Napa Mortgage News

Loans going to Pot!?

February 10th, 2018 6:35 AM by Dale DiGennaro

Dear Gena,

Could Loans to Pot Industry Go to Pot?

In a reversal of federal policy, Attorney General Jeff Sessions voided the Cole Memorandum, an Obama administration Justice Department memo that said there would be no federal prosecution for medical use of marijuana if there was no violation of state law.

Sessions' reversal sent shockwaves through the marijuana industry and anyone connected to it in any way, including lenders. It could have huge repercussions in the banking industry and the few companies that have lent mortgage money to these businesses.

At this time, Sessions is playing it down, not calling for an imminent crackdown. Needless to say, it is likely to have a cooling effect on those willing to lend or bank with these businesses.

Feel free to contact us for more information.

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Housing Starts Fall

The upward pressure on mortgage rates continued this week. Investors again favored stocks over bonds. Mortgage rates ended the week higher.

Thursday's report on housing starts was certainly disappointing, but a look below the surface indicates that it was not as bad as the headline figures suggest. In December, single-family housing starts declined 12% from November, which was far below the consensus forecast. This data is highly volatile from month to month, however

Single-family starts also are strongly influenced by the weather, and December saw particularly bad weather conditions in many parts of the country. Despite the drop at the end of the year, single-family starts in 2017 were 9% higher than in 2016. Another reason for optimism is that building permits for single-family homes, a leading indicator of future housing starts, increased in December.

As of noon EST on Friday, the experts are assigning about a fifty-fifty chance that there will be a government shutdown tonight at midnight. The House passed a bill to extend government funding, but the Senate is having trouble gathering enough votes. It's not clear what effect a government shutdown would have on mortgage rates, but it would not be good for the mortgage industry in many ways. Lenders would be unable to obtain case numbers to originate FHA loans. In addition, lenders are required to verify tax return information provided by borrowers with the IRS and verify social security numbers with the SSA. Delays in providing these services would postpone many loan closings.

Looking ahead, Existing Home Sales will be released on Wednesday and New Home Sales on Thursday. The first reading for fourth quarter gross domestic product (GDP), the broadest measure of economic growth, and Durable Orders will come out on Friday. In addition, there will be a European Central Bank (ECB) meeting on Thursday which could influence U.S. mortgage rates. Investors will be looking for guidance about the pace of tightening by the ECB.

My daughter Jenae's cheer competitions in Sacramento and San Jose!

Laith Al-Saadi from the Voice. Just Amazing! If you have a chance see him.

At the Blue Note again tonight!

"Thank you for always trusting in us to do the best for you and your family and please feel free to call me anytime you have questions. I will be happy to share with you whatever information you may need!"