My closest friends have told me that I have chilled over the years, and that my college nickname of ‘wiggie’ might no longer apply. However, lately, the feeling has resurfaced. Today, I attended a training for the Jan 1 changes that will take effect in our industry regarding the good faith estimate. Lenders and Title agents have new forms, new rules, new deadlines, which boils down to one thing: CHANGE. It will be cumbersome, unfamiliar and take time to retrain staff, clients, realtors, and title agents. We will get through it, that is for sure. Yet another reason that I advise my realtor friends (such as yourself) to know and love your lenders (like me!). We will hold your hand, coach your clients, and be sure that every detail is uncovered to a tee, and assure the transaction closes on time.
RATES have been low! It is hard to pinpoint one reason why. Who can keep up? Could it be that the media is so consumed with Tiger that they don’t blast economic news for traders to overreact? Or is it our plight in Afghanistan? Or that Goldman Sachs will not pay bonuses (cash) this year, but replace them with stock, a sign that the industry is regulating. Or that the FED will keep rates low for the near future? There is so much news in one week, it is hard to say. What I do tell clients, is that change is inevitable. Rates are low, prices are reasonable, and the time is right. Take the low rates for what they are, and Let’s go!
I’ll be finishing my shopping this weekend, hard to believe its almost Christmas! Whatever you will be doing, stay warm, and relax. You deserve it!
Tuesday, December 15, 2009
Monday, November 16, 2009
The Best is yet to come!
Have you had an AHA moment lately? Well, I just had 10 of them. As I sat writing on this wifi laptop at the JW Marriott in Orlando, Florida, taking in a gorgeous sunset, I renewed my purpose in life, in business and to the planet. My goals for 2010 are set, my vision is clear, and execution is on the horizon.
In case you are wondering, I just attended the CORE seminar (thecore.tv) for Realtors/Lenders this past week. A group of high producing, driven producers, that have the inspiration every 6 months at these 'summits' to do better. Do better for my clients, for my team, for my company, and the planet. We watched clips from 'Pay it Forward' and 'Braveheart.’ We discussed how to create relevance and purpose. We shared strategies to build better teams, delegate, and take control of our day. We talked about feelings, and about when we die, what will people say about us?
We all need a spark, an inspiration. You may find it in a seminar, a mentor, a book, or a movie. Whatever it is, own it. THERE IS NO TOMMORROW. SUCCESS IS NOT AN ACCIDENT. And most importantly, EXCUSES ARE UNACCEPTABLE.
Have a fabulous week, and may we continue to work together toward our continued success and prosperity, whatever you define that may be.
In case you are wondering, I just attended the CORE seminar (thecore.tv) for Realtors/Lenders this past week. A group of high producing, driven producers, that have the inspiration every 6 months at these 'summits' to do better. Do better for my clients, for my team, for my company, and the planet. We watched clips from 'Pay it Forward' and 'Braveheart.’ We discussed how to create relevance and purpose. We shared strategies to build better teams, delegate, and take control of our day. We talked about feelings, and about when we die, what will people say about us?
We all need a spark, an inspiration. You may find it in a seminar, a mentor, a book, or a movie. Whatever it is, own it. THERE IS NO TOMMORROW. SUCCESS IS NOT AN ACCIDENT. And most importantly, EXCUSES ARE UNACCEPTABLE.
Have a fabulous week, and may we continue to work together toward our continued success and prosperity, whatever you define that may be.
Tuesday, November 10, 2009
The Credit is Officially Extended!!!
If you are a Desperate Housewives junkie like me, you would have seen last week when Lanette Scavo busted her husband cheating on his college mid term (he went back to school at 40). His response was how is that different than her not telling her boss at a recent promotion that she is pregnant with twins? This show is soooo juicy! Then, his next statement made me wonder .................Sometimes we are all doing the best we can in order to survive. Well, isn't that the truth! However, where do we draw the line? Whether telling a white lie to your toddler that the Halloween candy is gone, or the teacher that the dog ate your homework, or that you cheated on a spouse, or forgot to tell your husband about the 50K in debt you have accrued on your private credit card, or that your income is $10,000/month on your mortgage application (the old stated income). Isn’t a lie a lie?
This is certainly an interesting debate. I bring it up, because of the mixed signals that exist in our society every single day. Including the ones we (the lenders, Fannie Mae, legislators) are creating with new rules an regulations. Reward in one category, punitive in the next. I could give you examples, but you would stop reading, the list is so long. How quickly will we forget this mess, and recover, and begin to live again as we did in the past. Should we, would we? I love to keep you hanging.
The First Time Homebuyer Credit has OFFICIALLY PASSED. No more Nov 30 deadline. It is now extended to April 30th (signed contract) closing by July 2010. The income limits have increased. Now you can be a single wage earner of $125,000, or household of $250,000. The max purchase price is $800,000. And now, if you are a current homeowner, and have been in your current home >5 years, you can get up to $6500.
The Federal Reserve this week left rates unchanged. They hold at 0 - .25%. There is fear that the economy really has not turned around yet. Well, one would think after the unemployment numbers jumped last month. I personally believe the worst is yet to come as unemployment benefits run out (despite the recent 20 week extension), and people cannot make mortgage payments. I believe the Spring will be difficult as well. More foreclosures and short sales, just what we need. Actually, I prefer foreclosures. Short sales, however, take 4-5 months for the contract to even be accepted! That takes patience.
Rates are low. Check out the 5/1 and 7/1 ARMS. Perfect for borrowers that will be in their homes less than 5 years. Get them while you can.
We are about to close a loan in 14 calendar days. I just received a frantic call here at my desk on a Saturday. What are the chances I would be here? At Patriot, we can do that: close quickly, service your customer. Large enough to serve you, and small enough to know you.
This is certainly an interesting debate. I bring it up, because of the mixed signals that exist in our society every single day. Including the ones we (the lenders, Fannie Mae, legislators) are creating with new rules an regulations. Reward in one category, punitive in the next. I could give you examples, but you would stop reading, the list is so long. How quickly will we forget this mess, and recover, and begin to live again as we did in the past. Should we, would we? I love to keep you hanging.
The First Time Homebuyer Credit has OFFICIALLY PASSED. No more Nov 30 deadline. It is now extended to April 30th (signed contract) closing by July 2010. The income limits have increased. Now you can be a single wage earner of $125,000, or household of $250,000. The max purchase price is $800,000. And now, if you are a current homeowner, and have been in your current home >5 years, you can get up to $6500.
The Federal Reserve this week left rates unchanged. They hold at 0 - .25%. There is fear that the economy really has not turned around yet. Well, one would think after the unemployment numbers jumped last month. I personally believe the worst is yet to come as unemployment benefits run out (despite the recent 20 week extension), and people cannot make mortgage payments. I believe the Spring will be difficult as well. More foreclosures and short sales, just what we need. Actually, I prefer foreclosures. Short sales, however, take 4-5 months for the contract to even be accepted! That takes patience.
Rates are low. Check out the 5/1 and 7/1 ARMS. Perfect for borrowers that will be in their homes less than 5 years. Get them while you can.
We are about to close a loan in 14 calendar days. I just received a frantic call here at my desk on a Saturday. What are the chances I would be here? At Patriot, we can do that: close quickly, service your customer. Large enough to serve you, and small enough to know you.
Monday, November 2, 2009
We're all doing the best we can
This week was brutal. From a personal standpoint, I have a loved one with cancer returned, another loved one pending foreclosure in NJ and unemployed for 1 year, and my assistant fell down the stairs taking the mail in our building. In the midst of complete personal, emotional chaos, I was once again reminded of those things I hold most dear. My reason for bringing this up, is that we all have our personal ups and downs, good days and bad, but it is those persons we surround ourselves with, personal as well as in business, that will get us through all challenges. If you are on this email blast, it means I am grateful for you!
The small gestures are the ones that count. I would like to extend heartfelt thanks to a realtor (you know who you are) that assured me yesterday, that he knew that if anyone could close our deal (that almost blew up), that I could. He knew I was working hard, and had faith that I would try my best. You made my day! I so needed that, you have no idea. Isn't that what we are all doing, the best that we can?
Speaking of best we can. It is all we (the lenders) can do to keep transactions together. I read a blog yesterday that was (so) true: Why is the government still trying to push low to moderate income households through (ex: FHA, 3.5% down, 620 credit score, 55% debt ratio, and seller closing cost credit), when there are many well qualified persons that can barely get by on approval, if at all. So many twists and turns, verify this and that, blah, blah, blah.
The latest policy change in mortgage that is , in my opinion, HUGE, is that we have to audit via the IRS EVERY CLIENTS' tax return, and if they are married, and the spouse is not on the loan (let’s say they have bad credit), and we pull the audit with IRS, and the spouse has negative income from a business they own, for example, we have to deduct that from total income. FULL DOCUMENTATION has a new meaning, and mandates full transparency. In every way. But oh, wait, you have perfect credit, and one little $60 collection with Time Warner, and your credit score lowered to 619, Sorry, no loan for you. Give me a break.
The first time homebuyer credit is in the House, yet to be approved, but hanging by a string. If passed at its current proposal, it would extend to contracts executed to April 15, Income levels to $250,000 household, and available up to $6500 to NON first time buyers. Lets wait and see………
What is the market doing? Rates rallied hard this week, but ended on a positive note. Unemployment is still depressing, and home sales declined for the first time in months. The t-bill auctions ended on a sour note Thursday. By the way, this was the last round of 3, 5 , and 7 year tbills that will be gobbled up by the US Government (buying their own debt). We should be thankful, you know. Because it is that one move, that has kept rates low. We should be thankful, folks.
The small gestures are the ones that count. I would like to extend heartfelt thanks to a realtor (you know who you are) that assured me yesterday, that he knew that if anyone could close our deal (that almost blew up), that I could. He knew I was working hard, and had faith that I would try my best. You made my day! I so needed that, you have no idea. Isn't that what we are all doing, the best that we can?
Speaking of best we can. It is all we (the lenders) can do to keep transactions together. I read a blog yesterday that was (so) true: Why is the government still trying to push low to moderate income households through (ex: FHA, 3.5% down, 620 credit score, 55% debt ratio, and seller closing cost credit), when there are many well qualified persons that can barely get by on approval, if at all. So many twists and turns, verify this and that, blah, blah, blah.
The latest policy change in mortgage that is , in my opinion, HUGE, is that we have to audit via the IRS EVERY CLIENTS' tax return, and if they are married, and the spouse is not on the loan (let’s say they have bad credit), and we pull the audit with IRS, and the spouse has negative income from a business they own, for example, we have to deduct that from total income. FULL DOCUMENTATION has a new meaning, and mandates full transparency. In every way. But oh, wait, you have perfect credit, and one little $60 collection with Time Warner, and your credit score lowered to 619, Sorry, no loan for you. Give me a break.
