Greece, The Fed and the Future of Mortgage Rates


From the perspective of those of us who watch mortgage interest rates on a daily basis, it is fascinating to follow the trends and events that governments, financial institutions and individuals track as they trade in the bond markets. The results of these investments, in turn, shape the direction of interest rates that consumers receive when they seek to get a home loan. In 2015, we have certainly had no shortage of both news and events. Up until this summer, most eyes were squarely focused on the Federal Reserve and the statement that they released on June 17. Would the Fed signal a timeline for interest rate hikes? Would they change their language and lead the markets to think that the present “zero interest rate policy” could last beyond this year? All of this was essentially addressed in a way that reinforced the status quo. That is, most bets for the timing of a rate increase remained intact and the Fed’s take on employment and inflation, the two fundamentals used to drive their monetary policy, were entirely in line with what the market expected.


And then came Greece.

In early July, and in a manifestation of something that had long been in the works, Greece missed its payment of $1.7 billion to the International Monetary Fund. Essentially, Greece has been borrowing to pay its bills, and those lending the money are now in the difficult position of determining what to do with a nation that may be facing the very real prospect of not being able generate the revenue necessary to service its debt. Along with this dilemma, the notion of a Greek exit from the Euro, cleverly dubbed the “Grexit,” would undoubtedly send ripple effects of an unprecedented nature through the European economies. The net result of Greece’s actions and inactions were to cause a “flight to quality.” That is, investors and governments from around the globe retreated to the US bond markets, where returns are lower, but safer. This reminded the mortgage markets that while all eyes had been on the Fed, and rates that had been climbing to 9-month highs, a new drama of Greek proportions was unfolding — one that could potentially send rates lower in the near term and possibly even foil the Fed’s intent to gradually lift its foot off of the brakes and begin to return rates in the US to more historically normal levels.


As we see it, the Federal Reserve’s already complicated task is made increasingly intricate by the situation in Greece. Already, Managing Director of the International Monetary Fund, Christine Lagarde, has suggested that the Fed not raise rates until at least 2016. There are other international voices that contend that developing countries who have borrowed heavily in US dollars to fuel their growth (and in turn became consumers of US and European goods and services) may have increased difficulty repaying if interest rates rise in the near term and before many world economies have attained greater momentum.

All of the above reinforces what we, in the mortgage industry, already know. Rates remain very good, yet they will always be subject to change. Sure, there are a lot of market forces that have the potential to bring rates down, but for the time being, we must accept the potential for rates to move lower is tempered heavily by the risks that they could move higher — either gradually, as the Fed would prefer to see it, or suddenly, as an international event might prompt without warning.


As home buyers and as homeowners in the United States, the second half of 2015 may prove to be a pivotal time for financing options. If you are looking to purchase or refinance, it simply cannot hurt to get a perspective on what is available right now. In other words, we have our own unique flight to quality, and today’s rates represent that opportunity. Call us today for more information.





Weekly Mortgage Commentary provided by Ubaldo V. Leon III




RPM-Pearl of Wisdom 


I have this much money now….what can I buy???

In working on loan preapprovals with various clientele we review credit, employment history, income etc.. One of the biggest determining factors as to how much they will prequalify for is how much they have to put down.  If the client does not have the proper down payment for their respective purchase price, they may fall short of qualifying and so… just how much does a client need to have to put down to qualify for that sparkling new home or that “charming” fixer?

As many of us know there are various lending institutions offering a multitude of loan products with varying down payments, here is a brief “cheat sheet” to use when trying to figure out what purchase price you might be able to qualify for based on the down payment you may have.  Keep in mind that, in most cases(especially with jumbo loans),  lenders will also require post-closing reserves as well s…o it is always best to refer them back to their mortgage professional for a concrete prequalification.

The table below is meant to provide the reader with a basic “guide” and should give them a pretty good idea as to what purchase price to shoot for based on their down payment on reserve.


Loan Product Type Down Payment % Maximum Loan Amount Respective Purchase Price
FHA 3.5% 625,500.00 637,000.00
True Conforming Fannie Mae 5% 417,000.00 431,000.00
Standard High Balance Conforming 20% Down 20% 625,500.00 768,000.00
Standard High Balance Conforming 10% Down 10% 625,500. (1st) 78,125.00 (2nd)Combined loan Amount 1st and Second 703,625.00 768,000.00
Jumbo 10% 1.282 Million 1.4 Million
Jumbo 15% 1.7 Million 2Million
Jumbo 20% 2 Million 2.5 Million
Super Jumbo to 3 Million 25% 3 Million 4 Million
Super Jumbo 3 to 5 Million 30% 5 Million 7.1 Million


Weekly Mortgage Commentary Provided by Ubaldo V. Leon III

RPM-Pearl of Wisdom

 Points… “Are you a good point or a bad point?”

When working with clientele, one of the most common questions we receive is “This is a no points loan, right?” in answering this question it is imperative that our client possesses an understanding of the two types of points.  (In general all of our loans are zero point loans however, there are times in which paying the “right kind of points” is a useful tool that can be used to assist the client in qualifying for their home loan.)  There are “Good points” called Discount Points and “Bad” points called Origination Points.

