Quiet Holiday Week

The mortgage market was quiet during Christmas week. The few economic reports released this week, including Durable Orders, Jobless Claims, and New Home Sales, were mostly stronger than expected. As a result, mortgage rates ended the week a little higher.

While the headline results for this week's New Home Sales report revealed a decline from the prior month, this obscured the substantial improvement. New Home Sales dipped slightly in November, but this was from a level in October which was revised substantially higher. In fact, the revised October reading was the highest level since July 2008. November New Home Sales were 17% higher than one year ago. This was another in a string of recent housing market reports which provide reasons to be optimistic heading into 2014.

On December 18, the Fed announced that it will begin to scale back its bond purchases. The added demand from the Fed for mortgage-backed securities (MBS) has been a major factor helping to keep mortgage rates low, so a reduction in bond purchases is clearly negative for mortgage rates. Considering this, it is interesting to see that mortgage rates have moved only a little higher since the Fed announcement. In other words, the taper was almost completely priced in to mortgage rates ahead of the actual announcement. By contrast, the reaction in the stock market to the Fed statement was much larger. Investors were pleased that the Fed intends to hold the fed funds rate low until much greater labor market improvement is seen, and the Dow stock index has climbed roughly 600 points to a record high.

Favorable re-pricing took place this morning in the mortgage rate department

This morning, Janet Yellen testified at her confirmation hearing to be the next Federal Chief. She expressed strong support for the Fed's bond purchase program, which lifted MBS. Weak results for the 30-year auction caused MBS prices to move lower in the middle of the session, but MBS later climbed back to the highs. Today's economic data had little impact and the Dow is up 50 points. Tomorrow Industrial Production, Empire State, and Import Prices will all be released.

Stay Tuned – you never know which way the rates will go next!

 Michelle Morris
Senior Loan Officer
Michelle@SDFunding.com
Cell: 619-850-3600
Fax: 619-821-8908

San Diego Funding
2468 Historic Decatur Road #160
San Diego, CA 92106
NMLS 264030   CA BRE 01238196

Job Gains Surge

Investors, highly focused on the economic data, had a lot to consider this week. The Economic Calendar was packed, and nearly all the major reports exceeded expectations. Stronger economic growth is negative for mortgage rates, and rates ended the week higher.
A shockingly strong Employment report caused a swift increase in mortgage rates on Friday. Against a consensus forecast of 120K, the economy added 204K jobs in October, and the figures from the prior two months were revised higher by 60K. The Unemployment Rate, however, rose from 7.2% to 7.3%. The increase in the Unemployment Rate was influenced by the government shutdown during the first half of October. The headline figure of 204K jobs is based on a survey which counts furloughed government workers as employed, while the Unemployment Rate is based on a different survey which counts them as unemployed. Before the data, most investors had expected that the Fed would begin to taper its bonds purchases in March or April. If the pace of job creation continues at this level, though, the Fed could begin to scale back sooner.
In similar fashion, the Gross Domestic Product (GDP) report, the broadest measure of economic growth, was much better than expected. Third quarter GDP rose to 2.8%, well above the consensus of 2.0%. The reaction in mortgage markets was somewhat limited, though, since the details did not quite indicate the same strength as the headline number. Part of the outperformance was due to an unexpectedly large increase in inventories, which means that some growth was "pulled forward" from the fourth quarter. The extra goods produced during the third quarter which caused inventories to expand will reduce production in the fourth quarter.

Requirements for Non-Warrantable Condos

Non-Warrantable Condos

Occupancy	LTV/CLTV	FICO	DTI	Transaction Type
Owner Occupied	80%/80%	660 Minimum	45% Maximum	Purchase, R&T Cash-Out
2nd Home (Vacation Home)	75%/75%	660 Minimum	45% Maximum	Purchase, R&T Cash-Out

(Investment properties are entertained case by case; maximum LTV/CLTV 65% - Requires reviewing of all condominium project documents to grant exception)

Litigation OK!

High Investment Property Concentration OK!

