Question of the
week: When we closed
on our home this summer you said our taxes would be around $6500 a year and our
tax bill shows we only owe $2000 for the first installment, which is it?
Answer: One of the more challenging
aspects of purchasing a home to explain, and for home buyers to retain amongst
the massive amount of information put to them in the process, is the
supplemental property tax.
With so many new home buyers this past year here
is a recap of how supplemental taxes work.
Property taxes are based upon the purchase price
of a property with the value of the property being split into the land value
and the value of improvements on the land, i.e. you house. In California the
tax year is from July 1st to June 30th and property tax
bills are mailed in October with the first installment being due by December 10th
and the second installment being due April 10th. The first
installment (due December 10th) covers taxes from July 1st
to December 31st and the second installment (due Aril 10th)
covers from January 1st to June 30th.
Depending on when you purchased your home the
tax bill prepared and mailed in October may not be reflective of what your
actual property taxes are but instead show the taxes due based upon the
previous owner’s tax obligation.
In the instance for our question of the week the
client purchased the home and closed at the end of August on a $525,000 home.
The prior owner had purchased the property in 1998 for closer to $300,000,
which is the $4000 tax bill our client received in the mail—the obligation
based on the prior owner’s taxable value.
Sometime in January you will receive a supplemental
tax bill that will be broken into two installments (due the last day in
February and June 30th) that will cover the difference between the
amount owed in taxes based upon your purchase price and the amount billed based
on the prior owner’s tax basis. The bill will be prorated based on when you
purchased the home and the new tax rate is to apply; for instance if closing
was August 31st then the supplemental bill will cover ten months of
differential between the old and new tax rates (September through June).
The total of the supplemental tax bill our
client will receive and the tax bill received in October will be near the
initial estimate of $6500 per year.
It is important to note if your taxes are being
impounded, i.e. collected every month by the lender as part of your monthly
mortgage payment, the lender will not pay the supplemental
bill. The lender will pay the taxes based on the bill mailed in October by the
county, any supplemental taxes are your responsibility to pay.
Taxes can get a bit complicated, if you have any
questions on your tax bill please do not hesitate to contact me. If you want to have a tax bill next year,
which means you will have to purchase a new home to receive that tax bill,
please call me so we can begin the process of getting you preapproved and ready
to purchase your new home in 2015.
Have a question? Ask me!
Remember, with Dennis it’s not just a mortgage,
it’s your complete financial picture.
economic news to end the week. Yesterday the Census Bureau released retail
sales figures for November which showed a big leap from October to November
with sales rising 0.7% for the month, stripping out auto and gas sales and the
increase was 0.6%. This news caused Mortgage Backed Securities to drop on the
news (higher rates) as investors saw the news as support for the Fed raising
interest rates in the nearer term rather than the further term.
yesterday was topsy today was turvy as the November Producer Price Index
data was released that showed prices in the month declined 0.2%, led by cheaper
energy costs to run plants and power vehicles. Taking out energy costs and the
PPI number was flat month over month. Year over year the PPI increase is up
only 1.4%. This news is rate friendly as it shows an absence of inflation, with
little to no inflation there is less pressure for the Fed to raise interest
one set of data points to higher rates and the other set of data points to
rates remaining at current levels. With data such as GDP growth, higher
consumer sentiment, improving employment and growing retail sales and very
importantly the Fed having stopped printing money to purchase mortgages in
October we should be seeing rates on the rise. Instead for the past month we
have seen Mortgage Backed Securities prices slowly climb to recent peak levels
in mid-November and previously seen in the spring of 2013. Counter-intuitive to
most economic theory, a growing and strengthening economy should have higher
rates not lower, our recent rate market seems to be less concerned with
domestic issues than global and that is a primary cause for our continuing low
Friday December 12, 2014: After last week’s little bounce in interest rates
this week we see them drift back down their lows last seen in May 2013 (and two
weeks ago). The environment is for rates to remain very low, this low for long
I’m not sure but surely below 4.00% on the conforming rates for perhaps another
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS
30 year conforming 3.625% Down 0.125%
30 year high-balance conforming 3.75% Down
30 year FHA 3.25%*** Flat
30 year FHA high-balance 3.625%*** Flat
Please note that these are base rates and adjustments
may be added for condominiums, refinances, credit scores, loan to value, no
impound account and period rate is locked. Rates are based on 20% down (3.5%
for FHA) with 740 FICO score for purchase mortgages. ***FHA rates have no
points and credit towards closing costs.
