Mortgage Rules Eased Again

Happy Friday Again!  Mortgage rules easing again! Debt to Income (DTI) Ratios expanding.

July 29th, this rule takes affect for Fannie Mae.  Freddie Mac and Fannie Mae more recently have allowed this case by case with enough compensating factors, but often loans would not receive that enviable “approve/eligible” finding.  Now, it appears we will see many more approvals possible.  Often there is income in a family that can not be counted according to the rules, cash, short term bonuses, short term overtime, 2nd job that does not have two years history or other famiy member income where they are not going on the loan, etc.  So this can make a lot of sense after a 2nd look.  🙂

The maximum allowable debt-to-income ratio (DTI) in DU will be adjusted in DU Version 10.1. Under the adjustment, DU will consider applications with a maximum DTI of 50%. For DTIs above 45% and up to 50%, DU will no longer require certain additional compensating factors. 

All the best on this great Friday!

Don

Mortgage Rules Eased

Refinancing with Cash Out to Pay Off Student Loans

Formerly paying off debt, including Edu loans or Equity Lines of Credit, etc. via refinancing your home and using some of your equity was considered a “cash out” transaction and depending on the amount of remaining equity and credit score, increased your interest rate and/or your costs of the loan.  Recently Fannie Mae issued a bulletin that they would no longer consider paying off a “student loan” a “cash out” transaction.  This is huge.  I am not holding my breath on Equity Lines of Credit receiving the same treatment, but at least the fox guarding the student loan hen house has provided some respite.  If you have a client or family member buried in student loans, please call me right away to discuss.  Like many rule changes, they have a tendency to change the other direction as soon as the markets change again. [Read more…]

Fannie Mae & Collections – Good News

Happy Friday!  DID YOU KNOW? 

Fannie Mae – A Good Option for Open Collections

FHA loans generally don’t require open collection accounts to be paid, but they will in most cases require that a payment is calculated based on the balance of the unpaid collection account. Needless to say, FHA’s method of qualifying borrower’s with collections can become problematic.

Fannie Mae, on the other hand, makes qualifying with collections easy (at least when the subject property is a 1-unit!). Please take a look at the Fannie Mae guidance below for  reminder on how to approach unpaid collection accounts:

When the subject property is a 1-unit Principal Residence: Borrowers are not required to pay off any outstanding collections or non-mortgage charge-offs regardless of the amount, unless specified in the DU findings.

When the subject property is a 2–4 unit Owner-Occupied Primary Residence or Second Home: Collections and non-mortgage charge-offs that total more than $5,000 must be paid in full prior to or at closing.

When the subject property is an Investment Property: individual collection and non-mortgage charge-off accounts greater than or equal to $250 and accounts that total more than $1,000 must be paid in full prior to or at closing.

All the best,

Don

FHA Appraisal Guidelines and Requirements for 2017

What Is a Home Appraisal?

When using an FHA loan to purchase a house, an appraisal will need to be done before the loan can close.

A home appraisal is an estimate of the current market value of a property. When a property is purchased or refinanced a home appraisal is almost always required.

FHA Lenders use the appraisal to calculate the loan-to-value ratio of the loan. And to make sure the borrower is not paying more than the fair market value of the home.

This not only protects the borrower, but the lender as well.

If you’re a first-time buyer, or seller it’s important you know about the different factors that a home appraiser looks at. [Read more…]

Reverse Mortgages: Ten Myths Debunked

Below are common myths that are important for  you to be aware of as you  investigate the benefits of our product!

Myth 1: I have heard that I won’t qualify for a reverse mortgage because of my limited income.

Most traditional mortgages require income qualifications and a monthly mortgage payment; HECM (Home Equity Conversion Mortgage) reverse mortgages require income qualifications, too, but many seniors who don’t qualify for traditional financing a e still eligible for a reverse mortgage. [Read more…]

December Holiday Special for Borrowers and Realtors!

With holiday schedules fast approaching, working with the wrong lending partner can cause significant delays at closing. CHM is proud to offer you GUARANTEED 24 hour underwriting on all purchase transactions in the month of December.

In addition, we are offering all borrowers with December contracts, the following pricing credits to offset their closing closts:

• Jumbo ARM: 0.25% *
• Conventional & Government ARM: 0.50% *
• Fixed Government Purchases: 0.50% *

Please forward this information to any borrowers who are currently in contract or call me today with any questions.

