“If passion drives you, let reason hold the reins.” – by Benjamin Franklin

Anyone interested in GSE reform and servicing compensation may want to listen in to a Banc of America Securities/Merrill Lynch call today at 7AM PST. Participant Passcode: 1239593, dial-in number US/CAN Toll Free: 1-888-797-2983. (It will also be available for the next 7 days, in replay form, at 1-888-203-1112, Passcode: 1239593.)

HUD issued a mortgagee letter focused on a change in the remittance process for over claimed amounts of FHA single family claims. This modification of the existing process is being made in response to the Department of the Treasury’s mandate for all agencies to switch from their current lockbox services to Treasury’s Pay.gov collection service. HUD

The FHA flipping waiver was extended. FHA’s “temporary” waiver of the agency’s ‘anti-flipping rule’ was extended through 2011. With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days, but this is now waived. “Since the original waiver went into effect on last February, FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition.”

And finishing up with HUD, recently HUD provided additional guidance on claim filing requirements for FHA’s refinance program for underwater borrowers. The program, begun last August, taps funds from the Emergency Economic Stabilization Act (EESA), administered by the Department of the Treasury, for partial payment of a mortgagee’s unpaid principal balance. HUDUnderwater.

The news out of Egypt on Thursday/Friday pushed bond prices higher & rates lower, and the stock market lower. MBS volume, depending on who you ask was either next-to-nothing or above the recent average. 10-yr notes rallied almost .5 down to a yield of 3.33%, and rate-sheet MBS prices were better by .250-.375, depending on coupon.

As long as Egypt hangs in there, and Europe doesn’t crumble, and China continues to buy our debt, the biggest economic event this week will be the employment report on Friday. Today we’ve already had Personal Income and Consumption (Spending), along with the PCE Prices number. PI was +.4%, as expected, and PC was +.7%, stronger. Later, at 7:45AM MST we have the Chicago Purchasing Manager’s numbers. After these numbers the 10-yr is at 3.36% and MBS prices are about .125 worse.

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Does It Make Sense To Buy a Home?
The financial turmoil we have experienced over the last five years has definitely taken it’s toll. It has especially been a difficult time for real estate. Nationally, values have fallen over 25% and there may be more softening in prices to come. We realize that this has caused difficulty, and in some cases, heartbreak for many families. People unable to make their mortgage payments have been forced to sell or, even worse, have faced foreclosure.

However, the thing that has continued to amaze us is the country’s steadfast belief in the benefits of homeownership even in these most difficult of times. The vast majority of Americans still realize that the value of a family owning a home goes far beyond just the financial considerations.

There have been three major surveys done in the last 75 days delving into Americans’ current belief in the value of owning a home:

The National Housing Survey by Fannie Mae this past November.
The Housing Survey by the Gallup Organization completed last month.
The American’s Attitudes About Homeownership (AAAH) study completed by Harris Interactive for the National Association of Realtors.

Each showed the country still believes that buying a home makes all the sense in the world. Let’s consider some of the findings:

Is owning a home good for a family?

In the AAAH study, 87% of homeowners and 64% of renters believed that “owning a home provides a healthy and stable environment for raising a family”.

The Fannie Mae study showed that the main reason people gave for buying a home is that “it is a good place to raise children and provide a good education”.

Has owning a home been a positive experience?
 

AAAH: The study shows that an astonishing 88% say it has been “a positive or very positive experience”. An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.

Fannie Mae: The study shows that 95% see homeownership as a “positive experience” for them and their families.

Do renters aspire to own a home?

AAAH: Most renters aspire to home ownership. The majority of renters (63%) say they are at least somewhat likely to purchase a home at some point in the future. Among them, young adults (18- to 24-years-old) have the strongest aspirations for home ownership.

Fannie Mae: 67% of renters plan to purchase a home in the future.

Is now a good time to buy a home?

AAAH: 78% of homeowners and 58% of renters believe now is a good time to buy.

Fannie Mae: 64% of those surveyed said it is a good time to buy a home.

Gallup Poll: 67% of Americans think now is a good time to purchase a home.

Bottom Line

Survey after survey report Americans believe two things: that there is a value in owning a home and that now is the time to buy!! What are you waiting for?

