Buying, Selling, Or Refinancing Real Estate?

Should you Lock a rate Today? yes!

2012-02-16T13:33:00.000-08:00

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

Which Housing Proposals are Going Somewhere?

2012-02-10T10:00:00.000-08:00

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

Obama to Unveil new Refinance Program

2012-02-01T06:47:00.000-08:00

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:

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

www.CrystalClearMortgage.com

888-634-6911

Rate Update 1/26/12

2012-01-26T12:37:00.000-08:00

From Our Friends at Mortgage News Daily (they are spot on today):

Mortgages Rates over the past two days have done much to make ground lost leading up to Yesterday's FOMC Announcement. After further improvements today, rates further solidified their reentry into 3.875% 30yr Fixed Best Execution levels. The rounded average of various lenders' Best-Ex rates had moved up to 4.0%, and more than a few lenders are still well-priced there, but a majority are once again offering 3.875% with attractive borrowing costs.

Yesterday's FOMC Announcement (Federal Open Market Committee or simply "The Fed") which surprised some market participants with it's inclusion of new verbiage describing how long the Fed anticipated that it would keep its "Fed Funds Rate" at so-called "exceptionally low levels," continues to be the primary driver of the bond market rally. When the broader bond markets are rallying like this, MBS (the "mortgage backed securities" that most directly affect mortgage rates) tend to rally as well. Most of the overnight news out of Europe as well as domestic economic reports garnered much less-than-standard levels of attention as markets continued adjusting to the new realities of the Fed's shift in verbiage from "mid-2013," to "late-2014."

We said yesterday that, while the FOMC Announcement definitely helped rates break recent trends at 4.0% Best-Ex, it would be up to the rest of the week to solidify the rebound. Cross the first half of that task off the list... 4.0% Best-Ex is increasingly looking like an outlying exception to a broader trend at 3.875%. (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 this low, 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).

Today's BEST-EXECUTION Rates

30YR FIXED - 3.875% mostly, with a few lenders at 4.0% still

FHA/VA -3.75%

15 YEAR FIXED - 3.375% and more 3.25's

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

Call us if you need anything~

Crystal Clear Mortgage

888-634-6911

Investor Cash Adding Downward Pressure on Home Prices

2012-01-23T08:03:00.000-08:00

Cash buyers, principally investors, may be putting downward pressure on home prices according to the Campbell/Inside Mortgage Finance Housing Pulse Tracking Survey released Monday. The survey found that investors with cash in hand are able to offer something that homeowners dependent on mortgage financing cannot, a guaranteed sale with a quick closing timeline. This seems to offset the desirability of a higher bid with a mortgage contingency.

The Housing Pulse survey found that the trade-off between price and speed is particularly true with offers on distressed properties because the lenders and servicers liquidating the properties generally prefer transactions that can settle within 30 days. The Campbell report states, "While investor bids may not be the first offers accepted, they often end up winning properties after other homebuyers are eliminated because of mortgage approval or timeline problems.
Appraisals below the contracted price are a common reason for mortgage denials. Most mortgage financing timelines are now in excess of 30 days."

The survey reports that 33.2 percent of home buyers in December were cash buyers, up from 29.6 percent in December 2010. However, 74 percent of investors came to the table with cash. This is especially striking as the survey found that investors accounted for 22.8 percent of home purchases in December, changed only slightly from 22.2 percent in November. But, Campbell says, "Despite their relatively small share among homebuyers, investors have an outsize effect on home prices because their bids bring down market prices."

Real estate agents responding to the survey commented on the low bids they are seeing from investors. Campbell quoted anecdotal information from a few agents indicating they are seeing investor bids 10-20 percent below list prices, but with quick closings.

The total share of distressed properties in the housing market in December continued at a three-month moving average of 47.2 percent, the 24th consecutive month that the HousePulse Distressed Property Index (DPI) was over 40 percent.The Campbell/Inside Mortgage Finance HousingPulse Tracking Survey involves approximately 2,500 real estate agents nationwide each month and provides up-to-date intelligence on home sales and mortgage usage patterns.

Crystal Clear Mortgage LLC
www.CrystalClearMortgage.com

Appraisers Say "Don't Shoot the Messenger."

2012-01-17T12:32:00.000-08:00

by Jann Swanson

Appraisers say "Don't Blame the Messenger" for Low Home Prices
Jan 17 2012, 1:58PM

The Appraisal Institute has apparently had enough and has decided to fight back against what it perceives as unwarranted blame for depressed home prices. In a press release the Institute says, " Don't blame the real estate appraiser if it turns out that house you're trying to sell or buy isn't worth what you thought it was."

Speaking for the Institute, its president Sara W. Stephens, MAI said that real estate agents, homebuilders and others have placed blame for the market's distressed condition on appraisers who produce opinions of value that don't match a home's listing, contract or sales price, delaying a recovery in the housing market and called that accusation "nonsense."

"The fact is that appraisers are undertaking the same thorough research and thoughtful analysis that they always have in order to continue producing reliable, credible opinions of value," Stephens said. "Don't shoot the messenger."

It is unclear why the Institute decided to refute the claims about appraisers at this time. We did a search and found a number of articles with the blame appraisers theme, but none that were more recent than last summer except for charges from the National Association of Realtors that low appraisals are among the reasons for recent high levels of sales contract cancellations. NAR, however, has been complaining about low appraisals since at least the spring of 2009.

Noting that buyers and sellers often have emotional value attached to a home or are unaware of the market, Stephens pointed out that appraisals completed for mortgage transactions are used to assist lenders, who are the clients, not buyers or sellers, in making lending decisions - and are not intended to confirm a listing, contract or sales price. There's no reason to assume the contract price is the "correct" price simply because it's higher than the appraisal, she said.

As to the claim that appraisers are using distressed sales as comps for market rate properties, Stevens said that qualified appraisers know how to handle adjustments for distressed properties and added that in some markets, distressed sales are so prevalent that it would be improper not to use them as comparables.

The Institute also released two handouts. The first explains the process of conducting an appraisal in a declining market and includes a discussion of how an appraiser discounts a distressed comp. The second handout attempts to explain what an appraisers job really is, making the points that:

-Appraisals aren't intended to confirm a home's sales price.
-Appraisers don't set the real estate market; they reflect what's happening in the market.
-Appraisers work not for buyers or sellers, but for lenders.
-Appraisers are independent, third-party experts with no motive to be biased.
-Appraisals sometimes are assigned to the least qualified, least competent appraisers, but especially in a distressed market, competent and qualified appraisers - such as designated members of the Appraisal Institute - should be hired for difficult assignments.
-Appraisers know how to use distressed sales as comparables

Crystal Clear Mortgage
www.CrystalClearMortgage.com
888-634-6911

Homeownership costs set to skyrocket with new fees, loss of tax write-offs

2012-01-13T12:53:00.001-08:00

January 13, 2012 12:45PM
By Kenneth R. Harney

Though its demise drew little attention because of the partisan year-end brawl over the payroll tax cut extension in Congress, a key mortgage financing benefit disappeared at the end of December: The ability of large numbers of homebuyers and owners to write off the premiums they pay for mortgage insurance.

The loss of that tax deduction — plus mandatory new fees imposed by Congress on all new conventional and Federal Housing Administration loans — could effectively ratchet up the costs of homeownership this year.

The expiration of mortgage insurance deductibility will hit many low-down payment conventional loans originated since 2007, plus virtually all new mortgages closed this year where the down payment is less than 20 percent. Though industry experts do not have precise numbers, their estimates range into the millions of existing owners and new purchasers potentially touched by the deductibility termination. Borrowers using guaranteed veterans and rural housing loans, where down payments can drop to zero, also are affected.

The change in the law took effect last month, along with the expiration of 58 other tax code benefits that Congress failed to renew, such as credits for home energy improvements, credits for builders of energy-efficient new houses and deductions for state and local sales tax payments. They were all components of what would have been an annual “tax extenders” bill authorizing continuation of relatively noncontroversial expiring benefits for another year or more.

Congress could still reauthorize all or some of the write-offs retroactively this year, but the current poisonous political atmosphere on Capitol Hill raises doubts about the timing of that scenario.

The mortgage insurance premium deduction dates to legislation enacted in 2006. It allows purchasers and refinancers who use either private mortgage insurance or federal insurance or guarantees, and who itemize on their federal tax returns, to write off their premiums. Borrowers who are single or married and filing jointly with adjusted gross incomes of $100,000 or less can write off 100 percent of their annual mortgage insurance premiums. Married homeowners filing singly can write off 50 percent of premiums. Borrowers with incomes above $100,000 may qualify for partial deductions on a sliding scale.

In many cases, the post-tax savings for these borrowers are significant. New buyers with an income around $100,000 and a mortgage of $200,000 would save between $600 and $1,000 a year, depending on their credit score and loan-to-value ratio, according to MGIC, one of the largest private mortgage insurers in the country. For households with lower incomes, the impact would be less, depending on their marginal federal tax brackets.

David Stevens, who served as FHA commissioner and is now CEO of the Mortgage Bankers Association, said the loss of deductibility of mortgage insurance “hits a segment [of consumers] — middle-income and first-time buyers — where affordability is especially important.”

But mortgage insurance was not the only housing-related casualty of the pre-Christmas skirmishing. As part of the temporary extension of the payroll tax cut, negotiators tacked an unusual provision that raises fees on the majority of conventional mortgages — those originated for sale to or guarantee by Fannie Mae and Freddie Mac. Starting in April, Fannie and Freddie will impose a surtax on the guarantee fees they charge private lenders equal to one-tenth of 1 percent. Lenders are virtually certain to pass those fees to consumers in the form of a higher note rate or loan charges up front. Industry estimates suggest the surtax could add an eighth of a percentage point to rates and raise costs to borrowers over the life of the loan by more than $4,000 on a $200,000 mortgage.

Unlike standard guarantee fees, which are used by Fannie and Freddie to defray loan-default expenses, the new funds will be sent directly to the Treasury to help pay for the $36 billion cost of the temporary payroll tax cut. FHA loans also will be hit with a fee increase by the payroll bill, raising the annual premiums it charges new borrowers by one-tenth of a point.

At a time when the Federal Reserve is warning that there can be no broad economic improvement until housing recovers, it may strike you as odd public policy to raise costs for homebuyers and refinancers in order to fund unrelated, temporary tax relief. But that’s not the way they saw it on Capitol Hill in the rush to holiday recess.

Bottom line: The mortgage insurance deductibility problem may disappear if mortgage insurance gets included in an election-year “extender” package. But the fee hikes on most new mortgages are here for the foreseeable future, so buyers should factor them into their housing budgets.

Crystal Clear Mortgage LLC
adam@crystalclearmortgage.com

Bridging the Divide between Home Buyers and Sellers

2012-01-06T12:09:00.000-08:00

By Kenneth R. Harney

January 1, 2012

With mortgage rates below 4% and prices near bottom in many markets, it's a good time to buy a house. But many owners won't sell because they can't get the price they want.

Where do you side in the great real estate buy-sell divide of 2012? If you're a homeowner considering selling sometime in the new year, are you apprehensive that you won't get the price you need or want, and therefore it's possible you won't even try to sell?

If you're a buyer, do you agree that with 30-year fixed mortgage rates now below 4% and home prices near cyclical bottom in many areas, 2012 offers extraordinary opportunities, even if listings are fewer than you might prefer?

A new study by the Research Institute for Housing America, the think tank affiliate of the Mortgage Bankers Assn., documents a profound market fissure caused by owners' fears and hesitation — what researchers call "negative selling sentiment."

Nearly 80% of consumers in the study's survey think this is a great time to buy a house, but more than 92% of homeowners think it's not a great time to sell.

The study was conducted by Syracuse University economist Gary Engelhardt using extensive data from the University of Michigan's Survey Research Center, which is generally recognized as an authoritative source on consumer attitudes.

Engelhardt said that compared with earlier post-recession periods, owners have been more deeply shocked by the extent and severe side effects of foreclosures, short sales and unemployment. In the aftermath of earlier recessions, such as in the early 1990s, 40% to 60% of homeowners remained relatively positive about their prospects if they chose to sell — far higher than the tiny sliver who see it that way today.

Many owners "have not adjusted their price expectations downward" to keep pace with local declines in property values after the mortgage bust, Engelhardt said, thereby contributing to the sharp divergence in their real estate visions compared with those of buyers.

This is consistent with the results of a study conducted in mid-2011 by Zillow, the online real estate and mortgage information company.

Zillow found that sellers nationwide were having trouble coming to grips with what market forces had done to their property values. They knew prices had declined, but they didn't necessarily think those devaluations applied to their houses.

For example, people who had purchased their homes in 2007 or later thought their homes were worth about 14% more than their actual sales value. People who bought homes before 2002 were slightly more realistic, but still overvalued their houses by about 12%.

How are such seller perceptions affecting local real estate market dynamics today? For one thing, they are keeping owners out of the game. But they also are bringing more motivated and committed sellers to the fore. Glenn Kelman, chief executive of Redfin, a national realty brokerage in Seattle, said the shortages of listings in some markets are the product of owners "waiting for better times to sell."

But owners who believe they need to sell now — they're downsizing, moving to a new area or getting divorced — turn out to be "more reasonable" in general, Kelman said. "Some are even resigned" to the reality that despite their unfortunate timing, they will definitely sell provided that they price the house realistically.

David Howell, executive vice president of McEnearney Associates, a large realty firm active in the Washington, D.C., area, said the absence of substantial numbers of people who would otherwise be sellers may also be a healthy development.

With listing inventories lower than typical for this time of the year, there are fewer houses for buyers to choose from. This, in turn, exerts a slight upward pressure on prices.

What about sellers who refuse to believe their properties won't command the prices they expect or require? Mike Litzner, broker-owner of Century 21 American Homes on New York's Long Island, said, "It's all about educating them. We try to show them the comparables" — the recent selling prices of similar houses in the area. "If sellers really want to sell," he said, "they adjust their expectations to the changed realities."

If they adamantly refuse, Litzner said, his agents often decline the listing rather than waste weeks or months trying to market an overpriced piece of real estate.

Howell said his firm's agents sometimes walk away from unreasonable listing price demands, but they also use a technique that seeks to bridge the seller-buyer divide: pre-authorized price reduction clauses in the listing contract that ratchet down the asking number. The initial reduction kicks in within the first two to three weeks if the house fails to attract buyer interest.

"It works," Howell said. "And both sides stand to benefit."

Adam Simmons
Crystal Clear Mortgage
adam@crystalclearmortgage.com
888-634-6911

A Message from a Mortgage Company CEO regarding the new fees inacted by Pres. Obama

2012-01-04T13:55:00.000-08:00

Sorry to post a second message today, as i do not like to send out too many updates. That being said this is a major issue and it needs to be tackled as soon as possible. This letter is very well written and sums things up very well. Please call us with any questions:

On December 23, 2011, Congress and President Obama gave all homeowners and home buyers an ironic "present" in the form of a 10 bp increase in g-fees for all mortgage loan products offered by Fannie Mae and Freddie Mac, in order to fund a two-month extension of a 33% payroll tax cut. This shift in tax burden to homeowners and home buyers will remain in effect until October 2021 (a period of almost 10 years), and will cost this already stressed group of Americans approximately .45% of any amount they subsequently borrow to purchase a home, or refinance an existing home loan.

As you can imagine, I think this is an absurd and irresponsible way to finance a two-month tax cut, and I encourage everyone to protest loudly to any politician in your district or state. While there's little chance this law will be changed, it is nevertheless very important that we be heard, because this unprecedented use of credit guarantee fees for general Treasury purposes cannot be repeated. If Congress somehow begins to perceive credit guarantee fees to be some sort of readily available "cookie jar" that can be used for whatever whim politicians believe appropriate, then this country's housing finance system will be in a world of real hurt. The payroll tax extension will now expire on March 1, 2012; and you can be certain that efforts will be made to extend the tax cut through the November 2012 general election. If it costs 10 bps to fund an extension for two months, just imagine what it would do to guarantee fees if they were used to fund a full year!

Please see the attached announcement from the Federal Housing Finance Agency regarding this matter. It is very likely that this change in law will impact some lock-in expiration dates; we're now reviewing our pipeline and will be providing guidance soon regarding impacted loans, as well as when you might expect to see the cost of this increase reflected in our daily pricing.
Thank you for your business in 2011, and we look forward to expanding our mutually beneficial relationship in 2012!

Sincerely,
Jon K. Baymiller, CFA
President & CEO
NYCB Mortgage Company, LLC

Tax Cut Extension Now Officially raising Mortagge rates!!

2012-01-04T09:15:00.000-08:00

As part of the temporary resolution to the recent battle over the Tax Cut Extension that took place in the last weeks of December, Congress decided that mortgage borrowers should foot part of the bill. Technically, Congress increased the "Guaranty Fees" that Fannie Mae and Freddie Mac charge to lenders that securitize MBS (Mortgage-Backed-Securities) with the Agencies, but ultimately, this cost must either be absorbed by lenders, passed on to consumers, or some combination of the two.

From the official release on 12/29/11:

"On Dec. 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act of 2011. Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Fannie Mae and Freddie Mac (the Enterprises) by no less than 10 basis points from the average guarantee fees charged by these companies in 2011 on single-family mortgage-backed securities. This requirement is effective immediately, meaning that the average guarantee fees charged in2012 need be at least 10 basis points greater than the average guarantee fees charged in 2011."

The first official effects of these measures were seen today when BB&T distributed information to it's brokers and correspondents regarding the impacts of the fee increase. In the announcement, BB&T explains that the 10 basis point increase in the Guaranty Fee or "G-Fee" as it's called, equates to a pricing difference of 30-40 basis points in terms of cost/rebate or roughly 0.125% in rate.

The announcement tacitly warns that other lenders will soon follow suit by saying that BB&T is executing this change now "a few days before all their competitors do the same." While similar announcements are indeed, to be expected, some originators in MND's MBS Live Community have noted recent erratic behavior in lender pricing above and beyond what they'd expect for the usual holiday fluctuations. The implication is that some lenders may already be in the process of pricing these increased costs into rate sheets and could forego formal announcements and simply spread the increased costs out over a longer period.

