Greetings,
Rates are up a fraction again according to survey
The average 30 year mortgage was up to 4.87% from 4.86% last week according to the Freddie Mac survey. The 15 year average was up to 4.10% from 4.09%. The 5/1 ARM average was up to 3.72%, from 3.73%. Average rates contained .70 discount points. One year ago the average weekly average was 5.21%. So far the pending government shutdown has not caused any immediate change in mortgage rates. That could change next week if investors lose confidence in U.S bonds. The Federal Reserve’s Loan Officer Compensation Rules went into effect this Wednesday. The overall effect is that rates may be slightly higher for consumers because loan officers are quoting from their “rate sheet” price and are discouraged from cutting their companies market pricing. Previously the lender and loan officer split the pricing underage’s and overages, which allowed more pricing flexibility. Terms will vary by lender as loan officer compensation must be in line with their pricing structures.
Points of Interest
Lenders must verify that an applicant has filed their tax returns (or filed an extension). The form 4506 is the means to receive this information. If an applicant has not filed returns for a year needed for loan qualification, it can cause a delay in loan processing. Returns take some weeks to be processed in the IRS system and time to get listed depends on electronic or paper filing. Encourage buyers to have their last two years taxes federal taxes filed and use electronic filing if possible.
You have heard of property flips (homes sold under 90 days from seller purchase). Now come “flops”. These are contracts originally submitted to banks as short sale offers and are usually in the buyer name of partnerships or LLC corps. The accepted contract is then assigned to a new buyer at a higher price, many times with the same settlement date as the LLC so no money is needed by the original buyer. Mortgage investors are concerned about fraud in these transactions and many will not accept an assigned contract. They also search the identity of the LLC or Partnership for conflicts of interest. Currently flips with increases of over 20% over the sellers original sales price require 2 appraisals to substantiate the increase.
Advise buyers not to apply for additional credit or raise their indebtedness during the loan application process. Mortgage investors are starting to require a “soft pull” credit update which discloses any additional debt balances or payments. Variances can cause the loan to be re-underwritten and could hinder a transaction.
Presidential Bank Mortgage can qualify buyers with the projected income from their signed employment offers. Buyers must be starting their positions within 60 days of property settlement and we must verify the offer is still valid prior to closing.
Stay dry this weekend! I am available by cell phone and email and I always take care of your referrals!
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John Melnick II
Senior Loan Officer
11320 Random Hills Rd. Ste 100
Fairfax, VA 22030
703-460-5510-O
703-303-6434-C
703-277-2882-F
www.MelnickMortgage.com apply online Thanks John for allowing me to share this information. Jeff Pearl
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