Well...we are still digesting the January production and have enjoyed little spikes of apps since then. The good news is that rates have gone up enough to get most of our apps to the table but not so much that you are upside down with an expiration or extension. The biggest issues are; 1) borrowers believing the headlines that the government will guarantee them a lower rate in the 4's and 2) the painful logistics of actually getting loans priced, locked, approved and funded with changing guides, collapsing MI, valuations, condos, and subordinations. Along with the borrowers all not understanding why you are torturing them when they just want to lower their rate!
We are fortunate that there is seemingly a ceiling on rates with the government less than half way through their $500B stash allocated for buying mortgages and with some definite margin built into pricing by the cabal (SAT word!) of remaining lenders controlling price. So there should be opportunities to execute clearly written and explicit rate lock agreements for buy orders with the understanding of what happens if rates go down from there -- Including lock and processing fees! It's a new world out there! If you don't get that monetary commitment you are screwed! PLUS you are incurring real fees today -- AVMs to see if it even makes sense, Condo doc/questionnaire fees, full appraisal++ fee, subordination fees, and just given the low pull through you have to try and cover some costs...(I think the Mortgage Coach site has a good example of a well thought out lock agreement/buy order...if you can't find it email me for one)
But the cabal will allow rates to come down only on their terms, which means they will avoid premium pricing. They will price to eliminate the easy/no/no process that has fostered the growth of the .25% rate move/refi industry. You will have to get your borrowers to embrace the math of paying points for those staying in that loan for 4 years or more. The numbers just plain work; Mortgage Coach Total Cost Analysis shows it beautifully. Pick any period the borrower states and you can let the math (and tax benefit) do the talking. SO when the borrower says "I'm waiting for 4.5%", tell them "I got it right now...it's got 2 points but it's fixed for 30 years! What? The Government said 'you wont have to pay anything to get 4.5%' Can you show me where you read that the Government was also dictating the point and closing costs structure? If you re at 6% right now I can save you $200/mo! If the Government gets it wrong (and wouldn't you say the bailouts so far have not necessarily been on target?), and rates move back up, would you feel more sick in your stomach than if you had locked and rates then went down?"
Remember to prioritize your most committed borrowers so you can execute your "sure things" with confidence and only work on those who are committed and confident. I still see too many people gloss over details and slide by agreements which end up blowing up in their face later. If you are a professional, give well-thought professional advice, backed by a solid professional standard of conduct, and then demand the same professional courtesy back to you.
Don't forget time blocking so that you still plant the seeds for when this market turns!!!
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