Shelter Six:  Good News for Borrowers Exiting Forbearance

May 25, 2020 by · Leave a Comment 

Mortgage purchase volume was up for the 5th week in a row and, after being down 35%, is now at nearly the same level as a year ago.

Moving in the right direction, the National Association of Home Builders’ Housing Market Index rose 7 points in May.

Also moving in the right direction, mortgages in forbearance decreased for the 5th straight week and now represent 9% of all mortgages, according to Black Knight.

Thanks to the protection of the forbearance program, foreclosure starts plummeted in April to record lows (down 73% from March and 94% from April 2019).

Fannie Mae and Freddie Mac rolled out some good news last week that will help borrowers who have been in forbearance obtain a new mortgage more quickly.

Borrowers who have exited forbearance and made at least 3 straight mortgage payments on-time will be able to obtain a new mortgage (previous guidelines called for 12 payment having to be made).

Rate Update

According to Mortgage News Daily, the benchmark Conforming 30-year fixed-rate fell this past week to a new all-time low of 3.04% and is dangerously close to cracking the 3% barrier for the first time.

This Week

New Home Sales will be released on Tuesday, Durable Orders on Thursday, and the Core PCE Price Index on Friday.

Shelter Six:  Forbearance Figures Better Than Anticipated

May 18, 2020 by · Leave a Comment 

Federal Reserve Chairman Powell repeated last week that the Fed will do everything in its power to support low rates and support the economy as needed.

Amid speculation, Powell did make it clear that the Fed is not considering negative short-term rates at this time.

Mortgage purchase volume was up 11% last week over the previous week and has now increased for the 4th week in a row (and only 10% behind last year’s pace YTD).

The University of Michigan’s Index of Consumer Sentiment actually rose in May, beating expectations as attitudes about current conditions improve.

Mortgages in forbearance decreased for the 4th straight week and now represent 8.8% of all mortgages (4.7M borrowers), according to Black Knight as of May 12.

Many early projections pointed to forbearance figures that would surge to 15-25% of all mortgages, so the figures are much better than expected, thus far.

Rate Update

According to Mortgage News Daily, the benchmark Conforming 30-year fixed-rate fell on Friday to a new all-time low of 3.09%!  Expect the Fed to keep buying mortgage bonds, which should keep rates in the low 3’s.

This Week

Housing Starts will be released on Tuesday and Existing Home Sales on Thursday.  Mortgage markets will close early on Friday in observance of Memorial Day.

Shelter Six:  Most Believe Job Loss to be Temporary

May 11, 2020 by · Leave a Comment 

Last week’s Employment figures were very bad (20.5M jobs lost in April), but the very important silver lining is that 78% believe their job loss to be temporary.

It is refreshing to see some mortgage guidelines loosen back up slightly. The maximum Debt Ratio on Shelter’s FHA/VA loans expanded from 45% to 50% last week.

More lenient employment verifications and exterior-only appraisals have been extended on Conforming loans from May 17 to June 30.

Governor Kemp also extended virtual “Zoom” closings through June 12. At Shelter, we are pleased to offer both virtual closings as well as a new streamlined eClosing process.

Self-employed or commissioned employees who missed work due to COVID-19 may need to be back on the job for a month to prove their income hasn’t slowed before qualifying for a mortgage.

The latest figures show 7.3% of all mortgages (4.1M borrowers) are now in forbearance, as of May 7 according to Black Knight.

Rate Update

The Federal Reserve continues to buy mortgage bonds, and this continues to keep 30-year rates super-low and in the low-to-mid 3’s.

This Week

The Consumer Price Index (CPI) is due out on Tuesday with Retail Sales due out on Friday.

Shelter Six:  Federal Reserve Doing What It Takes to Keep Rates Low

May 4, 2020 by · Leave a Comment 

The key takeaway from last week’s Federal Reserve meeting is that the Fed is going to do whatever it takes to keep rates low and stable during the pandemic.

Shelter is proud to roll out a new “hybrid” eClosing process that will enable buyers to electronically sign 90% of closing docs prior to closing.

Only the Mortgage, Note, and a few other docs will have to be signed in front of the Closing Attorney.  This is a huge technological upgrade that should shorten closings dramatically.