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WHAT’S IN THE NEWS?

Personal Income Increased 0.4% in December and Consumer spending increased 0.7%, higher than expected and increasing trend for sixth month in a row.  Spending for all of 2010 rose 3.5%, the fastest pace in three years, and the best performance since a 5.2% rise in 2007.

Influential Proposal to Outline Fannie, Freddie Fixes: All MBS would carry explicit government guarantees; Fees charged on mortgage bonds would finance a catastrophic risk insurance fund; If a mortgage firm became insolvent, the government would guarantee payments to investors on their securities, but the firm itself wouldn’t be rescued; Multiple firms would issue the same mortgage security, allowing for liquidity if one issuer failed. It is estimated that the proposal would increase mortgage rates by .5 of a percentage point on 30-year fixed, compared to the increase of 2 to 3 percentage points increase without such a guarantee as estimated by mortgage investors.

 “Never let what you cannot do stop
you from doing what you CAN do!” 
–Stephen Pierce:  Internet marketer and author  

5 Tips for 2011

1. Build Your Listing Inventory

This will be the year that people again realize that there are more than just financial benefits to homeownership. They’ll remember that homeownership is still the American Dream. We believe that there will be a growing number of people ready, willing and able to purchase homes in 2011. For that reason, you must build a salable inventory of listings.

2. Be Strong on Price

3. Develop a Great Buyer Presentation Manual

The buyers will be out in large numbers this year. However, they will still have concerns as to whether or not this is a good time to buy real estate. Over the last few years that concern has turned into fear which resulted in many buyers staying on the sidelines. They were afraid to purchase, and therefore didn’t.

5. Realize This Will Be YOUR Year!

4. Get Mobile With All Your Information  

1. Build Your Listing Inventory

This will be the year that people again realize that there are more than just financial benefits to homeownership. They’ll remember that homeownership is still the American Dream. We believe that there will be a growing number of people ready, willing and able to purchase homes in 2011. For that reason, you must build a salable inventory of listings.

“There’s lots of people in this world who spend
so much time watching their health that
they haven’t the time to enjoy it.” – Josh Billings: 19th century humorist

 Plans for Freddie and Fannie  – which are “required” by the end of January per Dodd-Frank, have now been pushed back until mid-February. “Officials say the delay is needed to accommodate other major policy initiatives, including next month’s release of the annual budget and the president’s State of the Union address today.”

While we’re on the topic, wanna buy a house? Call the agencies – Fannie & Freddie’s combined inventory of foreclosed residential property has quadrupled in just three years and now stands at $24 billion, and the number of properties on their books (over 241,000) has increased fivefold. That’s roughly a third of the total U.S. portfolio of repossessed homes. And the numbers show no signs of declining, since it seems that nationwide foreclosures are going up faster than buyers can be found.

The Nationwide Mortgage Licensing System and Registry (NMLS) is conducting the third annual NMLS User Conference & Training February 7-10, 2011 in Orlando, Florida. “The NMLS User Conference & Training brings together state and federal mortgage regulators, industry professionals, compliance companies, top law firms, and education providers to learn about the latest developments in mortgage supervision and to discuss pressing issues confronting the industry.” Website: NMLS

There is word out there that the FHA will suspend its anti-flipping rule for a second year in 2011. HUD’s existing rule, that prohibits the FHA from insuring a mortgage on a home that was owned by the seller for less than 90 days, was temporarily put on hold last February to help liquidity. There are certain restrictions, well known in the industry, but a HUD spokesman reported told HousingWire that the rule is currently “in the clearance process.”

Yesterday MBS prices worsened by .125, which was not enough for many investors to change their pricing and instead they let it eat into their profit margins. MBS volume was light, probably reflecting the state of new rate locks coming in the door. 10-year notes closed around 3.41%. Today for economic news we have nothing too dramatic: the Case-Shiller 20-city Index, along with Consumer Confidence, the FHFA Housing Price Index, the 2-yr auction, and tonight’s State of the Union Address. One issue contributing to this morning’s markets here in the US was a much-lower-than-expected GDP (Gross Domestic Product) number out of the UK. We find the 10-yr yield down to 3.35% and MBS prices better by roughly .250.

