TEAM EMPOWERMENT MORTGAGE CHATTER: March 22; News & Headlines; Measure What Matters To Your Real Estate Site; We Think We’re Going To Believe Grandpa; California Auctioned Properties Rigged; Jobs Key To Housing Recovery; Don’t Cut Home Insurance

Yes, gas prices are extremely high!

See 6 tips on how to squeeze out better gas mileage below…


“To live is the rarest thing in the world. Most people exist, that is all.” — Oscar Wilde: Was an Irish writer and poet



1. Slow down: Most cars get the best gas mileage at 45-55 miles per hour. Driving faster than 60 mph actually can cut gas mileage anywhere from 7 to 23 percent.

2. Don’t idle: If you need to wait longer than 20 seconds, you’re better off turning off your engine than keeping your car running. Restarting the car requires less gas than leaving it idling.

3. Lose the heavy load: Make sure you’re not carrying in your car more than what you need. An extra 100 pounds sitting in the trunk or back seat can reduce fuel economy as much as 2 percent.

4. Tighten the gas cap: Fuel can evaporate through gas caps with broken or weak seals. Loose or broken gas caps can cost you a loss of about 2 percent in your gas mileage.

5. Close the windows and turn off the AC: Driving with the windows open or the air conditioner turned on can be big gas wasters. Instead, the most efficient way to keep the car cool is by using the air that comes in through your flow-through ventilator.

6. Get an oil change: Improve your gas mileage by as much as 2 percent by using energy-conserving or synthetic motor oil, which can reduce engine friction.


Well, it seems that the “markets” had grown a little jaded about watching the turmoil in the Middle East, the European debt crisis, and the Japanese nuclear & tsunami havoc. What to do? The U.S. Treasury announced that it will begin an “orderly wind down” of its $142 billion MBS portfolio over about 1 year by selling roughly $10 billion agency MBS’s per month. (In this case, “agency” means Freddie and Fannie securities, as the Treasury does not have any Ginnie securities in this group, which started at $300 billion but has since been paid down by borrowers.) It is part of continuing wind down of emergency programs put in place in 2008 and 2009, which also include TARP, Citi stock, AIG, etc. The Treasury expects to make about $15 billion in profits. It does not impact the FOMC’s position (they bought $1.25 trillion, which is now down to about $950 billion.) MBS

Suddenly Wall Street firms and investors were scrambling to find out the current holdings of the Treasury. The bulk of its holdings (purchased between 10/08-12/09) are in Freddie & Fannie 5 & 5.5% securities, which contain 5.25-6.125% 30-yr mortgages, but the MBS pass-through rates range from 4%-6.5%, and include 15-yr MBS’s. MBSSaleFAQ

Keep in mind that monthly MBS pay-downs have slowed over the last 6 months (due to higher rates and fees), and, relatedly, daily origination has slowed to about $1.25 billion. Sterne Agee noted that in the context of the overall MBS market, $10 billion is slightly more than 1/3rd of the recent 3 month average net issuance of the total MBS market. Prior to December, net issuance had not totaled over $3.3 billion/month in any single month for 10 consecutive months, dating back to the initiation of GSE delinquency buyouts. There is no indication that the Federal Reserve will begin systematically selling its $950 billion MBS portfolio. However, the Treasury’s announcement makes one wonder…

Just when you thought your head was about to explode from comp “stuff,” HUD weighed in. “(HUD)…issues the following additional guidance on how mortgage loan originators comply with the RESPA, in light of the FRB LO Compensation rule…This guidance seeks to clarify RESPA requirements related to proper disclosure on the GFE and HUD-1 settlement statement. This guidance does not address substantive issues related to restrictions on mortgage loan originator compensation that are within the jurisdiction of the FRB.” HUDRegZ.

