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Delaware First Time Home Buyer Programs

John Thomas September 7, 2007 Tags:

Delaware First Time Home Buyer Programs

Our Flexible Home Financing Programs Reflect Your Personal Needs and Goals

We understand there is nobody quite like you with your individual needs, your dreams, and goals. Our special programs make home ownership simpler and more affordable, with features as unique as you are.

With a dedication to excellent service, we can tailor a program to your needs, and provide personal attention every step of your way home.

Programs

  • FHA / VA
  • 100% Financing
  • Relocation
  • Renovation

We offer you everything you need to get your finances in order.  We provide all of our First Time Home Buyers with Free Seminars on the First Time Home Buying Process and on Understanding Credit and Credit Repair.  We provide budgeting information as well as budget calculators so you don’t have to do it by hand.  We also provide educational material the home buying process, the credit scoring model, insurance, and equity management. We have a team of professionals that will work with you to make sure you are buying a home that fits within your financial plan.  If you don’t have a financial plan then we will put one together for you with the assistance of our Financial Planner – Doug MacGray. Keep Reading...

Delaware Mortgage Rates & Market Update – September 7, 2007

John Thomas September 7, 2007

The Labor Department reported a loss of 4,000 Jobs in August. This is in sharp contrast to the 110,000 new jobs that analysts were expecting. Making a bad number worse, was the downward revisions of 87,000 to the last two months. This month’s loss in Jobs was the worst report in four years. On a positive note, the unemployment rate remains steady at 4.6% and is seen as the only piece of good economic news within the report.

This morning’s surprisingly weak Jobs Report has helped the Bond climb further above the 200-day Moving Average. For now, I recommend floating and I will be watching closely as the market volatility may continue

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

History of FHA

John Thomas September 6, 2007

Congress created the Federal Housing Administration in 1934. At this time, nearly two million construction workers were laid off. Only four out of ten people owned their own home. In addition, mortgage loan terms were outrageous. Borrowers had to put 50 percent down, and the note ballooned in 3 to 5 years. So the mission of the FHA was to encourage home ownership.

The FHA became a part of HUD, which is the Department of Housing and Urban Development, in the year 1965. In the mid-1980’s, the FHA transitioned to what we call direct endorsement and began approving lenders to underwrite and close their own loans. Prior to this time, the FHA did have a hand in the process of the loan.

It’s amazing to me that after 20 years of this direct endorsement program being in effect, nearly eight out of ten real estate agents I speak with still think that the FHA has a hand in the process of the loan. This is something that’s very important for you to know. When you’re working with real estate agents, you need to make it clear to them that the loan will be processed like any other loan.

It’s also very important to know what the FHA actually does and does not do. First, let’s start with what the FHA doesn’t do. The FHA does not buy loans, they do not originate loans, and they do not service loans. What the FHA does do is provide insurance on loans made by FHA-approved lenders. It is actually the pioneer in mortgage insurance. As you know, mortgage insurance protects the lender in case of default on that loan.

Here are a couple of additional FHA facts. The FHA is the only government agency that operates entirely from its own income and costs the taxpayers nothing. It is also the largest insurer of mortgages in the world, insuring nearly 30 million properties since its inception in 1934.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

The Truth Behind the Mortgage Market

John Thomas September 5, 2007

Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They’ve reportedly wiped out 5 hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren’t enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year. Keep Reading...

President Bush annouces FHA secured loan that will bail out Delaware Home Owners

John Thomas September 5, 2007

On August 31, President Bush announced that HUD will help families avoid Foreclosure by providing a brand new FHA loan called the FHA Secured loan.  This loan will directly impact Delaware Home Owners facing foreclosure.  Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.

FHA will implement risk-based premiums that match the borrower’s credit profile with the insurance premium they pay.  This means riskier borrowers pay more for their insurance. This common-sense, risk-based pricing structure will begin on January 1, 2008.  This is what happens when a person receives private mortgage insurance with non-FHA loans.

FHASecure will be underwritten to ensure the borrowers have the ability to repay the loan, will require escrow for taxes and insurance, and will continue to offer unprecedented foreclosure prevention assistance. The FHA has never permitted and will not include pre-payment penalties like on subprime loans or teaser rates that are common in exotic mortgages and have caused much of the current market troubles with the credit liquidity crisis.

To qualify for FHASecure, eligible Delaware homeowners must meet the following five criteria:

  1. A history of on-time mortgage payments before the borrower’s teaser rates expired and loans reset;
  2. Interest rates must have or will reset between June 2005 and December 2009;
  3. Three percent cash or equity in the home;
  4. A sustained history of employment; and
  5. Sufficient income to make the mortgage payment.

If you need more info on this product or need help for yourself or a client that would benefit from this new loan please feel free to contact me at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Financial News Update – August 24th

John Thomas August 24, 2007 Tags:

Durable Goods Orders soared in July, rising by a far greater than expected rate of 5.9% and scoring their largest gain in about a year.  Transportation goods such as airplanes, autos, and trucks led the surge, but other long-lasting goods like machinery, computers, and steel products also showed strong demand.  When excluding vehicles, Durable Goods increased by a still-strong 3.7%. This report is volatile from month to month, so Bonds didn’t react much on the strong economic news.

Sub-prime news abroad – The Bank of China (BOC) revealed a far greater exposure to US sub-prime mortgage investments than expected.  The BOC disclosed about 10% of their US Dollar denominated assets consisted of sub-prime mortgage investments valued at $10 billion. This story will continue to develop.