High Delinquency HOA Default Ratio OK!

Non-occupying co-borrowers OK!

·      NO SHORT-TERM RENTALS

·      NO NEW PROJECTS (ESTABLISHED PROJECTS ONLY)

·      NO LOFTS

·      NO ENTITY MAY OWN MORE THAN 10% OF PROJECT

(Exceptions granted if project is large)

·      $417,000.00 MAXIMUM LOAN AMOUNT

(Exceptions granted case by case)

Contact me today for assistance on getting difficult condo projects funded.

Thank you very much for your business and have an amazing day.

Michelle Morris & Melissa Howell

Michelle: 619-850-3600 Email: Michelle@sdfunding.com

Melissa: 619-818-1263 Emails: MelissaH@sdfunding.com                           

NMLS 264030   CalBRE 01238196

NMLS 264026   CalBRE 01477506

Don't let a Forclosure or Short Sale get you down...

Did you know that even one day out of a Foreclosure, Deed in Lieu or Short Sale, we can help you or your buyers! It's no Problem as long as you can do the below guidelines:

• Min Fico score 660
• Cannot have multiple derogatory accounts (ie: bankruptcy and short sale)
• No gifts allowed - all funds for down payment must be seasoned 60 days·     
• 20-30% down is required
• Loan amounts up to 4 Million
• 43% Debt to income ratios
• 2 appraisals required
• Only 5/1 and 7/1 programs available, no 30 year fixed loans
• IRA distributions are acceptable, but one full month is needed
• Need a minimum of 45 day escrow to close

For more information, please call Michelle.

Michelle Morris
Senior Loan Officer
Michelle@SDFunding.com
Cell: 619-850-3600
Fax: 619-821-8908

San Diego Funding
2468 Historic Decatur Road #160
San Diego, CA 92106
NMLS 264030   CA BRE 01238196

Manufacturing Activity Improves

It was a relatively quiet week for mortgage rates. A slightly more bullish economic outlook from the Fed and stronger than expected manufacturing data were the main influences this week. Good news for the economy is negative for mortgage rates, however, and rates ended the week a little higher.
As widely expected, there was no change in Fed policy at Wednesday's Fed meeting, but Fed officials slightly upgraded their outlook for the economy from the prior statement. Fed officials again stated that they intend to wait for signs of sustained improvement in the labor market before they reduce their bond purchases. The consensus view is that the Fed will begin to scale back its bond purchases in April. The statement left the door open for an earlier start of the taper if the economic data is strong enough.
Early in the week, there were few surprises in the economic data and little movement in rates. That changed, though, when stronger than expected manufacturing data pushed mortgage rates higher on Thursday and Friday. The October ISM national manufacturing index rose to the highest level since April 2011, and the October Chicago PMI regional manufacturing index jumped to the highest level since March 2011. The consensus forecasts had been for lower readings due to the government shutdown at the beginning of the month. Investors will be watching to see if other sectors of the economy were similarly unaffected by the shutdown.

Jobs Fall Short

With the end of the government shutdown, investors turned their attention to the economic data. The September Employment report was weaker than expected, while the rest of the data released this week was mixed. As a result, mortgage rates ended the week a little lower.
Delayed by the shutdown, the September Employment data was released on Tuesday. Against a consensus forecast of 180K, the economy added just 148K jobs. The Unemployment Rate unexpectedly dropped from 7.3% to 7.2%, the lowest level since November 2008. The decline was mixed news, though, since it was due to both job gains and to people who left the labor force, meaning that they stopped trying to find a job. Bottom line, the results were weaker than what Fed officials would like to see. Between the ongoing uncertainty about future fiscal policy and the slow pace of improvement in the labor market, investors now expect that the Fed will not begin to taper until at least the March Fed meeting.
While the labor market data disappointed investors, the housing market continued to perform well. September Existing Home Sales were just slightly down from the four-year high reached in August, and they were 11% higher than one year ago. Total inventory of existing homes available for sale was unchanged at a five-month supply. Since the Existing Home Sales data is produced by the National Association of Realtors, it was unaffected by the government shutdown. The New Home Sales report, which is produced by the government, is delayed.