The first time homebuyer credit is in the House, yet to be approved, but hanging by a string. If passed at its current proposal, it would extend to contracts executed to April 15, Income levels to $250,000 household, and available up to $6500 to NON first time buyers. Lets wait and see………
What is the market doing? Rates rallied hard this week, but ended on a positive note. Unemployment is still depressing, and home sales declined for the first time in months. The t-bill auctions ended on a sour note Thursday. By the way, this was the last round of 3, 5 , and 7 year tbills that will be gobbled up by the US Government (buying their own debt). We should be thankful, you know. Because it is that one move, that has kept rates low. We should be thankful, folks.
Tuesday, October 13, 2009
Learning from our mistakes
Have you seen the video from the season premiere of the Oprah show, where the audience that covered 2 blocks danced in unison to the Black Eyed Peas song? It is now in the Guinness Book of World Record as the largest crowd performance. Way cool. Look at it on You Tube. Will the USA get into this Guinness Book as the country that couldn't even get along? Imagine the possibilities if we did all get along, as this crowd did on the Oprah show. Currently, our country is severely divided by bipartisanship, and it does not feel good. Government against Mortgage, Lenders against Appraisers, Bank against Builder, and Homeowner against Taxing Authority, ........catch my drift? The list goes on and on. It was refreshing to hear yesterday on a morning news station, Former Governor Jeb Bush (R) say nice things about our President. He was encouraging both sides to get along. It was a really nice interview, and he commended Obama on his desire to strengthen education. Its good we all have opinions, but there has to be common ground.
Same rules apply in the mortgage industry. Daily, we are being bombarded by new regulation that is 'guilty until proven innocent'. But how could we not be? We are the industry responsible for the largest meltdown in US History. Just yesterday, a Houstonian woman, 32 years old, was convicted of conspiracy to commit wire and mail fraud, money laundering, engaging in a monetary transaction in criminally derived property. Do you know how? By stating the homes were primary residences, when they were not. They were really investment properties. She faces over 20 years in prison, on each count. This is serious stuff friends. We must continue to be careful about what we represent, and how the clients are conducting themselves. It is our business to know, as lenders, as realtors. Its our duty to ask.
Interest rates have enjoyed continual low levels UNTIL YESTERDAY. Our analysts predict they will never get this low again (we saw 4.375% last week for 2 hours). We have had 2 days of increases, and at least 3 reprices a day for the worse, as the stock market has gained some ground with positive earnings, lower than expected unemployment. Just remember, mortgage bonds hate news of recovery.
Values (in some areas) continue to decline. We just had a borrower, that their home in Needville has declined in the 4 months since they began to build (Needville is south of Sugarland). By 5-7%. That is a lot in a 4 month period. Appraisals continue to attract scrutiny from our investors, and that transposes to more stringent underwriting guidelines.
There is still no word on the First Time Homebuyer Credit being extended. Likely, we will not see that until the current deadline has passed. In order to keep the momentum going for year end. Strong numbers. Isn’t that what its all about? Temporarily inflating our sense of security so we can have profits now, and put together the pieces later? When will we learn?
Same rules apply in the mortgage industry. Daily, we are being bombarded by new regulation that is 'guilty until proven innocent'. But how could we not be? We are the industry responsible for the largest meltdown in US History. Just yesterday, a Houstonian woman, 32 years old, was convicted of conspiracy to commit wire and mail fraud, money laundering, engaging in a monetary transaction in criminally derived property. Do you know how? By stating the homes were primary residences, when they were not. They were really investment properties. She faces over 20 years in prison, on each count. This is serious stuff friends. We must continue to be careful about what we represent, and how the clients are conducting themselves. It is our business to know, as lenders, as realtors. Its our duty to ask.
Interest rates have enjoyed continual low levels UNTIL YESTERDAY. Our analysts predict they will never get this low again (we saw 4.375% last week for 2 hours). We have had 2 days of increases, and at least 3 reprices a day for the worse, as the stock market has gained some ground with positive earnings, lower than expected unemployment. Just remember, mortgage bonds hate news of recovery.
Values (in some areas) continue to decline. We just had a borrower, that their home in Needville has declined in the 4 months since they began to build (Needville is south of Sugarland). By 5-7%. That is a lot in a 4 month period. Appraisals continue to attract scrutiny from our investors, and that transposes to more stringent underwriting guidelines.
There is still no word on the First Time Homebuyer Credit being extended. Likely, we will not see that until the current deadline has passed. In order to keep the momentum going for year end. Strong numbers. Isn’t that what its all about? Temporarily inflating our sense of security so we can have profits now, and put together the pieces later? When will we learn?
Friday, August 7, 2009
Some Consumers Still Don't Get It
Let's get to the point. This morning's release of unemployment (down from June) and payrolls up did not help things either. Once again, giddy investors trying to look for the silver lining to make themselves feel good about investing in the stock market. So once again...they pull their money out of bonds to invest in those stocks. This makes bond prices fall, as they want to attract more buyers with the low price, and yields (rates) go up on those bonds. Hence, there you have it, the mortgage backed securities are affected. Yesterday we had a reprice 2 times, and today already once.
So what is the takeaway? How about I explain it like this. I had a prospect email me yesterday and linked me to a graph (from the internet) of what the benchmark 30 yr fixed 'potentially' could do in the next 9 months. He is nervous. Doesnt know if he should buy. When? How can he assure himself the best rate?
He had asked for my opinion, so I gave it to him. No sugarcoating. In the nicest , most diplomatic way I know how, I implored him to consider that this was the home he was going to raise his family. Spend his free time, throwing ball with his kids. This was NOT Vegas, and trying to play the market by estimating the exact time to get in on a 5% rate was surely setting him up for disappointment. Surely. And further, that anything under 7%, historically speaking, is a gift. So in summary, I advised him to make an offer when the timing and the price seemed right for his family, and not to gauge it on what rate he thinks he will/will not get . Rates will increase. That is a given, with inflation surely soon to set in.
I'll end this weeks thoughts with a short story. I had a friend call me about a refinance. Her husband has bad credit, so the loan has to be in her name (she has 700 score). But she has no job. Husband earns cash, and deposits in her account. She recently went to get a car loan, and they gave it to her, without checking the employment, and thought surely this meant that now she could get a mortgage by just verifying deposits to her bank account each month, and 'saying' the job was hers. At first, I was not sure how to respond, thinking it must be April Fools day. But then very politely, and patiently, I said that (1) we cannot verify cash , and (2) It was not willing to mislead my employer about her work history when that was not true (aka: Fraud!= Jail).
Takeaway on this short story? SOME CONSUMERS DONT GET IT. So rather than wondering if they qualify or not, get them to us EARLY for pre qualification. That way we can set the record straight early on.
So what is the takeaway? How about I explain it like this. I had a prospect email me yesterday and linked me to a graph (from the internet) of what the benchmark 30 yr fixed 'potentially' could do in the next 9 months. He is nervous. Doesnt know if he should buy. When? How can he assure himself the best rate?
He had asked for my opinion, so I gave it to him. No sugarcoating. In the nicest , most diplomatic way I know how, I implored him to consider that this was the home he was going to raise his family. Spend his free time, throwing ball with his kids. This was NOT Vegas, and trying to play the market by estimating the exact time to get in on a 5% rate was surely setting him up for disappointment. Surely. And further, that anything under 7%, historically speaking, is a gift. So in summary, I advised him to make an offer when the timing and the price seemed right for his family, and not to gauge it on what rate he thinks he will/will not get . Rates will increase. That is a given, with inflation surely soon to set in.
I'll end this weeks thoughts with a short story. I had a friend call me about a refinance. Her husband has bad credit, so the loan has to be in her name (she has 700 score). But she has no job. Husband earns cash, and deposits in her account. She recently went to get a car loan, and they gave it to her, without checking the employment, and thought surely this meant that now she could get a mortgage by just verifying deposits to her bank account each month, and 'saying' the job was hers. At first, I was not sure how to respond, thinking it must be April Fools day. But then very politely, and patiently, I said that (1) we cannot verify cash , and (2) It was not willing to mislead my employer about her work history when that was not true (aka: Fraud!= Jail).
Takeaway on this short story? SOME CONSUMERS DONT GET IT. So rather than wondering if they qualify or not, get them to us EARLY for pre qualification. That way we can set the record straight early on.
Saturday, August 1, 2009
KNOW AND LOVE YOUR LENDER
Hmmmm. What to write about on a Friday afternoon at 3:30? The fact that I survived the week? Or the ‘new’ regulation that began yesterday that no lenders can figure out, because it keeps changing? Or the fact that appraisals are a sore topic of discussion for us on a daily basis? Can anything go right? Yes it can….mortgage backed securities enjoyed a nice rally today as GDP was released, showing companies are hiring, economy may be stabilizing. But wait! Usually this type of news makes rates go up. We don’t like good news! But trailing behind the horizon is news that consumers still are not spending. The bitter doom and gloom that the bond market loves, at least for today at 3:30, rates are attractive. Monday may be another story.
Thought for the weekend: KNOW AND LOVE YOUR LENDER. In these legislative times, and with regulation changing constantly, it is more important than ever that your clients know and trust their lender. Do I need to say more?
Thought for the weekend: KNOW AND LOVE YOUR LENDER. In these legislative times, and with regulation changing constantly, it is more important than ever that your clients know and trust their lender. Do I need to say more?
Friday, July 24, 2009
What I am seeing in the Real Estate Market
The term 'be careful what you wish for' is so overrated.....but true. Stocks and bonds were mixed this week. With good news of the earnings reports for some companies, and increased home sales, mixed with the bad news of unemployment, a jobless recovery and health care reform battles, NO WONDER bonds did not know how to price mortgage rates!
I did see a glimmer, and I mean glimmer, of 4.875% on Wednesday, for about 90 minutes. Then it was gone, as quickly as my winnings in Vegas last summer.
What am I seeing in the market? Lots of contracts, lots of backup offers, increased close times, so-so quality on appraisals, increased documentation from our investors, lots of review appraisals, longer underwriting times, lock extension fees, and volatility in rates. What else is new? This is the world we live in folks. And it may get worse before it gets better.
Ongoing advice to you is COMMUNICATE, and do it early - with everyone in the transaction. If you are not a list maker, BE ONE. If your client refuses to get pre approved early, THINK TWICE, and if you sense something does not seem right with a lender, title co, etc, ACT EARLY. And last but not least, BE FLEXIBLE. Your closings will be delayed when you least expect it. Advise your sellers not to move out until docs are at title, and don't let your buyers schedule movers that cannot be changed either. THIS WILL HAPPEN TO ALL OF US, even with the best intentions. Even when we are all on top of it. Something will come up, I promise you.
I did see a glimmer, and I mean glimmer, of 4.875% on Wednesday, for about 90 minutes. Then it was gone, as quickly as my winnings in Vegas last summer.
What am I seeing in the market? Lots of contracts, lots of backup offers, increased close times, so-so quality on appraisals, increased documentation from our investors, lots of review appraisals, longer underwriting times, lock extension fees, and volatility in rates. What else is new? This is the world we live in folks. And it may get worse before it gets better.
