Wholesale Conforming Mortgage Rates and Pricing 7/16/2008
July 16th, 2008 Categories: Conforming Wholesale Mortgage Rates
Wholesale Conforming Rates and Pricing 7/16/2008
Rates and Pricing Provided by RateSpeed‚
**The 3 Yr ARM @ 4.875% doesn’t really cost $20k+. Glitch in the matrix, to be fixed shortly…
Risk Based Pricing Variables:
- Primary Residence
- Purchase
- Single Family Residence
- <80%LTV
- 720 FICO score
- DTI <42%
- 400,000 Loan Amount
- Fully Documented Income and Assets
Mortgage Professionals, have your own personalized edition of the RateSpeed Mortgage Search Engine configured and embedded directly on your sites (yes we white label).
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Wholesale Mortgage Conforming Rates and Pricing 7/15/2008
July 15th, 2008 Categories: Conforming Wholesale Mortgage Rates
Rates and Pricing Provided by RateSpeed‚
Risk Based Pricing Variables:
- Primary Residence
- Purchase
- Single Family Residence
- <80%LTV
- 720 FICO score
- DTI <42%
- 400,000 Loan Amount
- Fully Documented Income and Assets
Mortgage Professionals, have your own personalized edition of the RateSpeed Mortgage Search Engine configured and embedded directly on your sites (yes we white label).
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Wholesale Mortgage Conforming Rates and Pricing 7/14/2008
July 14th, 2008 Categories: Conforming Wholesale Mortgage Rates
Wholesale Conforming Rates and Pricing 7/14/2008 11:15 am PST
Rates and Pricing Provided by RateSpeed‚
Risk Based Pricing Variables:
- Primary Residence
- Purchase
- Single Family Residence
- <80%LTV
- 720 FICO score
- DTI <42%
- 400,000 Loan Amount
- Fully Documented Income and Assets
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Interday Mortgage Rate Pricing for the Worse
July 11th, 2008 Categories: Conforming Wholesale Mortgage Rates, General
Tipped off by my friend Dan Green (via Twitter @lifeinqueencity) about 30 mins ago, there was an inter day pricing for the worse in the mortgage market today:
The bottom fell out of the mortgage market in the past 2 hours. Rates spiked — just in time for all of the weekend house hunters.
This morning I threw a post up showing today’s wholesale direct mortgage rates…below is the screen shot from that post showing where 30 Yr Fixed rates and pricing were at ~9am PST:
After getting Dan’s twit I repriced the identical scenario on RateSpeed at ~12:30pm PST and received the following results:
Boy was Dan right, the bottom did fall out this afternoon!
6.125% was paying 1.256% in YSP this morning, this afternoon it’s only paying .395%. On a $400,000 Loan Amount, that’s a $3444.00 difference! You could have locked 5.875% this morning for almost the same price that 6.125% is going for this afternoon.
It’s a turbulent market folks…the Mortgage Backed Security market is experiencing similar volitility to its equity market counterpart. Fun times.
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RateSpeed Licensed Mortgage Professional vs e-Loan
July 11th, 2008 Categories: Op/Ed
Sorry, this was supposed to be the second post in a series comparing loan results between a RateSpeed mortgage professional (who provides direct wholesale, transparent, anonymous mortgage rates and pricing quotes) and another online lending giant, e-Loan.com, then I was met with this screen:
Since I’m not willing to give up my identity to be spammed, telemarketed, and/or have my mailbox stuffed with solicitations all to get a peek at what mortgage rate I may qualify for, I’ll have to pass. Still waiting for the armed guard to pop out and ask me to pee in a cup, supply a drop of blood, and stick my eyeball up to my video camera for a retinal scan.
What personal information does RateSpeed ask for?
…and we’re moving this field to the results page.
