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And the FED…does nothing. August 5, 2008

The markets anticipated the FOMC to leave the Fed Funds rate alone at 2% and that’s just what they did.   The markets are reacting accordingly by not swinging drastically either way.   The DOW is enjoying triple digit gains while oil has been under $120.   What does this mean to mortgage interest rates?

As you know, the FOMC does not directly control mortgage interest rates as mortgage interest rates are based on bonds–mortgage backed securities (MBS).  Traders will react to what the FOMC does and does not do and THIS will impact mortgage interest rates.

The FOMC press release states:

“Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports”.   I’m wondering how much of the growth in consumer spending is from the economic stimulus checks?

This statement is quickly followed with: “…labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters”.

Bonds react negatively to inflation, I’m anticipating that we will see mortgage rates continue to trend higher.   Here’s a bit from the FOMC regarding the “i-word”:  

“Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.”

You can read today’s FOMC statement here.

PS:  As the Prime Rate is tied to the Fed Funds Rate, your HELOC is unchanged for now.

Mortgage Rates Improved August 1, 2008

The Jobs Report this morning wasn’t pretty.   We didn’t lose as many jobs in July at 51,000 instead of the expected loss of 75,000 (how is that for sugar coating?).  Our unemployment was reported higher at 5.7%.  Consider this, many loan originators who are 1099 (vs. W2) and do not qualify for unemployment may not be factored into these stats.  

The Tim, I’m sorry…I have no time today for the up and down arrows indicating rate changes for this post…I’ll do happy or sad faces instead (I do plan on using the arrows when I have the time).   The improved/worse rates are compared to when I last quoted rates two weeks ago at Rain City Guide.

To see these rates priced with zero points, please click here.   By the way, I’ve changed the rate quote to a 30 day lock (instead of 45 days).  Most of my purchases are closing within 30 days…if/when this changes, I’ll make the appropriate adjustments.

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties).  The conforming rate quote below is based on owner occupied with a minimum credit score of 720, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000.  This scenario includes reserves (taxes & insurance) not being waived.   Rates quoted are priced based on a 30 day lock with no prepayment penalties on any of the rates quoted below.   

30 Year Fixed @ 1 Pt:  6.250% (APR 6.410%)  improved 0.25% to rate.  :)

30 Year Fixed with 10 Year Interest Only @ 1 Pt:  6.500% (APR 6.648%) improved 0.125% to rate.  :)

15 Year Fixed @ 1 Pt: 5.875% (APR 6.135%) improved 0.125%  :)

5/1 ARM - LIBOR @ 1 Pt:  5.750%  (APR 7.099%) up 0.125%  worse by 0.25%  :(

Conforming-Jumbo Rates.   Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $650,000 and a $520,000 loan amount.

30 Year Fixed @ 1 Pt: 6.250% (APR 6.401%) improved 0.375%  :)

30 Year Fixed with 10 Year Interest Only @ 1 Pt:  6.625% (APR 6.767%) improved 0.25%   :)

5/1 ARM @ 1 Pt: 6.125% (APR 7.243%) worse 0.25%  :(

JUMBO (Non-Conforming) Rates.   Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down).   The specific scenario used to price the rates below is a sales price of $850,000 with a loan amount of $680,000.

30 Year Fixed @ 1 Pt: 7.500% (APR 7.656%) improved 0.25%  :)

FHA.  Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt: 6.375% (APR 7.158%) improved 0.25%  :)

FHA-Jumbo. Pricing based on loan amounts from $362,791 - $567,500 for King, Snohomish and Pierce Counties.  For other loan limits in Washington State, click here.

30 Year Fixed @ 1 Pt: 6.500% (APR 7.258%) improved 0.25%  :)

VA.  Pricing based on credit scores of 620 or better based on loan amounts up to $417,000.   VA loan amounts over $417,000 are also available.  Contact your local Mortgage Professional for more information.

30 Year Fixed @ 1 Pt:  6.500% (APR 6.824%) improved 0.125% :)

Prime Rate (what HELOCs are based on):  5.000%  

This is just a small sample available of rates and products.  Rates are as of Friday, August 1, 2008 at 3:00 p.m. and may change at any time.  Available programs may change at anytime as well.   This is not a guarantee nor is it a commitment of interest rate.   To see live rate quotes for various scenarios, check out my Twitter page.

