Another aspect of today's news from Europe was that the group of finance ministers tasked with voting on the current Greek bailout is set to meet again on Monday to potentially approve that bailout. If that happens, then today's ECB actions grease the skids for Greece to negotiate and finalize a deal with its private sector bond-holders. And if ALL of that happens before Tuesday morning, it will probably have a fairly negative impact on rates.
Now... Of course we have seen time and time again that things rarely happen exactly as expected when it comes to the EU debt crisis. So we certainly aren't planning on any catastrophic spike in rates and more so than we plan on a nice improvement. Both are possible. But the fact that it COULD happen, and on a market holiday (Monday is President's Day), means that Traders are essentially heading into 3-day weekend with big potential market movement waiting on the other side. That could cause them to have a more defensive stance than they otherwise might Tomorrow.
All that to say, it's unlikely that we'll see a noticeable bounce back tomorrow unless we get some new info out of Europe that changes the expectation for the weekend bond swap and Monday vote.
So while costs are indeed higher today, Best-Execution rates are still at their all time lows and we'd advocate thinking more about protecting yourself from risks in the near term future than about lamenting missed opportunities if you decided not to lock yesterday.
Sure, rates could get lower next week and it would be natural to regret locking today if that turns out to be the case, but it wouldn't compare to the level of regret that would come from NOT locking today and seeing rates move sharply higher next week. We say this NOT to advocate locking vs floating, but rather, if you were inclined to lock, not to second guess that decision simply because yesteray's rates were better.
Today's BEST-EXECUTION Rates
30YR FIXED - 3.875%
FHA/VA -3.75%
15 YEAR FIXED - 3.25%
5 YEAR ARMS - 2.625-3.25% depending on the lender
Ongoing Lock/Float Considerations
Rates and costs continue to operate near all time best levels
Current levels have experienced increasing resistance in improving much from here
There are technical reasons for that as well as fundamental reasons
Lenders tend to get busier when rates are in this "high 3's" level and can throttle their inbound volume by raising rates or costs.
While we don't necessarily think rates are destined to go higher, given the above facts, there seems to be more risk than reward regarding floating
But that will always be the case when rates operating near historic lows(As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario. There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you're following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate)
Crystal Clear Mortgage LLC
www.CrystalClearMortgage.com
888-634-6911
Thursday, February 16, 2012
Friday, February 10, 2012
Which Housing Proposals are Going Somewhere?
Which housing proposals are going somewhere?
February 10, 2012 11:00AM
By Kenneth R. Harney
Though it was pronounced dead-before-arrival by opponents on Capitol Hill, President Barack Obama’s new mortgage refinancing package contained far more than legislative proposals.
In fact, significant portions of it that have received little media coverage require no prior approval from a hyperpartisan Congress, and could begin affecting consumers within weeks.
Here’s a quick rundown on key segments of the housing proposals with a handicapping of their likely impact this year:
– Going nowhere: If you’ve got an underwater mortgage that isn’t owned or guaranteed by Fannie Mae or Freddie Mac, the president’s marquee proposal to help you refinance into a 4 percent mortgage is not likely to be of assistance. The plan’s core concept of funding your rate cut by levying a fee on the largest banks — “based on their size and the riskiness of their activities” — would be a nonstarter politically even if this weren’t an election year. R.I.P.
– Moving fast: Refinancings can be speeded up administratively by key executive branch agencies, and the new program directs them to do so within the next few weeks wherever possible. For example, the Federal Housing Administration will be removing a major barrier for lenders to “streamline” refinancings for current, nondelinquent borrowers who want to take advantage of today’s low rates. The FHA no longer will count streamlined refis — where some standard underwriting requirements are waived — against lenders’ performance ratings on delinquencies. The fear of getting a poor rating is a powerful deterrent for many lenders against doing streamlined refis because they can lose their eligibility to do loans for the FHA altogether. Removing ratings as a barrier should help significant numbers of FHA borrowers get into a better deal.
At the same time, the White House has ordered all the other federal agencies with homebuyer programs to clear the decks for streamlined refis of their existing customers. For example, the Agriculture Department, which runs the third-largest and fastest-growing program — last fiscal year, its loan guarantees funded more than 130,000 home purchases in communities located on the fringes of major metropolitan areas — is expected to waive requirements for new credit reports, appraisals and other documentation for streamlined refinancings. The main requirement for hundreds of thousands of existing USDA borrowers who want to switch to a lower loan rate: Just be on time with your current payments.
