Author Topic: How low can we go? 30 yr fixed at 3.75% with no fees...  (Read 468974 times)

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Offline USCTrojanCPA

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2235 on: March 26, 2020, 02:47:05 PM »
Still haven't pulled the chain yet on my own refinance as my ARM loan adjusted downward to just above 3% while still staying on it's payoff path. Every 12 months this will loan change and expect to stay in the high two's / low 3's at least for another year. Sure. I could get a 2.x handle 15 year loan, but the hassle, documentation (2 years 1040's at minimum is the starting point in my world...) and thinking there is still more to come here has me holding off.

Anyone else still in their ARM loan and also seeing rates move in their favor?

My .02c

Yeah, I have a small loan on a rental property that just reset to 3.25% from 5.00% with the lower LIBOR.
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Offline irvinehomeowner

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2236 on: March 26, 2020, 03:11:44 PM »
Anyone else still in their ARM loan and also seeing rates move in their favor?

This happened to us during that last downturn when we had the highly controversial Option ARM.

Interest rate went lower than fixed rates and our minimum payment was actually paying down principal too.
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Offline Soylent Green Is People

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2237 on: March 26, 2020, 04:57:40 PM »
I know two folks who still have their WAMU Option ARM right now. Best deal they ever made!
My .02c

Offline USCTrojanCPA

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2238 on: March 26, 2020, 06:26:50 PM »
I know two folks who still have their WAMU Option ARM right now. Best deal they ever made!
My .02c

If not abused, Option ARM loans weren't all that bad. It's when you paid less than the actual interest and the loan balance kept going up is when things went wrong fast.
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Offline Compressed-Village

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2239 on: March 27, 2020, 04:38:30 PM »
I know two folks who still have their WAMU Option ARM right now. Best deal they ever made!
My .02c

If not abused, Option ARM loans weren't all that bad. It's when you paid less than the actual interest and the loan balance kept going up is when things went wrong fast.


The next financial crisis: A collapse of the mortgage system

https://www.yahoo.com/news/next-financial-crisis-collapse-mortgage-200154233.html

The U.S. mortgage finance system could collapse if the Federal Reserve doesnt step in with emergency loans to offset a coming wave of missed payments from borrowers crippled by the coronavirus pandemic.

Congress did not include relief for the mortgage industry in its $2 trillion rescue package %u2014 even as lawmakers required mortgage companies to allow homeowners up to a year's delay in making payments on federally backed loans.

When individuals stop making payments on their home mortgages, the companies that handle the loans and process those payments, so-called mortgage servicers, are still on the hook: They're legally obligated to keep sending money to insurers and investors in mortgage-backed securities, the giant bundles of home loans that are packaged and sold on the securities markets.

My Questions

1) : how would that effects the Adjustable Loans that is getting close to reset or happens when soon before the reset take place? Instead of adjust down, now it might be frozen? Could that be possible?

2) : So the FED is the mother of all bail out. They are plugs in holes after holes, these are Trillions, yes dizzy amount, what do you think the consequence of this bail out would do?



Oh, and Zillow and Redfin stop temporary buy homes to flip.
« Last Edit: March 27, 2020, 05:23:42 PM by Compressed-Village »

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2240 on: March 27, 2020, 04:49:59 PM »
I previously said tightening in credit market when rates were rising. But many people said it is due to mortgage applications. I think I was right.

Offline Soylent Green Is People

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2241 on: March 27, 2020, 06:23:50 PM »
ARM adjustments cannot be stopped or reversed. The note has specific terms to abide by. Delays or freezes are not going to happen.

HELOC's will likely see reductions in available cash due to value issues - just as we did in 2008-2010. If your current HELOC is at 80% LTV today, you may want to draw that cash in a couple of months, because your LTV might get whacked by 10-20%

What's going on with Mortgages and Rates? A $100,000 loan is made. The payments are $1,000. Once the loan closes, it's sold to an investor. That investor is guaranteed $1,000 per month - no matter if the borrower makes the payment or not. This key fact is why many lenders failed in 2007-2008. Investors were not getting paid by borrowers, so they pushed the loan back to the originating lender to either make the $1,000 payment or buy the entire loan back, which caused the lender to bail on the deal. We just saw not a handful of $100,000 loans, but millions of $100,000 loans refinanced loans over the last 90 days! Who wants to buy these loans without any idea what the future will bring?

