San Francisco Schtuff

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December 1, 2008 • 2:12 pm 0

Writing Was On The Wall, Now It’s Everywhere

There were warnings about the possible devestating impact of adjustable rate mortgages and low down payments, but few listened.

“Expect fallout, expect foreclosures, expect horror stories,” California mortgage lender Paris Welch wrote to U.S. regulators in January 2006,

Federal regulators were especially concerned about mortgages known as “option ARMs,” which allow borrowers to make payments so low that mortgage debt actually increases every month. But banking executives accused the government of overreacting.

AP IMPACT: They warned us, but US eased loan rules [SF Gate]

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November 18, 2008 • 2:50 pm 0

FHFA Announces “New” Conforming Loan Limits

The Federal Housing Finance Agency (FHFA) on Friday announced that the “new” conforming loan limit for 2009 will remain at $417,000 for most areas in the U.S., unchanged since 2006. Loan limits for high-cost areas, including California, are capped at $625,500, down from the previous $729,750 limit. Loan limits for many areas of the state do not reach this lower threshold and are dramatically reduced from 2008.

“Although price declines mean that the total number of homes eligible for conforming financing has increased, we’re disappointed that the $729,750 limit stipulated in the Economic Stimulus Act of 2008 signed in February was not made permanent,” said 2008 CAR President William E. Brown. “The reduction in the loan limit to $625,500 will negatively impact both the interest rates and the availability of funds for jumbo mortgages. We hope Congress will make the $729,750 limit permanent before the end of the year as one of the provisions in an economic stimulus package.”

The conforming loan limit determines the maximum size of a mortgage that Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and negatively impacting affordability for households in California.

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October 6, 2008 • 7:53 am 1

Subprime–A Refresher

We’ve been swamped with Subprime questions and search engine referrals about the subject, so in case you missed our “Subprime For Dummies” post last March, here is another chance to visit this fantastic slide show that explains how some think we got into this mess in the first place.

Subprime Explained [google docs]

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July 23, 2008 • 8:16 am 0

Criminals Lending Money

More than half of Florida’s registered “mortgage professionals” went into business without a license, according to The Miami Herald. WOW.

5,306 people with criminal histories became loan originators. Worse, those include 2,201 who had committed financial crimes, such as fraud, money laundering and grand theft.

Thousands with criminal records work unlicensed as loan originators [Miami Herald]

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July 14, 2008 • 8:18 am 0

Shady Mortgage Ban

From the AP via SF Gate:

Chairman Ben Bernanke and his central bank colleagues approved a plan Monday that would crack down on dubious lending practices that have hurt many of the riskiest “subprime” borrowers

The the plan would:

  • bar lenders from making loans without proof of a borrower’s income.
  • require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.
  • restrict lenders from penalizing risky borrowers who pay loans off early. Such “prepayment” penalties are banned if the payment can change during the initial four years of the mortgage. In other cases, a penalty can’t be imposed in the first two years of the mortgage.
  • prohibit lenders from making a loan without considering a borrower’s ability to repay a home loan from sources other than the home’s value. The borrower need not have to prove that the lender engaged in a “pattern or practice” for this to be deemed a violation. That marks a change — sought by consumer advocates — from the Fed’s initial proposal and should make it easier for borrowers to lodge a complaint.
  • lenders will have to credit a mortgage payment to the homeowner’s account on the day it is received.
  • brokers and others are forbidden from “coercing or encouraging” an appraiser to misrepresent the value of a home.

Fed adopts plan to curb shady mortgage practices [SF Gate]
Subprime For Dummies [SF Schtuff]

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March 6, 2008 • 2:12 pm 0

Let There Be Money…

thousanddollar.jpg

By May Montana:

We have word that at least one bank will begin originating FHA (federal housing administration) loans tomorrow to $729,000 in San Francisco up to 97% of the purchase price.

On a purchase it would look like this:

Loan amount Purchase Price Down Payment
$729,750 752,319 3%
$729,750 768,157 5%
$729,750 810,833 10%
     

Schtuff:

  • No FICO score requirements
  • No reserve requirements
  • Does not have to be a First time home buyer
  • All of down payment can be a gift, so 3% does not have to come from the borrower

May Montana [website]
Mortgage Consultant
Guarantee Mortgage
415.694.5513

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March 4, 2008 • 9:02 am 1

Subprime for Dummies

subprime.jpg

We are not sure who created this excellent slide show that demonstrates needy borrowers, unethical lenders and fat-cat bankers, but it’s a funny as shit light-hearted explanation as to how the country got into this credit mess. Bastards.

