June 1, 2011 • 9:40 pm 0
Please visit a feature article by Ken Lambert at the largest mortgage magazine available-
http://www.sg-resdigital.com/resdigital/201106re#pg27
Please let me know your thoughts on the marketplace. Thank you,
Ken L.
Filed under: Uncategorized, marketing, mortgage, new products, sales
May 1, 2011 • 9:08 pm 0
What to do with your first and second mortgage… I run across this question multiple times a day. When the 80/20 loan was widely available many people took advantage of it as a way to do avoid PMI. It would allow you to borrow 80% of the purchase price then have a second mortgage for 5-20% depending on your down payment. Or, if you do put money down on a home you could tap into your home’s equity with an equity line for cash or anything you wanted with it.
Nowadays many people are trying to consolidate their mortgages with out really knowing the process. There are many different options available for refinance but one that has been very successful lately especially since home owners equity position has dropped is to get a “Letter of Subordination” from their current 2nd lien holder. This letter essentially says the second lien holder will allow you to refinance your first mortgage into a better situation and they will hang back in 2nd position.
In the past I personally found this process to be painful and lengthy, but I now feel the lenders have obviously realized if you better your position the chances of you continuing to make on-time payments increases. I am now getting letters of subordinations in less than two weeks, and guidelines have softened. This is an option I feel people do not take advantage of and can be extremely beneficial.
Written by:
Brian Grilo
Filed under: Uncategorized
April 5, 2011 • 8:56 pm 0
So you have been saving up for years and you are ready to buy a house. You find the home of your dreams, best location, perfect yard and ideal price. The problem is, it needs work you did not budget for because you only have enough money for a down payment and a reserve for emergency. The solution is the FHA 203k program. It is FHA’s rehabilitation loan available for owner occupied properties. This solution will give you the ability to actually finance specific things on a purchase or even refinance transaction. With this program you are able to update appliances, floors, heating systems, paint, etc as long as it is below 35k and non structural. The FHA 203k is ideal because it allows you to keep money in your bank for emergency while at the same time make the hour your home. FHA 203k even has an option for people who need to make structural improvements to the home and if you require more than 35k to do this. The bottom line is you are getting a federally backed loan, which means no funny business, with the opportunity to buy a home and repair it the way you want. As with every loan, there are stipulations to this product but, it is by far one of the easiest and most underestimated precuts out there.
Written by Brian Grilo
Home Savings Bank of America
Filed under: Uncategorized
March 10, 2011 • 8:38 pm 0
Recently Massachusetts-based financial services consultant Tom Corcoran sat down with Ken Lambert Mortgage Enterprises Inc’s (and UK-based Alternative Mortgage Funding Ltd’s) president Ken Lambert* to discuss numerous current and pending conditions regarding the mortgage lending marketplace. The timing of this discussion was prefaced by the recent political winds revolving around the future of Fannie Mae and Freddie Mac, as well as the recent rulings about FHA which will lead to the downsizing of their own mortgage market share. The following is a selected excerpt:
Tom Corcoran (TC): It seems like both the Democrats and the Republicans are dead-set towards significantly reducing the scope and breadth of the GSE’s and FHA-insured loans. Why is this suddenly a pressing issue that needs to be addressed, and do you think it is a wise move?
Ken Lambert (KL): Tom, last year Federal agencies or Federally-sponsored entities funded or guaranteed nearly 90% of all residential first mortgages. Essentially, for the better part of the last 3-4 years the U.S. government has totally run the housing market. And prior to that, Fannie and Freddie were a very large portion of the mortgage market for over 20 years. Is it the government’s job to give you a mortgage- or determine the terms of your loan? And if you default or are delinquent with your mortgage, is it the government’s job to bail you out? No matter your political stance, most would agree that the Feds have drastically overstepped their bounds in housing finance over the past 15 years- and now we have paid our price and finally the pendulum is swinging back to a more normal true capitalist market.
TC: What about the people that say that less people will be able to qualify for a mortgage now that the Feds are reducing their role in the market?
