Reading Financial Market Tea Leaves
The financial market tea leaves are too difficult for me to read without some guidance. Once again the Shelter Mortgage group; James Williamson, Robbie Crozier and Susan Sharp ; have provided some insight on the financial markets as it relates to mortgage loans and borrowing money to buy a home. Check out the latest on FHA credit guidelines, the government shut down, FED’s keeping interest rates artificially low and more:
1. Effective tomorrow, FHA is changing how and when collections that show on a buyer’s credit report have to be paid. The key amount to know is $2,000. FHA will not require collection accounts to be paid off if the total balance of all collection accounts is less than $2,000. If the balance is over $2,000, then it will be up to the underwriter’s discretion to analyze the buyer’s ability to pay and make a judgment call (a non-purchasing spouse’s collections have to be included in this analysis). It is worth noting that some payment plans will be acceptable as long as the payment is verified and included in the borrower’s debt ratio. Also, not part of the $2,000 limit are medical collections and charge-off’s which don’t have to be paid off and tax liens and judgments which always do.
2. Also, effective tomorrow, FHA is changing how any “disputed” accounts showing on a credit report must be handled. The most important criteria will be if the disputed account has had any late payments or not. The key amount to know is $1,000. FHA will allow disputed accounts to remain on a credit report if the total balance of all disputed accounts is under $1,000. If the balance is over $1,000, then the buyer must deal with the disputed accounts and have them removed from the credit report. This is handled by calling the creditor and resolving the dispute, which usually takes time and money. Worth noting, if the disputed account has never been late, is older than two years, or has a zero balance, it does not have to be included in the $1,000 limit. Same goes for medical accounts and any accounts tied to identify theft.
3. The Government Shutdown lingers but, so far, the mortgage industry is business as usual with most closings taking place as scheduled. The politicians need to figure it out soon or this will change.
4. Of bigger concern than the shutdown is the fact that the US is on the verge of running out of money to pay its bills. If Congress does not solve the debt ceiling quandary soon, there stands to be potential serious consequences for the economy. Don’t be surprised if the debt ceiling deadline is simply extended temporarily for a short period of time such as a month to remove the threat of a disruptive default and to give Congress more time to reach a longer-term compromise.
5. Investors almost universally misread the Fed’s signals leading up to the September 18th Federal Reserve meeting making the assumption that the Fed was going to taper its bond purchase program. As a result, investors were very eager to see the detailed minutes from that meeting, which were released last Wednesday. Turns out that the vote at the meeting was 9 to 1 in favor of maintaining the current level of bond purchases, but the minutes revealed that Fed officials had very mixed feelings about whether to taper and that it was a “relatively close call”. Overall, Fed officials wanted to wait for greater improvement in the labor market before reducing monetary stimulus. In addition, Fed members expressed concern that the rise in interest rates that had already been seen and the unresolved questions about fiscal policy could slow economic growth and, thus, they elected to not act at this time.
6. With Government produced economic reports still postponed by the Government Shutdown, the Consumer Sentiment figures were the only key data released last week and they showed a decline to the lowest reading since January.
The budget and debt ceiling discussions in Congress have dominated the economic news over the last week. The gridlock in Washington and the signs of progress have caused large movements in the stock market, but the impact on mortgage rates has been much more limited with rates up slightly this week. The benchmark Conforming 30 year fixed-rate is down to 4.375%.
Investors will continue to follow the budget and debt ceiling discussions. If the shutdown is not resolved, most of the economic reports scheduled for this week will be postponed, including the Consumer Price Index, Industrial Production, and Housing Starts. Unaffected by the shutdown, the Fed’s Beige Book will be released on Wednesday and the Philly Fed index will come out on Thursday.
If you want more detailed info about anything above, or if you just want to apply for a mortgage loan, here is your go to contact information:
If a buyer needs some work on their credit, James Williamson, Robbie Crozier and Susan Sharp will help the buyer figure out what the obstacles are to purchasing a home and provide them with a road map for working around those obstacles. Even if you do not qualify for a home loan the first time around, James and Robbie will help you determine what steps you need to take to make a home purchase a reality.
Call them to get started on your home loan:
James Williamson 404-483-5512 James.Williamson@sheltermortgage.com
Robbie Crozier 770-337-9833 firstname.lastname@example.org
Susan Sharp 770-724-8121 email@example.com