Don Parsons
Mortgage Advisor
NMLS# 287222
(949) 428-3099
dparsons@commercemtg.com

Mortgage Market Weekly – Update August 10, 2015

In This Issue…

Last Week in Review: July’s Jobs Report showed continued signs of improvement.

Forecast for the Week: Thursday’s Retail Sales report will be the closely watched release on a light economic calendar.

View: Wrap up your summer with a reading list to boost morale and motivate you to take on the rest of the year.

Last Week in Review

“Working 9 to 5. What a way to make a living.” Dolly Parton. A heavy economic calendar culminated the week with July’s Jobs Report singing of work for many Americans. The housing market showed strong gains as well.

housing-price-index_2015-06-22Employers added 215,000 new jobs in July, while the figures for May and June were revised higher by a total of 13,000 jobs. Retail, health care and leisure led the pack with job opportunities. The unemployment rate held on to its seven-year low, which is also good news. While the average workweek increased, growth rate of wages remains at the lowest levels on record.

Home prices jumped in June. Research firm CoreLogic reported that home prices rose 6.5 percent, marking the 40th consecutive month of year-over-year gains. While prices are still down from the peak in April 2006, they are expected to continue to rise. CoreLogic cited pent-up demand, affordability and a more robust labor market for the gains.

Data continues to show that the job market, housing sector and economy overall are improving, even though inflation remains below the Fed’s 2 percent target. The big question now is whether or not our economy has improved enough for the Federal Reserve to begin raising its benchmark Fed Funds Rate (the rate banks use to lend each other money overnight). September’s Federal Open Market Committee meeting provides the next opportunity to see what the Fed will do.

For now, home loan rates remain near historic lows. Let me know if I can answer any questions at all about the mortgage market, housing or home loan rates for you or your clients.

Forecast for the Week

This week’s economic calendar is light, though the second half of the week features several key reports.

  • Tuesday kicks off with data from second quarter Productivity.
  • Jump ahead to Thursday with weekly Initial Jobless Claims and the closely watched Retail Sales report.
  • On Friday, the Consumer Sentiment and the Producer Price Indexes will be released.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving; and when they are moving lower, home loan rates are getting worse.

To go one step further a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds improved throughout the latter part of July. Home loan rates remain near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Aug 07, 2015):

mtgbonds_2015-08-02

The Mortgage Market Guide View…

Summer of Success Reading List

If you’re looking for a few great titles to wrap up your summer reading, look no further than these top picks from Amazon’s Best Seller list! These great reads will boost your morale and motivate you to take on the rest of the year.

Getting to Yes with Yourself (and Other Worthy Opponents) is the highly anticipated follow up to “Getting to Yes: Negotiation Agreement Without Giving In.” Harvard University professor and negotiation expert William Ury addresses one of the most common obstacles to achieving goals: negative self-talk.

StrengthsFinder 2.0 asks if you have the opportunity to do what you do best every day. For many, natural talents go untapped. Instead, people devote more time to fixing perceived shortcomings than to developing and using strengths. This book reveals how to change the pattern.

The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing shares the secrets of the most popular organization consultant in Tokyo. Disorganization contributes to problems in both business and life. But author Marie Kondo (whose consultancy has a three-month waiting list) promises if you organize your home or office just once—and do it properly—you’ll never have to do it again, and you’ll see positive results.

The Achievement Habit: Stop Wishing, Start Doing, and Take Command of Your Life written by the co-founder of Stanford’s d.School, Bernard Roth, shares thinking insights gained from solving large-scale design projects. Gain confidence, overcome obstacles that keep you from your potential, and learn to think more creatively from one of the masters of applied creative thought.

As always, feel free to pass these helpful tips along to your team, your clients and colleagues!

econ-cal-2015-08-08_0-48-45

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

Don Parsons
Commerce Home Mortgage – NMLS 2105
450 Newport Center Drive Suite 480
Newport Beach, CA 92660
2130 Main Street Suite 260
Huntington Beach, CA 92648

Mortgage Market Weekly – Update June 26, 2015

In This Issue…

Last Week in Review: The housing sector is batting strong, while the overall economy showed signs of a slump.

Forecast for the Week: The markets may be closed on Friday, but not before key reports on housing, manufacturing and the labor sector are released.

View: Check out these six keys to maximizing your success.