To Review our past discussions on points you all remember that a point is 1% of the loan amount (not the purchase price) so if our loan amount is 1,000,000.00 then one point is 10,000.00 if the loan amount is 300,000.00 then one point is 3,000.00. 

Discount Points “Good Points”- Are prepaid interest on the loan and the payments of these types of points directly benefit our borrowers.  The lender will allow anywhere from Zero to 4 points to be paid(which may be paid with credits for closing costs from the seller.) The more points paid, the lower the rate and the lower the mortgage payment.  Think of discount points as points paid for a “discount” on the interest rate.  (If a client is paying these types of points, and it’s not a mechanism to lower the debt ratios, we will want to make sure the monthly benefit over the time they intend to have the loan is great enough to warrant the payment of such points.  For instance a client saving 120.00 per month who’s paid a point costing them 8k will take 66 months to break even so we want to make sure that client has their mortgage for more than 5.5 years to ensure they recoup and come out ahead. )   These types of points ARE tax deductible(however we always make is best practice to refer clientele with tax questions to their tax professionals for answers to tax related questions.)


Origination Points “Bad points” – These points are fees imposed on the borrower by the lender/broker.  “Bad points” or Origination points DO NOT lower the interest rate on a mortgage loan and are not always Tax deductible.  Keep in mind that the “Adjusted origination amount” on the GFE may simply consist of processing and underwriting fees for the lender/broker and this is acceptable.  Origination points beyond that make for an expensive loan.


An example of How Discount Points could assist in qualifying…

Discount Points are especially important when a client possesses a surplus of cash for closing or a large seller credit but may not meet the debt to income ratio requirements for their loan.  Through paying a “discount point” the client lowers the rate thus lowering the payment which may get their debt to income rations within qualifying guidelines.

See the example below:

 Option #1- 0 points

7/1 ARM P+I Loan Amount % Rate Years Mortgage
0 Points  $      800,000.00 3.750%      30 $3,704.92
   $                   -    
Mortgage  $      800,000.00     $3,704.92
Insurance        $      120.00
Tax        $   1,041.67
Mort + Tax       $4,866.59


Option #2- 1 point

7/1 ARM P+I Loan Amount % Rate Years Mortgage
1 Points  $      800,000.00 3.500%      30 $3,592.36
   $                   -    
Mortgage  $      800,000.00     $3,592.36
Insurance        $      120.00
Tax        $   1,041.67
Mort + Tax       $4,754.02


Paying 1 Discount point in the above scenario reduces our borrower’s monthly payment by 112.57 per month which may very well be the difference between qualifying or not qualifying for their loan.  Over the course of 7 years, paying this point will save them 9,455.88 which is 1,455.88 more in savings than the 8k discount point cost them not to mention they wrote that 8k off on their taxes.


Weekly Mortgage Commentary Provided by-Ubaldo V Leon III


RPM-Pearl of Wisdom 

What is the difference between Recurring and Non-Recurring closing costs?

When a potential buyer looks at their estimated closing statement they may be taken aback by the final funds due at close thinking that they only have to come in with the 10 or 20% their putting down plus whatever the lender fees may be.  This is not the case..  They will be required to come in with both “Recurring” and Non-Recurring” closing costs in addition to any funds being used for a down payment.  It is important to understand what the difference between these two items.

What are “Recurring” closing costs?

While these costs are collected at closing and called “closing costs,” they are NOT “fees.”  These costs will continue or be repeated after the escrow closes as a cost of maintaining the property, encumbrances on the property such as real estate mortgage interest, or taxes.

Examples of Recurring Closing costs are:

  • ◦ Basic Home Owners Insurance Premium
  • ◦ Additional Home owners Premiums for Fire/Flood/Earthquake Insurance
  • ◦ Homeowner’s Association Dues
  • ◦ Real Property Taxes
  • ◦ Interest on the New Loan

What are “Non-Recurring” closing costs?

Non- Recurring closing costs are charged ONE TIME ONLY as an expense of closing the transaction most often referred to as “fees.”  These items do not recur and are specific to this single transaction.  These too must be collected at close along with any recurring closing costs and down payment.

Examples of Non-Recurring Closing costs are:

Title Company Expenses such as:

  • ◦ Title Insurance Premiums
  • ◦ Recording Fees
  • ◦ Endorsements to Title Policies
  • ◦ Sub-Escrow Fee which may be due Title Company
  • ◦ Reconveyance Fees
  • ◦ Documentary Transfer Tax
  • ◦ Escrow Fees
  • ◦ Notary Fees
  • ◦ Messenger Fees


In the case of a refinance:

  • ◦ Fees Associated With Making an Existing Loan Payoff
  • ◦ Transfer or Document Fees to a Homeowner’s Association

Lender’s Costs such as:

  • ◦ Appraisal
  • ◦ Credit Report
  • ◦ Loan Origination
  • ◦ Loan Processing
  • ◦ Document Fees
  • ◦ Tax Service Contract

In the case of a sale:

  • ◦ Real Estate Broker Commissions
  • ◦ Fees for Property Disclosures or City Reports
  • ◦ Transaction Coordinator Fee
  • ◦ Home Warranty Premium


This week’s noteworthy news:

GDP Revised Up to 3.9% Growth in 3Q; Gains in Past Two Quarters Best Six-Month Stretch Since Late 2003.  Personal consumption expenditures were recast up to a 2.2% gain from a 1.8% initial estimate. Spending on residential building and improvements advanced at a 2.7% pace in the third quarter, also stronger than first estimated.


