Tax Deductibility

On December 18, 2015, the president signed legislation that renews the tax deductibility of mortgage insurance premiums for qualified buyers. This deductibility is effective for purchase and refinance transactions closed after December 31, 2014. Mortgage Insurance premiums payed or accumulated after December 31, 2014 through December 31, 2016 may qualify for tax deductibility on the borrower’s federal tax return. Borrowers with adjusted gross incomes below $100,000 may deduct 100% of their mortgage insurance premiums. For borrowers with adjusted gross incomes from $100,000.01 to $110,000, deductions are phased out at 10% increments for each additional $1,000 of adjusted gross household income.

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December 2015 FOMC Meeting: Fed Raises Fed Funds Rate

It marks the end of an era as the Fed raised its Fed funds target range to 0.25%-0.50%, an increase that hasn’t happened in over nine years since June of 2006. This increase ends an unprecedented period of record-low rates which were a part of the Fed’s controversial policies designed to stimulate the US economy after the worst financial crisis since the Great Depression in 2008. The FOMC lowered its benchmark rate to near zero in December 2008, three months after the collapse of the investment bank Lehman Brothers Holdings, Inc. and 10 months before unemployment peaked at 10%.

The vote was unanimous to hike the Fed funds rate up a ¼ point from its recovery range of 0-0.25% to its new range of 0.25%-0.50%. Jason Grote, President of Central Coast Lending, “was not at all surprised by the rate hike. There had been so much talk and warnings letting everyone know before the meeting that a rate hike may occur that it was expected. Furthermore 90% of economists expected it.”

The Fed predicts “gradual” and “data dependent” rate increases ahead. The majority of members project the rate to be 1.5% or lower by the end of 2016 and include a predicted total of 3 rate hikes within the year. It is predicted to be at 2.4% in 2017. In the statement released following the meeting of the Federal Open Market Committee, they expect “economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.” Fed policymakers stressed they intend to move gradually and in small increments, and will pull back if the economy falters. The team of policy makers judged the US economy to be expanding at a “moderate pace” and the labor market, they said, has shown “considerable improvement.” Inflation remains below the committee’s 2% target, but the committee remains confident it will get there in the “medium term.” The falling energy prices and commodity costs are believed to be the contributors to low inflation, but the Fed believes they will soon subside and prices will begin climbing again.

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CCL Market Update: Jobs, Consumer Sentiment, Housing Market, Mortgage Applications, and Mortgage Rates


The JOLTS report is the Labor Department’s Job Openings and Labor Turnover Survey. Job Openings fell to 5.383 million in October vs. the revised 5.534 million in September. Job openings fell 1 tenth to 3.6 percent, which in comparison to October of last year is still greater by 2 tenths. The hiring rate and quits rates remained unchanged at 3.6% and 1.9% respectively, which is a low reading that does not point to worker confidence in switching jobs. On the positive side, there was a 1 tenth dip in the layoff rate to 1.2%.


According to the latest data jobless claims are up 13,000 compared to the prior week for a total of 282,000. This is the highest level since July; however the 4 week average is stable, up only 1,500 to a 270,750 level which is only slightly higher than a month ago. Continuing claims also show an uncommon increase up a sharp 82,000 to 2.243 million for the week of November 28th, the highest reading since September. The 4 week average is up 16,000 to 2.183 million, showing about a 20,000 increase from last month.


The Consumer sentiment survey is directly related to the strength of consumer spending, it is a survey done by The University of Michigan questioning 500 households each month on their financial conditions and attitudes about the economy. Consumer sentiment fell back severely in the last half of November, from 93.1 in mid-November to a final reading of 91.3. But, it is bouncing back after tumbling following the Paris attacks. The mid December index comes to 91.8, 5 tenths above the final November reading. This report shows strength in core retail sales and current strength in the job market.


