MORTGAGE RATES REPORT

Speak English Or Go Home!

How often have you heard that statement?  If you live in California, Florida, or the Southwest, you've either heard that statement, or made it, 2-3 times in the past month.  The immigration and assimilation of Spanish-speaking people, both legal and illegal, is reaching record numbers in this country and its cultural effect is disruptive to the "old" and "new" Americans, alike.

I asked, "Should English be the Language of Business in America?" on NELA Live, last March.

Well, it turns out that there is a sub-group of the financially clueless who actually may have a case; they didn't understand the loan paperwork because English is not their first language. Their first language is Chinese, or Vietnamese, or Spanish, or Tagalog, or Russian.  In California, it can be a number of different languages because we are a land of immigrants.  It's one of our strengths in The Golden State.

 

Good loan originators have solutions to that.  We have an arsenal of already translated loan disclosures for all of the aforementioned languages except Russian.  The borrowers still need to execute their loan disclosures and loan documents in English but we'll give them a good translation if they want it.  I think that makes good business sense and offer it on every loan application now regardless of what their first language appears to be.

 

I don't want that practice legislated, though.  I'm against that kind of legislation; not for the reasons you might think.  I don't have an "ENGLISH ONLY" bumper sticker on my pick-up truck.  I don't even have a truck.  I'm against a legislative mandate because of we need to have uniformity in business dealings in this country.  It inspires confidence in our markets for investors.

I'll take my thoughts a step further, here.  English should be the official language OF REAL ESTATE in America. What I mean is that all recorded documents, such as deeds of trust, mortgage notes, warranty deeds, etc., should be in one common language; it is natural that language be English. My aforementioned reason of uniformity and market confidence, now more than ever, makes that case.

That doesn't mean we should dissuade real estate and lending professionals from embracing the languages spoken and understood by the New Americans. In fact, I not only support but encourage real estate and lending professionals to proactively advertise their propositions in the native tongues of people who may be likely to use their services.  It makes sense from a marketing position to be the Realtor or lender of choice for those people.  When a Harvard study suggests that some ten million new households will come from Spanish speaking families,

...necesitamos saber cómo hablar con ellos

If a comprehension of a client's native tongue gives you a distinct competitive advantage, use it.  Critics be damned on this one. A parochial vision of what things SHOULD be like is a sure-fire recipe for failure in the already competitive markets of real estate brokerage and lending.  Nobody is forcing every real estate agent or loan originator to market bilingually but those who are unable to accomplish this should understand that THEY are at the disadvantage; if Mohammed won't come to the mountain, move the mountain to Mohammed.

If a client's comprehension of English is poor, he is best served to hire a translator before signing official real estate documents.  Our uniform business document system shouldn't change for every immigrant's native tongue.  Marketing agents, however,  should never cry "Speak English or Go Home !" because that's EXACTLY what those clients will do...

..and there are Realtors Title Reps, and Lenders who will help them do just that.

San Diego Mortgage Rates Report: August 31, 2007 - Don't Hold Out For A Hero

"There will be no bailout for lenders" signaled Fed Chairman Ben Bernanke in his first speech since the credit crisis began.  Bernanke's speech was pretty much what one would expect; he is NOT Alan Greenspan and we may have to hold out for a rate cut to better understand that.  Here is a key quote from his speech:

It is not the responsibility of the Federal Reserve - nor would it be appropriate - to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.

While the majority of economists believe that the Fed will be cutting the Fed Funds rate on September 18, 2007, Bernanke will not be pushed into it.  He stressed the importance of analyzing CURRENT, rather than lagging economic indicators, to more appropriately formulate open market decisions.  We still think he's going to cut rates, just not as aggressively as our colleagues want.

Lock-in all loans at application.  There is much more risk of rates rising than there is to getting an extra .125% lower.  If the situation changes, we'll jump into a nearby phone booth, strap on our capes, and change our advice.

 

 

San Diego Mortgage Rates Report- August 28, 2007- Lock All Loans

Our San Diego Mortgage Rates Report from last week advised clients to float their loans.  We still maintained a lock-in stance for all non-conforming and jumbo loans as that market is changing daily.  Until Wall Street investors set the market for jumbo loans, we maintain that stance.

