Deanna Valeo

You can`t depend on your eyes when your imagination is out of focus. ~ Mark Twain August 3, 2009

Mortgage investors were more focused on last week's Treasury auctions than on the economic data. Overall, demand remained healthy for US Treasury securities, and mortgage rates ended the week a little lower. Major economic reports on Gross Domestic Product (GDP), Durable Orders, and Chicago PMI manufacturing contained mixed results and were roughly neutral for mortgage rates.

Last week's housing market data was generally positive. June New Home Sales jumped 11%, the third straight month of increases. Inventories of unsold new homes fell to an 8.8-month supply from a 10.2-month supply in May. The May Case-Shiller index of home prices in 20 metropolitan areas rose 0.5% from April, following 34 straight months of declines. While the results varied greatly in different parts of the country, the increase in average prices provided support for the analysts w ho believe that the housing market has bottomed.

Update on future and current Condo listings. The spot approval purchase program for FHA will end the last day of September. The opportunity to us FHA for your listing is still available however a DE approved lender must approve your project (if not already on the FHA site).

The good news is that FHA concentration for spot was only 10% allowable, with the new program FHA will allow 30% (and this may get higher). The bad news is that this will require Realtor to take the HOA by the horns and make sure all the requirements for FHA are met so the condo project can be approved.

With the current lending limit in Mecklenburg County sitting at $303,750 most condos on the market will fit within the range. Conforming loans for condos now require 10% down to get mortgage insurance. So FHA will really increase your available market. Important to note FHA approval cannot be given to mixed use condos where more than 25% of the floor space is commercial use.

We will put out more on the requirements as we move later towards the deadline. In the meantime if you would like to get a head start please shoot us an email and we can send you a list of requirements.

Have a great week and good luck with your clients’ whether they are buyers or sellers
As usual stay informed, stay in touch and remember the Valeo-Croy team is here for you.

Today's Rates:
30 YR Fixed - 5.125%
30 YR FHA - 5.375%
15 YR Fixed - 4.875%
5/1 ARM - 4.500%
7/1 ARM - 4.750%
30 YR Fixed JUMBO - 6.125%
5/1 ARM Jumbo - 5.375%
7/1 ARM Jumbo - 5.750%
5/1 <70% LTV - 5.250%

Extension of the $8000 tax credit, maybe. August 4, 2009

Deanna and I were at a sales meeting today and an issue was raised regarding the rumor that would raise the first time home buyer tax credit to $15,000.  It seems that some first time home buyers are deciding to wait based upon trying to get a bigger payday after closing.
This rumor comes from a June article in the USA today and other publications that references "a want" from the National Association of Realtors and the Builders Associations.  The link attached will take you to the USA today article and you can read it for yourself.
As you read,  the probablity for increasing the credit is unlikely as we are moving towards recovery and we are trying to raise tax revenues (for this same reason we may not see an extension either!).  The economist quoted doubt the amount will be raised and this is what we are hearing from our sources on the hill as well.
Recent new reports point to signs of recovery and statements saying "we should see recovery from the recession in 2010".  These are signals that rates are getting ready to move higher.  This is standard practice in anicipation of economic recovery  (we saw this after 9/11). 
The bottom line is congress may extend the tax credit into next year; however, there are no guarentees, most experts agree that raising the tax credit is unlikely. 

Furthermore we should expect to see interest rates begin to rise soon in anticipation of the recovery and anticipation of the Fed running out of funds to keep inerest rates artifically low with its mortgage back securities fund.  All experts in mortgage back securities state there is a threat to higher rates as we pass the half way point in using these Fed funds.  We are nearly to the half way point.
Keep getting the good word out on the $8000 but remember for now it still expires at the end of November. 

Our best regards,

The Valeo Croy Team -  Todd Croy, Deanna Valeo and Ryan Minto

(704) 366-7711

The Valeo Croy Team, we are here for you.

Lease Buy out - Seller Concession question - Answer August 5, 2009

Today at a realtor sales meeting we had a question regarding seller concessions.

A seller is willing to pay to buy the buyer out of their rental lease commitment so the buyer could close on the purchase of their home.  The realtors told me that underwriters at other lenders had turned this down.
The concessions were within what is allowable, either 3% or 6% depending on the loan product. 
The concession was detailed on the contract. 
The pay off would be line itemed on the HUD payable to the apartment complex or landlord.
Is there any reason why this could not be considered a reasonable sales concession?


