On Consumer's Back

CFPB's Proposed Amendment to TRID Disclosures Impact Lenders Oh NO MR BILL  We are going to hit you on the back side of the head, again 3 working days to Wait for LE,  three more to lock,  three more for final CD  but escrow has to massage the numbers two days  so minimum Federal requirement for closing a loan in perfect conditions is nine working days  BUT lender has to pay for appraisal re-inspection, any interest rate increases, seller can't give last minute credits, no add ins of repairs at the end.  Mine government at work.... or not as the case may be Mr. Bill don't worry we'll get you into a home. Mortgage lenders fear violating the disclosure requirements of the TILA-RESPA Integrated Disclosure Rule ("TRID" or "Rule").  Consumer Financial Protection Bureau ("CFPB") provided informal guidance on certain issues prior to the October 2015 effective date of the Rule, ambiguities in the Rule remain that impact accurate delivery of the Loan Estimate ("LE") and Closing Disclosure ("CD") in connection with applications for closed-end, real estate-secured mortgage loans. The CFPB recognized that regulatory amendments were necessary to memorialize this informal guidance regarding the LE and CD to reduce the risk to lenders of TRID violations. On July 29, 2016, the CFPB issued a Notice of Proposed Rulemaking ("NPRM") to propose a number of amendments to TRID that would formalize certain of its informal guidance and make other technical changes to the Rule.  The NPRM does not touch on every issue that industry participants have raised, but it is a step in the right direction, indicating that the CFPB is sensitive to some of the challenges created by the Rule. Although the NPRM does not provide all the cures that lenders would have hoped for, many of the proposals should provide some relief to them. As mortgage industry participants continue to anxiously await the CFPB's final regulations to implement these proposed changes Pray the proposals  improve upon the challenges that lenders currently face in providing accurate LEs and CDs to consumers.

USDA NEWS Income Limits for California

News from USDA about income limits per number of members in
family for California
GUARANTEED HOUSING PROGRAM INCOME LIMITS
STATE: CALIFORNIA
2017 Mid Year  A D J U S T E D  I N C O M E  L I M I T S
P R O G R A M
1 PERSON 2 PERSON 3 PERSON 4 PERSON 5 PERSON 6 PERSON 7 PERSON 8 PERSON Family
Bakersfield, CA MSA
VERY LOW INCOME 29950 29950 29950 29950 39550 39550 39550 39550
LOW INCOME 47900 47900 47900 47900 63250 63250 63250 63250
MOD.INC-GUARANTEED LOAN 78200 78200 78200 78200 103200 103200 103200 103200

Chico, CA MSA
VERY LOW INCOME 31300 31300 31300 31300 41300 41300 41300 41300
LOW INCOME 50100 50100 50100 50100 66150 66150 66150 66150
MOD.INC-GUAR.LOAN 78200 78200 78200 78200 103200 103200 103200 103200

El Centro, CA MSA
VERY LOW INCOME 29950 29950 29950 29950 39550 39550 39550 39550
LOW INCOME 47900 47900 47900 47900 63250 63250 63250 63250
MOD.INC-GUAR.LOAN 78200 78200 78200 78200 103200 103200 103200 103200

Fresno, CA MSA
VERY LOW INCOME 29950 29950 29950 29950 39550 39550 39550 39550
LOW INCOME 47900 47900 47900 47900 63250 63250 63250 63250
MOD.INC-GUAR.LOAN 78200 78200 78200 78200 103200 103200 103200 103200

Hanford-Corcoran, CA MSA
VERY LOW INCOME 29950 29950 29950 29950 39550 39550 39550 39550
LOW INCOME 47900 47900 47900 47900 63250 63250 63250 63250
MOD.INC-GUAR.LOAN 78200 78200 78200 78200 103200 103200 103200 103200

Los Angeles-Long Beach-Anaheim, CA MSA
Los Angeles-Long Beach-Glendale, CA HUD Metro FMR Area
VERY LOW INCOME 45050 45050 45050 45050 59450 59450 59450 59450
LOW INCOME 72100 72100 72100 72100 95150 95150 95150 95150
MOD.INC-GUAR.LOAN 103650 103650 103650 103650 136800 136800 136800 136800

Santa Ana-Anaheim-Irvine, CA HUD Metro FMR Area
VERY LOW INCOME 52150 52150 52150 52150 68850 68850 68850 68850
LOW INCOME 84550 84550 84550 84550 111600 111600 111600 111600
MOD.INC-GUAR.LOAN 121550 121550 121550 121550 160450 160450 160450 160450

Madera, CA MSA
VERY LOW INCOME 29950 29950 29950 29950 39550 39550 39550 39550
LOW INCOME 47900 47900 47900 47900 63250 63250 63250 63250
MOD.INC-GUAR.LOAN 78200 78200 78200 78200 103200 103200 103200 103200


