BluefoxToday blog : Bill Ladewig Your FHA Guru - FHA and VA Loans Since 1970

 DAILY MORTGAGE LOCK ADVISORY 

October 4, 2011, 6:30 AM PST

Click for Lock Advice Updated Several Times Daily  

Mortgage Interest Rate lock Advice for locks within 1 day:  FLOAT

Mortgage Points based on 3.5% Mortgage Backed Securities are up 0.03 point. 

30 Day Mortgage Interest Rate Lock or Float Advice:  FLOAT
On Wed. 09-21-2011 3.5% Mortgage Backed Securities (MBS) broke through a long standing resistance level which is very good news for mortgage rates.

MORTGAGE MARKET INDICATORS 

National Average Fixed Rate Mortgage 4.01%  A Hundred Year Low
MBS (FNMA 30-year 3.5) - 103.03, High: 103.25, Low: 102.91   
DJI Stocks currently $10,476.77,  Down $-178.53, Change -1.68%   
Asian & European Stock Market Indexes Down -2.605%   
Nymex Crude Oil Currently $76.01 Down $1.60  

MORTGAGE NEWS BRIEFS

MONDAY MORTGAGE RATES CLOSED AT THE LOWEST RATES IN OVER 100 YEARS!
 
Survey: Most Real Estate Investors Expanding Portfolios
Over eight in 10 U.S. real estate investors are making moves to shore up their portfolios even as talk of a double-dip recession persists, according to a recent survey. More shocking: most of the survey respondents parted ways with Americans at large by agreeing that the economy is headed in a northerly direction. Conducting the survey in early August, Colliers International, a real estate services company, deployed the 2011 Colliers International Global Investor Sentiment Survey as a way to measure investor appetite for risk and optimism. » Read More at MReport 

Greek Concerns Continue To Hamper Market Mood
The major U.S. index futures are pointing to a sharply lower opening on Tuesday, with sentiment likely to be weighed down by the fears that Greece is on the brink of default. The fears strengthened due to a lack of unanimity among euro group officials in finalizing the second round of financing for Greece. Risk aversion is still ruling the roost and risk assets are retreating. The upcoming economic data of the week is also likely to introduce some caution among traders.  Read more at RTT News

Most Americans feel our Government has failed us because it is controlled by big money.   

The documentary "Inside Job"  and the movie "To Big To Fail" clearly illustrate who is currently running our government.  Learn the advantages of publicly funded elections go to  Americans for Campaign Reform 

Rate Lock Advice & Mortgage Market Update

January 06, 2010, 8:30 PT

RATE LOCK ADVISORY

Lock Advice:  LOCK
MBS prices are down -10/32.  Unfavorable repricing is a risk from most investors.   Rising expectations for Friday's Employment report are hurting MBS markets.

RATE NOTES:
When MBS prices are up, Rates are down.
Lock advice can change throughout the day.  Update
Good economic news = Bad Rate News.

National Average Fixed Rate Mortgage
Unchanged at 5.2% on Jan.5

Fannie Mae Mortgage Backed Securities
MBS Opened at 4.81% Down 0.037%.

110 Year Treasury Currently 3.820% Up 0.05%

DJI Stocks $10,587.66,  Up 15.64, 0.15%

European and Asian Markets Up 0.131%

Nymex Crude Oil Currently $82.33 Up $0.56 

• Vote on To Big To Fail. Move your money to local banks and credit unions
• Bad News! Bill Introduced in House to Increase FHA Down Payment to 5.00% from 3.50 Read Story.
• Don't Miss The Real Deal - Real Estate closings in 2010 Real Deal
• Brokers, If you value your business then watch this three minute video TBWS Video

Rates 01-05-10, 8:40 PT
30 Year Fixed to $417,000
Rate 4.750%, Point 1.375, APR 5.004%

APR Based on $350,000 Loan at 80% LTV
Above Rate can be locked for 30 days.
Call for Quotes on FHA and VA loans With Detailed Good Faith Estimates.
No Application or Credit Report required

This post is inspired by Tim Bradford's blog on the new revised GFE that appears in January.

The revised GFE is another failed attempt to protect consumers,  The problem is, consumers cannot be protected with forms because those who wish to deceive will always find a way.  Consumer education is the only real consumer protection.

The new GFE requires lenders to guarantee their fees but it allows lenders to estimate fees for Title, Settlement, Prepaid Interest and Impounds.  Once again, it appears the rules are made by people with absolutely no understanding of real world lending.

Based on my experience, consumers are less interested in the individual fees than the grand total.   So, guess which fees will continue to be understated.

So, how can consumers be protected?  The answer is only with a little education.

Rule #1 All rate shopping should be on the same day and within a couple of hours

Rule #2 is really simple but, for some reason most people don't get it.

    ANY RATE QUOTE IS WORTHLESS WITHOUT ALL 3 OF ITS PARTS:

    The parts are:

1. RATE... for equal comparison request a 30 day lock price.  
2. POINTS...
3. FEES!!!

    It bares repeating, RATE... POINTS... FEES.

