TEAM EMPOWERMENT MORTGAGE CHATTER: March 3; It Takes A TEAM; News and Headlines; Home Prices: Double-Dip Is Near; 4 Ways To Get A Home In Show-Selling Shape; Disagreement on Mortgage Mess

Good Thursday Morning Team, 

I found the perfect blog to share with you this morning. As we all know there is no “I” in TEAM, and this blog reflects all aspects of a working team, and what it takes to continue great working relationships. With this said, my team and I are very appreciative of the working relationships we’ve developed with everyone we work with. We’re ready to work for you! So if you’ve got questions, concerns, or need a pre-approval, open house flyer, or want to find out if and how RPM can overcome other lender hurdles call me! Speaking of Open House Flyer – let me know if you’re in need of a co-branded open house flyer for this upcoming weekend. Have a great Thursday, and again, call me, lets talk about how to maintain success not only the new month of March but for 2011 as a whole.

“The first and best victory is to conquer self.” – by Plato


It Takes A TEAM

Today, people say: “It takes a village to raise a child”. The realities of today’s life (two family incomes and such) have extended a family to lean on others (neighbors, relatives, teachers, etc.) to protect and teach our young people about culture, history and acceptable behaviors. Teams, because of their ability to provide specialized solutions to problems, have often proved to be more efficient deliverers of information.

In real estate today (maybe more than ever), it also takes a team. As with a basketball team, each member needs certain skill sets and proper coaching on how to weave the different skills into a cohesive unit to achieve the desired outcome. The evolution of how things work has created a necessity of excellent communication between all the players. The needs of buyers and sellers have developed an even broader need for new members of a great team.

A great working relationship between an agent and a loan officer is an obvious connection. Changing mortgage guidelines, appraisal challenges and qualification standards requires everyone working together. But, there are so many others whose expertise may be needed to properly advise today’s clients.

An accountant

One of the reasons people buy a home is that they hear of the tax advantages. What really are they? How will the purchase affect my monthly cash flow? Should we adjust our exemptions with our employer? What about home repairs and depreciation? What about parents who gift money to their kids…is there a smart way to do it?

And for sellers, especially people who may not be buying a new home, what are the consequences of their sale? Capital Gains Tax? Can/should they consider “gifting” proceeds to relatives? Long term health care? Life Insurance? That leads to…

A financial planner

How does buying or selling real estate impact cash flow and long term savings and planning?


Divorce attorneys, estate attorneys, elder care attorneys and even bankruptcy attorneys have a role in many transactions these days. Choices made without their counsel can have very damaging repercussions.

Home Inspectors, Termite Companies and Home Improvement Contractors

These professionals protect customers from nightmares, or explain the costs associated with preventing or curing problems.

Making a decision to buy or sell a home has far reaching effects. To think your real estate agent or loan officer is an expert in everything is not prudent. However, aligning yourself with a professional who surrounds themselves with other professionals is extremely wise. Make sure the people you work with have a network of related experts that you can tap into. You need to be represented by a TEAM!

Initial claims unexpectedly decreased by 20,000 to 368,000, the lowest level since May 2008, and stronger than the expected rise of 9,000. Continuing claims declined by 59,000 to 3.774 million. For three of the last four weeks, claims have remained under 400,000, widely considered the point in which the economy is gaining more jobs than it’s shedding. New claims figures have been volatile in recent weeks due to unusually severe winter weather in January, however a Labor Department economist said there were no unusual factors in the latest week’s data.

ISM’s nonmanufacturing purchasing managers’ index edged up to 59.7 in February from 59.4 in January, stronger than the expected 59.0. The business activity/production index increased to 66.9 from 64.6 in January, new-orders slowed to a still-high 64.4 last month from 64.9, and the employment index rose to 55.6 from 54.5. Non-manufacturers are paying more for inputs, especially energy products. The ISM’s prices index increased to 73.3 in February from 72.1.

