Great News,
We are now offering Fannie’s new HomePath loan program! Let your clients know these improved loan terms to generate new business. Essentially, the program has the clients using Fannie loans to buy foreclosed properties owned by Fannie, therefore Fannie gives improved loan terms to the buyer.
PROGRAM HIGHLIGHTS:
-97% FINANCING WITH NO MORTGAGE INSURANCE ( That’s a lower monthly payment and lower closing costs)
-90% FINANCING ON INVESTMENT PROPERTIES
-NO APPRAISAL REQUIRED SAVING YOUR CLIENT TIME AND MONEY (Value is selling price determined by listing bank)
-CONDO’S AND 2-4 UNITS OK
-TODAY’S HOMEPATH 30 YR RATES AT 5.0%, 5 YR ARM’S AT ONLY 3.875% !!
TO SEE A ELIGIBLE PROPERTIES IN YOUR AREA SIMPLY GO TO WWW.HOMEPATH.COM

Email or call me with client loan scenario’s that can benefit from this awesome program.

Successfully [not Sincerely],

[Loan Guy]

It seems we’ve heard this before?

Can you have someone, maybe “the banker”, speak to the loan environment and requirements for loans on homes over 1 million dollars? Thanks.

Banker? You reading? You can either send us your answer via email, or post in the comments and we’ll cut/paste to the front.

[Update: It took him all day , but "the banker" chimed in...]

Jumbos are certainly still available and with a watchful eye and the right advice, the pricing is not absurd at certain institutions. The number that seems to be consistent with Jumbo Financing is a 70% Loan To Value, perhaps some banks may max out at 75%, but most counties are considered to be declining market and stuck at 70%. In terms of product types, these are few, 30 year fixed and a 5 year Arm may be the only two choices left. Within the fixed and adjustable choice, there may be a few interest only options to choose from.
Standard credit requirements are at least 720, Full income verification, and strong asset position, at least 6 months to 12 months of reserves.
Jumbo rates have been all over the board, but I have recently seen mid 5’s, no points, standard Bank fees. But, this is a Bank Loan. . .I am not certain Mortgage Brokers have many options on the Jumbo side of the game as many of there vendors have ceased making this type of loan or have shut down completely.
As we continue to see falling prices, this will be one of the most “cautiously monitored” loans, but as updates occur. . .I will make sure to post.

Thanks!

Now the Shame of it all. . .

Rates are strong.  Company earnings this week have forced money out of the stock market and into treasuries causing a drop in the 10 year yield, thus affecting mortgage rates.  These days, there is no rhyme or reason in pricing loans, or what we call around here; RISK!  So, rates are strong and a slim number of the population can afford to buy(down payments), refinance(income,etc), or eat dinner out.  We have been completely stalled by the current state of the market and all the while interest rates are still at fantastic levels and we are running out of time for the Jumbo Conforming Loan changes. . .this is currently $729ish and will be reduced to $625ish. 

One last blow. . .E loan is now gone and Downey Savings, one of the negative amortization kings, is also gone.  Lastly, Gateway Bank wholesale has also left the building. 

My point; rates are good, property is moving at so called “deals,” and we are running out of time!

“Crazy times. Whatever the political posturing, a plan needs to be passed. Credit markets are frozen and banks are going bust every day. This is not totally because of “toxic” mortgages. This has a lot to do with FASB 157, also known as “mark to market”.

Each day lenders must mark their assets to the marketplace. It’s like you having to appraise your home everyday and if your neighbor was under duress because they got very ill, divorced, lost their job and was forced to sell their home quickly they may have sold it super cheap. Now, does that mean your house is worth that super cheap price? Clearly not. Why? Because you are not under duress. You have the time to sell your home and get a more normal price, which more accurately reflects true market conditions. But “mark to market” does not allow for this, which creates a vicious cycle.

Why is this so bad? Because as lenders mark down their assets the amount that they have loaned previously becomes much riskier in relation to their assets. For example, say a bank has $1 million in assets and say they have $15 million in loans outstanding. Their ratio is an acceptable 15 to 1. But should they take a paper write down of $500 thousand due to “mark to market” requirements, their ratio suddenly changes to 30 to 1. This is because their assets are now only $500 thousand after taking the paper loss, while their loans outstanding are $15 million. And at 30 to 1 this bank is viewed as a risky investment. So the stock price starts to get hit, it becomes harder to borrow, and most importantly harder to make money. The bank is then forced to sell some of its loans to reduce its ratio…at cheap prices. And this makes the vicious cycle continue.

And a quick look at the holdings of these loans show that 95% are problem free. Additionally, the Credit Default Swaps (CDS) that are used with the pools of mortgages are relatively safe. But this requires a bit of understanding. You see, when a pool of mortgage loans is put together it isn’t just A paper or B paper etc. it’s everything. It’s got some A paper, B paper, C paper, and even what looks like toilet paper. An “A” investor buys the whole pool but because they are an “A” investor their safety is greater because they can avoid the first 20% (an example) of defaults. So they own the whole pool but are sheltered from the first batch of defaults, and for this they get the lowest rate of return. As you can figure from here the more risk investors want to take, the higher the return. So the investments are relatively safe, but the accounting rules currently place undue pressure on the banking institutions.

Now add to all this the opportunistic shorting done on the financial stocks, much of it illegal because those shorts did not legitimately borrow shares (called naked shorting), and you exacerbate this whole problem. Thank goodness for the recent temporary ban on shorting in the financial sector. As for the plan the government is the only one who can step in to do this. And they have to do this. And they will do this. The nauseating political posture from both sides is just part of the process.

This is not easy to understand for the general public. In fact most politicians don’t get this either. That’s why it is a difficult yet critical bill for them to vote on.

Once this is done it will take some time but the markets will stabilize. As for our industry it will take a bit of time but we will make it through this. Rates will remain attractive and the influx of credit availability will help the housing market gradually improve. This ultimately will be the medicine needed to fix our industry. We just need to be patient. Those who can stick it out will be handsomely rewarded.”

[Update: There have been a couple good comments made on this post and its accuracy. Make sure to check them out.]