Bob 's Blog

Weekly Update for November 24

2008-11-25T20:07:15Z

Estimated rates for the week of November 24, 2009

30 yr conforming 5.25 - 5.50

30 yr jumbo 6.00 to $600k

7/1 ARM 5.625 - 5.75

OR VA 5.75 w/1.5; 5.875 w/1.0

OR State Bond 6.25 FHA or VA

Rates saw a significant drop today even with the slight pull back at the end of the day. The reduction in rates was brought on by the Fed's announcement that they were ready to buy up to $500 billion in mortgage-backed securities and were willing to lend up to another $200 billion to help facilitate the purchase of other consumer and small business oriented asset-backed instruments. This news was well-received as the market is hoping this will be key in keeping credit flowing and interest rates down. We never know how long these rates will last. In the past, when rates went to these levels, they only lasted a few hours. Let's hope we'll see the market stay here for awhile.

In previous Updates, I have discussed changes that are to occur in the appraisal world. It looks like those changes are starting. Two of the largest mortgage companies announced their new guidelines for the ordering of appraisals starting in January. All of these changes are to stem fraud in the appraisal world. Some of these changes will make the buying and refinancing of a home a little more difficult. It looks like loan originators won't be able to order the appraisal or direct who prepares the report. This will impact our ability to get a rush appraisal done and it will impact us in those other areas where having a relationship with the appraiser has helped. I foresee more issues when it comes to property repair items as well as values - especially when the sale has large seller concessions. Fannie has also announced the addition of another form that the appraiser will need to complete. This form is to help underwriters analyze the market trends for a given neighborhood. The appraiser needs to complete an inventory analysis including a review of the absorption rate. The appraiser also has to review the sales information - days on the market, median price, list-to-sale price, etc. He or she also has to comment on foreclosures that have occurred in the immediate market area. We can assume that this will take the appraiser additional time to complete and it will probably increase the cost of an appraisal.

Happy Thanksgiving. I wish you all have a great holiday. I'll be available on Friday if you need anything.

Bob Chiodo, CFP

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Credit scores, down payment, and other risk related issues may change the rate. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee (1.75% for the Oregon Bond).

Weekly Update for November 24

2008-11-25T20:05:58Z

Estimated rates for the week of November 24, 2009

30 yr conforming 5.25 - 5.50

30 yr jumbo 6.00 to $600k

7/1 ARM 5.625 - 5.75

OR VA 5.75 w/1.5; 5.875 w/1.0

OR State Bond 6.25 FHA or VA

Happy Thanksgiving. I wish you all have a great holiday. I'll be available on Friday if you need anything.

Bob Chiodo, CFP

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

Weekly Update November 17, 2008

2008-11-18T19:33:35Z

Estimated mortgage rates for the week of November 17, 2009

30 yr conforming 5.750 - 5.875

30 yr jumbo 6.25% to a $600k

7/1 ARM 5.625 - 5.750 Conforming and jumbo

OR State Bond 6.250 FHA and conforming

OR VA 5.875 + 1.00/5.750 + 1.50

As you can see, rates are holding steady. We have seen rates come down a little over the last few days. Loans are still being made. In fact, the service levels are some of the best we have seen in a long time. We were able to close a transaction - from start to finish - in 6 working days. Considering that the last day was to have the deeds record, we really did it in five days!

News in our industry has been centered on borrowers' qualification standards, in particular, debt-to-income ratios and paperwork requirements. We are all aware that stated income loans are a thing of the past. However, both Fannie and Freddie have allowed us to use limited documentation for many of our better qualified borrowers. Looks like that is changing. Both agencies have announced elimination of reduced/minimal documentation and verbal verification of employment. Standard documentation will apply come the middle of December. This shouldn't have much of an impact for most of us. Many lenders have already moved in this direction and many loan originators (myself included) have already been requesting full documentation of income and assets.

The reduction in debt-to-income ratios will cause more concern, however. Freddie is implementing a maximum of 45% debt-to-income ratio (there is no word from Fannie or FHA as of this writing). Combined with more stringent documentation requirements, we can see that some borrowers won't be able to qualify for a loan that, just a month or two ago, they would have easily qualified. Not to be repetitive but we are back to the old days...again. I remember working with many clients over a three or six month period - even longer in some cases - to get them to be in a position to qualify for a loan. Helping clients make a budget, figuring out ways for them to pay off debts - and the right debts, trying to them to save money....these are things we all used to do. Personally, I enjoy assisting people in managing their personal finances. It does take more time but, thankfully, that is something that we have plenty of.

Have a great week!

Bob Chiodo, CFP

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

Weekly Update October 29, 2008

2008-10-29T17:20:14Z

Estimated Rates for the week of October 27, 2008

30 yr conforming: 6.250 - 6.375

30 yr jumbo: 6.375 - up to $600,000

7/1 ARM 5.625 - 5.75 for conforming and jumbo product

OR State Bond 6.000

OR VA 5.75 (1.5 Origination)/5.875 (1.0 Origination)

Rates still remain a little elevated for the last week or so. The Fed did drop the funds rate by .50%. Prime rate should drop to 4.00% tomorrow. That will lower the cost on those Home Equity lines of credit. Mortgage rates, though, did go up. That has been the norm when the Feds announce a rate cut. Remember, the Fed controls the short term rates, the markets control the long term. Mortgage rates are considered long term and they have also been closely tracking the stock market....when the stock market goes up, rates go up with it. It occurs because large investors sell their bonds in favor of purchasing stocks. The selling of the bonds decreases the bond's price but causes the rates to move up. Also, to fund the recent legislative bills, the federal government has a serious demand for funds. That demand is causing our long term rates to move up.

Some disconcerting news out of Freddie Mac recently. Although it's not in their guidelines yet, they have announced that the maximum debt-to-income ratio on loans that they will approve will be 45%. This change will probably come about at the beginning of next year. The problem that I have with this rule is that it doesn't appear to allow for exceptions. I understand that the rule makes sense on some transactions. In fact, many of the mortgage insurance companies that we use have already implemented the same guidelines. But where it might not make sense is when a borrower is putting down a rather sizable amount. In the case of someone putting 50% down with good credit and reserves, a higher debt ratio can make sense. This will also hurt those cases where there are two parties buying a home but only one is going on the loan. That happens when the other party's credit score isn't that good. The lower score transactions have higher rates. Amending the policy on increasing rate/costs for lower scores would help in these cases. We haven't heard anything from Fannie Mae though and that might be our way out. But we usually do see the agencies follow each other. Let's hope that there is some constructive feedback to Freddie before they implement the rule.

