Long Beach, Ca. When buying or selling an REO property, it is much better to go with a direct lender; especially, here is Southern California in that there's quite a bit of doubt about the viability and truthfulness for the pre-qualifications offered by mortgage brokers at the receiving end of a sales contract. In addition, CNN is reporting more large banks are cutting ties to mortgage brokers, insisting that direct contact with an internal mortgage officer who can explain various products and help borrowers choose one that best meets their needs is essential. Brokers counter that they help consumers by monitoring products and costs of various lenders and that lenders --not brokers-- have the final say when it comes to writing the loan. Perhaps that is why we are seeing a number of former broker shops wanting to become a mortgage banker. In fact, partly because of this reason, this writer has associated with GEM Mortgage, a direct lender headquartered in Bakersfield, Ca. From a seasoned mortgage broker's perspective, it is definitely an edge right now to be associated with a direct bank over brokering loans and I feel that if you are an active real estate agent, then you should stick with a direct lender that you trust and has the experience to ride out this market. Likewise, if you are a buyer, make sure that you wisely shop your new home loan to several lenders so at to get a feel for the available interest rates.
As you probably are aware, the Stimulus Package is being fast tracked, however one key provision for housing, the $15,000 tax credit will not be a lucrative as we originally thought. Senate lawmakers have agreed on a nearly $790 billion stimulus package, with the House expected to vote on the plan by the weekend and the legislation to arrive on the president's desk by Feb. 16. The bill comprises four main categories: investments in health care and alternative energy; funding for "shovel-ready" infrastructure projects; tax breaks for people and businesses; and aid to state and local governments. Initial reports showed that the bill includes $282 billion in tax breaks. However, the final package will substantially reduce the Senate's proposed $15,000 tax credit for home buyers, placing income limits on who could benefit and reducing the overall cost from $35 billion to about $5 billion. Not what we would have hoped for, but perhaps better than a poke in the eye as they say.
Equity market off to an unpleasant start this AM as skepticism is creeping in on the impact of the stimulus package and jobless claims climbed to a new record. "The market is deeply cynical of what's going on and no one in Washington has any more idea than a goat what they're doing," said Peter Sorrentino, who helps manage $15.5 billion at Huntington Asset Management in Cincinnati. "Unemployment numbers are going to be bad for a while. Wall street seems to be saying " President Barack Obama's stimulus plan will be insufficient to avert the biggest U.S. economic decline since 1946 as consumer spending posts its longest slide on record, according to a monthly Bloomberg News survey. The world's largest economy will contract 2 percent this year, half a percentage point more than last month's forecast, according to the survey.
With this concern in the equity market it has curtailed the increase in pricing from the last several weeks. Treasurys remained higher Thursday, pushing yields down, after a report showed continuing stress in the employment market amid rising concern that lawmakers' plan to stimulate the economy will not be effective. Yet on a positive side, retail sales were surprising improved in January. "U.S. Treasurys are lower in yield on concerns that the U.S. stimulus package will not be sufficient enough," said Thomas di Galoma, head of U.S. government bond trading at Jefferies & Co. Investors often seek the relative reliability of U.S. government debt as an alternative to riskier assets, including stocks, when the economy declines. So where does that leave us this morning. I still think rates will relax after the huge government auctions are over with and while investors remain in a skeptical mood, we should see rates moving back from our current highs in the next few weeks. So says the great "Oracle" of Bakersfield. For now your pricing for 30 year fixed rate loans is about the same as yesterday. Currently, the Ten Year yield is at 2.79% (2.82% yesterday) Remember tomorrow is a short lock day and with the long President's weekend, make your lock decisions early.
According to "The Wall Street Journal," the city of Las Vegas wants to use two million dollars of the economic stimulus for new neon signs. City officials are concerned, since they don't want to make the city look tacky. Appearances are everything. If you want to lighten your day, you can see some humorous looks at the so called Stimulus package. Enjoy. http://caps.fool.com/Blogs/ViewPost.aspx?bpid=144711&t=01001019292467236494
Kirk Mulhearn, a Long Beach Real Estate Broker and Professional Mortgage Planner, may be contacted at: 562-989-4608 ext. 110
Subscribe to this blog at: www.longbeachrealestateandloans.com