KL: I’d say that is true for a number of reasons, and it is not necessarily a bad thing. When I was originating loans a year or 2 ago, all of us loan officers were glad that FHA was still around and some FHA lenders were doing manual underwrites because those, and some USDA rural housing loans, were the “new Alt-A” loans. They were the only place we could go with “questionable” borrowers. It was good for the loan officer, but maybe not great in the long run for the borrower. And also not good for the American people if people were put into loans that really they shouldn’t have been in.
TC: Where do you see the mortgage market 1 year from now? And, what about 3 years from now?
KL: Well, I’ve written some more in-depth articles about just this (and the general real estate market) for a couple of industry outlets over the past several months. But, the simple and short version is that 1 year from now I would predict 30 year fixed rates at around 6.5% – 6.75%. That might sound terrible because of how deflated the rates have been over the past 2-3 years but in general 6.75% is the average mortgage rate over the past 40 years. Due to that rise, more borrowers will consider hybrid ARMs and other similar loan products. That is always the way it has worked; at a fixed 30 year 4.375% mortgage, nobody even considers alternative or adjustable loans. In 12 months I think we will be in the middle of a shift where the private sector will be responsible for about 35%-40% of the market share- instead of 13% as it was in 2010.
TC: And what about in 3 years time?
KL: I think for many dynamic reasons, including pending inflation, mortgage rates will be escalating. I don’t see anything crazy like 14%, but I wouldn’t be surprised to see 8.50% or so for a 30 year fixed. People forget that just 20 years ago, during the elder Bush administration, mortgage rates were around 9.50%. And the economy survived somehow…
TC: What about the types of loan products out there in 2014?
KL: By then, I see the private sector accounting for at least 60% of the residential market. I think the available products will be more similar to the UK and Canada. Shorter fixed terms, more adjustable products, and more unique products as well. Wall Street has always been more creative than the Federal agencies. For good and bad. But in the future, we know to stay away from loans that trigger negative amortization and such. We know not to have 102% LTV mortgages out there being written. So, as long as there is reasonable oversight and regulations, there will be some intriguing mortgages for borrowers to consider.
TC: Like what? Anything that you are hearing about?
KL: I think you will see some come to the forefront later this year and next year, after it is determined how much oversight the Feds will really have, and what the disclosure rules for loans will really be, etc. My company has such a product, the Alternative Mortgage Fund, which is tied to an index rate but is a fixed payment mortgage. Its structure allows the borrower to build up home equity faster than other mortgages, due to increased principal paydown. But, there are others that will prop up as well from various strategic firms.
TC: I’ve heard that smaller or regional banks have already started getting more involved in residential first mortgage writing. Is that true, and why?
KL: Yes, its true- and also don’t forget about credit unions. Both types of lenders should see greater market share in the coming years. But they have to be smart about it. These firms normally do a lot of dollar volume in home equity lines and loans- but I don’t see that right now, and for the rest of 2011 anyhow. Who has 40% equity in their home to take out a decent equity loan? No lender will allow more than 80% LTV, or not many, on an equity play. Especially since housing values will likely still decline another 5%-10% in the next 12 months. They all know that. So, they will need to write more 1st mortgages in order to build their portfolios and their departments. They all claim they have “money to lend”, so now they just have to do it. If they end up keeping most of the first mortgages in house, that is another reason why we will see less and less 30 year fixed rate loans. Banks don’t want those sitting around at a fixed level for over 15 years; they don’t want to be “stuck” with an asset like that. They will be pushing for more ARMs and hybrid ARMs, and maybe even our AMF loan. Who knows?
TC: I know there are plenty of other topics to discuss, but I realize you have to run. Potentially we could speak again in a month or two?
KL: Certainly, Tom. I’d look forward to it. Thank you.
