Rates
Although these was lots of swings this week in rates, as of today, rates only worsened by .26 bps, which really relates to a tiny worsening of mortgage rates.
This week was all about oil and the Federal Reserve.
Oil continued to slide as OPEC can’t seem to control prices and are good with letting them fall. Thus traders are taking their money out of commodities and putting them into bonds. Stocks also had a HUGE swing this week causing mortgage rates to spike and fall.
Items to watch on the international flavor:
-Oil continuing to fall, at some point, probably in the $40’s, you are going to start to see mass layoff in the oil fields of North Dakota and Texas, which will cause a spike in unemployment and investors will start to get nervous, thus stocks will sell off, but bonds will go up.
-Russia and their economic Collapse
-Greece, not much news this week, but still of concern that they will pull out of the EU.
Looking at the US, the Federal Reserve this week played on words in their statement. Really giving no indication on when they will start to raise rates, although at Yellan’s press conference she did indicate we are probably good until their 2nd meeting in June.
So I suspect May will be a VERY VOLITILE month for mortgage rates, as traders hedge bets on what will happen in June. We saw something similar a couple of years ago, and rates literally had ½ point to ¾ point swings on a daily basis.
Home Builder’s Sentiment 57 vs. est of 58.
Housing starts 1.028M vs est. 1.025M
Building permits 1.035M vs est. 1.047M
CPI or inflation, -0.3 vs est. of -0.1 (that would be NO inflation)
Jobless Claims 289K vs est. of 295K (watch this number as oil drops)'
Found this chart of New Single Family Start, pretty interesting, really shows that we still have a long way to recover, focus on the RED line.
Neutral on locking right now, leaning to just lock, rates are still pretty dang good to gamble.
RESPA Section 8
With the holiday season fast approaching, there seems to be more and more RESPA section 8 violations happening. I.e. Businesses giving gifts to other business.
That is great, and I don’t want to seem like a Grinch, but the CFPB is cracking down on RESPA section 8 Violations like there is no tomorrow.
I found a GREAT quote that pretty much sums it up
Questions 1: Do you give clients gifts for referring you business? If answer = Yes go to question 2
Questions 2: Do you give clients gifts for NOT referring you business? If answer is no you go to jail.
1 year in jail and $10,000 fine, per gift, and that is for the person giving the gift AND the person receiving the gift.
The CFPB is here to stay. And they are loving to crack down on US!
Here is REALTOR.org web site with some FAQ: http://www.realtor.org/topics/real-estate-settlement-procedures-act-respa/respa-faq
Earnest Money checks
Recently had a situation where as realtor took a earnest money check for $500 from borrower for a purchase.
When the check was cashed, the borrower didn’t have enough money in the account, but the money came out of their “overdraft” account.
The Borrower knew they didn’t have that money and knew it was coming out of the overdraft account.
As you can imagine there was some chaos on whether the PSA had to be re-written.
But we (lender) could not accept that earnest money check, because it came from “borrowed funds”.
Then this also caused some chaos on the lending side because the borrower purposely “bounced” a check.
So rule of thumb, when taking a check (and PLEASE never take cash) ask them if they have the money in their account, and that the money isn’t coming from any type of overdraft account.
Congress Budget
Late Tuesday night, the President sign into law a pseudo budget, and there was a couple of items in there that are particular interest to us in the Real Estate World:
1-The Mortgage Debt Relief Act of 2007, was extended again, this allows for the deficiency in a short sale to NOT be taxed by the IRS, owner occupied homes only. So anyone who completes a short sale, and their Bank forgives them of the deficiency, they will not be taxed, please consult your CPA.
2-Mortgage Insurance is still tax deductible, this was to expire this year, but a homeowner can still deduct not only their Mortgage Interest but they can deduct their Mortgage Insurance monthly payment as well….please consult your CPA…yadda yadda yadda.
What does a FHA appraiser look for?
Boy, this is a big question that is consistently asked to me. So I got with a couple of GREAT FHA appraisers (Thanks Mike & Stu) and we worked out a form.
This can be utilized when you walk through the home or can be given to sellers for them to walk thorough.
It is a good read, and also basically covers what a RD and VA appraiser looks for also.
Although this isn’t everything, it is a good start and gives an overview of the most common items.
Link to form here: FHA Appraisal Questions
I am not a licensed Appraiser in the state of Idaho.