“All you see in your world is the outcome of your idea about it.” — Neale Donald Walsch: Spiritual author

NEWS & HEADLINES

Recently the National Information Center released consolidated financial statements for bank holding companies for the 4th quarter. Large banks have been the primary buyers of mortgage-backed securities, and this study looked at the top 50 bank holding companies. In the 3rd quarter they added over $48 billion of agency MBS, and in the 4th quarter added another $38 billion. Most of this was in Fannie/Freddie product; Ginnie Mae pass-through holdings fell by about $1 billion. Most analysts believe that banks should be a leading force in supporting the agency mortgage basis going into 2011. Compare this to banking data released from the FDIC for the fourth quarter, which reported an increase of $42.7 billion in MBS holdings, and $87.4 billion for the year. The demand for agency mortgage-backed securities continues strong, whereas the supply is expected to lessen.

More recent news (the latest H.8 report) shows that large domestic bank holdings of agency MBS have declined by $15.5bn but agency MBS holdings of small banks have increased by $11.5bn since the beginning of the year. This is a continuation of the trend seen from 2010 – in general, smaller banks are providing a relatively stronger demand for agency MBS recently. For instance, agency MBS holdings of large banks rose by 5.3% while those of small banks rose by 18% since the beginning of 2010.

If you’re familiar with crossing a bridge, like the Golden Gate, there is a toll. Economists are very good about figuring out what happens when one raises the toll from $5 to $10. Revenue does not double, since the increase will cause a drop in commuters, and a large drop in drivers can cause profitability problems for the bridge district. This is a simplistic example, but one that may pertain to a small part of what HUD’s FHA is dealing with, in that its mortgage insurance premiums have increased while volumes have fallen. The premiums are expected to help the Mutual Mortgage Insurance Fund to the tune of $3 billion a year, although (due to many factors) HUD estimates that FHA originations will total $218 billion during fiscal 2012. Volume in the current fiscal year is projected to come in at $289 billion, while fiscal-year 2010 ended at $319 billion.

Friday the commentary mentioned the FDIC’s meeting this week “to discuss principles for low- and moderate-income (LMI) mortgage lending, and supporting financial education,” but also, “There are many people in the business who argue that the government’s insistence on lowering lending standards in the past, in order to increase home ownership, especially to those who weren’t credit worthy in the past, accounted for a good chunk of the credit issues that we’re dealing with now.”

The markets were pretty quiet yesterday, with MBS trading volumes running at about average and prices closing roughly unchanged as did the 10-yr (3.41%). The highlight today will be Chairman Bernanke’s semiannual Monetary Policy Report before the Senate Banking Committee beginning at 10AM EST. In addition, Treasury Secretary Geithner testifies before the House Financial Services Committee on “Mortgage Finance Reform: An Examination of the Obama Administration’s Report to Congress” – also starting at 10:00, and Construction Spending. Early indications point to a decent stock market, mortgage prices worse by about .250, and a 10-yr yield sitting around 3.48%.

Construction spending decreased 0.7% in January  to a seasonally adjusted annual rate of $791.8 billion, which is 5.9% below the January 2010. Private construction was 1.2% lower than Dec, and residential construction was up 5.3%.

ISM Manufacturing Index at 61.4% in February  , expanding 19 consecutive months in a row, and the highest PMI reading since May 2004. New Orders, Production and Employment Growing; Supplier Deliveries Slower; Inventories Contracting 

 

Treasuries Decline As Report Manufacturing Expanded.  Treasuries fell Tuesday morning ahead of Bernanke’s testimony and strong manufacturing report, weaker construction report, and on speculation central bank efforts to spur growth will boost the economy in 2011.

Text of Semiannual Monetary Policy Report to the Congress by Chairman Ben S. Bernanke Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate.

Inflation Queries Ahead for Bernanke .“ The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation,” Bernanke said in prepared remarks to the Senate Banking Committee.

