Author Archives: Mike Domines

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The Sun Also Rises For Housing and Mortgage Markets

May 22, 2020 2:54 PM ET

There’s no shortage of bad news when it comes to the economy and the housing market. But that’s no surprise considering the circumstances. 

The sheer size and speed of the economic contraction makes it easy to worry about what the future will look like.  Has coronavirus changed things forever?  Is it true that many jobs have been permanently destroyed?

I don’t know.  No one can really know.  Many of the more troubling questions won’t be able to be answered any time soon.  No one can deny things are bad and that some things may stay bad for a long time.

But hidden amid the understandable sea of pessimism, there are some reasons for hope.  We’re not talking about the kind of hope that makes us complacent to the ongoing economic risks.  Rather, there are simply some positive counterpoints to the abundant negativity in the recent data.  Let’s look at both sides!

April’s Existing Home Sales numbers were released on Thursday, and they easily fell to the lowest levels in years.  There’s not much of a silver lining here apart from the fact that economists expected the number to be even lower.

20200522 NL6

The Existing Home Sales report doesn’t capture activity in new construction.  For that, we have to turn to other data released this week on new building permits and housing starts (the ground-breaking phase of new construction).  Here too, things are quite a bit weaker, but the differences between “starts” and “permits” offer a clue.  Specifically, the bigger drop in housing starts suggests quarantine measures are physically preventing new home construction to a greater degree than a lack of demand. (read our complete post)

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FHFA sheds light on an important question regarding the forbearance program

What was this important question?
Can a borrower refinance or purchase a home after needing to use the forbearance program?

In March of this year the government initiated the forbearance program to allow people to postpone making their mortgage payments. The program did not address an important question regarding how to qualify borrowers with loans that are in or had been in forbearance. This week the FHFA, which regulates Fannie Mae and Freddie Mac, shed some light on this question. It announced that borrowers in the forbearance program and those who have left it may now refinance or purchase a home with a new mortgage. The main condition to qualify is that the borrower must have made at least the last three consecutive months of payments. Previously the guideline required the borrower to be current on their mortgage for at least a year, or have repaid the full amount of any payments missed.  

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Coronavirus Market Alert

  COVID-19 Updates  

Interest rates are back down to the historic lows seen in March before the Coronavirus’s (COVID-19) pandemic effect on the market.

Although, interest rates on certain programs have been affected by the Coronavirus (COVID-19) and the temporary status of certain programs change with current market conditions, it is recommended to have a game plan put together if your loan program is one of these affected and rates have not recovered yet.

See my weekly newsletter at for in depth market information.

Please reach out to me to take advantage of today’s low rates or with any questions you may have.

You can also sign up to receive weekly updates:

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Federal Reserve issues FOMC statement

Implementation Note issued April 29, 2020

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The virus and the measures taken to protect public health are inducing sharp declines in economic activity and a surge in job losses. Weaker demand and significantly lower oil prices are holding down consumer price inflation. The disruptions to economic activity here and abroad have significantly affected financial conditions and have impaired the flow of credit to U.S. households and businesses.

The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.

The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

To support the flow of credit to households and businesses, the Federal Reserve will continue to purchase Treasury securities and agency residential and commercial mortgage-backed securities in the amounts needed to support smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will closely monitor market conditions and is prepared to adjust its plans as appropriate.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.

Implementation Note issued April 29, 2020

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VA Interest Rate Reduction Loan (IRRL) Seasoning Requirement

Loan Seasoning

Before the 2018 law change, the VA loan didn’t have any seasoning requirement. However, in order to protect veterans from a few lenders who were practicing a predatory tactic called “loan churning,” a seasoning requirement was added.

In order to qualify for a VA IRRRL, a VA loan must be seasoned for at 210 days and you must have made your mortgage payment for at least 6 consecutive months.

The 210 day countdown begins from the due date of your first mortgage payment.

