Shutdown Continues

The past week can be characterized by its lack of significant economic news, and there has been no apparent progress in Congress in reaching an agreement on critical fiscal issues. Economic reports normally produced by the government are not being released during the shutdown. Without much new information, mortgage rates ended the week with little change. 

As the government shutdown continues, its impact on the mortgage market grows. It is causing some disruptions in the mortgage origination process, and it is limiting the amount of economic data which is released. The Employment report, the most important economic data of the month, did not come out as scheduled on Friday due to the shutdown. Several other significant reports on inflation and economic growth will be postponed as well. This lack of data makes it difficult for investors to get an accurate reading on the performance of the economy.

It was announced that President Obama will nominate the Fed's current second in command, Janet Yellen, to be the next Fed Chair when Ben Bernanke's term ends in January. Since Lawrence Summers withdrew from consideration, Yellen has been the clear front runner. Her views are similar to Bernanke's, and she is not expected to make any dramatic changes to current monetary policy. Her statements indicate that she favors loose monetary policy to help reduce the level of unemployment. She is a firm supporter of the Fed's bond buying program, which is favorable for mortgage rates.

Mortgage markets are in a holding pattern as investors wait for a compromise of some sort in Congress to fund the government and to raise the debt ceiling. According to the Treasury, the debt ceiling limit will be reached around October 17. After that, the government will be at risk of defaulting on its obligations, which could cause severe disruptions for the economy and financial markets. A significant deal should reduce the level of uncertainty. A deal which simply postpones the decisions for a short period of time would have a more limited impact. 

Information courtesy of Mike A Japhet, NMLS ID# 54723, Originator, Madrona Mortgage, 360-352-0237, mike@madronamortgage.com

US Government Shut Down & How it Affects Your Purchase and Sales Agreement

As most of you are aware, the House and Senate did not come to an agreement before the clock struck midnight this morning - and now we are experiencing the first government shutdown in over 15 years.

Please see below how the government shutdown is affecting certain loan types and documentation availability:

All loans:

·         Tax transcripts and VOE's will still be required on all loans.  4506T's can be ordered, but there is no one at the IRS to process them.  Any delays caused by the shutdown that affect the ability to get these conditions met will have to wait until those conditions can be met.

·         SSN verifications can be ordered, but at this time it appears that the results are at the very least going to be delayed past the normal 10-15 minute turn times they usually run by.

USDA:

·         The offices will remain closed until the government shutdown is complete.  Submission of loan packages to RH is suspended since nobody will be there to accept them.  Any loans currently at RH for conditional commitments will be delayed until the shutdown ends.

·         All USDA websites, including GUS and lookup sites for property/income qualification, will be unavailable during the government shutdown.
  

FHA:

·         FHA Connection will be available, but since FHA Connection occasionally interfaces with other systems that may not be available, FHA Connection processes may not be fully functional.  Note the following below:

o   You will be able to obtain a new FHA case number from the FHA Connection.

o   CAIVRS will be available to determine if a borrower has a delinquent federal debt.

o   FHA Total Scorecard will be available, and loans can fund during this time, provided all normal underwriting and processing requirements are met.

o   Automated password resets will be available for FHA Connection, but resets that require an FHA employee's direct assistance will not be available.

VA:

·         The VA portal states that "The VA Home Loan Guaranty Program will continue to function as normal in the event of a Government Shutdown."

·         Any scenarios where VA needs to be contacted will not be available until the shutdown ends.

As more information becomes available we will pass it along to you as quickly as possible.

HARP 2.0 Refinance Program

The government's new HARP 2.0 Refinance Program is available to U.S. homeowners as of March 17, 2012.

If you're underwater on your conforming, conventional mortgage, you may be eligible to refinance without paying down principal and without having to pay mortgage insurance.

What is HARP?

HARP was started in April 2009.  It goes by several names: the government calls it HARP, as in Home Affordable Refinance Program.

The program is also known as the Making Home Affordable plan, the Obama Refi plan, DU Refi +, and Relief Refinance.

In order to be eligible for the HARP refinance program:

1.  Your loan must be backed by Fannie Mae or Freddie Mac.

2.  Your current mortgage must have been secured prior to June 1, 2009.

If you meet these two criteria, you may be HARP-eligible.  If your mortgage is FHA, USDA, or a jumbo mortgage, you are not HARP-eligible.

To speak with a qualified lender to discuss your options, I can provide you a name upon request.