Mortgage Rates on a Friday Afternoon
Rhonda Porter on 08 8, 2008
Changes to rate are noted with a :) for a rate improvement or 
when rates are higher than what I posted last week. Seems like ever since The Tim from Seattle Bubble gave me up & down arrows, I’ve been busier–thanks The Tim! 
Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties). The conforming rate quote below is based on owner occupied with a minimum credit score of 720, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000. This scenario includes reserves (taxes & insurance) not being waived. Rates quoted are priced based on a 30 day lock with no prepayment penalties on any of the rates quoted below.
30 Year Fixed @ 1 Pt: 6.375% (APR 6.535%) worse by 0.125% to rate.
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 6.500% (APR 6.648%) unchanged
15 Year Fixed @ 1 Pt: 5.875% (APR 6.135%) unchanged
5/1 ARM – LIBOR @ 1 Pt: 5.875% (APR 7.150%) worse by 0.125%
Conforming-Jumbo Rates. Pricing is based on the same criteria above except where the loan amount is $417,001 – $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $650,000 and a $520,000 loan amount.
30 Year Fixed @ 1 Pt: 6.375% (APR 6.531%) worse by 0.125%
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 6.750% (APR 6.896%) worse 0.125% :(
5/1 ARM @ 1 Pt: 6.125% (APR 7.243%) unchanged
JUMBO (Non-Conforming) Rates. Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down). The specific scenario used to price the rates below is a sales price of $850,000 with a loan amount of $680,000.
30 Year Fixed @ 1 Pt: 7.750% (APR 7.656%) worse 0.25%
FHA. Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.
30 Year Fixed @ 1 Pt: 6.500% (APR 7.287%) worse 0.125%
FHA-Jumbo. Pricing based on loan amounts from $362,791 – $567,500 for King, Snohomish and Pierce Counties. For other loan limits in Washington State, click here.
30 Year Fixed @ 1 Pt: 6.500% (APR 7.258%) unchanged
VA. Pricing based on credit scores of 620 or better based on loan amounts up to $417,000. VA loan amounts over $417,000 are also available. Contact your local Mortgage Professional for more information.
30 Year Fixed @ 1 Pt: 6.500% (APR 6.824%) unchanged
Prime Rate (what HELOCs are based on): 5.000%
This is just a small sample available of rates and products. Rates are as of Friday, August 8, 2008 at 2:30 p.m. and may change at any time. Available programs may change at anytime as well. This is not a guarantee nor is it a commitment of interest rate. To see live rate quotes for various scenarios, check out my Twitter.
About the Author: Rhonda Porter
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26 Responses to “Mortgage Rates on a Friday Afternoon”
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Rhonda,
Do you have any insights as to what the implications of Fannie Mae’s decision to discontinue Alt-A lending will be? It’s not as if they were still accepting no-doc products, right? Which products might be impacted by this decision?
http://calculatedrisk.blogspot.com/2008/08/fannie-mae-push-back.html
I appologize for asking the same question in multiple threads (see above), but I didn’t know my questions were making it through at all since nothing showed up at the time I originally posted them.
By the way, I am still curious as to what impact Fannie Mae’s decision will have. Clearly it must have SOME kind of effect since they won’t be underwriting some loans that they currently do. Maybe those kind of loans just aren’t made in the Puget Sound area? I don’t know…
This whole “Alt-A” area is very confusing to me. I know that “no-doc”, no income variation, loans were in the Alt-A category, but it seems that there is also such a thing as a full-doc Alt-A loan. But what that kind of loan would be is completely beyond me… I can’t imagine why someone who could fully document their income would get an Alt-A loan with a high interest rate rather than either a Prime product or an FHA offering unless it was from sheer ignorance.
