? of the Day: Could you tell me when the increase in conforming loan limits will go into effect?

March 19, 2008 by Leave a Comment

I was emailed this question today:

Could you tell me when the increase in conforming loan limits will go into effect?

Believe it or not, the temporary increase in conforming loan limits is in effect.  In fact, it’s retro-active to July 2007.  Why?  This is so that Fannie and Freddie can provide some relief to Wall Street by being able to purchase loans over the true conforming limit of $417,000.   Investors have lost their appetite for jumbo mortgages, regardless of how great the borrower is, these loans did not have Fannie or Freddie’s backing.  Now that they will, we should hopefully see some relief as far as lower rates from lenders for jumbo mortgages.   The higher rates we have been seeing lately with non-conforming (jumbo) mortgages was to try to sweeten the pot on Wall Street. 

Lenders are being slow coming out with their pricing.   The first one I wrote about came out swinging with some very high "hits" to price.  I’m now beginning to see others just starting to appear with better pricing.  As more lenders enter the conforming-jumbo and fha-jumbo markets (i.e. competition), we may see rates improve.

Stay tuned!  I’ll be posting rates tomorrow.

Filed Under: Jumbo/Non-Conforming, Mortgage

Private Mortgage Insurance helps Home Owners at Risk

March 19, 2008 by Leave a Comment

Yesterday I attended the "Fannie Mae Back to Basics Road Show".  I was really hoping to get some clarity and "insider nitty gritty" but left feeling a bit underwhelmed.  The information that was covered was (I guess as the title says) the "basics" which every Loan Originator SHOULD KNOW and Fannie Mae guideline changes which have all ready been announced and I’ve all ready written about. 

I did learn something new, however…and it’s really a big "duh".   There was a panel of reps from various private mortgage insurance companies who were covering their many guideline changes as well.   One rep brought up the point that private mortgage insurance companies actually work with home owners who are facing foreclosure (of course the home owner must currently have pmi in order to have this assistance).  Private mortgage insurance may be required when a mortgage has a greater loan to value than 80%.  It protects the lender against loss (such as foreclosure).   It only makes sense (this is my personal "duh" part) that a pmi company would want to try to avoid a loss (an insured mortgage going into foreclosure).   Private mortgage insurance companies have loss mitigation departments, including mortgage loan counselors, to help home owners who have pmi and are in trouble with their mortgage payments.

From MGIC’s website:

Helping you maintain your dream of homeownership is our commitment here at MGIC. As the mortgage insurer of your mortgage loan, we work closely with your lender to resolve delinquencies, which could result in losses for MGIC, the lender and you.

If you are having difficulties meeting your monthly mortgage payment and you have private mortgage insurance, contact your mortgage company AND the private mortgage insurance company who insured your mortgage.

Here are some links (I’ll update with more pmi resources as I locate them).

MGIC Home Owners Assistance

PMI Home Preservation

Filed Under: Mortgage Insurance

A Good Faith Estimate is Not a Commitment

March 18, 2008 by 2 Comments

It’s very important to know that when you receive a Good Faith Estimate from any loan originator, it is not an offer nor is it a commitment to lend.  It concerns me when I’m dealing with a rate shopper (especially in a volatile market where rates may drastically change 3-5 times a day) and they are going to select who handles their mortgage transaction by the good faith estimate.  Here’s a quote from an email I recently received that prompted me to write this post:

"We do appreciate all your kind attention and the fine offer you made to us."

This couple had contacted for the past few months while shopping for homes requesting good faith estimates.  I appreciate that they were upfront with me by letting me know they were receiving quotes from someone else as well.  Depending on the day (actually the time of the day) the quote was prepared, they may have actually selected a lender who is quoting a higher rate than I would have.   Fact is, I only provided them good faith estimates when they requested them; I never provided them any "offers" or "commitments".

A Good Faith Estimate is a detailed interest rate quote for that moment (unless the LO doesn’t track the markets and is simply going off the morning "rate sheets") with the closing costs associated with that rate.  I’m actually considering adding a time/stamp to my GFE’s when I send them just because rates are changing that often (for better or worse) in this climate.

A Good Faith Estimate is not a guarantee of interest rate or closing costs.   In fact, the rate may all ready be different, or the cost to obtain the rate (higher or lower) by the time it’s been created and delivered to the borrower.  Make sure you receive a Lock Commitment from your lender and ask them to guarantee their closing costs.  As a matter of fact, certain situations may cause your rate or closing costs to change from the lock and/or good faith estimate, such as:

  • Appraised value – LTV (higher or lower than estimated)
  • Change in employment
  • Credit scores not what estimated prior to quote.
  • Closing time extended beyond the lock period.

If we have a change to cost (perhaps the appraisal cost less or the LTV is lower than expected changing the loan amount or cost for the rate) I will provide an updated Good Faith Estimate.

My last little bit of advise for you is (if you’re still insisting on shopping lenders by rate) to see if your lender offers a one time interest rate "float down" should the rate improve by more than 0.125%.   This provides you with a ceiling that your rate will never go higher than "x" and allows you to receive the benefit of a lower rate should they improve more than 0.125%.

Just because you have received a GFE from a lender, does not mean that you are qualifed for the mortgage.   It really just means that the lender is quoting this rate with those closing costs on that moment of the day.  Rates are a moving target, and without a lock–it’s just a quote.

Filed Under: Interest Rates, Mortgage

For Michelle – The Three Day Breast Cancer Walk

March 16, 2008 by 1 Comment

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.

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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

Filed Under: Charity

I’m a Cicerone!

March 15, 2008 by 2 Comments

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.

Filed Under: Weblogs

Please help my clients sell their Listing

March 14, 2008 by 3 Comments

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.

Redneckmansion_2

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.

Filed Under: Just for Fun

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

March 13, 2008 by 2 Comments

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. 

Filed Under: Home Equity Loans & Second Mortgages, Jumbo/Non-Conforming, Refinance, Residential Purchase

Mid-Week Humor: Ben Bernanke’s Twitter

March 12, 2008 by Leave a Comment

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 here.  I’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! 

Filed Under: Just for Fun
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