The California Mortgage Blog

 

Click on video above to see "How Seller's Agents Can Create a Win-Win Opportunity to Help Their Clients and Buyers Come Together!

The biggest challenge that we are all facing today is how to help our sellers get the best price for their homes and the most affordable Jumbo & Conforming Home Loan payments for our buyers.   The video illustrates a proven strategy and tool to bridge the gap between sellers and buyers requiring Jumbo and Conforming Home Loans.   If you are an agent, seller or buyer and want to learn more about the benefits of using this strategy, please call me directly at my office at 800-881-7572.   The examples given here are for the purpose illustrating a proven marketing strategy for Jumbo & Conforming Home Loans and are not a commitment to lend.  Rates, terms and conditions are subject to change without notice and are subject to individual buyer's credit, income, assets, loan amount, downpayment, property type and current underwriting guidelines.

Why Aren't Jumbo & Conforming Home Loan Rates Falling?

As mentioned in previous posts, Jumbo & Conforming Home Loan Rates are not based on US Treasuries, however, in general they tend to move in the same direction as they are impacted by the same "stuff."
 
It is the price and yield of Mortgage Backed Securities (MBS) that determine the raw price that lenders pay before they have added their operating costs and profit.  One of the factors that lenders must consider is volatility and if you weren't aware, this has been an extremely volatile market.  See MBS price chart below:

 

Volatility is expensive for Jumbo & Conforming Home loan lenders.  Some of the volatility can be absorbed in the lender's profits and some is passed along.
 
Supply, Demand & Turn Times
 
With Jumbo & Conforming Home Loan rates hitting 50-year lows, there has been a huge spike in refinance applications.  Once lenders are at full capacity, they no longer have incentive to lower their prices; in fact some will raise prices to slow down originations.
 
Lastly, title, escrow and appraisal companies, the 3rd party vendors required in every transaction are also jammed.  For example, in a typical market appraisals take 4 days.  Right now they are taking 10-14 days.  As a result, you may need to lock in your rates for a longer time.  The longer you lock in your Jumbo & Conforming rate, the higher the price.
 
In Conclusion
 
We are seeing resistance to rates getting much lower from current levels.  Rates are at historical lows, so if we can lower your rate by at least .50% point, you should call today and get started.

Saturday Consultations
 
I have extended my office hours and I am making myself available for Saturday appointments.  If you would like a Saturday appointment, please call or email to schedule.
 
To find out how much you can save with the lowest rates in 50-Years, please call me today at 800-881-7572.

 

My Plan to Fix the Real Estate Market

This is just a market fundamental.  Our real estate market has a high supply of foreclosed and pre-foreclosure properties on the market and there aren't enough homebuyers.  As long as there are not enough homebuyers, the real estate market will continue to slide.

Today, there are no Negative Amortization Loans, Alt-A Loans, 2-Year Fixed Loans and you need 30% equity to obtain an interest only loans.  In addition, policy makers have tightened credit on debt to income, equity and credit and increased the cost of Private Mortgage Insurance.  Furthermore, declining income can be a real stumbling block for many borrowers.  Know of anyone with declining income?

The Solution

Loosen the underwriting guidelines just enough to increase demand for the foreclosed and pre-foreclosure properties to be sold.  Keep the guidelines loose enough to absorb the flow of anticipated foreclosures and banks Shadow Inventory.

As the market's inventory shrinks, the market will stabilize and eventually home prices will start to appreciate at a normal rate.  The completion of all of these real estate transactions will put a ton of money into the economy.  When a home sells, agents, lenders, insurance companies, escrow companies, title insurance companies, appraisers, movers, painters, plumbers, electricians and retailers all make money.

In addition, once the real estate market turns around, new home builders who have been sidelined due to lack of demand can start to build again.  This too will put thousands of construction workers back to work.

The Health of Residential Real Estate

The health of Residential Real Estate is a key factor to our economy.  Consumer confidence is very much tied to how we feel about the value of our home.  Once homeowners see home values stabilize and their equity increasing, consumer confidence will increase.  Once consumer confidence increases, business owners will feel more confident about expanding and will hire new employees.

What Can You Do?

Call or write you your representatives in the Congress and Senate and let them know what you think.  Forward this blog to your friends and ask them to do the same.  Our voices do matter.

 

 

 

 

 

 

Can I Buy A Home After a Bankruptcy?

It is unfortunate, but there are situations where a bankruptcy is the best choice in a difficult situation.  No doubt, more and more Americans are facing difficult financial, moral and ethical decisions regarding their debts and credit.

The bankruptcy laws were created to give people a second chance and in some cases a chance to start over.  Prior to making a decision about a bankruptcy, you should know what all of the ramifications are.  Below is an explanation of the waiting periods currently in place for obtaining a new mortgage.

