Tri-Valley Mortgage News

Cari Anderson's East Bay Mortgage Update for August 2nd 2010

Economic News:  The Stock Market has started off strong today and taken a bit of the wind out of the sails of the Bond Markets.  This morning started with the release of the ISM Manufacturing Index. (The Institute for Supply Management surveys 300+ companies on business conditions with respect to hiring, new orders, production, inventories, etc).  The ISM Index came in at 55.5 and was better than consensus but the slowest rate of the year.  Even though the manufacturing sector shows a bit of a slowdown the markets liked the report as it was coupled with the better than expected Construction Spending data.

Mortgage Markets:   The yield on the 10 Year Note is currently losing a little ground with the strong equity markets and is trading at 2.948%.  In addition, the Mortgage Backed Securities are a touch weaker today.  If you are in the process of purchasing or refinancing rates are currently range bound and are at terrific levels.

This Week's Reports:  Monday:  ISM Manufacturing Index.  Tuesday:  Personal Income & Outlays, Pending Home Sales Index.  Wednesday:  ADP Employment Report.  Thursday:  Jobless Claims.  Friday:  Employment Situation.

Current Mortgage Rates

Stay tuned for the Next East Bay Mortgage Update...

In a recent article released by DSNews.com, Fannie Mae and Freddie Mac are starting to initiate foreclosures at a quicker pace. Between the months of May and June GSE-initiated foreclosures rose 21 percent.

This is said to be due mostly to HAMP Program cancellations from initial trial plans. Most of these loans were already more than six months delinquent when their HAMP modification began. In fact, more HAMP modifications have been cancelled than have achieved permanent status.

With the swell of GSE foreclosures in the near future, we can expect to see a greater number of Fannie Mae owned homes placed in the company's HomePath program.

HomePath Homes are homes owned by Fannie Mae which they hope to make exceedingly attractive to buyers. Fannie offers special HomePath loans as a financing option. This is a unique and aggressive loan program. Here are just some of the features:

• Up to 97% LTV for primary residences
• Up to 90% LTV for investment and 2^nd homes
• No prepayment penalty
• No appraisal
• No PMI
• No declining market policy  
• 3% of down payment may come from a gift, grant or non-profit loan
• Special Home Path Protection home warranty
• Competitive credit guidelines

Give me a call today for more information about HomePath loans.

Cari Anderson's East Bay Mortgage Update for July 16th 2010

Economic News:  Yesterday's Producer Price Index (PPI) came in lower than expected influenced by a drop in the food & energy prices.  The PPI inflation fell .50% on top of a .30% drop we experienced in May. Weekly Jobless Claims fell 29,000 to 429,000 which is good news.  On the other hand continuing claims rose by 247,000 to 4.681 million.  Industrial Production results were at the high end of consensus but were a little muted.  This mild slowdown comes on the heels of gains we have experienced over the past year.  Today's Consumer Price Index (CPI) showed a third consecutive decline led mainly by lower energy costs and, taken with the PPI data, shows no inflation in the pipeline at this time.  Finally, Consumer Sentiment came in well below expectations with a reading of 66.5 which is the lowest since March of 2009.  The recent declines in Consumer Sentiment have been partially attributed to the effects of the gulf oil spill and we can only hope that the cap which has stopped the flow of oil will be a success.

Mortgage Markets:   The yield on the 10 Year Note has broken back below the 3.00% level and is currently trading at 2.94%.  In addition, the Mortgage Backed Securities are rallying on the weak economic data and we are seeing mortgage price changes for the better this morning.  If you are in the process of purchasing or refinancing rates remain at terrific levels.

Next Week's Reports:  Monday:  Housing Market Index.  Tuesday:  Housing Starts. Thursday:  Jobless Claims & Existing Home Sales.

Current Mortgage Rates

Stay tuned for the Next East Bay Mortgage Update...

I read a blog today on the apparent lack of lending support for FHA's recent waiver of the 90 day flipping rule which has originators and real estate agents understandably frustrated.

It appears that the majority of lenders are gun shy about accepting deals where the current owner has owned the property for less than 90 days and is now attempting to sell at a profit. Of course, there is good reason behind this. The past decade of lax lending guidelines has created problems industry wide. So when HUD came forth with a proverbial dangling carrot, it's not hard to see why some have decided not to play.

Although, HUD has expressed its hope that the waiver will help to move the housing market towards recovery, it still requires that such deals comply with the guidelines they set forth. My previous blog post (here) outlines these requirements. So this is by no means a free-for-all.

That being said, there ARE lenders who will accept FHA loans that comply with the flip waiver. I am aware of two that are currently in the game. However, it's important that the originator knows of any overlays that may tighten even further HUD's guidelines. For instance, one major lender will not accept the deal if the current value is over 19.99% of the value the investor originally purchased the property for. This is due to HUD's requirement of further valuation documentation to justify the jump in value if the current value is 20% or over the original value. Personally, I feel that this is a prudent move because if the value exceeds the threshold, the additional appraisal documentation could very well hinder the transaction closing in a timely manner (if at all!). With all the RESPA and appraisal restrictions we are currently dealing with, do we really want to throw even more potential pitfalls into the mix? If the ultimate goal is to get the housing market moving forward in a positive direction, our focus must be on closing and closing in a timely manner. As we've seen, HUD has good intentions but all too often, putting these intentions into practice can be a whole other matter entirely.

