The article, Jumbo-loan rates unlikely to dip, from the Arizona Republic, reports that although Fannie Mae and Freddie Mac can now purchase and guarantee home loans of up to $729,750 as part of the government economic stimulus package, they won’t be traded in the secondary markets, limiting the prospect for sharply lower rates on “jumbo” mortgages. Mortgages above the conforming limit of $417,000 will not be allowed to be blended into packages of other loans traded in the To Be Announced secondary market because they carry greater risks and would therefore push up prices for securities tied to conforming loans. Because the securities derived from Fannie Mae and Freddie Mac backed jumbo loans will be traded in less liquid markets, the interest rates on these loans will need to be higher to attract investors.
Marcy GordonAssociated PressFeb. 21, 2008 12:00 AM
The Arizona Republic
WASHINGTON - The piece of the government's economic-stimulus plan aimed at bolstering the housing market may not work out as planned.Although Fannie Mae and Freddie Mac can now purchase and guarantee home loans of up to $729,750, they won't be traded in a key secondary market, limiting the prospect for sharply lower rates on "jumbo" mortgages.To address the worst housing crisis in decades, the $168 billion economic-stimulus package President Bush signed this month included a temporary increase in the cap on mortgages that the government-sponsored companies can purchase or guarantee, from $417,000 to $729,750 in high-cost markets.
In theory, this was supposed to spark investor demand for securities made up of higher-value mortgages backed by Fannie and Freddie, which would have the effect of driving down interest rates on jumbo loans and spur home-buying and refinancing activity. In practice, the impact is expected to be muted.That's because mortgages above the conforming loan limit of $417,000 will not be allowed to be blended into packages of other loans traded in the To Be Announced secondary market. The rationale is that these larger loans carry greater risks and would thereby push up prices for securities tied to conforming loans, according to Wall Street's biggest trade group, the Securities Industry and Financial Markets Association.The association said Friday that segregating the new securities would be the "least disruptive option."Because the securities derived from Fannie- and Freddie-backed jumbo loans will be traded in less-liquid markets, the interest rates on these loans will need to be higher to attract investors. And that's less than ideal for consumers looking to take out or refinance jumbo home loans."It's sort of an artificial barrier to segregate the loans in this way," Lawrence Yun, chief economist at the National Association of Realtors, said Wednesday.Rather than separating loans based on whether they fall above or below the $417,000 level, Yun said, it might make sense to assess each mortgage on the basis of its relative risk profile or by which geographic area it is in.Interest rates on jumbo mortgages have been running about a percentage point higher than those for conforming loans for months. That unusually wide spread is a reflection of investors' post-credit-crunch wariness toward mortgages not backed by Fannie, Freddie or Ginnie Mae, a government agency that sells bonds backed by the Federal Housing Administration.The average rate nationwide last week for a 30-year, fixed-rate, conforming mortgage was 5.7 percent, compared with an average 6.7 percent for jumbo mortgages.The rates for jumbo loans "will come down, but not as much as they could be," Yun said. He did not want to predict a specific level but noted that even a narrowing of the spread to half a percentage point "can certainly provide a significant boost" to the market. Before the credit crunch, a quarter-point spread was common.For a variety of reasons, Fannie and Freddie likely won't begin to buy the costlier mortgages and bundle them into securities for sale on Wall Street until sometime in the April-June quarter."There are a lot of lenders and consumers that are eagerly awaiting" to refinance their jumbo mortgages, said Doug Duvall, a spokesman for McLean, Va.-based Freddie Mac.
Mortgage NewsYour Credit: Tips to Score
A credit score is an extremely important financial tool. It provides access to the financing you need in order to buy a car, a home, or pay for college tuition, among other things. Since higher scores equate to lower costs and vice versa, it’s vital to understand the factors involved in calculating your score. Here are the five elements that make up a credit score, in order of importance: Payment History: 35% impact. Paying debt on time and in full has a positive impact. Late payments, judgments, and charge-offs have a negative impact. Missing a high payment has a more serious impact than missing a low payment. Delinquencies that have occurred in the last two years carry more weight than older items. When applying for a mortgage, every point in your credit score can make a big difference. So don’t make any major financial or credit decisions – even paying off an old debt or delinquency – without first discussing it with your mortgage professional. Outstanding Credit Balances: 30% impact. This factor marks the ratio between the outstanding balance and available credit. Ideally, consumers should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when trying to purchase a home.Credit History: 15% impact. