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Category Archive: ‘Mortgage News’

Goodbye Sandicor

There was a snafu in the rush to sign the tax reform bill:

“The Senate parliamentarian determined two minor provisions do not have budgetary impacts and had to be removed from the bill,” the representative told Business Insider. “The Senate will still vote tonight, and the House will vote tomorrow to send the final bill to the president’s desk.”

Republicans are using a process known as budget reconciliation to pass the bill without being subject to a Democratic filibuster. But that also means the legislation must comply with the Byrd rule, which stipulates that it must not be projected to add to the federal debt outside of 10 years and that all its provisions must deal with the budget.

The parliamentarian, a sort of umpire for Senate rules, determined that three elements of the bill violated the Byrd rule:

The name. The short name of the bill, the Tax Cuts and Jobs Act, appears to be placed incorrectly in the legislation.

Changes to the so-called 529 savings plan. The bill would have allowed money in the college-savings accounts to be used for homeschooling supplies.

The exemption for small colleges from a new excise tax. The bill had proposed a tax on college and university endowments exceeding $500,000 for every student enrolled, but it included a provision that would have exempted those with fewer than 500 tuition-paying students. The parliamentarian struck only the words “tuition-paying,” the Ways and Means representative said.

Even with the delay, the bill is expected to make it to President Donald Trump’s desk before the GOP’s self-imposed Christmas deadline.

We will wait patiently for Congress, and in the meantime find some good news in the Sandicor resolution, published today.  This isn’t much progress, but at least they are agreeing to something.

The two renegade associations will join the vastly superior CRMLS, and concede Sandicor to the only people who want it, the Greater San Diego Assocition of Realtors.

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Posted by on Dec 19, 2017 in Jim's Take on the Market, Mortgage News, Realtor, Realtors Talking Shop | 2 comments

Tax Reform – The Vote

Here we have three different real-estate-industry opinions on the effects of the final tax reform.  1) The demand will increase due to more spendable income, pushing home prices higher; 2) The demand will drop, due to less spendable income because middle-class families will have higher taxes, and 3) Congress did the right thing and should be applauded:


The Republican party’s self-imposed Christmas deadline for the widely debated tax bill is fast approaching. Last week, Republican lawmakers announced they had the votes necessary to pass the converged Tax Cuts and Jobs Act bill. As the process moves forward, details are changing quickly, and, now, a couple of steadfast voters may not cast their ballots.

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Posted by on Dec 18, 2017 in Jim's Take on the Market, Local Government, Mortgage News, Tax Reform | 2 comments

Champions of Affluent & Rich

It’s now been widely reported – and Rob Dawg agrees – that Congress did not change the two-out-of-five-year requirement for home sellers to receive up to $500,000 in net proceeds, tax-free.

The only two changes in the final tax reform bill are 1) Lowering the mortgage cap from $1,000,000 to $750,000 for future buyers, and 2) capping the state, local, and property taxes deductions to a max of $10,000.

This is a win for the real estate industry, yes?  After all, they were considering lowering the cap to $500,000, no SALT deductions, and changing the capital-gains exemption to five-out-of-eight years.

Yet, last night the California Association of Realtors sent out their second email since Friday’s final bill was published, and declared that it ‘Dramatically Weakens Homeownership Incentives’.

Why aren’t realtors forming victory parades, instead of complaining?

Should I just be happy that they stopped including the scare tactic of home values declining if the bill passes?

P.S. It is mortgage principal, not principle.

Now that N.A.R. and C.A.R. have been saying for weeks that home values will be plunging, here’s an example of how it is being reported (H/T to Susie for sending this in from the NYT):

Posted by on Dec 17, 2017 in Jim's Take on the Market, Mortgage News, Tax Reform | 16 comments

Tax Reform Getting Closer

Congress is expected to vote on the final version of the Tax Reform Bill next week.  The terms being bandied about:

  1. The mortgage-interest deduction will remain, but only for loans up to $750,000 for future buyers, instead of $1,000,000.
  2. State and local income and property taxes can be deducted, up to $10K.
  3. Home sellers who have lived in their home for five out of the last eight years can exclude up to $500,000 in profits, tax-free.

