The Voorhees/Kim Daily Comments

JVM Daily Comments Blog Moved To Our Website

2010-08-16T10:25:00.000-07:00

The JVM Daily Comments Blog has been moved to our website and this Blog will not be used in the future. All new and archived posts are now available on our website. We appreciate your interest in our Daily Comments Blog, please view the links below to keep up with the latest information.

For the latest posts, please visit the following link:
http://www.jvmlending.com/topic/blog

For archived posts, please visit our Blog archive at the following link:
http://www.jvmlending.com/archives

If you are looking for information on a mortgage loan please visit our website at: JVMLending.com or contact us directly at: 866-267-5777

Rates Improve; 2nd "Wave" of Foreclosures; Gift Funds Again

2010-07-15T10:36:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.25%*

Rates improved yesterday, as more surprisingly weak economic news surfaced (retail sales and manufacturing activity). The Fed also revised their growth projections downward, and inflation remains non-existent. The "recovery" is stalled or very weak at best, and this bodes well for rates.

1 million foreclosures are expected this year in the so-called "2nd wave". This one is supposedly caused by unemployment and it involves more "A Paper" loans instead of "sub prime", but it remains our observation that it is "negative equity" that sparks the most foreclosures. The upside to all the foreclosures: All of these houses have to be sold, meaning transactions for us, and more inventory for our buyers.

Gift Funds (for down payments) should always be transferred directly from the donor to escrow. Running gift funds through a buyer's account creates all kinds of "paper trail" issues. One of our best and sharpest Realtors yesterday stopped her client from getting gift funds too soon from her Mother, saving us all a ton of paperwork hassles.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve Slightly after a 5 Day Slide; Amortization Schedules at Bankrate

2010-07-14T09:18:00.001-07:00

30 Year Fixed Rate at a Cost of One Point: 4.25%*

We have one lender (Citi again) offering 4.25%; all of our other lenders are remain at 4.375%, as rates improved only slightly today after disappointing retail sales numbers were announced. Prior to today rates have been trending slightly upward every day for the last several days.

This is largely due to money managers shifting their focus back to stocks in an effort to chase higher yields. This translates to less demand for bonds and mortgages and generally higher rates. The advice we are getting from our analysts is to lock now, as rates appear to have bottomed out.

We frequently get requests for Amortization Schedules from our more conservative borrowers who want to see how fast they will/can pay down their principle. Bankrate.com has a great link that provides excellent amortization schedules with minimal input. Here is that link: http://www.bankrate.com/calculators/managing-debt/loan-calculator.aspx

We realize we are taking a mild risk by sending our clients to Bankrate b/c they have advertisements from mortgage lenders. But, our rates and turn-times are always much better than those advertised, so we worry little. Bankrate is a great resource.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Same As Last Week; Higher Than Yesterday

2010-07-13T11:12:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.375%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.625%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.375%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.0%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.25%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates About the Same; Among Many Lenders - Rates/Guidelines VARY Tremendously

2010-07-12T10:06:00.000-07:00

30 Year Fixed Rate Loan at ZERO Points: 4.375%* (rate requires impounds)

Rates remain about the same today as on Friday, as the markets sit on edge waiting for major corporate earnings reports and other major economic news this week. Expect more volatility.

Note that our Rate Quote above is for a "No Points" loan in lieu of our typical "One Point" loan. This is because the "Yield Curve" is very flat today, meaning borrowers get little bang for their buck in paying points. We will strongly encourage "No Points" loans today for that reason (It is not worth paying a point to buy down your rate 1/8 of a per cent).

This brings up another point. Among our 50 or so lenders, only one (Plaza Mortgage) is offering 4.375% at "No Points". No other lender touches that rate today. We have an EXTREMELY rate conscious buyer right now shopping for the "best rate available", and none of our competitors have come close to matching our quote.

This is why it is so important to have access to multiple lenders. Both RATES and GUIDELINES vary tremendously from lender to lender.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Tad Worse; How to Get Entire Condo Projects Approved by FHA

2010-07-09T09:48:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.375%*

Rates remain low b/c the economy remains weak. Many analysts consider them likely to stay low in the near future, as economic troubles continue to mount in both the US and Europe. The only thing that will spike rates in the near term are unexpected reports of strength in the economy - improving private sector employment numbers; improved retail sales; increases in factory orders, etc. Unexpected inflation reports would also spike rates, but such reports are considered highly unlikely in this languid economic environment.

If a buyer in need of FHA financing wants to buy a condo in a complex that is NOT FHA approved, we can get the entire complex approved by HUD (FHA). We have done this several times over the years, so we know it is possible. But the complex needs to be strong overall, with minimal HOA dues delinquencies, strong capitalization, and at least a 51% Owner Occupancy ratio. Time frames to get an entire complex approved by HUD range from 21 days (for very strong complexes with clean and clear financials and HOA docs), to 60 days for more complicated situations.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Increase As Stocks Rally; Townhome Complexes Do NOT Need FHA Approval

2010-07-08T08:48:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.375%*

Rates increased sharply yesterday afternoon, as the stock market rallied; investors pulled money from bonds and mortgages in favor of the stocks, and pushed rates upward. There was little financial news to spark the rally, but this type of volatility is typical when rates appear to have hit a trough or a low ebb. Expect more volatility; a "rate quote" remains valid for only a very short period of time, unless locked immediately.

Please remember that Town-home or PUD Complexes do NOT need a formal FHA approval in the same way that a Condo Complex does. A single PUD or town-home qualifies for FHA financing in the same way that any other SFR does; you do not need a "spot approval". This is very important b/c many buyers in need of FHA financing unnecessarily avoid PUD/town-home complexes.

A town-home can look just like a Condo, but the difference is that the owners of a town-home own the land or the lot underneath their unit. With Condos there are no individual lots; condo owners do NOT own a lot under their unit (often Condos are 2nd-story units with no access to the ground in any case). Condo owners instead own an equal and undivided portion of the entire parcel that encompasses the entire complex.

You can tell the difference between the two types complexes by looking at the preliminary title report and/or accompanying the plat map.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve Again As Economy Cools; Private Mortgage Insurance vs. FHA (again)

2010-07-07T14:05:00.000-07:00

30 Year Fixed Rate Loan at Cost of One Point: 4.25%*

Rates improved again for two reasons. First, recent reports indicate that the Service Sector of economy is growing at much slower rate than expected. Also, investors are once again realizing that mortgages, with their higher returns than Treasuries, might make better investments than treasuries. This drives rates down further.

The ridiculously tight underwriting standards that so grate on all of us have the upside benefit of making mortgages more appealing to investors, and thus keeping rates down.

We were asked again about the upside of Private Mortgage Insurance (PMI) financing vs. FHA financing. PMI has NO "Up Front" fee at all, while FHA has a 2.25% (of the loan amount) Up Front Funding Fee.

Also, buyers can get out of PMI as soon as they prove they have sufficient equity with an appraisal. FHA requires MI for a minimum of 5 years, no matter what.

PMI, however, has much tighter underwriting and credit score standards, and is only available for very strong borrowers.

FHA loans are ASSUMABLE, and no conventional loans are assumable whether there is PMI or not. This is a feature that might make FHA financing more desirable in this low-rate environment even if PMI is readily available to a strong borrower.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Higher than Last Week's and Friday's

2010-07-06T10:34:00.000-07:00

Rates About the Same; First Time Home-Buyer Tax Credit is For Closings Only

2010-07-02T10:30:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.375%*

Rates remain low as the stock market remains weak. Investors are avoiding stocks, as many continue to fear the dreaded "double dip" recession. And, as we repeat time and again, when money leaves stocks, it often moves to bonds. And, this increased demand for bonds drives up prices for bonds, and interest rates drop. There will be little activity to today, mostly likely, as investors and traders head out early for a 3-day weekend.

The extension of the First Time Home-Buyers' Tax Credit (to September 30th) is for "Closings" only. There has been no extension to the contract deadline of April 30th.

Have a great 4th of July!

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates About the Same; Do NOT Close Out Credit Cards; Homebuyer Tax Credit

2010-07-01T10:47:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.375%*

Rates ostensibly got better today b/c jobless claims shot up so much that the stock market was spooked again. This is accordingly to some of the analyst comments we receive. Our best lenders, however, are slightly off today from yesterday.

Do NOT close out credit cards. We have addressed this many times, but the problem surfaces so often that we are bringing it up again. Borrowers should almost never close out credit cards in their efforts to improve their credit standing. Closing out cards has two potential adverse results: (1) it usually lowers one's credit score; and (2) borrowers often end up with too few "open accounts" to meet a lender's requirements. Our best lenders all require at least three to four open credit accounts. It is best to leave the cards open with very low balances.

Congress extended the deadline for the $8,000 First Time Homebuyer Tax Credit to September 30th. Such buyers who did not make the June 30th deadline have a reprieve.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve; Deed In Lieu of F.C.; June 30 Tax Rebate Deadline May Be Extended

2010-06-30T09:59:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.25%*

Rates just keep getting better as investors get more and more nervous about the economy. We are going to stop expressing our amazement (at least for a while) by the fact that our money supply was increased by such a huge percentage and yet rates remain lower than ever, and inflation remains tame.

In case you haven't heard, the House voted to extend the June 30th deadline for the first time home-buyer tax credit. The new deadline will be September 30th, if the Senate and Mr. Obama also sign off on the extension.

We have a client who bought 18 rental houses during the "boom", as well as a mansion in Ruby Hills (Pleasanton) that is now worth "$1 million when negotiating loan modifications" and "$5 million when entertaining friends" (his joke). This former client has since become an expert at loan modifications and has started a loan mod consulting business.

He strongly advocates a "Deed in Lieu of Foreclosure" instead of a "Foreclosure" for two reasons: (1) it is far better for your credit; if you keep your credit clean up to the point of the "deed in lieu", it avoids the long, drawn out thrashing of your credit that a foreclosure involves; and (2) it avoids the tax liability associated with "debt forgiveness".

To get a bank to bite off on the Deed in Lieu, a homeowner must first list the property for the value of the loans for at least 90 days.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Lower Than Last Week's

2010-06-29T09:41:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.25%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.5%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.375%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.0%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.375%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.25%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Remain Stunningly Low; Where is the Refi Boom?

2010-06-28T10:33:00.000-07:00

30 Year Fixed Rate Loans at a Cost of One Point: 4.375%*

Rates remain amazingly low, as the economy remains surprisingly sluggish amid fears of a "double dip" recession. Again, these low rates are a shock b/c so many analysts expected the economy to revive by now and they expected inflation to surface by now b/c of the increase in the money supply.

With rates this low, it is also surprising that there is not a huge refinancing boom taking place (one that might stimulate the economy). But there are three reasons we are not experiencing such a boom: (1) many people paid points to refinance into low fixed rates during the last dip in rates, and they are happy with their current rate; (2) many borrowers no longer qualify for any type of financing under the new, far more stringent guidelines; and (3) many borrowers simply lack the necessary equity.

