Jeff Pearl

Greetings,

Average Weekly Mortgage Rates are up slightly once again

According to the weekly Freddie Mac survey, the average 30 year mortgage rose to 4.91% from 4.87%. The 15 year average went up to 4.13% from 4.10%. The 5/1 ARM average rose to 3.78%, from 3.72%. Average rates contained .70 discount points. The good news is that while rates have risen the last four weeks, the average is still below 5%. This keeps home affordability at an attractive level as the spring home buying season heats up.

Points of Interest

Purposed legislation for Qualified Residential Mortgages (QRM) would limit classified loans to 80% of value or less and set the maximum qualification ratios at 28/36. It would also require mortgage investors to retain a 5% stake in the mortgage investment. Loans through FHA, VA, Fannie Mac and Freddie Mac would be exempt. Lobbying in opposition to the legislation sites rates would rise 1-3% and many prospective buyers would not have the savings to buy a home. Also there are concerns that investors would opt to invest in government sponsored mortgages to avoid the cost of the 5% risk retention. Non agency loans are typically called non-conforming and may be higher loan amounts, interest only payment, adjustable features or serve borrowers and properties that are not agency eligible.

On Monday 4/18 the annual FHA mortgage insurance premium (paid monthly in the PITI) goes up .25% for all loan types. This works out to over a $50 increase in the payment for loan amounts over $250,000. FHA still offers the low 3.5% down payment and other lending flexibilities not found in agency conventional loans. For buyers with stronger qualifications, opting to put down at least 5% for a conventional loan will be less expensive.

Mortgage security investors are seeing more conventional loans securitized through Fannie Mae then Freddie Mac. In the last year Freddie Mac has tightened guidelines on property value (requiring appraisal desk reviews in cases its automated value engine does not show results) and condominiums. Loan officers feel that FNMA is more flexible in many cases and opt for that agencies programs. Freddie Mac does currently allow automated underwriting approvals to a 50% debt ratio where most Fannie Mae investors cap the debt ratio at 45%.

Financial regulations now require every mortgage loan officer to be registered with the nationwide mortgage licensing system and registry (NMLS). Loan officers must provide personal information, answer questions on conviction of financial crimes and be fingerprinted. This is to prevent the hiring and employment of loan officers with a financial criminal history and aid identification and prosecution of financial crimes.

Keep the umbrella handy this weekend. I am available by cell phone and email and I always take care of your referrals!

You may stop receiving this update by returning “remove” in the subject line.

John Melnick II

Senior Loan Officer

11320 Random Hills Rd. Ste 100

Fairfax, VA 22030

703-460-5510-O

703-303-6434-C

703-277-2882-F

www.MelnickMortgage.com apply online

Presidential Mortgage is local loan service nationwide.

Are you sure there are no clounds on the title? Sometimes, one title search may not be enough.

I sold 3 building lots in VA a while back. ( Same owner). All 3 lots sold, all 3 had title searches and title insurance, and I was glad to be done working in that area. Then I get the news. The buyer of one lot went to get his construction financing from a bank in Clarke county which did their own title search. Their title seach discovered the words " unborn heirs" in the will of a previous owner. This caused the title to become not marketable. It was considered clear since their was little chance some grand kid would read his grandparents will and notice that they are one of the unborn heirs and should have inherited that property. The buyers construction financing was held up until we could clear up the title issue. I had to hire 2 law firms to avoid a conflict of interest. One law firm to represent the live owners that were selling the lots, and another lawyer to represent the unborn heirs.

Yes, the judge required that the unborn heirs ( past and future) be represented in court even though they weren't born and weren't present now. We had to track down all the living unborn heirs and get them to sign a release that they had no ownership interest in the property. The ones that couldn't be found can't come back later and say they were suppose to inherit the land and were owners of the property, because now we can say that all previous, current, and future unborn heirs were represented in court by an attorney that approved the sale. $7000.00+ and several months after the sale, all lots have clear and marketable titles, and buyers have built their houses.

Not all Title companies are the same, and not all Title insurance companies are the same. Title insurance was useless in this case. In the 2005-06 rush, I know many compnies rushed the title searches and onlt went back a minimum amount of years. I would bet many title defects were overlooked or ignored during that time.

Funy how 2 little words can create such a huge mess. I do pre-listing title searches more often now, especially with all the short sales these days, just to identify clouds and defects sooner, and give myself more time to correct them if possible.

