TEAM EMPOWERMENT MORTGAGE CHATTER: February 16; RPM Jumbo Refinance; FHA Annual Mtg Insurance Premium & FHA Refinance Changes; News & Headlines; Avoiding Real Estate Failure; RPM Flyers – Jumbo Program and Example of Open House

Good Morning Team!

It’s Wednesday, can’t believe how fast the week is going by. We’ve got some exciting news from RPM, as mentioned we have our new Jumbo Program and I’m happy to share that we’ve just closed a jumbo refinance for $1.2 million, closed in less than 25 days. Don’t forget, we have in-house underwriters and appraisers to help with this turn around! This service is not only for the Jumbo Program however our underwriting and appraisal service is for all loans through RPM. If you need to discuss a loan scenario or need a pre-approval, do not hesitate to contact me. And don’t forget about our open house flyers, especially for those of you that may have open houses during this 3 day weekend for most (Monday is Presidents Day)!! Have a great day!

“That which you resist stays.” — Dr. David Hawkins: Physician, spiritual teacher, and lecturer



With Mortgagee Letter 11-10, FHA announces an increase to the Annual Mortgage Insurance Premium on standard FHA loan programs and a change that affects case numbers.

Here are the 7 things you need to know about these changes:

1. These changes are effective April 18th, 2011.

2. The Annual Insurance Premium will increase .25% for standard forward mortgages. The Upfront Mortgage Insurance remains at 1.00%.

3. The Annual Premium is now 1.15% for LTVs GREATER than 95% on 30 year loans

4. The Annual Premium is now 1.10% for LTVs EQUAL to or LESS than 95% on 30 year loans

5. The Annual Premium is now .50% for LTVs GREATER than 90% on 15 year loans

6. The Annual Premium is now .25% for LTVs EQUAL to or LESS than 90% on 15 year loans

7. Case numbers with no activity for 6 months will automatically be canceled (includes case numbers pulled prior to April 18th, 2011.



With Mortgagee Letter 11-11, FHA announces changes to refinance transactions. This ML provides guidance on the changes as well as clarification on existing refinance guides and it will be worthwhile to read this ML in its entirety as a refresher.

Here are the 8 things you need to know about these clarifications and changes:

Borrower must be current on their mortgage for the month of closing AND the month prior to closing (The payment due the month of closing CAN be included in the payoff).

Second liens must be subordinated to the new FHA first in their entirety.

For all case numbers on investment property refinances assigned on or after April 15th, 2011, the borrower must have occupied the subject property for the last 12 months to qualify for maximum streamline financing; if less than 12 months, a full credit-qualifying qualifying regular refinance is required with a maximum LTV of 85%.

Effective no later than April 15th, 2011, the following net tangible benefit scenarios must exist on all streamline refinances: A. The total of the new P&I and MI portion of the payment must decrease by at least 5% OR B. Refinancing from an ARM to a fixed product (See chart in ML).

Effective no later than April 15th, 2011, lenders may now use the short Uniform Residential Loan Application (URLA) for non-credit qualifying streamline refinances ONLY.

Effective no later than April 15th, 2011, lenders no longer have to certify employment and income on streamline refinances.

TOTAL Scorecard must not be used for streamline refinances.

Lenders CANNOT add closing costs, discount points, prepaids or other costs to the loan balance on non-credit-qualifying streamline refinances. Lenders CAN add closing costs and prepaids (not discount points) ONLY through a full-credit-qualifying streamline WITH an appraisal.



News & Headlines:

Let’s hope that they have some loans to fill those securities! Last week mortgage applications dropped 9.5% to a level last seen in November 2008. Refinancing activity was down 11.4%, and now accounts for 64% of new apps, and purchases were down about 6%. Braver Stern Securities wrote that, “with conforming mortgage rates at (these levels), almost 60% of the FH/FN mortgage universe does not have an economic incentive to refinance at the current time. For FHA borrowers this number is just over 85%.”

The cost of rescuing mortgage giants Fannie Mae and Freddie Mac is likely to sink to nearly half of the current cost over the next decade, for example. The budget estimates keeping Fannie and Freddie afloat will cost $73 billion by 2021, reflecting dividends paid back to the Treasury Department and is 45% lower than the $131 billion cost to date and much lower than outside estimates. Fannie and Freddie must pay 10% dividends on the quarterly cash infusions they receive from the Treasury, which some argue should just be forgiven, thus saving them a tremendous amount of ducats. In fact, the White House estimates that the companies will be paying back more in dividends by 2013 than they receive in cash infusions and from 2014 on, the companies are expected to need no more funding. Turning to HUD, the budget proposal outlines a $48 billion spending program for fiscal year 2012, an increase of more than $900 million from 2010.

For economic news today we’ve had Housing Starts were up 14.6%. But Building Permits were down 10.4%. The Producer Price for January was +.8%, as expected, although ex-food & energy it was +.5% – the biggest jump since 2008. The Consumer Price Index comes out tomorrow, and we’ll be able to see if these price pressures have come down the consumer level. We find the 10-yr at 3.63%, and MBS prices very similar to where they closed Tuesday.


How To Avoid Real Estate Failure

Enough fatigue and the result is failure, be it a slab of concrete, a bungee cord — or a real estate agent.

Most of you have spent the better part of the past five years feeling like underpaid test subjects in an engineering science lab. In fact, in the best of markets our work is defined by compression and tension. Find a client, serve the client, then go out and find another. Lather, rinse and repeat.

One minute, you’re are on top of the world, flush with listings or buyer clients, reveling in the ecstasy that is positive cash flow. The next, you’re wondering how we will eat in 45 days. If you have been licensed for more than two closing cycles, you know this feeling too well. If you have lived through a couple hundred or more transactions, you know it can wear you thin.

Ten years ago, it was easier to bounce back. You were tested in a fairly controlled environment. You had our highs and lows, your successes and failures, but the laws of real estate assured you that hard work would pay off, commitment would triumph, and your down time and down moments would inevitably be followed by another opportunity.

Rather, you’re just as busy as you were five years ago, the difference being you used to get paid for our efforts.

Fatigue happens. How to overcome it and avoid all-out failure is the question for all the marbles. It’s our marbles at stake, and I don’t profess to have the answers, but I do know that stagnation is not one of them.

You can’t win if your head’s not in the game. Catch up on your industry reading, tinker with your website, retool your listing presentation, or rewrite your business plan. Preview homes, research and study market trends, write a blog post or comment on a post. Engage in a little group therapy at the office — or here.

Rethink how the challenges you face now might be — if not altogether avoided — at least mitigated in the future. Dare to lose a listing opportunity by being brutally honest, knowing that the people who respect your honesty enough to hire you will be most likely to respect you throughout the transaction and find success.

This market is going to be with us for a while, and what that means is that the opportunities will be fewer and more difficult. But it doesn’t mean that we can’t each survive and thrive — both professionally and personally.

We need to remember that our business has cycles, as do markets. We need to be ever aware of the warning signs of too much tension and compression, and we need to be prepared to deal with the occasional fatigue lest we are threatened with catastrophic failure.


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