Flash forward to right now... borrowers are told they can get a "forbearance" on making payments. OK, sounds great. Ask yourself, who then is going to still make that $1,000 due to the investor on that loan? The Federal Government did not put in anything like this in the bill that passed. Because of this, Non-QM lenders have already fled the market. Wanted a 12 month business bank statement loan to buy or refinance? Not so fast there.... Fannie/Freddie may accept the loans that have forbearance or even first payment defaults. They also may push the loans back to banks and brokers, which means the possible collapse of several lenders.

Or not.

These are extraordinary times, but not a complete mirror to 2008-2010.

So for now, do not expect to see a 2.5% 30 year fixed rate at zero fees. One could wish for this to occur, but not likely because investors buying MBS's really don't know if they are buying into something of value (appraisal) or cash flow ($1,000 bond payments)

My .02c
« Last Edit: March 27, 2020, 07:36:21 PM by Soylent Green Is People »

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Offline Bullsback

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2242 on: March 27, 2020, 09:27:53 PM »
I know two folks who still have their WAMU Option ARM right now. Best deal they ever made!
My .02c

If not abused, Option ARM loans weren't all that bad. It's when you paid less than the actual interest and the loan balance kept going up is when things went wrong fast.

The next financial crisis: A collapse of the mortgage system

https://www.yahoo.com/news/next-financial-crisis-collapse-mortgage-200154233.html

The U.S. mortgage finance system could collapse if the Federal Reserve doesnt step in with emergency loans to offset a coming wave of missed payments from borrowers crippled by the coronavirus pandemic.

Congress did not include relief for the mortgage industry in its $2 trillion rescue package %u2014 even as lawmakers required mortgage companies to allow homeowners up to a year's delay in making payments on federally backed loans.

When individuals stop making payments on their home mortgages, the companies that handle the loans and process those payments, so-called mortgage servicers, are still on the hook: They're legally obligated to keep sending money to insurers and investors in mortgage-backed securities, the giant bundles of home loans that are packaged and sold on the securities markets.

My Questions

1) : how would that effects the Adjustable Loans that is getting close to reset or happens when soon before the reset take place? Instead of adjust down, now it might be frozen? Could that be possible?

2) : So the FED is the mother of all bail out. They are plugs in holes after holes, these are Trillions, yes dizzy amount, what do you think the consequence of this bail out would do?



Oh, and Zillow and Redfin stop temporary buy homes to flip.
IT isn't needed. The banks are all getting relief in their capital obligations from special changes the accounting regulatory body has made. This will enable mortgagers to adjust the terms of the loan (i.e., extend the payment) without needing to declare the loans at Troubled Debt Restructurings which require additional capital requirements to be held.  Now for those that have alternative capital, you might have a different story, but forebearances are ultimatley going to get kicked down the road. 

Offline Soylent Green Is People

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2243 on: March 27, 2020, 09:40:46 PM »
Almost....

If a Bank was required to hold 1.5x their deposits in reserve and now it's 1.0x in reserve, that still doesn't mean they will be able to make payments to bond holders, and that bond holders will accept this arrangement. In this chain from origination, packaging, re-selling, securitization, and investing of mortgages, all it takes is one spoke of a complex wheel to fail and the entire system gets jammed up.

That's just the FDIC Banks who service loans for others. What about private servicers (Mr. Cooper, for example) These private servicers don't have the capital to pay bond holders, nor are they backstopped by the Feds. How about insurance companies who rely on consistent bond income to help with policy payouts? This can spiderweb quickly into real trouble for some companies that aren't Banks yet hold or service mortgage loans.

It's too early to tell where this all ends up. It won't be in a smoldering heap, but I'm sure a few fires are going to break out soon with no way to stop them.

My .02c

Offline Compressed-Village

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2244 on: March 27, 2020, 10:22:03 PM »
Almost....

If a Bank was required to hold 1.5x their deposits in reserve and now it's 1.0x in reserve, that still doesn't mean they will be able to make payments to bond holders, and that bond holders will accept this arrangement. In this chain from origination, packaging, re-selling, securitization, and investing of mortgages, all it takes is one spoke of a complex wheel to fail and the entire system gets jammed up.

