Credit Scores going up?
You might of seen some media attention lately, that people’s FICO scores are going to go up. This is a great attention grabber headline, but the devil is in the details.
Due to a major court ruling, credit report will now not include Federal or State Tax Liens on the credit report. By not including these on the reports, it is anticipated that someone WITH the tax liens could see their FICO score jump 30 points. But that is ONLY for those who have tax liens. Rest of us, no change.
Now this is causing some chaos in the lending world, how do we verify that a borrower does NOT have any tax liens now. Because under Federal Lending Guidelines, a borrower can be potentially declined for a loan if they have outstanding tax liens.
Well lenders are going to 3rd party resources during the underwriting process and looking at title reports to ensure a borrower doesn’t have a tax lien. This is causing some issues because we will not know if a borrower does or does not have liens until we get into underwriting or until we have the title report.
Moral of this story is, loan approval letters are going to start becoming contingent on review of tax lien records and title report.
Link to one of the articles here: https://www.cnbc.com/2018/05/11/credit-scores-just-got-a-boost.html
Well this weeks sucked for rates, plain and simple. The jump in the 10-year Treasury note from 2.99% to a high this week of 3.11% caused a lot of worry to traders as the 3.04% was considered a strong resistance. Our next resistance is all the way at 3.34%. The 10 Year Treasury is a good gauge on what Mortgage Backed securities will follow.
The main focus that has caused the jump is Oil and inflation. Everything we touch is influenced by oil, and with the sabre rattling happening with Iran, Oil has jumped over $80 a barrel. This is adding some fuel to the inflation fire, and now the Fed is going to have to, potentially, increase the number of rate increases this year in order to keep inflation tamed.
Some of the numbers that have kept inflation fears alive:
Retail sales 0.3% vs est. of 0.3%, retail is rocking still.
Building permits 1.352M vs est. of 1.350M, huge number.
Weekly jobless claims, the 4-week average fell to 213,000, which is lowest since 1969.
Continuing Jobless claims fell from 1.780M to 1.707M, the lowest number since 1973!
We are seeing some temporary relief, but only because bonds are wayyy oversold. I added Trending Lines to the chart today. Only to give a sense of where rates are going to trend, and it also shows where rates can not improve to. Basically, rates cannot improve above the April 27th mark, which was the 4.625%.
Nothing, and I mean nothing is pointing to rates being in the 4’s much longer, and I suspect that with next week’s data, we can kiss the 4’s good by and welcome the 5’s. But we need to watch that 10 year treasury and the Federal Reserve next month, as we could see rates spike into the high 5’s, and dare we say, 6’s. Repeat after me….6% is not a bad rate.
FEMA updated flood data for both Ada & Canyon county, and there are more areas that now require flood insurance. I have linked the data map below.
I was recently asked by a Realtor about the difference between a Flood Plain and a Flood way. So I have found a good YouTube Video from the Army Corp of Engineers that explains it.
The reason the Realtor asked, is some clients purchased a home, and it was not disclosed that they are on a Flood Way. The clients wanted to build a shop on their property, but the City told them they could not, AND the existing structures on the property, that were in the Flood Way, and to be removed.
So, do you have to have flood insurance if you are on a flood way? Probably, you have to contact your insurance agent and review a Flood Certificate. Now if you are in a flood zone, you also need to see if you are in a Flood Way also, because if you are in a Flood Way, you cannot build on that area.
So be aware of this for your clients. And a couple words of wisdom:
If you get a loan, we pull flood certificates, on ALL homes, but the flood cert only tells me if you are in a flood zone and that you may or may not have to have flood insurance.
If the lender says you have to have flood insurance, further research would need to be done to see if the home is in a Flood Way.
But what happens if the borrower’s are paying cash for the home. Well call up your friendly neighborhood Mortgage Broker (ME!) and for $15.00 we can pull a Flood Certificate.
Valuable links that will save you from an E & O Claim:
Video on Flood Ways: https://www.youtube.com/watch?v=Pqyessf4xBA
FEMA site on Flood Ways: https://www.fema.gov/floodway
State of Idaho Flood Map: https://www.idwr.idaho.gov/floods/map.html
Ada County Flood Map with Recent updates: https://gis.adacounty.id.gov/Floodplain/
Why us a Mortgage Broker?
We use Local Underwriters and National Underwriters. Some of my best underwriters are actually on the east coast. They have my files complete even before my 1st can of Mtn. Dew, that is how we can get initial underwrites in <24 hours.