Bernanke Tempers Republican Criticism With Deficit-Plan Calls 

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IF YOUR GOAL IS TO BUY LOW, BUY NOW!

There is a very famous saying which asserts “Sell High, Buy Low”. It is obviously great advice no matter what the investment. Below is a graph showing the cycle of investments. It shows the points of maximum risk and maximum opportunity when purchasing. We want to sell high (point of maximum risk) and buy low (point of maximum opportunity).

The challenge is how to determine when we have hit bottom if you are a purchaser. The only time you can guarantee a bottom is after you pass it.

However, there is more and more evidence that the COST of a home has in fact hit bottom. Notice we have used the word COST. Unless you are an all cash buyer, you must take into consideration the expense of financing a property to determine the true cost of purchasing the home. Interest rates have increased over the last quarter; and the rise in rates has counteracted any fall in prices.

Let’s look at an example:

Let’s say you were going to take out a $200,000 30-year-fixed-rate mortgage in November of 2010. At that time, interest rates were 4.17% (as per Freddie Mac). Your principle and interest payment would have come to $974.54. According to the most recent report from Case Shiller house prices fell 3.9% in the 4th quarter of 2010. The most recent report from the Federal Housing Finance Agency shows a 0.8% fall in prices. Let’s use the larger percentage decrease: 3.9%.

For the sake of keeping the math simple, we will now say you can get the same house with a $192,000 mortgage (4% discount from November price). Interest rates are now 4.95% (as per Freddie Mac).

Your principle and interest payment would now be $1,067.54.

By waiting to pay less for the PRICE of the house, the COST increased $93 a month. That adds up to $1,116 a year and over $33,000 over the life of the loan.

We realize that there are other things to consider (ex. the mortgage tax deduction, etc.). This example is just a simple way to show that there is a difference between COST and PRICE.

Bottom Line

If you want to buy low, buy now. It appears COST has hit its lowest point.

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Buffett Says Buying Home Was Third-Best Investment He Made

Feb. 28 (Bloomberg) — Billionaire Warren Buffett said buying a home was the third-best investment he ever made, after the rings he bought for his first wife, Susan Thompson, and, after her death, his second wife, Astrid Menks.

“For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories with more to come,” Buffett wrote to shareholders of his Berkshire Hathaway Inc., in a letter released Feb. 26.

Buffett, the world’s third-richest man, still lives in the house he bought in Omaha, Nebraska, more than five decades ago. He said home ownership makes sense for most people, especially after a slide in prices and record-low interest rates.

The U.S. home ownership rate has fallen to the lowest level in a decade amid record foreclosures and a plunge in property values after a five-year boom. The S&P/Case-Shiller Index of prices in 20 cities is down 31 percent from its July 2006 peak.

“A housing recovery will probably begin within a year or so,” Buffett, 80, wrote in the letter. “In any event, it is certain to occur at some point.”

“A house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender — often protected by a government guarantee — facilitates his fantasy,” Buffett wrote. “Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”

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WHY 2011 MAY BE THE END OF THE HOUSING CRASH

Bernanke ’s calls for an immediate plan to control U.S. debt are winning praise from some of the same Republican lawmakers who rebuked him for the central bank’s record monetary stimulus.

There might finally be some good news this year about the nation’s dismal housing market. Or, at least, the bad news could stop.

Either way, it will be welcome relief for current homeowners as well as for potential real-estate investors. Reasons to be optimistic have been sadly lacking since the housing bubble burst in 2006.

For sure, last week we learned the widely watched S&P/Case-Shiller home-price index fell 1% in December, its fifth straight decline. The index tracks 20 major markets

First, let’s recap the economic signs a bottom is close.

Houses Are a Good Deal

Housing is the most affordable it has been in decades, according to analysts at Moody’s Analytics. They don’t just look at house prices. They also look at incomes.

Nationally, the cost of a house is the equivalent of about 19 months of total pay for an average family, the lowest level in 35 years. Prices usually average close to two years’ pay, although that varies nationally.

