I hope you all had a great weekend.  This Wednesday is an important day in the mortgage market as 10-yr Treasury notes are being auctioned for sale.  Depending on the demand we should see rates either stay low or increase on Thursday.  The 10-yr bond yield is at 3.19% today which is the lowest it’s been in a very long time.  What this translates to is extremely low interest rates.  This coupled w/ low prices and the 8k tax credit due to expire means an unprecedented activity level of offers.    

As always, let me know if I can assist you with your residential financing needs.  Have a great week!

As you know FHA was going eliminate / replace the SPOT approval process for Condo financing on 10/1/09.  I just learned right now that this has been pushed out until November 2, 2009!  This is great news as I know quite a few of you have FHA SPOT condo offers out there so this extends our time a bit.  I will keep you posted as guidelines roll out regarding the new SPOT process.  Have a great day!

As you all probably know, MDIA (Mortgage Disclosure Improvement Act) was put into place last Friday.  Below are the main bullet points of this act that can impact your contingency periods and close of escrow dates. 

So CALL me if you can’t afford to lose 3 days on the front end or 7 days on the back end for your escrows.  Have a great week and Happy Selling,

• Early Disclosures: A lender must provide a borrower with an initial Good Faith Estimate within three business days of receiving the borrower’s written loan application as specified.  For this provision, a “business day” is generally defined as a day on which the lender’s offices are open for business.

• Upfront Fees Restriction: Neither a lender nor any other person may impose any upfront fee (Pre-approval, Application, Credit report, Appraisal, etc) on the borrower until the borrower has received the early disclosures in person or, if mailed three business days after the early disclosures are mailed.  For this rule, a “business day” is defined as all calendar days except Sundays and legal public holidays as specified.

• Re-disclosure Requirement: If the final Annual Percentage Rate (APR) at loan consummation varies more than 0.125% (or 1/8 of one percent) from the initial APR on the early disclosures of a regular transaction, the lender must provide the borrower with a corrected disclosure at least three business days before the loan is consummated.  For purposes of this waiting period, a “business day” is defined as all calendar days except Sundays and federal legal holidays as specified.

• Three-Day Waiting Period: For corrected disclosures, a lender cannot consummate a loan until three business days after the borrower receives the corrected disclosure in person.  If the corrected disclosure is mailed, the borrower is deemed to have received it three business days after it is placed in the mail.  A borrower may waive this waiting period in writing in case of a bona fide personal financial emergency, such as an imminent foreclosure sale.

• Seven-Day Waiting Period: A lender must wait seven business days after providing the early disclosures before consummating the loan.  For purposes of this waiting period, a “business day” is defined as all calendar days except Sundays and federal legal holidays as specified.  A borrower may waive the waiting period in writing in case of personal financial emergency, such as an imminent foreclosure sale.

Lender Questions-My Interview with Dean Wong at First Capital Mortgage

DEAN WONG’S ANALYSIS, SNAPSHOT AND TOP 10 SELLING TIPS TO HANDLE THE CURRENT ENVIRONMENT:

Below you will find some technical information about what happened yesterday and some tips on how to handle the current environment.

1. Yesterday was a wild day in the banking system.  We received 4 mid day rate changes for the worse.  The 10-yr bond yield which has been holding steady at around 3% or so for the past few months steeply climbed yesterday to 3.69% today.  This effectively means an increase in rate of approximately .75% in rate.  Yesterday morning, I was locking loans at 4.75%.  By end of the day I was locking at 5.50%!
2. This could potentially shift someone from a pre-approval status to a decline status so if you have someone looking it may be a good idea to have them get a revised estimate from their lender and a new pre-approval letter.
3. If you have a buyer who’s in escrow and the current lender claims they are LOCKED, I’d ask for a LOCK CONFIRMATION IN WRITING.  The reason is because many lenders who have been used to the low rate environment may actually be trying to time the market and may not have actually LOCKED them in until closer to closing!  This is dangerous if your client is in FLOAT status thinking he was LOCKED at X rate!!
4. Buyers look mainly at the monthly payment so the strategy to keep the same purchase price and monthly payment would be to buy-down the rate as much as possible via points (hopefully credited by the seller).  Conventional financing allows seller to credit buyer up to 3% towards closing costs and FHA financing allows up to 6% credit towards closing costs!  Maximize the credit for your buyer to minimize the rate!!
5. If you’re a listing agent, I’d highly advise speaking to the potential buyers and request an updated Pre-Approval letter from their lenders to make sure they can still qualify for the offer price they made.  If you’re in escrow as a listing agent w/ a buyer, I’d highly advise reaching out to the buyer’s agent to make sure the buyer is LOCKED and is moving fwd with the approval process in a timely manner.
6. For your buyers if you have a pre-approval letter more than a couple of hours old go back to the drawing board and get re-approved so expectations of payments/costs are properly reset.  There’s nothing worse than entering escrow and facing buyer’s remorse.  Better know now right?
7. For buyers who are in escrow and LOCKED and may be on the fence of backing out due to minor repairs or cold feet, I’d advise them how lucky they are w/ the rate they have and to cancel and find another property, they’re doing it at the peril of a higher rate.  Hopefully, this keeps deals in escrow from canceling as well.

8. I advise working with a mortgage broker vs. a direct lender as we have the ability to “Float Down” and reposition the loan to numerous banks for a lower interest rate if the market yields a lower rate.  Why have all your eggs in 1 basket? 

9. Keep everything in perspective guys.  We’ve been very spoiled for the last couple of months with 30-yr Fix rates in the historically low mid 4’s.  With the current rates in the mid 5’s, even though it is higher than what the market has been seeing for the past few months, this is still an EXTREMELY low rate for a 30-yr Fix loan in the grand scheme of things if you look at a historic chart!  And prices are still LOW.  Still a great time to buy NOW!!!!!!    

10. Final tip – make sure your serious and qualified buyers are in constant contact with their lender so they are updated about what’s happening and again that their expectations are realistic for the price point in which they are searching. 

I hope this helps and I will continually keep you all updated on my end as always.  Happy Selling and have a great week.