Weekly Rates +Important Mortgage Disclosure Improvement Act

Mortgage bond prices rallied Friday pushing mortgage interest rates lower. Bond friendly Core PCE inflation data came in lower than expected. The Fed's most recent estimates call for an increase in this figure by the end of the year. The fact that the data showed lower inflation helped mortgage bonds rally. Consumer confidence came in at a weaker than expected 46.6 mark. Analysts were looking for a reading of 48.7. The Treasury auctions were mixed. The 2 and 5 year note auctions received poor foreign demand while the 7 year auction showed strong foreign demand. The employment report will be the most important release this coming week. With so many data releases expect the market to be very volatile.

As you may be aware, the Mortgage Disclosure Improvement Act (MDIA) became effective July 30, 2009. Essentially, the Act further regulates fees that can be charged to a borrower along with some "waiting period" timelines associated with the GFE/TIL disclosures. Because NOVA Home Loans is the direct lender in nearly all of our transactions any changes made in the loan process come directly to us and can be made immediately and efficiently. Because of this, MDIA will have little affect on the closing times of NOVA funded loans. However, it appears that if you choose to send your loans to a pure broker, all changes must then be forwarded to their chosen lender which may cause delays to the closing deadlines.

Below are some of the important pieces of MDIA that I thought may interest you.

- The new MDIA rules applies to both purchase and refinance loans.
- A lender must provide a borrower with an "early" Good Faith Estimate / TIL within three business days of receiving the borrower's loan application.
- A lender cannot collect upfront fees from the borrower until the borrower has received the "early" disclosures in person or, if mailed, three business days after the early disclosures are mailed.
- A lender must wait seven business days after providing the early disclosures before the borrower can sign closing documents.
- If the final Annual Percentage Rate (APR) on the closing documents varies more than 0.125% (up or down) from the initial APR on the "early" disclosures, the lender must provide the borrower with a corrected disclosure and wait three business days before the borrower can sign the closing documents. Clarification - the borrower cannot sign closing documents until three business days after the borrower receives the corrected disclosure in person. If the corrected disclosure is mailed, the borrower is deemed to have received it three business days after it is placed in the mail.

For these rules, a "business day" is defined as all calendar days except Sundays and legal public holidays as specified.

NOVA's policy will be to provide the borrower with a "re-disclosed" GFE & TIL well in advance of the borrower signing in an effort to prevent delays in closing. Changes that occur at the closing table will need to be avoided at all costs. Early commincation of "accurate" fees and charges will be critical to insuring a smooth, on-time closing transaction. Please note: if you want to give a credit to the buyer or seller, you must do it a week before closing so we can prepare updated TIL/GFE's in order to be in compliance with MDIA.

Rates for July 31st, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 5.00%, 5.113%APR
30 Year Fixed Interest Only 5.75%, 5.863%APR
15 Year Fixed Conventional 4.375%, 4.448%APR
7/1 LIBOR ARM Conventional 4.25%, 4.363%APR
5/1 LIBOR ARM Conventional 3.75%, 3.863%APR
5/1 LIBOR ARM Interest Only 4.875%, 3.988%APR
30 Year FHA/VA 5.375 %, 5.627%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 4.875%, 4.976%APR
7/1 Treasury ARM 5.125%, 5.226%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
3/1 LIBOR ARM (Conforming) 6.125%, 6.507%APR
5/1 LIBOR ARM (Jumbo) 7.25%, 7.632%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Weekly Rates + Market Update

Mortgage Bonds are trying to stabilize after yesterday's sharp losses, which came in response to the Treasury announcing that it will be auctioning off a sizable $115 Billion in Notes next week. This in addition to $90 Billion in T-Bills that is usually auctioned off on a weekly basis. That's a lot of paper. Recent past has shown that the announcement of the Treasury auctions has weighed on the entire Bond market and yesterday was no different. Also adding pressure to Bonds was an explosive move higher in Stocks, with the Dow closing above 9,000 for the first time since Jan 6th. But Stocks failed to break resistance around 9090 on the Dow, which represents the previous intra-day high from that same day.

Consumer Sentiment was reported at 66, meeting expectations but continuing a modest trend of improvement. We feel this probably has a bit more to do with Stock prices trading higher and less to do with actual economic improvement. The Stock market often influences consumer psychology, especially when it comes to buying a home. And the nearly 50% rise since fixing mark to market in early March has helped people feel a little better about their finances.

On Wednesday, our friend and the chief economist of Freddie Mac, Frank Nothaft said that "recent housing data suggests that the positive signs indicate that the worst may be behind us". He also went on to say that "housing affordability right now is the highest it’s been in many years".