This is a seller concession that results in a dollar for dollar reduction of the sales price.  It is not a financing concession and therefore does not fall in the category of the 3%/6% financing concessions that are allowed.
Options are to increase seller paid closing costs to recoup the amount of pocket expenses to the buyer of the property. 


Important loan changes that will impact your closings August 6, 2009

In 2008, the Home Ownership and Equity ACT (HOEPA) and the Housing and Economic Recovery Act (HERA) were passed by Congress, and the Federal Reserve board published the regulations under the Truth in Lending Act. These regulations were written to provide a more transparent, level and fair regulation of the real estate industry; to add additional steps to help prevent deceptive lending practices; and to protect consumers by making them more informed – and therefore more confident – in their home financing choices. In addition, Fannie Mae and Freddie Mac protections, and enhance the overall integrity of the valuation process.
This is important when applying for financing and when selling property as any buyer will be faced with these changes that can impact a closing! The following is a summary of those changes:
Effective May1 ,2009 HVVV promotes the accuracy of appraisals by shielding appraisers from undue influence, and ensuring that borrowers have sufficient motive of appraisal content by requiring that borrowers receive a copy of their appraisal reports no less than three days prior to the closing of their loan absent a borrower waiver of this requirement.
Effective July 30, 2009 HERA amends the Truth in Lending Act (YIL), implemented through Regulation Z, has a number of provisions including the Mortgage Disclosure Improvement act, which changes the Truth in Lending requirements surrounding early and final disclosures to homebuyers and addresses the timing of when fees can be charged.
1.     If the homebuyer is financing the property, these new regulatory and investor guidelines will impact – and could even dictate – the closing date. Historically, homebuyers and sellers would agree on a closing date, and then service providers –including lenders – would work as best as they could toward meeting that date. Going forward, purchase contracts can still be written with a specific closing date in mind, but all parties need to take into account t that the earliest any home purchase transaction can close is 7 business days after the homebuyer is issued his or her initial mortgage disclosures from the lender. (Note: At Wells Fargo Home Mortgage, Saturdays, with the exception of federal holidays, do count as a business day for the purpose of disclosures only.) 
2.     Upfront fees cannot be collected by the lender (except for a credit report fee) until the initial disclosures are received. If the disclosures are overnighted, they are considered “received” the next business day- (excluding Saturdays) allowing the fees to be collected on the following business day. Historically, upfront feed could be collected immediately at the time of application for both in person and phone applications. Moving forward, the homebuyer must receive his or her initial disclosures before upfront fees can be collected. The only exception is the credit report fee which can be collected at application. 
3.    The homebuyer must be approved with a copy of his or her appraisal a minimum of 3 business days prior to closing. To help expedite the process, many mortgage companies have elected to have a copy of the appraisal issued at least 3 business days prior to the mortgage closing. This means the homebuyer may receive his or her appraisal before or simultaneous to the lender receiving their copy. If the homebuyer believes that 3-business-day required review periods is not necessary for whatever reason. He or she has the right to waive that requirement. 
4.     An increase of more than .125% in the Annual Percentage Rate (APR) from the initial Truth in Lending Disclosure (TIL) requires the TIL disclosure to be revised and reissued to the homebuyer. The homebuyer must receive a revised TIL disclosure at least 3 business says before closing, providing the homebuyer with the time required to determine if the homebuyer is comfortable with his or her loan choice. If mailed, the TIL disclosure is considered “received” 3 business days after mailing.
Clearly it is important to deal with a lender who knows what they are doing.  Make sure you have the right team assembled!

Timing the market to land a mortgage with the lowest rate... August 10, 2009

"Success is a science; if you have the conditions, you get the result." ~ Oscar Wilde

Saw this article and liked it's content, spreads between ARM rates and 30-YR Fixed are getting much larger.  While there are many pro's and Con's to consider, if you are not going to be in your current home for more than 7 years you may want to consider an ARM solution and save.

Timing the market
to land a mortgage with the lowest rate is like trying to hit a moving target. Mortgage rates can fluctuate over a few days or several weeks. The leading indicators that influence rates vary depending on the type of mortgage for which you’re approved and whether it’s a fixed rate or an adjustable rate (or ARM).