The advice was fruitful to San Diego home buyers who heeded it.  Rates decreased an average of .125% this past week.  Now, we think it's time to reap that reward and lock-in interest rates for all loans at application.  Mortgage bonds are trading near their 200-day moving average which means that the next 2-3 days may show the absolute best rates in 6 months on the fixed-rate mortgage side.  We think there is more risk to rates rising before the Fed meeting in September than there is opportunity for lower rates during that period.

One of our portfolio lenders is offering an annual ARM, interest only,  at 5.5% with an APR of 6.44%.  This means that the first year is locked in at 5.5%, the second year at 6.44%, and then the loan becomes a LIBOR-based ARM.  There is no pre-payment penalty associated with this loan.  We particularly like this loan product because we believe that interest rates are in a 12-24 month downward trend; we think there will be some opportunities to refinance to a fixed rate loan as low as 5.5% in the next two years.  Borrowers with a short-term horizon (meaning they may consider a move in 12-24 months) should ask for more information.  Admittedly, this is a teaser rate but sometimes teaser rates have the right application when the hold timeframe matches up to the interest rate term.

Mortgage Interest Rates*

Rates as of 08/27/2007:

Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 5-Yr. Interest Only 6.5% 6.572% $5.42 7.25% 7.350% $6.04 10 Yr Interest Only 6.625% 6.744% $5.52 7.25% 7.411% $6.04 7/! ARM 6.625% 6.697% $5.52 7.25% 7.350% $6.04 30 Year Fixed 6.125% 6.195% $6.08 7.5% 7.602% $6.99 Annual ARM 5.75% 5.819% $5.84 6.125% 6.219% $6.08 HELOC 8.25% 8.330% $6.88 8.25% 8.357% $6.88 5 Yr ARM- Amo 6.375% 6.446% $6.24 7.125% 7.225% $6.74

*Rates are subject to change due to market fluctuations and borrower's eligibility.

Thriving During the Mortgage Liquidity Crisis

Credit markets are in crisis and residential lending is changing fast.

If you are a Realtor, ask yourself these questions:

• Do you understand what key factors got us into this mess?
• More importantly, can you clearly and confidently articulate the explanation to your clients and offer proactive advice to protect them and your business?
• Do you have the right systems in place, when it comes to dealing with lenders, to adjust your business for the next 12-18 months?

If you can't say yes to all of the questions, this conference call presentation may be for you.

Join Brian Brady, Managing Director of World Wide Credit Corporation this Friday morning, August 24, 2007, for a 20 minute presentation.  He will explain what happened and present specific strategies for Realtors about how to deal with the liquidity crisis so that your business does not drop off.  Questions answered after the presentation.

DATE:                                   Friday, August 24, 2007

TIME:                                   9AM (Pacific) sharp

PLACE:                                 www.MeetBrianBrady.com                                                                                                                                  (please  login around 8:45 in case of technical problems)

CONFERENCE CALL NUMBER:    712-775-7000   PIN   789949

Presented by America's Mortgage Broker- Collaborating, Learning, and Thriving Together

Fed Discount Rate Reduction- What's It Mean ?

The Federal Reserve has taken significant action in the last few weeks due to the credit crunch. And now they've made an unexpected move by cutting the discount window rate – which is great news. I'll get to that in a minute, but first let's look at recent events and understand what they mean.

Market movement
To date, over 120 mortgage companies have closed their doors due to reduced liquidity. The result: Borrowers who want to take out non-conforming loans have fewer, more expensive options.

Many media outlets have incorrectly added fuel to the fire by stating that mortgage lending has stopped altogether and that borrowers can't get a loan without a 20% down-payment. This is not true.

Conforming interest rates and loan programs, those backed by Fannie Mae and Freddie Mac, have not been significantly impacted by recent events. Even better, interest rates have come down from recent highs. While this is good news, the market is experiencing unprecedented volatility and changes could come at any time. Borrowers need to act swiftly and decisively in today's climate.

