Rates
After the near collapse of the Chinese Economy, and the market correction to the US stock market, you would think that mortgage rates would of fallen into the low 3’s this week.
But nope, we did see conventional dip into the high 3’s, down from the low 4’s, but they rebounded right back into the 4’s this week, you might get a high 3, but definitely not a dip in rates as expected…and why???
Well when China’s market started to crash this week, all bond traders were sure that bonds would pick up the buy, and rates would of dipped, but later in the week we found out why this didn’t happen, China SOLD US bonds.
Yep, China sold BILLIONS and BILLIONS of US bonds, i.e. our debt, in order to fund a recovery of their economy, by 1 calculations, China sold $100BILLION is US Treasuries, so they can take that cash and prop up their economy.
Even though we did have a nice dip in rates, the lingering concern is if China’s economy continues to slump, will China not only quit buying US Debt, but even worse, start selling it off???
This scenario would be even worse for Mortgage Rates then the highly anticipated Federal Reserve Fund Hike.
Rates are now in a pretty strong trading channel since July 24th, and it is anticipated to stay in there through September, or until the Federal Reserve decides what to do with the Feds funds rate.
I might be floating a little now, but it could take just 1 day of China and rates could see a spike.
FHA Changes
If you haven’t heard, FHA is rolling out a TOTALLY new guideline book on 9/15/2015. The literally re-wrote their guidelines, ALL OF THEM, and now the guideline book, called the 4000.1 is over 800 pages long.
Quick moral of this story:
-IF your borrowers were qualified before 9/15/2015 and they DO NOT have a FHA case number assigned to them, they will have to RE-QUALIFY all over again. AND they may NOT qualify now.
-IF your borrowers DO have a FHA case number, they are grandfathered in on MOST of the new rule changes, I do stress MOST.
So how do you know, ask the loan officer if they have a FHA case number, and if they don’t…GIDDY UP!!!
800 pages of change is significant, so I am just going to hit some of the highlights that are changing:
- -100 mile rule, prior, we had a 50 mile rule, where as a borrower could get a 2nd FHA home or a new FHA primary residence if they moved more than 50 miles away from their existing home, now it is 100 miles.
- -Student loans, prior, if you student loan was deferred for a minimum of 1 year, we didn’t have to count it, now a deferment or forbearance will require us to take 2% of the loan balance as a debt… OUCH!!!!
- -Gifts, Cousins are OUT, In-Laws are IN, so you can get a Gift of downpayment from the in-laws, but not cousins.
- -FHA recognizes marriages between man/man & women/women and getting gifts from those in-laws, spouses, etc.
- -No more paying down a car loan to less than 10 months to prevent it from being counted towards debts. It has to be paid off, legitimate funds, or fully counted.
- -Medical Collections ARE NOT considered debt now!!
- -Grossing up income, previously we could take Social Security Income and gross it up by 25%, now we can only gross it up by 15%.
- -Job Changes, if borrower changes jobs more than 3x in a 12 month period, LOTS of documentation!
- -2nd jobs, have to have a full 24 month history of the 2nd job, no gaps or we can’t count.
- -Overtime and Bonus calculation is significantly stricter, and in most situations will NOT be allowed to be used.
- -Commission income calculation significantly stricter.
October Loan Estimator and Closing Disclosure Deadline
Don’t forget, Real Estate as we know it changes on 10/3/2015, with the release of the new LE and CD.
Did you know, you borrowers and ENCOURAGED by the CFPB to shop the loan 3 days prior to closing the loan!!!
Find out more in my AWESOME class: https://www.titleonecorp.com/classes
I am also taking suggestions for new classes, what do you want to learn?? Email me with suggestions!!!