MortgageMan's Update on Mortgage Markets

Posted by mortgageman

Thu Jan 21st, 2010 01:10 PM

First and foremost, apologies... Haven't had much time in the past half a year or so to post anything. Much of it had to do with the refinancing boom of 2009 and me taking my mortgage career to the next level and switching lenders.

That said, it is nice to be back and I truly look forward to posting here on a regular basis and reading your feedback.

So lets backtrack a little bit and let me give you a little update as to what has happened in the mortgage market since my last post:

1. RATES: We are hovering around the 5.25% area for the 30 Year, 4.25% on the 5/1 and about 4.50% for the 7/1 Conforming products. The Jumbo 30 year is around the 5.75% range and the 5/1 JUMBO ARM's are in the high 4's.

2. LOAN LIMITS : Might be a bit of old news but the extended loan limits of '08 & '09 were extended to 2010. Take advantage of the High Balance Conforming $729,750 while you can.

3. NEW DEV FINANCING: Still require a 71% presale for New Construction before banks can step in to provide lending. FHA can sometimes go into a building for a spot approval and issue a 51% approval. Also some regional banks (Astoria, Emigrant, Apple) that don't sell the loans off their portfolios may have a lower threshold...This may go down to 51% once HUD declares Manhattan a non-declining market.

4. RESPA GUIDELINES: By far one of the most significant changes of 2009/2010 is the new RESPA regulation imposed by HUD. Basically it boils down to a completely brand new Good Faith Estimate that is supposedly easier to understand and shop around, as well as full disclosure of ALL fees and a limit by the government on banks charging various processing and underwriting fees.

The RESPA guidelines require full disclosure of lender, buyer, seller, and title fees. There is a tolerance of 10% by which certain individual fees can increase on the HUD-1 Settlement Statement (the piece of paper you get at closing listing ALL your fees), from the originally quoted GFE. The GFE can only be changed under very stringent circumstances or instances where it is out of the lender's control. For instance if the rate needed to be extended due to the seller not being able to set a closing on time, and as a result points needed to be charged for the rate extension.

5. LENDING RATES & 10YR TREASURY NOTE: From 2007 to 2009, it seemed that rates weren't affected as much as they were by the TNX or the 10 Year Treasury Note, and at one point in 2007 Noah wrote an article on the comparison of rates and the 10 Year. It showed very little correlation between both.

As a result, many lenders started following Mortgage Backed Securities and trusted it as a gauge for predicting where rates were going. Obviously I am not going to discount that the MBS is not an indicator of where rates are or where they are going, but in the past couple of months I do see some trends relating to mortgage rates and the 10 Year Note once again... Down to a point of where the yields drop and rates move down as well.

I am going to ask Noah to research the 10 Year vs. Mortgage rates and post up his findings here.
For 2010 many in the mortgage world are seeing the purchase business coming back and refinances dying off slowly. I concur with that outlook. I see a lot of inventory on the market and am starting to see a pickup in inquiries relating to pre-approvals.

More updates to come next week!

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