Archive for the ‘Mortgage News’ Category
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Apr
08
Posted by Mark Clawson
The Fed is at it again and making no sense. Politics doesn’t mix with common sense and the Feds latest proposal makes little if any sense. The Fed is trying to put forth new regulations that will require Mortgage Brokers only NOT LENDERS to disclose, before application, what the mortgage brokerage fee and rate on your loan will be. This fee and or rate cannot change under the proposed changes to Reg Z, commonly known as the Truth in Lending disclosure.
As you may know Collen McGrath and myself work for a Mortgage Broker in Las Vegas and in the State of Washington.
Below you will find our individual comments regarding this proposed change:
Comments by Mark Clawson:
Dear Sir or Madam,
I find it incredulous that you have chosen to allow lenders to continue to non-disclose their fees. Isn’t non-disclosure, on the part of lenders, what has caused this mortgage mess that we know have on our hands. Did the lenders disclose how they were packaging their collaterilized debt obligations? Why place your confidence in the lenders and not the many mortgage brokers who chose not to provide loans to unquailifed borrowers?
In many cases, loan officers working for mortgage brokers, actually helped to avoid an even worse mortgage crisis.
The proposed re-vamp of Reg Z where the broker is required to provide the consumer with a “precise” dollar estimate of fees the broker will charge is not well thought out. How can you know the borrowers situation without taking a loan application.
It is through the “precise” accumulation of client data that you are then able to provide the client with a “precise” estimate of fees. I understand the intent but let’s get real. You can’t provide good information to the client without good input from the client. Shouldn’t lessons of the past guide how we approach the future in dealing with the client?
Let’s not let politics dictate changes. What ever happened to common sense?
Comments from Colleen Jane McGrath:
Dear Sir or Madam,
I am writing to express my comments on the proposed Reg Z changes now currently being considered. As a preface, you should know that I was in the business when Reg Z first became a law many years ago (at the urging of Senator Proxmire if my memory serves me well). I tell you this so you have some indication of the years of experience I have in the mortgage industry.
For my first twenty six years in the mortgage business, I worked as a mortgage banker for various companies, primarily bank owned. As an originator I was encouraged to get “overages” to increase my income as well as that of the bank. However, when I became a broker, I was able to use yield spread premiums to offset buyers costs, AND I was able to offer my customer a better rate that he could obtain from a bank.
The differentiation between lenders and brokers has become blurred over the years because, unlike in the past, lenders now package and sell their loans and most often times do not retain the servicing. When the loan is originated by the lender they know in advance what investor they are delivering the loan to for purchase. In essense acting as a broker.
However, lenders, unlike brokers ARE NOT REQUIRED TO DISCLOSE their total compensation. Why is that? How can the consumer be fully served if full disclosure is not required by both lenders and brokers alike? Moreover, how does the consumer know that he is indeed doing business with a lender versus a broker?
There have been several studies which show, on an overall average, that the consumer fares better when dealing with a broker versus lender. Are these studies not being taken into consideration when debating the matter at hand?
The most egregious part of the proposed re-vamp of Reg Z is the requirement for the broker to provide the consumer with a “precise” dollar estimate of fees the broker will charge, especially in light of all of the recent changes in the Secondary Market. It is impossible to provide the consumer with a precise estimate when so many factors can impact the pricing such as:
Credit Scores
Loan to Value
The Income and Financial Statement of the consumer/borrower themselves as it relates to program, fees and rates they will be eligble for when making application.
In essence, the very items needed to make a determination on how best to help the consumer cannot be obtained in advance under the proposed changes. In a time when consumers need more avenues for financing, these proposed changes will constrict those avenues in essence hurting the consumer even more.
There must be other ways for the Federal Reserve to protect consumers in their dealings will ALL mortgage originators, Lender or Broker, and encourage competition that is based on price and service. What can I do to help you pursue these other venues?
I thank you for taking the time to read my comments and would welcome any questions you might have regarding my suggestions.
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Mar
18
Posted by Mark Clawson
I must admit that the mortgage market is getting very crazy and unpredictable. So do we need to be celebrating with a glass of wine and a nice dinner? You can be the judge.