These low rates are a huge boon to our many first-time buyers. A 1/2 per cent rate reduction lowers the monthly payment on a $300,000 home by $90. This may seem insignificant to many of you, but to our first- time buyers squeezing into a home, that $90 is like winning the lottery.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Worse; Short Sales Statistics - Short Sales Still Take Forever

2010-06-25T10:29:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.5*

Rates got worse yesterday, as they often do soon after they hit a trough. We had many borrowers asking if we thought "rates would drop down to 4.0%", and we would respond: "no; we think it is more likely that they will bounce back up after dipping so low". And, bounce back they did. When rates hit a "low", it is advisable to lock soon, and to not try to "time the bottom of the market".

If you are nursing a "Short Sale", continue to expect long wait times. Legislation intended to speed up short sales apparently is not yet working. Deutsche Bank published a study of short sale turn times with various different servicers. GMAC is fastest with an average approval time of 6 months. Citi takes an average of 7.5 months to approve a short sale. And Wells takes 8 months. B of A takes an average of 13 months. And it only gets worse for subprime servicers. Here is the link to the article: ShortSales

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve Marginally Again; Considerations When Keeping Current House

2010-06-24T10:32:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.375%*

Rates improved again, as Durable Goods orders were down in May. We have one lender offering 30 Year fixed rate loans at 4.25% at a cost of one point (but their service is way too slow, so we not quoting that rate); these are definitely the lowest rates quoted since the 1960s.

Factors to consider when a buyer keeps his existing house. If a buyer does NOT have a 30% "Equity Cushion" (the loans exceed 70% of the value of the home), for debt ratio purposes, lenders will hit that buyer for the mortgages on both the new house and the existing house, whether the existing house has a prospective renter or not. This often prevents buyers from qualifying for a new home, as we mentioned yesterday.

Another factor is "buying UP", or "buying DOWN". If a buyer is buying a home that is worth less or that is inferior to his current home, lenders will often deem the new home an "investment property", and demand higher rates and more down payment, even if the buyer promises/swears/guarantees that the new home will be owner occupied.

We have a client with major vision problems who is forced to move out of his Oakland Hills home (that he will sell in a few months) to the flatlands near public transportation b/c he can no longer drive. Even though we can prove the vision problems, two lenders denied the loan, claiming his new purchase was actually an "investment property". We now have the loan approved and in documents, but we were surprised by the other lenders' excessive levels of suspicion.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Lower than Ever; Buying New Home, but Keeping Current Home- Considerations

2010-06-23T10:29:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Pont: 4.375%*

Rates remain pretty much lower than ever, as weak housing data and a nervous stock market push investors into bonds and mortgages. In addition, the economy remains so weak that inflation remains at bay.

We have many clients buying new homes with the intention of selling their current home after they move, or with the intention of renting out their current home.

Lenders now scrutinize the "current homes" quite closely. First of all, a buyer can use the future rent from a current residence to help qualify for his new home, BUT there must be a 30% "equity cushion" in the current home, or the rent cannot be used. This is a serious consideration, as many of our clients need this "future rent" to qualify.

To prove that there is a 30% equity cushion (existing liens against the home are 70% or less than FMV), lenders often require an appraisal of the current residence. And, if there is a 30% equity cushion and in order to use the future rent as "documentable income", we need to provide three things: (1) a fully executed lease agreement; (2) a copy of the renter's check for the first month of rent and the security deposit; and (3) proof that the check (or an amount equal to the check) was deposited into our client's bank account.

There are also "Buy and Bail" and "Moving Up" issues that come into play when a buyer retains his current residence; these issues will be discussed in future commentary.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Tuesday Rate Quotes; Rates LOWER than Yesterday, Last Week, Ever...

2010-06-22T10:52:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.375%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.625%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.125%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.25%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates About the Same; JVM Officially MOVED; Feel Free to Visit Our New Office

2010-06-21T10:45:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*

Rates started out slightly higher this morning, but they came back fairly quickly. There is little economic news moving rates today. The Treasury plans to auction off another $100 billion of bonds this week to finance our on-going deficit spending, and as long investors keep buying these bonds, rates will remain low. Of course, as soon as investors decide not to buy our bonds, all hell will break loose. Investors will back off sooner or later; we cannot borrow forever, and rates will go up.

JVM Officially Moved to Walnut Creek. We welcome visitors; please feel free to stop by.

Directions to and Parking at JVM LENDING: 1850 Mt. Diablo Blvd., Suite 160, Walnut Creek, CA 94596

DRIVING EAST FROM OAKLAND ON HIGHWAY 24: Right before the I-680 interchange, take the 680 South Exit to San Jose. Then stay to the left and take the Mt. Diablo Blvd Exit. Stay straight onto Mt. Diablo Blvd. JVM’s building is the first large midrise office building on the left. It is shaped like a Mayan Pyramid, and you will see the H&R Block sign at street level facing West.

DRIVING NORTH FROM PLEASANTON: Take the Olympic Blvd Exit (to the right). Turn right onto Olympic Blvd. Turn left on California. Turn left on Mt. Diablo. JVM will be on your right less than one block up (right before Bonanza Street). You will see the First American Title sign on our building at street level. We are across the street from Alborz Persian Cuisine.

DRIVING SOUTH FROM BENICIA/MARTINEZ: Take the North Main Exit. Stay to right on Main Street South Ramp. Merge on to Main Street. After about half of a mile, merge right onto California Blvd. Turn right onto Mt. Diablo Blvd. JVM will be on your right less than one block up (right before Bonanza Street). You will see the First American Title sign on our building at street level. We are across the street from Alborz Persian Cuisine.

PARKING: You can either park in the metered spots surrounding our building, or in the garage underneath our building. There are almost always metered spots readily available around our building on both Bonanza Street and Mt. Diablo Blvd. We maintain a large supply of quarters just for the meters. Call us when you arrive and we will happily run out and stock your meter. Alternatively, please feel free to park in our covered garage with access from Bonanza street. We have vouchers to pay for your garage parking as well.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Hold; Equity Lines - for Cash After a Purchase; Ameriprise goes to 95% CLTV

2010-06-18T10:52:00.000-07:00

Rates held as the economy remains “sluggish” and there is little news pushing rates upward. As long as unemployment remains high and inflation stays in check, rates will remain low. Stocks are hanging in there b/c all of the cost cutting is keeping profits at adequate levels. But if corporate earnings start to drop and stocks tank, rates could get even lower if more money leaves the stock market for the bond market.

Equity Lines and Second Mortgages are hard to come by these days; many banks still offer them to low “LTVs” (Loan to Value Ratios) through their branches. We like Schwab the best for LTVs up to 80% b/c their terms and service are the best. For higher LTVs, we recommend Ameriprise, as they will still go to 95% LTV for strong borrowers.

We frequently refer buyers to Ameriprise after a purchase so they can get an Equity Line to pay back “gifts”, 401k Loans, or other money they needed to make their purchase possible. Ameriprise, of course, uses the Equity Line as an excuse to pitch their financial planning, but their high-LTV Equity Lines are a great tool for cash-starved buyers.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve Again; "Negative Equity" = Harbinger of Foreclosure

2010-06-17T10:53:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*

Rates improved again, as inflation remains tame and the economy remains weak.

One of our market analysts spouted more statistics today about the continuing failure of "loan modifications". It appears that no matter how "affordable" a payment becomes, borrowers will still walk away from their properties if they remain upside down (if they have no equity). All this talk about "qualifying", and "liar loans" and "affordable payments" is often irrelevant when it comes to the foreclosure crisis. The crisis appears to have been caused by the collapse in values more than anything else.

This is why analysts are concerned about a "double dip" recession. Another dip could cause more marginal borrowers to walk away from their homes, creating a further influx of inventory and reducing values even more. And, if this happens, we start all over with "Foreclosure Crisis II", or least an exacerbation of the current crisis that is clearly not over yet.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve; Appraisal Horror Story

2010-06-16T10:13:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*

Rates improved slightly on news that home sales were down in May (tax credit expired), and on Price Index reports that indicated inflation remains tame.

Appraisal Horror Story: We have a $285,000 purchase in an especially depressed area. We thought there would be no issue with the appraisal b/c the most recent comp was a "model match" that sold for $315,000, and it was clearly in inferior condition. We under-estimated the appraiser's laziness, and he came in $20,000 LOW.

The appraiser correlated to two much smaller homes that sold in the low $200,000s. Both of those comps, however, sold in unfinished condition (no floors, no appliances, and no gas lines). One comp was a cash sale, and the other used "Homepath" financing (so appraisals were unnecessary).

The appraiser all but ignored the "model match" b/c the County Records were off by a few feet, and he did not know it was a model match.

A five minute phone call to any of the local Realtors would have educated this appraiser sufficiently for him to EASILY come in at or above sale price.

BUT, the bigger lesson is that IF the buyer's or listing agent had met the appraiser at the property, or sent him some info (per our suggestion), the appraisal would have come in at value from the get go.

As it stands now, the appraiser is digging in his heels despite our very lengthy and "eloquent" rebuttal.

Always provide data and info to the appraiser, if you can.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates The Same as Last Week, but Getting Worse

2010-06-15T11:16:00.000-07:00

NOTE: We held off on our rate quotes today because the bond market is "tanking". Rates, however, have still not fully adjusted. The market is extremely volatile right now, and the below quotes may change quickly.

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.5%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.75%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.25%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE:
Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.375%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates About the Same; "Double Dip Recession"?? No Worries...

2010-06-14T09:16:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*

Rates are better than Friday morning, but marginally worse than Friday afternoon. As predicted, the retail sales number on Friday morning was so much worse than expected that rates continued to improve as Friday wore on. Again, money flowed from stocks to bonds, pushing rates lower.

Today there is little economic news influencing rates.

There is much talk in the media of a "double dip" recession for a variety of reasons: (1) spillover of Europe's debt problems; (2) high unemployment; and (3) threat of high taxes and regulation inhibiting investment. We have had three successive quarters of economic growth, so most economists think it is unlikely.

If we do have a "double dip", rates will most likely stay low, and this will continue to keep entry level housing very affordable. So, all of our Realtor clients focusing on this end of the market should continue to do well as banks continue to release pent up foreclosure inventory.

If the economy comes chugging back, employment and confidence will return. This will send rates back up (possibly way up if/when inflation returns). But, with improved employment and confidence, a new segment of buyers comes back to the market, creating new opportunities for those nimble enough to tap into them.

The only people who get badly hurt in the latter scenario are mortgage companies and banks that focus on "refinancings" in lieu of purchases. There will be few people interested in refinancing when rates climb back over 7% and 8%.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Come Back... Volatility Anyone?? Paying "Points" is advisable.

2010-06-11T10:02:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*

Rates got continually worse yesterday, as the day wore on and the stock market rallied. When money leaves bonds for stocks, rates climb. And, just about when we thought the "low-rate" party was over, retail sales reports came out this morning with much lower than expected numbers. And rates came back. So, the party is back on.

This illustrates just how volatile the market is. Our rate quotes can literally change by the hour.

Paying Points vs Not Paying Points**: We think it is advisable to pay points for a purchase money loan whenever affordable. First of all, points or "origination fees" are fully tax-deductible, giving the buyer an almost immediate discount of up to 44% (depending on one's combined state and federal tax brackets).