I'll leave you with some encouraging news. I receive many reports from various analysts. One analyst has an audience of over one million readers all over the globe. He offered some guidance on where investors should invest their money today. One of his suggestions was that real estate will offer a good return over the next few years. He suggested that in many areas the prices are at a point that the investment makes sense. It's nice to see that a very well-informed investor is now talking about real estate. With his million-plus readers, word should spread. As we all know, it is impossible to time the market. Now might just be the right time for buyers to jump in.

Have a great week.

Bob Chiodo, CFP

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

Weekly Update October 13

2008-10-14T20:01:34Z

Estimated rates for the week of 10/13

30 yr conforming 6.25-6.50

30 yr jumbo 6.125 to $600k

7/1 ARM 5.625 - 5.75 for jumbo too

OR State Bond 5.750 Conventional or FHA

OR VA 5.50 but we hear it could increase very soon

As you can see by the above, rates have moved up. We have two competing themes for the rate markets. The first is the slowing U.S. and world economies. That should be helping to ease rates down. The opposing side is that the U.S. Treasury needs to borrow a lot of money to fund the recent legislative bills. Treasury has to come up with around a trillion dollars. Using those basic Economic 101 principles of supply and demand and that interest rates determine the price of money, rates have to go up. So far, the latter is what we are seeing. It's still extremely volatile out there but it does look like we have turned the corner on the panic in the financial world. There is still much work that needs to be done but at least the light is back on at the end of the tunnel.

Let me assure everyone who reads my Update that we are still able to close loans. Although underwriting guidelines have gone back to the old days, we haven't had any issues on getting the money to close transactions. None. The mortgage business is still fully operating and "business as usual' is what we see. With the events that occurred over the weekend, many pundits are thinking that the worse is behind. Still too early to call but it definitely appears that way. It looks like all of the developed countries (and many of the less-developed countries) are all on the same page now. There is no question that the events of the last few weeks are destined for the history books and that there will be significant changes as to how the business world will operate. With that said, I for one am done dealing with all of the stress that this has brought on. It's time to go back to business and do what we all do best! I think it's also time for us all to take a refresher class on the basics. Regardless of what business we are in, we all need to focus on those basic business principles that we first learned....good customer service, personal discipline, and hard work.

Enough of the pep talk speech. Have a great week.

Bob Chiodo, CFP

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Weekly Update September 29, 2008

2008-09-29T20:27:51Z

Estimated rates for the week of September 29, 2008.

30 yr conforming                                           5.750 - 5.875
30 yr jumbo                                                  6.125 to $600k
7/1 ARM                                                       5.875 - 6.000
OR VA                                                          5.500
OR State Bond FHA                                        5.750

Obviously, most of the news today surrounds the House of Representatives failure to pass the bill that would have re-capitalized our financial system. Investors around the globe showed their displeasure by dropping stock prices in a very dramatic fashion. Hopefully, many of those who opposed the legislation will now understand what's involved if this bill - or one similar to it - is not passed. And it needs to be sooner and not later.

I have been asked a number of times today whether we can lend money. As I mentioned last week, there is still money out there to lend and we are finding it. The recent turmoil hasn't made it easier but we - and many other lenders - are still at it. Rest assured, if the buyer/borrower is qualified, we can get them financing.

For those who want to understand the how's and why's of the recent turmoil more than the local news can give you, I have attached an article for you to read. It comes from a gentleman who has an excellent grasp of the situation. It can be a little difficult at times, but it does a great job of covering how we got here and where we are going. It's from John Mauldin, Best-Selling author and recognized financial expert, who is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore

****Since I can't attach the document to this blog, please email me and I will forward it directly to you. Sorry for the inconvenience.****

Of course, his isn't the only opinion of where we go from here....especially since the bill didn't pass the House. I am currently reading another analyst's opinion that states that it could be good that the bill didn't pass. Here is a quote from his letter : "Congress would be much better advised to take the extra few days or week it would take to structure a plan that the world is going to have to live with for a very long time" (1) Personally, I hope that Congress passes the bill and then allow the necessary regulation of Wall Street to follow.

Although the financial news is very unsettling, we will get through this. It will take some pain but we will come through it stronger and better. Don't let the financial issues of today take any more control of your life than necessary. Maintaining good personal health, keeping family relations strong, and doing the right thing for your clients and yourself is where our focus should be. Thanks for reading!

Bob Chiodo,
Equity Home Mortgage, LLC
12550 SW 68th Parkway
Portland, OR 97223
(503)670-7393
fax: (503)670-7062
bobchiodo@equityhome.com
www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

(1) Michael Lewitt of Hegemony Capital Management. Article titled "Haste Makes Waste" as printed in John Mauldin's Outside the Box. Vol 4, Issue 48, September 29,2008.

Weekly Update for September 22, 2008

2008-09-24T19:47:56Z

Estimated rates for the week of September 22

30 yr conforming 5.75 - 5.875

30 yr jumbo 6.125 to $600k

7/1 ARM 5.625 - 5.75

OR VA 5.50

OR State Bond 5.75 Conventional or FHA

I held off on my doing my weekly update in the hopes that some stability would return to the markets. Since that hasn't happened, I still wanted everyone to see what the rates were doing and to assure our market participants that we are still lending money and real estate transactions are still closing. Although underwriting is tougher, it's business as usual as far as I am concerned.

By now everyone is aware of the bill that is trying to get through Congress. I'll leave the analysis of the bill to those far more qualified. There is no question that something has to happen and it has to be big. I have read many different points of view on it. Right now, there are more questions than answers. That said, it's going to happen and it will be big. Congress knows it too. The hope is that it will free up our capital markets - without which there would be a standstill in business. The consequences of it not happening are far worse for all of us. And, there is a good chance that the total costs won't be anywhere near the $700 billion. Remember, the design is to buy assets (loans) that are tough, if not impossible, to sell. The government will buy them at discounted prices and, the hope is, will be able to sell these loans later at the same or higher prices. It actually makes sense, and if done correctly, it shouldn't cost us taxpayers that much money. It will allow the banks and investors to get rid of these loans which should allow them to start lending money again. The banks and investors will take their losses but that should be it. Business back to usual, right? Don't count on it - count on much more regulation, less profits for the banks and investors, less risk taking, etc. Out of this mess will come new ideas on capitalism, government involvement in the markets, and risk management - to name just a few. Interesting times!

