Mortgages

Massachusetts Weekly Mortgage Rate Lock Advisory

by Rich Vetstein on July 28, 2010

in Mortgages

Our Mortgage Guy, Brian Cav, is back with his Massachusetts weekly mortgage rate report. JUMBO is the name of the game this week.

I have never seen Jumbo Mortgage rates as low as they presently are right now. Absolutely everyone with a loan amount of $523,750 or greater (depends on county) should be reaching out to their Mortgage Banker for updated mortgage pricing, etc. The new home sales helped the stock market post strong gains yesterday, so when stocks advance, their gains come at the expense of higher interest rates. MBS prices are holding steady down near record highs and mortgage rates are holding steady near record lows. This is all I got this week…  absolutely everyone under this beautiful summer sun should at least be attempting to refinancing your current home loan.

The lowest 30 year fixed mortgage rates remain in the 4.25% to 4.625% range. The standard mortgage rate with closing costs is  still at 4.50%, 1 discount point of origination presently can get you 4.375% for qualified borrowers. Borrowers must have a mid FICO credit score of 740 or better and a loan to value of 80% or less.

Inquire within for current Mortgage Rates or guidelines [email protected] 617.771.5021

Economic Data

Wednesday’s bond market has opened relatively flat even though we saw weaker than expected results in this morning’s economic news and a negative open in stocks. The stock markets are posting minor losses with the Dow and nasdaq down. The bond market is currently up, which will likely improve this morning’s mortgage rates by approximately .125 of a discount point.

The Commerce Department gave us this morning’s important economic news with the release of June’s Durable Goods Orders. They announced a decline of 1.0% in new orders for big-ticket items when analysts were expecting to see a 0.7% increase. This data is known to be volatile from month to month, but this is still a sizable difference. Even if larger, more volatile transportation-related orders were excluded, we would have seen a drop of 0.6%. That was also well short of forecasts, indicating that the manufacturing sector may have been weaker than expected last month. Therefore, this data can be considered favorable for the bond market.

The Federal Reserve will release its Beige Book report at 2:00 PM ET this afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress last week gave us a recent update, I don’t think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates as a result of this report.

Also today is the first of this week’s two Treasury auctions that may influence mortgage rates. Today’s sale is the 5-year Note auction while tomorrow brings us the 7-year Note sale. Their results will be posted at 1:00 PM ET both days, so any reaction will come during afternoon hours. If investor interest was strong, the bond market may rally and mortgage rates could move lower later today. However, lackluster demand could lead to bond selling and higher mortgage rates.

There is no relevant monthly or quarterly economic data being posted tomorrow. The Labor Department will post weekly unemployment figures early tomorrow morning, but this data usually has a minimal impact on mortgage rates. Since it tracks only a week’s worth of new claims for unemployment benefits, it takes a large variance from forecasts for the bond market to react enough to influence mortgage pricing. Analysts are expecting to see little change from the previous week’s 464,000 new claims.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – FLOAT

If I was closing on a Home Mortgage in the next 60+ FLOAT

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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Weekly Mortgage Rate Lock Advisory: July 7, 2010

by Rich Vetstein on July 7, 2010

in Massachusetts Real Estate Law, Mortgages

Our Mortgage Guy, Brian Cav, is back from vacation with his Massachusetts weekly mortgage rate report. Interest rates are still hovering around historic lows.

Mortgage Market

Mortgage Rates are still at all-time lows and there is no real economic news due out this week to make any changes in the markets.  The MBA Applications, Weekly Jobless Claims, and Fridays Wholesale Trade should all have minimal to no impact on Mortgage rates this shortened week.  I hope everyone had a fun and safe Holiday weekend.

The conventional 30 year fixed mortgage rates remain in the 4.375% and 4.625% range for well qualified borrowers. To get the lowest possible mortgage  interest rate on a conventional loan you must have a credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including one point loan discount fee.  If you are seeking a 15 year term, you should expect those rates to be in the 3.875% to 4.125% range with similar costs.

Mortgage Rates are slightly higher than the all time lows set last week, but rates continue to hold near the best levels ever. I see very little to gain by floating so I continue to favor locking all loans closing in the next 30 days.  In my personal pipeline, I have even locked a few clients on 45 day commitments to remove the risk of volatility.

Inquire within for current Mortgage Rates or guidelines [email protected] 617.771.5021

Economic Data

Wednesday’s bond market has opened in negative ground with no relevant economic news scheduled for release and the stock markets showing early gains. The Dow is currently up while the Nasdaq has gained 25 points. The bond market is currently down 6/32, but I believe we will still see a slight improvement in this morning’s mortgage rates due to strength late yesterday.

The stock markets opened strong yesterday also, but actually fell into negative ground during the day before closing with respectable gains. If the major stock indexes repeat that cycle, particularly closing well below current levels, we may see improvements in bonds this afternoon. Since it is an especially light week with no relevant data being posted today, this could lead to a downward revision to mortgage rates this afternoon.

However, the flip side of that scenario is if stocks extend this morning’s gains rather than retreat from their current levels. If the major stock indexes move higher, bonds could move lower later today. This would likely lead to an upward revision to mortgage rates this afternoon, but would probably be a minor adjustment.

The Labor Department will post weekly unemployment figures early tomorrow morning. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 460,000 new claims for benefits were filed last week. The higher the total of new claims, the better the news for bonds and mortgage rates.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – FLOAT

If I was closing on a Home Mortgage in the next 30 to 60 Days – FLOAT

If I was closing on a Home Mortgage in the next 60+ FLOAT

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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David Gaffin Of Greenpark Mortgage Launches The Mass. Mortgage Blog

by Rich Vetstein on June 29, 2010

in Massachusetts Real Estate Law, Mortgages

David Gaffin, Greenpark Mortgage

I’m excited to announce that our guest blogger, David Gaffin of Greenpark Mortgage, has jumped on the blog bandwagon, launching the Mass. Mortgage Blog located at www.massmortgageblog.com. David is a mortgage industry veteran who has a wealth of knowledge about all things mortgage and lending. I learn something new from Dave just about every day.

Dave’s got some good posts up on his blog already, so check it out and subscribe (as we will). Thanks!

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Massachusetts Mortgage Rate Lock Advisory: Week of June 24, 2010

by Rich Vetstein on June 24, 2010

in Mortgages

Our Mortgage Guy, Brian Cav, is back with his Massachusetts weekly mortgage rate report. With near record interest rate lows, his sage advice, again, is to LOCK IN!