Before the downturn, some mortgage rates could be tracked and predicted relatively easily because a few leading indicators were more closely bound to rates, says Keith Gumbinger, a vice president at HSH Associates, a mortgage-data tracking firm. For example, fixed-rate mortgages moved in closer lockstep with 10-year Treasury yields than they do now. Now, those rates are heavily influenced by other factors, including the unemployment rate, consumer spending and fear of inflation, he says.

According to the most recent data from HSH Associates, average mortgage rates are down from one month ago. The average rate for a 30-year conforming mortgage was 5.42% for the week ending July 31, compared to 5.55% for the week ending June 26. The average rate on a 15-year mortgage for the last week of July was 4.85%, down from 5.01% in the last week of June. And the average rate on a 5/1 ARM (the most common ARM, whose interest is fixed for the first five years and then becomes variable) was 4.89%, down from 5.14% in the week of June.

These lower rates are well above the near-historic lows they touched earlier this year. For the week ending May 1, the average rate on a 30-year fixed mortgage hit 4.96%.

“Trying to time the bottom of the marketplace is like trying to time the stock market,” Gumbinger says. “Even insiders don’t know when interest rates may change quickly.”

Borrowers can lock in a mortgage rate with a few weeks or more left until closing is completed. This is particularly useful if the borrower believes rates will soon increase. But navigating this process can become tricky and even costly.
Here’s what borrowers should know about locking in mortgage rates.

When is the right time to lock in a mortgage rate?
In most cases, buyers must first find the home that they want to buy and sign a purchase agreement on it. That often requires a deposit of around 5% of the home’s purchase price, says Gibran Nicholas, the chairman of the Ann Arbor, Mich.-based CMPS Institute, which trains and certifies mortgage lenders and brokers.

Then, once your lender has told you the mortgage for which you have qualified, ask if you can lock in the rate through the closing process, which usually lasts around 30 days.

What are the pros of locking in a mortgage rate?
Locking in a mortgage rate eliminates uncertainty for the buyer, says Buz Livingston, a fee-only certified financial planner in Santa Rosa Beach, Fla. You’ll know whether you can afford your mortgage and in most cases what your monthly mortgage payments will be.

When a shopper finds a mortgage at a price level that they can afford, they should lock it in, says Gumbinger. Otherwise, they run the risk of ending up with a higher rate, which could result in a smaller mortgage that doesn’t cover the cost of the home. 

What are the risks?
Consumers who pay a fee to lock in a rate could end up losing out on the savings they’re after, Cummings says. Even if the lock-in rate is lower than rates four months from now, the fee you’ve paid could wipe out the savings you had hoped to reap from the lower rate.

Those who walk away from a mortgage after they lock in a rate stand to lose the money they gave the lender, including an application or appraisal fee or the fee they paid to lock in the rate or extend the lock, Cummings says. Fees vary, depending on the lender.

What are the leading indicators that are pegged to mortgage rates?
Interest rates on fixed mortgages are determined by mortgage-backed securities or mortgage bonds that trade on the bond market, Nicholas says. When there’s demand for mortgage bonds, mortgage rates drop, and when that demand declines, rates increase.

The Federal Reserve plan to purchase more than $1 trillion of mortgage-backed securities by the end of the year, which has helped lower rates, Nicholas says. (Reliable mortgage lenders will keep track of when the Fed buys mortgages to handicap a rate drop, he says.) Also, as economic indicators – including unemployment figures, consumer spending and concerns about inflation – worsen, rates on fixed mortgages drop, Gumbinger says.

Interest rates on ARMs are typically tied to either short-term Treasurys or the LIBOR, which is the interest rate that banks charge each other for short-term loans. The rate on the 5/1 ARM is often pegged to the 12-month LIBOR, Nicholas says.

What kind of buyer is best suited for fixed-rate mortgage vs. an ARM?
Buyers who plan to stay in a home for the long term or who can’t stomach the risk of a variable mortgage rate are better off with fixed-rate mortgages, Livingston says. Long-term homeowners often include families with young children that move into a neighborhood for the schools.

ARMs make sense for borrowers who plan to stay in a home for the number of years that the mortgage’s rate is fixed, especially if that temporarily fixed rate is significantly lower than what’s offered in a fixed-rate mortgage, Cummings says. Newlyweds who plan to upgrade or individuals who are transferred to new locations for work every few years often benefit from an ARM.

