CPC Holiday Newsletter 2015

Dear Friends and Clients,


For the 30th year, I’d like to extend the warmest of Holiday wishes to all of you, and your families, that we’ve had the pleasure to work with over the years. That’s right! If you would have taken out a 30 year mortgage when we opened our business in early 1986, you’d be close to having your home free and clear. It’s hard to believe that we’ve arranged funding on over $2 billion. Thank you all for your support and your referrals. We would not still be in business today without you.


This past year marked our first full year in our Pasadena office. It was quite a transition from 28 years in Arcadia. Due to the technology of the “cloud,” we were able to operate in a more mobile way. I was able to split time between Pasadena and my home office. Shelly Dunn, our office manager and processor, also spent more time in her home office. But thanks to email, text and the telephone, we found our business ran as efficiently, if not more so, as at any time in the past. Our automated phone system tracks us down whether we’re in the office, at home or on vacation. As I have said, we’re now “leaner and meaner.” I’m pleased to say, we had a very productive and profitable year in 2015.


This last twelve months didn’t produce much of a ripple in the mortgage industry. Interest rates stayed in a very narrow range for the entire year. Though most economists had predicted the Fed would tighten by mid-year, it didn’t happen. The economy, both domestically and globally, didn’t warrant higher rates. And with inflation non-existent, the Fed has had flexibility to delay their first increase in 7 years. However, based on recent employment numbers, there is a very good chance the Fed will push short term rates by the time you read this letter. But, I feel mortgage rates won’t move much as this has already been factored. If I had to guess, I’d say our rates may move to the mid 4% range in 2016, still historically low. I also think home sales should be strong as we’ll see more inventory coming on the market to satisfy some of the pent up demand we’ve seen in the past couple years.


There are a number of financing opportunities for many borrowers. Interest rates continue to be at or near historic lows which is great for buying and refinancing. Hybrid ARMS with 5,7 and 10 year initial rates are very competitive and provide the stability of a fixed rate for an ample period. Also, for those with home equity lines of credit (HELOCs) that are 8-9 years old, you are, in most cases, going to experience severe payment shock as these lines will recast after 10 years. This means the “interest only” payment you have enjoyed for several years will change to a fully amortized payment for the next 15 years. This can raise your payment as much as $1,000 or more per month. Now is a perfect time to consolidate your 1st mortgage with your HELOC and maybe even take a little extra to pay off some bills.


The “jumbo” market continues to expand, providing lower rates and more lenient underwriting. We can now lend 80% to $1.5 million, and 70% to $3.0 million at very competitive rates. We even have a program where we can lend up to $875,000 with only 10% down and no PMI. Give us a call with any questions.


For those who may still owe more than your property is worth, the HARP program may enable you to take advantage of the lower rates. There are certain guidelines and restrictions with HARP so give us a call and we can help you determine your eligibility. We also offer FHA, VA and Reverse Mortgage products. FHA can be ideal for those that need to use a co-borrower to qualify or who are limited with their down payment. And Reverse Mortgages are becoming more popular due to the changing demographics.


For those that worked with my partner, John Patterson, I’m happy to say that he is doing very well in his retirement. We speak often and get together a few times during the year. For those of you that worked with “JP” over the years, please feel free to give me a call. I’ve worked with a number of you already and look forward to hearing from you again.


In closing, I’d like to stress that we’re alive and well and in need of your loans and referrals. Our system is more efficient than ever and our rates are very competitive due to our much lower overhead. Please check out our website at www.CPCMortgage.com. On behalf of Fred Olson and Shelly Dunn here at CPC Mortgage, I’d like to wish everyone a Merry Christmas and the happiest of Holiday Seasons. Here’s to a very successful New Year for us all. I look forward to hearing from you in 2016!!





Ed Cree


90% to $875,500 with no PMI!!!

As the jumbo mortgage market expands, we can now offer a program where a buyer can purchase a property for as much as $972,000 and put down just 10%. We will make two loans (piggy back) to the borrower, one for the maximum conforming limit of $625,500 and the other for up to $250,000. Because the first loan is less than 80%, there is no mortgage insurance (PMI) required. And unlike other piggy back loans where the 2nd trust deed is at a much higher rate, in our case the 2nd is very competitively priced, nearly as low as the 1st TD.