MBS Live! community member, Victor Burek stated in live chat: "I think some other lenders have added it already. One of my most frequently used lenders is about 30bps off in price despite unchanged MBS prices. Granted, there are other factors that could be driving this, but they could also be pricing in some of the expected costs of the Tax-Cut Extension."Either way, mortgage borrowers end up footing the bill for the Tax Cut Extension.

Despite the April 1st implementation, the letter of the new law states that the average G-Fees in 2012 must be 10 basis points higher than those in 2011.

The bottom line is that rates must move higher on average and if lenders aren't building the fee increase into their rates now, they'll have to do so to a greater extent in the future to meet the "on average" guideline set forth by Congress

Homebuyers shouldn't assume they won't qualify for mortgages in 2012

2011-12-28T07:18:00.001-08:00

December 23, 2011 09:30AM

By Kenneth R. Harney

Could gloomy popular assumptions about how tough it is to get approved for a mortgage be scaring away large numbers of people who are qualified from even applying?

Could the same worries -- I can't come up with the big down payment I need, my credit scores are too low, my bank account has almost none of the "reserves" lenders want to see -- put a needless damper on a housing recovery in the new year?

You bet. Lenders and economists will tell you flat out: The lack of accurate information about the availability of loan programs that are designed to address special needs is discouraging far too many consumers from even considering an application, much less shopping around.

Mortgage banker Alex Stenback of the Residential Mortgage Group in Minnetonka, Minn., said he sees it every day: "People just aren't aware of what's possible right now" and as a result, they are missing real estate prices and long-term interest rate opportunities they shouldn't. Doug Lebda, founder and CEO of LendingTree, the online site that allows banks to make competing offers to applicants, believes that "the fear of being rejected" because they don't conform to standards that may not even exist, is keeping qualified applicants on the sidelines for no reason.

For example, what's needed for an acceptable down payment? Is it 20 percent? Ten percent? Less? Yes, it's less -- and potentially a lot less if you qualify for the right program. The widespread erroneous assumption that banks require a minimum 20 percent for conventional loans may have arisen from heavy media coverage this spring and summer of a controversial proposal by federal agencies calling for borrowers to put down that much if they want to get the best interest rates and lowest fees.

Also contributing to incorrect beliefs about down payments: The Obama administration floated the idea of a phased-in move to 10 percent upfront cash for all loans eligible for purchase by mortgage giants Fannie Mae and Freddie Mac, who together dominate the conventional home-loan sector. But neither the 20 percent nor the 10 percent plan has been adopted and the odds of either moving forward in 2012 are remote. Fannie Mae's and Freddie Mac's standard minimums are still 5 percent with mandatory mortgage insurance coverage.

If you have little or no cash to put down, there are multiple options for you: FHA requires just 3.5 percent down on its insured mortgages. Other programs let you go to zero -- even finance more than the price on the house when fees are rolled into the mortgage -- provided you fit into an eligibility niche. If you qualify as a veteran or active member of the military, you can get a zero-down VA-guaranteed mortgage. Plus the VA allows your seller to pay your loan fees and closing costs provided they don't exceed 6 percent of the house price.

You can also buy with nothing down if you are purchasing a home in any of the many communities around the country that are eligible for rural (USDA) guaranteed mortgages. Though the property may be located on the outskirts of a large metropolitan area and might not strike you as particularly "rural," if the local population is below roughly 20,000, there's a decent chance you're eligible. The little-publicized USDA guaranteed home loan program, by the way, is booming. In the last fiscal year alone, according to housing administrator Tammye Trevino, more than 130,000 borrowers received low or no down payment guaranteed mortgages -- quadruple the number of loans extended as recently as 2006.

What about credit? Haven't lenders been pushing up minimum FICO scores into the mid-700s and rejecting applications with lower scores outright? Not everywhere. Though most lenders doing FHA loans require 620 to 640 scores to get you in the door, a few of the biggest FHA originators, such as Quicken Loans, will accept scores down to 580. Bob Walters, Quicken's chief economist, said underwriters scrutinize low FICO applications extra carefully but are seeing good to excellent performance from them: Not one has gone seriously delinquent this year.

And how about debt-to-income ratios? Aren't they tighter than ever? Not really. Lenders say that when loan applications go through the "automated underwriting" systems used by Fannie, Freddie and FHA, borrowers with high total monthly debt levels of 45 percent to 55 percent of household income -- well beyond the posted limits -- frequently get approved if they have positive compensating information elsewhere in the application.

Bottom line: Don't assume you can't qualify for a mortgage in 2012. Talk to lenders and seek out loan products that offer flexibility where you need it. You just might be surprised.

Adam Simmons
Crystal Clear Mortgage LLC
adam@crystalclearmortgage.com
888-634-6911
www.CrystalClearMortgage.com

Real Estate Market Again Ripe for Fraud

2011-12-19T05:22:00.000-08:00

Real-estate market again ripe for fraud

In an ironic twist, there are signs that the wreckage left over from the housing bust may be reigniting dubious real-estate schemes and fraud.

By Kenneth R. Harney

DEC 16, 2010

WASHINGTON — Could today's seductive conditions in the housing market — severely marked-down prices, record low interest rates and hundreds of thousands of foreclosures waiting to be resold — be breeding new generations of the very practices that led to the crash?

In an ironic twist, there are signs that the wreckage left over from the housing bust may be reigniting dubious real-estate schemes and fraud. According to researchers:

• Property flippers are back in action in places like South Florida and Las Vegas, where condo prices crashed but are now seeing appreciation again in some areas.

• So-called "floppers" are defrauding banks by hijacking short sales at prices below what legitimate purchasers are willing to pay. In these schemes, realty agents obtain fraudulent appraisals to persuade banks to sell houses at below-market prices to investor groups. The investors then flip the houses at fair market prices to ordinary homebuyers and split the quick profits.

• Creative "credit enhancement" companies are "renting" investors the bank-account balances they need to demonstrate to lenders that they have the financial wherewithal to qualify for a mortgage. The accounts are for real, but they don't belong to the loan applicants who claim them. Account names are assigned to applicants — who pay for the service — but they are never allowed access to the money. When mortgage underwriters check to verify the deposits — which are in reality fraudulent sub-accounts — they are told the money is in the name of the loan applicant. One investigator pretending to be a purchaser was verified as having funding available in the amount of $850,000. The loan application was to buy 935 Pennsylvania Ave. N.W., in Washington D.C., which is the headquarters building of the FBI.

• Investors are hoodwinking lenders into giving them low down payments and rock-bottom interest rates by lying about their intentions to occupy the property they plan to buy as a principal residence. Some investors consider such dissembling nothing more than a fib, but in reality it's bank fraud. Researchers at the Federal Reserve Bank of New York have documented that widespread falsehoods by investors about occupancy played a major but previously unrecognized role in the real-estate bust.

To Ann Fulmer, a former white-collar-crime prosecutor who is now a vice president with mortgage-fraud analytics company Interthinx, this all amounts to a "past is prologue" situation — the market conditions are ripe for a reprise of some of the worst behavior of the boom and bust.

Her firm's latest study of mortgage fraud nationwide, covering loan origination and other data from the third quarter, found that applicants' dishonesty about their employment and income was up 9 percent from the same period the year before and a stunning 50 percent from the third quarter of 2009. The reason: Borrowers increasingly are falsifying W-2s and other records in order to meet the tougher debt-to-income thresholds lenders adopted after the bust and recession.

Interthinx works with major mortgage lenders to spot fraud and has access to vast loan-application databases, credit-bureau data and other information, and runs it all through proprietary models to establish estimates of fraud risk. For example, when an applicant claims to be purchasing a home as a principal residence, Interthinx pulls credit-bureau files and public records and may find that the applicant already has other homes listed as principal residences. The anti-fraud systems also spot cases where buyers apply to multiple lenders for the same property.

For the sixth straight quarter, the states that Interthinx ranked riskiest for mortgage fraud are the same that experienced the most explosive booms and the most crushing busts between 2004 and 2008: Nevada, Arizona, California and Florida. California alone accounted for half of the 10 highest-risk metropolitan areas in the most recent rankings. Miami-Fort Lauderdale and Cape Coral-Fort Myers, Fla., are high on the list as well. Metropolitan Washington, D.C., which had been ranked sixth in fraud risk earlier this year, dropped to 24th place in the most recent study.

San Jose, Calif., saw a 16 percent jump in "identity fraud" schemes where loan applicants seek — and get — new identities and credit histories good enough to qualify them for mortgages that would otherwise be beyond reach.

Déjà vu? "I wouldn't be surprised," says Fulmer. "There's so much money on the sidelines" looking for high returns in the face of a volatile stock market and low yields on conventional investments. If you have larceny in your heart, mortgages and houses can be tempting targets.

MOrtgage Lenders could soon take homes' energy costs into account

2011-10-28T12:30:00.000-07:00

When you apply for a mortgage to buy a house, how often does the lender ask detailed questions about monthly energy costs or tell the appraiser to factor in the energy-efficiency features of the house when coming up with a value?

Hardly ever. That’s because the big three mortgage players — Fannie Mae, Freddie Mac and the Federal Housing Administration, who together account for more than 90 percent of all loan volume — typically don’t consider energy costs in underwriting. Yet utility bills can be larger annual cash drains than property taxes or insurance — key items in standard underwriting — and can seriously affect a family’s ability to afford a house.

A new, bipartisan effort on Capitol Hill could change all this dramatically and for the first time put energy costs and savings squarely into standard mortgage underwriting equations. A bill introduced Oct. 20 would force the big three mortgage agencies to take account of energy costs in every loan they insure, guarantee or buy. It would also require them to instruct appraisers to adjust their property valuations upward when accurate data on energy efficiency savings are available.

Titled the SAVE Act (Sensible Accounting to Value Energy), the bill is jointly sponsored by Sens. Michael Bennet (D-Colo.) and Johnny Isakson (R-Ga.). Here’s how it would work: Along with the traditional principal, interest, taxes and insurance (PITI) calculations, estimated energy-consumption expenses for the house would be included as a mandatory underwriting factor.

For most houses that have not undergone independent energy audits, loan officers would be required to pull data from either previous utility bills — in the case of refinancings — or from an Energy Department survey database to arrive at an estimated cost. This would then be factored into the debt-to-income ratios that lenders already use to determine whether a borrower can afford the monthly costs of the mortgage. Allowable ratios probably would be adjusted to account for the new energy/utilities component.

For houses with significant energy-efficiency improvements built in and documented with a professional audit, such as a home energy rating system study, lenders would instruct appraisers to calculate the net present value of monthly energy savings — i.e., what that stream of future savings is worth today in terms of market price — and adjust the final appraised value accordingly. This higher valuation, in turn, could be used to justify a higher mortgage amount.

For example, Kateri Callahan, president of the Alliance to Save Energy, a nonprofit advocacy group and a major supporter of the new legislation, estimates that a typical new home that is 30 percent more energy efficient than a similar-sized, average house will save about $20,000 in utility expenses over the life of a mortgage. Under the Bennet-Isakson bill, appraisers would be required to add those savings to the current market valuation of the house. In this instance, Callahan says, the increase in value would be about $10,000.

Dozens of housing, energy and environmental groups have endorsed the new legislation including appraisers, large home builders, the U.S. Chamber of Commerce, the U.S. Green Building Council, the Natural Resources Defense Council, green-designated real estate brokers, the Institute for Market Transformation and the National Association of State Energy Officials, among others.

Business groups such as the U.S. Chamber are backing the legislation because they see it as an employment generator that requires no federal budget outlays, no new taxes or programs. A joint study by the American Council for an Energy-Efficient Economy and the Institute for Market Transformation estimated that 83,000 new jobs in the construction, renovation and manufacturing industries could be stimulated by the legislation if the new underwriting rules were phased in over a period of years.

But not all interest groups are lining up behind the bill. The National Association of Realtors expressed concern that it might hamper a real estate recovery by complicating the mortgage process. “NAR supports efforts to promote energy-efficiency in housing and believes it’s something that all consumers should strive toward,” the group said. “However, we believe that homeowners should move toward energy efficiency at their own pace, without a mandate that impedes their ability to qualify for a mortgage or causes them to incur substantial additional costs to purchase a home, especially while the housing market continues to recover.”

Another group whose members and clients could be affected by the bill, the Mortgage Bankers Association, declined to comment for the record, saying it is still evaluating the bill’s provisions.

But one might ask: In a fractious, polarized Congress, could this bill actually make it through this session? The co-sponsors are optimistic and supporting groups say there is substantial bipartisan support — a rarity — for the idea in both the House and Senate.

In the meantime, for homeowners who think their energy-efficiency and cost-saving improvements should be worth something, there is no rule barring you from asking a qualified appraiser or a lender to assess the added market value of those features. You can get your house rated and documented and insist they do precisely that.

Or you can invest in documented improvements that save on utility expenses — a worthy goal in its own right — and hope that the federal agencies see the light and change their underwriting and valuation procedures before you go to sell. Sooner or later, this is going to happen.

New Loan Product with No Loan to Value restrictions!

2011-10-24T09:05:00.000-07:00

Federal regulators on Monday plan to unveil a major overhaul of an under-used mortgage-refinance program designed to help millions of Americans whose home values have tumbled.

The plan is the latest White House effort to deal with one of the most critical impediments to economic recovery—a stagnant housing market caused in part by a surfeit of homeowners who are unable to refinance.

The overhaul will, among other things, let borrowers refinance regardless of how far their homes have fallen in value, eliminating previous limits. That could open up refinancing to legions of borrowers in Nevada, Arizona, Florida, California and elsewhere who are paying high interest rates and are deeply "underwater," owing more than their houses are worth. President Barack Obama is expected to tout the program in Las Vegas on Monday.

The plan will streamline the refinance process by eliminating appraisals and extensive underwriting requirements for most borrowers, as long as homeowners are current on their mortgage payments, according to administration officials and an official at the Federal Housing Finance Agency. Fannie and Freddie have also agreed to waive some fees that made refinancing less attractive for some.
The Long Haul

The revamp is aimed at homeowners like Christine and Hector Penunuri of Gilbert, Ariz., who have never missed a mortgage payment and who both have jobs and good credit. Yet their application to refinance their five-bedroom home, which has fallen in value, was denied earlier this year because their tax returns showed a $1,000 loss in start-up costs from Mr. Penunuri's business, which isn't even his day job.

It's "absurd," says their mortgage broker, Steve Walsh of Scottsdale, because the loan is already guaranteed by government-backed mortgage company Freddie Mac.

The Penunuris could save $350 a month by refinancing to a 4% rate from their current 5.75%. They would use that money to put their two sons into junior sports, take a family vacation and pay off other debts, says Ms. Penunuri, 41 years old. "It's a win-win situation."

Freddie Mac declined to comment on the rejection of the Penunuris' earlier refinancing. Freddie Mac and sister company Fannie Mae together guarantee roughly half of the nation's $10.4 trillion in home loans outstanding.

Christine Penunuri, and her husband have never missed a mortgage payment and have jobs and good credit, but have been unsuccessful in refinancing their loan.

Regulators are revamping a program rolled out two years ago, the Home Affordable Refinance Program, or HARP, which lets borrowers with less than 20% in equity refinance if their loans are backed by Fannie Mae or Freddie Mac. President Obama announced HARP roughly one month into his presidency. So far, only 894,000 borrowers have used it, of which just 70,000 are significantly underwater.

"It hasn't worked," said James Parrott, a White House economic adviser, in a speech last month.

Officials at the Federal Housing Finance Agency, which regulates Fannie and Freddie, estimate that between 800,000 and one million more borrowers should be able to refinance. "It's in our interest to have these borrowers refinance into lower rates and continue to pay," said an FHFA official.

Monday's refinance announcement is separate from a recent push by state attorneys general to extract concessions from banks to refinance underwater mortgages. That effort, part of the months-long negotiations to settle alleged foreclosure-processing abuses, would apply only to loans held on the books of five of the nation's largest banks, a much smaller subset of loans.

In past downturns, lower interest rates engineered by the Federal Reserve were a powerful antidote for a sluggish economy. Falling mortgage rates triggered a refinancing wave that lowered homeowners' mortgage payments, freeing up cash for other things. That, in turn, helped to stimulate spending that boosted economic growth.

This time around, falling mortgage rates—now averaging just 4.11% for a 30-year fixed-rate mortgage, according to a Freddie Mac survey—haven't packed the usual oomph. The reason: Many homeowners haven't been able to refinance.
Where Reﬁnancing Should Be Happening

CoreLogic, a company that tracks 85% of all mortgages, estimates that 20 million borrowers with equity in their homes could cut the interest rates on their loans by more than one percentage point if they could refinance. That's about a quarter of all the homeowners in the country.

Because a refinanced mortgage is treated like a brand new loan, refinancing is nearly impossible for another eight million borrowers whose homes are worth less than their mortgages, unless they qualify for HARP.

But what about those who still have equity in their homes? Some have blemishes on their credit and employment histories or don't have enough income to qualify under today's tougher lending standards. Some find refinancing isn't worthwhile after factoring in new fees imposed by Fannie and Freddie or other closing costs. Still others can't get a refinancing application through a clogged mortgage-processing system.

That's a big obstacle to a stronger economy. Goldman Sachs economists estimate that if current borrowers with a 30-year fixed-rate loan backed by Fannie or Freddie were to refinance, they would save $24 billion annually. Researchers at Columbia Business School estimate that the benefits would accrue primarily to working- and middle-class borrowers with mortgages below $200,000.
Refinancing Rethink

Key points of the overhaul, designed to make refinancing easier for people with mortgages backed by Fannie Mae and Freddie—about half the nation's $10.4 trillion in outstanding home loans:

Open to those owing more than 125% of their home's value

Appraisal and underwriting requirements to be reduced

Loan fees will drop; waived for borrowers who reduce their loan term

Borrowers must be current on previous six payments

The changes should help borrowers like Carol Gesior, who has two underwater mortgages, backed by Freddie Mac, on suburban Chicago properties she bought for siblings. She says she tried to refinance but her bank, Citigroup Inc., told her she couldn't without equity. She was unaware of HARP. If she could refinance both properties, she says she would replace her 1995 Ford Crown Victoria.

"I made a commitment. I signed an agreement to pay. But I didn't do anything to cause the values of these homes to decrease," says Ms. Gesior, 52, an office manager at an investment management firm. "Any logical person would have walked away already."

A Citi spokesman says the company is "happy to work with this client to explore refinancing options that may be available to her."

