in some way. It is so easy to think those rate locks are for free, like air! They just appear! Not so.
Will the mortgage market be destroyed with a bailout of Fannie Mae or Freddie Mac? This week both their stocks tumbled 4 days straight, amidst worries that a government bailout would effectively wipe out common shareholders, and maybe preferred shareholders as well. The government says they do not want to own these companies. But will they have to? Don't bet on it before the elections at least. Fannie Mae chief Dan Mudd says that they are seeing record profits on their new business, and they are selling Treasury debts at auctions very successfully. Fannie Mae issued a new 'Return Policy' to lenders saying that they will 'ramp up' their loan reviews from 900/mo to 4,000/mo by the end of the year. They are expanding quality control products and practices, and are on track to double their anti-fraud investigations. Why should you care? This will be passed on to our customers in the form of increased paperwork, and lots of questions. We are already seeing it. Most customers understand, and say ' oh that darn sub prime crisis really messed us up'. But it really is not all about sub prime. It was all loans, even the conventional ones. It was the borrowers we let borrow 100%, roll in closing costs, do interest only with 5% down. These were normal people with great income, just no assets. Remember, we are a negative saving loving country! I just hope lenders don't regress back to 20% down minimum. That would be hard to digest.
I had several questions this week about the TAX REFUND of $7500 to first time homebuyers. But wait...you only qualify if you make less than $75,000 (individual) or $150,000 household. Do you think it is fair for those people to be left out? My opinion is no. They deserve a break too. They are the ones that are spending extra money on goods and services, even luxury items that trickle down to the rest of the population. Anyway..back to the program. A direct credit on your tax return, $7500 . But wait...you have to pay it back over the next 15 years. So really, should we call it a credit? Or an interest free loan? I think the latter. Either way, it will help people now, so they can prosper later.
Have you had any friends or family get their home equity line of credit reduced or cancelled? Its the new craze. Banks are assessing that values are dropping, and they are reducing credit lines everywhere. Another reason glad we live in Texas where we are capped at 80% equity on cash out lines of credit. Aren't we whistling dixie now?
Monday, August 11, 2008
August 11, 2008
The 400 people charged as of date by the FBI in mortgage fraud has totaled over $1 billion in losses. GM alone reported a quarterly loss of $15 billion- more than the market value of the company. Freddie Mac lost $821 million in the 2nd quarter (might as well round that to a billion) . I think my point is….is the BILLION the new MILLION? What is going on? Lets see, a billion is 000,000,000 – that is 9 zeros. Can you fathom that amount? How are any of these companies going to recover? Or are we all so used to hearing the B word now, that its no big deal?
Gas prices fell 20 days in a row. That is refreshing. Down more than 25 cents /gallon from the record high.
Fed left the rates unchanged. Refreshing? For some maybe. It will keep the cost of money for banks and borrowers (short term credit) lower. But the reason is that they are admitting to inflation fears and a slowdown. The fed typically will lower rates to spur spending by consumers, and raise rates when concerned about inflation.
Russia bombed Georgia (the country, not the US State) today. Now that sent the market rallying. Who knows where that will lead us. Just put them in the same category as Iraq and Iran now. Problems that we will be dealing with. The markets could go either way.
Oh, and Lenders fear a bigger waive of loan defaults, according to the NY Times. A growing number of homeowners are falling behind on their payments.
Now for some GREAT news! Texas represents 43% of the job growth in the nation! And Houston is 17% of that! Yee ha! My consensus for the week is not to float rates if you are buying a home. Don’t gamble. Lock em’ as soon as you can. Anything can happen tomorrow.
Gas prices fell 20 days in a row. That is refreshing. Down more than 25 cents /gallon from the record high.
Fed left the rates unchanged. Refreshing? For some maybe. It will keep the cost of money for banks and borrowers (short term credit) lower. But the reason is that they are admitting to inflation fears and a slowdown. The fed typically will lower rates to spur spending by consumers, and raise rates when concerned about inflation.
Russia bombed Georgia (the country, not the US State) today. Now that sent the market rallying. Who knows where that will lead us. Just put them in the same category as Iraq and Iran now. Problems that we will be dealing with. The markets could go either way.
