Weekly Mortgage Update From Tom Balk – The Huge Upcoming Challenge in the Mortgage Industry That no One Seems to be Talking About

Success story – A client found a property that he and his fiancee fell in love with but she had a few past credit issues; so we could not use her income. Previous lender was pushing them into an FHA loan (where he would make a lot more money). I found a source in the state of Washington that would allow his debt ratios to go as high as 64.9% of his income on an A-paper loan. We have signed docs and are awaiting funds. They are a very happy couple and she is 8 months pregnant so they are really motivated.

For those of you with clients who are waiting for lower house prices/lower rates/Christmas/ or are generally procrastinators you need to be aware that in the very near future lending industry guidelines will be changing again. The $729,750 is a TEMPORARY limit through December 31st and it is unknown whether it will be extended. AND, here is one bit of news that no one in my industry seems to be talking about…. In December, the Agencies (FNMA and FHLMC) are going to be revising their underwriting software. This version (I have been told) will only accept debt ratios to 45% of income. Currently I can do ratios to 64.9% (see success story above). So this may have a dramatic impact on how much of a house, buyers can qualify for. We need to convince borrowers NOW is the time at ACT.

3.875% at No points, 5 year Fixed to $417K

have been asked ‘Who/What is Mortgage California?’. We are a subsidiary of PHH Corporation; the 8th largest mortgage originator in the US. We are originating $2.5 BILLION in mortgage loans every month, so we are big, stable and we are good at what we do. Unlike some other lenders, we have never run out of funds to close loans.

These quoted rates are for Full Doc Purchase transactions with either no prepay penalties or a 1 year penalty and good credit. Rate ranges are shown when LTV and/or credit scores and/or loan size affects the rates offered; I hope this makes sense because rates at 900K are different form 700K and also from1.1M:

• 4.375% at No points, 5 year Interest Only to $417K
• 80% to $1.1M – 5.875% at no points 10/1 IO
• 10 year (then ARM) Jumbo- 5.375% at 1.0 Point, 75% to $2M
• 5 year (then ARM) Interest Only Jumbo-5.25 % at no points
• 30 year Conforming-Jumbo fixed 5.25% at no points (Up to $729,750)
• 30 year Conforming fixed 5.00% at 1 point (Up to $417,000)
• 30 year Conforming fixed 5.25% at No points (Up to $417,000)

As always, email tom@afirealestate.com to continue the discussion. We look forward to hearing from you.