Cash-out Refinances are now more costly and harder to obtain, thanks to Fannie Mae / Freddie Mac announcing they will not buy these types of loans that are in forbearance.

Investment Property purchases now require greater cash reserves and the rental income from the subject property can no longer be used to qualify the borrower.

Self-employed borrowers now need to provide a YTD Profit-and-Loss Statement within 30 days of closing that supports their previous level of income.

Rate Update

Thanks to the Federal Reserve’s ongoing mortgage bond purchases, mortgage rates continue to remain stable and in the low-to-mid 3’s.

This Week

The ISM National Services Index will be released on Tuesday and Employment figures on Friday. Information surrounding the coronavirus will continued to be closely monitored.

Shelter Six:  Mortgage Markets Have Stabilized

April 27, 2020 by · Leave a Comment 

There were no dramatic mortgage product changes last week and it feels like things have stabilized in the mortgage world.

Riskier programs have either been eliminated or tightened up significantly, but Conforming loans remains strong with few changes and a more streamlined process.

The Federal Reserve meets on Wednesday and investors will be closely tuned in to learn more about the Fed’s plan for future bond purchases.

A growing concern is furloughed or laid-off borrowers who won’t be able to qualify until they go back to work.

The longer self-employed and commissioned employees are out of work, the longer they will need to be back at work to show their income is consistent with pre-virus levels.

Thankfully, Fannie Mae and Freddie Mac announced they will buy loans that have entered into forbearance (except cash-out refinances).

Rate Update

The Fed continues to buy bonds stabilizing the market and keeping rates low. The benchmark Conforming 30-year fixed remains in the low-to-mid 3’s.

This Week

Investors will be watching for news about medical advances and government fiscal stimulus programs. First Quarter GDP will be released on Wednesday and ISM Manufacturing on Friday.

Shelter Six:  Good Mortgage Options Remain

April 20, 2020 by · Leave a Comment 

The economic data rolling out for March has not been good, but it has not been nearly as bad as the Unemployment and job loss figures suggest that it could have been.

Conventional Conforming programs remain as strong as ever with few changes and a more streamlined process allowed during the pandemic.

Jumbo options are limited right now with very strict underwriting guidelines. A great alternative is a Jumbo Blend combo loan which allows for less money down, lower credit scores, less strict underwriting guidelines, and lower rates.

A “Cash-Out” refinance could be a great option now for anyone looking to tap into their equity and improve their liquidity situation.

A growing concern is borrowers who might not qualify at this time due to a loss of income. Lenders can’t use income from someone furloughed or laid off until they are back at work.

Shelter continues to prioritize purchases and we are back on normal time frames for Appraisal and Financing Contingencies.

Rate Update

The Fed continues to buy bonds, which has kept rates remarkably stable over the last few weeks. The benchmark Conforming 30-year fixed remains in the mid-to-low 3’s.

This Week

Investors will continue to watch for news about new government programs. Existing Home Sales will be released on Tuesday, New Home Sales on Thursday, and both Durable Orders and Consumer Sentiment on Friday.

Shelter Six:  Still Plenty of Strong Conventional Programs Available

April 13, 2020 by · Leave a Comment 

On Thursday, the Fed announced $2.3 trillion of aid to help midsize companies and local municipalities (the initial round of aid was for individuals and small businesses).

Conforming lending is stronger and more streamlined than ever, but riskier programs with lower credit scores or higher LTV’s have either disappeared or tightened up greatly.

The perfect solution for today’s Jumbo market is a “Jumbo Blend” with a Conforming 1st mortgage maxed out at $510,400 combined with a HELOC 2nd mortgage.

The Jumbo Blend offers lower rates and payments, allows for as little as 10% down, and has significantly less strict underwriting standards.

Anyone with a rate of 4% or higher who plans on staying in home 3+ years should look into refinancing. Pulling out cash is also a great way to tap into home equity and increase liquidity.

In this environment, consider an Appraisal Contingency of 15-20 days and a Financing Contingency of 20-25 days. It is more important than ever to work with lenders prioritizing purchases.

Rate Update

Last week was a great week for the financial markets with the stock market posting massive gains, the bond market stabilizing, and mortgage rates trickling down near recent lows.