S&P/Case-Shiller index of property values increased 4.9% from September 2013, the smallest gain since October 2012, after rising 5.6% in the year ended in August. All 20 cities in the index showed a year-over-year gain, led by a 10.3% rise in Miami and a 9.1% increase in Las Vegas. Cleveland showed the smallest year-over-year increase, with prices rising 0.8%.   The year-over-year gauge, based on records dating back to 2001, is a better indicator of trends in prices than the month-to-month data, the group has said. “With the economy looking better than a year ago, the housing outlook for 2015 is stable to slightly better,” said David Blitzer, chairman of the S&P index committee.


FHFA Index Shows Mortgage Interest Rates Increase in October.  The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders index was 4.11% for loans closed in late October, up 5bp from 4.06% in September.  The average interest rate on all mortgage loans was 4.11%, up 4bps from 4.07 in September.   The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 4.31%, a decrease from 4.33 in September.   The effective interest rate on all mortgage loans was 4.27% in October, up 5bp from 4.22% in September. The average loan amount for all loans was $285,000 in October, up $4,000 from $281,000 in September.


FHFA House Price Index Rises for 13th Consecutive Quarter.  Latest Monthly House Price Index Shows Sign of Possible Slowing.  Home prices rose 0.9% in the third quarter of 2014.   The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. Compared with last year, house prices rose 4.5% from the third quarter of 2013 to the third quarter of 2014. “Easing interest rates and modestly improving labor market conditions helped to drive up prices in the third quarter,” said FHFA Principal Economist Andrew Leventis. “The price increases were relatively small in most areas, however, and are consistent with the type of market deceleration that other housing market statistics have shown in recent periods.”


The Conference Board Consumer Confidence Index Declines, with the Index now at 88.7 in November,  down from 94.1 in October. The Present Situation Index declined from 94.4 to 91.3, while the Expectations Index decreased sharply to 87.0 from 93.8 in October.   The Director of Economic Indicators at The Conference Board said: “Consumer confidence retreated in November, primarily due to reduced optimism in the short-term outlook. Consumers were somewhat less positive about current business conditions and the present state of the job market; moreover, their optimism in the short-term outlook in both areas has waned. However, income expectations were virtually unchanged and gas prices remain low, which should help boost holiday sales.”


Treasuries Seen Attractive as Yield Near 2-Month High Versus G-7.  The 10yr UST is up 3/32 in price to yield 2.29% as of 11AM, and FNMA 3.0% are up 1/32, 3.5% up 1/32, and 4.0% are down 1/32.  The US will auction $35 billion of 5yr UST securities and $13 billion of two-year floating-rate debt today.


Weekly mortgage Commentary provided by Ubaldo V. Leon III


Good afternoon,

this week there is much to discuss as the markets are abuzz with the news of the recent drop in mortgage rates.  At present we are seeing the Jumbo(loan amount over 625,500.00) 30 year fixed loan coming in at 4.125% which is on par with rate conforming (less than 417k) loans are yielding.  We also learned that investors lending on FHA owns are loosening up guidelines and many of them are excepting 620 as the minimum qualifying credit score which used to be 640.  This is an example of further loosening of stringent underwriting guidelines.  Following the FED’s meeting yesterday markets rallied but couldn’t home on to their gains.  The FED is not said to move interest rates until mid 2015.

This week’s noteworthy news:

Job Openings in U.S. Increase to Highest Level in 13 Years.
With numbers up from July, and the highest level since January 2001, there were 4.8 million job openings on the last business day of August. The hires rate (3.3%) was down and the separations rate (3.2%) was little changed in August.

Treasury 3-Year Notes Advance Before U.S. Sells $27 Billion.
The 10 year UST is now up 12/32 in price to yield 2.37% as of 12:15 PM, and FNMA 3.0% are up 7+/32, 3.5% +7/32, and 4.0% +4+/32.

Homebuilders Offer Freebies as Booming U.S. Markets Cool.
New-home sales have been uneven nationwide, dropping in June before rising in July and August.  The federal government is reducing its share of the mortgage market to lure back private capital, and cut FHA loan sizes in 652 high-cost U.S. counties in January. “We were having a nice robust recovery and then that happened,” said Buddy Satterfield, president of the Arizona division for Shea Homes.

