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.

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?