FLORIDA: the results may surprise you!

It is amazing, nationwide, how people vote when they are up for re-election… WA is the same way.

Democrats — 8 Yes, 1 No

Boyd, Y;

Brown, Corrine, Y;

Castor, N;

Hastings, Y;

Klein, Y;

Mahoney, Y;

Meek, Y;

Wasserman Schultz, Y;

Wexler, Y.

Republicans — 3 Yes, 13 No

Bilirakis, N;

Brown-Waite, Ginny, N;

Buchanan, N;

Crenshaw, Y;

Diaz-Balart, L., N;

Diaz-Balart, M., N;

Feeney, N;

Keller, N;

Mack, N;

Mica, N;

Miller, N;

Putnam, Y;

Ros-Lehtinen, N;

Stearns, N;

Weldon, Y;

Young, N.

For the Full House Roll Call

Orlando FHA Short Refinance

An FHA Short Refinance is designed for people who owe more than their home is worth. Wow, this is more of us than eer anticipated is it not?

Well, when faced with this scenario, there are about three main options available which are determined by the process of negotiating with your current mortgage lender:

1. FHA Secure Refinance - This was put forth by Congress and unfortunately was more symbolic than it was substantive. Sorry… facts can be inconvenient. Anyway, this is typically the case when the borrower owes on two different mortgages that are now greater than the total of the homes current value. For an FHA Secure Refinance, the new lender will allow the second to remain as a subordinated lien but this is a very small box to fit in to be sure.

2. Short Refinance - A Short Refinance is also considered a Mortgage “Write Down” where the current mortgage company allows for a payoff that doesn’t add up to the current amount owed. There is a process of negotiating with the current lender to allow this transaction to take place.

3. FHA Secure Short Refinance - There are some unique occasions that the current mortgage company will allow the writing off a certain amount of the balance and arrange for an unsecured loan to be paid independently by the borrower. The benefit with this example would be to obtain a very low interest rate on the remaining balance that was not wrapped up into the new mortgage payment.

All of these options may need the help of an Orlando mortgage professional that has had experience negotiating FHA Short Refinances with the reeling banks.

In many cases, the borrower doesn’t have to pay for any of the fees at the time of that they make application and can wrap the normal costs into the new-born mortgage.

Written by Chris Brown, an Orlando Loan Officer. For more information about purchase loans or refinances on primary residences or investment properties, please contact me directly @ 407-377-0500 x 210.

Well, while you and I were kicking back over the weekend, Congress was hard at work. [Wow, when have I ever said that before...LOL.] They drafted their ‘bill’ Sunday evening and within the 110 pages of Congressional Brilliance [again, work with me here....], an important clause emerged that should be positive for interest rates for the time being…

In summary, page 40 has the points of interest:

In other words, the U.S. Treasury checkbook is not “wide-open” and they must get the go-ahead from these other checks and balances… this is a good thing. By limiting the Treasury’s spending to $250 billion up-front, with the $450 billion balance being subject to third-party approval, inflation concerns from last week should settle a bit. This feeling within the markets should, in general, have downward pressure on mortgage rates.

That is not to say that all other economic data is usurped though. This week, there are a few things things that could influence rates all on their own.

Today, Monday, September’s Personal Consumption Expenditures data comes out. Ewwww, doesn’t that sound fancy! Well, it basically is a cost-of-living measurement with a fancy name. It is one of the FEDs favorite measurements though, because it allows for human behavior modification in response to market prices.

For example, if orange groves got wiped out and OJ was $10 for a gallon, uuuhhh…. most people are switching to a new fruit juice and not going to pay that premium. PCE allows for those behavioral changes in its numbers.

Ah, PCE numbers just came out as I am putting finishing touches on the blog here… they came in just as expected .2% for August.

The Unemployment Rate touched 6.1 percent in August 2008. In addition, on Friday, the jobs report is released so we should see that number change slightly. Expectations are that it will increase [for the 9th straight month].

Rates - up or down? Yes, it will be up or down… sorry, poor humor i know, but i gotta tell you with all the volatility, it is really hard to predict. Therefore, if you see a mortgage rate with a comfortable accompanying payment, consider locking it in.

With as fast as markets have moved this year, you can be pretty sure the rate — whatever it is — won’t last for long.

Oh, one last thing, Citigroup just bought Wachovia’s banking assets. This is sure to be another fun week!

Chris - out

Read Previous Left-overs:

Mortgage Chili: Last week’s leftovers and what’s to come…

As a concerned citizen myself, I try to hunt around the internet to find things that influence our lives here in central Florida. [Besides just Gator Football that is.]

As most of you know, we have an election coming up in November, and while this is not a political post, it is important to know what is on the docket for those of us in FL other than the Presidential Race.

