Floyd’s Mortgage Facts, December 5th
It was Christmas 1960. The great question of the day was would I, or would I not, be lucky enough to receive the real life Roy Rogers six shooter and holster I felt I desperately wanted? There was that incident where I had told my 2nd grade teacher, Mrs. Kachuck, that my homework had blown away in a gust of wind (she let me get away with that little fib) and of course the time Johnny Boyle and I threw rocks to break the lights in the hallway but hey, in the big scheme of life, was that a big deal? Would Santa hold a grudge?
2008 has been a tough year, no doubt about it. Will the mortgage industry’s past indiscretions continue to haunt us through the Holidays and into 2009? While it is my belief that 2009 will most certainly have its challenges, I am optimistic that we can and will overcome the obstacles before us. And just like I was lucky enough to have my wish granted in 1960, this week Santa delivered an early Christmas Present to all those who have been looking for lower mortgage rates. With that in mind, here are this week’s mortgage facts:
Fact #1: Mortgage Rates finally made the move down that so many have been waiting for. As of today, a 30 Year Fannie Mae Conforming Fixed Rate is 5.25%+1.00 point! Jumbo Conforming Rates to the $625,000 loan amount are just a tad higher.
Fact #2: Mortgage lenders are gearing up for 2009. As things settle down in the marketplace those lenders still in the business are focusing on how they can make loans. Smart loans, well-secured loans, but more loans.
Fact #3: It appears that there are some signs that a few more Jumbo Loans are coming available and some at pretty good prices. We have one lender who offers a 5/1 Adjustable Rate Mortgage with a rate of 4.75%+1.00 point up to a $3 million dollar loan amount!
I hope that you this week treats you well and as we move through the month of December I wish you the best life has to offer.
All the Best!
Floyd
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“Just what makes that little ole ant, think he’ll move that rubber tree plant?
In 1959 Sammy Cahn and Jimmy Van Heusen wrote one of my favorite motivational songs of all time. The opening goes like this, “Just what makes that little ole ant, think he’ll move that rubber tree plant? Anyone knows an ant, can’t, move a rubber tree plant, but he’s got Hi-i-igh hopes…” (I can hear Sinatra singing it right now).
If you recall, not only were we introduced to that persistent ant, but also additional inspiration was provided by a “silly old ram” who “thought he’d punch a hole in a dam”. In the end, both succeeded at their task, despite others telling them that it was hopeless and no success would be found.
Today’s financial environment places many obstacles in front of even the most qualified consumer and so I just encourage you to think like that ant and with a little help, you can move that rubber tree plant.
With moving metaphorical rubber tree plants in mind, let me share with you a few facts from this week’s activities.
Fact #1: With Congress passing the $700 billion dollar financial services bail out package this week, the lending markets will return their focus to more market fundamentals. The Fed’s, for example, meet again at the end of this month and with the poor employment report that was out today you may see a softening in rates. But, there are lots of unknowns so we will keep you posted.
Fact #2: Residential Mortgage Lenders, for the most part, continue to lend with the same standards that they have been using for the past several months. We did not see any real impact from the past two weeks upheaval. That being said, if Congress had not acted I am not sure how things would have played out.
That’s it for this week. Keep doing what you do best and in the end, all things work themselves out!
All the best,
Floyd
(818) 952-2726
What’s Really Going on Out There? And How Will This Affect Me?
A few years back I read former Speaker of the House, Tip O’Neill’s, autobiography “Man of the House” and found it very entertaining. The master politician had, throughout his career, made observations about life and human nature that had served him well in achieving his goals. His political savvy came to my mind this week as I watched some of the unprecedented negotiations going on in Washington. In my opinion, his famous quote “All politics is local” rang truer than ever. I might paraphrase that today and say, “All economics is local.
I received several calls this week, asking the question, “what’s really going on out there?” and many asked “how will this affect me?”
As I have repeated in the past, we just don’t have all the answers. That being said, in an attempt to try and answer, factually, a very small portion of the questions in many of our minds, I want to recap some of the mortgage industry’s current circumstances.
Fact #1: As an industry, lenders have returned to more traditional underwriting standards. Many of those standards are the same ones that were in place when I started in this business 23 years ago. At this time, with good credit, a reasonable down payment and verifiable income, you can get a loan at pretty remarkable rates. Without those items, it’s tough.
Fact #2: Lenders are scared. They may not verbalize it to you that way but the reality is, they are scared. That is not a criticism, heck most days I am scared. Everyone is looking over their shoulders, questioning every move they make. The affect of that fear is that they scrutinize every loan and ask questions to the point we often say “you’re kidding, right? But they are not, and answer we must.
Fact #3: Every one is treated the same. What I mean by that is, because “all economics is local” and there is nothing more local than our own households, we tend to take it personal when an lender asks us to dig a little deeper with an answer or verify a particular circumstance. You should see my face turn red with frustration and I wish I could tell you that will change soon. I do not think it will.
Fact #4: What can change is our preparation and our ability to take a “can do” approach. We must know that it is not us personally being challenged but an industry, attempting to right the wrongs of the recent past and we are all caught in the current. No need to fight the current, it is stronger than us as individuals and it will only wear us out. Swim with the current, like it or not, and look for the opportunity and we will make it through. A bit tired, somewhat bruised but make it we will!
I hope this information is useful this week. I wish I could offer more but truth be known, I know little more than most, supplemented by what I read in the industry news, and of course what I experience in my small world. All economics is local, even at BWA.
All the Best!
Floyd Walters
BWA Mortgage
1035 Foothill Blvd
La Canada, CA 91011
818 952-2726
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