Mortgage News that Matters

Current 30 year fixed rate at par - 6.125%

This week's the economic calendar promises to be a tough one with several hig-impact reports.

Tuesday kicks off the week with Consumer Confidence;

Wednesday has the latest FOMC meeting minutes;

Thursday brings 1^st Quarter Preliminary GDP, the Chicago PMI, and Initial Jobless Claims;

Friday brings the May Jobs Report and Core PCE Inflation.  We probably won't see a lot of serious reaction by the bond traders until Friday.  

Bonds remain "oversold" and could be ready for an improvement, however, we're in a downward trend with a tough week.

If you need to close this week and haven't lock yet, I would. If you can wait and have the stomach for it, then float. Stay tuned for any significant news.   

Larry Morris is a loan Officer with Equipoint Financial Network in Newberg, Oregon. He specializes in relocations and Sherwood, Oregon neighborhoods and Yamhill County. He can be reached at larry.morris@equipoint.com . His website is www.PDX-Mortgage.com . This material is copy protected 2007 by Larry Morris, Mortgage News that Matters. All Rights Reserved His opinions do not necessarily represent the views of Equipoint Financial Network.

Licensed in: OR, WA, AL, AK, AZ, CA, CO, CT, FL, GA, HI, ID, IL, IN, IA, MD, MA, MI, MS, MO, MT, NE, NV, NH, NM, OK, SC, SD, TN, TX, UT, VT, VA,

Since my warning to lock on May 9th, we have seen a decrease by .84 basis points. This has led to a rate deterioration of about approximately .125% - .25% depending on the lender.

Currently, the Bond Market is holding it's own, but there has been a lot of money taken out of Bonds lately and put into a flaming hot Stock Market. As there are no major reports being issued for the next few days, the Stock Market will most likely have the greatest impact on Bond prices.

Bond Prices are nearing an important floor of support at the $97.97 level, just 6bp below present levels, and also matching the lowest prices of the year hit in late January.  We will want to be patient and see if this floor can stop the recent downtrend. 

On brand new transactions, we are going to advise Cautiously Floating as the Bond hovers just above this floor of support.

China has also agreed to invest roughly $3 Billion in the Blackstone Group, a prominent and powerful U.S. private equity firm. Will this money be taken away from their investments in foreign bonds? If so, rates could continue to increase.

Larry Morris is a loan Officer with Equipoint Financial Network in Newberg, Oregon. He specializes in relocations and Sherwood, Oregon neighborhoods and Yamhill COunty. He can be reached at larry.morris@equipoint.com . His website is www.PDX-Mortgage.com . This material is copy protected 2007 by Larry Morris, Mortgage News that Matters. All Rights Reserved His opinions do not necessarily represent the views of Equipoint Financial Network.

Licensed in: OR, WA, AL, AK, AZ, CA, CO, CT, FL, GA, HI, ID, IL, IN, IA, MD, MA, MI, MS, MO, MT, NE, NV, NH, NM, OK, SC, SD, TN, TX, UT, VT, VA,

Whether you are a Realtor, Home-Buyer or Home-Seller, you have a vested interest in making sure that the offer that is being submitted for the purchase of a property is bonafide.  Traditionally, a potential buyer gets a pre-approval letter from a lender indicating that they are pre-approved for a loan at a certain amount. But not all pre-approval letters are equal. Nor do they guarantee a smooth close. Here's why.

1) A pre-approval letter is not worth the paper it's written on if you do not know and trust the lender. Even then, it's not a guarantee. It is not binding on anyone and is only as good as the work that was done to give the pre-approval. This isn't to say that a pre-approval letter should never be accepted, or that every lender is a liar, but it's not binding. Mistakes can happen, or things surface that were not known. 

2) A DU (Direct Underwriting) finding is better, but is still not binding. It shows that the lender has at least taken a full application and that the on-line origination system has given it an approval SUBJECT TO verificationof all pertinent information. In other words, prove what you have stated is fact. But the loan has still not been submitted to a lender nor has an underwriter verified the information or an offer to lend been extended.  Also, a pre-approval letter could be generated with this information.