Last Week in Review

“You don’t have to swing hard to hit a home run. If you got the timing, it’ll go.” Yogi Berra. May was a good time for the housing sector, as several reports came in strong.

jun26-new-home-salesNew Home Sales hit their highest level in seven years in May, rising 2.2 percent from April to an annualized rate of 546,000. April’s figures were also revised higher to 534,000. Sales of new single-family homes are up nearly 20 percent from May 2014! Existing Home Sales also rose 5.1 percent in May from April.

However, the economy overall isn’t batting as well, as the final reading for first quarter Gross Domestic Product (GDP) showed that economic growth contracted by 0.2 percent, though less severe than the -0.7 percent from the second reading. In addition, the negative reading for the quarter was the fifth time in the six-year recovery that the economy couldn’t produce at least an anemic reading of 1 percent.

Growth in the first quarter was stunted by a negative trade balance due to the stronger dollar, harsh weather and the West Coast port closing. And with inflation still tame, rest assured the Fed will be watching economic reports closely this summer, as they determine when to raise the benchmark Fed Funds Rate (the rate banks charge each other to lend money overnight).

Overseas, the uncertainty surrounding Greece continues. Mortgage Bonds reversed course and moved lower in recent days, in part because signs have pointed to a possible deal. This will be a key story to watch in the next week.

Home loan rates are near 2015 highs, but are still very close to historic lows. If I can answer any questions at all for you or your clients about a home purchase or refinance, please get in touch!

Forecast for the Week

The fireworks could begin early in this holiday-shortened but jam-packed week.

  • In the housing sector, Pending Home Sales will be released on Monday, followed by the S&P/Case-Shiller Home Price Index on Tuesday.
  • Look for manufacturing data from the Chicago PMI on Tuesday and the ISM Index on Wednesday.
  • Consumer Confidence will also be released on Tuesday.
  • The first of two key reports on the labor sector will be released on Wednesday with the ADP National Employment Report.
  • Thursday is the big day with the June Jobs Report, which includes Non-farm Payrolls, Hourly Earnings and the Unemployment Rate. Weekly Initial Jobless Claims will also be reported on Thursday, as usual.

All U.S. markets will be closed on Friday in observance of the July 4th holiday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving and when they are moving lower, home loan rates are getting worse.

To go one step further a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds have struggled in recent days. I’ll be watching closely to see if they’re able to bounce back in the days and weeks ahead.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jun 26, 2015)

jun26-bonds-chart

The Mortgage Market Guide View…

6 Keys to Remarkable Success

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” Aristotle, 345 B.C.

The myth that people are born talented is evaporating. The scientific community is at last catching up with what even Aristotle knew—the difference between success and non-success, skill and mediocrity, is a matter of dedication and time rather than innate ability.

But can the way you practice make a difference? Yes, says Tony Schwartz, author of “The Way We’re Working Isn’t Working,” who offers six principles for becoming really good at anything:

Pursue your passion. Passion will keep you motivated better than anything. If you can’t be passionate, find something else or you may burn out.

Hard work first. Most experts (and experts who study experts) say that practicing first thing in the morning when you have the most energy is best.

Practice intensely, but not too long. Working without interruption for short periods of no longer than 90 minutes with short breaks (and not longer than 4.5 hours each day) seems to be the norm for top performers.

Get feedback in small doses. Too much advice too frequently can impede learning and make you gun shy. Focus on your own experiments.

Refresh regularly. All work and no play … stinks! And it won’t help you in the long run. Plus, if it’s a breakthrough you want, rest is the best thing for activating your creative right hemisphere.

Ritualize practice. Time blocking ensures you don’t have to expend any energy thinking about when or how to work.

As always, feel free to pass these helpful tips along to your team, clients and colleagues!

econ-calendar-20150626

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

Don Parsons
Commerce Home Mortgage – NMLS 2105
450 Newport Center Drive Suite 480
Newport Beach, CA 92660
2130 Main Street Suite 260
Huntington Beach, CA 92648

Mortgage Market Weekly – Update June 22, 2015

In This Issue…

Last Week in Review: There was mixed news from the housing sector, while Greece and the Fed also made headlines.

Forecast for the Week: Look for key reports on housing, inflation and consumer sentiment. Plus, the potential default in Greece could lead to volatility in the markets.

View: Simplify your business with these four tips.

