The Problem With Rate Fixing

So I'm sitting here watching Forbes on Fox on a Satuday morning (yes, I have no life) and the talking heads are discusing the newest Republican plan to fix rates at 4%. Fortunately, most of them think this is a bad idea, they just don't know why so let me tell you.

Currently, we have the lowest national average for mortgage rates ever and it will likely be dropping a bit more as the Fed continues buying mortgage backed securities. That said, the lending guidelines that are set by Fannie and Freddie make these rates available onlty to the most deserving of borrowers. The people I help every day have 700 or higher credit scores,a 75% or lower loan to value, a good stable job they've had for years and plenty of assets. These people have a good rate but are looking for a great rate. Good for them but this will not help the housing market or stimulate the economy in any real substantive way. What we need is guideline changes that make acquiring a home easier. So far nothing has been done to fix the real problems and the fixes are readily available and free to implement.

There are three main changes that would create an immediate improvement in the marketplace and serve to stabilize the housing market. The first change that needs to be made is the reauthorization of Seller Funded Downpayment Assistance Plans. Non-proftis like HART, AmeriDream and others have been around a long time and only recently have come under scrutiny. The programs were legislated out on October 1st of last year due to data that indicated a higher default rate among those who use these programs. Much of the data used ny HUD and the Fed has been deemed erroneous however and now there is a movement to bring these programs back. HR600, a new bill in congress, has bi-partisan support and will likely pass. The difference between this law and others is that access to these programs is now limited to a higher quality of borrower. Passage of this bill is critical to getting first time buyers back to buying homes.

The second change that must be made is that stated income loans must come back. Whoa!, you say, weren't these loans the biggest problem? I answer, yes and no. Stated income loans have been around and successfully used for years. Long before anyone could get one of these loans and simply lie about their income these loans were used to help the successful, self-employed borrower with good credit and assets get a 70 to 80% loan. There is a way to do stated loan correctly and the Fed acted irresponsibly by simply outlawing them altogether. Now, successful, well off self-employed people are out of the market. There are 100s of thousands of these borrowers who would buy in this market in a heartbeat if they could. Guidelines can be implemented that keep the market safe and allow these peopke to still get in the game.

Fianlly, we need to allow buy and hold real estate investors, the professional landlords, to buy more property with Fannie and Freddie loans. Currently, guidelines allow these people the have only three financed investment properties and only four total financed properties. Until recently that number was nine. The rationale to the reduction is to lower the risk of the downturn to Fannie and Freddie. However, I beleive there is a way to determine if someone is a speculator or a landlord who buys and keeps real estate and we should allow landlord borrowers who are good at owning and managing real estate to buy up more of the inventory. This step would eliminate many of the vacant homes and would allow the low end of the inventory to get soaked up right away by people whose job is to provide housing for others. Keeping these quality borrowers out of the market is shameful.

Some people will read this and think "isn't that what got us into trouble in the first place?" While on the surface this may be true remember that these guidelines and programs were available long before the current housing/credit bubble and worked just fine when they were implemented with a little sanity and lenders used solid underwriting principals and some common sense. Ultimately, the lending pendulum is going to have to swing back toward a neutral center to get things back on track and no low rate price fixing will help someone who isn't allowed to buy or can't afford a downpayment.

"Worried About Losing Dollars? You Better Watch Your Data Too..."

Hi All,

 

Here's a great little tidbit from my friend Tony at www.yourmortgageoryourlife.com. Read on…

 

 

"Worried About Losing Dollars?  You Better Watch Your Data Too..."
 
"What of the dozens of boxes of personal financial information, credit reports, social security numbers and other sensitive information that was found in a dumpster behind an apartment complex in Georgia?  It had been in the custody of Ameriquest... And do you remember when WaMu, the troubled national lender, was discovered to have shipped sensitive loan documents to Mexico in semi trucks with some 10,000 records lost in transit?   Don't underestimate the threat that shrinking budgets and layoffs pose to your data security.  In these heady and uncertain economic times, don't we want to know where our data is day and night?"
 
http://information-security-resources.com/2008/12/09/worried-about-losing-dollars-you-better-watch-your-data-too/

--
Best Regards,

Anthony M. Freed
eFax  1-210-579-1109
YourMortgageOrYourLife.com

Don’t Believe Home Mortgage Rate Hype

A couple of days ago it was reported in the Wall Street Journal online that the Treasury is considering an option that would lower interest rates on new home loans down to 4.5% fixed. This has put the home buying and refinancing public into a minor frenzy as we continue to receive calls about our new "low rates". The problem is that rates simply aren't quite that low yet. Like everything the Treasury and the Fed are doing these days this may….., or may not happen. The reality is that an unnamed source at the Treasury reported that they are "considering" dropping interest rates down. Nothing has happened and may not happen. Everything about this "bailout" has been hit and miss with no real structure or plan attached to it so we'll see.

The problem with reports like these is that they cloud the facts about the already positive side of the mortgage market and have the unintended impact of slowing the very market they are trying to speed up. When people hear reports like this they naturally hesitate in completing a loan transaction to either buy or refinance hoping that what they hear may actually come to fruition. This hesitation could easily cause many people to lose out on a great deal.

