Last month I talked about the Making Home Affordable and The American Recovery and Reinvestment Act of 2009 mortgage stimulus plans. Visit our newsletter archive for this and other past newsletters on www.cwcfinancial.com.

This month, the key issues are:

1. The new appraisal processes (HVCC) - which could make or break your refinance and subsequent big dollar savings.
2. The history and direction of mortgage interest rates.
3. Update on temporary high cost conforming loan limits.
4. The new pre-foreclosure obligations of lenders (provided by Ben Hamburg - Real Estate, Business and Employment Attorney).

1. The new appraisal process is a result of the new Home Valuation Code of Conduct - HVCC. The basic purpose of this code is to protect consumers and lenders from inflated appraisals. The way this is attempting to be accomplished is by removing the communication between lender and appraiser. It is against the law for a lender to request that an appraiser provide an estimated, predetermined, or desired valuation in an appraisal report prior to the completion of the appraisal report, or request that an appraiser provide estimated values or comparable sales at any time prior to the appraiser’s completion of an appraisal report. Additionally, it is against the law to provide an appraiser an anticipated, estimated, encouraged, or desired value for a subject property or a proposed or target amount to be loaned to the borrower, except that a copy of the sales contract for purchase transactions may be provided. What this means, simply, is that consumers will have to bear the expense of appraisals with potentially no confidence in the outcome of the appraisal and the home value. In the past, I would have a pretty good idea of the property value before risking the cost of the appraisal for the borrower. I now expect a fair amount of appraisals to be completed - only to result in preventing a consumer from a refinance transaction.

2. I have created an interesting chart that shows the history of 30 year fixed mortgage interest rates since 1972. The question is, what does this chart tell you about the future of mortgage rates? Do you think it's likely rates will go lower or higher? Click here to view the chart. It is my opinion that interest rates will remain low for the balance of 2009 unless inflation gets ugly fast... The reason I think this is because of the 1.2 Trillion dollars our government has committed towards purchasing mortgage backed securities (which drive fixed interest rates) and treasuries. My opinion is that we have seen the bottom and in the event that is not correct, I strongly believe that any improvement over the recent bottoms, will not be appreciable. Conversely, I believe that rates/points will remain within 1-2% of the lows. For example, 4.75% at 0 points on a $417,000 loan has been the low and we wouldn't expect the cost for a 4.75% loan to exceed 2 points in 2009. Hopefully we stay closer to a 1 point spread. Today we are at 4.75% at a .5 point cost. It is also very important to understand that many other factors go into determining a consumer's actual interest rate - including, but not limited to: equity in the property, credit score, credit history, income, rate lock period, impound accounts, loan amounts, second mortgages etc.

3. The new temporary high cost loan limits will be accepted by Fannie Mae on May 1. We don't have pricing on these loans and cannot do them at the time of this writing. I am anxiously awaiting the release of pricing so that I may deliver these loans to my clients. It is important you understand that there are currently two levels of pricing (rates/points) for Fannie Mae loans. The first level is loans up to $417,000 and the next level is for loans up to $625,500 (this amount actually varies by county). Generally speaking, the 4.75% rate would cost roughly 1 point more on a $625,500 loan vs. a $417,000 loan. I hope the re-release of the $729,750 limit does not include another level or tier of pricing - let's all keep our fingers crossed.

4. Finally, I have attached an excellent update of the new pre-foreclosure obligations of lenders (provided by Ben Hamburg - Real Estate, Business and Employment Attorney). Click here for the article.

As always, I welcome you to give me a call or drop me a note anytime so that I can analyze your individual situation and advise what strategy might serve your best interest based on the present market.

Sincerely, Charlie Christensen

888-711-5454 Toll Free / 415-454-1130 Local ext. 111

charlie@cwcfinancial.com