Drought or deluge seem to be the options for weather
in Southern California, and we are definitely experiencing deluge the past few
days. Thankfully we replaced our roof over the summer and no longer are worried
about where to set the buckets up in our family room when it sprinkles, much
less brings down the rain we had last night.
I love a great big storm and last night got up in the
dark early morning to check on things, got to make sure the new roof is
leak-proof, and loved looking out at the wind and rain coming down in torrents.
Though my thoughts did run to when I would be able to get a Christmas tree and
not have a big ball of wet mess to drag into the house.
Hoping everyone is able to safely navigate their way
in the stormy weather.
Have a great week,
Question of the
week: If my wife is
not on title to our home and I die does she have to pay off the mortgage?
Answer: This week’s question comes
from Doug, one of our partners at Stratis Financial, who was double checking
information for a client engaged in a refinance transaction. The scenario is
our client was refinancing their mortgage as husband and wife, however the wife
is not a U.S. citizen but a permanent resident and her green card had expired a
few weeks ago. The renewal process has
been slow and she has not yet received her renewal card. As a result the lender
cannot approve her for the mortgage application.
Fortunately the husband, who is a U.S. citizen,
qualifies for the refinance on his own, as a result Doug set up the application
package for the husband only to be on the loan and the husband and wife to
remain on title. The husband brought forth our question of the week, if he were
to pass away before the mortgage was paid off could the lender call the
Most mortgage notes have what is known as a due
on sale clause, under this clause if there is a transfer of title from the
current title holders to new title holders who are not currently on the title
to the property the lender can call the note due, i.e. it must be paid off in
full now. As an example, John and Jane are on title to their home as joint
tenants and both are on the mortgage. The get divorced and John deeds his
interest to Jane. In this instance the mortgage would not be callable on the
due on sale clause as Jane is still on the title and mortgage. In two years
Jane deeds the property to her brother Jack. At this point the mortgage company
could call the loan due and demand it be paid in full as Jack is not on the
mortgage, nor was he on the title when the mortgage was approved and funded.
Our client’s concern is that the last instance
above may occur with his wife should he die with the loan outstanding, that the
lender will enact the due on sale clause.
Our common experience in the industry is that we
have never heard of a lender calling a loan due after one of our borrowers has
passed away and while we thought that would be the case in this circumstance we
were not certain enough to pass along the information to the client.
I reached out to friend and Long Beach attorney
Greg Burnight with the question and his response put our client at ease and he
is moving ahead with his refinance.
Greg provided us with information from the
Garn-St. Germain Depository Institutions Act of 1982 that essentially allows a
surviving spouse to continue to pay the mortgage left behind by a deceased
spouse—whether on the loan or title to the property at the time of the spouse’s
death under certain circumstances.
If the spouses own their home as joint tenants
surviving spouses are free to assume the outstanding mortgage(s) at no costs
(so don’t let a lender try to impose assumption fees) under the law. As well if
a home is inherited by relatives the
mortgage may also be assumed and retain the mortgage in the deceased borrower’s
name, provided they reside in the property.
This expands the right of retaining the mortgage
to children of a deceased parent, so long as the child(ren) inheriting the
property make the property their primary residence.
While I can be critical of many of the laws our
state and federal governments pass, and often am, here is an instance where
government intervention is for the well-being of all. Prior to the passing of
the Garn-St Germain Act spouses whose were not on mortgages could be, and not
infrequently were, forced to pay off mortgages with no ability to qualify for a
new mortgage or having to take a mortgage with less favorable terms in order to
retain their homes. This Act allows for grieving spouses to not have the added
emotional burden of being forced to sell their homes in order to satisfy a
clause in a mortgage note.