More Fannie Changes for Investment Properties and Second Homes July 31, 2008

Effective tomorrow (August 1, 2008) borrowers who convert their existing residence to an investment property or second home will be treated to tougher standards if they’re using a Fannie Mae loan.    Here are the new requirements:

Converting existing residence to a “second home”.

Converting existing residence to “investment property”

Either an appraisal, AVM or Broker Price Opinion is used to determine if there is 30% equity in the existing home that is being converted to a second home or investment property (this may be determined by underwriting).  

Last, be careful when reading guideline changes, such as this.  Underwriting guidelines and loan programs are changing constantly, post like this are quickly “dated material” and no longer applicable–do verify information you find on the internet with your Mortgage Professional to make sure the information is still valid.

The Housing Rescue Bill July 30, 2008

Today President Bush signed a housing “rescue” bill HR 3221.  I’m really still absorbing all of this (I think it’s taking me a bit longer after my trip to Inman Connect).   Here are a few quick pointers:

The FHA risked base mortgage insurance pricing (which I’m in favor of) that was to be effective last week is now postponed until September 30, 2009.   FHA can now save some borrowers in trouble with their mortgage if their existing lender will forgive the underlying debt to 85% of the current value of the home.   Gee…risked based MIP might be handy in these cases.

Also with FHA, Seller paid down payment assistance programs are will be gone and the minimum down payment for an FHA insured loan will be 3.5% (which is a very small increase) beginning October 1, 2008.

Jumbo FHA and Jumbo Conforming loan limits will be reduced from the current 125% of median home value to 115% of the median home value beginning January 1, 2009.   As I mentioned, your days of a loan amount of $567,500 are numbered.   The new conforming/FHA jumbo limit may be closer to $520,000.  

First time homebuyers (someone who has not had interested in a property for the past 3 years) are eligible to receive a tax credit…however, it’s really an interest free loan to be paid back over 15 years or from the proceeds when the home is sold (which ever comes first).  This is available only for homes purchased on or after April 9, 2008 and before July 1, 2009.  Income restrictions do apply.   For more information, check out this website.   

Last but not least (and I’m sure I’m missing stuff) Fannie and Freddie have a new regulator: The Federal Finance Housing Agency aka FHFA.   This from James B. Lockhart:

“Today President Bush signed the ‘Housing and Economic Recovery Act of 2008.’ I thank President Bush and Secretary Paulson for their leadership in making government sponsored enterprise (GSE) regulatory reform a reality.

The Act creates a world-class, empowered regulator, the Federal Housing Finance Agency (FHFA), with all the authorities necessary to oversee vital components of our country’s secondary mortgage markets — Fannie Mae, Freddie Mac and the Federal Home Loan Banks — at a very challenging time.  As Director of the new agency I look forward to working with the combined Federal Housing Finance Board (FHFB), Office of Federal Housing Enterprise (OFHEO) and Housing and Urban Development (HUD) GSE Mission teams and with other regulators to ensure the safety and soundness of the 14 housing related GSEs and the stability of the nation’s housing finance system.

For more than two years as Director of OFHEO I have worked to help create FHFA so that this new GSE regulator has far greater authorities than its predecessors.  As Director of FHFA, I commit that we will use these authorities to ensure that the housing GSEs provide stability and liquidity to the mortgage market, support affordable housing and operate safely and soundly.”

Too much to write about in detail for one post…just wanted to throw you some bits.

Rates on a Rocky Ride July 18, 2008

It’s been tough on mortgage backed securities this week.  Today there are no economic indicators being released and compared to last week’s rates, they’re up across the board.   The Tim, from Seattle Bubble, made a special request that I show the weekly difference between posts…which I used to do with RCG Rates…which such a dramatic increase to rates this week, his request is quite timely.   Mortgage rates continue to be very volatile and even as I post this, I’m receiving new rate sheets for the worse.

Rates below are based with one point (1% total origination/discount fee).   To see this morning’s rates based on zero points (no origination and no discount points), click here.

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties).  The conforming rate quote below is based on owner occupied with a minimum credit score of 720, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000.  This scenario includes reserves (taxes & insurance) not being waived.   Rates quoted are priced based on a 45 day lock with no prepayment penalties on any of the rates quoted below.   