June Homes Sales Rise

SHORT SALE VS FORECLOSURE
WHAT IS IT AND HOW DOES IT AFFECT YOUR CREDIT?

What does “short sale” mean? “A short sale in real estate occurs when the outstanding obligations (loans) a property are greater than what the property can be sold for.”
In this time of depreciating markets and option-arms coming due, we will see more and more borrowers trying to negotiate short sales as opposed to going into foreclosure. In most cases the borrower will be behind on payments and about to go into foreclosure, however this will not always be the case. Some short sales are negotiated simply because a borrower knows they are upside down on their mortgage but has not reached the point where they have late payments. For example, if the borrower’s loan is an option arm and they have been making minimum payments, the balance may have increased to $263000 when the original loan amount was $250,000. At the same time, the home only appraises for the $250,000 or possibly even less. Because the option-arm period is up, the borrower’s mortgage payments will increase and they are unable to make the higher payment. There is no equity in the property and they cannot sell the home to cover the balance of the loan. At this point they can either try to negotiate a short sale with the lender or go into foreclosure.

If the lender agrees to a short sale, they are buying back the loan for less then what they are owed. This is not something a lender has to do, but it is an option for them. Why would they consider this? The real cost for the lender in a foreclosure action is that they have to carry the loan until they can resell the house. They have to pay the taxes, insurance, closing costs and marketing costs. This will take time and the cost of carrying the loan can become quite substantial. In some cases it will be more beneficial for them financially to take the short sale.

How does it affect credit?

Typically the loan will show up on a credit report as “settled for less then the full balance”. This will have a negative impact on the borrowers score however it will be less then if it shows as “foreclosure”. How much it will actually affect the score will depend on the rest of the borrowers credit history. It is always best to have an attorney negotiate a short sale with a lender and at the same time have them negotiate how it will appear on the credit report. Some lenders will agree to show the loan as “paid with no late payments” (providing the borrower hasn’t made any) or they may show it as “paid was 30” if there have been some late payments. This would be optimal.

A short sale can also have a negative affect on a borrowers credit if the lender issues a deficiency judgment. A lender may take this route even if they show the actual mortgage on the credit report as paid as agreed. When they take the short sale there is still a difference between the actual mortgage balance and the amount of the short sale. The Lender can then issue what is called a deficiency judgment against the borrower and this will show on a credit report just as any other judgment would. The attorney should attempt to get the lender to accept “payment in full without pursuit of any deficiency judgment.” Sometimes the lender will put the borrower on a payment plan for the deficiency without issuing a judgment. Again, this would be optimal. The one instance where a lender will not consider a short sale is if the borrower is in bankruptcy. Lenders consider a short sale payoff as a collection activity and collection activities are prohibited once a person has filed bankruptcy.

For any pre-qualifications or 2nd opinions on loan scenario's, please contact me at 480-626-2202.


Rates for July 24th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 5.25%, 5.383%APR
30 Year Fixed Interest Only 6.00%, 6.113%APR
15 Year Fixed Conventional 4.625%, 4.738%APR
7/1 LIBOR ARM Conventional 4.375%, 4.476%APR
5/1 LIBOR ARM Conventional 3.875%, 3.988%APR
5/1 LIBOR ARM Interest Only 4.00%, 4.124%APR
30 Year FHA/VA 5.25%, 5.502%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 4.875%, 4.976%APR
7/1 Treasury ARM 5.125%, 5.226%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
3/1 LIBOR ARM (Conforming) 6.125%, 6.507%APR
5/1 LIBOR ARM (Jumbo) 7.25%, 7.632%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

New Law Limiting the Protection of Arizona Anti-Deficiency Statutes

By: Aaron M. Green and Christopher A. Combs

On July 10, 2009, the Governor of Arizona signed into law (effective September 30, 2009) a significant amendment to Arizona's anti-deficiency statutes. This new law decreases the protection to Arizona homeowners after they lose their home to foreclosure. The anti-deficiency statutes had not been amended since 1990.

The Arizona anti-deficiency statutes (primarily A.R.S. §33-814(G)) generally protect most homeowners from being sued after foreclosure by their lender for any unpaid balance of the loan, i.e., deficiency, if the home was "utilized" as a "dwelling." The Arizona courts have ruled that even vacation homes rented out by investors for only a few weeks of the year were being "utilized" as a "dwelling."

The new law states that homes must be utilized as a dwelling "by the trustor [borrower] under the deed of trust for at least six consecutive months...." (Emphasis added.) Therefore, occupancy of the home for at least six consecutive months prior to the foreclosure is now required.