Sterne Agee, on the other hand, stratified prepayment speeds by servicer for conventional 30-yr and 15-yr MBS’s. “We conclude that the business practices of any given servicer can have a meaningful impact on the prepayment speeds of MBS. Furthermore, market prices do not fully reflect the differences in speeds among servicers presenting investors with opportunities to enhance prepayment protection.” MBS investors, of course, are particularly interested in rates and their impact on early payoffs (refinancing), but should also note the company servicing the loan.

Sterne Agee suggests that “investors consider pools that are not explicitly prepayment protected pools, but have a relatively high concentration of attributes that can be associated with slower prepayment speeds. In addition to a relatively low WAC (low rate) and a relatively low average loan size, we favor pools that have a relatively high LTV ratio, low FICO score, high % of non-owner occupied property, low % of third-party origination (TPO), high % of purchase loans, low % of refi loans, low % of delinquent loans, favorable ‘geographics’, and favorable servicers.”

Rates began Monday slightly worse than Friday’s close, but by the end of the day were worse by .375-.5, depending on coupon and security. Who cared about the Existing Home Sales number after the Treasury’s announcement (noted at the top) that it would commence selling its holdings of MBS’s at $10 billion per month. 10-yr Treasuries tagged along for the ride somewhat, but finished down about .375 to 3.32%.

Any moves in the market will be driven by “headline news.” Currently the 10-yr is sitting around 3.35% and MBS prices, depending on coupon, are worse by about .125.


One thing consistently recommend to clients is that they install and monitor Web analytics. Not everyone does, of course. But it’s definitely the starting point for making websites better, in terms of accomplishing business goals.

There can be lots of different approaches to a Web analytics program. In fact, there might even be as many unique uses for Web analytics as there are different real estate websites that have analytics installed.

One company may be measuring to calculate ROI on paid advertising or search traffic versus social media efforts.

Another company might be using analytics to listen to their customers by reviewing keyword reports and traffic patterns.

A third company might be using analytics to identify conversion rates for different paid advertising headlines.

A fourth might be using analytics to figure out if new visitors behave differently than repeat visitors.

Depending on the goals of each company, all of these approaches are right. There really isn’t a simple “four metrics every Realtor must track day and night or risk joining the career path of the fax boy.”

Here are some examples of metrics that might be aligned with your company values.

Outstanding customer service: Many real estate professionals promote their high commitment to customer service. You can measure your performance in this in several ways.

Number of social media mentions that are expressing positive sentiment after being helped in some way. (Usually these messages include “Thanks!”)

Number of qualitative/voice-of-customer surveys that mention “ease of use” of website as something good about the site.

Number of non-real estate questions answered via social media (answering real estate questions isn’t outstanding if your business is real estate — it’s standard).

Expertise: Like outstanding customer service, many real estate professionals claim to have expertise in a geographic region or property type or type of sale. You can put some measurements in place to track your progress in being the expert. Here are a handful of metrics related to expertise:

Number of questions related to your expertise answered.

Number of new pages related to your expertise created.

Increase in expertise-topic mailing list distribution.

Measuring for values, measuring values

The purpose of metrics and analytics is to help you make better decisions so you can take better actions. If you aren’t sure how your Web analytics can really relate directly to your bottom line, start by measuring things that encourage fulfillment of your brand promises.

Once you do have a solid program in place that can directly relate online activity to your company revenue, continue measuring the company values metrics. Hopefully you will see a direct relation between your values-based metrics and your bottom-line-based metrics.

If you don’t see a relationship between fulfilling your brand promises and an increase in your business, then perhaps your values aren’t matched well with the people in your market. Or perhaps you don’t really believe your company values yourself.

Either way, if you see no relationship between your company values and your bottom line then it’s probably a good time to review your values.

Ultimately, the kinds of things we measure will influence the actions we take each day. If all of your key metrics are strictly focused on the bottom line, you may run the risk of losing your company “soul.” Attaching performance metrics to your values is a way to maintain your vision.


There are those currently debating the financial advantages of owning a home. Some are looking at studies and reporting that homeownership has never really been a great investment.

