TEAM EMPOWERMENT MORTGAGE CHATTER: February 11; Fannie/Freddie Phase-out Proposed; Foreclosure filings on decline; Egypt and Wall Street; CalHAFA – Keep Your Home California Initiative; Altisource and HAFA; The Cost of Waiting For Prices to Fall; Rates

Happy Friday! 

Good Morning Team! As mentioned in yesterdays chatter, we’ve received a lot of new pre-approval requests, opened new escrows and I continue to work with my referral partners to keep it going at this pace. If you haven’t called to chat on our strategy don’t hesitate to call me. My team and I are committed to growing with you in 2011. I’m in the office today contact me with any pre-approval requests, discuss a loan scenario or maybe even provide you with a flyer for your open house you’re holding open this weekend. Friendly reminder, Monday is Valentines Day! Call me direct if you need anything 925-295-9360. Have a great weekend!!

“As soon as you start to feel differently about what you already have, you will start to attract more of the good things, more of the things you can be grateful for.” — Joe Vitale: Hypnotic marketer and author


Fannie, Freddie Phase-out Proposed. The “white paper” presented to congress today by Treasury Secretary Tim Geithner proposes three options for what could take their place and will begin the long process of debate over the nation’s $10.6 trillion mortgage market, calling for changes to be phased in “responsibly and carefully” to avoid economic disruptions. The steps likely mean higher borrowing costs, and less access to home loans for consumers. Administration officials said the transition to a new system could take five years or longer. The paper also recommends gradually raising fees that Fannie and Freddie charge to lenders in order to make mortgages that aren’t government-backed more competitive, and calls for gradually reducing the maximum loan limits. Banks would be required to hold more capital to withstand future housing downturns, and the paper calls for “more conservative underwriting standards that require homeowners to hold more equity in their homes.” The paper also calls for reducing the role of Federal Housing Administration.

RealtyTrac: Foreclosure filings fell 17% in January from a year earlier, the fourth straight month of declines, and rose 1% from December.

Wall Street slips on unrest in Egypt U.S. stocks fell on Friday as market uncertainty over Egypt grew amid risks of spreading unrest in the Middle East.


CalHAFA – Keep Your Home California Initiative  The California Housing Finance Agency fully implemented the programs under its “Keep Your Home California” initiative, a nearly $2 billion endeavor funded by the U.S. Treasury’s Hardest Hit Fund.


New Altisource Short Sale Service capitalizes on HAFA & provides opportunities for agents Altisource, based in Luxembourg, with US headquarters in suburban Georgia, said the addition of short sales and deed-in-lieu services comes in response to the Home Affordable Foreclosures Alternative (HAFA) program, a Treasury Department initiative that offers cash incentives to loan holders, borrowers and servicers that complete short sale and deed-in-lieu transactions instead of foreclosures


The Cost of Waiting for Prices to Fall

Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about housing prices. They should be concerned about cost.

The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point.


The National Association of Realtors (NAR) released their 4th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.

A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.


The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said:

“Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”

So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?

The price is the same. It just costs more.

By sitting on the sidelines for the last 90 days a purchaser lost:

$89.44 a month

$1,073.28 a year

$32,198.40 over the thirty year life of the mortgage

If you buy a $340,000 home, double all these numbers.

Bottom Line

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.

Todays Rates – RPM Mortgage

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