Nathan’s National Hot Dog Eating Contest Held at Coney Island Courtesy of YouTube

For me the 4th of July means good times with family and friends, great food, and relaxation while I watch an enticing Bay Area waterfront fireworks display. As you can see in the above video the 4th of July can be a very different experience for each of us. I just did a little internet search to see what Independence Day means for other people. Let’s start with some interesting historical facts.

The 4th of July is a federal holiday that signifies the United States adoption of the Declaration of Independence on July 4, 1776. This is when the United States declared independence from Great Britain. Fireworks were first associated with the 4th of July in 1777.

Interestingly enough, “Independence Day” as it would come to be known was not established by the US Congress as a federal holiday until 1870. At this time it was deemed an unpaid federal holiday. That must have sounded bogus for the financially ambitious federal government employees in 1870. It was not until 1941 that the US Congress made Independence Day a paid holiday.

Today, the 4th of July seems to mean different things to different people. I found it interesting how people seem to practice different customs. Check out what the rest of the United States is up to on the 4th of July.

The Midwest’s largest fireworks display, called Rhythm & Booms, happens on the Saturday before the 4th of July in Warner Park in Madison, Wisconsin. In its 15th year, an estimated crowd of 300,000 people view the fireworks display, which is synchronized to music.

In Provo, Utah, America’s Freedom Festival is one of the countries largest. It includes one of the largest Fourth of July parades, and the Stadium of Fire.

The town of Bristol, Rhode Island is noted for having the oldest, continuous Independence Day celebration in the United States.

James River Assembly in Ozark, Missouri, hosts the annual “I Love America” Celebration at the Springfield Underground. In 1997, 13,000 people showed up for the first event. In 2006, 120,000 people attended the celebration. Highlights include the choir’s “Living Flag”, the “Concert in the Sky”, nearly 100 games and activities, and a four-hour air show.

As you can see above, in New York hot dogs are all the Independence Day rage. The Nathan’s Hot Dog Eating Contest is held in Coney Island, Brooklyn. It supposedly started on July 4, 1916, as a way to settle a dispute among four immigrants as to who was the most patriotic. It was estimated that Americans would consume about 150 million hot dogs on July 4, 2006, or almost one hot dog for every other person in the United States.

Minor League Baseball and Major League Baseball games are also played on Independence Day.

Since 1959, NASCAR has held the Pepsi 400 on July 4 or the Saturday of Independence Day weekend.

On the Capitol lawn in Washington, D.C., a free concert, A Capitol Fourth, precedes the fireworks and attracts over half a million people annually.

Where ever you may find yourself on July 4th, 2007, we are wishing you a happy Independence Day.

From Mortgage Mania to Credit Crunch: Part IV

Credit to Rachel Van Emon for this article. 

The changes to guidelines are here. Fannie Mae has set a date to begin implementing new policy and guidelines for approving conforming loans.  The rest of the nation is likely to follow.  Here’s why.

Fannie Mae and Freddie Mac purchase loans up to the conforming loan limit (currently $417,000).  In order to sell a loan to Fannie Mae, banks are required to use their Desktop Underwriting System (DU) to process and approve the loan.  Changes in policy and guidelines by Fannie Mae are implemented nationwide by updating the DU system.

What is not widely known is that jumbo loan lenders use DU guidelines as their starting point for loan policies and guidelines.  Fannie Mae and Freddie Mac set the fundamental guides from which everyone else, even the jumbo lenders, write their specific guides.

When there are universal changes to the way Fannie Mae underwrites a loan, these changes typically flow out to the banks and to jumbo lenders and are adopted sooner or later by most everyone.

Here is the news we just received from Fannie Mae:

Effective July 22, 2007, for all loans originated with an IO feature…DU Version 5.7 will use the payments as described below in is risk assessment:

· Interest Only Fixed Rate Mortgage: PITI based on the full principal and interest payment at the note rate, in addition to the taxes and insurance payments, amortized over the full repayment term

· Interest Only Adjustable Rate Mortgage:  PITI based on the full principal and interest payment at the fully indexed rate (index + margin), in addition to the taxes and insurance payments, amortized over the full repayment term

 What will this mean?

 1. Buyers will qualify for smaller loan amounts after this takes effect than they would have before its implementation. 

2. It will be more stringent to qualify for an Adjustable Rate Mortgage than a Fixed Rate Mortgage.  Fixed mortgage note rates are currently in the range of 6.625-6.875%.  This is the rate that is used for qualifying.  A 10-year ARM might have a note rate of 6.5%, but a fully indexed rate of 7.645% (The 1 yr LIBOR index is 5.4 + margin of 2.25).  Whatever the start rate on this ARM, the fully indexed rate will be used for qualifying. 

3. Buyers will qualify for less loan amount which will require a larger amount of down payment or they will need to consider lesser priced homes.

4. Banks may raise their debt to income limits to minimize the impact on buyers.

5. Home sellers will be offering concessions to help buyers with closing costs to free up the buyer’s cash to pay off debts or put more down payment.

6. Lenders and homebuyers will be working closely together to document as much income as possible, to pay off debts to qualify and to structure the deal so it is most advantageous on the financial side of the transaction.

Actions that Realtors® and Mortgage Advisors can do now:

 1) Confirm that all of your clients pre-approvals are still valid. You don’t want to get into contract only to find out the financing is no longer possible.  A pre-approval letter does not ensure the loan program will still be available to that borrower.

2) Encourage clients to act now if they believe that they will not be able to qualify for the same level of financing later.  The client’s situation should be reviewed again by an underwriter using the new guidelines.  If they cannot, then they may consider buying before the changes are implemented.