As always, my goal is to not only close as quickly as possible but to leave everyone with the feeling that they've received superior service - it's harder to accomplish these days but certainly not impossible.

Beginning of the Week Update

Economic News:  The Industrial Production numbers increased mainly due to higher utilities output relating to the weather.  Last week did not give us much market moving data but this week will.  Keep a close eye on the Consumer Price Index (CPI) and the Producer Price Index (PPI).  These will both give us the near term view of the inflation picture.

Mortgage Markets:  The 10 year note is trading around 3.70% and has pricing about .125 better in fee from Friday's closing.  The Mortgage Backed Security Market is stable and we now have two weeks until the FED ceases the MBS purchasing program.  If you are refinancing or closing on a new home in the next 21 days now is a good time to consider locking in your rate.

Upcoming This Week:  Monday:  Housing Market Index.  Tuesday:  Housing Starts, FOMC Meeting Announcement.  Wednesday:  Producer Price Index.  Thursday:  Consumer Price Index, Jobless Claims.

I have been hearing for the last couple of years that the days of the McMansion are limited.  Is this a response to the overall economy or a long term trend?  After doing the Broker Tours over the past couple of weeks we have seen everything from a 700 square foot tear down to an 11,000+ square foot mansion (this one certainly had no "Mc" in front of it).  The following video is a good look into the smaller footprint being promoted today.  After viewing it I began to ponder the long term ramifications.

• Is the building industry adjusting to the consumer?
• Are the builders looking to lower their overall cost per home?
• Even if consumers are demanding smaller, isn't the market so diverse that it is hard to "pigeon hole" buyers into a one size fits all approach?

When you apply for a home loan it's important to know what will be expected of you to provide. Gone are the days of "limited", "stated" and "no doc" lending - no longer does a decent credit score and a healthy pulse virtually guarantee you favorable financing. Indeed, the pendulum has swung to the other end and now many loan applicants feel the lender wants nothing short of their first born in order to get the loan funded. It's true, lending guidelines have tightened up considerably in the current market. Therefore knowing in advance what a lender will need from you as a borrower will put you ahead of the game when preparing to apply for a home loan.

1. Loan Application: if you want to hit the ground running a great place to start would be to fill out a loan application to the best of your ability prior to your loan application appointment. Yes, that may sound redundant but familiarizing yourself with the different facets of the application will a) give you a better understanding of the kind of information that is pertinent to the loan transaction and b) give your loan officer a lot of useful information up-front that he or she would otherwise have to take the time to get from you during your application appointment. This frees up lots of time to discuss other important aspects of your loan process and also hopefully shorten the length of the appointment. Most loan officers would be happy to send you a loan application ahead of time for you to complete. We have a simplified mortgage application questionnaire that we like to have our clients fill out. It goes more in-depth than the typical application but it gives us a wealth of information to help us determine the very best program for the client. You can find it here.

2. Income Documentation: if you are a salaried individual or paid hourly, you will want to gather your most recent 30 days' worth of paystubs to give to your lender. You will also want to give your lender your last 2 years' worth of tax returns. But you only need to provide the Federal returns, not the State. Also, include the last 2 years' W2s or 1099s. If you are self employed you would just provide the tax returns and a current year-to-date Profit and Loss Statement and Balance Sheet. Please be aware, if you are self-employed, that you must be able to provide evidence that your are currently still in business via current business licenses or public listings such as 411.com. Lenders are very cautious given the current economy in ensuring that a self-employed borrower's business is still thriving and viable.

3. Asset Documentation: In addition to the above, you will need to give your lender at least the last 2 current months' bank statements. Be sure to include all checking and savings accounts. You'll also want to provide your most current quarterly stock, mutual funds and/or retirement account statements. Of course, if you receive these monthly, then provide the most recent two months' worth. These are all to determine where your down payment will come from if you're applying for a purchase loan.

4. Legal Documents: Have you been divorced? Do you have a bankruptcy in the past? Neither of these occurrences automatically disqualifies you for a home loan. But providing your lender all related documentation can greatly improve the chances of your loan going smoothly. If you are providing either bankruptcy or divorce papers please provide the final judgment/discharge as well as all supporting schedules. In a bankruptcy it is incredibly important that the schedule of included debts is provided. If the bankruptcy is a Chapter 13 repayment structure, then you will also need to provide the payment history which your attorney should be able to provide. By the way, on an FHA loan, as long as your attorney gives permission, you may get a loan even if you are still in the repayment phase of the bankruptcy as long as you have paid on time!

5. Your landlord's Information: If you are currently renting you will need to give your lender the name of your landlord, his/her/their address and phone number. This is so the lender can verify that you pay your rent on time each month. Be aware that if you rent from a family member you may have to provide cancelled rent check to prove this - most lenders assume that a family member would give you a favorable rating whether or not it' the truth! This is not to be confused with if you live with your parents and just contribute to household expenses. If this is the case, then it's most likely you will need to go with an FHA loan which does not require a rental rating in this case.

6. Finally, if you are refinancing, you'll need to bring your lender copies of your current mortgage statement(s) and hazard insurance policy. Although there are probably more items the lender will ultimately request from you, this list is the "common denominator" - most applicants will need to provide this information regardless of the loan they are applying for. If you have these at the ready during your initial application appointment, your lender will most certainly be impressed and the pre-approval process will move forward much more smoothly.