Week of Feb 21 – Econmic Roundup

February 21, 2012 by · 1 Comment 

Mostly good news to report as the DOW Jones stock index has recently climbed to its highest point in years and January Housing Starts are up to the highest level since October 2008.  Here are three other key recent economic developments of which you should be aware:

Good News from Greece

After several weeks of uncertainty, European officials have agreed to provide a $172 billion bailout package to Greece, and Greek officials also reached a debt deal with private investors.  As a result, Greecewill be able to avoid defaulting on debt maturing on March 20.  Anticipating that European leaders would not allow Greeceto default, investors showed little reaction to the news.  Questions remain about whether Greek leaders will fully implement the unpopular austerity measures called for by the terms of the deal.  This announcement is probably not the end of this story…..

Inflation Concern

Recent inflation data indicates that core inflation (which exclude food and energy) is on the rise.  Core CPI inflation was 2.3% higher than one year ago, which was the highest annual rate since September 2008.  Fortunately, Fed officials forecast that core inflation levels will moderate later in the year.  However, if it unexpectedly continues to rise, the impact could be detrimental to mortgage rates as higher inflation is always negative for mortgage rates.  In addition, it would be more difficult for the Fed to maintain its current loose monetary policy.  Needless to say, investors will be closely watching core inflation levels in the coming months to see if the Fed’s forecast proves correct.

Good News on the Job Front

Weekly Jobless Claims have unexpectedly dropped to 358K and are now at the lowest level in nearly four years.  Considering this measure has been consistently over 400K for a number of years, it is good news to see this figure maintaining sub-400K levels for the last few months.  This is significant because in the past when this figure improves so does the labor market.  In January, the Unemployment Rate dropped to the lowest level since February 2009, and the recent Jobless Claims reports provide additional evidence that the labor market is moving in the right direction.

Looking ahead, this will be a light week for US economic data.  Existing Home Sales will be released on Wednesday and then New Home Sales and Consumer Sentiment will be released on Friday.  In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday of this week.

Mortgage Insurance Guidelines Easing Up

February 21, 2012 by · Leave a Comment 

A few years back, mortgage insurance guidelines got so strict that it became common for a loan officer to obtain a mortgage approval from an investor and then run into a Private Mortgage Insurance (PMI) approval problem. The main reason for this is that the PMI guidelines had become stricter than the investor guidelines. Well, good news to report on this front as not only are the PMI guidelines easing up a bit, but a new trend has emerged where PMI companies are once again automatically approving a loan if the lender obtains an approval through either Fannie Mae’s DU or Freddie Mac’s LP automated underwriting system. This is a wonderful development that will be of great benefit to realtors, lenders, and borrowers alike. When a borrower submits an application for a Conventional loan, he will once again be seeking just one approval, rather than two. This is another sign that things are headed in the right direction…..

Make Sure You are Working with Best Appraisers

February 7, 2012 by · Leave a Comment 

It would be a big understatement to say the the residential appraisal business has changed over the last few years.  Rules have been enacted to restrict communication between loan officers, customers, and appraisers.  Loan officers and realtors are, in fact, not even allowed to talk with appraisers directly about a property or its value any longer.  New reporting requirements, with updated codes and explanations, have gone into effect as well.  The goal of all of the changes has been to create appraisals that are more accurate and less influenced by the loan officers and realtors who rely on their conclusions to get a transactions closed. 

Although a noble goal, the new regulations have caused many a headache and do not always lead to the most accurate results.  So, what can a real estate professional do to alleviate appraisal problems?  The answer is to work with a lender that has a system in place the insures only the very best appraisers in each county are used on each and every transaction.  Working with such a lender will be critical to a realtor’s success in 2012. 

Can you really afford to have your customers working with national appraisal firms that look for the cheapest appraisers who are rarely local?  At Fairfield Mortgage, we have a very limited list of the best appraisers in each county who are local and know the given area.  They know the factors such as the neighborhoods, schools, surrounding communities, etc. that truly impact a valuation.  Quality people produce quality work and our approved appraisers are the best of the best and produce extremely accurate work.  They are also professional, courteous, and almost always turn around orders in a week.

Your next transaction does not have to die due to a bad appraisal.  There is a better way…

Unemployment Drops to Lowest Level in Three Years

February 7, 2012 by · Leave a Comment 

Friday’s Employment data exceeded expectations in nearly every area.  Against a consensus forecast of 135K new jobs, the economy added 243K jobs in January, the most since April 2011!  In addition, revisions to prior months added another 60K jobs.  The Unemployment Rate also dropped from 8.5% to 8.3% (see graph below), which is the LOWEST LEVEL SINCE FEBRUARY OF 2009!  Strong labor market data is great news for the economy, but it increases future inflationary pressures, which is unfavorable for mortgage rates.  As a result, mortgage rates moved a little higher on this news, but the key word is a “little.”  In past years, rates would have really jumped on such news, but rates continue to be resilient and maintain super low levels.

 The economic calendar is very light this week.  There will be Treasury auctions on Tuesday, Wednesday, and Thursday that could influence rates.  The Trade Balance and Consumer Sentiment reports will be released on Friday as well.