Ongoing advice to you is COMMUNICATE, and do it early - with everyone in the transaction. If you are not a list maker, BE ONE. If your client refuses to get pre approved early, THINK TWICE, and if you sense something does not seem right with a lender, title co, etc, ACT EARLY. And last but not least, BE FLEXIBLE. Your closings will be delayed when you least expect it. Advise your sellers not to move out until docs are at title, and don't let your buyers schedule movers that cannot be changed either. THIS WILL HAPPEN TO ALL OF US, even with the best intentions. Even when we are all on top of it. Something will come up, I promise you.
Monday, July 13, 2009
Tips to survive the recent TILA changes effective July 30
Let me preface the next paragraph by saying that Patriot Bank Mortgage is committed to the success of your business! We have been embracing changes as they happen, so that we can ease the transitions and complexities of the real estate industry as we know it today.
Now, for the news. On the heels of the HVCC (appraisal) changes we saw May 1, we now have disclosure changes that affect how mortgage companies will have to disclose to consumers. HERA (The Housing and Economic Recovery Act) was passed by Congress and the Federal Reserve to provide a more transparent, level and fair regulation of the real estate industry. These additional steps (effective July 30, 2009) are to help avoid deceptive lending practices:
The earliest a home purchase transaction (with a loan) can close is 7 BUSINESS days after the homebuyer is issued his initial truth in lending disclosure from the lender. M- Sat are considered business days. ·
Application fees cannot be collected until the initial disclosures are received (this could delay appraisals being ordered) ·
ANY change to the loan amount (ex. Sale price), days of interest, or fees (that all affect the Truth in Lending disclosure) , will trigger a new 3 day disclosure and waiting period until the transaction can close. Hence, last minute changes to the contract, or change in closing date from initial application, ‘could’ (not always) impact the closing date.
Tips to ensure timely closings: ·
Now, for the news. On the heels of the HVCC (appraisal) changes we saw May 1, we now have disclosure changes that affect how mortgage companies will have to disclose to consumers. HERA (The Housing and Economic Recovery Act) was passed by Congress and the Federal Reserve to provide a more transparent, level and fair regulation of the real estate industry. These additional steps (effective July 30, 2009) are to help avoid deceptive lending practices:
The earliest a home purchase transaction (with a loan) can close is 7 BUSINESS days after the homebuyer is issued his initial truth in lending disclosure from the lender. M- Sat are considered business days. ·
Application fees cannot be collected until the initial disclosures are received (this could delay appraisals being ordered) ·
ANY change to the loan amount (ex. Sale price), days of interest, or fees (that all affect the Truth in Lending disclosure) , will trigger a new 3 day disclosure and waiting period until the transaction can close. Hence, last minute changes to the contract, or change in closing date from initial application, ‘could’ (not always) impact the closing date.
Tips to ensure timely closings: ·
- Set realistic expectations with listing agents, seller and buyer for potential closing dates)- 30 days min . is a ‘wise’ choice·
- Be sure the lender and title company are in contact as early as possible in the transaction. Title and mortgage need to work together on fees/disclosure , etc more than ever.·
- Be sure homebuyers understand that if their loan is not locked until later toward closing (if they choose to float), this could impact the APR, and therefore trigger new disclosure 3 day period, therefore delaying closing. Borrowers should NOT expect to be able to float down their rate or switch lenders last minute. This would trigger close date changes for sure.·
- Be in constant contact with the lender, and ensure title/lender have a ‘preliminary’ HUD 4 days prior to closing, in case a new TIL disclosure required.·
- Make changes to the contract (lowering price, seller credits, etc) is done as EARLY as possible, and that lenders have those amendments asap, so they can redisclose early.
In the Chronicle, July 15, business section, Scott Burns had a wonderful article titled ‘Buying a Home Takes a Miracle’. He sums it up nicely in the last paragraph : “There is no way you can accumulate enough paper to substitute for human judgement. The No Paper System did not work, It created the housing crisis. The Infinite Paper system that replaced it doesn’t work either. It will extend the crisis. Scott, those are wise words. Only time will tell. We have no choice, Jennifer, but to embrace this change, and hit it head on with changing the way we do business. We must be more tenacious than ever, and encourage team work more than ever as well.
Friday, July 3, 2009
No Democracies with Fannie/Freddie - Happy 4th!
May you enjoy and cherish this precious day, and remember what a gift FREEDOM is! We are so blessed to live in a country with the ideals of independence and democracy. The thought of managing 302 million people is overwhelming! No wonder our legislators cannot agree. But that is the beauty of it all! We need balances, so that we can continue to function as a democracy.
As for the mortgage industry, no democracies here! It is Fannie /Freddie way or the highway. We continue to see increased regulation, silently trickling into our everyday lives. More disclosures. More verifications, and ultimately, more cost to the consumer. That is what ultimately will happen. In many cases, it already has.
Why do we think the rates are not lower than they are? If they followed the 10 year bond as in historic past, the yields would be below 5 for sure. But investors are tired (not to mention poor), and they are not going to 'give it away' this time around like they did in 03/04 during the last rate craze. They want profits, and they want them big. What we have seen is a 'no mercy 'attitude from our lenders. No exeptions, no forgiveness, no anything. It is brutal, but we are managing and shielding this from our clients as much as we can, to continue to ensure a stress free transaction!
This weeks letter is short, and as promised last week, more information on the July 30 changes is coming in my next letter. This week was crazy with month end and I dont have all the facts yet. I hope you are off somewhere fun , and relaxing.Until next week.........
As for the mortgage industry, no democracies here! It is Fannie /Freddie way or the highway. We continue to see increased regulation, silently trickling into our everyday lives. More disclosures. More verifications, and ultimately, more cost to the consumer. That is what ultimately will happen. In many cases, it already has.
Why do we think the rates are not lower than they are? If they followed the 10 year bond as in historic past, the yields would be below 5 for sure. But investors are tired (not to mention poor), and they are not going to 'give it away' this time around like they did in 03/04 during the last rate craze. They want profits, and they want them big. What we have seen is a 'no mercy 'attitude from our lenders. No exeptions, no forgiveness, no anything. It is brutal, but we are managing and shielding this from our clients as much as we can, to continue to ensure a stress free transaction!
This weeks letter is short, and as promised last week, more information on the July 30 changes is coming in my next letter. This week was crazy with month end and I dont have all the facts yet. I hope you are off somewhere fun , and relaxing.Until next week.........
Friday, June 26, 2009
$8,000 First Time Homebuyer Credit- as good as it seems?
If you read the paper, you will have noticed on Thursday in the Chronicle Business section the article stating ‘A break for first time homebuyers ‘. Well…….there is a catch. Isn’t there always? Last month, the legislators came up with a feel good plan for buyers to access this $8,000 before they actually earned it. What a shocker! They now made it possible , in theory, for buyers to access these funds for closing costs (only) when they buy the house, not having to wait until next spring when the return is filed. The issue since this was released is ‘ WHO’ is going to forward this money? No agencies have really stepped up. There have only been a few. So as of this week, the State of Texas (via the Texas Dept of Housing and Community Affairs – TDHCA), will make that possible. BUT WAIT!!! Let’s look at the fine print. First, it says ‘some ‘ of the tax credit. Second, only 700 borrowers for the first wave of approved money. And thirdly, the most important, is it has to be paid back within 90 days to remain interest free.
Well, let me give you a hint here. If the people using it today for buying a home could afford to pay it back within 90 days, do you think they would take this in the first place? So what we will have is yet another quagmire of a government agency earmarking some federal money to this program, in hopes people pay back in the 90 day period, and when they don’t, the program will freeze because they have no more money to advance.
I am not sure you really want to know my thoughts about this. But I’ll give it a shot. You can stop reading if you want to. WHY CANT WE ALL JUST BE COMPLACENT WITH THE DELAYED GRATIFICATION OF ‘ FREE’ MONEY IN 2010? Why do we have to look for ways to get ourselves in trouble with borrowed/advanced funds, yet again?
Rates are down this week! Hip Hip Hooray! The reason? Do we really care? Soon enough we will own the bragging rights of having an interest rate below double digits, or won’t we? That remains the million dollar question. In summary, they are low, so get out there and spend it.
Well, let me give you a hint here. If the people using it today for buying a home could afford to pay it back within 90 days, do you think they would take this in the first place? So what we will have is yet another quagmire of a government agency earmarking some federal money to this program, in hopes people pay back in the 90 day period, and when they don’t, the program will freeze because they have no more money to advance.
I am not sure you really want to know my thoughts about this. But I’ll give it a shot. You can stop reading if you want to. WHY CANT WE ALL JUST BE COMPLACENT WITH THE DELAYED GRATIFICATION OF ‘ FREE’ MONEY IN 2010? Why do we have to look for ways to get ourselves in trouble with borrowed/advanced funds, yet again?
Rates are down this week! Hip Hip Hooray! The reason? Do we really care? Soon enough we will own the bragging rights of having an interest rate below double digits, or won’t we? That remains the million dollar question. In summary, they are low, so get out there and spend it.
Friday, June 19, 2009
Home Valuation Code of Conduct - ACT NOW!
This is a SPECIAL EDITION , and the most important column I have ever written. The integrity of the appraisal process as we know it has been severely, and I mean severely, compromised.
All of you realtors have likely already been affected somehow if you have closed a loan since May 1, when HVCC (Home Valuation Code of Conduct) became our reality after a very persuasive New York Atty General persuaded Fannie and Freddie to amend their guidelines to his personal gain- winning a case. You need to forward this to ALL YOUR CLIENTS, past , present, and future. The people that the legislators will listen to are the homeowners (not the realtors, nor the lenders, who’s income is dependent on the process. Not to mention lenders/loan officers are taboo now anyway, in their eyes). So if you are not selling a home today, you will be, and this will most certainly affect you! So consumers need to take action now! And of course if we do, it won’t hurt.
THIS IS HOW YOU CAN MAKE A DIFFERENCE!
NY Attorney General Andrew Cuomo's Office: (212) 416-8000,
Internet ComplaintFederal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (202) 752-7000, headquarters@fanniemae.com
Freddie Mac: (703) 903-2000,
Also, please contact your local TV and Newspaper outlets.
Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.
Talking Points:
1) National Assoc of Mortgage Brokers (NAMB) conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.
2) Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.
3) AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.
4) HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo's investigation.
5) No Portability! Consumers are "trapped" with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.
Background:
I. Lack of Portability
A. Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.
B. Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.
C. In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.
II. Lack of Quality
A. AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal. i. Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.
B. Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.
III. Increased Cost of Appraisals
A. The minimum increase we have seen in direct consumer cost is $150 per appraisal. That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.
B. $150.00 - minimum increase per appraisal$561.95 - average loan amount of $224,778 at .25% for extended lock period$711.95 - average total increase per transactionx 3,870,552* - 2007 HMDA report of residential real estate loans originated$2,755,639,496 - $2.8BILLION in increased fees to consumers!