What Will Regulators Target Next.
At a mortgage conference last week, top enforcement officials from the Department of Justice, Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency said they have ramped up investigations of the mortgage space. Steven Rosenbaum, Chief of Housing and Civil Enforcement in the DOJ’s Civil Rights Division said, “We do not regulate you. We do not supervise you. We do sue you”. In addition, several attendees said they expected the agencies to focus on fair lending scrutiny of their portfolios, but were still struck by certain regulators’ sometimes aggressive tone.

MBS Day Ahead: Still Slow From a Calendar Standpoint; Still Waiting on Techs and Stocks.
After an exceptionally busy week last week and with very little on the calendar of scheduled events, this is an understandably slow week for bond markets. As far as market movers are concerned, all we have on the schedule are the Treasury auctions, starting with today’s 3yr, and Wednesday’s FOMC Minutes.

Weekly Mortgage Commentary Provided by Ubaldo V. Leon III

Good afternoon,

Labor Day has passed signaling the official end of Summer!  Which means…. it’s time for carb consumption in California!  Labor Day, for many in the business world is a reminder that the 3rd quarter is coming to an end and the 4th quarter push for year end is upon us.  With that said we’ve had an impressive response from realtors, business managers and clients alike on our new and exclusive RPM Tailored line of loan products which is one of the most important tools we’ve had the pleasure to present to home owners and potential buyers to assist them in financing their dream homes. 

Here again are the star products that we are oh so proud to have exclusivity with at RPM:

The Sneek Peek Product-Reduced 1-Year tax return products for self employed borrowers-File your tax return and use only the most recent year to qualify(loan amounts up to 4 million dollars with just one years tax returns.)

The Nifty Fifty(no it’s not for fifty year olds)- Allows for borrowers with substantial equity(50% loan to value or less) assets to qualify with up to a 70% Debt to income ratio(most jumbo lenders only go to 43% so this is HUGE) while using asset depletion and any other forms of income to qualify.

Standard non QM product- this product blows Fannie Mae out of the water with qualifying debt ratios of up to 50% !  Only 6 months reserves are required for loan amounts under 1 million.  This product also allows for non-warrantable condos so bring em on!

Ample Assets- Asset depletion Program- this product is designed for borrowers with a minimal income stream and derive income based on assets in the bank.  Unlike most banks conservative approach to their formulas for asset depletion our qualification model for asset depletion vastly benefits the borrower.  Some lenders only use remaining life expectancy calculations so if we have a younger borrower(in their 50’s or younger) who’s trying to qualify trying using asset depletion then age effectively works against them with conventional lender’s formulas.  Well not with our loan!  All borrowers are equal, it’s simply the asset amount multiplied by .04 and divided by 12(months in a year) to get the monthly income used for underwriting.  For example: 2,000.000.00 x .04 / 12= 6,666.00 in usable income.

These programs also allow for jumbo loans to have credit scores as low as 660 and I cannot wait to teach you all about them so please feel free to reach out with questions any time!

This week’s noteworthy news: 

ADP National Employment Report: Private Sector Employment Increased By 204,000 Jobs in August.  “August marks the fifth straight month of employment gains above 200,000, continuing an encouraging trend for the U.S. labor market,” said Carlos Rodriguez, president and chief executive officer of ADP.  Mark Zandi, chief economist of Moody’s Analytics, said, “Steady as she goes in the job market. Businesses continue to hire at a solid pace. Job gains are broad based across industries and company sizes. At the current pace of job growth the economy will return to full employment by the end of 2016.”

Jobless Claims Rose 4,000 Last Week, rising more than expected, but remained consistent with tightening labor market conditions. The four-week moving average of claims, which smooth’s out weekly volatility, rose 3,000 to 302,750. Initial jobless claims, viewed as a proxy for layoffs, fell to a 2014 low of 279,000 in mid-July and have been hovering around 300,000 since then. The last time that regularly happened was in early 2006, at the height of the last economic expansion.

U.S. Trade Deficit shrank 0.6% in July to $40.5 billion as both exports and imports rose, and  reflecting stronger demand for U.S. goods overseas that could boost the factory sector in the second half of the year.   Exports climbed 0.9% while imports increased 0.7%. smaller trade deficit generally helps the economy over the long term because it means a growing share of money in the U.S. is being spent on goods and services domestically rather than abroad

Nonfarm labor productivity, or output per hour worked, rose at a 2.3% rate in 2Q,  below the 2.5% growth first estimated last month but in line with forecasts. Unit labor costs, a measure of how much companies are paying for their workers’ output, fell 0.1% in the second quarter, down from the initial estimate of a 0.6% increase.   From the same period last year, second-quarter productivity rose 1.1%, in line with the meager growth of around 1% recorded in 2012 and 2013.

Treasuries Drop as Yields Top Developed Peers by Most in 7 Years.  Treasuries fell, with yields rising to a seven-year high versus their developed-market peers, before a jobs report tomorrow forecast to show the U.S. economy is strengthening as major central bank policies diverge.  The 10yr UST is down 12/32 in price to yield 2.44% as of 11:44 AM EDT, and FNMA 3.0% are down 6+/32, 3.5% are down 4/32, and 4.0% are down 2/32.