A friend of mine, Rob Arnold, wrote a great post about the amendments that are going to be showing up for us as well.

I recommend everyone go read the official stuff for themselves, but here is a summary of what we will see…

Amendment 1: Touches on property rights of Aliens not eligible for citizenship.

Amendment 2: Would amend the definition of marraige to be one man - one woman.

Amendment 3: Relates to property taxes.

Amendment 4: Also relates to property taxes.

Amendment 5: There is no 5.

Amendment 6: More on property taxes.

Amendment 7: There is no 7.

Amendment 8: Sales tax and community colleges.

Check it out, be informed, and go do your civic duty!

Chris

Other Top blog posts:

WAKE UP! Smart Buyers are jumping in… with both feet!

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Bad Credit? Orlando Credit Repair made accessible…

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Well, we knew one of the ‘big, big dogs’ was gunna get eaten… and as of Thursday, the guessing game was over. Federal regulators seized Washington Mutual as it became the3rd lender of real interest to close its doors since July, joining IndyMac and Lehman Brothers.

In 2007, these three institutions covered about 10 percent of the mortgage market and now that they have closed shop what they have successfully done is…

…confuse American homeowners. [Or is it just me?]

The most prevalent question:

If my mortgage company fails, do I still have to make my payments?

Well, wouldn’t THAT be nice. We could all just look for the weakest company and all do business with them. Unfortunately that utopia doesn’t exist. If a mortgage company has financial problems [seized, bankrupt, or is otherwise closed] it doesn’t change the terms of the bank’s mortgages whatsoever — possibly just the mailing address.

This is because a mortgage (and its associated note) is a legal contract between the lender and the “lendee” [that's you], signed on the date of closing. It is binding and cannot be altered by either party. The only way to “end” the contract is to satisfy the contract.

This can happen by:

• Selling the home and the mortgage is paid
• Refinancing the home and the mortgage is paid
• The loan is paid down to $0

So, if a mortgage lender fails, none of the above occurs… so the contract is still in force. So i recommend making those payments…they are still due.

This means that a homeowner will still make the same mortgage payments for the same mortgage but to a different company. Follow me?

To reduce confusion around transactions like this, the government puts two safeguards in place.

1. First, the govt requires the former lender to send a 15-day advance notice of the change to the homeowner.
2. Second, it requires the new lender to do the same.

In other words, the onus is ultimately on the homeowner to open and read their mail, and make the appropriate changes.

SPECIAL NOTE: IF you pay your Orlando Mortgages online, make sure you address this with your online bill pay as well… you likely won’t get notified if you’re sending payments to the wrong place and that may be a headache in the making!

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Woo Hoo… the August Existing Home Sales report was released Wednesday, showing a decline in the number of homes sold nationwide, and a reduction in the median sales price.

LEAVE IT TO THE MEDIA:

I can’t say that I am surprised, though, the mainstream media… playing on their love for the “sensational” spun these statistics as a big negative.

Are they driving an agenda, or do they simply NOT GET IT?

Sure… the slow down in home sales wasn’t a good thing, but it wasn’t terrible, either — sales were actually up in half of the regions around the country.

And, if I can get on my soapbox for a sec… citing “median sales price” is somewhat pointless because median sales price only measures the price point at which half the homes sold for more, and half sold for less. Woopie!

What does matter [I am glad you asked] =0) The third statistic in the report is what deserves as much — maybe more — attention that the others.

According to yesterday’s press release, the national home supply is decreasing.

This is sweet news for those selling their homes… even those selling Orlando Real Estate.

In this report, the National Association of REALTORS [NAR] said that the country’s existing supply of homes for sale fell by 7 percent in August.

At the current pace of sales, that represents a 10.4-month supply, which is down .5 down from July. I don’t have my mortgage calculator handy, but I think that is 5%, is it not?

The POINT: A reduced supply of homes for sale, everything else remaining equal, home prices go up!

This is Supply and Demand in its purest form.

The one thing that is seems economists and experts can agree on, is that reducing the housing supply is one of the most important elements to a sustainable housing recovery. And let there be no doubt… we have seen several indications that this is happening, like…uh… builders not building as much.

Bottom Line:

This is refereshing news for home sellers because a reduction in housing supply tends to lead to higher prices.

(Images courtesy: The Wall Street Journal Online)

Earlier this year — and for the first time in its history — the FHA changed its funding fees and mortgage insurance structure.

Effective October 1, 2008, it’s repealing those changes.

Partly to keep FHA home loans affordable, and partly to comply with new laws, the FHA is rolling back its up-front fees and ongoing mortgage insurance requirements and replacing them with new ones.