Next…
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Wholesale Conforming Mortgage Rates and Pricing 7/11/08
July 11th, 2008 Categories: Conforming Wholesale Mortgage Rates
Conforming Mortgage Rates and Pricing for 7/11/08
Rates and Pricing Provided by RateSpeed…
Risk Based Pricing Variables:
- Primary Residence
- Purchase
- Single Family Residence
- <80%LTV
- 720 FICO score
- DTI <42%
- 400,000 Loan Amount
- Fully Documented Income and Assets
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Transparent Wholesale vs Retail Lender Mortgage Rates and Pricing
July 7th, 2008 Categories: Op/Ed
Great question in the form of a comment from a recent post:
I like this, but I don’t see how it is any different than the likes of what Amerisave, e-loan, theratesmart.com are currently doing. Nor what your competitors are doing and have been doing for much longer; Nylx, LenderFlex, etc…
Maybe you can enlighten us to why I would choose your product over a company that is more established and been in the field a lot longer.
Depending on who the company is, the differences range from night and day, to small but vital nuances. Websites and companies that redisplay mortgage rates are ubiquitous, all of them look very similar making it difficult for the average person to tell what the real differences are, who is really showing ‘the real rates’? Overall it’s a losing proposition for the consumer and ethical mortgage professional trying to navigate through the mish-mosh of compromised information being pimped under the guise of ‘trust me’.
First, the most important aspect of ‘how’ we are different rests in RateSpeed’s core value propositions:
- Maintain the integrity and purity of information between the wholesale/correspondent lender and the consumers eyeballs, while keeping the mortgage professional in the middle of the transaction.
- We are not a lender nor do we originate mortgages in any way, shape, form or fashion.
- We do not sell (or buy) leads, period.
- Create an even playing field, win-win environment for consumers and mortgage professionals to negotiate business on.
- Our sole interest is to become the most respected provider of the most authentic, accurate, unaltered, unmanipulated, uninflated mortgage program, rate and pricing data in the marketplace for the consumer through the licensed mortgage professional.
These value propositions allow us to remain a completely objective 3rd party that concentrates on transparent mortgage program, rate and pricing search.
Second, as to why someone should consider RateSpeed over a perceived competitor who has been in business longer, has more experience etc. our back end technology and architecture is extended via an exclusive relationship with a long time, well respected, patent-pending mortgage PPE (program and pricing engine) provider called who has been in business for 5+ years.
On most occasions, running a side by side analysis, using identical submission criteria between a licensed RateSpeed mortgage professional and another ‘mortgage rate website’ will be enough. In other cases some intricate nuances will have to be expounded upon, as they’re not nearly as obvious but just as important.
This will be the first in a series of posts that will attempt to point out the differences between RateSpeed and perceived ‘like services’. Amerisave was chosen first, in the order of the comment above.
Comparison #1: Transparent Wholesale vs Retail Lender
Both scenarios were run on July 5, 2008 at ~2pm pst.
Amerisave is a direct lender who’s primary business is the origination and sale of mortgages.
RateSpeed is a PPE (Program and Pricing Engine) software program that is configured to the broker or bankers existing wholesale or correspondent relevant direct data feeds, and runs consumer front facing on their respective websites. The Broker/Bankers who run RateSpeed on their web/blogsite have no ability to manipulate the information disclosed in the application between the wholesaler providing it and the consumer seeing it. Why the last sentence is important can be evidenced below:
Amerisave Search Criteria
RateSpeed Search Criteria
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Granted our UI needs (and is getting) some much needed make-up, don’t be superficial and instead notice the far deeper quality of information RateSpeed is collecting on behalf of our search engine for subsequent crawling. Better information in = better information out.
The Credit Crunch cliche refers to the far more highly scrutinized nature in which mortgages are approved compared to the not so distant past. Credit scoring, more specifically: what credit scores cause an increase in pricing and higher interest rates, weighs heavier than ever. The difference between a 679 and a 680 score can have large financial repercussions.
