Interest Rates, Napa Valley and Private Planes

Quick Rate Update:

Not much change, but the markets didn’t react favorably to the State of the Union so rates were slightly worse yesterday, with slight improvement today.
30 Yr fixed rates range from 4.75% to 5% depending on loan size; 15 year rates are slightly lower, and 5-yr arms still hovering in the 3.25% to 3.5% range. All rates and programs are sensitive to FICO score, loan-to-value, reason for financing (purchase, refinance, cash-out) and occupancy type. Underwriting guidelines continue to contract and become more conservative. (!)

Napa Valley Report

We flew to the Bay area for a weekend of wine tasting with Steve’s sisters and their spouses over the Martin Luther King Holiday, which happens to coincide with Steve’s birthday. The most exciting part was flying up and back in a private plane owned by Steve’s younger sister and her husband, who is a pilot. Our “ride” was a four seater and my first comment upon seeing it was “we’re flying in that?” Everyone laughed. Although I’d flown in private planes in the past, nothing quite this small. They all assured me size doesn’t matter! The flight from Carlsbad took two and ½ hours, and was pretty amazing. The weather was clear and we could see forever. We hit a couple of bumpy sports over the grapevine but nothing major.

We took off in a van the next morning for Napa. First stop was Clos Pegase, where we tasted and bought a few bottles for our picnic on their lovely grounds. They have an amazing art collection, and offer tours twice a day. I heartily recommend visiting them. Next stop: Cuvaison, home of a favorite chardonnay. We then headed up into the hills for a private tour and tasting at the O’Shaughnessy Winery, which was a real treat. They offer really “big” reds and an enormous cave build into the hill, including a private dining room and private wine collection to boot.

Afterwards we drove up to our friends’ home on the hill above Calistoga for a glimpse of sunset accompanied by more wine and cheese before heading off to dinner at Brannan’s Grill downtown Calistoga. We had a lovely dinner and enjoyed listening to live jazz. I found out the restaurant is named for the founder of Calistoga, who named the city for its springs, e.g. the “Saratoga Springs” of California, hence Calistoga! www.brannansgrill.com

Sunday morning we visited Rombauer – our favorite Chardonnay – and then lunched at Frank Family Vineyards. Our final stop of the day was a tour and tasting at Schramsburg. Their sparkling wines are the best! www.schramsberg.com



Back in Palo Alto, we dined at Trader Vic’s, which is an institution there. Our return Monday was delayed due to heavy fog, and we finally took off after 2:00 in the afternoon. Luckily our pilot Chuck is instrument-rated, so we could have left earlier-- but we waited for better viz. Our flight home was entirely beautiful and uneventful and we arrived to witness a fabulous sunset just behind Catalina before landing. What Fun!

2 Exciting New Mortgage Products!

There are many big changes on the horizon this year. First and foremost, there are two great improvements to programs:

Jumbo Reverse loans

Yes, they are back! We are going to be offering new jumbo reverse loans as high as $5,000,000 for high value homes. This is great news for many Orange County homeowners, since the FHA loan products currently available “cap out” at a $625,000 value.

Make Sense Underwriting – Asset based loan programs

Second, we have a new loan program offering loans to $5,000,000 that are asset based, for purposes of determining income and loan amount eligibility. They will also take assets as “pledged” additional security for loan amounts up to 90% LTV.

For example, if you have assets of $1,000,000 and are 50 years old, you are imputed with monthly income of $5000 a month in addition to income reflected on tax returns. If you have assets of $2,000,000 you are awarded an additional $10,000 a month in income. This “imputed” income is used to determine your eligibility for a refinance or purchase loan. The loans are all 5-, 7- or 10- year terms at competitive rates. THIS IS GREAT NEWS!

Financial planners especially like these programs since the assets are maintained “under management” even if pledged toward the new loan, and if they appreciate substantially they may be released.

Loan Officer Compensation

Last, but certainly not least, the manner in which originators will be paid is up for interpretation at present, due to new legislation l due to go into effect April 1st. No one knows for certain how it’s going to actually work.

Legislators have attempted to cap or limit the fees earned by loan originators so a flat amount per loan. Think of it as a stockbroker or salesman or any other individual paid on a commission basis having their gross commission per transaction limited to a fixed amount. Sound strange? Talk about too much regulation!

The Holidays are Over, and so are Record Low Rates!

Happy New Year! I hope everyone had a wonderful holiday season. Mine was filled with lots of fun as well as stress, but more about that later!

Interest rates have moved higher. The uptick in rates was very sudden in mid-November, and appears to be the result of improvement in the economy coupled with anticipated increasing inflation. There is also the spectre of higher yields demanded by investors to fund the burgeoning budget deficit.

Rates are up approximately 1/2% to 3/4% across the board…which is quite a jump. That said, we are still looking at fixed rates that should continue this year in the 4.25% to 5.25% range which are very low relative to the last 25+ years.
Home affordability index should continue to be high this year. Low home values coupled with rates in the low end of the range make this a great time to buy… and I encourage you, your children and friends to act in 2011.

This year may not be as attractive for refinancing...but much depends on your individual circumstances and current loan program/rate. If you are still on a 5/1 arm due to reset soon, now is the time to act.

We are still dealing with a massive number of foreclosures on the market with more to come at an accelerating pace. It is likely we’ll see more foreclosures in 2011 than 2010. In many markets, over one-third of all housing sales are distress sales, either houses that were in foreclosure, or short sales or some similar non-normal situation. This will continue to keep values down.




Can you identify the Waterfall?

My holidays started with a turkey feast in Ann Arbor with my daughter and her friends, followed by an intimate Thanksgiving Day at my mother’s home, and finally a third Turkey Fest Friday evening after Thanksgiving in Oceanside with Steve’s family. I was entirely turkeyed out!

December brought an extended visit from my daughter Katie, an engagement party for my son Drew and his fiancé Mary Grace, brief hospitalization of Steve in Colorado, (he’s fine now) a minor flood at my mother’s home, and finally Christmas!
We rang in the New Year with a group of old friends at the Balboa Yacht Club and had a blast, complete with slumber party afterwards.

Finally, the waterfall in Dana Point Harbor was flowing again with all the rains before and after Christmas, and I won a bet for a bottle of wine with a co-worker who took this picture of the falls and challenged me to identify it…not realizing I ride my bike in the harbor on a regular basis and have seen it myself during rainy periods!

I wish everyone a happy, healthy and prosperous 2011!