It’s about that time, fresh cut grass, hot dogs, garlic fries, and more! Enjoy Baseball fans!…
“No matter what you’ve done for yourself or for humanity, if you can’t look back on having given love and attention to your own family, what have you really accomplished?” – by Lee Iacocca
NEWS & HEADLINES:
The U.S. District Court denied NAIHP and NAMB’s motions for a temporary restraining order and preliminary injunction against the Federal Reserve’s loan officer compensation rule. Call me uninformed, but I could almost hear a collective sigh of relief from all those companies that paid out thousands and an industry that spent millions of dollars in manpower and attorney fees in setting up plans geared for tomorrow. DelayDenied
HAMP. Tens of billions of dollars remain unspent and hundreds of thousands of homeowners have been rejected. Tuesday the Republican-controlled House voted to kill the foreclosure relief program. But the Senate, which the Democrats control, will probably pursue a rescue. But, the program is grappling with, as American Banker points out, “weak oversight, conflicts of interest, mind-numbing complexity and poor performance by many participating banks.”
But by one measure TARP appears to have worked. TARP (Troubled Asset Relief Program) received some good news yesterday when three banks repaid $7.4 billion in TARP funds. Including these three, taxpayers have now recouped $251 billion from the TARP program in the form of repayments, dividends, interest and other income. “That exceeds the original investment Treasury made through those programs ($245 billion) by nearly $6 billion,” the federal agency said. “Treasury currently estimates that bank programs within TARP will ultimately provide a lifetime profit of approximately $20 billion to taxpayers.”
Fannie Mae released news on its latest updates for mortgage insurance companies, including a list that any personnel charged with sending MI Disclosure Instructions and Released forms to each MI company probably already has printed and stapled on to their cubicle wall. It is the MI contact information: FannieMI
Over at Freddie, it provided an update for the effective dates and scope of the Uniform Loan Delivery Dataset (ULDD) requirements for Phase I, along with some additional details on key implementation dates to “support your transition from our existing loan delivery data requirements to the ULDD requirements.” Although much of this doesn’t happen until next autumn or winter, and setting specific dates nearly a year away may appear “iffy”, look for investors to be making changes soon. And if you’re asking yourself, “What the heck is ULDD?” you may want to visit ULDD
Jobs and housing, housing and jobs… Yesterday the ADP jobs report, always of questionable predictive ability for Non-farm Payroll, came in about as expected. In recent months ADP has outpaced the NFP growth of late – it generally does a better job of capturing new business growth. Later in the day we had the third poor auction of the week, a 7-yr Treasury-note sale that came in around 2.90%. But despite the poor auction, fixed-income securities’ prices were higher with the 10-yr down to 3.45%. There is a definite lack of mortgages hitting the market, and the demand is decent. So even though the 10-yr was up about .250 in price, MBS prices were up that and even more, which is unusual. Traders saw “heavy real money buying from domestic banks, insurance companies, REITS and Index accounts.”
Today we already had Initial Jobless Claims. Expected to drop, Claims fell 6k to 388k, with its 4-week moving average coming in at 394k. Later we will have the Chicago PMI at 9:45AM, and at 10AM are Factory Orders for February. Rates are a little better, with the 10-yr down to 3.42% and MBS prices a shade higher.
TRULIA ROLLS OUT iPAD AND ANDRIOD APPS
Property search site Trulia has launched two mobile applications, one for the Apple iPad and one for smartphones that run on Google’s Android platform.
Trulia also has an iPhone app, which it launched in September 2008. That app is ranked fourth in popularity among real estate-related apps, according to a keyword search for “real estate” at ranking site TopAppCharts.com.
Traffic from mobile phones accounts for 12 percent of the site’s overall traffic. In February, more than 2 million users accessed Trulia from their phones — a 300 percent year-over-year jump, the company said. Meanwhile, website traffic overall rose 80 percent year-over-year.
Trulia’s iPad app, which already ranks ninth in popularity among real estate-related iPad apps, according to TopAppCharts.com, allows users to search for-sale, for-rent, or sold homes nearby or at a user-specified location.
Users can filter their search by price range, number of bedrooms or bathrooms, square feet, and property type. Users can also decide to see properties that are foreclosures, have an open house, and/or have experienced a price reduction.
With Trulia’s Android app, users can also search for-sale, for-rent, and sold properties using the same filters as in the iPad app. Homes appear in list or map view and users can sort results by best match, newest listing, price, bedrooms, bathrooms, or square footage.
Listings include similar property details as those noted in the iPad app, as well as a description, public records and tax information, and a price history.
Users can save searches and listings, e-mail listings, contact the listing agent, and get directions from the app.
In contrast to the iPad app, users of the Android app are able to voice search, add open houses to their built-in calendars with the touch of a button, and read QR (“Quick Response”) codes directly from the app.
MORTGAGES: IS WHAT YOU BELIEVE ACTUALLY TRUE?
What if everything you believed to be true about mortgages, wasn’t actually true after all? Would you rather know now or later? In my experience, I have come to understand that many, if not most, clients come “pre-conditioned” by what has long been termed “conventional wisdom”. For generations, people have been told that when buying a home, they should:
Make a big down payment
Obtain a fixed-rate-mortgage; 15 years if you can afford it
Make additional principal payments whenever possible
Pay off your loan as quickly as you can
People see a mortgage as a “necessary evil”- one that they should be afraid of and try to eliminate as soon as they can. And while the concept of being mortgage-free may seem attractive on the surface (and may have been an acceptable strategy in the past), we no longer live in the same world that our parents and grandparents did. Unlike previous generations:
We will not have the same job for life. Most people will have five to six different careers. That simple fact will preclude most people from a company pension as part of a retirement strategy.
