Danny Salas

Freddie Mac’s Automated Engine Gets A Facelift

Freddie Mac Changing LP

LP Changes

Loan Prospector has updated it’s automated underwriting engine to accept only ratios to 50.33% of a client’s income, when qualifying for a loan.  Previous to the current announcement, Freddie Mac would allow a 55% of a client’s income to pay monthly obligations.  The announcement, from Freddie Mac, is another example of the changes in the lending industry, and the more stringent guideline requirement that the industry in going through.

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Freddie Mac Event A HUGE Success

Over 100 Real Estate Agents poured into The Big Room, at Sierra Nevada Brewing Company, to listen and learn from one of the nations largest purchaser of real estate loans; Freddie Mac’s, Governing Board Member, Scott St. John.  Sponsored by Access Real Estate Lending, the event lured participants from Red Bluff, Orland, Willows, Chico, Paradise, and as far away as Roseville, California.  Sr. Partner of Access, Daniel C. Salas, said, “It’s a real pleasure to have Scott St. John, here, to educate the real estate agents in our area.  With the exception of the Federal Open Market Committee Members, you don’t get much bigger than this!”

St. John discussed the reason banks are having more difficulty closing loans, these days.  He also talked about reasons why banks are slowly releasing their foreclosure inventory, as opposed to releasing it all at once.  Another key subject he talked about was where the lending and real estate industry is expected to go, through the remainder of 2010 and even into 2011.

Some of the positive points, brought up by St. John, were that even though the United States Government would stop buying Mortgage-Backed Securities, at the end of March, Freddie Mac felt as though there were many investors, sitting on the sideline, waiting to get into the market, and purchase these investments.  Therefore, even though rates are expected to move upwardly, resulting from this buying halt, it shouldn’t be too worrisome; as these investors haven’t been on the sidelines for years, and now we’re seeing them start to sit on the sidelines.  Another positive point was that Mortgage Insurance Companies are starting to become more flexible with their underwriting guidelines, and even have relaxed their loan amounts, compared to real estate prices, in Santa Cruz County.  This could just be a precursor to the rest of California.  ”It’s been difficult to obtain conventional financing with less than 10% Down (excluding FHA loans), until this recent development, in Santa Cruz.  It’s quite promising,” stated Salas.

St. John noted the lending industry saw about $3.5 Billion in loans, in 2009, while the industry expects anywhere from $1.3 – $1.6 Billion for 2010.  Eighty percent of these loans will be first-time home buyers.  ”What’s interesting about the eighty percent figure,” stated Salas, “is that seventy percent, of that eighty percent, is categorized as ‘first-time home buyers,’ because the industry’s definition of ‘first-time’ is somebody who hasn’t owned a home in the last three years.  So, people who owned a home, then lost it during the mortgage credit crisis, will be eligible to purchase another home, with only 3.5% down (FHA).  It’s an interesting situation, as these buyers were of the old-style qualification standards, and they’ll have to be ready to understand that loan qualifications have changed.  But, we’re ready to educate them.”

Scott St. John indicated, “financing a home, using FHA, will become more difficult, unless using a HUD Approved FHA Direct Lender, like Access Real Estate Lending.”  As one of the areas premier mortgage bankers, Access has financed over $665 Million in loans, in just ten short years.  ”We’re excited about the future, about the Chico Market, and that Scott St. John would come to our wonderful community, enjoy Sierra Nevada Brewing Company’s Big Room, and say such wonderful compliments about Access Real Estate Lending.  We’re quite honored.”

Chico, CA Interest Rates Market Report – Economic Influences – March 26, 2010

The Big Room At Sierra Nevada Brewing Company

YOU DON’T WANT TO MISS THIS EVENT!!!

Scott St. John will be speaking at The Big Room At Sierra Nevada TODAY!!! Scott is a 3rd-Term Governing Board Member of Freddie Mac.  You’ll have an opportunity to inquire into the expected economic future of the United States, Real Estate and its REO future, and what’s happening behind the scenes that is making closing loans less timely and more difficult, these days.   REGISTER AT THE CHICO OR PARADISE BOARD OFFICES.  $10 includes appetizers. $15.00 AT THE DOOR!