One problem is that bankers or other mortgage originators shy away from refinancing all but the safest borrowers because Fannie and Freddie can force a lender to buy back a loan if underwriting flaws emerge. In response, lenders are asking for extra documentation of incomes and scrutinizing appraisals, steps that raise costs and lead to more denials.

Another obstacle is new fees that Fannie and Freddie charge borrowers with less-than-perfect credit, even if the borrower's existing mortgage is guaranteed by Fannie or Freddie.

The changes being prepared by federal officials should boost refinancing because they will let banks avoid the risk of any "buy-back" on a HARP mortgage as long as borrowers have made their last six mortgage payments and they prove that they have a job or another source of passive income. They are also set to reduce loan fees that Fannie and Freddie charge. The fees will be waived on borrowers that refinance into loans with shorter terms, such as a 15-year mortgage.
Developments

Pricing details won't be published until mid-November, and lenders could begin refinancing loans under the retooled program as soon as Dec. 1, according to federal officials. Loans that exceed the current limit of 125% of the property's value won't be able to participate until early next year. The program's expiration date, originally next June, will be extended through 2013. HARP is only open to loans that Fannie and Freddie guaranteed as of June 2009.

Mr. Walsh, the Scottsdale broker, says such changes could lead him to hire "a ton" of new loan officers. "I have a line out the door of people who want to refinance under that program and can't," he says.

Refinancing can't fix the biggest problems eating at the housing market. Tight lending standards and high volumes of foreclosed-property sales are putting pressure on home prices at a time when demand is weak, potentially creating more underwater borrowers.

But refinancing could help those borrowers repair their balance sheets and guard against future defaults. If lenders and regulators successfully execute the changes, they could be "amazingly powerful," said mortgage-market pioneer Lewis Ranieri. "It'll start to create the confidence which is largely what's keeping the system from going forward."

The changes could spur an additional 1.6 million refinanced loans by the end of 2013, assuming interest rates don't rise sharply, according to Mark Zandi, chief economist at Moody's Analytics.

For the very safest homeowners, falling mortgage rates have been a bonanza. Some have become serial refinancers. Jim Wozniak locked in a 3.88% rate for 30-year fixed-rate mortgages for his primary residence in Brookfield, Wis., and his lakefront home in nearby Hartland late last month. Replacing 4.25% loans, he will save $2,700 annually.

"This is probably my third time in three years," says Mr. Wozniak, a 54-year-old investment adviser who says he has an excellent credit score and lots of equity in both properties.

For others, the hurdles are insurmountable. Appraisals are a big one. When an appraisal shows that a property has too little equity, lenders sometimes order a second appraisal. "You get into these appraisal wars, often at the borrowers' expense," says Marietta Rodriguez, the national director for home-ownership and lending at NeighborWorks America, a nonprofit housing group.

Steven Eisner, a 59-year-old attorney in Haddonfield, N.J., says he expected to sail through the process when he tried to refinance last month because he has good credit and strong income. Instead, he was startled to find that the appraisal on his vacation condo in Bonita Springs, Fla., came in so low he would have needed to ante up $52,000.

He put 25% down when he bought it four years ago. But, because of sagging home prices, his equity has declined to just 10% of the property's value. Refinancing "is simply not worth the trouble," says Mr. Eisner, whose mortgage is guaranteed by Fannie.

Not everyone benefits from encouraging more refinancing, of course. Banks and investors in mortgage-backed securities—including Fannie and Freddie and the Federal Reserve—stand to lose billions if performing loans pay off, leaving investors with cash to reinvest at today's lower rates.

"Somebody's going to get hit. This isn't a free good," says Anthony Sanders, a real-estate finance professor at George Mason University in Fairfax, Va.

That doesn't faze Mr. Eisner. "We've certainly done enough to prop the banks up," he says. "These are loans that everyone knew could prepay."

The success of any refinance push rests not only on whether policy makers can untangle a Gordian knot of technical hurdles, but also on whether they can get buy-in from private-sector players. One major obstacle to refinancing is that the mortgage industry has shrunk. Four big banks now control more than 60% of the mortgage market. Many originators, including the biggest banks, have cut staff or shifted loan underwriters into units working through piles of delinquent mortgages.

New rules designed to prevent independent mortgage brokers—who originate loans on behalf of a bank or other lender—from fleecing consumers have made it harder for them to compete with bigger lenders that aren't subject to the same rules. For example, new compensation rules make it less attractive for brokers to originate smaller or more complicated loans.

The reduced competition has led to longer processing times and higher prices for consumers. When their borrowing costs fall, banks aren't necessarily reducing the rates they charge borrowers by the same amount. Banks with big market share "know they can get away with it," says Thomas Lawler, an independent housing economist in Leesburg, Va. "The market's just not as competitive as it once was."

Industry executives dispute the notion that the market isn't competitive but concede that the industry wasn't ready to handle a surge in applications after rates dropped two months ago.

"Capacity constraints" will be temporary because lenders are hiring more staff, but "in the short run, there's no question that's a challenge," says David Stevens, the chief executive of the Mortgage Bankers Association. Lenders are going "through a lot more checks and balances simply to get a loan approved safely and soundly."

Some spurned borrowers aren't giving up. Barb Skaer, 70, of Appleton, Wis., and her husband wanted to refinance a $402,000 mortgage on a second home that appraised at $547,000 two years ago. She says they have strong credit scores and own part of a manufacturing business that makes bobby pins and hair clips.

Ms. Skaer says their bank, J.P. Morgan Chase & Co., quoted a 4% rate. But she says her loan officer told her she and her husband wouldn't qualify for a new loan because their income from their factory business declined the past two years. A J.P. Morgan spokesman declined to comment.

Ms. Skaer says they are appealing the decision at their bank and may go elsewhere if that doesn't work.

"Our theory is that if we can afford [the current payment of] $2,189 per month, we should be able to afford $200 less by refinancing," says Ms. Skaer. "This makes absolutely no sense to us, and we are not taking 'no' for an answer."

How To Shop for a Home Loan

2011-10-21T10:41:00.000-07:00

After hitting record lows of 3.94% with 0.8 points the week of October 3, rates are up .375% in the past two weeks. And while rates are still extremely low, refinancers and homebuyers are always looking for the lowest.

A primary reason rates rose is market optimism about Eurozone leaders acting more forcefully to contain problems with insolvent member nations like Greece. Eurozone issues are also a big reason rates got so low.

Here's why:

If one or more Eurozone nations defaulted on their debts, European and U.S. banks would both suffer and it could lead to market turmoil on the level we saw in 2008. These concerns have driven global investors into safer bets like U.S. mortgage bonds, and rates fall when bond prices rise on this buying. This extreme volatility won’t stop as the Eurozone crisis plays out in the coming weeks and months. Rates trade in realtime and react to each little development. This is why it's rates will likely touch early-October lows again. But these lows come and go in minutes during specific trading intervals each trading day. And this kind of volatility drastically changes the way consumers should shop for a mortgage. Because markets move up and down so fast right now, the rates you see in mainstream media* headlines are long gone by the time you can do anything about it.

So here’s how to shop for a mortgage in this new world. Shop For Loan Agents, Not Rates
Every consumer shops for mortgages and they should. But this is the critical distinction: you should be shopping for the best mortgage advisor. If you have that, you’ll get the best rate. Here’s what happens when shoppers focused only on rate get quoted by a good loan agent: Loan agent quotes a rate only after they've analyzed the client's entire financial profile and analyzed their home’s value and condition—also known as pre-approving them.

The client will either tire of the pre-approval analytics or be unhappy with the rate and go somewhere else. Then 80% of those cases come back to that loan agent because the competing rate quote was revealed to be incorrect when the other lender actually completed the client’s profile, or the home’s value/condition made the loan ineligible.

Mortgages are extremely competitive so rates and fees are generally the same with most (established, credible) lending firms. What’s not the same lender to lender is the loan agent’s ability to: (1) advise properly, (2) analyze borrower and property profiles, and (3) close with no surprises. So shop to find the lender and loan agent you feel most confident can perform on these three things. Then work with that loan agent to pick a rate target you can’t or won’t go above, and give them a standing order to lock when they see it. These guidelines are for refinancers.

For homebuyers, you can’t lock a rate until you’re in contract to buy a home, but once you’re in contract, the same approach applies.

Rate Targeting

Their are two reasons for the pre-approval and rate targeting tactics discussed above: (1) A rate quote that flies through the air means nothing. If a loan agent doesn’t issue you written terms after obtaining a full profile on you and your home, then you haven’t received a quote you can count on. (2) Rate lows are here and gone in minutes each trading day as mortgage bonds rise and fall on economic and technical trading signals. So if you don't first get pre-approved then set a rate target with a standing lock order, it's nearly impossible to hit the lows AND close with no surprises.

Your loan agent also must be able to brief you daily or weekly on the market outlook, so if you're not sensing market competence from your agent, then keep shopping. A loan agent must have a strong read on what's impacting the rate market ups and downs to deliver you the best terms.

*Mainstream media is almost always off the mark on rate data

Crystal Clear Mortgage
888-634-6911

Why Aren't Mortgage Rates Getting Lower as Fast as Treasuries?

2011-09-09T11:06:00.000-07:00

From our friends at Mortgage News Daily.com:

Yet again, Mortgage Rates improved today. But the improvements were fairly minor, just as they have been in general despite a healthier rally in Treasury rates. In some cases Best Execution rates may be lower, but in most cases, the improvements will be seen in the form of lower closing costs for the same rates available yesterday.

Today we want to use that space to address this question of why mortgage rates aren't lower considering the record low Treasury rates.

As you might already be aware, mortgage rates ARE NOT based in any way on US Treasuries. However, IN GENERAL, Treasuries tend to move in the same direction as mortgage rates because of their relationship to the "stuff" that actually does determine mortgage rates: Mortgage Backed Securities, or MBS for short.
Getting into a detailed definition of the MBS Market isn't necessary for the purposes of this post. What's important to know is that MBS are SIMILAR to Treasuries in a lot of ways. They're both fixed-income investments, both are in the "less risky" realm of the investment world, although MBS are more complex and their value is subject to certain factors that DO NOT AFFECT Treasuries.

In short, the PRICE and YIELD of MBS are the basis for mortgage rates. This equates to the raw pricing that lenders are dealing with in order to lend you money. But lenders can't simply offer mortgage rates based on raw MBS pricing because they wouldn't make any money, and they gotta make some if they're going to keep offering mortgages! This is where a subjective component enters into mortgage rates. There are several factors that affect profitability which lenders attempt to account for in deciding the ideal amount of cushion between raw MBS and mortgage rates (also known as primary/secondary spread).

Actually, we could probably write a whole series on those factors but we'll focus on a few of the "biggies" for today. First of all, we've already been mentioning VOLATILITY as a reason for a discrepancy in rates from lender to lender. Bottom line: volatility makes things more expensive for lenders. They absorb some of that cost with lower profits and you absorb some with higher mortgage rates than you might otherwise see in a lower volatility environment.

Beyond volatility, this whole rally in the fixed-income world (bonds, Treasuries, MBS, etc...) has been very fast and abrupt. That has created capacity constraints for lenders who can only really raise rates in order to deter the new business they can't handle. Additionally, if rates get low too quickly, lenders may lose commitments from borrowers who now seek a lower rate. But the lender has already "accounted for" that new mortgage in their pipeline when you locked your loan (meaning they've promised to sell into the MBS market using your loan as part of that MBS). When that happens, it costs them more money to readjust and consequently will cost future borrowers more money in the form of slightly higher rates.

These are just a few of the reasons why you're not seeing mortgage rates fall as quickly as Treasury yields. It's a whole different world-a deep dark rabbit hole of financial complexity. Today's post only begins to scratch the surface, but if it's helpful, let us know and we'll do more. Or let us know if you have questions about this one and we'll follow up on those.

Crystal Clear Mortgage
888-634-6911

Rates, Rates, and more Rates

2011-08-17T06:22:00.000-07:00

If you have not already heard it in the news, mortgage interest rates are back to all time lows. Combine that with current home prices and there has never, I repeat NEVER, been a better time to finance a real estate transaction. With the combination of low rates and low prices, you can get more house for cheaper than ever before.

So what are the rates? Every situation is different but here is a quick run down:

CURRENT MARKET: The Best Execution 30-year fixed mortgage rate is around 4.25% in most cases. Several investors we work with are willing to offer around a 4.000%, and even 3.875% is possible for those interested in buying down their rate, but around 4.250% is widely-available. On FHA/VA 30 year fixed Best Execution is around 4.000%, but 3.875 and even 3.750 are available with additional closing costs. 15 year fixed conventional loans are best priced around 3.625% but we're seeing aggressive quotes as low as 3.375%. Five year Adustable Rate Mortgage's are still best priced around 3.25%. ARMs seem to have bottomed out.

Though many lenders we work with have greatly improved their consumer rate quotes over the past two weeks, we must point out an increased amount of volatility in what individual lenders are now quoting as their Best Execution rates. This is a factor of price volatility in the secondary mortgage market. Unfortunately when volatility picks up in the secondary mortgage market, the cost of doing business gets more expensive for lenders (hedging costs go up). Those added costs are usually passed down to consumers via extra margin in rate sheets. These costs are unavoidable. The best thing for mortgage rates right now is stability. Additionally, some lenders have been adjusting their loan pricing strategies to better control the flow of new loan originations. To put it more simply, some lenders are busier than others and can't take-in anymore business, so they've pushed rates higher to encourage consumers to either wait it out or find another lender before rates rise.

GUIDANCE: If you missed the boat on record low mortgage rates last November/October, the opportunity is still out there for the taking. And we think you should jump on it as soon as possible. The risks involved in floating have greatly expanded to include (1) lenders taking it upon themselves to negatively adjust rate sheets (to slow loan production) and (2) interest rates finding a bottom and moving higher on their own. The frustration of missing out on "high 3's" and instead getting "low 4's" seems nowhere near as bad as the frustration of missing out on a refi opportunity (moving from 5% to 4.25% for instance) altogether.

*Best Execution is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the costs you paid at closing vs. the monthly savings of permanently buying down your mortgage rate by 0.125%. When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask your loan officer to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The Best Execution loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive."No point" loan doesn't mean "no cost" loan. The best 30year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process

PLease call us with any questions!

Crystal Clear Mortgage
888-634-6911

FHA credit score requirements and other fun things...

2011-07-12T08:25:00.000-07:00

When one hears about a particular lender claiming, "'ABC Mortgage' is now doing FHA loans with a 620 score!!!" , the odds are that it is a negotiated deal with a larger investor. Yes, there are some cases where it is a portfolio lender or direct Ginnie Mae issuer, but for the typical conventional or government products, if something falls outside the overlay guidelines usually some negotiation has taken place. What is Ginnie Mae's minimum FICO for a FHA loan? A trick question - there is none. All Ginnie requires is that the loan be insured for final pool certification which must occur within a given period. So in effect, typically whatever minimum FICO overlay levels that are out there are a combination of FHA loan delinquency studies by servicers and negotiations with the companies that sell to them.

But before you go calling the Wells' & Chase's of the world trying to wangle 500 FICO borrowers for condos (we do FHA with a 600, by the way), remember that investors are unlikely to disregard their underwriting and overlays entirely. It is a give & take process, and benefits accrue to high volume, loyal, well capitalized counter parties who know what they're doing -but there are rumors of cracks in the ice in certain underwriting areas IF they make sense - and you didn't hear this from me.

Speaking of large investors, JPMorgan Chase, Bank of America, Citigroup and other major banks are preparing to report second-quarter results, which analysts expect will be down from the previous quarter. CSFB expects core trading revenue at major Wall Street banks to have declined by as much as 25% on average, much of it due to lower levels of activity/volume.
Volume is important for Annaly Capital Management, the largest U.S. mortgage REIT (Real Estate Investment Trust). It spread the word that it plans to sell 100 million shares in its third public stock offering this year. The proceeds will be used to buy mortgage-backed securities, adding on to 150 million shares it has already sold this year for a total of about $2.6 billion. Annaly has expanded from investing in government-backed mortgage bonds to over seeing distressed-debt buyers and a securities firm, along with financing middle-market companies and home lenders, and entered ventures to make commercial real estate loans. Since the federal government basically ended their run buying mortgage backed securities in June, it will be good to have another purchaser in the market place.

In somewhat dated news, a report in the Wall Street Journal said two Representatives plan to introduce legislation to merge Freddie & Fannie and restructure the company into a government-held corporation. Most doubt that anything will happen until after the 2012 elections, and until then much of the talk may be political grandstanding and sound bites for the folks back home. It is one idea out of many competing plans for housing finance, and there is certainly no consensus on whether or not the government should offer a guarantee. But the plan has some genetics that we may see in future proposals. "Frannie" would be a utility-like entity and phase out government-controlled Fannie Mae and Freddie Mac, would purchase mortgages and repackage them as government-backed securities, and have no shareholder investors. But as you might recall back in May, another duo of politicians introduced legislation that would create at least five private companies to replace the two co-called government-sponsored enterprises, or GSEs. Not much has happened with that one.

Like most other things, figuring out Freddie & Fannie seems to have paralyzed our elected officials. The dividing line among many lawmakers is whether or not to provide a government backstop for mortgages and, if so, on what terms to provide the guarantee. Any bill that is crafted by anything related to the Republican-led House would likely still be in jeopardy once it reaches the Democrat-controlled Senate. All of them want to stop the"taxpayer bailouts," an easy term for the folks back home to understand, but it is easier said than done. According to experts, none of the plans are confronting the key decision, which is the role of the government in the system. And as mentioned above, with the housing market still in the doldrums, any final decisions on housing finance reform are expected to be put off until after elections in 2012.

What is new with the agencies? For one thing, currently Fannie Mae requires a minimum of six months to elapse between the time a borrower purchases a home and subsequently applies for a cash-out refinance. Its Selling Guide has been updated to allow a cash-out refinance within six months of a purchase transaction when no financing was obtained for the purchase transaction. There are of course all kinds of parameters, including maximum LTV (loan-to-value ratio), documentation, arms-length transaction and "all other cash-out refinance eligibility requirements and cash out pricing applies." But this is good news for investors who can now remove equity out of their investments faster, and for home buyers who couldn't compete in the long term with all-cash investors, but who might be able to put down the cash for a few weeks before obtaining a mortgage.