What about locking in when refinancing?
The benefits of locking in a rate when you’re refinancing become apparent more quickly than when you’re buying a home. That’s because once you’re quoted a new mortgage rate, you can compare it to the rate you’ve been paying so far. Assuming the new rate is lower, you should consider locking it in, Nicholas says.

Before you can lock in a rate, you’ll typically have to pay for a home appraisal (costs vary, but they are often around $500) and around $30 to $50 for your credit report.

Have a great week and good luck with your clients’ whether they are buyers or sellers

As usual stay informed, stay in touch and remember the Valeo-Croy team is here for you.  704-366-7711 Deanna, Todd and Ryan

Today's Rates:

30 YR Fixed - 5.375%
30 YR FHA - 5.500%
15 YR Fixed - 5.000%
5/1 ARM - 4.125%
7/1 ARM - 4.500%
30 YR Fixed JUMBO - 6.375%
5/1 ARM Jumbo - 5.625%
7/1 ARM Jumbo - 6.000%
5/1 <70% LTV - 5.750%

The Valeo-Croy Team and Cunningham and Company Mortgage Bankers are equal housing lenders

HO6 Insurance is needed for Condo purchase/refi + rates got better August 17, 2009

"A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing." George Bernard Shaw

Tame inflation data, strong demand for the Treasury auctions, and a lack of surprises from the Fed were all positive for mortgage markets, and mortgage rates ended the week lower.

No changes were announced for the $1.25 billion mortgage-backed securities (MBS) purchase program, which is set to conclude at the end of the year. Mortgage rates are largely determined by MBS prices, and the added Fed demand for MBS has helped keep mortgage rates low. Investors will soon need to hear what the Fed plans to do with the MBS purchase program. The direction the Fed chooses could have a significant impact on mortgage rates later in the year.

Hazard Insurance for Units in Attached Condominium Projects (HO6 required)

The updated policy now requires that the borrower obtain a "walls-in" coverage policy (commonly known as HO-6 policy) unless the lender can document that the master policy provides the same interior unit coverage. The master policy must include replacement of improvements and betterment coverage to cover any improvements that the borrower may have made to the unit.

The HO-6 insurance policy must provide coverage in an amount that is no less than 20% of the condominium unit’s appraised value. In the event such coverage can not be obtained, the lender should call the Fannie Mae Project Standards Department at the phone number listed at the end of this Announcement. The standard requirement for a 5% deductible applies.

Have a great week and good luck with your clients’ whether they are buyers or sellers

As usual stay informed, stay in touch and remember the Valeo-Croy team is here for you. 704-366-7711 Deanna, Todd and Ryan

Today's Rates:

30 YR Fixed - 5.125%
30 YR FHA - 5.37%
15 YR Fixed - 4.750%
5/1 ARM - 4.375%
7/1 ARM - 4.750%

30 YR Fixed JUMBO - 6.125%
5/1 ARM Jumbo - 5.250%
7/1 ARM Jumbo - 5.500%

What are the typical Condo and PUD insurance requirments? August 18, 2009

I was asked to day, what type of insurance does the HOA have to have in place to qualify for FHA financing (conventional is much the same)?


The typical insurance requirement is as follows:

Insurance Requirements - (1) Hazard: blanket all risk policy with 100% replacement, deductible not to exceed 5% of policy face amount, (2) Liability: coverage must be $1 Million per occurrence, (3) Flood Insurance: lesser of 100% of insurable value or maximum coverage allowed per NFIP ;coverage of each unit should be the lesser of $250,000 or the amount of its replacement cost (I.e., the replacement cost of all units combined or the number of units x $250,000);deductible not to exceed $25,000 per building located in the flood zone, (4) Fidelity Bond: required for projects with over 20 units, coverage must be In amount sufficient to cover three months of HOA dues or meets requirements of state law.

Condominium project insurance master or blanket policies containing either of the following are prohibited: 
·         A blanket policy that covers multiple unaffiliated condominium associations or projects, or
·         A self Insurance arrangement whereby the owners' association is self insured or has banded together with other unaffiliated associations to self Insure all of the general / and limited common elements of the various associations.


Looking great for Charlotte MSA and future home prices August 20, 2009

A recent article from Business week expects home prices in Charlotte to rise 3.5% between now and 2012... We are amoung the leaders in the top 20 MSAs.

If you are in the market for buying a home in Charlotte and the surrounding area we are nearing a bottom we have seen prices increases in the past two months.  This combined with our population growth will lead to the price upticks.