Chapter 7 & 11 Bankruptcies:  A four-year waiting period is required, measured from the discharge or dismissal date of the bankruptcy action.  A two-year waiting period is permitted if extenuating circumstances can be documented.  Certain restrictions apply. 

Chapter 13 Bankruptcies:  A two-year waiting period is required, measured from the discharge date or four years from the dismissal date.  A two-year waiting period is permitted if extenuating circumstances can be documented.

In all of the scenarios above, the borrower would need to re-establish credit.

Please note that the governmental agencies that write these laws and guidelines may change them at any time. 

For more information on how any of the above may impact you and your local market, stay tuned in.  I will update the guidelines in this blog should there be any significant changes.  If you know someone who may be wondering about their options, feel free to forward this email to them so that they know what the facts are before making any decisions.

 

 

Evening of Enchantment

Who would ever think that wine and magic would be the perfect match.  Not me, until I went to the "Evening of Enchantment,"featuring David Minkin at The Beau Rivage restaurant in Malibu, California. 

Let's start with a beautiful location in Mailbu across from the beach at The Beau Rivage Restaurant, a Malibu landmark.  Then sip four flights of distinctive local wines while overlooking the Pacific Ocean from the award winning Rosenthal Winery.  All enjoyed while being served delicious hors d'oeuvres and learning about the histories of each wine by our gracious hosts from the restaurant and winery. 

After the wine tasting and appetizers, we were directed down the stairs to an intimate wine cellar with seats for 30 for the magic show.  David Minkin, is an international champion magician, who won first place from the world's largest organization of magicians for his close-up magic show in 2007.  He is a regular at the Magic Castle and travels and performs shows worldwide.

David's Minkin's Evening of Enchantment show was amazing!  He was entertaining and really took on a tough group in a very small room and literally controlled every moment.  All of us were completely dazzled by his magic and a lot of us were scratching our heads saying, "How did he do that, that was impossible?"

After the show, we went back upstairs for a wonderful dinner, great service and a very memorable experience.  If you are looking for something to do for a special occasion, I highly recommend the, "David Minkin's Evening of Enchantment." 

Obtaining a mortgage loan these days takes a bit of magic as well.  Even borrowers with excellent credit, equity and income are having difficulty getting their loans funded when applying with the major banks.

As a veteran mortgage banker, we can give your more options, competitive rates and make the process as easy for you as possible.  For a free consultation, please call me directly.

With guidelines continuing to get tighter, the time to lock in these outstanding rates locked in for the future is RIGHT NOW!

 

 

 

Can I Buy A Home After a Foreclosure?

Depending upon which survey you read, about 25% of all homeowners with a mortgage are in a negative equity position.  In California, the figures are more than 30%.  As in each of the preceding years since the real estate collapse, it is anticipated that we will see another 1 million foreclosures and pre-foreclosure sales, aka short sales in 2011.

In addition to the impact of all of these foreclosures, a side impact is that the vast majority all of those former homeowners will be out of the market and not able to return to purchase another home until the various waiting periods have occurred and the borrowers have been able to rebuild their credit.  Below is a list of the current waiting periods for Conforming and Jumbo Loans in California.

Foreclosures:  A seven-year waiting period is required, and is measured from the completion date of the foreclosure action.  A three-year waiting period is permitted if extenuating circumstances can be documented.  Certain restrictions apply.

Deed-In-Lieu of Forclosure and Pre-Foreclosure Sales aka Short Sales:

These transaction types are completed as alternatives to foreclosure.  A deed-in-lieu of foreclosure is a transaction in which the deed to the real property is transferred back to the servicer.  A pre-foreclosure sale or short sale, is the sale of a property in lieu of foreclosure resulting in the payoff of less than the total amount owed.  The payoff amount must be approved by the servicer.

A two-year waiting period applies and requires a 20% downpayment or you can purchase with a 10% downpayment, but you would need to wait a minimum of 4 years.

 

Regardless of the type of disposition, it is critical that you maintain and re-establish new credit.  In some cases, as with FHA, they will consider a new loan earlier as long as you were never late on your mortgage prior to the foreclosure.

Please note that the governmental agencies that write these laws and guidelines may change them at any time. 

For more information on how any of the above may impact you and your local market, stay tuned in.  I will update the guidelines in this blog should there be any significant changes.  If you know someone who may be wondering about their options, feel free to forward this email to them so that they know what the facts are before making any decisions.

Purchase and Refinance Rates change on an hourly basis and in the current financial climate are extremely volatile.  Based upon non-market criteria, different lenders may respond very differently too market conditions. 