Last Week in Review

“Here is a promise of summer to be.” English poet William Ernest Henley. With mixed news from the housing sector, no clear timetable from the Fed regarding a rate increase, and Greece facing a potential default, this summer certainly promises to be an interesting one.

housing-starts_2015-06-22Housing Starts slumped in May, with construction on new homes falling 11.1 percent from April, reversing the big gains seen in April. The Northeast took the biggest hit, down nearly 27 percent. However, Building Permits, which are a sign of future construction, were up 11.8 percent.

Meanwhile, the National Association of Home Builders Housing Market Index rose five points to 59, the highest since September 2014. The Housing Market Index is a reflection of builder confidence, and any reading over 50 indicates that more builders view conditions as good rather than poor. With many areas around the country featuring a limited supply of houses for sale, it’s a good sign that builders are feeling confident about the future.

There are two other important stories to monitor in the coming weeks and months. First, in news here at home, the Fed stated that it will most likely raise the Fed Funds Rate (i.e., the rate banks charge each other for lending money overnight) later this year—though they did not specify the timing for this action. Fed Chair Janet Yellen said she wants more “decisive evidence” that the labor market is healing and that wages are growing.

Overseas, Greece faces default and a potential exit from the European Union. Mortgage Bonds here at home have seen some benefit from safe haven trading due to the uncertainty. However, if a deal is reached, the safe haven trade could unwind, which could hurt Mortgage Bonds and home loan rates in the process.

At the moment, Mortgage Bonds have rebounded after a rough early June. Home loan rates remain near historic lows, and now is still a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

A jam-packed economic calendar is ahead, plus there will be important meetings overseas regarding Greece’s potential default. Volatility could be rampant.

  • Economic data kicks off on Monday with Existing Home Sales, followed by New Home Sales on Tuesday.
  • Also on Tuesday, look for Durable Goods Orders, which are orders for items that last an extended period of time.
  • On Wednesday, the final reading for first quarter Gross Domestic Product will be closely watched for signs of economic growth.
  • Thursday brings Personal Income, Personal Spending, Personal Consumption Expenditures (the Fed’s favorite measure of inflation), and Weekly Initial Jobless Claims.
  • Ending the week, look for the Consumer Sentiment Index on Friday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving and when they are moving lower, home loan rates are getting worse.

To go one step further a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds have rebounded in recent days, keeping home loan rates at historically low levels. However, market sentiment can change quickly so I’ll be watching things closely in the week ahead.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jun 19, 2015)

mtgbonds_2015-06-22

The Mortgage Market Guide View…

Keeping Business Simple

KISS is an acronym for “Keep It Simple, Stupid” and was coined by U.S. Navy engineers in 1960 to stress the importance of building aircrafts that could be repaired on the battlefield by a regular mechanic using only basic tools. Essentially, the KISS principle states that most systems work better when they are simple rather than complex.

The same goes for business, no matter what the industry or niche. If you don’t keep things simple, it’s a recipe for unnecessary stress and, worst case scenario, losing business.

Here are a few ideas on how to keep things simple in your business:

Identify the need you fulfill. Whether you sell homes or financial services, you are fulfilling an emotional or psychological need for your clients that has nothing to do with real estate or Stocks and Bonds. Focus on the top three such needs you fulfill.

Build your plan around serving those needs. This is about limiting yourself. You may have the ability to offer other services that don’t serve the core need of your market, but avoid the temptation to use them if possible. The likelihood of confusing your prospects and customers is too high to justify the value you think you’re creating.

Don’t get too elaborate with systems, especially those that impact customer service. While every business should have processes for every detail of that business, the more common sense they are the better. If yours are intuitive and easy to perform for both staff and clients, they are going to be win-win.

Stay focused. If you’re in business to sell houses or do financial planning, don’t extend your brand to include staging or insurance—or anything else you can think of that might dilute your ability to perform those three core emotional/psychological needs.

As always, feel free to pass these helpful tips along to your team, clients and colleagues!

econ-calendar-2015-06-22

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

Don Parsons
Commerce Home Mortgage – NMLS 2105
450 Newport Center Drive Suite 480
Newport Beach, CA 92660
2130 Main Street Suite 260
Huntington Beach, CA 92648

Mortgage Market Weekly – Update June 1, 2015

In This Issue…

Last Week in Review: New Home Sales rebounded in April, while the latest Gross Domestic Product reading showed the economy struggled in the first quarter.

Forecast for the Week: Look for key reports on inflation, manufacturing and the labor sector.

View: Make all your video conferences successful by following these easy tips.

[Read more…]