fed rate cuts....

[EmpirE231]

what does this mean for us?? are mortgage rates getting lower? what's the inside scoop from all the loan people?

other questions

1. is anyone still writing stated income loans? if so, who and what are their best rates?

2. how much income does one need to show to approve for a 400k loan?


:beer

 

[whiteworks]

holding out for 4.5% we will see what happens.

 

[TPC]

I've always understood mortage money flows through bonds sold :
fannie mae:
http://www.fanniemae.com/aboutfm/index.jhtml

Fed rates is money loaned to banks. Money that is, in turn used by the banks for things like car and boat loans ect ect.
Auto and boat loan rates should drop.

 

[mbrown2]

Rates on 30 fixed conforming are actually up compared to last week...I am kind of bummed, there was day wed (i think) you could have gotten 5% fixed no point 30 yr conforming....I want 5 or even at most 5.5...

 

[EmpirE231]

holding out for 4.5% we will see what happens.

I'm right there with ya

 

[HBCraig]

I am at 5.75% now and would like to get it at an even 5.00%.

 

[catman-do]

The rate drops may not affect it as much as you might think. Here's the deal with us lenders. Because there is so much fraud going on right now in loans (fraud loans are now higher than it was a few months back with the subprime era), the banks must cover their losses. Now we had seen a couple rate drops, also have seen a few rate deteriorations. So in the end, our rates are down a little from a few weeks ago, but not as low as one might think. The banks way the banks will survive is by covering their losses on bad loans by passing on higher rates on the good loans. They make their money on rate vs risk calculations when being sold off on the secondary side. If LO's and borrowers would cut the fraud out, then we would all see a much better market. More programs, better rates, a much more stable RE economy etc... Occupancy fraud is huge right now. Income fraud is on the rise with the reduction of stated programs, everyone wants to 4506 or pass through tampered w2's. A more recent rise of appraisal fraud is being noted, many appraisers out there over inflating property values.

Examples

We had almost 30% of our loans submitted to us with some sort of fraud this last month. One broker alone tried to do 4506's on 8 deals in a row, all from the same employer (give me a friggen break!)

Appraisals- I have started having the appraisers include one comp (on top of the others) that is a current listing. This is in order to see how the current days market is since the values are dropping so fast.

Occupancy- Mostly this is people trying to get higher ltv's on non-owner homes, now that the programs have started tightening up. For some reason they think that a utility bill in the borrowers name is a "proof of occupancy". Its fairly easy to look up everything you every wanted to know on anyone with LexisNexis.

Brokers need to start training their LO's how to do clean business or they are going to get licenses pulled left and right.

 

[Outnumbered]

The rate drops may not affect it as much as you might think. Here's the deal with us lenders. Because there is so much fraud going on right now in loans (fraud loans are now higher than it was a few months back with the subprime era), the banks must cover their losses. Now we had seen a couple rate drops, also have seen a few rate deteriorations. So in the end, our rates are down a little from a few weeks ago, but not as low as one might think. The banks way the banks will survive is by covering their losses on bad loans by passing on higher rates on the good loans. They make their money on rate vs risk calculations when being sold off on the secondary side. If LO's and borrowers would cut the fraud out, then we would all see a much better market. More programs, better rates, a much more stable RE economy etc... Occupancy fraud is huge right now. Income fraud is on the rise with the reduction of stated programs, everyone wants to 4506 or pass through tampered w2's. A more recent rise of appraisal fraud is being noted, many appraisers out there over inflating property values.

Examples

We had almost 30% of our loans submitted to us with some sort of fraud this last month. One broker alone tried to do 4506's on 8 deals in a row, all from the same employer (give me a friggen break!)

Appraisals- I have started having the appraisers include one comp (on top of the others) that is a current listing. This is in order to see how the current days market is since the values are dropping so fast.

Occupancy- Mostly this is people trying to get higher ltv's on non-owner homes, now that the programs have started tightening up. For some reason they think that a utility bill in the borrowers name is a "proof of occupancy". Its fairly easy to look up everything you every wanted to know on anyone with LexisNexis.

Brokers need to start training their LO's how to do clean business or they are going to get licenses pulled left and right.

