Posts Tagged ‘lehi lender’

Markets: The collapse of the dollar has driven rates slowly but surely to levels we haven’t seen in six months.  Seriously.  It would not be impossible to find 4.625% on some 30-year fixed loans, and we’re closing a 5/1 ARM tomorrow at 3.875%.

Analysis: Well, exactly a year ago today we watched as the mortgage market exploded and rates dropped by more than a full point in two hours.  I remember this well, as I logged on in a spare moment from a condo in Florida, where I was supposed to be on vacation, and spent the next two solid days on the phone because of it.  Not that I’m complaining, exactly, although it was surely most inconvenient.

But this is gratitude week, and I am spending it more or less being grateful.  I am truly grateful for all of you and your willingness to pass along the information I share here.  I depend on referrals for all of my business, and I don’t forget that you have to be thrilled with what you get from me, or you won’t refer me – and I wouldn’t want you to.

We’ll be making some changes to our operations here over the next couple of months that should improve our communications and expand the number of available channels for it, so that you can get this alert however suits you best, whether by Twitter or Facebook or email or text or what have you.  Watch for that, and in the meantime, give me suggestions on how I can make this alert more useful to you.  In turn, let me ask you to forward it on to someone – just one person – that might enjoy it, so that the reach of good, solid market information can grow.  Thanks in advance.

Action: And here is a suggestion from alert reader AmyJo in which she suggests that I add an action section to RateWatch, so here it is: if you’re interested at all in potentially refinancing or purchasing, hit reply to this email and let’s start the conversation.  Average lead time from first discussion to close is running at a career-high 84 days now.  It takes time to get things in place to qualify in this environment.  Do not wait and miss out, and yes, we’re still working in the holidays.  Let us work for you.

Cj

Chris Jones

Markets: The bond market has reversed itself the last two days and is headed higher once again.  It has broken through a couple of lines of resistance and is now trading at what my sources say is “an unsustainable level”.  More on that below.  Current levels on the FNMA bond correspond to 30-year fixed rates below 5%, though not very much below.  Still.

Analysis: What is the definition of “unsustainable”?  If you ask me, unsustainable means “you can’t keep doing this forever”.  These days, it seems to also mean “you can’t keep doing this for long enough to matter,” as when a football team grabs an early lead through fancy trick plays, but shortly runs out of those and cannot sustain the advantage.  It matters which we’re talking about, because the bond market certainly is in Unsustainable 1 territory, but not – again, just as clearly – in Unsustainable 2 territory.  We know this because we’ve been here before.

So we’re here, and we’re here long enough to matter, IF.  It is absolutely true that most lenders (and this is especially true with the new federal babysitting regulations) cannot react fast enough to help you take advantage of rates that will be abnormally low for only a few hours.  It is also true, however, that some lenders can, and the number that have that capability can be increased by your timely action.  DO NOT WAIT FOR RATES TO HIT YOUR TARGET ZONE BEFORE YOU START TALKING TO YOUR LENDER.  That’s not going to work, people.  For most, a couple of hours is just not enough time to get all the documents whizzed back and forth before a lock becomes possible, not with rates moving with this kind of volatility.

Since I already used the running analogy last time, let me use a hunting one here.  If you think you’re going to get the perfect shot on a deer by waiting for the deer to get in the right area, then going in after it, you’re crazy.  The way to make sure of a good shot is to get there first and wait.  Similarly, the way to make sure you get the rate you want – and 15-year rates are in the very low 4s right now, for instance, with 5-year ARMs in the mid 3% range – is to get your documentation together and go over it with your lender BEFORE you need to shoot.  That gives you the very best possible chance to get exactly what you want.

These days, a couple of extra days is a godsend.  Get moving now, and give yourself a break.

Cj

I’m not sure how to say this without making myself unpopular, so I’ll just go for it.

HVCC is here to stay.

I’ve written before, several times now, on the Home Valuation Code of Conduct (HVCC), which has been widely blamed for depressing home values and causing borrower and buyer and seller and Realtor and mortgage professional frustration since it went into force on May 1 of this year.  There has been what appears to be a huge outcry over the Code; there’s a petition to get rid of it that has over 75,000 signatures, and there’s a bill in Congress to institute an 18-month moratorium.

None of this makes any difference.  Want me to outline the reasons?

1. 75,000 people sounds like a lot, until you realize that it isn’t enough people to fill up the Big House at the University of Michigan on Saturday.  Spread that over the entire country, and it’s 1500 people per state.  That’s an irrelevancy.

2. HR 3044 was introduced by two of the most obscure memners of Congress.  This is never a positive.  It now has 91 cosponsors, which sounds like a lot, until you realize that cosponsors don’t mean very much.  Congressmen cosponsor most anything that gets introduced, if they think it will give them cover.  HR 3044 is perfect for this, because it makes it look like Congress is doing something when, in fact, it isn’t.  The bill is stalled in the House Finance Committee – hasn’t even been assigned a subcommittee yet – and isn’t going anywhere.  Paul Kanjorski (D-PA), who is on the Finance Committee, has his own bill that has passed the House twice already, and that’s the one the Committee is backing.  Read it.  It doesn’t do anything at all with HVCC.

