TEAM EMPOWERMENT MORTGAGE CHATTER: March 30; News & Headlines; GOLDen Opportunity; 8 Bills To Chip Away At Fannie, Freddie; Web Logs & Evolution of Marketing

Have you seen the sun today?  Don’t miss out!  Homebuyers perfect weather to find your home!!  It’s beautiful, enjoy the weather while looking for your home…


“Great things are done by a series of small things brought together.” — Vincent van Gogh: Was a Dutch post-Impressionist artist


NAMB/NAIHP motion for a temporary restraining order to prevent the rules from becoming effective this Friday. The judge’s last words, reportedly, were that they should expect her ruling shortly. If the judge rules in favor of granting a temporary restraining order, she will probably also grant a preliminary injunction, which would prevent the rule from becoming effective until after July 21st, when the new Consumer Protection Bureau comes into effect.

Markets don’t like uncertainty. So, on the plus side, at least yesterday’s QRM-related proposals by the Federal Deposit Insurance Corp. (FDIC) and the Federal Reserve (the Fed) removed some of it. And it would certainly seem to help the argument of many in the industry that we’re better off with government sponsored agencies (GSE’s) than without them. Qualified mortgages are defined as those that will not require any form of risk retention by any entity. The proposal limits qualified mortgages to below 80% LTV for purchase loans, below 75% CLTV for refinanced loans, and below 70% CLTV for cash out refinance transactions. Negam loans, IO loans, and loans with significant rate increases are excluded. Front end/back end DTI is capped at 28% and 36%, respectively, and for ARMs, these ratios are calculated at the maximum interest rate attainable in the first five years after origination of the loan. There is also a restriction on the timing of prior delinquencies. In particular, mortgages made to borrowers who have been 60 days or more delinquent on a prior mortgage at any time in the preceding 24 months do not qualify. Any pools with an explicit government guarantee or backed by the GSEs, as long as they are under conservatorship or receivership, is exempt from risk retention requirements.

In the short run, most experts see no significant effect on the mortgage origination and funding universe if what was proposed goes through. This is because more than 90% of current originations are done through the GSEs and FHA which are not really affected by this proposal. The remaining origination volume is being funded through bank balance sheets, so is not affected by risk retention.

Monday’s 2-yr auction was poor, and yesterday’s $35 billion was bit “sloppy” but not as bad as the 2-yr. (Today we have $29 billion 7-yr. sale.) Stocks rose in spite of the economic outlook being whacked yesterday by a couple pieces of minor news. The S&P/Case-Shiller Home Price Index, which I don’t think has ever gone up, showed its 20-city index down 1% in January, and down over 3% for the last 12 months. (11 cities saw prices sink to new lows – Atlanta, Charlotte, N.C., Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland, Ore., Seattle and Tampa.) And the Conference Board’s Consumer Confidence Index dropped to 63.4 in March, down from 72.0 in February.

Yesterday, for the day 10-year notes lost about .375 and closed at 3.49%. Current coupon mortgage prices were worse by about .250. This morning we have already learned that the ADP employment number showed an increase of 201k jobs, with service sector jobs +164k, and small business gains positive for 13 straight months. The MBA reported that apps dropped last week by 7.5%, with refi’s down about 10% and now accounting for about 64% of all apps. Currently the 10-yr is yielding 3.47% and MBS prices are roughly unchanged.


Everyone wants to comment on the current real estate market. They want to talk about how now is not the time to buy a home. Some even argue owning a house has never been a great investment. Most say it will be a long time before real estate again begins to appreciate. It all sounds so familiar to me. It was just a decade ago that many made the same arguments about gold as an investment.

Gold had dropped from over $400 an ounce to $250 an ounce (a 40% decline) from February 1996 to August 1999. People ran from gold as though it was a plague.

Lord William Rees-Mogg, the current Chairman of The Zurich Club, in 1997 said:

“No investment has been so thoroughly exploded as gold; most people think that there will no more be another gold boom than there will be another boom in tulip futures in The Netherlands.”

Two years later in 1999, Don Wolanchuk author of the Wolanchuk Report explained:

“Everybody hates gold. You can’t have a bottom until everybody is out. And everybody is out of the gold sector.”

