30 Year Fixed Rate Loan at a Cost of One Point: 3.375%*
Rates remain higher after Friday’s positive jobs report pushed stocks up, bonds down and rates higher. The report is considered somewhat “weak”, however, because the data is a bit suspect and because unemployment overall went up. This implies that rates could come back soon.
We address this frequently and are doing so again because it comes up so often. We constantly get extremely strong borrowers from a financial perspective who either cannot qualify for a loan, or who gets conditioned to death. And, as always, they become irate and blame us for the problems, telling us how strong they are and how they present a zero-default risk. These borrowers might have millions in the bank, but b/c they show a business loss (that won’t repeat) or because their CPA was overly aggressive with deductions, or b/c they cannot “paper-trail” their hundreds of large deposits, they get beat up by lenders.
This is a sad manifestation of the regulation pendulum swinging way too far to the “safety side”. We explain time and again that this is not b/c we or the lenders are just being “nasty” or ignorant. We all realize that such borrowers present no default-risk. But, we and the lenders are forced to comply with all of Fannie’s and Freddie’s requirements, irrespective of borrower strength and default-risk.
It is as frustrating to us as it is to the borrowers b/c all the regulatory nonsense requires an immense amount of labor on our part.
If lenders do not comply exactly with all Fannie Mae requirements, they are at risk of being forced to buy back loans they funded long after they fund, whenever Fannie does random file-audits. This is an enormous risk for lenders.
*The above rate quote has the following assumptions: $400,000 Loan Amount; 20% down payment; credit score above 740; property is SFR; borrower has sufficient income to qualify; APR is approximately 0.20% higher than quoted rate for a $400,000 loan. Estimated closing costs affecting the APR include $4,595 for Origination and Processing Fees, $850 for other Lender Fees; $1,400 for Escrow Fees, and $1,000 for Prepaid Interest.
Call Jay Voorhees or Heejin Kim at (925) 855-4491
Real Estate Broker, CA Dept of Real Estate, DRE# 01524255, NMLS# 335646