Investors Stepping Up

Here’s another sign the market is nearing a bottom: Investors have started to buy up houses and condos, in some instances paying entirely in cash. That’s a far cry from the heady bubble days when borrowed money seemed the key to riches. The bubble-era speculators who got burned tended to buy at the peak and borrowed heavily to do so. When the crash came, they quickly saw their wealth erased.

It’s a sign that these investors are betting on a rebound. Investors buying at current prices are looking for deals, or so-called bottom fishing. They typically like to pay entirely in cash (or with a relatively small loan) to speed up transactions. That can be vital for an investor wishing to lock in a deal fast.

Plan to Stay Put

Buy and hold. While the good news is that the worst of the housing crash might be over, the bad news is that the fast gains of the glory days of 2005 and 2006 won’t be back any time soon. So to cover the costs of buying and selling, and what could be a prolonged recovery, plan to own for more than 10 years, explains Jack Ablin, chief investment officer at Chicago-based Harris Bank.

Home Buying Without a House

There are other ways to benefit from a real-estate rebound than directly buying a house. Such investments include stocks, mutual funds or exchange-traded funds. Unlike homes, which typically cost tens of thousands of dollars, these financial investments can be made in smaller amounts and typically are easy to sell.

Rather than pick individual stocks, he says, it probably makes sense for small investors to pick broader investments that hold many different stocks. In particular, he points to the SPDR S&P Homebuilders ETF (XHB), which tracks a basket of home-builder stocks.

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ANDROID PHONES – TOP FREE REAL ESTATE APPS

 

 

The following is a list of the most popular free mobile app downloads for Android-based devices, based on a search of the phrase “real estate” at the Android Market website. The rankings, text summaries and user ratings were sampled Feb. 24.

Zillow Real Estate (Shop homes for sale, for rent, and more on Zillow’s database of all U.S. homes …)

Homes.com (Search nearby homes for sale or rent using the Homes.com real estate search …)

REAL ESTATE 114 (View apartment price trends and floor plans using the location-based services; find out recommended houses for sale …)

REALTOR.com Real Estate Search (Find the perfect home. Search more than 4 million homes for sale. Let your fingers do the searching with Area Highlighter …)

Real Estate by Smarter Agent (Combines three powerful real estate searches in one easy-to-use app …)

Real Estate Droid (Search homes for sale or rent, new homes or foreclosures, rooms for rent or sublets. Get live, updating real estate info about your current location …)

ZipRealty (Search active multiple listing service-listed homes in 5,000-plus cities across the U.S. … )

HotPads (Search for apartments, houses for rent, real estate, vacation rentals and hotels Take your housing search on the road with the HotPads map-based housing search. Use GPS …)

Real Life White Papers (Hard, difficult to handle real estate content … but nice to know real estate knowledge … interesting cartoons …)



“If you do not conquer self, you will be conquered by self.” – by Napoleon Hill

 

Interest rates are… doing ok. Friday trading volume was a little lower than the recent average, and the 10-yr note’s yield closed around 3.42%. Although the trend in rates seems to be higher, it was a good week as the 10-yr’s price improved by about 1.25 and MBS prices improved nearly a point (.125-.250 on the day). In fact, on Friday stocks improved, the dollar rallied, and Treasuries improved – all on one day!

This week we have a full platter of economic news. Today we’ve already had Personal Income and Personal Consumption/Spending (+1.0% and .2%, respectively); later we have the Chicago PMI and Pending Home Sales. Tomorrow is Construction Spending and February’s ISM Manufacturing Index. Wednesday is the ADP number and the Fed’s Beige Book, Thursday is Jobless Claims and some productivity and ISM numbers. And then on Friday we’ll see the latest unemployment data points, with Nonfarm Payrolls expected up about 180k and the Unemployment Rate to move to 9.1% from 9.0%. One can still expect markets to be subject to events in Africa and the Middle East – the situation is still very volatile. Tomorrow and Wednesday Ben Bernanke will give his semi-annual monetary policy report to the Senate Banking Committee and the House Financial Services Committee. The 10-yr is currently unchanged at 3.42%, and MBS prices are also about unchanged.