The fact that Amerisave assumes very broad score ranges between 661 and 749 leaves alot of tiered Risk Based Pricing (RBP) thresholds out of being considered in the rates they display. That’s a polite way of saying the rates and pricing results Amerisave is redisplaying is likely to have at least a marginal degree of inaccuracy. There are other RBP factors that Amerisave doesn’t consider in its application, the credit scoring aspect happens to be a very important and easy one to understand for most people. In this case, we’re saying we have at least a 750 FICO score by selecting Excellent Credit on the Amerisave interface and inputting 750 in the RateSpeed credit fields.
Lets look at the results:
Amerisave 30 Year Fixed Results
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RateSpeed Transparent Broker/Banker 30 Year Fixed
Lets look at the rate 6.375% and the subsequent pricing. With Amerisave 6.375% would cost you $2498.00 in Broker/Banker fees to acquire, not including 3rd party closing costs. The RateSpeed licensed Broker/Banker is offering 6.375% and will credit you $4540.00 (after paying their $2000 fee which may be applied toward 3rd party closing costs), a difference of $7038.00.
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Amerisave 5Yr ARM Results
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RateSpeed Transparent Broker/Banker 5 Year ARM
Under the 5 Yr ARM program, lets look at the rate 5.75% and the subsequent pricing. With Amerisave 5.75% would cost you $3564.00 in Broker/Banker fees to acquire, not including 3rd party closing costs. The RateSpeed licensed Broker/Banker is offering 5.75% and will credit you $1748.00 (after paying their $2000 fee which may be applied toward 3rd party closing costs), a difference of $5312.00.
There’s no need in stating the obvious about the difference between what this one Retail Lender is offering vs what a Wholesale Direct RateSpeed licensed broker is willing to provide. Even if the mortgage professional running RateSpeed had a flat (Broker/Banker) fee as high as $5000, the savings would still be over $5000 and $3000 respectively, no small coin.
Many professionals feel consumers shouldn’t shop for a mortgage based on rates and fees. That used to be a valid statement/philosophy mainly because access to clearly untaintable real time mortgage program, rate and pricing information was not available to them…that was, until now.
So, who says that big retail or direct lenders have an advantage over brokers or smaller bankers? Turn what has been kept inside on to the outside and wield transparency as an advantage instead of a hindrance.
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Risk-Based Pricing and Mortgage Rates.
July 2nd, 2008 Categories: Consumer Information, Op/Ed
Risk-Based Pricing (RBP) and Mortgage Rates.
Also posted on TheXBroker.com
Risk Based Pricing is quite simply, a pretty complex topic…so over a series of posts (I was going to throw up one long post but could hear heads hitting keyboards after trying to read the first 5 pages) I’m going to break down how each of these general factors and subsets effect program, interest rate and pricing for potential borrowers.
The opening cited** content below is paraphrased from Wikipedia. The driving reason for using this source is that I personally submitted much of the relative content to the online encyclopedia over a period of time.
Risk-based pricing is a methodology adopted by most lenders in the mortgage industry to mitigate the perceived risk of lending money to a given set of financial, credit and property factors.
Lenders effectively ‘price’ loans according to these individual factors and their multiple derivatives. Each derivative either positively or negatively affects the price/cost of an interest rate. For example, lower credit scores will yield higher interest rates (higher price) and vice-versa, a non-owner occupied (or investment) property will yield a higher price than a primary residence; providing less verifiable income documentation (due to self-employment or otherwise) will qualify for worse pricing (higher interest rate) than someone who fully documents all income appropriately.
RBP gets even more complex when you consider that one factor may depend on another factor to determine how price may or may not be adjusted. For example, ’stated’ or reduced income documentation will typically cause a pricing for the worse (higher rate), but if the credit score is high enough some lenders will offset the pricing hit with a correlating improvement in price.
