Dennis' Mortgage Blog

Question of the week:  With all that is happening and from what I am reading and hearing, are you still able to have loans approved and closed?  Answer:  YES!  Stratis Financial Corporation, and other brokers and lenders across the country are assisting home buyers and owners with their mortgage needs.  We are approving mortgages and funding them for our clients.  While credit approval criteria is tightening, and in some circumstances mortgage insurance companies are not insuring (like condos with less than 10% down in California), we are working with client to structure their transactions and ultimately fund their mortgages. 

If you have a question you would like answered send to me!

Greetings from the edge of the Sonoran Desert where Leslie, the girls and I have been engaged in some hot R&R in Scottsdale—thank goodness for Blackberries and laptops!

Last week I went into some depth on “The Plan” (go to my Mortgage Blog and scroll to last week’s date if you missed it) and it was close to being passed. As you know by now, on Monday in a bi-partisan “pphhhhhbbbttttt” to leadership Democrats and Republicans voted against the measure in enough numbers to defeat the plan and send it back to the drawing board.  Yesterday the Senate restructured the plan and approved it.  Then in what is a procedural matter, because any tax bill must initiate in the House of Representatives, took a bill that has been lying around for several years, gutted the language and substituted The Plan—and this is how our government operates!  As I type this early Friday morning the only news thus far is that the House has agreed to debate the new Plan and will probably vote on I later today.

You will recall that last week President Bush, Secretary Paulson, Senator Reid, Congresswoman Pelosi and others were stating that if the Plan was not passed by the opening of the markets this past Monday the financial world would collapse—it wasn’t and they didn’t.  Maybe the longer they stall the Plan the more things will work out. 

Warning political comment!  If I were a member of the House of Representatives I would not vote for any Plan, and would lobby hard against it, unless the following provision was provided:  Rep. Barney Frank and Sen. Christopher Dodd would have to be removed from their seats as Chairs of their respective committees on banking and oversight; as well their Republican counterparts who are most senior on their committees.  Fannie Mae and Freddie Mac are under Congressional oversight.  For years both of these men have been vociferous in their defense of Fannie and Freddie and politically maneuvered to not only avoid increased scrutiny and oversight of the two GSEs, but also allowed significant reduction in qualifying criteria.  I am not saying the blame for the whole credit mess lays at their feet, but they are part and parcel of the situation.  If the previous move by the Feds in taking over Fannie and Freddie required their CEOs to step down, and also those of AIG and other companies, I feel it is only right that the Congressional “CEOs” of the oversight committees also lose their jobs as Chairs of their respective committees.  That their historic roles have not been more of the story being reported shows the inability our nation’s media has to properly cover any story that involves Washington D.C.   End of political comment.

Bonds were once again on the roller coaster this week with huge ups and downs as news of the Plan surged and receded and funds flowed from stocks—sending prices tumbling—to bonds—sending prices higher and rates lower; and back to stocks—sending prices soaring—from bonds—sending prices lower and rates higher.  Up and down as investors tried to guess what would happen and moved like sheep from stocks to bonds and back again and fro again.  Here we are early Friday morning and mortgage rates have already dipped and then climbed as money flows into the stock market in anticipation of the Plan’s passage in the House.  I am sure as the debate gets coverage on CSpan and influential members make positive and negative comments that our markets today will be moving accordingly.  Underlying all of this is an unemployment number today of 6.1%, a number calling for hysteria from some pundits, but I fall back to my economics classes and degree from 1984 in which we considered the “natural” rate of unemployment to be 5%--meaning if everyone was offered a perfect job 5% of the force would still be unemployed for various reasons.  No panic from this mortgage broker on this number.

Some good news.  The mortgages that have been funded in the industry the past twelve months or more are perhaps the most credit worthy mortgages funded in any twelve month period, and the mortgages keep getting stronger.  Because of the tightened credit standards and the absence of stated income mortgages and adjustable rate mortgages the current portfolios of mortgages are very strong investments for lenders---a great foundation for them moving forward.

My advice, be it your 401(k), your home loan, or your nerves:  stay the course, keep having payroll deduction into your plan, keep planning on purchasing a home and doing what you are advised to do in order to qualify, keep faith in the American economy and the long term investment.  This too shall pass as other busts and booms have passed. 

Here are the rates as we finish off the week:

NOTE PRICING BELOW IS BASED ON 20% DOWN FOR JUMBO LOANS AND 10% DOWN FOR CONFORMING, 3% FOR FHA, FULL DOC, AND FICOS OF 740 AND ABOVE (change from last Friday):

30 year conventional at 1 point 5.75%              ê 0.125%

30 year conforming-jumbo at 1 point 6.00%              ó Flat

30 year FHA at 1 point 5.875%                                  ó Flat

30 year jumbo at         NO PRICE CALL FOR INFORMATION              

Back to Long Beach tomorrow after a great week in the Scottsdale area, Dolly my horse from earlier in the week is glad I am gone and hoping on my next visit she has a smaller cowboy to drag around the desert!

Have a great weekend,

Dennis