Oh, and Lenders fear a bigger waive of loan defaults, according to the NY Times. A growing number of homeowners are falling behind on their payments.
Now for some GREAT news! Texas represents 43% of the job growth in the nation! And Houston is 17% of that! Yee ha! My consensus for the week is not to float rates if you are buying a home. Don’t gamble. Lock em’ as soon as you can. Anything can happen tomorrow.
Saturday, August 2, 2008
Constantly I am asked ‘How is the mortgage business doing?' Actually, it is doing quite well. My production is up 25% from last year. What I am finding, is that the brokers that were doing loans out of their garage, internet lenders, all of them are restructuring. No longer can these companies run on fumes. They go out of business, or if they stay in business, they are cutting costs and keeping only the top team players. This is, in my opinion, a good thing. Borrowers are realizing that doing business with smaller and unstructured companies has its costs. At Patriot Bank Mortgage, we are finding that consumers are relying more on reputation of their mortgage lender, more so than just finding the lowest rate. They are demanding service and results, at the most competitive terms as possible.
Yes, guidelines are stringent, and sometimes brutal. But isn’t that how things should be anyway? How in the world did we ever think the honeymoon of the ‘liar loan’ or the no down payment loan could go on? So……now that things are calming down, we, the average American, are left to deal with the aftershock. Those who are the most disgruntled , are the ones that have been caught red handed. The ones that were benefitting the most from the laxed guidelines. I must comment as well that there are those borrowers that have excellent credit, income and reserves that are caught a bit in the crossfire. The biggest complaint I (still) get, is that those borrowers are disgruntled about having to verify anything at all. They think that because they have all these things, they don’t have to prove it. There in lies a big issue. You see, we are loaning people, let’s say, $300,000. That is a lot of money! Yes, we require you to verify that what you are telling us is true. Just give us those bank statements. What’s the harm? Turn over the tax returns. Yes, we really want to know.
This last week, the President signed a bill that is anticipated to help some $400,000 homeowners avoid foreclosure. Here are the real interpretations:
Jobless claims are at a four year high. This news has relaxed rates a bit going into the homestretch of the summer. Oh, and have you noticed, gas is down at the pumps? Now it only costs me $55 to fill my tank versus $61. What a relief!
Rates as of Friday, August 1, 2008:
The following assumptions apply:
30 year (fixed) 6.250% APR 6.383% 30 year ( fixed ) 7.450% APR 7.585%
15 year (fixed) 5.875% APR 6.115% 15 year ( fixed ) 6.625% APR 6.836%
3/1 ARM 5.750% APR 6.639% 3/1 ARM 5.950% APR 6.073%
5/1 ARM 5.875% APR 6.549% 5/1 ARM 5.750% APR 5.872%
7/1 ARM 6.250% APR 6.638% 7/1 ARM 6.000% APR 6.124%
FHA/VA call for quote (max loan $270,000)
Yes, guidelines are stringent, and sometimes brutal. But isn’t that how things should be anyway? How in the world did we ever think the honeymoon of the ‘liar loan’ or the no down payment loan could go on? So……now that things are calming down, we, the average American, are left to deal with the aftershock. Those who are the most disgruntled , are the ones that have been caught red handed. The ones that were benefitting the most from the laxed guidelines. I must comment as well that there are those borrowers that have excellent credit, income and reserves that are caught a bit in the crossfire. The biggest complaint I (still) get, is that those borrowers are disgruntled about having to verify anything at all. They think that because they have all these things, they don’t have to prove it. There in lies a big issue. You see, we are loaning people, let’s say, $300,000. That is a lot of money! Yes, we require you to verify that what you are telling us is true. Just give us those bank statements. What’s the harm? Turn over the tax returns. Yes, we really want to know.
This last week, the President signed a bill that is anticipated to help some $400,000 homeowners avoid foreclosure. Here are the real interpretations:
- Conforming loan limit will be increased to 115% of the median home price, or $625,000, whatever is less. Sorry, Houston, with our median home price below $200,000, we will be stuck with the same $417,000.
- FHA loan limits will increase to $115% of the median home price, or $270,000, whatever is less. Sorry again, Houston, we are staying at the $270,000.