Simon Cowell would have to be considered congenial compared to the critics of real estate in the last few years. But like the popular TV show, where the ultimate winner is not chosen by a select few but instead by the vote of the nation, homeownership again has proven to be the choice of the people. There have been numerous survey’s and polls done in the past 90 days that confirm this.

  

American Attitudes About Homeownership is a new survey conducted by Harris Interactive for the National Association of Realtors. The findings of this survey combined with the findings of Fannie Mae’s November National Housing Survey and last week’s Gallup Pollpaint a clear picture that the majority of Americans still value homeownership and believe in its benefits. In the latest survey, America’s belief in owning a home came through loud and clear.

Here are a few of the findings:

 

Homeowners and renters agree that owning a home is a positive choice. A majority of homeowners and a sizable percentage of renters agree or strongly agree that owning a home provides a healthy and stable environment for raising a family (87 percent among homeowners and 64 percent among renters), that it helps them meet long-term financial goals (77 percent among homeowners and 55 percent among renters) and it helps them realize the American Dream (70 percent among homeowners and 48 percent among renters).

Most homeowners (95 percent) and renters (72 percent) believe that over a period of several years, it makes more sense to own a home than to rent

More than 8 in 10 homeowners (82 percent) and half of renters (50 percent) would prefer to buy a home if they had to move in the next six months. Furthermore, 78 percent of homeowners consider now a good time to buy as do 58 percent of renters.

Homeownership is viewed as a positive experience while less so for renting. Eighty-eight percent of current homeowners report that owning a home has been a positive or very positive experience. About half of renters (51 percent) consider their experience as positive or very positive.

Many renters aspire to homeownership. More than 6 in 10 renters are at least somewhat likely to purchase a home in the future and 24 percent indicate that they are extremely likely. Among young adult renters, 74 percent say they are likely to buy at some point in the future. About one-third (35 percent) of renters plan to purchase a home in the next 3 to 5 years (43 percent among young adult renters).    

We have argued for some time that the benefits of homeownership are more than just financial. This survey addressed this point and reported:  

 Bottom Line

A larger share of homeowners than renters describe their communities as safe and stable. Homeowners also report that they are more satisfied with their community and family life. While many factors contribute to a positive community environment, a large percentage of homeowners and renters believe a high rate of homeownership is one factor. Homeowners generally feel more connected to their communities, participate in community and civic activities more frequently and are more likely to know their neighbors well.

Owning a home has both financial and social benefits for your family. Today, you can buy a home at a discounted price and at an historically low interest rate. Why wait?  

 PRESS RELEASE – RPM STRIKES A “JUMBO DEAL”

 

 RPM is pleased to announce that it has entered into an agreement with a major Wall Street firm that will allow RPM to offer Jumbo loans up to $2 million. With this new product available to its clients, RPM anticipates originations over $1 billion within the first six months of this year.

Rob Hirt, CEO of RPM, is ecstatic about the new Jumbo loan capabilities which he feels will be a real “game changer” for the company.

“After an almost three year hiatus, it looks like Jumbo liquidity is making a comeback!” said Hirt. “This is excellent news for borrowers who need loans above $729,000 which is the maximum loan offered by Fannie Mae, Freddie Mac and FHA.”

The program will allow RPM to lend a 30 year mortgage up to $2 million on a home with the buyer making a 30 percent down payment, and up to $1 million with a 20 percent down payment.

Pricing for this program easily competes with the banks who are “too big to fail” and have made it so difficult for borrowers to obtain loans. Moreover, RPM has the ability to internally underwrite these loans and can use RPM Appraisal Services’ local appraisers to value the property versus the national appraisal companies sending in an appraiser from out of the area.

Hirt sees a lot of potential with this new product and believes that it will allow RPM to tap into untouched markets and really capitalize on Jumbo loans, which is a huge advantage the company now has over competitors.

“Believe it or not, interest rates are still at 40 year lows,” said Hirt. “Part of the problem now is that anyone that had a conforming loan has most likely refinanced. But the Jumbo market has been dead in the water! But not for long!”