ECB Cuts Rates, Announces Stimulus to Combat Low Inflation.  Mario Draghi Says New Programs Will Be Launched Next Month.


What’s Happening in the markets: 

Yesterday we had jobs, jobs and more jobs…. Applications for unemployment benefits in the U.S. were little changed last week, about as expected. But the total number of people on benefit rolls fell to the lowest level in more than seven years. ADP’s jobs numbers were lack luster to say the least.

This morning August payroll and employment data numbers were incredibly anemic signaling a stall in the month of August in new job creation, perhaps because America was on Vacation.  Non-farm payrolls (+209k prior, expected around the same), came in at +142k – disappointing (and June and July were revised downward); the Unemployment Rate (6.2% previously) came in at 6.1%; and average hourly earnings came in at +.2% which is interesting as we head in to an election year.  Soon after the employment numbers bonds have rallied. At present the Ten Year yield has lost this mornings slight gains and sits slightly worse at 2.46% leaving mortgage prices slightly worse than yesterday’s close.

As always thank you for your continued support through the consistent referral of your friends and family for refinance and purchase loans.  I look forward to being in your service this coming week!

Your trusted mortgage professional, 



Weekly Mortgage Commentary provided by -Ubaldo V. Leon III

Good evening,

I know we’ve been discussing it for months now, murmurs in the hallway, hints in my weekly rate sheet updates, etc. and it’s finally arrived!  RPM has officially, and with pride, rolled out its “Tailored” line of loan products.  These loan products are EXCLUSIVE to RPM as they are available to us through a very special relationship with one of our prized investors.  After careful consideration of necessity defined by the marketplace for a common sense approach to lending we’ve personally customized the features and underwriting guidelines on these loans to accommodate borrowers who didn’t necessarily fit in “the box” where conventional conforming and jumbo lending is concerned.  These are strong loan products for established, well qualified, credit worthy borrowers who may or may not show much income “on paper” because they didn’t want to take a huge hit from uncle sam.  The Tailored line of loan products, which allow for jumbo loans to 4 million dollars,  which include but are not limited to:


The Sneek Peek Product-Reduced 1-Year tax return products for self employed borrowers-File your tax return and use only the most recent year to qualify(loan amounts up to 4 million dollars with just one years tax returns.)


The Nifty Fifty(no it’s not for fifty year olds)- Allows for borrowers with substantial equity(50% loan to value or less) assets to qualify with up to a 70% Debt to income ratio(most jumbo lenders only go to 43% so this is HUGE) while using asset depletion and any other forms of income to qualify.


Standard non QM product- this product blows fannie our of the water with qualifying debt ratios of up to 50% !  Only 6 months reserves are required for loan amounts under 1 million.  This product also allows for non-warrantable condos so bring em on!


Ample Assets- Asset depletion Program- this product is designed for borrowers with a minimal income stream and derive income based on assets in the bank.  Unlike most banks conservative approach to their formulas for asset depletion our qualification model for asset depletion vastly benefits the borrower.  Some lenders only use remening life expectancy caluculations so if we have a younger borrower(in their 50’s or younger) who’s trying to qualify trying using asset depletion then age effectively works against them with conventional lender’s formulas.  Well not with our loan!  All borrowers are equa, it’s simply the asset amount multiplied by .04 and divided by 12(months in a year) to get the monthly income used for underwriting.  For example: 2,000.000.00 x .04 / 12= 6,666.00 in usable income.


These programs also allow for jumbo loans to have credit scores under 660 and I cannot wait to teach you all about them so please feel free to reach out with questions any time!


This week’s noteworthy News:

Fed Debates Early Rate Increases   Federal Reserve officials debated at their July policy meeting whether they might need to raise interest rates sooner than expected in light of a strengthening recovery, but they were restrained by lingering doubts about whether the economy’s gains would persist.

Existing-Home Sales Continue to Climb in July +2.4%,  to their highest annual pace of the year, but are down 4.3% year-over-year, and the ongoing decline in distressed sales reached an important milestone. Distressed homes – foreclosures and short sales – accounted for 9% of July sales, down from 15% a year ago.  NAR chief economist, says sales momentum is slowly building behind stronger job growth and improving inventory conditions. “The number of houses for sale is higher than a year ago and tamer price increases are giving prospective buyers less hesitation about entering the market,” he said. “More people are buying homes compared to earlier in the year and this trend should continue with interest rates remaining low and apartment rents on the rise.”  Yun does warn that affordability is likely to decline in upcoming years. “Although interest rates have fallen in recent months, median family incomes are still lagging behind price gains, and mortgage rates will inevitably rise with the upcoming changes in monetary policy. ”    The median existing-home price for all housing types in July was $222,900, 4.9% higher YOY, the 29th consecutive month of year-over-year price gains.  Total housing inventory at the end of July rose 3.5% to 2.37 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. Unsold inventory is 5.8% higher than a year ago.

Jobless Claims Fall -14k to 298k, Bolster Labor Market Outlook.   The four-week average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 4,750 to 300,750. But at that level, it remains consistent with solid job growth and claims are back at their pre-recession levels.

