Foreclosure Ban...Review for Obama's Modify Mortgage First

The Federal Housing Finance Agency (FHFA) is authorizing the extension of Home Affordable Refinance Program (HARP) until June 30, 2011. Also included in the HARP is the modification program. This is good news for those who need to refinance their homes but still have little equity in their home. TheTruthAboutMortgage.com reports that 24% of mortgages in America are "underwater". Meaning, there is a need for modification or refinance to lower payments and get payments to a managable amount.
The Obama Administration announced the foreclosure ban. Possible foreclosures under this plan would have to be reviewed for to see if they would qualify for the Home Affordable Modification Program first. TheTruthAboutMortgage said, "A document detailing the proposal obtained by Bloomberg said it 'prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed.'”
This plan is not approved, but many think it will not be shot down.

Mortgage Rates as the Economy Recovers

Moving.com continues to do an excellent job of telling the public about the daily progress of our economy and how it relates to mortgage rates...just in case the layman wanted to keep an eye on the economy in publicity that can be read and understood by anyone.
Today, bonds started out in negative fashion as the morning report in retail level sales came out not just good, but better than research would have expected. That is a good sign of recovery in our economic times...as I always say, "what's good for our economy, many times is not good for low mortgage rates". In the end for today in comparison to yesterday, rates came out a tad higher...by .125% in discount point (for the layman. That "ain't" much).

This retail level establishments report is announced by The Commerce Department. This is an important report, in case you wanted to take mental note for long term memory, as apposed to trying to add the huge number of reports that we see from day to day in the Stock Market that don't necessarily have a huge influence like this one. The retail level establishments report is important as it makes up two thirds of the U.S. economy.

Furthermore, this blog is piggy backing the recent blog post I made in the Frisco Economic Forecast a couple weeks back, in regards specifically to what rates may do in the coming 6-8 months...if you haven't read it, go read it. Remember, sitting here today with the 30 year fixed FHA and Conventional rates at 4.875%, a 7% to 7.875% rate on that price range you are holding off on today will bring a monthly payment well more than $100 a month higher at the expected higher rates than the ones today. That means you will probably settle for a lesser house in 6-8 months than you would now.

$8,000 Tax Credit Towards FHA Downpayment

HUD Secretary Donovan appeared at a NAR yesterday, and this is an exact excerpt of his remarks:

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment. So FHA will permit trusted FHA-approved lenders and HUD-approved nonprofits, as well as state and local governmental entities to "monetize" the tax credit through short-term bridge loans. We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit. FHA will be publishing the details shortly."

Okay - so what does that MEAN? It means that they are about to "officially" put their stamp on approving the process (and authority) on who/where/why/when a first-time homebuyer can get a LOAN for the $8000 tax credit - to be used as part of the required down payment!

THIS IS HUGE! As soon as the "official" announcement is out, we will get it to you. For now, if you are inside the transaction process of buying a home, all you can do is cross your fingers that this happens soon enough that you can take advatage of this if you choose. If you are considering on buying a house, know that this may drag on a month or two...be prepared to wait if you must.

Rates Getting Lower and Tomorrows Employment Reports Could Help More

Rates were great today, 3/5/2009, but I need interest rates for a 30 year fixed loan to get below 4.875% and 4.5% for a 15 year fixed. The one thing that could help that scenario to happen is that there be a increase in the unemployement rate in tomorrow morning's report, a drop in payrolls, and little or no incresase in earnings.
How can I track tomorrows outcome in such reports? The forecasts for unemployment are .3% increase to 7.9%. So if you Google "todays unemployment report" after say 8:30am Eastern Time and compare the findings to the above, you will at least have hope that lenders open with better rates...they don't always follow as we plan or hope.

Should I pay points/origination...CONT'D/Part II

Should I pay points/origination?
If you haven't read part I of this Blog, please click on this hyper link...Part I or scroll to the Blog title previous to this one below.
...YES!!! Pay points.
First off, somewhere in the time continuum's past, the word "point" became a trigger word that people hear and focus in on. The way I see it, it's a block for understanding how to shop or understand how to effectively shop your loan. I can tell you this, as a long time loan officer, when I hear a client ask about "points" or mention that their father, brother, uncle, or spouse asked them to ask about "points", I right now know there is a possibility I will have a hard time explaining mortgage and explain how to structure a loan for this person because they are "cursed" with the "point block".
That being said, if it makes since, pay points! Lots and lots and lots of points! OK, I'm exaggerating...but yes, pay points when it makes since. The interest rate that families are getting today, at this point in time, they will unlikely be able to refinance into a lower rate that makes since for the duration of that loan's life. So, there is no fear that they pay up front money to get the best rate and then rates drop months or a year later and now they refinance again and double the cost that they are trying to make up for the savings of the refinance.
There is a less obvious reason to pay points now, and many/most loan consultants won't "go there" with their client, lenders, investors, and banks are being really greedy with their incentives that pay the commissions and overhead for their loan officers. (I also don't "go there" with many clients because some clients are not interested in how or why, they are only interested in, "what's in it for me". I try to profile clients that care about me as a business relationship, not a slave that happens to have the key to the door that they have to get through to get a loan.) It used to be easy to go to a client and say, "George, I can offer you 5.5% with no origination/points, or I can offer you 5.375% with you paying .5% in origination/points, or 5.25% with you paying a full 1% origination/point." Reason being, the lending establishments would pay much larger incentives to loan officers that would offer .125% above the rock bottom lowest rate and then every .125% increase to the next and so forth as the rate that is offered moves up. Well now, we loan consultants would have to literally move an interest rate that we offer where the borrower has to pay 1% origination up .5% or .875% to be compensated enough to waive the origination/point...that blows the deal for a refinance because the payment increases to much.
What does that mean to me, the refinancing borrower or home buyer?That means that you need to ask your mortgage consultant for the lowest rate possible and ask him what kind of origination and discount must be paid for that rate. If you want your lender to waive origination/discounts/points, you are setting yourself up for trouble in this market.
Good luck! Go and buy a home or refinance to help your country through this recession.