I want to comment on a letter that was sent to a borrower from their current lender. An agent asked me to review it and, I have to say, I was very impressed with the letter. It seems that this particular borrower had taken out a Neg Am loan that was due to recast. Without fully explaining how that works, the bottom-line was that the payment was going to go up by over 100%. There was no way that the borrower was going to be able to make that payment. Of course, due to the Neg Am, the borrower was upside down in the home -the loan was higher than the home's value. The lender, without being asked, offered to freeze the loan payments for 3 years at an interest only (no longer Neg Am) equal to the current below market payment. That payment worked out to be less than 4% interest only. If the borrower paid more, the overage would go to principal. After the three years, the loan adjusts to the scheduled interest rate but that would require only an interest only payment for five years. After that, the loan converts to a 40 year fully amortizing loan. Overall, it's a fantastic deal. The borrower gets a 4% rate for three years and can afford to stay in the home. No foreclosure or short sale for the bank. The neighborhood doesn't get impacted by having the home being sold at a loss. The bank keeps getting paid. This was a win-win for everyone. And, again, the bank did this without being asked. It's really good to see that the lender was taking the initiative and was doing the right thing. There is hope out there after all!

Have a great week.....I welcome your comments or calls.

Bob Chiodo,

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Weekly Update

2008-09-08T20:26:37Z

Estimated Rates for the week of September 8, 2008

30 yr conforming 5.500 - 5.625

30 yr jumbo 6.50 to $600k

7/1 ARM 5.500 - 5.750

OR VA 5.500

OR State Bond FHA 5.750

We have had a few good days in the rate markets. Today we can get 5.50% with a few lenders. Not sure how long it will last but there is some talk that they can even go lower. Since the recent drop is rather large for rates, we might see some pull back though. Many are now thinking that we can see mortgage rates come down over the longer term due to the takeover of Fannie Mae and Freddie Mac. It wasn't that long ago that the difference between mortgage rates and like maturity U.S. Treasuries was a little above 1.00%. That difference, or spread, has gone up to over 2.50% recently. As the uncertainty in the real estate market prevailed, that spread wouldn't come down. Now that the government has taken action, the risk surrounding mortgage-backed securities issued by Fannie and Freddie should dissipate. If that spread even narrows to 1.50%, we could see rates in the low fives again. This would be very good medicine for the real estate markets.

As for the takeover of Fannie and Freddie, I will let you read about it on all the other press. There is much being said today. It's obvious that the interest rate and mortgage markets liked it. There will undoubtedly be some fallout though. We will see over the next few weeks how it plays out. There will be a lot of press about it as well as a lot of opinions will be voiced. We will also probably see a more volatile rate market. With the recently passed housing bill and a much more secure secondary market, things are starting to line up to ease the issues in our real estate market. Of course, there are still many other problems that remain. Mortgage insurance plays a very pivotal role as do other funding sources besides Fannie and Freddie. Next week I will cover what I consider the three main sources of mortgage financing that are available to homeowners.

Since almost all of our low down payment/high loan-to-value transaction are requiring mortgage insurance, I thought I would pass on a web site:

http://www.frbsf.org/publications/consumer/pmi.html This site describes how a homeowner can go about cancelling their mortgage insurance for private mortgage insurance. This does not apply to FHA loans. For FHA loans, take a look here: http://www.hud.gov/offices/hsg/comp/premiums/prem2001.cfm It will direct you to read a couple of letters. They seem to be very clear and informative. Of course, refinancing the loan is always an option too.

Have a great week.

Bob Chiodo,

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Weekly Update

2008-09-02T19:39:20Z

For the week of September 2, 2008

*Estimated rates:

30 yr fixed conforming 6.125 - 6.250

30 yr jumbo 6.625 to $600k

7/1 ARM 5.750 - 5.875

OR VA 5.500

State Bond FHA 6.000

Rates are holding steady. Every day they are up a little or down a little with no real change from week to week. We have been in this range for quite some time and there is nothing expected to change things. The minutes from the Fed's last meeting showed that they still wanted to raise rates because of inflation pressures but weren't going to due to the uncertainty in the economy. That uncertainty hasn't vanished but the issue about inflation might be partially resolving itself. Commodity prices have dropped substantially, especially that of oil. The price of a barrel of oil has come down about 25%. Gasoline hasn't dropped near that amount but we have seen it come down. And, hopefully, we will still see further declines at the pump. There hasn't been any wage inflation to speak of so we might see some weaker inflation numbers going into fall and winter. That should keep the Fed from making any moves through the end of this year.

There has been a lot of talk in the market about failing banks and whether Fannie Mae and Freddie Mac will survive. This creates some of the uncertainty that I referred to above. Fannie and Freddie will survive. The question is one of whether their stock holders will or not. Seems like the consensus is that the government will have to inject a lot of capital into the firms and, most likely, will wipe out the stockholder's equity. Everyone agrees, though, that they have to survive to keep the mortgage market alive. It's the 'too big to fail' syndrome being played out again. As for the banks going under, there will be many who get hurt by the failures but the failures shouldn't impact the overall market in general. Those depositors with concerns about FDIC insurance should do some research. An excellent tool to help calculate the amount of FDIC insurance on your accounts can be found at http://www4.fdic.gov/EDIE/

The change in fees charged by Fannie and Freddie have taken place. There will be no increase on loans at 60% or less of the value/sales price of the property. There is a new grid that we need to review to quote a rate today. That grid has seven different credit scores and eight different loan-to-values. So having a rate quote isn't as easy as it may seem. Everything now depends on credit score and down payment. The interest rate range I show above is usually for those with good scores....above 720. If the scores are lower, the rate could be substantially higher. Again, those rates above are really just to inform you of what the overall rate trend is.

Hope you all had a great Labor Day!

Bob Chiodo,

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Weekly Update August 18, 2008

2008-08-19T19:43:31Z

Estimated rates for the week of August 18, 2008*

30 yr fixed conforming 6.250 - 6.375

30 yr jumbo 6.625 to 600k

7/1 jumbo 5.750 - 5.875

OR VA 5.375 - 5.500

OR State Bond 6.000 FHA or Conventional

Rate markets are staying steady. That's our good news for the week. I mentioned over the last few weeks that the down payment assistance (DPA) programs are going away. Last week we had two lenders suspend the use of the DPA programs. My company announced that this week will be the last for us. I have no update for the bill that is in Congress that would keep the DPA programs - it doesn't look like it will go anywhere though.

