What in the world?
Friday, May 29, 2009
So I went on vacation last week and felt pretty good about it. Rates were at 4.75% and we were talking with plenty of people about the market, refinancing, reducing the terms of their loans and saving money in the long run. Additionally, we were having a great closing month as well and were happily moving loans to the closing table at a good pace.
I walked back into the office on Wednesday after a vacation that included lots of family time and no email, to a surprise. Rates had risen over .50%. Then on top of that rates went up again on Thursday. All of a sudden rates are at 5.5% in the blink of an eye!
Will they get better? Likely so. Rates never really move up or down in a straight line. However, they are unlikely to get near the bottom very quickly. The market is very worried about all of the debt created by the stimulus plan and financial rescues. This means that though the selloff is an overreaction, the change in sentiment is for rates to start rising.
If you have been considering refinancing, get your paperwork in. Pick your target rate and be ready for an interesting ride!
posted by Dylan Kramer @ 7:45 AM,
Why the refinance boom is over...
Monday, May 18, 2009
Here at America's Mortgage Choice, we pride ourselves on being customer centric. Understand your options, make good choices and get a great rate. These are the things we want to deliver to every customer. It has helped keep us very busy over the last several months as rates have gotten down to 5% and we have been glad to be that busy.
However several things have gotten us to the point where we think that the end of the refinance wave is at hand. First, rates seem to have bottomed out. There may be a new wave that starts IF and when they fall to 4.25% or lower. I think it's very, very unlikely that will be the case and rates are as low as they will be. Second is that foreclosures are through the roof and killing refinancing opportunity in the process. In fact is has been said that for every one property that banks have dumped on the market as a foreclosure, there are another two in inventory coming to market. This will further depress prices and values in the very near future.
This is critical because lenders are demanding that opinions of value, otherwise known as appraisals, be "backed up" with facts. By facts they mean actual closings. Just this morning a loan was rejected with 790 credit scores, great debt to income ratio and a borrower with savings of over one year's income in the bank. Why, you might ask? It was because they lived in a great neighborhood that is minimally impacted by the foreclosure crisis. No homes have been sold in the area over the last 9 months. In fact, things are fine in the area. The zip code has 2 foreclosures in the last year and thus, people are staying put. No financial distress means no distressed sales. But the bank needs "current evidence" of market value and rejected the loan. Literally rejected the loan because the neighborhood has stable schools and is the type of place where most people put 20% down and get fixed rate loans. The area is too good at avoiding the foreclosure crisis so is now being punished by not being able to refinance.
The bottom line is it is getting harder to refinance, not easier. If you have not done so, do it now. By month end, AMC and many other lenders will have turned attention to home buyers not refinancers. The fact is buyers are now easier to approve, since they are buying foreclosures, and rates will not be spurring refi demand. It's time to act, or not act. Either is OK, but it is time to choose!
Labels: current market
posted by Dylan Kramer @ 2:14 PM,
HVCC and the government program designed to protect you.
Thursday, May 7, 2009
The Home Valuation Code of Conduct (HVCC) is now in full force. The May 1, 2009 deadline has passed and the early results are in.
Remember, this system is a result of the settlement between Fannie Mae and Freddie Mac and Andrew Cuomo the Attorney General of New York. As of now, we are not able to "check value" with the appraisers in advance to gain any assurance about value or the viability of a transaction.
Lenders are requiring that all appraisals be ordered through independent third party companies with no contact between the appraiser and mortgage originator. The third party companies are owned by the banks! So in the name of "protecting the consumer" and independent analysis the company lending the money is now in charge of the value. Nice.
But it gets better. We had negotiated fees for our customers in advance for appraisals. In exchange for the delivery of regular volume, the average appraisal used to cost $300. Our first client just got his call from the appraiser we don’t know and the fee is $525.
So in the name of consumer protection, this customer has no idea that the home will or won't appraise and has to risk $525 to find out. Even if the value is OK he has to spend over $200 more.
Government at work…Sweet don't you feel protected?
posted by Dylan Kramer @ 12:41 PM,
Loan Modification Case Study from the Debt Advisory Alliance
This video is a short case study showing how the Debt Advisory Alliance successfully helps homeowners avoid foreclosure and obtain a loan modification to keep their home.
Labels: loan modification
posted by Dylan Kramer @ 8:46 AM,
Learning through Teaching
Monday, May 4, 2009
My first grade daughter, Hanna has been indoctrinated into daisy scouts. They start the usual scouting stuff. Meetings, group activities etc. She is going along having a great time since last fall. Then they drop the item that every parent of a daughter who is in girl scouts for the first time has to know is coming, at least in the back of their head: Girl Scout Cookie sales.
By selling cookies, the scout troop gets to go on a field trip or have a party or some other goal they set as a group. The cookie drive is set up to encourage participation from every scout by having them setting goals tied to rewards. Hanna is interested in a water bottle. To get the Girl Scout logo water bottle, a girl has to sell 100 boxes of cookies. That’s right, 100 boxes of cookies. Never mind that plenty of water bottles are available for three bucks in every store we set foot in. She wants the Girl Scout logo bottle, so 100 boxes of cookies at four bucks each need to be sold.
Additionally, I am not of the belief that as a parent, I should be accomplishing my kids’ goals/work for them. Because of that, I was disinclined to lean on my employees to by large amounts of cookies through me on her behalf. I said to Hanna, if you want to sell 100 boxes of cookies, let’s go do it.
Now you may not be aware, but here in Chicago, 2008 had a horrible winter. We had over 40 inches of snow. The first time the temperature was over freezing during January was on the 31st when the high was 34. It’s not the best time of year to be selling cookies door to door. However, that is exactly what we did one Sunday in January.
We got our boots, parkas, mittens, gloves, hats and order form ready and headed out into the cold. We started knocking on doors, the next door neighbor, folks with kids her age down the street. We were going along fine and then it happened. We ran out of "doors we knew" and now had to start knocking on the doors of people we did not know.
Her first question was "What do I say?" So we talked about saying exactly what she said to the other neighbors. "Hi, my name is Hanna Kramer and I was wondering if you were interested in buying some Girl Scout cookies from me?" It worked with the other folks so let’s not change it.
After a few no answers and a few rejections you could see the disappointment start to develop on her face. The ease of the first few sales passed and I could see the hard reality starting do dawn on her that there was a long way to go to get that water bottle. Surprisingly though, just as she was starting to get a little discouraged, one neighbor, whom we had never met, invited us in and bought several boxes of cookies. She was as excited about our "old school" selling in the weather conditions as she was excited to meet some people from down the block that she never had met.
After completing that order and heading back into the winter afternoon, I suggested that we take a break and go in, we had been out for awhile and it was cold, snowing and we had made some progress. My suggestion was denied though by my 6 year old when she quickly and directly proceeded to remind me what selling always boils down to...
"Daddy, we can’t stop now! I need more tries"!
"More tries?" I asked?
"Yes, I need more tries to sell 100 boxes".
So I pulled my hat down and we headed up the block. Not letting a little snow or any other obstacle get in the way of that water bottle.
posted by Dylan Kramer @ 12:00 PM,