Archives for March 2008

For Michelle – The Three Day Breast Cancer Walk

Last year, I lost a dear friend to breast cancer, Michelle Brown.  She’s touched so many lives that a many of her friends have assembled a team to walk in the 3-Day Breast Cancer Walk in September: Valley Girls A Walking In Memory of Michelle".  Her widow Robert is a part of this group.

I pledged to support the team by posting a link for donations on my blog until their mission is accomplished.  The link is to help Robert raise some funds for breast cancer in memory of his wife.


I keep Michelle above my desk.  She’s on the top of my bulletin board.  If I’m having a rough day…I look up at her smiling face.  Michelle was my processor during my first five or six years at Mortgage Master.   Mortgage Master also lost another co-worker a few years back to Breast Cancer, Tammy Swanberg.  My good buddy (and fellow LO at Mortgage Master) Larry Swanberg walks in his wife’s memory.

If you are able to support either of these gentleman honoring the memories of their partners lost to breast cancer, it is greatly appreciated.

Robert Brown’s 3 Day Breast Cancer Page honoring Michelle Brown

Larry Swanberg’s 3 Day Breast Cancer Page honoring Tammy Swanberg

Update:  One of my friends and clients is also walking on the three day:  Angela

I’m a Cicerone!

Recently I was invited to write posts on The Mortgage Cicerone.   What the heck is a Cicerone?

Cicerone – cic•e•ro•ni (-nē)

A guide for sightseers or person who is eloquent in sharing knowledge.

I’m really excited about this because I’m often asked by fellow Mortgage Professionals for help or guideance with their mortgage practice. 

The Mortgage Cicerone consists of a team of Mortgage Professionals with various backgrounds, viewpoints and opinions…all combined…just may help the fellow Mortgage Professional out during these rocky times. 

Tony, thanks so much for the invite…I’m flattered and look forward to where the Cierone may guide me.

Check it out.

Please help my clients sell their Listing

They’re buying contingent and are having a difficult time getting their current residence sold.  (Wink wink).  Their agent promotes the property as:

Unique, west facing, mid-century modern waterfront home with lots of water views and private spaces. Many bedrooms, baths & kitchen. A must see!  Click here for the website.


Hat Tip to Lisa Wallace-Baker.  I needed a laugh today!   And no, this is not her listing.

On a more serious note, Friday’s rates are posted at Rain City Guide.  I’ll post rates here a little later as rates continue to be very volatile.

New Conforming Loan Limit Won’t Help Refi’s w/2nds…FHA May Save the Day

Fannie Mae’s underwriting guidelines for the temporary conforming loan limits have been released and it looks like the new loan amounts are not going to be as helpful as many had hoped.   The new guidelines for loan amounts between $417,001 – $567,500 in King, Snohomish and Pierce Counties are far more strict.

The biggest whammy is that if you were hoping to combine your first and second mortgage (or heloc) into one new conforming-jumbo mortgage, you’re out of luck.  Fannie is not allowing any "cash out" refinances.  This means that even if you were just paying off the two mortgages and not receiving a nickle back at closing–it’s not going to fly. 

You must have a minimum of 660 credit scores for a fixed rate purchase for a LTV of 80% or less for a purchase using a fixed or adjustable rate.

Limited cash out refinances are allowed up to 75% loan to value with a minimum 660 credit score.  Limited cash-out means that you are allowed to roll in the closing costs to the refinance and receive no more than $2000 cash back at closing (no second mortgages/helocs can be included in the refinance).

Update:  it appears that Freddie Mac will allow cash out refinances up to a 75% loan to value with a 720 minimum credit score.

Adjustable rate mortgages are qualified at the fully amortized PITI at the higher of the note rate or fully indexed rate (worse case rate). 

Be prepared for a "full doc" mortgage.  There is no "stated income" allowed.   You will also need two months of reserves (PITI) and are limited to a 45% DTI (debt to income) ratio.

You can only have four financed properties, including your principal residence.

On Monday, I believe lenders will finally unveil pricing…which again is said to not be as exciting as consumers had hoped.  I’m hearing that the rates will fall between current Jumbo and conforming.   

Rumor has it that the FHA-jumbo will be more friendly to "jumbo" homeowners…if they can get over paying the upfront MIP (1.5% of your loan amount) and monthly mortgage insurance (0.5% of your loan amount/12 months).   For example, on a $500,000 loan amount, the upfront MIP would be $7500 (typically financed into the loan) plus monthly mortgage insurance in the amount of $208.33…even if you have an 80% loan to value.  We’ll just have to wait and see a couple more days.

Remember, these loan limits only last through December 31, 2008.

More to follow. 

Mid-Week Humor: Ben Bernanke’s Twitter

Ben_bigger_2 I have to thank Todd Carpenter and Morgan Brown for pointing out Ben Bernanke’s Twitter.  Following Ben on his Twitter has provided me chuckles throughout the day.   My husband says this confirms I’m a nerd.   Twitter allows people to post short quirps (140 spaces) on what they’re doing at that moment. 