The circumstances above highlight another reason
to have your property ownership within a family trust. And as always we
strongly suggest obtaining your own legal and accounting counsel when needed
for matters involving legal ownership, transfer and tax obligations.
That was the professional reaction when the Labor Department announced the
employment data for November. With expectations of job growth in November to be
somewhat in line with October’s job growth (initial 214,000 new jobs revised to
243,000) and a consensus of 230,000 new jobs being added in November to the
economy everyone was shocked when actual number of new jobs in November to be
321,000 jobs. Not too great on the consensus estimates, only off by 40%. In
fairness the number was completely unpredictable given the other data in the
month of November including weekly unemployment claim filings.
reacted quickly to the news with Mortgage Backed Securities (MBS) opening
down significantly from yesterday’s close (lower price means higher rates) and
stock markets opening higher. As the trading day has progressed there has been
large swings in MBS prices with investors using the data to speculate on if the
news pushes up the time frame for the Federal Reserve to raise interest rates.
factors are part of the decision by the Fed governors on raising short term
rates, but for quite some time the commentary from the Fed has been that a key
factor as to when to begin raising rates is the health of the employment
markets in the economy. The sudden spike in new hirings in November seems to
peel away a layer of two of resistance as to when the Federal Funds Rate will
be increased by the Federal Reserve.
economic data for the week is pretty much a whisper in a storm compared to
today’s announcement, but investors stay in business by moderating the shouts
and hearing the whispers. And the whispers are that Europe is not doing well
economically and that despite our slowly strengthening economy we are no longer
number one. The International Monetary Fund’s recent data for the world economy
shows that China is now the number one economy, the first time since Ulysses S.
Grant occupied the White House that the United States has not had the world’s
is generally not known for snap decisions or knee jerk reactions, well
except for the Qualitative Easing policies of the past six years in my opinion.
As such today’s employment data will certain be noticed but absent continued
growth of an equal measure in the coming months the November numbers could be
considered a one-off spike in hiring. We will know more in early January when
December’s job report is released.
Friday December 5, 2014: After small gains through the week today’s market
activity wiped out the gains from this and last week. Perhaps an over-reaction
to today’s news, but once the momentum starts investors don’t want to be left
behind. We should see a calmer market next week and perhaps a drift back down
in rates. “Perhaps” being the key word and as always I recommend locking your
rate through your escrow period.
30 year conforming 3.75% Up 0.125%
30 year high-balance conforming 3.918% Up
I hope everyone had a wonderful Thanksgiving, I
finished the last of our leftover turkey yesterday…now confused what to do for
There are only three more Fridays in 2014, make the
most of them!
Question of the
week: No question this
week as the Answer Man takes a break for Thanksgiving.
economic data recap:
The first revision for 3rd quarter
Gross Domestic Product was an upward revision, surprising those who make up the
“consensus” who had predicted a downward revision. The initial estimate was
3.5% growth, the revised estimate was 3.9% growth in the economy and 1.4%
increase in the price index. This data would create environment for higher
Durable goods orders for October showed slight
increase after dropping in September, however the “core” index (taking out
orders for transportation orders) the index was negative. This data is
favorable for lower rates.
Initial unemployment claims spiked last week
with 313,000 filings, the highest number since September. This is favorable for
Personal income and spending both saw slight
increases in October, income up 0.2% and spending up the same amount. Year over
year personal income is up 4.1% and spending up 3.6%. This data is slightly
favorable to higher rates but somewhat muted vis-à-vis the overall economic
Friday November 28, 2014: While markets are open today trading tends to be
light as the big decision makers are taking a long weekend and leaving the
junior varsity in charge of trading with the orders “don’t do anything drastic.”