Here is the link to the article:


Have a great day and keep informed.  If you need to know more reach out and give us a call at 704.366.7711 or visit us at

New FHA Condo particulars taken directly from the mortgagee letter; the new rules go into effect on October 1st 2009 August 24, 2009

Cunningham and company is a Direct Endorsement lender for FHA and this means we can approve projects as needed.  We will have to have all documentation from agents to get projects approved and this will start with a condo questionnaire.  Please note that the questionnaire must address all the questions below (and more for conventional lending).  This process if different from spot approvals - FHA spot for projects with less than 10% FHA concentration.  Please Note that FHA case numbers must be assigned before 9/30/09 to do spot approval (the new needs will replace the spot process and may have a cost).
  • Projects consist of two units or more.
  • Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
  • Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100.
  • No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a nature that is homogenous with residential use, which is free of adverse conditions to the occupants of the individual condominium units.
  • No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units. For two and three unit condominium projects, no single entity may own more than one unit within the project; all units, common elements, and facilities within the project must be 100 percent complete; and only one unit can be conveyed to non-owner occupants.
  • No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
  • At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit. Valid presales include an executed sales agreement and evidence that a lender is willing to make the loan.
  • At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.
  • For proposed, under construction or projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50 percent of the number of presold units (the minimum presales requirement of 50 percent still applies).
  • Legal Phasing is permitted for condominium processing. It is recommended that developers submit all known phases for initial project approval. For purposes of calculating the owner-occupancy percentage:
    • On multi-phased projects the owner-occupancy percentage is calculated on the first declared phase and cumulatively on subsequent phases if the ownership of the condominium project remains the same;
    • If multi-phasing includes separate ownership per phase, each phase is calculated individually; or
    • Single-phase condominium project approval requests must meet the owner-occupancy percentage requirement.

FHA Concentration

  • Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
  • Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.
Reserve Study - a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.

Today's Rates:

30 YR Fixed - 5.125%
30 YR FHA - 5.37%
15 YR Fixed - 4.750%
5/1 ARM - 4.125%
7/1 ARM - 4.750%

30 YR Fixed JUMBO - 6.125%
5/1 ARM Jumbo - 5.250%
7/1 ARM Jumbo - 5.500%

Cunningham and Company preferred Lender for Saussy Burbank Homes August 24, 2009

We are thrilled to let you know that Cunningham and Company has been chosen by Jim Burbank as one of 3 preferred lenders for Saussy Burbank. 
Saussy Burbank is paying $2500 towards closing costs if a buyer uses their preferred lender.

As usual stay informed, stay in touch and remember the Valeo-Croy team is here for you. 704-366-7711 Deanna, Todd and Ryan

Indicators are upward moving for the economy. August 31, 2009

Indicators are upward moving for the economy. The time is now to get the best rates and best prices. See below.
  • The Commerce Department reported new home sales jumped 9.6% in July to a seasonally adjusted annual rate of 433,000 the highest since September 2008.
  • Consumer confidence index rose to 54.1 in August from a revised 47.4 in July.
  • The Standard & Poor’s / Case-Shiller 20-city housing price index rose 1.4% in June, following a 0.5% increase in May.  It was the first quarterly gain since 2006.
  • Orders for durable goods — items expected to last three or more years — rose 4.9% in July. Initial claims for unemployment benefits fell by 10,000 to 570,000 in the week ending August 28th

Also YTD the Fed has spent $792B of the $1.25 Trillion set aside for Mortgage Backed Securities (MBS) - As mentioned in the past the Fed's purchase of Mortgage Backed Securities has been the reason for the lower mortgage rates during the credit crisis.

All of this news points to what we know that rates must get higher. This combined with the pending expiration of the $8000 tax credit should move buyers off the side line. 

Be loud, be vocal and be assured that now is the best time to buy. 

Today's Rates:

30 YR Fixed - 5.000%
30 YR FHA - 5.125%
15 YR Fixed - 4.875%
5/1 ARM - 4.125%
7/1 ARM - 4.750%
30 YR Fixed JUMBO - 6.125%
5/1 ARM Jumbo - 5.250%
7/1 ARM Jumbo - 5.500%

Rates are subject to change and are based upon 1% origination fee. 

The Valeo-Croy Team and Cunningham and Company Mortgage Bankers are Equal Housing Lenders.