FOMC Policy Influence

I believe interest rates are going to improve. Initially I said this would happen late August to Mid September and that holds true' we have seen some improvement, albeit...nominal improvement.

We're teetering on edge of a treasury rally & more QE. We can no longer look at chart fundamentals and rely solely on those indicators. We're at a point where stimulus & more stimulus determine the trickle down credit benefits.

Why do I think another treasury rally is on the horizon? Security...... sovereign economies have morphed into the world economic order since WWII with so much interdependence that other countries can only hope for better borrowing terms in America.

The Fed & Policy makers have engineered the situation so you sure better believe they understand it. We cannot expand with higher cost of credit. Treasury's overall trend has always been downward, that's because we monetize our prosperity through more credit - in layman terms: our money supply is expanded through loan. In this type of system you can have momentary rate increases but overall the trend is downward.

Good News....Bad News---I'm no expert; but that's a good thing; experts tend to be trained liar's whether they know it or not. The good news is mentioned above....I think we'll see more pumping & another rally; Mini Bubble.

Bad News, the bench mark 10 year treasury yield is just under 3% & was as low as 1.43% in 2012. We're running out of downward room, hence the engineered bubbles and bust. How can I say engineered?.....well you tell me? Can the FOMC have anymore influence on securities, equities & currency markets? Did you see the break off from normal patterns when the Fed Chairman mentioned a PLAN to curtail treasury purchases that was based on IF's, If the economy continues its improvement . Really.....the language couldn't have been any softer considering 85 billion a month being pumped into the system. You would think markets would be prepared for statements like the Fed made but the reactions across all markets was staggering & scary. When you see simultaneous shedding of securities and equities you're basically seeing the movers and shakers agree with everything mentioned above.

Incremental Contraction with moments of relief.

Purchase Page Coming Soon

We intend to develop a page dedicated to purchase financing.  

Right now we're discussing the tools and links to help homeowners educate themselves.  The tools will range from a cost estimator to regulations in particular states.  If you have any idea's please post. 

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HECM

HECM can be an attractive option for a senior interested in pre-paying their mortgage balance's.

Consider a Senior who has limited refinance options available that has an existing lien with a high cost of credit.  Consider a Senior who has a substantial fully amortized long term mortgage balance that was recently originated. Seniors in these types of situations and more may be able to reduce their balance faster pre-paying a HECM.  

Not only can they likely reduce the balance faster they also provide themselves with future credit availability with the same flexible terms.  Future credit availability that is non-taxable. Future interest that is still tax deductible when paid.   

These types of loans have a bad reputation for a lot of bad reasons.  You tell me below....where is it different than any other note securitized to a primary residence?  If there's a balance , it has to be paid.  You don't have to allow interest to compound in Reverse, that's a choice and one that can make sense in some cases.  

The other point to consider in today's mortgage market is cost. Traditional Government Mortgage products are more costly than the HECM.  HECM's don't require funding an Escrow account lessening overall settlement fee's.  The lender fee's outside of possible origination are nominal.  Annual Mortgage Insurance is less & the Upfront Mortgage Insurance can be much less if utilizing the HECM Saver program.  Otherwise it's only 25 basis points more. 

HECM needs more serious consideration and market penetration shows that to be the case.  There are many Seniors who at a minimum need to consider this program. 

The HARP 2.0 program has provided greater relief for many more homeowners. I still think the program has been under utilized.  Originators of both Fannie Mae & Freddie Mac versions need to consider the full possibilities instead of simply addressing negative equity.

We also have misinformed homeowners who may have been denied for HARP 1.0 and given up. Further complicating matters is the application of Automated Underwriting programs. Fannie's Mae provides appraisal waivers for submitted value within variance of Fannie Mae's value assertion. This allow's for more creativity in obtaining a homeowners approval. Freddie Mac's loan prospector issuance of waivers is not as aggressive Fannie's but its still a possibility. I've also noticed where Originators and Processor's will accept a findings that may adjust the borrowers pricing when an alternative finding with less risk to the investor is possible.

I could go on with examples of homeowners being denied at one lender and approved at another simply because of improper loan structuring but it doesn't stop there.

Fannie Mae and Freddie Mac issue their guidance as the agency willing to purchase the loan based on those parameters.  Investor's who loan the money have a certain amount of exposure.  As such many place their own guidance/overlays to further restrict the generic guidance.

So...we have improper application analysis, improper automated underwriting, overlays & misinformed homeowners who could greatly benefit from a refinance.

Unlimited loan to value and no minimum credit score....what more could we ask for?

_____________________________________________________________Mortgagee Letters



FHA issue's Mortgagee Letters to industry insiders and the public regarding their policy and procedural updates.  Attached are direct links for each mortgagee letter.  If you have questions, we have answers. 

Mortgagee Letters Previous years: 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1979 1978 1976 Document Number Title 13-23 Updated Pre-Foreclosure Sale (PFS) and Deed in Lieu (DIL) of Foreclosure Requirements 13-22 Extension of Unemployment Special Forbearance 13-21 FHA's Proposed Tier Ranking System II; Request for Comments 13-20 Good Neighbor Next Door Sales Program 13-19 Partial Claim Documentation and Delivery Requirements 13-18 Updated Clarification Regarding Title Approval at Conveyance 13-17 Interest Rates for Loss Mitigation Home Retention Options 13-16 Subordination of Partial Claim Liens Associated with Federal Housing Administration (FHA) Streamlined Refinances 13-15 Updated Delinquency/Default Status Codes for the Single Family Default Monitoring System; Special Forbearances and Trial Payment Plans; New Reporting Requirement for Non-Incentivized Loan Modifications 13-14 Minimum Cash Investment and Secondary Financing Requirements -- Acceptable Documentation for Funds Provided by Federal, State, or Local Governments, their Agencies or Instrumentalities 13-13 Lender Delegation of Non-Critical Repair Administration 13-12 Lender Insurance Program Attachment - Lender Insurance Guide 13-11 Additional Guidance for the Origination and Servicing of FHA-insured Loans in Presidentially-Declared Major Disaster Areas and Specific Requirement for Hurricane Sandy Affected Communities 13-10 Superseded by Mortgagee Letter 2013-12 13-09 Concentration of Principal Risk; Principals with Insured Assets Greater than $250 Million 13-08 Hurricane Sandy/Superstorm Response - Expedited Processing for FHA Multifamily Mortgage Insurance Applications 13-07 HUD Office of Multifamily Development Radon Policy 13-06 Extension of Disaster Moratorium and Suspension of Evictions for Specified Properties Impacted by Hurricane Sandy 13-05 Manual Underwriting for Loans with Decision Credit Score Below 620 and Total Fixed Payments to Effective Income Ratio Exceeding 43.00% 13-04 Revision of Federal Housing Administration (FHA) policies concerning cancellation of the annual Mortgage Insurance Premium (MIP) and increase to the annual MIP 13-03 Extension of Implementation Date for Mortgagee Letter 2012-22, Revisions to FHA's Loss Mitigation Home Retention Options 13-02 Home Equity Conversion Mortgage (HECM) Program - Amended Late Request for Endorsement Procedures 13-01 Home Equity Conversion Mortgage Program - Consolidation of Pricing Options and Principal Limit Factors for Fixed Interest Rate Mortgages Mortgagee Letters

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