Mortgage Backed Securities are higher than last Friday and rates are down for
30 year conforming 3.625% Down 0.096%
30 year high-balance conforming 3.75% Down
I hope you all had a wonderful Thanksgiving, we sure
did. Tonight is a big night as Long Beach Poly High ranked #5 in California and
#18 in the nation takes on St. John Bosco, ranked #1 in the state, #5 in the
nation and defending champions—of their CIF division, CIF Southern Section, California
and national champions. The game has been described as the biggest matchup in
America so far this year and we are excited to be going. Kickoff is at 7:30 at
Cerritos College, but tickets may be scarce. Go Jackrabbits!
Question of the
week: Why do I have
to provide documentation on the $3000 birthday check my grandmother gave me?
Answer: With all the
new buyers entering the real estate market, and some old buyers purchasing for
the first time in many years, it is time to revisit the issue of gift funds and
unusual deposits on your bank statements.
As I have written in the past, and try to remind
everyone a couple of times a year, for the past several years the number one
issue that slows approvals, documents and fundings is verification of
funds. It used to be verifying funds to
close, now it is verification of all funds in mortgage applicants’ bank
accounts whether needed for closing or not.
More so than ever Fannie Mae, Freddie Mac and FHA have
tightened down on asset verifications and have been sending loans back to
lenders due to what they deem inappropriate verification of funds and assets,
i.e. deposits. Because of this lenders
are tightening down even more so on what they require for asset verification.
Adding an extra layer of tightness for lenders are the
anit-money laundering rules in place that require financial institutions, from
stock brokers to credit unions to mortgage lenders, to report suspicious bank
activity to FinCen, the Financial Crimes Enforcement Network of the Department
of Treasury and to the Department of Homeland Security.
What is suspicious? It is a bit subjective but large
and frequent cash deposits, routine deposits just under the IRS $10,000
reporting threshold or large deposits that seem out of character for the rest
of the profile of the depositor. So mortgage lenders are not just worried about
Fannie Mae or Freddie Mac kicking back a loan but also worried about an audit
by the Federal government and possible penalties for violations of the
anti-money laundering statutes.
As part of the approval process your loan application
package will need to include verification of funds to close and/or
reserves. Verification requires two
months bank statements (all pages please) or in some cases a Verification of
Deposit (VOD) which has current balance and the two month average balance.
Trouble arises when on the bank statements there are
deposits that are “unusual” and exceed what are considered “significant”
amounts by underwriters, in some cases as low as $500, in other cases deposits
totaling one-third or more of your monthly employment income. “Unusual” is a deposit that is not funds from
your normal pay check or direct deposit from employer. If using VODs if the average balance is below
the current balance the underwriter may request a statement to see why, what
deposits have been put into the bank to increase the current balance above the
two month average.
So to prevent being delayed, or even in some cases
unable to be approved, due to deposits into your bank account(s) that are above
and beyond your normal income deposits:
Before depositing any check that is not from your
employer copy it, source it and be prepared to explain it. I repeat this again and again for clients and
we get tripped up consistently on verification of funds and deposits into
One more time, if you are considering purchasing a
home or refinancing at any time in the near future make sure you have copies
and can source every deposit into your bank accounts. If you cannot then you will run into
headaches with your loan approval in the future.
If you have any questions concerning depositing funds
not derived from your regular employment please contact me to discuss how these
funds may be properly documented and used for your mortgage transaction and not
derail your transaction.
had plenty of significant economic data. Monday started off with Industrial
production in October and it was down 0.1% from the prior month after a 1%
increase in September. Industrial production is important economic indicator as
it reflects into the job markets and overall economic growth, a low or negative
growth number tends to create lower interest rates.
