Team Empowerment Mortgage Chatter: May 24; Look Past The Headlines; National Housing Survey: What Americans Think; Appraisals: Why You Must Now Sell Your House Twice; RPM in Contra Costa Times

“The art of resting the mind and the power of dismissing from it all care and worry is probably one of the secrets of energy in our great men” – Captain J.A. Hadfield: Author



Earlier this week, Trulia and RealtyTrac issued a press release regarding a survey completed for the two companies by Harris Interactive. The press release, American Expectations for Housing Market Recovery Falters , reported:

“As more cities across the nation experience double dips in home prices, more than half (54%) of U.S. adults believe recovery in the housing market will not happen until 2014 or later, according to the survey released today.”

And both organizations that commissioned the survey addressed the reasons Americans may feel this way:

Rick Sharga, SVP of RealtyTrac

“Our survey reflects a growing perception among potential homebuyers that the housing recovery is still a long way off. Demand remains weak, loans are increasingly difficult to qualify for, and the shadow inventory of several million distressed properties is weighing down the market. All of these things need to improve before housing can recover.”

Pete Flint, CEO of Trulia

“Most Americans, as our latest survey revealed, overestimated how quickly the housing market would bounce back, but when it does, it will likely be a long and gradual process. Looking at the recent double dips in home prices, I expect the rest of 2011 to be volatile for real estate… In my eyes, we have another 18 months until we start to see signs of price stability in the housing market.”

These findings created a rash of sensational headlines declaring the housing market’s further decline.

While we are not sure how people defined ‘recovery’, we don’t disagree that the housing market still needs time to heal. How much time? What do other experts predict? We’ll leave that to another time.

Today, we want to mention other parts of the press release that didn’t receive the same coverage as the the parts that created those strong headlines. Mr. Flint addressed the nation’s concerns (above) but also said:

“On the flip side, mortgage rates won’t stay low forever and even if home prices continue to fall for a bit, now is still a good time to enter the housing market.”

And Ken Shuman, a Trulia spokesperson said:

“According to our latest data, it is more affordable to buy a home than to rent in 78 percent of major U.S. cities. With concerns of rising inflation and the potential for rising interest rates, now is a good time for people to buy and we may not be in this environment for much longer.”

Bottom Line

There is great data about today’s housing market being released almost every day. Let’s make sure that we read not only the headlines but instead study the entirety of the information.


Each quarter, Fannie Mae releases their National Housing Survey.  They survey the American public on a multitude of questions concerning today’s housing market. We like to pull out some of the findings we deem most interesting each time it is released. Here they are for the most recent report:

The Most Important Reasons to Buy a Home

When we talk about homeownership today, it seems that the financial aspects always jump to the front of the discussion. However, the study shows that the four major reasons a person buys a home have nothing to do with money. The top four reasons, in order, are:

  • It means having a good place to raise children and provide them with a good education
  • You have a physical structure where you and your family feel safe
  • It allows you to have more space for your family
  • It gives you control of what you do with your living space (renovations and updates)

The Home as an Investment

Though most people purchase a home for non-financial reasons, everyone realizes their is a money component to homeownership. Here is what they said on this issue:

  • 66% of the general population (and 71% of homeowners) believe that homeownership is a ‘safe’ investment. This is the first time since the studies inception in 2003 that this number increased.
  • 57% believe that homeownership has more potential as an investment than any other traditional asset class.
  • 67% think that now is a good time to buy a home

Rent vs. Buy

We are always interested in the difference people see in renting vs. owning.

  • 65% of renters have aspirations to someday own their own home
  • 74% of renters think that owning is superior to renting (up 6% since the last survey)
  • 96% of homeowners see homeownership as a positive experience (3% see it as a negative experience) while 82% of renters see renting as a positive experience (16% see it as a negative experience)
  • 92% of homeowners live in a single family residence while 48% of renters live in a multi-unit building

Bottom Line 

Our belief in the value of homeownership grows each time this survey is released.


Banks have become very conservative when lending mortgage money today. With the current foreclosure challenges in the country, we can’t really blame them. The requirements now necessary to qualify for mortgages have gotten much more stringent and it seems will get even more stringent as we move forward. The banks want to make sure the prospective buyer has the ability to repay the loan. However, this does not just involve the borrower buying the property.

The second way a bank can protect their investment in the mortgage is to make sure that the collateral backing that mortgage is secure. That is where the appraisal comes in. The bank wants to make sure that, should the buyer not be able to make their payments, the house they will be forced to take back will sell for an amount at least equal to the balance left on the mortgage. For that reason, the banks seem to be getting more conservative with appraisals also.

This past week, the National Association of Realtors (NAR) released their Existing Homes Sales Report. In that report, they said:

“11 percent of Realtors® report a contract was cancelled in April from an appraisal coming in below the price negotiated between a buyer and seller, 10 percent had a contract delayed, and 14 percent said a contract was renegotiated to a lower sales price as a result of a low appraisal.”

One out of four real estate transactions was either cancelled (11%) or renegotiated to a lower sales price (14%) because of a low appraisal!!

Bottom Line

Every house now has to be sold twice: first, to a potential purchaser and then to the bank appraiser. And, it seems that the second sale may be the more difficult of the two. Sit with a local real estate professional and make sure you put together a plan for both sales.


Dodging the debris unleashed by a shattered housing market, RPM Mortgage powered to its most successful year in 2010 and is off to a robust start this year.

Walnut Creek-based RPM generated hundreds of millions of dollars more in mortgage business in 2010 and hired hundreds of new employees over the past two years, a track record that sparkles against the gloomy backdrop of the real estate sector.

“We’ve been very fortunate,” said Robert Hirt, RPM’s chief executive officer. “2010 was the best year in the history of our company.”

The company’s success has been fueled in great measure by its ability to meld its connections to Fannie Mae with a veteran sales force and low interest rates. By being able to sell loans directly to Fannie Mae, RPM has attracted experienced loan officers who can drum up more business.

In 2010, RPM generated $4.55 billion in loan production, up 12.9 percent from the $4.03 billion in loan production in 2009.

The pace is brisk so far in 2011. For the first three months of this year, RPM generated $804 million in loan production, said Elise Watkins, an RPM spokeswoman. That was up 11.4 percent from the $722 million produced in the January-March quarter of 2010.

In contrast, the country’s largest home lender, San Francisco-based Wells Fargo, saw originations for residential loans fall 8.1 percent in 2010 compared with 2009, regulatory filings show. However, in the first quarter of 2011, Wells Fargo’s originations for home loans rose 10.5 percent compared with the year-ago January-March period, the bank said.


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