IV. Articles Illustrating the Effects of the HVCC
A. The Appraisal Bubble - The Center for Public Integrity
B. The Cure is Worse than the Disease - Appraisal Press
C. Appraisals Roil Real Estate Deals - The Wall Street Journal Feel free to forward these articles and/or reference them in your conversations
All of you realtors have likely already been affected somehow if you have closed a loan since May 1, when HVCC (Home Valuation Code of Conduct) became our reality after a very persuasive New York Atty General persuaded Fannie and Freddie to amend their guidelines to his personal gain- winning a case. You need to forward this to ALL YOUR CLIENTS, past , present, and future. The people that the legislators will listen to are the homeowners (not the realtors, nor the lenders, who’s income is dependent on the process. Not to mention lenders/loan officers are taboo now anyway, in their eyes). So if you are not selling a home today, you will be, and this will most certainly affect you! So consumers need to take action now! And of course if we do, it won’t hurt.
THIS IS HOW YOU CAN MAKE A DIFFERENCE!
NY Attorney General Andrew Cuomo's Office: (212) 416-8000,
Internet ComplaintFederal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (202) 752-7000, headquarters@fanniemae.com
Freddie Mac: (703) 903-2000,
Also, please contact your local TV and Newspaper outlets.
Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.
Talking Points:
1) National Assoc of Mortgage Brokers (NAMB) conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.
2) Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.
3) AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.
4) HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo's investigation.
5) No Portability! Consumers are "trapped" with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.
Background:
I. Lack of Portability
A. Lenders are not allowing borrowers to transfer appraisals, regardless of the reason.
B. Forces the borrower to pay for another appraisal and wait for a new appraiser to be assigned and complete it, increasing the total cost and time needed for obtaining a home. Delays in turnaround times also cause the borrower to miss rate lock deadlines and possibly face penalties charged by the lender.
C. In a poll conducted by NAMB, 75.8% of respondents said that 0% of their appraisals are portable since the enactment of the HVCC.
II. Lack of Quality
A. AMCs are assigning appraisers from a different municipality, county, or even state to appraise the target house, therefore unfamiliar with the neighborhood and unable to produce an accurate appraisal. i. Because of this, the HVCC is forcing appraisers to be in direct violation of the Uniform Standards of Professional Appraisal Practice (USPAP) for jurisdictional competence.
B. Because AMCs pay appraisers such low fees, those assigned appraisers willing to do the work are often inexperienced and fail to adequately appraise the home.
III. Increased Cost of Appraisals
A. The minimum increase we have seen in direct consumer cost is $150 per appraisal. That, coupled with the drastically increased appraisal turnaround times that impose extended lock periods at an average expense of $561.95 per loan, is now costing consumers an estimated additional $711.95 per transaction.
B. $150.00 - minimum increase per appraisal$561.95 - average loan amount of $224,778 at .25% for extended lock period$711.95 - average total increase per transactionx 3,870,552* - 2007 HMDA report of residential real estate loans originated$2,755,639,496 - $2.8BILLION in increased fees to consumers!
IV. Articles Illustrating the Effects of the HVCC
A. The Appraisal Bubble - The Center for Public Integrity
B. The Cure is Worse than the Disease - Appraisal Press
C. Appraisals Roil Real Estate Deals - The Wall Street Journal Feel free to forward these articles and/or reference them in your conversations
Tuesday, June 9, 2009
Will mortgage rates go back down?
It feels like summer ! Not only is school out and the traffic is eased up, but it feels like summer! The glorious hot days dear to Houstonians are officially here. So are the home buyers! We continue to see contracts pending, and inventory lessening. Thank goodness! There are still, however, some appraisals that come back with inventory at a 6 mo + supply. To lenders, that means a ‘declining market’. And beware that if your listing is in such an area, the lender may have some additional conditions, or may not even do the loan at all. That’s right, declining markets are not favorable. The reason? If we foreclose, we don’t want large marketing times to get rid of it! It also signifies a trend downward in prices. No lender wants to be on the top end of the market. So encourage your sellers to consider all realistic offers. I suppose realistic is the main catch here. Who knows in these unprecedented times? There may be other reasons, but that is the main concern.
The First Time Homebuyer Credit – in all its glory, has to be the most confusing legislation there is right now. No one is clear on what, how or when. The latest rumor is that FHA will allow the moneys to advance for down payment. Part of it is true, but keep reading. Our representatives on Capitol Hill have no idea what has to happen to ‘advance’ a tax credit to a homeowner. Who will check if they are delinquent on any federal debt? Who will advance the money (a HUD memo states it has to be a ‘3rd party’, certainly not them). Ok, then who? Is it really a good idea to advance money anyway before its spent? Isn’t that what got us in this mess to begin with? And then, the legislation just last week changed yet again, and now FHA loan purchases can use the money ONLY toward closing costs, not down payment. Again, WHO will administer this money? No lender thus far has jumped on this idea. So the opportunity may be there for your buyers, but they need to settle to the fact they will get it upon filing 2009 return. Not too much to ask for free money!
Interest Rates – are still low! Maybe not the 4.5% of last month, but STILL historically, low! As compared to 2 weeks ago, almost up a full point! Why? Good news in the market. Could it be from the good news to investors that Angelo Muzilo has been charged with Fraud, and that gives them a ‘temporary’ feeling that the culprits are about to be caught? Or could it be that banks are to pay back tarp money? Or maybe the ‘come clean’ speech to Muslims by our President in Egypt last week. I would have thought that the unemployment doldrums would have shocked rates back down…but no such luck yet. Rates also have gone up due to positive indicators in the market. Words from our legislators and commander in chief like ‘not as bad as it was’, or ‘the recession end may be near’ ……those types of words allow investors in stocks to feel like buying. When they buy, investors pull money out of bonds. Then bond rates go up, as the price is down to attract buyers back into the bond market.
Will rates go back down? – THAT is the million dollar question. Who knows. But inflation and higher rates is INEVITABLE. Take my word. My advice? If your buyers are holding out for rates to come down, or purchase prices to come down, they may be missing the boat on living in the present. Our (primary) homes are where we raise our families and share time with loved ones. If it makes sense, do it. If not, wait. But hanging on for a false sense of reality may be missing the boat on opportunity that is right in front of them.
The First Time Homebuyer Credit – in all its glory, has to be the most confusing legislation there is right now. No one is clear on what, how or when. The latest rumor is that FHA will allow the moneys to advance for down payment. Part of it is true, but keep reading. Our representatives on Capitol Hill have no idea what has to happen to ‘advance’ a tax credit to a homeowner. Who will check if they are delinquent on any federal debt? Who will advance the money (a HUD memo states it has to be a ‘3rd party’, certainly not them). Ok, then who? Is it really a good idea to advance money anyway before its spent? Isn’t that what got us in this mess to begin with? And then, the legislation just last week changed yet again, and now FHA loan purchases can use the money ONLY toward closing costs, not down payment. Again, WHO will administer this money? No lender thus far has jumped on this idea. So the opportunity may be there for your buyers, but they need to settle to the fact they will get it upon filing 2009 return. Not too much to ask for free money!
Interest Rates – are still low! Maybe not the 4.5% of last month, but STILL historically, low! As compared to 2 weeks ago, almost up a full point! Why? Good news in the market. Could it be from the good news to investors that Angelo Muzilo has been charged with Fraud, and that gives them a ‘temporary’ feeling that the culprits are about to be caught? Or could it be that banks are to pay back tarp money? Or maybe the ‘come clean’ speech to Muslims by our President in Egypt last week. I would have thought that the unemployment doldrums would have shocked rates back down…but no such luck yet. Rates also have gone up due to positive indicators in the market. Words from our legislators and commander in chief like ‘not as bad as it was’, or ‘the recession end may be near’ ……those types of words allow investors in stocks to feel like buying. When they buy, investors pull money out of bonds. Then bond rates go up, as the price is down to attract buyers back into the bond market.
Will rates go back down? – THAT is the million dollar question. Who knows. But inflation and higher rates is INEVITABLE. Take my word. My advice? If your buyers are holding out for rates to come down, or purchase prices to come down, they may be missing the boat on living in the present. Our (primary) homes are where we raise our families and share time with loved ones. If it makes sense, do it. If not, wait. But hanging on for a false sense of reality may be missing the boat on opportunity that is right in front of them.
Saturday, May 16, 2009
Beumont Appraiser to Valuate a River Oaks Listing
This is Major Hernandez, reporting from the enemy lines. Lots of activity this week. We were shot at by underwriters, dodged by appraisers, and yelled at by our processors. JUST KIDDING. It is sometimes a war zone though! Mostly from some of the recent regulation passed down (my previous emails have mentioned the appraisal changes). I thought this week I would summarize for you the day in the life of a mortgage originator. Maybe there will be one tidbit of information you can use to help your clients close on time!
Here is a summary of what happened this week:·
Clients current lender (the FDIC) offered a 15% principal reduction if he would refinance within 30 days !·
Rumored by one of my competitors that underwriters no longer accept a non realty add – THIS IS WRONG……·
Mortgage Lender (remaining nameless) is turning away clients saying 90 days min processing time to close – actually 2 (hint: they are in the top 5 national lenders)·
Seller rejects pre approval letter from buyers mortgage company because fear they will not close on time (one of the national lenders mentioned above)·
Realtor I know gets a call from an appraiser (not mine!) from Tyler , TX (this is a true story)·
Prospect calls me and asks if we do liar loans- IS HE KIDDING?·
At closing, we discover that borrower quit his job (we always call the day of closing to the employer!!!) HINT: don’t quit job day of closing·
We saved 2 borrowers from losing their close dates- and closed their loan in 7 days! (the first lender dropped the ball for the last 6 weeks). Hard to do in this market!
Well, at least I can say my job is interesting. Actually, I love every minute of it! So please, if you have a client that needs a trusted mortgage lender, we are your answer. Thank you for your referrals!
Here is a summary of what happened this week:·
Clients current lender (the FDIC) offered a 15% principal reduction if he would refinance within 30 days !·
Rumored by one of my competitors that underwriters no longer accept a non realty add – THIS IS WRONG……·
Mortgage Lender (remaining nameless) is turning away clients saying 90 days min processing time to close – actually 2 (hint: they are in the top 5 national lenders)·
Seller rejects pre approval letter from buyers mortgage company because fear they will not close on time (one of the national lenders mentioned above)·
Realtor I know gets a call from an appraiser (not mine!) from Tyler , TX (this is a true story)·
Prospect calls me and asks if we do liar loans- IS HE KIDDING?·
At closing, we discover that borrower quit his job (we always call the day of closing to the employer!!!) HINT: don’t quit job day of closing·
We saved 2 borrowers from losing their close dates- and closed their loan in 7 days! (the first lender dropped the ball for the last 6 weeks). Hard to do in this market!
Well, at least I can say my job is interesting. Actually, I love every minute of it! So please, if you have a client that needs a trusted mortgage lender, we are your answer. Thank you for your referrals!
Thursday, May 7, 2009
There is a Rumor that the Mortgage Appraisal Process is Deteriorating
Just great. As I write this, I have full blown laryngitis and bronchitis pending if I don’t behave. So if I seem chatty, it’s because I am just longing to speak to someone. Why did this happen to me? Is it because I only sleep 5 hours a night after being on the computer sending pre approval letters? Probably. Or that I am closing 4 times the loans this month than normal? Probably. I am just venting, not looking for sympathy, but want you to comprehend that it is busy! I don’t care what Barton Smith says. Houston is rockin. Whether you are purchasing or refinancing, it is money in the economy. People buy, they go to Target and Home Depot. They refinance, they save money, and have more spendable dollars in their pocket. Heck, I a have 2 new employees starting Monday to support me, and is that not keeping the economy going? So Barton….whatever. We survived Alison, Enron, and Ike, and we will survive this!
