Not much movement in rates today.  The bond market opened up strong with big gains but those were quickly lost. 

Even with all the uptick in bonds not many banks are passing on these gains with even lower rates. 

However we are still seeing a "

• 30 year fixed High Balance conforming FHA loan 3.6% down (>$417K - $729,750 loan amount) with 620 FICO at 4.75%; 
• Conforming FHA  3.5% down 620 FICO 4.5% 30 year fixed
• Conforming with 20% down 720 FICO 4.625% 30 year fixed
• High  Balance loan with 20% down 720 FICO 4.75% 30 year fixed

Many are looking for safe havens right now due to news that Dubai has asked for a 6 month reprive or payment of their debts.  Safe haven usually means bonds.

Dubai which has funded projects all over the world and holds billions of dollars of debt on their books.  Many of these debts are are held by financial institutions that could be significantly impacted by this.  

• Dubai Jitters Infect Debt of Sovereign Spendthrifts    http://online.wsj.com/article/SB125936720204567249.html?mod=WSJ_hpp_LEFTTopStories
• Nervous Money Seeks Safe Have  http://www.mortgagenewsdaily.com/consumer_rates/121079.aspx

Don't know how long this ride will last! 

Now is your time to Refinance or Buy.  Get off the fence...

Unbelievealble, Bond market is UP!!!  it is almost to the levels it was on Mar 19, 2009 but a few days after that we lost alot of those gains.  So honestly we don't know what Friday or Monday will bring, tough to say.

Recommendation.... LOCK if you are closing in the next 30 days.  RATES are the lowest they have been since March.  Potential reprice for the better today or on Friday but.....I see a drop coming and better to be ahead of it than to REGRET it!

Lock Lock Lock.... WHY....

The market could see some volitalite. 

There is alot of economic data due out today, some of which has already been released.  Jobless claims came in lower than expected.  Home sales improved but could this have been due to the First Time Home Buyer tax credit many thought was going to expire so there was the rush to close before the end of Nov.  Personal spending came in slighly higher and the saving rate remains high.  http://www.mortgagenewsdaily.com/mortgage_rates/blog/120772.aspx

Alot of good news for the economy which is usually bad news for bonds because it pushes people out of bonds into stocks because they want to captialize on the gains of our economy. 

However we are still seeing the improvement in the bond market which is keeping rates in the 4.5% to 4.75% range depending on borrower FICO, donw payment etc; always remember a interest rate is a custom quote for each borrower. 

BUT BEWARE...  bonds have a long way to fall and it could happen suddenly as the remaining economic reports are released today.  LOCK those rates in don't regret later....  GREED in this voititale market can come back to bite you....  As I'm typing this Bonds have already lost some small gains from yesterday with all the good news that was released with more news to come.....

The Tresasury is auctioning off another $32B in 7 year notes, if the auction goes well then bond prices may hold but if the auction doesn't we could see a decline.  Remember these notes are our debt and if no one is really interested in purchasing it hurts the bond market.  Yesterday's auction of $42B of 5 year notes was well received.  GDP and Consumer Confidence came in slightly better than expected which could be part of what pushed the stock market up as this can be a indicator for an improved economy pushing people out of the safe haven of bonds into stocks.    http://www.mortgagenewsdaily.com/consumer_rates/120561.aspx  Article on why to LOCK

http://www.mortgagenewsdaily.com/mortgage_rates/blog/  Mortgage Back Securities Commentary

VALLY REAL ESTATE NETWORK

Last year the Valley Real Estate Network transformed their annual yearend Holiday Party into a fundraising event for the 2^nd year and raised $25,000. In the two years of this event, VREN has raised $67,000 for local Tri-Valley Community Organizations such as Tri-Valley Haven, Open Heart Kitchen, Hope Hospice and Axis Community Health. The party is a great event, but the best part is raising these funds to help so many needy families and individuals.

This year the Holiday Event will be held December 9, 2009 from 6-9 PM at the Marriott Pleasanton Hotel. Tickets are $15 and will include a fabulous array of hot and cold appetizers, a live auction, prize drawings, entertainment and dancing!

I'm excited to share with you our financial goal to reach $56,000. Here is how you can help; Any contribution you make will be matched 4 to 1 For example, a contribution of $10 will turn into $40, a $100 will turn into $ 400 and $250 will turn into $1,000.