Philly Fed Six-Month Outlook At 28.0, Highest Level Since June 1992.  The diffusion index of current general activity increased from a reading of 23.9 in July to 28.0 this month.  The August Business Outlook Survey suggests continued expansion of the region’s manufacturing sector, although some indicators returned to near their readings in June. Firms reported overall continued increases in general activity, new orders, shipments, and employment this month.

Conference Board’s index of U.S. leading indicators climbed 0.9% after a 0.6% gain in June.  “The LEI improved sharply in July, suggesting that the economy is gaining traction and growth should continue at a strong pace for the remainder of the year,” said the Economist at The Conference Board. “Although housing has been one of the weakest components this year, the sharp gain in building permits helped boost the LEI in July. Financial markets and labor market conditions have also supported recent gains, but business spending indicators remain soft and their contribution marginal.”

Treasuries Halt Three-Day Drop Amid Yellen Speech Speculation.   The 10yr UST is up 2/32 to yield 2.42% as of 11:30AM, and FNMA 3.0% are up 1/32, 3.5% are up 2/32, and 4.05 are up 3/32.

2014 Economic Growth Expectations Get Boost from Second Quarter Rebound.  Housing’s Contribution to GDP Downgraded Following Sluggish Q2

MBA’s Annual Convention & Expo 2014  October 19-22 | Mandalay Bay | Las Vegas.  “Every year, MBA’s Annual Convention & Expo brings together thousands of real estate finance professionals for an unparalleled networking and business experience. As the country’s largest gathering of industry leaders and top performers, no other event guarantees you the access and opportunity you will find at our annual convention. Hear from dynamic and engaging featured speakers from all facets of the industry, get up to speed on the issues directly impacting your business, network with industry peers and learn about the latest products and services available to keep you and your business on target for success.”


What’s happening in the markets: 

Total housing inventory at the end of July rose 3.5% to 2.37 million existing homes available for sale, which represents a 5.5-month supply at the current sales pace. Unsold inventory is 5.8% higher than a year ago.  At present the 10 year treasury is sitting at 2.40 with mortgage backed securities about .125% better in price than yesterday’s close.  Mortgage rates remain extremely low despite economic indicators that the FED should make it’s move in raising them.

Thank you for your continued support through the consistent referral of your friends and family for refinance and purchase mortgage loans.  I look forward to supporting each of you with the new Tailored line of loan products this coming week! 

Your trusted mortgage professional,




Weekly Mortgage Commentary Provided by -Ubaldo V. Leon III


Good afternoon,

Jobs and housing, housing and jobs what comes first the chicken or the egg?  Most industry professionals and economists alike will tell you that jobs come first.  Solid income within a demographic boosts consumer confidence and household formation occurs hence consumers spend money on homes.   When a home is purchased more jobs are created for those involved whether in the real estate, construction  or ancillary industries.  The good news is that this week we learned that jobless claims have fallen to an 8 year low to 284,000 which means that employment in the U.S. is on the rise.

Why then in the same breath of news have we learned that there were fewer new home sales in the U.S.  in June than in may showing “possible”(according to the media) signs of a struggling housing recovery?  First one must understand that the U.S. housing numbers are for just that, the entire U.S. as a whole, and while sales in Los Angeles county were also down last month median home prices were still up 1.8% overall from May and up 11.6% since June 2013 .  The drop in New home sales in Los Angeles sales could be from any number of things such as a lack of new home inventory or lack of speculator interest.  The general sentiment is that speculators(real estate investors/individuals who purchase property for a short period of time in order to turn a profit) have begun to focus elsewhere and markets are beginning to normalize.  As this happens homes prices should find a comfortable place to rest closer to the median price trend line going forward.   Remember, the median price trend line can only “truly” adjust upwards once wages have increased…there’s the chicken again…or was the egg?…

****It is also important to consider the source when reading your news… that while New home sales(This measure comprised of new sales contracts, not closings and is established by builders and loosely routed in future inventory.  It is NOT a hard fact supported with hard data supplied by the National Association of Realtors) were slightly down.   The National Association of Realtors (NAR) reported a 2.6 percent month-over-month rise in existing-home sales(actual contract closings proven with facts on actual closings) last month to a seasonally adjusted annual rate of 5.04 million. May sales were revised slightly upward to a rate of 4.91 million.****  to read more on the difference between Existing home Sales and New home sales, please click here: *****


This week’s noteworthy news:

Standards are Tighter, Sure. But is It Really That Hard to Get A Mortgage?   It has become a common refrain: “It’s too hard to get a mortgage.” But is it true?

New Homes Sales fall 8.1% in June to 406,000,  falling in every region of the country, led by a 20% decline in the Northeast. The dropoffs elsewhere were 1.9% in the West, 8.2% in the Midwest and 9.5% in the South.  Despite recent signs of a pickup in the housing market after a rough winter, the pace of its recovery has not quickened as much as economists expected.