are always important. Tuesday the Producer Price Index (PPI) for October
was released showing a 0.2% increase in prices wholesalers pay for goods and
services, year over year PPI is up 1.5%. Take out volatile energy and food
prices and the growth was 0.4% for the month reflecting the drop in petroleum
prices around the globe. Thursday the Consumer Price Index (CPI) was released
reflecting what you and I pay for goods and services and it showed no change in
prices from September, taking out energy and food costs and CPI rose 0.2%,
again showing the impact that lower gasoline prices have in our basket of goods
we buy each month. Low and flat numbers for CPI and PPI tend to push rates down
as it delays increases in rates from the Federal Reserve and can indicate a
importance to most readers are existing home sales. For October sales
showed another month of increases in sales gaining 1.5% after a 2.6% boost in
September. Sales in October 2014 of existing homes were up 2.5% from last
October, the first time this year sales have topped 2013 sales. The median
price shrank in the month indicating some slack in demand with the median price
dropping 0.4% for the month following a 4.3% drop in the median price in
September, year over year the median price is up 5.5% from October 2013. Regionally
the West saw a decline of sales of 5% from September and 3.4% from last October.
Improving home sales puts upward pressure on interest rates as they reflect
stronger consumer confidence and stronger economic activity.
Friday November 21, 2014: Technical trading information kept rates from
dropping a bit further than they maybe should have this week but drop slightly
they did from last Friday after a bit of an increase on late Tuesday and into
Wednesday. Next week is a short week which should make it a bit volatile as
traders move positions ahead of spending the Thanksgiving holidays in the
30 year conforming 3.721% Down 0.029%
30 year high-balance conforming 3.875% Down
The question of the moment this time of year is, of
course, “are you staying home or going somewhere?” We will continue our
tradition of staying home for Thanksgiving and I will be spending the day in
the kitchen with old movies on as I prepare our Thanksgiving meal, the menu for
which has changed only slightly over the years—and that is on the dessert side.
Barbecued turkey, homemade rolls, sausage cornbread dressing, green beans and
mashed potatoes for dinner and typically pumpkin cheesecake and apple pie for
dessert (note not “or” but “and,” it is Thanksgiving afterall). This year we
have guests from abroad, Sweden and Scotland, and our Scottish visitor will be substituting
trifle for our cheesecake.
Whether you are going somewhere or staying home my
families—the Smith family and the Stratis family—wish you a wonderful Thanksgiving,
knowing it will be spent with those you love and enjoy and are thankful are in
your lives; as I am thankful you are in mine.
Have a great week and happy Thanksgiving,
of the week: What do you think of the news that the government
wants to loosen home mortgage standards to increase the number of people who
can qualify to purchase a home?
Answer: I think government officials pushing for the changes and their
supporters either have very short memories or are more concerned with scoring
political points than the economic impact on the mortgage and housing
industries and the overall economy of their proposals.
The question arose from news that Melvin Watt, former Congressman who
was appointed by President Obama earlier this year to head the Federal Housing
Finance Agency (FHFA)—the entity that
regulates Fannie Mae, Freddie Mac and the Federal Housing Authority (FHA)—wants
to expand homeownership opportunities by relaxing many policies put into place
following the housing and mortgage markets crisis. There are many facets to the overall
objective of expanding opportunities of homeownership, some of which I do not
object to and several that I do.
Whenever anyone addresses the tighter lending standards in our current
market the fingers can be pointed directly at the entities controlled by FHFA.
Fannie and Freddie, who determine our conventional mortgage guidelines and
purchase mortgages qualified mortgages from lenders, have significantly
increased their repurchase demands from lenders over the past several years,
which in turn has resulted in lenders tightening their underwriting guidelines
to be stricter than those required by Fannie and Freddie. A “repurchase” is
when Fannie or Freddie purchases a mortgage from a lender and then after
reviewing the mortgage finds some aspect they feel is not up to their guideline
and requires the lender to buy the loan back. This is very expensive to the lender
who cannot recirculate those funds for other mortgages. As repurchase requests
increase lenders get tighter and tighter. (At end of this section I have an
example of repurchase for those interested.) FHA has tightened lending but
jacking up, a technical term used in the
industry, the mortgage insurance fees for borrowers to the extent that
FHA loans are almost subprime in cost and used by many lenders as a last resort
if we cannot find a way to qualify the borrowers with a conventional mortgage.