As a direct lender, we process, underwrite and fund our clients loans with our own money.  Thereafter, we sell the loans in the secondary market to the investors who have the best pricing that meet your specific criteria.  With your one application with us, we provide access to all of those investors.

Below is the Weekly Primary Mortgage Market Survey for Purchase and Refinance Rates prepared by Freddie Mac of lenders nationwide.  You may qualify for better or different rates and terms depending upon your loan income, assets, equity, credit and property type.  The value of the chart below is to show the market trends and provide a general idea as to what current market rates are each week.

December 30, 2010 30-Yr FRM15-Yr FRM5/1-Yr ARM1-Yr ARM Average Rates Fees & Points Margin

4.86 %	4.20 %	3.77 %	3.26 %
0.8	0.8	0.7	0.6
N/A	N/A	2.75	2.76

December 23, 2010 30-Yr FRM15-Yr FRM5/1-Yr ARM1-Yr ARM Average Rates Fees & Points Margin

4.81 %	4.15 %	3.75 %	3.40 %
0.7	0.7	0.6	0.7
N/A	N/A	2.75	2.76

December 16, 2010 30-Yr FRM15-Yr FRM5/1-Yr ARM1-Yr ARM Average Rates Fees & Points Margin

4.83 %	4.17 %	3.77 %	3.35 %
0.7	0.7	0.7	0.7
N/A	N/A	2.74	2.76

December 9, 2010 30-Yr FRM15-Yr FRM5/1-Yr ARM1-Yr ARM Average Rates Fees & Points Margin

4.61 %	3.96 %	3.60 %	3.27 %
0.7	0.7	0.6	0.6
N/A	N/A	2.75	2.77

In order to receive a specific quote and to get Pre-Approved for the best Purchase and Refinance Rates, please call me directly.

MORTGAGE RATES POP UP!!!

According to Freddie Mac, the typical rate mortgage lenders were offering on 30-year Conforming Fixed Rate Loans was up to 4.83%, up from last month's record lows of 4.17% since rates hit bottom!

The Japanese Candlestick Chart below shows the decline in the price of the 30-year mortgage backed securities over the last 30 days.  Conforming and Jumbo Fixed Rate Mortgage rates respond in the opposite direction, which is why mortgage rates are up.

 

Does this mean that Conforming and Jumbo Rates bottomed out, and we will now see rates continue to climb from here? The answer to both questions is the trillion dollar question that all of the analysts on Wall Street, Washington and on Main Street are trying to figure out. 

So how does this news impact your timing to purchase or refinance?  There is no denying that rates on Conforming & Jumbo Mortgages are still at historical lows. If you are looking to buy and purchase a home for 30-50% less than the market peak prices with today's rates, right now is still a great time to buy!

If you were looking to refinance and haven't done so, you should apply right now so that if rates dip, you can lock in your rates on the next dip or lock in now and secure these historically low rates for the long haul.

 

Uncle Same Wants You~Your Fee's May Be Next!

Are you a real estate agent, doctor, lawyer, or contractor? Does your company sell any service or expertise? 

How would you like the federal government to come in and tell you that next year, regardless of the scope of work that you performed for a client and regardless of how much experience or education you have, you must charge every client the same amount?

Could this really happen in America and in your home town?  If it can happen in one industry, could yours be next?

Well, if you assist homebuyers, and homeowners obtain Conforming & Jumbo Loans, thanks to a component of the Dodd-Frank Bill, the federal government will dictate how much loan originators will be allowed to make.

As a result of this new bill, many loan officers and lenders will be forced out of the business adding to the already long unemployment lines.  With the decline of competent competition and with fewer choices, consumers will end up paying higher interest rates and fees and the big banks will make more!

Please note that the bill does not regulate how much the banks can make, it only regulates how much the mortgage banker, broker or loan officer can make.  In other words, it does nothing to reduce how much consumers will pay; it just increases the lenders profit on every loan.

When I started in this business in 1987, it was common that a borrower would pay about 4-5% of the loan amount in fee’s and points to obtain a Conforming or Jumbo Loan.  Today, due to the highly competitive market, lenders charge half that amount.  

If you have years experience in your field of expertise and built a practice of providing excellent service  for your clients, should the federal government be able to come in and tell you that your fee must be the same as an agent who hasn’t even completed 1 transaction?  Should a new law be created that takes away competition and rewards shoddy providers?

Banks and mortgage companies are still reviewing the 2,300 Frank-Dodd Bill and are trying to determine how to keep their best loan professionals, but none that I am aware of have released their new compensation plans.  All we know is that at this point…it will be less.  In some cases, much less. 

Due to the massive government regulations already in place and the ever increasing documentation requirements, loan professionals are working harder on every transaction and are therefore not able to manage too many loans a month.  Five years ago, I typically managed a loan pipeline of 40+ loans without an assistant.  Today, it is almost impossible to manage a pipeline much greater than 10 loans without an assistant.