Rates are FANTASTIC! Make no mistake about this. For the last two weeks we have had rates that have challenged any rates we've seen in my 40 yrs. There are several factors that contributed to this environment that I won't go into here but needless to say, if you are looking into a loan or a purchase, do it now when you know, with certainty, you are going to get a great deal. Pigs get fat and hogs get slaughtered so getting greedy and pausing to see what happens might be a recipe for not getting a good deal. If you're buying a home keep in mind that you won't be the only one who knows rates dropped to 4.5% if they do. Your seller will know it and expect a higher demand for his home and other potential buyers will know it and be willing to compete for the right home. Believe this, it is far more expensive to get in a price war on a home than it is to get a slightly higher rate. If you are refinancing, how low do you need??? Rates are at a level where after taxes the money is nearly free. I know people who have 25% credit card rates who will wait to see if they can get an extra quarter lower in interest. Again, don't get greedy.

I guess what I am saying, and will continue to say is that you NEED to act today. Rates are very low, prices are VERY low and sellers are hurting. Take advantage of this while you can. I know I am.

 

Call me if you have questions at 541-342-2535 or email me at jeff@evergreenpacificmtg.com. You can also go online to www.jeffnunley.com .

Millionaire Homeowner Magazine Goes Online

For over a year now I have been publishing a magazine called Millionaire Homeowner. Until now, I've only been able to do a very small printing for my best clients. With all of the great technology out there I felt that there must be a better way to get this fantastic publication distributed. As of this month I am now able to produce a fully indexed digital copy of the magazine. The link is included here, I hope you enjoy it as much as those people who have been receiving it. I am extremely proud of what has been accomplished. Click HERE for your copy and then please, forward the link to everyone you think would be interested and we will include them in the distribution.

Don't Believe the Hype

As I speak to Realtors all over the country I hear the same thing over and over "people think they can't get a loan to buy a house". Thanks in large part to the media's constant negative reporting on the credit crisis it is no surprise that many would be buyers feel hopeless and won't even try to get financed. After all, getting a home loan already ranks right up there with a root canal so why go through the embarrasment and invasion of privacy just to be told no. I believe that many people who want a home mey even forgo getting one just out of the fear of rejection.

For all the hype though there is money available. Sure, we don't do much 100 percent financing any more and you can't buy a home without a decent income or credit but there are some great programs out there that are fully funded and ready to help would be buyers. FHA, VA and Rural Development are all great programs with low or no downpayments and easy qualifying.

Frankly, now IS the time to buy a home. Rates are low, money is available and homes are cheap, in some areas, really cheap. It's this kind of economic environment where the smart get rich by getting the good deals others leave, or in many cases, put on the table. I know, thiings won't be getting easier for quite a while and economic fear rules the day but now is the time to ignore the media, be brave and do what's right for you.

Don't let some talking head determine your future. If you want more information visit the video network at www.jeffnunley.com.

Foreclosed Properties Build Future Wealth

ABC News recently released a report on bank owned or REO properties. In summary, people who buy these properties today will make big money in the future.

Watch the video here:

http://abcnews.go.com/video/playerIndex?id=6286291

To your success.

Jeffrey

An open letter to our readers

Amidst all the uncertainty surrounding the economy, I've had a number of calls from my clients concerning the tumultuous real estate and mortgage markets. As such, I wanted to take a few moments to address some of these concerns and shed some light on the reality of the situation.

 

The Real Estate and Lending industries are in fact going through a necessary correction. The industries became saturated with fly-by-night companies looking to make a quick but short on offering any real value.

 

Contrary to numerous reports in the media, mortgage funds are still readily available. The credit markets are tight, but it has yet to have any real significant impact on the availability of mortgage financing. Although 100% loans are all but gone, 3% down loans are still readily available, even for buyers with less than perfect credit. Most of the reports you are hearing about the rapidly disappearing mortgage products have to do with loan programs that were very common in coastal areas.

 

There has never been a better time to purchase real estate. With inventories at a higher than average level and extremely low interest rates (slightly under 6% for a 30 year fixed rate mortgage as of the writing of this letter) this truly is a wonderful time to move-up or purchase a vacation home. For first –time home buyers there is a window of opportunity that has never before existed to take advantage of a $7500 tax credit! I like to call this the "perfect storm" of opportunity. If you know anyone who is even considering purchasing a home, especially first-time buyers, please let me know!

 

If you have an adjustable-rate mortgage now may be the WORST time to refinance to a fixed rate. Adjustable rate mortgages are tied to a specific index that changes with the ebb & flow of economic conditions. If your ARM is tied to the 1-year treasury you may be in line for a rate reduction! On the other hand, if your ARM is tied to the LIBOR you may be in for a significant increase. Regardless, my suggestion is to consult you're your mortgage professional for an audit. As I mentioned earlier, many mortgage professionals have left the industry. Those who are "left standing" are likely the professionals. If you need a referral to a highly qualified professional mortgage planner please give me a call.

 

Interest rates may be on the decline in the next few months. Economic conditions are ripe for improvement. Interest rates can and do move swiftly so it is imperative that your mortgage professional have an active management system in place to notify you of market conditions. Again, if you need a quality referral please give me a call.