Yesterdays Roller Coaster ride for interest rates

In the hunt to locate the best interest rate for a mortgage loan many people may spend an afternoon calling or emailing local lenders or use an online service like zillow to get free quotes from many different lenders. This was the procedure recommended for years by financial professionals. But as the lending landscape has changes in the past 24 months this procedure has proven ineffective. Wednesday December 17th 2008 was the case in point.

My first notice of 30 yr fixed interest rates started at 4.625% that lasted for about 10 minutes. I was notified in minutes that locks were no longer being accepted and rate changes were coming momentarily.

As the morning progressed I took calls from customers following the time tested procedures I listed above unwilling to heed my advice and noting they would be back in touch.

Next notice was 4.75%, then 4.875 and by 1:00 pm rates were back at 5%, which was the prior days level.

By the end of the day rates were 5.125-5.25% to close the day.

When customer called back in the afternoon they were disappointed to hear the news.

In today’s banking environment locking an interest rates just like buying stock. A rate lock is a buy call and your committed good or bad. There no bell when you hit bottom so the advice of a trusted professional is worth its weight in gold. One customer’s indecisiveness cost them a savings of over $64,000 yesterday on the term of their loan.

My recommendation:

Get an application completed now.
Get me a signed document outlining your terms, desired rate, and other information.
Having a plan in place for getting your best rate can ensure it happens without suprises.

Brent Diebert
BrentDiebert@ArlingtonBank.com
Mobile 614-571-3554

Are Some Owners Purposefully Falling Behind?

There is a  growing increasingly alarmed that programs to bail out troubled home owners might have the unintended consequence of encouraging people to miss mortgage payments in order to qualify for easier loan terms.

Such initiatives typically require that borrowers be 60 to 90 days late on payments to get a mortgage reworked.

Customers who are contacting their lenders before they fall behind are being told to call back when they are 2-3 payments late.  “They essentially told me to stop paying my loan” is a comment I have heard from several homeowners looking for assistance. 

 

Half of newly modified loans become delinquent

Comptroller of the Currency John Dugan said more than half of loans modified in the first quarter have become delinquent within six months of being modified with more favorable terms. "After three months, nearly 36 percent of borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months 58 percent," he said. Why is the re-default rate so high? Were the loans so badly underwritten that the customers were never qualifiable at any payments. Here are some headlines from lender solicitations I received in years past: Credit score of 620? No job no proof of income no problem 1 day out of a chapter 7 bankruptcy 100% financing available $417,000 loan amount with a $322 payment No proof of income required! 100% stated income stated asset investment property purchases available The loan modification process is a road paved with good intentions but they might as well be building it on a sandy beach unless they start re-underwriting the loans prior to any changes.