And, it used to be that points were considered less advisable b/c nobody kept their mortgages long enough to justify the extra cost. BUT, we think that with rates this low, it is unlikely anyone will ever refinance again after this year b/c rates will start to climb so much that a refinance will rarely make sense.

**A "Point" is 1% of the loan amount. A "One Point Buy-Down" typically reduces an interest rate (in this market) by about 1/4 of 1%.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates About the Same; Irrational Fear of FHA Financing? We Can Help.

2010-06-10T08:47:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*

Rates remain shockingly and wonderfully... LOW. A few positive economic reports are surfacing and stocks are rallying a bit, so we may see some minor rate increases later today.

Last week we touted FHA loans again b/c they are "assumable". BUT, many sellers and asset managers continue to fear FHA financed offers, and we think that fear is utterly irrational.

There is almost no difference between an "AS IS" FHA Offer and an "AS IS" Conventional Offer. The only difference is that the FHA appraiser has a duty to check a few more items (working appliances, strapped down water heater, etc). BUT both FHA and Conventional appraisers have the same duty to call out health and safety, and structural issues (conspicuous dry rot, water accumulation, worn out floor coverings, leaky roof, etc.).

With respect to Underwriting standards, FHA is FAR MORE FLEXIBLE with credit standards, debt ratios and the source of funds to close. FHA is tighter with respect to "paper trail" requirements for "cash to close", but that is about the only thing.

For "As Is" transactions involving properties in good condition, FHA financing is more likely to close than Conventional financing in most cases. If you have an FHA Offer and a reticent asset manager, we encourage you to have that asset manager contact us so we can persuasively assuage his or her concerns about FHA financing.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates About The Same; Condo Occupancy Requirements

2010-06-09T09:58:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*

Rates are about the same to slightly worse, upon little economic news other than a widening trade deficit.

We still get questions about Owner Occupancy Requirements for Condo Projects.

FHA financing requires a 50% Owner Occupancy ratio.

Conventional Financing for an Owner Occupant has NO Occupancy Requirement at many of our lenders.

Conventional Financing for an Investor or Non-owner Occupant has a 51% Owner Occupancy Requirement.

The main point to note is that you do NOT need to worry about Owner Occupancy ratios if a buyer will be an Owner Occupant; Owner Occupancy ratios can be UNDER 50%.

The only other considerations are: (1) no single entity other than the developer can own more than 10% of total units; and (2) the unit owners must control the Homeowner's Association (developer must have relinquished control of HOA).

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates Better than Yesterday and Last Week

2010-06-08T09:37:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.5%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.75%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.25%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.375%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Marginally Worse; FHA Loans ARE Assumable - More Important Now than Ever

2010-06-07T08:41:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*

Rates increased marginally today; coming back up a bit after a significant decrease on Friday, as the bond marker reacted (over-reacted?) to surprisingly low private-sector job creation numbers.

We have addressed this numerous times but it is so important that we want to bring it up again: FHA Loans are assumable. We still get questions about this, and we get asked to "provide proof", but rest assured FHA loans remain assumable. The only caveat is that the they are only assumable by "qualified borrowers"; they used to be assumable by most anyone.

This is significant b/c FHA loans have a limit of $729,750, and FHA rates are extremely low right now. More importantly, when the economy recovers (and it will), inflation will likely surge and interest rates will shoot up.

If rates are in the 10% range, a home with an assumable 4.75% FHA loan will be far more valuable than a home with no assumable financing. A 5% lower rate on a $500,000 loan works out to over $25,000 per year in interest rate savings.

Finally, FHA loans are not to be "feared" in the way that so many asset managers and realtors do. FHA underwriting is more flexible than Fannie Mae's in many ways, and FHA allows for "as is" transactions.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve on Very Weak Job Numbers; In-Law Units for INCOME

2010-06-04T08:49:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.625%

Rates fell sharply as pay-roll numbers came in far weaker than expected. Even though the unemployment rate fell, far fewer jobs than expected are being created in the Private Sector (JVM Lending is hiring, but I think we are the only ones). Anyway, stocks collapsed on the news; money flowed to bonds, and rates fell.

We have a client who builds pre-fab In-Law or Granny units. He says it costs about $100,000 (permits, materials, labor, etc.) to construct a 900 square foot, 2 bedroom, 1 bath unit. These units easily rent out for about $1,250 in Concord, for about $1,500 in Walnut Creek, and for over $2,000 per month in Alamo (for example).

Our client builds these units all over the country, and he can help with the permitting and approval process. Calling the building a "granny unit" and staying within a City's prescribed guidelines for such units makes the process fairly straight-forward.

We bring this up b/c such units are an efficient way for homeowners, with a bit of backyard to spare, to earn a lot of extra income, or to actually house "granny". $1,500 of rent works out to an 18% annual return, pre-tax. That is not bad in any economy.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Worse; Do NOT Let Your Buyers Deposit "Cash to Close"

2010-06-03T09:57:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates are off today on a few positive economic reports, and nervousness about the amount of debt coming to market.

We have an FHA deal right now that is a complete mess b/c our buyer's realtor encouraged her to "quickly gather all of the cash she needed to close". This was OK advice, but he should have implored her NOT to deposit ANY of the funds she "gathered".

This particular buyer borrowed money from her boss, pawned some jewelry, and she got a "pay-day loan", amazingly enough. She promptly deposited all the funds as she received them. These random deposits cannot be explained in a way to satisfy the lender.

If she had instead just held all of those checks, we could have easily helped her make one large deposit that was acceptable to the lender in appearance. But now it may be too late.

Our advice, once again. NO large deposits. Tell your clients to hang on to their money until we can coach them. This issue is crucial and comes up time and again.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates About the Same; After Tax Housing Payments Cheaper than Rent

2010-06-02T09:24:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*

One of our Analysts, who sends his commentary out at 6 in the morning, said rates "were slightly better", but now, two hours later, rates are back to "the same" or slightly worse. This is a good indicator of how volatile the market is.

It is important to remember that rates can change so quickly now that our morning rate-quotes are often completely invalid by mid-afternoon.

Rent vs Own: We have buyers renting in Oakland for $3,000 per month. They are interested in a $550,000 home. The FHA payment on their new home will be about $3,750. These buyers make six figures and will enjoy income tax savings of over $12,000 per year after they buy and take advantage of the deductibility of Interest and Property Taxes.

With this $1,000 per month tax savings, their "net housing payment" will be $2,750 or less. We "beat this dead horse" often, but many of our Realtor clients either own or manage rental properties and many of their "buyers" are their own tenants.

When rates are this low, it is often the case that one's housing payment, after tax, will be less than his rental payment. We are more than happy to assist with this analysis, and we can even involve our CPA if necessary.

If you know any "fence sitting" renters, have them call us for a "Rent vs Own" analysis. We are very good at knocking people off the fence (in a friendly way, of course).

Jay Voorhees and Heejin Kim at (925) 855-4491.

Tuesday Rate Quotes; Rates Higher Than Last Tuesday

2010-06-01T09:13:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.625%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.755%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.5%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Improve; "Coaching" the Appraiser Works (if done respectfully)

2010-05-28T09:38:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*

Rates improved slightly today on mixed economic news. This is a surprise, as rates often get worse on a Friday before a 3 day weekend, as traders take profits and hedge. "Mid-Day" rates changes for the worse can still be expected.

We have had good luck "coaching appraisers" lately. BUT, the coaching has to be very respectful and professional, with the offering of pertinent information and data. Derision and blatant requests for a specific number get us nowhere.

Remember, generally speaking, appraisers need comps that closed within 90 days of the inspection date; that are not 20% larger or smaller than the subject property; and that are within a mile of the subject property. Lot sizes also must be similar.

We had a purchase in Walnut Creek recently involving a 1,000 square foot house on a quarter acre lot that we had great difficulty appraising. The listing agent was upset that we could not use the comps he provided, but one comp was on a flat acre lot; another comp was 3 miles away (but still in Walnut Creek); and two were over 1,400 square feet (comps needed to be 800 to 1,200 square feet). All of the comps he provided were virtually worthless to the appraiser.

"Negative" Information regarding comparable sales is also extremely helpful. Case in point is our Alamo PUD purchase we referenced yesterday. The subject has a large, flat, 100% useable lot. The two comparable in the development have the same size lots, but they are steeply sloping, making their "effective" lots almost non-existent (they have no backyards). This is something the appraiser would not figure out on his own. The subject's MUCH larger yard is probably worth $50,000 or more.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Marginally Worse; "Appraised" Value is often NOT "Market" Value

2010-05-27T10:06:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*

Rates seem to be edging higher prior to Memorial Day, as one of the best analysts predicted.

There is a transaction involving a house in Antioch that was listed for $249,000. There were multiple offers for the house, and all of them were over $220,000. In light of the fact that numerous, arms-length, knowledgeable buyers were willing to pay over $220,000, the "market value" is clearly over $220,000.

The problem is that there is not a single comparable sale anywhere near the property above $200,000, so there is no way the appraiser (who well understands the definition of "market value") can appraise the house for more than $200,000.

This issue surfaces frequently, as we have a very similar situation in Alamo right now for a $970,000 PUD. It is very important that both buyers and sellers recognize this issue; both sides need to be prepared to compromise, unless the offer is "all cash".

Note that in the Alamo case, the loan is only $720,000, so the appraisal can come in $70,000 LOW with no effect on financing. Because of this, we went out of our way to explain the difference between "market" value and "appraised" value so our buyer will not be alarmed when the appraisal comes in low.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Worse; The Case for 30 Year Fixed in the Face of Inflation

2010-05-26T10:24:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*

Rates got worse today again after money flowed back into stocks. Once again - for newcomers to our comments, more money into stocks means less demand for bonds and mortgages. And this results in increased rates.

We have conservative clients request 10 and 15 year fixed rate mortgages b/c they "want to pay off their house quickly". Conversely, we have clients requesting 7/1 and 10/1 ARMs b/c they want a lower payment for now.

We, however, think both strategies are ill-advised b/c inflation appears inevitable. We do not advise saddling oneself with a higher payment now with a 10 or 15 year fixed rate mortgage b/c if high inflation comes to fruition, it is better to pay off one's mortgage with much less valuable "inflated dollars" down the road. Don't speed up your pay-off using today's more valuable dollars.

We also dislike 7/1 and 10/1 ARMs b/c those loans will likely adjust in inflationary environments. And, if those borrowers have NOT paid off their mortgages, they will be saddled with much higher payments after their loans adjust.

This is why we encourage all borrowers with adjustable rate mortgages now to refinance into fixed rate mortgages even if their payment will go up.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Tuesday Rate Quotes; Rates Same as Yesterday; Better than Last Week

2010-05-25T09:41:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.5%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.75%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.5%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.25%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.5%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Rates Off a Bit; Buyers Need to "Behave" During Escrows; Last Minute Checks

2010-05-24T08:45:00.000-07:00

30 Year Fixed Rate Mortgage at a Cost of One Point: 4.5%*

Rates edged up slightly Friday afternoon, as the stock market came back somewhat and investors pulled money from the bond market.