RPM is in the midst of building partnerships with other large Wall Street firms that will hopefully be able to deliver more Jumbo products to RPM. With these products now available, RPM has a bright future for purchase money originations.

RPM Mortgage, Inc. is based in Walnut Creek and is a private family-owned mortgage bank and broker whose roots in the Bay Area stem back to 1986. RPM has 42 branches in California, Nevada, Texas, Idaho, Colorado and Connecticut and over 700 loan agents and employees. RPM’s loan agents are specially trained to offer FHA, VA and CalSTRS loan programs to their customers. They work with borrowers, realtors, CPAs, financial planners, attorneys and financial consultants to provide home buyers with the best financial solutions in the market today.

Visit The RPM Website: Jumbo Loan Program – RPM Mortgage Press Release

 

 

“The indispensable first step to getting the things you want out of life is this: decide what you want.”   – Ben Stein

To all of you sport enthusiasts keeping track of who will be meeting each other at the next Super bowl, looks like we’ll be watching the Steelers and Green Bay on Sunday, February 6th. To start off a new week, the news is light, but we do have some RPM News! If you haven’t talked to me about it yet, we’ve got a new 30 Year Fixed Jumbo Loan program rolling out, call me for more details. As mentioned last week, this feature is one of many from RPM, aside from our loan programs offered we also have our own manually underwritten loans which are done in-house as well as our appraisals, also done by in-house by appraisers who are local and know our market and areas. Don’t forget about co-branding, this is a great opportunity for you to continue your marketing even after a home is sold and you’ll also be able to utilize our co-branding library for open house flyers and more! Have yourself a great Monday and a wonderful week! I’m in the office today so please do not hesitate to contact me to discuss any of the above mentioned information or if you’ve got a loan scenario or need a pre-approval!

Rates continue to chop along. MBS prices were better by .250-.375 on Friday, and the 10-yr sitting at 3.42% keeps us right in the middle of our recent range. Traders reported “Seeing good buying of the basis by hedge funds and decent real $ buying 4.5s and 5s is helping MBS firm up into the afternoon. With the expectation of supply being light into the afternoon and continued rally, MBS could go out pretty well to end the week.” The same might be said for this week.

The biggest economic event this week will be Wednesday’s FOMC meeting, with an update on the economy and the Fed’s plans for monetary policy (but don’t look for any change in overnight rates). For economic news, there is nothing slated for today. Tomorrow we have the Case-Shiller 20-city Index, along with Consumer Confidence, the FHFA Housing Price Index (I lose track of the dozens of house price indices that come out every month), and, of course, the State of the Union Address. Wednesday we have the MBA applications index and New Home Sales, along with FOMC rate decision. Thursday has the usual Jobless Claims, but also Durable Goods & Pending Home Sales. Friday is the Employment Cost Index and GDP number for the fourth quarter along with the University of Michigan Consumer Sentiment survey. And don’t forget that $99 billion 2-yr, 5-yr, and 7-yr supply. Currently the 10-yr is about unchanged at 3.42%, and MBS prices are also about the same as Friday’s close.

DISTRESSED INVENTORY TO STEP OUT OF THE SHADOWS

We are beginning 2011 with much more positive news about real estate than we have had in several years. The pending sales numbers (houses going into contract) have been climbing for several months. Last month’s Existing Homes Sales Report from the National Association of Realtors showed an increase of over 12%. Demand definitely seems to be increasing. Does that mean prices will begin to appreciate? Probably not. Though buyers have finally come out of hiding and started to purchase homes again, an increased inventory of distressed properties is also emerging from the shadows. These houses will impact prices.

Prices are determined not by demand alone but instead by the relationship of demand to the supply of inventory available. We are talking about the ‘shadow inventory’ of homes that will come to market at discounted prices when they are sold as short sales or foreclosures. This inventory has swelled to several million units.

WHEN WILL THIS BEGIN AND WHAT IMPACT WILL IT HAVE ON PRICES?

Over the last year, banks have been slowly releasing this inventory to the market being careful not to release too great a number in fear of driving down house values even further. Over 25% of all sales in 2010 involved a distressed property. The numbers increased as the year went on with 33% of all sales in November being in this category. In December, that number jumped to 36%! It now seems that banks are preparing to increase the flow of such properties to the market.