Right now, today, rates are increasing because investors are feeling a sense comfort that some bank stress tests will be favorable. They are so fickle. Then tomorrow, for jobs report, if it is less than stellar, rates will go down again. So why is it that negative news keeps the rates so low? Chrysler not paying back the bailout money, a major bank in Atlanta failing, the Swine FLU (rates dropped big after that was released!). The worse the news, the better the rates. Why is that? Because bad news makes investors feel skiddish about the stock market. THey feel unsafe. So they take their money, and dump it into the bond market to seek safe returns for a while. This increased demand pushes up the bond prices, and the yields push down in response (always inversely related to the price).
Changing the subject, I had a realtor ask me a few days ago if rates were going down after the Fed just announced a .75% rate cut. How can that be? The fed funds rate is already .25%. It would be negative!!!!! There are so many rumors flying around out there, it really is hard to keep up.
Another rumor is that the appraisal process is deteriorating. Oops. That’s not a rumor! That 'could be' interpreted as true by some. We are now back to elementary days where loan originators, like me, or anyone paid a 'bonus' on any type of production (ie, vested interest) cannot order the appraisal. We cannot 'talk to, or discuss', the process with appraiser. On a refinance, we cannot put an estimated value on the order form, as it may be construed as trying to ‘sway’ the appraiser. Give me a break. A disinterested party has to order randomly from our list of approved appraisers. It is assumed now that appraisers have no where with all to avoid coercion by any parties as to the outcome of value. If I was an appraiser, I would be insulted. None of the appraisers I have ever used were swayed by my opinion anyway. I am just a hot head loan officer that always wants my way. It is the few bad apples out there, that were part of fraud schemes, that have given all appraisers a bad name. This is just great. I think I need a bag of chocolate chip morsels to munch on. This is getting really stressful!
By the way, I must stress that my thoughts expressed here are not those of Patriot Bank at all. So you can make your own opinions, mine mean nothing if you so choose.
Right now, today, rates are increasing because investors are feeling a sense comfort that some bank stress tests will be favorable. They are so fickle. Then tomorrow, for jobs report, if it is less than stellar, rates will go down again. So why is it that negative news keeps the rates so low? Chrysler not paying back the bailout money, a major bank in Atlanta failing, the Swine FLU (rates dropped big after that was released!). The worse the news, the better the rates. Why is that? Because bad news makes investors feel skiddish about the stock market. THey feel unsafe. So they take their money, and dump it into the bond market to seek safe returns for a while. This increased demand pushes up the bond prices, and the yields push down in response (always inversely related to the price).
Changing the subject, I had a realtor ask me a few days ago if rates were going down after the Fed just announced a .75% rate cut. How can that be? The fed funds rate is already .25%. It would be negative!!!!! There are so many rumors flying around out there, it really is hard to keep up.
Another rumor is that the appraisal process is deteriorating. Oops. That’s not a rumor! That 'could be' interpreted as true by some. We are now back to elementary days where loan originators, like me, or anyone paid a 'bonus' on any type of production (ie, vested interest) cannot order the appraisal. We cannot 'talk to, or discuss', the process with appraiser. On a refinance, we cannot put an estimated value on the order form, as it may be construed as trying to ‘sway’ the appraiser. Give me a break. A disinterested party has to order randomly from our list of approved appraisers. It is assumed now that appraisers have no where with all to avoid coercion by any parties as to the outcome of value. If I was an appraiser, I would be insulted. None of the appraisers I have ever used were swayed by my opinion anyway. I am just a hot head loan officer that always wants my way. It is the few bad apples out there, that were part of fraud schemes, that have given all appraisers a bad name. This is just great. I think I need a bag of chocolate chip morsels to munch on. This is getting really stressful!
By the way, I must stress that my thoughts expressed here are not those of Patriot Bank at all. So you can make your own opinions, mine mean nothing if you so choose.
Friday, April 17, 2009
Houston Housing is Solid!
You may have noticed I have not written in a while. Well I am back after a 3 week sabbatical (wishing the excuse was vacation!) . The great news today is that everyone wants a piece of these rates! So if your pipelines have not begun to increase, they will. Remember, that the deadline for the First Time Homebuyer Tax Credit of $8,000 is Dec 1, 2009. Also….the premonition is that within 12 – 18 months, inflation will set in. Who knows where rates will go then? Our 4-5% mortgages may look really good by then. Cocktail party conversation!
Let me get the statement over with. Yes, parts of Houston are feeling the results of some minor devaluation. How could we not, with the other 49 states feeling such drastic effects? The mentality of the consumer has surely been tainted. BUT I WOULD LIKE TO POINT OUT SOME REAL, POSITIVE FACTS about why your clients should be buying now! Other than the obvious- interest rates. We must invest in our economy, if we are to turn things around.
In Houston:
Housing is Solid, with an average of 6 months supply - a healthy market! (Metro Study, Q3, 2008)
Is the #1 best city to buy a home , as rated by Forbes Magazine, August 2008,
Ranks #1 for Job Growth in the Nation - 17% of the entire country!!!!!!!!!!!!!!
Largest IT Service Economy (Onforce, Inc, December 5, 2008)
America's Best Hospitals (US News& World Report , July 2008)
Best Big City for Business (Inc.com , July 2008)
We are survivors! Think about our recovery from Allison, Enron, and recently Ike.
Patriot Bank is growing right with Houston. We are the 5th Largest Bank domiciled within the city (and we are only 5 years old!). We are THE LARGEST privately owned bank within the city. Our total assets are currently at just over 1 Billion dollars. The most important aspect of our bank, in my opinion, is that our Total Equity Capital is 12%, where our peers are at 9%. And 6% is the minimum government requirement. That is awesome, and secure!
Let me get the statement over with. Yes, parts of Houston are feeling the results of some minor devaluation. How could we not, with the other 49 states feeling such drastic effects? The mentality of the consumer has surely been tainted. BUT I WOULD LIKE TO POINT OUT SOME REAL, POSITIVE FACTS about why your clients should be buying now! Other than the obvious- interest rates. We must invest in our economy, if we are to turn things around.
In Houston:
Housing is Solid, with an average of 6 months supply - a healthy market! (Metro Study, Q3, 2008)
Is the #1 best city to buy a home , as rated by Forbes Magazine, August 2008,
Ranks #1 for Job Growth in the Nation - 17% of the entire country!!!!!!!!!!!!!!
Largest IT Service Economy (Onforce, Inc, December 5, 2008)
America's Best Hospitals (US News& World Report , July 2008)
Best Big City for Business (Inc.com , July 2008)
We are survivors! Think about our recovery from Allison, Enron, and recently Ike.
Patriot Bank is growing right with Houston. We are the 5th Largest Bank domiciled within the city (and we are only 5 years old!). We are THE LARGEST privately owned bank within the city. Our total assets are currently at just over 1 Billion dollars. The most important aspect of our bank, in my opinion, is that our Total Equity Capital is 12%, where our peers are at 9%. And 6% is the minimum government requirement. That is awesome, and secure!
Friday, March 27, 2009
Mortgage Industry Changes that will Rock Our Worlds
Frequently I run into many of you that read this column, and I am asked if I am the one that writes it. The answer is YES! I do not cut and paste from any other source. I do my own research, and expose my own thoughts. Which by the way, to clarify, are not the thoughts of Patriot Bank Mortgage. Read at your own risk. Why does my opinion matter? It does not. But my goal each week is to provoke thought, and through that, understanding. I hope that by sticking together, and providing you , the real estate professional (most of my readers), insight that you can trickle into the community.
So you know what is coming next........my experience, and my insight. Emotioanl response (by the way) is EXACTLY how our economy is affected every single day. The 'emotions' of individuals and companies, and their buying behavior as the buy and sell stocks. Have you really sat down to think how much we rely on the stock market to identify our lives? Our well being? It is astounding. The S&P 500 has the most psychological power over people that I have ever seen. That and the news media. Which is another story. Don't get me started.
It is time to 'step up to the plate', fellow Houstonians. If we do not start believing in our economy, and start buying, we are succumbing to the hoopla of this whole entire mess we are in. Is there risk I could lose my job? Of course, always has been, and always will be. If I am living in my means, if I save, hopefully I will get through tough times. For those of us that are suffering, or facing foreclosure, I am truly saddened, and hope things go your way. But for those of us that are not, it is our RESPONSIBILITY to keep the economy going.
Interest Rates are LOW LOW LOW. There will never be a better time. If you sell low, chances are you will buy low too! So move past it! Are we all relying on values that maybe were never there anyway? Apolologies for upsetting anyone, but the market value of our homes is what buyers are willing to pay. And in today's market, it is maybe a little less than 1.5 years ago. But maybe it is time to upgrade to the house I have always wanted that is now priced where I can afford it! We have seen ups, and we have seen downs. Neither of these cycles will last forever.
Now some facts:
Rates are at record lows- 4.5%-4.75% on a good day (with a point, and excellent credit and 20% down!)Loan availability is shrinking due to credit scores: Get qualified early, and with a mortgage lender that can guide you on how to improve those scores before buying (like me for instance!). Let me elaborate on this by saying that if you do not have a 720, you will not get the best rate, and further more, if you do not have a 680, probably no loan at all unless you put 20% down. The credit scoring system is unfair and imperfect (regarding how it treats collections, for example), but it is what we have to deal with. So understanding is the key.
Appraisal changes are about to rock our worlds: As of May 1, mortgage companies have to outsource (if you are a broker) and centralize (if you are a direct lender, like us) the ordering of appraisals. The loan officer can not 'choose' its favorite appraiser anymore that will 'make value'. You very well may have a listing that has an appraiser that does not frequent the area. Sorry, its is the way it is going to be. Fannie Mae (and HUD) has determined that direct loan officer involvement has contributed to the over inflated values, and must be removed from the process.
There will be more mortgage company failures: with the shrinking of credit (for lenders) and increased foreclosures for lenders , there will be more consolidation. Example: CNN MONEY reported this morning that Thornburg Mortgage (THE TOP JUMBO LENDER) is about to file Chapter 11. Like Jumbo's needed more negative news. They already are at record highs (for the last 6 years). But for a million dollar mortgage, fixed for 30 years , for slightly under 7%, come on, are we that spoiled that we don't remember double digit interest rates? The trouble is , no, most buyers these days are too young to remember.
We will survive this! Its just another cycle.
So you know what is coming next........my experience, and my insight. Emotioanl response (by the way) is EXACTLY how our economy is affected every single day. The 'emotions' of individuals and companies, and their buying behavior as the buy and sell stocks. Have you really sat down to think how much we rely on the stock market to identify our lives? Our well being? It is astounding. The S&P 500 has the most psychological power over people that I have ever seen. That and the news media. Which is another story. Don't get me started.
