Mortgage Industry Updates

National Association Of Realtors Survey:

According to a recent survey from the National Association of Realtors; 75% of non-homeowners said owning a home was still an important part of the “American Dream”. 90% of current homeowners said owning a home was still apart of the “American Dream”. This is good to hear as other recent survey’s have suggested that homeownership was not a priority for many non-owners. However if you dig deeper into these survey’s and the the Realtor survey you’ll see that the main issue non-homeowners are having is “affordability” and that is a serious issue. Home values have gone up significantly since 2008 however incomes have not. With the rise in interest rates in 2017 and 2018 it made owning a home even more difficult. And that is why you’ve see a significant decline in homes sales; especially among new home builders.

Shutdown Increases Risks For Lenders:

With each passing day the risk that homeowners affected by the government shutdown will miss their next mortgage payment increases. There are hundreds of thousands of homeowners that are not receiving their paycheck as expected and that could start to become an issue when February comes if the shutdown has not been resolved. According to report by Moody’s; if the shutdown continues there are some risks to balance sheets especially non-bank lenders.

Will The Fed Hike In 2019?:

News outlets are starting to pose this question as some economic data is coming in softer than expected. The next meeting is January 29th-30th and I don’t many investors and analyst think the Fed will raise at this meeting. And unless economic data starts to improve it’s unlikely they’ll raise at the following meeting March. As for the rest of 2019; it’s way to early to tell however it is something we’ll keep an eye on.

Buying Down The Interest Rate:

Have you heard this before “buying down the interest rate?” are was wondering what it actually means? Previously on Koloans.com we discussed this very topic in detail; what it means to buy down the interest rate. The very basic answer to this question is this; when you refinance your current mortgage or you purchase a home; you’ll have the opportunity to obtain a no point interest rate or an interest rate that’s lower but comes with a cost. That cost you’re paying to obtain a lower mortgage rate is called “buying down the interest rate”. So for example; the Loan Officer may quote you a 4.50% 30 year fixed interest rate with no origination/no points. He/she may then also offer a 4.25% with 1 origination cost/point. 1 origination cost/point is 1% of the loan amount; and to be clear: paying 1 point does not always equate to receiving a .25% discount on your interest rate. Sometimes is less and in a few cases it may be more.

JB Mortgage Capital, Inc.:

If you are looking to refinance your current mortgage or purchase a new home please be sure to contact us for a no-cost/no-obligation quote. We offer industry low mortgage rates, the latest technology to ensure a fast closing and every one receives one-on-one personal service from application to closing. This means you’ll work with one person from beginning to end which is much different then other mortgage companies that pass you from department to department during the loan process. You can contact us through our website or call Loan Officer Kevin O’Connor directly: 1-800-550-5538.

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Consumer Price Index Report:

The CPI report was issued earlier this morning and the numbers came in as expected. This report showed that inflation is not higher than what the market had already anticipated and Mortgage Backed Securities/mortgage rates prefer CPI reports that come in within expectations. Months ago many had feared inflation was only going to move higher as we finished 2018 and that simply was not the case. If any thing this report might be the first of many that shows inflation reversing corse  and cooling off a bit.

New Home Sales Fall Significantly:

According to John Burns Real Estate Consulting, new home sales feel a whopping 18% in December (compared to December 2017). In addition to that November sales were down 19% (compared to November 2017). Due to the government shutdown we don’t have the “official” numbers from the government however John Burns Real Estate Consulting firm is well respected in the industry and many people rely the company for detailed and specific real estate market data. If we move into the state specific data we see Northern California dropped 40%, and in Southern California sales dropped 49%. These are massive reversals and they’re being attributed to interest rates moving higher during the early fall and the high cost of housing. The nation’s largest luxury home builder (Toll Brothers) warned of a slowdown recently; per their press release “We saw similar consumer behavior beginning in late 2013, when a rapid rise in interest rates temporarily tempered buyer demand before the market regained momentum.” With rates moving from the low 5’s to low 4’s that should inspire buyers to return. If the market returns to the lowest mortgage rates we’ve seen in two years then I think you’ll really see a boost in new home sales.

Bond Market Rally – Is It Over?:

For anyone who follows the Mortgage Backed Securities market and the Treasury market you already know that the recent rally in which the 10y yield moved from 3.25% to 2.54% has stalled over the last 5-6 days. And if you’ve been following bonds the last 2 years you’re probably feeling like yields and mortgage rates are going to shoot back up any day now. That may happen however there is no firm indication the recent rally is over and mortgage rates are going back to the levels we had early fall. What appears to be happening is a “wait and see” attitude with respect to the direction the economy is going. More of a sideways movement until we see further clarification with how the economy us doing. If the economy picks up then yes it might mean the rally is over however we’re not there yet and today’s CPI report was bond and mortgage rate friendly.