30 Year Fixed @ 1 Pt:  6.500% (APR 6.664%) up 0.375% to rate.

30 Year Fixed with 10 Year Interest Only @ 1 Pt:  6.625% (APR 6.775%) up 0.375%

15 Year Fixed @ 1 Pt: 6.000% (APR 6.262%) up 0.375%

5/1 ARM - LIBOR @ 1 Pt:  5.500%  (APR 7.001%) up 0.125%

Conforming-Jumbo Rates.   Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $650,000 and a $520,000 loan amount.

30 Year Fixed @ 1 Pt: 6.625% (APR 6.781%) up 0.375%

30 Year Fixed with 10 Year Interest Only @ 1 Pt:  6.875% (APR 7.020%) up 0.25%

5/1 ARM @ 1 Pt: 5.875% (APR 7.141%) up 0.50%

JUMBO (Non-Conforming) Rates.   Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down).   The specific scenario used to price the rates below is a sales price of $850,000 with a loan amount of $680,000.

30 Year Fixed @ 1 Pt: 7.750% (APR 7.917%) up 0.125%

FHA.  Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt: 6.624% (APR 7.421%) up 0.50%

FHA-Jumbo. Pricing based on loan amounts from $362,791 - $567,500 for King, Snohomish and Pierce Counties.  For other loan limits in Washington State, click here.

30 Year Fixed @ 1 Pt: 6.750% (APR 7.421%) up 0.375

VA.  Pricing based on credit scores of 620 or better based on loan amounts up to $417,000.   VA loan amounts over $417,000 are also available.  Contact your local Mortgage Professional for more information.

30 Year Fixed @ 1 Pt:  6.625% (APR 6.958%) up 0.25%

Prime Rate (what HELOCs are based on):  5.000%  

This is just a small sample available of rates and products.  Rates are as of Friday, July 18, 2008 at 8:00 a.m. and may change at any time.  Available programs may change at anytime as well.   This is not a guarantee nor is it a commitment of interest rate.   To see live rate quotes for various scenarios, check out my Twitter page.

Rates, Rumors and Reaction July 11, 2008

This morning began with rumors of a possible Government take over of Fannie and Freddie which caused the GSEs stocks to further tumble.  Later in the day Reuters reported that the Fed was going to open the emergency discount window to the GSE’s (Fannie/Freddie)…following that announcement, Reuters admitted that the source of this information was from a “source of a source” close to Freddie Mac.   The latest spin…is that Dow Jones is reporting that the Fed says there is no official talk between the GSEs and the Fed.

Add in the world tensions with Israel and Iran, rebel threats in Nigeria…and record oil prices–we had a very volatile day in the markets.   One lender that I work with has issued 5 different rate sheets (changes to rate) so far today losing approx. 0.50% in fee or 0.125-0.250% in conforming fixed rates since this morning.  Rates are improved over what I posted last week.

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties).  The conforming rate quote below is based on owner occupied with a minimum credit score of 720, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000.  This scenario includes reserves (taxes & insurance) not being waived.   Rates quoted are priced based on a 30 day lock with no prepayment penalties on any of the rates quoted below.   

30 Year Fixed @ 1 Pt:  6.125% (APR 6.283%)

30 Year Fixed with 10 Year Interest Only @ 1 Pt:  6.250% (APR 6.394%)

15 Year Fixed @ 1 Pt: 5.625% (APR 5.882%)

5/1 ARM - LIBOR @ 1 Pt:  5.375%  (APR 6.952%).  

Conforming-Jumbo Rates.   Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $650,000 and a $520,000 loan amount.

30 Year Fixed @ 1 Pt: 6.250% (APR 6.401%)

30 Year Fixed with 10 Year Interest Only @ 1 Pt:  6.625% (APR 6.767%).

5/1 ARM @ 1 Pt: 5.375% (APR 6.943%)

JUMBO (Non-Conforming) Rates.   Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down).   The specific scenario used to price the rates below is a sales price of $850,000 with a loan amount of $680,000.

30 Year Fixed @ 1 Pt: 7.625% (APR 7.789%)

FHA.  Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt: 6.250% (APR 7.032%)

FHA-Jumbo. Pricing based on loan amounts from $362,791 - $567,500 for King, Snohomish and Pierce Counties.  For other loan limits in Washington State, click here.

30 Year Fixed @ 1 Pt: 6.375% (APR 7.160%)

VA.  Pricing based on credit scores of 620 or better based on loan amounts up to $417,000.   VA loan amounts over $417,000 are also available.  Contact your local Mortgage Professional for more information.

