Dennis' Mortgage Blog

August 17th, 2007 11:38 AM
Would have liked to get this communication out last week but unable to send emails from where I was staying--Leslie and I were in Tulsa seeing family and friends and also attending the PGA Championship.  Great trip, always good to return to the roots and needed a little R&R to be strong in this current mortgage environment.
 
I have so many issues and factors I wish to comment on regarding the current credit crisis that to do so in one communication would take several pages. 
 
First:  WE ARE STILL MAKING LOANS!!!  Media is saying that "the mortgage market is frozen" and other comments indicating borrowers cannot get mortgages.  This being a family website my toned down response is cow-poop.  There are a lot of mortgage products that were created by Wall Street in the past several years (that they have subsequently stopped funding starting this mess) that are no longer available.  What is available is what has always been available: mortgages for qualified borrowers with some equity investment--either in the home through appreciation for refinancing or for down payment for a purchase. 
 
Second: The non-conforming mortgage market, which is most dependent on Wall Street investment to keep the loans funding, is relatively the most expensive it has been in my memory.  The spread between a jumbo 30 year fixed rate mortgage and a conforming 30 year fixed rate mortgage is almost 1%, for some companies the spread is 1.5%.  This spread should (should) shrink in the not too distance future as investors begin to remember what a great investment the overwhelming majority of fixed rate mortgages are and begin to re-invest in the products. 
 
Third:  In my opinion the result of this current situation will be more tiered pricing for borrowers based on credit risk for the lenders/investors.  Until very recently there was little to no differentiation in most mortgage products pricing for "good" credit versus "excellent" credit.  We will soon see very tiered pricing using FICO scoring ranges at 20 point ranges, and perhaps as small as 10 point ranges, providing better pricing for borrowers with higher scores.
 
I will be trying to keep up the market news and post my thoughts and opinions my Blog as time permits, please bookmark it and check in to see what is new.
 
As you see Jumbo continues to climb away from conforming pricing:
 
30 Yr. Fixed Conforming with 10% or more down: 6.25% at 1.00 point
30 Yr. Fixed Jumbo with 10% or more down: 7.125% at 1.00 point
 
Note these are for 30 day locks, purchase transactions with 10% or more down and strong FICO's. 
 
 
***PLEASE NOTE*** "Jumbo" for this rate graph is for mortgages identical to those mortgages that fit Fannie Mae and/or Freddie Mac guidelines with the exception of loan amount greater than $417,000.  "Non-conforming" mortgages may be below the $417,000 loan amount and are so designated depending on may factors, including but not limited to FICO scores, income and/or asset verification, etc.
 
 
Be sure all clients are in constant communication with the lender (me!) before writing your offers to make sure they are not impacted by the now daily changes and dropping of programs.  Caution rues the day and leads to smoother transactions.
 
Have a great weekend.
 
 
Dennis
 
Dennis C. Smith
Stratis Financial
Direct (562) 472-1118
Mobile (562) 243-6912
Fax (562) 684-4316
 
Posted by Dennis C. Smith on August 17th, 2007 11:38 AMPost a Comment (0)
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