Mortgage Refinancing BOOM! Mortgage Markets are officially at 2010 lows and, extremely close to 2009 lows. We are “near record low” rates, and this is going to be as good as it ever will be, I know, I know…  I sound like a broken record. The funny thing is rates are at all time lows and the Federal Reserve has stoppped buying mortgage backed securities a few months ago. U.S. housing  and the U.S. economy is the reason for record low mortgage rates, the past 4 months it has all been about economic issues in Europe. Mortgage rates will not go any lower, LOCK in your refinancing or purchase mortgage financing very soon, I know, I sound like a broken record.

Inquire within for current Mortgage Rates [email protected] 617.771.5021

Economic Data

WEDNESDAY AFTERNOON UPDATE:  This week’s FOMC meeting has adjourned with no change to key short-term interest rates. This was widely expected and has not affected the markets or mortgage rates. The post-meeting statement did help influence opinions and bond trading. One of the points of interest was a comment that said the “economic recovery is proceeding” which differed slightly from the previous meeting that said economic activity continued to “strengthen.” Traders are taking that to mean the economic recovery is at a slower pace than previously thought.

The Fed indirectly indicated that concerns about Europe could affect that recovery, but said that they don’t expect that it to push the U.S. economy back into a recession. They also said that inflation remains subdued, which means there is no pressure to raise key rates anytime soon.

Overall, the lack of a change to rates has had no impact on the markets or mortgage rates, but the post-meeting statement was taken as favorable for the bond market. The lack of concern about inflation and the more cautious remarks on the status of our economic growth makes long-term securities such as mortgage-related bonds more attractive to investors.

The stock markets have changed little from their pre-announcement levels with the Dow up a couple of points and the Nasdaq still down a few points. The bond market is currently up, but I don’t think we will see a change to mortgage rates this afternoon since bonds had slipped slightly from morning highs before the 2:15 PM ET announcement. The bond market has improved slightly from its 2:15 PM level, but is still below where it was when rates were posted this morning.

May’s New Home Sales from the Commerce Department was today’s only relevant economic report. It revealed a whopping decline of 33% in sales of newly constructed homes, pushing sales levels down to record lows. This further indicates that the tax credits being offered to homebuyers were heavily supporting the housing market. That raises significant concerns about the growth ability of the housing sector now that they are expiring. This data is favorable news for the bond market and mortgage rates because a weakening housing sector will make a broader economic recovery more difficult and eases inflation concerns. Today’s data usually has little impact on trading and mortgage rates, but the size of decline has allowed the news to influence this morning’s rates.

The only important release scheduled for tomorrow is May’s Durable Goods Orders, which gives us an indication of manufacturing sector strength. It is known to be quite volatile from month to month and is expected to show a decline of 1.3% in new orders from April to May. A larger decline would be the ideal scenario for the bond market and could lead to a decline in mortgage pricing tomorrow.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK

If I was closing on a Home Mortgage in the next 60+ LOCK

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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Massachusetts Mortgage Rate Lock Advisory–Week of June 16, 2010

by Rich Vetstein on June 17, 2010

in Mortgages

Our Mortgage Guy, Brian Cav, is back with his Massachusetts weekly mortgage rate report, and his advice is to LOCK IN:

Brian Cav

The Stock Market is extending its gains and Mortgage Rates are starting to go up despite bad economical data coming from overseas. Yesterday afternoon we had a worsening pricing in Mortgage Markets because Greece had their credit rating cut by Moody’s to “junk.” Ouch. Floating your loan is very risky right now with investor optimism improving quickly. With the new Fannie Mae Loan Quality Initiative (eff. June 1st, 2010) please do not take out any new credit, extend any credit or have your credit pulled while applying for mortgage financing.  This is extremely important for all of those borrowers currently refinancing and looking to close June and July. Yes, you should be refinancing. The Massachusetts Mortgage Bankers Association says mortgage refinancing applications are up 21% the month of May.

The Conventional mortgage rate is still in the 4.625% to 4.875% range for well qualified borrowers. To get the best conventional mortgage pricing you must have a FICO score  of 740 or higher, and a 80% or less loan to value (1% discount point quoted with current rates).  The 15 year fixed conventional fixed mortgage is currently at all time lows.

Inquire within for current Mortgage Rates [email protected] 617.771.5021

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK

If I was closing on a Home Mortgage in the next 60+ LOCK


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Massachusetts Mortgage Rate Lock Advisory–Week of June 9, 2010

by Rich Vetstein on June 9, 2010

in Mortgages

Mortgage Guy, Brian Cav, is back with his weekly interest rate report. He says while it’s been a “slow boring week for rates, ” rates remain at all time lows.

Mortgage rates are currently holding down by 2010 lows, the 15 year conforming hit a all time low earlier this week… but I do not expect them to stay down this long for much longer. It’s been a slow boring week for rates but I expect Fridays Retail Sales to make the Mortgage Markets volatile. I would suggest LOCKing in at these 2010 low rates in the next few days.

Brian Cav

The conventional rate mortgage remains in the 4.625% to 4.875% range for qualified borrowers, and for a 15 year fixed you should expect rates in the 4.125% to 4.375% . Well qualified borrowers should have a 740 FICO score of better and have a loan to value of less than 80%. Closing costs for this pricing would include 1% discount point of origination for both products.

FLOAT your rate for now? I find it difficult to turn down this current  mortgage market pricing. The only loans I maybe recommend floating are those that can be locked on a shorter commitment period in the next few days, certainly before Friday. If stocks rally soon be careful of mortgage rates going up as well.

Inquire within for current Mortgage Rates [email protected] 617.771.5021

Economic Data

Wednesday’s bond market opened in negative territory again following early stock strength. The stock markets are showing gains with the Dow up 120+ points and the Nasdaq up 30 points. The bond market is down 12/32 as investors shift funds into stocks. However, due to some improvements in bond prices late yesterday, we should see little change in this morning’s mortgage rates.

Fed Chairman Bernanke’s statement to the House Budget Committee was the only relevant news this morning. He reiterated similar comments made Monday evening that helped influence trading yesterday. He said this morning that the U.S. economic recovery is moving in the right direction and that the European financial crisis will have a “moderate” impact on it but will not derail it. He mentioned that the employment and housing sectors are still of concern but his words seem to have reassured the markets that all will be well eventually.