Buyers need to be aware that almost all lenders do last-minute "employment verifications" on the day of funding (the day before closing). We have had several escrows this year with borrowers who either were going on maternity leave (with no pay), or they were losing their jobs altogether. In all cases, the buyers thought they were OK b/c they had supplied current income documentation and their loans were formally approved. Buyers have to be employed and earning pay on the day of closing.

Last minute Credit Reports: Lenders are also going to start requiring updated credit reports on the day of funding. This too is important to remember, as many buyers finance appliances and other items once their loan is approved. This used to be OK; up until now, our lenders never required an updated credit report if the report in the file was "current" (under 30 to 60 days old, depending on the lender).

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Hold; Energy Efficient Mortgages - Great Tool for Repairs

2010-05-19T09:21:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*

Rates remain very low, as the CPI (Consumer Price Index; Inflation) number came in lower than expected. The CPI was actually down by 0.1% in April. This "Deflation" is a huge surprise, as the money supply grew markedly over the last few years, and the economy is supposed to be in recovery mode. These factors normally portend significant INflation.

EEM Mortgages are a great tool to do ANY so-called "energy efficient improvements" to a home, including installing new windows, new furnaces, new doors, new insulation, etc.

$8,000 for such improvements can be added on to an FHA loan irrespective of the resulting LTV. The work does not have to be done before close, as long as a qualified "EEM Contractor" puts in a bid. And EEM work has no affect on the appraisal. The appraiser does not even need to be made aware of it.

We used this tool numerous times last year to cover necessary repairs for which there was no other source of money. It is truly a great tool for cash-strapped FHA buyers to cheaply finance necessary improvements.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates Better Than Last Week

2010-05-18T09:31:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.625%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.125%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.625%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.25%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.625%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Rates Hold; The Right Kind of "Experience" - Not from the "Stated" Era Only

2010-05-13T09:43:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates held steady on mixed employment news and continued investor demand.

We have a self-employed client with about $360,000 of income on his Federal Tax Returns (1040s). His income is derived from a salary he pays himself, a Sub S Corporation, and two Partnerships. When we dug into the returns for those entities, we discovered tens of thousands of "non-cash expenses" like Depreciation and Amortization.

Lenders allow us to add these "non-cash" expenses back to his income, making his effective income for qualification purposes almost $500,000.

This type of borrower is common in California. What is interesting is that we frequently get loans like this from other loan agents who have no idea how to calculate income. In addition, when we run this scenario by job applicants (who want to work at JVM) who claim substantial "experience", they are clueless.

Many loan officers and processors derived ALL of their "experience" during the "Stated Income" era (2003 - 2007) and have no idea how to calculate income. Our point: When evaluating lenders, make sure they have the right kind of experience, or expect surprises and delays.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Improve as Stocks Crash; PMI (Mortgage Insurance) Is Back for The Better!

2010-05-07T09:37:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

The markets went crazy yesterday, as stocks crashed and money flowed into bonds, pushing down interest rates. Nothing helps rates more than a healthy stock market crash :). We actually have one lender today quoting 4.625% for a One Point Loan - something we all thought we'd never see again.

Mortgage Insurance is back. MGIC, our favorite provider of mortgage insurance, recently lowered all of their rates, and they increased their Maximum LTVs.

This is extremely good news, as PMI is a welcome alternative to FHA. The reasons are two-fold: (1) PMI has NO UP FRONT Mortgage Insurance (while FHA currently requires 2.25% of loan amount); and (2) buyers can get out of PMI much faster - as soon as the LTV drops below 80% of FMV, in most cases. With FHA, you HAVE to keep MI in place for a minimum of 5 years.

MGIC now insures SFR loans up to 95% LTV in all California Markets if the loan is $417,000 or less, and they insure SFR loans up to 90% LTV for loans up to $729,750. These LTVs are subject to high FICO requirements, however.

For strong borrowers, PMI is now a much better alternative than FHA for high LTVs.

If you have PMI questions, please contact us or our MGIC Rep, Harper Wong, at harper_wong@mgic.com

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Worse; FHA Repairs/Concerns; We (JVM) Can Pay For & Do Repairs

2010-05-03T09:08:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates increased today, as personal income, consumer spending, and manufacturing activity all increased. This is interesting b/c our secondary analysts were telling us NOT to lock last week, as "trend lines" pointed to continued rate improvements. Today's strong economic indicators prove that no matter where "trend lines" point, rates can and will always change unexpectedly depending on economic reports. Predicting interest rates is always a "50/50 crap shoot".

FHA Appraisers do not care so much if properties are "old or tired" looking. They test appliances for working order; they look for "Health and Safety Concerns" (is water heater strapped down), and they look for major deferred maintenance (dry rot, leaky roof, etc.). FHA appraisers are not significantly worse than conventional appraisers with respect to the issues they illuminate. We have had more "repair" delays on conventional deals than on FHA deals.

Solution for Repairs or Costs Nobody Will Pay For: Let JVM Lending pay for them. We have had numerous transactions where we have used our lender-paid-commissions ("yield premium") to pay for necessary repairs or closing costs. We have contractors who will quickly do required work and put a demand in escrow. They will then get paid out of our commission at close.

Email us if you have questions regarding this.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Hold; Rent vs FHA Buy vs Investor Buy #s: MESSAGE: BUY

2010-04-30T10:12:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates held steady again on mixed economic news.

We have a $315,000 purchase in Antioch for a 3,000 square foot house. An investor is buying it with 20% down. The "Rent Survey" came back with a range of $2,150 to $2,400 per month.

With 20% down, the investor's PITI with a rate of 5.375%* will be about $1,825 per month. This house could generate almost $500 to $600 per month of cash flow on $70,000 invested (down payment plus closing costs). This house will also very likely appreciate in the future when the market comes back, or when inflation sets in.

*Citi Mortgage is aggressively buying the "Investor Market" right now. This rate (5.375%) is easily obtained at a cost of one point. Today's rate is actually lower.

If an FHA buyer bought the above house as an Owner Occupant with 3.5% down, the PITI would be about $2,200. This assumes a one point loan and a rate of 4.875% (rates are even lower today).

After tax, it is far cheaper for this person to buy than it is to rent. Housing in the "foreclosure areas" remains a great buy all the way around.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Hold Steady; Do Not Reference "Reports" Anywhere; FHA lower than Fannie Mae

2010-04-29T09:28:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates held tight from yesterday, as jobless claims improved (decreased) but not as much as analysts hoped. In addition, banks are not lending as much as hoped (outside of mortgages), and housing starts remain depressed. Hence, rates stay low for now.

Interesting observations: Our FHA rates remain LOWER than our conventional Fannie Mae rates, and that is why we "push" FHA sometimes over Fannie Mae (it is not b/c we make more money, as some people think). And, the rates among our 50 some lenders currently vary by as much as 0.375%, making the correct choice of lenders more important than ever.

Referencing Reports: If you have an "AS IS" transaction, please do not reference any reports anywhere. We have underwriters requesting all referenced reports no matter how emphatically we illuminate the "As Is" nature of a transaction. If you must reference a report, please do so in an addendum that we do not have to see.

Finally, a reminder again that this commentary will come from Jay Voorhees' email address starting on Monday, simply for the sake of convenience.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve; Investors Step In; Tough Lending Standards Keep Rates Low

2010-04-26T09:32:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates got worse last week, as New Home Sales numbers came in surprisingly high and too much debt hit the market for investors to absorb. Rates improved a bit today, as more investors continue to come to the market to buy mortgages.

These "Investors" buying mortgages include Asian investors, banks, hedge funds, and money managers. But for these guys recently stepping into the picture, rates would be shooting up.

Investors like mortgages now for two reasons: (1) Fed Funds rates are near zero, and Treasury Bond rates are very low too, so mortgages seem like good investments now b/c of their higher returns; and (2) Mortgages are far safer investments than they used to be!!

This is the upside of the extremely tough lending standards we are all enduring right now. Because financing is so much tougher to obtain now a days, mortgages themselves and mortgage backed securities are now considered far safer investments, and this keeps rates much lower.

So the next time a client complains about all the trouble he has to endure to obtain financing, remind him that "all that trouble" is keeping his rate far lower.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Improve; Owner Occupancy Ratios for Condo Complexes

2010-04-21T09:11:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates improved a bit primarily due to investor demand, as there has been little economic news of significance.

We are still getting questions about required Owner Occupancy ratios in Condo Complexes.

At many of our lenders, if the financing is "Owner Occupied", the owner-occupancy ratio is irrelevant. Again, Owner Occupied Buyers do not need to worry about Occupancy Ratios in most cases.

It is only when the financing is FHA or NON-Owner Occupied that the Owner Occupancy ratio must be above 50%.

The big Caveat for the Owner Occupied scenario is Mortgage Insurance. The MI Companies do have occupancy ratio requirements that vary depending on the company and the LTV.

Owner Occupants with 20% down do not need to worry about occupancy ratios.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Tuesday Rate Quotes; Rates Higher Than Last Tuesday; FHA Rates Are Lower Than Conforming Rates

2010-04-20T10:43:00.001-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.875%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence
30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 5.125%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence
Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.375%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down
FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680
Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.5%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down
FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.875%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Improve; What to Watch for When Bidding on a CONDO? Flood Insurance.

2010-04-19T10:01:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates improved Friday and today largely b/c money left the stock market for the bond market ("flight to quality") as a result of the Gov't's Goldman Sachs Indictment. Goldman's troubles are our gain.

Congress recently extended funding to FEMA, restoring the availability of Flood Insurance. Transactions in need of flood insurance have been for on hold for the last 2 weeks across the country b/c Congress "forgot" to fund FEMA before their Spring recess.

When bidding on a Condo, there are numerous criteria to check (Complex FHA approved? Fannie Mae Approved?). Other criteria include Owner Occupancy Ratios (Over 50%?); HOA in Litigation?; More than 10% of Units Owned by One Owner?; No More than 15% of Units Over 30 Days Late with HOA Dues (this comes up often now).

Even if a complex strikes out on many of these criteria, financing can still be obtained with a 20% Down Payment, and a "Limited DU" Approval in most cases. With such a Fannie Mae approval, many of our lenders require no condo documentation, and we can therefore ignore HOA delinquencies and other issues.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve Slightly; Our Best Appraiser Thinks "STAGING" Effective

2010-04-12T09:25:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

Rates improved slightly (and continue to improve), as inflation reports were positive (inflation appears to remain under control). As yields (effective rates) fall, investor-interest in bonds and mortgages wanes, and then yields increase and investors return. This is a good sign, as there appears to be an approximate "equilibrium" at about the 5.0% rate for mortgages. Concern was that something would spook the market and investors would not return until rates were much higher.

Our most experienced appraiser is in constant contact with us, frequently sharing his market observations. Over the last several months, he has been appraising numerous "Flip" properties at the lower end of the market. He concluded recently that investors who aggressively "stage" their "Flips" get much higher prices for their properties (than those who do not "stage"); these higher prices more than offset the cost of staging.