- First time homebuyers will receive a 10% refund up to $7,500- but if you make >$75,000, the refund will be phased out. Oh, and the refund is to be repaid over the next 15 years. So essentially, it is a 15 year interest free loan.
- All mortgage originators (brokers, bankers, etc) will be required to be licensed and adhere to a national registry. This is a good thing.
Jobless claims are at a four year high. This news has relaxed rates a bit going into the homestretch of the summer. Oh, and have you noticed, gas is down at the pumps? Now it only costs me $55 to fill my tank versus $61. What a relief!
Rates as of Friday, August 1, 2008:
The following assumptions apply:
- 20% Down Payment (call for other options)
- 1% Origination Fee
- Escrows Required (if no escrow, higher fees may apply)
- Purchase Transactions
- Primary Residence 30 day closing
- Credit Score 720 +
- Full Documentation of Income/Assets
- Loans > 1 mm require 30% down for these terms
30 year (fixed) 6.250% APR 6.383% 30 year ( fixed ) 7.450% APR 7.585%
15 year (fixed) 5.875% APR 6.115% 15 year ( fixed ) 6.625% APR 6.836%
3/1 ARM 5.750% APR 6.639% 3/1 ARM 5.950% APR 6.073%
5/1 ARM 5.875% APR 6.549% 5/1 ARM 5.750% APR 5.872%
7/1 ARM 6.250% APR 6.638% 7/1 ARM 6.000% APR 6.124%
FHA/VA call for quote (max loan $270,000)
Monday, July 28, 2008
July 25, 2008
On a (Sunday), July 14, we all know by now that Congress met about 'rescuing' Fannie Mae and Freddie Mac. Since then, they have been able to issue /sell bonds and raise some capital. However, investor confidence is still waning, and the S&P is considering downgrading their credit rating. Uh oh. The July publication of ‘The Economist’ makes some very interesting comments . The name of the article is ‘End of Illusions’. A couple of illusions are cited : (1) Investors fell for the idea that American house prices would not fall across the country, and (2) that debt issued by Fannie Mae and Freddie Mac is backed by the government. These 2 beliefs alone have allowed the ‘twins’ to borrow cheaply for as long as I can remember , and offering fixed interest rates at a low cost (comparatively to the market). Now they are at risk of their own demise, since their portfolio has consisted (since the 1990’s) of ‘other’ than conforming mortgage backed securities. They lowered their standards just like everyone else, and have had pools of non performing assets as well.
Did you realize that Fannie and Freddie do not actually service any loans? They merely guarantee them to lenders, for a fee, and let the lenders retain the servicing rights. NO ONE pays a mortgage note to Fannie Mae. Now, Fannie Mae and Freddie Mac ARE the ones who make the rules. They have a general set of guidelines (call it a box) that all loans (conforming, <$417,000) must fit into. It 'used to be' over the last 5-6 years, that box got bigger and bigger. Or maybe we should say it kept getting holes in it. Until there almost was no box! Well, now the box is revived. And if you don't fit into it, there is no loan. That is right, no loan. In fact, just this week, a national leading lender (who shall remain nameless) that we sell (most) of our mortgages to.... said that EVERYONE has to verify income with paystubs and/or tax returns. What a concept! Really! How did we ever get away from that? I am not sure. It just happened.
The Dow plunged and surged at least 7 times in a 2 week period (normal these days). After almost a week straight of increasing rates, we had some relief early last week, that only lasted about 3 hours. Then started to surge again (who can remember why) and now, finally…..the week ended on Friday the 25th showing some relief again. Why the roller coaster? Lets see………Iran is building nukes, oil is out of control, Fannie/Freddie are rumored to be crashing, jobless claims are up to $406,000, all the major banks (WAMU, CITI, WACHOVIA, JP MORGAN) reported losses in the first 2 quarters, almost all the home builders cited major losses in revenue, Ford Motor reported an 8.7 million loss, UBS is in a lawsuit now with Ny State Attorney General, Wachovia announced over 6,000 layoffs nationwide, and Obama could win the white house…….Wow. I am out of breath. SO MUCH IS HAPPENING! My motto is ‘no time like the present’. Live in the moment. Just do it.
