A key inflation report, Personal Consumption Expenditures (the Fed’s “favorite”) was released today, and it showed that inflation continues to cool.
But, despite that, rates went up. This surprised many casual market observers because cool inflation reports normally send rates sharply down, given that bond investors focus so heavily on inflation.
Rates, however, went up because of profit-taking and trading trends that sometimes defy normal market moves. Rates could still come down in response to this news later today.
Delayed Closings – Switching Lenders; Cyber Attacks
We are seeing a substantial number of closings delayed as buyers are pulling their loans and moving to other lenders to pursue lower rates when rates fall (if lenders are not able to roll down a locked rate enough to satisfy the buyer). The new lender then has to start the disclosure and underwriting process over, resulting in substantial delays. We also recently saw a cyber attack at a major title company that significantly delayed closings.
Fast closes, such as our 14-calendar-day-close, can often solve this problem, allowing transactions to close before rates move too much. We also like to remind borrowers that they can usually refinance after closing at no cost with JVM’s “Rate Drop-Free-fi™.”
Walls-In Insurance for Condos: Difficult to Obtain
I was on a speaker panel yesterday with a prominent insurance broker, Abdullah Al-Hadeethi, and he reminded us that Walls-In Insurance for condos is very difficult to obtain nowadays. But he did give the names of two providers who still offer it: AAA and Progressive.
Accessory Dwelling Units (ADUs) Are Not Part of Square Footage
A prominent appraiser and the owner of a major AMC, Anthony Young, was also on the panel, and he reminded agents to be sure to NOT include ADU square footage with the main dwelling square footage – IF you have to leave the main dwelling to access the ADU. If the ADU is accessible within the main dwelling, then it can be included in the overall square footage. This is extremely important because it impacts the comparable sales that can be used for the appraisal report. A 2,500-square-foot home with a separate 1,000-square-foot ADU will require comps that are in the 2,500-square-foot range (hopefully with ADUs too); appraisers will not use 3,500-square-foot comps. This confusion often causes homeowners and agents alike to vastly overestimate values – depending on how much value the ADU itself adds.
