Danny Salas

Archive for the 'Mortgage Industry Updates' Category

The Positives of the Local Market

Previously Owned home sales have decreased recently. However, listen to why Danny thinks there are positives in the local market.

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Also, Access Real Estate  Lending is a proud sponsor of CSU Chico’s Adopt-A-Class Program. This past Wednesday, lucky classes got to go see School House Rock! Live Jr. The show was put on by Playhouse Youth Theatre and was a great time. Here are some pictures from the field trip.

  

For more Chico Performances, check out http://www.csuchico.edu/upe/performance/index.html

Information on Adopt-A-Class: http://www.csuchico.edu/upe/performance/Kids/adopt.html

Distressed Markets Update

 

 

 

 

PMI Distressed Markets Policy – Effective 4.25.11

Encouraging news! Market conditions have improved sufficiently to enable PMI to expand LTV
and Minimum Credit Score requirements. The new criteria apply to conforming loan amounts in
PMI Distressed Markets.

The PMI Distressed Markets Policy will change as follows:

• LTV eligibility expanded to 95% for Purchase and Rate/Term Refinance transactions
• Minimum Credit Score lowered to 680 for LTVs less than or equal to 90%
• High-Balance loans remain unchanged

 

PMI Distressed Markets List – Effective 4.25.11

In addition, the following 4 MSAs* will be removed from PMI’s Distressed Markets List:

	12540	Bakersfield-Delano, CA	19140	Dalton, GA
	40900	Sacramento-Arden-Arcade- Roseville, CA	25100	Hagerstown Martinsburg, MD-WV

PMI Distressed Markets List – Effective 7.1.11

The entire states of Arizona and Florida will be added to the PMI Distressed Markets List effective 7.1.11. Attached housing remains ineligible in the state of Florida.

For complete information, please review the updated PMI Distressed Markets Policy, the
PMI Distressed Markets List, and Guidelines at a Glance.

 

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Chico, CA Interest Rates Market Report – Economic Influences -April 15, 2011

This week, like so many in recent times, has been volatile for stock investors.  The stock market through most of the week has been down with a net loss of approximately 200 points.  Between late Thursday and early Friday trading it appears the market should finish with a net loss of 100 points which in the scheme of things is not significant.  The mixed economic reports during the week contributed to the downward pressure on the stock market.

Retail sales continue to improve and reinforce that the economy is recovering.  In March Retail Sales increased a strong .4% which piggy backs on the prior two months of strong increases of 1.1% in February and .8% in January.  Consumers are definitely returning to the stores and buying items not considered necessities.

Industrial Production once again is fueling the recovery with another strong increase of .8% from the prior month.  This report exceeded analyst expectations.

One of the significant challenges facing consumers and the economy is the rapidly increasing gas prices.  With the national average for a gallon of regular gasoline at $3.85 per gallon, we are starting to see a change in consumers spending and driving habits which will most likely show up in the next round of economic reports next month.  Additionally, although the national average is $3.85 for a gallon of regular gas, the reality is that many major cities across the country are pricing gasoline $4.10 to $4.30 per gallon.

The Producer Price Index showed that prices on the wholesale level are rising rapidly.  In March we saw and increase of .7% which followed a very large 1.6% increase in February.  The rapidly rising prices of oil are the main contributor to the jump in wholesale prices.  On the retail side, the Consumer Price Index increased .5% which was in line with economist expectations.  However when you exclude volatile energy and food prices, the core inflation rate on the consumer level is only .1%.

It is this mixed message about inflation that is creating even more division within the Fed regarding monetary policy.  The stimulus plan currently in place and some members want to start rolling it back while others believe the economy is still too fragile to do so.

Well…now we have a mixed inflation report to make things worse.  Some Fed members believe that the gross wholesale and consumer prices are the figures that should be used to dictate monetary policy.  However other members believe that only the core inflation numbers matter because energy prices will always be very volatile. 

Reports due out next week are:

• Monday April 18^th – Housing Market Index
• Tuesday April 19^th – Housing Starts
• Wednesday April 20^th – MBA Mortgage Applications & Existing Home Sales
• Thursday April 21^st – First Time Jobless Claims and FHFA House Price Index
• Friday April 22^nd – Markets Closed for Good Friday

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Loan Officer Compensation Reform – For Real Estate Agents & Their Clients

You may or may not have heard about the new Loan Officer Compensation Reform that went into effect on Wednesday April 6^th.

