Archives for February 2008

President’s Day

Mortgage Master is closed today in observance of Presidents Day.   We will reopen for business as usual on Tuesday, February 19, 2008.

A Sunday Drive to Chuckanut Drive

We decided to drive up to Bellingham today via Chuckanut DriveImg_6258


On our way back home, we picked up some fresh oysters at Samish Bay for dinner. Img_6261


I wish I had a picture of our baked oysters in their shells…we devoured them too quickly!  If you enjoy a beautiful drive with windy roads, evergreens, mossy trees, dramatic bays; I highly recommend taking the Chuckanut exit from I-5.  Unwind.

500 Posts!

Okay…I won’t do another post like this until I hit 1,000.  I truly enjoy this and it’s a huge bonus that others are finding the information at Mortgage Porter helpful.  It means the world to me and I thank YOU! 

Dawn’s Army Marching Forward to The Big Climb


The troops at The Talon Group are preparing for the The Big Climb which takes place a month from today.    This troop, aka Dawn’s Army, is climbing in honor of their co-worker, Dawn, who was recently diagnosed with Leukemia.   

My husband is part of Dawn’s Army and will be climbing flights of stairs in the Columbia Tower on my birthday for this great cause.   I’m doing my part by looking for folks to sponsor my husband who’s going by the alias of Gomer Pile.   Fund raising efforts support the Leukemia and Lymphoma Society.   Will you sponsor my Gomer?  Click here.

MGIC declares Pierce County a “Restricted Market”

Mortgage Guaranty Insurance Corporation, a private mortgage insurance company, has included Pierce County as a "restricted market" limiting the loan to value to 95% for what they will insure effective March 3, 2008.

Private mortgage insurance is used when a borrower has less than 20% down and are not using a second mortgage to bridge the gap between the down payment and 80% loan to value.   MGIC is just one of the big players in the private mortgage insurance industry.

From MGIC’s site:

MGIC has designated a number of Core-Based Statistical Areas (CBSA) as "Restricted Markets." A CBSA is the official term for a functional region based around an urban center of at least 10,000 people, based on standards published by the Office of Management and Budget. Loans secured by properties in these areas must follow MGIC’s Restricted Markets underwriting guidelines.

In determining whether to place a market on the restricted markets list, MGIC uses both external and internal information sources including OFHEO Home Price Indices, National Association of Realtors change in median home prices, Moody’s home price projections and MGIC’s own proprietary business mix and performance data.

Here are other MGIC guidelines for restricted markets:

  • LTVs of 90.01%-95% require a minimum credit score of 680.
  • LTVs of 90% or less require a minimum credit score of 620.
  • The maximum LTV for condominiums is 90%

MGIC will not insure the following in a restricted market:

  • LTVs greater than 95%
  • Investment properties
  • Cash out refinances

It’s important to note that MGIC is not the only private mortgage insurance company.   Other pmi companies are also restricting their guidelines.   Effective March 1, 2008, PMI Mortgage Insurance Company will no longer insure mortgages with a loan to value of 97.01% or higher anywhere.   

These changes will also impact LMPI (lender paid mortgage insurance) programs where the private mortgage insurance is financed into the rate as well as Fannie Flex programs depending on where your lender is able to obtain private mortgage insurance.   As of this moment, 1:40 p.m. on February 15, I still have Flex 100 with LPMI.   

The mortgage industry continues to tighten their guidelines as well.  In fact, earlier this week, Washington Mutual declared most zip codes (including Seattle, Bellevue) in Washington state as "soft" reducing the amount they will lend by 5% of the total allowed loan to value.

This is a great case for using FHA mortgages if the current loan limit works for your mortgage needs.

If you are buying a home in Pierce County and are planning on putting less than 10% down, please contact your Mortgage Professional.

Update 5:37 pm 2/15/2007:  You may want to read Kenneth R Harney’s article on MGIC

My Valentines Post on Commitment


Just in time for Valentines Day, I thought I would revisit a word that used to horrify my husband before we married a couple years ago (on April Fools): commitment.   I’m thinking about this because I received this comment from a potential client, it’s a common one and I appreciate their honesty:

"I would like to go ahead with preapproval if it does not cost anything and does not bind me in any way to anything….How long can I shop after getting preapproved?"