– Coming your way: a mortgage servicing “bill of rights”: Though some reforms already are in place, the White House is requiring all federal housing agencies to enforce minimum standards on mortgage servicers, including mandating immediate interventions with offers of forbearance or loan modification at the earliest hints that an owner is facing financial strains. For borrowers, the plan also requires continuous points of contact with a customer service employee of the servicer plus access upon request to all relevant documents the servicer maintains on the borrower’s account. For homeowners who are turned down for a modification or other assistance, the plan requires a guaranteed right of appeal in “a formal review process” to give the borrowers a second chance.
– Long shot but could happen: The federal regulatory agency that oversees Fannie Mae and Freddie Mac in conservatorship disagrees, but the White House believes that both companies could eliminate all closing costs for large numbers of underwater borrowers who want to refinance into shorter-term loans and rebuild their equity. The idea is aimed at potentially hundreds of thousands of owners whose loans already are owned or backed by Fannie and Freddie.
To encourage them to use their refinancing savings to pay down their principal debt faster, the program would eliminate all closing fees for borrowers who opted for loan terms of 20 years or less. The refinancers generally would end up paying the same amount per month on their loans, but the compressed amortization schedule would reduce the principal much faster than a standard 30-year payoff schedule.
For example, say you’re underwater but still current on a 30-year, $214,000 mortgage you took out in 2006. The monthly payment is $1,350 and the remaining principal balance is $200,000. If you refi under the federal government’s Home Affordable Refinance Program, or HARP, into a 30-year mortgage at 4.25 percent, after five years your principal balance would be $182,000 — still underwater. But if you refinanced into a 3.75 percent 20-year loan, you’d owe $152,000 in five years — back into positive equity territory, according to the White House.
Don’t count this one out. It’s a potential winner for borrowers if the legal issues can be resolved.
If you have any questions about these programs that have been proposed please do not hesitate to call me at anytime.
Crystal Clear Mortgage
www.CrystalClearMortgage.com
888-634-6911
February 10, 2012 11:00AM
By Kenneth R. Harney
Though it was pronounced dead-before-arrival by opponents on Capitol Hill, President Barack Obama’s new mortgage refinancing package contained far more than legislative proposals.
In fact, significant portions of it that have received little media coverage require no prior approval from a hyperpartisan Congress, and could begin affecting consumers within weeks.
Here’s a quick rundown on key segments of the housing proposals with a handicapping of their likely impact this year:
– Going nowhere: If you’ve got an underwater mortgage that isn’t owned or guaranteed by Fannie Mae or Freddie Mac, the president’s marquee proposal to help you refinance into a 4 percent mortgage is not likely to be of assistance. The plan’s core concept of funding your rate cut by levying a fee on the largest banks — “based on their size and the riskiness of their activities” — would be a nonstarter politically even if this weren’t an election year. R.I.P.
– Moving fast: Refinancings can be speeded up administratively by key executive branch agencies, and the new program directs them to do so within the next few weeks wherever possible. For example, the Federal Housing Administration will be removing a major barrier for lenders to “streamline” refinancings for current, nondelinquent borrowers who want to take advantage of today’s low rates. The FHA no longer will count streamlined refis — where some standard underwriting requirements are waived — against lenders’ performance ratings on delinquencies. The fear of getting a poor rating is a powerful deterrent for many lenders against doing streamlined refis because they can lose their eligibility to do loans for the FHA altogether. Removing ratings as a barrier should help significant numbers of FHA borrowers get into a better deal.
At the same time, the White House has ordered all the other federal agencies with homebuyer programs to clear the decks for streamlined refis of their existing customers. For example, the Agriculture Department, which runs the third-largest and fastest-growing program — last fiscal year, its loan guarantees funded more than 130,000 home purchases in communities located on the fringes of major metropolitan areas — is expected to waive requirements for new credit reports, appraisals and other documentation for streamlined refinancings. The main requirement for hundreds of thousands of existing USDA borrowers who want to switch to a lower loan rate: Just be on time with your current payments.
– Coming your way: a mortgage servicing “bill of rights”: Though some reforms already are in place, the White House is requiring all federal housing agencies to enforce minimum standards on mortgage servicers, including mandating immediate interventions with offers of forbearance or loan modification at the earliest hints that an owner is facing financial strains. For borrowers, the plan also requires continuous points of contact with a customer service employee of the servicer plus access upon request to all relevant documents the servicer maintains on the borrower’s account. For homeowners who are turned down for a modification or other assistance, the plan requires a guaranteed right of appeal in “a formal review process” to give the borrowers a second chance.