I mentioned in the last Update that Fannie and Freddie are increasing their fees. This, of course, means that rates are going up a little. The rate increases are tiered based on credit scores and loan-to-values. 740 is the top tier for the credit scores. Due to the lower risk to Fannie or Freddie on loans with Mortgage Insurance (MI), the mortgage rates/fees are actually lower on loans with 10% down versus those with 20% down. Of course, to the borrower, the payment is higher because they have to pay for the mortgage insurance.

Speaking of mortgage insurance, we have seen a few companies starting to sell their hybrid or split-level MI. This is looking to be a great alternative to standard MI or to LPMI. For instance, we just did one on the hybrid that worked out well. Standard MI had an annual premium cost of .84%, the LPMI cost was 2.40% up front (which worked out to be about .625% in a rate increase) and the hybrid was only 1.05% up front (about .25% in rate) and a annual premium monthly cost of .11% The total for the hybrid worked out to be about .375% - far better than the other two options. It's nice to see that the MI companies are working on new - or revised - products.

Next week I am going to cover the various types of lenders: portfolio, private, and pass-through. Hope you all have a great week.

Bob Chiodo,

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com*

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Weekly Update for August 4, 2008

2008-08-06T14:22:18Z

Estimated rates for the week of August 4, 2008

30 yr conforming 6.375 - 6.500

30 yr jumbo 6.625 to 600k

7/1 ARM jumbo 6.000 - 6.125

OR State Bond FHA 6.000

OR VA 5.500

Rates have moved up but we'll probably be in a 6.25 - 6.75 range for the foreseeable future. The Fed met and left rates unchanged; this was expected. Inflation worries could slowly dissipate with the fall in commodity prices. Oil traded below $120 a barrel today and we all see gasoline prices come down - although not near as much as oil prices. Steady rates and lower gas prices will definitely help consumer confidence levels. Although it's a slow process, the economy, the markets, etc. are heading in the right direction. Which brings me to the housing bill.

http://www.federalhousingtaxcredit.com/

The above is a good web site to help anyone interested in the 1st time home buyer tax credit. This credit should definitely motivate new homebuyers. Even though the credit is more like an interest free loan for 15 years, it will put money in the pockets of home buyers. One item that deserves particular attention is the ability for a homebuyer to choose which tax year to take the credit. If a buyer closes in Jan of 09, that buyer can elect to take the credit for the 2008 tax year. That way, the buyer would be able to get their tax credit in a short period of time instead of waiting until the filing of 2009 returns. As always, having them check with their tax advisor is highly recommended.

By now, most have heard that the Down Payment Assistance (DPA) programs are to end on October the 1st. This was part of the housing bill. These have been important programs in getting buyers to be able to purchase with nothing down. The two big sponsors, Ameridream and Nehemiah, have helped many buyers purchase homes through their gift program. Here's a excerpt from an analyst review of the housing bill from Schwab:

"But even worse for builders: In October, it will halt seller-funded down-payment assistance programs, controversial because they help buyers get into a home with little or no money down. Buyers without equity are more likely to walk away from their mortgage.

Such assistance has been key to sales: Industry giant Lennar Corp. (LEN) recently said one-third of the mortgages it originated had tapped the assistance, while Centex said 25% of its sales did. The Wall Street Journal reported Wednesday that the elimination could bar as much as 10% of the nation's buying pool and as many as 25% of buyers in lower-priced markets, such as Texas.

Even so, Centex thinks the change is probably a good thing "over the long term."

"The end of DPA will probably pressure industry sales in the near term, but over time our buyers and the market will adjust," said Cathy Smith, Centex's chief financial officer. "We continue to believe that a return to more normal qualification standards is a very good thing long term, even if it carries with it a little short-term pain."

Currently, about 10% of my business utilizes this program. There is a little life still in the program though. We still have a month or so to assist buyers on their purchases and there has already been a bi-partisan bill presented in Congress to amend the housing bill and keep the DPA programs alive. We will see how that goes.

The minimum down payment for FHA loans will be increased from its current 3% to 3.5%. We win some, and we lose some.

I just received notification that Fannie Mae is increasing the costs of some of their loans. I'll cover this in detail next week.

Bob Chiodo,

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Weekly Update 7/28/08

2008-07-28T17:43:19Z

*Rates:

30 yr conforming 6.250

30 yr jumbo 6.625

7/1 jumbo 6.000

OR VA 5.500

OR Bond FHA 6.000

The 30 yr conforming rates dropped a little from last week, however, the 7/1 jumbo and the Oregon Bond rate moved up. The rest of the market was stable.

The big news was out of Congress with the Senate passing the Housing Bill on Saturday (do they get OT for working on a Saturday?). The main impact that I see is that first time homebuyers will get a tax credit of up to $7500. This should definitely get some buyers out shopping. Based on what I read, the credit applies to those who purchase a home from 4-9-2008 through 7-1-2009. The credit will put money in their pocket since a credit is a dollar-for-dollar offset to taxes. Although I haven't read how it works, the homebuyers will have to pay the credit back over a 15 yr period. But, with no interest charge and a 15 yr period, it seems to me that this could be a very important aspect on getting the first time homebuyer market moving.

There will also be some refinancing opportunities for those in foreclosure but the program isn't expected to be in place until, at the earliest, October. This could help slow the pace of foreclosures which, in turn, will help stabilize the market in many areas. There is some help for FNMA and Freddie Mac, as well as funds for some communities to buy and rehab foreclosed properties. Overall, the bill should definitely help get the real estate market back on its feet.

With the low rates, the positive aspects of the housing bill, and some very good deals out there, the real estate market should soon see better days. And, as everyone who is in the stock market knows, you can't time the market. We sometimes need to remind our buyers (and ourselves) of that.

Cheers!

Bob Chiodo,

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Weekly Update 7/14

2008-07-14T18:38:18Z

*Rates

30 yr conforming 6.000

30 yr jumbo 6.375 (to $600k)

7/1 jumbo 5.875

State Bond FHA 5.625

OR VA 5.500

Last week was a very interesting week that should go in the record books. Friday was one of the most volatile I have ever seen. Rates were up and down and all over the place. I had received two, three, or more rate change notices from every lender. By the time you tried to quote a rate, it changed. The stock market was all over the place too. Of course, everyone knows that Fannie Mae and Freddie Mac made the biggest splash. Their stocks took a substantial drop and rumors were rampant. Take a look at the last paragraph to see one analyst's opinion.

