Living In Tucson Blog

Mortgage bonds have seen steep sell-offs for the past four days which will impact the housing recovery and slow down the pace of refinances! We have had multiple rate increases since last week. The sell-off will put added pressure on an overloaded system to close loans before rate locks expire. As I write this update on May 27th (around 11:00 A.M.), mortgage bonds have dropped over 350 basis points since May 20th. The bonds are at the levels we saw in March when the Federal Reserve announced their strategy to purchase mortgage bonds and push rates lower which ignited a mortgage bond rally dropping bond yields. Let’s see if the Fed will try to calm the markets by purchasing more bonds and stopping the bleeding. Eventually, the bond market will find a floor of support and bounce back. Keep in mind, rates are still near historic lows and the conditions for buying a home are still excellent. I am only trying to point out the drastic selling of mortgage bonds within the last week.

Here’s an article from Bloomberg by Jody Sheen:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aw90LMfkBOeU&refer=home

If you are interested in buying or refinancing a home, contact David Wolsky (that’s me!) at 520-977-3300 for all your mortgage needs in Tucson, Arizona. I am licensed throughout the state.

HVCC (Home Valuation Code of Conduct) is a work in progress. HVCC is the new legislation that went into effect on May 1^st, 2009 for the appraisal process which forbids loan originators (that’s fancy talk for loan officers) and loan processors from having any direct communication to the appraiser. The original intent of the program sounded good on paper. Unfortunately, the implementation of this program leaves much to be desired. Of course, this is coming at the worse time for our industry as real estate sales are extremely sluggish and credit is already tight.

When appraisals are ordered for a refinance, the loan amount and estimated value are not furnished to the appraiser. A contract is submitted to the appraiser for a purchase transaction. Appraisals are obtained from appraisal management companies which can potentially add extra expense to the cost and quality of an appraisal. For example, some appraisal management companies charge borrowers a flat fee, such as $400 and then pay the appraiser only $200. These appraisers were receiving $325 for the same work prior to HVCC and they may decide to opt out of certain appraisal management companies leaving behind less experienced appraisers that are willing to work for reduced fees plus the quality is potentially worse thanks to inexperience. Ultimately, the consumer suffers. The program is only a few weeks old and we are already experiencing delays and lower values than expected. A borrower can try to get a second appraisal if they are unhappy with the results, however the appraisal management company may assign the same appraiser to the property or the value could be even worse from different appraiser! If the borrower wants to switch to another mortgage company for their loan, the appraisal in not transferable which means an additional expense for the consumer.

Check out this article by Kenneth Harney for more information on this subject: http://realtytimes.com/rtpages/20090511_washingtonreport.htm

Hopefully the program will be tweaked and improved. If you are unhappy, an email or phone call to your senator or congress person could help.

If I can assist you with your mortgage needs, please contact me, David Wolsky at 520-977-3300. My email address is david@davidwolsky.com.