Orlando Mortgage Blog

We're waiting like everyone else for the upcoming HARP II program availability. But we're building a call back list of interested parties once it's rolled out. What is HARP II you might ask? It's the latest version of the popular HARP program that has been authorized and then extended by congress the last couple years to assist high loan-to-value (LTV) mortgage borrowers do a rate and term only refinance that have been blocked by standard conventional loan guidelines. The caps will be off the LTV. Of course Fannie or Freddie must own your loan* and it must have been on their books no later than May 31, 2009. The latest version is supposed to open up that capability even more for those that have experienced the drastic value decline in recent years that kept many from getting a lower rate in this market due to excessively high LTV's. For more information contact us today.

The problem since the end of the year has been that though the new version has been authorized since the first of the year Fannie Mae (FNMA) will not update Desktop Underwriter (DU) to implement the enhancements until on or after the weekend of March 17th, 2012. It seems the interpretation of the guidelines are changing daily at the moment. Any lender that might book a loan under the perceived guidelines must underwrite it manually and hope it passes DU so they can sell it through later. Most lenders are biding their time until DU is available rather than risk it. What's the best thing to do if you think you are a candidate? Get on our call back list. When we have the full details we'll give them to you to hopefully get you started. Freddie Mac has a few program specific details to ask about. Additional guideline requirements will apply and will be available as known.

* To find out if Fannie Mae or Freddie Mac owns your loan go to our website and click the left bar under HARP at www.OrlandoMortgageMasters.com, input your address and follow the instructions at both Fannie and Freddie to see. If neither comes up then double check your address input. Still not showing up, call your lender and ask who owns it just in case. It may be owned by someone else and therefore not eligible for the program.  

You can bet most people are not aware of this detail...

Quoted from the Fannie Mae "Selling Guide Announcement SEL-2011-14:

"As directed by the Federal Housing Finance Agency (FHFA), pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011. Fannie Mae (and Freddie...I added to the quote for complete input) is required to increase the guaranty fee charged for all mortgages delivered on or after April 1, 2012, by 10 basis points. In order to comply with the Directive, FannieMae (and I assume Freddie) will increase the guaranty fee applicable to loans in MBS pools with issue dates on or after April 1, 2012, by 10 basis points...".

So, that means 10 basis points to the yield. The  Guaranty Fee (Gfee) increase will actually worsen prices for new borrowers by 30 to 80 basis points (bps)* on the note rate because the impact across the various coupon changes daily based on what par is. One or two lenders have started announcing the staggered plan effective dates based on Rate Lock requirements to meet the February 29, 2012 must close by date. Eventually all will have to align with the new guideline and it will happen quickly.

Considering how conservative present conventional loan underwriting guidelines are today this is a good example of closing the the barn door years after the horses ran away. So the increase helps who at this point? Apparently the cash drawer at the GSE's to apparently cover loss reserves from the days they booked what they asked for and now are eating those decisions and policies big time. So it appears the new "well qualified borrower" not only has to jump through the most difficult loops in decades to get approved, but has to help pay for all those who didn't years ago. Sounds about right for D.C. doesn't it?

*Here's the explanation of how a 10 bps yield becomes a 30-80 bps change in "price":

• Securities are in half point increments

• Today it’s basically 3.0%, 3.5%, 4.0% or 4.5% 

• Most loans can fit into the security at or above their note rate (Buy Up) or the security below their note rate (Buy Down)

• “Buy up” – example: putting 3.625% loan into a 4.0% security
• “Buy down” – example: putting that same 3.625% loan into the 3.5% security
• Our Capital Markets teams is making that call (to “buy up” or “buy down”) based on where we get the best return (“best execution”)

• The GFee change is making it so the buy up/buy down options are somewhat diminished, meaning it costs more to put certain note rates in certain securities

• The buy up/buy down factor is generally a multiple of somewhere between 3-8 times the yield change depending on the loan’s note vs. the security price

• Long story short: the 10 bps in yield times the 3-8 multiple for the buy up/buy down factor = 30-80 bps in price