Good call on the appraisal listings. HM and I had a heated debate on this subject on HotBoat a while back Lenders are and will start to require closed comps within 90 days and listings/pendings on the reports. This happened in the 90's and I am surprised that more lenders have not made this requirement yet this time around. The appraiser should already be doing it anyway because closed sales are not the real value indicators in this market in most cases. The problem is lender pressure (not all, but many are very pushy) from smaller lenders and brokers to "make value". I have found that working with the bigger, more reputable, companies lets you do your job as an appraiser as it was designed--to protect the lender, not make a bogus deal work. The drawback is less work but at least I don't feel like I have contributed to this mess we are in.

 

[TOBTEK]

holding out for 4.5% we will see what happens.

WHATA talking about... the Fed rate is at 3% as of today

now Mortgage rates are a whole different story.. they are ALL over the board for the last week loving the four price changes per day from the same lender...CRAZY!

 

[whiteworks]

WHATA talking about... the Fed rate is at 3% as of today

now Mortgage rates are a whole different story.. they are ALL over the board for the last week loving the four price changes per day from the same lender...CRAZY!

any chance in hell we will see under 5% in the near future?

 

[EmpirE231]

and.... how much income does one need to show for a 400k loan??? 750 ficos, etc etc?

 

[essexjet]

Mortgage rate are borrowed against the bonds. The one to watch is the 10 year treasury note (tc10Y). The yield on the 10 year is what rate are based off of. So if you see bonds raising then most likely the conforming rates will drop.

 

[essexjet]

any chance in hell we will see under 5% in the near future?

On what? A 30 year will be difficult to get in the near future I believe. I got a few people 5/1 Fannie Mae at 4.5% last week.

 

[whiteworks]

On what? A 30 year will be difficult to get in the near future I believe. I got a few people 5/1 Fannie Mae at 4.5% last week.

Yes, 30 year fixed. why will these loans be difficult to get? Not sure what 5/1 means?

 

[essexjet]

Yes, 30 year fixed. why will these loans be difficult to get? Not sure what 5/1 means?

A 5/1 means that it is fixed for the first five years and then adjusts once a year following.

I am not financial expert but do follow my industry as much as possible, but the ten year treasury note is is at 104.66 and we seen it at 106 last week. It would have to get into the 107 mark to get the 30 year into the high 4% IMO

 

[Moody]

5/1 are Commercial type loans.

 

[essexjet]

5/1 are Commercial type loans.

5/1 are also residential loans, could be either conforming or non-conforming arms

 

[catman-do]

5/1 are Commercial type loans.

5/1 has nothing to do with commercial or residential. All it dictates are the loan terms. Residential/ commercial, either way its the same like essex had said. 5 year fixed (30-50 year ammortized), and after the 5 year period it will adjust every subsequent year after that. Usually most lenders are basing it off the LIBOR.

 

[catman-do]

On what? A 30 year will be difficult to get in the near future I believe. I got a few people 5/1 Fannie Mae at 4.5% last week.

Thats a good rate. Where was that through? Indymac, or BofA? We have had rates recently in the 5.375 arnge on 30 fixed. I know before Aurora went down, they had some good rates they were offering as well. I heard something in the range of 5.5 with <1.75> 30 fixed from one of their irvine underwritters. But, even he admitted that the service sucked so back that they HAD to give those rates in order to get loans in the door.

 

[Tamalewagon]

Mortgage rate are borrowed against the bonds. The one to watch is the 10 year treasury note (tc10Y). The yield on the 10 year is what rate are based off of. So if you see bonds raising then most likely the conforming rates will drop.

Bingo. Rates are mostly determined by the 10 year bond. Most folks think that as the prime rate is dropped the mortgage rates will follow. This for the most part is untrue. What happens is the Fed drops the rate to stimulate the stock market. This has an adverse effect on the bond market as most investors pull out of the bonds and put their money back into stocks. This is what increased mortgage rates...not decrease. Home equity lines of credit are directly impacted by the Fed dropping their rates, so if you have a one, your rate and payments will decrease.

The only erroneous portion is when the bond increases rates will drop. It is actually the opposite. When the bond decreases, mortgage rates drop too. I have followed the 10 year bond for 12 years and have never seen rates drop when the bond increases.

 

[Wmc]

holding out for 4.5% we will see what happens.

Last week when the fed dropped the rate you could have gotten that rate with Indymac on a 15 yr note, for about 2 hours. I locked my Aunt's 15 yr @ 4.75% with Provident Bank Mortgage today it is 5%.

