THIS MORNINGS QUICK LOOK
- TOUR DE MTG FINANCE – Volatile Market
- PRODUCT HIGHLIGHT – Using Assets Outside The Box
- JACKISM OF THE DAY- It’s Time To Let Go
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Tour De Mortgage Finance Learn Something New Everyday About Your Industry
VOLATILE MARKET
We ended the day yesterday pretty much where we started. We were 3 BPS up on the day for Conventional and the exact same for FHA, VA and USDA loans. The 10 Yr ended down 1 which was good to see.
Unfortunately the DOW ended down 173 BPS so your 401-K’s did not fair so well.
We continue to sit right on the floor of support that we are really hoping that holds.
There are SO MANY items that are impacting the volatility of rates. I want to chat about one of these items today that helps some folks understand what is happening.
You are always hearing about the Fed and their actions and how it impacts rates. The Fed has a dual mandate to control inflation which means 2% and maximum employment. That is their job.
The storyline right now is the Fed may be backing off of rate hikes in order to control a few items like U.S. debt downgrades, employment concerns, banking sector downgrades which all impact their dual mandate.
We do not like it when the Fed does a strong stance on increasing rates but we also do not like when they do nothing as well.
You see our mortgage MBS market is a fixed rate investment. If you invest in a fixed rate security and a year later you are at a 4% inflation. Your fixed rate investment rate of return is worth 4% less than what it was the previous year which is not good for investments.
On the equities side of the picture with stocks Those go up and down and your investment stays in line with inflation and does not hurt non-fixed types of investments the same.
When the Fed says they are going to cut back and not raise the Fed Funds Rate then that means inflation will stay the same or come down much slower than it would if they raised rates. Therefore, if Feds do not stay aggressive which we do not like either then inflation stays up longer and investors put their money elsewhere. This means demand for mortgage bonds decrease and in order to sell them we must raise rates to give investors better rates of returns.
Any form of aggressive behavior up or down is not mortgage bond friendly.
It is very difficult to understand why the market reacts the same to completely opposite news. You have to look at the why behind everything that is happening to figure out what is good for mortgage rates and what is bad.
Right now we are on a wait and see for Fridays Jackson Hole Summit Meeting. This will tell us a lot of the mindset behind what other countries will be doing with their rates and the impacts on their inflation which impacts ours.
Having fun yet?
Product & Guideline Highlight Knowledge That Gives You An Edge Over Your Competition
USING ASSETS OUTSIDE THE BOX
Using income for assets is fairly common knowledge and has made many a deal work for my clients.
One of the downsides to using assets for income is you must take the total assets with multiple restrictions and divide it by at least 120 months and as high as 360 months.
That is great for the multi millionaires but not so great for that qualified borrower who has plenty of money but just not enough income.
One of the income options that is very often overlooked is Trust Income.
Ask your borrowers if they have a trust and do they have their assets inside of their trust? If they do they can then set up a distribution if not already receiving and they only need to have a 3 year continuance to use that amount. That takes assets from a minimum of 120 months to 36 months and no real restrictions on asset types.
You can put all of the assets above in a trust and set up a distribution. This is actually a pretty decent set up for a lot of people to be able to transfer their wealth upon their death to family members.
PLEASE do not use this as a sales tool to get a deal done. Use this as an opportunity to educate your borrowers on their options and if this concept fits or they are already set up this way then utilize this to help them structure their finances wisely.
This is not for everyone but it is a great opportunity for those whose financial consultants suggest this as an option.
TRUST INCOME GUIDES
FANNIE MAE
Need copy of trust agreement or trustee’s statement confirming the amount, frequency and duration of payments. Must verify trust will continue for at least three years via statements. Verify the distribution is set up if monthly and if annually receive you can get tax returns to prove. No history is required if doing monthly.
FREDDIE MAC
Need copy of trust agreement specifying amount, frequency and duration of payments. If receiving currently and they are differing amounts you will need a two year history with tax returns. If a fixed payment you do not have to have a history of receiving payments but only the trustee statement showing above and will continue for three years.
FHA
They show allowed for income regularly distributed to a borrower from a trust. Must show trust agreement or trustee statement. Flagstar prefers to see one distribution. The frequency, duration and amount and a bank statement or transaction history showing the payments. Must continue for three years.
USDA
Must have received for 6 months and will receive for at least 12 more months. Documentation the trust is legally filed or recognized to document the balance, payments and term of trust. Proof of the 6 months received.
VA
VA does not reference Trust Income in their guides. I would assume could use it but not verified as of yet. We typically follow FHA guides when VA is silent on a subject.
Jackism of the Day Truths and Thoughts that make you go hmmm
IT’S TIME TO LET GO
Do you ever feel like in life you are not living up to the expectations that you have set for yourself, that you always feel like you must do more and continuously drag your past in to your present?
I fall in to this trap on a regular basis and have to dig my way out from under my own self.
So many of us have such high expectations of who we should be that before we realize it ten years have gone by and we have not reached our potential.
Others of us think of all the harm we have caused in our past and we carry it with us as a reminder of what we never want to do again or never want to be a part of again. It stays as a weight on our lives and we think it keeps us from making the same mistakes but in reality it keeps us from moving on beyond who we once were.
Then others who are in a good position in life or in one area of our lives like our marriage or finances or role in our company or community. Then we spend our days worried about how we are going to lose all that we have been blessed with. That someone is going to walk out the door, we will get hit by a financial meteor that is going to destroy us or our role will cease to exist.
For me, this hit home for me with my faith and my walk I have with the Lord. I get to the point where my pursuit and passion for the Lord is not enough or where I want it to be, then I find it difficult to let go of the sins I have committed in my past and drag them along and then I am not worthy of the blessings that I receive when I am obedient to the word. These limiting thoughts keep me from being who I am in Him.
You can use this situation for your faith if you desire, for your life in general, for your roles in marriage, work, community and family.
It does not matter what you attach it to. Many of us spend time in this arena and it is tough.
I encourage you to think about areas of your life as it applies to above.
Then I want you to know something that can set you free.
What if you were to take your faith, your role at work, at home, in your community or whatever you like.
What if you just went in to your day today simply. You just begin your day as you are today, believing in yourself or in your faith, go in to your day with humility and with appreciation and love if you will for others. Then apply your mind today to do diligently what you set out to accomplish and even more so who you set out to be today.
If you mess up then accept the mess up. Let it go and continue in your day simply, diligently and at peace with who you are today and who you desire to be. No expectations other than being the best you that you can be today.
Nothing on your back, no past issues coming to haunt you, no fear of losing everything and no thoughts that you are not good enough.
Today, be good enough and honor who you are for the sake of those that look up to you and count on you. It is quite simple. We are our own worst critics so maybe it is time to let go.
Turn Times As Of This Morning Lookin Good!
| TURN TIMES | Purchase | Refinance |
| Business days | business days | |
| Conv Non-MI | 1 | 1 |
| Conv MI | 1 | 1 |
| FHA/VA | 1 | 1 |
| USDA | 1 | 1 |
| Jumbo | 1 | 1 |
| Conditions | 1 | 1 |
