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This site is dedicated to informing the Real Estate Professional. I Blog each Friday, to keep you informed of upcoming changes, statistics, rates and lending news.  There is also links to program brochures on the right, as well as charts and news to keep informed.

Home Loan rates TANK, Mortgage Fraud on the rise

In this Blog:
-Mortgage rates worsen, more than last week.
-Mortgage Fraud on the rise
-Appraisal Waivers
-Marketing Idea!

Mortgage Rates

Although the sky isn’t falling, I will be blunt with you, mortgage rates sucked this week.

We had 2 reports that came out this week, and both reports caused and is causing mortgage rates to jump, quite significantly.  Let’s look at the reports.

Wednesday, we say ADP private payroll numbers, the number was supposed to be 180,000 new jobs, but it jumped to 230,000 new jobs.  This number caused the bond market to sell off, and fears of inflation, specifically wage inflation, sent traders worrying. 

Wages increase because there aren’t enough workers in the market, so employers are “buying” people from other companies in order to fill staff.  In order to “buy” employees, wages or benefits have to increase.  With wages or benefits increasing, this means the company’s profits decrease, OR they increase the price of the product they sell, i.e. inflation.

Wednesday was one of the worst days for mortgage rates since 2016.

Now onto Friday, we received unemployment numbers, and it only showed a creation of 134,000 jobs, on the expectation of 180,000 jobs, but this is expected to be revised, mainly due to the Hurricane that hit the east coast.  And speaking of revisions, July was revised from 147K to 165K, and August was revised from 147K to 157K.

Unemployment, which is kind of a dumb, biased number, did come in at 3.7%, which is the lowest unemployment rate in 50 years.

These numbers spooked Traders, but what really got them in a tizzy today is Wage Inflation. Weekly Earnings rose from 3.2% to 3.4%, year over year, and is the highest level in 11 years.

Now with inflation going higher, employment cost going higher, and bond rates going higher, the stock market is selling off, because all of these are going to start to hurt Corporate Earnings.  And with such a HOT inflation number in wages, there is more chatter that the Federal Reserve is going to increase rate by more or even more frequently. 

At this time, there is no end in sight for this cycle.  We might get some leveling out, but if any, it would be for a short period.

I was locking rates all day yesterday, and I am pretty sure I locked my last 4% rate, for a long time.  Say Hello to 5’s and I think I can see 6’s coming sooner rather than later.


Just when you think it couldn’t get any easier to approve a borrower, this report came out.

Fraud increased 22% in a survey by CoreLogic.  So, what does this mean for you?  I suspect guidelines are going to tighten up with regards to income.

Right now, for conventional purchases, we are basically only need a 2017 w-2 and a paycheck stub, as long as the borrower has been with the same company for 24 months.  For Government, FHA/VA/RD, we just need 2 years of tax returns, with w-2’s, and 30 days of paycheck stubs.

Based on this survey and data, we might be going back to the day of 3 year of tax returns, 60 days of paycheck stubs, and Verification of Employment Forms, AND tax return verification.

But I think the overall, underlying theme here is that underwriting guidelines have loosened up, and home prices have risen and interest rates are rising, that people are scrambling to get into homes, so they are creating fraud. 

Starting to feel like 2008 all over again…I hope not.

Appraisal Waivers

We are starting to see more and more appraisal waiver, so much so, that 1 of my lenders is even paying for an appraisal if you don’t get one, on conventional mortgage only.

FHA/VA/RD are not allowing for appraisal waivers.

So what happens here, we well if the borrower has good FICO scores, and is putting 20% down, I would say 90% of the time Fannie/Freddie is issuing an appraisal waiver.  Now some lenders will not tell you they have the waiver, so you should ask.

All of my lenders are accepting Appraisal Waivers, which is saving a buyer $550, and cutting down closing times significantly.

Marketing Idea

It is October, and October is Halloween time, and Halloween time means 2 things…Pumpkins and Costco Pumpkin Pies!

Contact all of your past clients, you should have a list of them, because you are mailing monthly mailers out…right?

Offer a Free Pumpkin for Halloween, or a Free Pumpkin Pie, get a list together and then go to Costco and pick up your Pumpkin or Pumpkin Pie, and HAND DELIVER them to your past clients.  Have a cool little tag on it, thanking them, and…wait for it…asking for referrals.  Don’t forget to attach 5 business cards to each one also!

Posted by 375loan at 10/6/2018 12:41:00 AM


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