West Los Angeles, CA

Is time running out on the long-running mortgage rates decline of 2009?

While rates have been steady for a while, the long-term outlook could look more and more like an inflationary one, which should trigger higher mortgage rates before too long. That means higher interest payments for mortgage customers.

Opinions as to where our economy is headed for are conflicting and even contradictory. Some claim that deflation threatens our economy. Some, on the other hand, believe that the real threat to the U.S. economy is inflation, even hyper-inflation.

I tend to believe that once we are truly out of the current recession ("Main Street" recovery, not "Wall Street"), and unemployment is back to average historical level ( it may take a few years,) our economy will experience "contained" inflation. Increased global demand for agriculture commodities, and higher oil prices due to systemic weak dollar, will force the Federal Reserve to raise rates to keep rising inflation at bay.

That's why sooner than later rates are poised to rise.

Here is my question. How long will it take for mortgage rates to go up again, and why?

I look forward to your comments and opinions.

ANSWER:

THIS IS OLD LAW. IT NO LONGER APPLIES No rollover, no more over-55 rule.

The rollover or once-in-a-lifetime options were replaced with the current per-sale exclusion amounts under the Taxpayer Relief Act of 1997.

Before May 7, 1997, the only way you could avoid paying taxes on your home-sale profit was to use the money to buy another, more-expensive house within two years. Sellers age 55 or older had one other option. They could take a once-in-a-lifetime tax exemption of up to $125,000 in profits. And in all instances, there was tax paperwork (to fill out to show that you followed the rules.

Now when you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, $500,000 if you're married, and not owe any capital gain taxes every time you sell a home. And there is no more age requirement.

In today's market banks and mortgage lenders are being extremely cautious about which loans they approve. Real estate values are dropping and foreclosure rates are rising, and many banks are dropping out of the mortgage business all together. Gone are the days when banks could sell their loans on Wall Street, reload, and do it again. Banks are now faced with the reality of having to actually hold on to their loans like they did in good old days. This means that they want to make sure that the loans they make at this time are good loans that will pay them back on time.

Nowadays, it seems like all we ever hear about, in reference to mortgage brokers, are the bad brokers; the ones that make headline news and are carted away on TV in handcuffs. What these stories fail to report, is that the bad mortgage brokers make up less than 1% of all the brokers that are licensed in America. In fact, it has always has been the mortgage brokers that have advocated for tougher licensing guidelines, not the banks. They have always argued that by tightening licensing guideline they can eliminate the ‘bad brokers" that give legitimate brokers a bad reputation.

What columnist and reporters fail to mention in their stories is the indispensible service brokers perform in the marketplace. For instance, each bank tends to have their own, distinct, personality when it comes to approving loans. Knowing these "personalities" is where brokers really begin to benefit their clients. Brokers have working relationships with almost every kind of lender imaginable and know each lender's uniqueness, rates and approval thresholds. This way, they are able to place your loan with the best investor the first time, saving their clients time and money.

Most brokers also have working relationships with the underwriters that work for these lenders as well. This doesn't mean that they can get bad loans through the system; but it does mean that they can help underwriters see the glass half-full as opposed to half-empty while they are underwriting your loan. In today's market, almost all mortgages are considered "marginal" and scrutinized by underwriters, having someone on your side is an invaluable asset.

One of the biggest selling points using a broker is personalized service. "So what, all I need is a good rate" is the response I have had from some customers in the past, but consider this. As opposed to brokers, when you submit your loan application to one of the large banks, your loan becomes a number and is pushed through the system as if it was on an assembly line. The monolith lenders usually have a person at the bank accept your application who will never see the loan package again. Those of you that have used the large banks know what I mean, those of you who haven't, I suggest you try this exercise before committing to a larger lender.

Pretend you have just submitted a loan application a week ago with one of the large lenders. Let's assume that you have forgotten to give the loan officer a key piece of information that can really help with your approval. Call their 800 number and try to find the right person to give this to so that the underwriter can consider it when approving your loan. This should answer the question, "Why do I need good service." Another misconception a lot of people have is that you actually pay more using a broker because they are the infamous "middle man."

This couldn't be farther from the truth, in fact, most brokers can offer lower pricing than larger banks nine out of ten times. This is because, much like manufactures, money has a retail cost and a wholesale cost, and brokers get the wholesale pricing. Banks have to charge retail for their money because of the added expense it takes to close mortgages. They have to pay loan officers, processors, underwriters and many more expenditures that are involved with closing a loan. Simply put, their overhead is higher than most of the brokers, which results in lower pricing for you. Keep these facts in mind the next time you read an article about "crooked brokers" and remember, honest brokers don't sell newspapers but they can save you time and money.

Reprint from an articles written by Aubrey Clark author and editor for Direct Banc 08.11.2008.

Many of us, mortgage originators and Realtors are experiencing the negative impact of new appraisal rules. The Home Valuation Code of Conduct, or HVCC, forced on the industry by State Attorney General Andrew M. Cuomo, are slowing down sales and mortgage process.

The change came as a result of the mortgage and housing crisis. Many decision makers blamed the crisis in part on inflated valuations. The new rules are preventing mortgage lenders and brokers from ordering an appraisal directly to avoid influencing or pressuring the appraiser to come up at the desired valuation.

Today most lenders are using independent, third-party appraisal management companies. These companies are middlemen, taking requests from lenders and farming them out at random to individual appraisers.

So now, under current rules, individual loan officers and mortgage brokers, who may benefit from the loan, are no longer allowed to choose, hire, pay, or even communicate with appraisers.

Real estate agents also cannot choose, retain or compensate appraisers, but they can talk to them and provide information or address problems.

I believe we need to demand from policy makers that they modify the new Home Valuation Code of Conduct taking into consideration feedback and recommendations from real estate and mortgage professionals, appraisers, and consumers.

1. In order to avoid ending up with a very few large national appraisal management firms, lenders should be required to limit the volume of appraisal orders to a single appraisal management firm to 20%.
2. Consumers need to have the opportunity to use the same appraisal report with different lenders. The current system makes it near impossible for the consumers to reuse the same report in the event the first lender who ordered the appraisal declined the loan or offered terms unacceptable to the borrower. Right now the consumer has to pay for a new report, or waste a lot of time waiting for the lender to "release" the appraisal report to another lender.

There are many other changes that are required to better protect and serve consumers. Right now I am suggesting you do what I did which is to sign an online Petition to Rescind HVCC has it stands today. Yes, we need change but we need the kind of change that will really benefit consumers instead of policy changes imposed by overreacting politicians.

Please click on the link below if you want real change.

www.hvccpetition.com