Two weeks ago the thirty year fixed rate mortgage had a note rate of 5.875% and today it is 5.5%. This is good. However, the 3 Year Adjustable Rate Mortgage has gone from a note rate of 4% to 5.625%. This is not good. You can view all of todays conforming rates by clicking here.
My thinking is not nessarily supported in fact, however, I will give you my best read. Long term mortgage rates are pegged, somewhat, to long term Treasury Notes or Bonds. Short term rates don’t have such a mechanism at work. Bankers are having a hard time finding Wall Street investors for their ARM products and with little demand the rates are moving upward. I believe there is concern about home values in the short term. Prices are falling and there is concern about the borrower losing equity in their home. Without a pricing mechanism in place fear is coming into play.
For now, ARM Products for mortgage loans don’t look very appealing. The rates are higher than fixed rate mortgages.
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Mar
04
Posted by Mark Clawson
LAS VEGAS FORECLOSURES AND BERNANKE
Fed Chairman Ben Bernanke today put forth some new ideas on how to prevent homeowners from falling into foreclosure. Bernanke notes that lenders have increased their efforts toward “loss-mitigation” but he believes that more can be done.
He went as far as saying that lenders should “reduce the amount of the loan to provide relief to a struggling owner.” Bernanke stated that “Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.” He indicated that “with low or negative equity in their home, a stressed borrower has less ability — because there is no home equity to tap — and less financial incentive to try to remain in the home.”
This would be a very tough sell to the lenders. Would they be pressured to write down the principal again in the future if housing prices continued to fall? Would the lender then share in any equity increase going forward?Lots of questions, but at least someone is thinking. The lenders are getting hurt due to the loan programs that they made available. The borrower is getting hurt because of a real lack of understanding the loan program that he signed off on.
We should be requiring our high school students to acquire the knowledge necessary to make decisions on home loans, as well as, understanding what and how credit scores work.
On the Mortgage Rate front, rates on 30 year fixed rate conforming loans have stayed pretty much the same. Three and Five Year ARMS are getting much better. It seems as though investors are not so concerned with the short term. They are worried about inflation and they are demanding higher rates on thirty year mortgages for that added risk.Here is a link to Conforming Mortgage rates for today.
Mark V Clawson 702-351-7912
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Feb
29
Posted by Mark Clawson
The stock market is in trouble and mortgage rates are falling. A couple of days ago I wrote a post about the potential for a test of the recent lows in the stock market. It seems as though this may be occuring. The Dow Jones Industrial Averge was down over 300 points today. The recent low was 11,645 on January 23rd and we could see a test of that number next week. If you are in the market for a refinance or a home purchase get ready to act.
My guess is that the Fed will cut rates again at their March 18th meeting. When this happens I would expect that 30 Year Fixed Rate mortgage rates will move higher. The last time the Fed cut short term interest rates 30 Year Fixed rate mortgages did not benefit at all. Rates moved quite a bit higher and the reason was inflation worries.
Mark V Clawson 702-351-7912
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Feb
22
Posted by Mark Clawson
Thirty year fixed rate mortgage rates in Las Vegas continued to move higher over the past week. What I am seeing is a slight disconnect from the 10 Year Treasury note yield. Changes in fixed rate mortgage rates tend to mirror the movements in the 10 Year Treasury Note Yield. A week ago the 10 year Treasury note yield was at about 3.7% and today it is about the same. However, fixed rate mortgage rates are higher. So, what is happening?There seem to be three factors that are influencing this type of action on rates for fixed rate mortgages.
One, you have uncertainty concerning the impact of the increase in conforming loan limits on mortgage backed securities.
Two, investors are demanding higher returns given the lack of liquidity in the market and the perception that inflation is on the rise.
Three, there is concern over the viability and sustainability of the insurers who guarantee performance on bonds. It’s a crazy market right now.
I still think rates on fixed rate mortgages can go lower since rates are moving down when the stock market has problems. My guess is that we will see the stock market test the lows seen on January 23rd of this year. That number was 11,645.
So, if you are thinking seriously about buying or refinancing your home; you need to plan in advance. On January 23rd of this year fixed rate mortgage rates dropped, for one day, to about 5.25%. That was the day that the market hit 11,645. The next day rates were back to about 5.625%.