He is quick to point out that his observations are not "scientific", but we find them interesting, and in this case is especially, because "staging" does not always prove effective.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Worse; Loan-to-Value Limits for FHA and Conventional Financing.

2010-04-09T11:58:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

Remember when we said rates were getting better b/c bond auctions were going surprisingly well? Well, that was a day ago. Yesterday afternoon, the auctions started to NOT go well. Too much debt; too few investors; rates got worse. Let's hope more investors step up next week.

Loan-to-Value Limits:

For FHA Purchases for SFRs, Town-homes/PUDS, and FHA Approved Condos: The LTV limit remains 96.5%.

For Conventional Purchases with Mortgage Insurance: Condos can go to 90% LTV, and SFRs can go to 95%.

Remember that Town-home or PUD complexes (where the buyer owns the land under the structure) do not have to be FHA approved.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Improve - Thank You Greece; Seller Carried Financing;

2010-04-07T10:25:00.001-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

Rates improved somewhat, as Greece's debt problems continue to spook the markets, sending more investors to the U.S. (more demand for U.S. bonds means lower rates).

Currently, we have only two lenders at 5.0% - Citi and Provident Funding; everyone else is at 5.125%. And, it should be noted that we rarely use Provident no matter how good their rates appear to be for two reasons: (1) they are notoriously fickle, and the risk of having a deal-killing issue surface at the last minute is never worth a lower rate or an increased commission to us; and (2) several Realtors have specifically requested that we NEVER use Provident b/c they have had deals blow up at Provident one too many times.

If ever you have a strong borrower, with excellent credit and decent income, who cannot qualify for a loan, please consider "seller financing". We have a client now with substantial assets, perfect credit, and good income, but he cannot qualify for financing b/c he does not have the required 6 months at his new job (after being out of work). He is a perfect candidate for seller financing.

Seller financing is a great option for seller's with substantial equity who might otherwise have few options to garner a decent and secured, fixed rate of return for their proceeds. Even if sellers have a small existing mortgage, seller financing can be done as a "wrap around" mortgage. There are risks, of course, but this is an option that should be considered for otherwise strong buyers who are currently outside the financing box.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates Higher than Last Week; About the Same as Yesterday

2010-04-06T09:22:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 5.0%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 5.125%*
*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.5%*
*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*
*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.625%*
*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.125%*
*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 6.0%*
*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740.

Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers
Jay Voorhees or Heejin Kim at (925) 855-4491

Rates are Up; Fed Gone; FHA UFMIP is 2.25% Now; > 4 Hours = Silver Oak

2010-04-05T09:16:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

Rates are edging up now that Fed has pulled out of the mortgage market and the economy continues to show improvement. The good news is that private sector fund managers are stepping in to buy mortgages, as most mortgages have the implicit "guarantee" of Fannie and Freddie (and therefore the Federal Government). A WSJ article on Saturday suggested that Mortgage Rates will settle out about 0.25% higher than they were a few weeks ago.

As of today, all FHA mortgages will require an additional 0.5% of Up Front Mortgage Insurance, or 2.25% of UFMIP.

And lastly, we had numerous clients referred to us last week and we didn't always respond as fast as we like to. Typically, we contact the referral within an hour of receiving the info, and then report back to the referral source. We promised one client last week a bottle of Silver Oak Cabernet if ever we did not contact her referral and report back to her within 4 hours of receiving the referral info, whether by phone or email.

It then occurred to us, that we should make that same promise to everyone. If ever you don't hear back from us within 4 hours, we'll happily send you a bottle of Silver Oak (or anything you'd like of similar value). This will certainly keep us accountable, and you happy.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Tuesday Rate Quotes; Rates Higher than Last Tuesday; Same as Yesterday

2010-03-30T08:58:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.875%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 5.125%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.375%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.5%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.875%*

*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Unchanged but Upward Pressure Remains; FHA MIP Up by 1/2 Per Cent, 4/5/10

2010-03-29T08:57:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates are about the same as Friday's, as "Personal Income" stats did NOT show the improvement analysts expected. This "bad news" held rates in check. "Good news", of course, would have sent rates upward, as huge gov't deficits across the world are making investors leery of debt instruments (bonds, mortgages, etc.) overall.

Reminder: FHA's Up Front Mortgage Insurance Premiums (UFMIP) increases from 1.75% of the loan amount to 2.25% of the loan amount next Monday, April 5th, 2010.

The only way to avoid this increase is to order case numbers for any identified properties (even if contracts are NOT ratified) by this Thursday (Friday is probably too late). As long as the FHA Case Number is established for a particular property, buyers get the benefit of the lower UFMIP irrespective of the closing date.

Myth: Many Realtors think we "push" FHA Loans b/c we make more money. Not so. FHA loans are more work for us, and we typically make less for the effort required. We prefer conventional loans, and only push FHA if it benefits the borrower.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Climb; WSJ: "Debt Fears Send Rates UP"; 95% Is Back

2010-03-26T09:41:00.000-07:00

30 Year Fixed Rate Loans at a Cost of One Point: 4.875%*

Rates continue to climb in general as the bond market rests on pins and needles. The WSJ's main headline today was "Debt Fears Send Rates Up". The huge government deficits worldwide are pushing too much government debt into the market for investors to absorb.

There are not enough buyers for all of the debt issues, and this includes mortgage backed securities. Sooner or later this will come home to roost, and rates will spike up indefinitely. We are surprised rates stayed this low, this long.

95% LTV Conventional Loans are returning to the market - another good sign for "a normalization" of lending. FHA is still often a better deal, but this is another option for cash-strapped buyers. It is also a good option if a seller is irrationally leery of FHA financing.

Jay Voorhees and Heejin Kim at (925) 855-4491.

The Voorhees/Kim Daily Comments: Rates Worse Again; "Seasoning" Requirements for BKs, Foreclosures & Short Sales

2010-03-25T09:03:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates increased again on news that the number of jobless claims fell. The improvement was marginal, but as we stated earlier, the bond market is on edge and even marginally good news will send rates up very quickly.

We still get questions every week about "seasoning" requirements for different adverse credit events, like Bankruptcies, Foreclosures, and Short Sales. So, here they are again, in a nutshell. These are just "general guidelines", as they vary from lender to lender.

CREDIT SEASONING REQUIREMENTS FOR FINANCING:

I. CONVENTIONAL FINANCING

A. Foreclosure: 5 years from discharge

B. Short Sale/Short Pay-off: Case by case, depending on what the credit report says, and on circumstances. Can be as little as one year, especially because sometimes the credit bureaus are surprisingly lenient in how they report.

C. Bankruptcy: 4 Years from discharge is standard, but can be 2 Years with “extenuating circumstances” (not their fault, re-established credit, one time event)

II. FHA FINANCING

A. Foreclosure: 3 years from discharge

B. Short Sale/Short Pay-off: Same as "conventional" above - case by case, depending on what the credit report says, and on circumstances. Can be as little as one year, especially because sometimes the credit reports are surprisingly lenient.

C. Bankruptcy: 2 years from discharge.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Higher; FHA Stories; Short Sales

2010-03-24T09:14:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates jumped today on news of the 3rd consecutive month of a positive "Durable Goods Shipments". A 3 month increase in such shipments bodes well for continued economic improvement, and this sent rates upward.

One of our top producing Realtors told us this week that none of her Bank clients are accepting FHA offers if there are alternative Conventional or Cash offers, even if the latter are at a lower price. This amazed us b/c FHA is now so much easier and so much more flexible.

We have a $300,000 FHA purchase in our office with a large seller credit for closing costs. The total "cash to close" is about $12,000. The appraisal came in low but the seller would not bend on the price. As a result the buyer had to come up with an additional $4,000. This was easy for him to do b/c his "cash to close" was minimal to begin with. And even if he did not have the cash, FHA would have allowed him to obtain a "gift". If this had been a conventional transaction, we suspect the low appraisal would have been more problematic.

Only 12% of all sales in the U.S. were short sales in 2009. But, according to one of our secondary market analysts, banks are now far more willing to negotiate short sales (they have come to their senses) if: (1) the property is "upside down" (2) the borrower is behind in payments; and (3) the borrower is facing a legitimate hardship.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates About the Same as Last Week and Yesterday

2010-03-23T09:03:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.75%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.375%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680
30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.875%*

*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Off Slightly; FHA Mortgage Ins. for 5 Years; Up Front MI Goes Up To 2.25%

2010-03-22T09:53:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates are off slightly in spite of little news in the market. Investors remain on alert for "positive" economic news and for negative side affects resulting from the Fed's pending departure from the mortgage market. Any bit of news signaling higher rates in the near future will send rates sharply upward now. We continue to encourage locking now while the "getting is good."

Remember that FHA Monthly Mortgage Insurance must remain in place for at least 5 years (even if the LTV is 50%), but borrowers can eliminate MI after 5 years IF they can prove they have 22% Equity (their LTV is 78% or lower).

Remember too that FHA's "Up-Front-Mortgage-Insurance" jumps up to 2.25% (of the loan amount) from the current level of 1.75% on April 5th (for case numbers ordered on April 5th or later). NOTE: Even if you do NOT have an accepted contract, we can still order case numbers as long as we have a designated address. So you can you save your borrowers 0.5% in Up Front MI by ensuring that we order case numbers before April 5th even if the contract is not fully ratified.

Finally, an increase in Up Front MI is not that serious in any case, as the Up Front Mortgage Insurance is just added on to the loan amount (fully financed). Over 30 years, it will hardly be felt.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Off a Bit; Different Lenders - Different Guidelines; Broker Arena Stronger than EVER, and VERY NECESSARY.

2010-03-19T10:53:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates are a bit worse today, upon little economic news of note.

We had a delayed approval for a very tough transaction (seasonal employment; flip property) this week, and the Realtor called me in a panic. She was told by a bank that Brokers are getting their “Broker Approvals” pulled by lenders all the time, and she thought that was the cause of our delay. We were both shocked and bemused.

First of all, we ARE a direct lender too; we only pursue the Broker Route when it behooves our clients, and our Realtors. Right now the Broker Arena is THRIVING and necessary, as we add additional lenders to our stable every week. We need multiple lenders b/c guidelines vary so much! Below are a few examples.

Must Close in 14 Days: Franklin American
90% LTV Conventional Condo w/ MI: Plaza Mortgage
Best High Balance FHA Pricing: Citi Mortgage
FLIP Properties for FHA: Met Life
55% Debt Ratios: Essex Mortgage
Best High Balance Conventional: JMAC Mortgage
No Sourcing of Gift Funds: Met Life
No HOA Cert with Ltd DU Approval: FPF Wholesale
Best Conforming FHA Pricing: Provident Bank
Buyer has more than 5 Mortgages: First California
Fannie Mae Homepath: Reunion and PRMG

The above are only a few examples of the many variances we take full advantage of every day. If anyone relies on a single bank/lender, they are losing deals. The Broker Community is not only thriving, it is absolutely necessary for the best rates and the ability to close the most deals.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Improve Again! APOLOGY for 23 Day FHA Close! Private Invsestors Return!