Lets put it to music:
    1, 2, 3  umm papa Rateta da...Points tra la,  Fees tra la
    Like love and marriage, you can't have one without the otherrrrr.

    Ok, So I am not a song writer but it makes the point

Providing credit where credit is due; the revised GFE points out that total lender charges are a function of the interest rate.  The relationship of points fees and rate is an important piece of information.

Note: Forget about APR because it is the most gamed number in lending and with Rate, Points and Fees it is not needed to compare rates from various lenders.  APR is only as dependable as the lender.

Rule #3

Unless a closing date is known... PREPAID INTEREST MUST ALWAYS BE ESTIMATED AT LEAST 15 DAYS!!

Rule #4 requires a little help from Buyer's Agents.

1. Impound amounts vary by the month and locale so every real estate agent should provide their buyers with a local impound schedule.
2. Title and settlement costs vary by locale and every real estate agent should have average fees for title and settlement to provide their buyers.
3. Agents should make their buyers aware of any special state or local fees or taxes.

Note: Most title companies have schedules for impounds, title and settlement fees.

FHA 90 Day Flip Rule Extended

This may be old news to some but I still receive calls requesting FHA 90 day flip rule information.

The FHA 90 Day Flip Rule originally prohibited anyone from using FHA financing on homes owned for less than 90 days. 

In 2008 FHA lifted the ban for banks only for one year then in 2009 extended the exception for one more year.

Some lenders are have extended the 90 Day Flip rule to include VA and Conventional loans so it is a good idea to check each lender's policy before placing any loan on property owned for less than 90 days

Below is the notice extending the FHA 90 Day flip rule to May 10, 2010.  The extension only applies to banks, the rest of us will have to wait 90 days before we can sell a newly purchased home with FHA financing.

This revised notice on the FHA property flipping waiver extension corrects the date in the last line of the notice that was published on 5/15/09:

"Federal Housing Commissioner Brian D. Montgomery has extended the temporary property flipping waiver to May 10, 2010.  Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by FHA borrowers without regard to the 90-day seasoning period. The waiver does not apply to entities that purchase foreclosures either singly or in bulk for resale. Subsequent sales of such properties will continue to be subject to the standard regulatory requirements. 

The waiver expires for all loans for which the sales agreements were signed by the seller and buyer on or before May 10, 2010. "

The FHA 90 day Flip rule only applies to FHA loans and does not effect VA and conventional financing.

Current lending updates can be found at: http://www.yourfhaguru.com

Unfortunately, there are many ways to fleece a trusting buyer.

Who can you trust? Obliviously not the sleazy looking guy pictured but there are others who appear trustworthy who could be picking your pockets.

Most of us, when shopping, search for someone we can trust for good advice and a fair deal. Consequently, there are those who fulfill that need with a trustworthy appearance.  

Often advertisements show them with Trust Symbols: holding a cute child or pet, surrounded by family. 

Some appear trustworthy by company association, like starting a credit union or even better a military credit union.

On Friday, 11/27, I noticed a military federal credit union (FCU) advertising a Zero Point loan for 4.875% with an APR of 4.963% and the FCU would even pay lender fees. 

Hmmmm... on Friday, at that rate, they should be paying their borrower's fees and a signing bonus.

The Zero Point APR seemed high to me so I used my APR calculator to find the fees.

The calculation required a loan amount and there was no loan amount disclosed beside the advertised rate and APR so I scrolled down to their detailed disclosure to see what I could see.  

Below, in lots of small print, the FCU disclosed a $300,000 loan with a rate of 5.000%, 1-Point and an APR of 5.089.   Hmmm... In this example, the APR contained 1 Point but no lender fees or prepaid interest. 

So, based on their small print disclosure I also used a $300,000 loan amount and zero allowance for prepaid interest to find the fees on their Zero point 4.875% Rate.

Wow, based on the advertised Rate and APR, lender fees are a whopping $3,000.  BUT WAIT.... There's more!  Leave us not forget the small matter of 1.75% undisclosed yield spread premium (YSP) that, translated to dollars, is an additional $5,250.  How do I know there is 1.75 Point YSP, you ask.  Since you asked, on Friday, I know of at least two wholesale lenders offering their approved brokers 1.75 YSP on a 4.875% Rate.  If a small, local mortgage broker can find that much YSP then a national FCU should be able to do that or better.

Did I mention that credit unions are not required to disclose yield spread premium?

To recap, let me count the ways this Military Federal Credit Union pissed me off.

1. Credit Unions are supposed to be Non-Profit clubs which implies their rates and fees will at least be competitive with other lenders. 
2. A "military" CU implies it is a private club where our military will receive better deals than elsewhere. In reality, this Federal CU is even more expensive than any of the expensive four big banks.
3. $8,250 is a lot of profit on a $300,000 loan; especially from a company that lulls it's customers into a false sense of security that may prevent their "club members" from aggressively shopping elsewhere.
4. This CS CU is targeting our young military personnel which is typically an unsophisticated market and that dear readers is a load of BS.
5. The APR in their small print disclosure failed to include prepaid interest.  Never trust a lender that does not include at least 15 days prepaid interest in their APR when the closing date is unknown. The dollar amount for 15 days interest on a $300,000 loan at 5.000% is $625 and that is a large Whoops at closing.
6. This Federal CU may disclose prepaid interest in their good faith estimates but I don't know that because a GFE could not be obtained until the borrower completed a loan application... more BS.