If you are prepared to act you might just get lucky. Here is a link to mortgage rates being quoted today. Mark Clawson 702-351-7912
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Feb
20
Posted by Mark Clawson
This afternoon I was driving around just south of Aliante and I noticed three attractive homes for sale. All threeof them are in the 3800-3900 block of Internet Avenue. Now remember I’m not a real estate agent so I had some trouble finding information about the properties. What I can tell you, with a fair degree of confidence, is that the next two homes are both about 3500 square feet. The one above is a little smaller.
According to a realtor that I spoke to; they seem to be owned by the banks and represent good value for the buyer.
This home is currently priced at $499,000 and an open house is expected this weekend. The price is likely to be adjusted downward, according to the realtor.
Hope I have the right house on this one. This home is said to have a pool and a casita. The price is $499,000, hence the potential for a price reduction on the last home.
I thought that these homes were a little different from what is normally seen in Las Vegas. They are not in a gated community, they just caught my eye and I have tried to find out more information on them.
When you decide to buy one, call me and I’ll help you with the loan.
Mark V Clawson 702-351-7912
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Feb
18
Posted by Mark Clawson
The Las Vegas Review Journal had an interesting article on the foreclosure market in the Las Vegas Valley this weekend. A time warp in real estate values seems to be occurring.
“Sometime this weekend, while you’re shuttling the kids to soccer tournaments or picking up milk at the grocery store, several dozen of your neighbors will go back in time nearly 10 years. They’ll see a 3,128-square-foot Christopher Homes house in Summerlin’s upscale Country Rose Estates on sale for it’s circa 2000 price of $370,000.”
The Housing Bubble is creating a Perfect Storm for many homebuyers, investors or otherwise. The Bubble which was created by over zealous investors, lenders and builders pushed prices too far and too fast. We are seeing a retrenchment in home prices which will probably be overdone.The values of homes in the Las Vegas Valley will recover and move forward again.
You can review my reasoning in this article Las Vegas Real Estate - Time to Buy. The recovery time for the Las Vegas Real Estate market may be longer than some had thought. The same lenders who gave you option ARMS, stated income and stated asset loans are now trying to be good business people. These changes will reduce the number of homebuyers who can qualify for home loans.
There is an inventory of 7,000 foreclosed homes on the market in the Las Vegas Valley and this is hurting everyone’s home values. They need to be sold and taken out of the market.
A new marketing strategy is unfolding in Las Vegas. The investor or homebuyer will “simply hop a ride on a foreclosure bus tour led by Barbara and Marshall Zucker of Prudential Americana Group, Realtors. Such tours have been hot since the fall in distressed housing markets in California, Florida, Michigan and Georgia. Now they’re revving up here.”
This seems like a great way to get a real look at the market and to find some true values. The bus tours are free and you will have a chance to view multiple properties.
To read the full article “Home sellers warp time” in the Review Journal here is a link.
Mark V Clawson 702-351-7912 Your Local Mortgage Loan Consultant
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Feb
17
Posted by Mark Clawson
I think it’s important to know what points mean when you’re applying for a mortgage loan. Points are not necessarily evil as many borrowers think. A no fee loan doesn’t always work in your best interest.
Loan Origination Fees: Points
These fees are how your loan consultant gets paid. When the borrower pays all of these fees (points) the rate is lower. The borrower can receive what is called par pricing from the lender (the lender is not paying anything to the loan consultant). Let’s say that par pricing on a 30 year fixed rate loan is 5.5% and that the loan amount is $200,000. If the borrower pays 1 ½ points (loan origination fee) the loan consultant receives $3000 in fees from the borrower.
When the borrower chooses not to pay any points then the loan consultant must look to the lender in order to get paid. The consultant views the lender’s rate sheet and looks at what is called the yield spread premium. This is the lenders term for points paid to the loan consultant. To get 1 ½ points from the lender the rate may be 5.875%, for example, instead of the 5.5%. Hence, if you don’t pay the points the rate on your loan will be higher.
Here is some math on the differences:
- The points cost you $3000.
- You save $576 a year in interest payments with the lower rate.