We cannot realistically count on Social Security to exist in its current form. Either your benefits will have to be reduced or pushed off to later years to enable the fund to remain solvent.
We won’t have “Mortgage Burning Parties”. People live in their homes on average just seven years now and, because of refinancing, their mortgages will only last 5 years.
Ultimately, we have to appreciate that we live in a very different world and that the tactics and solutions of the past no longer fit the challenges of the present or future. I believe we have an obligation to custom design our clients’ mortgage in a way to enhance cash flow, minimize income taxes and help implement alternative strategies to protect their assets and create wealth.
I know clients can make better choices if they are armed with the understanding that every dollar applied to the principal of their mortgage (through down payments, regular mortgage payments, and even pre-payment strategies) is NOT the strongest fiscal strategy. When you pay down your mortgage, the BANK is in a less risky position. Whose risk is increasing? YOURS!
I have seen clients apply money towards their principal balance of their 5% tax-deductible mortgage, while carrying 18% non-deductible credit cards. Why not get rid of the revolving debt? I know you need discipline to actually save the money you would normally apply to lower your mortgage balance. However, I promise you that good mortgage professionals can show you the power of separating the equity from the home; the increased liquidity, the phenomenon of compounding interest and why the actual rate of return on home equity is 0%.
I imagine many will dispute my contentions here, but they are mathematically proven. If you have discipline, there IS a better way to manage your finances. Explore them and decide for yourself.
NAR OPPOSES HIGH DOWN PAYMENT REQUIREMENT
High down payment requirements being proposed by federal regulatory agencies as part of the upcoming rule-making under the Dodd-Frank Wall Street Reform and Consumer Protection Act will unnecessarily burden home buyers and significantly impede the economic and housing recovery, according to the National Association of REALTORS®.
Six agencies (including the Department of Housing and Urban Development, Federal Deposit Insurance Corp., Federal Housing Finance Agency, Federal Reserve, Office of the Comptroller of the Currency, and the U.S. Securities and Exchange Commission) are developing a proposed risk retention regulation under the Dodd-Frank Act that requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is a qualified residential mortgage (QRM); FHA and VA mortgages would also be exempted. The purpose is to create strong incentives for responsible lending and borrowing.
“As the leading advocate for home ownership, NAR supports a reasonable and affordable cash investment requirement coupled with quality credit standards, strong documentation and sound underwriting,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “A narrow definition of QRM, with an unnecessarily high down payment requirement, will increase the cost and reduce the availability of mortgage credit, significantly delaying a housing recovery.”
NAR believes that Congress intended to create a broad QRM exemption from the 5 percent risk retention requirement to include a wide variety of traditionally safe, well-underwritten products. Congress chose not to include a high down payment among the criteria it specified in the Dodd-Frank Act to guide the regulators in defining a QRM. Strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk.
“We need to strike a balance between reducing investor risk and providing affordable mortgage credit. Better underwriting and credit quality standards have greatly reduced risk. Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home,” said Phipps.
The definition of QRM is important because it will determine the types of mortgages that will generally be available to borrowers in the future. Borrowers with less than 20 percent down could be forced to pay higher fees and interest rates, up to 3 percentage points more, for safe loans that otherwise do not meet too narrow QRM criteria.
NAR is concerned that a narrowly defined QRM will also require severe tightening of FHA eligibility requirements and higher FHA premiums to prevent huge increases in its already robust share of the market, adding additional roadblocks to sustainable home ownership.
“Saving the necessary down payment has always been the principal obstacle to buyers seeking to purchase their first home. Proposals requiring high down payments will only drive more borrowers to FHA, increase costs for borrowers by raising interest rates and fees, and effectively price many eligible borrowers out of the housing market,” said Phipps. “We strongly urge the regulators to consider the negative consequences of setting onerous limits on the availability of credit.”
HOUSE VOTES TO END HAMP
The House voted Tuesday to end the Home Affordable Modification Program (HAMP), the Obama administration’s flagship program for foreclosure aid.
HAMP provides federal money to help banks modify mortgages for borrowers who are behind on their payments.
“To many struggling Americans seeking permanent mortgage relief, HAMP offered little more than false hope,” Rep. Darrell Issa (R-Calif.), who chairs the House Oversight Committee, said in a statement. “More home owners have been kicked out of the program than have received permanent relief.”
The program has faced criticism that it hasn’t done enough to help struggling borrowers and is costly to taxpayers.
The House voted 252 to 170 to end any new funding for HAMP. The bill will now go before the Senate.
In recent weeks, President Obama has threatened to veto any bill that tries to end the administration’s foreclosure aid programs. House Republicans already have passed three other bills to stop funding of smaller programs, which are aimed at helping families, those who have lost their jobs, and neighborhoods dealing with foreclosure.
Despite being a mostly Republican led fight to end HAMP, Democrats have also urged government officials that HAMP needs to help more home owners.
“Yes, the HAMP program has a lot of problems,” says Rep. Barney Frank (D-Mass.) on the House floor. “But, the absence of any program leaves home owners worse off.”
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