I don't think we will see that on a 30 yr note. Today 5.375 %, last week 5%. When the fed cuts the rates like he does, it screws up the stock market, when the stock market gets screwed up our rates start to increase again. It is a cycle. So when everyone hears the fed just lowered the rates, does not mean every Lender follows at the same pace. For a short time a few hours, you can get a good rate, but the stock market starts to crash and we lenders have price changes for the worse the remainder of the day. It is very tough market right now.

Someone posed the question how much income for a $400,000 loan. Well based on 680 credit, full doc, 5.625 rate. Your looking at a payment including taxes and insurance (approximately) $2750 Now let's say you have $1100 in additional credit (car payment/ credit cards) Total $3850. You would need to make a monthly income of $8000 to qualify. Remember this is approximation. Hope it helps.

 

[Cole Trickle]

Last week when the fed dropped the rate you could have gotten that rate with Indymac on a 15 yr note, for about 2 hours. I locked my Aunt's 15 yr @ 4.75% with Provident Bank Mortgage today it is 5%.

I don't think we will see that on a 30 yr note. Today 5.5 %, last week 5%. When the fed cuts the rates like he does, it screws up the stock market, when the stock market gets screwed up our rates start to increase again. It is a cycle. So when everyone hears the fed just lowered the rates, does not mean every Lender follows at the same pace. For a short time a few hours, you can get a good rate, but the stock market starts to crash and we lenders have price changes for the worse the remainder of the day. It is very tough market right now.

Someone posed the question how much income for a $400,000 loan. Well based on 680 credit, full doc, 5.625 rate. Your looking at a payment including taxes and insurance (approximately) $2750 Now let's say you have $1100 in additional credit (car payment/ credit cards) Total $3850. You would need to make a monthly income of $8000 to qualify. Remember this is approximation. Hope it helps.

What about a 30 year fixed with a 750+ Fico stated for 480K

Don't forget about the 1700 a month for cars,trucks and boats:swear:skull

No credit card debt and a good savings account

Pretty sure I make about 11K a month I just can't prove it...lol:skull:smackhead

 

[OCMerrill]

What about a 30 year fixed with a 750+ Fico stated for 480K

Don't forget about the 1700 a month for cars,trucks and boats:swear:skull

No credit card debt and a good savings account

Pretty sure I make about 11K a month I just can't prove it...lol:skull:smackhead

How do you know all this about me?

 

[Cole Trickle]

How do you know all this about me?

lol....Pretty sure that describes every responsible 30 year old born in Orange County

 

[HavasuHank]

lol....Pretty sure that describes every responsible 30 year old born in Orange County

only in orange county?

 

[Wmc]

What about a 30 year fixed with a 750+ Fico stated for 480K

Don't forget about the 1700 a month for cars,trucks and boats:swear:skull

No credit card debt and a good savings account

Pretty sure I make about 11K a month I just can't prove it...lol:skull:smackhead

Jumbo 30 yr fixed rates aren't that great right now. We are rolling something out in the next couple of days that is supposed to be pretty competitive. We will talk offline when I get it. See you Sunday.:beer

However, once the senate passes the bill to increase fanniemae loan limints, you will fall into conforming and then we can talk.

 

[Cole Trickle]

only in orange county?

I should revise that to so. Cal

 

[Cole Trickle]

Jumbo 30 yr fixed rates aren't that great right now. We are rolling something out in the next couple of days that is supposed to be pretty competitive. We will talk offline when I get it. See you Sunday.:beer

However, once the senate passes the bill to increase fanniemae loan limints, you will fall into conforming and then we can talk.

I want to wait a tad bit longer for that new jumbo limit to go through. I would love to re fi everything into a 1st at less than 5.5 for 30.

Congrats on passing your test!!!:beer

 

[djunkie]

Jumbo 30 yr fixed rates aren't that great right now. We are rolling something out in the next couple of days that is supposed to be pretty competitive. We will talk offline when I get it. See you Sunday.:beer

However, once the senate passes the bill to increase fanniemae loan limints, you will fall into conforming and then we can talk.

Yup. They say they may raise that $417k limit up to over $600k.
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[djunkie]

I want to wait a tad bit longer for that new jumbo limit to go through. I would love to re fi everything into a 1st at less than 5.5 for 30.