*learn more about Ken and his firm and product at www.homequitybuilder.com
Filed under: Uncategorized
March 10, 2011 • 8:34 pm 0
Do you have a Fannie Mae or Freddie Mac loan? Most people would immediately say “no” because they do not know what that means; the DU Refi Plus and Freddie Relief programs have to be looked up on the Fannie and Freddie website. These programs were introduced by Fannie Mae and Freddie Mac as part of the making home affordable project by President Obama. In short this is a solution for people who currently have their loans backed by either Fannie or Freddie take advantage of these low interest rates. When ever I speak to someone and ask them what they think their home is worth I typically get the same response “well when the market was good it was worth… now it is only…”. That is why this program is great, they are taking borrowers who in the majority of situations had the 20% equity to avoid PMI who now since the decline in values if they were to refinance into a conventional loan would have to pay PMI and any payment savings they would have because of the lower rate would be taken away because of the PMI they would now have to pay. This program allows for the client to be as high as 105% loan to value and even 125% loan to value since the new loan is not a cash out transaction and just looking to lower the clients monthly obligation. Some people I have talked to have taken out equity lines in the mean time and I have even been able to get those loans approved with a letter of subordination from their current 2nd position lien. Appraisal waivers are even used which not only saves money for the client but allows the process to move a little faster which definitely makes the client happy. In all this is a great solution that people should look into, if applicable.
Brian Grilo, Community Banker
Home Savings of America
Filed under: Uncategorized
February 28, 2011 • 10:21 pm 0
Something to think about if you currently have a preapproval letter for a FHA mortgage on a purchase. FHA will be rolling out another guideline change in April of 2011, the change will in how they calculate their monthly mortgage insurance premium. Right now for example on a 30 year mortgage at 95% loan to value the calculation takes the loan amount multiplied by .0085 divided by 12 will give you the monthly obligation. On case numbers ordered under the new guideline we will see an increase to from .0085 to .0110 for 30 year mortgages at 95%.. For example on a 200k loan you would have paid roughly $141 dollars for FHA mortgage insurance, now you will be paying $165 under the new guidelines. The problem I am seeing is getting this information to the public and realtors. This is not a huge change but still a change which could affect the ability to qualify for the loan because of the client’s debt to income ratio. FHA is still an extremely beneficial product but knowing this information while shopping for a home is crucial to make sure everyone is on the same page.
Article Submitted By,
Brian Grilo, Community Banker
Home Savings of America
Filed under: Uncategorized
February 18, 2011 • 1:55 pm 0
Builder confidence in the market for newly built, single-family homes was unchanged for the fourth-consecutive month, according to the National Association of Home Builders/Wells Fargo Housing Market Index. But, though the index held steady, components gauging current sales conditions and sales expectations for the next six months both rose slightly. NAHB chairman Bob Nielsen said builders are beginning to see more interest from potential buyers but continue to face a challenging market. More here and here.
Filed under: Uncategorized
February 17, 2011 • 12:18 pm 0
The U.S. Census Bureau and the Department of Housing and Urban Development’s new residential construction statistics for January show privately-owned housing starts up 14.6 percent from December’s estimates. The increase, which exceeded analysts’ expectations, was largely due to gains in multifamily construction. Single-family housing starts were flat but, according to National Association of Home Builders’ chief economist David Crowe, it’s encouraging that the category didn’t decline due to severe winter weather in much of the country. After a 16.7 percent surge in December, building permits fell 10.4 percent in January. More here and here.
Filed under: Uncategorized
February 16, 2011 • 2:28 pm 0
According to The Mortgage Bankers Association’s Weekly Mortgage Applications Survey, the average contract interest rate for 30-year fixed-rate mortgages fell to 5.12 percent from 5.13 percent the week before. With rates remaining above 5 percent, refinance and purchase activity were both down. The Refinance Index dropped 11.4 percent from the previous week and the Purchase Index decreased 5.9 percent. More here and here.
Filed under: Uncategorized
February 15, 2011 • 11:47 am 0
Freddie Mac’s February 2011 Economic Outlook Report says the labor market will continue to improve this year, though the pace of the jobs recovery will be slow. The report, released by the office of chief economist Frank Nothaft, says housing will be supported by record high homebuyer affordability and, despite expected increases, mortgage rates will remain low by historical standards and do nothing to dampen the opportunity for buyers. Last month’s report estimated a 10 percent increase in home sales this year. More here and here.
Filed under: Uncategorized