Nonfarm business productivity rose at a 2.6% annual rate in 4Q2010, the same rate as previously estimated, and stronger than the expected 2.2%. Unit labor costs fell at a 0.6% annual rate, lower than the forecast a 0.4% drop. This is favorable news for the bond market as rising productivity and tight wages help keep inflation down, even though not always welcome by workers.

Treasury 10-Year Notes Touch One-Week Low as Employment Data Signal Growth. The 10-year note is down 20/32 with the yield increasing 0.07 percentage points to 3.54%, the highest since Feb. 22. Although MBS prices are lower by 10/32 on 4.5% 30yr coupons, their yields are tightening to USTs. The Fed is scheduled to buy $6 – $8 billion of UST’s maturing between 2018 to 2021 today as part of QE2.

Bernanke Says Stronger Recovery Would Reduce State Woes relating to the possibility of widespread state and municipal bond defaults due to lower tax receipts and cash-strapped local governments. Bernanke said risk “remain elevated, they have been looking somewhat better recently, presumably reflecting expectations of continuing improvement in the finances of states and localities.” “Because the pace of near-term economic growth expected by most forecasters is relatively modest given the depth of the downturn, some time will likely be required before state and local fiscal conditions return to something approximating normal,” Bernanke said that while it’s “possible” U.S. states could pose a risk to the financial system, the Fed won’t purchase state debt. “While states are facing very tough financial conditions, at least as long as the recovery continues, they are seeing higher tax revenues and that will at least be helpful to some of them,”

Trichet Says ECB May Raise Rates, Show ‘Strong Vigilance’ European Central Bank President Jean-Claude Trichet said the ECB may raise interest rates next month to fight accelerating inflation pressures.


On Tuesday, we found out that home prices were near their post-bust lows. Two days later the government reported that January saw a double-digit dip in the number of new homes sold.

Then Robert Shiller, the Yale economist and co-founder of the S&P/Case-Shiller home price indexes, dropped this bomb: “There’s a substantial risk of home prices falling another 15%, 20% or 25%,” he said.

Baker looks at the ratio between local home prices and annual rents to judge whether markets are overvalued. If the median-priced home sells for more than 15 times the median annual rent, there’s a good chance prices may come down.

On a national level, Shiller and other economists compare home price changes with income growth over the years. Before the bust, home prices had been outpacing earnings since the late 1990s.

Just to get that back to a normal ratio — which we last saw in 1998 — home prices would have to drop another 15%, according to Anthony Sanders, a director of Real Estate Entrepreneurship at George Mason University.

“Even after the bubble burst, the ratio of income to home prices is still way too high,” he said.

Naturally, many disagree with these assessments. Karl Case, who co-founded the home price index with doom-sayer Shiller, believes that the market will “bounce along the bottom all year.” If that’s the case, buyers who take the plunge now shouldn’t expect big profits if they sell in the next few years, but they shouldn’t have to take a major hit either.

Besides, a home purchase is more than a potential investment, especially for families planning to stay put for a while. The big plus for them is the pleasure of living in their own homes.

Despite the gloom, many Americans remain confident about home buying. A survey released Monday by Fannie Mae revealed that 65% of people believe it’s a good time to purchase, with 78% expecting prices will rise or remain the same over the next 12 months.

And buyers may take heart from some positive recent indicators, such as an up tick in the sales of existing homes in January; a drop in vacant rental homes; and more investors snapping up properties.

There’s also been an upswing in the number of high-end homes — those costing more than $750,000 — being sold, according to Yun.


A growing number of home owners whose homes have dropped drastically in value are deciding to stop paying their mortgage and walk away from the property, even though they can afford to keep making the payments–a move known as strategic default.

The exact number of strategic defaults is unknown. A study conducted by the Federal Reserve Board showed that half of home owners who walked away from their home owed twice what their house was worth.

From celebrities to prominent business people to the average home owner, strategic default is a growing option more home owners are taking. For example, Morgan Stanley walked away last year from a $1.5 billion mortgage on five buildings in San Francisco despite record-breaking profits in 2009.

For some, strategic default has spurred a debate over ethics.