New Home Sales was reported at 870,000, which was better than expectations of 825,000. The monthly sales inventory came in at 7.5 months, which is less than last month’s reading and well below March’s reading of 8.3. And the median sales price rose 0.6% year over year. Overall a pretty good housing report considering the present landscape in the lending industry.

A number of economists believe the economy is moving toward a recession because of the events in the mortgage and housing sector.  We believe the Fed will soon begin to cut short-term interest rates in an effort to help the economy avoid this. With inflation on the decline and now inside the Feds target range, and with the Job market showing signs of moderating, the Fed should have a “green light” for a cut on September 18th.

Bonds are trading in a sideways pattern along key support at the 100-day MA, presently at $99.57.  We are continuing to advise floating as the Bond remains above this solid floor of support.

If you would like to apply for a Delaware Home Loan, you can APPLY ONLINE HERE, you can call John R. Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Four Major US Banks Borrowed $500 Million Each from Federal Reserve

John Thomas August 23, 2007 Tags:

Yesterday August 23, 2007, four major US banks stepped up to the Fed’s Discount Window and each borrowed $500 Million. Analysts believe the Discount Window borrowing by these huge banks was largely symbolic and designed to help calm all the nervousness in the credit and financial markets.

Now, remember that the Fed just cut the Discount Window Rate last week, and many expect them, in turn, to cut the Fed Funds Rate at the upcoming September 18, 2007, Fed Meeting.

Here’s an interesting tie-in…today’s Initial Jobless Claims number showed a little softening in the labor market, and since Fed Chairman Ben Bernanke has been so concerned about a strong labor market leading to wage based inflation, this is another indicator that the Fed will more than likely make a cut to the Fed Funds Rate at that next meeting on September 18th.

For now, Mortgage Bonds remain above a floor of support at the 100-day Moving Average. I am continuing to advise floating, but should prices turn lower and move beneath the 100-day Moving Average, I will recommend locking your Delaware Mortgage Rate.

If you would like to apply for a Delaware Home Loan, you can APPLY ONLINE HERE, you can call John R. Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713

Liquidity and Its Importance in the Mortgage Bond Market

John Thomas August 22, 2007 Tags: ,

In years past a borrower would visit their local Savings & Loan to obtain a mortgage. The Loan Officer at the bank would approve the mortgage and fund it with cash reserves from the vault. This system worked well until the bank ran out of money to lend. Borrowers came to the S&L looking for a loan and were told to come back when a current mortgage was paid off. What the bank needed was a way to sell the loans it made, freeing up the capital to lend to new borrowers. This way they could lend the same money over and over, earning an income from servicing the loans and assisting the community by offering a near limitless pool of money.
 
To address this issue, FNMA and GNMA were established. The goal was to provide cheap mortgage money to prospective homeowners and a high-quality bond for the investment community. The bond or Mortgage-Backed Security (MBS) takes mortgages with similar risk characteristics and pools them together. Investors in the MBSs know ahead of time the return they are going to receive, much like a Certificate of Deposit. To ensure the performance of the bond, each mortgage is underwritten to specific guidelines. By ensuring the borrower is both capable (VOE), willing to repay (credit report) the debt, has the cash to close (VOD), and the value is in the property (appraisal), the loans and thus the bond will perform as expected.
 During the recent real estate boom underwriting guidelines were relaxed giving way to a whole new menu of products such as the 100% N/O/O with credit scores below 600. In addition, to streamline the influx of applications, income and asset verification took a back seat to a borrower with strong credit. With housing prices rising rapidly, the basis for the mortgage, the property, could be sold to cover the note and foreclosure costs if this occurred. This cycle worked well until the price of houses moderated in 2006.

 Once the housing market began to cool and prices moderated, foreclosed homes were being sold for less than the note. To add insult to injury, the loans underwritten to the looser guidelines are not performing as hoped. With the value of the collateral in question (falling home prices) and the future performance of the borrowers unknown, investors appetites for this risk has waned. To attract investors in this environment, rates had to increase substantially.
Loans sold to GNMA or FNMA remain largely untouched in the recent credit rout because the investment qualities of the loans are well known. The foreclosure and delinquency rates are well within acceptable standards lending support to these products as their interest rates have fallen in the recent weeks.
 The recent rapid rise in rates not directly tied to FNMA/GNMA is an example of the pendulum swinging too wide. The fact remains that a qualified borrower is a good investment from a bondholder perspective. In a typical interest rate market, jumbo loans (loans in excess of the conforming limit) with proper documentation carry a yield about 1/4 higher than similar conforming products. Sanity will eventually return to the markets and non-conforming pricing will come in line with their risk characteristics. The depth and breadth of the current sub-prime issue will determine when that change occurs.

Our hearts go out to everybody touched by this unfortunate issue. Investors have closed, companies have closed, and borrowers have been left with un-funded loans. Unfortunately, the damage is widespread. The fact remains this is the best industry in the world and we diligently press forward as we work harder through these difficult times.

If you would like to apply for a Delaware Home Loan, you can APPLY ONLINE HERE, you can call John R. Thomas at 302-703-0727.

John R. Thomas – NMLS 38783

Certified Mortgage Planner – Primary Residential Mortgage, Inc.

302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office

248 E Chestnut Hill Rd, Newark, DE 19713