The Fed will post its’ Beige Book report at 2:00 PM ET this afternoon. This report is named simple for the color of its cover, but contains details about economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve to determine monetary policy during their FOMC meetings. If it shows much stronger economic activity than its last release, we could see mortgage rates rise this afternoon. Particularly if the report indicates inflation is growing.

We also have to watch for the results of today’s 10-year Treasury Note auction. Results the sale will be posted at 1:00 PM ET. If investor demand was high for the Notes, we may see bonds rally during afternoon trading, however, weak demand could lead to broader selling in bonds and an increase to mortgage rates.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK, FLOAT until Friday

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK

If I was closing on a Home Mortgage in the next 60+ LOCK

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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Weekly Mortgage Rate Lock Advisory For May 26, 2010

by Rich Vetstein on May 27, 2010

in Mortgages

These days, every time I order a Greek salad, the feta cheese makes my stomach churn. I wonder if the Greek economic meltdown has something to do with it! Here’s our Mortgage Guy, Brian Cav, with his weekly Massachusetts mortgage rate report.

Mortgage Market

Brian Cav

Mortgage Rates have moved up from the 2010 lows that we had last week, this is  largely because of the modest stock rally and investors getting out of risky investments, “flight to quality,” These Greece issues, which are spreading throughout Europe, should keep mortgage rates down thru the summer, and not to mention North Korea is threatening military action against South Korea. Is it time to refinance out of that ARM mortgage? Yes, because LIBOR is rising. It’s time to get an updated mortgage rate quote.

The 30 year conventional rate mortgage remains in the 4.75% to 5% range for well qualified borrowers. To get the best mortgage pricing on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point discount fee.

I am a huge fan of LOCKing in your mortgage interest rate right now. It would not matter to me if you were closing in one week or 60 days out. I would LOCK in immediately.

Inquire within for current Mortgage Interest Rates. [email protected] 617.771.5021

Economic Data

The bond market has moved lower following today’s 5-year Treasury Note auction. The stock markets have also given up a good portion of this morning’s early gains. Yesterday, the Dow was up 56 points after being up nearly 135 points earlier. The Nasdaq fell from earlier highs, and was up only 23 points. The bond market has extended yesterday morning’s losses, and was down 21/32. This will likely lead to an upward revision to this afternoon’s mortgage rates of approximately .125 – .250 of a discount point.

Yesterday’s economic data gave us mixed readings on the economy. The more important of the two was April’s Durable Goods Orders data that showed a 2.9% increase in new orders for big-ticket items last month. It also showed a sizable upward revision to March’s orders, indicating that the manufacturing sector was stronger than thought. However, if more volatile transportation related orders were excluded, we would have seen a 1.0% decline in orders. This was much weaker than expected, so overall the data can be considered neutral to slightly positive for the bond market and mortgage rates.

April’s New Home Sales data showed a much larger than expected increase in sales of newly constructed homes. This is negative for bonds, but the data usually has little influence on mortgage rates unless it varies greatly from forecasts. This report did show a sizable variance, but it appears that it is has not had much of an impact on today’s rates.

The first of two revisions to the 1st quarter Gross Domestic Product (GDP) will be released early tomorrow morning. The second revision to this report comes next month but isn’t expected to have much of an impact on the financial markets. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best indicator of economic growth. Last month’s preliminary reading revealed a 3.2% increase in the annual rate of growth. Analysts expect a slight upward revision to this reading with the consensus being a 3.3% rate of growth. If the upward revision is much stronger than expected, we may see the bond market react negatively and mortgage rates move higher.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK

If I was closing on a Home Mortgage in the next 60+ LOCK

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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Home Buyers, Don’t Go To Home Depot Before Closing! Lenders Pulling Second Credit Reports Under New Fannie Mae Loan Quality Initiative (LQI)

by Rich Vetstein on May 25, 2010

in Closings, Fannie Mae, Mortgages

Fannie Mae’s new Loan Quality Initiative (LQI) mandates become effective on June 1, 2010, and these rules are really taking the mortgage industry by surprise. The new rules could derail some closings for buyers who rack up purchases or even take out new store credit cards before their home sales have closed. The Wall Street Journal online recently wrote about it here.

The June 1 changes are part of a new effort by mortgage giant Fannie Mae to cut down on slipshod underwriting by lenders and frauds by borrowers. Fannie’s so-called “loan quality initiative” will result in lenders pulling last minute credit reports and additional verifications of borrower information. These last minute credit checks could result in a closing delay, pricing adjustment, or, worst, loan approval cancellation.

  • The last-minute credit report will be designed to find out whether a borrower has obtained — or even shopped for — new debt between the date of the loan application and the closing. If borrowers have made applications for credit of any type — for furnishings and appliances for the new house, a car, landscaping, a home equity line, a new credit card — the closing could be put on hold pending additional research by the lender. Our advice: save the trip to Home Depot, Restoration Hardware and Crate & Barrel until after the closing.
  • If you’ve taken out new loans that are sizable enough to affect the debt-to-income ratio calculations used in your original mortgage approval, the deal could fall through. The added debt load could render you ineligible for the mortgage because you suddenly appear unable to handle the payments without a strain on your household budget.
  • Many lenders already pull second credit reports right before the closing, but the Fannie Mae mandate will likely result in a markedly increased number of lenders pulling second credit reports and performing other last minute verifications.
  • Borrowers should be counseled to avoid obtaining or applying for new credit, or even increasing utilization of existing credit, before their closings. Lenders may view this added debt as a strain on a household budget sufficient enough to make a once qualified borrower now appear unable to handle the payments. If these new loans are sizable enough to affect the DTI (debt-to-income) ratio calculations used in the original mortgage approval, then the deal could fall through.
  • Under the terms of the standard purchase and sale agreement, a borrower who loses his financing  just days before the closing due to LQI issues could potentially forfeit his deposit. Buyer’s attorneys should think about how to address this in their P&S riders.
  • The mortgage and real estate industries are still trying to adjust to the dynamic changes in the economy, making it more important than ever to seek out professional, knowledgeable mortgage brokers and to seek counsel from experienced attorneys specializing in real estate law. In the end, the best advice may just be avoidance; borrowers will be best off not obtaining any additional credit in the time between the application for a mortgage and the date of closing.