It is time to 'step up to the plate', fellow Houstonians. If we do not start believing in our economy, and start buying, we are succumbing to the hoopla of this whole entire mess we are in. Is there risk I could lose my job? Of course, always has been, and always will be. If I am living in my means, if I save, hopefully I will get through tough times. For those of us that are suffering, or facing foreclosure, I am truly saddened, and hope things go your way. But for those of us that are not, it is our RESPONSIBILITY to keep the economy going.
Interest Rates are LOW LOW LOW. There will never be a better time. If you sell low, chances are you will buy low too! So move past it! Are we all relying on values that maybe were never there anyway? Apolologies for upsetting anyone, but the market value of our homes is what buyers are willing to pay. And in today's market, it is maybe a little less than 1.5 years ago. But maybe it is time to upgrade to the house I have always wanted that is now priced where I can afford it! We have seen ups, and we have seen downs. Neither of these cycles will last forever.
Now some facts:
Rates are at record lows- 4.5%-4.75% on a good day (with a point, and excellent credit and 20% down!)Loan availability is shrinking due to credit scores: Get qualified early, and with a mortgage lender that can guide you on how to improve those scores before buying (like me for instance!). Let me elaborate on this by saying that if you do not have a 720, you will not get the best rate, and further more, if you do not have a 680, probably no loan at all unless you put 20% down. The credit scoring system is unfair and imperfect (regarding how it treats collections, for example), but it is what we have to deal with. So understanding is the key.
Appraisal changes are about to rock our worlds: As of May 1, mortgage companies have to outsource (if you are a broker) and centralize (if you are a direct lender, like us) the ordering of appraisals. The loan officer can not 'choose' its favorite appraiser anymore that will 'make value'. You very well may have a listing that has an appraiser that does not frequent the area. Sorry, its is the way it is going to be. Fannie Mae (and HUD) has determined that direct loan officer involvement has contributed to the over inflated values, and must be removed from the process.
There will be more mortgage company failures: with the shrinking of credit (for lenders) and increased foreclosures for lenders , there will be more consolidation. Example: CNN MONEY reported this morning that Thornburg Mortgage (THE TOP JUMBO LENDER) is about to file Chapter 11. Like Jumbo's needed more negative news. They already are at record highs (for the last 6 years). But for a million dollar mortgage, fixed for 30 years , for slightly under 7%, come on, are we that spoiled that we don't remember double digit interest rates? The trouble is , no, most buyers these days are too young to remember.
We will survive this! Its just another cycle.
Saturday, March 14, 2009
Tips to Survive the Mortgage Approval Process
As of March 9, there are more restrictions being passed down from the powers that be (who are they anyway? ). Mostly having to do with condo's , and PMI. This week I actually had 2 actual clients affected mid process. They were approved, and then sort of , and then not...as we needed more 'stuff' after these new rules were released. This kind thing does not happen to me! Well, I almost truly cratered this time. Delayed closings, sellers and buyers affected. I was face to face with a seller that let me have it for not providing the funding number that afternoon (the FIRST time that I can remember in 3 years). We fund on time ! Not that day. The stress is unimaginable. But we are got through it, and that is the important thing.
As for the cumulative changes affecting our industry as of date, here is a summary:
CONDO's:
LOTS of more questions to ask. We used to get by with 'limited reviews' (kind of like a stated income for condo projects! ). Well , no more. We have to ask the HOA questions like: 'How much fidelity bond insurance do you have? ' , ' Are more than 15% of the homeowners delinquent on HOA dues?', 'In event of foreclosure, confirm we do not have to notify the HOA we are doing so...' Are blanket mortgages allowed?' .... WHAT!!!!!!!!!!???? All this detail makes your head spin. But there is a reason to this madness, believe it or not. Condo's attract investors, and they also attract fraud. There are entire buildings in Houston that have foreclosed from fraud schemes. So any triggers that pre empts a red flag is being asked. Also, when large percentages of condos in a project are suffering from foreclosures, units become in disrepair, the HOA does not have money to function, and deferred maintenance occurs. My Advice: be sure your lender has access to the HOA EARLY!
Mortgage Insurance-
out of 6 companies total in the US that offer PMI: Only 1 will allow a 5% down condo purchase. Otherwise, 10% down is the minimumThree companies require a 680 minimum credit score - the trend here is that no one with <680 will be able to have PMI. Many of the 2nd lien lenders are 680 too. So where do they go???? They put 20% down (this is a forecast, not fact yet)Two companies allow Second homes investors are not eligible for PMI - so 20% down minimumFive companies require maximum debt to income ratio of 45% (even if Fannie Mae allows to 55%- they don’t care!)**One of the PMI companies is owned by AIG- HINT, that is where your tax money is going, to keep them in business, and help homeowners! So that is why we should be in favor of some big business bailouts (some of them) Mortgage Insurance Companies are losing billions of dollars. The way it works is that (for example) on a 5% down loan, the MI company insures the lender 30% of the loan in case of default. So if a $100,000 mortgage goes into foreclosure, they pay a premium of $30,000. With foreclosures at current levels, the loss is absolutely huge.
CREDIT:
Any open accounts in dispute must be resolved or removed - this could take up to 30 days with the bureaus! We need to see your clients’ credit to prequalify early!!!!!!!!!!!!!!!!FHA new minimum score is 620- all lenders have adopted this.Credit scores <720 have severe hits to the interest rate. 740 is the new 'best score for pricing'Remember- it only takes ONE collection for $5 to bring your score down 70-100 points. No kidding. Get those clients with a lender 3-6 months in advance...so we have time to correct issues.
How do we survive this chaos? Put your two feet on the ground, smile, and get through each day with a positive attitude, and last but not least, refer Jennifer Hernandez to your clients in need of mortgage financing.
As for the cumulative changes affecting our industry as of date, here is a summary:
CONDO's:
LOTS of more questions to ask. We used to get by with 'limited reviews' (kind of like a stated income for condo projects! ). Well , no more. We have to ask the HOA questions like: 'How much fidelity bond insurance do you have? ' , ' Are more than 15% of the homeowners delinquent on HOA dues?', 'In event of foreclosure, confirm we do not have to notify the HOA we are doing so...' Are blanket mortgages allowed?' .... WHAT!!!!!!!!!!???? All this detail makes your head spin. But there is a reason to this madness, believe it or not. Condo's attract investors, and they also attract fraud. There are entire buildings in Houston that have foreclosed from fraud schemes. So any triggers that pre empts a red flag is being asked. Also, when large percentages of condos in a project are suffering from foreclosures, units become in disrepair, the HOA does not have money to function, and deferred maintenance occurs. My Advice: be sure your lender has access to the HOA EARLY!
Mortgage Insurance-
out of 6 companies total in the US that offer PMI: Only 1 will allow a 5% down condo purchase. Otherwise, 10% down is the minimumThree companies require a 680 minimum credit score - the trend here is that no one with <680 will be able to have PMI. Many of the 2nd lien lenders are 680 too. So where do they go???? They put 20% down (this is a forecast, not fact yet)Two companies allow Second homes investors are not eligible for PMI - so 20% down minimumFive companies require maximum debt to income ratio of 45% (even if Fannie Mae allows to 55%- they don’t care!)**One of the PMI companies is owned by AIG- HINT, that is where your tax money is going, to keep them in business, and help homeowners! So that is why we should be in favor of some big business bailouts (some of them) Mortgage Insurance Companies are losing billions of dollars. The way it works is that (for example) on a 5% down loan, the MI company insures the lender 30% of the loan in case of default. So if a $100,000 mortgage goes into foreclosure, they pay a premium of $30,000. With foreclosures at current levels, the loss is absolutely huge.
CREDIT:
Any open accounts in dispute must be resolved or removed - this could take up to 30 days with the bureaus! We need to see your clients’ credit to prequalify early!!!!!!!!!!!!!!!!FHA new minimum score is 620- all lenders have adopted this.Credit scores <720 have severe hits to the interest rate. 740 is the new 'best score for pricing'Remember- it only takes ONE collection for $5 to bring your score down 70-100 points. No kidding. Get those clients with a lender 3-6 months in advance...so we have time to correct issues.
How do we survive this chaos? Put your two feet on the ground, smile, and get through each day with a positive attitude, and last but not least, refer Jennifer Hernandez to your clients in need of mortgage financing.
Saturday, March 7, 2009
Smart Buyers are buying now!
Our phones have been ringing nonstop today after the unemployment numbers released worse than expected. Rates normally would go down. But not today. They went up a small bit, as the treasury prices are being pushed down with flooded demand (rates move the opposite…so up).
National employment is at 8.1% , the highest level since 1983. Let’s look at the bright side, it has not yet reached the worst in history, which was 10.8% in 1982. I don’t mean to make light of a grim situation, but they say psychology is everything. If you tell yourself it is a bad time, it will be. If you tell yourself it is a great time, it will be. Which is it for you? I say it’s a great time. A great time to be a Houstonian/Texan for sure. We are (finally!) getting the recognition we deserve as having (a) lower unemployment (b) more affordable housing (c) less foreclosures, and (d) having a positive jobs market. And did I mention we only have 6.5 months of housing inventory? Its a far cry from Florida with 28 months. I just cannot even imagine what that would be like. Again, thankful to be a Houstonian.
Is Houston experiencing lower pricing and sale levels? Yes, we are. No one is recession proof. Oh wait……Fargo, ND has 3% unemployment, and according to CNN is not in a recession. That’s right. Let’s pick up and move there! (No offense if you are from Fargo). I’m a city girl. We live in the 4th largest city in the US (#1 if you are talking land size) with lots of people. And that means that we are impacted more by trends. Also, we have to keep in check that the last few years we enjoyed above average returns in real estate. Incredible numbers! What we are seeing now is more ‘normalcy’. That statement is from Mike Inselmann himself , the President of Metro Study.
SMART BUYERS are buying now with these low rates! With unemployment numbers on the rise, and the recession with no end in sight, will we have a repeat of the 80’s and 17% interest rates? My generation (I was born in the 70’s ) is too young to remember these times. But I have been told that history is starting to repeat itself. So will Obama’s policy making make Jimmy Carter look like a saint? My point here is: get out there and buy while you can, before the rates spiral out of control. You could be one of the lucky few someday with a single digit rate- and in the 4’s at that!
National employment is at 8.1% , the highest level since 1983. Let’s look at the bright side, it has not yet reached the worst in history, which was 10.8% in 1982. I don’t mean to make light of a grim situation, but they say psychology is everything. If you tell yourself it is a bad time, it will be. If you tell yourself it is a great time, it will be. Which is it for you? I say it’s a great time. A great time to be a Houstonian/Texan for sure. We are (finally!) getting the recognition we deserve as having (a) lower unemployment (b) more affordable housing (c) less foreclosures, and (d) having a positive jobs market. And did I mention we only have 6.5 months of housing inventory? Its a far cry from Florida with 28 months. I just cannot even imagine what that would be like. Again, thankful to be a Houstonian.
