Rate Lock Extensions Now Cost More

Thank you to Jonathan K. for reporting that Nancy Pelosi demanded a new round of stimulus checks for Americans. “The last check didn’t work out so well. The people who spent it are broke again and the people who put it in the bank are waiting for the bank to open so they can get it out.” Speaking of banks, this story received a lot of attention. Suddenly folks started talking about another FDIC takeover this Friday, and throwing out names like “Lehman Brothers Bank”, “SunTrust”, and the perennial favorite “Washington Mutual”.

MORTGAGE APPS LOWEST SINCE 2000
There’s an old mortgage banker saying: “Don’t use the bullwhip on the Lock Desk personnel. Unless it’s absolutely necessary.” With the summer buying season, for what it was worth, winding down, rates stable, but continued tight guidelines, the Mortgage Bankers Association released its Weekly Mortgage Applications Survey for the week ending August 15, 2008: loan application volume was -1.5%. Refi’s were -3.7%, and purchases were -.4%. (The survey covers approximately 50% of all U.S. retail residential mortgage applications through mortgage bankers, commercial banks and thrifts.) It is apparently at the lowest level since the winter of 2000/2001.

RATE LOCK EXTENSIONS GETTING HARDER
Would you like to extend your lock with Chase? Be prepared to pay .625 minimum. The announcement came out this morning that effective immediately, Chase will be changing their individual loan lock extension fee from roughly .125 to .625!

ROUNDUP OF OTHER MORTGAGE NEWS

• Would you like some good news? How about, “You’re not carrying Freddie or Fannie’s debt on your credit card”? According to a story in Bloomberg, Fannie Mae and Freddie Mac, in order to avoid a federal bailout, will need to repay $223 billion of bonds due by the end of the quarter. Fannie has $120 billion of debt maturing through Sept. 30th, and Freddie has $103 billion. Both stocks are down to 1991 levels, and “Freddie paid its highest yields on record in a debt sale yesterday amid concern that credit losses are depleting the capital of the beleaguered mortgage-finance companies.” Who buys their debt? Investors in Asia are the largest foreign owner of Fannie’s $3 trillion of bonds.
• Are retail bank branches all allowing their agents to broker loans out to other lenders? Perhaps not, but Chase retail agents are allowed to do so if Chase does not offer the product internally, although it is highly discouraged. Locally, here in Northern CA, Tamalpais Bank branches, since they have stopped even offering single family mortgages, refers clients elsewhere.
• U.S. Bank Home Loan defines a short sale/ preforeclosure as a “Sale that involves the sale of a property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by the lender/servicer.” Freddie Mac is silent on how to address short sales (preforeclosure sales) when evaluating a borrower’s credit reputation. Fannie established a requirement that for borrowers with extenuating circumstances that requires a 2-year time period reestablished credit profile prior to application for a new loan for a borrower with a previous short sale. USBHL is adopting the Fannie Mae guideline of a 2-year timeframe for reestablished credit following a preforeclosure sale provided that the borrower can document extenuating circumstances. U.S Bank also lowered their maximum LTV for Florida condos to 80%, unless it is an approved project where private mortgage insurance is obtained.
• They remind us that the major MI Companies are not insuring condos due to the oversupply in the market and the associated lending risks.

LIGHT ECONOMIC NEWS
No news out today, but tomorrow we’ll see Initial Jobless Claims, the Philadelphia Fed survey, and Leading Economic Indicators. There is no news Friday either. All quiet on the mortgage front, with prices unchanged from yesterday afternoon and the 10-yr comfortable at 3.82%.

JOKE OF THE DAY
Thank you Anjali:
The couple was 85 years old, and had been married for sixty years. They were far from rich, but managed to get by because they watched their pennies. They were both in very good health, largely due to the wife’s insistence on healthy foods and exercise for the last decade.
One day, they went on a rare vacation and their plane crashed, sending them off to Heaven. They reached the pearly gates, and St. Peter escorted them inside. He took them to a beautiful mansion, furnished in gold and fine silks, with a fully stocked kitchen and a waterfall in the master bath. A maid could be seen hanging their favorite clothes in the closet.
They gasped in astonishment when he said, ‘Welcome to Heaven. This will be your home now.’
The old man asked Peter how much all this was going to cost. ‘Why, nothing,’ Peter replied, ‘remember, this is your reward in Heaven.’
The old man looked out the window and right there he saw a championship golf course, finer and more beautiful than any ever built on Earth.
‘What are the greens fees?’ grumbled the old man.
‘This is heaven,’ St. Peter replied. ‘You can play for free, every day.’
Next they went to the clubhouse and saw the lavish buffet lunch, with every imaginable cuisine laid out before them, from seafood to steaks to exotic deserts, free flowing beverages.
‘Don’t even ask,’ said St. Peter to the man. This is Heaven, it is all free for you to enjoy.’
The old man looked around and glanced nervously at his wife.
‘Well, where are the low fat and low cholesterol foods, and the decaffeinated tea?’ he asked.
‘That’s the best part,’ St. Peter replied. ‘You can eat and drink as much as you like of whatever you like, and you will never get fat or sick. This is Heaven!’
The old man pushed, ‘No gym to work out at?’
‘Not unless you want to,’ was the answer.
‘No testing my sugar or blood pressure or…’
‘Never again. All you do here is enjoy yourself.’
The old man glared at his wife and said, ‘You and your bran muffins. We could have been here ten years ago!’