A shocking story before I say 'adios'. I had a prospective client call me this week. Bless his heart. First time homebuyer. In his email, he actually asked me for information about a 'liar loan' that a doctor colleague told him about. He is a new doctor/resident. Not making much money. I guess he has been studying too hard to watch the news (or living under a rock) to realize that the 'liar ' loans that Americans have gotten used to, is actually why we are in this mess. NEXT WEEK: Details about the bill that was passed to rescue homeownership – including a raise in the conforming limit?
Did you realize that Fannie and Freddie do not actually service any loans? They merely guarantee them to lenders, for a fee, and let the lenders retain the servicing rights. NO ONE pays a mortgage note to Fannie Mae. Now, Fannie Mae and Freddie Mac ARE the ones who make the rules. They have a general set of guidelines (call it a box) that all loans (conforming, <$417,000) must fit into. It 'used to be' over the last 5-6 years, that box got bigger and bigger. Or maybe we should say it kept getting holes in it. Until there almost was no box! Well, now the box is revived. And if you don't fit into it, there is no loan. That is right, no loan. In fact, just this week, a national leading lender (who shall remain nameless) that we sell (most) of our mortgages to.... said that EVERYONE has to verify income with paystubs and/or tax returns. What a concept! Really! How did we ever get away from that? I am not sure. It just happened.
The Dow plunged and surged at least 7 times in a 2 week period (normal these days). After almost a week straight of increasing rates, we had some relief early last week, that only lasted about 3 hours. Then started to surge again (who can remember why) and now, finally…..the week ended on Friday the 25th showing some relief again. Why the roller coaster? Lets see………Iran is building nukes, oil is out of control, Fannie/Freddie are rumored to be crashing, jobless claims are up to $406,000, all the major banks (WAMU, CITI, WACHOVIA, JP MORGAN) reported losses in the first 2 quarters, almost all the home builders cited major losses in revenue, Ford Motor reported an 8.7 million loss, UBS is in a lawsuit now with Ny State Attorney General, Wachovia announced over 6,000 layoffs nationwide, and Obama could win the white house…….Wow. I am out of breath. SO MUCH IS HAPPENING! My motto is ‘no time like the present’. Live in the moment. Just do it.
A shocking story before I say 'adios'. I had a prospective client call me this week. Bless his heart. First time homebuyer. In his email, he actually asked me for information about a 'liar loan' that a doctor colleague told him about. He is a new doctor/resident. Not making much money. I guess he has been studying too hard to watch the news (or living under a rock) to realize that the 'liar ' loans that Americans have gotten used to, is actually why we are in this mess. NEXT WEEK: Details about the bill that was passed to rescue homeownership – including a raise in the conforming limit?
July 10, 2008
Well, FINALLY we have seen some easing of rates. Why? For starters, there is much global unrest at the announcement of Iran launching those missles. Is it hoopla or show? No one knows. Oil is over $140/barrel and climbing, Indy Mac Bank (one of the top 5 Jumbo and Alt A Lenders ) closed its doors this week, and Freddie Mac’s stock dropped to $6 from $10 this week. There is uncertainty and unrest on the horizon…..and the bond market loves that! It means that investors are nervous about keeping their investments in the volatile stock market, and seek the safe haven of bonds. As the demand for bonds increases, the price increases, and the yield (rate) decreases. Lets just enjoy this while we can. After almost 3 straight weeks of an increasing market, I am ready for these lower rates!
Some quotes that inspired me this week: ‘Give yourself permission to succeed’ – Stephen Davis, Lifestyles Unlimited, Inc.‘Always give without remembering, and always receive without forgetting’ –Brian Tracy‘Integrity is the most valuable and respected quality of leadership. Always keep your word’ – Brian Tracy
Some quotes that inspired me this week: ‘Give yourself permission to succeed’ – Stephen Davis, Lifestyles Unlimited, Inc.‘Always give without remembering, and always receive without forgetting’ –Brian Tracy‘Integrity is the most valuable and respected quality of leadership. Always keep your word’ – Brian Tracy
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