Does the six-month occupancy requirement only protect owner-occupied homes, or do investors with tenants who meet the six-month occupancy requirement have the same protection? Our opinion at Combs Law Group is that investment homes will continue to have the same protection as owner-occupied homes under the anti-deficiency statutes.

Does the six-month occupancy requirement apply only to foreclosure of loans entered into after September 30, 2009, or to all foreclosures that occur after that date? Our opinion at Combs Law Group is that the six-month occupancy requirement applies to all foreclosures after September 30, 2009, and that the borrower will have to prove at that time the six-month occupancy requirement even though the loan documents may have been executed years earlier.

A copy of the new law can be found at www.combslawgroup.com.

If you would like more information regarding landlord/tenant, short sales, loan modifications, bankruptcy or other real estate related issues, please call our office at 602.957.9810 and arrange for an initial consultation with one of our attorneys.


Chris Combs

Certified Real Estate Specialist
Combs Law Group, P.C.

Weekly Update/Rates (They are creeping up quickly) + $8,000 Tax Credit Link

Please make note that Nova Home Loans has raised our minimum FICO score for FHA loans to 600. Secondly, news came down the pipe last in regards to the use of the $8,000 tax credit. FHA announced this morning that first time home buyers can apply the $8,000 tax credit towards closing costs on FHA loans. Please follow the link below for more details. I will keep you posted on further developments on gaining access to these funds prior to closing.
http://www.hud.gov/news/release.cfm?content=pr09-072.cfm

Mortgage bond prices had another terrible week pushing mortgage interest rates considerably higher. Personal income, outlays, construction spending, ISM Index, and payrolls data came in stronger than expected. This did little to help the already shattered bond market. Oil prices continued to escalate hitting over $70/barrel. The Fed attempts to keep rates in check were not very effective as selling pressure continued. Bernanke tried to calm the markets by reiterating forecasts of tame inflation but his words fell on deaf ears among bond traders.

Today was a prime example of the divergence between the unemployment rate and payrolls figure along with the risk of floating into important data. Unemployment came in at 9.4%, higher than the expected 9.2%, while non-farm payrolls fell 345,000, not as much as the expected 520,000 decline. Mortgage bond prices fell and rates spiked higher.

Energy prices have risen considerably stoking inflation fears amid record debt levels. As a result the low mortgage interest rates that everyone considered a given have quickly gone away. The Fed continues to purchase mortgage bonds in an effort to keep mortgage interest rates low but they face a daunting task as the selling pressure continues. The Fed still has over $700b marked for purchasing additional mortgage bonds. The question remains whether that will be enough to help rates turn lower. So far it appears additional measures are needed.

Please give me a call if you have any financial questions or if you need a second opinion on a loan scenario. If you are calling after hours or on weekends, please use call me at 480-626-2202.


Rates for June 4, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 5.375%, 5.488%APR
30 Year Fixed Interest Only 6.125%, 6.238%APR
15 Year Fixed Conventional 4.875%, 4.988%APR
7/1 LIBOR ARM Conventional 5.00%, 5.134%APR
5/1 LIBOR ARM Conventional 3.875%, 3.988%APR
5/1 LIBOR ARM Interest Only 4.375%, 4.488%APR
30 Year FHA/VA 5.50%, 5.752%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 4.75%, 4.851%APR
7/1 Treasury ARM 5.00%, 5.101%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
3/1 LIBOR ARM (Conforming) 5.75%, 6.132%APR
5/1 LIBOR ARM (Jumbo) 6.875%, 7.227%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Weekly Update/Rates + FHA Min FICO Now 600 + Breaking News on Tax Credit

Please make note that Nova Home Loans has raised our minimum FICO score for FHA loans to 600. Secondly, news came down the pipe today in regards to the use of the $8,000 tax credit. FHA announced this morning that first time home buyers can apply the $8,000 tax credit towards closing costs on FHA loans. Please make note this CANNOT be used towards the down payment. More details to follow on how borrowers can gain access to the credit before closing, stay tuned.

Mortgage bond prices had the worst week in a very long time falling precipitously pushing mortgage interest rates considerably higher. Stronger than expected consumer sentiment data started the bond market off on the wrong foot. Debt supply concerns permeated throughout the financial markets with the US Treasury auctioning $100 billion of notes. Escalating oil prices added fuel to the fire. Fortunately it appeared the Fed finally stepped in to stop the bleeding towards the end of the week helping bonds recover a small portion of the large losses from earlier in the week.

Please give me a call if you have any financial questions or if you need a second opinion on a loan scenario. If you are calling after hours or on weekends, please use call me at 480-626-2202.