A criticism amongst consumers and other groups has been that RBP can make ’shopping’ for the best interest rates very difficult and opens the door to potentially deceptive practices due to the relatively low education material available to exactly how RBP works. Further, program guidelines change often and the base price/cost of interest rates change daily (up to three times in some cases), so what may be available today may not be available tomorrow. It is almost impossible to tell at first glance if one is qualified to get an advertised rate or exactly what interest rate they qualify for at all. Risk-based pricing can be manipulated to wield deceptive marketing practices, such as the bait and switch.
Consumer-rights advocates also believe that risk-based pricing in the extreme hurts financially disadvantaged and vulnerable consumers by cutting them off from reasonably affordable capital and exposing them unwittingly to soaring interest rates and unsustainable financing schemes that erode equity and may lead to default. The fairness of these lending practices, more specifically the proper disclosure of such within the mortgage industry is being investigated by Congress.**
The primary risk based factors (and their subsets) considered by lenders that dictate what mortgage programs and interest rates a given borrower qualifies for include:
- Loan Type
- Property Type
- Property Use
- Property Location
- Credit Score and History
- Debt to Income Ratio (Gross Income vs Monthly debt obligations disclosed by the three main credit bureaus.)
- Loan Amount
- Appraised Value/Purchase Price
- Loan to Value/Purchase Price
- Documentation Type
In this post, I’ll cover common Loan Type/Purpose and Property Type factors.
Loan Type/Purpose
Subsets:
- Purchase
- Rate/Term Refinance
- Cash-Out Refinance
Purchase loans are deemed to contain the least amount of risk and thus ‘price’ purchase loans most favorably, yielding lower interest rates.
Rate/term refinances are priced similar, usually identical to purchase loans, with no price increase. The purpose of a rate/term refinance, as the name implies, is to reduce the interest rate, payment, and/or overall term of the mortgage. To qualify as a rate/term refinance the cash received by the borrower at closing may typically not exceed $2000.
Cash-out refinances are deemed to have a higher risk factor than either rate/term refinances or purchases due to the resulting increase in loan amount relative to the value of the property, thus risk-based pricing typically mandates a pricing increase (higher interest rate) for this loan purpose.
Property Type
Subsets
- Single Family Residence
- Condo/Townhome
- 2-Unit (Duplex)
- 3-4 Unit
- Modular
Single Family Residence (SFR) is considered the lowest risk of property types, so no increase in risk pricing (and rate) is implemented.
Condo/Townhomes are often risk priced the same as a SFR especially if the Property Use is a Primary residence. Price exceptions for the worse are common if the property is above 4 floors tall, reasons include disparity in construction quality, as many ‚hi-rise’ properties were converted from hotels or other mixed-use purposes. This is a very lender specific risk-price adjustment and can vary widely.
2-Unit properties or a Duplex will typically risk price for the worse, resulting in a higher interest rate.
3-4 Unit properties typically risk-price slightly worse than a 2-Unit duplex.
Modular built properties have evolved substantially in overall quality over the past 5 years to the point they rival and can even exceed the quality of a stick built SFR. For this reason most modular homes have no risk price increase. Modular homes are pre-manufactured off site, usually in a large warehouse and delivered in pieces to the home-site where construction is completed. Recently built modular homes are almost impossible to identify vs traditional ‚stick-built’ construction.
The term ‚manufactured home’ is often mistakenly interchanged with ‚modular’ homes. Manufactured homes typically encompass the definition of a mobile home, which are risk-priced substantially worse than any other property type and/or do not qualify for conventional financing. Talk with a licensed mortgage professional to determine how a specific ‚pre-manufactured’ or other property type is risk-priced.
Next I’ll cover Property Use and Property Location…
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Captains Log, Stardate 6272008…
June 27th, 2008 Categories: General
Crazy week meeting and talking to the typical disparity of lovers and haters in the quest for mo-better, accurate access to mortgage information…In any case, I’ve made the acquaintance of some very progressive people in and around this space and looking forward to announcing some affiliations in the coming weeks leading up to Inman Connect San Francisco.