Subprime Explained [google docs]

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February 7, 2008 • 11:36 pm 0

Jumbo to Conforming

stimulussavings.jpg

From Bloomberg.com:

Fannie Mae and Freddie Mac, the government-sponsored mortgage finance companies, will be allowed to buy loans worth as much as $729,750 for loans made between July 31, 2007 and Dec. 31, 2008, an increase over the current $417,000 loan limit, a move that could help struggling homeowners to refinance large mortgages at a lower interest rate. It will also allow the Federal Housing Administration to insure loans as high as $729,750 in expensive markets.

Senate Approves $151 Billion Economic Stimulus Bill [Bloomberg]

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January 30, 2008 • 9:06 pm 0

Cheap Money

cut-dollar.jpg

The Fed cut the fed funds rate yet again. The second such cut in 8 days. The rate now stands at 3%! The federal funds rate is the interest rate at which private institutions (mostly banks) lend balances at the Federal Reserve to other banks overnight. Though there is a slight lag in the time before consumers feel such a cut, it means money is getting cheaper to borrow. Some [me] worry about inflation, but the Fed seems to think that stimulating the economy in the short term is a good long term solution.

The New York Times Reports:

“The central bank acknowledged that it is now far more worried about an economic slowdown than rising inflation, and it left open the possibility of additional rate reductions.

“Financial markets remain under considerable stress, and credit has tightened further for some businesses and households,” the central bank said in a statement accompanying its decision. In addition, it said, recent data indicated that the housing market is still getting worse and the job market appears to be “softening.””

This, coupled with the soon to be voted on conforming rate stimulus package will mean that borrowers are going to save a whole lot of dough versus just a few months ago to borrow money to purchas a home in sF. If the Stimulus Package is passed, the conforming loan rate will change from $417,000 to $729,750 for one unit dwellings in San Francisco. This alone (not including the rate drop) will save a borrower $600 a month with 10% down on a borrowed amount of $900K.

Fed Cuts Rates by Half-Point; 2nd Reduction in 8 Days [NYT]
Federal Funds Rate [Wikipedia]

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March 23, 2007 • 6:36 pm 0

Mortgage Update

Friday: 03/23/07 10:30 AM EDT :
Treasuries began the day in the green but a stronger than expected home sales report has reversed the advance and bonds across the maturity spectrum are currently in negative territory. The bullish news may be providing some support for stocks but rising oil prices are exerting counter-pressures and the indices are narrowly mixed.

In the only major economic release of the day, the National Association of Realtors said that the seasonally adjusted, annualized pace of existing home sales rose by 3.9% to 6.69 million in February from 6.44 million in January (originally reported as 6.46 million). The acceleration, the largest in a year, surprised analysts who were predicting a decline of about 1.7% to 6.35 million.

The Northeast experienced a surge of 14.2% to a 1.210 million rate. This was the largest increase in the region in three years and the pace was the highest since August of 2005. The sales pace rose in the Midwest by 3.9% and in the South by 1.6%. The rate was unchanged in the West.

The report said that inventories of existing homes on the market rose by 5.9% last month, the biggest increase since last April. But with the increase in sales pace, inventories represented 6.7 months’ worth of sales, up only slightly from 6.6 months in January. Average and median home prices edged up in February but only after falling sharply in January.

Weakness in the housing sector in the past year had raised economic concerns that Fed watchers believed would eventually lead the monetary policy committee to cut rates. But today’s better than expected sales report suggests that the housing situation may not be as dire as previously thought.

Additional pressure on bonds is coming from additional supply headed to market next week. The Treasury will be conducting its monthly 2-Year Note auction on Wednesday and its 5-Year Note auction on Thursday. Moreover, the economic calendar is relatively heavy next week with two consumer indicators and reports on new home sales, durable goods, gross domestic product, personal income and spending, construction spending, and manufacturing in the Chicago area.

source: www.lioninc.com

Information Provided By:
May Montana
Loan Consultant-Notary Public
Guarantee Mortgage Corp
[email protected]
(415) 694-5513

Filed under: mortgage, news , ,

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