Mortgage Rates Staying Low!

Advertised mortgage rates and real mortgage rates often differ according to how much deceptive "spice" the advertiser sprinkles on the dish.   Discount points, origination fees, broker fees, credits are often manipulated to confuse what should be a fairly simple truth.  While there are some minor variations due to the lender's mark-up, most of the money comes from the same sources.  I have found a good benchmark to be Freddie Mac's Primary Mortgage Market Survey.  It is a weekly average that runs Thursday to Thursday and will center you on the true rate picture. 

Rates are really low and fairly stable.  Pressure is building for a rise, but no one know when this will happen.  For now though....



Have a great weekend!

California Housing Shows Signs of Improvement

In contrast to the national figures, California pending home sales rose for the second straight month, even as foreclosure activity in the state declined!  That's a bit of welcome news.

Fannie Takes Aim at Strategic Defaulters

"Strategic Defaults" occur when people who still have jobs and enough income to make their mortgage payments walk away anyway.  Why do they do this?  Usually it's because they are way "under water" and they figure that they can default on the mortgage and repair their credit quicker than their house will regain its lost value.  In studies conducted by Experian, the typical strategic defaulter is "clearly sophisticated", usually someone with higher credit scores, a higher loan balance, and a clear idea about the consequences.  In other words, it's a borrower who looks at the situation and says "it's just business."

Well, that's going to be more expensive soon.   Fannie Mae just announced this week that it is increasing the time required after a foreclosure to 7 years for those who default in this fashion.  It gets worse.  The GSEs are going to hold these former homeowners responsbible for the costs of repairs and getting the home back on the market.  I find myself wondering how they will make this determination, but whatever the mechanism, it's sure to create more conditions that must be met by all future borrowers.  We'll see how much it changes the calculus of foreclosure for this group.

Are Short Sales Getting Easier?

With the inventory of available homes increasingly restricted to short-sales, at least one bank is ramping up to push short-sales through more quickly.  That can only be good for the legions of frustrated buyers who seem to be spending months waiting for short-sale bank approval after a seller has accepted their offer.  

Commenting at an REO Expo in Dallas this past week, Matt Vernon of BofA said ""We're going to do everything possible to liquidate property prior to foreclosure.  "REO will still be available, but we will do everything we can to do short sales." 

Last November, the Treasury Department established the Home Affordable Foreclosure Alternatives Program (HAFA) to assist those unable to qualify for loan modifications.  Hopefully it will prove to be more successful.

So what's with the photo?  It came in one of those joke emails, and I saved it just because it made me laugh. 

 

Rates Improve a Bit at Weeks' End

Today's jobs report brought good news for mortgage rates, even as it delivered more gloom for the economic recovery.  In this business, bad is sometimes good, and we often find ourselves wishing for bad news to help push rates down.

The Labor Department reported early this morning that nonfarm payrolls rose by 431,000 --mostly temporary census workers-- while private employment, a barometer of labor market strength, eked out a very modest gain. Payroll data for March and April were revised to show 22,000 fewer jobs. The stock market took it on the chin with the Dow dropping 323 points.

So, you're probably wondering what this photo has to do with the jobs report.  Maybe you're trying to interpret the sunset as some sort of metaphor for the stock market or the economy.  Nope.  It's a picture I took of sunrise in Tulum, Mexico at a little resort called Zamas where I spent a week in January with the family.  For those looking for a quiet, backwater resort, far enough from the civilized world to disconnect from the world while enjoying great food, Mayan ruins, unspoiled Caribbean beaches, check it out.  It's a couple of miles south of the Tulum ruins on Boca Paila Rd. We like it enough to have been back three times.

Last Minute Credit Reports: Fannie Mae's new "Loan Quality Initiative"

Remember when lenders would pull a last-minute credit report before the loan closed just to make sure you hadn't incurred new obligations after your loan was approved? Well, maybe you don't. But that used to be the case. As a result, we mortgage folks got in the habit of forbidding clients from making any new purchases after we had pulled credit for a loan application. In the past few years we have become less vigilant about this because lenders were not requiring a last-minute credit pull. Well guess what. It's back!

Fannie Mae announced a new Loan Quality Initiative designed to help reduce the alarming increase in "repurchase requests" (that's where they make us buy the loan back) resulting from things like new car loans that didn't show up until after the loan closed. According to an Equifax analysis, up to $142 million in car loan payments were missed during underwriting in 2009, resulting in loans applications that were substantially misrepresented and in loans which the borrowers were incapable of repaying.

"As part of the Fannie Mae Loan Quality Initiative, mortgage lenders will have to meet additional guidelines to ensure that the borrower has the propensity and capacity to repay a debt. For loan applications dated on or after June 1, 2010, Fannie Mae will require lenders to verify at pre-funding that borrowers have not incurred new debts or liabilities that may affect their ability to fulfill a mortgage payment obligation. If additional credit was obtained up to the funding date, a borrower must be re-qualified with the monthly payment included in the debt-to-income calculation. Any debts or liabilities incurred during this period, which are not reflected on the credit report or disclosed in the final loan application, may subject the lender to the risk of loan repurchase."

We may even be required to directly contact any creditor who has inquired recently into your credit to determine if there are pending obligations not yet appearing on your credit report. So caveat emptor: once your credit has been pulled for a mortgage application, do NOT apply for, accept, borrower against, or make any new purchases on credit without first talking with your lender.

I'm giving consideration to moving Lending Clarity to this format...exploring Google's blogger options now.