A Loan With Jennifer

Constantly I am asked ‘How is the mortgage business doing?' Actually, it is doing quite well. My production is up 25% from last year. What I am finding, is that the brokers that were doing loans out of their garage, internet lenders, all of them are restructuring. No longer can these companies run on fumes. They go out of business, or if they stay in business, they are cutting costs and keeping only the top team players. This is, in my opinion, a good thing. Borrowers are realizing that doing business with smaller and unstructured companies has its costs. At Patriot Bank Mortgage, we are finding that consumers are relying more on reputation of their mortgage lender, more so than just finding the lowest rate. They are demanding service and results, at the most competitive terms as possible.

Yes, guidelines are stringent, and sometimes brutal. But isn’t that how things should be anyway? How in the world did we ever think the honeymoon of the ‘liar loan’ or the no down payment loan could go on? So……now that things are calming down, we, the average American, are left to deal with the aftershock. Those who are the most disgruntled , are the ones that have been caught red handed. The ones that were benefitting the most from the laxed guidelines. I must comment as well that there are those borrowers that have excellent credit, income and reserves that are caught a bit in the crossfire. The biggest complaint I (still) get, is that those borrowers are disgruntled about having to verify anything at all. They think that because they have all these things, they don’t have to prove it. There in lies a big issue. You see, we are loaning people, let’s say, $300,000. That is a lot of money! Yes, we require you to verify that what you are telling us is true. Just give us those bank statements. What’s the harm? Turn over the tax returns. Yes, we really want to know.

This last week, the President signed a bill that is anticipated to help some $400,000 homeowners avoid foreclosure. Here are the real interpretations:

• Conforming loan limit will be increased to 115% of the median home price, or $625,000, whatever is less. Sorry, Houston, with our median home price below $200,000, we will be stuck with the same $417,000.
• FHA loan limits will increase to $115% of the median home price, or $270,000, whatever is less. Sorry again, Houston, we are staying at the $270,000.
• First time homebuyers will receive a 10% refund up to $7,500- but if you make >$75,000, the refund will be phased out. Oh, and the refund is to be repaid over the next 15 years. So essentially, it is a 15 year interest free loan.
• All mortgage originators (brokers, bankers, etc) will be required to be licensed and adhere to a national registry. This is a good thing.

There is a community outreach group called Hope Now that counsels homeowners on restructuring their debt and avoiding foreclosure. Sources say they have helped drop the foreclosure rate quite a bit, and successfully aided couples renegotiate fixed rates, extend fixed rate terms , or extended the time to catch up on their delinquent payments. For more information contact www.hopenow.com

Jobless claims are at a four year high. This news has relaxed rates a bit going into the homestretch of the summer. Oh, and have you noticed, gas is down at the pumps? Now it only costs me $55 to fill my tank versus $61. What a relief!

Rates as of Friday, August 1, 2008:
The following assumptions apply:

• 20% Down Payment (call for other options)
• 1% Origination Fee
• Escrows Required (if no escrow, higher fees may apply)
• Purchase Transactions
• Primary Residence 30 day closing
• Credit Score 720 +
• Full Documentation of Income/Assets
• Loans > 1 mm require 30% down for these terms

Conforming ($250,000* - $417,000) Jumbo ($417,001- $1,500,000*)
30 year (fixed) 6.250% APR 6.383% 30 year ( fixed ) 7.450% APR 7.585%
15 year (fixed) 5.875% APR 6.115% 15 year ( fixed ) 6.625% APR 6.836%
3/1 ARM 5.750% APR 6.639% 3/1 ARM 5.950% APR 6.073%
5/1 ARM 5.875% APR 6.549% 5/1 ARM 5.750% APR 5.872%
7/1 ARM 6.250% APR 6.638% 7/1 ARM 6.000% APR 6.124%

FHA/VA call for quote (max loan $270,000)