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The Feature Millennials Are Most Willing To Go Without

Unless you’re having a house built to your exact specifications, the house you end up buying will likely be a feature or two short of what you’d been fantasizing about. That’s because, you’re going to be choosing only from the homes that are on the market during the time you’re shopping. So the odds of finding each and every thing on your wish list in one home are pretty slim. In other words, you’re going to have to compromise. But how willing you are to compromise may have something to do with your age. In fact, according to one new study, millennial home shoppers are more willing to compromise on home and neighborhood features than Gen X buyers or baby boomers. Among respondents, 89 percent of millennials said they’d be willing to give up a neighborhood feature for their ideal home and 84 percent said they’d be willing to sacrifice a home feature to live in their preferred neighborhood. So what is the feature young home buyers are most willing to forgo? Well, garages top the list, with 34 percent saying they’d be willing to give up having one to live in the right neighborhood.

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Homeowners Get A Better Grip On Home Values

The mortgage process is really just about verifying and documenting the various aspects of the home’s sale. Whether it’s verifying the buyer’s income and debts or that the house doesn’t have a major problem with its foundation, there are a number of items that are typically among the checklist of things that need to be done before the deal is closed. The appraisal is one of them. In short, an appraisal provides a professional evaluation of the home’s worth. Based on the size of the home and lot, as well as the prices of similar homes sold in the area, an appraiser will determine whether or not the home’s price is fair. Sometimes, when a homeowner has an unrealistic idea of their home’s value, a lower-than-expected appraisal can be an issue. For that reason, a recent report tracking the difference between homeowners’ perception of their home’s worth and its appraised value is encouraging. That’s because, it found that homeowners’ expectations and actual appraised value are more in line than they have been in more than three years. In fact, nationally, appraised values were just 0.33% off homeowner estimates in April.

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What Is The Best Time To Sell Your Home?

If you’ve ever sold a house or are currently thinking of selling, you know there are a lot of factors that play a role in deciding when it’s the right time to list your home. Most of the decision-making process will rightly focus on your personal goals, finances, and plans for the future. But there is also the question of what time of year is the best for selling a house. Well, according to an analysis of nearly 15 million home sales that occurred between 2011 and 2017, ATTOM Data Solutions has narrowed the best time to sell down to, not just the month, but the exact date when it’s best to sell a home. Their study shows that homeowners who sold during the month of May realized the biggest premiums over estimated market value. In fact, the average seller premium was 5.9 percent. But, if you’re looking for the single best day to sell a house, the results says it’s June 28. Sellers who sold on that date saw an average premium of 9.1 percent.

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Compromise Isn’t Just For Home Buyers

With buyer demand high and the number of houses for sale low, today’s market is favorable for homeowners who want to sell. But though they’re likely to find interested buyers, homeowners shouldn’t expect that everything will always go their way. In fact, a home’s sale almost always involves a negotiation and home sellers, just like buyers, should expect to have to compromise here and there. For example, 76 percent of sellers said they had to make at least one concession when selling their home, according to one recent survey. That means, even in markets that favor sellers, homeowners should have some flexibility when it comes to working out the details of the final sale. Home sellers should also be prepared to make some pre-sale improvements to their house, as the vast majority of recent home sellers also said they had to fix up their home before listing it. In short, regardless of how hot your local market is, you still have to get your house in shape and work with your home’s buyer to ensure the sale is a success on both ends.

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Housing Outlook Says Take The Long View

If you spend any time following the real estate market or economy, you know there’s no shortage of data. Nearly every day there’s a new report detailing some corner of our economic lives, whether it’s consumer spending, mortgage rates, jobs, or home sales. But reading the day-to-day news reports can sometimes give you a distorted view of what’s really happening. That’s because monthly updates on the housing market’s ups-and-downs can be more volatile than a look at annual results. And so it’s important to take a big-picture view of the market from time to time. For example, Fannie Mae’s most recent Economic and Housing Outlook says, despite a slower-than-expected first quarter, the economy will continue to grow. And, according to Doug Duncan, Fannie Mae’s chief economist, home sales will also continue to improve, despite a more challenging environment for buyers. “Soft residential investment last quarter should prove temporary, as home sales resume their slow upward grind, with inventory shortages playing friend to prices but foe to affordability and sales.”

October 2020