30 Year Fixed @ 1 Pt:  6.375% (APR 6.700%)

Prime Rate (what HELOCs are based on):  5.000%  

Sorry, I don’t have enough time today to post both rates priced both with and without points.

This is just a small sample available of rates and products.  Rates are as of Friday, July 11, 2008 at 1:30 p.m. and may change at any time.  Available programs may change at anytime as well.   This is not a guarantee nor is it a commitment of interest rate.   To see live rate quotes for various scenarios, check out my Twitter page.

The Fate of Fannie and Freddie

Fannie Mae and Freddie Mac opened trading at record lows due to rumors about a possible bail out.  I’m writing this waiting to hear an announcement from Treasury Secretary Paulsen….

If you are in a transaction at this time and your mortgage fits within the FHA loan limits ($567,500 for King, Pierce and Snohomish County), I recommend considering FHA as a back up plan.  In fact, I’ve realized yesterday that all of my loans in process are currently FHA.   ,

If you are considering buying or refinancing a home and are not yet in transaction, I highly recommend making sure that your Loan Originator is able to provide FHA financing.   I recommend asking your Loan Officer (in writing-using email):

What will the Fannie and Freddie look like after if the Gov steps in?

If you look at FHA, you know that HUD is very pro-homeownership.   We may see low down programs like Flex 97 stick around–it’s very similar to FHA with the minimum 3% down.

Mortgage rates will probably increase dramatically since we will no longer have a private sector.  It will all be government controlled.

I’m also wondering if the governement would utilize private mortgage insurance companies or if they will utilize something similar FHA’s mortgage insurance?

Stay tuned…this is not over.

Update 7:53 am:  Here is Treasury Secretary Paulsen’s statement (from Market Watch):

Here is Paulsen’s statement (from Market Watch):

“Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission.

“We appreciate Congress’ important efforts to complete legislation that will help promote confidence in these companies. We are maintaining a dialogue with regulators and with the companies. OFHEO will continue to work with the companies as they take the steps necessary to allow them to continue to perform their important public mission.”

Update 2:51 p.m.  I just received this Press Release from OFHEO (Office of Federal Housing Enterprise Oversight):

Statement of OFHEO Director James B. Lockhart

“I congratulate and thank Chairman Dodd, Ranking Member Shelby and the Senate for passing a sound and comprehensive GSE regulatory reform bill.  This bill should help restore confidence in the housing markets by creating, on passage, a new, stronger regulator with all the necessary tools to oversee Fannie Mae, Freddie Mac and the Federal Home Loan Banks.  I am hopeful the House will act quickly and the bill will soon be enacted into law.

With this very turbulent market it is important to strengthen the regulator of Fannie Mae and Freddie Mac and combine it with the regulator of the Federal Home Loan Banks as soon as possible as all of the GSEs are being asked to do more and more to support the mortgage market.”

IndyMac Leaves the Mortgage Arena July 7, 2008

This announcement from IndyMac came via a press release today:

“…effective July 7, 2008, that we will no longer accept any new loan submissions or rate locks in our retail and wholesale forward mortgage lending channels, except for our servicing retention channel. We plan to honor all of our existing rate-locked loans and will continue to fund these loans in the coming weeks. While the managers and employees in these units have worked incredibly hard, these units are not currently profitable due to the continuing erosion of the housing and mortgage markets.”

IndyMac is planning on retaining the FHA portion of their reverse mortgage division, Financial Freedom.

This also means more people will be displaced from the mortgage industry.

“Unfortunately, the above actions will necessitate the reduction in our present workforce from approximately 7,200 to roughly 3,400 or so over the next couple of months…”

The press release mentions a couple locations where employees will be retained…no word or mention of the Bellevue office.

IndyMac had a lot of unique products and were no stranger to the subprime and alt-a markets.   They had their own automated underwriting system, eMits, that provided “risk based” decisions and pricing.    They are reported as being the seventh largest savings and loan in the nation with both retail and wholesale operations.

Free Credit Monitoring…available for a limited time July 3, 2008

Due to a settlement from a class action lawsuit where they were accussed of reselling personal and financial consumers information for marketing purposes, Transunion is offering free credit monitoring.   Selling the information is a violation of Fair Credit Reporting Act.   You only have until September 24, 2008 to apply for your benefit of either free credit monitoring or possibly a cash payment.