Some of Ben’s recent Twitter entries are:

It’s the question I get at parties: Will there be a surprise rate cut next week? Well, if I told you it wouldn’t be a surprise, now would it

Busy day, saving the world from itself by herding central bank cats. A saintly man like me can never sleep. But squash league tonight!

Pay no attention to the Fed chair behind the curtain. I should have been a magician!

Someone is having too much fun "being Ben".  To see Ben’s Twitter, click hereI’ve subscribed!

I "Twitter" too.  If you subscribe to my Twitter (by clicking "follow me"), you’ll get updates on various rate quotes I’m providing, breaking news that impact mortgages and perhaps some oddball details of what I’m currently doing.   My Twitter updates are posted on Mortgage Porter under the green Mortgage Market Guide button.

Here are some of my recent entries:

Mortgage rates improving: 30 year is back under 6% with 1 point.

preparing GFE for $285k sales price 690 score 30 yr: FHA 6.25% (APR 6.536%) and Flex100-LPMI 6.875% (APR 7.054%). Rates improving.

registering my husband for The Big Climb benefiting Leukemia. He’s doing this on my b’day… sponsor?

Do you Twitter?

BTW I do know that this is not the "real" Ben Bernanke! 

Second Mortgage Subordinations May Cause Huge Delays with Refi’s

If you have a second mortgage (home equity line or fixed term), and you are not going to pay it off during a refinance; it needs to be “subordinated”.   This is because of lien position with your mortgages…who gets to be first.   Lien position is determined by when a document (such as a Deed of Trust) is recorded at the county.   If you have two mortgages and are only refinancing the first mortgage, the second mortgage will need to be “subordinated”.  The subordination agreement is a recorded document with the second mortgage lien holder and the borrower that the second mortgage will go back into second position after the new first mortgage is recorded.   If this document was not recorded, than the old second mortgage would be in “first lien position” and the new refinance would be in “second lien position”.  This boils down to which mortgage has more rights in the event of a foreclosure…everyone wants to be first as the further down the line you are, the higher the odds are that the lien may not be cashed out (again, in a worse case scenario). 

Prior to our current mortgage crisis, a subordination agreement typically was not an issue.  We send a request for subordination along with a copy of the appraisal from the refi.  The second mortgage lien holder would review the request, consider the amount of equity remaining in the property and 9 times out of 10, agree.  This process would take a couple days.

With more banks being concerned about depreciating or soft values, they are now taking much much longer to consider if they will all allow a subordination to take place. In fact, I recently closed a transaction where the bank took over 10 business days (this eats away at your lock) for a borrower with 800 credit scores and a loan to value of just over 50% to subordinate a HELOC that with a zero balance.    An Account Manager from a bank that does a large amount of second mortgage recently sent out this memo:

“UPDATE on SUBORDINATIONS:   Please get your files in early… the subordination dept is running approx 20 business days.  I do not have any contacts for rushes etc.  They are trying to work date sensitive deals, but they have not been able to get caught up…”

Folks…20 business days is a month! 

If you are refinancing and have a second mortgage or HELOC that will not be included in the refinance, make sure your loan originator is aware and that they know how long subordinations are taking so they can lock your rate in appropriately.   A 30 day lock with a 20 day subordination is not going to cut it.  You’ll be looking at having to deal with a lock extension.

If your loan to value is higher, there is a possibility that the subordination may be declined.  Discuss this with your loan originator upfront.  Lenders are looking at any way to protect themselves from additional risk during these historic times.  If your loan amount qualifies and you have enough equity, you just may have to include that second mortgage in your refinance.


Is the Seattle Area in a Recession?

Not according to this graph from USA Today.


The article reports that Washington State is a leader in exports, which is helping our State stave off recession.   Even though our State seems to be fairing well as compared to other economies, it’s important to keep in mind:

"Businesses and consumers not in areas most affected by the housing boom and bust are not escaping the effects of the housing slump entirely. That’s because in the fallout from the subprime mortgage mess, banks have tightened lending standards for a variety of loans, no matter where the borrower is."

Hat tip to Transparent Real Estate

The Mortgage Porter Quarterly


The first issue for 2008 of The Mortgage Porter Quarterly is being mailed starting this weekend. 

This snail-mail newsletter features:

  • Your Credit: Tips to Score Big
  • Last Minute Tax Changes for 2007
  • What’s New with Rhonda (a true read if you’re having troubles falling asleep)
  • My (and my hubby’s) favorite recipe for Huevos Rancheros (pictured above).  YES…I made that. 
  • My Mortgage Adoption Campaign
  • Credit Check Up (this issue, I recommend visiting and pulling your free copy from Experian.  (You’re allowed 1 free copy from each bureau annually).
  • And much, much more.

Would you like to be on my snail-mail list and receive The Mortgage Porter Quarterly? 

Confession:  it’s really not a quarterly.  I only mail this out three times a year (currently).  I didn’t want to call my newsletter "The Mortgage Porter Thirdly".