Conventional Vs. Non-Conventional:

One mortgage term that is easily miss-understood is the term “conventional” and “non-conventional”. A conventional mortgage loan is any mortgage loan not guaranteed by the Federal Government. Under the umbrella of conventional there are conforming mortgage loans and non-conforming loans. Conforming loans adhere to the underwriting guidelines of Fannie Mae and Freddie Mac; conventional mortgage loans that don’t are called conventional non-conforming mortgage loans. What is a non-conventional loan? Those are loans guaranteed by the Federal Government: FHA mortgage loans or VA mortgage loans.

JB Mortgage Capital, Inc.:

If you are looking to refinance your current mortgage or purchase a new home please be sure to contact us for a no-cost/no-obligation quote. We offer industry low mortgage rates, the latest technology to ensure a fast closing and every one receives one-on-one personal service from application to closing. This means you’ll work with one person from beginning to end which is much different then other mortgage companies that pass you from department to department during the loan process. You can contact us through our website or call Loan Officer Kevin O’Connor directly: 1-800-550-5538.

Mortgage Rates Have Moved Down:

Per Freddie Mac the average mortgage rate fell to 4.45% with an average of 0.50 a point. It’s a big move down from last weeks 4.51% level.  It’s the first time it’s been below 4.50% since the Spring. A year ago the average 30 year fixed rate was 3.99%. The average 15 year fixed rate fell to 3.89% with an average of 0.40 in cost. That’s down from last weeks 3.99% average but still higher than the 3.46% average we saw a year ago at this time. The move towards the lowest mortgage rates in California (over the last 9 months) happened mostly last week. In the last few days we’ve seen mortgage rates stall as the bond market rally has come to end (for now). The good news is even though mortgage rates and bond yields have moved down significantly over the last 2 months were not seeing a significant snap back like some were expecting. That still may happen but for now the bond markets and mortgage rates remain somewhat stable. That’s good for mortgage rates as we move further into 2019.

Decembers Job Report Was Good And Bad:

The most recent jobs report had blockbuster numbers; over 300k jobs created good earnings and low unemployment. Add to it the November numbers were revised upwards. While the jobs report was good news for the economy; it was somewhat bad news for mortgage rates and bonds. Albert Edwards, a Societe Generale investment bank strategist mentioned in a recent research report that there is a history of accelerated hiring just before a recession develops.

Serious Mortgage Delinquency Declines:

Mortgage giant Fannie Mae report that Single Family Serious Delinquency rate declined in November from 0.79% to 0.76%. That is well below the 1.12% that was reported back in November 2017. Serious Delinquent mortgages are mortgages that are three monthly payments or more behind or in foreclosure proceeding. The highest it’s ever been was about nine years ago when it was over 5.50%.

As for Freddie Mac; their delinquency rate was 0.70% in November which was slightly down from Octobers 0.71%. Back in November 2017 the delinquency rate was just under 1.00%. The highest it’s ever been was just above 4.00% back in 2010.

Overall this is a good sign for the economy and it’s something to keep an eye on. The reason is that if delinquencies creep up it might give us our first clues that the average American is feeling the pinch from the economic slow down that’s being reported.

How Long Does A Refinance Take?:

A great question every homeowner should ask. For most companies the typical time frame is 30-40 days however with JB Mortgage Capital, Inc. we generally can get them done in under 30, sometimes as little as 21 days. I have heard some other companies taking as long as 45-60 days which seems a bit absurd considering all the advancements with technology in the mortgage industry. How long does a refinance take is a question every homeowner should ask prior to moving forward with a loan application. If you’re moving forward this week and your mortgage company is telling you more than 30 days; you might want to consider looking for another mortgage company.

JB Mortgage Capital, Inc.:

If you are looking to refinance your current mortgage or purchase a new home please be sure to contact us for a no-cost/no-obligation quote. We offer industry low mortgage rates, the latest technology to ensure a fast closing and every one receives one-on-one personal service from application to closing. This means you’ll work with one person from beginning to end which is much different then other mortgage companies that pass you from department to department during the loan process. You can contact us through our website or call Loan Officer Kevin O’Connor directly: 1-800-550-5538.