Thanks to my colleague, Patrick Maddigan, Esq., for assistance with this post.

Helpful Links

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Weekly Mortgage Rate Lock Advisory, May 19, 2010

by Rich Vetstein on May 19, 2010

in Mortgages

Brian Cav, Smarterborrowing.com

If it’s Wednesday, that means our weekly Massachusetts Mortgage Rate Report from our own Mortgage Guy, Brian Cav of Smarterborrowing.com. Take it away, Brian!

Mortgage Rates are currently staying and settling down near 2010 lows. I would have thought they would have come up a bit from last weeks close but they have not. Yes, now is absolutely the time to think about refinancing in you have not already. I would suggest LOCKing in at these current mortgage rates. I think it is a gamble if you do not. Remember, mortgage rates always rise faster than they fall.

The 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified borrowers. To secure a 2010 low interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point discount fee. Yes, there are options to finance without paying the discount point. If you are not planning on keeping your home for more than 5 years, you should consider a no cost loan or a Adjustable Rate Mortgage (5/1 ARM, 7/1 ARM or 10/1ARM). On a no cost loan, the Lender will pay the fees for you however you will pay a higher than par market rate. Or you can finance a ARM product were the rates are near all time lows if you know you will be in your current home for a specific amount of time.

Inquire within for current Mortgage Interest Rates. [email protected] 617.771.5021

Economic Data

Wednesday’s bond market initially opened in negative territory but has since erased those gains as stock prices started to fall. The stock markets are in selling mode again with the Dow down and the Nasdaq down. The bond market is currently up, which might improve this morning’s mortgage rates by approximately .125 of a discount point.

Today’s important inflation data gave us favorable results. The Labor Department reported that the Consumer Price Index (CPI) fell 0.1% last month when it was expected to rise slightly. Even better news was the core data reading that showed no change from March when it was expected to rise slightly. This means that inflationary pressures at the consumer level of the economy were lighter than thought. That is good news for rates because it makes long-term securities such as mortgage-related bonds more attractive to investors.

Later today, the minutes from the last FOMC meeting will be released. Market participants will be looking at how Fed members voted during the last meeting and any comments about inflation concerns in the economy. The goal is to form opinions about when the Fed may make a move to key short-term interest rates. The minutes will be released at 2:00 PM ET, so if there is a market reaction to them it will be evident during afternoon trading.

Tomorrow brings us the last relevant economic data of the week when April’s Leading Economic Indicators (LEI) are posted at 10:00 AM ET. This Conference Board report attempts to measure economic activity over the next three to six months. It is expected to show a 0.2% increase from March’s reading, meaning that economic activity is likely rise slightly during the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher tomorrow.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK

If I was closing on a Home Mortgage in the next 60+:  LOCK

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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The 2 Major Snags That Can Derail Your Mortgage Loan: Significant Home Repairs And A Low Appraisal

by Rich Vetstein on May 19, 2010

in Appraisals, Fannie Mae, FHA, Massachusetts Property Values, Mortgages

The mortgage lending underwriting environment has changed dramatically in the last several years. At the peak of the bubble, mortgage professionals joked that you needed only to be able to fog a mirror to get a loan. These days, even borrowers with good incomes and good credit scores can get turned down.

Much of the change is driven by the stricter underwriting standards imposed by Fannie Mae, Freddie Mac and FHA. There are two major issues which come up repeatedly in transactions today which can derail a borrower’s loan: (1) extensive home repairs, and (2) a low appraisal.

The house requires substantial repairs

A lot of properties on the market these days are foreclosures owned by banks, short sales, or otherwise aren’t in great repair. Further, in a buyer’s market, sellers will not hesitate to agree to a list of repairs.

Broken windows, defective appliances, roof leaks, unfinished renovations, and serious water damage can all cause problems with obtaining final lender approval of the loan. At worst, the a substantial amount of required repairs could cause a lender to bail out. At best, the lender will require a pre-closing inspection and make the loan commitment subject to the satisfactory completion of all work.

Talk to your lender before the purchase and sale agreement is signed to figure out the extent to which substantial repairs will affect the underwriting process.

The appraisal is lower than the purchase price

Occasionally during the bubble an appraiser would decide a home was worth less than the price a buyer and seller had agreed upon. But that was relatively rare. Critics accused appraisers of colluding with lenders to “hit the number” — deliver the values needed for loans to be approved.

These days, appraisals are administered is a completely different fashion. New rules – the Home Valuation Code of Conduct (HVCC) – hold appraisers to higher standards and sharply limit communication between appraisers and lenders. Mortgage professionals cannot select their “hand-picked” appraiser now; there is basically a random lottery system to select the appraiser. The downside of this lottery is that the appraiser may not be very familiar with the town or neighborhood being appraised. So the appraisal may fall short of the agreed-upon selling price. Even if the first appraisal goes well, a second evaluation — known as the review appraisal and now ordered by most investors that buy home loans — may not.

Today buyers, sellers and their agents often attempt to manage the appraisal process by recommending better comparable sales available than the ones the appraiser used. As a buyer’s attorney, I always negotiate an “out” in the purchase and sale agreement for the buyer’s protection in case the appraisal comes in too “low.” If the appraisal remains under the purchase price, buyers may need to reopen negotiations with the seller or come up with a bigger down payment to make a deal work — or pay down their mortgage in order to refinance.

Have you felt the change when you have tried to get a loan?

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Weekly Massachusetts Mortgage Rate Lock Advisory For May 14, 2010

by Rich Vetstein on May 14, 2010

in Massachusetts Real Estate Law, Mortgages

Mortgage Guy Brian Cav has his weekly Massachusetts mortgage rate lock advisory.

Mortgage Markets have gone up a bit the past 24 to 48 hours. The European bailout will have a ton to do with what happens with markets in coming weeks. Mortgage rates are going up and down based on the guidance they get from headline news and the stocks. With mortgage rates down near the low of the year, I love LOCKing all loans closing in the next 30 to 45 days. Borrowers closing in more than 30 to 45 days should consider paying the extra costs to secure a longer term lock. Most Lenders will charge a 0.25%  fee (based on your loan amount) to lock in your loan for more than 45 days. On a $300,000 loan, that is an extra cost of $750 which is a small price to pay over the life of your loan if rates do increase in the next 45 days. I think they certainly will.

