Inflation and Interest Rates

What’s Going on with Inflation and Interest Rates?

If you’ve seen the news lately, you know concerns about inflation are increasing. But what does it really mean to you?

The fact is, inflation is a very serious issue, and it will likely be on the rise as 2009 proceeds…and along with it, home loan rates will rise too.

To help you learn more about this important topic, I want to send you a link to a short video, featuring the nation’s foremost mortgage industry expert. In this video, you’ll learn how inflation impacts interest rates and what the outlook is for down the road.

Because home loan rates will be on the rise, if you or any of your family, friends, neighbors or co-workers have been considering a purchase or refinance, now’s the time to act.

Please contact me today to discuss your specific situation, and feel free to forward this email and video link along to others that you think might benefit from it as well.

Watch the Video

Thank you,

Matt Steinmetz

Envoy Mortgage

2151-P Salvio St.

Concord, CA 94520

Phone 925-671-9501 x119

Fax 925-940-9639

msteinmetz@envoymtg.com

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Information about the $10,000 New Home Tax Credit in CA

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HERA – Housing and Economic Recovery Act

On July 31st, 2009 a new regulation published by the Federal Reserve Board will begin that will drastically change the process of obtaining a home loan.  At least on the originators side of the transaction that is.  Even though the changes have no new hoops for the borrowers to jump through, the hoops the originator will jump through will certainly affect the borrower and everyone else attached to the transaction.  These regulations will impact your closing dates on all transactions for primary and 2nd homes that require financing.

The New requirements dictate to lenders and brokers the following:

• When up front fee’s can be collected
• When an appraisal can be ordered
• When a new Truth in Lending Disclosure must be re-issued
• When a copy of the appraisal must be delivered to the borrower
• When a loan can close

The earliest a transaction can close is 7 business days from when the initial disclosures are received by the borrower.  With that said even 15 days will be difficult to do.

After the Initial application is taken the lender must mail the upfront disclosures and wait 3 business days before collecting any fees aside from a credit report fee.  After the 3rd business day the appraisal may be ordered and the fee collected.  Once the appraisal is received, the borrower must be given a copy and time to review.  This means another 3 days if mailed and 3 days to review for a total of 6 business days.  On the 7th business day the loan may proceed.

If at any time the APR increases from the initial disclosure by more than .125%, a new Truth in Lending must be re-disclosed to the borrower and again start a 3 day clock, if mailed, and 3 days for review.  The estimation of up front fee’s is crucial.  Getting to the closing table andadjusting escrow fee’s will delay your loan by 7 business days as a new Truth in Lending is mailed and reviewed.

Note: For applicable refinances the 3 day rescission is in addition to this, so that makes the wait 9 business days.

Some Potential impacts to the APR:

• Unlocked rate and rate changes from initial disclosures
• Change in loan amount
• Loan product change
• Change in closing date
• Change to any fees

The only time period that can be waived is the appraisal review period of 3 days, and must be done so in writing by the borrower.  The only other way to speed up the process is to hand deliver the appraisal and disclosures, and get a signed receipt from the borrower to include in the loan file.  This will save the 3 days you have to wait when mailing the items.  Even still you can see how days begin to add up. 

30-45 day escrows will become even more common than they are today, as closing early becomes more and more difficult.  Add in lender turn times, and one mistake in timing can easily cost you a week or more. 

Bankers (like myself) have an advantage over brokers here as brokers have to wait for the lender they are submitting to, to send out the disclosures.  So Bankers may have a 3-4 day advantage in this example.

If you have any questions or comments please feel free to email me or use the comment feature below.  If you are a Realtor I would  be happy to present this information to you or  your office in person, whether we work together or you already have a lender relationship, we all need to understand the new requirements, as our clients depend on this. 

Matt Steinmetz

Envoy Mortgage

Concord, CA Contra Costa County

Calpers Sues Rating Agencies

Calpers Sues Agencies Over Ratings of Securities

The California Public Employees Retirment System is the nation’s largest public pension fund and has filed suit against rating agencies; Moody’s Investors Service, Standard & Poor’s and Fitch.  Calpers states the agencies ratings were “wildly innaccurate”.

