Getting a mortgage without leaving your bedroom

 Mortgage Process  Comments Off on Getting a mortgage without leaving your bedroom
Jul 232018

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By G. Steven Bray

The real estate and mortgage industries historically have been paper intensive. Getting a mortgage typically involved signing lots of paper documents. That is changing, and many companies now allow you to apply for a mortgage online, but a truly paperless mortgage process has been elusive. Documents signed at closing require a notary seal, and Texas law required a notary to be physically present when a borrower signed the closing documents.

That changed this summer with the implementation of HB 1217, which introduced online notarization to Texas. To understand why it took so long for this to become a reality, you have to consider a notary’s functions.

The concept of a notary public dates backs to at least ancient Rome, and today’s notary public still operates as an officer of the State. A notary’s primary duty is to show that a disinterested party has notified the signer of a document as to the significance of that document and has ascertained that the signer’s identity, signature, and reasons for signing the document are genuine. That was difficult to do in the past without the signer physically appearing before the notary.

HB 1217 has allowed us to ease our way into the 21st century by redefining “personal appearance” to include the use of two-way audio-video communications. With this, Texas becomes the third state to allow notarization of documents this way.

Being an online notary requires a special commission, and online notaries have extra record-keeping responsibilities, so it may take a while before online notarization becomes common. The state also allow online notaries to charge a small fee for the service.

I understand the first online mortgage closing in TX occurred a couple weeks ago, and it may not be too long until you can buy a home start to finish without getting out of your pajamas.

Jul 162018

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By G. Steven Bray

It feels like deja vu all over again. The National Flood Insurance Program (NFIP) will expire on Jul 31 unless Congress acts to extend it. The program currently is operating on a short-term extension passed in March.

In Nov, the House passed a package of bills that extended the program until 2022. However, they included reforms, including the expansion of private flood insurance to compete with the federal program. While most recognize the program needs to be reformed, the Senate wasn’t comfortable with the scope of the House vision.

Without its own NFIP reform bill, the Senate has opted to kick the can down the road one more time. It slipped another short-term extension into the Farm Bill passed at the end of Jun.

Unfortunately, the Senate version of the Farm Bill differs significantly from the House version. The two bills now go to conference committee to find a compromise that can pass both chambers. The problem is compromise could take a long time, and the clock is ticking on NFIP.

If Congress fails to extend the program, it would have to stop issuing and renewing policies. Realtors estimate this could impact as many as 40,000 loan closings each month.

Congressmen and Senators, especially those from coastal areas, are well aware of what a disaster that would be, especially with the onset of the hurricane season. I wouldn’t be at all surprised to see Congress strip the extension from the Farm Bill and pass a standalone bill just in the nick of time.

Rate update: Trade war vs inflation

 Interest Rates, Residential Mortgage  Comments Off on Rate update: Trade war vs inflation
Jul 102018

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By G. Steven Bray

If you’ve been waiting to lock your mortgage rate, I have good news and bad news. The good news is that you haven’t lost any ground. Rates have been remarkably flat for the last few weeks. The bad news is that if you were hoping for lower rates, your hopes went unfulfilled.

Rates seem to be caught in a tug of war. On one side, we have trade war fears. Traders have been yo-yo-ing in response to constant headlines. Now, it’s quite possible that trading partners are using the headlines to manage their bargaining positions, but this leads to uncertainty, which exerts downward pressure on rates.

On the other side, we have inflation. The Federal Reserve’s favored inflation metric, the personal consumption expenditures index, finally rose to the Fed’s target of 2% in May. Analysts attribute the rise to the robust economy. Even though last Friday’s jobs report didn’t show elevated wage inflation, it did show that job growth remains strong. A strong labor market does exert pressure on wages in some parts of the economy even if the overall inflation rate remains tame.

So, which side will win? We could find out this week. This Thurs, we get the granddaddy of inflation reports, the Consumer Price Index (CPI). Analysts predict 2.3%, which is as high as the CPI has been since the Great Recession. A higher number could pull the rope in favor of inflation, leading to a quick jump in mortgage rates. However, a number that matches expectations probably will leave rates stuck in their current range for another couple weeks – waiting for the next headline.

USDA shrinks areas eligible for RD mortgage

 Loan Programs, Residential Mortgage  Comments Off on USDA shrinks areas eligible for RD mortgage
Jul 012018

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By G. Steven Bray

The USDA Rural Development loan is a great option for homebuyers in rural locations. It requires no down payment and has lower monthly mortgage insurance than an FHA loan.

The loan is only available in areas that USDA considers “rural,” but USDA’s rural includes some areas you might not expect. USDA provides an eligibility map you can use to determine if a particular property is eligible, and a new map went into effect on Jun 4th, which narrowed the eligible area just a bit.

The biggest changes I noticed in the map are around Austin. Most of the fast-growing suburbs of Hutto, Buda, Kyle, and Leander were eligible under the previous map. Now, they’re ineligible. However, more distant suburbs, like Dripping Springs, Liberty Hill, Bastrop, and Taylor remain eligible.

In the Houston area, the expansion of the ineligible areas occurred mainly to the south and southwest and around Conroe. The I-10 corridor to the west and east, and the I-69 corridor to the northeast appear unaffected.

Around the Dallas-Ft. Worth area, more of the fast-growing 380 corridor is now ineligible, but otherwise the metro escaped mostly unaffected.

In the San Antonio area, more of the 281 and I-35 corridors are ineligible as is the suburb of Boerne. However, the boundary to the west appears unchanged.

We’ve got a link to the eligibility map on our Web site or in the text version of our blog.

USDA Rural Development eligibility map