Freddie Mac released guidelines for servicer handling of delinquent loans, per a FHFA mandate from April. Fannie Mae released guidelines at the beginning of June and Freddie's appear similar. The bottom line is that servicers will have to devote additional resources to deal with these tightened guidelines to avoid a fine. UBS analysts suggested this could detract from the day-to-day business of originating purchase or refinance loans and lead as well to tighter underwriting standards given the increased costs of complying with the guidelines. As a result, there could be some marginal decline in prepayments. Freddie Mac's guidelines must be implemented no later than October 1 and Fannie's by September 1.

Housing and realty lobbies are pushing for a continuation of the $729,750 high-cost area maximum, but banks don't appear to be along for the ride. As industry folks have seen for a few years now, jumbo loans are valuable items in a portfolio (basically earning that spread versus what banks pay folks on their checking accounts) , and banks are happy to step in for borrowers who are credit worthy and have enough of a down payment. On Oct. 1, the maximum loan at each of the three federal mortgage giants will fall to $625,500 in some areas mostly along the coasts.

Fannie Mae released news for servicers. Specifically, it addressed HUD's Emergency Homeowners' Loan Program (the EHLPis designed to provide mortgage payment relief to eligible borrowers experiencing a reduction in income resulting from involuntary unemployment or underemployment due to adverse economic conditions or a medical emergency.) For details go to FannieEHLP. As mentioned above, the enhanced delinquency management and default prevention policies announced in June via SVC-2011-08 will go into effect September 1. "As part of these requirements, servicers must reach out to delinquent borrowers between the 31st and 35th day of delinquency and again between the 61st and 65th day of delinquency using a Borrower Solicitation Package."

Bottome line, a lot of changes still happening in the mortgage industry. Please call your neighborhood experts at Crystal Clear Mortgage with any questions. We have 3% down conventional loans, 3.5% down FHA loans, $100 down FHA loans, Fannie Mae Homepath, USDA, VA , refinance and more...

Crystal Clear Mtg
888-634-6911

Home Values and Mortgage Interest Rates

2011-06-01T05:47:00.000-07:00

Yesterday the S&P/Case Shiller Home Price Index was released and painted a bleak picture of the overall housing market.

from the release...

The U.S. National Home Price Index declined by 4.2% in the first quarter of 2011, after falling 3.6% in the fourth quarter of 2010. The national index hit a new recession low with the first quarter data and posted an annual decline of 5.1% versus the first quarter of 2010.

my take...

Yes, of course this is disappointing news yet it is being over played by the media. The issue at hand that no one is talking about still revolves around foreclosures. Over the last two years the federal government was pulling out all the stops to try and help struggling home owners avoid foreclosure. Because of that loan servicers were reluctant to force someone out of their home in a timely manner. The backlog of (pending) foreclosed homes piled up. Once everyone began to see that the loan modifications and workouts were not helping, the foreclosure process was accelerated which resulted in much more distressed inventory, thus lower home prices. How else could home values decline 7.8% in 6 months yet we post back to back gains in new home sales (up 7.3% in April per the Commerce Department). Bottom line, once these distressed homes are sold the values will stabilize. Thank goodness we live in Texas!

Mortgage interest rates are currently at some of the lowest levels seen in the past 12 months. Not quite record lows, but very close. If you are thinking about buying, or have clients that are thinking about buying, now is the time. With home values at the lowest since 2002 and interest rates near all time lows, there literally has never been a better time to buy.

Call us with any questions!

Adam Simmons

Crystal Clear Mortgage

888-634-6911

adam@crystalclearmortgage.com

Fannie Mae Revised Outlook

2011-04-21T08:40:00.000-07:00

Fannie Mae's April Economics and Mortgage Market Analysis attributes the current state of temporary weightlessness to a pair of major shocks - the political turmoil which continues in the Middle East and North Africa and the earthquake and resulting nuclear catastrophe in Japan coupled with what it calls multiple cross-currents in both the U.S and Europe. These include budget problems on all levels of government and related cut-backs in spending, concern over federal monetary policy and "rising headline inflation" driven by increasing food and energy prices.

Meanwhile, there appears to be a slowdown in economic activity in the first quarter of the year with consumer spending growth poised to come in well short of the high-water mark set in the fourth quarter of 2010. Business investment and nonresidential investment in structures also slowed and housing is showing renewed softness. Just as the picture begins to seem bleak, Fannie Mae's economists post some good news - more new jobs created in March, an unemployment rate that dropped to its lowest level in two years, and the best quarter for the Dow Jones Industrial Average in 12 years. Despite the overall gloom in the report, Fannie Mae says the contraction in growth is expected to be temporary with a modest acceleration projected for the second half of the year. The group predicts economic growth to average 3.1 percent for 2011, a downgrade from 3.5 percent projected in the March forecast. The key to this outlook is continued improvement in the labor market and moderating oil prices in the second half of the year. Fannie does however exhibit nervous sentiments on the potential for further downgrades, saying "significant challenges lie ahead, which could potentially lower growth this year by much more than we project."

The report calls housing the "Achilles Heel of the Expansion." Activity weakened across the board in February. Existing home sales fell 10 percent, perhaps partially due to earlier weather conditions and distressed sales continue to account for more than a third of total housing sales. The distressed sales are a particular hurdle for the new home market which set a new record low in February and is now 9 percent below the old record set last August. The lack of sales activity has resulted in sharp drops in housing starts which are now only about four percent above the record lows in January 2009 and the second consecutive monthly drop in the issuance of single-family permits suggest continued sluggish home building activity near term.

Distressed sales and a winding down of programs to support the housing market have affected home prices which have shown persistent declines. The FHFA purchase-only price index fell in January for the seventh time in eight months while the CoreLogic and Case-Shiller indices show year-over-year home price appreciation during the firsthalf of 2010 and then renewed declines following expiration of the home buyer tax credits. Market expectations for home prices have deteriorated over the past several months according to multiple surveys of consumers.

Some of the shifts in housing projections since the March report are disquieting. Median prices of existing homes which were projected to float in the $211,000 to $223,000 range through the end of 2012 have been downgraded to a range of $160,300 to $167,500 in the first three quarters of 2011, falling again at the end of this year and beginning of next before recovering to around $167,000 by Q4 2012. Housing starts have been downgraded to 478,000 for the year compared to 508,000 in the March report and total housing sales projections were modified slightly from 5.56 million 5.53million.

Mortgage originations are still projected to total $1.038 billion with 40 percent coming from refinances and the estimate for the 30-year interest rate remains at 5.4 percent at year-end.

Bottom Line: Fannie Mae says home prices are falling right now but interest rates should remain low throughout the year. Sounds like a good time to be a home buyer!

Call today for a Pre Approval!

Crystal Clear Mortgage
888-634-6911

How Would a Government Shutdown Impact the Loan Process?

2011-04-06T11:37:00.000-07:00

With a possible government shutdown on the horizon, I thought it interesting to report this article from Mortgage News Daily, written by Adam Quinones. Bottom line...potential issues on FHA loans, verifying employment for buyers with government jobs, current paystubs for borrowers with current government jobs, verifying tax transcripts, and likely higher interest rates. Here is the article:

Congress to pass a "Continuing Resolution" by Friday, April 8th to avoid a government shutdown. From Wikipedia: A continuing resolution is a type of appropriations legislation used by the United States Congress to fund government agencies if a formal appropriations bill has not been signed into law by the end of the Congressional fiscal year. The legislation takes the form of a joint resolution, and provides funding for existing federal programs at current or reduced levels.

RTRS-WHITE HOUSE SAYS PROCESSING OF SOME PAPER-FILED IRS TAX REFUNDS WILL BE SUSPENDED IF THE GOVERNMENT DOES HAVE TO SHUT DOWN

RTRS-WHITE HOUSE SAYS PROCESSING IRS TAX AUDITS WOULD ALSO BE IMPACTED BY A GOVERNMENT SHUTDOWN

RTRS-PROCESSING OF SMALL BUSINESS ADMIN LOANS WOULD BE AFFECTED IF GOVT SHUTS DOWN - U.S. OFFICIAL

RTRS-US OFFICIAL - GOVERNMENT SHUTDOWN WOULD IMPACT FHA, HAVE "SIGNIFICANT IMPACT" ON HOUSING MARKET IN PEAK HOME-BUYING SEASON

RTRS-US OFFICIAL-NUMBER OF FEDERAL WORKERS WHO WOULD BE IDLED COULD BE IN THE SAME VICINITY AS THE 800,000 IMPACTED IN LAST SHUTDOWN

RTRS-US OFFICIAL-ELECTRONIC FILING OF US TAX RETURNS WILL CONTINUE IN THE EVENT OF A GOVERNMENT SHUTDOWN

RTRS-SIGNIFICANT NUMBER OF PENTAGON CIVILIAN EMPLOYEES WOULD BE FURLOUGHED IF GOVT SHUT DOWN - U.S. OFFICIAL

RTRS-US OFFICIAL-MILITARY WILL BE PAID UP TO APRIL 8TH IF GOVT SHUTS, SALARIES WILL ACCRUE AFTER THEN BUT PAYMENTS WILL BE DELAYED

RTRS-OBAMA SAYS GOVERNMENT SHUTDOWN WOULD HURT U.S. ECONOMY RIGHT WHEN IT'S GAINING MOMENTUM

RTRS-OBAMA URGES DEMOCRATS AND REPUBLICANS TO MAKE COMPROMISES TO GET BUDGET DEAL, KEEP GOVERNMENT RUNNING

HOW WOULD A GOVERNMENT SHUT DOWN HAVE A "SIGNIFICANT IMPACT" ON THE HOUSING MARKET?

INITIAL THOUGHTS: The government's servers won't be taken off-line. The network will still be up and running. Essential staff will still be in place. FHA Connection is web-based but ordering FHA Case Numbers ASAP is advised. The IRS is an important part of the loan application process. Tax transcripts are generally accessible online but i t seems like a safe move to get 4506-T ordered now. One obvious thought is not being able to verfiy the employment status of borrowers with government jobs. Plus there could be a delay in getting current paystubs. FHA and Ginnie Mae aren't the only program offices within HUD though.

HERE IS A LIST OF HUD PROGRAMS THAT COULD BE IMPACTED..... Community Planning and Development * Community Development Block Grants (CDBG) (Entitlement) * Community Development Block Grants (Non Entitlement) for States and Small Cities * Community Development Block Grants (Section 108 Loan Guarantee) * Community Development Block Grants (Disaster Recovery Assistance) * Community Development Block Grants (Section 107) * Community Development Block Grants for Insular Areas * Community Development Block Grants (Rural Innovation Fund) * The HOME Program: HOME Investment Partnerships * Housing Trust Fund * Shelter Plus Care (S+C) * Emergency Shelter Grants (ESG) Program * Surplus Property for Use to Assist the Homeless (Title V) * Supportive Housing Program * Continuum of Care Program * Section 8 Moderate Rehabilitation Single Room Occupancy (SRO) Program * Rural Housing Stability Assistance Program * Brownfields Economic Development Initiative (BEDI) * Economic Development Initiative ("Competitive EDI") Grants * Empowerment Zones * Self-Help Homeownership Opportunity Program (SHOP) * Capacity Building for Community Development and Affordable Housing * Housing Opportunities for Persons With AIDS (HOPWA) * Loan Guarantee Recovery Fund for Church Arson and Other Acts of Terrorism (Section 4) Federal Housing Administration (FHA) * Single Family Housing Programs o One to Four Family Home Mortgage Insurance (Section 203(b)) o Mortgage Insurance for Disaster Victims (Section 203(h)) o Rehabilitation Loan Insurance (Section 203(k)) o Single Family Property Disposition Program (Section 204(g)) o Loss Mitigation o FHA-Home Affordable Modification Program (FHA-HAMP) o Graduated Payment Mortgage (GPM) (Section 245(a)) o Adjustable Rate Mortgages (ARMs) (Section 251) o Home Equity Conversion Mortgage (HECM) Program (Section 255) o Manufactured Homes Loan Insurance (Title I) o Property Improvement Loan Insurance (Title I) o Counseling for Homebuyers, Homeowners, and Tenants (Section 106) o Good Neighbor Next Door o Energy Efficient Mortgage Insurance o Insured Mortgages on Hawaiian Home Lands (Section 247) o Insured Mortgages on Indian Land (Section 248) Risk Management and Regulatory Affairs * Manufactured Home Construction and Safety Standards Multifamily Housing Programs * Supportive Housing for the Elderly (Section 202) * Assisted-Living Conversion Program (ALCP) * Emergency Capital Repairs Program * Multifamily Housing Service Coordinators * Manufactured Home Parks (Section 207) * Cooperative Housing (Section 213) * Mortgage and Major Home Improvement Loan Insurance for Urban Renewal Areas (Section 220) * Multifamily Rental Housing for Moderate-Income Families (Section 221(d)(3) and (4)) * Existing Multifamily Rental Housing (Section 207/223(f)) * Mortgage Insurance for Housing for the Elderly (Section 231) * Supplemental Loans for Multifamily Projects (Section 241) * Supportive Housing for Persons with Disabilities (Section 811) * Multifamily Mortgage Risk-Sharing Programs (Sections 542(b) and 542(c)) * Mark-to-Market Program * Self-Help Housing Property Disposition * Renewal of Section 8 Project-Based Rental Assistance Healthcare Programs * New Construction or Substantial Rehabilitation of Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities (Section 232); Purchase or Refinancing of Existing Facilities (Section 232/223(f)) * Hospitals (Section 242) Public and Indian Housing * Housing Choice Voucher Program * Homeownership Voucher Assistance * Project-Based Voucher Program * Public Housing Operating Fund * Public Housing Capital Fund * Public Housing Neighborhood Networks (NN) Program * Revitalization of Severely Distressed Public Housing (HOPE VI) * Choice Neighborhoods * Public Housing Homeownership (Section 32) * Resident Opportunity and Self-Sufficiency (ROSS) Program * Family Self-Sufficiency Program * Indian Community Development Block Grant (ICDBG) Program * Indian Housing Block Grant (IHBG) Program * Federal Guarantees for Financing for Tribal Housing Activities (Title VI) * Loan Guarantees for Indian Housing (Section 184) * Native Hawaiian Housing Block Grant (NHHBG) Program * Loan Guarantees for Native Hawaiian Housing (Section 184A) Fair Housing and Equal Opportunity * Fair Housing Act (Title VIII) * Fair Housing Assistance Program (FHAP) * Fair Housing Initiatives Program (FHIP) * Equal Opportunity in HUD Assisted Programs (Title VI, Section 504, Americans with Disabilities Act, Section 109, Age Discrimination Act, and Title IX) * Section 3 Program * Voluntary Compliance Policy Development and Research * Policy Development and Research Initiatives Government National Mortgage Association (Ginnie Mae) * Ginnie Mae I Mortgage Backed Securities * Ginnie Mae II Mortgage Backed Securities * Ginnie Mae Multiclass Securities Program * Ginnie Mae Platinum Securities Program * Healthy Homes and Lead Hazard Control * Office of Sustainable Communities o Sustainable Communities Initiative Temporary Programs * Housing and Economic Recovery Act of 2008 (HERA) Programs * HOPE for Homeowners * Neighborhood Stabilization Program (NSP1) * American Recovery and Reinvestment Act of 2009 (Recovery Act Programs) o Neighborhood Stabilization Program 2 o Green Retrofit Program for Multifamily Housing o Healthy Homes Demonstration Grant Program and Technical Studies Grants o Homelessness Prevention and Rapid Re-Housing Program (HPRP) o Lead-Based Paint Hazard Control Grant Program and Lead Hazard Reduction Demonstration Grant Program o Indian Housing Block Grants (Formula) o Indian Housing Block Grants (Competitive) o Public Housing Capital Fund (Formula) o Public Housing Capital Fund (Competitive) o Tax Credit Assistance Program (TCAP) * Dodd-Frank Wall Street Reform and Consumer Protection Act Programs o Neighborhood Stabilization Program 3 o Emergency Homeowners Loan Program Other Resources * Neighborhood Reinvestment Corporation (NeighborWorks America) * U.S. Interagency Council on Homelessness -------------------------------------

We see this childish Congressional behavior as politics in their purest form. STANDARD OPERATING PROCEDURES ON CAPITOL HILL. Playing this game of chicken with the bond market carries massive conseuqence. We're cutting off our nose just to spite our face here. The last thing we want to do is put the U.S. credit rating in the global spotlight. We don't want bond vigilantes chasing after our debt like they are EU debt right now. A "bitter fight over budget cuts" unfortunately would do just that. I hope our so called leaders in Washington avoid that bitter fight. I hope they act like adults and avoid grand-standing and pandering. We don't need bickering. We need common ground. We need to develop a plan and make some moves to restore confidence in our country.

READ MORE: Budget Battle Looms. Bond Vigilantes Lurk Besides the observations made above, we don't know exactly how a government shutdown would impact the housing market, we don't see anything positive coming from it though....mortgage rates certainly wouldn't react well!

WHAT ELSE ARE WE MISSING HERE? Do Fannie and Freddie count as government or is that just an "implied" shutdown? Did you know?

FHA Purchase and Refinance to 600 credit score!

2011-03-24T13:06:00.000-07:00

FYI...We have one of our primary investors that is relaxing their credit score requirements on FHA refinances and purchase loans. Starting April 4th Crystal Clear Mortgage can now accommodate borrowers with a 600 credit score and above!

Their are significant caveats to this program, here are a few:

The property must be single family residence, condominium, or PUD
Borrower's may not have had any short sales, "settled for less than amount owed", public records, judgments, bankruptcies, foreclosures, or tax liens in the most recent three years
Borrowers may not have had any collections in the last 12 months other than medical
no 30 day late pays on mortgage, rent, or installment debt in the previous 12 months
No more than one 30 day late pay in the last 12 months on revolving debt
overtime, bonus, second job, income from part time employment, commission income, and self employment income cannot be used to qualify unless the borrower has a two year history of receiving this income. Must be consecutive years but does not need to be same employer.
Gift funds for down payment are eligible from a family member

This is a stark reduction is the severity of underwriting guidelines. Perhaps this is a trend of what is to come. Of course, most people with a 600 score will not be able to clear these hurdles. This loan is not designed for the person that doesn't pay their bills. This loan is designed for someone that had a medical emergency or a divorce situation and could not maintain a decent credit score under the weight of all of the bills.