I hope you will join us this year in contributing directly to the fund and or attending the event. Thank you for helping us, help those in need!

 http://www.vmamakingadifferencefund.org/default.html

Sincerely, 

Roy Dronkers

President,VREN

925.872.8671

Bonds finished up 25bp as the Fed minutes from their previous meetings indicate no rate hikes anywhere in the near future. The Fed expects unemployment to remain high in the range of 9.3-9.7% in 2010---- that may prove to be very optimistic.

Stocks were down 17pts.

Update.....Auction results were very good, and bonds are up 28bp at $102.28. $102.28 is the exact top reached in early October. It will be interesting to see if bonds have any steam left. 

Looking at the bond page bonds have gone up so we this could put some in a posiiton to maybe re-price but maybe not.  With rates as good as they are now the banks probably will just hold steady on pricing for today. 

Bonds prices are really pushing the next ceiling of resistance which gives bonds a long way to fall.

 Earlier posted.....Mortgage Bonds are slightly higher, but off their best levels of the morning.  Once prices approached the intraday high from October 2^nd, they subsequently backed off.  This has us on guard as the market appears overdue for a move lower.  What continues to prop prices up?  As we have been discussing, it's the weak Dollar and carry trade. 

In the news, the Preliminary Gross Domestic Product reading for the 3rd Quarter was reported in line with expectations, while Consumer Confidence was reported slightly better than expected. Also, the Case-Shiller Index for September reported a slight rise in home prices in the 20 largest US cities, marking the 5th consecutive month of price increases.

At 1pm ET, the Treasury will auction a record $42B in 5-year Notes.  This follows yesterday's good auction results of 2-Years, which helped push Bond prices higher.  Then at 2pm ET, the Fed Minutes from the November 4th meeting will be released.  It will be interesting to see if there were any comments from members regarding removing the current accommodative policy.  And looking ahead, next Thursday December 3rd, is the day the Senate decides to either approve or disapprove Obama's nomination of Fed Chairman Ben Bernanke to a second term.  There has been chatter from some, including Chris Dodd, suggesting that Bernanke's nomination is in jeopardy - but we think it will go through.

Based on where Bond prices are right now in relation to resistance and historic highs, I recommend locking in recent gains.  There is no rush but bond prices seem to be bouncing back and forth on that 1st line of pricing resistence thus we could see some gains or we could see some sudden losses thus getting a re-price for the worse. 

Interest rates are very good holding at around that 4.875% to 5.125% depending on if you are conforming or high balance conforming.  If you are closing in the next 10 days lock in and not stress about it as you have a great rate.

You can refinance your conventional mortgage into a FHA mortgage. 

FHA will allow you to refinance to 96.5% loan to value but there can be no cash out.  Loan to value means the amount of your loan as a percentage to the value:  example value of home is $200K with a loan of $193K gives you a loan to value of 96.5%.

If you are trying to refinance an into an FHA loan and taking cash out than there are limitations.  Most banks will not allow you to take out cash beyond 85% loan to value.  What does that mean:  If your home is worth $200K you cannot have an FHA loan with cash out beyond $170K.

This is for loans that are $417K and under.  The guidelines for loan amounts > $417K to $729,750 maybe different. 

FHA has max loan amountsallowed that are based by state and than by county.  These limits are set by HUD.  The max loan limits are set by HUD and are 120% of the median home price for the county to a max loan amount of $729,750.  Example:  Calaveras County, CA max loan amount is $462,500 for a single family home versus in San Francisco County, CA the max loan amount for a single family home is $729,750 which is the max amount HUD will allow for FHA. 

Good info on the local market in Contra Costa County.

Mortgage Bonds are trading slightly higher and, for the moment, remain relatively close to the best prices of 2009.

This morning, Initial Jobless Claims met expectations, and Continuing Jobless Claims fell by 39,000. Once again, that drop is likely due to benefits expiring, rather than people finding jobs. Later today, the Treasury Department will announce next week's auctions, which could add volatility to the market, depending on how the announcement is received.

Currently, Bonds are near their highs for the year. Therefore I recommend locking, since there's presently a higher risk of Bond prices moving to the downside than there are potential gains available to be made on the upside.

Interest rates are holding in the 4.875% range on a 30 year fixed.  Remember that interest rate quotes are custom to each individual.  Factors that must be considered are credit score, type of loan, down payment, reserves, area buying, co-borrower, etc. 

In the case above 4.875% on a FHA loan with 3.5% down, 30 year fixed, 620 FICO, no reserves left at closing, with 1 point on a $500K home purchase. 

