How low can we go? 30 yr fixed at 3.75% with no fees...
- Thread starter ps99472
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sgip
Well-known member
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
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
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.Compressed-Village said:
sgip
Well-known member
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
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
irvinebullhousing
Well-known member
Soylent Green Is People said:
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.
sgip
Well-known member
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
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
sgip
Well-known member
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
https://www.politico.com/news/2020/03/27/mortgage-system-collapse-coronavirus-pandemic-152338
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.Soylent Green Is People said:
sgip
Well-known member
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
If only time travel were possible....
My .02c
sgip
Well-known member
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
FYI - anyone who was watching lender info in 2008-2009 may remember this jewel - still an active site:
https://ml-implode.com/
My .02c
usctrojancpa
Well-known member
eyephone said:
Not for buyers with good credit. One of my buyers locked in a rate of 3.25% on a jumbo loan for a 30-year fixed purchase this week.
sgip
Well-known member
Yes, the purchase door is wide open. That 3.25 becomes 3.0 if money is moved. In some cases even lower! Some of the refi-only shops are in dire straights right now as are a few mortgage bankers who can't get closed loans off of their warehouse lines. They've taken to either moving rates into the 4's or shutting down completely as it appears CC has done.
My .02c
My .02c
Liar Loan
Well-known member
Soylent Green Is People said:
Yes, this was in the mortgage news. Impac (and subsidiary Cashcall) are suspending new loans for two weeks. They gave the reason that one of their whole loan buyers has stopped returning their calls, which implies they may have trouble clearing some of their funded pipeline. This has their warehouse lenders nervous. Still, Impac survived the Great Recession when few other lenders did, so they have a shot at making it out of this based on that prior experience.
Their stock is down 70% since early March. I know somebody that bought their stock at 10 cents in early 2009 and made an absolute killing! So here's your chance to get rich quick gamblers!!
usctrojancpa
Well-known member
If you are looking to buy, I would stick to the banks and credit unions to not risk things. Those lenders have increased refi rates to slow the volume down because they got overwhelmed with refi apps, not because credit is tightening up.
usctrojancpa
Well-known member
Innosint said:
Stick with a bank or a credit union and you'll be fine as long as you have good credit and meet the DTI parameters.
sgip
Well-known member
@Mads
Unless you agreed to accept a prepayment penalty, you can refinance anytime you want. Given the rate you may have locked (or closed at) it's unlikely the rate numbers will bend in a direction. A sub 2x 30 fixed at no cost while theoretically possible isn't that likely to come in a week or two.
Let's say they do. Rates fall far enough. You are able to refinance at any time. This isn't just a LenderFi discussion as many other companies will ask that you not refi for a 3-6 month time period due to Yield Spread clawbacks and early payoff penalties to the lender - not to you the borrower.
A prepayment penalty would need to be hard coded into your Note. Any other document would be unenforceable.
My .02c
Unless you agreed to accept a prepayment penalty, you can refinance anytime you want. Given the rate you may have locked (or closed at) it's unlikely the rate numbers will bend in a direction. A sub 2x 30 fixed at no cost while theoretically possible isn't that likely to come in a week or two.
Let's say they do. Rates fall far enough. You are able to refinance at any time. This isn't just a LenderFi discussion as many other companies will ask that you not refi for a 3-6 month time period due to Yield Spread clawbacks and early payoff penalties to the lender - not to you the borrower.
A prepayment penalty would need to be hard coded into your Note. Any other document would be unenforceable.
My .02c
we opted for the no cost rate, 3.375 for an attached condo.