If you have clients or you yourself has been declined recently please call us!

Adam Simmons

Crystal Clear Mortgage

888-634-6911

How do the Events in Japan affect Mortgage Rates?

2011-03-15T06:35:00.000-07:00

Another explosion at a nuclear power station in Japan triggered a 10.55% sell-off in Japanese stocks last night and initiated a massive global flight to safety away from equities into safe haven bonds and currencies. This helps to lower long term mortgage rates.

"The situation at Japan's Fukushima Dai-Ichi nuclear plant worsened overnight with at least one other explosion and fire at the facility," said economists at BMO. "There was some release of radiation and those living within 30km were advised to stay indoors, while those within a 20km range were being evacuated."

Prime Minister Naoto Kan said the risks of further radiation leaks are increasing. Japanese economic minister Kaoru Yosano told reporters the nation's economy is healthy and that stocks are falling because of uncertainty.

S&P 500 futures are a staggering 32.50 points lower at 1,258 and Dow futures have tumbled 232 points at 11,694 - the lowest since early January.

Light crude oil fell 3.24% to $97.93 per barrel, while gold prices surprisingly dropped 2.44% to $1,391.80

Meanwhile, risk averse assets are rallying. Among Treasuries, the two-year yield has firmed 7 basis points to 0.53% and the benchmark 10-year yield has fallen 12.5 basis points to 3.24%. The 2s/10s curve is 6bps flatter at 271bps wide.

"The safe-have Swiss franc and US$ are being bought across the board," BMO reports.

The drop in Japanese stocks marks the biggest single-day decline since October 2008 despite the Bank of Japan injecting 8 trillion yen into money markets. The volume of trading is considered all the more remarkable considering how short-staffed Japanese desks are.

European markets are currently down 2% to 4%, while shares in China finished 1.38% lower and those in Hong Kong fell 2.86%.

BOTTOM LINE: If you are waiting or were waiting to lock in your rate today will probably be the best day in the last month to do so. Call us today!

Crystal Clear Mortgage
888-634-6911

Obama Admin Releases White Paper on how to Fix Housing Market

2011-02-11T06:36:00.000-08:00

Funny, but I thought we were in the middle of a massive self correction,free market style, but I digress...

This is a long post but it is vitally important for real estate agents to understand what is happening right now to their industry. The following was taken from Mortgage News Daily and written by Adam Quinones. My comments are embedded in their too!

The long-awaited report on the future of housing finance has been released by the Obama Administration.

The first thing to take away from this paper is the Administration's intention to wind down Fannie Mae and Freddie Mac on a responsible timeline. That tells you this reform process will take many years and much debate. There's nothing wrong with that though. Slow and steady works as long as lenders have funding liquidity in the process. The main goal is to get housing finance reform done right....the first time, as this market can only take so much more stress, rewriting regs repeatedly would be detrimental to the overall housing recovery process. Plus, any elimintaion of Fannie and Freddie from the market place on an immediate basis would have catastrophic consequences that most people do not understand.The average tax payer is upset about the bail out of Fannie and Freddie, but do not understand the economic situation if those bailouts did not take place. Let's be upset about the bailouts of Wall Street firms, but this one was needed.

Next on the list of observations is a tightrope transition from government supported loan funding to private investor supported loan funding. It appears the Administration is taking an "if we don't do it, someone else will" approach. They will attempt to accomplish their objective of reducing the government's "footprint" in the secondary mortgage market by tightening underwriting guidelines and raising fees. This will effectively "level the playing" field and lower the barriers to entry for private investors. We hope risk retention (skin in the game) regs don't "unlevel" the playing field. This means for conventional loans you will see higher down payments, tighter credit standards in an effort to push people to other loan products.

There is a ton of discussion still to be had. For now, read on...

------------------------

WASHINGTON – Today, the Obama Administration delivered a report to Congress that provides a path forward for reforming America’s housing finance market. The Administration’s plan will wind down Fannie Mae and Freddie Mac and shrink the government's current footprint in housing finance on a responsible timeline. The plan also lays out reforms to continue fixing the fundamental flaws in the mortgage market through stronger consumer protection, increased transparency for investors, improved underwriting standards, and other critical measures. Additionally, it will help provide targeted and transparent support to creditworthy but under served families that want to own their own home, as well as affordable rental options.

“This is a plan for fundamental reform – to wind down the GSEs, strengthen consumer protection, and preserve access to affordable housing for people who need it,” said Treasury Secretary Tim Geithner. “We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market.”

“This report provides a strong plan to fix the fundamental flaws in the mortgage market and better target the government’s support for affordable home ownership and rental housing,” said Housing and Urban Development Secretary Shaun Donovan. “We must continue to take the necessary steps to ensure that Americans have access to quality housing they can afford. This involves re balancing our housing priorities to support a range of affordable options, from promoting much-needed financing for quality, affordable rental homes to ensuring the availability of safe, and sustainable mortgage products for current and future homeowners.”

The Obama Administration's reform plan will:

1. Wind Down Fannie Mae and Freddie Mac and Help Bring Private Capital Back to the Market. In the wake of the financial crisis, private capital retreated from the housing market and has not yet returned, leaving the government to guarantee more than nine out of every 10 new mortgages. That assistance has been essential to stabilizing the housing market. However, the Obama Administration believes that, under normal market conditions, the private sector – subject to stronger oversight and standards for consumer and investor protection – should be the primary source of mortgage credit and bear the burden for losses.

The report recommends using a combination of policy levers to wind down Fannie Mae and Freddie Mac, shrink the government’s footprint in housing finance, and help bring private capital back to the mortgage market. The Obama Administration is committed to proceeding with great care as we work toward the objective of ensuring that government support is withdrawn at a responsible pace that does not undermine the economic recovery.

Phasing in Increased Pricing at Fannie Mae and Freddie Mac to Make Room for Private Capital, Level the Playing Field. The Administration recommends ending unfair capital advantages that Fannie Mae and Freddie Mac previously enjoyed by requiring them to price their guarantees as though they were held to the same capital standards as private banks or financial institutions. This will help level the playing field for the private sector to take back market share. Although the pace of these increases will depend significantly on market conditions, the Administration recommends bringing Fannie Mae and Freddie Mac to a level even with the private market over the next several years.

Reducing Conforming Loan Limits. To further reduce Fannie Mae and Freddie Mac’s presence in the market, the Administration recommends that Congress allow the temporary increase in those firms’ conforming loan limits (the maximum size of a loan those firms can guarantee) to reset as scheduled on October 1, 2011 to the levels set in the Housing and Economic Recovery Act (HERA). We will work with Congress on additional changes to conforming limits going forward.

Phasing in 10 Percent Down Payment Requirement: To help further protect taxpayers, we recommend requiring larger down payments from borrowers. Going forward, we support gradually increasing required down payments so that any mortgage that Fannie Mae and Freddie Mac guarantee eventually has at least a 10 percent down payment.

Winding Down Fannie Mae and Freddie Mac’s Investment Portfolios: The Administration’s plan calls for continuing to wind down Fannie Mae and Freddie Mac’s investment portfolio at an annual rate of no less than 10 percent per year.
Returning Federal Housing Administration (FHA) to its Traditional Role.

As Fannie Mae and Freddie Mac’s presence in the market shrinks, we will encourage program changes at FHA to ensure that the private sector – not FHA – picks up this new market share. The Administration recommends that Congress allow the present increase in FHA conforming loan limits to expire as scheduled on October 1, 2011, after which it will explore further reductions. The Administration will also put in place a 25 basis point increase in the price of FHA’s annual mortgage insurance premium, as detailed in the President’s 2012 Budget.

Throughout the transition, we remain committed to ensuring that Fannie Mae and Freddie Mac have sufficient capital to perform under any guarantees issued now or in the future and the ability to meet any of their debt obligations. This assurance is essential to continued economic stability.

We recognize the critically important role that Fannie Mae and Freddie Mac and their employees have played in the housing finance market while they have operated in conservatorship. We look forward to continuing to work with them to find ways to develop and implement the longer term reform solutions that the Administration determines together with Congress.

2. Fix the Fundamental Flaws in the Mortgage Market. The Obama Administration is committed to fixing the fundamental flaws in the housing finance chain. That process is already underway as we move to fundamentally transform the mortgage market through the Dodd-Frank Wall Street Reform and Consumer Protection Act’s (Dodd-Frank Act’s) critical reforms. Implementing these key measures, as well as additional reforms outlined in this report, will help to strengthen the long-term health of the mortgage market for borrowers, lenders, and investors.

Helping Consumers Avoid Unfair Practices and Make Informed Decisions About Mortgages: The Administration will continue to implement the Dodd-Frank Act’s reforms to strengthen anti-predatory lending protections, improve underwriting standards, require lenders to verify a borrowers’ ability to pay, and provide increased mortgage disclosures for consumers.

Increasing Accountability and Transparency in the Securitization Process: The Administration is currently working on rules to require originators and securitizers to keep greater “skin in the game” and to align incentives across the securitization chain. Dodd-Frank charged the SEC with setting stricter disclosure requirements so that investors can more easily understand the underlying risks of securities, and establishing an Office of Credit Ratings to more effectively regulate the credit rating agencies.

Creating a More Stable Mortgage Market: The Administration supports stronger capital standards to help ensure that banks can better withstand future downturns, declines in home prices and other sudden shocks, without jeopardizing the health of the economy. Additionally, the comprehensive reforms undertaken pursuant to the Dodd-Frank Act to constrain excessive risk in the financial system, including strengthened and coordinated oversight through the Financial Stability Oversight Council (FSOC), will help build a healthier and more stable mortgage market for the long term.

Servicing and Foreclosure Processes: The Administration supports several immediate and near-term reforms to correct problems in mortgage servicing and foreclosure processing to better serve both homeowners and investors. These include putting in place national standards for mortgage servicing; reforming servicing compensation to help ensure servicers have proper incentives to invest the time and effort necessary to work with borrowers to avoid default or foreclosure; requiring that mortgage documents disclose the presence of second liens and define the process for modifying a second lien in the event the first lien becomes delinquent; and considering options for allowing primary mortgage holders to restrict, in certain circumstances, additional debt secured by the same property.

Forming a New Task Force on Coordinating and Consolidating Existing Housing Finance Agencies: Following on the President’s call in the State of the Union to reform government to build a stronger future, the Administration will create a task force to explore ways in which the Department of Housing and Urban Development, the Department of Agriculture, and the Department of Veterans’ Affairs housing finance programs can be better coordinated, or even consolidated.

3. Better Target the Government's Support for Affordable Housing. The Administration believes that we must continue to help ensure that Americans have access to quality housing they can afford. This does not mean, however, that our goal is for all Americans to become homeowners. Instead, we should make sure opportunities are available for all Americans who have the credit history, financial capacity, and desire to own a home have the opportunity to take that step. At the same time, we should ensure that there are a range of affordable options for the millions of Americans who rent, whether they do so by choice or financial necessity. Moving forward, we must design access and affordability policies that are better targeted and focused on providing support that is financially sustainable for families and communities. The Administration recommends initially focusing our efforts on four primary areas:

Reforming and Strengthening the FHA: We will continue to ensure that creditworthy borrowers who have incomes up to the median level for their area have access to affordable mortgages, but we will do so in a way that is healthy for FHA’s long-term finances, including considering options such as lowering the maximum loan-to-value ratios for qualifying mortgages and adjusting pricing.

Rebalancing our Housing policy and Strengthening Support for Affordable Rental Housing: The plan advocates additional support for rental housing through measures that could include expanding the FHA’s capacity to support lending to the multifamily market, with reforms like risk sharing with private lenders and dedicated programs for hard to reach property segments like smaller properties.

Ensuring that Capital is Available to Credit-worthy Borrowers in All Communities, Including Rural Areas, Economically Distressed Regions, and Low-income Communities: The plan calls for greater transparency by requiring securitizers to disclose information on the credit, geographic, and demographic characteristics of the loans they package into securities. The Administration will explore other measures to make sure that secondary market participants are providing capital to all communities in ways that reflect activity in the private market, consistent with their obligations of safety and soundness.

Supporting a Dedicated Funding Source for Targeted Access and Affordability Initiatives: The plan calls for a dedicated, budget neutral, financing mechanism to support homeownership and rental housing objectives. The Administration will work with Congress on developing this funding mechanism going forward.

4. Longer-Term Reform Choices. The report also puts forward longer-term reform choices for structuring the government’s future role in the housing market. Each of these options would produce a market where the private sector plays the dominant role in providing mortgage credit and bears the burden for losses, but each also has unique advantages and disadvantages that we must consider carefully.

Deciding the best way forward will require an honest discussion with Congress and other stakeholders about the appropriate role of government over the longer term. The Obama Administration looks forward to working to build consensus, on a bipartisan basis, with a wide range of stakeholders on this issue.

IF YOU HAVE ANY QUESTIONS ABOUT THIS REPORT AND HOW IT CAN IMPACT YOUR BUSINESS PLEASE CALL US AT 888-634-6911. PLEASE ALSO LET YOU CLIENTS ON THE FENCE KNOW THAT IN THE NOT TOO DISTANT FUTURE THEY WILL NEED A MUCH LARGER STACK OF CASH TO BUY.

ADAM SIMMONS
CRYSTAL CLEAR MORTGAGE

Mortgage Rates Hit 10 Month High

2011-02-09T07:31:00.000-08:00

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 4th, 2011.
The Refinance Index decreased 7.7 percent from the previous week. The four week moving average is down 1.5 percent. The refinance share of mortgage activity decreased to 66.6 percent of total applications from 69.3 percent the previous week. This is the lowest refinance share observed in the survey since the week ending May 14, 2010.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13percent from 4.81 percent, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This means your no point loans are carrying even higher rates. This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009.

"Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance," said Michael Fratantoni, MBA's Vice President of Research and Economics. "We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis."

We all new that rates could not stay in the 4% range for ever. The question is are they gone for good? Bottom line...Rates in the 5% range, on a historical basis, are still fantastic and should not stop you from trying to buy a home if that is your goal. Remember, mortgage interest is also a tax dedcutible expense.

Crystal Clear Mortgage
888-634-6911

Rough Start for Mortgage Rates

2011-02-07T06:57:00.000-08:00

Last week ended on a very brutal note for interest rates. The Fannie Mae (FNMA) 4.5%coupon has now stopped being the primary benchmark for mortgage rates. That title now belongs to the FNMA 5.0% coupon.

When I use the term "coupon" that just means a tranche of loans that are bundled together and sold on the secondary market. This bundling of loans and the price they sell at determines the interest rates available for people buying and refinancing homes.

What does it mean that the 5.0% coupon is now reigning supreme? It means goodbye interest rates in the upper 4% range on thirty year notes. Your best execution (combination of rate and fees, usually no point loans) is officially above 5%. Depending on how the treasury auctions go this week you could easily see 5.375% become the new norm on 30 year notes. Don't say we didn't warn you! If you are closing a loan in the next 30 days you better have your rate locked in and you better make sure it is locked for a long enough period of time. Rate lock extensions could be very expensive in this market!

Crystal Clear Mortgage
888-634-6911

Jumbo Loans Making A Comeback...where are rates going?

2011-02-02T07:47:00.000-08:00

There has been a product missing from the mortgage market for the past couple of years. That product is a jumbo, fixed rate loan. Jumbo loans are any loan that is above 417K. The reason these are called Jumbo loans is because they exceed Fannie Mae and Freddie Mac's loan limit for insurance.

That means that these loans are purchased on the secondary market by private firms, pension funds, hedge funds, etc. At the start of the housing/mortgage debacle this loan was one of the first to disappear. The lenders that remained in this market had to fund with their own money, and keep the loan on the books and service it. This meant two things: tight underwriting guidelines and higher rates.

Over the last month these Jumbo loans have been appearing on rate sheets with more frequency. A lot of the lenders that exited this niche market are now back in it. Rates are still slightly higher than conventional loans (always have been, but the spread is starting to narrow) and you will need 20% down. There are now also second lien options up to 200K to make the purchase process and resulting loan a little more palatable.

Bottom line, you or your clients now have more options for their large purchases. Please call us for current rates and program guidelines.

As far as current conventional rates are concerned, where we go remains any one's guess. Like a see-saw on a playground we are up then down up then down...rely on your mortgage professional to ride the waves and lock you in a trough rather than a peak.

Adam Simmons
Crystal Clear Mortgage
888-834-6911

Anti Flipping Rules and More

2011-01-19T06:20:00.000-08:00

Have you ever thought about flipping houses? Most people who flip houses buy those homes with cash, and renovate them with cash. The issue has been lately that a lot of the buyers do not have enough cash. That means they must finance the home they want to flip, which still requires 20% down when buying as an investment property. That also means there is a 90% chance that the buyer of your property will need to do an FHA loan when purchasing your newly renovated house.

For a period of time FHA made that extremely difficult with strict rules against property flipping when using their loan product. FHA used to not allow homes that were purchased in the previous 90 days to be sold within that same 90 day period for a higher price. Also, if you bought the home within the last 12 months, and were selling it for 25% more than you bought it for,you would have to show receipts to prove that you made improvements to the house. Thus, an anti flipping rule. FHA has announced this week that they are waiving the 90 day rule for the next 12 months. This is set to expire in January 2012. what does this mean?? You can now buy a house with an FHA loan, pay to fix it up, and now sell it to someone using an FHA loan to buy.

I am not sure how many more people this will bring into the market place, but it can definitely give real estate agents another avenue to market their properties. I can see the tagline already..."Buy this house with 20% down and make 50% on a flip!" HMMMMM...my wheels are spinning.

So what else is happening in our mortgage market? Interest rates are continuing a slow climb to who knows where. It is time for buyers who are thinking about buying to stop worrying about rates when it is your time to buy. The rates will be what they are, and from a historical perspective, still very good. Buying a house should not be put on hold because you can only get a 5.25% instead of a 4.75%. Stay on top of rate trends buy signing up for this blog to be emailed to you. You can do this at www.CrystalClearMortgage.com.

Current purchase rates for well qualified buyers are 4.75% to 4.875% with no points or origination fees. If you are getting quoted a higher rate ask your loan officer why your situation is not considered ideal. It could be your credit, loan amount, loan to sales price value, etc. There are many factors that effect a rate that can be offered. Take the time to know why your rate is what it is.

