Rates are good, let's keep this ball rolling!

What more can I say than rates are good and let's keep going for as long as we can.

The economy sucks. Don't let anyone tell you differently. I'm constantly seeing "signs" of a turn around. You never see the article weeks later that refutes those claims or that after the numbers are adjusted we're still suffering from a depression.

I had an interesting talk with an associate the other day. Everyone in the Real Estate business (that I feel knows what they're talking about) agrees that we're still only about 1/3 of the way through the foreclosure mess. People are not paying on their mortgages but it's become such a huge problem and the lenders don't want to 1) truly solve the mortgage issue which would be easy, drop the principal amount. Lowering the interest rates on modifications are just patchwork fixes and in some cases still won't solve the problem. If you owe 400k on a now 200k property, even a 0% interest rate isn't going to probably solve your issues. 2) hire more staff and quality staff to address all these files. I know from talking to inside people that not only is there more work and files than the people that are hired able to address but the people working on the files don't know anything about what they're working on. Many times your dealing with someone from a collection department that was transferred over to foreclosures / short sales and can't figure out what's a good deal or arrangement. They'll submit the file and the computer system will tell them no on a short sale. But maybe the offer on that short sale is only 1,000 off. The computer says no but a person who knows can say yes and save a company thousands in further interest and falling home prices. 3) been living off free money from the government. While most of these departments to rate mod or lower interest rates are slowly helping people (I read that B of A was touting that they had modified 57,000 loans in 2010 already, WOW out of probably 10 million loans in trouble, we should really be getting a grasp on this problem soon) on the other side of the bank, they're making money doing loans that then have been sold off to the government and backed so that there is no risk that falls to them. Banks have shown profits during this time while people are loosing their homes and jobs. Banks have been able to rely on Fed money to make sure that they're not risking anything, in essence it's been business as usual but with no risk. They just pass the risk on to the Fed or the smaller lenders who use them as money lines.

And the list goes on. Basically even though "We" are backing the loans, the lenders are doing the hardest to not close loans. Underwriters are nit picking each line of the approval and application to see how they can cover their asses when / if a loan gets put into question a month down the line.

Back to the issue of false news. The conversation I had was funny in a bad way. I was saying how a report was showing that people where spending more money and this was a sign that we where on our way to recovery. But from everyone that I talk to, we're way out from seeing true recovery. I don't see anyone that's doing better. There's no one saying that it's easier to find a good job or even a bad one. Then my friend tells me the secret behind this consumer "confidence"... People are buying more things because they're not paying their mortgage. I just thought to myself, DUH!! Sure, with all these modifications and people stringing out foreclosures, anyone who's still working will have extra cash so why not buy yourself something. You didn't pay your 2,000 mortgage so why not buy that new flat screen TV you've been checking out. People have more money to spend because they're not spending it on their monthly housing bill.

If anyone comes into my office and tells me that they're getting foreclosed on and loosing there house and this process just started a few months ago, my first question is what's wrong with you? I know of people who haven't paid a house bill for 2 years and are still in the property. With a few creative ways of working the system you can string out a foreclosure or short sale for a long time. The banks are so screwed up that you can play the game. Don't get me wrong, I'm not suggesting people do this or saying it's the right thing to do but lets get realistic; it's happening.

Is this fair to the people who are paying their mortgage, no. Is it fair to the banks, no (but come on, it's like if the deal accidentally give you an extra chip are you going to feel bad for the casino?). It's the world we live in. If I were to guess, and I feel this happens in cities more than rural areas, that 20 - 30% of people are trying to get assistance on their mortgage and in some why are going to be able to miss at least one payment if not multiple payments and not suffer severe consequences. In worse hit areas I'd put that number up to about 50 - 60% of homes. That's how bad this economy is.

That's why I tell people that this is a great time for loans. Sure the lenders aren't lending and are taking forever to get anything done. Sure they're over conditioning and denying anything that they can. But if you can survive the fight and close a loan, which we've been doing here at BEAR Financial (plug, plug, plug - hey it's my blog) you'll be extremely happy with the results over the life of your loan / home.

If you haven't thought of refinancing or purchasing something, it's time that you have. If we're in the middle of refinancing or purchase, just bear with us. It's a tough journey but we'll get there. Now some people won't fit into the box. I say to hang in as well because I'm guessing we're going to go through another batch of changes over the next six months with all the Federal regulations coming out soon. This year is about patience and as I started this post out, we need to keep the ball rolling. So hang on and push!!

No rate drop - follow up

The treasury auction didn't do as well as most anticipated. Who knows why, it could be because half of the east coast is under 3 feet of snow and no one went to work?

Bottom line is that we're just about where we were a week ago. I still hold out for a swing down. But as I've been telling clients lately, let's take a step back and look at the big picture. "So you don't get 4.875%?" Is there something wrong with 5% or 5.25%? I don't think so. Let's remember pigs eat and hogs go to the slaughter (or something like that, but you know what I'm getting at).

I don't believe this next item to be what will happen but the Fed is supposedly slowing down on its buying of MBS (mortgage backed securities). This will probably cause rates to rise by a percentage. Like all things lately, if the Fed does this and rates go up, I think we're going to be in for a big disaster. One of the few REAL green "shoots" that are propping up our economy is the fact that rates are low which encourages purchases and refinances. Just like the housing credits, which they actually expanded who can qualify, I feel they'll see the light and continue the buying of MBS through the end of the year. But you never know.

My suggestion is let's capitalize on these great rates and not try to gamble and get the very bottom. Let's get loans in and closed out. Because you don't want to be someone who missed the boat because you HAD to have a rate in the 4's instead of 5%, which probably is only a $25 - 50 per month difference.

Keep 'um coming!!!

As I've predicted rates have stayed low, if not gotten lower. If you own a home and aren't thinking about refinancing then you're not doing the correct thing. At least check in and see what's possible.

I certainly can't guarantee that everyone will qualify. And with these new HVCC rules, who knows what value you are going to get? But if we don't explore the options, like run the credit and possible pay for an appraisal, then you'll never know.

If we think that there is a possibility to refi, I'm looking at rates in the 4's for a 30 year fix and have even seen some rates in the 3's, YES 3's on a 5/1 ARM even interest only!!!

Let me try to help you. I usually don't do adds here but when I'm seeing the trends like I have in the past, I don't want people to miss the boat because this truly could be the last chance. As always we can be reached at 818 264-0999.

Please be patient as well. Now the lenders are starting to get backed up again and so is everyone else. From appraisers to title and escrow and even us brokers. Each deal is now twice as hard and there is a lot of up front work that needs to be done so we know that we can get each loan done. The good part is eventually the loans are funding. It might take longer that the good old days but the loans are still funding. So call now and see what can be done.

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.