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Fate of Foreclosure Programs Heads to a Vote

Republicans on the House Financial Services Committee said they will push for a vote next Thursday on bills that would end four government programs that are aimed at helping prevent foreclosures.

Among the programs on the chopping block include the Home Affordable Modification program, which was created to help struggling home owners reduce mortgage payments by offering lower interest rates and longer repayment times. The Treasury Department recently acknowledged that HAMP will fall short of meeting its original goal of preventing 3 to 4 million foreclosures; it’s expected to complete 700,000 to 800,000 loan modifications.

Other smaller programs at risk are aimed at refinancing loans, helping unemployed home owners, and aiding state and local governments in buying foreclosed properties in order to sell or rent them.

Committee chairman Rep. Spencer Bachus, R-Ala., says the foreclosure prevention programs haven’t had much impact and, in some cases, actually are doing more harm than good in helping struggling home owners.

The Obama administration argues that killing the programs will hurt home owners.

“The administration remains committed to reaching eligible home owners to give them every opportunity to avoid foreclosure and will continue working to make our programs as effective as possible,” said an Obama administration spokesperson.

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Fewer people sign contracts to buy homes in Jan.

WASHINGTON (AP) — Fewer Americans signed contracts to buy homes in January, the latest evidence that the housing market is struggling to rise above depressed levels.

The National Association of Realtors says its index of sales agreements for previously occupied homes fell 2.8 percent last month to a reading of 88.9, the second straight monthly decline.

The reading was higher than the 75.9 reading from June, the low point since the housing bust. But it’s below 100, which is considered a healthy level. The last time it reached that point was in April, the final month people could qualify for a home-buying tax credit.

Sales of previously owned homes fell last year to the lowest level in 13 years. Economists say it will be years before the housing market fully recovers. High unemployment, strict lending standards, and a record number of foreclosures are deterring potential buyers, who fear home prices haven’t reached the bottom.

Contract signings of previously owned homes are usually a good indicator of where the housing market is heading. That’s because there’s usually a one- to two-month lag between a sales contract and a completed deal.

Steven Wood, chief economist for Insight Economics, said the tax credits have pulled home sales on a “rollercoaster ride over the past two years” and that sales have not yet found a steady level.

The Realtors group had reported a modest 2 percent increase in December, which would have marked the fifth such uptick in the previous six months. But the trade association, which began tracking contract signings of homes in 2001, revised its figures to show that signings fell in December from November by nearly 3.2 percent.

Jennifer Lee, senior economist for BMO Capital Markets, said the dismal contract numbers in January is “clearly bad news” for the nation’s housing industry.

“And we can’t blame weather as three of the four regions saw a decline,” she said.

Prices and sales of previously occupied homes have painted a grim picture of that portion of the housing market, which historically accounts for roughly 85 percent of home sales.

Housing prices in all but one of the 20 cities tracked by the Standard & Poor’s/Case Shiller index fell in December from November. Eleven of the markets — stretching from Seattle to Miami — hit their lowest point since the housing bubble burst in 2006 and 2007.

Sales of previously occupied homes rose slightly last month. But the seasonally adjusted annual pace of 5.36 million is still far below the 6 million homes a year needed to maintain a healthy market.

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Become a Real Estate Expert in the Public Eye

There’s no better time for real estate pros to position themselves as industry experts. As we recover from twin crises in housing and the general economy, people are anxious to get back into the market as buyers, sellers, and investors. And the media is paying very close attention to housing and commercial sales.

If you combine your market expertise with solid public relations techniques, the news media and the public will seek out your opinion – and, in turn, you will get more leads from the free publicity. You can share your insights through a mix of online commentary, news releases, guest columns, media appearances, social media, and participation in trade groups. This mix will increase your contacts, boost your reputation as an expert in real estate, and convince buyers and sellers that they want to work with you.