Is Houston experiencing lower pricing and sale levels? Yes, we are. No one is recession proof. Oh wait……Fargo, ND has 3% unemployment, and according to CNN is not in a recession. That’s right. Let’s pick up and move there! (No offense if you are from Fargo). I’m a city girl. We live in the 4th largest city in the US (#1 if you are talking land size) with lots of people. And that means that we are impacted more by trends. Also, we have to keep in check that the last few years we enjoyed above average returns in real estate. Incredible numbers! What we are seeing now is more ‘normalcy’. That statement is from Mike Inselmann himself , the President of Metro Study.
SMART BUYERS are buying now with these low rates! With unemployment numbers on the rise, and the recession with no end in sight, will we have a repeat of the 80’s and 17% interest rates? My generation (I was born in the 70’s ) is too young to remember these times. But I have been told that history is starting to repeat itself. So will Obama’s policy making make Jimmy Carter look like a saint? My point here is: get out there and buy while you can, before the rates spiral out of control. You could be one of the lucky few someday with a single digit rate- and in the 4’s at that!
Friday, February 20, 2009
Where is my mortgage relief?
Just when I thought my ‘drama factor’ for the week had been accomplished squashing my three year old’s meltdown over which shoes to wear, the Galleria area near our office was swarmed with helicopters and FBI agents on the roof of the Stanford Financial building. What a shame that is, seeing the destruction of yet another financial institution. Can we trust anything anymore? And then the first article on CNN Money today was “ Expect a wave of bank failures’. That may be the case, but for me , personally, I can express that I have never felt more job security in my 14 years as a mortgage originator. And I work for a bank. Patriot Bank is steadfast and strong. Not only are we the 6th largest bank domiciled in Houston, but we have been profitable since our 5th month in business after opening in March of 2005. The year ending 2008, we generated more than 4 mm in net profit, and we maintain < 1 % of net loans charged off as a percentage of loans outstanding. Not only that, our asset to debt ratio exceeds the limit set by the FDIC as a minimum bank requirement. Please know that at Patriot, we are your trusted source in mortgage lending. And we are here for the long haul.
Changing the subject……….Where is my mortgage relief? I pay my mortgage on time, and sometimes we struggle. I could use some relief! Oh, wait a minute. I need to be 3 months behind on payments to get any relief, like a lower rate, or payment, or renegotiation with my lender. At first thought, that bothered me. Should we really destroy the incentive to act responsibly? Capitalism will not work without the possibility of failure!
But a guest on CNBC Sqwak Box yesterday summed it up nicely ‘ The Kool Aid has been flowing freely for a long time, and we all drank it”. Boy did we ever! We have all benefited in some way, whether it be cashing in on our home equity, selling our house at a rock star value , stock profits, the car loan at 1.9%, the 0% credit cards, etc. If we do fail, foreign investors will lose confidence in our system. Their investments in our economy has kept us going, believe it or not. And our home values. If we allow our neighbor to foreclose, the values in our neighborhood decline. So you see, my part in all this is to continue to do the right thing. Pay my mortgage since I can, and allow those that need it, and have hardship, to benefit from the policies of recent that have been put in place. We will all be rewarded some day, when this is behind us, and we have learned the larger lesson , which has yet to be defined.
To clarify my article of last week, the First Time Homebuyer Credit of $8,000 is not required to be repaid. A first time homebuyer is defined as anyone who has not owned a home in the last THREE years.
Product of the Week: Check out the 5 and 7 ARM Jumbo Rates below! 4.75% !
Changing the subject……….Where is my mortgage relief? I pay my mortgage on time, and sometimes we struggle. I could use some relief! Oh, wait a minute. I need to be 3 months behind on payments to get any relief, like a lower rate, or payment, or renegotiation with my lender. At first thought, that bothered me. Should we really destroy the incentive to act responsibly? Capitalism will not work without the possibility of failure!
But a guest on CNBC Sqwak Box yesterday summed it up nicely ‘ The Kool Aid has been flowing freely for a long time, and we all drank it”. Boy did we ever! We have all benefited in some way, whether it be cashing in on our home equity, selling our house at a rock star value , stock profits, the car loan at 1.9%, the 0% credit cards, etc. If we do fail, foreign investors will lose confidence in our system. Their investments in our economy has kept us going, believe it or not. And our home values. If we allow our neighbor to foreclose, the values in our neighborhood decline. So you see, my part in all this is to continue to do the right thing. Pay my mortgage since I can, and allow those that need it, and have hardship, to benefit from the policies of recent that have been put in place. We will all be rewarded some day, when this is behind us, and we have learned the larger lesson , which has yet to be defined.
To clarify my article of last week, the First Time Homebuyer Credit of $8,000 is not required to be repaid. A first time homebuyer is defined as anyone who has not owned a home in the last THREE years.
Product of the Week: Check out the 5 and 7 ARM Jumbo Rates below! 4.75% !
Saturday, February 14, 2009
First Time Homebuyer Tax Credit
Love. It does make the world go around, doesn’t it? Let us temporarily forget in its bliss? My hope for you on this day is that you find the love you have always been looking for! As for the mortgage business, there is not much love to be found, or so it feels sometimes. We have good days and bad days. But for the most part, really, it is still good.
Things are starting to look up for home buying! Rates have come back down to historic lows. Still not quite as low as early January, but low. Where is the 4.25% I keep hearing about? That should tell you something, hearing……..In other words, should we hold our breath? Let’s enjoy the 4.625% of today!
The stimulus package that has passed Congress (to be signed into bill tomorrow) has some important changes to the First Time Home Buyer Tax Credit. It is raised to $8,000. It does not have to be repaid if you live in the home at least 3 years. It is extended to Dec 2009. A local/state government agency may advance the credit to home buyers for closing. This is the clause I would like to see more detail on. We still do not know which government agency this would be. It will be an awesome task, to say the least, to advance this credit. As I hear more detail, I will surely pass it on.
Changes for investors? Currently, Fannie Mae limits the TOTAL number of properties an investor can finance to 4 (including their homestead). It has forced a huge decline in investment property financing. We need investors to help us gobble up these foreclosures! There is a rumor this may be reversed back to 10. There is no confirmation yet. Stay tuned. That would surely put the love back in the air for some of us.
Wishing you and yours a wonderful Valentine weekend! I am here now with my little kiddo in my arms. Nowhere I would rather be. Off to watch my 100th episode of Monsters Inc…………..
Things are starting to look up for home buying! Rates have come back down to historic lows. Still not quite as low as early January, but low. Where is the 4.25% I keep hearing about? That should tell you something, hearing……..In other words, should we hold our breath? Let’s enjoy the 4.625% of today!
The stimulus package that has passed Congress (to be signed into bill tomorrow) has some important changes to the First Time Home Buyer Tax Credit. It is raised to $8,000. It does not have to be repaid if you live in the home at least 3 years. It is extended to Dec 2009. A local/state government agency may advance the credit to home buyers for closing. This is the clause I would like to see more detail on. We still do not know which government agency this would be. It will be an awesome task, to say the least, to advance this credit. As I hear more detail, I will surely pass it on.
Changes for investors? Currently, Fannie Mae limits the TOTAL number of properties an investor can finance to 4 (including their homestead). It has forced a huge decline in investment property financing. We need investors to help us gobble up these foreclosures! There is a rumor this may be reversed back to 10. There is no confirmation yet. Stay tuned. That would surely put the love back in the air for some of us.
Wishing you and yours a wonderful Valentine weekend! I am here now with my little kiddo in my arms. Nowhere I would rather be. Off to watch my 100th episode of Monsters Inc…………..
Friday, February 6, 2009
How Stimulus Package Affects Housing
Another exciting week, as rates were up down, up ,down, and finally down .25% from last week. Will we ever see 4.0%? I don’t know, but if it makes sense right now to buy or refinance, do it. That is my ongoing advice.
There is rumor that a $15,000 homebuyer credit has been approved in the Senate. I have not been able to confirm , but I know it is looming. Currently, there is APPROVED a $7500 tax credit that is given at the time they file their taxes. So, if a first time homeowner (who makes less than $75,000/year) buys before July 2009, they can claim this credit for 2008 (if they file an extension) or on 2009 tax return (a whole year from now!). The credit offsets the tax they owe, and is required to be repaid over 15 years. So basically, and interest free loan.
The NEW PROPOSAL posed to the Senate as a part of the stimulus package is: Increase the credit to $15,000 (or 10% of the purchase price if less), and available to ALL homebuyers, regardless of income or purchase history, and not require repayment. Wow. That would spur some buying for sure. I will just avoid thinking where that money will come from for now. Let’s just take a bat for the team on this one, and call it a good thing.
I saw an article online that said ‘Credit Standards Tighten’. Where has that journalist been? That is old news! Yes, it is true. There are more rules, more paperwork. But we just get through it all somehow. The funniest example I have is one of our investors now requires that any letters of explanation for the borrower are handwritten, not typed. Hint: loan officers have really good writing skills. But isn’t that funny? We are going to such extremes. But again, a bat for the team. When I am 80, I hope to look back on 2009 with a grin, and know that I helped a lot of people accomplish the American dream of homeownership.
There is rumor that a $15,000 homebuyer credit has been approved in the Senate. I have not been able to confirm , but I know it is looming. Currently, there is APPROVED a $7500 tax credit that is given at the time they file their taxes. So, if a first time homeowner (who makes less than $75,000/year) buys before July 2009, they can claim this credit for 2008 (if they file an extension) or on 2009 tax return (a whole year from now!). The credit offsets the tax they owe, and is required to be repaid over 15 years. So basically, and interest free loan.
The NEW PROPOSAL posed to the Senate as a part of the stimulus package is: Increase the credit to $15,000 (or 10% of the purchase price if less), and available to ALL homebuyers, regardless of income or purchase history, and not require repayment. Wow. That would spur some buying for sure. I will just avoid thinking where that money will come from for now. Let’s just take a bat for the team on this one, and call it a good thing.
I saw an article online that said ‘Credit Standards Tighten’. Where has that journalist been? That is old news! Yes, it is true. There are more rules, more paperwork. But we just get through it all somehow. The funniest example I have is one of our investors now requires that any letters of explanation for the borrower are handwritten, not typed. Hint: loan officers have really good writing skills. But isn’t that funny? We are going to such extremes. But again, a bat for the team. When I am 80, I hope to look back on 2009 with a grin, and know that I helped a lot of people accomplish the American dream of homeownership.
Saturday, January 31, 2009
Mortgage Financing is Definitely Available!
Houston is known for its hot weather, but days like today make it all worthwhile! No wonder our New Year season is always labeled as the kick start to the home buying season. Is it the crisp weather, or the sense of starting with a ‘clean slate’ that motivates buyers to put off buying until the Spring each year? Whatever the reason, this year I have surely seen an increase in buyers. And financing is definitely available! Take for example, the fact that I am in the office on a Saturday, and was last Saturday. In fact, after I wrote my newsletter to you last week (on Saturday!), I received 4 new referrals, all purchases, and had to come in Sunday. My husband has just resolved to the fact dishes and laundry are now on his honey do list! If your prospective buyer roster has not filled up yet, my prediction is that it will, and fast. So enjoy the silence. Use your time wisely to get recharged and organized.
