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Will Mortgage Underwriters Be Using Mapquest Soon?

commute-transportation-costsTransportation costs may soon become a recognized expense for mortgage applications if the Natural Resources Defense Council study holds up.

The San Francisco Chronicle reported that the study showed that higher transportation costs resulted in a higher foreclosure rate:

The draft report looked at trends associated with 40,000 mortgages in San Francisco, Chicago and Jacksonville, Fla.

The release date for the final study has not been announced. The research included borrowers’ income and expenses, credit scores and loan-to-home value ratio.

It focused on the average number of vehicles owned per household in a neighborhood, and through a complex formula, found that the likelihood of mortgage foreclosure increased as neighborhood vehicle ownership rates rose.

If transportation costs were as much as 17% of a household budget, as the study suggests, a $5/gallon price for gasoline could negatively impact a family’s budget. Recent years’ foreclosure activity suggests that compunction towards making mortgage payments has given way to liquidity concerns. Moreover, a legal scholar suggests that any moral consideration associated with a strategic default is passe.

Let’s consider the hypothetical case of a family, with jobs in Los Angeles County, who purchased a $400,000 Riverside, CA home in 2007. The home price has withered to $300,000 and the family has “lost” their $80,000 down payment; they are $20,000 “in the hole”. This has them feeling despondent about the future of the property as an “investment”. Continue reading this post

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Posted by: Brian Brady on February 3rd, 2010 under Financing, Mortgage and Home Loans

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September, 2009 Mortgage Rates About as Good as They Get

We ended August and started September with a little rally in the mortgage-backed securities market. Economic figures, while better than the last few months, aren’t pointing to a sustainable economic recovery.  The Fed noted that inflation is hardly at the top of their list in the near future:

After accounting for these factors, the underlying pace of core inflation seemed to be running a little higher than the staff had anticipated. Survey measures of inflation expectations showed no significant change. Nonetheless, with the unemployment rate anticipated to increase somewhat during the remainder of 2009 and to decline only gradually in 2010, the staff still expected core PCE inflation to slow substantially over the forecast period; the very low readings on hourly compensation lately suggested that such a process might already be in train.

That should be good for mortgage rates but there is a tempest in the teapost-a-brewin’.  The Fed might pull back on its mortgage-backed securities purchase program: Continue reading this post

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Posted by: Brian Brady on September 5th, 2009 under Financing, Mortgage and Home Loans, Market Trends

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Mortgage Brokers Need To Shut Up

Mortgage brokers need to stop complaining because customers think we have something to hide.

mortgage-brokers-shut-upForget how non-disclosure of yield spread premium gives direct lenders an advantage; the consumer thinks you’re trying to hide something.

Don’t complain about the Home Valuation Code of Conduct interfering with the transaction; the consumer thinks it gives her an unbiased valuation of the property she’s buying.

Definitely stop complaining about the new truth-in-lending disclosure law (enacted last month); ‘ consumers want to know what their rate and fees might be and how they change… immediately, when it happens.

NEVER complain about how lenders favor their retail sales forces over their wholesale channels; the consumer thinks the banks give better service when they read that.

Who cares if bank sales representatives don’t have to be individually licensed?  Consumer might and that gives us an opportunity.

Don’t even THINK about complaining about the new good-faith-estimate (due next year).  That document is one of the best sales tools I’ve ever seen.  An originator who explains that disclosure document properly, wins the loan engagement.  The consumer won’t even THINK about filling out the last page because he trusts YOU. Continue reading this post

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Posted by: Brian Brady on September 1st, 2009 under Financing, Mortgage and Home Loans, Guest Bloggers

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The June 2009 Mortgage Rates Massacre

Mortgage rates, prior to June, were stabilizing after a volatile first quarter.  Potential home buyers and existing homeowners were settling in to the fact that a 4.5% conventional mortgage rate could be had; some days you had to pay a couple of points, some days only one.  FHA and VA loans were about an eighth of a percentage point higher.

Brighter days in the real estate market seemed inevitable.

Volatility hit the mortgage rates market like an unexpected tsunami.  Here’s how it unfolded:

What does this mean to you, the professional real estate agent? Continue reading this post

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Posted by: Brian Brady on June 8th, 2009 under Financing, Mortgage and Home Loans

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Four VA Home Loan Myths Debunked

Are you using VA loans properly in your real estate brokerage business?  Most agents don’t fully understand them and their customers are suffering because of it. 

Here are four myths, truths and action items, about VA home loans, that could help you serve your home buying customers better:

LOAN MYTH 1You have to be on active duty, in the military service, to use a VA home loan.
FACTEligibility is determined by current and past service.  Essentially, if a veteran served for at least six months, from 1964 to today, they most likely have VA home loan eligibility.  There are 15 million veterans under the age of 65 today; most of them should be eligible.
ACTION ITEM: Ask every new homebuyer, regardless of their age if they served.  Don’t rule out the gals; about 10% of those vets are women.

 

LOAN MYTH 2:  Sellers have to pay for the veteran’s closing costs.
FACT:  The VA doesn’t allow for certain loan-related fees to be paid by the veteran.  Those fees are usually about $1,200.  The loan originator or REALTOR can pay those fees.  THE VA allows the seller to contribute up to 4$ of the selling price towards ANY loan-related costs but the seller does NOT have “mandatory” fees.
ACTION ITEM:  Write “seller not responsible for any allowable or non-allowable VA loan-related costs” and call the listing agent to explain this when presenting an offer. Continue reading this post

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Posted by: Brian Brady on March 10th, 2009 under Financing, Mortgage and Home Loans

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How a 4.5% Mortgage Rate Can Benefit REALTORs

Mortgage rates have been very volatile this past month.  If you’ve been paying attention, you’ll note that the Fed is trying to drive fixed-rate conventional loans down to a 4.5% rate.  Last week, The Fed announced it would purchase mortgage-backed securities, in the open market, in order to drive down mortgage rates to 4.5%.

The preponderance of the Government intervention is being perceived as inflationary.  In short, investors believe that the Government has created so much money in the past eighteen months that it could render our currency as worthless as a Banana Republic.  This should drive mortgage rates much higher in 12-18 months. Continue reading this post

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Posted by: Brian Brady on January 5th, 2009 under Financing, Mortgage and Home Loans

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