Danny Salas

Archive for the 'Chico Home Loans' Category

Temporary Payroll Tax Cut

Market Conditions

The Temporary Payroll Tax Cut Continuation Act of 2001 has all investors and lenders going into a pricing tailspin. The response by investors to absorb the initial increase in guarantee fee was uniformly quick, but the impact on pricing and rate sheets is quite diverse because each investor has its own pricing model and structure. This has become clearly evident in our routine comparative analysis of our rates sheets against a select group of lenders. We anticipate that this will continue over the next 30 days as the April 1, 2012 effective date draws near.

Our rate sheet will be no exception to this turbulent trend. We thus encourage all our loan originators to pick up the phone and call Secondary Marketing, if any rate sheet pricing appears to be out of whack, or when a concession may be needed to make deals work.

Fannie Mae and Freddie Mac Pricing Changes Due to G-Fee Increase

CAPITAL MARKETS

January 2012
Fannie Mae and Freddie Mac Pricing Changes due to Guarantee Fee Increase

As you probably have gathered from the notices you have recently received from other wholesale lenders, investors have immediately implemented the increase in the Fannie Mae and Freddie Mac guarantee fee. We apologize and wish we could have given you more notice. The following schedule illustrates the timing of guarantee fee increase on 45, 30 and 15 day locks.

Lock Period

Price Change effective Date

45 days                                         1/11/2012
30 days                                         1/18/2012
15 days                                          1/23/2012

In addition, we need to temporarily adjust our lock extension and relock fees. Again, this is temporary until the new guarantee fee is completely absorbed. The following schedule illustrates the cost and timing of the our temporary relock and extension policies;

Expiration Date

Additional Extension/Relock Fee

Prior to 2/10/12 0                                                 0
After 2/10/12 50 bps                                         50 bps

As you will see, our pricing, relock and extension fee changes are consistent and in line with what you will see from other lenders.

The following are some FAQ’s that might help explain this:

Why is this occurring?
As directed by the Federal Housing Finance Agency (FHFA), pursuant to the Temporary Payroll Tax Cut continuation Act of 2001, Fannie Mae and Freddie Mac are required to increase the guarantee fee charged for all mortgages delivered on or after April 1, 2012 by 10 basis points. In the next few months, FHFA will further analyze whether additional guarantee fee increases are appropriate to ensure the new requirements of the law are being met.

What is a guarantee fee?
It is a fee charged by mortgage-backed securities (MBS) providers such as Fannie Mae and Freddie Mac, to lenders for bundling, servicing, selling and reporting MBS to investors. The main component of the guarantee fee is charged to protect against credit-related losses in the mortgage portfolio. Think of it as insurance. Commonly known in the mortgage industry as “g-fee”, this is a deduction in relation to the interest rate.

How does a 10 basis points increase in guarantee fee impact my borrower?
A 10 bp increase in g-fee effectively raises the interest rate to the borrower by 12.5 basis points. A 12.5 bp increase in rate generally translates to a 50 bp increase in fee or a 50 bp reduction in rebate. Since all investors have already implemented this increase in their respective pricing structures, you will be seeing the effect of this increase in the rate sheets published by all lenders.

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Check Your New Temporary FHA Loan Limits

Temporary Loan Limits Return for all FHA Loans in High Cost Areas 

Recently, the President signed into law a new bill H.R. 2112, called the Consolidated and Further  Continuing Appropriations Act of 2012. In response to this new legislation, HUD has issued Mortgagee Letter 2011-39 detailing the acceptance and timing of the return to higher FHA loan limits.

Visit HUD’s FHA Mortgage Limits webpage for a simple way to find out your loan limits

 

Effective Case Numbers (Based on case assignment date)	Loan Limit
10/1/2011 to 11/17/2011	Lower Limits that were in effect from October 1, 2011 through November 17, 2011 unless they meet the criteria for exceptions to those loan limits as set forth in Mortgagee Letter 11-29 for: Mortgages with credit approval on or before September 30, 2011 FHA-to-FHA Refinance transactions
11/18/2011 to 12/31/2011	Loan Limits in effect from January 1, 2011 through September 30, 2011 per Mortgagee Letter 10-40 and reiterated in Mortgagee Letter 2011-39
1/1/2012 to 12/31/2013	Loan Limits in effect for January 1, 2012 through December 31, 2013 per Mortgagee Letter 10-40 and reiterated in Mortgagee Letter 2011-39

 

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Ins and Outs of the New HARP Loans

 

Home Affordable Refinance Program (HARP)

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Listen to Real Estate Today Radio with Daniel Salas on the new guideline changes for these loans and how it affects borrowers.

Local Market Segments with Daniel Salas. Sundays from 11am to 1pm.

Read the article: http://accessloans.net/2011/11/22/clearing-up-confusion-on-harp-loans/

 

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