4.875% for a conventional loan 30 year fixed with 20% down on a $500K purchase need 700 FICO.  In this same scenario if your credit score is 680 your interest rate is now 5.125% on a 30 year fixed.  All with 1 point orgination fee. 

Just a small change in credit score and loan program can change the dynamics of the interest rate.

Never take them at face value. 

Yes you can but you need to find out what your loan to value will be when you combine the two as banks are limiting the amount they will loan on a cash out refinance.

You maybe asking; I'm not taking cashout.  In the eyes of the banks your 2nd is cashout because you took a 2nd mortgage out on your home's equity (like drawing on your credit card limit) and now you want to combine that cash you took out into a new securitized first mortgage.  The equity in that home is reduced and will take longer to pay off combining it into a longer term mortgage.  They look at your home equity line in someways like a credit card debt thus you are combining your cash debt (cash out of your home) into a first mortgage.  

Banks also look at cash out refinances as a higher risk.  Borrower is leveraging even more of their home thus reducing the amount of equity available.  Putting the bank at risk if there is a foreclosure or short sale as the equity has been reduced because of the cash out thus leaving the bank and it's investors with a nonperforming investment.

Most banks will not allow a cash out refinance beyond 85% of the value of the home.

Good Day!!! 

• What a great time to be a Buyer, Seller, or Refinancer!
• Interest Rates are the lowest in over 30 years.  That is unbelievable.  So what ARE YOU WAITING FOR!  Move up, buy a home, or refinance.
• Rates will not stay here forever.
• OH wait and home prices at their lowest

Below you will find.....
-          First Time Home Buyer Tax credit
-          Extension of Higher Loan Limits
-          FHA Condo Changes
-          Change to Debt to income ratio
-          CAR helps buyers and Realtors stand out! - flyer attached

 First Time Home Buyer Tax Credit - has NOT passed yet:  Here is what we know:
-  Has passed the Senate but has to go back to the House than to the President
-  10% of the purchase price to max of $8K for FTHB
-  Extended to Apr 30 but COE has to be within 60 day after
-  Move up buyers eligible; has to have lived in their house the last 5 of the 8 year;  eligible for $6500 credit
-  Capped at purchase price to $800K
-  Income limits are expanded to $125,000 on a single return and $225,000 on a joint return. Current law $20,000 phase-out retained.

Extension of Higher Loan Limit
            There is a bill that has passed House and Senate that is to extend unemployment benefits.  Also tied to this is the extension of the High Loan Limit of $729,750.  It is sitting on the President's desk waiting for signature....

FHA Condo Changes Dec 7th
There has been no full release of the new guidelines yet by FHA.  We do know:
-  Spot approvals will no longer be allowed
-  Condos FHA approved prior to Nov 2008 will no longer be FHA approved
-  Banks will be allowed to do the approval but there will be heavy fines ($1M or $500K I've heard both) if HUD finds the approval not to regulation/liking.
-  The cost for an HOA will be $3 to $5K for the approval
-  HUD will take 8 to 12 weeks to approve
-  Only 30% of all condos in the complex can have FHA loans

CAR Help Buyers - Mortgage Protection Program -   http://www.car.org/aboutus/hafmainpage/carhafmortgageprotection/
     I made a call yesterday to find out that one of my clients a First Time Home Buyer a year ago was laid off 3 months ago.  I gave him some advice but what could I say.
There is something that you can do for you current First Time Home Buyers.  I've told you about this before but I think we all need a reminder...... 
                              C.A.R. Housing Affordability Financing Mortgage Protection Program
Qualified buyers who lose their job due to Layoff maybe eligible to receive $1500 per month for up to 6 months to help them making their mortgage payments

Change to Debt to Income Ratios
     As I mentioned in a previous email; maximum debt to income ratio guidelines are changing.
Date has been moved to Dec 12th with the release of Fannie Mae's updated underwriting software (DU). 
The max debt to income ratio of ALL LOANs will be 45% with exception to 50% with compensating factors; reserves at closing, high FICO (680 or higher), 10% or more down payment, no derogatory credit history, and others. 
           What is debt to income ratio:  all expenses / total income
            Example:  Two Borrowers;  Total expenses before purchase of new home of $1000
           -  Total income is $6000
           -  Borrower is purchasing a home for $200K with total house payment of $1800
                    (principal/interest/property taxes/insurance)
           -  Debt to income ratio ($1000+1800)/$6000 = 47%