Here are five ways to reach a bigger audience and build more business.

Focus Your Expertise

Chances are you’re already fluent in several specific areas of real estate. You may know a little bit about everything, but stressing overall knowledge doesn’t let you stand out from the crowd.

Instead, consider your unique interests and experience. For instance, everyone’s concerned about energy efficiency these days; maybe you have a stronger interest than most in green home trends. Or perhaps you’re attracted to historic homes, or to modern design.

Look at your business and calculate where most of your transactions come from. Is it suburban homes, downtown condos and apartments, retail or industrial space, vacation properties, or something else? What’s the mix of your clients, and where do you have the most success? Are your buyers mostly looking for first homes, or are they established families upgrading their lifestyle? What are the lifestyles of the geographic areas you serve? The appeal and features of location are, of course, part of the dream people are looking to buy, and you should have the “insider” information about the unique and even overlooked benefits of specific locales.

In essence, what is it about real estate that attracts you and gets your juices going? Do a strong and precise evaluation of what you know best, what you wish to know more about, and what will get traction in your area. Then focus on those issues that come out at or near the top of the list.

Blog What You Know

Think of the blog as the 21st century newsletter. It’s a written conversation with the public and potential clients about your thoughts on real estate and what they should know as a seller or buyer. Don’t make it sound like an ad: Your blogs should be conversational in tone and informational in content. The more a reader of your blog learns about real estate, the more readily they will give you a call.

Your blogs should be as specific as practical about the areas of expertise you’ve chosen. A blog on how to buy a new home is too general to stand out in an Internet search. A blog on what to look for when buying historic homes in the Midwest will bring in readers who are really interested in just those types of homes, while identifying you as an expert guide. The more you write on the specifics of your market, the more you attract people with the motivation to enter that market.

Also, be consistent. Writing once a week is a good target, but you don’t have to write long. Breaking up topics into a series of two or three blog posts helps bring people back to your site. Continue this way, and your archive becomes a ready resource for new clients.

On the technical side, use a blog service such as WordPress and Movable Type that automate the formatting, layout, archiving, and indexing of your blogs so you don’t have to be a Web wizard to publish online or be found by search engines. You should focus on the content of your blog, not the technological minutiae.

Get Active in Trade Groups

Serving at a high level for a national trade group such as the NATIONAL ASSOCIATION OF REALTORS® brings instant credibility. But there’s a just few positions like that for approximately 1.1 million members.

Still, associations at the local, state, and national level are often practically begging members to be on committees and boards. And don’t think of strictly real estate trade groups, either. If your interest is in environmental building standards, historical preservation, downtown redevelopment, or another area of real estate, you may have many groups in which you could become active. Active involvement in even one group gives news media an identifying phrase to attach to your name that adds to your credibility and brings you ready fodder for news releases and blogs.

Know Your Local Media

Get to know the business editors and reporters of print, broadcast, and online media in your markets. Get to know the features editors, too. What you’re selling is lifestyle, and that’s the features editors’ business. Read or listen to their stories to find out the specific interests and coverage priorities of each of these journalists. Find out their deadlines and how they want news releases delivered. Make sure any news release you send is about real news. Ask why someone outside your real estate office would care about the story. If you can’t find the answer, it’s not news.

Follow these approaches to get noticed by the local press:

Respond to the news. Journalists are always looking to localize state and national stories. If a story affects your market, send a short and timely release with your comments about the local impact. Editors eat that stuff up, providing it isn’t fluff. Any release should be straightforward, in a news article style, with any opinions kept in quotes.

Let the media know you’re writing a blog. Reporters constantly look for news tidbits for columns and story leads, and if your blog is a good source, they’ll pay attention and quote your blog. Online media will link to it.

