THIS MORNINGS QUICK LOOK
- TOUR DE MTG FINANCE – MBS Today
- PRODUCT HIGHLIGHT – FHA SPOT CONDO APPROVALS
- JACKISM OF THE DAY- Are You Worthy Of An A?
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MBS TODAY
We lost some ground on Monday and I bet your clients and referral partners said “What happened?”
What do you tell them? This is the purpose of this section of the morning update.
The big issue is the response changes everyday and I assure you with the week we have coming it will change everyday. For today you can say this is what happened yesterday and why we lost some ground on Monday.
Bring a version of this in to any conversation you have to show you are the person in the know that understands what is happening in the markets.
What Happened Monday?
On Monday we lost about 25 – 30 BPS in the conventional mortgage market which equates to a higher cost of lending of about $250 – $300 in worse pricing per 100K in loan size. In the Govt market we lost about 65 BPS which would equate to about $650 higher cost of lending per 100K in loan size.
As a reminder Govt loans had a lot more gains last week so they had more potential for higher losses this week.
But why? The markets are being pulled in multiple directions and it does not know which way is up. Over the weekend First Republic Bank was seized by the FDIC and was taken over by JPMorgan. This typically would be good for rates due to concerns in the banking industry causing the Fed to not raise rates. The issue with that is although First Republic did go under the rest of the banking industry is regaining the proper traction. That is a bit of a tug of war between what traders that buy our securities are going back and forth with.
In addition, we have the Fed meeting this Wednesday and remember the markets are forward thinking. This just means traders hedge their bets on what they think is going to happen and when something different happens the markets react aggressively to come in line with what actually happens. Wednesday could prove to be a volatile day.
Yesterday morning we receive the ISM PMI which just means the purchasing managers index. It is a survey of 600 industrial companies and how they are doing in the manufacturing sector. This is important because what they are manufacturing and everything associated with it determines what we will pay in the stores and what will be passed on for the betterment or worse of U.S. consumers.
The survey covers new orders, output they are manufacturing, employment for their industry, timeliness of suppliers and the current supply that they have.
The magic number is 50. Above 50 is an expanding manufacturing environment (good for the economy) and below 50 is a contracting. The number came in at 50.2 in one area and 47.1 in another area so we have both a contracting and expanding area of the markets. More confusion!
They are expecting growth in manufacturing so they have been hiring up to pay new job openings to cover expectations of new orders. This caused the cost to manufacture to increase from both suppliers and manufacturers. If it is costing more to supply and to manufacture that means we have inflationary news and inflation is bad for rates. That is what hit us yesterday morning.
Lastly, we are bumping up against an important ceiling in the 10 Yr Treasury market which we hope we can hold. This is what we call the technical market where we watch charts and graphs to determine what rates will do if news around the world did not exist. If we go through this ceiling in to a higher trading window this would be bad for rates. If we bounce off this ceiling and it holds it could be good for rates. Guess what? We don’t know what will happen.
Bottom line. Mr. Customer, are you happy with this rate? Yes I am. Great, then lock.
All of that means not much to anybody and after this afternoon it won’t mean much to you. But while you are in the here and now use it to explain what is happening in the markets.
Make it a great day!
Product & Guideline Highlight Knowledge That Gives You An Edge Over Your Competition
FHA SPOT CONDO APPROVALS
I have never really understood why we do not do more FHA condos. Conventional has that market completely cornered.
Here is the good news for you. If conventional has the market on condo’s really dialed in then that means that originators are not giving options for approvals using FHA pricing and LTV’s.
This gives you an advantage over others because most originators have no idea how to do FHA condos.
So, how do you do a condo loan using FHA financing without going through the entire process of getting them approved with FHA?
They call it the FHA single unit condo spot approval which Flagstar can approve and here is what you need to know.
THINGS YOU NEED TO KNOW
– 96.5% Max LTV allowed with APPROVE Findings
– 90% Max LTV if MANUAL Underwrite
– 50% of units must be owner occupied
– <10 Units can only have 2 FHA loans
– >=10 Units cannot be over 10% FHA loans
– <20 Units max owned by 1 entity = 1 unit
– >20 Units max owned by 1 entity = 10%
– Similar requirements on budget, condotel regs & other items
– COO must be at least 1 year ago
– Minimum complex size is 5 units
– Max units in arrears on dues is 15%
DOCS NEEDED TO APPROVE FHA CONDO
Full Condo Questionnaire Form 9991
click to download this form
2023 Annual HOA Budget
HOA Master Insurance Policy
Recorded Master Deed and Bylaws
Appraisal
PROCESS FOR FLAGSTAR LOANS
FLAGSTAR BANK FHA SPOT APPROVAL CHEAT SHEET
Jackism of the Day Truths and Thoughts that make you go hmmm
ARE YOU WORTHY OF AN A?
I bet you think the days of earning an A, B, C, D or F went away when you graduated from college or high school.
Unfortunately, although we no longer receive progress reports from our teachers. We are likely being graded by our clients.
I use to play this little game on certain days and if you read yesterdays Jackism I could probably apply this concept to one of my theme days.
The purpose was to receive as many “U D Man Jack” responses from clients I served that day and tally them up.
It is not because I need a pat on the back. It was to rate the quality of service and how frequently my clients felt good about the service they received. A big THANK YOU in bold letters or a U D Man or something with a little umpfh received from my clients awarded me a mark in the good job column.
You can apply this to just about anything but what I want to apply this to is expectations that clients have of how we respond to their needs.
The example I am going to use will be that you are working on a marketing project with a co-worker or your boss or really anyone who is relying on you to do what you have been requested to do.
This project is nothing special and is not a rush request. It is not going to make a difference in anyone’s life in any huge way.
It is Wednesday and you need to have the job completed by Friday at noon.
This is how our co-workers, bosses and clients grade you on your response time.
GRADES
A = Completed by noon on Thursday. 24 hours early. And you delivered more than they requested.
B = Completed same day as due but before time set with what was promised.
C = Completed and delivered right on time and as expected.
D = By end of day on date due but still a little late.
F = Did not complete on day due and did not let them know.
This is the point I want to make. The important things like getting a rate quote out to a potential client, responding to an atty needing something at closing, a person yelling in your ear saying I need something now. All of these items most do a pretty decent job of responding quickly to what is needed.
But what about everything else. The pile of items that need to get completed. The stuff a client, co-worker or boss needs but is not necessarily in a hurry.
That is when you make the difference. When you tell a borrower you will review their documents in the morning and let them know what else is needed. If you respond in the morning then congrats, you got a C. But respond within 20 or 30 minutes and you went in to detail then you just earned an A.
An agent asks what will they need to get an approval on an FHA condo for a client that is looking at buying. You let them know you are out of the office at lunch and will get it to them this afternoon. Congrats on your C if you do. Or you call someone at the office after promising it this afternoon and have it to them in 5 minutes. Boom, A+++.
If all you receive in response is thank you, I appreciate it or I will let you know, then you will be a stellar C graded individual and your profits will reflect it.
But if you promise a reasonable and good timeline but then deliver an exceptional experience. Then you will be the one on the podium addressing the class with the 4.0 GPA.
If you have not gotten a “U D Person” response lately it may possibly be because you are delivering C level service when you could be delivering A+ service.
Go ahead, see how many “U D Persons” you can get today and the kind of responses you receive.
VERY IMPORTANT: It is not always how fast you respond. It is much more important HOW you respond and what you give them when you do.
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 |