You are eligible if you have had credit from January 1, 1987  until May 28, 2008.   This includes mortgage loans, credit cards, auto loans, student loans…if you’ve had credit over the past 21 years, this is worth checking out!

Here are your choices:

  1. Sign up for six months of credit monitoring services. If you select this option, you can also register to possibly receive cash benefits in the event of a cash distribution or file an individual lawsuit against the Defendants.
  2. Sign up for nine months of enhanced credit monitoring services. If you select this option, you will not receive any further benefits, including a cash payment, and you will not be able to file an individual lawsuit against the Defendants.
  3. Register to possibly receive a cash payment. If you select this option, you can also sign up for six months of credit monitoring; however if you receive a cash payment, you cannot file an individual lawsuit against the Defendants.

Of course you can always chose to do nothing!

You can call TransUnion’s settlement number at  (866) 416-3470  or visit the website: www.listclassaction.com to file your claim.

It’s about time these Trigger Leads came to an end!

Friday’s Rates on Thursday

Huh?  Since tomorrow is Independence Day, the bond markets will be closed…so I thought I would provide you with mortgage rates on today.   We also had the Jobs Report released today which reported a loss of 62,000 jobs and an additional 52,000 jobs lost in April and May with unemployment remaining at a four year high at 5.5%.   Rates should be doing great with all this bad news, right?  Not so fast!  It seems as though Wall Street is a bit relieved that the Jobs Report wasn’t worse!   Plus the European Central Bank raised their key lending rate by 0.25% in order to try to hedge inflation.   You can count on mortgage rates to continue to be volatile and to change several times per day. 

Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties).  The conforming rate quote below is based on owner occupied with a minimum credit score of 720, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000.  This scenario includes reserves (taxes & insurance) not being waived.   Rates quoted are priced based on a 30 day lock with no prepayment penalties on any of the rates quoted below.   

30 Year Fixed:  @ 0 Pts: 6.500% (APR 6.566%) ~ @ 1 Pt:  6.250% (APR 6.410%)

30 Year Fixed with 10 Year Interest Only: @ 0 Pt:  6.750%  (APR 6.686%)  ~  @ 1 Pt:  6.500% (APR 6.648%)

15 Year Fixed:  @ 0 Pt:  6.125% (APR 6.201%)  ~  @ 1 Pt: 5.875% (APR 5.135%)

5/1 ARM - LIBOR: @ 0 Pt:  6.000% (APR 7.104%).  ~   @ 1 Pt:  5.625%  (APR 7.051%).  

Conforming-Jumbo Rates.   Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $650,000 and a $520,000 loan amount.

30 Year Fixed:  @ 0 Pt:  6.625% (APR 6.681%)  ~  @ 1 Pt: 6.375% (APR 6.681%)

30 Year Fixed with 10 Year Interest Only:  @ 0 Pt:  7.000% (APR 7.060%) ~ @ 1 Pt:  6.750% (APR 6.893%).

5/1 ARM:  @ 0 Pt:  6.000% (APR 7.089%) ~ @ 1 Pt: 5.625% (APR 7.036%)

JUMBO (Non-Conforming) Rates.   Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down).   The specific scenario used to price the rates below is a sales price of $850,000 with a loan amount of $680,000.

30 Year Fixed: @ 0 Pt:  7.875% (APR 7.963%)  ~ @ 1 Pt: 7.500% (APR 7.656%)

FHA.  Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.

30 Year Fixed @ 1 Pt: 6.375% (APR 7.158%)

FHA-Jumbo. Pricing based on loan amounts from $362,791 - $567,500 for King, Snohomish and Pierce Counties.  For other loan limits in Washington State, click here.

30 Year Fixed @ 1 Pt: 6.500% (APR 7.258%)

VA.  Pricing based on credit scores of 620 or better based on loan amounts up to $417,000.   VA loan amounts over $417,000 are also available.  Contact your local Mortgage Professional for more information.

30 Year Fixed @ 1 Pt:  6.375% (APR 6.700%)

Prime Rate (what HELOCs are based on):  5.000%  

This is just a small sample available of rates and products.  Rates are as of Thursday, July 3, 2008 at 10:00 a.m. and may change at any time.  Available programs may change at anytime as well.   This is not a guarantee nor is it a commitment of interest rate.   To see live rate quotes for various scenarios, check out my Twitter page.

Have a very happy and safe Fourth of July!  :) 

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