Funding

We are still funding. I just funded a purchase today. We've got another two refinances set for this week.

The biggest question I seem to get these days is, "Are lenders still funding?" The answer is yes. They try everything they can not to, but they are still funding. I know it seems silly to write a post about it, but I get the question all the time.

I won't lie. It's not easy and the loans can take some time to get done. But the lenders are funding loans. With the new guidelines coming out very shortly I expect even more issues but more fundings. The more we can continue to fund loans, the sooner we'll hit the bottom.

You tell me what to do.

Attached is the graph for the last 5 days on the treasury again. When I woke up, I see the market going in our favor big time. Then I get into the office and I see the yield up. Then right before the close, I see it back down. All this in one day. I didn't get one rate change, I think the lenders have given up also. All this up and down and we're right back where we started.

As you can see there is a gradual decrease. All this talk of rates dropping, it's like I've said in previous posts. Yes, I think rates will drop, but not over night. It will take time. Sure there will be some great days and not so great days. You need to step back and be patient. With rates in the 4's and low 5's now, I urge everyone that can, to lock in and take advantage now. We can always refi again down the line if they continue to get better. I'm seeing rates lower now than any other time I've been doing this.

Keep in mind one thing I've noticed. The yields where even lower earlier this year, but the rates where not better. There has to be a bottom that the lenders can do these mortgages where investors see them as a viable investment. Rates CAN NOT go down to 2 or 3% because who's going to buy that on the secondary market? If all an investor is going to make is 3%, than why not put it in bonds or even is a money market fund and make the same amount with no risk? So if you have ideas that rates will just keep going lower and lower and will never find a bottom, think again. If the lender can't sell the rate, it's the same thing if the loan is a stated loan or subprime loan, it just doesn't have a market.

The Value of a good Appraiser

There are changes coming to the lending world regarding appraiser / broker relationships. Starting in May, there could be new rules that state that only the lender that receives a loan application may order the appraisal and the broker is to have no say or contact with the appraiser.

No one wants this. Not the Lenders, not the Brokers, not the Appraiser's and most importantly not the BORROWERS!! Essentially this will eliminate a fair market. The new rule would mean that if we submit your loan to Wells Fargo, they would order an appraisal and make you pay for it. If we then submitted the loan to MetLife, they would order an appraisal and make you pay for it. Just to shop the loan around and get the best rate, could cost a fortune in appraisal fees. This is unfair to the borrowers and hurts their right to get the best rate.

Also, if they don't allow us Brokers to talk to the appraisers, you are putting entire files at risk. How can we know what a property is going to appraise at? What if I think a property is worth 1 million dollars but the appraiser comes in at 900,000? That difference could change the loan, if not cancel it completely.

I understand there was a lot of fraud that went on in the past, but most of that was perpetrated by the LENDERS ordering the appraisals. Even in the easy days, a few years ago, when a Broker submitted a loan with an appraisal, it would get reviewed by the lender. But a lender who ordered an appraisal directly didn't get it reviewed. There are people sitting in jail right now that abused the lender / appraiser relationship to push values and get loans off of inflated values. So let's not pretend like it was just us Brokers who did all the damage and should never talk to the appraiser because of the possibility of fraud.

The relationship between me and my appraisers is very special and is meant to help our borrowers. I'm working on a deal right now that needs the appraiser and myself to work together and be on the same page. This is not just a value issue. I, as just the loan broker, rely on what the appraiser sees and their expertise in area / location and condition to know what the value of the home is. If this relationship is taken away, it won't be the Brokers or the Appraisers who suffer, it will be the Buyers and Borrowers. You'd be shocked to know the amount of bad appraisers there are out there. If you are unlucky enough to get one hired by the lender, you could be out money, a loan or a home. I've been doing this a long time and I've worked with a lot of appraisers. I only TRUST two of them. I'll use others and some are good and some aren't so good but my appraisers are great and we've been able to help many borrowers.

When you hear of any new rules that will limit the interaction between Brokers and Appraisers, please vote or speak against it. You're home and loan may be at risk. Regulation is fine and probably needed now more than ever. But don't cut off one of the most important aspects of the Real Estate and Mortgage business.

How to use the day?

Slow but Busy, that's what I call a day like today. Rates aren't doing much, maybe down slightly, I see a possible mid day coming, nothing big. No new programs or guidelines today. So that's where we get the slow from.

Slow news means Busy work day. I'm not getting a million calls about what's happening. I need to focus on getting files worked on. Set up new files and call old clients and get new ones. You might just get an email or call from me today, if we haven't talked in a while. I can annoy the UW, Funders and Reps, push them to get my files done. These are the days I hope for so I can get stuff done. It's always important to me to use these days to their fullest. It'd be very easy to get distracted with such a beautiful day out today, but one must focus. I'll have something more later. Maybe today I'll get into some of the new Fannie / Freddie guidelines....

Bear-stradamus!!!

I'm not always correct but sometimes I know what I'm doing. I truly wish the market wasn't like this, but this is the world we're living in. It makes it very hard to predict or give great advice when things change and swing every 24 hours.

Meanwhile, the rates are the same as they where 2 days ago. All this up and down, just to be back where we started the week at.

Rate Drop??

Above is a 5 day snapshot of treasury yields. This used to be a good barometer of where the rates would go. 5 days ago was when the Fed said they where going to buy up assets over the next few months. The yield tanked and everyone called to see about this huge rate drop they heard about. As you can see, the yield when right back up and the low rates lasted no more than 24 hours.

Today, the same thing happened only later in the day. I can see rates being lower tomorrow and then going back up. I think gradually rates will come down slightly, but not overnight. The yield has been creeping up over the past few weeks but rates have stayed in the 5% range. Now that the yield is going down, I don't see why there would be a massive rate cut, since there wasn't one on the way up.

The main lesson to be learned is, what I've been preaching to so many, to get your loan in and let's get it going through processing. We can set a goal and when the rates hit that goal we are able to lock. Lenders are swamped and overloaded. From a time frame standpoint it's very hard to get loans closed in 30 days. If we can get the loan in, get it underwritten and then be ready to move when the rates do, we'll be much more successful than to wait until the rates get to where we want and then start the process.

As you can see, a rate might only be available for a moment or two.

The Bear's first post

Hello world! My name is William Kinoshita. I'm the owner of Bear Financial. We're a Real Estate and Mortgage company. In this particular blog I'll be discussing anything and everything that I feel that needs to be said about this business and the economy. I'm hoping that who ever reads this will enjoy it, learn a little and help you understand the business better.

I feel the best way to do business is to be honest. I'm good at what I do and deserve to get paid for it. It's in my best interest to give all my clients the best and most honest advice possible. Most of my clients come from referrals and my reputation is how I make a living. I'm looking to make life long relationships with people. I'll always tell you the truth because that's what I expect from everyone else. Whether it's good, bad or ugly the truth will always set you free, and will allow you to make the best decisions for you and your family and your finances.

At times this can be a very complicated business and at other times be very simple. It just takes someone to explain how things work and everything will be fine. I'm not always right, but I'm rarely wrong. In this blog I'll try to explain what's happening in the world the best that I can, which will hopefully help us make the right decisions together.

I look forward to writing this. I also look forward to hearing what you have to say, so feel free to comment.