E-mail to CNBC re: 100% Financing and Stated Income

Good morning:
My name is Rich Bouchner and I am a principal at Commodore Mortgage Group in Jersey City. We are licensed in 8 states, and have been in business since 2003. I enjoy your work on CNBC and just wanted to offer my two cents on what seems to be available in the mortgage market place.

As you know, many lenders that had previously played in the Alt A space (loans that are above conforming limits, stated income, ect) have either pulled out of the space (Chase, Wells Fargo) or have gone out of business all together (too many to mention!). However, 100% financing and stated income deals do exist, though they are harder to originate.

Fannie Mae is still offering no money down deals for purchases. Credit needs to be in the high 600s, and borrowers are required to buy mortgage insurance. As of last week, 30yr rates for such programs were in the mid 6s.

Stated income programs are still out there as well, but except for one lender that I know of, all of the programs for those that are not self-employed, have vanished. Citi has a stated program available for 2 family investment properties up to a 80% loan to value, as long as the borrower is not taking any cash out of the property.

Hope this helps clarify what is available these days. The market is definitely challenging. Many deals that would have gotten done 6 months ago are no longer possible, but many people who should be getting loans are still getting them. Those w/ poor credit, or few assets, will most likely need to stay on the sidelines until they become stronger candidates.
Thanks,
Rich

Richard C. Bouchner
Principal
Commodore Mortgage Group Ltd.
"The Right Loan at the Best Rate"
One Exchange Place, 9th Floor
Jersey City, NJ 07302
direct: 201.830.1801
direct: 646.825.5734
cell: 917.627.3459
toll free: 888.604.7400 ext 1801
fax: 201.434.7601
www.CommodoreMortgage.com

Fed Surprises with Deepest Cut since 1984

The Federal Reserve surprised everyone Tuesday with an emergency intersession rate cut of .75%, the deepest cut in the Fed Funds Rate since 1984. The Fed Governors are acting in direct response to recent reports that the country is on the brink of recession.
If you have credit cards, auto loans, HELOCs, or an Adjustable Rate Mortgage, the Fed's decision to cut this key interest rate is great news. For long-term mortgage rates however, this could signal the beginning of the end for the lowest 30-year home loan rate borrowers have experienced since 2005.

Let's look at the impact of a few recent Fed Funds Rate cuts and the corresponding impact to home loan rates to see what this could mean for you:



Period Fed Funds Rate Cut Impact to Home Loan Rates
January to June 2001 Down 2.25% Rose 0.10%
October to December 2001 Down 0.75% Rose 0.45%
May to August 2003 Down 0.25% Rose 0.78%

Rates are predicted to be cut again when the Federal Reserve meets at the end of this month. Many believe Tuesday's action was taken because of a dramatic downturn in the stock market, where the Dow dropped 464 points, the worst single day drop since September 11, 2001. Since the Fed's announcement, the Dow has recovered much of those losses but volatility is likely to remain a consistent theme throughout the week.

If you are waiting for long-term mortgage rates to fall further from here, don't count on it. Your best chance to lock in the lowest mortgage rates since 2005 is now. Getting your application in process will allow you to capture a rate near all time lows and, with many experts predicting home values could continue to decline, waiting could kill your chance to capture a great rate if your home doesn't appraise.

This is an unprecedented market and things are moving fast. Regardless of your current mortgage, please give me a call so that we can review your current financial situation in light of these market movements.

Call today to discuss how I may assist you. Not calling today could cost you tens of thousands of dollars in the next few years. Don't let this happen. I look forward to hearing from you. 201.830.1801.

Lehman exiting wholesale channel....

Lehman exiting from the wholesale channel is a big blow for the Alt A marketplace. They had been one of the last Alt A players standing. They had many niche products particularly for HNW borrowers. Earlier this week Chase pulled most of their ALT A products and Wells has been out of the market for some time as well. Any deal that is is not a Freddie, Fannie, FHA or very clean jumbo is not going to get done. The exiting of these lenders will make a rebound in the housing market and the economy very hard to come by....

Thoughts on Paulson

Joe:

Just felt the need to comment on one of your reports this morning where you mentioned that Secretary Paulson is contemplating offering relief to high credit borrowers who are falling behind on their mortgage payments. While I understand the philosophy behind his plan, it bothers me on two levels:

1) As a homeowner w/ strong credit and an adjustable rate mortgage on my 2nd home in CT, I recently paid a lender $2,000 to obtain a new 10yr interest only ARM ay 5.5%. My old loan was a 5yr balloon at 3.75%. If Paulson’s plan in enacted, I feel as though I am being penalized for paying my debts on time and not defaulting on my obligations.

2) As the owner of a mortgage brokerage, a large part of my business plan for 2008 focused on capturing the refi opportunity being offered by the billions in dollars of ARMs that are due to adjust. The mortgage arena is tough enough as it is…never mind that the Federal government is now contemplating bailing out mortgagors who had no complaints when they were able to purchase their dream home or take cash out to consolidate their debts. Why not loosen Fannie and Freddie guidelines to allow these high credit folks to refi? This would at least assure that the investors who purchased the original paper receive the duration that they have built into their portfolio models as well create revenue for the mortgage related firms that still manage to exist outside of the NYC real estate marketplace. Maybe not a PC solution, but more in line of what I had hoped for from an ex-Wall Streeter.

I feel badly for those that are currently struggling, but the government needs to steer clear of solutions that create moral hazard for borrowers. Owning a home is, believe it or not, a privilege, not a right.

Best,
Rich Bouchner