Sniglet,
No problem…(for future reference, you can see your responses on the comments column to the left and can click on them to find which thread they are in).
alt-a loans were “shy” of being prime borrowers. If a borrower could qualify full doc, they may have elected to go that route. Some borrowers who could go full doc may have elected to not to because they did not want to provide their paperwork (they considered it an inconvenience)… I also had one LO contact me months ago (from another company) wanting to find out how to read a tax return to calculate income–every loan she did for a self employed borrower she did stated (whether her clients knew it or not). I was shocked.
Interest rates were based on risk–here’s an example:
HIGHEST RATE
No income verified
Stated income without 4506
Stated income with 4506
BETTER RATE
Credit scores and LTV helped improve pricing.
As I mentioned (I think in another thread) I’ve noticed lenders pull out of the alt-a arena months ago (w/exception to Wachovia and I’m not sure if Wachovia was Fannie).
Alt-a loans were done in our area (and everywhere).
If you read the Fannie Mae press release from the link you provided via CR, it states that they are eliminating “newly originated” alt-a loans by the end of the year.
As I’ve said in other threads responding to your comments, alt-a loans may be originated from other LO’s. The companies I work w/ have not been providing them and I’ve never been a huge “alt-a” loan originator.
Just received a notice dated today that Chase is no longer accepting DPAs or non-traditional credit w/FHA loans.
All DPAs should die and never be brought back to life.
Jillayne, I much prefer HR 3221 allowing families to actually loan (provide a second mortgage) for the buyer instead of a DPA or seller contribution towards downpayment.
Even though the family loan may be 100% financing, at least we know the borrower has family in position to help (worse case scenario) and the borrower has to qualify with both mortgages (FHA first and family second).
I’m using my rate post as an general lending update (kind of Sniglet’s idea) of what I’m finding…
Looks like CMG is not doing their HOA program (this is another one that I’m not a fan of at all–home ownerershipo accelerator). Here’s the email I just received from our CMG rep:
Rhonda, all the abbreviations are hard for us non-lenders to keep up with
! What is a 4506? And, what is the Home Owners Accelerator (HOA) loan?
Leanne, thanks for asking!
4506 is a form that borrowers are asked to sign that may be sent in to the IRS to verify that the income used on the loan application (1003) is the same as what the borrower reports to the IRS.
4506 forms are often used w/stated income loans. Borrowers are told by their LO “don’t worry they just stay in the file”… I wouldn’t sign anything with the hopes it just “stays in the file”.
Mortgage companies and lenders will exercise the 4506 form simply for quality control. And, if a mortgage looks like it’s not performing, the lender may decide to use that 4506 just to make sure the income is legit.
HOA loans–I’m not super familiar with as I have never done one. They have been heavily pushed by LO’s as a way for home owners to pay off their home quickly. It’s essentially a home equity loan (variable rate) where the borrower “deposits” their entire paycheck towards the principal/interest and can use their equity like a giant debit card. The idea is that borrowers are suppose to pay more than they spend.
Rhonda, you’re kidding! A HOA loan actually exists? I can’t imagine any reason anyone would get that kind of loan.
By the way, do you do reverse mortgages? Or, recommend who does?
Leann, I believe I’m still authorized to do a reverse mortgage however, I want to verify that. Everything is changing so quickly these days!
The pitch made by HOA reps was just as tempting for some as an option ARM with low low rates/payments. Probably like an option ARM, this product may serve some borrowers well–but there is no one program that’s right for all.
Leanne, I just confirmed that we are still doing reverse mortgages. It’s been so grey with the legislation that was passed in June…according to WAMB, DFI is going to be issuing clarification regarding who can and cannot provide a reverse mortgage…I just wanted to double check w/my office too.
One good thing that passed regarding HR 3221 w/reverese mortgages (IMO) is a limit on LO origination fees.
The HOA is the best thing to happen to mortgages since … well ever. I would recommend doing more research on it before dismissing it. It is the loan that I did for my mom and it has been one of the most popular loans with my customers who already had a low rate, but wanted to figure out how to pay off their home faster. Check it out a bit more before you start telling people that it is bad. You’d be surprised…
In reference to my above post, hopefully CMG will re-initiate their funding of these loans in the near future.