Last month, CNBC reported on economist Nouriel Roubini’s predictions on this issue:

“There has been an effective moratorium on foreclosure,” said Roubini.

And the beginning of the end of that moratorium means more housing supply is about to become available on the market.

“The shadow inventory of not-yet-foreclosed homes – due to the moratorium – will surge in the next year,” Roubini says.



And Housing Wire reported last week that Fannie Mae “directed its mortgage servicers to delay scheduled foreclosure sales 45 days” for borrowers trying to get assistance through certain government programs

What impact will this have on prices? Wells Fargo projected that house prices will drop 8% by mid-year. Fannie Mae and Bank of America have also predicted price depreciation for the first half of 2011.

SHOULD I WAIT TO PURCHASE?

Not necessarily. Remember, sellers should sell now before prices do begin to fall. However, as a purchaser, you should look at cost. With interest rates on the rise, waiting may result in a higher monthly mortgage payment even with a lower sales price.

As a good example, Mr. Roubini, who was mentioned above, just sold his home and upgraded to a more expensive residence. Get counsel from a mortgage professional before you consider delaying a purchase.

Bottom Line

If you are looking to sell, you probably want to do it before this ‘surge’ of discounted competition comes to market.

CO-BRANDING FROM RPM

BECOME A FAN IF HAVEN’T ALREADY-

“You may believe that you are responsible for what you do,but not for what you think. The truth is that you are responsible for what you think, because it is only at this level that you can exercise choice. What you do comes from what you think.” — Quote from A Course in Miracles

CALL ME TODAY FOR MORE DETAILS about the new 30 year Fixed Jumbo Loan Program that RPM will be rolling out soon!

It seems that the housing market is finally showing signs of a recovery. We are not suggesting that it will come roaring back and we will see 2006 numbers again. However, the National Association of Realtors released their December Existing Home Sales Report  yesterday. The report showed a 12.3% increase in closed transactions over the month before. Earlier in the week the Census Bureau reported  that:

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 635,000. This is 16.7 percent above the revised November rate of 544,000.

Should we believe that real estate is starting to make a comeback? To some degree, we think yes. Both of the above reports are promising.

However, not all the news in the reports was positive. Existing home sales were slightly down from the same month last year. Housing completions were down 22.2% from last year’s numbers. Yet, we must also factor in that the numbers from the end of last year were artificially inflated by the Homebuyer Tax Credit. Any correlation between these numbers is not an apple-to-apple comparison.

These reports, coupled with anecdotal information we are receiving from the agents we coach all across the country, seem to suggest that we may have bottomed out in regard to the number of transactions being completed. That can only be a positive for the industry.

Bottom Line

Even though there is a huge amount of visible and shadow inventory which will continue to put downward pressure on prices, it seems that buyers are beginning to realize that there are tremendous opportunities in the market.

BUY OR RENT? PLAY CHESS, NOT CHECKERS

A number of pundits are saying that now is NOT the time to buy a home. They look at how prices have fallen over the last four years and claim that investing in real estate is too risky. However, we must also look at the gamble one takes in not buying to determine which is the riskier of the propositions. The cost of renting today verses the cost of purchasing a home today must be compared. We must also consider probable future costs in order to fully calculate the risk. We must think a few moves ahead.

We must play chess, not checkers.

There is much to consider in the rent/buy decision. If you own a home, your mobility is curtailed to some degree. If you rent, there is less stability in the household as the landlord, not the tenant, determines if or when the house must be vacated. For the sake of today’s debate, we will only look at the financial aspects of this decision.

Renting

In a growing number of regions, homeownership is already less expensive than renting. And, it looks like rents are headed even higher. The WSJ, in an article on their online resource Market Watch,titled Double Digit Rent Hikes Are on the Way  reported:

Apartment dwellers could be facing double-digit rent increases in the coming years as a shortage of new multifamily units coupled with a rise in prime renter-age households gives landlords clout they haven’t see since the mid-1990s.