3) A Conditional Approval is even better, but is still not binding. The file has been submitted to underwriting and an approval has come back with the outstanding conditions. These could still include many borrower related issues that could stall or kill an approval. 

4) A credit approval from a lender with all borrower conditions signed off on is money in the bank!! If this hasn't happened prior to a buyer looking at houses it still should be able to happen within the 10 day inspection period. Realtors, give yourself protection by writing this into your agreements. Make sure that you have a credit approval with all borrower conditions signed off within that same time period that a buyer has to walk away. If all conditions are not met, at least you can see what is outstanding and make a judgement decision as to whether or not you want to move forward.

5) A Public Records search on the Borrower will reveal their ability to purchase, or any potential red flags. This also should be able to be done during that 10 day period if it hasn't been done prior to looking at homes.

With a Credit Approval with all conditions signed off and a Public Records search showing that a potential buyer does not have any liens or judgements against him/her,  a potential buyer now becomes a solid borrower with the ability to close quickly. All responsibility now shifts to the seller and the ability of the property to be financed.

Buyers -Put yourself into the strongest possible position to buy. Work with a lender who will get you a true pre-approval... a Credit Approval with all conditions signed off. Take the extra time to have your credit examined. You might be surprised at what a a few points to your score could do to improve your interest rate and your purchasing power. Spend a little extra to get a Public Records search to confirm that you don't have any surprises that you are unaware of. Mistakes can happen. What you don't know could cost you your dream home.

Buyers agents- Time out!! Put your buyers long-term needs before their short-term desires. Get them "Bonafide". Several of my lenders will give a credit pre-approval with a property to be determined. I even have two who will allow me to lock a rate without a property. One will allow for rate extensions with a re-lock at a lower rate. Protect yourself and make your borrower stronger by requiring that their lender gets this done. It takes a little more time, but strengthens your deal. Ask your escrow officer to do a Public Records search. Again, protect yourself and strengthen your bargaining position.

Also, please, please, please give us loan officers the time to get your borrower pre-approved. If we get a call Saturday afternoon about a new client who has a few credit issues and wants to make an offer on a house, don't expect a rock solid pre-approval or the best rates. At least give us a few days to be able to work our miracles.

Listing Agents- Take your due diligence a step further, but please show grace as most Realtors/lenders will not be on the same page and might be offended. Suggest that it would strengthen their offer if these things were done. Ask them "Is your buyer Bonafide"?

With a little more work up front, there should be very few deals that fall apart at the last minute because of borrowers with surprises.  

Call me. I make buyers bonafide. 503-421-0096

Larry Morris is a loan Officer with Equipoint Financial Network in Newberg, Oregon. He specializes in relocations and Sherwood, Oregon Real Estate. He can be reached at larry.morris@equipoint.com . His website is http://www.pdx-mortgage.com/ . This material is copy protected 2007 by Larry Morris, Mortgage News that Matters. All Rights Reserved

Licensed in: OR, WA, AL, AK, AZ, CA, CO, CT, FL, GA, HI, ID, IL, IN, IA, MD, MA, MI, MS, MO, MT, NE, NV, NH, NM, OK, SC, SD, TN, TX, UT, VT, VA,

Bill (not his real name) was referred to me by an agent that I'm working with. He was in the process of purchasing a new property and selling one of his rentals. His credit score was around 650. He had no derogatory marks on his credit but did have high balances on both of his credit cards. Our intention was to pay his debt down once he sold his rental.

I ran a scenario through a "what if" simulator that my credit reporting company has and found that if we left around $100 on both cards his scores would raise by at least 50 points. This would put him in a great loan at 95% CLTV.

Several weeks later I reran his credit as we were faced with a decision and I wanted to make sure taht we were ok. His scores had decreased to about 642. Ouch! Other than my credit pull, the only other action was an additional $1000 placed on his credit cards.

Fast forward to last Friday. He has sold his rental, paid his cards down to around $300 each and we have successfully updated his credit report with all three bureaus. He now has a 713, 705 and 698. We will be able to place him into a great loan. 

I bring this up to show how much a credit score can flucuate in a very short time period.