Rates for May 29th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 5.00%, 5.113%APR
30 Year Fixed Interest Only 5.875%, 5.988%APR
15 Year Fixed Conventional 4.375%, 4.488%APR
7/1 LIBOR ARM Conventional 4.50%, 4.613%APR
5/1 LIBOR ARM Conventional 3.875%, 3.988%APR
5/1 LIBOR ARM Interest Only 4.00%, 4.105%APR
30 Year FHA/VA 5.25%, 5.502%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 4.75%, 4.851%APR
7/1 Treasury ARM 5.00%, 5.101%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
3/1 LIBOR ARM (Conforming) 5.625%, 6.007%APR
5/1 LIBOR ARM (Jumbo) 6.625%, 6.977%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Rates + Market Update + Tax Credit as Down Payment

Please make note that Nova Home Loans still allows FICO scores as low as 580 for FHA & VA loans.

Tax Credit
I am sure that many of you have been hearing a lot about the tax credit now being available for use as a down payment on a home, which is great! However, the media spoke a little too soon because we have not received any guidance from HUD as to how it can exactly be used. This should be specified in a new mortgagee letter in the very near future, but as of right now the subject is still grey (see attcahed Mortgagee letter).

Market Update
Mortgage bond prices rose last week helping mortgage interest rates fall. Most of the gains came early in the week prior to the surprise inflation data. Weaker than expected retail sales data along with concern about the health of the banking industry helped mortgage bonds improve. Unfortunately stronger than expected producer price and core consumer price data Thursday and Friday stoked inflation fears which erased some of the earlier gains.

For LSR's or 2nd opinions on loan scenario's over the weekend, please call me on my mobile at 480-225-2987.

Rates for May 8th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.625%, 4.738%
30 Year Fixed Interest Only 6.00%, 6.113%
15 Year Fixed Conventional 4.25%, 4.383%
7/1 LIBOR ARM Conventional 4.25%, 4.363%
5/1 LIBOR ARM Conventional 3.75%, 3.863%
5/1 LIBOR ARM Interest Only 4.00%, 4.121%
30 Year FHA/VA 5.00%, 5.252%
*30 Day Lock

JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%
15 Year Fixed (to $600K) 5.625%, 5.726%
5/1 Treasury ARM 4.75%, 4.851%
7/1 Treasury ARM 5.00%, 5.252%
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
3/1 LIBOR ARM (Conforming) 5.625%, 6.007%
5/1 LIBOR ARM (Jumbo) 6.625%, 6.977%
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Market Update + Rates, 580 Fico Still Available!

Please make note that Nova Home Loans still allows FICO scores as low as 580 for FHA & VA loans.

Mortgage bond prices remained unchanged for the week keeping mortgage interest rates steady. Trading remained volatile with rates improving the first portion of week. However, some of the data came in surprisingly better than expected Thursday and Friday which caused mortgage bond prices to fall and rates to rise.

There is a Chinese proverb that states, "May you live in interesting times." It is often argued that the word interesting is meant to be a synonym for turbulent or dangerous. This phrase hits the bull’s-eye given the current state of the financial markets. While stocks and bonds are swinging around wildly there is some good news. Interest rates for conforming and FHA/VA loans are still historically low by many standards.

However, low rates are not a given considering the escalating inflation fears that reemerged recently. Oil prices rose most of last week and Fed Chairman Bernanke expressed concerns about "how to wind down the federal balance sheet" and "avoid inflation." When a Fed official mentions inflation it is generally not positive for bonds. Inflation, real or perceived, erodes the value of bonds causing bond prices to fall and rates to rise. The last thing the economy needs now is rising mortgage interest rates. If inflation emerges that very well may happen despite the continued Fed efforts to keep rates low.

Pending home sales jump 3.2%

Dow up 165 as hopes build for a recovery

Please give me a call if you have any financial questions or if you need a second opinion on a loan scenario.


Rates for May 8th, 2009. Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.625%, 4.738%APR
30 Year Fixed Interest Only 6.00%, 6.113%APR
15 Year Fixed Conventional 4.25%, 4.383%APR
7/1 LIBOR ARM Conventional 4.25%, 4.363%APR
5/1 LIBOR ARM Conventional 3.75%, 3.863%APR
5/1 LIBOR ARM Interest Only 4.00%, 4.121%APR
30 Year FHA/VA 5.00%, 5.252%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 4.75%, 4.851%APR
7/1 Treasury ARM 5.00%, 5.252%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
3/1 LIBOR ARM (Conforming) 5.625%, 6.007%APR
5/1 LIBOR ARM (Jumbo) 6.625%, 6.977%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.