– Long shot but could happen: The federal regulatory agency that oversees Fannie Mae and Freddie Mac in conservatorship disagrees, but the White House believes that both companies could eliminate all closing costs for large numbers of underwater borrowers who want to refinance into shorter-term loans and rebuild their equity. The idea is aimed at potentially hundreds of thousands of owners whose loans already are owned or backed by Fannie and Freddie.
To encourage them to use their refinancing savings to pay down their principal debt faster, the program would eliminate all closing fees for borrowers who opted for loan terms of 20 years or less. The refinancers generally would end up paying the same amount per month on their loans, but the compressed amortization schedule would reduce the principal much faster than a standard 30-year payoff schedule.
For example, say you’re underwater but still current on a 30-year, $214,000 mortgage you took out in 2006. The monthly payment is $1,350 and the remaining principal balance is $200,000. If you refi under the federal government’s Home Affordable Refinance Program, or HARP, into a 30-year mortgage at 4.25 percent, after five years your principal balance would be $182,000 — still underwater. But if you refinanced into a 3.75 percent 20-year loan, you’d owe $152,000 in five years — back into positive equity territory, according to the White House.
Don’t count this one out. It’s a potential winner for borrowers if the legal issues can be resolved.
If you have any questions about these programs that have been proposed please do not hesitate to call me at anytime.
Crystal Clear Mortgage
www.CrystalClearMortgage.com
888-634-6911
Wednesday, February 1, 2012
Obama to Unveil new Refinance Program
Feb 1st, 2012
By: Adam Simmons
President Obama is expected to release the details of his refinance plan that he touched on in his state of the union address. This plan is expected to be targeted to "responsible" home owners that have not missed a payment in the previous 6 months and whose homes may be worth far less than they owe.
Rumor has it that appraisals will not be necessary, nor will income qualification. As a prospective borrower, you must prove that your credit score is above a 580 and that you are currently employed. This refinance program will be geared towards those people that have privately held mortgages (loans not secured by Fannie Mae or Freddie Mac or FHA). These refinances will be sent through the governments FHA program. The FHA program is a wonderful product but I see a few problems with this right now:
By: Adam Simmons
President Obama is expected to release the details of his refinance plan that he touched on in his state of the union address. This plan is expected to be targeted to "responsible" home owners that have not missed a payment in the previous 6 months and whose homes may be worth far less than they owe.
Rumor has it that appraisals will not be necessary, nor will income qualification. As a prospective borrower, you must prove that your credit score is above a 580 and that you are currently employed. This refinance program will be geared towards those people that have privately held mortgages (loans not secured by Fannie Mae or Freddie Mac or FHA). These refinances will be sent through the governments FHA program. The FHA program is a wonderful product but I see a few problems with this right now:
- FHA already has a disproportionate volume of all new loans. They have had to raise their fees and mortgage insurance premiums several times over the last few years to keep their reserves in line. Their reserves are not in line yet, as they hold over 1 trillion in notes with only a couple billion to insure against default.
- FHA loans have higher monthly PMI premiums and have higher up front fees rolled into the loan. Therefore a borrower may get a lower rate but they will be even further underwater on their home and perhaps their payment might even go up due to the higher PMI than they currently pay.
- The government is proposing new, higher fees and taxes on the big lenders to fund this 10 Billion dollar effort. Who do you think pays these higher taxes and fees? It is not the banks. These fees get passed on to the consumer. Therefore everyone that is buying a new house, or refinancing a house will be subsidizing this effort.
Raising fees and taxes on banks will just create higher interest rates and higher fees. If the administration thinks that we need the housing market to come back to lead us out of our recession then they have a odd way of showing it. This is the second time in the last 30 days they have called on current home buyers and people refinancing to take higher rates for the success of some other temporary program. In January, home buyers and refinances will be paying higher rates through 2016 just to fund a one month extension in the payroll tax (true story!). Political feelings aside, this is not a good idea. The mortgage industry is not the administrations (current or any other) personal piggy bank. This would only hurt main street in my opinion.
There are many other options that can be rolled out. Let's hope this does not pass through Congress as it will not be a good program for very many people. Helping people get further underwater on their homes does not help the situation.
Underwater mortgages are the number one reason people default right now. Let's try to address that problem instead.
Crystal Clear Mortgage LLC
888-634-6911
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