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Rates May Not Get Much Lower; Make Sure “Seller” Can Convey Title; FHA MIP

Rates may not get any lower, as we have been saying. The Federal Reserve of New York bought $30 billion in mortgage backed securities over a 5 day period last week, and rates only fell marginally, and that was due largely to the collapse of stocks. The point is that the Fed’s purchases represented a huge portion of the market for mortgage backed securities, and the extra demand did little to drive down rates. Hence, it appears that there is little more the Fed can do to drive rates down further.

We are having issues arise time and again with the ability to convey title on the part of sellers. This problem arises with purchases involving shorts sales, foreclosures and relocations. Our lenders are requiring proof that the selling authority on the contract has the right to convey a property. We are often required to get “Powers of Attorney” or other types of proof that the seller is allowed to sell, and this is delaying our closes in many cases. When you open escrows, make sure that escrow has all of the necessary Powers of Attorney in place from the start. This issue is somewhat confusing, but it has come up so much recently that we feel it is important to mention. Please feel free to call us for further clarification.

FHA Mortgage Insurance Premium rates are now higher than in years past. We bring this up again because this morning’s paper had a feature story about FHA loans with incorrect information. The “Up Front MIP” fee is now 1.75% of the loan amount, and the monthly MIP is now .55%. This is up from 1.5%, and .50%, respectively. Note that the Up Front MIP can still be financed or added to the loan amount.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167