The par 30 year conventional rate mortgage remains in the 4.75% to 5.00% range for well qualified borrowers. To secure a  interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated 1 point discount fee. For consumers with lower FICO scores (700 and less) and higher loan to values, you should consider an FHA loan.

Inquire within for current Mortgage Interest Rates. [email protected] 617.771.5021

Economic Data

Wednesday’s bond market opened in negative territory following early stock strength. The stock markets are showing noticeable gains with the Dow and Nasdaq up. The bond market is currently down, but we still may see a slight improvement in this morning’s rates as a result of strength late yesterday afternoon.

10-year Treasury Notes will be sold today and could impact bond prices and mortgage rates. The 30-year Bond sale will take place tomorrow. Results of the auctions will be posted at 1:30 PM ET each day.

There is no relevant economic data scheduled for release tomorrow, except for weekly unemployment figures from the Labor Department. They are expected to announce that 440,000 new claims for unemployment benefits were filed. It will likely take a much larger or smaller figure for this report to affect mortgage rates tomorrow morning. I don’t expect this to have much weight.

The remaining three economic reports will be released Friday morning. This is when we will get April’s Retail Sales data (very, very, very important!), April’s Industrial Production (important) and May’s University of Michigan’s Index of Consumer Sentiment (important).

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK

If I was closing on a Home Mortgage in the next 60+ LOCK

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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Fannie Mae Tightens Its Belt On Adjustable Rate (ARM) and Interest Only Mortgage Programs

by Rich Vetstein on May 12, 2010

in Fannie Mae, Massachusetts Real Estate Law, Mortgages

We are thrilled to have Sheira MacKenzie, a Certified Mortgage Planner with Fairway Mortgage in Needham, MA, who is here to guest blog about the new, tighter Fannie Mae lending underwriting guidelines on adjustable rate and interest-only loan programs. You can contact Sheira at 781-719-4673 or by email [email protected]. Her website is www.sheiramackenzie.com.

Overview Of Changes

Sheira MacKenzie, Fairway Mortgage

For the first time this year, Fannie Mae announced significant updates to its mortgage underwriting guidelines. The changes include strict new ARM qualification standards, the elimination of a once-popular 7 year balloon loan product, and tighter rules for interest only mortgages.

Fannie Mae made its official announcement on April 30, 2010.  The changes will roll out over the next 12 weeks.

These changes are intended to ensure that shaky borrowers can afford an adjustable rate mortgage not only during the first fixed term, but once the rate adjusts even higher.

Borrowers Need More Affordability Muscle For Their ARMs

The first guideline change is tied to ARMs of 5 years or less. This is a huge change which will really impact the ARM market. Mortgage applicants must now qualify based on a mortgage rate 2% higher than their note rate. For example, if your mortgage rate is 5%, for qualification purposes, you must be able to afford a 7% interest rate. The elevated qualification payment will disqualify borrowers whose debt-to-income levels are borderline.

Adjustable Rate Mortgages are still a great product… for the right consumer. Today, it is critical to have a team of experts to help borrowers to determine the right loan strategy for their needs. In Massachusetts, we see slightly higher incomes, but consumers need to be aware of their overall monthly obligations prior to applying for a loan. Take your gross monthly income and multiply it by 35%. If your new housing payment (including taxes, insurance, or condo fee) plus your car, credit, and other loan payments is higher than that number, you could be over-extending yourself in the eyes of investors today. Get introduced to a seasoned mortgage expert who can review your credit and monthly obligations with you, and be sure to check with your financial planner prior to embarking on the approval process. Together you can determine if you are best suited for an ARM or fixed rate as well as the best loan strategy for your short and long-term goals.

Pop Goes The 7 Year Balloon Program

The second change is Fannie Mae’s elimination of the standard 7-year balloon mortgage.  Balloon mortgages were popular early last decade.  Lately, few borrowers have chosen them, though.  Mostly because rates have been relative high as compared to a comparable 7-year ARM.

Interest-Only Belt Tightening

Lastly, Fannie Mae is changing its interest only mortgages guidelines. Effective June 19, 2010, Fannie Mae interest only mortgages must meet the following criteria:

  1. The home must be a 1-unit property
  2. The home must be a primary residence, or vacation home
  3. The borrower’s FICO must be 720 or higher
  4. The mortgage must be a purchase, or rate-and-term refinance. No “cash out” allowed.

Furthermore, borrowers using interest only mortgages must show two full years of mortgage payments “in the bank” at the time of closing. Earlier this year, Fannie Mae’s sister, Freddie Mac, announced that as of September 2010, it will stop offering interest only loans altogether.

Between Fannie Mae, Freddie Mac, the FHA, and other government-supported entities, the U.S. government now backs 96.5% of the U.S. mortgage market. So long as mortgage default rates are high, expect approvals for all borrower types to continue to toughen.

Great post Sheira! We welcome you to the ever-increasing stable of guest bloggers on the Massachusetts Real Estate Law Blog. And we can attest from working with Sheira that she is truly a highly experienced, trusted professional, whom any buyer would be fortunate to have on their team.

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Weekly Massachusetts Mortgage Rate Report For May 5, 2010

by Rich Vetstein on May 5, 2010

in Mortgages

Mortgage Guy Brian Cav has his weekly Massachusetts mortgage rate lock advisory. Brian and I were talking mortgages last night at the Boston Real Estate Now Blog first inaugural get together. The circular irony is that bad economic news = lower mortgage rates. But by the same token, bad economic news = less housing sales = less mortgage originations. An interesting Catch-22!

Mortgage pricing has gotten better over the past 24 to 48 hours, and the reason they have gotten better is non US related issues; Greece and economic uncertainty have kept US mortgage rates down over the past week. I would cautiously FLOAT over the next day or two and LOCK in before Friday’s unemployment numbers. Please try not to get to greedy on the beautiful Cinco De Mayo!

The 30 year conventional mortgage rate still remains in the 4.875% to 5.125% range for well qualified consumers. To secure a par interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount. If you are seeking a 15 year term, you should expect par in the 4.25% to 4.50% range with similar costs but lower FICO score requirements.

Inquire within for current Mortgage Interest Rates. [email protected] 617.771.5021

Economic Data

Wednesday’s bond market opened in positive territory again following more weakness in stocks. The bond market is currently up, which should improve this morning’s mortgage rates by approximately .1250 – .25 in mortgage pricing..