Please call me with any questions!

888-634-6911

The Eight Most Important Factors for 2011's Mortgage Market

2011-01-04T15:22:00.000-08:00

From the Texas Association of Mortgage Professionals (TAMP). If you have any questions about what any of this means please do not hesitate to call us!

1. Consumer Finance Protection Bureau. By July 21, the structure to promote what may be sweeping overhaul of mortgage products, Stack of paper processes and disclosures will be put in place. Elizabeth Warren, charged with creating the structure of the new Bureau, is expected to have much of the framework in place for the new regulatory body by the "official" July start date. By that time, a new director will have been named and regulators and regulations drawn from other bodies will be assembled.

It does seem likely that mortgage disclosure reform will be first on the list for the Bureau to tackle. Confusing, unclear and seemingly conflicting documentation has been implicated in the mortgage market mess, and a push for more explicit yet simpler forms for consumers to review and sign are thought to be a top priority for the new body. That said, a simplification of the document stream has long been a dream of any number of regulators, with an exhaustive study completed just a few years ago with limited results. The change in 2010 to the Good Faith Estimate to make fees charged to borrowers more explicit was helpful to a degree, and trying to revise required RESPA and TILA documents will surely be an even greater challenge.

2. Fannie Mae and Freddie Mac Will Change... maybe. Reforming the Government-Sponsored Enterprises (GSE) has been an on-again, off-again, on-again crusade for the last couple of administrations. To be sure, it's a love-hate relationship; the GSEs have totally distorted the mortgage market, but without them, there would be no mortgage market to distort. They have eaten tens of billions of taxpayer funds, but remain perhaps the key support for millions of homebuyers and homeowners. In such a fragile market, making immediate, substantial changes could have many unwelcome consequences. Reforming these entities is a thorny issue, to be sure.

After having been kicked down the road three times by the Obama administration, recommendations for change are expected to come from the Treasury Department in January. But will reform follow quickly? Probably not. There has been some talk of perhaps a five-year wind down plan for the GSEs, some discussions of separating their "public" function of securitizing mortgages from their "private" investment portfolios, but both have proven useful to politicians at various times.

No matter what the proposals have to say, we expect long and contentious debate between Democrats and Republicans over the role of government in housing finance markets. If the housing market can begin a small but steady recovery, the firms' losses will start to ease and possibly reverse, and so any delays in making changes argue in favor of keeping the status quo. We think that if there is no real progress toward reform made by perhaps October, it is very likely that GSE overhaul won't happen until after the next presidential elections. For our part, we're betting on little if any real change to come in 2011.

3. The Economy Improves. If you want to know what will happen to mortgage rates in 2011, watch what happens to the economy. AsEconomy Improves we write this, the economy has put in about six quarters on the positive side of the economic ledger, and Federal Reserve stimulus and the recent tax agreement seems likely to ensure that growth continues on an upward track in 2011. The labor market recovery should continue to gain momentum as the year progresses, but unemployment will remain stubbornly high for perhaps years to come.

That said, continual but gradual improvement seems likely. As the economy finds firmer footing, so will mortgage rates. After being pressed to 56-plus-year lows in 2010 by various crises, deflation concerns and government manipulation, we may just see a bit of the other side of the coin in 2011. Although the Fed will keep short term interest rates low, they are unlikely to want to leave them at emergency levels forever; as the economy recovers, the market will probably begin to demand that the Fed begin the process of raising short-term interest rates and backing off on policy "accommodation" in order to avoid an inflation problem at some point. Since they would tend to temper any outsized growth potential, which in turn would trim inflation concerns, any rise in short-term rates (whether directly or through the process of managing currency reserves) should keep long-term mortgage and other interest rates from rising too far. As we begin 2011, mortgage rates have moved off recent bottoms, but have probably overshot where they should actually be, given current economic condition.

4. Homebuyers Return in Greater Numbers. We'll stop short of calling 2011 "the year of the homebuyer," but the gentle improvement in the labor market, still-low interest rates and what should be gradually easier lending conditions seem to us likely to foster a stronger housing market.

Whether we see easier lending conditions depends upon Fannie and Freddie reform, a resurrection of private secondary markets and whether or not consumers find an appetite for mortgage products that banks prefer to put in their own portfolios and can exercise full underwriting control over, such as ARMs. Few banks want to hold sizable portfolios of low-yielding, long-term fixed-rate mortgages, and so the vast majority of those are sold to Fannie and Freddie and are thus beholden to their standards. Without a competitive private market, the restrictive standards put in place by the GSEs over the last couple of years will continue to be the only game in town, and will serve to continue to limit access to the cheapest mortgage credit.

With only one private offering of a new Mortgage-Backed Security in 2010 -- a "best of the best" package of loans early in the year -- and financial market reforms still being digested, it does seem unlikely that we'll see a huge swing away from tight underwriting standards, but could see some nibbling around the edges. This perhaps may come in the form of some flexibilities in borrower employment histories, for example.

5. The "Distressed" Real Estate Market Improves. Recently, there was a slight improvement in the number of underwater homes that Foreclosure for Saleoccurred not because of any gains in home prices, but rather because a rise in foreclosures produced a final "cure" that loan modifications did not. It makes a curious headline, indeed: "Underwater Crisis Solved by Foreclosure Crisis", but this does seem to be continue to be a resolution for at least some underwater loans in 2011. The combination of an increase in the use of principal forgiveness in modifications and FHA "Short Refinances" in 2011, coupled with a resumption in the stream of foreclosures, should ultimately render fewer loans delinquent and fewer homes underwater, and the headline figures should begin to improve as the year progresses.

Loans written in 2008-2010 and the new ones to come in 2011 are certainly subject to economic tides, but they are underwritten far better than those from 2004-2007, which are still being wrung out of the system. Loan failures from fundamentally flawed, "bad" or "risky" loans are fading behind us; many weren't curable no matter the offer of assistance or modification. More recent delinquencies and failures have been economically driven, and probably are more curable as hiring resumes and household finances improve. To be sure, the improvements here will be gradual, but real.

6. A "Soft Demise" for HAMP. By now, it should be fairly clear that the Obama administration's goal of saving 3-4 million homeowners from foreclosure by 2012 was wildly optimistic. By the program's end, we may not even make half that number (and even fewer with "permanent" help), but the administration is claiming some success in shaping and focusing the loan servicing industry to deal with borrowers in crisis, fostering more private and lasting modifications. With the big push to get people into various Making Home Affordable (MHA) programs now over, and the economy gaining strength, it stands to reason that the number of new entrants into mortgage assistance programs would begin to dwindle. We have noticed diminishing media coverage of MHA as 2010 progressed, and expect that the noise coming from the program will continue to fade in 2011, excepting perhaps news of re-failing loans.

7. Mortgage Rates Remain Favorable. Of course, we mean this from a historical perspective. Barring a new economic crisis of widespread proportions, it's increasingly unlikely that we will challenge the 56-plus-year lows for mortgage rates seen in 2010. Borrowers will again have to become accustomed to rates in the low- and mid-five-percent range for 30-year fixed rates. Still, much of the year should continue to feature rates that rank among the best seen in a generation or more, even if they don't test new record low levels. The low mortgage rates of 2010 came as a result of multiple financial panics and investor fears of more losses, and to wish for their return is to hope for renewed economic catastrophe. For our part, we'll take low- and mid-five percent rates in a growing economy over four percent rates in a collapse anyday.

8. The Federal Reserve's Quantitative Easing II (QEII) Program Ends. Initiated in November 2010, the Fed's program of purchasing Federal Reserve Treasury Securities in hopes of fostering lower interest rates has had the exact opposite effect, and interest rates have risen measurably off their panic-level bottoms. This is partly due to an improving economy and partly due to the expectation that the Fed's moves will further spur economic growth in 2011. Instead of a mechanism to lower interest rates, we've come to believe that the Fed is instead using the program as a way to buffer the market, keeping market interest rates from rising more quickly than the Fed would like.

As the economy improves, interest rates will naturally rise, but a sustained unanchored spike could push the economy back into recession. The Fed's program is perhaps a means to keep this from occurring, and there have even been discussions that the program could be extended when it expires about mid-year. We think that this is unlikely, unless there is at the time a general buyer's strike for U.S. government debt. The program will go, and the economy will continue to grow... and the Fed will probably be considering draining excess reserves and raising short-term interest rates before the summer comes to a close.

Crystal Clear Mortgage
888-634-6911

Happy New Year!

2011-01-03T07:04:00.001-08:00

Hard to believe that 2011 is already upon us. We at Crystal Clear Mortgage hope you had a great 2010 and hope 2011 is going to be even better! We would like to thank all of our customers, referral partners, and business associates for helping make our 2010 our best ever. In a down year for a lot of mortgage companies we were on the up side! We ended the year with a 51% purchase portfolio and a 49% refinance portfolio. We are truly your purchase money specialists and look forward to a great 2011.

Speaking of purchase money, let's recap some of the down payments requirements currently in place if you are thinking of purchasing a home in 2011. Veterans (VA) and USDA purchase loans are still zero down loans. FHA currently has a 3.5% down payment requirement (can be a gift from a relative) and most conventional loans have a 5% down requirement. If you are extremely well qualified you can do conventional loans with only a 3% down payment. The cost of PMI has continued to rise to you will want to get the low down on that from us.

For those seeking second homes you must have a 10% down payment and if you want to buy an investment property you must have a minimum of 20% down, with the best rates coming at 25% down.

Jumbo financing (loans over 417K) need a minimum of 20% down and will come with a higher rate.

Rates started to move up quickly in December 2010. When looking at historical rate charts, current rates are still at some of the lowest levels in history even though we have pulled off of the all time lows of 2010.

If you are in the market to buy or refinance your home please call us to discuss down payment scenarios, closing costs, and rates. We can have you pre approved in minutes!

Happy New Year!

Crystal Clear Mortgage

888-634-6911

Massive Rate Jump, New Foreclosure Guidelines

2010-12-08T08:04:00.000-08:00

On the weekend of December 11,2010, Fannie Mae will release Desktop Underwriter Version 8.2. All conventional loans are ran through Fannie Mae's automated underwriting system to receive a preliminary loan approval. The new version going into effect this weekend will have some updated guideline changes. The most important one to take note of concerns previous foreclosures. If you have had a foreclosure on your record you will now have to wait 7 years before buying a new home in your own name, regardless of credit score. Pre foreclosure sales (i am assuming short sales and potentially deed in lieu's)are now two years.

The rate train has been steadily moving higher and higher, with yesterday being an absolutely brutal day in the bond market. If you were quoted a rate on Monday, by Tuesday afternoon that same rate would have cost you an extra 100 basis points (1% of the loan amount) to keep it. If you kept the same fee structure as you were quoted on Monday, your rate would be .25-.375% higher over a 24 hour span.

The generally accepted culprit of yesterday's rout is twofold, beginning with an Irish budget cut and intensifying with a Congressional compromise on extending both the Bush era tax cuts and unemployment benefits. Tax cut extensions lifted the stock market right out of the gate (and hurt bonds) while news that Ireland was close to confirming austerity measures was an early motivator of interest rate weakness in U.S. benchmarks (stole demand from Treasuries).

Today's advice is the same as yesterday. Volatility and uncertainty remain ways of life. We are NOT in a position yet to say we've reached some important support levels that should allow mortgage rates to recover. Things can get worse before they get better, and judging by what we've seen in recent weeks, will probably do a little bit of both in rapid succession. For those who must pull the trigger in December, get safe and get out with a livable payment. All others are at the whim of a market that makes no promises as to when or if it will see improved loan pricing (rates).

Current market rates for well qualified buyers are hovering around 4.75%. Please call to inquire about the definition of a well qualified buyer in today's market.

Crystal Clear Mortgage
888-634-6911

Wild Ride over Thanksgiving!

2010-11-29T07:02:00.000-08:00

WOW...Thank goodness for half days on the day before Thanksgiving. Otherwise I would have been in my office watching my hair fall out from the horrific performance of the bond markets. Rates increased a full quarter point (some lenders more) on Wednesday. We picked up some of those losses on Friday but not all of them. It will be interesting to see how this week plays out with regard to mortgage rates. I had chalked up the Wednesday ride to the usual near holiday trading day on Wall Street, but now I am not so sure. For those not familiar with the near holiday trading day, here you go:

Any day near a holiday is notorious among traders. First of all, lots of experienced Mortgage Backed Securities (MBS's) and stock traders take the day off. In general, December is year-end and many annual bonuses have been earned so there is little motivation to take risks or make moves. At the same time mortgage loan shoppers should know that there can be large desperation trades to recover losses or adjust balance sheets prior to year-end reporting. This can make for large and quick movements in rates. For the five weeks traders and investors tend to go along with the herd. Preservation of existing gains takes precedence.

I will post more later in the week regarding the movement of interest rates. As you can imagine the email inbox is quite full after a four day weekend!

Current rates are hovering around 4.25%-4.5% for the best qualified customers on 30 year notes.

Important Mortgage Rate Disclaimer: Loan originators will only be able to offer these rates on agency conforming loan amounts to borrowers who are have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording + escrows (things like upfront MIP (if required), property taxes, homeowners insurance, accrued interest)".

Happy Thanksgiving!

2010-11-24T06:27:00.000-08:00

Well...that time of the year is officially upon us. Thanksgiving is tomorrow and that means Christmas is right around the corner. We have much to be thankful for here at Crystal Clear Mortgage. It has been a banner year for us and we owe it all to our customers and realtor partners. We give thanks to you this weekend, and our team of great associates that make it all possible. We are thankful for the troops that protect our freedom, and pray for their safe return from far away lands. We hope you and yours have a wonderful Thanksgiving and a safe one as well.

As far as mortgages go...Rates have been holding steady after a few days of rate increases. We are still seeing 30 year mortgage rates in the low 4's to mid 4's for the best qualified candidates. Historically speaking, still fantastic. Make sure to get pre approved before you start shopping for that home of your dreams. There have been a lot of changes to FHA loans and PMI guidelines. Please call us if you have any questions!

Adam Simmons
Crystal Clear Mortgage
888-634-6911

4th day in a row of rising rates

2010-11-10T07:49:00.000-08:00

Interest rates have risen for the fourth consecutive day. QEII has come and gone and with almost no fanfare as predicted. The reason rates have not moved lower since the FED announcement is simply because the mortgage bond market had one trillion dollars already priced into it. When the FED announced 600 Billion in asset purchases it actually ended up being a disappointment to the markets and they are correcting their long term positions now. Here is some insight from Sigma Research:

Interest rates continue to increase; so far the fourth day in a row interest rates have climbed. The last three days the 10 yr note yield has increased 17 bp and mortgage rates up about the same; add in the decline so far this morning, the 10 off 23 bp and mortgage rates down 18 to 20 basis points. The bond and mortgage markets were expecting the QE move would drive rates down and the markets were heavily long, now we know QE 2 isn't going to push rates lower as widely expected and all those long positions are being closed out driving rates up quickly. Every technical indicator we apply to bond and mortgage markets are now bearish. The bond and mortgages markets opened weaker this morning but by 10:00 have re-gained the early losses

The QE decision by the Fed is being criticized heavily around the world as unnecessary and an attempt to drive the dollar lower to increase US exports. Many finance ministers are worrying over a currency war with nations moving to lower their currencies to accomplish the same thing the Fed is doing. Haven't heard this much strong criticism of a Fed decision in years.

I personally think that QEII was not needed and only served to further weaken our dollar as well as raise our debt levels. With rates already testing all time lows before the announcement, why was there a need to try and drive them lower? Do people really think 3.0% on 30 year fixed rate money is going to happen. I will be shocked if it does. However I do think we are seeing an over correction right now and a mortgage rate rally will probably happen in the next few days. This rally will not get us back to historic lows, but rates are still amazing!!

Please let us know if we can help in anyway!

Crystal Clear Mortgage
936-447-5626

Tomorrow Is the Day We have all been waiting for...

2010-11-02T14:21:00.000-07:00

From our friends at Mortgage News Daily (they saay it a lot better than I can!):

Tomorrow is the day we've all been waiting for....

At 2:15pm, the Federal Open Market Committee (FOMC) will release their policy statement. At 2:15pm we find out if Quantitative Easing becomes a reality. At 2:15pm we find out if mortgage rates are destined to retest record lows.

Let's recap the "What If's" one more time...

If you're still a passenger on the float boat, it's because you made a decision to pass on rates below 4.25% in favor of a chance to lock in a rate below 4.00%. It's because you decided to PLAY THE RANGE UNTIL BERNANKE PLAYED YOU

On November 3, 2010 I anticipate the Federal Reserve will announce another Quantitative Easing program. This event is expected to lead consumer borrowing costs back down to record lows, which means we should see mortgage rates dip below 4.00% with much more attractive float down structures (in terms of how long it will take to recover points paid at closing).

FYI: This process might not be instantaneous, we might have to give lenders a few days to ease into rates below 4.00% again.

Do I think mortgage rates will go lower than 3.75% if the Fed announces QEII?
No I do not. Why don't I see rates moving below 3.75? Because I don't see 3.0 MBS trading in enough liquidity to allow lenders to offer rates below 3.75%. This is a bold prediction considering we don't know exactly what the Fed is plotting. If 3.0s do trade in size, lenders will be able to go as low as 3.25%

How long do I think QEII will keep mortgage rates at the record lows??
Long enough to lock your loan at record low rates!!! :-D

Unfortunately I can't provide an acceptable answer to that question yet, we just don't know enough details about the QEII program. We do however know that the Fed is looking to spark a little "Demand Pull Inflation" via "Cost Pull Inflation", and we also know inflation is the enemy of mortgage rates. While demand pull inflation won't ignite immediately, if the Fed's QEII plan is as successful as previous alternative policy strategies (which were intended to stabilize the economy, and they did), mortgage rates will eventually rise, and it will happen on the slightest hint of consumer led inflationary pressure or sustained job creation. I'm not even going to venture a guess on when that might happen though. Traders, economists, and analysts alike are still operating in a very reactive manner. Outlooks are constantly changing as the economic and political environments evolve. Let's see what the Fed says on November 3rd and go from there....