Everyone knows what happened next. The proclamation of gold’s death was rather premature. Gold rose from $250 an ounce to over $1,400 an ounce in the next twelve years. I see the same situation with real estate today. I am not predicting that real estate will see the same levels of appreciation. I do believe however that the market will rebound strongly.

Those who continued to believe in gold as an investment were rewarded. Those who continue to believe in real estate as a sound investment will also be rewarded.

Here is what Adam Hamilton wrote in October 2000 in an essay titled Is Gold Dead?

The road for gold investors has been long and parched in the last five years. They have wandered through a seemingly endless desert, occasionally tempted by what proves to be an illusory mirage. Many have fallen beside the sun-cracked path, their white bones picked clean by buzzards and gleaming in the sun. Nevertheless, a brave contrarian core continues to march forward. They have studied history, currency, gold, investments, economics, and finance. They understand the timeless value of gold, the cyclical nature of the markets, and the vagaries of human psychology. They realize it is darkest before the dawn, and the journey most difficult right before the homestretch is reached. Gold is in an INCREDIBLE position, and it will have its day. Nothing goes up in price forever, and nothing goes down in price forever. Investments are cyclical. Gold is NOT dead, it is simply biding its time, waiting for its next earth-shattering mega-rally. The spoils that go to the few remaining gold investors when that day inevitably arrives will be fantastic. The stunning victory will quickly blot out the painful memories of the long struggle…

You could replace the word “gold” with the words “real estate” throughout this essay and it would apply today.


House Republicans plan to introduce eight bills on Tuesday in what some are calling a “bite-sized approach” to phasing out government-sponsored enterprises Fannie Mae and Freddie Mac, the Associated Press reports.

Fannie and Freddie, along with other federal agencies, have backed about 9 in 10 new mortgages over the past year. The federal takeover of the GSEs in 2008 following the housing market collapse has cost taxpayers $150 billion, which has prompted many in Congress and even the White House to call for the GSEs to be phased out gradually over a five-year timeline.

Earlier this month, Rep. Jeb Hensarling, R-Texas, a member of the House GOP leadership, took the first shot by introducing a wide-ranging bill to end the government’s ownership of Fannie and Freddie in two years, either phasing them out completely or making them fully private companies within five years. However, experts say that the bill has little chance of surviving the Democratic-run Senate.

The eight smaller bills would include many of Hensarling’s proposals but by taking a “bite-sized approach” may have a better shot at weaving its way through Congress, aides and lobbyists told The Associated Press. The proposals are also expected to include a gradual increase in Fannie’s and Freddie’s fees as well as reduce the size of loans they’ll be able to back.


The question becomes: Which customer are you trying to woo? And if you can’t answer that question, you can’t possibly make thoughtful and ultimately profitable business decisions.

There is no right approach, but understanding who it is you are targeting is paramount in understanding how to go about the whole new-business-capture thing. With my little blog lacking initial purpose, I admittedly lucked out, but hoping to get lucky is a pretty bad business strategy in the long-term and not one I would recommend.

Instead of intentionally packing each post with so many search-happy keywords that one might suspect I suffered from Tourette syndrome (“If you are searching for San Francisco homes or San Francisco real estate in San Francisco and haven’t found the best San Francisco real estate agent in San Francisco …”), I just wrote stuff. Crazier yet, it worked.

I learned over time and quite by accident that the right words tend to find their way into the post all by themselves if you stay on topic.

For me, these include words like “San Francisco” and “Sunset District,” and in the case of a more recent post, “Gisele Bundchen” and “Weebles.” In any event, my blog magically started to rank well beyond the pages of anonymity for many popular search terms and a larger number of the more obscure ones.

The goal is to write something someone, like, say, a potential client, might want to read without having a gun pointed at his head.

In other words, my approach is backwards; use traditional media to drive Internet traffic and let the Internet presence put the icing on the relationship — not the other way around. I guarantee that, whatever your market, sticks in the ground — those all-important yard signs — will trump any online lead generator you can find or manufacture. Every time.

For the average agent, however, the job is to connect with committed and qualified buyers and sellers and earn their business. For the average agent, the goal is to build an impressive following of happy past clients who will do repeat business and refer prospective clients.

Your approach may be different. But whatever your approach, just remember whom it is you are targeting and be sure to allocate your most valuable resource — your time — accordingly.

Oh, and it’s not a bad idea to give each page on your site a unique name, something other than “New Page.”

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