There is no relevant data scheduled for release today, so any afternoon revisions to mortgage rates will likely come from movements in stocks. If the stock markets move into positive territory, we may see bonds fall and mortgage rates move higher. If the major stock indexes move lower, afternoon improvements to rates may follow.

The Labor Department will release its 1st Quarter Productivity and Costs data early tomorrow morning. This information helps us measure employee productivity in the workplace. If employee productivity is rapidly rising, the bond market should react favorably. It is expected to show a increase in productivity.

We also will get weekly unemployment figures from the Labor Department early tomorrow. They are expected to say that 440,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week, but unless we see a large variance from forecasts this data likely will not have much of an influence on tomorrow’s mortgage rates.

The big news of the week comes Friday when we will get April’s monthly employment numbers. They are expected to show that the unemployment rate stood at 9.7% last month and that 187,000 new jobs were added to the economy. The higher the unemployment rate and the fewer number of jobs added, the better the news for bonds and mortgage rates.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – FLOAT/LOCK

If I was closing on a Home Mortgage in the next 60+ FLOAT

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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Weekly Mortgage Rate Lock Advisory By Mortgage Guy Brian Cav For April 22, 2010

by Rich Vetstein on April 22, 2010

in Mortgages

Here’s our Mortgage Guy Brian Cav’s weekly report on mortgage rates. I also read an interesting blog post on how Iceland’s Eyjafjallajökull volcano has helped interest rates.

Mortgage rates went up a bit this morning. Why? Because the stock market rallied from an eight session low yesterday. This has been a pretty slow week in regards to economic data up to this point. The 30 year fixed is in the 4.875% to 5.25% range for qualified borrowers. You must have a mid FICO score of 740 or better and a loan to value below 80%. I am still in favor of LOCKing right now because I believe there are a few factors that are pressuring rates higher. The stock market seems likes it is only going to continue to go up plus there are more Treasury auctions on Thursday. These rates are low now… LOCK them in. Yes you should be thinking about refinancing!

Economic Data

Wednesday’s bond market has opened in positive territory despite a lack of economic news. The bond market is currently up, which should improve this morning’s mortgage rates pricing

It’s another quiet day in the markets, particularly in bonds. There is no relevant economic data being posted today. The stock markets are being driven mostly by earnings results. But those reports do not directly affect the bond market or mortgage rates.

Tomorrow morning brings us the release of March’s Producer Price Index (PPI). It will give us an important measurement of inflationary pressures at the producer level of the economy. The core data is more important to market participants because it excludes more volatile food and energy prices. If it shows rapidly rising prices, inflation fears may hurt bond prices since it erodes the value of a bond’s future fixed interest payments, leading to higher mortgage rates. However, a slight increase, or better yet a decline in prices, would be good news for the bond market and mortgage rates.

Late tomorrow morning, the National Association of Realtors will post March’s Existing Homes Sales numbers. A similar report to this one and actually the week’s least important data- March’s New Home Sales will be released Friday morning. Both are expected to show increases from February’s levels.

Also being released tomorrow are the weekly unemployment figures from the Labor Department. They are expected to show 450,000 new claims for benefits were filed last week, down considerably from the previous week. Generally speaking, a higher than expected number of claims would be considered favorable for bonds and mortgage rates.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK/FLOAT – Tough Call

If I was closing on a Home Mortgage in the next 60+ FLOAT

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Home buyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

Inquire within for current Mortgage Interest Rates. [email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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Weekly Massachusetts Mortgage Rate Lock Report

by Rich Vetstein on April 19, 2010

in Mortgages

We’re pleased to welcome back our resident Mortgage Guy Brian Cav with his popular weekly Massachusetts Weekly Mortgage Rate Lock Report. (There was a delay in posting this–Brian wrote it last Wednesday–Sorry!).

Way to much to lose than to gain right now with Mortgage Interest Rates!  I still like LOCKing in your Mortgage Rate very soon, especially if you are closing in the next 30 days. I just think there is so much volatility within the Mortgage markets right now…  over the past two weeks I have seen mid day price changes almost every day, that’s unheard of. Mortgage Rates started off the week doing the same thing it did last week… recovering.  Hopefully you gained some back on the rally late last week and earlier this week and LOCKed your rate in.

Inquire within for current Mortgage Interest Rates. [email protected] 617.771.5021

Economic Data

Wednesday’s bond market has opened in negative territory following the release of stronger than expected consumer spending data. The bond market is currently down, which will likely push this morning’s mortgage rates higher by approximately .25 of a discount point.

This morning’s economic data actually gave us mixed results. The Commerce Department said that sales at the retail level of the economy rose 1.6% last month, exceeding forecasts. This is considered negative news for bonds and mortgage rates because consumer spending makes up two-thirds of the U.S. economy. This makes bonds less appealing  and pushes mortgage rates higher.

March’s Consumer Price Index (CPI) was today’s second release, but it gave us good news. The Labor Department reported that the overall index rose 0.1% as it was expected to do. The good news came in the more important core data reading that excludes more volatile food and energy prices.  That can be considered quite favorable for bonds, but the sales data seems to be taking center stage this morning.

The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET this afternoon. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Generally speaking, signs of strong economic growth or inflation rising would be considered negative for bonds and mortgage rates.

The Industrial Production and Consumer Sentiment are not extremely important Data & Reports mortgage mortgage rates coming out Thursday and Friday of this week.

FLOAT or  LOCK

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK/FLOAT – Tough Call

If I was closing on a Home Mortgage in the next 60+ FLOAT

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

  • Are you a possible Massachusetts First Time Homebuyer?
  • Do you have a Real Estate client inquiring about current Mortgage Rates?
  • Do you have any Refinancing questions?
  • Should you be thinking about Refinancing out of your ARM (Adjustable Rate Mortgage)?
  • Have your Real Estate clients been Pre Approved?

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline, WSJ, NY Times

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More Legal Commentary On Ibanez Foreclosure Decision From Real Estate Attorneys

by Rich Vetstein on April 17, 2010

in Foreclosure, Massachusetts Real Estate Law, Mortgage Crisis, Mortgages

Reporter Steven Altieri of the real estate trade journal Banker & Tradesman recently published an article on the Ibanez foreclosure case, Impending SJC Ibanez, Title Ruling May Invalidate Thousands Of Foreclosures, Why Real Estate Attorneys Expect The Worst, And What It Means To The Industry.