Watt’s proposals to expand lending are to restrict the use of “over-lays”
by lenders, over-lays are lender guidelines on a particular policy that are
stricter than the policy of Fannie, Freddie or FHA, loosen the repurchase
requirements by Fannie and Freddie and to ease the underwriting guidelines of
Fannie and Freddie, primarily by having a minimum down payment of 3% instead of
either 5% for regular conventional loans or 10% for high-balance loans.
By restricting over-lays by lenders while at the same time loosening
Fannie/Freddie repurchase requirements Watt is saying that he wants lenders to
loosen their lending standards and if they do they will not run afoul of
Fannie/Freddie and risk having to repurchase the loans made with the looser
standards. The risk to the lenders of course is the implementation of such
agreements, afterall lenders have been underwriting to Fannie and Freddie
standards for decades and after the mortgage crisis saw loans that had been
performing for many years go into foreclosure only to have Fannie and Freddie
require the lenders to buy back mortgages funded years ago under then current
Fannie/Freddie standards only to have them apply new standards and require a
repurchases. The mistrust is somewhat palpable and understandable given the
past actions of Fannie and Freddie.
I support the loosening of the repurchase standards of Fannie and Freddie
but disagree with the ability of individual lenders to have their own
standards. If a lender wants to have tighter lending standards and reduce their
risk, and the risk to taxpayers who back Fannie and Freddie mortgages, then
that should be their right. It will reduce their loan volume and revenue but
that is a decision any business should be able to make in an open market.
One restriction Watt would like to eliminate is lenders being able to
have higher minimum FICO requirements than those allowed by Fannie and Freddie.
This to me is walking down the path to trouble. Over the past few years the
minimum credit score for conventional loans has dropped down to 620 (FHA has
dropped to 580 for minimum down and as low as 500 for 10% down). In my opinion
this is too low, and realizing there are individual circumstances due to one-time
circumstances, I feel a minimum score of 660 or even 680 is more reflective of
an applicant who is able to maintain a mortgage with timely payments while not
adversely impacting other credit payments or obligations. If a lender wants to
impose their own scores for their applicants at 660, 680 or even 700 or 720
that should not be Watt’s decision to disallow.
As for lowering the down payment requirement for Fannie and Freddie to
expand homeownership for those that can afford monthly payments for a mortgage
but are challenged to save a down payment, especially in higher cost areas like
Southern California, if feel Watt would be better served to instead of changing
the guideline for conventional loans to instead change the mortgage insurance
requirements and payments for FHA mortgages which already allow for a 3.5% down
payment. For decades the FHA mortgage program worked for those whom Watt is
trying to include in the homeownership experience. Following the mortgage
crisis FHA raised its mortgage insurance requirements to where they are today,
for a $300,000 FHA mortgage the upfront mortgage insurance premium is 1.75%
($5250 usually added to the loan) and then a monthly payment for the life of
the loan of 1.35% ( $337.50 per month, which is $4050 per year). These higher
premiums have priced many otherwise qualified buyers out of homeownership.
Obviously given my longevity in the mortgage industry I am a huge
proponent of homeownership. However as I have told thousands of clients over
the years, I do not want to help someone get a mortgage that results in the
part of their home they know best is the ceiling above their bed that at the
end of the month they stare at in the middle of the night wondering how they
are going to make their next mortgage payment.
I sense our government regulators and many politicians are slipping
back into the mindset that homeownership is a right and not a privilege and as
such as many accommodations as possible need to be made that results in many
people buying homes they really cannot afford and/or should not be buying.
There are many underwriting guidelines and policies that I find ridiculous and
restrictive that can be loosened that will expand homeownership in a way that
is responsible without jeopardizing the financial strength that Fannie and
Freddie have come to have since their bailout from and repayment of the funds
to the U.S. Treasury.
Unfortunately it seems to be the nature of our government officials to
swing pendulums too far one way and then too far the other, often times the
with very slight pressure on the pendulum from regulators the markets most
often can control the swings to a much more measured degree and pace that
benefits the vast majority of consumers.