Send tips to reporters about stories that aren’t about you and your business. If you send a tip about a great new architect in town, the story will be all about the architect, but you’ll be quoted as someone who knows and appreciates good building design. Your credibility in the eyes of journalists and potential clients will go up another notch.

Know Your Legislators and Local Officials

Don’t shun a government official because you don’t like his or her party. All politics is local, and legislators will listen to you on specific issues dealing with real estate. Position yourself as someone who can be called for public hearings, and when you are, send press a release on what you said.

Gaining a reputation as an expert in your field isn’t as much about knowing more than anyone else as it is about making people aware of what you know. It takes work, but the payoff is a reputation that brings more business through the door.

“Trying to change the outer is like seeing your unshaven face in the mirror and trying to shave the mirror.” — Joe Vitale: Bestselling author and co-star of The Secret movie

 

 4 WAYS TO BOOST YOUR REFERRALS

 To get more referrals coming your way, you need to get your sphere of influence spreading your word. Real estate coach Maya Bailey offers tips on how to motivate your sphere of influence to refer you.

1. Offer to help.  When you call your sphere, make sure you have something to offer them, such as by offering to be a referral source for them and connect them to people who could help them, anyone from painters, electricians to plumbers. At the end of the conversation, you could add something such as: “When you hear of anyone who’s interested in buying or selling a home, please call me with their name and number. If it’s okay with them, I will call them and make sure that their real estate needs are being taken care of.”

2. Offer something valuable. Each month provide them with a valuable item, such as a colorful postcard that lists upcoming events in the community. They likely will post it on their refrigerator so to stay top of mind, don’t forget to include your photo, phone number, and tag line, such as “relax and let me run the extra mile to fulfill your real estate needs.”

3. Don’t be afraid to call. Some real estate pros suggest calling your sphere once a month but trust your instincts about how often you should call. Regardless, make sure you have a reason to call, such as “did you receive the postcard? What event are you going to go to?”

4. Be excited. You’ll make them excited to refer you if they see how excited you are about what you do. Say something like: “I am so excited about my business. I get to meet such wonderful people and I’m really in an expansion phase of my business. If you want to help out, just send people my way if they have a real estate question or issue, and I will be happy to help them.”

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NEWS AND HEADLINES

The FDIC Advisory Committee on Economic Inclusion (ComE-IN) will meet on Wednesday “to discuss principles for low- and moderate-income (LMI) mortgage lending, and supporting financial education.Committee members will discuss responsible ways to restore LMI mortgage lending and sustainable homeownership in the wake of the mortgage and housing crisis… borrowers’ opportunities for homeownership have diminished as the availability of mortgage credit has contracted. The market disruptions have been particularly difficult for lower-income borrowers, who have been disproportionately affected.” The meeting will be open to the general public and the media in Washington DC, and on the web: FDIC

Fannie reported a loss of $2.1 billion in the fourth quarter, while Freddie checked in with a loss of “only” $113 million. Freddie’s loss for 2010 was $14 billion, versus 2009’s loss of over $21 billion. “Freddie Mac also said Donald J. Bisenius, executive vice president of the single-family credit guarantee business, received a “Wells notice,” which indicates the SEC is considering filing a civil lawsuit against him. Credit-loss provisions at Freddie were $3.1 billion, down from $7.1 billion a year earlier and $3.73 billion in the third quarter. Down the street, Fannie is asking for an additional $2.6 billion in federal aid. For the year Fannie lost $21.7 billion. Both company’s performance includes billions paid to the government in dividends.