Since we’ve written about the case extensively here, Steve asked for my views about the impact of the case and recent matters I’ve handled with Ibanez title defects:

Framingham real estate attorney Richard Vetstein recently represented a family who had bought a house out of foreclosure about a year ago, then invested in excess of $100,000 in improvements to the property with the intention of selling it to their daughter. But before they could complete the sale, a title issue came up and put the transaction on hold.

In Vetstein’s client’s case, when the original owner was foreclosed upon, the mortgage company did not have a properly recorded assignment. To clear the title, Vetstein had to track down the original owner in Alabama, and persuade him to sign over the deed to the property.

“They can close now that the title issue is solved, but in a lot of cases that [is] not going to be able to be solved,” said Vetstein. “We were lucky, that’s what it came down to.”

Steve asked me how I would handicap the appeal of the case:

Vetstein, who has blogged on the Ibanez case at length, thinks the court might uphold the Ibanez decision.

“Given the current constitution of the court and their tendencies of recent years to be kind of moving towards some pro-consumer decisions, I wouldn’t be surprised if they upheld the land court probably by a slim margin,” Vetstein said. “And so for people who are stuck with an Ibanez issue, that is in essence the worst-case scenario.”

Indeed, it’s unlikely that a “pro-consumer” verdict upholding the Ibanez decision would actually help consumers on the whole. Home buyers or investors who thought they had gotten a good deal and a clean title on a foreclosed property will instead be saddled with hefty legal bills and an inability to sell their property.

Lastly, Steve asked if the Ibanez ruling has created an business development opportunties for real estate attorneys:

“I don’t know of any real estate attorney using Ibanez as a business development opportunity, mainly because solving these title defects, if at all, is incredibly difficult and in some cases impossible,” Vetstein said. “It’s a ‘lose-lose’ in many situations.”

One aspect of the case could potentially provide plenty of work for attorneys. Should the SJC uphold the Ibanez decision, Vetstein reasons that there will be many claims against the foreclosing lenders and the foreclosure attorney, for failing to convey good title.

“There will also be claims for rescission of these transactions,” he added. “There is a class action against lenders and foreclosing attorneys which could encompass many millions in potential damages.”

Banker & Tradesman is a great publication. If you don’t want a paid subscription, you can follow them on Twitter and Facebook.

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Controversial Ibanez Foreclosure Case Heading Up To Massachusetts Supreme Judicial Court

by Rich Vetstein on March 23, 2010

in Foreclosure, Massachusetts Real Estate Law, Mortgage Crisis, Mortgages, Title Defects

Update (July 27, 2010): Oral argument is scheduled for October 7, 2010.

Good news for those eagerly following the controversial U.S. Bank v. Ibanez case, which invalidated thousands of foreclosures across the state. On March 22, the Massachusetts Supreme Judicial Court (the highest appellate court in the state) agreed to take the case on direct appellate review (as I originally predicted). This sets the stage for one of the most important real estate decisions in recent years.

The SJC’s acceptance of the case now expedites what will be the final word in this case, good news for everyone affected by this ruling. A final decision, however, is still many months away. Both sides still have to file briefs, and the case will be scheduled for oral argument probably within 4-5 months, with a decision coming several months later. (Appeals take time).

Click here and here for my prior posts on this case. Here is Globe reporter Jenifer McKim’s story on the development.

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Guest Post: Massachusetts Mortgage Rate Advisory Weekly Report

by Rich Vetstein on March 18, 2010

in Mortgages

I’m pleased to welcome mortgage professional Brian Cav, the creator of a great mortgage blog called Smarterborrowing.com. Brian was nice enough to give us his weekly mortgage rate report which I’m sure you’ll find interesting.

Mortgage Market

How did the FOMC meeting affect mortgage rates? Pricing actually got a bit better, both benchmark treasury yields and MBS prices improved after the FOMC statement was released. 30 year conventional mortgage rates are in the 4.75% to 5.125% for well qualified borrowers. If you are presently being quoted these mortgage rates and are closing in the next 15 to 45 days I like LOCKing these rates in. Could this small rally extend?

Economic Data

Yesterdays FOMC meeting has adjourned with an announcement of no change to key short-term interest rates. This was widely expected, but the post-meeting statement did cause some discussion. The Fed left the language in the recent statements that indicate that rates will remain near current levels for some time. This is good news for the bond market and mortgage rates as it means that the Fed is still concerned about an economic recovery.

There is little doubt that the Fed has to raise rates sometime in the future. The question is when. Some analysts feel that it has to be sooner than later to prevent other economic issues down the road. The ultimate goal is for the economy to gradually strengthen so Mr. Bernanke and company can slowly raise interest rates. Raising rates too soon could dampen economic activity by making borrowing more expensive for businesses and consumers. However, waiting too long to raise them could let inflation build momentum, leading to a rapid increase in key rates that also undermines economic growth.

Yesterday’s statement pretty much reiterated recent ones that hint the increases will be later than sooner. Some market analysts believe that is a mistake and that rates need to be raised this year. Others think the employment and housing sectors are still too weak to start raising rates. Who is correct? The future will show us, but in the meantime the debate will continue.

The bond and stock markets have improved from where they were before the statement was released. I would not be surprised to see a small downward revision to mortgage rates shortly as a result of the bond market strength. However, many lenders may opt to wait until tomorrow morning’s rates to reflect that improvement.

February’s Housing Starts was this morning’s only relevant economic data. The Commerce Department reported that construction starts of new homes fell 5.9% last month. This data is not considered to be greatly important to the markets or mortgage rates, so its impact on this week’s trading has been / will be minimal.

LOCK / FLOAT

If I was closing on a Home Mortgage in the next 0 to 15 Days – LOCK/FLOAT

If I was closing on a Home Mortgage in the next 15 to 30 Days – LOCK

If I was closing on a Home Mortgage in the next 30 to 60 Days – LOCK

If I was closing on a Home Mortgage in the next 60+ FLOAT

This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

[email protected] 617.771.5021

Credit: Bloomberg, Yahoo Finance, Mortgage News, MBS Quoteline

Thanks Brian! Hopefully, you’re weekly report will be a regular feature here on the Blog.