What did the Fed do?
Now back to the discount rate. This is the interest rate charged to commercial banks and other depository institutions on the loans they receive from their regional Federal Reserve Bank's lending facility. The Fed's decision to cut this rate provides stability in the financial markets and this can be good for all of us.

How exactly does this provide stability? Here's an example: Imagine you just wrecked your car and it requires $5,000 worth of repairs. You have a short-term need for cash to pay your mechanic. Even though you know you will eventually be reimbursed by your insurance company, you still need the cash now. So do you sell off stocks to get the cash, or tap into an equity line of credit? Most likely, you draw from that line of credit rather than liquidating a long-term investment.

This is what the banks are facing in today's liquidity crisis. And Bernanke's move helps them avoid long-term damage by supplying access to short-term cash.

It's important to note that the discount rate is different than the Fed Funds Rate, which directly impacts interest rates that you pay for Home Equity Lines of Credit, credit cards, and automobile loans. Most importantly, the discount window rate cut does not directly impact mortgage rates.

What should you do now?
Information, knowledge, and expertise are the building blocks of sound financial decision making. If you are considering financing or are in the process of financing a home, you should tap into the resources of a skilled mortgage professional. I strongly encourage you to contact me as soon as possible. I would welcome the chance to help you navigate these choppy waters.

Reprinted by permission through Loan Toolbox.

San Diego Mortgage Rates Report: August 21, 2007

San Diego home buyers can take a breather.  Our advice to lock rates at application these past two weeks was sound.  Although treasury bond yields dropped, mortgage-backed securities yields rose in fear of more defaults.    It was understanding this conundrum that prompted our lock advice.

Today, we think it is safe for a San Diego mortgage applicant to float their mortgage rate; there may be some room for improvement this week.

The liquidity crisis extends past our borders:  A large British insurance company may have been forced to borrow from the Bank of England and a potential German banking crisis abounds.

Senator Dodd just met with Fed Chairman Bernanke.  He queried whether the Fed was willing to use any and all available resources to avert a mortgage liquidity crisis and seemed satisfied with the Fed Chairman's response.  That may have averted Congressional interference (we hope).  Senator Dodd is continuing to petition the President to raise the statutory limits of conforming loans ($417,000) as an emergency measure.  Californians would benefit from this prospect because conforming loans offer lower rates and more loan options than jumbo loans.

Mortgage Interest Rates*

Rates as of 08/21/2007:

Conforming APR Payment per $1,000 Jumbo APR Payment per $1,000 5-Yr. Interest Only 6.625% 6.697% $5.52 7.25% 7.350% $6.04 10 Yr Interest Only 6.75% 6.869% $5.63 7.25% 7.411% $6.04 7/! ARM 6.625% 6.697% $5.52 7.25% 7.350% $6.04 30 Year Fixed 6.25% 6.321% $6.16 7.5% 7.602% $6.99 Annual ARM 5.75% 5.819% $5.84 6.125% 6.219% $6.08 HELOC 8.25% 8.330% $6.88 8.25% 8.357% $6.88 5 Yr ARM- Amo 6.5% 6.572% $6.32 7.125% 7.225% $6.74

*Rates are subject to change due to market fluctuations and borrower's eligibility

Countrywide Just Didn't Charge Enough

What really happened to the mortgage market ? They didn’t properly price loans for the risk they assumed. While Hilary Clinton is crying about the “poor borrowers” what about the poor lenders who got caught in the middle of this mess? Borrowers said “We’ll buy it if you give it to us on the cheap !”, Wall Street said “We’ll take the extra yield!”, and we all said “This time it’s different !” Extrapolations proved that a two bedroom condo on the Las Vegas Strip would sell for at least $5 million in this new economy, fueled by leverage.

Did any sub-prime borrowers REALLY lose anything in the sub-prime mortgage explosion?

Who were the REAL winners in the sub-prime mortgage explosion?

HINT:  It ain't the lenders

READ ON

Countrywide Layoffs- Greenpoint is Closed- Happy Birthday, Brian !