In short the agencies, allegedly, gave bulk packages of sub prime loans higher ratings in order to win the bidding war against other rating agencies.  Investors, like Calpers in this case, buy the bulk loans based on the ratings.  Calpers is now seeking damages as those packaged loans are falling apart, and unveiling that the loans should not have been rated so high in the first place.

If this is true and rating agencies did inflate sub prime ratings to get a deal done, then they will be blamed for the current state of the housing industry.  With out their good ratings, these bulk loan packages would not have been such a hot item for investors to buy, and the loans would not have been pushed so hard to sell on the street. 

Do you believe any one entity is to blame for the mortgage meltdown, or a combination of?  Comment below!

Use the share icon to pass this along to Facebook, Twitter, etc.

Matt Steinmetz

Envoy Mortgage

Concord, CA Contra Costa County

Baltimore sues Wells Fargo

Baltimore sues Wells Fargo

The city of Baltimore claims that they have lost tax revenue because Wells Fargo put buyers into subprime loans that should not have qualified for a loan, and that Wells encouraged loan officers, through compensation packages, to give subprime loans to borrowers even if they could get better loans.  All of the foreclosures have taken away property tax revenue and Baltimore want to be paid.  Two former loan officers have made statements to support that Wells Fargo encouraged this sort of steering clients into subprime loans.  I am curious to find out the results of this.  If Wells Fargo is found liable for this, what do you think should be the penalty?  Comment below.

Use the share icon to put this on your Facebook, Twitter and many more social networking sites. 

Matt Steinmetz

Envoy Mortgage

Concord, CA Contra Costa County

Rent from your Lender

Reuters says  U.S. Officials are weighing a plan to allow borrowers who are falling behind on their mortgage payments avoid eviction by surrendering their home to their lender and paying the lender rent.  This is in the think tank because Obama’s Hope for Homeowner’s Plan is not working as they’d hope.  This way those who cannot afford their home can still ive in the home for several years.   Do you think this is a good idea?  Comment where you see “Responses” and at the top right.

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The article goes on to say that 1 in 5 homeowners owe more than their property is worth and with record unemployment today, the Treasury Dept. is looking at ways to save jobless homeowners from losing their home.

Use the share icon to put this on your Facebook, Twitter and many more social networking sites. 

Matt Steinmetz

Envoy Mortgage

Concord, CA Contra Costa County

A 2nd Stimulus Plan and more Foreclosures

Vice President Joe Biden said the current administration may have miscalculated the jobless problem facing America, as to how bad it would be.  Another stimulus plan would mean more Treasury auctions.  You know from my previous posts that Treasury auctions can take money away from bonds and increase mortgage rates.  A new plan would also cause inflationary problems which would also mean higher rates. 

Many Banks that held off on foreclosing on delinquent mortgages are now planning to move forward.  A lot of banks held off because they signed up for Obama’s Home Stability Plan, but reports show that a large amount of  the loans that have been modified by the lender are still delinquent.  People are still not paying their mortgages, even after modifications go through.  Not only does this clog up the modification departments for those who want help and would pay, but it tells the lenders the pograms don’t work and perhaps foreclosure is the way to go.  Either way, a new wave of foreclosures is on the horizon and this will depress home values further.  This is good news if you are in the market to buy. 

Matt Steinmetz

Envoy Mortgage

Owe more than your house is worth?

Fannie Mae had recently come out with their DU Refi Plus program which allows borrowers to refinance up to 105% of their homes value. This helps, but very little as most people who bought in the last few years are more under water than that. However it appears as of September 1, 2009 the new guidelines will allow refinances up to 125% of the homes value. This should encompass more homeowners, though still not a significant number for those of us in California, but even still kudos to Fannie Mae for trying. If you think this helps you, let me know and we’ll discuss further. Remember that your home loan must be owned by Fannie Mae to qualify and chances are you do not know who owns the loan. It is not necessarily the company you write your check to, as other companies retain servicing rights to loans even after the sell them off to Fannie Mae. Contact me and I’ll help you find out if Fannie Mae is the owner of your loan.

