Last week, Existing Home Sales, Housing Starts and Building Permits were all weaker than expected while China and Europe both reported slowdowns in manufacturing. This negative date led the S& P 500 index to its biggest weekly loss since December.
Typically when this type of news occurs we will see a positive reaction in Bond and thus some improvement in home loan rates. Bonds struggled even in spite of this news to maintain their support and we did not get the anticipated boost we hoped for . Rates overall have had modest movement from and 1/8th to ¼% over the last several weeks.
On the FHA front two new rules will be hitting the underwriting table effective April 1, 2012. New documentation for Self Employed borrowers and how Disputed, Collection and Public record accounts will be handled going forward.
Self Employed clients will now have to provide a P&l and Balance Sheet if more that a calendar quarter has elapse since date of the most recent calendar or fiscal yearend tax return was filed – no exceptions. Additionally if the income used to qualify exceeds a two year average you will need an audited P&L or signed quarterly tax returns.
Disputed/Collection/Public Records – the total outstanding balance of all disputed credit and collections accounts –(including Medical) can remain if less than $1000.00 and also the disputed accounts or collections are aged two years from the date of the last activity as indicated on the credit report. You cannot pay these accounts down to meet the benchmark. You could, however, set up a payment plan and provide proof of at least 3 on time payments or pay the accounts in full prior to or at closing.
Things are changing and the economy bounces back, then falls again. New rules, other country’s economic outlook, interest rates, S&P….. what a roller coaster!