Although they were higher on Friday, rates did improve this morning and we saw a small improvement since my last Weekly Update. We went through all of that stomach acid on Friday for nothing. Sometimes, it's better to just stick to business and not get caught up in the hype. Business is still out there, homes are being sold, and we are still lending money - and 6% is still a great rate. If only we can get the media to mellow out....of course, they couldn't sell their advertising if they did that.

I have written about inflation issues over the last few months. We all see it in higher gas and food prices. I read an interesting report from a money manager who oversees about $4 billion in bonds and fixed income. Here's a contrarian point of view: he sees inflation as a temporary issue but deflation as a bigger threat. Part of the deflationary issues stem from unemployment. "The higher unemployment rate points to downward pressure on wages and benefits. This is clearly happening since wage gains have fallen to 3.4%, down 0.9% from their cyclical peak. The low rate of manufacturing plant use indicates that firms do not have pricing power. As such they are unable to pass through higher fuel and raw material costs, thus squeezing their profit margins. The negative output gap confirms the excess supply in the labor and production markets and also points to lower inflation. In such a disinflationary environment, long term Treasury bond yields should continue to work lower." Bottom-line, he is looking for rates to be lower next year. I am sure none of us would mind that!

Mortgage insurance (MI) is in our headlines again. FHA has increased their MI premiums and have based them on loan-to-value and credit scores. Overall, the changes aren't significant. Lender Paid Mortgage Insurance (LPMI) has seen substantial increases though. Last week's premium with one MI company cost 1.15% (about .375% to the interest rate to remove the MI) on a 95% loan. If the borrowers qualified, this was a lot cheaper than going the standard MI route. This week that same program costs 2.40% - over a 200% increase. Now to remove the MI it costs about .75% to the rate. LPMI still could make sense for a buyer but it'll take some numbers crunching to see if it makes any sense.

Comments on Fannie and Freddie:

Fannie and Freddie had been in the eye of the storm for weeks, but it was the New York Times article on Friday that exploded into a tsunami. Was there some attempt to manipulate their stocks? That is now what the SEC will try to find out as it begins a look into who knew what and who may have leaked deliberately false information. The article in the Times that set off the panic Friday was based on comments from Treasury officials (of course unnamed) that implied the government would take over the agencies and that both were ready to hit the financial wall. Neither was true; the agencies have sufficient capital at the moment and sit on trillions of dollars of solid, seasoned and current mortgage loans; but it is housing and anything connected to it these days is ripe for the pickings. As we emphatically noted on Friday; the mortgage lending abilities of the two agencies will not be negatively impaired so mortgage lenders and originators need not fret. (Shirmeyer Rate Market Report 7/14/07)

Bob Chiodo,

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Weekly Update

2008-07-08T17:49:32Z

*Rates:

30 yr conforming 6.125

30 yr jumbo 6.625 (to 600k)

7/1 jumbo 5.875

OR VA 5.50

State Bond FHA 5.75

We are seeing some nice improvement in rates so far this week. After some negative comments from Lehman Bros about Fannie and Freddie on Monday, everything is looking better today. A regulator was quoted that Lehman's comments "make no sense". That's helped the rate markets along with a nice two day drop in oil prices and a corresponding increase in the value of the dollar. Let's hope a trend is starting to occur!

NAR reported pending home sales were down more than expected (4.7% actual vs. 3%) but I think most of us in this business already know that. We are seeing some very good buys come across our desk. Although it's tougher to qualify for financing, we are definitely seeing some excellent buying opportunities in our market.

Now for some changes: Fannie has announced effective with applications dated August 1, 2008, that their rules on converting a principal residence to a rental property are changing - and it's a big change. It's been typical in our industry that if you have a client who wants to purchase a home but hasn't sold their existing home and can't qualify for both the new and existing mortgage payments, the buyer would supply a rental agreement on the existing home. Lenders would typically use 75% of the rental income to offset the existing house payment. That dropped the buyer's total payments and made the debt-to-income ratio fit guidelines. It's been done a million times. But....come August 1st, it all changes. To use the rental income, lenders will need to legitimately calculate that the buyer has 30% equity in their current residence (using an appraisal, AVM, or BPO). Additionally, a copy of the executed rental agreement plus verification of receipt and deposit in the owner's account of the security deposit. If you can't verify the equity and the security deposit, the buyer will have to qualify for both house payments. Reserve requirements are also increasing in these situations. There is no question that this will make it tougher for some of our buyers to qualify for their new home. If you have a buyer that fits this description, get them in now. I'm certain that this new policy is trying to prevent those homeowners who are upside down in their current home from purchasing a new home and letting the existing one go into foreclosure. Freddie Mac hasn't made this change but, as is usually the case, will probably follow suit.

For some of my readers, please note that with almost 30 years experience in the Real Estate and Lending fields, I am well versed in many areas of our business. Keep that in mind if you ever have the need for a speaker to come out and address your group. I would be happy to accommodate your requests.

Final comments from one of the analyst reports that I receive:

There is continuing chatter from The Street that GM may file for bankruptcy; that would be a difficult thing to accept for those older than 45 0r 50. GM in the days of yore was considered the embodiment of US industrial and manufacturing strength and prowess, the envy of the world in the 50s and 60s. Sitting here thinking of the possibility is a very unsettling thought. The economic world has changed and the US is no longer the leader of the economic parade---except in spending.

Have a great week!

Bob Chiodo, CFP

Equity Home Mortgage, LLC

12550 SW 68th Parkway

Portland, OR 97223

(503)670-7393

fax: (503)670-7062

bobchiodo@equityhome.com

www.ResCommLending.com

*Rates quoted are for the use of Realtors and others in the real estate/financial service industries. They are not meant to be a quote for an individual situation. Rates change daily and those above are only listed to assist market participants by keeping them informed of current interest rates. Quotes are usually shown for a 30 day lock period and a 1% origination or discount fee.

Back from Italy with THE report..

2008-07-02T15:42:43Z

Rates:

30 yr conforming 6.125

30 yr jumbo 6.625

7 yr ARM jumbo 5.75

OR VA 5.375

I apologize for another late Update but I just returned from a 2 week vacation in Italy with my son. A high school graduation and college send off gift for him (and me). Time sure flies by. Wasn't it just yesterday when he entered school? I'll talk a little more about the trip in future updates but we had a great time.