Employment Reports Hoping to Drop Mortgage Rates

What are the hopes for the short term in interest rates for your hopes in a more successful refinance?
In a daily report yesterday, Moving.com said, "Current forecasts call for a 0.3% increase in the unemployment rate, pushing it to 7.0%. Analysts are expecting to see a drop in payrolls in the neighborhood of 500,000 with earnings rising 0.2%. If we see weaker than expected results, mortgage rates should improve tomorrow. However, stronger than expected readings will likely push mortgage rates higher." This would mean that if the reports showed a worse than expected figure, we would see rates possibly fall even lower for the hopes of that next best rate in your refinance or purchase.

How did the employment report turn out today?CNBC report that the U.S. private-sector employers shed 693,000 jobs in December, a private employment service said Wednesday in a report that was far worse than expected and pointed to more ugly news from the government's jobs data due later this week. The drop, much bigger than the revised 476,000 private sector jobs lost in November, is consistent with about a 670,000 fall in December non-farm payrolls, said Joel Prakken, chairman of Macroeconomic Advisers, which jointly develops the private sector employment report with ADP Employer Services. After the ADP report, U.S. Treasury bonds regained some lost ground, the dollar extended its losses against the euro and the yen and U.S. stock futures slid.

What were the results for mortgage rates today or what is to hope for?
Rates came out this morning pretty much unchanged, because typically the changes take half a day or better to have their affect. So we'll either see the affect as a mid day pricing change today, or hopefully Monday.

Greed or Good Hope Drive Strategies In Refinancing Game

Refinancing in today's market for the Dallas, Frisco, and surrounding cities can be a time for a mortgage consultants where the consultant may have to decide in deciding what the near future may bring in market changes whether to advise a prospective borrower to lock and realize what the market has brought, or to float (hold of on the lock for the time being) in hopes for the even better rate. My concern is, are there too many people striving for the ever "impossible deal". Working in a refinance boom brings out the shifty character that is embedded in man...in general. This thought brings me back to a trophy fish that has not, and will not ever be caught by "The Sons of the Sacred Shrimp".

As a kid, my father and some of his fishing buddies organized a small amateur fishing "club" that was only made up of about 5-6 people w/in their tight nit buddy group. Their club names were derived by using a coastal fishing name that started with the same letter as their last name...Lighthouse Lynch was my families club name, and there were names like, Gaftop Godfrey, Redfish Robinson. The motivation that was set in the goals of the club was a single fish by the the name of Freddy Fish. Freddy Fish was the ever elusive largest fish one could catch of any such fish species. You can't catch it, I did. ha ha




It might be the one that got away" that all fishermen have come across. This thought is one that comes to mind in the mortgage world. I have witnessed clients chase the one interest rate that can never be "caught", and I'm going to call it, Iden (pronounced with a long i) interest rate. Iden is an Anglo name meaning wealthy.

It seems like the lower a rate lock I secure for a client, the more I'm pushed to find the next lower. I don't see this as hope as much as I see it as greed. Iden the Interest rate will not be "caught" by the masses. There is only one owner of the record size bass caught in the world, yet every angler fishes in hopes to catch that next record. Obviously, the angler has nothing to lose by fishing for Freddy Fish, but let me advise to you prospective borrowers and buyers, YOU DO HAVE SOMETHING TO LOSE BY CHASING IDEN THE INTEREST RATE. Only a very small few will stumble upon Iden, and the rest will ultimately settle for a lesser rate after you've passed on Iden's not so bad cousin (a better one) hoping to catch Iden.

In the last week, I had 4-5 past clients that became prospective borrowers in the refinance market. They all mentioned to me that "if I could just get 5% flat or ANYTHING UNDER 5%, I would jump on it". Well, "the tide receded" lower than ever expected in recent years and I had the opportunity to lock them all at .25% or better than they thought possible. I was very excited to deliver the message to all of them about exceeding their expectations, and not a one of them responded with excitement as their innate drive for Iden the Interest rate set in.

I read Christian literature, and this morning I came across some reading that was written by a Christian Author, but is probably written in numerous publications in all genres of readings that made good since. The basic thought that I pulled from this is that every leading world power that has ever been throned in the history of mankind has been dethroned, whether it be the unimaginable dynasties in China, or the crushing power of Caesar and the Romans, or the vast reaching power that had such an abrupt ending of Hitler's Germany. You may ask what this has to do with this Blog? America the beautiful has been the so called world power for some time now, and if history defines the future as it has for years, we Americans may need to realize that we aren't necessarily "world beaters" by default. We bleed the same color as the guy living in the Siberian Mountains that still survives from hunting and gathering. Our countries foundation is breakable only when the economy to support it is broken. In a 2009 economic forecast by an industry leading economist I listened to yesterday, he mentioned of Japans struggle through my lifetime to pull from a depression and/or recession, just as they appeared to break free, they fell back into it. America could very well be on a drawn out fall with the rest of the worlds economy that may lead to unforeseen and expected economic times that no man can forecast...I'm not speaking Biblically here.

Economists do not have crystal balls, and the mortgage forecasts are gambles. I use the name economist and optomist synonamously, because it seems like economist never fail to deliver a positive hope accompanied by their report of our failing economy.

In the concluding statement here, I'll let you draw your own conclusion for an answer to the question, "Brad, I know rates are unbelievably low right now. But, we didn't think they would get this low. DO YOU THINK WE SHOULD REALLY LOCK MY LOAN RIGHT NOW?"