Typically real estate agents would not know, or even care about how loan officers get compensated however this new legislation has a direct impact on you and your clients.

Without getting too technical about all the details of the new comp reform, it is critical that you at least understand some of the basics of the new rule, and most importantly, how it will impact you and your clients.

“Good news” in how compensation reform will positively benefit you and your clients.

To start, all loan officers, mortgage brokers, and bank loan officers will be required to have a set commission in dealing with borrowers.  What this means is that loan officers can no longer arbitrarily negotiate rates and points and must offer all of their customers the same pricing.  Additionally in the past, a loan officer could change their rates and points to attract a specific customer to do business with them.  THIS IS NOW ILLEGAL.

A loan officer has to decide on a set price and profit margin for their loans and must offer the same thing to ALL of their customers.  Once a loan officer decides on their commission structure, they cannot simply change it to accommodate a specific client.  They must treat all clients equally.  – This is the good news as it eliminates inconsistent pricing as well as discriminatory pricing by loan officers!

The major challenge with the new loan officer compensation rules is that the loan officer can no longer just change the pricing of a loan to appease an unhappy customer or to help them qualify.  The loan officer cannot cut his or her commission to make a deal work.

I am sure that you have had transactions where things started out fine and then something may have gone wrong.  Maybe the customer had more debt than was originally disclosed and it messed up the qualifying ratios.  Maybe the buyer was short on money to close.  The bottom line is that a transaction that started out fine, later on developed a problem.

In the past, a loan officer could simply adjust the rate, or change the points to make the deal work.  The new law forbids a loan officer from changing their commission which means they cannot change the rate or points without approval from the company – period.  The power of pricing choice has been eliminated from all loan officers.

Under the new rule, in order to make the deal work, the company, not the loan officer has to be willing to absorb the loss and that is not always a done deal.  Depending on the company, you now may be dealing with corporate hierarchy that can delay your transaction and put the contract and closing in jeopardy.

Although there are many challenges that are being created for real estate agents and their clients relating to loan officer comp reform, the last major issue is that with the new rules, loan officers must have their commission built into their rate sheet up front.  This is both good news and bad news.

The good news is that now the borrower no longer has to even ask how much the loan officer is making because the loan officer has no ability to adjust his compensation anyway.  The price is the price!

The bad part about having rate sheets with profit margins already built in is that depending on the profit margin the loan officer built into his or her own rate sheet, you can have two different loan officers from the same company offering different rates and fees.  (Sounds crazy doesn’t it?)  Imagine how a customer will feel if they see different rates and fees coming from the same company?  This is where trust in a company can be compromised.

You must be weary of a loan officer that prices his or her loans at rock bottom pricing.  The reason for this is that you now know based upon the previous message that the loan officer who offers a mortgage with ridiculously low rates and points is absolutely getting paid less for his/her services.  This WILL ultimately have an impact on the service they provide to you and your buyers.

We have all heard you get what you pay for….The loan officer that works for a very small commission is the loan officer that is either going to be way too busy to provide you the communication and service your require, or they simply don’t put enough value on their time and energy to close a file.  Either way in the end their pricing will be a reflection of how they will treat you and your client.  In the end you can definitely expect that the lowest price loan officer will undoubtedly provide you and your clients a level of service far below your needs and expectations.

Think for a second about the level of service that low commission real estate agents offer.  They don’t offer the same level of service that you do.  It works exactly the same for loan officers.

I am not suggesting that the highest priced loan officer is the best.  In the end, you and your customers need to shop for the professional loan officer that has the right balance between offering competitive mortgage rates combined with offering you the highest level of communication, knowledge and expertise to get your deal closed quickly

Access Real Estate Lending:

Rest assured, after intense planning, testing and client feedback, we have come up with what we know to be the best solution for you and your clients.  We have created the perfect balance of all the variables to make sure that your transactions are closed quickly, at the most competitive pricing, with the highest level of service and communication that you and your clients deserve.

Our specialty is making sure that:

• Your customer is properly pre-approved up front so we never need to worry about having to attempt to change pricing or a mortgage program to get the deal done.  We do it right the first time.
• We offer very competitive pricing on our loan programs to make sure that your customer gets a mortgage that they can afford along with the communication and service that makes the loan process far less stressful for everyone.
• We close your loans on time so you get paid quickly.

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