2010-03-18T09:23:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75*

Rates IMPROVED AGAIN, as CPI (Inflation) numbers came in lower than expected, and unemployment showed little improvement. In addition, Private Investors appear to be stepping in to buy mortgage backed securities, making the Fed's pending departure far less ominous, much to our tremendous relief.

This is truly a shock to most of us in the industry. We all thought rates would be bouncing upward by now.

We somewhat flippantly want to apologize for several FHA deals we closed this month in about 23 days. In 2009, we were closing FHA deals in under 20 days time and again. But the new Disclosure Rules slowed us and our lenders down a bit.

HOWEVER, we have revamped our system, hired additional staff, and rebuffed our less than speedy lenders. We are back. We can again close clean FHA loans in 21 days or less, when necessary.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Improve On Tame Inflation; CONDOS - Watch Out for HOA Issues! Solution.

2010-03-17T09:03:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates improved b/c the Fed announced that they would keep rates low for several more months and b/c inflation numbers came in surprisingly low today. If Producer Price Index numbers (PPI) had come in higher than expected, rates would have shot up, as investors would have then expected the Fed to raise rates sooner to "tame inflation". But instead, rates remain low.

We are having issues with Condos. First, there are no more "Spot Approvals" allowed for FHA financing, so FHA is NOT allowed unless the entire complex is "FHA APPROVED". But now that we are shifting to Conventional Financing, we are having issues with HOAs.

Almost all lenders require the HOA to certify that NO more than 15% of the units are behind 30 days or more with their HOA dues. Many HOAs cannot due this right now b/c so many Condos are in foreclosure, or are bank-owned.

Solution: Put down 20% and get a "LIMITED APPROVAL" from DU (Fannie Mae Automated Desktop Underwriter). Such LIMITED APPROVALS do not require CONDO CERTIFICATIONS at many lenders, and we can therefore ignore HOA issues altogether. Caveat: Condos still must not have litigation issues, and more than 10% of the units cannot be owned by one entity.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Tuesday Rate Quotes; About the Same as Yesterday and Last Week

2010-03-16T08:55:00.000-07:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.75%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 5.0%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.375%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.875%*

*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Come Back; The Beauty of Gift Funds; Gift Funds Explained

2010-03-15T09:03:00.000-07:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates got worse Friday Morning on news of improving Retail Sales, but rates improved late in the day upon news of weaker than expected Consumer Confidence. Rates remain strong, but they are expected to move this weak. A slew of economic news is coming, including the all important "Inflation Reports" (PPI and CPI).

Gift Funds for Down Payments are often employed to salvage transactions. Gift Funds for FHA transactions need to be sourced at the DONOR level, meaning the Donor must prove her "ability to gift" with bank or investment account statements.

For Conventional Transactions, however, we have lenders that do not require Donors to "prove their ability to gift". This feature is often very convenient. BUT, this is only the case if Donors write checks directly to escrow.

Donors should never give funds directly to Buyers, as it makes the "paper trail" issues more complicated.

Lastly, please remember that nobody knows (not us, not the lender, and not the IRS) if a "gift" turns back into a "loan" after close of escrow. Transfers of money only need to be a "gift" through close of escrow.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Up; Disclosures; Appraisals; Delays! (Important)

2010-03-12T10:14:00.001-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875*

Rates are up today on news of a much stronger than expected increase in retail sales numbers. Remember: strong economic news results in higher rates.

We have new disclosure rules that are causing delays beyond our control, but we are aggressively addressing the issue.

New rules require that we disclose ALL fees (NOT just ours, but escrow's and everyone else's) in exact amounts. PROBLEM: We have to wait for Escrow to give us their exact fees. And sometimes Escrow takes more than a week to give us their fees.

PROBLEM #2: We are not allowed to order an appraisal until AFTER a buyer signs the "exact" disclosures. This results in huge appraisal delays.

SOLUTION: If we (JVM Lending) pay for the appraisal and agree to NEVER charge the borrower/buyer, we are allowed to order the appraisal right away.

But this is a problem for us not only b/c we have incurred almost $10,000 in appraisal fees over the last few weeks alone, but also b/c we end up eating the fees altogether when deals fall apart for reasons beyond our control. This happens often b/c borrowers lose their jobs, appraisals come in too low, inspections reveal too much damage, etc.

So please be patient as you demand "fast appraisals". We are working with our attorneys to find efficient ways to skirt the regulations in a legal manner. We'll keep you posted, rest assured.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Off a Bit; FLIP Rules Explained Again

2010-03-11T09:44:00.001-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates are off just a bit after employment numbers improved slightly.

We are still getting FLIP questions. We have both FHA and Conventional lenders that allow for FLIP Transactions. A FLIP is a property getting re-sold by a party (other than a bank) that took possession in the last 90 days.

Our FHA FLIP lenders typically request two appraisals to ensure the value is there and they require the appraisers to explain why the value increased from the time the selling investor bought the property.

Our main point is that FLIPS are "OK" for both FHA and Conventional loans. Do not let any lenders tell you otherwise. We can close our FLIP transactions in 30 days.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Remain Low, May Stay Low into April?; "Yield Premium" for Repairs or Fees

2010-03-10T09:47:00.001-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates remain low much to everyone's surprise. The economy remains weak, and the private investors are stepping in to buy mortgages and/or mortgage backed securities. We are locking loans at today's low rates the will not close until well into April - LONG AFTER the Fed has pulled out of the market.

It looks like rates may not spike up when the Fed pulls out of the market, as we are being told over and over by our secondary analysts. There might actually be enough private demand now to fill the void that the Fed's departure will create.

We have a transaction in which we are using our "yield premium" or commission to pay for about $8,000 of repairs. The seller won't do the repairs, and the buyer cannot afford to do the repairs, so we increased the rate to get more commission. We then agreed to credit the commission to the contractor. This is all legal and we cleared it with the lender. We will net about a point after all the dust settles.

We tell this story b/c someone commented yesterday about our fees after reviewing our closing statement from another transaction in which we did the same thing. On the surface, it looked like we made a ton of money, when we in fact made less than a point. We "took one for the team" so to speak, and we'll take more for the team if it helps us close transactions!

For straight, clean transactions, nobody touches our rates.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Tuesday Rate Quotes; Rates About the Same as Last Tues.; Better than Yesterday

2010-03-09T09:45:00.000-08:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.75%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.375%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.875%*

*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Worse; Flips "OK" for FHA and Conventional, but "Coach" the Appraiser!

2010-03-08T15:27:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates are off a bit today in the face of little economic news; it appears that traders are just shoring up their positions as they wait to see what transpires this week.

We are getting numerous "FLIPS" in our office, as we have several lenders who accept them for both FHA and conventional purchases (even NON-owner occupied). A Flip is a property that changed title (to an owner other than a foreclosing bank) in the previous 90 days.

Remember, however, that lenders scrutinize Flip appraisals much more closely. Our Realtors (listing and selling agents alike) have been doing a beautiful job of meeting the appraisers at the property and explaining/justifying WHY the value increased.

It is absolutely necessary that the appraiser make a strong case as to why the FLIP investor bought the property for $200,000, for example, and can now sell it for $300,000. And the Realtors involved in the purchase need to provide as much info as possible to the appraiser, such as recent improvements, or the removal of illegal units that made the property ineligible for financing previously.

A Flipped Property can sell with more than a 20% increase in value if it is justified. There is no "cap on appreciation", as many think.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Worse; FHA for UNITS; FHA Instead of TIC Financing

2010-03-05T15:26:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Yesterday we mentioned that any positive economic news will likely spike rates upward. And that happened today. Unemployment numbers stayed the same, but that was merely “better than expected” and rates spiked upward.

Once again, positive economic news signals the market that the Fed may start pushing up interest rates for two reasons: (1) a stronger economy may bring on inflation (higher rates hold off inflation); and (2) a stronger economy does not need the extra support of the Fed’s low interest rates.

Don’t forget that FHA financing can be used for OWNER occupied financing of up to FOUR units. With only 3.5% down, buyers can get a $934,200 Duplex Loan; a $1,129,250 Triplex Loan; and a $1,403,400 Fourplex Loan in most “High Cost” areas (Bay Area and much of the LA Basin).

We also HIGHLY recommend FHA Financing in lieu of TIC financing in any TIC Building with 4 or fewer units (common in San Francisco). FHA financing is far superior to any TIC financing available in the current market.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Slightly Better; The Fed Pulling Out of the Mortgage Market?

2010-03-04T15:25:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates improved a bit as the economy continues to show unexpected signs of sluggishness. Expect rates to spike as soon as we see strong jobs or manufacturing reports. Fortunately, for rates at least, few positive economic reports have been forthcoming, and rates remain surprisingly low in light of the Fed's pending pull out of the mortgage market.

Remember once again that the Fed's $1.25 Trillion mortgage buying subsidy program is slated to end at the end of this month. Given that the Fed has been almost the only buyer of mortgages, we expected rates to start ticking up by now.

And we certainly expect them to shoot up after March 31st, if the Fed truly does pull out of the market. Whether the Fed does pull out or not remains to be seen. We think with the economy remaining so soft that the Fed's support may be extended.

If the Fed does pull out, rates will have to shoot up significantly to entice private investors to buy mortgages or mortgage backed securities.

Our point, as always: Buy now and lock now while rates are so low.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Slightly Better; Beware What You Disclose or Reference w/ "AS IS" Deals

2010-03-03T15:24:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates improved a bit largely b/c of the troubles in Europe with Greece's debt problems (money leaves Europe and comes to the US and pushes our rates down). A few more lost jobs helped rates too.

We have had several relatively clean "AS IS" deals delayed by references to Transfer Disclosure Statements (TDS's) and/or Agent Visual Inspection Disclosures (AVIDs). The Realtors were careful not to reference termite reports or any other inspections in the purchase contracts, but they did reference TDS's and/or AVIDs and the underwriters called for them. And unfortunately, these forms disclosed some major structural issues that the underwriters wanted repaired.

Remember, both FHA and Conventional Loans can be "AS IS", but underwriters can and will request any documents referenced in a contract. We suggest referencing all potentially damaging documents in an addendum only. Otherwise, please make sure that all referenced documents do not disclose structural or repair issues when they get sent to us or any other lender.

Jay Voorhees or Heejin Kim at (925) 855-4491.

Tuesday Rate Quotes; Rates Same as Last Tues.; Worse than Yesterday

2010-03-02T15:24:00.000-08:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.75%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 5.0%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.375%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.625%*

*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Hold; FICO's More Important Than Ever; JUMBO is Back Everywhere

2010-03-01T15:23:00.000-08:00

30 Year Fixed Rate Loan at Cost of One Point: 4.75%*

Rates are about the same in the face of a slew of economic reports that are coming this week. Today Personal Consumption numbers came in lower than expected and this held the bond market at bay. Strong numbers would have signaled a recovery and pending rate increases, sparking mortgage rate bumps today. The market will be "on edge" all week, rest assured.

FICOs affect rates and pricing more than ever now. For an 80% LTV purchase with a $400,000 loan, a FICO of 680 results in a quarter point HIGHER rate than does a FICO of 740. Our above quote today for a 680 FICO results in a rate of 5.0%, vs the 4.75% that we quoted for a 740 FICO.