Jobless Claims Unexpectedly Drop to Eight-Year Low, Falling by 19,000 to 284,000 in the week ended July 19.  The four-week average of jobless claims, considered a less volatile measure than the weekly figure, decreased to 302,000, the lowest since May 2007, from 309,250 in the prior week.   Continuing claims declined by 8,000 to 2.5 million in the week ended July 12, the fewest since June 2007. The unemployment rate among people eligible for benefits held at 1.9 %.

Ginnie Mae Set To Launch Electronic Issuer Application Process — Government Corporation Brings Transparency to the Application System  “We want to do everything that we can to ensure that our process is smooth, efficient and responsive for all parties,” said Ginnie Mae President Ted Tozer. “This includes creating a more efficient application process, becoming more responsive to applicant concerns and helping prospective Issuers clearly understand our issuer eligibility criteria and what it means to become a participant in our program.”    “This new process, which will also allow applicants to check their application status online, will make the process more transparent,” Ted Tozer said.  Beginning September 1, 2014, applicants will be required to file applications for Ginnie Mae Issuer approval electronically via Ginnie Mae’s new Application Connection.

MBA Fly-In Urges Uniform SAFE Act Loan Originator Requirements.  More than a dozen MBA members, including members of the Task Force, visited with the Consumer Financial Protection Bureau, the Conference of State Bank Supervisors and members of Congress to urge changes to the Secure and Fair Enforcement of Licensing Act and other regulations that would provide uniform testing standards for all mortgage loan officers.

IMF Cuts U.S. 2014 Growth Forecast to 1.7%   The International Monetary Fund revised its growth outlook for the U.S. economy for the second time in two months after a first-quarter contraction turned out to be worse than the fund originally forecast.


What’s happening in the markets:

For starters this week we have old reliable, The FED, continuing their purchase of mortgage backed securities  at a rate of about $2 billion a day.

Initial Jobless Claims shocked markets and came in lower than expected and New Home Sales, expected to be low at 5% came in lower at 8%.  For numbers the 10 tear treasury closed on Friday at 2.46% and on todays news has closed up at 2.51% on the yield with mortgage prices slightly worse than Friday’s close.


As always thank you for your continued support through the consistent referral of you new and existing clientele for refinance, purchase loan prequalification and cross qualification of buyers submitting offers on your listings.

I look forward to supporting each of your businesses this coming week!


Your trusted mortgage professional, 




Weekly mortgage commentary Provided by -Ubaldo V. Leon III

Good afternoon,

I think I speak for all of us when I say that, even though we’re well into the month of July,  this “June Gloom” is providing a much welcomed reprieve from the hot summer temps we’d seen over the past few weeks.  As we evolve as a nation and laws governing our nation change, so too do financial regulations pertaining to lending.  Recently the CFPB weighed in on same-sex marriages. In order to mandate equality for all, the CFPB writes, “On June 26, 2013, in United States v. Windsor, the U.S. Supreme Court struck down Section 3 of the Defense of Marriage Act as unconstitutional. This decision has important consequences for our work. In order to fully implement this decision, we took steps to clarify how the decision affects the rules that we are responsible for. Recently, Director Cordray issued a memo to staff clarifying that, to the extent permitted by federal law, it is our policy to recognize all lawful marriages valid at the time of the marriage in the jurisdiction where the marriage was celebrated. This aligns our policy with other agencies across the federal government.” The consumer Financial protection Bureau clarified that it will use the terms of: spouse, married, marriage, wife, and husband, including all terms relating to a “family status” as policy; this policy will apply to the Equal Credit Opportunity Act and Regulation B, the Fair Debt Collection Practices Act, the Interstate Land Sales Full Disclosure Act and Regulation J, the Truth in Lending Act and Regulation Z, the Real Estate Settlement Procedures Act and Regulation X, the Bureau Ethics Regulations, and the Procedures for Bureau Debt Collection.

As a result we’ve seen widespread changes to the way we as brokers structure loan applications for same sex couples.  Prior to these changes they were required to divide the files for our same sex clientele and file separate loan applications whereas now we join the application and credit reports as one.  This could however affect those obtaining FHA financing as the debts, even of a non-borrowing spouse, are included in qualifying the principal borrower for their loan.  All things being equal, the same would hold true when same sex couples obtaining government financing from FHA/HUD which could alter their qualifying debt to income ratios following their union.  This is of course a step in the right direction towards civil equality however those same sex couples prequalifying for home loan financing should be aware of changes to underwriting as a result of the recent DOMA victory.


This week’s noteworthy news:

Grand Central: Fed Minutes Show Some Worries About Financial Stability and appear much more focused on the economic outlook than the vagaries of asset markets.

Fed’s Plosser: Federal Reserve Must Prepare Markets for Rate Increases   Federal Reserve Bank of Philadelphia President Charles Plosser said Friday that the U.S. central bank needs to start preparing markets for increases in short-term interest rates that may come sooner than many currently expect.

Rate Debate Heats Up Among Fed Officials   A debate is intensifying among the Federal Reserve’s regional bank presidents about whether to push interest rates up from zero sooner than planned because of recent improvements in the U.S. job market.

