Rick gives us hope in the never ending Challange of "whos got the best loan". 

One thought that with the conforming limites going up that the affordability of homes in Morgan Hill and other parts of Santa Clara County would ease up a little bit.  But NO.....  Instead of Conforming and Jumbo all that the Fed's increasing the limits on Conforming did was create a new category of "Jumbo Conforming" which has a higher interested rate than the regular Conforming loan. 

It has a lot to do with Banks not really knowing what their risk factors are so they add a bit more interest to make them feel a bit more comfortable.  But Gee Wizz, when will there be any balance.  Rick says November and is willing to buy coffee to back up his claim - any takers?  Pamala Meador


Fights on

Many years ago, a young and brash boxer named Cassius Clay predicted he’d knock out the
Heavyweight champion, Sonny Liston.  When he accomplished this goal, he was asked about
his bragging so much.

“It ain't bragging if you go ahead and do it” he said.

Cassius Clay became Muhammad Ali, and the rest, as they say, is history.

Is bragging just another form of prediction, although one that luckily comes true?

It’s hard to say, and certainly, in the area of economics, predictions have a way of making
even the most prescient and intelligent look foolish.

As one man put it, “Wall Street indices have predicted five of the last nine recessions”, or as
another put it, “Forecasting is the art of saying what will happen, and then explaining why it
didn’t.”

Funny quotes, all, but let’s look back at this column for the past few months.

Our two biggest predictions did come about.

Biggest was my firm belief that spreads would tighten, a fancy way of saying that mortgage
rates would go down without the market going lower.

Second, was that underwriting standards would be relaxed, especially the down- payment
requirements.

I don’t want to be seen as patting myself on the back.  Not at all.  I’ve been in this business
over 27 years, and to me, it was obvious and inevitable that these would happen.

In many ways, government as well as private sector policy had caused the housing crisis.  So
it was obvious that they would have to make some changes to undo that crisis.

In my view, the down payment requirements that Fannie Mae recently relaxed were the most
crucial to those of us who work in the Silicon Valley and San Francisco Bay Area.

When people are paying $ 700,000 or more for a home, the difference between 20% and 3%
down is huge. It makes all the difference in the world as to whether a family can buy a house
or not.

But what might a crystal ball show for the next year or so?

First, the higher loan limits are set to expire December 31 of this year.

I’m 100% certain that with an election coming up, Congress will absolutely extend these
limits.

No politician wants to be seen pulling the rug out from under the American homeowner,
especially in the middle of san election year.

Second, the economy clearly appears to be under stress, and this will keep pressure on rates. 
I’ll say I’m 98% certain that rates aren’t going up, and that they’ll probably continue to come
down.

Third, the difference in rates between conforming (loans under $417,000) and Conforming
Jumbo ($417,000 - $729,000) will continue to shrink, as we have seen over the past several
weeks. Fannie Mae and the Fed are working diligently to drive rates between those two
categories closer together, and they have made great progress in a very short time. It will get
even better.

Let’s meet here, same time, same place, in six to nine months and see if these three predictions
will have turned out to be right.

Better yet, give me a call to set a date by which I come by you’re office, maybe meet in
November or so, and we can discuss it in person.

And maybe we can even set a bet at who buys coffee in November. 

Rick Soukoulis
Chairman & CEO
Intero Mortgage