Since the first loan is within conforming limits, the underwriting is much more down to earth and lenient as opposed to a jumbo loan. And the rates are lower. So, if you are looking at prices above $650,000 but only have 10% down, give us a call. This “piggy back” combo is fast becoming of our most popular loan products.

80% Jumbo Fixed Rates More Competitive

For the past several years, jumbo loans have been scarce to come by and what money was available was at much higher rates with more restrictive underwriting guidelines. Now, as money has loosed up a bit, we are seeing more and more competitive jumbo fixed rate products.

Currently, we can offer 80% jumbo fixed rates for up to $1.5 million. We can go 75% to $1.5 million and 70% to $3.0 million. The rates are very competitive, barely over the high balance conforming rates. Underwriting has become less restrictive and, in many cases, is more make sense than on conforming programs. So, if you’re looking for properties over $1,000,000 and have 20% down, give us a call and we’ll explore your options.

In addition to purchases, we also offer these programs on refinances. Where conforming refinance loans consider combining a 1st and a 2nd loan “cash out” and charge a higher fee, these jumbo loans treat combining two loans as “rate and term” and don’t upcharge. These programs are available on fixed rates as well as very competitive hybrid ARMS. Additionally, there is a 30 year fixed rate where the borrower can opt to make “interest only” payments for the first 10 years, a huge monthly savings. Give us a call and we’ll answer any of your questions.

TRID…..What’s It All About?

As of October 3, the new mortgage disclosure requirements went into effect. The TILA (Truth in Lending)-RESPA (Real Estate Settlement and Procedures Act) Integrated Disclosure Rule (TRID) was instituted by the Consumer Financial Protection Bureau (CFPB), part of the Dodd-Frank Act. If this sounds like a mouthful, you can imagine the amount of time and training that has been done throughout the mortgage, escrow, and title insurance industries.

Below is a useful print out provided by one of our lenders as to the various steps required with the new TRID disclosure process. Basically, once we get over the “newness” of the forms, most everyone I talk to is getting the hang of the system. In many ways, the new disclosures are more reader friendly and less complicated to the borrower. The biggest issues are in the timing of the forms. Before a file can go to loan docs, the Closing Disclosure has to be sent to the borrowers and a grace period has to pass where the client can review the final loan terms. Once we get the hang of the timing, things should move smoother. In cases where there was a change of terms for whatever reason, new forms have to be originated and sent to the borrower.

In reading this print out, the new requirements seem somewhat overwhelming. However, as in the past, we will manage and within a few months, we’ll look back and laugh about how much we feared the new guidelines.


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Warning About Home Equity Lines!

Many of you, over the years, have taken out equity lines of credit (HELOCs) on your homes. HELOCs are great in that you only pay interest on the amount you use and in almost all cases you are only obligated to make “interest only” payments. HELOCs are great for home improvement projects, debt consolidation, college tuition, etc. And the interest you pay is usually tax deductible. This is all great.

But what a lot of borrowers don’t realize is that most HELOCs are written for 25 year terms. The first 10 years of the loan, the borrower may access their credit line, pay it down, access it again, etc. And during that 10 year period they are only required to pay back the interest. However, what happens after 10 years can be quite disturbing. First, after 10 years the borrower can make no more draws against the available line of credit. And, after 10 years, in most cases, the borrower must start making fully amortizing payments over the balance of the term or 15 years. So, the minimum payment goes from a low interest only amount to a 15 year fully amortized payment. This can create a substantial increase in monthly payment, especially on HELOCs with balances above $150,000  For example, on a balance of $200,000, assuming an interest rate of 4%, the interest only payment would be $667. When the loan “recasts” at the end of 10 years, assuming the rate is still 4%, the payment will jump $812 to $1,479. Then, if rates increase, which is almost certain, the payment will increase again. If the Fed moves 1%, the HELOC will also move 1% and the new payment at 5% would be $1,581.

If you’ve had your HELOC for 8-9 years, now might be an excellent time to combine your 1st mortgage and your HELOC into a new fixed rate loan. That will enable you to avoid the sharp increase on your line of credit while taking away the uncertainty of future interest rate hikes. Give us a call and we’ll go over your options with you.