Banks Aren’t Being Stingy on Mortgage Lending, They’re Being Smart.  

Beauty of New Mortgage Rules In Eye of Beholder   The beauty of some draft mortgage regulations out of Washington this week are in the eye of the beholder.

Downside of Low US Mortgage Rates? Less Selling

Canada Central Banker’s Unusual Approach   Central-bank economic models failed to foresee the storm that devastated the global economy in 2008. Stephen Poloz, the head of Canada’s central bank, is trying an alternative approach he thinks will have better foresight: actual human beings.


What’s happening in the markets:

Bearish on Thursday and Bullish on Friday, the markets have been all over the place with risk adverse investors pulling out of the markets on news of the Malaysian Airlines Boeing 777 crash. Speculation over just how the U.S. will involve themselves all but crippled the markets as the DOW hit a session low and fell 56.87 points.  At present we’ve seen the markets stabilize and this morning as we’d seen investors step back into the markets.   Although tensions between the Ukraine and Russia remain high we have the ten year treasury at a yield of 2.49% and mortgage rates as a result continue to stay low.  Stocks an bonds have normalized, for now. but then again in a market like ours, what exactly is normal?

Thank you for your continued support through the consistent referral of your friends and family for refinance an purchase mortgage loans.  I look forward to supporting each of you in attaining your homeownership goals this coming week.


Your Trusted Mortgage Advisor, 

Ubaldo V. Leon III



Weekly Mortgage Commentary-Provided by Ubaldo V. Leon III

Good morning!  “Oh say can you see….” the three day weekend approaching!(My apologies to Francis Scott for ruining his song.)   As many of my real estate associates strike up their barbeques, stake out the best places for fireworks and do those last few minutes of cardio to get “pool ready,” lets take a moment to read up on some changes in lending that definitely affects our clientele.  Effective August 16th Fannie Mae has updated it’s guidelines to increase the waiting period following a shortsale from 2 years to 4 years.  This also applies to Charge-Offs related to mortgage debt.   This means that all loans with a shortsale or Charge-Off of mortgage related debt must be funded by this date.  It should also be noted that going forward even though Fannie Mae has changed their guidelines regarding shortsales, I do have access to both portfolio lenders and the FHA who will allow for a shortsale with a seasoning period less than 4 years.  With our diversification of lenders and loan products we will still be able to service our clients with this type of credit blemish while others lenders may fall short.


This week’s noteworthy news:

Yellen Says Financial Instability Shouldn’t Prompt Rate Change.  “Monetary policy faces significant limitations as a tool to promote financial stability,” Yellen said yesterday at the International Monetary Fund in Washington. “Its effects on financial vulnerabilities, such as excessive leverage and maturity transformation, are not well understood and are less direct than a regulatory or supervisory approach.”

Jobless claims +2k to 315k last week.   4-week moving average was 315,000, an increase of 500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 314,250 to 314,500. There were no special factors impacting this week’s initial claims.

June Nonfarm Payrolls +288k, Unemployment rate declined to six year low of 6.1%.  Average hourly earnings rose by 0.2 percent for a second month, to $24.45 in June from the prior month, and increased 2 percent over the past 12 months. The average work week for all workers held at 34.5 hours. Fed Chair Janet Yellen said last month that she expects consumer spending will continue to grow at a “healthy rate,” in part as bigger income gains materialize.

Trade Balance gap narrows to $44.39 bln in May. Total May exports of $195.5 billion and imports of $239.8 billion resulted in a goods and services deficit of $44.4 billion, down from $47.0 billion in April,  revised. May exports were $2.0 billion more than April exports of $193.5 billion. May imports were $0.7 billion less than April imports of $240.5 billion.

ISM May Non-Manf. Composite 56.3 vs 55.5 Expected.    This represents continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing decreased to 57.5%, reflecting growth for the 59th consecutive month at a slower rate. The New Orders Index 61.2%, The Employment Index 54.4% and indicates growth for the fourth consecutive month and at a faster rate. The Prices Index 61.2%, indicating prices increased at a slightly slower rate in June when compared to May.


What’s happening in the markets:

Mortgage rates continue to stay relatively low with a conforming 30 year fixed at about 4.25% at the moment.  The Ten year treasury did hit it’s highest yield in almost 2 months at 2.69% up from a low of 2.45%.  Surprisingly ADP numbers looked strong adding 281k.  Markets close early today in observance of the 4th of July Holiday and what better to celebrate with but non-farm payrolls coming in higher than the expected 220k at 288k and unemployment dropping from 6.3% to 6.1%.  With the jobs numbers and housing looking so strong…rates will inevitably continue to rise.

As always, thank you for your continued support through the consistent referral of your friends and family for refinance and purchase mortgage loans.  I look forward to supporting each of you, your friends and famlies this coming week.  Have a fantastic 4th of July weekend!

Your trusted mortgage professional, 



“I am impelled, not to squeak like a grateful and apologetic mouse, but to roar like a lion out of pride in my profession.” John Steinbeck

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