Rates, Industry Updates, and Dallas Arts District

The mortgage market closed up yesterday by 52 bps, which is a nice improvement on news of the increased danger in Japan and an overall weaker economic outlook. Bad economic news = good news for interest rates.

Mortgage rates are currently running in the 4.75% to 5.125% range for 30 year fixed rate loans up to $729,000, depending on loan size, FICO score, loan to value and occupancy. Rates are lower for shorter terms, i.e. five, seven, and 15 year fixed terms.

The “conforming jumbo” program allowing lower rates for loans over $417,000 and up to $729,000 is scheduled to sunset this September 30th. The government could extend the deadline again, but it is unlikely given the fact that the government wants to get out of the business of guaranteeing mortgages. This is also a precursor for a sunset of the 30 year fixed rate loan. So, if you want one, get it now while they are still available. Rates will rise for those loans over the current conforming limit of $417,000 and it is possible that the limit could drop due to average home values having dropped since the limit went into place.

Dallas and the Arts



I visited Dallas last week to attend various events revolving around the Dallas Art Fair. Steve has been handling the marketing of a high rise luxury home project called “Museum Tower” that is closely aligned with the arts--both fine and performing-- in downtown Dallas.




We toured individual galleries; attended the Gala preceding the opening of the Art Fair; attended a private event at the Trammel Crow Asian Art Museum; had a private tour in the Dallas Museum of Art with the curator of the Gustav Stickley exhibit (think Craftsman home movement); and attended an event for the unveiling of a new sculpture at the Nasher Sculpture Garden. Amazing works of art and sculpture were all around us! I was floored by the sight of many famous pieces I’ve only seen in books.

All of the above were attended by lots of waiters offering food, champagne, wines, etc. Also attending were lots of beautiful and fascinating people. All I could say was WOW.

Dallas seems to have more trendy restaurants and bars within walking distance of the “Uptown” area and the “arts district” than anywhere I’ve been. And, those people love to party! I even had a glass of wine on the terrace of the fabled Mansion on Turtle Creek.

I can’t wait to go back to visit, and will follow up with more in-depth reports on hotels, museums, restaurants, the Katy Trail, etc. I even found a great 24 Hour Fitness downtown with a great Zumba class on Saturday morning…what could be better?

New Year's State of the Union for the Mortgage Industry

I survived January with only a short bout with the flu. Unfortunately I’m not sure how the mortgage industry is going to survive the continuing wave of regulation from Washington. To quote my market research source, at www.TBWSratealert.com

“After the collapse of the mortgage and housing markets there is a push to make changes based on beliefs that servicers have not done their job well, and are responsible for extending the housing recovery. A long stretch, but that is what the industry has dealt with for the last three years; beat up the lenders but don’t tread on Wall Street as the fuel for the housing market disaster . Blame it on brokers, blame it on servicers, blame it on anyone and don’t let the smoke clear. We don’t really have to say it for our audience; originators didn’t make an Alt A loan or most of the junk originated unless they had an upstream market to sell it to.”

So, who is ultimately taking the fall for all this? The consumer, of course. It is much harder to qualify for a loan. Even if you are qualified! You’d better have perfect credit or you’ll be paying a lot more in interest rate for that new loan. You’d better have adequate equity, or refinancing is more difficult, and more costly in rate, if not impossible; your tax returns need to reflect adequate income, and it had better not be declining.

Your loan modification chances are next to nil, even though the erosion of your property value was completely out of your control and you’ve made all your payments in a timely fashion (almost worse!) but you can’t qualify for a normal refinance due to lack of equity.

I could go on and on…the government programs that were forced onto the banks (after paying them lots of bail-out $$) are parsed out in a very limited basis, and only those who scream loudest are heard, and oftentimes not even then.

Some surmise that only a few mega banks will survive… which doesn’t make for a better deal for the consumer. Who is the real winner in all this? The banks. They pay less, and their agents don’t need the licensing etc. the rest of us brokers/mortgage bankers do. Their profits are rising.

Enough whining today! Enjoy Superbowl. Go Black Eyed Peas!

End of the Heat Wave for Rates -- and Summer Too!

We are still seeing rates in the low 3’s to low 4’s depending on program, loan term, FICO score, etc.

Last week delivered extreme volatility in the fixed income markets. Translation: interest rates have been up and down. By Friday, we'd seen prices drop and rates had eroded as of the week's end.

Mortgage loan rates traditionally move in tandem with the pricing of Mortgage Backed Securities. Friday’s better than expected job and unemployment news sparked improvement in the stock market and pushed rates up a bit as a result.

Although the long term view is that rates will hold fairly steady at lows through year-end, the short term outlook is for increased volatility. Remember, any “good” economic news will cause funds to flow into the stock market and out of bonds, causing rates to rise.

Catching the wave and timing your rate lock will be more important in the next few months. I don't recommend waiting any longer to start a refi process, if you are still considering it.

Underwriting guidelines continue to contract. Some of the latest news is that we are required to pull a 2nd credit report at funding…and there had better not be any new inquiries on that report, or evidence must be provided that no new debt has been established. This is just another move to prevent loan fraud. It can slow down or prevent closing altogether.

Another new twist is any deposit to checking or savings accounts over $500 must be documented, unless it is an auto-deposit from employer. Also, we need all income and asset documentation to be dated within 30 days of closing, e.g. paystubs, bank statements, etc.

I like to joke that the loan process is now similar to giving birth. Possibly even more painful!