Mortgage Blog

So many changes in our market place over the last couple of months has made me announce a few changes coming our way. First, the biggest news as of today, is the Financial Accounting Standards Board (FASB) voted favorably to relax mark-to-market accounting principals to help financial institutions. This huge change will significantly reduce the "writedowns" banks have had to take on investments such as mortgage backed securities. This doesn’t help those who have already had to take the writedowns over the last 1 1/2, but it could improve earnings by 20% for banks into the near future. This change is effective starting in the 2nd quarter of this year.

Secondly, starting yesterday, FHA appraisers have to start addressing declining market conditions for subject properties. We have had to deal with this on our conventional appraisals for quite some time and now FHA has jumped on board to whereby we have to start meeting/addressing declining market conditions for properties that get FHA financing. This will affect appraised values and underwriting conditions on FHA transactions.

Thirdly, starting May 1st all of us lenders have to abide by HVCC rules which prevent anyone of us, in ordering appraisals or having communications directly with an appraiser. This will have a huge impact on how long it will take to get deals done, conditions on appraisals, potentially higher fees being charged, and lower valuations on homes in general. This is a big big thing people, and if you have any one on the “fence” on whether or not they should buy now vs later, more than EVER before, this is our last ditch effort in securing deals today! ACT NOW BEFORE ITS TO LATE and get appraisals done before the end of this month!!! This is only for Conventional mortgages but I wouldn’t be surprised if FHA jumps on board later on down the road.

For anyone who thinks rates are going down below 4.5% because this is what the media has brainwashed the public to think – its NOT HAPPENING!!! There are several reasons why this won’t happen but here is the evidence:

The 1.3 TRILLION dollars our Federal Government has and will be investing in mortgage back securities (MBS) is on the 5.0-5.5% coupon rates. They are NOT buying 4% MBS’s! The other reason why, is that investors themselves are not allowing rates to go down that low INTENTIALLY because we literally don’t have the man power to take on such a “flood” gate of applications PLUS if you think about it, they want to take as much profit as they possibly can today, given all the trillions they have lost over the last 1 ½ years. So, if you have people who say they are waiting for 4.5-4% rates to buy or refinance, tell them what you know (because you are the educated one) and the reasons why it won’t happen! Because, if they wait, the rates we have today, will be in their “rearview mirror”!!!

If you have questions, please feel free to call me at 303.524.9191

Randy Reed – CMPS, CML, Licensed Mortgage Broker (MBCO100015425)