Making Sure Your Credit is in Tip-Top Shape!

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Ukraine and China

Tensions in Ukraine flared up again this week, causing investors to shift assets from stocks to the relative safety of bonds. Weaker than expected economic data in China also favored bonds over stocks, while the US economic data was roughly neutral. As a result, mortgage rates ended the week lower.

The most significant US economic report released this week, Retail Sales, contained some good news and some bad news. On the positive side, the results for February were stronger than expected. Unfortunately, the figures for January were revised lower. Overall, this left the data over the two-month period a little weaker than expected. Given the offsetting effects of the solid headline number and the downward revisions, combined with weather related distortions, the report caused no change in the economic outlook and had little impact on mortgage rates.

There was a lot of talk in the mortgage industry this week about a proposal out of the Senate Banking Committee that would replace Fannie Mae and Freddie Mac. Together Fannie and Freddie purchase or insure the majority of fixed-rate mortgages, so any changes to their structure would have enormous implications for mortgage lending. In the proposal, a new government entity would take over many of the functions of Fannie and Freddie, while some of the default risk would be shifted to private insurers. Both political parties support a reduction in the risk to taxpayers, but beyond that opinions vary widely about the appropriate role of government in the housing market. As a result, this proposal is viewed as a starting point for a long political debate, and the implementation of major reform of Fannie and Freddie is projected by most experts to be many years away.

Delayed Financing After a Cash Purchase!

   


If you’ve got a client who is doing a quick closing with cash but may want to consider doing delayed financing, we have an option for your client!  Help them conserve their cash and have them give us a call!

Your borrower might qualify as long as their cash out refi loan doesn’t exceed their initial investment in the property purchased and was an arm’s length transaction.  We must also be able to verify that no financing was acquired for the cash purchase and we must be able to source/trail all the funds used for the cash closing.  All other refi requirements must be met, but this is a great option for clients who are interested in conserving their cash.  (Note on jumbo delayed financing, the transaction must be completed within 90 days of the initial closing or cash out rules restricting the dollar amount of cash out will apply)

As you know, making a cash offer can be of great value in negotiations and getting delayed financing after closing helps refill your client’s bank account.  It’s a win win for everyone!

We look forward to hearing from you and your clients about all your mortgage needs.  Call us any time!

Strong Demand for US Bonds

The economic data released this week contained mixed results and had little impact on mortgage rates. Strong demand for US fixed income securities was the main influence this week, helping mortgage rates end the week a little lower.

There were strong indications this week that foreign investors, most likely in Japan and China, increased their purchases of US bonds, including mortgage-backed securities (MBS). The currencies of Japan and China have weakened recently versus the dollar, and the economic policies currently in place in both countries have caused investors to expect their currencies to weaken further. This makes US bonds more attractive to investors in those countries as the investor not only receives interest on the investment, but also expects appreciation in the value of the investment.

After a couple of months of weaker readings, the New Home Sales report released this week was a pleasant surprise. January New Home Sales jumped 10% from December to an annual rate of 468K units, far above the consensus of 400K. This was the highest level since July 2008. Also released this week, January Pending Home Sales posted a slight increase.

Asset Income Loans

Chinese Manufacturing Slows

The driving force for mortgage rates this week came from an unexpected source. Chinese manufacturing data fell short of expectations, causing sharp losses in global stock markets. Investors shifted to relatively safer assets, helping mortgage rates end the week lower.

On Thursday, China's PMI manufacturing index dropped to 49.6, below the consensus of 50.3. Readings below 50.0 indicate a contraction in the sector. China has been an important engine of growth for the world economy, so a slowdown would have significant implications for global markets. In fact, the news from China completely overwhelmed the strong results in Europe, which showed that manufacturing in the euro zone reached the highest level since the summer of 2011. The Chinese data caused concerns about the pace of global economic growth, and investors sold stocks. This resulted in an increase in demand for bonds, including mortgage-backed securities (MBS).

This week's Existing Home Sales data showed that, despite a slowdown in the fourth quarter, 2013 reflected a year of solid gains. Over five million existing homes were sold in 2013, an increase of 9% from 2012, and the highest level since 2006. While the gains may be more modest, most analysts expect the improvement to continue in 2014 as well. The National Association of Realtors (NAR) projects a very small increase in home sales next year, but both Freddie Mac and the Mortgage Bankers Association (MBA) forecast home sales to increase about 5% in 2014.

What Separates Us from Other Lenders

We have some fabulous niche products! 

Since every loan is done here LOCALLY at the office, our turn-around times are the BEST!!! 25 day closings NO PROBLEM! Rescues- no problem!

We can do the following loans:

• 1 day out of Short Sale purchase Loan 
• Condo’s with litigation
• No owner occupancy requirements on condos
• Foreign Nationals
• No maximum number of financed properties
• Bank statements to qualify loans (may require additional time for processing)
• No income on tax returns but assets – we can do!
• FHA,VA, Conventional, Jumbo
• 10% down to $750,000 with NO PMI
• 15% down to $1,275,000 loan amounts
• 20% down to $2,000,000 & 30% to $3,000,000 loan amounts  (may require additional processing time)
• Condos- 5% down with PMI with less than 51% owner occupancy-- (even 2% will work!)
• VA - Jumbo’s to $1,500,000 loan amounts (may require additional processing time)
• Non Occupant co borrowers on refinances if they do not qualify 
• Non Occupant co borrowers with 10% down conventional
• Cross Collaterization loans
• Title in LLC, Corporation, Trusts and Partnerships
• Very Competitive Jumbo Pricing 
• And many more!

 Don’t hesitate to contact our team with any questions about the above products or about any of your lending questions.

 We look forward to assisting you and your clients with their new home purchase and refinance needs.  

Job Gains Fall Short

Investors were focused on the strength of the labor market this week. A strong reading for job gains in Wednesday's ADP report caused mortgage rates to move a little higher. The ADP data turned out to be a poor indicator for Friday's weaker than expected Employment report, however, and mortgage rates ended the week lower.

Against a consensus forecast of 200K, the economy added just 74K jobs in November. This was the smallest monthly increase in jobs since January 2011. Given that several other labor market indicators showed greater strength in December, many investors were skeptical about how accurately the data reflects the strength of the labor market. For one thing, bad weather likely was a factor in the shortfall, as the construction sector was particularly weak. Upward revisions to the November data also partly offset the December results, leaving average gains of about 160K over the last two months. Bottom line, though, the report fell short of expectations, causing mortgage rates to move lower after the news.

In another twist, the Unemployment Rate unexpectedly declined from 7.0% to 6.7%, the lowest level since October 2008. Looking below the surface, reported job gains accounted for just 0.1% of the decline, while a large group of people leaving the labor force was responsible for the remaining 0.2% decline. While the headline Employment report is based on data collected from just large employers, the Unemployment Rate is derived from a separate survey of individual households. According to this survey, there were job gains of about 150K in December, while roughly 350K people were no longer seeking work and thus were removed from the labor force. Since the Unemployment Rate is simply the number people in the labor force seeking work divided by the total labor force, it counts equally whether a person stops seeking work by finding a job, giving up on the job search, or retiring.

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.