Our beta group is almost full, we’ll be making proper announcements soon.
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Most common question/statement/epiphany of the week: You can provide agency guideline specific pricing????
Yes. While not perfect yet, RateSpeed is the only application of its kind (to our knowledge) that will take into consideration Conforming, Alt-A and Sub Prime (FHA very very soon) agency specific guidelines when returning a rate and pricing quote.
Why is this important? Accuracy and choice. Many other pricing engines only consider a few pieces of criteria when searching for and returning loan quotes, which can be misleading or lead to undeliverable pricing quotes, or they simply return ‘no results’.
Why don’t other applications (pricing engine companies and similar products) provide this level of detail? Not only do rates change daily (as often as 3 times) but program qualification guidelines change very often too. The sheer magnitude of data that needs to be updated and maintained is simply too prohibitive for others to deal with. In other words, they can’t…so don’t settle for a watered down version of a transparent mortgage program, rate and pricing search engine. Remember: You get what you pay for…
Thought for food:
Real estate professionals love the idea that they can feature RateSpeed on their sites too…If you’re a mortgage professionals looking for a way to differentiate yourself in the industry, streamline your business processes and maximize your marketing reach, apply here and we’ll help you spread your seed…
Back to my cave…
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I Submitted My Information, So Whats Next?
June 20th, 2008 Categories: General
We ’soft launched’ a working demonstration of the RateSpeed application late Monday afternoon and it’s created a storm of activity and opinion from those in and outside the industry. If anyone’s interested in reading a mile long comment thread thats far more interesting than the post, click on over to Active Rain.
There is such a love/hate relationship over this little application. While the love is great, its the hate that fascinates me. Hearing the virile comments from those in the mortgage industry reminds me of what happened in the real estate industry when greater access to property listing data was feverishly debated. RateSpeed is similarly akin to cracking open Pandora’s Box in the mortgage industry for consumers and professionals…opening Pandoras Box always sets off fireworks and usually changes how people percieve a given reality…once open, its almost impossible to close.
So what’s next? Well I didn’t plan on such a flurry of activity and interest so quickly. The plan was soft launch, contact some well respected folks in the mortgage industry get their opinion and see if 25 of them would like to take part in a Beta test over the next week to ten days. We would run the beta period for about 4 weeks, collect some invaluable feedback, make some adjustments in how the application worked and then do a formal launch. Well, I’ve been contacted by far more than 25 interested parties, ranging from the individual mortgage broker to technology companies to real estate agencies all inquiring as to how they can get involved with the RateSpeed initiative on too many levels to discuss at this time.
At this time on Friday, June 20th the plan moving forward is to go through the database of interested parties over the weekend and begin to select our 25 beta testers. I’ve already got a few hand selected with verbal commitments and will announce who they are starting Tuesday of next week. If you’ve submitted your information via the site or email, thank you, I’ll be reaching out to each one of you very soon. If you are not selected as a beta tester please don’t take it wrong, this wont be an easy process for me with so many quality mortgage professionals expressing interest, I just ask that you be a little patient and welcome the chance to be amongst the early adopters when we hard launch.
On a different level, a very common question I get is: What happens when I provide my (email) information to RateSpeed?
It’s privately filed away on our secure servers, so don’t expect a call from a mortgage professional or anyone else for that matter. We do not, will not sell or disclose your information to anyone. The application running on the www.ratespeed.com site is redisplaying rates and pricing available on the wholesale market so consumers, mortgage professionals and real estate pro’s can get a feel for it’s accuracy. It’s basically out there so everyone can put it and the quality of information it returns to the litmus test. So far, so good. I’ve had dozens of licensed mortgage professionals contact me and verify that what is being displayed is exactly the same information they receive from their wholesale or correspondent relationships and can deliver. Huzzah!
Anyways, its been a long week. I need a beer.
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