That's just the FDIC Banks who service loans for others. What about private servicers (Mr. Cooper, for example) These private servicers don't have the capital to pay bond holders, nor are they backstopped by the Feds. How about insurance companies who rely on consistent bond income to help with policy payouts? This can spiderweb quickly into real trouble for some companies that aren't Banks yet hold or service mortgage loans.

It's too early to tell where this all ends up. It won't be in a smoldering heap, but I'm sure a few fires are going to break out soon with no way to stop them.

My .02c

When our POTUS got on prime time TV for  first time on March 11 to address our nation in regarding to covid pandemic. He paragraphed %u201DThis is not a financial crisis%u201D

His team failed to see the inter-connected and intertwined of economic health and healthcare goes together.

Can we keep on providing bailout forever? If we can what would becomes of Make America Great Again, like Argentina Venezuela, stagflation nation.
« Last Edit: March 27, 2020, 10:37:59 PM by Compressed-Village »

Offline Soylent Green Is People

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2245 on: March 28, 2020, 07:34:02 AM »
The 2008 Financial Crisis saw 3 full weeks for the Treasury, The Fed, and POTUS to come up with a "Shock and Awe" plan for the rescue of the economy. The 2020 plan was created in about 1/2 the time - all that was available given the present panic. Is it perfect? No. Can there be changes? Yes.

Going back to the Feb 4th State Of The Union Address (the first mention by POTUS 45 of Coronavirus) had he said then "Hey, this is serious, so we're closing all of our borders, cancelling  inbound flights to the US, and you must shelter on place for 3 weeks." you know what the reaction would have been....

This is really for the other threads on politics and elections. Let's continue it there instead.

My .02c
« Last Edit: March 28, 2020, 08:10:56 AM by Soylent Green Is People »

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Offline Soylent Green Is People

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2246 on: March 29, 2020, 01:52:36 PM »
Another perspective on the 2nd coming of this crisis....

https://www.politico.com/news/2020/03/27/mortgage-system-collapse-coronavirus-pandemic-152338

My .02c

Offline Bullsback

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2247 on: March 29, 2020, 01:57:54 PM »
The 2008 Financial Crisis saw 3 full weeks for the Treasury, The Fed, and POTUS to come up with a "Shock and Awe" plan for the rescue of the economy. The 2020 plan was created in about 1/2 the time - all that was available given the present panic. Is it perfect? No. Can there be changes? Yes.

Going back to the Feb 4th State Of The Union Address (the first mention by POTUS 45 of Coronavirus) had he said then "Hey, this is serious, so we're closing all of our borders, cancelling  inbound flights to the US, and you must shelter on place for 3 weeks." you know what the reaction would have been....

This is really for the other threads on politics and elections. Let's continue it there instead.

My .02c
You are right in the sense that you are going to have secondary impacts, but I'll take secondary impacts vs. the Financial crisis where the big banks were at massive risk and you had real concerns about an entire crash of our entire financial system.  As a result of all the changes, we've seen the financial institutions were much more prepared for this type of crisis (they have more stringent capital standards plus having just been burned from 08/09, Banks/Insurance companies implemented far more robust and advanced risk management capabilities to plan for these type of situations. 

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Offline Soylent Green Is People

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2248 on: March 29, 2020, 02:17:46 PM »
I think we're in agreement that many of the changes in law to the banking/financial system are partly the reasons why 11 years later we're not seeing imminent bank failures because of all this. The only part I wish they had done better is perp walking the major players. Put a few CEO's/CFO's of all of the banks behind bars, even if it was in a "Club Fed" type of jail would have ensures less problems going forward.

If only time travel were possible....

My .02c

Offline Soylent Green Is People

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Re: How low can we go? 30 yr fixed at 3.75% with no fees...
« Reply #2249 on: Yesterday at 12:32:15 PM »
Per outgoing voice message at CashCall, they are no longer originating new loans for the next two weeks. They say due to "Covid-19 concerns", but most mortgage bankers are being pummeled with margin calls right now - so it's my guess that it's something other than a health related issue. If you have a loan in process they say in their voice message that the loan is still in process - a hopeful sign.

FYI - anyone who was watching lender info in 2008-2009 may remember this jewel - still an active site:

https://ml-implode.com/

My .02c

 

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