I am almost caught up on my emails and all of the analyst's reports that I receive. Looks like over the last two weeks the market's volatility remained intact. Interest rates benefitted from the drop in stock prices. The analyst's call these "safe haven' moves. When stocks prices are dropping, traders sell stocks and buy bonds with the proceeds thus helping to drop the rates. One report suggested that if the stock market recovers, interest rates would jump a 1/4 of a percent. Personally, I don't think another 1/4 or even a half of a percent increase in rates will hurt our market. From a historical perspective, rates would still be quite low. There are signs that the housing market is strengthening and that the bottom might have passed. There are some very good buys in real estate today and we are starting to see some savvy buyers and investors enter the market. We still have a ways to go though to work through the inventory levels and the foreclosures.

The Fed met last week and didn't change the rates - that's what the market anticipated. All are curious as to when they will start increasing the rates. There is a lot of opinion as to whether they should increase rates or not. Increasing rates will help strengthen the dollar and help to ease the price pressure on oil and commodities, yet it could hurt employment and our business, in particular. This topic can be a very confusing and complex issue. Since I don't have any input with Mr. Bernanke, we'll just wait to see what he and the Fed does.

I hope everyone has a great and safe 4th of July. I'll tell you this, you can gain a greater appreciation for our country (especially the Northwest) when you spend some time outside of it.

...THOUGHTS?

Good Faith Estimates cont. (part 3)

2008-06-25T16:43:03Z

*Rates:

30 yr conforming: 6.25%

30 yr jumbo: 6.625% (to $600k)

7/1 jumbo: 5.875%

OR Vet: 5.50%

State Bond FHA: 5.75%

This installment of comparing Good Faith Estimates strays from its main theme but covers a topic that all borrowers need to understand. Look at the below loan quotes and decide which is better (let's assume that the garbage fees are similar).

6.00 with 1 point; 6.125 with 0.50 points; 6.25 with 0.00 points.

As you will recall from my first installment in this series, since .125% in rate equals .50% in points, all three of these quotes are pretty much the same. So which one is best?

The answer isn't a simple one because it depends on a number of factors. You can over-analyze this too and, believe me, I have done that. Let's first look at a what I call a cash-on-cash comparison. Assume the loan amount is $200000. The first option has a payment (fully amortized) of $1199.10 with a point cost of $2000 (1%). The 2nd option is $1215.22 w/cost of $1000, the 3rd is $1231.43 with zero points. The difference between each option is $16 per month for every $1000. Take that $1000 divided by $16 and it takes 62 months to break even. That's a little over five years. This is a very simple analysis. So I always ask client what would you rather have - a payment of $32 more per and $2000 in the bank or vice versa. The problems with this analysis: the lower the rate the more that goes to principle at the beginning of the loan. The first option has about $199 going to principle, the 3rd option has $189. That can impact the breakeven point. Tax deductions play another role. The first year deduction will be much better with the first option on purchase loans (assuming you deduct all of the points up front - on refi's you usually amortize the points) but in subsequent years the deduction will be lower (since the rate is lower). Opportunity cost of the money paid up front can come into play. If you spend the $2000 on the points, it's gone. If you kept it you can earn some interest on it. More importantly, if you kept it and needed it later to spend and didn't have other funds you might need to resort to using a credit card - which obviously has a much higher rate. That is one main reason why we tell our clients that we want to see them keep money in reserves after buying a home. I'd rather see a client take the higher rate and payment and keep the $2000 in the bank if that was all they had.

On a purchase loan, having the seller pay costs can impact this decision. It might make sense to use the seller's money to buy the lower rate. Obviously, the borrower's monthly budget needs to be taken into consideration. Can they handle the higher payment. Normally it's not that big of an issue but what if the buyer is buying at the very top of his or her limit?

As I said before, you can over analyze this - and I pretty much did with all of the info above. I tell clients if they get confused then take the middle ground - the .50% point option. That's easy. But, if they are only going to keep the loan for a short time period (less than a couple of years) then the zero option is always best. As always, send me a note if you have any questions.

AHHH! The return of the "Good Faith Estimate" post!!

2008-06-18T16:02:07Z

Rates:

30 yr conforming 6.25%

30 yr jumbo 6.625%

7/1 jumbo 5.75%

OR Vet 5.5%

OR Bond FHA 5.75%

There is still a lot of volitlity in the market place. The rates down a little off of this weeks high. We are still expecting the Fed and ECB will lead the way to higher rates in the future, we don't look for any central bank to begin tightening until later this year. The action in the bond market yesterday and today is taking back a lot of the selling that was instigated by the view last week the Fed was about to move.

In this week's installment on Good Faith Estimates (GFE) I am going discuss my take - and that's my take only - on Annual Percentage Rate or APR. First of all, I think that the APR, even though it's a regulatory requirement, is a terrible way to compare loan programs. APR's are very difficult, if not impossible, to calculate without a computer. In fact, I don't know anyone in our business who can calculate an APR by using only a calculator. I have been in this business for almost 30 years and, although I learned how to a long time ago, I can't calculate one without my processing software program. I would say that most in our business don't truly understand what goes into the calculation and how it relates to the Truth-In-Lending form. To me, though, it doesn't matter. The last two previous Weekly Updates clearly explained how a borrower should compare GFE's and not once did I mention APR's. I think that most in our industry understand that the APR disclosure needs to change but getting a consensus on how it should change has been very difficult to accomplish.

A couple of problems with the APR. As I previously mentioned, if most don't understand how then APR is calculated, then how can they tell if it is accurate and what changes it? The APR takes certain costs and fees charged on a loan (Prepaid Finance Charges) and includes these certain charges into an amount called Finance Charges (which also includes the interest paid on the loan over it's term). These Prepaid Finance Charges are removed from the loan amount with the remainder being labeled the Amount Financed. Then the Finance Charges are calculated back into the Amount Financed and you get your APR. Sound confusing? You betcha! There are things that will change the APR. Prepaid interest can change the APR - which means that the date the transaction closes will change it. What we estimate for some third party fees (escrow charges) will change it. I do primarily purchase transactions. If the seller contributes money to the buyer's closing costs, this will change the APR. I just ran one scenario where the seller paid most of the buyer's closing costs (this happens frequently) and the APR came back lower than the actual interest rate. That's because the seller paid an amount in excess of the prepaid finance charges - part of the closing costs aren't considered Prepaid Finance Charges.