Debt Problems Return:

Not too long ago we were in the midst of a debt crisis. It was 2008 and according to some we were days away from the ATM’s not working. Lenders were failing, banks were failing even one of the largest insurance companies in the world was failing. The reason; too much bad debt. The housing boom prior to 2008 created a massive debt bubble. What was worse is that this debt was really bad debt – debt based on fraudulent loan applications, fraudulent appraisals and bad underwriting. It was dependent on home prices going up to keep it going. When home prices stalled things went bad, and they went bad fast.

Here we are in 2019 and our debt problem has not gone away; just moved around to other areas. Car loans, credit cards, student loans etc. In total we have more debt now then we did in 2008. However consumer debt is not what’s concerning Steve Eisman according to an article in the Financial Times. Who is Steve Eisman? He was the guy who spotted the housing bubble long before other investors even knew there was a problem and he was the main character in the book “The Big Short”. He’s concerned about the corporate debt market and how it may affect banks and investors. Considering his track record it’s something to keep an eye on moving forward.

New Penn Financial Is Now NewRez:

A fairly large wholesale mortgage company (familiar with most Loan Officers and less familiar with the average consumer) is changing their name from New Penn Financial to NewRez. This has been in the works since last July when the company was bought by New Residential Investment.

Millions Of Homeowners Can Lower Their Mortgage Rate:

According to Black Knight; 2.4 million homeowners can lower their interest rate by at least 0.75% saving them thousands of dollars in interest. That’s a huge number and for some the savings is even greater than that. The question is; will they take advantage of the lower rates?

Refinance Guidelines For 2019:

Refinance guidelines for 2019 are less restrictive in years past for some yet for others a bit more restrictive. The 2019 refinance guidelines that are a bit more restrictive than in 2018 have to do with borrower’s who are doing a cash-out loan and have a debt-to-income ratio above 45%. If you are doing a cash-out loan and have a high debt-to-income ratio then you’ll be asked to provide six months of cash reserves to be able to get a Fannie Mae AUS approval. For other though we’re seeing things get a bit easier when it comes to obtaining appraisal waivers. Although not a specific “guideline” per se; it is a nice benefit when a client receives an appraisal waiver. Less hassle for the client and it speeds things up.

JB Mortgage Capital, Inc.:

The lowest mortgage rates in California; at JB Mortgage Capital, Inc. we work day in and day out to try and find ways to deliver the lowest mortgage rates in California. We also offer one-on-one personal service; and fast closings. Veteran Loan Officer Kevin O’Connor has over 14 years of experience in the mortgage industry. He has a five star rating on Zillow.com and Mortgage101.com. JB Mortgage Capital, Inc. has an A+ rating with the Better Business Bureau (their top rating) and we are “AAA” rated with the Business Consumers Alliance (their top rating).

The Government Shutdown And Homeowners:

According to Zillow government employees affected by the shutdown have a combined monthly mortgage bill of $249,000,000.00. The longer the shutdown goes on the more difficult it is for those families to pay their mortgage. Hopefully the shutdown gets resolved asap.

One Day Closings?:

Forbes was out with an article that poses this question; could future homeowners close their mortgage in one day? Most of the article was based on the evolution of technology in the mortgage industry and how it has enabled borrower’s to close much faster than before. It goes on to guess that at some point in the near feature you’ll be able to buy a house and move in a few days later (just ignore that pesky thing called government regulation). So closing in one day – that might happen 50-100 years from now but it certainly is not in the near future.

Understanding Who Is Involved When Closing A Mortgage Transaction:

What the author fails to cover in the article is the number of other people and entities involved when buying a house. No matter how efficient the mortgage industry becomes; we still have to work many different people to be able to close a loan. For one there is the seller, then we have title and escrow, there also is an appraiser, the property inspector, and if the property is a condo then we have to work with the HOA. And then there is this little thing called verification of employment (and income). I can assure you, based on my 14+ years of experience, when one of those important pieces to the transaction fails to deliver it can push everything out further than expected.

The More Likely Scenario:

The major slowdown with closing on a mortgage is not a mortgage company. Over the last 5 years the industry has been rapidly adopting technology to make the process smoother. For awhile now we’ve had the technology the author of the article claims is new and currently for a few type of transactions you might be able to get a purchase closed in as little as 2 weeks – that’s if everyone involved is on board with moving extremely fast.  The more likely scenario is that a refinance transaction becomes more efficient and overall the time to close improves to a couple of weeks. Due to current regulations in terms of waiting periods you’re not going to get much shorter than a few weeks on a refinance transaction.

Here’s What The Mortgage Industry Should Focus On Moving Forward:

Making the transaction easier for the borrower. One area could be rather than asking the borrower to provide income documentation a lender could simply verify the income reported to the IRS and then do a verification of employment to ensure the borrower is employed by the same company. Another area is to continue to reduce the number of full appraisals for borrower’s that have more than 40% equity, a low debt to income ratio, excellent credit, long term mortgage history and long term job history.

