THIS MORNINGS QUICK LOOK
- TOUR DE MTG FINANCE – Historically Rates Drop After Fed Hike
- PRODUCT HIGHLIGHT – Rescissions On Const To Perm Loans
- MARKETING – Are You Languishing
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HISTORICALLY RATES COME DOWN AFTER FED RATE HIKES
Although we are in a different world and in a different time history has a tendency of repeating itself.
If you look below you will see two charts. The top chart goes back to 1971 and that green line is the 30 year fixed rate. The black bottom shaded portion is the CPI (Consumer Price Index) which is the index that tells us what a basket of goods costs us and is the measure of inflation.
Then the blue line is the actual Fed Funds rate.
What we want to review is what happens to rates when inflation is high and the solution is to hike the fed fund rate which is exactly what we are about to do to the tune of likely 1% in the next few months which is a huge hike and then some more.
The process as far as history shows is to control inflation the Fed slows down the economy by raising the Fed Rate making items more expensive to purchase. This in turn slows down the economy and when you slow down the economy you tend to have lower rates although not immediately.
Barry Habib believes that March is going to be a rough month for rates but then thinks we will get some relief come April. Not much fyi.
The biggest battle for the Fed is to figure out how to bring down inflation (aka the cost of everything skyrocketing right now) without killing the booming economy we are in. He is in a no win situation so must figure out the best win. That is why rates have been so unpredictable. It can go either way depending on how they do what must be done.
I certainly do not envy them…
Product & Guideline Highlight Knowledge That Gives You An Edge Over Your Competition
ARE RESCISSIONS REQUIRED ON CONSTRUCTION TO PERM LOANS
Many of you do a lot of loans where you are paying off a construction loan and putting a borrower in to permanent financing.
First thing to know is per Fannie Mae and not Flagstar all loans that are paying off a construction loan must be classified as a construction to perm and not a rate and term.
Yep, I know some lenders do as rate and term and so did we but Fannie cracked down and it is straight up in their guides.
Then comes the question does it have a rescission period?
The answer is if the borrowers have not occupied the property yet then no rescission period is required. If the borrowers have occupied the property at time of closing then you must have a rescission period.
On a side note: when doing an FHA loan and the borrowers occupy the property already you do the loan as standard financing and not a construction to perm. This gets you around all of the builder docs if they already occupy the property. This is a huge benefit fyi.
Marketing Ideas And Opportunites Little Things That Can Make A Big Impact
ARE YOU LANGUISHING
As you know I rarely send out other people’s stuff but a fellow AE of mine sent this to me and it kind of hit the spot.
It is a TED talk about languishing and the impact it has had on our productive lives.
It is 15 minutes and just thought I would share this one with you today to see how this may have impacted you.
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 |
