Rate Snapshot--Edging Up

Rates are edging up the last week. It hasn't been dramatic, so not time to panic yet...if you haven't taken advantage. Here goes:

Up to $417,000

Ranging from 3.125% for 5/1 ARM to 4.25% 30 year fixed

$418,000 to $729,000

Ranging from 3.375% for 5/1 ARM to 4.5% for 30 yr fixed

True Jumbo loans (over $729,000)

Ranging from 4% for 5/1 ARM to 5.375% for 30 yr fixed

All rates quoted assume a one point origination fee plus closing costs, and are dependent on FICO scores, loan-to-value, loan amount, property type, and occupancy.

I am going to be out of the office next week on a cruise down the coast to Mexico with my mother. We are celebrating her 85th birthday! If you want to take advantage of these rates before my departure, please contact me prior to Saturday evening the 18th as I will leave Sunday the 19th.

Viva la Mexico Y mi Mama!

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!

Rate Snaptshot - HEAT WAVE

We’re having a heat wave here in Orange County, both in terms of weather and rates!

Here goes:

Up to $417,000
30 yr fixed—4. 25%
20 yr fixed—4.0%
15 yr fixed—3.75%
5/1 Arm—3.125%
10/1 arm—3.625%

$418,000 to $729,000
30 yr fixed—4.375%
15 yr fixed—3.875%
5/1 Arm—3.375%

True Jumbo loans (over $729,000)
30 yr fixed—5.375%
5/1 arm—4.0%
10/1 arm—5.0%

All rates quoted assume a one point origination fee plus closing costs, and are subject to FICO scores, loan-to-value, loan amount, property type, and occupancy.

HEAT WAVE

Summer has finally arrived in Orange County--now that it’s almost over! The rest of the country has been sweltering for some time, while we were still wearing sweaters. Hopefully temperatures will remain warm at the beach through September. I was awakened last week by the fog horn in Dana Point Harbor which was a first for the summer months!

We’ve experienced a bigger than usual swell though, which is supposed to get even bigger. I noted it kept most of the swimmers out of the water this weekend—at least where I was watching at Doheny, Capo Beach and Table Rock in Laguna. Lifeguards were out in full force keeping most swimmers out of the water.

My daughter Katie has been visiting most of this month, and we stopped at Sunsets in Capo Beach on PCH on our way home Sunday. They have live music playing on their outdoor patio--with a front seat view of the ocean--every Sunday afternoon, which adds a lot of fun. This is my new favorite haunt for Sunday afternoons in South County. They usually host a big crowd of locals on Friday and Saturday nights though, complete with DJ and dancing-- for all ages. www.sunsetsbar.com

I spent five days mid-month at Rock Creek Lake in the Eastern High Sierra. (elevation 10,000 feet) My mother, who began visiting Rock Creek Canyon around 1949 joined me, along with my daughter and sister. Girls’ trip! We hiked, fished (yes we caught and ate trout) and played a lot of cards. One night we ventured out to dinner at the Convict Lake Restaurant outside Mammoth, and had a fabulous meal. Rock Creek is a very special place that I’ve been visiting since I was 3 or thereabouts (my mother claims I went there the first time when she was pregnant with me). This is where I learned to ride horses and fish. I’ve joined the pack station in the past for the fall horse drive which is a four-day endurance event driving stock down the Owens’ River Valley to Independence. For more information go to: www.rockcreeklake.com or www.rockcreekpackstation.com

Dinosaur Dash XX

This November 7th is the 20th anniversary of the Dinosaur Dash, a running event and fundraiser for the Tustin Public Schools Foundation (TPSF). It is held annually at the Tustin MarketPlace. More than 10,000 people attend each year, including volunteers and participants. This year’s Dino Dash has added a cycling tour in addition to the 10K, 5K and 2K “fun run.” Each year the logo is selected in a contest among Tustin student entries.

Last year’s Dash earned $125,000 for the District’s student and teacher support through event registrations and sponsorships. The prior year, in a better economic environment, they raised $170,000. To give some perspective, TPSF has donated over $2.3 million to the school district over the past twenty years--from all income sources—including the Dinosaur Dash.

TPSF is seeking residents who participated in the inaugural Dash to share their memories, so here goes!

I was a founding Board Member of the Foundation, and was Chair of the Inaugural Dino Dash. As Fundraiser chair on the Board, I was given the responsibility by the Board to create an annual event that would involve the entire community in an effort to support our schools.

