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THE FED SPOKE
The big testimony we were waiting on for the last week happened yesterday and it amounted to not much effect at all on the markets. We were up yesterday but less to do with the testimony than it was other things.
If you would like to read it, here was his prepared remarks.
FED POWELL SPEECH
HERE IS THE CLIFF NOTES VERSION
Inflation is on the way down, employment is stable, we WILL get to the 2% inflation mark, we are aware households are struggling with higher costs but must continue higher for longer.
Economic activity was strong in 2023 with 3.1% GDP gain because folks keep buying stuff and housing costs slowed down substantially both in volume and home appreciations.
On avg we have gained 239K jobs per month, the supply and demand of jobs is becoming balanced. Workers 25 – 54 are a strong supply of workers with the strong pace of immigration. Labor demand does still exceed the supply of workers.
Core PCE increased 2.4 to 2.8% over the year which is consumer expenditures inflation. Fed Funds rate have stayed stable since last July while continuing to shrink the balance sheet in a quick manner. We are forcing less spending and less inflation with our monetary policy and will continue to do so.
We do not expect to raise rates and do expect to begin to lower later this year but we still say the outcome is uncertain and will monitor reports as they come in before making a decision. He made it clear though they will not lower rates until they are confident the inflation rate is substantially moving towards the 2% target rate.
He ended with we know and understand we are causing havoc in communities across the country but everything we do is in service to our public mission
JACKS OPINION
Whether we like them or not they pretty much do exactly what they say they are going to do and they stick to their dual mandate. That is their job. Their job is not to sell mortgages, manage businesses, keep the stock market positive or to sell goods and services.
Their job is to keep inflation sustainable at 2% and maximize employment for this country. That is it.
With that being said as much as we say they are ringing the cookoo clock sometimes the inflation is coming down and employment is doing alright. Guess they are doing their job.
Yesterday we ended the day with Conventional being up 19 – 28 BPS and FHA, VA and USDA loans were up 10 BPS across the board. This was due to some bond friendly ADP and JOLTS employment reports. The DOW ended up 75 and the 10 Yr down 3 to 4.10 which is fabulous.
Today we do have the ECB (European Central Bank) interest rate decision which is up in the air and could impact the markets this morning.
Text Flagstar to 888-290-3968 to find out what happened at time of morning rate sheets.
Use above information to bring up in your conversations with clients and referral partners to show you are in the know.
Product & Guideline Highlight Knowledge That Gives You An Edge Over Your Competition
FHA MANUAL 12 OR 24 MONTHS?
Assuming you do not have extenuating circumstances out of the borrowers control FHA is crystal clear on who will qualify and not qualify from a credit report perspective.
The answer to do we look back 12 or 24 months on a manual underwrite is YES.
Yes, FHA looks back 12 months and yes FHA looks back 24 months.
Here is something that most folks do not realize that assume we always look back two years.
FHA separates manual underwrites of the credit report between Mortgage and Installment loans and Revolving credit.
On accounts that are revolving which is typically credit cards FHA only looks back 12 months. In addition, within those 12 months the only requirement is that you cannot have significant derogatory credit which is defined as any account that is greater than 90 days past do and/or any account that was made 60 or more days past the due date three times. This can be made up of one account or all accounts together.
When reviewing collection and charge-off accounts the key is knowing when it went to collection or charge-off. If currently active but went to those statuses either 12 or 24 months ago depending on the type is what you base the timeline on and not that it currently has a balance.
On Mortgage and Installment loans you go back 24 months. They must be 0 X 30 in last 12 months and you cannot have more than 2 x 30 using all accounts combined in last 24 months.
If more than these derogs exist they are looking to see if it is financial mis-management or if it is extenuating circumstances outside of their control. Extenuating circumstances can be considered even if you have derogatory credit worse than stated above. It cannot be considered if it is financial mis-management which means they forgot, didn’t know it was due or any other reason they did not make the payment.
Hope this helps understand that FHA manual underwrites are super easy to know if they will work or not.
Send me a credit and AUS and if they have compensating factors and I can tell you the likelihood of being approved manually. I love Govt loans and I love manual underwrites.
Jackism of the Day Truths and Thoughts that make you go hmmm
RE-ARRANGING LIFE
Life can be a jigsaw puzzle that sometimes you just need to put the right pieces in the right places in order to make the entire picture come to life.
I was meditating on something this morning and I pieced together two concepts and made it in to one and it gave me a wonderful aha moment.
What I came to the conclusion of was that sometimes we need to “Re-Arrange Life so that Chores are not a Burden”.
Oh snap did that hit close to home for me and the life changes Misty (my wife) and I have made over the past 30 years.
If what you do for a living or if your schedule is out of control or your commitments are causing frustration and stress or if you are living beyond your current means then everything you do can seem like it is a burden.
No matter how good life may look on the outside when one area of your life is only running on one cylinder and is dragging down the areas of your life that are purring on 8 cyclinders you must re-arrange life so that those purring on 8 cylinders do not become a burden because of other areas of your life.
My wife and I for the past 6 years lived in a condo on the beach in Orange Beach AL. We loved it! One of our favorite places we have ever lived. In October we decided to sell the condo and go on to our next phase in life.
But why? We could afford it if we wanted to. It was paid for but with the cost of insurance on the beach it was going to cost us 26K to live there for the year without a mortgage. Plus we were getting tired of the tourists after six years with only 3 of us couples living there full time out of 72 units.
So, we sold our place. Hopped in our RV and spent five months full timing it in our RV and truly enjoyed it. Then one of our tenants left and we said lets move in there for a couple years while this market corrects itself.
We are now living in a 1,500 sf townhouse in a community in the same town for a quarter of the cost to live a few miles down the road. We re-arranged our life so that the other parts of our life like travel and eating out and going to festivals was not impacted. We could not be happier.
What in your life may need a little re-arranging but you just are not willing to do it yet. Don’t wait until your entire life is a burden before you make the changes necessary to live and do what you love to do.
Stuff and commitments are never worth not enjoying where you are and what you are doing. Make a change, re-arrange and see if you can get all areas of life purring on 8 cylinders.
