Mortgage update

Highlights of the Day and other info:

- Bond Market Highlight

- FHA HVCC implemenatation

- Tax credit extended for Active Military

- Fannie and Freddie cutting debt to income allowances impacting government loans as well

- Buyers Choice Act

Bond Market Highlights:

Stocks closed last week at their highest level since October 2008. Mortgage Bonds, on the other hand, were unable to close above resistance and were ultimately pushed lower. As we head into this week, two important news items are worth repeating... and worth sharing with your database.

First - as we explained in last Friday's Market Update, the remainder of the Fed's purchase program equates to $12 Billion per week in purchases. However, since the Fed is reducing the frequency of purchases, it may elect to purchase $24 Billion every other week. This is significantly lower than we've seen up until now, which will probably lead to softer Bond prices and higher mortgage rates.

Second - don't forget Fed Chairman Bernanke's remarks last week about the Fed raising its Fed Funds Rate at some point down the road to protect against inflation. Even if inflation looks tame now, this is insight you and your referral partners can use to educate and better advise clients who are sitting on the sidelines waiting for better rates. After all, when you combine Bernanke's comments with the news about the Fed dialing back its purchases of MBS, it is highly unlikely that future rates will be lower or even equal to where they have been recently.

FHA HVCC implementation???

Yes, starting January 2010 FHA appraisals can no longer be ordered by anyone that will receive a commission or monetary compensation from the transaction. FHA also implemented in Oct that any appraisal done must also be licensed by the state.

REMEMBER!!! Cherry Creek Mortgage Company, Inc does not use AMC to ordered appraisals. Our appraisers are LOCAL and are VERY experienced! Are list of appraisers are those we have been working with for sometime and our system complies with all our investors and the HVCC.

House Passes Legislation Extending FTHB Tax Credit for Active Military

The House of Representatives voted unanimously Monday to extend the deadline for the home buyers tax credit for one group of Americans.

HR 3590 will allow eligible military personnel and foreign service and intelligence officers to apply for the $8,000 tax credit for one year beyond its current November 30 deadline. Those meeting the underlying requirements for the credit must also be serving overseas or have spent at least 90 days deployed outside of the country during the current calendar year. It is expected that about 350,000 military personnel and an unknown number of federal employees may be affected by the new law.

The bill, introduced by Representative Charles Rangel (D-NY) because it was thought that families serving overseas were being passed over for this one-time opportunity to purchase a home. It passed the Housed passed with 416 votes and 16 abstentions.

Fannie and Freddie Cutting DTI Allowances to 45%?!

What this means is that borrowers who could afford a $500k home today will have to settle for a $400k home in the future. Get those buyers moving!

The maximum allowable total expense ratio in DU will be revised to 45 percent, with flexibilities offered up to 50 percent for certain loan casefiles with strong compensating factors. If current debts exceed the maximum allowable total expense ratio, the loan casefile will receive an Ineligible recommendation. This will apply to government loans FHA/VA. Investors will take on this new guideline. As mentioned in a previous email Cherry Creek Mortgage Company, Inc as implemented this guideline for loans that fund after Nov 13^th as to allow us time to sell those loans with DTI higher than this guideline to end investors. Thus new loans funded after Nov 13^th will be under the new guidelines.

Governor signs AB957; Buyers Choice Act

Prohibits sellers of so-called REO properties - typically foreclosed properties owned by banks - from requiring the buyer to use a particular title company, escrow settlement or other real estate service provider. http://www.prnewswire.com/news-releases/buyers-choice-act-ab-957galgiani-signed-into-law-64103832.html

Bonds Market: