Las Vegas, NV: What is Happening with the Mortgage Business?
Posted at 9:50 AM, Aug. 10, 2007
Clients are calling asking what is happening with the Mortgage business and how will it affect my home value? Here is a brief outline of what is happening:
We are in an unprecedented mortgage market equivalent to a category 5 hurricane if it were a storm. For those that are "pre-approved" with a Lender, the loan program they are "pre-approved" on may no longer be available an hour later. Many programs that were available two weeks ago are gone today, second mortgages are extremely hard to find, "Stated Income" loans are being priced so high it does not make sense, Jumbo loans (loans over $417k) are raising rates daily, & mortgage companies are struggling to keep their doors open. The whole reason for this is really complicated but the bottom line is, the loans people received a year ago are not performing (the borrowers are not making their payments on time) so the Lenders are taking it in the shorts.
The good news is regular "conforming loans" (up to $417k) that are "Full Documentation" are still good and still have 100% financing options available as well. The rates are on these loans are just 1.5% ish over the record lowest rates recorded in 2003. The point I want to make is that the market is changing daily.
Here is the real question: What is this doing for my house value? The answer is: Time will tell, and here is why...
With a record number (25k+) of homes on the MLS (Multiple Listing Service for Realtors) many people are scared & think their home value is going down every month. The reality is, the buyers have so many homes to choose from they are not in a hurry to "pin the tail on the home". Statistics say a normal MLS inventory should be about 1% of the population which would make it about 18k ish here in the valley. That being said, there are just not as many people buying homes now & there are lot of people trying to sell right now. So you ask "with so many people still moving here every month, where are the homebuyers"? The answer to that question is: Some are looking for a deal, some don't have income to qualify, & some do not qualify since the loan guidelines have changed so much. Fast forward that to what is getting ready to happen soon...jobs. There is a LOT of construction & a lot of jobs going to be created by the end of next year. With that will come more homebuyers. My take is, give it some time, they will come. The Lenders will loosen the guidelines after the short sale/foreclosure mess is dealt with (next 6-12 months), the people with ARM's that are adjusting will figure it out by refinancing or selling, & the renters will find out their rent is going up after their lease runs out so they will turn into a homebuyer.
I really feel the pendulum is starting to swing back. We just need time. The old saying is: "What goes up...Must come down". We are down now, but the up is on its way again. Please make sure that all of your friends & co-workers are working with a reputable Lender more than ever before. The risk of shopping for the best rate will kill the deal in today's market. When they find the "best deal" the loan program might just be gone.
Thanks again for being a client of ours. I do not take your business or your trust lightly and will never take it for granted.
Reposted here with permission from Mark Baker, of The Mark A. Baker Team also known as "The Mortgage Experts" of Meridas Capital. Please fee freel to e-mail by clicking on his name or phone him direct @ 702-451-1040 with any of your questions. Or, contact me and I will be happy to put you in touch with him!
www.MaryW.com or www.MaryWarren.com
Rates & Programs are subject to change without notice prior to locking. Locks are eligible upon underwriting approval and are valid for 30 days.
Discount Points
Posted at 9:35 PM, Apr. 27, 2007
Discount points are fees paid at closing to lower monthly mortgage payments, and can help buyers save money in terms of overall costs over the life of the loan. In essence, points are prepaid interest. A point is 1% of the loan. So on a $100,000 loan, one point equals $1,000. This cost is paid to buy a lower interest rate, and is known as a rate buydown.
If homeowners intend to keep their property short term -- five years or less -- they might not recover the cost of paying the discount points. If they intend to keep the mortgage for a long time, discount points are an excellent upfront investment.
To determine whether discount points are to their advantage, clients must first calculate their monthly payments both with and without the points. Determine the difference of the monthly mortgage payment. Now take the difference (i.e., the savings) on the monthly payment and divide it into the cost of the discount points. The end result is the number of months it will take to recover the upfront cost to lower the interest rate.
Another key benefit is that discount points for residential real estate are tax deductible in the year they are paid. Tax deductibility can vary for points in purchase and refinance transactions. In refinancing, the deduction for points must be spread out over the life of the home loan. Consult your tax advisor regarding the details of these deductions.
Clients should consult their tax advisors regarding the details of these deductions.
Kirk.Alexander@americanhm.com, American Home Mortgage
Look Who's Closing Their Doors
Posted at 10:20 PM, Mar. 3, 2007
I received this email and I wanted to share it with everyone!
- E-Loan announced it will close their sub prime wholesale division
- ResMAE listed for sale Wachovia Corp's consolidation of its recently acquired wholesale lenders American Mortgage Network
- WorldSavings operations will result in layoffs
- Fieldstone announced that it's closing 5 west coast branches including its Arizona operations. Fieldstone Mortgage also has closed their Las Vegas branch.
- Mortgage Lender Network (MLN) "stopped funding residential loans" on 12/29 (they didn't actually say they were closing) but they have closed.
- HMIC closed its doors on Dec 20. As part of a $100 million cost reduction strategy, Sovereign Bancorp its owner exited the wholesale mortgage market.
- Own it Mortgage - closed its doors
- Sebring Mortgage closed its doors
- Axis Mortgage closed its doors
- Oak Street Mortgage closed its doors
- Right Away Mortgage closed its doors
- Secured Funding closed its doors
- Loans 123 - Not taking any more business
- Aegis Funding (sub-prime) closed its doors (Aegis Wholesale (Conforming and Alt-A) and Home Equity are still open) for now.
- Option One (Owned by H&R Block, Owned By HSBC) - Is Up for Sale selling off it's portfolio
- Meritage Sold to Lime Financial
- Mandalay - Closed it Doors
- Southstar - AE's leaving (a good source stating company cannot meet payroll obligations)
- Accredited - OC Regional office production at its lowest levels, rumors they may close by 1st quarter.
- Saxon - Layoffs possible closure.
- RFC - Layoffs
- Decision One closed 6 regional centers. Division of Option One.
- Bank of America Mortgage laid off 225 locally.
- Countrywide Mortgage - Multiple layoffs. In talks with Bank of America about possible merger (CNN). Countrywide has also filed suit against 15 parties alleging that the company may have been tricked into lending as much as $40 million dollars (figures elsewhere say $80 million.) The defendants include eight individuals an appraiser, a property management company, and several mortgage and lending companies. According to The Wall Street Journal, another large lender, Argent Mortgage Company may also have been caught up in the scam. Some of the bad loans also appear to have been acquired by Fannie Mae.
- Argent consolidated and let 1,000 people go. Currently for Sale Ameriquest laid off 3,800 and shut 229 retail branches after announcing a $325 million settlement with state's attorneys general for overcharging borrowers. THEY MAY NOT LAST TILL SPRING.
- Washington Mutual - Continued layoffs. Wholesale reps offer 1 point to REALTORS® for referral of loans. (Cutting the throats of their Broker base! Not good for biz!)
- Encore Credit - closed its doors
- Then there's Silver State Mortgage whose doors were closed just a couple weeks ago.
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