Taos Real Estate

Market Direction:
Rates are: MOVING SLIGHLTY HIGHER
Rate Volatility: MEDIUM

Interest Rate Trends:
Long Term (4-6 weeks): FLAT
Short Term (1-2 weeks): UP

FAREWELL TO STATED INCOME LOANS??...
TIGHTENING OF GUIDELINES CONTINUES...

Last week, mortgage insurer Radian announced it would no longer insure Stated Income loans. They cited poor loan performance as their reasoning. It's unclear if the few remaining mortgage insurers will follow suit, but I won't be surprised if/when they do. This means - if nothing else - there won't be any stated products available above 80% loan-to-value (LTV).

The following day we received notification from two separate lenders that they were no longer offering stated products in any form. Will other lenders follow suit? Will we be left with only a fully-documented loan product available below 80% LTV in fixed variants of 15 to 30 years? I don't see this happening, not long term anyway. The Fed, along with the Treasury Secretary and Congress, realize this situation cannot be allowed to materialize - no matter what the cost to the dollar or the taxpayer.

The next day new guidelines from Fannie Mae were released. Remember when I said 720 is the new 680? Well I guess you can change that to: 740 is the new 680... They have added new loan-level price adjustments (LLPA's) that can increase rates by another 4.0%, on top of the already-instituted LLPA's that impacted rates by as much as 2.5% (that adds up to as much as 6.5%). Any loan submitted with a credit score below 740 will have rate/price adjustments (starting June 1st).

That's probably enough to digest for one week. Let me end with a few good notes:

- Existing home inventory (nation-wide basis) is down. That is good news for us locally as many of our buyers are discretionary in nature & are looking for a bottom before purchasing (second homes, retirement, etc).
- Last week's employment reports showed more job loss. This is good because it will help to temper inflation and thus keep mortgage rates in check.
- I personally noticed an increase in calls, referrals, prequals and property showings last week. While one week isn't enough to make any formal assessment, the increase in activity was palpable.
It is that time of year - spring is in the air - and buyers are beginning to surface for air Have a great week!

Jason Leach
Mortgage Consultant
Taos Lending Team
Phone: 575.751.4641
Mobile: 575.741.0814
jason@taoslendingteam.com
www.taoslendingteam.com

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