What if QEII is not what the market was expecting???
"Disappoints" is hard to quantify but I think there would be an initial period of selling that pushed the best par 30 year fixed mortgage rates at least back up to 4.375%. "At least" would imply the Fed announces QEII but it fails to inspire aggressive bond buying. In that case I still think we'd see mortgage rates touch record lows again sometime in months ahead, but I also think that would be a factor of the market losing faith in the Fed which would lead to a sense of panic and extra protectionism. This would be good for no one!

What if the Fed paints a much rosier picture of the economy and they say "no QEII for you"????

When the bond market gets overcrowded, which it still is, an event that shocks the herd would greatly increase the potential for snowball selling. The Fed deciding to delay QEII would be an event that "shocked the herd". If this scenario played out, the best par 30 year fixed mortgage rate would move at least up to 4.75%. This would reflect a lack of liquidity in the 4.0 MBS market.

We don't want that, we really don't want that. I don't think the Fed would let that happen either. They've over-telegraphed QEII. In none of my studies was I able to uncover a logical reason why the Fed would be planning a trick when we clearly expect a treat.

Waves of asset purchases are coming. And the size should be limitless (trillions = limitless) if the Fed really wants to spook wage earners into requesting a hike in their wage rate(bc of cost-push inflation). These asset purchases should also accompany a more accommodative tone in the FOMC statement. For example "rates will be low for longer than an extended period" (not how Ben would communicate but you get the point). This is an imperative part of the easing/debt monetization process. The Fed must send the markets a clear message that they fully intend to reflate the monetary base with inflationary policy. On a side note, I still believe the Fed will eventually encourage the designation of a resolution authority to mop up the overabundance of non-performing assets in the market. It's like Cancer, we gotta cut it out.

If QEII is not announced fence sitters are gonna be o.g "ticked off" and many loan officers are gonna be pointing their fingers directly at me! I'm cool with taking the blame though. I usually don't offer such direct lock/float advice, so when I do, and I do it consistently like I've done all week, you know I believe in it.

Patience is counting down without blasting off....

2:15pm.

The End of Record Low Interest Rates

2010-10-27T07:41:00.000-07:00

There is a lot of chatter these last few days about interest rates and where they may be heading. I have been saying for months...how can they get any better? If they do, you may see a .125% drop but nothing substantial. There is just no room for a large downward adjustment. That being said we have now had a few days in a row of rate (price) increases. This means that to keep the same rate quoted to you on Friday, it will now cost you more in closing costs.

Here is some great commentary from Sigma Research (they think the record low rates are going away for good):

Interest rates continue to increase, the 6th day in succession that the rate markets have experienced selling. The bellwether 10 yr note is now back to the level it was trading when the FOMC statement called for another QE move. The mortgage market and treasury market rallied sending rates down as much as 40 basis points on the 10 yr and 20 basis points on mortgages. Now there is apparently a concern in the markets that whatever the Fed may do next Tuesday won't be enough shock-and-awe to drive rates lower. The Wall Street Journal reported this morning that the Fed is likely to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, in contrast to the central bank's purchases of nearly $1.5 trillion worth of bonds during the financial crisis. The report said officials want to avoid the "shock-and-awe" approach used during the crisis in favor of an approach that allows them to adjust policy over time as the recovery unfolds.

As the calendar ticks off closer to the easing move, designed to push long term rate lower, there is increasing skepticism that the amount of the easing move may not be what the original beliefs thought when the FOMC made that statement. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said Monday that more expansive monetary policy was a "bargain with the devil." While there is a serious debate within the Fed about another easing move, it is still likely to occur but as we noted in past comments, traders are withdrawing their bets that the amount of the Treasury buying will be less than originally believed. While speculators are covering their bullish bets that rates will decline substantially, the Fed will ease and at worse will keep rates from increasing. The issue now is by how much and on what time frame? How the bond market will trade on the easing next Wednesday is uncertain, but we believe the market is coming close to the end of its bull market that has taken interest rates to historic lows.

Bottom line...if you are closing in the next 30 days I would take your medicine and lock. If you don't you may be in for a rough ride especially with the election surely to be a market mover.

Call me with any questions!

Adam Simmons
Crystal Clear Mortgage
www.CrystalClearMortgage.com
936-447-5626

Best Rates ever...and have been for a while

2010-10-08T08:14:00.000-07:00

The news has finally hit the mainstream media. Rates are at the lowest levels in history when it comes to mortgage financing. 30 year and 15 year notes are in the 3% range if you are willing to pay for it in the form of points.

***My personal recommendation*** With rates this good take a slightly higher rate and have your lender waive all of your lender fees to lower your loan amount or lower your cash needed at closing. It is not worth it to pay points in our current environment. If you or someone you know is getting a quote with discount/origination points please send them to us and we will give them the deal they should be getting. The breakeven points on buying down your rate are far too long right now.

Of course these low rates are reserved for the top tier of credit borrowers with the lowest risk profile. Risk profile includes debt to income ratio, loan to appraised property value, credit score, etc. If you do not fall into the best credit/lowest risk sceario you will be subject to Loan Level Price Adjustments (LLPA's). Ask your lender if there are any LLPA's in your loan so you can understand the rate being offered to you.

Do you lock the rate or not lock the rate?? If you are being quoted a base rate below 4.125%, I think you're Gary Busey crazy not to lock it up. If your base rate is above 4.125%, there is room for you to float without seeing a big change in your borrowing costs, regardless of market data. Ugh. That means you should be locking every rate Crystal Clear Mortgage is quoting right now!

Adam Simmons
Crystal Clear Mortgage
936-447-LOAN

Rapid Refinance Program and Check on rates...

2010-09-29T08:41:00.000-07:00

As many as 30 million U.S. homeowners would be able to refinance their mortgage at record low interest rates regardless of their income, credit history or loan-to-value ratio under a plan to be unveiled on Tuesday by a Democratic lawmaker.

The legislation would allow for blanket 30-year, fixed-rate mortgages at the prevailing market rate, now around 4.3 percent, for anyone seeking to refinance a government-backed loan, Representative Dennis Cardoza told Reuters on Tuesday.

The plan would help a wide swath of borrowers and is much more comprehensive than the narrowly targeted efforts President Barack Obama has tried to date.

While this is purely seen in the mortgage market as political posturing (the representative that proposed the bill is up for re election and has been strongly against Obama's current foreclosure prevention efforts)it has been talked about in various forms or fashion for months now. Any action taken on this will come with extreme advance notice (think several months) as the ramifications to the secondary mortgage market would be severe, and in my opinion would likely foretell a complete dismantling of Fannie Mae and Freddie Mac which may be difficult to sell. Does the American tax payer really understand what happens if Fannie Mae or Freddie Mac are shut down? I doubt it.

Is the rapid refinance program a cure all? Will people start making their payments at a lower rate even if they are upside down on their mortgage note. President Obama's current refi program says no as only 30% of all enrolled are making timely payments. Until the issue of negative equity is dealt with, there will be no cure for what they are trying to fix.

...In other news mortgage interest rates continue to hold steady. On loans amounts above 150K you should be able to obtain a very low 4% 30 year rate with no points or origination fees. 15 year notes are ringing in around 3.75%. These rates are based on 9/28 and may have changed by the time you read this. Bottom line, there is still money to be borrowed and at great terms. Hope to hear from you soon!

Adam Simmons
936-447-LOAN
Crystal Clear Mortgage

Where to from here? Disappointing data...

2010-08-24T07:29:00.001-07:00

So the dog days of summer are officially over even if it does not say so on the calendar or on the temperature gauge. Kids have gone back to school and fall is right around the corner.

This can typically be a slow time for those of us that make a living in the real estate business. What is unusual for this year is that the summer purchase season was very slow. The data is out today that existing home sales in July were down way more than expected, to the tune of 27.2% over this time last year. Here is the article: http://www.mortgagenewsdaily.com/mortgage_rates/blog/168738.aspx.

Where are the buyers? With historical interest rate lows (think upper 3% on 15 year and low 4% on 30 year) there has never been a better time to finance the purchase of a home. Home prices have come back to earth as well. That being said it is obvious that the general public is not buying into the fact that the economy is rebounding. In talking with real estate professionals and potential buyers there is a general edginess to the normally exciting prospect of buying a house. Buyers are extremely cautious right now and are worrying more about their future job prospects, worried about overbuying (which is a good thing), and the feeling that they want to hold on to what ever cash they have instead of sinking it into real estate. Hopefully things will turn around soon because this slow down in purchases will have a tremendous effect on the economy. If people are not buying houses that means people cannot sell their homes. If they cannot sell their homes they cannot buy new houses, they may be forced to foreclose if they cannot afford the payment any longer, may not be able to take a new job out of the area, etc. Let's all hope this turns around soon.

As far as home refinancing, the time has NEVER BEEN BETTER. If you have an interest rate above 5.5% on 30 year money or above 4.75% on 15 year money it is at least worth it to look into your options. Depending on your loan amount, there could be substantial savings for you In our current market. Feel free to call us with any questions you may have about refinancing!

Keep an eye on the Headlines!!

2010-08-05T08:20:00.000-07:00

Wow, what a crazy mortgage environment we are lending in. A lot of potential news on the horizon that could have a HUGE impact on the economy, and more importantly homeowners.

First off...RECORD LOW MORTGAGE RATES FACE TOUGH TEST ON FRIDAY. From our friends at Mortgage News Daily:

"The official Employment Situation report is slated to be released this Friday at 8:30am eastern. This event holds the most potential to move mortgage rates in the day's ahead. At the moment, conditions in the secondary market are not supportive of mortgage rates moving any lower. This implies anyone floating their loan on a short timeline, as in less than 20 days to closing, should strongly consider locking in as their is much more to lose than to gain. Anyone closing on a 30 day timeline is less sensitive to this data but should still consider the idea of locking as loan pricing is generally as aggressive as it's ever been in my lifetime"

Secondly...Look for a big push from the government to force Fannie Mae and Freddie Mac into doing one of two things, or both. Either a massive write down on principal balances owed on millions of mortgages to help borrowers that are underwater. (this is the only thing that will stop foreclosures, no one wants to get a loan mod on a house they owe 100K more than it's worth), or a loosening of guidelines to help people with bruised credit, late pays, etc. do refinances to lower their payments.

I would look for a combination of both. Most people cant refinance today because their home won't appraise. Question is...how loose are the guidelines going to get if at all? As long as we remain at full doc loans I think we will be fine. Verifying capacity (the ability to repay) should always be paramount in loan underwriting. Ignoring payment history would help, but it all boils down to how much a borrower owes vs how much the house is worth.

Here is a link to somoe Wall Street rumors regarding FNMA: http://blogs.reuters.com/james-pethokoukis/2010/08/05/an-august-surprise-from-obama/

Loan Quality Initiative

2010-07-28T10:56:00.000-07:00

Fannie Mae has begun to require specific data and processes on all new loan undewrites as part of a Loan Quality Initiative (LQI). This LQI includes various changes that will be implemented at different times in the coming months.

For those that are not aware, Fannie Mae is the backer on roughly 80% of all residential mortgage loans in today's market. When you hear the word "conventional" loan, it means that there is an 80% chance that the loan will be underwritten to Fannie Mae's standards no matter what lender you are using.

The first hurdle in the LQI is labeled as "undisclosed credit and liabilities". In order for a loan to close the underwriters and lender will have to represent and warrant the fact that the loan was underwritten with all of the borrower's credit and liabilities taken into account.

This means all loans will be closely analyzed for credit inquiries that could have resulted in new deb that has not found it's way onto a credit report and the time of applicaiton. A written statement fomr the borrower may be required, itemizing out the inquiries and the reason for the inquiries. If the borrower states they have obtained new debt, the loan will need to be underwritten based off of the new debt load as well as the new credit score.

BOTTOM LINE: WHEN YOU APPLY FOR A MORTGAGE LOAN AND GET AN APPROVAL, DO NOT GO BUY ANYTHING ON CREDIT, USE YOUR CREDIT CARDS, OR APPLY FOR NEW CREDIT. IF YOUR SCORE DROPS YOU COULD BE IN BIG TROUBLE OR AT LEAST IT WILL COST ADDITIONAL TIME AND CONDITIONS.

Please call me if you have any questions!

Rates rise, then come back...but for how long?

2010-07-08T06:30:00.000-07:00

Consumer borrowing costs moved higher yesterday morning but were able to recover from weakness later in the day after stocks experienced a late session sell-off that pushed investor funds back into the bond market. A decline in bond yields led mortgage-backed securities prices higher and allowed lenders to reprice for the better.

A flight to safety happens when investors are nervous about owning risky assets like stocks, but do not want to miss out on earning a return on their funds, so they allocate money into risk-free U.S Treasury debt to provide a safe-haven AND an investment return. To remind readers, as benchmark Treasury yields fall, prices of mortgage-backed securities move higher, which allows lenders to offer lower mortgage rates. As Treasury yields rise, mortgage-backed security prices are led lower, which generally forces lenders to push mortgage rates higher.

Rates are still at the lowest points in history. What does that mean? It means that based on 60 years of historical data rates only have one way to go, and that is up. But when?

We are in a period of very little economic activity on the calanders. When this happens the prices of bonds and mortgage backed securities take their cue from the stock market. Bad day in stocks, expect small to no gains on interest rates. Good day in the stock market, expect an increase in borrowing costs to keep rates the same (i.e. points). please remember that rates move up a lot faster than they move down.

Please call me with any questions! I hope you have locked in your rate becasue it may be a wild ridde!

Mortgage rates Sink to Record Low's

2010-06-24T07:58:00.000-07:00

Against all odds, mortgage rates have continued to fall. We are now at the lowest interest rate levels in history. Don't believe me? Read this article; http://www.msnbc.msn.com/id/37896585/ns/business-real_estate/.

If you have been sitting on the fence wondering about refinancing or purchasing a home, it is time to get off of that fence.

How long will rates stay this low? Great question, and a hard one to answer. All of the "experts" and "analysts" never thought we would be this low in the first place. SO it is important to understand why the rates have fallen to the current levels.

From our friends at Mortgage News Daily:

We can look at price action in one of two ways today...

1.A Product of Excess Uncertainty: continued choppy behavior (stocks, bonds, mortgage backed securities)within a well-defined but wide range OR

2.Double Dipper: We are experiencing the beginnings shift in global economic sentiment...sparked by a downturn in housing, weak June employment numbers, and earnings disappointments.

If you are a supporter of the range bound perspective (#1), you might view today's interest rate rally as a "buy the rumor, sell the news" pre-FOMC flight to safety. This would assume you felt Treasuries were overbought and unlikely to break long term 3.17% resistance. You might also feel that stocks were "selling the rumor" so they could "buy the news" tomorrow. The rumor being a significant FOMC downgrade of housing or the labor market. Supporting this theory: stocks are still trading in low volume and the 10yr note didn't breakout of the recent range

If you're a "DOUBLE DIPPER" (#2), today's worse than expected Existing Home Sales print was another nail in the coffin of the global economy. You've probably been patiently waiting for the short covering led stock market glass rally to shatter. This camp speculates that the Fed will downgrade the housing market tomorrow by referencing "SHADOW INVENTORY" in the FOMC statement.

While option #2 seems like the most logical outcome, especially to frustrated housing professionals (even I am frustrated), I find it hard to believe the Federal Reserve will "cut off their nose to spite their face" and spook the markets with some bearish verbiage. More or less, given the government's recent rhetoric on housing and the NAR's "glass half full" spin on data, the Fed will probably sidestep the issue while finding a way to remind us all that the road to recovery is going to be LOOONG and ROCKY.

If this LONG and ROCKY sentiment holds tru, we may see rates at these low levels (sub 5%) for quite some time.

Adam

The Loan Process, in Summation

2010-06-03T06:37:00.000-07:00

It has come to my attention over the last year or so that most people actually have no idea what takes place from womb to tomb (application to funding) in a mortgage transaction. Most real estate agents have a general idea, but still think we hold all the keys to the puzzle when things don't go as planned regarding time lines. Therefore I shall give a brief rundown off the entire process for some clarity to those in the business, or those thinking of purchasing/refinancing property in the near future. Here goes:

1. Application (or Pre Qualification Stage): At this time a loan officer will collect information from an applicant in order to pre qualify them for a home loan. This is an initial glance, or birds eye view, of someones ability to get financed. Usually credit is pulled and reviewed, and income and asset information is reviewed verbally. This allows us to get a look at an estimate of the buyer/refinancer's debt to income ratio's. Credit and debt ratio (DTI) are the two most important pieces to loan approvals these days. If the credit and verbal debt ratio all check out, a pre qualification can be issued. WARNING: IF YOU WANT A PRE APPROVAL, YOU BETTER HAVE YOUR W2'S AND PAYCHECK STUBS FOR VERIFICATION.

2. Preliminary Good Faith Estimate/Fee Worksheet: At this point we can issue a prelim Fee Worksheet that will show borrowers the current market interest rates, and fees that they would incur if the transaction were closing, or being locked, on that day. These are subject to change based on the market, so buyers don't start railing your loan officers at this point because it will do you no good. If you are not in a position to lock, it is not a time to discuss interest rates. If doing a refinance, you will get a legally binding GFE and it IS the time to discuss.

3. Home shopping (for purchasers): Have fun! When you think you have a home in mind, call your loan officer to get an estimate of the payment for the home, closing costs, etc. Get a list of documents you will need to gather for the loan processing so you can start collecting them.

4. Home under contract: THE DAY you get a home under contract call your loan officer to lock in the interest rate. They may require that you send in all of your application verifications prior to (W2's, paychecks, bank statements, etc.) so get those ready.

5. Once the contract is received by the loan officer it is thoroughly reviewed. Any nuances (seller concessions, non realty addendum's, survey costs) are added to the loan application to get it true and correct. The loan officer will then analyze your paycheck stubs (looking for average monthly income based on year to date earnings, whether you are commission, etc.) analyze bank statements for unusual deposits, verifying you have the needed cash to close, etc. Once everything checks out the loan is ready for processing. That is where the fun begins!

6. Processing: This is when the appraisal gets ordered (provided the home has passed inspection), survey gets ordered, and title gets opened. It typically takes about 7 business days to get all of these items back. In the meantime the loan is submitted to the underwriting department for review against the investor (bank) guidelines. Turn around times are always changing so this can take a day, or a week. As we move into June it will take longer thanks to the influx of tax credit contracts trying to close.

