The squeeze is on!
Monday, April 27, 2009
Today in the mortgage space, everything is getting squeezed. Values are getting squeezed. Consumers are getting squeezed by credit bureaus, Fannie Mae and the lack of transparency of the Obama plan. Lenders are getting squeezed as they are overwhelmed with demand and try to get loans closed as they are near the top of their warehouse lines with increased costs of providing each loan. Employees throughout the industry are squeezed by everything in this challenging landscape and customer service is suffering horribly.
With that all said, thank you to everyone who reached out to us after our message of urgency last week. For anyone who missed it, we are in a situation where effective with all applications dated after May 1, 2009 the appraisal will have to be ordered blindly through an independent repository. This will have several effects. First, appraisal times will be delayed. Second, there will be no more "gut checks" of value for the consumer to see if it is worth spending the fee on an appraisal. Finally, there will be higher costs. Appraisal costs are expected to rise by $100 to $150 to the consumer. By the way, the repositories are owned by, you guessed it, the big banks. So much for independence in valuation.
So again, if you are considering refinancing to get a better rate or perhaps, shorten your term, move on it this week. You will maintain maximum control of the process.
Labels: mortgage truths
posted by Dylan Kramer @ 8:44 AM,
The Secret of Term Reduction Webinar
Tuesday, April 21, 2009
In case you missed it, here's the recorded version of our "Secret of Term Reduction" webinar from Saturday, April 14th. It describes the powerful strategy many savvy homeowners are using in today's market to save tens of thousands of dollars in interest over the life of their loan.
Labels: term reduction
posted by Dylan Kramer @ 8:09 AM,
More changes happening that impact your mortgage.
Monday, April 13, 2009
So do you want the good news or the bad news this week? It seems that every time something positive happens in the business, we have a new hurdle or challenge to handle as well. This week is no different.
First here is the good news. Several large national lenders have rolled out their guidelines to refinance consumers impacted by a drop in their homes value. The "Obama Plan" allows folks who have an eligible mortgage to secure financing when they, to date, have not been able to take advantage of the low rates out there today.
To be eligible, your mortgage should not currently have PMI and you have not likely been able to refinance due to a drop in value. Though previously you would not be able to refinance and because your loan would now require PMI, you will not have to add it through the "Obama Plan". This program has quite a few hoops to jump to take advantage of it so expect a 60 day rate lock and it's likely to be a little more challenging than your last refinance. But it is available and the professionals at America's Mortgage Choice are ready to work to help you get the new mortgage and relief you deserve.
Now, here is the bad news part of the story. On May 1st, mortgage brokers will not be able to order an appraisal of your property from an appraiser that they have a relationship with. Effective May 1, all appraisals must be ordered "blind". Central repositories are being set up and will take your appraisal order and generate the order randomly to a licensed appraiser.
This is being done to avoid pressure being put upon appraisers to "hit the number". However, the consumer impact could backfire. Today, appraisers tell brokers up front to "forget it" any time the value of a home makes it unlikely that a loan would get approved. This courtesy saves the consumer $300 bucks. Now appraisals will likely be closer to $400 and there is no way to gauge the risk the consumer is taking. The appraisals are likely also take longer to deliver. So you could wait six weeks (versus one) for an appraisal that could kill your home purchase or refinance.
So in a nutshell, appraisals will take longer, be more expensive and there is going to be less communication between the consumer and the appraiser about the prudence of even trying to do the deal. The message is clear, if the numbers make sense to refinance, do it right away and avoid more expense and delays after May 1.
Labels: appraisals, current market
posted by Dylan Kramer @ 7:02 AM,
Crazy Things Happening in the Mortgage Business!
Monday, April 6, 2009
Word is the mortgage business is busy. And to a degree, it's true. We are in a situation where rates are down and the phones are ringing off the hook. If you are one of the lucky ones who can secure a mortgage at today's rates, get it done though. The landscape continues to change and there is no reason to think that the pendulum will swing back toward "easy lending" any time soon. Combine that with a short staffed industry working at full, albeit reduced capacity you have a recipe for challenges.
Sure we are swamped, the phones keep ringing and everyone wants to get take advantage of today's lower rates. However, it's not that simple for us and more importantly the customers. We have told dozens of people who would love to refinance, "Sorry, we can't get you approved". Any one of several factors can prevent you from getting a loan. First, changing guidelines are an issue. Last week on one day notice several lenders reduced the amount of cash you could take out of your home to consolidate debt or raise cash by ten percent of the property value. This was done by email and effective immediately. Also, if you live in a condo, you have a "risk adjuster" that makes it impossible to get the lowest rate in the market unless you have 30% equity in your property. Finally, speaking of equity, most people we are talking with have a drop in property value making it challenging if not impossible to secure these rates.
Add to this the customer service challenges. Brokers, lenders and others that support the mortgage process were all struggling to survive in 2008. With that they all have lost money and are often not willing to "staff up" to meet current demand. This has caused the standard 2-3 days in underwriting to balloon to 2-3 weeks and longer. In fact, as of this writing on March 28th one of our lenders is working on loans submitted to them on February 16th. This is causing customer service problems through out the industry, especially related to rate lock periods, and purchase closing deadlines.
Finally, getting the lowest rate is the final hurdle. Every week there is a great interest rate survey published. The most recent one's results can be found here. Read it carefully though, it gives not only the average rate from last week and mortgage rates change every day (rising and falling). Additionally, the survey always mentions the average amount of points being paid (yes, points). Points can now financially make sense and we are seeing many people run the numbers. A further discussion of points will come to this blog soon.
The bottom line is this. If you have not tried to secure a mortgage since early 2007 or before but are thinking of it, the rules have changed. The interest rate market is in your favor but the lending environment is not. Get your loan up and running sooner rather than later, even if you don't lock the interest rate in right away. This way, you can manage all the other headaches that exist in getting a new loan approved and get the low rate you want.
Labels: current market, mortgage truths
posted by Dylan Kramer @ 8:03 AM,