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area. Type of Credit: 10% impact. A mix of auto loans, credit cards, and mortgages is more positive than a concentration of debt from credit cards alone. Inquiries: 10% impact. This quantifies the number of inquiries (or requests for credit) that have been made on a consumer's credit history within a six month period. Each individual inquiry can cost from 2 to 50 points on a credit score, but the maximum number of inquiries that will reduce the score is 10. In other words, don’t start the loan process until you’re ready to act. Otherwise each individual credit inquiry could cost you. However, scoring models have now been adjusted to count multiple "hard" inquiries within a 14-day period as a single request. So, when you’re ready, your credit will be too.Rebuilding Credit It’s true, negative credit items can remain on your credit report for up to 7 years (up to 10 years for a bankruptcy). But this doesn’t mean that you have to wait 7 to 10 years to begin reestablishing a good credit rating. Because credit scoring models typically lend more weight to your recent activity than to the mistakes you might’ve made in the past, you can change your habits right now and begin reestablishing yourself as a good credit risk for a home loan or mortgage refinance in just 6 to 12 months.The following are a few Dos and Don’ts when it comes to rebuilding your credit:1) Three months prior to securing your mortgage, DON’T apply for, close, or pay off any credit cards, loans, or other kinds of credit without speaking to your mortgage professional first. Any one of these actions, as innocent as they might seem, could seriously affect your credit score, adding significant costs to your mortgage should your score suddenly drop. 2) If you have a credit card account with an excellent credit history, DO use it – but use it strategically. In other words, use it only for small purchases that you can easily pay off completely at the end of the month. Remember, creditors like to see evidence of stability, so the goal here is to keep the good reports coming month to month without falling into the same financial traps that led to credit challenges in the past. 3) If you don’t have a credit card, DO get a secured credit card. This is a great way to rebuild or establish credit quickly. Because this account is secured by funds that you deposit (typically between $100 and $400) you’re not seen as a great risk to the card issuer because of your initial investment. Again, use this card strategically to build a strong credit history. Pay your bill on time every month, and it won’t be long before you qualify for an unsecured credit account. 4) Finally, DO monitor your credit. Ask your mortgage professional to refer you to a professional credit repair company you can trust. Having an experienced professional on your side will allow you to focus on your long-term credit goals without having to make reestablishing your credit a second career.
Real Estate Facts Column
Avoid Foreclosure – Help is Available
January 2008
RealtorsÒ build communities in part by expanding homeownership opportunities and getting people into homes of their own. Those are noble goals, but helping homeowners stay in their homes is also important to sustain those communities.
Cam Wallaert with Arizona Premier Realty Homes & Land explained that in this marketplace of rising mortgage delinquencies and foreclosures, that goal can be challenging, to say the least.
Over the past few years, lenders invented new types of mortgages to help families buy their first home and refinance their existing mortgage. Many of those mortgages helped families without cash for a down payment, or with less-than-perfect credit, qualify for loans known as “subprime” loans.
Subprime loans have a higher interest rate and higher costs, such as prepayment penalties. In recent years, a very popular, widely available mortgage product was the hybrid adjustable-rate mortgage (ARM). Hybrid ARMs have an initial period with a lower interest rate (“teaser rate”) followed by significant increases over the remainder of the loan.
A growing number of borrowers with hybrid ARMs and other nontraditional forms of loans are seeing monthly payments jump beyond their means. With overall credit markets tightening, refinancing can be difficult but there is hope, according to [Gary Lau with West America Mortgage.
Jan 08 Real Estate Facts Column
Foreclosure or Possible Foreclosure
“When monthly payments become too much, the first thing to do is to speak up,” Gary said. “You need to seek the help of professionals, whether they are financial counselors, often available through local nonprofit counseling centers, or your lender.”
While many people believe that telling a lender about financial difficulties will only hasten a move to foreclosure, borrowers should remember that lenders do not like to foreclose on mortgages. “Taking possession of your house, maintaining it and then attempting to sell it will nearly always be a losing financial proposition for your bank,” Lau, said. “Therefore, talk with your lender sooner rather than later to try to arrange new repayment terms.”
Gary Lau agreed that RealtorsÒ can provide assistance to troubled borrowers by explaining sources of help and referring them to counseling. “If your lender is not willing to restructure your loan, RealtorsÒ can refer you to other responsible lenders in your area,” Lau said. Some elderly borrowers have even found solutions to their mortgage difficulties through reverse mortgages and other creative, but responsible, tools.
Above all, beware of consumer scams often advertised as “We Buy Houses for Cash,” or similar slogans that sound too good to be true, because they are, Gary warned.
Project HOPE NOW is a voluntary alliance of major lenders who have agreed in principle to assist qualified homeowners who are on the verge of default due to resetting adjustable-rate mortgages. The national toll free number is 888-995-HOPE to reach a counselor for advice and further referral.
Foreclosure or Pre Foreclosure or REFINANCE
The National Association of RealtorsÒ Web site also has several important consumer brochures that can be downloaded free of charge. In addition to information specifically aimed at borrowers facing trouble in making repayments, other brochures offer advice on avoiding predatory loans and obtaining traditional mortgages. All the brochures are available at www.REALTOR.org/subprime.
“Remember, the worst thing you can do if you’re having trouble making your monthly mortgage payment is to remain silent. Help may be available; you just have to ask for it,” Gary said.
Think twice before just doing nothing at all, call a REALTOR today and get started before something worse comes along, and be diligent with can do ads without knowing who they are.