“Demand pressures are building. It’s not bad today because rents have been down the last two years,” said William McLaughlin, an executive vice president with Avalon Bay Communities.

“But it feels a lot like 1992, when we were coming out of a deep recession…and we ended up seeing double-digit rent increases after that,” he said.

…Already there are signs the apartment market is tightening and in some cities rents are already going up 7% or 8% per year

Buying

Although prices are falling, interest rates are on the rise  and that can have a huge impact on your cost . The monthly mortgage payment (COST) you can negotiate today may be the lowest it will ever be in your lifetime.

John Paulson , one of the smartest housing analysts in the country, recently made it a point to say that if you don’t own a home – BUY ONE! Stan Humphries, chief economist of Zillow, explains  that Paulson is talking about COST NOT PRICE.

Paulson is not just betting on house prices, but also on the ability to lock in low financing now with the expectation that it will be easier to pay it back in the future because of inflation.

Bottom Line

Don’t play checkers! If you want to make the best financial decision regarding your housing, think ahead a few moves. Play chess by considering future costs

“Habit is stronger than reason.” – by George Santayana

January is scheduled to be a big month for Freddie and Fannie, in that the Treasury is expected to release plans for their future. Merrill Lynch released some conjecture about upcoming news, which will probably come out after the State of the Union address on 1/25. Merrill reminds us that “The GSEs are in two very different and distinct businesses. One is in the Guarantee (or “G” fee) business which is essentially an insurance business and where a big chunk of the losses came from in the 2008-09 period. The second business is the retained portfolio business where they own mortgage products on their balance sheets and do so because it is accretive and where the bulk of the profits come. Incoming Republicans have been very vocal about GSE reform and all of the commentary seems to be negative for the retained portfolio business at a minimum, and currently, under the Senior Preferred Stock Purchase Agreement, Fannie and Freddie must shrink their retained portfolio’s at a 10% per annum clip.”

The report continues to opine, “Regardless of the content, Republicans will dismiss it as spin and cry for immediate action on reform that includes, among other things, a much more rapid wind down of the retained portfolios. The market is very complacent on the topic of GSE reform and few have gone through the calculus of, for example, what something like a 4 year wind down of the GSEs would mean to absolute rates, Agency debt and mortgage valuations, spreads and volumes. Or what an economic based mortgage insurance (or re-insurance) premium assessed by the government would do to housing prices and the macro economy in general.

HUD offered up a couple Mortgagee Letters yesterday, in what some would say are somewhat obscure topics. The first letter addressed “Claim Process for FHA Refinances of Borrowers in Negative Equity Positions (ADP Codes 821, 822, 831, or 832)”, and the second dealt with the “Elimination of the Master Appraisal Report (MAR).” Check them out at HUD

At least rates seem to have stabilized. Yes, MBS volumes are on the light side, as you’d expect with these pipelines, but MBS prices are doing ok. Yesterday lower coupon product gained ¼ in price, and about .125 on current coupon product while the 10-yr yield closed out the day at 3.34%. As we learned, Housing Starts fell, as expected, while Building Permits were up almost 17%, possibly due to changes in regulations in NY, PA, and CA but also due to a huge increase in multi-family permits. Builders continue to be faced with the economic reality of the high current and forecast future supply of homes on the market.

Today closes out this week’s “docket of data”. Initial Jobless Claims came out at 404k, down from 441k, a significant drop. Continuing Claims dropped slightly, and the 4-week moving average dropped 4k. At 7AM PST, 8AM MST we have Existing Home Sales (expected to show an increase), Leading Economic Indicators (expected +.6%) and the Philly Fed. At 11AM EST we find out the details of next week’s 2-, 5-, and 7-year Treasury auctions, and at 1PM a $13 billion 10-year TIPS auction. Currently the 10-yr is 3.39% and MBS prices are about .125 worse from Wednesday.