Example of repurchase: Lender funds $400,000 mortgage to couple in Scottsdale for the purchase
of a $500,000 home. Borrower is self-employed and receives income from his retirement
account on a monthly basis, has a very good credit score and was a prior
homeowner. The funds for the purchase come from sale of his prior residence in
Minneapolis. The lender packages the loan with several others and sells a
portfolio of $25 million mortgages to Fannie Mae. Upon receiving the package
Fannie Mae reviews the Scottsdale buyer’s mortgage package and sees that there
were several large deposits made into the retirement account that were not
account for and that the retirement account does not show a year to date
history of the borrower accessing the monthly amount put on the application.
Fannie says the lack of fund documentation and proof of continuity of income on
the retirement account fails to meet its criteria and sends the loan back to
the lender to repurchase. At which point the lender must send $400,000 to
Fannie Mae and set up to maintain and service the loan until it pays off. In reality the borrower accumulated various
retirement accounts he had acquired over a lifetime of working with different
employers that rolled into different IRA accounts. All the funds came from
similar accounts but the history of those accounts was not fully documents. On
the income the borrower’s tax returns showed the amount of income from
distributions from his retirement accounts as he took a little from each
account, upon consolidating the accounts his income was consolidated as well to
the one account. Perhaps some sloppy underwriting by the lender but the assets
and income were present for a qualified borrower.
As a result of this repurchase, or buy-back, the lender may tighten its
criteria for using retirement account assets for proof of income in a mortgage
interesting foreclosure data making the news this week. October saw a surge
in foreclosure auctions and an increase in filings. Foreclosures have been
climbing for the past couple of months and this article in Mortgage
New Daily they will
continue to increase mostly due to the lack of performance of mortgages that
were modified under the government backed Home Affordable Modification Program
(HAMP), Home Equity Lines of Credit set to be reset to fully amortized payments
and millions of homeowners still underwater and/or behind on payments. The article
is a good complement to those pondering the desire of the Administration to
loosen lending standards. If the numbers continue this could push prices down,
restricting or constricting economic growth and lead to lower rates.
Not a lot
of data this week that impacts mortgages. Yesterday initial unemployment
filings came in higher than the week before and at the highest level in seven
weeks at 290,000 applicants for unemployment insurance, there are currently 2.4
million Americans receiving federal unemployment benefits. The data is somewhat
neutral, while typically higher unemployment filings lead to lower rates
investors shrugged off the news as an outlier in the recent trend.
are spending their savings on gasoline. Overall retail sales in October
increased 0.3%, strip out auto and gas purchases and sales increased 0.6% for the
month. After declining in September the higher numbers are making retailers
happy heading into the holiday shopping season.
Further buoying spirits of retailers was another increase in consumer
sentiment. Right now the data shows for more consumer spending which would lead
to faster economic growth which would result in higher mortgage rates.
Friday November 14, 2014: With the off day on Tuesday for the markets we
have in effect two Mondays and two Fridays. Not surprisingly the mortgage
markets sold off on Monday ahead of the holiday (higher rates) and then bounced
around the rest of the week with the end of each day’s bounce being slightly higher
than the day before (lower rates). The net result from last week are rates are
flat—always a positive in my book when rates are steady.
30 year conforming 3.75% Flat
30 year high-balance conforming 4.00% Flat
High school football playoffs start this week in California and I’m excited to experience them
for the first time this year. Our
daughter is in the marching band for Long Beach Poly High School which is a perennial
football power in the region. Having attended most of the games this season I
look forward to watching the team try to advance through some of the toughest
competition in the country as they seek another state title.
Having gone to a small high school in Brussels,
Belgium for sophomore through senior years that had a football team (school was
about 75-80% American) this is my first experience of big time football with large
crowds and expectations. And I have been enjoying it very much.
Dennis C. Smith, California Bureau of Real Estate Broker #00966315; NMLS #296660
Stratis Financial Corporation, California Dept. of Real Estate Broker #01269597; NMLS #238166