Dennis' Mortgage Blog

I hope you are in the stock market either with individual stocks or mutual funds. Yesterday's record finish sucked a bunch of money out of bonds pushing rates down some (a slight rebound today) but creating a lot of additional wealth for tens of millions of Americans invested with their pensions, 401(k)s, IRAs, insurance products and other investments. Too bad the Social Security Administration cannot provide such a return...Since October 2002 when the Dow hit post-9/11 low the index has doubled in value. If you invested $5000 in a mutual fund invested in every Dow stock today you would sitting on $10,000, that is an annual return of about 20%. This performance in the equity markets indicates investors are bullish (positive) on the ability of our nation's companies and corporations to sustain profits in the near term.

Investors are not the only positive ones, consumers are as well. Although retail sales fell last month, this month consumer confidence soared above expected number and Americans are much more positive about their financial futures than predicted. This is not great news for mortgage rates as the tendency is for this positive confidence to show itself in big ticket and durable good purchases and can be inflationary--we know what the "I" word does for rates.

No change from last week:

30 Yr. Fixed Conforming with 10% or more down: 6.5% at 1.00 point

30 Yr. Fixed Jumbo with 10% or more down: 6.625% at 1.00 point

Note these are for 30 day locks, purchase transactions with 10% or more down and strong FICO's.

I received a call from an agent this morning with a client working with a friend who is a mortgage broker and there may be cause for some concern. One issue that was brought up is of great concern to me and is an issue I hear about frequently from agents: lack of a good faith estimate from the lender or broker. A few things about good faith estimates, first anyone should be able to provide one almost instantaneously with the technology and industry specific programs we use. When pre-qualifying a borrower following the conversation a good faith should be offered and provided. Many lenders do not like to provide a good faith because if gives them something to be shopped with and rates and fees can be compared. It would be easy for me upon seeing another lender's good faith to lump charges together to make it look like I have less fees, or take fees off the good faith and change the points, essentially tailor a good faith that looks better than what the client has in hand to try to take the deal. Being confident in my ability to provide what I quote and knowing that while other brokers can quote lower not all close at what they quote I have no problem providing a good faith. This has cost me business as clients have taken them to other lenders who have chopped up fees, etc to get the deal, but in the long run this policy has served me and my clients well.

Finally, at application a mortgage broker in the state of California must provide a Mortgage Loan Disclosure Statement which is a two page form, the first page looks like a Good Faith and breaks down fees, as well as separates payments to the broker, plus and rebates. Page two has some description of the loan program. Many brokers only show page two of this form as they do not wish to disclose their fees upfront. If your client has not received a good faith estimate and/or Mortgage Loan Disclosure statement at time of application they need to contact their lender and demand a copy.

Let me know how I can assist you and your clients. Be sure to send them to www.DennisCSmith.com for rates, to apply for mortgages, and a lot of great information on loans and mortgages.

Dennis