“Ask yourself ‘Where can I win?'”
— Stephen Pierce: Internet marketer and author

Of course, everyone in mortgage banking is hoping that 2011 is not a disaster. (Remember – borrowers still borrowed money even when rates were in the high teens.) That being said, not only did Freddie Mac recently lower its production estimates for 2011, but the Mortgage Bankers Association (of America) came out with its forecast for 2011: 30yr conforming conventional fixed rates at 5.5% by year end, and $966 billion total single family originations in 2011. How’s your business plan? MBAforecast

Regarding volumes, this morning we learned from the MBA what many lock desks could tell us: that apps picked up by 5% last week, with refinancing applications up almost 8%. Purchases dropped about 2%.

Although the supply of MBS’s is sliding, and the demand is still decent, yesterday “rate sheet” mortgage-backed security prices finished off Tuesday worse by about .250 after beginning the day better by .250. Tradeweb reported that volumes averaged 87% of the 30-day average, up from a daily average last week of 73%. Our 10-year Treasury notes closed worse by .250 in price and at a yield of 3.37%. “Lower and wider didn’t draw in significant buying as many real money types held closer to the sidelines waiting for stabilization in the market and volatility, said sources” per one trader.

Most Americans Say It Is a Good Time to Buy a Home

We have been making two major points for several months. If you are selling a house, you must do it now AND if you are buying one, you must also do it now. This sounds crazy　- but it is true. PRICE is the most important thing to a seller. With prices projected to fall through the first half of 2011, if you want to sell, do it now. The alternative might be to wait over a year just for prices to recover to current values.

Even the Gallup people weighed in on the subject:

There may be people advising you to use caution before buying a home right now. That is probably good advice. However, there is a difference between caution and fear. Fear could paralyze you and prevent you from making a good decision. Caution will make sure you make the right decision. And remember: if you do think it makes sense to buy your home today, 2 out of 3 people agree with you.

We also had Housing Starts and Building Permits for December; starts were expected to decline and permits pick up. Starts were indeed down 4.3%, possibly with some influence from weather, and permits were up 16.7%. Regardless, housing is slow, and continues to grapple with a foreclosure overhang. After the news the 10-yr yield is chopping around 3.34% and MBS prices are a shade better.

The second point revolves around the fact that buyers are more concerned about COST (price AND interest rate). Fannie Mae, the National Association of Realtors, the Mortgage Bankers Association and the PMI Company are all projecting interest rates to rise this year. If you want to buy, your best time to purchase could be right now.

We have had people question us on the second point. We truly believe it is a good time to buy however. And a new survey says that the majority of Americans agree with us. Gallup just released a poll showing that 67% of Americans think this is a good time to purchase a home. The interesting thing is that the same poll showed that more people believed that prices would decrease (27%) than increase (21%). Most people realize that this is a opportune time to purchase even if prices continue to soften.

turned some heads yesterday by announcing that it is “revising certain refinance mortgage eligibility and underwriting requirements, and announcing the elimination of Freddie Mac-owned streamlined refinance mortgages.” After May 1 Freddie is, “Requiring verification of funds for all refinance mortgages. This requirement will apply to all refinance transactions except for certain Relief Refinance Mortgages – Same Servicer. The elimination of Freddie Mac-owned streamlined refinance mortgages and requiring that a purchase money mortgage be seasoned for 120 days in order to be refinanced as a “no cash-out” refinance mortgage.　 If the new mortgage is refinancing a purchase money transaction, the note date of the original mortgage must be at least 120 days prior to the note date of the “no cash-out” refinance mortgage.” See all the details, and more including news on PACE obligations, at FreddieChanges

“When it comes to eating right and exercising, there
is no ‘I’ll start tomorrow.’ Tomorrow is disease.” – Terri Guillemets: Quote anthologist

A few weeks ago HUD announced it will begin collecting NMLS identifier information for individuals and entities participating in the origination of loans submitted for insurance by the FHA. And recently the OCC issued a SAFE Act reminder notice of the expected start date for federal registration of residential mortgage loan originators employed by banks, savings associations, credit unions, and their subsidiaries. The registration period is expected to start at the end of this month and last for 180 days, after which any employee subject to registration under the SAFE Act will be prohibited from originating residential mortgage loans without having first met the registration requirements. Check out NMLS and the notice at SAFENotice