We’ve Settled Down A Bit

Credit market participants are shaking their heads, and trying to recover form a horrible auction week for U.S. Treasuries.  Is the writing on the wall, here, too?  Remember, that without the United States’ Government purchasing Mortgage-Backed Securities (MBS), that’s a major buyer out there, that has left the building, so to speak.  And without a major buyer, in order to attract other investors, you have to offer a greater rate of return…and therefore, greater interest rates.  We lost 88 basis points, alone, on Wednesday.  That’s .875% Points on a loan.  UGLY!  Today, however, things are looking slightly better.  We’ve managed to creep up about 30 basis points.  That equates to approximately .25% Points on a long.  What have I been saying?  Rates will increase once the government stops purchasing MBS, and I suspected anywhere from .25% to .5% in RATE, not Points.

GDP

The Commerce Department reported that Gross Domestic Product (a statistical measure of the total market value of all final goods and services produced in the country) expanded at a 5.6% annual rate, instead of the 5.9% pace estimated earlier.

Non-Farm Payroll Figures

The big news will be the March Non-Farm Payroll figures, that will be release this next Friday.  This will be a touch call.  The expected number is 180,000 new jobs, and the unemployment rate to remain close to 9.7%.  Any move in any other direction could have an effect on rates, however, if unemployment moves down, and the new job creation number moves closer to the 200,000 range…it could have a real negative impact on rates.

I'd Float Into The Day, As We Somewhat Recovered

Locking Advice

It’s probably a good idea to lock your pipeline.  Particularly since the government census workers will be considered in this Friday’s employment numbers.  So, I think the risk is too great!  With the Market settling now, I’d float until we see signs of market worsening.  That could happen any time, next week.

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Chico, CA Interest Rates Market Report – Economic Influences – March 25, 2010

The Big Room At Sierra Nevada Brewing Company

YOU DON’T WANT TO MISS THIS EVENT!!!

Scott St. John will be speaking at The Big Room At Sierra Nevada Friday, March 26, 2010. Scott is a 3rd-Term Governing Board Member of Freddie Mac.  You’ll have an opportunity to inquire into the expected economic future of the United States, Real Estate and its REO future, and what’s happening behind the scenes that is making closing loans to less timely and more difficult, these days.   REGISTER AT THE CHICO OR PARADISE BOARD OFFICES.  $10 includes appetizers. $15.00 AT THE DOOR!

Appetizers Served: Artichoke Dip w/Crostini and Sierra Nevada/Chico State Farm trio of sausages with pale ale sauerkraut and SNBC’s trio of award-winning mustards, to be served to nice people, at this event!!!!!

Rates Skyrocket!

Well…Yesterday…You know what…hit the fan!  We were busy locking…all morning long…before rates SKYROCKETED!  We lost 88 basis points, throughout the day, however, managed to lock loans when we had only lost 28.  That’s about 0.5% Point Savings on each loan we locked!

What Rates Skyrocketed!

What have I been saying?  When the Fed runs out of their $1.25 Trillion Government Sponsored Mortgage-Backed Security (MBS) Purchase Program…what’s going to happen?  Higher Rates!  Well, the market woke up yesterday, realizing that there’s only one week left in March…not to mention that the Treasury Auctions have not fared too well, this week.  Without the government purchasing MBS to keep rates low, where do you think they’ll go?  Also…there is another auction of $32 Billion of 7-Year Treasuries…if that doesn’t fare well…expect even higher rates!

Initial Jobless Claims

They crept in at a weekly claim of 442,000 while the market expected 450,000.  Be prepared for Friday’s Unemployment figures!  They’ll probably come in pretty strongly, due to better weather around the country, and hiring people for the government census.

Greece VI, (I Believe)

Germany has agreed to help bail out Greece.  This is giving some security to the European Union, and helping boost Stocks in the U.S.

Get Used To Seeing This Picture For Quite Some Time

Locking Advice

Lock, like you’ve never locked before.  Protect your clients and yourselves.  I don’t thing the 7-Year Treasury Auction will fare well, as the others did not and the longer the term, the harder to gain a return, when you factor in inflation.  All signs point to locking!

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