- It will take 5.2 years in interest payment savings to pay for the $3000 in fees.
- After that you save $576 a year.
So, how long are you going to stay in this house?
If you are only planning on staying in the house for a few years you’re better off with the higher rate and not paying the points.
Keep in mind that you can structure the loan so that you can have a combination where you can pay part and the lender can pay the rest. There are options available to you. I am trying to bring some transparency to the subject. It is also important to talk about locking your loan with your loan consultant. Nothing is set until the loan is locked.
Where do you find the yield spread premium?
Currently only mortgage brokers have to disclose the yield spread premium, and you should find it on your Good Faith Estimate. Banks and mortgage bankers (loan officers who work for the banks) do not have to disclose. I find this rather odd when you look at the mortgage crisis that has been evolving over the last year or so. It doesn’t seem to me that the banks have been providing the best disclosure on some of the products they have brought to the marketplace.
It is important that your loan consultant is a trusted advisor who is working in your best interest. Not all loans are the same; some are more difficult than others. Remember points are percentage fees. A smaller loan amount should have a higher percentage fee than a large loan amount. It is important that the fees are reasonable.
I had a client who was quoted a rate of 7.5% on a 30 year fixed rate mortgage refinance. I reviewed the good faith estimate and the loan officer was making 4 points or $12,000 on a $300,000 refinance. My client had good equity in his home, good income, and excellent credit. I got him a 6% rate on a 30 year fixed rate mortgage and my fee was about $3500.
This post is just about keeping your eyes open and asking some significant questions. We don’t need loan officers like the one mentioned above. Just remember that the banks aren’t required to disclose. Always ask for the APR (annual percentage rate) and compare. Truth-in-Lending (Reg Z) requires this disclosure and it is a good basis for comparing loan programs as long as the terms of the loan are the same. You need to have an apples and apples comparison.
Discount Points:
This is really pretty simple. You can buy your rate down by paying the lender a certain number of points. You may be able to lower your rate by about .25% by paying 1 discount point (it will depend on the loan program that you are choosing). The money doesn’t go to the loan officer it will get you a lower interest rate. Here again you need to do the mathematics and determine if the cost is worth it. How long will you be in the home? If it is only going to be a few years then you’re better off with the higher rate and avoiding the fees.
If you ever have any questions please call me. Mark Clawson 702-351-7912
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Feb
14
Posted by Mark Clawson
I have updated Las Vegas Mortgage rates and you can view them by clicking on the bar at the top of the page. Over the last week we have seen the stock markets move higher and this has impacted the 10 Year Treasury Note Yield. We are seeing 30 year fixed rate mortgage rates moving up by about .375%. I have mentioned that in a declining stock market there is a flight to quality, so when the markets are doing better then rates on mortgages tend to move higher.
Now on the bright side, while the 30 year fixed rate mortgage rate has been moving higher the shorter term adjustable rates (3-5- and 7 year) have remained the same or have gone somewhat lower. The reason for this is that the loosening by the Fed is perceived as inflationary and inflationary pressures are not felt as strongly on shorter maturities.
Mark V Clawson 702-351-7912
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Feb
09
Posted by Mark Clawson
Everyday I will be posting conforming mortgage rates on my blogsite. You can click on Mortgage Rates on the bar at the top of the home page. These rates will be for purchases only. The rates that you will see assume 20% down, 680 credit scores, a conforming loan and purchase only. Your needs will vary because we are all unique.
Should you need a mortgage rate quote that is specific to your needs, please feel free to call at 702-351-7912 or e-mail me at markvclawson@gmail.com. The mortgage loan market has been in a state of turmoil for a number of months and lender quidelines are in a continual state of flux. Zero down loans are temporarily unavailable in Nevada. A good alternative is FHA. FHA will lend 97.15% of the value of the property and better yet these loans are assumable! Credit scores can be below 680. The rates I have quoted are for the perfect situation on a purchase. If your situation is not perfect there are alternatives. I just want you to know that each purchase or refinance (rate and term or cash out) is unique and that can effect the rate that you are eventually quoted. The best situation is to get pre-approved and determine what your real rate will be. There have been too many lenders who have been promising what they can’t deliver. We will work with you so that you don’t have any surprises.