Sincerely
The CamRic Team
www.thecamricteam.com
Cam Wallaert (CNE) (e-PRO) (REALTOR) 602-380-4994
cam@thecamricteam.com
Ric Leone (ASSOCIATE BROKER) 602-499-1344
ric@thecamricteam.com
Keeping Your Credit Clean
Many homebuyers frequently wonder, "If I am shopping for a home loan will my credit be affected each time a credit report inquiry is made?"
It's a logical and intelligent question to ask; the answer is: not significantly, if the credit checks are done in a short period of time.
When a credit check is made by a potential lender it is called a hard inquiry. When a hard inquiry occurs it does have an impact on your credit score. However, when you're shopping for a mortgage or a car loan, credit bureaus typically cluster the hard inquiries together because the credit reporting bureaus understand that the consumer is shopping for the best loan.
"So for example, if you're shopping for a new mortgage and three potential lenders pull your credit score within three weeks, that is looked at as one inquiry for that purpose," says Steven Katz a spokesperson for TransUnion's TrueCredit.com.
Keeping your credit clean is critical. Katz offers the following advice to help ensure healthy credit.
One card you should not carry. Leave your Social Security card at home. "There is basically no reason that you need to carry that with you," says Katz.
Most people have their Social Security card number memorized. If you're not one of those people, then only carry your card with you when you know you need the information on it. Your Social Security card number contains personal information that if it gets into the wrong hands, can cause major credit dilemmas.
Lock it up. Apartment complexes and condominiums typically have locking mailboxes, but these types of secure mailboxes aren't as common in residential, single-family neighborhoods.
"If at all possible, people should have a locking mailbox," says Katz.
Katz says mailboxes with locking devices are becoming more popular at hardware stores because identity theft is spreading. Taking precaution to protect your personal information can save you months of agony.
Shred your documents. Katz says if you don't shred your personal documents and criminals access the information, the result can be devastating to your credit. Criminals will often attempt to open new accounts using your name and information. If they're successful, they will use the new account and divert the account information to the criminals' address or post office box.
"So, you'll never even know that the account was established. They'll be receiving the bills and then just throwing them out. It's ruining your credit." explains Katz.
Keep an eye on your credit card: Katz says while it is difficult, people should not let their credit card out of their sight or else they run the risk of becoming a victim of skimming.
Skimming has become prevalent at some restaurants and gas stations where a clerk might have a small device that scans the consumer's credit card.
"It's a very small scanner that captures all the information that is on the magnetic strip, and then the card's information can be cloned," explains Katz.
Of course, keeping your credit card visible at all times is nearly impossible. Katz says, "If you're going to go to a restaurant in an area that you're a little uncertain of -- that's in a fringe area or you're in a foreign country and you're not too certain about where you're dining -- attempt to use cash."
Also, when using credit cards be sure that the receipt you leave with the merchant does not have your credit card number exposed. Most merchants have credit card systems that only print out the last four digits of a consumer's credit card; however, some still show the entire account number on the print out. If your full credit card account number appears on the receipt, scratch it out with a pen. Additionally, in rare cases where carbon copies are used, ask for the carbon.
Check your credit history.
Consumers can check their credit history for free once a year at annualcreditreport.com. Katz says that the free reports will not contain an actual credit score, but you can get the scores for a fee.
Another good credit-checking resource is found at truecredit.com. The website offers access to tools to manage a consumer's credit health by receiving credit reports, credit scores, credit monitoring, and informational materials.
Going to Mexico? New Border Crossing Rules Jan 31, 2008
Lots of folks in Arizona travel to Mexico. Rocky Point (Puerto Penasco) is within easy driving distance from Phoenix and Tucson and an absolutely lovely vacation destination. (Our last trip to Rocky Point.)
And as we’ve seen recently, lots of folks from Canada travel to Phoenix!
To get into Mexico, all you need is any official US ID. Passports are not required. (Source: Mexican Foreign Ministry)
But it is really kind of important to make sure that once you get into Mexico, you can get back into the United States!
The rules for entry into the US change this Thursday, Jan 31 2008. Note: this includes driving into/out of Mexico, not just plane flights!
In the past, an ID and oral declaration of US citizenship was all that was required.
Effective Jan 31, 2008 you have to provide proof of identity and proof of US citizenship to enter the US.
From the U.S. Customs and Border Protection web site:
Effective January 31, 2008, U.S. and Canadian citizens ages 19 and older should no longer expect that they will be able to prove identity and citizenship by relying on an oral declaration alone.
These regulations apply to both US and Canadian citizens for entry into the United States.
There are two options for documentation:
Single Document Option – one of the following meets the requirements to prove both identity and citizenship:
Two Document Option – If you don’t have one of the above documents, you must present BOTH an identification and citizenship document:
Identification Documents (must have a photo, name and date of birth)
Citizenship Documents
Procedures for Children – U.S. and Canadian citizen children ages 18 and under will be expected to present a birth certificate issued by a federal, state, provincial, county or municipal authority.
Experts are saying these requirements will likely increase border crossing wait times (and trust me, they are already lengthy) — at least until people get used to the new requirements.
Technorati Tags: Mexico, Puerto Penasco, Rocky Point, border crossing requirements
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