Congress Reaches Deal

Congress approved a deal on Wednesday to raise the debt ceiling and to fund the government for a few months. The news lifted both stocks and bonds. The S&P 500 index reached an all-time high. Mortgage rates also improved nicely after the deal was reported.

The deal extends the government's borrowing authority until February 7, removing the risk of default. The deal also funds the government until January 15, ending the shutdown. It provides more time for negotiations, but it does not bring the two sides any closer to reaching a long-term agreement on the major fiscal issues. For mortgage markets, even the slight risk of default had been enough to prevent some investors from purchasing government bonds, including mortgage-backed securities (MBS). After the deal, these investors resumed their purchases of MBS, which lifted MBS prices and lowered mortgage rates.

Mortgage rates benefited from the agreement for another reason. Investors now think that the Fed will wait longer to begin to taper its bond purchase program. Fed officials have expressed reluctance to reduce monetary stimulus while future fiscal policy remains uncertain. If history is any indication, the debate in Congress over a longer-term budget and deficit reduction package likely will continue right to the extended dates. In addition, before tapering the Fed will want to see how much the government shutdown slowed the economy. The flow of economic data produced by the government will resume next week, but it will take some time to sort out the impact of the shutdown from the underlying strength of the economy.

Week Ahead

The end of the government shutdown means that the government will produce its economic reports again. The important September Employment report, originally scheduled for October 4, will be released on Tuesday. The other postponed reports, including CPI and Retail Sales, will be released in coming weeks. The rest of the schedule for next week includes Existing Home Sales on Monday, Jobless Claims on Thursday, and Consumer Sentiment on Friday. New Home Sales was originally scheduled for Thursday, but the report may be delayed.

Debt Deal Passed

Last night, Congress passed the debt deal which will fund the government and raise the debt ceiling for a few months. Some investors had been hesitant recently to purchase government bonds due to the risk of default, however slight. When the deal seemed certain to pass, these investors began purchasing Treasuries and MBS in the middle of yesterday's session and have continued this morning. Today's Jobless Claims data caused little reaction. Weekly Jobless Claims dropped to 358K, above the consensus of 330K, as the shutdown had a bigger than expected impact.
The Dow is down 100 points. Philly Fed is scheduled to be released at 10:00am ET.

Debt Deal Update

 The Senate and the House will vote on a debt deal later in the day, and it is expected to pass. The deal would extend the government's borrowing authority until February 7, which would remove the risk of default. The deal also would fund the government until January 15, ending the shutdown. It would provide more time for negotiations, but it does not bring the two sides any closer to reaching a long-term agreement on the major fiscal issues.
Reports of the imminent deal caused the stock market to move sharply higher. For MBS markets, the deal was also positive. Without a longer-term resolution to the fiscal issues, the Fed may be hesitant to begin to taper its bond purchases well into 2014. Today's other economic news had little impact.
The October NAHB Home Builders confidence index dropped from September to the lowest level since June. The Fed's Beige Book report  ed "modest to moderate" economic growth in all regions, despite the government shutdown. The Dow is up 200 points.
Tomorrow, Jobless Claims, Housing Starts, Industrial Production, and Philly Fed are scheduled.

TOP TEN THINGS A REAL ESTATE AGENT SHOULD REMEMBER

1. True Conforming loan limit is $417,000 Loan amounts and under.

2. Upper conforming before JUMBO loans go from 417 loan amounts to max 546,250 currently in San Diego County. Rates are typically a bit higher on Upper Conforming.

3. Minimum down conventional SFR purchase 417K loan amount and under 3% - Condo 5%

4. There 5 different types of PMI for conventional—not just monthly.

5. FHA is min 3.5% down all can be gift and also NON Occupant co borrower allowed.

6. When taking a listing ask if paying off an FHA loan—if so has to fund at the end of the month to avoid seller paying interest all month.