YOUR THOUGHTS?

Good Faith Estimates and "Garbage Fees"

2008-06-11T17:19:09Z

Rates:

30 yr conforming 6.125

30 yr jumbo 6.375 (to 600k)

7/1 jumbo ARM 5.625

OR Vet 5.250

State Bond FHA 5.625

As you can see, we had an increase in rates for conventional loans. The bond market dropped over the last few days taking mortgage rates up. I mentioned a few weeks ago that ARM's were much lower than 30 year fixed. The big rate difference has changed. With our Fed commenting that they are more concerned with inflation rather than the economy, the Treasury and rate markets jumped. Especially at the short end - and that is where the 3 and 5 year ARM's are priced. This week's consensus is that rates will start a new range - from 6.00% to 6.50%. Of course, that consensus can change next week.

Underwriting guidelines are still being restricted but we are hoping that we have seen the end of the tightening. Fannie and Freddie recently announced their changes and the MI companies have already announced theirs (some of the effective dates aren't until next month). Hopefully this is the end for them as there are signs that things are stabilizing. The recent pending sales report from NAR showed an unexpected large jump and a foreclosure report showed that the rate of foreclosures has slowed two months in a row. This is leading many to think that the bottom, if we are not already there, is just around the corner. Some of our lenders, however, have placed new restrictions on their guidelines. One large national bank has just announced loan-to-value restrictions (max. 90%) for our Tri-County area and another national lender has cut their second mortgages down to a max of 85%. We will still see some tightening by individual lenders but most of us think that the big guys (Fannie, Freddie, et al) are finished.

This installment on my Good Faith Estimate (GFE) theme deals with what I call "garbage fees". Personally, what I call garbage fees are all fees charged by a lender or broker that are not points. As you may recall from last week's discussion on the different terms used for points (origination, discount, mortgage broker fee), I consider points as part of the interest rate comparison. Garbage fees have many, many names. Some are very legit, others are ways to increase the bottom-line (for the lender, of course). Fees for credit reports, tax service and flood certs are legit. The total of these are usually about $100 or so and are charged by practically everyone. Appraisal fees are part of this too but those can range from $150 - $600 or more, depending on the type of transaction. Title insurance, county taxes and recording fees, total escrow charges, property taxes and hazard insurance costs are from third parties. These charges often show up as different amounts when comparing GFE's but these are just estimates of what others will charge for their services. When comparing a GFE, these latter charges shouldn't be included in your analysis. When a GFE is completed, we lenders estimate what these other service providers will charge. Regardless of our estimates, those other providers will charge what they need for their services. Typically, lenders have nothing to do with those charges. So, to complete a comparison of a GFE, you review rate, lock term, points, and garbage fees. When I review a GFE, I look for fees labeled as processing (almost all lenders have some form of processing fee), underwriting, document preparation (doc prep), warehouse, administration and review fees. Sometimes, you'll see other creative fees. It's very common to see a lender charge a processing fee and a doc prep or underwriting fee. For instance, a mortgage broker will normally charge a processing fee to package and process the loan. Once completed they will forward the file to a wholesale lender who will underwrite the file and disburse the funds. The wholesale lender will always charge an underwriting or document fee of their own. Seeing those two fees would be normal. Some lenders can and will charge excess fees. For example, I reviewed a GFE recently and the broker had charged .50% origination (which is fine), a processing fee of $595 an underwriting fee of $495, an Administrative fee of $295, and a document preparation fee of $495. When all totaled, it was on the high side. Although the .50% origination fee sounded good, when all of these other fees were added, the total cost of the loan made it uncompetitive. On a loan of $100,000, those fees added up to be almost 2%.

When talked with last week's update, a borrower should be able to make a complete and accurate comparison between two or more GFE's. As always, if you have questions just shoot me an email.

PLEASE FEEL FREE TO GIVE FEED BACK. I WOULD APPRECIATE IT.

Learn about the market 6/3/08

2008-06-03T16:32:09Z

Rates:

30 yr conforming 5.875

30 yr jumbo 6.375

7/1 jumbo 5.625

OR VA 5.250

We saw a jump in rates late last week but it appears most of the increase has been erased with rates coming back down yesterday and today. The expected trend is for them to stay within a new range of 5.75% - 6.25%. A little higher than the past 2 month range but still very attractive historically. Let's not forget that rates have only been under seven for the last six years or so. Prior to that, they dipped to around seven in 1999 but, for over 20 years prior to that, they were well above seven. 6.25% seems like a good deal when you look at the last 30 years. Under six is a whole lot better!

I have mentioned that Fannie Mae has changed their automated underwriting system. The revised system is now in effect. As is the usual case, Freddie Mac has followed the lead and has just announced that they are making changes to their system. That didn't take long....their system changes are effective in two weeks. They did announce that some of their guidelines are tightening.

This weekly update is the first of a few that I will discuss Good Faith Estimates (GFE's) and how to understand them. I have seen many GFE's lately and I am concerned with the trend that is appearing. The GFE is supposed to making shopping for a loan a simple task. But, lately, that isn't the case. When comparing GFE's the first step is to try to make the estimates comparable. That's not easy when two or more estimates have different rates and fees. Over the next few Updates, I'll discuss how to adjust the estimates to make them comparable.

Today I'll cover rate and points. The examples will be for a 30 year fixed but a similar analysis can be made for ARM's too. Here is an important rule of thumb:

on a 30 year fixed, for every .125% in rate, the borrower will either pay or save .50% in fee. That fee will be called points - either origination or discount - or a Mortgage Broker fee. There could even be a combination of these fees. I have heard lenders say they are charging no points but there is a Broker Fee. Although that is a technically correct statement, I think it's misleading. It's still a fee that most call points. I have seen this from brokers and even large banks. Some large banks are quoting no closing cost loans but have a large discount fee. Again, that is a misleading statement. So when comparing GFE's, one needs to add the loan fee/broker fee/origination points and discount points together (I'll cover other fees in a later Update). Use that with the rate quoted and the rule of thumb I mentioned above. As an example, say we have three GFE's with three rates and different fees:

6.00 0 points but .75% discount

6.125 1.00 point but no discount or broker fee

6.00 0 points, 0 discount, but a 2000 broker fee.

