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% !
Friday, February 20, 2009
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.
Saturday, December 20, 2008
Mortgage Rates at their lowest in 50 Years!
The week has been exciting, to say the least. Mortgage rates have been up and down at least 15 times, the prime rate is down to 0.0-0.25% (the lowest EVER), the auto giants are getting bailed out, and the government legislated that credit card companies can no longer raise rates on existing balances when there are on time payments, and a 21 day grace period on late charges. Oh, but the companies have until July 2010 to comply. What a relief!???????
The mortgage rates are the lowest in 50 years. According to where the 10 year treasury is, they should be lower than 4.25%, but no investors on the secondary market are buying these coupons. No buy, no sell. The lenders are gridlocked. Running scared to offer a coupon (rate) they cannot finance as a mortgage backed security. The government has talked of stepping in and buying such coupons, so that lenders will lend. Not official yet, but when they do, who knows? The result would be motivated buyers, and ability to qualify for the dream home they have always wished for. Maybe just in time for all of us to return from the holidays refreshed, and ready to sell some houses! I really do predict that 09 (at least Q1) will be vibrant, and the market will begin to move. Who would not want to buy a home at historic lows?
Have a joyous holiday. This will be my last update of the year. Thank you for your support of Patriot Bank Mortgage. Your referrals are so appreciated, and we look forward to being your trusted mortgage source in 2009!
The mortgage rates are the lowest in 50 years. According to where the 10 year treasury is, they should be lower than 4.25%, but no investors on the secondary market are buying these coupons. No buy, no sell. The lenders are gridlocked. Running scared to offer a coupon (rate) they cannot finance as a mortgage backed security. The government has talked of stepping in and buying such coupons, so that lenders will lend. Not official yet, but when they do, who knows? The result would be motivated buyers, and ability to qualify for the dream home they have always wished for. Maybe just in time for all of us to return from the holidays refreshed, and ready to sell some houses! I really do predict that 09 (at least Q1) will be vibrant, and the market will begin to move. Who would not want to buy a home at historic lows?
Have a joyous holiday. This will be my last update of the year. Thank you for your support of Patriot Bank Mortgage. Your referrals are so appreciated, and we look forward to being your trusted mortgage source in 2009!
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