7. When a buyer goes into escrow please make sure the Loan Officer gets a FULLY executed contract with all counters immediately to help expedite the appraisal process. Appraisers have to have to complete the appraisal. Please remove lock box so the agent will be there to meet and also make sure the CO2 monitors are on all levels of the home.

8. After a short sale the first loan a buyer can get is an FHA loan – 3 years after the final sale of the home.

9. If you have a change in COE or a credit from the seller we need the Addendum fully signed ASAP to update the file and the appraisal.

10. No personal property that is removable to be on the contract. Deal with outside of escrow, please.

Call Michelle Morris 619-850-3600 with any questions!

Progress in Congress

With government produced economic reports postponed by the shutdown, the budget and debt ceiling discussions in Congress dominated the economic news again this week. The gridlock in Washington and the signs of progress have caused large movements in the stock market, but the impact on mortgage rates has been much more limited, and mortgage rates ended the week just a little higher.

Of the two, the debt ceiling has much more serious potential consequences for the economy and financial markets than the government shutdown. With the debt limit rapidly approaching, on Thursday the two parties raised investors' hopes for a deal. It was reported that both sides might agree to a short-term deal which would extend US borrowing authority until November 22. Such a deal would remove the threat of a disruptive default in the short-term, and it would give Congress more time to reach a longer-term compromise. It is not known at this time whether the deal would end the government shutdown. On Thursday, stocks recovered all their losses from earlier in the week and turned positive for the week.

Investors almost universally misread the Fed's signals leading up to the September 18 Fed meeting, when the Fed decided not to taper its bond purchase program. As a result, investors were very eager to see the detailed Minutes from that meeting, which were released on Wednesday. The vote at the meeting was 9 to 1 in favor of maintaining the current level of bond purchases, but the Minutes revealed that Fed officials had very mixed feelings about whether to taper and that it was a "relatively close call". Overall, Fed officials wanted to wait for greater improvement in the labor market before reducing monetary stimulus. In addition, they expressed concern that the rise in interest rates that had been seen and the unresolved questions about fiscal policy could slow economic growth.


The Week Ahead

Investors will continue to follow the budget and debt ceiling discussions next week. If the shutdown is not resolved, most of the economic reports scheduled for next week will be postponed, including the Consumer Price Index, Industrial Production, and Housing Starts. Unaffected by the shutdown, the Fed's Beige Book will be released on Wednesday and the Philly Fed index will come out on Thursday.

Reasons Why You Should Consider Buying in 2013

Are you planning to buy in the next few month? Here are some reasons why you should consider making your new home purchase in 2013.

1.     Rates continue to be low and are still falling and it may be easier to get a mortgage.  Though rates are slightly higher than their all-time low at the end of 2012, they are still an attractive option for many home buyers.  

2.     The cost of renting is higher than the cost of owning a home.  Recent studies have shown and many experts agree that home purchase can be up to 44% cheaper than renting, making home purchase more and more attractive.

3.     Home prices are still relatively low.  Although market trends vary from neighborhood to neighborhood, on a whole, housing prices have increased by only about 1%, making 2013 a great year to purchase a home.

4.     The opportunity to invest your money and build equity is now.  Investing your money into a new home purchase enables you to put your monthly payment towards equity.  With rates as low as they are and home values holding steady, selling in 5 or 10 years at a profit may make sense for you.

Michelle Morris and Team Join San Diego Funding

Some exciting news to share via San Diego Funding

San Diego Funding is proud to announce that Michelle Morris and her team have joined the company. Michelle has more than 20 years of experience as a loan officer and has achieved numerous honors and awards. In her previous company she was in the President’s Club and ranked in the top 10 Nationally. “The decision to move to San Diego Funding was to ensure that we are always providing the most competitive pricing, best selections of products and most of all the best service and time frames possible for our borrowers and agents,” states Michelle. The team includes Melissa Howell, who has been Michelle’s partner for the past 10 years, and licensed assistant Brianna Deichstetter.

Learn more about San Diego Funding and all we have to offer HERE.