Mortgage Update

Great News for Your Super Jumbo Clients!
The Loan Source has new products for "Super Jumbo" loans up to 2 million for primary residence, second homes and non-owner occupied. Fico’s need to be at 700 or better, and the loan-to-values (LTV) are 80% at 1 million; 75% at 1.5 million; and 70% on 2 million for primary residence. All loan amounts mentioned are for an 80% cumulative loan-to-values (CLTV).
Our rates are going to be unbeatable, in the 5’s and 6’s for Arm products, and in the 7’s for 30 year fixed. If you have any questions, please give me a call.
Make it a great day!
Celeste


Thursday’s Mortgage Update
The FBI now says that 80% of the crime in the U.S. is being carried out by ruthless gangs... But enough about Citigroup, Bank of America and Goldman Sachs.

Topic of the day: Pricing. Many loan officers are still looking at tying economic news to the bond yield and then in turn tying bond yield to interest rates. Besides the base securities market, it is important for agents to remember that other factors need to be considered. SRP values (what these lenders actually get paid for these loans), guaranty fees charged by Freddie & Fannie, and the spread between best efforts and mandatory execution (we lock on a best efforts basis and the lenders – at least the ones wearing the big boy pants – sell on a mandatory basis) contribute toward an all-in price. For example, the servicing released premiums that the servicers are willing to pay are a key difference between Wells, Citi, Chase, GMAC, CW, etc. The agencies control the guarantee/guarantor fees, and "in the old days" there were large differences in ‘g-fees’ for lenders of different sizes. These differences, measured in basis points, have been reduced, but still the risk associated with a smaller lender is greater than that of a large lender, and the fees will be different. Lastly, the difference between best efforts and mandatory pricing has moved out past 1 point, or 100 basis points, versus the historical average of around .250. This is due to the volatility of the market, along with increased fall out of best efforts locks.

So what is happening with the Fed trying to spot mortgage rates, in the face of market forces? Ever since the magical 4.5% mortgage was "targeted", rates have moved up, and we now find ourselves above 6% with one point back to the broker. It would appear that successful agents are "re-educating" their borrowers to move files off their desks, and telling them, "You’re going to be in the house a while, so pay 1-2 points in order to get back down near 5% for a 30-yr fixed rate mortgage."

Rates have not been good lately for anyone waiting to lock. (Have the borrower pony up a point and get it over with!) No one is arguing that the economy is weak, so what is holding rates up? Increased borrowing by the federal government to fund stimulus packages has helped drive underlying Treasury yields, and to some extent mortgage rates, higher. And no one knows what will happen when the music stops, i.e., when the Fed stops buying MBS’s after June, will investors be interested? With this on its collective mind, the market has the 10-yr currently at 2.90% and mortgage prices are a shade better from yesterday afternoon.

FNMA released DU 7.1, hoped to streamline the underwriting process for existing Fannie Mae loans. The primary interest has been in Fannie’s move to waive the reappraisal requirement for some borrowers seeking to refinance loans that are already with Fannie. It is not viewed as looser underwriting guidelines, but instead as a way for brokers to use a more automated appraisal system in DU. For existing Fannie loans, DU will use HPA data to estimate home values, and if the borrower fits current underwriting guidelines then the appraisal will likely be waived. But why rely on someone else’s interpretation – see for yourself: https://www.efanniemae.com/sf/guides/duguides/pdf/current/rndodu71aprupd.pdf