3. When the momentum is this heavily toward increased regulation, there is no practical chance that any restrictions on the mortgage industry will be lifted.  Since we all talk to each other all the time, we get this sense that the whole country is opposed to the HVCC and that the momentum is to get rid of it.  Then FHA institutes its own HVCC-like language, and you realize that you’re getting a false picture of how things really are.  Washington is spending thousands of man-hours a week finding NEW regulations to place on us, and you think any effort will be wasted on removing some?  That’s delusional.  If there really were any pressure to pass the moratorium, or to get rid of HVCC altogether, what do you think the chances are that the bureaucrats at FHA would be patterning their own parameters after it?

4. Not even everyone in our industry is opposed to the HVCC.  I’m not, for instance.  I like most of it.  There are parts that I think need tinkering with – I’ll talk more about that later – but on the whole, I think it addresses a serious problem.  I’m far from alone.  Yesterday there was an excellent article by the inimitable Marcie Geffner about how repealing the HVCC would be a step backward, and this was echoed in the comments, especially notably by two long-time professional appraisers that like the HVCC and what it’s done for them.  I have letters from appraisers that praise the AMC I use – these are quite important to me – because their lives have been made easier since the HVCC went into force.  Saying that you like the HVCC is about on par with saying George Bush was a decent President, so most people, even if they think that, keep their mouths shut.  This doesn’t mean there aren’t any people that do.

When I started writing about this back in the early summer I predicted not only that there would be no repeal, but that the FHA would institute its own version of HVCC before long.  Last Friday, FHA released new appraisal restrictions that are almost word-for-word out of the HVCC, exactly as forecast.  I confess that I cheated when I made the prediction; I had actually spoken to people in Washington DC that knew what was going on (I know, I know, bloggers are supposed to make wild, unsubstantiated guesses about things, not do actual research).  Since then, I’ve done more discussing, and I have an idea what the next HVCC-related event is going to be.

It’s okay, you’ll like this one.

It concerns appraisal portability and the use of AMCs.  Before too long – I’m forecasting by early next year – there will be a national registry of AMCs.  At that point, Fannie/Freddie will institute a regulation that a lender must accept an appraisal performed by any registered AMC, which mirrors the way things used to be, where as long as an appraiser was licensed under the state laws where the loan was to be done, the lender could accept the appraisal.  Seems a small change.  But it isn’t.

The biggest problems mortgage and appraisal people have with the HVCC are caused by bad AMCs shorting appraisal fees and causing crappy appraisals to be generated.  Good AMCs – and there are some, I use one – don’t do this.  The good AMCs would, in a free market, kill off the bad ones.  Appraisers would insist on full fees, and only the good AMCs are paying them, so appraisers would only work for the good ones and the bad ones would die.  Most of the problems with HVCC would go away.  Once this regulation appears, we’ll have a much free-er market in appraisals than we do now, and a great deal of normalcy will return to the market.

For those of you that have spent a great deal of time and energy protesting and rallying the troops to get rid of the HVCC, I strongly recommend that you use your time to do something else.  Lobby for a free market in AMCs instead.  For you appraisers, help is on the way.  Call the Appraisal Institute and tell them to lobby for an AMC registry, so we can get back to being able to sell appraisals to anyone, instead of a restricted few.

It’s going to get better.  Eventually, it’s going to get better.  I promise.

Market: MBS close down 29 bps.  This erases half the gain from yesterday, which was twice the loss of the day before.  So after all this, where are we?  Exactly where we were.  Rates hanging 5% to 5.25% (your rate can and will vary).

Analysis: It’s pretty much official, this is as low as we go.  There is no buying power below 5% on the bond.  Whenever we touch 101 on the 4.5% bond, we retreat.  That means we’re not going lower from here.  At some point, the dam will break, and money will start flowing out of bonds in quantity, and at that point rates will rise, and fairly dramatically.  If you were waiting for the bottom, folks, this is it.

Take your $8000 credit, take your HomeRun2 $4000 (if you’re in Utah), and run with it.  Take what you can get and go.  Now is the time.  You’ve got 70 days to close for the Federal Tax Credit.  Waiting longer than the next week to find a house is unwise.  We’re closing loans contract-to-fund in 19 days, but that’s if everything is perfect, and counting on it is very risky.  So don’t.  Go now.

Cj

Market: We’re flat.  Yesterday we were up 34 bps.  This is a trend, now, and not a blip.  There is consistent pressure for mortgage-backed securities (mbs) to rise to the 100- and 200-day moving averages, which we are sitting on right now.  That means rates holding steady at their current very low levels, between 5% and 5.25%. [Disclaimer: YOUR rate might be higher, and it might be lower.  That depends on a lot of things, not just the current market.  Get a pro to check for you.] [Incidentally, I am a pro.  <grin>]

Analysis: As usual analysis is complicated.  This morning’s data (ISM and pending home sales) were better than expected, which for months now has meant that mbs would retreat and stock would rise.  But for the past two weeks, that has not been so.  It’s not the Fed, this time – the Fed is buying mbs, of course, but buying them in ever-smaller quantities, and buying mostly the 5% and 5.5% coupons, meaning that they are providing no pressure for rates to go below 5%.  That pressure, what of it exists, is coming from the broader market.  And frankly, people, it makes no sense.

There’s no big move to the upside.  There is no immediate prospect of rates dropping back into the 4.5% range.  But still, there is this persistent pressure on mbs pricing that is holding things right where they are, instead of losing ground, as analysts expected (myself among them).  I wrote last week that the only thing I could point to was back-bench sentiment that the economy really wasn’t bottoming out and that there were worse things to come, but as time goes on that argument is less and less persuasive to me.  So I don’t know what it is.  Ideas?  What do you think?

Cj