What about these rates? With the Fed announcing this last week their plans to buy mortgage backed securities, a partial approval of the stimulus plan for the economy, and the news that national home sales ROSE 9% in December, you would think the rates would have gone down. Well, except these are different times. Unchartered territory. The stock market is manic (really). Nothing seems to make sense or follow basic economic principles anymore. After this weeks’ news, the bond market (where mortgages most closely relate) did not fare well, as yields , or rates, of bonds lowered because (1) the bailout plan shows flaws, and had not Republican support (2) The FED did not announce ‘specific’ plans for purchasing securities and ( c) 100,000 layoffs that were announced. So you see, the news is never good enough! Never specific enough!
Despite what you may hear, the government cannot directly control the rates . They can purchase the mortgage backed securities in an attempt to push the rates down, but what if that doesn’t work? What if ‘other’ pressures on the bond market cause their plan backfire? It could very well happen, and some critics of this strategy are anticipating it. So my point here is that borrowers (whether purchasing or refinancing) need to take what they can get NOW. Enjoy these low rates now. Waiting on the sidelines for 4.5% or lower, may be about as reasonable as me hoping to win the lottery tonight – when I didn’t even buy a ticket.
What about these rates? With the Fed announcing this last week their plans to buy mortgage backed securities, a partial approval of the stimulus plan for the economy, and the news that national home sales ROSE 9% in December, you would think the rates would have gone down. Well, except these are different times. Unchartered territory. The stock market is manic (really). Nothing seems to make sense or follow basic economic principles anymore. After this weeks’ news, the bond market (where mortgages most closely relate) did not fare well, as yields , or rates, of bonds lowered because (1) the bailout plan shows flaws, and had not Republican support (2) The FED did not announce ‘specific’ plans for purchasing securities and ( c) 100,000 layoffs that were announced. So you see, the news is never good enough! Never specific enough!
Despite what you may hear, the government cannot directly control the rates . They can purchase the mortgage backed securities in an attempt to push the rates down, but what if that doesn’t work? What if ‘other’ pressures on the bond market cause their plan backfire? It could very well happen, and some critics of this strategy are anticipating it. So my point here is that borrowers (whether purchasing or refinancing) need to take what they can get NOW. Enjoy these low rates now. Waiting on the sidelines for 4.5% or lower, may be about as reasonable as me hoping to win the lottery tonight – when I didn’t even buy a ticket.
Friday, January 23, 2009
Where are the 4.5% rates?
So where are the 4.5% rates, you are wondering? Your clients are asking, I am sure. They ask me too! Well, as you can see below, the rates are not far from that at 4.625%. But keep in mind, to get that, you MUST pay 1% origination fee (1% of the loan amount added to closing costs). If you want to ‘waive’ that fee, you can expect .625-.75% higher interest rate. That is a far cry from the .25% in the past. In other words, it makes sense to pay the 1% origination for many people, who expect to be in the home a long time. For those on a 6 year or less timeline, maybe not pay the point, and save your cash.
Why such a large spread between the 1 Origination and 0 Origination? I have heard several theories (a) lenders do not want to sell the higher coupons (rates), as they anticipate rates will go down, and their fallout will increase (b) they have been burned in the past paying originators the premiums on the back end, just to have early payoff in low rate markets, and (c) no one knows. I pick C! Does anyone really know?
Another rumor I have heard, is that some , if not all, of the big banks are losing money in their mortgage divisions. Big money. So they are hesitant to lower their rates because they are adding larger margins than in the past. To make it ‘worth it’ for them to stay in business. The margins from 03/04 when the rates were also at historic lows, and lenders could not print money fast enough, were turbulent times. Hiring frenzies, backlog in processing and fundings. The grass was not necessarily greener on the lenders’ side. Are they now remorseful and learning from their mistakes?
The FED meets this week for a 2 day meeting (Tuesday/Wednesday). For the first time, they will not consider lowering or increasing the rates. They will be concentrating instead on strategy to get the economy turned around.
On a personal front, I took my home off the market this week after 90 days. 27 showings and 4 offers later, we were just amazed at some of the offers (low) we were getting. So, since we don’t have to sell, we decided to stay put for now. I know, agents hate sellers like us. But as my article last week mentioned, the psychology (of buyers and sellers) must change in order for the market to get moving again. Even in Houston, a healthy, stable real estate market. As for me, I am stubborn, wanting a fair price for my house. A price that was there 1 year ago. Not willing to accept that the psychology of the CNN glued buyers are driving prices down. They think that all sellers are going bankrupt? No thanks, I would rather wait.
Have a great and prosperous week! Remember, we at Patriot Bank Mortgage are your trusted source in mortgage lending. We are here for you! Steadfast and strong.
Why such a large spread between the 1 Origination and 0 Origination? I have heard several theories (a) lenders do not want to sell the higher coupons (rates), as they anticipate rates will go down, and their fallout will increase (b) they have been burned in the past paying originators the premiums on the back end, just to have early payoff in low rate markets, and (c) no one knows. I pick C! Does anyone really know?
Another rumor I have heard, is that some , if not all, of the big banks are losing money in their mortgage divisions. Big money. So they are hesitant to lower their rates because they are adding larger margins than in the past. To make it ‘worth it’ for them to stay in business. The margins from 03/04 when the rates were also at historic lows, and lenders could not print money fast enough, were turbulent times. Hiring frenzies, backlog in processing and fundings. The grass was not necessarily greener on the lenders’ side. Are they now remorseful and learning from their mistakes?
The FED meets this week for a 2 day meeting (Tuesday/Wednesday). For the first time, they will not consider lowering or increasing the rates. They will be concentrating instead on strategy to get the economy turned around.
On a personal front, I took my home off the market this week after 90 days. 27 showings and 4 offers later, we were just amazed at some of the offers (low) we were getting. So, since we don’t have to sell, we decided to stay put for now. I know, agents hate sellers like us. But as my article last week mentioned, the psychology (of buyers and sellers) must change in order for the market to get moving again. Even in Houston, a healthy, stable real estate market. As for me, I am stubborn, wanting a fair price for my house. A price that was there 1 year ago. Not willing to accept that the psychology of the CNN glued buyers are driving prices down. They think that all sellers are going bankrupt? No thanks, I would rather wait.
Have a great and prosperous week! Remember, we at Patriot Bank Mortgage are your trusted source in mortgage lending. We are here for you! Steadfast and strong.
Friday, January 16, 2009
Houston's Economic Outlook for 2009
I wish you and yours the most prosperous year ever! This is my first newsletter in the new year. I have missed you all dearly. So let’s get on with it!
What a year end and new year it has been! I slaved all through Christmas, and ever since the new year (don’t feel sorry for me please, I welcomed it). December we issued a record number of approval letters- in my 14 year history as an originator! We had more purchase closings this January than ever as well. This tells me that the low rates are spurring activity. People are regaining confidence. Certainly there are some that are concerned about job stability and finances. That is a given. But rates are historically good! Who would not want to get a rate in the 4’s! So hang in there. I predict Q1 of 2009 will be vibrant.
Earlier in the week, I had the privilege of hearing Mike Inselmann speak. He is the President of Metro Studies http://www.metrostudy.com/corpwebsite/about/who.aspx . They are a housing market research firm . Mike is a household name to many lenders, realtors and builders. Each year he is almost right on his forecasts! In summary, this is what he predicts for 2009:
It’s not a buyer’s market. It’s not a seller’s market. It is balanced. We have 6-7 months of inventory, and 78 days on market. That is healthy!· The last quarter of 2008 we had a hurricane, an election, and the most horrible financial news in a matter of 6 weeks. So let’s agree to forget Q4 2008! Ok by me!· Texas is NUMBER 1 in job growth in the nation! The 5 top cities in Texas are all in the Top 20 for job growth in the nation, Houston being the leader, of course!· Houston housing GREW in 2008. However there was a shift – more rentals than ever before. Housing is not declining, it has just shifted. These people will need homes eventually· Houston will add jobs in 2009, but potentially not many. Energy and Healthcare will be important fuelers of the economy.· We had 29,000 home starts in 2008! That is a stable number! What is unstable are the gargantuan numbers we saw in 2006/2007. So the market has adjusted to normalcy.· Houston has the lowest appreciation market in the nation – 4.4% average. But look at us now! We are not seeing the ‘bubble ‘ effects of other markets .· In 2008 there were 12,000 foreclosures in Houston. There were 50,000 in 1987. Foreclosures are a given in any market. The numbers we see are normal for a market as large as ours. The takeaway from Mike’s talk, if you forget all the graphs and fancy numbers that only an economist can understand, is that it is really not as bad as it seems. Not in Houston anyway. TWO THINGS must happen for our market to turn around. (1) Psychology of buyers and sellers have to change, and (2) Credit must be available. The latter, credit, is available, but it is more difficult to obtain.
What a year end and new year it has been! I slaved all through Christmas, and ever since the new year (don’t feel sorry for me please, I welcomed it). December we issued a record number of approval letters- in my 14 year history as an originator! We had more purchase closings this January than ever as well. This tells me that the low rates are spurring activity. People are regaining confidence. Certainly there are some that are concerned about job stability and finances. That is a given. But rates are historically good! Who would not want to get a rate in the 4’s! So hang in there. I predict Q1 of 2009 will be vibrant.
Earlier in the week, I had the privilege of hearing Mike Inselmann speak. He is the President of Metro Studies http://www.metrostudy.com/corpwebsite/about/who.aspx . They are a housing market research firm . Mike is a household name to many lenders, realtors and builders. Each year he is almost right on his forecasts! In summary, this is what he predicts for 2009:
It’s not a buyer’s market. It’s not a seller’s market. It is balanced. We have 6-7 months of inventory, and 78 days on market. That is healthy!· The last quarter of 2008 we had a hurricane, an election, and the most horrible financial news in a matter of 6 weeks. So let’s agree to forget Q4 2008! Ok by me!· Texas is NUMBER 1 in job growth in the nation! The 5 top cities in Texas are all in the Top 20 for job growth in the nation, Houston being the leader, of course!· Houston housing GREW in 2008. However there was a shift – more rentals than ever before. Housing is not declining, it has just shifted. These people will need homes eventually· Houston will add jobs in 2009, but potentially not many. Energy and Healthcare will be important fuelers of the economy.· We had 29,000 home starts in 2008! That is a stable number! What is unstable are the gargantuan numbers we saw in 2006/2007. So the market has adjusted to normalcy.· Houston has the lowest appreciation market in the nation – 4.4% average. But look at us now! We are not seeing the ‘bubble ‘ effects of other markets .· In 2008 there were 12,000 foreclosures in Houston. There were 50,000 in 1987. Foreclosures are a given in any market. The numbers we see are normal for a market as large as ours. The takeaway from Mike’s talk, if you forget all the graphs and fancy numbers that only an economist can understand, is that it is really not as bad as it seems. Not in Houston anyway. TWO THINGS must happen for our market to turn around. (1) Psychology of buyers and sellers have to change, and (2) Credit must be available. The latter, credit, is available, but it is more difficult to obtain.
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