On Monday I blogged about how the sudden emergence of the Chinese AI firm, DeepSeek, crashed the markets – making the point that because it was developed with so little money, it posed a huge threat to America’s dominant AI firms.
Tech Icon, Palmer Luckey, called b*llsh*t though in this post on X. “The $5M number is bogus. It is pushed by a Chinese hedge fund to slow investment in American AI startups, service their own shorts against American titans like Nvidia…” (I recommend reading the entire post though).
Fed Day – Woohoo or Who Cares?
Today is “Fed Day,” meaning that the Fed will announce whether it is raising, lowering, or holding the Fed Funds Rate. There’s a 98% chance they’ll hold, but why the markets continue to care so much about the Fed is beyond me – given how powerless they’ve proven to be over the last 15 months.
Once again: The Fed’s control over long-term rates seems limited at best, given that mortgage rates fell from October of 2023 – September of 2024 while the Fed Funds Rate held steady; and mortgage rates shot up 1% over the last 4 months while the Fed Funds Rate fell 1%.
Seller Rent-Backs – The Other Option for Sellers Who Don’t Want to Be Homeless
Our many bridge loan or “buy before you sell” financing options have become a huge part of our business, as I mention often. But there is another route for sellers who are trying to juggle selling their current home while buying another: the old-fashioned rent-back.
Most lenders allow sellers to “rent back” their home for as long as 59 days after they sell the home – without threatening the buyers’ “owner occupancy” status. With inventory building in many markets, a 59-day rent back period is sometimes long enough for sellers to find a new home before they are forced to move into temporary housing.
Flip Rules Only Apply to FHA Loans
A flip is property that was purchased by investors with the intent to rehab and quickly re-sell it. After the 2008 meltdown, lenders cracked down on flips given how prevalent they were and given the opportunities for abuse. Now the only loan program that prohibits flips is FHA, and that is only when a property is purchased and then re-sold within 90 days.
Fannie and Freddie don’t prohibit flips, but they will scrutinize them more carefully and sometimes require two appraisals if the re-sale price is significantly higher the price that the investors paid originally.
Beware of Fake Lender Credits
I was on the website of a prominent national mortgage lender recently and I noticed they were offering all kinds of credits to homebuyers. So yay, free lunch, right? No. They merely jacked up their rates so they could get more yield premium or commission to cover the cost of their credit.
The rate quote in today’s blog, for example, for 5% down is at 6.625%* at “no points.” At 6.875% though, I could offer a $7,000 credit to buyers. I would not be giving away anything of course; I’d merely be offering a higher rate and using the extra yield premium to pay for my “generous offer.”