Almost ALL of our lenders are coming out with true "JUMBO" products - a very good sign for the industry. Today, an $800,000, 80% LTV, 30 Year Fixed Rate loan can be obtained at about 5.625% at cost of one point for a strong borrower.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve; High Debt Ratios Won't Kill Deals w/ Freddie and "No Overlays"

2010-02-26T15:22:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates improved slightly on revised GDP numbers and low housing sales numbers.

We received a frantic call yesterday from a borrower whose deal was falling out of escrow b/c he could not get his loan approved. He had used the internet to shop for "the lowest rate" and had hooked up with an East Coast Bank. The problem: his debt ratio is 54%.

Most major banks do not allow debt ratios over 45%. Freddie Mac, however, allows debt ratios up to 55%, and we have several lenders that have "no overlays". This means if Freddie Mac's automated "LP" underwriter approves the loan, so will the lenders with "no overlays", irrespective of the debt ratios. Very few lenders honor LP approvals in this manner.

It took us about an hour yesterday to obtain an LP approval for the borrower who called. Once we had the LP approval, we knew for certain we could obtain financing on his behalf. We will have loan documents in about 2+ weeks, and he can now release his loan contingency.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Improve; Underwriters Paranoid and Out of Control

2010-02-25T15:21:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates improved again, as jobless claims increased again, and GDP numbers came in relatively weak. In addition, Mr. Bernanke pledged to keep rates low. This is good news for us, but we still need to see what happens when the Fed pulls out of the mortgage market at the end of March.

Please be warned that Underwriters are more out of control then ever, as they worry about taking the blame for a missed condition that results in a loan getting "kicked back" by Fannie or Freddie. As a result, we frequently get extraordinarily "nit-picky" and nonsensical conditions that delay transactions for no reason whatsoever. Making this extra painful is the fact that these conditions often have zero bearing on credit quality, and they are added at the 11th hour. ALL LENDERS are doing this now.

Case in point: The following is an actual underwriting condition from a major lender: 'Please provide a signed letter from CPA stating if the client has 25% or more ownership in the Federal Reserve Bank. If 'yes' he should be run as self employed.'" The borrower subjected to this ridiculous condition is a Staff Attorney for the Federal Reserve Bank.

We take enormous pride in our ability to spot all issues up front, but sometimes even we cannot foresee the ignorance of some underwriters.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates the Same; What to do if CONDO Project is NOT FHA approved?

2010-02-24T15:20:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates remain the same as the debt issues faced by other countries make U.S. Debt more appealing. Rates remain surprisingly low in light of the fact that the Fed “pull out” of the mortgage market looms over us all; the “pull out” is still slated for March 31st. And there have been no indications that Fed might re-up its commitment.

If a Condo Project is NOT FHA approved, chances are that it is still Fannie Mae approved. If so, borrowers can still get conventional financing with 10% down. 5% must be the borrower’s own funds, and 5% can be a gift. There are advantages to the conventional financing despite the higher down payment requirements; these advantages include no “up front mortgage insurance” (like with FHA), and the ability to get out of mortgage insurance sooner (FHA requires MI for a minimum of 5 years).

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates Higher than Last Tues.; Better than Yesterday

2010-02-23T15:19:00.000-08:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.875%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 5.0%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.375%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

30 Year Fixed Rate JUMBO Purchase to $2,000,000 Loan Amount at a Cost of One Point: 5.875%*

*Assumes: 20% Down; Loan Amount less than $2,000,000; Credit Score above 740. Call for Quote. True "Jumbo Loans" are readily available now for qualified buyers.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Come Back a Bit; "Flipped" Properties Are OK; 5% Down for FHA Not Required, but Sometimes Requested

2010-02-22T15:18:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

There is very little economic news today and rates came back somewhat after the almost panicked reaction to Thursday’s increase in the Fed’s Discount Rate. Rates got better on Friday and today, although just a bit.

We still get questions about “Flipped” properties, or properties that were purchased by investors less than 90 days ago. We have numerous lenders (both FHA and Conventional) that have NO issues with flipped properties, irrespective of whether or not the current buyer is a potential occupant or an investor.

If, however, the price has increased by over 20% in the last 90 days, the price increase will have to be justified with an extra appraisal and an explanation regarding improvements to the property.

FHA has NOT announced an increase in the required down payment percentage. Down payments remain at 3.5%. We sometimes ask for 5% down payments, however, b/c our automated underwriter (DU) provides more flexible approvals with a slightly larger down payment.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Worse; Fed Raises "Discount Rate"; Headlines Lag the Market - Can Mislead

2010-02-19T15:17:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates jumped up significantly yesterday for several reasons. First, the Fed announced a quarter point increase in their "Discount Rate" which signaled to the markets that more rate increases are coming. Also, the increase in the Producer Price Index sparked inflation fears. And, there is huge concern about what will happen when the Fed stops buying mortgages in March (b/c few other investors are buying mortgages). It looks like rates will continue to climb.

Interestingly, after rates spiked sharply yesterday, the banner headline in the business section of our local newspaper read: "Mortgage Rates Down...". When newspapers report mortgage rates, their data almost always lags the market by one or more days, so it is wrong about 50% of the time. This is significant b/c it misleads our borrowers so often; they frequently call us looking for the "lower rates" they "read about", when in fact rates went up. I am sure we will get at least a half a dozen of those calls today.

Jay Voorhees and Heejin Kim (925) 855-4491.

Rates Off Slightly; We Need China as Borrowing Source

2010-02-18T15:15:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates are actually a bit better this morning upon worse than expected unemployment numbers, and CPI (Consumer Price Index) and PPI (Producer Price Index) reports that indicate that inflation is still under control. Remember, as soon as strong signs of inflation appear, rates will spike b/c traders fear that inflation will force the Fed to tighten the money supply and raise rates.

Rates actually got worse yesterday in mid-day trading b/c of a report that China is now the #2 holder of U.S. debt (behind Japan). China was #1. This caused fears that China is purposefully holding back on their purchases of U.S. Debt to express disapproval for both our fiscal and foreign policy. This is serious b/c without China's demand/support, rates will have to increase to attract other buyers/investors.

The U.S. used the same type of bludgeon to force the United Kingdom to bend to our whims in the 1950s when Eisenhower refused to support the Pound (during the Suez Canal Crisis, in case anybody cares). But the point is that the concerns about China are warranted. We need China's friendship so we can continue to borrow.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates About The Same; Will Foreclosure Inventory Hurt Home Prices? No.

2010-02-17T15:14:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates are off slightly from yesterday afternoon upon news of import and export price increases, among other things. But yesterday there was a major mid-day price improvement, so we are about back to where we were yesterday morning.

Our buyers continue to express concern that the continued onslaught of foreclosures coming to market will depress housing prices. There are supposedly as many as a million unsold foreclosures or pending foreclosures in California alone, and, per the Wall Street Journal, there are about 5 million potential foreclosures coming to market nationwide over the next few years.

We think the fears are overblown b/c during "the boom", about 4 million new homes were built per year, and during normal times, our economy absorbs about 2 million homes per year. Right now, very few new homes are getting built, leaving ample room for the foreclosure inventory. Furthermore, the economy overall will come back, and when it does, so will "normal demand" for housing. Normal demand is the demand over and above that driven by abnormally low rates, low prices and tax advantages.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates About the Same As Last Tuesday; Off From Yesterday

2010-02-16T15:14:00.000-08:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.75%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.375%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

5/1 JUMBO Purchase to $2,000,000 Loan Amount: 5/1 ARM at a Cost of One Point: 4.625%*

*Assumes: 25% Down; Loan Amount less than $2,000,000; Credit Score above 740

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Improve; Rates Will Shoot Up No Matter What the Fed Does

2010-02-12T14:54:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates improved from yesterday even though retail sales numbers came in stronger than expected (remember that signs of an improving economy usually push rates higher). The rate improvement is even more surprising b/c rates often increase in front of 3 day weekends.

Our continued reminder to our clients is that rates will increase, and increase sharply, no matter what the Fed does. The Fed does NOT have 100% control over market interest rates. The Fed's limited tools are not enough to control the interest rates in the way many think they can.

What will spike rates: (1) The Fed pulling out of the mortgage market in March, when they stop buying mortgages; (2) News of inflation, such as spiking CPI numbers; and (3) News of the economy heating up, such as a sharp reduction in unemployment. ALL of these events are coming, and rates will spike.

Our repeat message: Buy soon and lock soon, while rates are ridiculously low.

Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Up a Bit; Risk of a Double Dip in Housing? We Don't Think So

2010-02-11T12:24:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Pont: 4.875%*

Rates were up slightly today, as unemployment numbers improved and news of a "debt crisis" in Europe spooked the markets somewhat. The Fed's comments yesterday about pulling back from its massive support of the mortgage market in March also did not help rates.

Some of our clients are expressing concern about a "double dip" in house prices after seeing some recent "scary" headlines. But, we do not think another drop in housing prices is likely for several reasons. First and foremost, as you all know, inventory is down significantly from last year (about half the level in many areas), and demand for housing is surprisingly outpacing supply in many areas. Equally significant is the point every "monetarist" economist is making right now: the Fed is "priming" the economy with a huge increase in our overall money supply, and this always results in at least a temporary increase in asset prices and economic production.

In light of the above points, and the extremely low fixed rates, we think housing is the buy of a lifetime right now. And yes, we are well aware of the potential onslaught of REOs that could hit the market.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates the Same; FHA Rules/Dates Again; Spot Approval; Appraisal; MIP Increase

2010-02-10T12:23:00.000-08:00

30 Year Fixed Rate Mortgage at a Cost of One Point: 4.75%*

Rates held today on little news other than a widening trade deficit.

FHA Down Payment: An increase to 5% Down does not seem likely for FHA loans according to several of our lenders.

Using our OWN Appraisers: If FHA Case Numbers are ordered on or after Feb. 15th, we are subject to HVCC appraisal rules. This is serious, as our super-skilled appraisers have saved many FHA deals over the last 12 months. So get your offers in now.

Spot Approvals are no longer available unless the FHA Case Number was ordered prior to Feb. 1st.

Up Front Mortgage Insurance Premiums for FHA Loans increase to 2.25% for all Case Numbers ordered on or after April 5th, 2010. Up Front MIP is now 1.75% of loan amount.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates Lower than Last Tuesday; Off From Yesterday

2010-02-09T12:22:00.000-08:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.75%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.375%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

5/1 JUMBO Purchase to $2,000,000 Loan Amount: 5/1 ARM at a Cost of One Point: 4.625%*

*Assumes: 25% Down; Loan Amount less than $2,000,000; Credit Score above 740

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates About the Same; 90 Day Flip Rule for FHA Explained

2010-02-08T12:22:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates hold on little economic news on this quasi-holiday.

Several of our FHA sources no longer enforce the 90 day flip rule; irrespective of who the seller is (the seller can be an investor who just bought at auction, for example). However, the requirements get onerous if the current buyer is paying more than 20% more for the property than did the previous buyer. In this situation, the price increase must be justified, and further inspections and appraisals are required.

