Archive for June, 2007
I came back from two weeks vacation last Tuesday to find rates half a point higher than when I left. You just can’t take your eye off things for a minute anymore. But seriously, 6.625% at one point. That’s a serious increase for a two week period.
So What Happened?
Near as I can tell, concerns about global inflation, a weak dollar that causes it’s own inflationary vortex, and a strong economy with it’s hint about higher wage costs caused bonds to sell off and pushed rates higher. Now since then, last week’s domestic inflation at both wholesale and retail levels were benign and this week’s housing weakness and builder confidence are again suggesting economic slowdown. The key 10 year Treasury is trying to duck below the 5% support level.
We’ll see. I’m looking for rates to be pretty stable the rest of the year, hopefully with a possible of lower rates in the Spring as consumer spending slows and retail sales weaken. They’ve got to, right?
read comments (1)Is This the End of Credit Score Piggybacking?
You may be familiar with the credit improvement trick of piggy-backing on someone elses good credit to improve low Fico scores. Usually this is done to build scores for a son or daughter with no credit or to rebuild credit for someone who has had problems.
I feel dumb for being even a little surprised that there are on-line businesses encouraging and facilitating the use of this tacticand worsebetween complete strangers to game credit scores and defraud lenders. See the Mortgage Fraud Blogs post for a good analysis of the problem.
Heres another article I saw today, apparently one of many that appeared last weekend on this topic. The bottom line is that this tool is about to be shut down because of abuse. Dont blame the mortgage industry for this one. Its like drugs. The fundamental problem is demand.
This is the final post in a series designed to help agents prevent fallout that can occur when you work with an unknown lender. Part I was aimed at down payment. Part II was all about income. Part III focused on credit, and Part IV on pre-approval. Today well find out who our client is working with.
Normally, you look to your lender for confirmation that its okay to start spending time and effort on this buyer. But when the client arrives pre-qualified by someone you dont know, dont assume the best. Take these steps to protect your transaction.
Question #5: Who is the lender?
Ah, the final question. You should know who is messing around in your sandbox. Is the client working with a friend or family member, perhaps someone part-time or new to the business? As business slows, recently minted loan officers have scurried back to their day jobs while still trying to grab a loan here and there. Part-time lenders cannot possibly stay current on the important changes that are rapidly occurring in the industry. You dont want to be in a transaction with that person.
Okay, after covering down payment, income, and credit in Parts I, II, and III, let’s move on to the fourth important question.
Question #4: Are You Pre-Qualified or Pre-Approved?
When I speak with Realtors, there is inevitably some question about the difference. And lenders will frequently take advantage of the confusion.
An agent of mine recently had a deal fall out at the 11th hour with a client whose lender had provided a pre-approval letter with the original offer. When my angry agent confronted the lender, the lender shrugged and laughed as if to say hey, I lied, so what.
To avoid that type of deception, here’s a convenient place to draw the line in the sand.
This is the third in a series of posts designed to help prevent fallout when dealing with buyers that bring their own lenders to the deal. Part I discussed down payment, and Part II income documentation.
No one wants to start a new client relationship off with an argument about lenders. But if they arrive with a pre-qual letter from someone you dont know, dont automatically put them in the car. These questions will help you determine if that letter is really worth the paper its written on.
Remember, if the borrower really is pre-qualified, theyve been through these questions and should have some very clear answers.
Question #3: What are your Fico scores?
There is no mortgage-related topic that generates more myth and new, old wives tales than credit scoring. Most consumers are somewhat aware of the condition of their credit, and some may even be able to tell you their scores. Many people now subscribe to services that keep them updated on their scores. Others recently bought a car, refinanced the old house, or obtained a free on-line credit report. Thats not enough for our purposes.