Taos Real Estate

TLT is Taos’ only ‘certified’ mortgage broker by the National and NM Association of Mortgage Brokers.

Rates are Still Fabulous
30 year  5.00%
15 year  4.75%
5/1         4. 375%
FHA         5.00%
Prime      3.25%

The Mortgage Backed Securities (MBS) market dropped like a rock last week which lead to much higher interest rates by the end of the week.

We had a nice run up in MBS prices on Monday and early Tuesday morning which gave us the third best rates that we have seen this year and the fourth best rates that many of us have ever seen.

But we started to move the wrong direction by mid-day Tuesday and by the end of the week we lost -66BPS from Monday's close.  Many clients that were quoted rates on Monday and Tuesday were shocked to hear that rates were much higher at the end of the week.

Lenders are still overwhelmed and closing loans takes a few more weeks than usual. We are seeing lenders and underwriters declining properties that were closed by those same lenders last year or prior. Approving borrowers is simple enough; properties are being scrutinized more and more closely.

None of the old rules apply any more, guarantees are more difficult to ensure and patience is once again the key to maintaining our sanity in this business.

Appraisal HVCC update

IF you recall, May 1^st all lenders now require appraisals to be ordered via 3^rd party agencies. Our lenders have signed up with numerous third party agencies and are allowing us the option of choosing which agency to order the appraisal. I have sent a list of these agencies to most of the appraisers in town. The appraisers have the option to sign up with these agencies or not. Following this I have requested the appraisers to email us a list of the agencies with whom they are registered. This way when we choose an agency, we have a higher chance of getting an appraiser who is local and familiar with local properties.

Obama Mortgage Payment Assistance Plan

Not all but many lenders have signed up for a number or all of the programs required by the Obama Plan to help people hold on to their homes. While this plan doesn’t bring any business to TLT and mortgage companies in general, I feel it is important to give you a brief review of the plan and help you and/or family and friends get a better understanding of the available options.

Lenders have signed up for the refinance and modification options within this program, what does this mean for you? Your existing lender will consider your loan a refinance if your property values have dropped significantly, if your property values are stable and have not dropped your loan will be considered a modification loan. The criteria established apply whether your loan is deemed a refinance or a modification loan and are as follows:

1. If your interest rate has increased, you may apply.

2. If your income has dropped in the past year, you may apply.

3. If you see a possibility of being late on a payment + #1, you may apply.

4. If you are already late on your mortgage payment +#1, you may apply.

5. You do not have to be delinquent on any payments to qualify

6. You may have money in the bank, i.e. you do not have to be near the end of your financial rope to qualify

7. Terms available are 30 and 40 year fixed loans

8. First 5 years your loan is at 2% fixed

9. When you apply and are deemed qualified your loan is locked, rates now are at 5.00%. After the first 5 years are up, every year thereafter your interest rate will increase by 1% until it reaches the locked rate.

10. Lenders are required to make sure your debt to income ratio on your mortgage does not exceed 31% of your income and up to 55% of your total debt. Therefore, if lowering the interest rate to 2% does not place your monthly mortgage payment into the 31% or less category, the lender is then required to reduce the principal balance of your loan so the monthly payment = 31% of your income. The reduced principal is then placed at the tail end of the loan and is paid back to the lender without interest.

11. If you have a second mortgage or HELOC on your property, these lenders are required to work with the first mortgage lender to help reduce payments. Many of them have not signed up to be a part of this plan so please note, the first and second liens WILL NOT be rolled into one loan. You will still have a 2^nd mortgage lien; hopefully that agency will see it in their best interest to work with the first lien lender and their clients.

12. The incentive for the lenders is of course financial. They will be paid an agreed upon amount per borrower who is converted into the payment assistance program on a yearly basis for the first 5 years.

13. You can view all of this information at www.financialstability.gov and http://www.makinghomeaffordable.gov/ ” These programs are put in place to help everyone, take advantage of it!

Market Place Updates

According to RANM the stats are out for 4^th quarter comparison for 07 and 08. Units sold are down in 08, median price was down in 08, multi board unit MLS units sold are up in a few counties in 08 and multi board MLS median price is higher in 6 out of 9 counties in 08.

While I am sure you are all aware of these statistics it is showing some level of activity.

More Banks Tightening Home Loan Standards

by The Associated Press  www.npr.org

A larger share of banks have made it more difficult for people to obtain home mortgages over the past three months even as demand has grown, the Federal Reserve reported Monday.

The Fed's new quarterly survey found that about 50 percent of U.S. banks tightened their lending standards on prime mortgages, up from about 45 percent in the survey issued in early February.

Meanwhile, 65 percent of banks said they tightened standards on nontraditional mortgages, such as adjustable-rate loans with multiple payment options. That was up from 50 percent in the previous survey.

Demand for nearly all types of consumer and business loans continued to weaken over the past three months, with one exception. Demand for prime mortgages registered its first increase since the Fed began to track those loans separately in April 2007.

That uptick in demand comes as mortgage rates dropped, helped by a concerted effort by the Fed to drive down rates to help revive the crippled housing industry.

Rates on 30-year mortgages slid to 4.78 percent last week, trying a record low, according to figures compiled by mortgage giant Freddie Mac.

In other lending, nearly 60 percent of banks said they tightened standards on credit card loans over the past three months, the same proportion as in the previous Fed survey.

There were some spots of improvement in the latest Fed survey. About 40 percent of banks said they tightened standards on commercial and industrial loans over the last three months. That was down from around 65 percent in the prior survey.

Looking ahead, however, "the vast majority" of banks said they expected deterioration in credit quality for all types of household and business loans.

More than 70 percent said the quality of their banks loan portfolio was likely to deteriorate this year with nontraditional mortgages and credit cards figuring prominently in that scenario. That response was to a special question contained in Monday's survey not asked in the previous one.

The Fed survey was based on the responses of 53 domestic banks and 23 U.S. offices of foreign banks.

Getting banks to boost lending is critical to lifting the country out of recession.

The Fed has slashed a key bank lending rate to a record low near zero and is expected to hold it there well into next year to entice businesses and consumers to spend more.

The Obama administration is counting on tax cuts and increased government spending to revive the economy. And it has put forward plans to rescue banks and curb home foreclosures, also key ingredients to turning the economy around.

If someone in the industry is telling you they can close loans within 30 days, be careful! Many in town are using low rates and quick closings to lure folks in…it just isn’t that easy any more.

Summary

Do you feel as though you are throwing your time and money into a wishing well these days and every day is a Monday? Join the club.

Please understand we in the mortgage industry are doing all we can to provide lenders with the inordinate amount of information they ask for these days but it doesn’t guarantee loan closings within 30 days. Honestly I have loans that are taking 45- 60 days to close and we are working diligently every day on these loans with the lenders.

That’s enough for today…I am sorry to have missed writing you last week, it couldn’t be helped.

Thank you for your time and consideration!

Sincerely,
Elisabeth Guillemin