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The New Good Faith Estimate (GFE): Some Glaring Omissions

by Rich Vetstein on February 2, 2010

in Closings, HUD, Massachusetts Real Estate Law, Mortgages, RESPA

Lenders have been using the new Good Faith Estimate for a little over one month now. Gauging from the vociferous complaining in the lender blogosphere, it is an understatement to say that many lenders believe HUD really blew it with this new form. One would think that the new 3 page GFE would provide everything a borrower needs to know about what she’ll pay at closing, yet the new GFE inexplicably fails to provide at least 5 critical pieces of information for home buyers:

  • the total monthly mortgage payment (including escrows, taxes and insurance)
  • total cash needed to close
  • escrow amounts for real estate taxes, hazard insurance, and PMI
  • seller paid closing costs
  • Loan-to-value ratio/down payment

The GFE’s failure to provide this essential data about the loan is why one mortgage lender called the new GFE “the single worst government form dumped on the real estate industry.”

Surely, every borrower wants to know their total monthly mortgage payment month and how much cash they’ll need to bring at closing. Borrowers also want to know ahead of time how much the tax and insurance escrows will be since they have to pay several months in advance at the closing. Since the new GFE doesn’t provide this important information, lenders are filling in the gaps with their own custom made loan worksheets.

Some have complained that these worksheets are a work-around the new rules, but lenders have an obligation to provide borrowers with the full financial picture of the loan. The criticism is unfair, in my opinion, if the intent is to fill in the informational gap of what the GFE fails to provide.

The new GFE may be an overall improvement to the hodge-podge of good faith estimates previously used by lenders, but it’s certainly not the Messiah that HUD billed it out to be.

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The USDA Loan: Not Just for Farmers Anymore

by Rich Vetstein on January 29, 2010

in FHA, Massachusetts Real Estate Law, Mortgages, USDA loans

I’m pleased to welcome back guest blogger, David M. Gaffin, a licensed Loan Officer with Greenpark Mortgage Corp. of Needham MA. You can visit him at Greenpark Mortgage or through his LinkedIn profile.

Dave is here to talk about USDA loans which are, surprisingly, available in such *rural* areas of Massachusetts such as Hopkinton, Sudbury, Ashland, South Shore, Cape Cod and many other communities.

Due to the mortgage meltdown that has plagued our county for the past couple of years, lending guidelines have tightened significantly and obtaining a home loan has been more akin to giving birth. In fact, it seems that many lenders want your first born in order to complete the transaction. Low down payment and no down payment loans vanished from the landscape, unless you really knew who to speak with. FHA became the buzzword and savior to those with less than a 10% down payment in a declining real estate market.

Now that FHA is more mainstream (requiring only a 3.5% down payment and having very generous credit and debt tolerances), many think this is the only alternative to the traditional Fannie/Freddie loan.

However, there are some little known loan programs available from the United States Department of Agriculture (USDA) that could benefit borrowers in many parts of Massachusetts and beyond. Known as the Guaranteed Rural Development Housing Section 502 Loans, these programs are designed for low to moderate income individuals or households purchasing a property in a “rural” community. The definition of rural is surprising, as you will see from the list of eligible communities in Massachusetts.

Massachusetts communities eligible for the rural loan include: Ashland, Hopkinton, Sherborn, Sudbury, Maynard, Littleton, Harvard and most of central and western Mass. Most of the South Shore and virtually all of Cape Cod are considered “rural” for this program as well. To see an interactive map of eligible Massachusetts communities follow this link.

There are some exceptional features to these programs, as well as some needed conservative features. Program Features include:

  • No Down-payment
  • No Monthly Mortgage Insurance
  • Unlimited Seller Contributions
  • The ability to repair certain aspects of the property and build in those costs into the total loan.

To be eligible to purchase a home with a Rural Housing loan, borrowers must meet income eligibility requirements.  Here is the link for Massachusetts.  For example, in the Boston-Cambridge-Quincy MSA (which includes most of Middlesex, Norfolk and Suffolk Counties) for Moderate Income a 1-4 person household’s income cannot exceed $95,100. For a 5+ household income cannot exceed $125,550.

Like FHA, the USDA programs requires an upfront fee of 2% that will guarantee the loan for the lender. FHA will allow the borrower to finance the upfront mortgage insurance premium (MIP) (currently 1.75% of the base loan, but scheduled to rise to 2.25% in April). In addition FHA will be reducing the allowable seller contributions from 6% to 3%. USDA will allow the upfront fee to be financed only if the appraised value of the home is greater than the purchase price.

Let’s look at the differences between FHA and USDA loans side by side:

USDA v. FHA FHA USDA
Appraised Value $200,000 $200,000
Purchase Price $175,000 $175,000
Down Payment 3.5% FHA $6,125 $0
Upfront Fee 2.25% FHA 2% USDA $3,800 $3,500
Monthly Mortgage Insurance $77 $0
Allowable Seller Contributions $6,000 $25,000
*Assumes $200 monthly taxes and $50 monthly homeowners insurance.  Interest rate of 5.50%, $400 monthly consumer debt

As you can see, with the upcoming FHA changes, the USDA loan requires less out of pocket, a lower guaranty fee and greater flexibility in managing the closing costs associated with the transaction.

The USDA loan is more conservative in qualifying than FHA, but that is probably a good thing. FHA, with its looser guidelines, is in trouble and may need the dreaded taxpayer bailout. FHA’s overall percentage of loan activity has increased from roughly 3% of closed loans to about 40%. With no minimum credit score and debt to income limits of 55%, the fact that folks are defaulting on these loans and FHA has tightened its requirements is not surprising.

David Gaffin, Greenpark Mortgage

USDA qualifies borrowers with more traditional debt ratios of 29% for housing and 41% for overall indebtedness. This is good for the borrower, who will not bite off more than they can chew, and for the taxpayer as the default rate on these loans is less than FHA. However, you will need to earn a higher income to qualify for the same house with USDA than FHA.

So, what do you do if you want more information about these loans?  Start by visiting the USDA program page.

You may also contact me with any questions you may have at [email protected].

Greenpark Mortgage Corp. is licensed to originate USDA loans in Massachusetts, Maine, New Hampshire, Vermont, Connecticut, Rhode Island and Florida.

Wow, what a great post Dave. I never knew about this program and its availability in some of the most toniest “rural” towns in Massachusetts.

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