What Is A Good Mortgage Rate For 2019:

As mortgage rates continue to be near one year lows; many homeowners are asking: What is a good mortgage rate for 2019? For starters we’re starting off the year below 4.25% on a 30 year fixed (best base scenario – no cash out, paying 1 point). Not too long ago it was 4.875% and with some lenders it was  well above 5.00%. When trying to determine what is a good mortgage rate you first must start with what you currently have (if you’re looking to refinance). If you’re at 5.50% you’ll be looking at things differently then for people at 4.50% and those at 4.00% or below. As for those buying a home; as long as you’re below 5.00% you’re still at a historically low mortgage rate. Avoid trying to compare today’s rate to the ultra low; once in a lifetime rates from several years ago that lasted for a very short period of time. The likelihood they’ll have go that low again is really small. Lastly; as we move further into 2019 this analysis may change due to possible changes in the market place and possible changes in the economy.

JB Mortgage Capital, Inc.:

At JB Mortgage Capital, Inc. we offer one-on-one personal service; industry low mortgage rates and fast closings. Veteran Loan Officer Kevin O’Connor has over 14 years of experience in the mortgage industry. He has a five star rating on Zillow.com and Mortgage101.com. JB Mortgage Capital, Inc. has an A+ rating with the Better Business Bureau (their top rating) and we are “AAA” rated with the Business Consumers Alliance (their top rating).

Many Americans Think It’s Not A Good Time To Buy A Home:

According to a recent survey conducted by Fannie Mae; the number of Americans dropped sharply in December (after an increase in November). Several news outlets blamed “higher rates” but the fact is rates were lower in December (compared to November and October). And others blamed higher purchase prices as the cause when in fact home values in many areas has pulled back a bit compared to previous months.

So what’s the cause?

Possibly a combination of a slowing economy and the recent/sudden pull back in stocks. When ever there is a significant decline in stocks people generally feel less excited about spending money. Generally speaking; wages have not risen in a long time (once you factor inflation). In addition to that homes are still somewhat expensive considering the rise in values over the last 2-4 years. And in the last 5-6 weeks you’ve seen your 401k just decline by 20%. Throw in the fact you just spent a ton of money on Christmas presents so it’s not entirely surprising to read that some people simply were not interested in buying a home in December.

TransUnion Thinks Rates Will Go Higher:

The giant credit bureau is out with a report saying they believe mortgage rates will hit 5% by the end of 2019. One news outlet is suggesting an old strategy of “paying points” will come back. For one; it never went away. Two it works with some loan scenarios and doesn’t work with others. While I do not think we’re going back to mid 3% range on a 30 year fixed mortgage rate I also don’t think we’ll see mortgage rates push to 5% or higher in 2019. Unless incomes rise and home values fall; 5% or higher in mortgage rates will have a significant impact on the US economy. Simply put; people can’t afford 5% or higher mortgage rates when you add in the student loans, car loans and other expenses. Predictions are difficult at best so we’ll have to see what happens. But for now we’re much closer to 4.00% then we are to 5.00%.

Lawsuit Against Homebuilder Lennar:

The homebuilding giant Lennar Homes has a mortgage division and according to a former employee they violated federal law by making loans to unqualified buyers. Back in December the Justice Department reached a $13.2 million settlement with their mortgage division to settle claims that they violated the False Claims Act (FHA mortgage loans). In court documents the whistle blower claims that in several cases the loan originator, the appraiser and the loan processor all were related, non verified reserves were allegedly added to loan application and debts were omitted as well. If true this would be a major issue for the company.

Best Mortgage Lenders For Refinancing:

With mortgage rates so low everyone is asking who the best mortgage lenders are for refinancing. Needless to say #1 is JB Mortgage Capital, Inc! However if you want a to know a step-by-step non-biased process for finding the best mortgage lenders for refinancing then continue reading on our page devoted to helping homeowners figure out who is the best. It starts with working with top rated companies and asking five simple questions to find which mortgage companies will fit your mortgage needs best.

JB Mortgage Capital, Inc.:

At JB Mortgage Capital, Inc. we offer one-on-one personal service; industry low mortgage rates and fast closings. Veteran Loan Officer Kevin O’Connor has over 14 years of experience in the mortgage industry. He has a five star rating on Zillow.com and Mortgage101.com. JB Mortgage Capital, Inc. has an A+ rating with the Better Business Bureau (their top rating) and we are “AAA” rated with the Business Consumers Alliance (their top rating).