Rates Have Improved!

Interest rates have slowly improved since February 10th…here are the details:

Loan amounts of $150,000 to $729,500

30 YR fixed - 4.75 to 4.875%
15 YR fixed – 4.125% to 4.375% depending on loan size
5/1 ARM - 3.375% to 3.625% depending on loan size

Jumbo loan amounts – over $729,500

30 YR fixed - 5.625%
5/1 ARM - 4.25%

Rates are down and so are home prices…what are you waiting for?

I’m looking forward to the Oscars…who are you rooting for? Hmmm-- The Social Network, The King’s Speech, or the Black Swan to name a few?

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!

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!

Post Election Market Update -- Don't Postpone the Refi

Now that the dust has settled, so to speak, it’s time to turn our attention back to interest rates before the holidays arrive.

Mortgage-backed securities are still moving up and down in a tight trading range…so interest rates follow, and are just off the record lows of the year.

However most of the data/market info suggests that with the Fed trying to stimulate the economy, inflation will soon kick in and rates will move up. No one thinks it will happen next week, but maybe by next month or the first quarter….so don’t delay!

NO COST / NO POINT RATES:
4.375% for a 30 YR fixed under $417,000;
4.625% for a 30 YR fixed from $418,000 to $729,000

Obviously you can obtain a lower rate if you want to pay for the closing costs and /or origination fees. Rates for adjustable loans are even lower. They can be difficult to qualify for, however, since they use a higher interest rate to underwrite due to the higher assumed risk of a shorter term loan.

I can’t believe it is already November, and Thanksgiving will be here before we know it! Hope everyone had a Happy Halloween!

Market Update...& The Battle of the Paddle

Rates are still hovering right around their record lows. If you can qualify, and your property appraises out, you can get a rate in the 3’s to low 4’s depending on your loan size and the term. Money is cheap, but is still relatively hard to qualify for in terms of documentation required!

Underwriting guidelines continue to contract, and seem to take the heaviest toll on self-employeds – for whom two years’ tax returns and YTD P& L’s are the norm. Investors don’t want to take any chances on any file, lest they be forced to “buy back” the loan at a later date…which is happening right now with hundreds of thousands of loans that went into default. Oftentimes these defaults aren’t the fault of the original mortgage lender, but are due to loss of income or other related effects from the economy, but banks as well as Fannie and Freddie are enforcing their “buy back” provisions in the contracts they have with mortgage bankers. This is why so many mortgage banks are out of business – the tremendous liability they face to buy back defaulted loans.

Battle of the Paddle

We rode our bikes down to Doheny State Beach a few Sundays ago, before the onset of rainy weather. We often jump on our bikes for a little “road riding” on weekends. Last month we rode down to San Onofre State Beach to check out the sharks we’d read about at Trail One. Alas we saw none!

This trip we planned to witness day two of the Battle of the Paddle, the largest SUP (Stand Up Paddle) competition in the world. In case you haven’t heard of this, the sport involves standing up on a large surf-type board--while using a paddle to move forward. Lots of people are doing it in harbors and in the ocean for exercise, to surf, or just to “get around.”

We hoped to watch our friend Jerry Meador. He is an old friend of mine from high school. I literally hadn’t seen him for about 40 years, YIKES!

Jerry was competing in a couple of different events, and we watched the “relay” event which was really fun. Each team had four members --with at least one woman. They had to paddle out through the surf, rounding two buoys, ride waves and/or paddle back in, and run up the sand to a spot on the beach where their teammate waited to take off next. They all had to paddle the route twice, and there were some pretty funny crashes, near misses, etc. since there were competitors both coming in and heading out at the same time --after the start of the race.

The waves got bigger in the middle of the event with some pretty nice sets coming in. Some paddlers handled the waves well and others…well, wiped out! It definitely separated the surfers from the non-surfers, albeit on super large SUP boards.

I learned there are all different kinds of SUP boards…some are more like regular long surfboards. I also found out that people of all ages can do this.

The oldest participant, who won for his age class, was on my friend Jerry’s team and is 72. They also had a team member who is a pro surfer—Leah Dawson—who is ranked as one of the top female long boarders in the world. She was fun to meet…friendly and down-to-earth. When I met her I asked her where she was from, and she replied, “Heaven. I live in Hawaii…” with a big smile on her face! Jerry had sort of arranged for a ringer on his team since his daughter Kassia is also a pro surfer.

Steve and I can’t wait to try it next, in the Harbor where there are no waves!