According to the May 7th Freddie Mac survey the national average for 30 year fixed rate conventional mortgages is 4.84% with .7% in points. Wow!! Great rates!! Why is my quote higher or lower? Well…rates are not one size fits all. They are tiered based on your loan-to-value ratio (LTV) and your credit score. If you are purchasing a home and have a 10% down payment and a 680 FICO score, your rate will be slightly higher than a buyer with a 25% down payment with a 740 score. If you are refinancing your home and your LTV is over 70% and your score is under 740, you will likely be quoted a higher rate or higher points.
Fannie Mae (FNMA) and Freddie Mac have changed the rate or point structure significantly in the past eighteen months for borrowers with lower credit scores and higher LTV ratios. At the same time, credit guidelines have also tightened. Another recent change in mortgage rates is points! In the past fifteen years, lenders paid premiums or rebates to the originator in lieu of the borrower paying points to get a mortgage with low rates and fees. This year, the rebates are smaller and lenders are charging borrowers points. Here in Tucson at Sunstreet Mortgage, LLC, we have not seen as many zero point refinances or no cost refinances of conventional loans. One reason for this dynamic is because borrowers were refinancing the loans frequently and the lenders were not getting their money’s worth for the larger rebates. One positive aspect of the current rate and fee environment is the costs seem to pay for themselves within three years in most cases due to the historically low rates we are currently experiencing.
I would be happy to personally answer any mortgage related questions and concerns that you may have. I can be reached by calling me — David Wolsky – at 520-977-3300. I offer conventional, FHA and VA mortgages. I have fifteen years of experience originating mortgages. In fact, rates were double in 1994 than the current rates.
Andrew Cuomo wants to follow in his father’s footsteps and become governor of New York. His impressive resume includes time spent in the Clinton administration in the Department of Housing and Urban Development as the HUD Secretary. In Cuomo’s current role as the Attorney General of New York, he has been a vigilant fighter of predatory lending as was his predecessor Eliot Spitzer. In 2007, Cuomo came devised the Home Valuation Code of Conduct (HVCC) because of alleged collusion between the mortgage lender, Washington Mutual and their appraisal management company. Cuomo sued WaMu and First American Corporation’s eAppraiseIT unit for using a select list of appraisers to inflate the property values of mortgage appraisals. Freddie Mac and Fannie Mae implemented a revised HVCC on May 1, 2009. The new code is an attempt to improve the reliability of appraisals.
Mortgage originators (that’s me!) will no longer be able to communicate with appraisers thus eliminating the potential for an inappropriate conversations about values. Sunstreet Mortgage has implemented a system of having a neutral third party order our appraisals. Our new system has satisfied our investors (the folks who buy our loans). Naturally, any major change in procedures such as HVCC may require some tweaking. In my opinion, the consumer may suffer. For example, we are already hearing stories of large banks experiencing long delays and inferior appraisals.
Wednesday (April 29, 2009) was the deadline for submitting feedback regarding HVCC or the Home Valuation Code of Conduct. The HVCC, in its current form, contains select language that hurts brokers, agents, appraisers, and consumers.
The underlying story is how well this story has flown under the radar. A handful of appraisers, agents, and mortgage brokers I have spoken with were either unaware or vaguely aware of the HVCC and its implications. Unlike legislation moving through the Senate and House, the HVCC has received very limited coverage. While we are acutely aware that with less then 36 hours until the feedback deadline meaning a petition may be a bit late, we are also aware that you miss every shot you don’t take, that is why we ask you to join us in signing the Petition to Reconsider HVCC.
History:
After an investigation by New York Attorney General, Andrew Cuomo into Fannie Mae and Freddie Mac Appraisal practices, the agencies (with the Office of Federal Housing Enterprise Oversight (OFHEO)) agreed adopt new changes to how appraisals are processed in the mortgage industry in exchange for an end to the investigation. The centerpiece of the agreement is the HVCC, which contains many positive and common sense initiatives to help clean up the industry, but also contains significant negative changes to the how brokers and agents are able to work with appraisers and how appraisers are able to operate, hurting consumers, mortgage brokers, agents, and appraisers.
What it means for Brokers:
1. Brokers (or anybody compensated on a commission basis upon the successful completion of a loan) may not choose appraisers to be used for loans they originate and may not engage in any communication with appraisers. Choosing appraisers and all communication with appraisers is delegated to lenders. This means that brokers are not only not allowed to choose appraisers based on quality of work and professionalism, but ultimately lose control of an integral part of the loan origination process, possibly increasing loan funding times and increasing costs to the consumers in the form of longer rate locks and the need to order new appraisals if there is a change of lender.
2. Since appraisals are made in the lender’s name and not the broker’s, if the broker chooses a new lender for the deal, a completely new appraisal will need to be ordered. This increased consumer costs and the time involved in the transaction.
3. All relationships with appraisers are rendered meaningless overnight.
4. Brokers lose control over transactions and are put at disadvantage as power is shifted toward and biased towards large institutions.
What it means to Appraisers:
1. Must use AMC’s (appraisal management companies), meaning independent appraisers are forced to join and AMC and give 40% or more of their income to the AMC. You read that correctly, this will deprive independent appraisers of nearly 50% of their income in most cases (this could likely mean many experienced appraisers will leave the industry altogether). AMC’s are not regulated, by the way.
2. Unfairly targets appraisers, does not affect AVM’s (Automated Valuation Models) and BPO’s (Broker Price Opinions). This not only hurts appraisers as Lenders may prefer unregulated and unrestricted alternatives that are not included in the HVCC and in a manner which is in contrast with the stated purpose of HVCC.
3. Disallows appraisers from engaging in ANY communication with mortgage brokers, loan officers, agents, or others that may receive a commission upon funding of a deal. This means appraisers are not allowed to talk to their clients, a restriction no placed on any other industry to date. This means all the client relationships they have built are rendered meaningless overnight, an unprecedented act against any industry segment to date.
What it means to Consumers:
1. Must use AMC’s (appraisal management companies), meaning independent appraisers are forced to join and AMC and give 40% or more of their income to the AMC. You read that correctly, this will deprive independent appraisers of nearly 50% of their income in most cases (this could likely mean many experienced appraisers will leave the industry altogether). AMC’s are not regulated, by the way.
2. Unfairly targets appraisers, does not affect AVM’s (Automated Valuation Models) and BPO’s (Broker Price Opinions). This not only hurts appraisers as Lenders may prefer unregulated and unrestricted alternatives that are not included in the HVCC and in a manner which is in contrast with the stated purpose of HVCC.
3. Disallows appraisers from engaging in ANY communication with mortgage brokers, loan officers, agents, or others that may receive a commission upon funding of a deal. This means appraisers are not allowed to talk to their clients, a restriction no placed on any other industry to date. This means all the client relationships they have built are rendered meaningless overnight, an unprecedented act against any industry segment to date.