The new up-front FHA fees are as follows:

• 1.750% : All purchase and “standard” refinances
• 1.500% : All “streamline” refinances
• 3.000% : All FHASecure programs for delinquent mortgagors

These fees are paid as a one-time cost at closing, and are calculated by multiplying the loan size by the fee. A $200,000 FHA purchase, for example, now carries a $3,500 one-time charge.

Ongoing mortgage insurance requirements have changed, too. These changes are based on the loan type and the amount of equity in the home.

• 15-year fixed with 90% borrowed or less: 0.000% annually
• 15-year fixed with more than 90% borrowed: 0.250% annually
• 30-year fixed with 95% borrowed or less: 0.500% annually
• 30-year fixed with more than 95% borrowed: 0.550% annually

Mortgage insurance premiums are calculated by multiplying the initial loan size by the annual premium. The same $200,000 FHA purchase outlined above, using a 95% 30-year fixed mortgage, would require a monthly mortgage payment add-on of $83.33 until the loan is paid in full.

FHA-insured mortgages have grown in popularity this year because, while the guidelines of other mortgage products have tightened, FHA guidelines have remained relatively loose. FHA allows 3.500 percent downpayments on purchases, for example, and allows “cash out” refinances to 95 percent.

Fannie Mae and Freddie Mac do not.

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Crude oil prices jumped $25 at one point Monday, ending the day up by 16 percent.

This is an unwelcome development for home buyers because the same market forces that pushed up oil prices had a similar impact on mortgage rates.

It all comes down to the U.S. dollar.

Because both crude oil and mortgage-backed bonds are denominated in dollars, the fate of both instruments has been closely tied to the greenback lately. [I know, i know.... "What Chris?!"]

Well, with respect to the mortgage market, when the dollar has been strengthening, rates have tended to fall.  And, when the dollar has been weakening, mortgage rates have tended to rise.

Yesterday, the U.S. dollar had its worst one-day performance against the Euro in history so it only follows that conforming mortgage rates spiked.  Across the board, they added about a quarter-percent.

Add this quarter percent to the run-up from last week and conforming mortgage rates are now close to 0.750% higher than where they were last Monday, further evidence that how quickly the market can move.

(Image courtesy: GasBuddy.com)

That is the title of an amazing article that my friend Tim Davis of Titan Home Loans wrote.¬† It was a great article that really goes past the surface ‘lip-service’ of what needs to be done and analyzes the actual results if those things were to come to pass…

Here are the poitns that Tim made:

“I think there should be tighter guidelines when getting a mortgage”

 

“I think you should have to put money down to buy a house”

 

“I think the appraisers are to blame. The appraisal should be completely unbiased”

These are just some random thoughts that go through my head these days. A lot of people have opinions until they are the ones in the situation. We all like to say we have faith, but faith is not truly tested until we are deep in up to our eyeballs.

I guess the conclusion is we all make the argument depending on which side of the fence we are on at a particular time. That tends to be our human nature. That is why I like he following statement…

Sure the grass is greener on the other side, but don’t forget it still has to get mowed.

Keep your head moving forward and remember, this too shall pass…

 

There are even more I am sure… maybe we can get Coach Tim Davis to come and post what some others might be…

 

Chris

 

 

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The U.S. Treasury is the biggest reason why most conforming mortgage rates increased by a half-percent.

Hank Paulson’s [Secretary of the Treasury] government group helped to restore investor confidence that had steadily¬†eroded from concern to fear since July 2007, before succumbing to outright panic last week.

Wall Street nerves were so frayed that at one point Wednesday, yields on government bonds were actually in the negative; investors were paying the U.S. government to hold and protect their money in exchange for a guaranteed loss of investment.  No Joke!

After the Treasury’s interventions, however, a sense of normalcy returned to Wall Street…¬† money poured back into stocks…¬†siphoned from the bond market and that pushed rates higher…. again.

This week, OMG, it’s anybody’s guess what will happen.¬†

From a data perspective, it’s light — there’s Existing Home Sales, New Home Sales, and not much else.¬† From a policy perspective, however, the week is heavy:¬†

• Congress is expected to authorize “hundreds of billions” for market support… $700 B is the discussion.
• Ben Bernanke and Hank Paulson will testify before the Senate Banking Committee
• 7 members of the Fed are making public appearances

With so much rhetoric, it’s difficult to predict how mortgage rates will perform this week.¬† The stock market may be the best predictor of rates.

If stocks are up, risk-taking is back in vogue and the bond market should suffer, pushing mortgage rates higher.  By contrast, if traders stay clear of stocks in search of safer investments, mortgage rates should fall.

(Image courtesy: Wall Street Journal)