* ADD 8% OF 4 PERSON LIMIT FOR EACH PERSON IN EXCESS OF 8 PERSONS
** MODERATE INCOME IS DEFINED AS THE GREATER OF 115% OF THE U.S. MEDIAN FAMILY INCOME OR 115% OF THE AVG.
OF THE STATE-WIDE AND STATE NON-METRO MEDIAN FAMILY INCOMES OR 115/80THS OF THE AREA LOW-INCOME LIMIT
05/17/2017

Note USDA requires the property legal location to meet their rural guidelines.
Some of the Counties above in California may have only a handful of homes that
meet USDA location rule. for example Orange County Irvine is listed but there are zero
residences in Irvine that qualify. Silverado Canyon is one rare example of property location
that may meet USDA rules in Orange County

This mortgage loan program is wonderful for rural properties. It was intended to
populate the more remote parts of America with solid homeownership

new mortgage guidelines

Mortgage Loan  Approvals

Freddie Mac Income changes and Asset changes.  

New requirements 2017 Mid year

 Freddie Mac selling guide section

Some of the current common reasons for using Freddie vs. Fannie are:

• 1 mo. bank statement (vs. 2 mos. required by Fannie).  No change on this in July for streamline Accepts.
• 1 year business and personal tax returns for self-employed borrowers (vs. 2 years most often required by Fannie). In July 2 years business and personal tax returns will be required for those businesses less than 5 years old.
• Using K-1 income without it showing distributions.  In July Freddie will also require the lender to assess business liquidity before being able to use this income to qualify.

Some important changes to note:

• Coming in July - When analyzing income over a 2 (+) year period, whether employed or self-employed, the trend and degree of fluctuation must be analyzed.
• Coming in July – the loan LTV requirement for Assets as a Basis for Income will increase to 80%.  Currently is 70% LTV for both Fannie and Freddie.
• Using business asset will require specific documentation requirements. 

Mortgage Rates Fall!

MORTGAGE RATES FALL WITH BAD NEWS

YIPPEE for me 

weed out high interest rates and refinance or 

jump to another lender to avoid "unlock" penalties

WAIT UNTIL THURSDAY 5/18/17  

but not Friday (every bond trader goes to the Hampton's for the long weekend to lock, 

maybe Monday. if open or Tuesday depends on Lender

·         Overnight headlines of former FBI director Comey's records of potential wrongdoing on the part of Trump regarding the FBI's investigation of former Security Adviser Flynn spark panic but they also shake up markets. Bad news brings down mortgage rates which have been climbing in past months

So what do we hear

o    vocal outrage among other lawmakers

o    uncertainty among investors

o     yelling "impeachment" in news media

o    and the sky is falling

·         "Impeachment" news is scary stuff, but level brains in the room agree that the political uncertainty surrounding this sort of drama raises  bigger roadblocks to fiscal policy making than those encountered in mid-March.  

·         Bottom line: markets are worried that all the "stuff" that drove the big move in late 2016 is suddenly not quite as justified--or at least that it definitely won't be happening quickly ("something" would still likely happen even if Trump is impeached, because we'd still have one party in control of law-making, and they'd be arguably more unified under Pence).

Long-Term Lock/Float Strategy 

·         POST TRUMP election trade was said to be the death of the decades-long bond market rally, but some traders simply saw it as a temporary pull-back with the next rally being driven by geopolitical and fiscal uncertainty surrounding the new administration.  

·         The "temporary pull-back" explanation makes sense as rates entered a downtrend in mid-March.  They bounced out of that downtrend and had been moving higher until mid-May.

·         Either way, risks are far more balanced than they were before mid-March

Short-Term Lock/Float Strategy

·         Today's huge move obviously turns short-term strategy on its head. 

·         Risk-averse clients who are inclined to lock are justified in doing so, provided the lender in question has passed along enough of the market gains.  I'd be looking for at least 3/8ths of a point 

·          we'd like to see more of the gains passed along and are willing to accept the risk that M B S prices will be a quarter point weaker tomorrow.  A quarter point of losses should leave many rate sheets right about where they are now.  A bigger sell-off is a risk that comes with the territory of floating.  

·         Realize that big pullbacks/reversals are common in cases like this.  Interest rates are going to jump to touch ceiling and crash on the court in the same day. Advantages last for a brief time.  Floaters understand we're likely to see that weakness and they'll need to bail if it gets out of hand (i.e. if 10yr yields were moving back above 2.27.  

Technicals/Trends in 10yr 

·     TOP

o    2.27

§  this is your best friend if you're floating longer-term now. 

o    2.35% 

§  we'll talk about this if 2.27% breaks

·       Bottom

o    2.21%

§  today's lows

o    2.15-17%

"The Gap" from Nov 2016.  Breaking below this leads to the promised land, but a bounce would be as bad as a break would be good.

Call me for a quote

C G

(949) 784- 9699

NMLS 324982