Just an FYI. Seems like I've noticed 5-6 blog postings recently that reek of bs. I noticed some agents are replying to these blogs thinking the poster is sincere. My impression is, these postings are all fraudulent and just trying to capture your info for possiblky placing advertising on your blog site.

I'm sure many have noticed the increase in unauthgorizized advertisement son some blogs recently. Maybe these are related.

The blog postings which I feel are just BS all originate from NJ and start with area code 732. I woiuld think before replying to any of these. None of them have a picture. I just saw 2 more today.

White, Beige, and Green Homes Sell Best. (edit/delete)

The environmentally friendly home. Agents and Stagers, are you looking for something a little different? Tired of REALTOR beige carpet, Antique White walls, and neutral everything else? Want to add a little variety to your listings, save sellers and buyers a little money, present a clean and green home to potential buyers? Just want to add something a little different? Consider some green products like Paperstone, Kirei Board, Toto, Polywhey, Clay Wall Plaster, in your pre listing repairs and staging presentation!

Every couple of months I like to scan through our local Green Building Supply store to see what's new in healthy home bulding products and supplies. Lots of products there I've been wanting to try out, and lots of great ideas for doing projects around the house. Also many unusual but interesting and attractive decorating ideas. Great source of non toxic cleaning products, flooring products, etc.

Will any of these products be attractive to home buyers? I believe many of them would. If a seller is going to paint before putting house on market, why not use a more healthy low VOC paint? Need new lighting, maybe some LED's would look good on an outside stairway? Flooring? Many possibilities available! Cabinets or hardware? New countertops?

Just adding a few " Green" projects or products might just give the sellers that little bit more of a edge when trying to sell in a tough and slow market like we're in now, and attract a buyer with an interest in "Green"!

There are probably "Green" building suppliers in your area, but if not , I think agents and stagers will find it interesting to visit http://www.amicusgreen.com and review all of the many " Green" products they have available.

Greetings,

Rates are up a fraction again according to survey

The average 30 year mortgage was up to 4.87% from 4.86% last week according to the Freddie Mac survey. The 15 year average was up to 4.10% from 4.09%. The 5/1 ARM average was up to 3.72%, from 3.73%. Average rates contained .70 discount points. One year ago the average weekly average was 5.21%. So far the pending government shutdown has not caused any immediate change in mortgage rates. That could change next week if investors lose confidence in U.S bonds. The Federal Reserve’s Loan Officer Compensation Rules went into effect this Wednesday. The overall effect is that rates may be slightly higher for consumers because loan officers are quoting from their “rate sheet” price and are discouraged from cutting their companies market pricing. Previously the lender and loan officer split the pricing underage’s and overages, which allowed more pricing flexibility. Terms will vary by lender as loan officer compensation must be in line with their pricing structures.

Points of Interest

Lenders must verify that an applicant has filed their tax returns (or filed an extension). The form 4506 is the means to receive this information. If an applicant has not filed returns for a year needed for loan qualification, it can cause a delay in loan processing. Returns take some weeks to be processed in the IRS system and time to get listed depends on electronic or paper filing. Encourage buyers to have their last two years taxes federal taxes filed and use electronic filing if possible.

You have heard of property flips (homes sold under 90 days from seller purchase). Now come “flops”. These are contracts originally submitted to banks as short sale offers and are usually in the buyer name of partnerships or LLC corps. The accepted contract is then assigned to a new buyer at a higher price, many times with the same settlement date as the LLC so no money is needed by the original buyer. Mortgage investors are concerned about fraud in these transactions and many will not accept an assigned contract. They also search the identity of the LLC or Partnership for conflicts of interest. Currently flips with increases of over 20% over the sellers original sales price require 2 appraisals to substantiate the increase.

Advise buyers not to apply for additional credit or raise their indebtedness during the loan application process. Mortgage investors are starting to require a “soft pull” credit update which discloses any additional debt balances or payments. Variances can cause the loan to be re-underwritten and could hinder a transaction.

Presidential Bank Mortgage can qualify buyers with the projected income from their signed employment offers. Buyers must be starting their positions within 60 days of property settlement and we must verify the offer is still valid prior to closing.

Stay dry this weekend! I am available by cell phone and email and I always take care of your referrals!

You may stop receiving this update by returning “remove” in the subject line.

John Melnick II

Senior Loan Officer

11320 Random Hills Rd. Ste 100

Fairfax, VA 22030

703-460-5510-O

703-303-6434-C

703-277-2882-F

www.MelnickMortgage.com apply online Thanks John for allowing me to share this information. Jeff Pearl