Right now there is a “tug of war” between two schools of thought. On the one hand, the economy remains weak, and the government is buying huge portions of mortgage backed securities in an effort to keep rates low. The economy remains weak enough that there is no threat of inflation. Mr. Bernanke, our Fed Chairman, said as much last night in a 60 Minutes interview. On the other hand, the Fed is manufacturing so much money with their massive quantities of bond-buying, many analysts believe tremendous inflation is inevitable. And with the economy showing signs of improvement, significant inflation may come sooner rather than later.
As of late, the bond market has been adhering to the latter school of thought, and rates remain high. Our current administration is relying heavily on low rates to stimulate economy and to shore up the sagging housing market. An effort by the administration to push rates back down is expected soon, but whether they will be able to move rates back down remains to be seen.
We received a purchase last week from another lender that went into escrow in February. It was a single source lender and the underwriters refused to believe the owner-occupancy claims. The transaction involved a 70 year old couple moving from a 20 acre farm into small house in town. The buyers are obviously going to occupy the property, but the lender’s underwriters, located back east, remained skeptical for some reason. So the file languished for four months before coming to us. We quickly and easily found a lender that had no issue with owner-occupancy, and we will close the deal in less than two weeks.
Our point: If you have a file languishing somewhere with a single-source lender, let us look at it. Odds are very good that one of our many lender-sources will like the transaction and give us a fast approval. There is no reason to let a file stew for weeks-on-end in underwriting, ever.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167