Vince, did you read my comment #11? I don’t think there are bad mortgage programs, just poor (or lack of) advice and/or planning.
Someone can pay their mortgage off simply by paying additional towards principal w/out turning their home into a giant credit/debit card.
Rhonda,
Here is a suggested topic for a future post if you ever have a spare moment: how important is the mortgage insurance industry to real-estate finance, and what would be the consequences of this mortgage insurance industry going bust?
I am reading more and more stories about growing problems with mortgage insurers but I don’t really understand what the implications are. Does it only mean that all loans will simply go the FHA route? If so, then maybe this is no big deal.
In any event, I would love to hear from someone with a more informed perspective (such as yourself).
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/13/AR2008081303539.html
Sniglet, if conventional loans (fannie/freddie) went away (which I cannot see happening)…we would have FHA however FHA can only do so much. There would also be private financing, seller financing and hard money lenders… financing would be much tougher to come by.
Side note: with FHA, even if you’re putting 20% down, you still have upfront and monthly mortgage insurance.
Private mortgage insurance companies must be in an interesting postition.
The problem I see with PM insurers is they don’t have the revenue streams they should have because until recently most people avoided PMI by going 80/20s. So now they’re being asked to take on a lot of risk from loans all of the same era, which is more risky.
Stated differently, they’re more at risk because they weren’t exposed to the peak of the market because they aren’t (and weren’t) getting revenues from the peak.
Rhonda wrote: “FHA can only do so much”
Why couldn’t FHA just handle ALL loans if the mortgage insurance industry went bust? What would be so terrible about that? They allow 3% down, and no need for some private insurance.
What percentage of loans wind up with private mortgage insurance these days? Do all Freddie/Fannie loans require it?
I should have read Sniglet’s article before posting. I didn’t realize they had exposure to sub-prime. Apparently how they tried to cope with their main “customers” moving to 80/20s.
It’s my understanding that some lenders obtained pmi on loans without the borrowers knowledge (I’ve heard of second mortgages having pmi coverage, for example) where the lender wanted to reduce their exposure to risk.
LTVs over 80% required private mortgage insurance.
PMI on a 20? That would be very risky. Also, how would they price that–it would seemingly have to be a percentage of the total loan package.
Rhonda wrote: “LTVs over 80% required private mortgage insurance.”
Just to clarify, you are saying that all non-FHA loans with over an 80% LTV require private mortgage insurance?
If this is true, it would seem that a collapse of the private mortgage insurance sector would simply drive all loans with higher than 80% LTVs through FHA. Problem solved…
Conventional mortgages over 80% LTV have private mortgage insurance–whether that’s borrower paid or lender paid (financed into the rate).
I have no idea how pmi was priced on loans ordered by the lelnder without the borrower’s knowledge (like second mortgages and conventional mortgages under 80%).
Sniglet, I’m all ready seeing a majority of loans that are over 80% LTV (and even a few 80% LTV and under) go FHA.
Sniglet:
Thanks for the link
Sometimes it is the “throwaway line” in a news story that catches my eye.
The writer states:
“With FHA mortgages, which require as little as 3 percent down, the government provides the insurance.”
Really?
I have been told many times that the FHA is self insured, as in the premiums paid in (including the 1.5% upfront fee, and the everpresent .5% monthly fee), pay for the admin overhead and the claims paid out.
I have never audited their books to challenge that claim, but I have no reason to believe that it is taxpayer money that is being used to pay out on claims.
Does anyone have evidence to the contrary?
Re subprime mortgage insurance, I understood it was not tacked on as a separate fee, but built into the rate. The lenders then took out insurance policies from the major mortgage insurance companies to spread out their liabilities. Probably wasn’t nearly enough insurance to cover the losses.
Re HOA’s, I studied them carefully, and concluded that they probably made some kind of sense for a financially disciplined individual, with well above average income and expenditures, but not for the average (or slightly above average) Joe.
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