We decided on a running event, interviewed race directors, and hired Herb Massinger of Race Pace. Hence the Dino Dash was born. I remember how hard it was initially to obtain the Board’s approval to proceed…I practically had to twist their arms and stand on my head…but finally received the go-ahead.

We held weekly meetings for what seemed months at my home with the race director and race volunteers to organize the event. The first year was tough going, and we finished with something like a meager $5000 net profit. We had big goals though, and were optimistic that the event would build over time. Of course optimism is my middle name!

I remember that Linda Jennings and I met with the General manager of Tustin Lexus, who agreed to be our Major Sponsor… and we were off and running! The first year ALMOST everything on the day of the event came off without a hitch, although the weather was cold and windy that first Sunday. I have photos of my children, who were quite young then, wearing ear muffs and jackets.

Every Board member worked the event…and we also had lots of community and school volunteers. We decided to invite local Olympians to sign autographs for young and old athletes, with the help of our own home-grown Olympians who had children in our school district. My good friend Dana Schoenfeld Reyes (Breastroke, Silver, Munich ’72) put us in touch with most of them including a number of swimmers, triathletes, runners, and more.

The event has morphed and changed over the years with all kinds of related activities: A food court, games, community booths, costume contests, contests between schools for registration, and more.

The Foundation offers grants to teachers throughout the district, sponsors a Teacher of the Year event, teacher training, scholarships for college-bound students, books, technology, a Go Green Initiative, and tutoring.

To this day one of my most treasured possessions is the baby dinosaur hatching from an egg that was presented to me for “hatching” the Dinosaur Dash. It was a difficult birth but well worth it!

for more information on Dino Dash XX or to register, go to: http://www.tpsf.net/dash.htm

Market Update and Summertime Blues

We haven’t had much sunshine to enjoy along our Orange County coastline so far this summer, but we have continued to enjoy record low interest rates. If you haven’t yet considered a refinance to lower your rate, please give me a call.

I have a number of “no point, no cost” refinances in process for clients. Although their monthly payment and interest saving is not as great as it might be if they paid all loan costs, they are not out of pocket any cash, or adding to their loan balance to enjoy a reduction in their mortgage payment.

Much of the final decision about a refinance rests on how long you expect to remain in your property. Obviously a longer time horizon makes the decision for the lowest rate possible more attractive.

New federal laws make “full disclosure” a requirement, and I have had many clients ask me questions about the total costs, and the new good Faith Estimate. In the past many loan-related costs were paid by the bank or broker, and were essentially “hidden” from view. Costs haven’t increased so much as they are just more fully disclosed today, in an attempt to provide the consumer with better and more complete information.

Newport’s Back Bay

Steve and I visited Newport Beach last Saturday afternoon for one of our favorite activities…a bike/kayak adventure. We parked at The Dunes, unloaded our bikes, and took off on the 10.5 mile loop that winds through the Upper Newport Bay Ecological Reserve and Nature Preserve, then around through the residential area off Irvine Avenue, to PCH and back. We stopped for a break at the Muth Interpretive Center to view an art exhibit by the Southern California Plein Air Painters Association-- ”SOCALPAPA” -- with wonderful renderings of the Back Bay and other local beaches, etc.


The map of the trail loop and complete information on the nature preserve can be found on the Irvine Company website at http://www.irvinecompany.com/Our-Legacy/forever-wild/back-bay-loop.aspx

After our return to the car, we packed up the bikes and changed into attire more suited to kayaking, only to discover we’d forgotten our paddles. (we own three!) So, we drove to the kayak rental spot on the bay, just under the bridge on PCH, to rent them. We decided to head inland into the preserve and enjoy the quiet…since we usually head out for a circuit of Balboa and Lido Islands. It is always fascinating to check out the “wildlife” in the inhabited portion of Newport Bay.

This trip we had expected complete quiet, but we found ourselves on the water with a large number of children and young adults playing around on kayaks and racing outrigger canoes. We were in front of the Newport Aquatic Center. We didn’t realize we could have parked here for free, and launched our kayak from here. The Aquatic Center is located on a public beach, (ahem on a man-made land extension) and is a non-profit organization that offers membership on an annual or daily basis. They house an on-site gym, shower/locker facilities, and warehouse a large number of water recreation craft. They rent their kayaks, outriggers, sculls and a few motorized boats, all of which are free for members. NAC holds all kinds of events and they train competitive teams for both juniors and adults. NAC boasts Olympic champions as members/trainers. www.newportaquaticcenter.com

But back to our kayak experience: our wildlife sightings including primarily birds and crabs (and a few fish). We needed a bird book along to identify the birds, but we counted at least five or six different ones including a group of odd-looking black ducks (cormorants I believe, after some research) that were sleeping on the sand. My best guesses for the rest were sandpipers, egrets, and swallows. The bay is host to over 200 species.