Congrats on passing your test!!!:beer

Less than 5.5% is a long shot IMO on a 30year. But what the hell do I know.
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[HavasuHank]

I want to wait a tad bit longer for that new jumbo limit to go through. I would love to re fi everything into a 1st at less than 5.5 for 30.

Congrats on passing your test!!!:beer

what jumbo limit are you talking about? i spoke with my lender yesterday and he recommended that i stay put with my jumbo. and i wanted to refi with the same company.

 

[Wmc]

Yup. They say they may raise that $417k limit up to over $600k.

$720,000 in high cost areas.

 

[essexjet]

Thats a good rate. Where was that through? Indymac, or BofA? We have had rates recently in the 5.375 arnge on 30 fixed. I know before Aurora went down, they had some good rates they were offering as well. I heard something in the range of 5.5 with <1.75> 30 fixed from one of their irvine underwritters. But, even he admitted that the service sucked so back that they HAD to give those rates in order to get loans in the door.

Thats with Chase. Found that Chase and Wachovia has the best wholesale rates out there.

 

[djunkie]

what jumbo limit are you talking about? i spoke with my lender yesterday and he recommended that i stay put with my jumbo. and i wanted to refi with the same company.

The jumbo starts at I think $417k. There is talk that it may be raised to over $600k so that would allow for us with huge loans to maybe see a rate break.
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[Wmc]

Less than 5.5% is a long shot IMO on a 30year. But what the hell do I know.

5.375 right now with a rate change for the better.

 

[HavasuHank]

$720,000 in high cost areas.

what constitutes a high limit area?

 

[djunkie]

$720,000 in high cost areas.

Just as long as it goes high enough to affect me.
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[djunkie]

5.375 right now with a rate change for the better.

On a 30year?
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[Wmc]

what constitutes a high limit area?

California is a high cost state!

 

[OCMerrill]

lol....Pretty sure that describes every responsible 30 year old born in Orange County

I bought my house in MV about 3 1/2 years ago.

You nailed it straight accross the board.

So now increase the debt about 30-50%, shrink the house by the same and help me find a 120% cash out refi?

I am looking for a 30 year fixed at around 5 flat.

 

[Wmc]

On a 30year?

yes right this minute.

 

[HavasuHank]

Just as long as it goes high enough to affect me.

you're not the only one

 

[Cole Trickle]

On a 30year?

yep

We need to wait a tad bit more it's looking better for us since we both locked in on rates when they were the highest and climbing in a while. As long as our appraisals come back good we should be pretty set in the next 6 months to refi.

 

[Cole Trickle]

yes right this minute.

stated?

I wonder what my house will appraise at...lol:swear

 

[HavasuHank]

yep

We need to wait a tad bit more it's looking better for us since we both locked in on rates when they were the highest and climbing in a while. As long as our appraisals come back good we should be pretty set in the next 6 months to refi.

are you sure that you are below 80% loan to value ratio?

 

[djunkie]

you're not the only one

I am not far off. I only need it to go up about $15k for me to fall underneath it. It would be nice to get my rate over a whole % lower than what it currently is.
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[djunkie]

yep

We need to wait a tad bit more it's looking better for us since we both locked in on rates when they were the highest and climbing in a while. As long as our appraisals come back good we should be pretty set in the next 6 months to refi.

I really don't think my rate is that bad. I'm at 6 1/2 % right now. I know others are well over 7%. My agent pulled my comps earlier this week and he said they've gone up in my neighborhood compared to what I paid. I just saw a beater down the street from me, same size house on a smaller lot sell for $20k more than I paid. Kinda shoots a hole in this market I keep hearing is bottoming out.
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[Cole Trickle]

are you sure that you are below 80% loan to value ratio?

Today? who knows.......:swear

I paid 540K and owe 465K after my down.

I imagine I am in the 85% neighborhood. My house is alot nicer now(upgrades) but I am gonna guess the comps are screwed.

 

[djunkie]

stated?

I wonder what my house will appraise at...lol:swear

Thats gonna be the biggest problem for you. Appraisals are gonna be vvveeerrryyyyyy crucial IMO.
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[HavasuHank]

Today? who knows.......:swear

I paid 540K and owe 465K after my down.

I imagine I am in the 85% neighborhood. My house is alot nicer now(upgrades) but I am gonna guess the comps are screwed.

exactly. you are pretty close. i am in the same boat and can't do anything about it:swear