Luxury homes, defined as the priciest 5% of home sales, saw its first drop in prices in three years according to the latest from the Redfin luxury home price report. The luxury market was the first to recover after the housing crisis and now it’s indicating a future slowing of price growth for the rest of the market. Sales at the top end of the market continue to rise, but prices are declining. Luxury market prices fell 2.2% from last year. Prices in the rest of the market, however, continue to increase at a rate of 3.8%. This decline is a potential signal that home prices may start to slow down across the board as we step into the New Year

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Fannie Mae Guideline Updates HomeReady, High Balance & Non-Occupant Co-Borrowers

he Fannie Mae Selling Guide has been updated to include a number of changes to its core programs. In general, the changes are aimed at expanding mortgage eligibility to more homeowners and buyers. The updates are described in more detail below:

HomeReady Mortgage
Fannie Mae is introducing the HomeReady Mortgage as its enhanced affordable lending product. It is set to replace the MyCommunityMortgage (MCM) product, launched back in 2001. Some of MCM’s eligibility and underwriting flexibilities have been transitioned into standard policy over time. Fannie Mae has recognized the continuing need to provide more access to credit for creditworthy borrowers, and has developed new or revised loan and borrower eligibility requirements and underwriting flexibilities aimed at low to moderate-income borrowers and buyers in its new HomeReady Mortgage product. It is intended to help lenders, nonprofit organizations, housing finance agencies, and other affordable housing advocates serve today’s market and support sustainable homeownership.

The following list highlights some of the major policy changes that have been incorporated into the HomeReady Mortgage program:

  • Income limits – General income limit of 80% of area median income (AMI) to align with Fannie Mae’s housing goals. Eligibility is also provided for properties located in low-income census tracts with no borrower income limits, and up to 100% of AMI for properties located in high minority census tracts or designated disaster areas.
  • First-time home buyer – The requirement that at least one borrower must be a first time home buyer has been removed for one-unit principal residence loans with LTV ratios greater than 95% up to 97%.
  • Non-occupant co-borrowers – Now permitted for qualifying purposes.
  • Rental income – Rental income from an accessory unit may be considered in qualifying the borrower.
  • Manufactured housing – One-unit manufactured home properties will be permitted as an eligible property type for principal residence transactions. The maximum LTV and CLTV ratios for manufactured housing apply.
  • Renovation – HomeStyle Renovation mortgages will be permitted for principal residence transactions. The maximum LTV and CLTV ratios for HomeStyle Renovation apply.

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Cozy 2 Bedroom in Cambria!

Make this Cozy Two Bedroom, Two Bath home your escape from the pace of the city. Enjoy the pine scented serenity of this quiet street on Sunny Lodge Hill in Cambria. New dual pane windows, easy to care for laminate flooring, fresh paint and nearly new fixtures make this the perfect turnkey home. Ask your Realtor to see this home today. $420,000

Spanish Style Splendor in Westrails!

Take a look at me now… This home features 4 spacious bedrooms, 3 baths, a great guest quarters area with a separate entrance (downstairs) along with a large family room, game room, formal dining room, gourmet kitchen complete with island and granite counters..and that’s just the downstairs! Upstairs you’ll find an master suite complete with dumb-waiter, cedar lined closets, a cozy fireplace, remodeled bathroom and an enclosed sun room. The secondary upstairs bedroom is a suite, with a sitting area, private entrance and roomy bathroom. The features don’t stop inside the home. On this 1 acre lot, a 3 car garage is large enough for all your toys, along with a garden area, horse corral and tack room. And the best sunset views around! It’s a must see, too much to list here! $900,000

Fabulous Custom Home on 20acres!

Fabulous custom home sits up on knoll on 20+acres, surrounded by Olive Orchards and Vineyards. Beautiful setting, useable acreage. Stunning front courtyard. Many custom features. Italian tile. Australian Jarrah Hardwood floors. Spacious kitchen, dining nook. Incredible Butler’s pantry with built in shelves & cabinets. Family room w/fireplace. Elegant living room w/fireplace. Spacious guest bedrooms. Huge master retreat. Gorgeous bathrooms, tiled walls to ceiling! Huge back patio overlooking countryside. Pool heated by solar tubes in surrounding fencing. Pool house with separate bathroom, shower & changing room. Quaint side patio. Another huge patio under gorgeous Oak Tree, fabulous for outdoor parties! Oversized dog house inside large fenced area, your dog’s own oasis! Palm Trees. Rose garden. Cactus garden. Mature fruit trees. Lush landscaping, drip irrigation. 3 car garage + large workshop. This amazing property is just 35 minutes NW of Paso Robles! Private setting. $935,000