Which is better? Let's compare apples to apples using the rule of thumb (remember it's just a rule but it will be very close). To compare them, let's make the second one a 6.00% quote too. We do that by buying down the 2nd one by .125% (an eighth of a percent) in rate to get 6.00%. The rule says that would save .50%. Take that .50% from the points quoted (1.00%) and you get a remainder of .50%. So the second quote would be 6.00% with .50% cost. That's obviously cheaper than the first one. The third one already has the same 6.00% rate but we have to convert the Broker fee to a percentage. To make it easy, let's say the loan amount is $200,000. Take the Broker fee of $2000 and divide it into the loan amount: $2000/$200,000. That equals 0.1 or 1%. So the third quote is now 6.00% with a 1% fee. So, in the example above, the 2nd quote should be the best one.

6.00 at .75

6.00 at .50

6.00 at 1.00

It might seem a little confusing at first but work with it and it will make sense. Next week, we will cover more. Please feel free to call or write if you have any questions.

Market Update 5/30/08

2008-05-30T10:49:43Z

Rates:

30 yr conforming 5.875

30 yr jumbo 6.125 7/1 5.50

OR VA 5.250

Rates ended up a little last week. However, interest rates still remain range bound. We have seen 5.50% to 6.00% for well over two months now. Over the long term, most economists predict increasing interest rates as the world adjusts to the increased energy and food costs. As you can see, the Oregon Dept. of VA has the best rate out there. Only 5.25% for a 30 yr fixed. Did you know that you can refinance a mortgage using the OR VA as long as the home was purchased in the last 18 months? It's a nice option for veterans. Just call if you have any questions.

Here are a couple of noteworthy items: 1) By now everyone knows that Fannie and Freddie have increased their rates for those with scores lower than 720. It costs an additional .125% to rate between 680 to 719. A lot higher if you are lower than that. That said, these increases are only for terms greater than 15 years. So, a 15 year mortgage term isn't subject to the rate increases. This might be a good option for a few buyers out there. 2) ARM's are back. As the yield curve returns to "normal" (where shorter terms have lower rates and longer terms have higher rates) we are seeing 5/1 ARMs being priced much more aggressively. You can get a 5/1 or 7/1 in the low to mid five's now. It's a good option for those who won't be holding on to their home for a long time. FHA also has a very reasonable 5/1 today.

Speaking of FHA.....make sure your clients are aware of their anti-flipping rule. This comes up on homes that have changed hands within 90 days of a new sales agreement. For example, if I bought a foreclosure last month and wanted to sell it this month, my buyer couldn't obtain FHA financing. FHA requires a 90 period between sales. Please pay particular attention to the issue with contract dates. This 90 day period has to elapse before an offer can be signed/dated. Also, no work on the file can be performed prior to the expiration of the 90 day period - no appraisal, prelim, etc. We recently closed one where this occurred. The buyer and seller couldn't execute the sales contract until the 90 day period elapsed. Let's just say this caused some angst between all parties - it did close though. Special rules do apply if the previous owner acquired title through foreclosure proceedings (i.e., bank owned).

Remember, Fannie's updated DU system becomes effective this weekend. It'll be interesting to see how conservative the changes will be. If you can, get your buyers pre-qualified before then.

Would appreciate your thoughts on this!!

Have a great week!

WHAT IS GOING ON...AGAIN?

2008-05-30T10:47:07Z

Rates:

30 yr conforming 5.875

30 yr jumbo 6.125 7/1 5.50

OR VA 5.250

Remember, Fannie's updated DU system becomes effective this weekend. It'll be interesting to see how conservative the changes will be. If you can, get your buyers pre-qualified before then.

Would appreciate your thoughts on this!!

Have a great week!

WHAT IS GOING ON?

2008-05-22T16:32:46Z

Rates:

30 yr conforming 5.625

30 yr jumbo 6.125 7/1 5.625 (80% max)

ODVA 5.250

OR State Bond 5.625

As you can see, interest rates are doing very well. I think this is the lowest we have seen for the last 30 days or so. No one seems to know where they will go from here though. Some think lower, most think higher. Again, as you have heard from me a number of times, inflation concerns are the primary driving force causing most to think rates will increase. Over the last week, the two main inflationary reports came out. CPI and PPI. Both of these were lower than expectations but both also showed that gasoline prices were lower in April. Not in our world! It seems that an adjustment due to seasonal factors was applied - it obviously flawed the reports.

We did have an announcement that Fannie Mae will no longer restrict loan-to-values (LTV's) in, as to what they determine, declining markets. Good news, but for those transactions with little down, the private mortgage insurance companies (MI) make the rules too. If you can't get MI then it doesn't really matter what Fannie Mae says. For zero down, we still have FHA with a down payment assistance program, VA and the USDA rural program. We can do 97% on conventional with our mortgage insurance company - there are a few MI companies still doing that - only on single-family homes. Condo's are a different story. Most are requiring 10% down. When listing or selling a condo, always check the FHA list. If it's already FHA approved, our job gets a lot easier. That web site is: https://entp.hud.gov/idapp/html/condlook.cfm

Last week I mentioned that FNMA's automated underwriting system has gone through a major revision. That's effective for June. They don't tell us what changes they are making but I anticipate that credit standards and debt-to-income ratios will be tighter. If this is the case, it's better to get your borrowers pre-approved before the end of the month.

A final note on inflation. For those of you who watch inflation readings as I do, here's a quote from Charles Gave of GaveKal (www.gavekal.com):

"So maybe, just maybe, what we are seeing today is a change in relative prices (food and energy higher, housing lower) and not a general rise in the inflation rate."

Translation: this period of inflation may be a required, long term adjustment to higher food and energy prices. Once these prices are hit, inflation readings will stabilize. Good news for the long term but, for us consumers, higher gas and food prices will stay with us.

WHAT ARE YOUR THOUGHTS??

WHAT IS GOING ON??!!

2008-05-21T18:02:24Z

Rates:

30 yr conforming 5.625

30 yr jumbo 6.125 7/1 5.625 (80% max)

ODVA 5.250

OR State Bond 5.625

A final note on inflation. For those of you who watch inflation readings as I do, here's a quote from Charles Gave of GaveKal (www.gavekal.com):

"So maybe, just maybe, what we are seeing today is a change in relative prices (food and energy higher, housing lower) and not a general rise in the inflation rate."

WHAT ARE YOUR THOUGHTS??