Feel free to comment below or share this with your social network.

Matt Steinmetz

Envoy Mortgage

First Time Buyer Tax Credit

Here is a link to the flyer

New $8,000 Tax Credit for First-time Home Buyers- is set to end soon!
Great news for first-time home buyers in 2009! The stimulus plan that President Obama signed into law contains a new
$8,000 tax credit for qualified first-time home buyers. And, unlike the $7,500 tax credit from last year, this credit does NOT
have to be repaid to the government, as long as you stay in the home for at least 36 months after the purchase date.
Remember, a tax credit is much more valuable than a tax deduction. A tax credit reduces dollar for dollar the amount of tax
you owe. A deduction merely reduces the amount of your income that is taxable. This means the home buyer credit can be
claimed even if the taxpayer has little or no federal income tax liability to offset.

Who?
First-time buyers or anyone who hasn’t owned a home in the 3 years prior to a purchase of a primary residence may qualify
for a tax credit of up to 10% of the purchase price or $8,000, whichever is less. To qualify for the full credit, the buyer’s
modified adjusted gross income must be less than $75,000 for single taxpayers and $150,000 for married taxpayers filing a
joint return. Partial credit is proportionally reduced for incomes under $95,000 (single) or $170,000 (married). For married
taxpayers, the homeownership history of both the home buyer and his/her spouse are taken into account. This means if you
or your spouse has owned a principal residence in the last 3 years, neither you nor your spouse qualifies for the credit.
What?
According to the IRS, a primary residence is the one you live in most of the time. It can be a house, houseboat, housetrailer,
cooperative apartment, condominium, or other type of residence. If you constructed your main home, you are treated as
having purchased it on the date you first occupied it.
When?
The $8,000 tax credit is available for qualifying home purchases made from Jan. 1, 2009, until Dec. 1, 2009. This is not a
typo. To receive the credit you must purchase a qualified home before December 1st, 2009 – not the end of the year.
How?
Unfortunately, you can NOT use the credit as a down payment. To receive the credit, you must purchase a qualified home
first and then claim it on either your 2008 or 2009 taxes. If you make a qualified purchase after April 15, or after having
already filed your 2008 taxes, you and your tax professional can submit an amendment to your return. To claim the credit, use
form 5405.
Why?
The current combination of lower home prices and lower interest rates makes for an amazing opportunity to buy real estate.
Add to that this $8,000 gift from the government, and renting a home just doesn’t make much sense.
If you or someone you know is ready to stop paying the landlord’s mortgage and start building equity in your own home, give
us a call. We’ll run the numbers and see what makes sense for your individual financial needs.

Matt Steinmetz
Envoy Mortgage

FHA 203K Streamline

Here is a link to a flyer on this topic

The FHA Streamline 203K loan can be used on purchases or refinances.  This loan allows  you to get extra money above the payoff amount or cost of the home to handle repairs or upgrades.  This is great for buying fixer uppers or putting windows in your existing home, plus much more. 

Loan amounts can go up to the maximun FHA loan limits in your county.  For Contra Costa County that limit is $729,750.  The maximum for repairs is $35,000 but a portion of that is not available to you as it is kept as reserves and then returned to the bank if unused, which reduces the balance on your loan. 

The borrower gets 50% of the improvement proceeds at the loan closing and the other 50% after the repairs are completed.   The repair work can be financed over and above the contracted sales price or appraised value with the total being added to the final loan amount, up to 110% of the value.  Any repairs over $15,00 do require an inspection upon completion.

Let me know your thoughts on this by commenting below, and feel free to use the share button to pass this along.

Matt Steinmetz
www.mattsteinmetz.com