One of these people is Jack C. Francis, a former Federal Reserve economist and professor at Baruch College. He said in a recent CNBC article:

“For generations, parents and grandparents have been telling us that the way to get ahead was to buy a house and keep making payments with a fixed interest rate and after 20 or 30 years it would be way up in value and that was your nest egg in old age. You could either live in it rent free or sell it and use the proceeds to rent an apartment.”

The article goes on to explain the rest of Mr. Francis’ comment:

That was good advice until 2006 when home prices collapsed, he says, and it “may become good advice 10 years from now, but right now it’s not.”

Mr. Francis bases his conclusions on a study he completed which covered the years 1978 through 2008. In his study it showed that home prices increased annually by 5.7% and that the S&P 500 increased by 10.8%. Based on this information, Mr. Francis gives the following advice:

To students who come to him for guidance on whether to buy or rent in the near term, however, Francis has one word of advice: wait. “I keep telling them this is not the time to buy,” he says.

Let’s take a closer look at this conclusion.

1. We have our own study.

Mr. Francis did a study over a thirty year period which did not include the last 3 years. If we look at the same categories since January 2000 (covering one of the worst decades in American real estate history), we find that home values GAINED 42% while the S&P LOST 4.7%. It all depends on which set of data you choose to use.

2. The proper comparison is rent vs. buy.

All of these comparisons claim that putting your money into a different investment vehicle other than real estate might make sense. What they are not taking into consideration is that the investor will still have a housing expense. They will still need money for shelter. They cannot just take their money for shelter and buy other assets with it. A person can’t live in their 401k or their IRA. This leads us to…

3. In most markets today, owning is LESS expensive than renting.

Trulia recently came out with their Rent vs. Buy Index. The report shows:

that it is more affordable to buy than to rent a two-bedroom home in 72 percent of America’s 50 largest cities.

For more on this issue including a 50 city breakdown, click here.

4. Current mortgage opportunities may never be available again

The government has driven mortgage interest rates to all time lows. You can still get a 5% rate and guarantee it for 30 years. Both of these opportunities may soon disappear. Mortgage rates will increase as the economy improves and the Fed no longer feels pressure to keep rates low. The 30 year mortgage may soon be a thing of the past if suggested mortgage reforms come to be. You can lock in your housing expense for 30 years if you purchase. Renting is like having an adjustable rate loan with no cap that readjusts EVERY year. Which way do you think a landlord will readjust it?

For more on this, click here.

5. Most Americans see more to homeownership than financial value.

Last week, Fannie Mae released the National Housing Survey. The survey reported:

96% of all homeowners said homeownership has been a positive experience.

84% of Americans still believe that owning a home makes more sense than renting. Even 68% of renters believe owning makes more sense.

2 in 3 Americans believe that lifestyle benefits of homeownership (65%) are superior to the financial benefits (32%).

Bottom Line

There are more and more studies being done on the value of homeownership. We think we will trust in what our parents and grandparents said. Your mortgage payment is money you put into your savings. Your rent payment goes into the garbage.


Six people, including two licensed real estate brokers, have pleaded guilty to conspiring to rig bids at public foreclosure auctions in San Joaquin County, Calif.

Prosecutors said the conspirators would designate one person to bid for them at public auctions in order to keep prices low. After the designated bidder bought a property at a public auction, the group would hold a second, private auction, where each conspirator would bid what they were actually willing to pay.

The highest bidder at the private auction won the property. The difference between the rigged bid at the public auction and the high bid at the private auction was divided among the conspirators — an “illicit profit,” prosecutors said.

The scheme ran from about September 2008 until October 2009, with more than $10 million in homes purchased at artificially low prices. The U.S. Department of Justice, the FBI and the San Joaquin County District Attorney’s Office are conducting an ongoing investigation of “fraud and bidding irregularities” at auctions in the county, prosecutors said.