After drying off and sharing a couple of beers we drove the coast home to Capo Beach, braving the crowds through Laguna, and were thoroughly exhausted when we arrived. And still wishing for more sunshine.

Rate Snapshot and Strategic Defaults

The market continues to enjoy all-time lows in rates, although they are slightly off today.

Up to $417,000
30 yr fixed—4.5%
20 yr fixed—4.25%
15 yr fixed—3.875%
5/1 Arm—3.375%
10/1 arm—4.125%

$418,000 to $729,000
30 yr fixed—4.75%
15 yr fixed—4.25%
5/1 Arm—3.875%

True Jumbo loans (over $729,000)
30 yr fixed—5.625%
5/1 arm—4.375%
10/1 arm—5.25%

All rates quoted assume a one point origination fee plus closing costs, and are subject to FICO scores, loan-to-value, property type, and occupancy.

STRATEGIC MORTGAGE DEFAULTS

New research based on national consumer credit files, and academic papers, shows that many high credit borrowers are defaulting on their mortgages in the face of large negative equity situations. This is particularly true in states such as California and Arizona, where state laws limit the lenders’ ability to collect post-foreclosure or short sale deficiencies, vs. states such as Florida and Nevada where lenders have more recourse available to them.

Many strategic defaults are not motivated by an inability to make the mortgage payments. They are typically more related to the extended time horizon necessary to achieve a breakeven situation, e.g. 100% loan-to-value, much less realizing equity once again in the property. Many of these homeowners would still face a loss of 20% or more of original property value they paid in a cash down payment at the time of property purchase. Some are so far "under water" their property value is less than 1/2 of original value.

The Deed-in-Lieu is a more attractive option for many borrowers, vs. a short sale or foreclosure. In this case, the borrower simply deeds the property over to the lender, who saves time and money by not going through the foreclosure process or spending months processing a short sale transaction. Further, the bank does not try to execute on any deficiency (shortage) of payoff. Their goal is to quickly sell the property during the traditional summer months, while interest rates continue at record lows.

Bank of America is one lender who has instituted a new deed-in-lieu program and offers cash incentives to their borrowers in some cases.

A deed-in-lieu doesn’t have as negative an effect on your FICO score as a foreclosure or bankruptcy, but will reflect the same as a short sale, or “not paid as agreed” on the credit report.

In the case of a short sale, the bank agrees to accept less than the amount due on the mortgage through the sale of the property. These can be very sticky transactions that may take months for approval by the bank, and are especially tedious when there are two lenders, e.g. one in first position and one in second position. Although the first TD lender has priority, the second lender often jockeys for some sort of payoff as well from the seller and in some cases will pursue the seller after the close of the sale.

Many thanks to my dear friend and real estate broker Cynthia White, for providing the research on this timely issue.

The Pacific Queen

My son Drew, who earned his captain’s license in ‘05, recently became partners with Pacific Queen owner Bill Cavanaugh. The Pacific Queen is an 88’ sport fishing boat, originally built in 1944 to rescue downed planes… and has since been converted to a sport fisher. Drew has been part of the sport fishing industry for eleven years, and his partner Bill has been in it for 30 years. Drew earned his captains’ license while working on the Apollo, beginning with summers during college at UCSD.

The Pacific Queen runs anywhere from one- to eight-day trips out of Fisherman’s Landing in Point Loma. They fish primarily in Mexican waters, and mainly catch tuna in the summer, along with yellowtail and dorado. Average fares are $200 a day…and their boat holds up to 33 passengers.

Next time you want a maritime adventure I hope you give them a call! I can’t wait to go out…

Their website is www.Pacific-queen.com . For more information call Fisherman’s landing – at 619-221-8500.

I can’t say how proud I am of Drew for his achievements and for following his dream. He is a true Waterman! i.e. captain, fisherman, surfer, spearfisher…and jack of all trades on the boat!