“Most people considering strategic default come to me and want my permission,” says Ronald Kaniuk, a foreclosure defense lawyer. “People who cannot pay their mortgage are apologetic. For people who can afford their mortgage or can just barely afford their mortgage and see it as a losing investment, they want absolution.”

But the stigma attached to strategic defaults is influenced by how many other people are doing it, says Luigi Zingales, an economist and professor at the University of Chicago’s Booth School of Business.

“Once you think it’s socially acceptable, it becomes easier to do,” Zingales says. But Zingales cautions home owners that strategic defaults hamper neighbors’ property values and can affect the home owner’s credit scores. Plus it can become a question of ethics–they are breaking a commitment they made to pay back the mortgage.


Make your home stand out in a crowded real estate marketplace. Housing experts offer some tips for sprucing up a home to get it ready to sell.

1. Create curb appeal. Here are some easy, big impact ideas: Paint the front door, pick a new color for the exterior trim, fix any old shutters, and make sure the path from the driveway is clear to the front door. Also, remove any overgrown plants and replace them with low-growing shrubs and perennials.

2. Fix the flaws. Fix everything, they say, including broken joints, cracks in walls or the foundation, and recaulk the bathroom tub, if needed. “If the little things are not done, people will think, what else is not done?” says Steve White, the owner of Handyman Connection in Elmsford, N.Y.

3. Paint. “Paint is the greatest single thing you can do and it’s the most cost effective,” says David Sanders of Sanders Properties in Nyack, N.Y. “Use light, cheery colors. People don’t want to walk into a dark, dreary room.”

4. Add some new bling. Interior designer Nancy August from Piermont, N.Y. says just swapping out the home’s hardware for new can quickly freshen up a home. For example, new hinges, doorknobs, drawer pulls, and light switches and fixtures can quickly transform a dated room, particularly in a dated bathroom.


Even as state attorneys general and regulators in Washington approach the end of their investigation into abuses by the nation’s biggest mortgage companies, deep disputes are emerging over how much to punish the banks as well as exactly who should benefit from a settlement.

The newly created Consumer Financial Protection Bureau is pushing for $20 billion or more in penalties, backed up by the attorneys general and the Federal Deposit Insurance Corporation.

But other regulators, including the Office of the Comptroller of the Currency, which oversees national banks, and the Federal Reserve, do not favor such a large fine, contending a small number of people were the victims of flawed foreclosure procedures.

As the negotiations grind on, there are signs that the banks still have not come to grips with the problems plaguing the foreclosure process. These problems burst into view last fall with accounts of so-called robo-signers processing thousands of foreclosures at a time without the required legal safeguards. The resulting furor prompted the attorneys general and other government officials to step in. Some banks suspended foreclosures to review their processes before resuming.

The acting comptroller of the currency, John Walsh, testified last week that while there were widespread problems with documentation and oversight of law firms and other crucial links in the foreclosure chain, only a “small number of foreclosure sales should not have proceeded.”

Despite skepticism on the part of the comptroller’s office, other regulators would like a broader plan to help pay for modifications of mortgages that are delinquent or in default, even if homeowners cannot point to a specific example of wrongdoing on the part of servicers. In other cases, the money might be used to help mortgage holders whose loan principal exceeds the home’s current value.

What’s more, the Obama administration, as well as the F.D.I.C., sees any broad settlement with the servicers as an opportunity to do more than just fix the foreclosure process. They want to stabilize the housing market, where prices are continuing to decline, and try to help bolster the economic recovery, which is facing newer threats like higher oil prices.

Some two million American homes are in foreclosure, a third of which are vacant. Another two million households are behind on their payments and facing the prospect of foreclosure this year. To make matters worse, roughly a fifth of the nation’s home loans exceed the value of the underlying house, raising the risk that homeowners will simply walk away, further weakening the housing market.

Right now, the Obama administration argues, the housing market is facing the worst of both worlds – a big back-up in foreclosures as procedures are reworked, and a similarly long wait to get a mortgage modification in which the principal or the interest rate of the loan is lowered, easing monthly payments.

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