Stockton, the county seat, has been a hotbed for foreclosures. Stockton real estate executive Anthony B. Ghio was the first to enter a guilty plea in the case last year.

Facing a maximum penalty of 10 years in prison and a $1 million fine, Ghio pleaded guilty to bid rigging in April and agreed to cooperate with investigators in return for a recommendation of a lighter sentence.

On June 24, licensed brokers John R. Vanzetti and Theodore B. Hutz also pleaded guilty to participating in the conspiracy.

Vanzetti agreed to cooperate with investigators and pay $271,000 in restitution and a minimum fine of $20,000. In return, federal prosecutors said they would recommend that he be sentenced to no more than 24 months in prison.

Hutz, who is also a Realtor, agreed to the terms of a plea bargain calling for him to pay $96,500 in restitution and a minimum fine of $20,000. In return, prosecutors said they would recommend the same sentence for Hutz as Vanzetti — 18 to 24 months in prison.

In February, real estate executive Richard W. Northcutt was the fourth person to enter a guilty plea, followed by real estate investors Yama Marifat of Pleasanton and Gregory L. Jackson this month.

The California Department of Real Estate still lists Vanzetti and Huntz as licensed brokers, with no record of disciplinary action.

A California Department of Real Estate spokesman, Tom Pool, said that charges against an agent or broker can’t serve as the sole basis for disciplinary action — licencees are entitled to a hearing before an administrative law judge. Even in cases where a broker has entered a guilty plea or been convicted, they may still have the right to appeal their conviction.

A recent investigation by the Sacramento Bee found dozens of California real estate professionals charged with crimes or sued for allegedly fraudulent dealings in recent years still have their licenses.


Get ready for a showdown between the Obama administration and the banking industry over the mortgage market. Described as a “shock and awe” approach, the White House wants the nation’s five largest banks to reduce the principle on mortgages in an effort to reduce monthly payments for struggling homewoners, reports the Huffington Post.

The White House hopes the plan will take effect in the next six months may cover as many as three million distressed homeowners. This new modified mortgage plan could cost Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial as much as $30 billion, according to unnamed sources cited in the Huffington Post report.

“The banks are going to fight this tooth and nail,” says Paul Muolo, executive editor of National Mortgage News and author of “Chain of Blame: How Wall Street Cause the Mortgage and Credit Crisis.

If implemented the plan will lead to a “horrible precedent for the industry,” he tells Aaron and Henry in the accompanying clip.

Muolo raises two key problems with the plan:

Legality “There’s something called rule of law. The mortgage contracts are legal contracts and there’s nothing in those original loan documents that say they should write-down the principle in the event of a default,” he argues.

Not a Solution Like the White house’s first attempt at this – HAMP – Muolo says there’s no reason to believe a principle write-down will prevent foreclosures, just delay them.

Nearing a Bottom?

The key to finding a bottom in the housing market is not government intervention, it’s employment, Muolo argues. “If you want to help someone with their mortgage, help them with their job, get them back to work and they’ll pay their mortgage,” he says.

The good news is, we are getting closer to that bottom. Muolo estimates the balance between supply and demand may tip back to sellers in the next year or so. We’re closer to a healthy equilibrium judging by the February housing starts data released today. Home construction dropped 22.5% last month to a seasonally adjusted 479,000 homes – the lowest level since April 2009 and the second-lowest on the books.


Many home owners are contemplating reducing their homeowners insurance coverage since their property’s value has dropped. But experts warn that’s not a good idea and could leave home owners with insufficient coverage if a disaster ever strikes.

“The market value of your home and its insurance value can vary widely because they are based on different assumptions and calculations,” according to an article in the Baltimore Sun. The insurance value is based on what it would cost to rebuild the house, not on what you paid for it.

As such, even though housing prices have dropped in many markets, rebuilding costs have not.

For home owners looking for savings, they might instead consider increasing their deductible. For example, increasing a deductible to $1,000 from $500 could lower the premium by 25 percent.

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