This Week

The coronavirus remains the primary focus, and investors will be watching for news about fiscal stimulus programs. Retail Sales are due out on Wednesday and Housing Starts on Thursday.

Shelter Six:  Jumbo Blend is Ideal Jumbo Solution

April 6, 2020 by · Leave a Comment 

Conforming remains as strong as ever with few changes, but FHA/VA has tightened up with a higher minimum credit score, lower max Debt Ratio, and 2 months of required payment reserves.

Most non-banks have lost Jumbo, and the banks still offering are doing so with extremely strict underwriting, such as 20% down, very high credit standards, and no exceptions.

Jumbo Blend is the perfect solution for today’s Jumbo customer. Max out a Conforming 1st mortgage at $510,400, and then tack on a 2nd mortgage HELOC up to 90% of the sales price.

Jumbo Blend allows for a lower down payment, lower credit scores, less strict underwriting standards, lower rates and payments, and an exterior-only appraisal.

Exterior-only “drive-by” appraisals are now allowed on virtually every type of loan (other than Jumbo).

Lenders are beginning to approve and offer virtual closings as well as a streamlined e-Closing process.

Rate Update

Mortgage rates finally stabilized last week, mostly due to the Fed buying unlimited bonds. For the first time in weeks, rates were less volatile holding steady in the mid 3’s.

This Week

Any news around the coronavirus will be the focus again this week. Weekly Jobless Claims are also due out on Thursday and CPI figures on Friday.

Shelter Six:  Mortgage Industry Continues to Find a Way

March 30, 2020 by · Leave a Comment 

The riskier side of the mortgage industry is changing drastically. The Non-QM industry disappeared overnight last Monday. Rates have surged on low-down payment loans. Few lenders are still doing Jumbo loans or purchase-money 2nd HELOC’s. FHA minimum credit scores are increasing.

The mortgage industry has been extremely resilient over the last few weeks though and continues to adapt and get loans closed despite the current environment, as evidenced by a shift to exterior-only appraisals, more flexible verifications of employment, and e-recording of deeds.

Inflation has fallen as the economy has slowed, which is good for rates short-term.

Congress passed the $2.1 Trillion CARES Act, an unprecedented stimulus relief package providing relief to both individuals and businesses, but not necessarily good for rates long-term.

The stimulus package gives mortgage holders the ability to pursue a forbearance, which is the temporarily suspension of a mortgage payment due to a borrower verbally attesting to an inability to make a payment (no written evidence required).

Please understand that a forbearance is a type of default and that anyone pursuing a new purchase or refinance mortgage can’t have a forbearance request in process. The borrower has to choose between pursuing the forbearance or the new mortgage.

Rate Update

Mortgage rates stabilized and didn’t change much last week after the Fed announced an unlimited bond-purchase program to make sure every mortgage bond seller has a buyer.

This Week

The coronavirus continues to dominate financial market news. Economic data is expected to reflect the negative impact of the epidemic to a greater degree. Employment figures are due out on Friday.

Shelter Six:  Mortgage Rates Experience Wild Ride

March 23, 2020 by · Leave a Comment 

Mortgage rates have been on a wild ride over the last few weeks, experiencing both all-time lows and all-time surges during this time.

Two Sundays ago, the Federal Reserve aggressively slashed short-term rates to zero, but it is critical to understand that this does not directly influence mortgage rates.

Mortgage rates dropped as the stock market tanked and investors shifted holdings into bonds, and later thanks to the Fed cutting rates and announcing bond-purchase programs.

Mortgage rates subsequently surged as investors began to sell everything, including bonds, in the pursuit of cash, and because of lender capacity concerns over being able to get loans closed.

Non-conforming Wall Street-backed products are really struggling right now as many specialty Non-QM loans are temporarily going away and Jumbo rates are especially high.

Appraisals are now running 2-3 weeks but lenders and closing attorneys continue to find ways to get loans closed.  Mortgage prospects’ best course of action is to get applications and loan documentation submitted and be ready to lock when rates drop.

Rate Update

The coronavirus continues to dominate financial market news and cause extraordinary daily movements.  Mortgage rates have remained resilient, however, with the 30-year still in the mid to high 3’s.

This Week

Investors will be watching for news about government special operations and fiscal stimulus relief programs.  Economic data will begin to reflect the negative impact of the epidemic.

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