Here are the exact rules per one of our FHA sources:

Effective with fully executed sales contracts dated February 1, 2010, through January 31, 2011, the 90-day requirement can be waived for forward-mortgages only if all of the following apply:

a. Transaction is arms-length; there is no identity of interest between the buyer, seller or other parties to the transaction.

Including but not limited to: seller holds title to the property, any non-individual seller (i.e. LLC, corporation or trusts) was established and operating in accordance with applicable state and Federal laws; no pattern of previous flipping activity exists for subject property (i.e. multiple title transfers within a 12-month time frame, property was marketed openly and fairly via MLS, auction, For Sale By Owner offering or developer marketing).
b. If sales price is 20% or more over the seller's acquisition cost, lender must:
a. Justify the increase in value with documentation supporting the increase in value was the result of renovation of the subject property and/or a second appraisal verifying seller has completed sufficient legitimate renovation, repair and rehabilitation work on the subject property to substantiate the increase in value, or in cases where no such work was performed, the appraiser provides appropriate explanation of the increase in property value since the prior title transfer
b. Obtain a property inspection via CMS and provide inspection report to the borrower before loan closing. Borrower may be charged the cost of the inspection. Inspector does not have to be FHA-approved inspector or 203(k) consultant. Inspection must include at minimum:

Property structure, including the foundation, floor, ceiling, walls and roof;
Exterior, including siding, doors, windows, appurtenant structures, such as decks and balconies, walkways, and driveways;
Roofing, plumbing systems, electrical systems, heating and air conditioning systems;
All interiors; and
All insulation and ventilation systems, as well as fireplaces and solid-fuel burning appliances
Jay Voorhees and Heejin Kim at (925) 855-4491

Rates Hold; Debt Crisis Looms; Too Many Ignore Tax Benefits

2010-02-05T12:20:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

The unemployment rate improved in January, but it was largely b/c people gave up looking for work and are no longer counted as "unemployed". So the improvement did not spike rates.

Rates improved yesterday afternoon b/c of a looming debt crisis in Europe, primarily sparked by Greece's inability to pay its national debt (sending investors to the US and lowering our rates). Why should we care about a "debt crisis"? B/c if it becomes global, ALL investors will pull out of bonds in a quasi-panic, and rates could instantly go through the roof. We are precariously perched.

We have had several buyers this week overly concerned about "payment shock" b/c they did NOT take into account the immediate TAX BENEFITS from buying a house. Remember that homeowners can deduct ALL of their interest and property taxes from their taxable income.

A $400,000 FHA purchase can result in annual interest and property taxes of over $25,000. This could translate to income tax savings of over $10,000, or about $800 per month in real tax savings that needs to be taken into account when evaluating payments. And this savings can be realized immediately by adjusting one's take- home-pay immediately after buying a home.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Improve; Reasons to Buy Now; FHA Assumable!

2010-02-04T12:16:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates improved today primarily b/c of an unexpected increase in Jobless Claims. Signs of economic weakness usually result in lower rates.

Yesterday, our client's CPA told her that she was "stretching herself too thin" with a $500,000 FHA purchase, even though her debt ratio was less than 38%. We were surprised to say the least, and we of course pointed out the reasons why we think now is a great time to buy: (1) buyers can lock in extremely low rates before they shoot up; and (2) buyers can still take advantage of very depressed housing prices before they rebound. Economist Brian Wesbury in his recent book "It's Not As Bad As You Think" believes housing prices will accelerate rapidly in the near future. http://www.amazon.com/Its-Not-Bad-You-Think/dp/047023833X

But we forgot to point out one more great reason to buy now with FHA financing. FHA Loans are 100% Assumable. If a buyer locks in a 5% rate now and sells her house 5 years from now when rates could be 10%, her "assumable loan" could make her home worth far more. This is a HUGE "plus" that should never be ignored.

Our buyer's CPA is missing her upside potential.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Off a Bit; Check HUD Website for Approved Condo's; Fed Pulling Out?

2010-02-03T12:14:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates are off somewhat today, as there is little economic news that is moving the market, and there is a lot of uncertainty about what will happen to interest rates when the Fed pulls out of the Mortgage Backed Securities market in March. The government, in one form or another, has been buying or backing almost 90% of all mortgages over the last year. When a huge chunk of that "artificial demand" dries up in March, rates could go way up.

If you have an FHA buyer, remember that he or she can only buy Condos in FHA Approved Complexes. Below is the link to find out if a complex is FHA Approved. If you don't know the exact name of the complex, you can just type in the city and look for your complex among the approved complexes within that city. Please feel free to have us help too.

https://entp.hud.gov/idapp/html/condlook.cfm

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates Higher than Last Tuesday; Improve From Yesterday

2010-02-02T12:14:00.000-08:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.875%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 5.0%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.25%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.5%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

5/1 JUMBO Purchase to $2,000,000 Loan Amount: 5/1 ARM at a Cost of One Point: 4.75%*

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Off Slightly; Additions w/o Permits "OK" for FHA & Conventional

2010-02-01T12:13:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates are off slightly today primarily b/c the stock market is up somewhat. Remember when stocks are up, bonds are often down and this can result in rate increases. (Mortgages often move in conjunction with bonds)

We have had issues with additions or structures that were built without permits on many occasions over the last year, but we finally have a few lenders loosening up with respect to such additions. If the addition is just a "finished basement", there usually is not an issue, but if there is actually a structure (attached or detached) built without permits, FHA lenders often refused to lend.

Plaza Mortgage, however, now allows additions without permits for both FHA and Conventional loans. The additions have to be constructed in a workmanlike manner, and they cannot pose a health or safety risk, but such additions are now allowed in most cases.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Increase On GDP #s; 401K or IRA for Down Payment?

2010-01-29T12:12:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates increased slightly primarily because the 4th Quarter (of 2009) Gross Domestic Product growth figure came out better than expected. Consumer confidence also showed a surprising gain.

Homebuyers who have not owned a home in 2 years can use $10,000 of their 401K for a Down Payment without PENALTY, but they still have to pay the deferred income taxes against that money. A better plan for those intent on tapping into a 401K is to borrow from it. They pay the interest back to themselves, and there are no taxes to pay.

Homebuyers can, however, draw from an IRA for a Down Payment without taxes or penalties.

Jay Voorhees or Heejin Kim at (925) 855-4491

Rates Increase Even Though Fed Holds Rates; Why Buy Now?

2010-01-28T12:11:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.875%*

Rates increased slightly even though the Fed stated yesterday said that rates would remain low (0% Fed Funds Rate). Rates increased b/c of some of the Fed's other comments about the economy strengthening and the fact the Fed remains to committed to pulling out of the mortgage market in late March (their commitment to buy up $1.25trillion of mortgages will end). Rates also increased b/c of some mildly strong economic news today.

We have a first time buyer who has been making offers continually for over 18 months. His problem is not a lack of inventory; his problem, we think, is that he is too obsessed with getting a "good deal" and he underbids time and time ime again.

We tell him to bid more aggressively and he will think he got the best deal in the world in about two years. First and foremost, rates will go up, probably WAY up as inflation sets in. So buying now allows him to lock in an amazingly low fixed rate.

Secondly, 2 years ago there was nearly 17 months of unsold inventory in CA; today there is less than 4 months. Further, Forbes.com Columnist/Economist Brian Wesbury, in his just published book, thinks there is a major housing SHORTAGE in the near future and buying now is the best opportunity ever. Here is the book: http://www.amazon.com/Its-Not-Bad-You-Think/dp/047023833X

Our point once again for "deal chasers" and "fence sitters": Buy now; you can't go wrong.

Jay Voorhees and Heejin Kim at (925) 855-4491.

Rates Improve Slightly; FHA Changes; Fed Speaks Today

2010-01-27T12:10:00.000-08:00

30 Year Fixed Rate Loan a Cost of One Point: 4.75%*

Rates are slightly better on news of lower than expected new home sales, among other things. The market is anticipating comments by the Fed today. The Fed is expected to announce that they will end their support (massive buying) of mortgages in March, and that will push rates up.

The Fed is also expected to announce continued efforts to keep rates low now that economic news from December (unemployment and manufacturing) has come out worse than expected. If the economic news had continued to show improvement, it is likely the Fed would have allowed rates to go up a bit.

SO, it looks like rates will stay low for the next month or two, but will go up almost for sure when the Fed pulls out of the mortgage market.

Our point: BUY NOW while rates remain low.

Lastly, FHA announced that Up Front MIP will increase to 2.25% of the loan amount from 1.75% for case numbers ordered after April 5th. Also, Condo Spot Approvals go away on Feb. 1st.

Jay Voorhees and Heejin Kim at (925) 855-4491

Tuesday Rate Quotes; Rates Lower than Last Tuesday; Improve From Yesterday Too

2010-01-26T12:09:00.000-08:00

30 Year Fixed Rate CONFORMING Loan at a Cost of One Point: 4.75%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount Less than $417,000; Owner-Occupied; Single Family Residence

30 Year Fixed Rate HIGH BALANCE Loan at a Cost of One Point: 4.875%*

*Assumes: 20% Down; Credit Score above 740; Loan Amount GREATER than $417,000; Owner-Occupied; Single Family Residence

Investment Property CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 5.125%*

*Assumes: 25% Down; Loan Amount less than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase CONFORMING: 30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

*Assumes: 3.5% Down; Loan Amount less than $417,000; Credit Score above 680

Investment Property “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of ONE Point: 5.375%*

*Assumes: 35% Down; Loan Amount GREATER than $417,000; Credit Score above 720; NOTE: Competitive Investment Property Financing Requires 25% Down

FHA Purchase “HIGH BALANCE”: 30 Year Fixed Rate Loan at a Cost of One Point: 5.0%*

*Assumes: 3.5% Down; Loan Amount GREATER than $417,000; Credit Score above 680

5/1 JUMBO Purchase to $2,000,000 Loan Amount: 5/1 ARM at a Cost of One Point: 4.75%*

*Assumes: 25% Down; Loan Amount less than $2,000,000; Credit Score above 740

Rates Off a Bit; 95% "Dream Loans" with No MI - FHA May Be Better

2010-01-25T12:08:00.000-08:00

30 Year Fixed Rate Loan at a Cost of One Point: 4.75%*

Rates are off a bit today, as the stock market comes back somewhat, and investors leave bonds and mortgages; more demand for stocks equals less demand for mortgages and therefore slightly higher rates.

We had clients ask about the 95% Loan-to-Value loans with no mortgage insurance that are being touted by some lenders. But despite the lack of mortgage insurance, these loans are often less competitive than they might appear at first blush.

When there is "no mortgage insurance" on a high LTV loan, that simply means the mortgage insurance is built into the rate, so the rate is much higher. So if a buyer ends up with a 6% rate to avoid mortgage insurance he or she would have been better off with an FHA Loan at 5.0% with 0.55% mortgage insurance. Not only is the effective rate much lower, but FHA mortgage insurance can, in most cases, fall off in 5 years, leaving the borrower with a 5.0% fixed rate with NO mortgage insurance.

Jay Voorhees and Heejin Kim at (925) 855-4491.