May everyone have a pleasant week.
Mortgage Rates: Time is Now
– Don’t Miss Out –
Markets are calming as more data is coming forth – prevention of the virus and alleviation of associated CoVid-19 suffering – yet its not time to relax. I will continue to assess our current situation and it effects upon the real estate market.
Forbearance and Caution: Be alert and aware of this most important reality within real estate lending industry.
The concern: Current head of the FHFA – who controls both Fannie and Freddie and then some – is not in alignment with the market operations. Please note: When a mortgages goes into forbearance, the Servicer – the company you write your check to – must continue to make the payment, as if you had not missed a payment. Fortunately, they have the needed capital on hand, for standard market swings. Caution: They can be overwhelmed by too many, to fast.
One wonders if FHFA is bent on controlling Fannie and Freddie, especially when quoted as saying, ‘If there is a problem, we will simply take over the mortgages’. This is a bit distressing. Keeping our private companies private, is any issue we should be ever vigilant.
SBA: Two helpful programs. 1) The $10 K grant that comes directly from SBA, under the SBA -EIDL program. I have note heard if the program is done regarding applications. If anyone has received the grant, please email me. I am trying to find out the effectiveness of the program. 2) Let’s hope Congress will not put politics before the best interest of our Small Business and all their employees. Keep our doors opened and people employed.
I would like to hear from anyone about the experience with the program.
If you have companies considering this, please call. Not all banking institutions are helping. From recent data, brokerage community – me – are not receiving compensation for helping out our clients. Regardless, we are still here to help, in any way we can. We continue to gather helpful information. Consider businesses and sole-proprietors, you can receive about 2 1/2 months of salary, as a loan. And more – there are provisions whereby such a loan, can become forgiven. Let’s talk.
Be sure to call. Let’s make sure you know how best to move forward.
US Federal Reserve: The waiting is done, actions are happening:
– Fed Funds rate are now effectively zero (target rate now 0.25 %)
– Adding / pumping liquidity into the market, in a controlled method. How will the market react as the funding begins to pull back.. Another unknown.
– Buying both Treasuries and Mortgages, doing so in ways to best stabilize and
maintain a healthy balance within the financial system.
Goal: Provide greater confidence in the banking system – their ability to act as needed
and to act now, not later. This injection of liquidity – directly or by lowering interest rates – should keep the wheels of our economy turning and people confident.
Federal Government actions:
Good News: Removing liquidity restrictions put in place by Dodd-Frank. In short, banking money, frozen by this law, is now available. Amount: $1.5 Trillion.
Good News: Talks are beginning for a limited re-opening of businesses in areas, where impact of CoVid-19 is limited. Social distancing is helping to contain its spread and each day, approval of more therapies and valid self-testing techniques are happening.
Underwriting – Priorities have shifted. Non-QM loan products are mostly gone.
Funding sources utilized Wall Street, has all be vaporized. Many of our mainstream
sources are gone, as concerns of a lasting slow down is being discussed. But Note: We DO HAVE lenders and they are ready to lend. Have a lending need: Please call us.
The good news: Our Federal Government has acted quickly and aggressively.
Thus any recession or its negative impacts from this Black Swan event,
should be minimized and speed up our economic recovery.
Staffing, appraisals, signing.. Technology is allowing most staff to work from home.
Locally, some appraisal companies are closed. Most all turn times are extended due to people working from different locations. This takes a bit more time with some details to move from one party to the next. Patience is the key at this time.
Pricing: Hats off to the Federal Reserve. After first dumping too much money in the market, they are now actively intervening daily. As a result the 10-year treasury market has not seen a 1/4 % or higher daily swing since March 27. Our Mortgage Backed Securities market is similar. We talked earlier about swings of 100 to 300 + basis point swings. Since April 1, 50 bps swings – or less – are normal. Amen.
Pricing for Veteran loans or FHA 30-year loans, are showing pricing beginning with a 2. Fun Fact: This past week, a 15 year mortgage was priced higher than a 30 year loan. Market instability is very much with us, making now a great time to call.
After bottoming on the 23rd of March, the trend indicators are slowly turning up, some now above their 25-day moving average. What this all means, I leave this to market professionals. My first choice is real estate, especially with rates so very low.
WHAT CAN YOU DO?
Potential Strategies: Preparation is key here.
A) Debt consolidation reduces overall payments, puts cash in the bank, and builds a safety net. Home improvements can also increase home value and salability.
B) No Cash out / Lower rate loan. Get into the system now. Then let underwriting, appraisal, all.. do their thing, while you watch / wait / execute when interest rates hit a low point. Good News: Appraisals are good for 4 months, with a simple update. So too, all the paperwork with a quick update. Start today.
A) Fear creates opportunity, storms can create deals. Those ready are in the driver’s seat. I am a long-term Bull with California real estate market. The fundamentals remain the same – lack of Supply, one of the best places to live,
and home to high tech. These will continue to drive demand and pricing
B) With rates this low, consider a low down payments options. Keeps you in control of your cash and remember, cash is king during an economic slow down. Even better, when the market kicks back in gear and rates double from here, you will be smile at your low rate, while enjoying your cash for other investments.
Being a SBA lender, along with our Commercial and Residential work, our phone is ringing. I will return any missed call as quickly as I can. Sadly I have no crystal ball, nor does anyone else. Instead, ours is to make some sense of the market, the day you call. But predicting tomorrow is impossible. So finding safe and secure lending is critical and what we do best.
Key to success: Being diligent in gathering up all your information. This has become a time-sensitive market and your extra effort will help assure the success, we both desire. Like you, we are doing whatever is needed, to get it done. Being prepared, we can be the team that wins.
We Believe in You and You Matter to Us
Thank you for trusting me with yourself, your friends and family. Referrals are appreciated.
We are working hard in these stressful time, and are doing our best to keep things moving smoothly. Sadly, I am only human, with human and life limitation. But my motivation for you to succeed, has not diminished. :-)
Call me. Your success is my priority.