What I haven’t seen is the date when the five-out-of-eight requirement begins – the House and Senate each had different versions.  If you see or hear how they decided to resolve it, let us know!

Republican lawmakers are trying to release the text of a compromise bill by Friday in order to hold votes in the House and Senate early next week, said Senator John Thune, the chamber’s third-ranking Republican.

Posted by on Dec 14, 2017 in Jim's Take on the Market, Mortgage News, Tax Reform | 12 comments

Fed Hikes, Mortgage Rates Drop

With the new Fed transparency, these rate hikes are telegraphed well in advance now and priced in by the market. Free enterprise is working – the competition between Chase, Wells Fargo, and Bank of America is keeping rates in check.  BofA is quoting 3.875% and no points for 30-year jumbos today – and we’ve had three Fed hikes this year (doubling from 0.75% to 1.5% today)!

From MND:

Mortgage rates fell fairly quickly this afternoon following the Federal Reserves updated economic projections.  While it is indeed true that the Fed “raised rates” this afternoon, there are two reasons that doesn’t matter.

First of all, the rate the Fed adjusts (aptly named, the Fed Funds Rate), governs only the shortest-time frames (overnight loans among big banks).  Although its effects radiate to longer-term debt like mortgages, the two are far from joined at the hip.  Short term rates often move one direction while long term rates move another.

More importantly, EVERYONE responsible for trading the bonds that govern interest rates (and I do mean every last person without a single exception) was well aware that the Fed would be hiking rates today.  No Fed rate hike has been better telegraphed during this cycle.

When bond traders know what’s going to happen in the future, they’ll trade accordingly as soon as possible.  That means rates had long since adjusted to today’s rate hike–so much so that the hike itself was a non-event.  Again, it was the update economic projections that helped rates move lower this afternoon.  Fed Chair Yellen’s press conference played a major role as well.

Even before the Fed news came out, a weaker reading on an important inflation report helped bond markets get into positive territory on the day.  The net effect of the Fed and the economic data was a moderately quick move back to last week’s low rates.

Loan Originator Perspective:

Bonds are rallying following the Fed announcement today and weaker inflation data.   As of 4pm eastern, only a few lenders have passed along any of the gains.  So, I favor floating overnight and evaluate pricing tomorrow.  Hopefully this rally can continue.


Posted by on Dec 13, 2017 in Interest Rates/Loan Limits, Jim's Take on the Market, Mortgage News | 0 comments

San Diego #1 for Rents

Even if the tax reform includes fewer incentives for buying, the rising rents should still help to power sales – and San Diego was #1 in the country for our 5% increase year-over-year!

An excerpt:

Most of the 20 largest core-based statistical areas had rent increases, but those with limited new construction and strong local economies tend to have low rental vacancy rates and stronger rent growth.

The largest rate of growth was in San Diego, while Phoenix experienced 4.3 percent year-over-year rent growth, driven by employment growth more than double the national growth at 2.8 percent year over year.  In contrast, Houston, which has been hit with energy-related job losses since early 2015, saw rents decline by 0.9 percent year-over-year (pre-hurricane) and Miami was also down. Seattle’s skyrocketing rents, and rents in other cities that experienced strong but less exuberant gains, saw growth moderating significantly.

But at first glance, renters are getting off easy when compared to those shopping for new homes and loans. Andrew LePage says that while home prices have risen about 6 percent over the past year, recent homebuyers have taken on mortgage payments that have risen closer to 10 percent.