The moral of this story?  Let education, facts and figures be your guide... NEVER buy anything based solely on trust.  You may choose a lender because you trust them for one reason or another but do not fail to always verify your trust.

Education is the Consumer's Only Real Protection.

Fannie Mae is implementing the Deed for Lease instead of Foreclosures

FANNIE MAE NEWS RELEASE - September 5, 2009

WASHINGTON, DC -- Fannie Mae (FNM/NYSE) is implementing the Deed for Lease^TM Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.

"The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, Vice President of Fannie Mae. "This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities."

The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.

For additional information about the Deed for Lease Program, including full details on program eligibility, please review the Guide Announcement on www.efanniemae.com.

If anyone doubts that Big Banks are out to crush their competition read Donne Knudsen's post.  The video describes Barney Frank's Financial Stability Improvement Act that is aimed and small mortgage banks.

The FDIC is also taking aim at mortgage brokers with Regulation Z - [R-1366].  Barney and the FDIC have joined in creating laws that would wipe out over 70% of BoA, Chase, CitiBank and Wells Fargo's competition. 

Email your congressperson at: Congressional Email  

For those of you who missed Think Big, Work Small this morning... according to InterThinx, the mortgage fraud specialists, appraisal fraud is up 46% from the same time in 2008.  InterThinx 

But wait, who would be the perpetrators, has not HVCC made us safe?  Thanks to HVCC, Mortgage brokers, those evil, underhanded, self-serving scourges of real estate and sole cause of the mortgage crisis have not been able to order appraisals (except FHA) or even talk to appraisers in the third quarter of 2009.

OMG, that leaves (choke) the innocent victims of wicked mortgage brokers, Banks.  There must be some mistake because we all know that banks would never do anything underhanded. 

I am sure we will soon learn, probably from a trusted politician, that, possibly, the cause was appraisers still tainted by previous mortgage broker contact.  These appraisers will certainly be sent to rehab at taxpayer expense. 

Soon, thank god, due to vigilent efforts of our trusted banks and politicians, the world will be a better place.  Mortgage brokers will have disappeared, banks will make all home loans unfettered by pesky competitors and politicians will be provided will deserved taxpayer paid Cayman Island vacations to visit their secret bank accounts.

Is that the happy ending what you want?

Your Fha Guru

Bill Ladewig
800.664.SAVE (7283)
Bill@yourfhaguru.com

Rate Lock Advisory is updated several times a day and is available at http://www.yourfhaguru.com

San Diego FHA and VA Home Loans Escondido Mortgages Escondido Localism San Diego FHA and VA Home Loans San Diego Localism San Diego UFMIP Escondido Mortgages Escondido Localism San Diego Mortgage What is APR

It is apparent that an increasing amount of our country's financial power is being consolidated into the big four banks; Bank of America, Chase, Citibank and Wells Fargo making these guys absolutely To Big To Fail, what's next?

Will there be further consolidations... maybe big bank inspired elimination of mortgage brokers? 

Whoops, it's happening now unless you take action,  Big Banking Buddy FDIC is helping big banks eliminate one of their largest competitors leaving consumers with even fewer choices as early as 2010 unless you take immediate action.  Read how

For those of you who do not subscribe to the lending and real estate site Think Big Works Small you might enjoy their humorous take on banks to big to fail.  See Video

Although FHA has no minimum credit score requirement for FHA loans, currently many FHA lenders do impose a minimum score.  Most lenders have already moved their minimum credit score requirements to 620 or 640. 

While there may be others, at this moment I am only aware of two wholesale lenders accepting between 550 and 580 with compensating factors and recent good credit.  After December 12, it looks like all lenders will move to a minimum of 620 unless they have a special investor tucked away somewhere. 

Fannie Mae, announced that it "is revising the eligibility, underwriting, and pricing policy to support housing market liquidity and sustainability." In a statement released on Tuesday, September 24, 2009 Fannie said that starting December 12, 2009, the minimum credit score will be increased to 620 for all loans delivered to Fannie, including loans insured or guaranteed by FHA, VA and USDA-RD.

While the increased minimum score is still much lower than what is required by private mortgage for a conventional loan, it's a reminder for everybody, especially first-time-home-buyers, that a good credit score is needed even if they want to buy a home with a FHA loan.

Lenders often run back up credit reports prior to funding which can lower scores.  So while the minimum will be 620 if you are currently working with buyers with less than 630 mid scores my best advice is to begin immediately with a legitimate credit repair company.   Personally, I would pass on any that require a large upfront fee.

Bill Ladewig, Your FHA Guru.

Bill@YourFhaGuru.com

Website

October 2009, FHA Credit Score going to 620

San Diego FHA and VA Home Loans Escondido Mortgages Escondido Localism San Diego FHA and VA Home Loans San Diego Localism San Diego UFMIP Escondido Mortgages Escondido Localism San Diego Mortgage What is APR