One less option for my borrowers today.  Capital One- owned, Greenpoint Mortgage shut it's wholesale lending operation today.  i didn't use them that much.  They had some really cool products for investors but otherwise were cumbersome.  I think I closed 3-4 loans with them these past 24 months.

Countrywide is laying off originators in their Full Spectrum lending unit.  That could trim their sales force by some 25%.

Appraisers believe that values in San Diego County are reset back to 2003.

Oh...I turned 42 today and have more grey hair than brown.

Countrywide in Trouble: CEO Mozilo Bails Out of Stock "Just In Time"

This is just the epitome of disrespect to every stockholder, bondholder, lending partner, mortgage broker and borrower:

From an Associated Press story on Thursday:

NEW YORK (AP) -- The chairman and chief executive of mortgage lender Countrywide Financial Corp. exercised options for and sold 70,000 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing Wednesday.

In a Form 4 filed with the SEC, Angelo R. Mozilo reported he exercised the options Wednesday for $9.94 apiece and then sold all 70,000 of them on the same day for $35.68 apiece.

The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.

I am beyond the point of polite critical analysis.  Countrywide stock dropped to below $20/share on Thursday amid concerns that Merrill Lynch downgraded the stock to a sell.  Merrill analyst, Bruce, felt that Countrywide may declare bankruptcy:

"We fear that the acceleration of margin calls and forced asset sales in the capital markets could lead to more problems for (Countrywide) to finance its mortgage operations," Merrill analyst Kenneth Bruce wrote in a research report. He furthered, "if liquidations (of assets) occur in a weak market, then it is possible for (Countrywide) to go bankrupt."

Spokespeople at the Cacabasas, Calif., lender weren't immediately available for comment. The stock, which has dropped 42% this year, recently declined $1.22, or 5%, to $23.24, a new 52-week low. Meanwhile, the perceived risk of owning Countrywide bonds also rose Wednesday.

The downgrade came despite repeated assurance by Countrywide officials that it has enough cash to survive the credit-market turmoil. During a recent conference call with analysts and investors, Countrywide Chief Executive Angelo Mozilo said, "We are certainly not going to have any issues funding the company," pointing to its "very conservative liquidity management philosophy" and "adequate, diversified, reliable sources of liquidity available." But he also said, "The pressure point would be short-term funding."

This is beyond reprehensible. The extra $1million Mr. Mozilo profited off of the "timely" transaction suggests that he is all about protecting his own family's money before ours.  The Countrywide troubles have gone beyond bad luck and are starting to stink.  It is virtually impossible for Mr. Mozilo to sell that stock Wednesday without knowledge of a potential downgrade.

Don't tell me it was for "estate planning purposes" or that it was planned; this borders on criminal behavior.

 

Why Short Sales Are A Waste of Time

Mario Villagrain asks: Short Sales - Why are banks so difficult to negotiate with?

Mario:

Because they're not banks. 

The mortgage markets exploded in the past 15 years through a technique called securitization.  This means that the loans are packaged up into pools and sold to Wall Street investors.  In the late 80s/early 90s, most loans were made by S&Ls.  These savings and loan associations made wild-ass loans due to deregulation of the industry. In short, they were almost rewarded for gambling with depositors money because the money was insured by the government.  EXCEPT...

They had to mark the bad loans to the market.  This means that they had to increase their reserve requirements to account for the loan losses.  In short, they had to "set aside" money for those losses.  It was more convenient for them to sell the property AT ANY PRICE and take the loss rather than to ride it out.

That's not necessary today.  Investors in whole loans have these loans buried in pools.  Investors are insurance companies, pensions, etc.  They are longer-term investors than the S&Ls and are not required to "write off the bad loan" or increase thier liquidity.  the investors of today don't have the same pressures of the S&Ls of yesteryear.

They have the staying power to ride this thing out and hold out for higher prices.  Not forever, mind you, but they do have staying power.   

THE MORAL:  Don't build a business on short sales because you think it's easy money; you'll be working for about $10/hour when it's all said and done.