And as this commentary noted a while back, law firm BuckleySandler reminds us that HUD issued Mortgagee Letter 2011-02. “The letter reminds mortgagees that, since the FHA no longer approves or monitors Loan Correspondents, mortgagees now must perform quality control reviews on all sponsored third-party originators (TPOs) from whom they acquire loans. Additionally, the letter states that mortgagees must create a report documenting (i) the methodology used to review TPOs, (ii) the results of each review, and (iii) any corrective actions taken as a result of their review findings. This report must be kept on file for two years.” HUDQC

In its latest downward revision, Freddie Mac estimates that mortgage originations will total $1.05 trillion this year, down from its projected $1.2 trillion last month. Most of this, of course, comes at the expense of refinancing as rates are expected to grind higher in 2011. Per Freddie, refinancing made up 69% of the total $1.55 trillion in home mortgage originations last year, but are expected to constitute just 41% this year and 35% in 2012. FreddieVision

Given the lower supply, one would think that, relative to Treasury yields, mortgage rates and prices should be doing ok. And they are – MBS prices are about 1.5 points off their lows (worst) last week. Friday MBS prices finished the day about unchanged from Thursday’s levels, and the 10-year T-note closed off .250 in price hitting 3.33%.

Besides earnings, this week’s news includes some “Empire State” manufacturing data today, Housing Starts and Building Permits tomorrow, and weekly Jobless Claims, Existing Home Sales, Leading Economic Indicators & the Philly Fed on Thursday. There is zip scheduled for Friday. Today, so far, we’re seeing some improvement, with the 10-yr down to 3.29% and MBS prices better between .1225-.250.

Once a homeowner decides to sell their home and hire a professional agent to market it for them, most sellers will interview a few agents before signing on the dotted line. That’s a good idea. However, most sellers don’t have a clue on who is the RIGHT choice. Many sellers pick and agent based on a “connection” or similar personalities.

Unfortunately, just a good personality match alone is rarely enough these days. You need an agent who is more effective in getting results than someone you “have a good feeling about”. You are not hiring a friend; you are hiring someone to do a job.

The average agent’s listing presentation is very similar to every other agent’s presentation. And as a result, the seller really has little to judge by and they reduce their decision down to the two questions they want answered.

1. Which agent will sell my house for the most money? (That leads to overpriced listing inventory that sits unsold because today’s buyer is looking for a “deal” and NOT overpaying.)

 

2. Which agent will charge me the least to do it? (That results in getting an agent less likely to invest in improving their performance through education or technology or an agent with a limited budget to spend on the marketing of your home.)

 

Of course, I understand the logic to those questions (make more, spend less), but focusing on these questions alone is shortsighted and eventually costly. Here are four questions that most sellers don’t think of- questions that actually WILL give you a better indication of the relative strength of your agent.

Expired listings are listings that didn’t sell during the time agreed to between the seller and the agent. If one agent has 95% of their listings sell without expiring and another has 25%, wouldn’t you want to know that? ASK!

If the average days for homes listed “For Sale” in your market is 180 days, and one agent is selling their listings in 90 days, wouldn’t you want to know what they do differently to get their results? Conversely, wouldn’t you want to avoid the person who is at 270 days?

There are many agents who take overpriced listings with the plan to bring the price down as seller frustration goes up. They know it won’t sell at the overpriced number, but they get to have months to get it priced correctly because you have signed a listing agreement. But, you want to sell your home, not drag out a process. Agents with big gaps between List Price and Sales Price are not doing any favors for their client. Uncover their game early and save yourself the heartache. Great agents price correctly Day 1 because they know that price is the best possible marketing strategy.

Occasionally, agents and I battle on this point, because they feel that the methods they use to market your home to other agents (to bring their buyers to your home) are more important. But I believe, an agent’s ability to sell their own listings is evidence of the effectiveness of their marketing plan to the consumer (which is really what you are hiring them to do, isn’t it?).

If I were selling my home today, in my quest to find the best agent, I would be asking different questions- questions that prove effectiveness. You may be surprised to learn that some of the most “successful agents” in terms of “units sold” have a large percentage of listings that expire or a high number of days on market or a significant gap between list price or sales price or that after they list your home they are off looking for another listing and NOT for a buyer of your home. In a twist of the old adage, “Seller, Beware”.