7. Underwriting: Once the file is received in underwriting it goes in line. It will not be looked at until the files in front of it have been reviewed. Get with you loan officer to confirm turn times. The underwriter will review your file and either clear the file to close (if they have appraisal and title) or issue an approval with conditions. The conditions on the approval can be small items, or very large, deal killing items. I will get into this in a separate post.

8. Processing: At this point the processing team will gather all of the conditions on the approval and resubmit to underwriting. However long it takes you to gather the conditions will effect how soon we can close your loan. Once we have them, it's back up to underwriting, waiting on the updated turn times to come and go.

9. Clear to close: The underwriters have cleared the loan for closing. Documents still have to be ordered, prepared, reviewed, sent to title, HUD's balanced, etc.

That is a VERY quick summary. Depending on turn times and how handy you as a borrower have all of your documents, can directly impact how long it takes for a file to get to closing. You may have got your loan officer everything they needed 4 days ago, but if turn times are 5 days in underwriting, you will be waiting one more day. I know this was a very long blog post, and they typically will not be that long. I will take the next couple of weeks to breakdown the entire process step by step. Please call me with any questions!

Are You Kidding Me??

2010-05-28T06:53:00.000-07:00

WOW! Get ready for this one...effective June 1st, Fannie Mae will now require that a second credit report be pulled prior to closing on all home transactions (refinances and purchases).

I understand that Fannie Mae had a lot, and I mean a lot, of losses over the past couple of years. However, the ramifications of this are going to send shock waves through the industry for several reasons:

1. Credit is always a moving target. You can have zero transactions on credit in a 30 day period and pull different scores. Loans must be underwritten off of exact credit scores. This means that if you started your loan with a 740 and end up with a 739 (yes one point), your loan has to go back to underwriting and closing will be delayed.

2. Borderline Deals: If you have a 680 credit score, which is the lowest you can have to obtain PMI, and at the end of the transaction you are a 679 you can say good bye to your loan, your earnest money, and the house.

It remains to be seen exactly how this will be handled in underwriting, but for now, DO NOT have any activity on ANY lines of credit once you apply for a loan application. More information to follow...

Legislative Alert!

2010-05-14T06:02:00.000-07:00

So those of you that have read this blog are aware of the trials and tribulations that have occured since the onset of the Home Valuation Code of Conduct (HVCC). Some of the Realtors that I work with read this blog and know first hand some of the issues that we have had to deal with, and the work it takes to overcome these issues. Well...good news may be on the horizon! The National Association of Mortgage Brokers has successfully lobbied congress to get an amendment offerred to immediately "sunset" the HVCC. This means that lenders would again be able to order appraisals from their trusted associates, appraisers would get paid their fair wages, and the overall quality of work on appraisals would increase. This is potentially great news for Buyers, sellers, loan officers, Realtors, title companies, appraisers...basically everyone connected to a home transaction. I will continue to keep you updated. here is some of the info: (by the way...rates are still unbelievable!!!)

After months of hard work and meetings with Congress, NAMB is pleased to announce it was successful in working with Congress to have an amendment offered to S. 3217, the "Restoring American Financial Stability Act of 2010," that would create new appraisal independence standards and SUNSET the HVCC. Senate Amendment 4015, introduced by Senator Casey (D-PA), would, upon enactment of S. 3217, immediately sunset the highly controversial Home Valuation Code of Conduct (HVCC). The amendment would also bring greater appraisal quality and accountability to the housing market by requiring licensing standards for appraisers pursuant to the SAFE Act, and require minimum standards for AMC's, among other provisions.

NAMB applauds Senator Casey and staff for their hard work on this amendment. The amendment will be officially public tomorrow, continue to monitor your email and NAMB's website (www.namb.org) for updates on this amendment's progress.

For a copy of the amendment, go to this link: https://www.namb.org/images/namb/GovernmentAffairs/casey%20amdt%204007.pdf

Thanks for stopping by! Call me or our great team with any questions!

Wow! Did you see the DOW yesterday...What it means for Rates

2010-05-07T05:55:00.001-07:00
Absolute chaos and pure panic on Wall Street yesterday as the DOW suffered it's largest single day fall in History, almost 1000 points. Stocks ended up down about 360 for the day, gains coming as word spread that most of those mass sell offs were triggered by computer programs, and someone had fat fingered their keyboard selling billions of stock instead of millions.

However, not all of the anxiety was due to an error. The issues with Greece are becoming more paramount by the day. The concern is that other countries, who are heavily invested in Greek debt, such as France and Germany will follow them into a financial black hole should the Greeks default on their promissory notes. France and Germany are widely considered to be the healthiest of the European Union (at least financially!). If Greece were to default on the loans France and Germany made, it would hurt their economies tremendously. Spain, Italy, Portugal, and Great Britain are widely invested in Greece as well, and are already paying the price. The Portuguese government is issuing 10 year bonds paying 11.5%!!!! That means they pay twice as much to borrow money as France does. Holy Cow!!

What does this mean for mortgages, i.e. why am i talking about it?? It is the flight to quality that results when stocks are in a wide sell off. Investors pull out of the stock market and invest in government debt (treasuries). The prices of the bonds go up, which causes the yield to fall. Mortgage backed security bonds are closely tied to these types of securities. That means...RATES FELL YESTERDAY! Bad economic news for most people is good news for those buying and refinancing. Rates are now at the lowest levels of 2010. Not quite as low as the tail end of 2009, but close. If you were sitting on the fence, you better jump off ASAP as rates move up much faster than they move down.

Call me with any questions. 936-447-LOAN!

Common Pitfalls during Home Financing

2010-04-29T07:51:00.000-07:00
Realtors....ever have a great deal, one that looks like a slam dunk, only to have it fall apart once the file hits an underwriters desk? Absolutely you have, because it is unavoidable in some cases. A good loan officer should do their best to ask the right questions at the initial loan application, but you never know what can rear its ugly head during processing. Here are some common issues we see and hear about:

1. TAX RETURNS, TAX RETURNS, TAX RETURNS: everyone wants to pay Uncle Sam as little as possible. I get that. What I don't get is why you think you should be able to qualify with more than you tell Uncle Sam you made. For example: if you take unreimbursed business expense deductions (the worst is mileage and car expense, especially for W2'd sales reps), the amount you deduct will be taken out of your W2 income for qualifying purposes. The underwriters will look at two years of your tax returns and average the deducting. That is the amount they will "hit" against your income. It does not matter if you "aren't going to do it again this year (wink,wink)", the underwriters will assume you will until they have proof. This has killed many of deals in the past, and will continue to do so in the future so be careful.

2. SELF EMPLOYED BORROWERS: same issues as above. If you write down all of your income to help you on the tax side of things, get ready for a difficult underwrite. The only line item you can add back to your bottom line for qualifying is depreciation. So, if you take a huge write off, better hope it's depreciation if you want to buy a house. Also, you need two years self employment history in 95% of cases. If your company W2'd you, and then switched to 1099 recently, you will have difficulties.

3. Have a debt that someone else pays? Better have 12 months of cancelled checks to prove it. If you co signed on a car for someone, and they pay you, and then you pay Ford Motor....fuggitaboutit. That debt will be factored into your dent to income ratio.

These are just a few issues that can pop up from time ti time. We are only as good as the information the borrower gives us. So if they think they can not be honest with us on the forefront, it will be figured out, and usually not at the best time (i.e. well on down the road).

If you have a unique situation, call us and we can guide you through the process!

Having Appraisal Issues? Here's why...

2010-04-15T06:44:00.000-07:00
HVCC, a.k.a. Home Valuation Code of Conduct. This may be one of the most absurd, pieced together, least thought out rules to ever materialize in the mortgage/real estate business. The funny thing is...IT IS NOT EVEN A LAW!!!

HVCC was a settlement to a lawsuit filed by the Attorney General of New York, Andrew Coumo, against Fannie Mae and Freddie Mac. The idea behind HVCC was to help ensure appraiser independence and to protect the integrity of the appraisal valuation process. HVCC was a settlement. Instead of the NY Attorney General suing Fannie Mae, Freddie Mac, WaMu and First American’s e-Appraise-it appraisal management company, we ended up with HVCC. Sounds like a decent idea on the surface.

However...here is the issue. Appraisals used to cost about $380 for a standard lot/block appraisal. The cost has not changed. What has changed is the amount the appraiser actually receives out of that $380. Now, because of HVCC, all appraisals must be ordered through an appraisal management company, or AMC. The AMC contracts out the appraisal job to the lowest bidder and pockets the rest. Therefore you have appraisers viewing property for pennies on the dollar for what they are used to, and have no incentive to spend the time and put in a quality report. They have to see twice, maybe even three times the number of properties to make the same amount of money. You cannot see properties when you are analyzing comparables at a computer. Thus enters LOW APPRAISAL VALUES, HORRIFIC COMPS, and the exit of customer service.

While not all appraisal reports are coming back low, a lot of them are. What do you do in this case? What recourse do you have? HVCC forces appraisers to respond to comments and additional comp suggestions regarding the appraisal report in question. If you have a low appraisal on your deal here are the steps you and your lender/real estate agent should take:

1. Get the agents together and come up with three new comps for the home under contract. Make sure these homes truly are comps (i.e. less than 5 miles away, sold in the last 6 months, similar square footage and amenities). If additional comps are outside of these listed areas, your not going to like your results.

2. Have your lender submit the comps to the appraisal management company for review and comment. Usually the AMC will give the appraiser 24-48 hours to make any changes. CROSS YOUR FINGERS. Appraisers do not like to be told how to do there job.

3. If the appraiser does not adjust the value, have your lender take the appraisal to the appraisal review board inside of the lenders offices. Sometimes they will override an AMC appraisal but you need strong compensating factors (large down payment, typically 20%, great credit, cash reserves). Lenders want that type of paper and don't want to lose it to a bad appraisal.

If that does not work...get ready to renegotiate the contract. There are a lot of movements underway to repeal this aberration and hopefully it will be repealed soon.

I will keep you updated with more information as it comes along. Thanks!

What is Good Credit anyway?

2010-04-06T05:58:00.001-07:00
The definition of good credit has changed rapidly over the last 2 years. Ever since the "Mortgage Meltdown" (I hate that term), there has been a fast and furious tightening of underwriting guidelines. One of the major components of loan underwriting is a potential borrowers credit score, and what the credit report says about their past borrowing history.

Let's time travel back about 24 months, or 10 years in the mortgage years, when loans could be had by stating your income, or basically proving that you could fog a mirror. Back then Fannie Mae/Freddie Mac had allowances for credit scores down to a 580. Yes 580! You still had to receive an Approve/Eligible response form Fannie Mae/Freddie Mac, which was unlikely on that credit score. However 620 scores and up usually received the approval. That means a 620 score received the same rate as someone with an 800 credit score. NOT ANYMORE!

Fannie Mae/Freddie Mac have implemented loan level pricing adjustments (called LLPA's). These are nothing short of bumps to your interest rate depending on what your credit score is. In today's world, you need a 740 or above if you are looking at conventional loans to not get an LLPA attached to your loan. If you have a 700-739, the hit to your rate is not that bad, but some days may be as much as .125% on a 30 year note. Credit scores below a 700 get hit much harder. Expect about .25% higher of an interest rate than current market if your score is a 680-699, and as much as .375 if your score is 660-679. If you have score that low, you better have 20% down or you must go with an FHA loan. I'll talk more about that at a later time.

Just because you have a credit score in the range I just discussed, does not mean you can get approved. It is also important to look at what is on your report (i.e debt ratios, late pays, etc.).

If you are thinking about buying or selling and are not sure what your credit reports says, or are unsure about the credit score, call a mortgage professional today. Do not go the free credit report websites as they are not always the same as what a mortgage company will pull. Lenders eventually need their own credit report anyway, so you don't want to base a loan approval off of a credit report the lender did not obtain.

It is official!

2010-04-01T06:25:00.000-07:00
The dreaded day has come and gone. The FED has officially exited the mortgage secondary market and (for the time being) ceased propping up an entire industry. What does this mean for you as a realtor or as a buyer/seller?

First things first. Rates WILL go higher. This is understood. What is not understood at this point is how much higher they will go and how quickly. We at Crystal Clear Mortgage, along with other market participants, expect rates to move upward but not at alarming levels. I expect the best interest rates to be around 5.5% within the next 30 days on 30 year notes. This will scare some buyers but it is our new reality. You snooze you lose.

There will be a tremendous amount of volatility in the near future regarding mortgage rates. Price worsening will be harder to predict. The reason for this is Private investors are now entering the market for the first time in a long time without the security of the FED. They will be in a "feeling out" mode to try and even out supply and demand and the price points that create this equilibrium. It is quite possible that a quote on one day can be .25% better or worse than the day before. Prepare your buyers for this. IF YOU HAVE A HOME UNDER CONTRACT, LOCK IN YOUR RATE TODAY AND FORGET ABOUT IT. BY THE TIME YOU CLOSE YOU WILL HAVE A BELOW MARKET INTEREST RATE. THE TIME TO BEAT UP YOUR LENDERS ON RATE, OR WAIT FOR RATES TO GET BETTER HAS DISAPPEARED.

I am also recommending longer term rate locks for the first time ever. Usually the best rates are had on 30 day locks, with rate adjustments the longer out you lock. If you have a buyer or are a buyer but have a closing 45-60 days away, LOCK. Once again, by the time you close, odds are you will have a below market rate even after taking a slight hit for the piece of mind.

When Should you lock in an interest rate?

2010-03-26T05:22:00.000-07:00
I hear this question from my clients all of the time. My answer to them is that they should lock in as soon as they get a fully executed sales contract. That being said, your best rates will come on a 30 day lock, and some contracts these days are pushing closings out for 45 and even 60 days. What do you do then?

You need to bite the bullet and take a slightly higher rate for the added security of the longer rate lock. The reason I suggest this is two fold:

1. You can always float down, or renegotiate, your interest rate before you close. Make sure your lender offers a float down option on your rate locks. There may be a small fee for doing this, but locking in your rate protects you by giving you a worst case scenario. Keep in mind you will only be able to float down if rates have remained stable or have moved lower. This is getting increasingly doubtful in our current market.

2. We are no doubt about to enter a rising rate environment. If you have a 45 or 60 day escrow and hold off locking until you get within 30 or even 15 days of close you are risking a higher rate then if you had done an extended lock. The markets can adjust fast, and by the time your loan officer gets in touch with you to let you know rates are going up, you could end up very disappointed. If you have high debt to income ratios, a higher rate can blow your loan, and at a minimum the loan will need to be processed through underwriting again at the higher rate, adding more time to the process.

I hope this information helps. Check back soon!

Mortgage Rates go from 2010 Lows to 2010 highs in one day!

2010-03-25T05:27:00.000-07:00
It is more than a little ironic that I cautioned yesterday about interest rates moving upward and doing so quickly, because it happened yesterday. Across the board (by that I mean conventional, FHA, VA, etc.) rate sheets took a hit of about .375%! That is a HUGE jump in one day. That means if we were quoting 4.875% in the morning, by the afternoon we were quoting 5.25%. I would like to think that this is just a knee jerk reaction to a horrific bond offering yesterday, but I know it is more than likely going to continue. Why did this happen yesterday??

There are several factors. However the likely culprit is a lackluster 5 year bond offering. At 1PM eastern, the Treasury Department auctioned 42 Billion dollars worth of 5 year notes. When our government lacks the cash needed for spending, they must find it from investors (China!). They do this by selling debt such as bonds and t-bills. The success of any auction is always gauged by demand....and there wasn't any! This had investors jumping out of the bond market (which drives mortgage interest rates as Mortgage backed Securities are tied closely to bonds) which drove the prices for Mortgage Backed Securities in the toilet. The less the bonds are worth, the higher rates go to attract buyers. Bad Situation.

IF YOU HAVE BORROWERS WHO HAVE NOT LOCKED, YOU NEED TO ADVISE THEM TO DO SO. With FED support of the mortgage markets ending on 3/31, it is doubtful rates will rebound.

Feel free to comment!

Welcome to My Mortgage Blog!

2010-03-24T07:51:00.001-07:00
Thanks for stopping by my new blog. I will update this blog at least every week with information regarding home mortgage rates, new guideline requirements, appraisal issues, unique scenarios, etc. My goal is to educate the real estate community and potential buyers and sellers in all aspects of mortgage financing. It is always important to have a fundamental knowledge of the mortgage markets before entering a real estate transaction. And for all the Realtors out there...we know that every loan you have is unfortunately not as smooth and perfect as the ones we do (wink, wink) and in those cases hopefully you can find some answers here. Once again, thanks for stopping by and I look forward seeing you on the blog. Fill out the poll question to the right and I will use the answers to help fill content!

For now, my first post will be directed towards all of the FENCE SITTERS and agents with FENCE SITTERS in your Rolodex (do people still use Rolodex's?). There are a lot of reason why potential home buyers hesitate in making a decision. Each one of the reasons is very real to the people that are feeling it, and those reasons need to be understood so we can find out if the reason for hesitation is valid. We are in a unique spot right now in that those that hesitate may just price themselves out of the market all together, and here is why:

The main reason has to do with mortgage interest rates. The FED is ending their presence in the mortgage secondary market. This secondary market is where mortgage backed securities (Large bundles of mortgage loans) are sold. This market used to be filled with Pension Funds, Hedge Funds, private investors, etc. Once the market collapsed, everyone left the mortgage secondary due to increased risk. That is when the government stepped in last year and dedicated 1.25 TRILLION dollars towards the future purchase of mortgages. The prices these mortgage fetch on the secondary is what drives current mortgage rates. Because the FED has been paying above market prices for these securities,rates have been artificially low over the last 12 months. The 1.25 Trillion is expected to run out at the end of March, and according to the FHA commissioner, a "healthy" increase in rates overnight will be half to three quarters of a percentage. Any more than that, and you may see the FED re enter, but for now they are out. Make no mistake, we will be entering a rising rate environment. TAKE ADVANTAGE OF RATES YOU WILL NEVER HAVE TO REFINANCE. Once the FED exits the secondary will be filled with private investors who demand much more return for their money, which means higher rates.

Also, the tax credit is set to expire. If you are not under contract by April 30Th you miss out on $8,000 from the federal government. This is not an 8K tax deduction, this is a credit. It is a free 8K back to you! This can replenish most borrowers down payments in our current market. This program WILL NOT be extended.

Check back soon!