A 30 year rate below 4% without any points is on the cusp of disappearing right now with most lenders already at 4% or higher and the 10 yr bond firmly over 2.00% in the last week. Currently it sits at 2.16% after hitting lows of 1.71% in the last couple weeks. So have we tested the interest rate lows and are rates in the 3's almost out of sight? Maybe. I've been telling everyone I know that if they can they probably should consider grabbing a rate at current levels and move on. But, so many times we'll see someone target a rate, it comes available and when it does they want to hold for more only to see it disappear like fog in a stiff breeze as we've seen in the last two weeks. Those same folks probably think twice about spending $2.00 on a lotto ticket, that being a low odds risky use of their money, but are willing to gamble on their mortgage rate to get an extra $10 off a payment. Go figure...

Ok all you Florida property rate fence sitters. Check out our rate sheet. We broke 4.00% again this morning on well qualified customers with credit scores of 740 and above and 75% LTV's and below...purchase and refinance. Same customer exceeding that LTV only adds 0.25% point (not rate) to market maximums. Lower scores price according to risk level and availability. Even HARP DU Refi Plus loans start as low as 4.125% up to 95% LTV with No PMI. That's nothing short of remarkable!

Monday was up from Friday. Tuesday was down from Monday. Wednesday ended with late afternoon point bumps up and that is up to discussion as to the "why". I guess many lenders seeing the gaps in secondary pricing hedges out there opted to go conservative and move it up, they can't guess wrong there from their viewpoint, right? But...STOP! Day-to-day points and therefore rate moves have been like trying to compare one crew cut to another lately. The good news has been you don't have a "Part" to contend with...in this case PARTing from your pocket money. With rates that have been on the low end of 4% on a well qualified 30 year fixed borrower for the last week or so the only worry is how long do you hold off before locking and what are you waiting on, a free toaster? Friday's employment report is the only real item on the agenda at this point and that could go either way. As Clint was famous for saying..."Do you feel lucky? Well, do ya mister?" 

We have VA loans with no jumbo adjuster up to $1.5 million folks!

Our investor's VA program allows loan amounts over $417,000 – with no Jumbo pricing. In fact, we can lend up to a loan amount of $1.5 million.

Call Bill Wilbanks today to discuss VA loan options at (407)647-4440. This is an exceptional IRRRL VA refinance opportunity if you have a VA loan now.

After the 10 year closed higher last evening again at a 2.153% yield, we've now seen it rise to a current high at 3:51 PM just before closing to hit a 2.2959% yield, up 0.1429%, so it's no wonder we've seen three rate sheet re-pricings today. Net impact on points so far appears to be about 25 bps across the board from where lender points started this morning. And that was up from the day before. The DOW was up 129 points about the same time. Have we bounced off bottom what has been a 50 year bottom? Who knows? Bernanke's comments this Friday have folks betting in both directions. QE3? Will he push short term instead of long term bonds. Or, what? Time will tell. Hope you had your stuff ready to take advantage of the rate swing, as we suggest all over our site, the day it swung your way. Remember, the lowest rates available always require complete loan files to obtain them and a little time to get registered on someone's system. So be prepared.

Many borrowers who were able to jump on what was then a historic rate drop in the last several years haven't awoken yet to the new reality. Rates have plunged even further. So let's say you got that great 5.25% rate on that $200,000 refinance loan anytime in 2008 to 2009 and you got your payment down then by $100 or so or more by doing it. Today we're offering 30 year fixed rates as low as 4.125% zero points to a well qualified borrower with scores of 720 and higher up to 75% LTV and below. That would drop the same payment above by another $100 per month or more. But there are so many examples of higher LTV or lower score options, it's just not possible to mentioned them all in this context. But suffice it to say, many folks can save even more today than they did just 2 and 3 years ago. So yes, the market can ceratinly improve, but interest rates and what lowering yours again if you are qualified can do for your finances, should be high on your ToDo List of things to follow up on very soon.

That's right. Look at our rate sheet. If you're buying and need a 30 year fixed, rates are starting at 4.125% zero points to a well qualified borrower. I'm done.