Thursday, May 2, 2013

Great post from Greg Vanslow on markets


Good afternoon,

The GDP numbers weren’t so hot.

That was good for bonds. Rates are great.

 

The Dow ended at 14,713 up from last week’s 15,457.

The 10 year treasury closed at 1.66% down from 1.70% and the lowest yield since December 12.

The dollar closed at $1.29/Euro, about the same.

The MBS is at its best in a month.

 

Rates are the same or lower.

 

 

Reports/inspections

I was asked this yesterday, after a lender found an inspection fee on the seller’s final HUD-1 and eventually demanded section 1 clearance (not my loan):

“If the borrower is putting 50% down, if it’s a mere $4000 in termite work, it’s as-is and the buyer is willing to take the risk, why does the lender feel it has the right to derail the transaction?”

 

I’m going to skip over the golden rule and talk about the lender’s rationale.

 

Let’s imagine the borrower defaults. I know, with 50% down, the borrower isn’t going to default, but imagine the termite work wasn’t done, the house fell down, and the borrower walked away from it. OK, still not going to happen in Los Altos, but you wouldn’t have to go far from here where it could.

Or, the borrower loses his job and is late with some payments.

Or, puts all his money into the property and has nothing left to make payments with.

Or, just forgets to make a payment.

 

The investor who buys the loan is then going to pick up the loan package and go through it page by page, line by line. Until he comes to the Final HUD-1 and sees the inspection report. He picks up the phone and calls the funding lender, “There was clearly an inspection. Why didn’t you ask for the inspection report? You didn’t do your due diligence. Here, you can have the loan back.”

Or, “There is a termite report calling for work and you funded the loan without asking for the work to be done first? It’s yours.”

 

Now not all lenders are going to ask for an inspection listed on the seller’s HUD every time.  We generally don’t, but that isn’t something I like to leave to chance.

 

However, if an underwriter finds out that a professional expert has called for work, 100% of the time the underwriter will require the work be done. If Larry Ellison’s house needed $100 of termite work, and Larry wanted a tiny conventional loan, he’d have to get the work done.

 

There is a short list of lenders who still allow holdbacks. Not Fannie and Freddie loans, and there are restrictions, but the holdback is possible.

 

I’ve said it before, there is always a reason lenders want something. The reason might be that we have illogical regulations and liability laws and so the condition is illogical, but it’s a valid reason to the lender.

 

Wine

2007 Sanford "La Rinconada" Sta. Rita Hills Chardonnay (Previously $35) ($16.99 @ K&L Wines) – pretty good deal for Santa Rita Hills Chard. I tend to like mine a little more mature, too.

 

93 points Wine Enthusiast: " *Editor's Choice* Rich in acids and steely minerals, which gives the wine a tart scour, grounding the pineapples, pears and honeyed oak. Very nice and classic, and should gradually develop bottle complexities through 2013. (Web-2009)"

 

92 points The Wine News: "Pale yellow-gold hue. Sweet, smoky oak scents with undertones of apricot, peach and vanilla. Flavors of pineapple and caramel laced with minerals and crisp acids. Lengthy, even, sweet finish with wet stone-like mineral impressions. " (08/2009)

 

91 points Wine & Spirits: "Hidden behind oak flavors and a tight structure, this is hard to read at first. It's more open after a day of air, revealing zesty lemon and orange flavors in addition to rich vanilla and ripe apple notes. It will be brilliant with seared scallops after a year or two in the cellar. " (10/2009)

 

 

 

2010 Pecchenino  Dolcetto Dogliani Superiore  Siri d'Jermu  Piedmont, Italy - $21.99 @ the Wine Club – benchmark Dolcetto-

93 points James Suckling

The Pecchenino wine estate dates back to the end of the 1700's and has always been a family-run operation, with the holding handed down from father to son for generations.

Today, brothers Orlando and Attilio Pecchenino run this small property in Dogliani, where they make "some of the most powerful, intense wines readers are likely to come across" according to former Wine Advocate wine writer, Antonio Galloni. We agree.

 

Beginning with the 2005 vintage, Siri d'Jermu qualifies for the fairly new Dogliani DOCG which producers can use for their high-end Dolcettos.

 

James Suckling (jamessuckling.com, January 18th, 2013):

"A wine with a balance of spices and dark fruits with firm yet polish tannins. Muscular but agile. One of the best Dolcettos around. Better in 2014."

 

Apart from Mr. Suckling's glowing review, the other critics had this to say too…

 

"An intense, deeply-colored red, boasting black pepper, blackberry, black currant and leather aromas and flavors. Polished to a gleam, with structure buried beneath the fruit and flesh. Excellent finish. Drink now through 2015. 400 cases imported. 91 pts" –BS (Wine Spectator, Dec. 15, 2012)

 

"The 2010 Dogliani Siri d’Jermu (Dolcetto) explodes from the glass with bacon fat, smoke, licorice, plums and the blackest of cherries. A deep, muscular wine, the 2010 shows all the qualities of top-flight Dolcetto from Dogliani. This is a decidedly huge, powerful wine loaded with personality. Expressive floral notes add a measure of lift on the finish, but this remains a big wine with a bright future. Anticipated maturity: 2012-2016. 90 pts" - AG (Wine Advocate, Oct. 2012)

 

 

Greg Vanslow

Mortgage Planning Specialist

Princeton Capital

Telephone  (650) 917-4263  |  Mobile  (650) 537-7905  |  Private Fax  (408) 335-1176


 

Princeton Capital is a Residential Mortgage Lender, and an RMR Financial company, licensed by the California Department of Corporations under the California Residential Mortgage Lending Act, license #415-0027.

 

  Please consider the environment before printing this email.

 

No comments:

Post a Comment