There are many issues that this brings up.  My response to this home buyer in a chocolate covered nut-shell (you got to have chocolate on Valentines) is that I’m happy to provide a prequalification without obligation.  However, I will not do a preapproval at this stage in our relationship.   Here’s why:

  • A true preapproval involves more than just my efforts and time, which alone are valuable and limited.  With a preapproval, I may also be involving the time of my Processor and Underwriter. 
  • Back to my time:  I have to prioritize which clients I’m working with in any given day.  My first priority is to bona fide transactions.  I must take care of those who have committed to working with me first.  Especially in our current market.
  • Preapprovals also involve more costs.  There is a fee to underwriting and credit (minimal for credit).
  • Lenders are relying on our commitments as originators when we submit loans to them.  Having a higher "fall out" from clients who do not close a transaction jeopardizes our relationships with those lenders.  One lender I work with tracks "fall out" and charges a slight fee (0.05 bps) when our fall out ratio is too high.

Other Loan Originators may be perfectly happy to issue a preapproval letter to people who are not ready to commit to a Mortgage Professional.  The preapproval letter may or may not be legitimate.   

As a home buyer, would you rather work with a Loan Originator who is chasing ever rate shopper (which is a lot of work) or a Mortgage Professional who is committed to you, your transaction and sticking around for you after closing by continuing to keep you informed of news that may impact your mortgage?

Related PostWhen Are You Obligated to a Loan Originator?

My Favorite Valentine’s Post: There’s No Love for the Subprime Borrower

Message from Top Patches Pal: Bryan Johnston

I received a request from Bryan Johnston to help "spread the word":
Patches Pals,
I hope you had a chance to listen to Dori Monson’s interview with Chris Wedes (JP Patches) and Pemco CEO Stan McNaughton on Monday. It was outstanding! (If you’d like to hear it, it will probably be active as a podcast on the kiro radio website in the near future. Look for Dori Monson show 2/11.)
Stan announced how he and a few other mystery Patches Pals will match donations for the statue project up to $50,000. And right off the bat Alaska Airlines pitched in $5,000, so that means we just got $10,000 in the bank. And there’s still $45,000 left in the matching pot!
If you or anyone you know would like to buy a paver or make a donation, now is the time to do it. Basically whatever you donate will be doubled! (And if you work for a company that also has a donation matching program, between the Pemco challenge and your own company your donation will be quadrupled!  Check with your company’s human resources department.)
To purchase a Patches Paver or make a donation go to
Feel free to forward this message to any Patches Pals you know.
It’s been a great day for the statue project!
Bryan Johnston
Chairman of the JP Patches statue project to benefit Children’s Hospital
KIRO-TV Creative Services
(206) 728-8872
Come on Seattle!  Our donations for the statue are now being matched.  Don’t want a Patches Pal Paver…that’s fine: write a check and get double the bang for your buck!   

Quick 4-1-1 on Jumbo Loan-Conforming Loan Limit Increase

I’m noticing that a lot of Mortgage Porter readers are finding my by googling various terms to learn more about when and how the conforming loan limits will be increased.

Here’s what I know (and what I’m speculating) so far:

I’ve heard that President Bush will be signing the bill into law this Wednesday.  Then HUD has 30 days to publish what the median home prices are for various areas.  The new conforming loan limit will be based on 125% of those values.

It’s estimated in the Seattle-Bellevue-Everett area, our new loan limit will be just shy of $500,000. 

While this process is taking place, Fannie and Freddie need to figure out how they’re going to deal with this influx of new business.  Underwriting guidelines will need to be considered and distributed to lenders.  Also, I will eat a shoe if there are no "add to rate" to loan amounts $417,001 and over.   I’m estimating the add will be 0.25% – 0.50% to the now conforming rate.   For example, if your loan amount is $417,000 your rate for a 30 year fixed could be 5.500% – if your loan amount is $417,001 your rate would be 5.75% – 6.00%.   This is still more attractive than what the current jumbo rates are.

Remember, the increase to the conforming loan limit is temporary.  It is currently only valid through the end of 2008.  Who knows, maybe Congress will extend it as they have the PMI deduction if they see it as a benefit to the American economy.

You can see this process will take a little time.  I’m assuming that Fannie and Freddie are diligently working on the guidelines/pricing issues and not waiting for HUD’s home value information.   Even so, it could very well be some time in March before this all takes place.

Stay tuned!