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Posted by on Nov 10, 2017 in Jim's Take on the Market, Local Flavor, Mortgage News | 2 comments

Tax Reform – Senate Version

We’re breathing again – the Senate’s version of tax reform doesn’t change the mortgage-interest deduction, leaving the cap at $1,000,000:

The mortgage interest deduction stays. The current mortgage interest deduction rules remain intact in the Senate plan: Americans would still be able to deduct the interest they pay on the first $1 million of mortgage debt. The House plan reduced that threshold for new mortgages to $500,000, causing outcry from some real estate agents and builders as well as congressmen who represent areas with extremely hefty real estate costs.  While there was pushback on the House plan, the reality is only about 6 percent of new mortgages are valued at more than $500,000, according to a report by the United for Homes campaign.

So far this year, 37% of the mortgages funded in San Diego were over $500,000, so there is a significant impact upon our area:

In the San Francisco metro area, 60% of new loans were for more than $500,000, while in Los Angeles and San Diego, the figures were 44% and 37%, respectively.

While there is still more wrangling to come for the House and Senate to agree on a bill to send to the President, at least this might be enough to stop the NAR from declaring that the sky is falling.

Posted by on Nov 9, 2017 in Jim's Take on the Market, Mortgage News, Tax Reform | 13 comments

GOP Tax Reform

From HW:

The Republican tax plan is in, and an investigation reveals one place stands to lose far more than any other under the new plan.

To recap – the Tax Cuts and Jobs Act will slash the mortgage interest deduction in half from $1 million to $500,000, double the standard deduction and reducing the capital gains exemption, allowing homeowners to deduct profits from a home sale only once every five years, instead of two. Read a full analysis of the new plan here.

The GSEs Fannie Mae and Freddie Mac also say it could trigger yet another bailout for them, so there’s that.  But the lower corporate tax rate could also allow them to quickly pay back the draw – read all about that here.

But the mortgage interest deduction debate has been going on for a while. A quick search on HousingWire shows articles debating the mortgage interest rate going back seven years.

Before the Republicans announced their intent to slash the mortgage interest rate deduction, the National Association of Realtors argued that even an increase in the standard deduction could be detrimental to the MID as it would make it irrelevant for all but the wealthiest Americans.

However, in one state, the effects of the cut could be much more far-reaching.

You guessed it – California.

Using the IRS statements of income data from 2015 and filed in 2016 compiled LendingTree, these are the top metro areas where homeowners utilize the mortgage interest deduction, all of which are located in California:

1. San Francisco – with 24% of tax filers claiming mortgage deduction of an average $16,167

2. Samford-Norwalk – with 32% of tax filers claiming mortgage deduction of an average $15,237

3. San Jose – with 28% of tax filers claiming mortgage deduction of an average $14,815

4. Orange County – with 27% of tax filers claiming mortgage deduction of an average $13,938

5. Santa Cruz-Watsonville – with 27% of tax filers claiming mortgage deduction of an average $13,496

6. Oakland – with 30% of tax filers claiming mortgage deduction of an average $13,406

7. Ventura – with 29% of tax filers claiming mortgage deduction of an average $13,257

At this point, another state comes into the picture, taking the eighth spot with Honolulu, Hawaii, with 22% of tax filers claiming an average $13,092 in mortgage deduction. However, the list then continues on with more metros from California.

9. Santa Barba-Santa Maria-Lompoc – with 22% of tax filers claiming mortgage deduction of an average $13,053

10. Los Angeles-Long Beach – with 21% of tax filers claiming mortgage deduction of an average $12,904

11. San Diego – with 26% of tax filers claiming mortgage deduction of an average $12,727

12. Salinas – with 20% of tax filers claiming mortgage deduction of an average $12,279

13. Santa Rosa – with 28% of tax filers claiming mortgage deduction of an average $12,067

14. San Luis Obispo-Atascadero-Paso Robles – with 28% of tax filers claiming mortgage deduction of an average $11,825

Needless to say, Californians could see a hard hit if the new tax bill passes. Experts point out that only about 5% of U.S. mortgages are more than $500,000, but the map above, produced by the National Low Income Housing Coalition, shows the majority of these homes are either in California or in the Northeast.

Posted by on Nov 3, 2017 in Jim's Take on the Market, Mortgage News, Tax Reform | 29 comments