Since capasity is limited, we may have to reconsider the new loans we will take on much more carefully.  Not all borrowers and loans are alike.  If we are not allowed to adjust our fees based upon the time and effort required, these loans will likely fall into the hands of the less experienced loan officers and/or clerks.  Good luck in getting these loans funded.  How will this benefit buyers, sellers and homeowners?  It won't!

Few industries have suffered greater losses than the mortgage industry over the last several years.  While the government has bailed out the big banks, no one has bailed out the loan professionals who diligently assit their clients obtain purchase financing or current homeonwers lower their rates and payments on their Conforming and Jumbo Loans. 

Please note that there are many worthwhile provisions in the Dodd-Frank Bill that are needed to reform Wall Street and the lending industry.  I fully support many of the new provisions that force lenders to be more transparent to consumers and the investors who purchase Conforming and Jumbo Loans. There is no doubt reform is needed to help prevent another mortgage and Wall Street meltdown in the future.

However, the way I see it is that the big benefactor of the new bill will be the big banks.  The same banks that: 

• Took your hard earned tax dollars in bailouts.
• Paid pennies on the dollar when they purchased failing banks.
• Are making huge profit margins on the new loans they are making right now.
• Have dragged their feet and failed to assist millions of homeowners restructure their loans.
• Are now looking for another windfall in profits by eliminating the competition.
• Will reduce the compensation to their experienced loan officers and will hire low paid clerks to do a professionals job to line their own pockets with even greater profits.

For more information on the Dodd-Frank Bill, and how it may affect you, the rates you will pay in the future, check out the video link below from the guys at ThinkBigWorkSmall. 

 

 

 

 

 

 

 

Whether you are a real estate agent, a lender, or a professional in another industry, please make sure you click on the links below and let your representatives know that you don’t agree with any policy that allows the government to determine your fees!

 

 

 

 

 

Senator Barbara Boxer

 

 

 

 

 

 

 

 

Senator Dianne Feinstein

Sophisticated Investors with Conforming and Jumbo Option Arm Mortgage Rates

Isn't it true that in any economy there are those that profit no matter what.  Many right now think that if you took a Conforming or Jumbo Option Arm Mortgage Rate in California you are either a deadbeat or a moron.  Many would even make a moral judgment about your type, and that you are the scourge of the neighborhood for taking an Conforming or Jumbo Option Arm Mortgage Rate in California.

But I know your secrets and I am going to expose your financial trickery right now.  First you are not a deadbeat, nor a moron.  You are in fact a sophisticated investor who learned how to beat the house at it's own game.  This was even better than the students from MIT who beat the casinos with card counting.

You are a college grad, a corporate executive or a self made entrepreneur, you owned a multi-million dollar home and you had lots of equity.  You discovered that you could buy your next dream house or refinance the existing loan on a Conforming or Jumbo Option Arm Mortgage Rate in California and invest the extra cash-flow back in your business to finance expansion or to increase you investments in the market and arbitrage the rate.

At the end of the tax year when your accountant told you that you were going to owe Uncle Sam to much, you paid back the deferred interest so that you could offset your income with your mortgage interest to reduce your tax liability.  As soon as the new tax year began, you started again to defer the interest on your Conforming or Jumbo Option Arm Mortgage Rate loan.

Even though the Conforming or Jumbo Option Arm Mortgage Rate Loan for Investors in California adjusts monthly, your rate has averaged about 4.0% depending upon when you started.  In fact right now you likely have a sub 3.0% rate.  Who is laughing now?

Not all bets work out nor go the way they're planned, but this one worked out just right!  You made your profits on the extra cash flow from your Conforming or Jumbo Option Arm Mortgage Rate Loan for Investors in California, but with every game there is a time to get in and a time to get out.  In my opinion, the time to get out is now!

With the termination of the Federal Reserves $1.25 trillion dollar investment to buy mortgage backed securities expiring at the end of March, it is just a matter of time before rates will head up.  Rates on Conforming Mortgages could rise .50% to 1.50% and Jumbo Mortgages would likely go even higher.

If you have a Jumbo or a Super Jumbo Mortgage the market could all but disappear like it did before the stimulus plan went into action in January of 2008.  If this takes place, you do not want to be holding a monthly adjustable rate.  It could get ugly.

Right now you can lock in great fixed rates!!!  

Even great fixed rates on Conforming and Jumbo Interest Only Loans fixed for 3, 5, 7 and 10 years, so that you can still maximize your cash-flow.

For a free consultation and to see how you can take advantage of the best loans available, please call me directly at 800-881-7572. Please note that excellent credit, income, assets and equity are required to qualify for the best products.