News on MERS goes ’round and ’round. A California appeals court ruled that MERS has the right to foreclose on defaulted borrowers in California. “Under California law MERS may initiate a foreclosure as the nominee, or agent, of the note holder,” wrote the judge last week. Earlier this month, an Oregon bankruptcy court allowed a MERS “Wrongful Foreclosure Claim” to proceed, based in part on plaintiff’s allegation that not every transfer of the loan was recorded in the land records. This may in part be due to Oregon’s judicial foreclosure statute allowing for foreclosures where not every transfer has been recorded. In McCoy v. BNC Mortgage, the plaintiff received a mortgage loan secured by a deed of trust naming MERS as the “Beneficiary.” According to the allegations in plaintiff’s complaint, the beneficial interest in the loan was sold several times, and was eventually securitized into a mortgage-backed security. According to plaintiff, none of the transfers was recorded in the county land records. Plaintiff eventually defaulted on the loan and, after the substitute trustee issued a notice of default, filed a chapter 7 bankruptcy petition. It goes on from there, and the case can be seen at BuckleySandler’s MERS.

Higher oil prices… are they inflationary? Many would say “yes,” although from the Fed’s point of view, higher oil prices actually cause people to spend less on other items and instead put their money into the gas tank. Either way, the oil market is all over the press, and we are reminded of it every time we drive by a gas station – prices are easily back up to 2008 levels.  CLICK HERE TO READ MORE: U.S. CONSUMERS FEEL THE PINCH OF SURGING OIL PRICES

Yesterday, and today, the turmoil continued to impact the financial markets. We also had a better-than expected Jobless Claims number, and a disappointing Durable Good figure. MBS volumes were less than the recent averages, and MBS prices finished the day better by about .250 in price with the 10-yr around 3.44%.

Wednesday we had one housing price index, yesterday we had another. The FHFA House Price Index declined 0.3% in December versus a projected 0.1% dip. On top of that, New Home Sales in January declined a more than expected 12.6% to 284k from a downwardly revised 325k that was previously reported at 329k. In terms of supply, at this pace we have a 7.9-month supply. For news today we have the Q4 GDP number (old news) and final February Michigan Sentiment at 9:55. The second look at the 4th quarter GDP number moved it from +3.2% to +2.8%. After the number we find the 10-yr around 3.45% and MBS prices close to unchanged.

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7 TIPS TO MOTIVE YOUR SPHERE OF INFLUENCE TO REFER TO YOU

The following tips will show you how to motivate your sphere of influence to refer to you easily and effortlessly.

Tip 1: Have a script so you know what to say.

What you decide to say may vary from person to person. The way you talk to a close friend may be quite different from the way you talk to a distant acquaintance. It is very helpful to have something to offer when you call. One idea that many of my clients have found helpful is to call your sphere of influence and offer to be a referral source for them. In other words, let them know that you have plenty of connections to people who could help them. For example, you know many painters, electricians, plumbers, etc. and your sphere of influence should know that if they need any names and phone numbers they should call you and you will be happy to provide a referral source for them.

Tip 2: Think of yourself as being “the giver.”

Most of us love to be the giver. We know we will be well received and people will like us. We also know that “giving” leads to more business. Before you pick up the phone to call your sphere of influence ask yourself, “what can I give to them?” One way that you could be of service to them is to offer to be a cross referral partner. If they have their own business, ask them how their business is doing. Ask them how you could help them at their business. Ask them what kind of referrals they would like to receive. Let them know that you will do your best to send referrals to them. At the end of the conversation, you can say something like, “when you hear of anyone who’s interested in buying or selling a home, please call me with their name and number. If it’s okay with them, I will call them and make sure that their real estate needs are being taken care of.”

Tip 3: Send an “valuable item” each month.

What kind of valuable item should you send? It used to be that sending newsletters was a hot item. However, most people have gotten too busy to read a newsletter.

The item that works best is a colorful postcard that gives the events happening in their area. Your sphere of influence is likely to put that postcard on the refrigerator and refer to it often. Of course, next to the list of events happening in the area is your photo, your phone number, and your tag line such as “relax and let me run the extra mile to fulfill your real estate needs.”

You start to enter their stream of consciousness. They start to associate positive ideas with you:

-You are associated with happy events in their area,

-You are associated with brilliant bright, happy colors in the postcard,

-Your face smiles at them every time they go to the refrigerator.

Do you think they will be more likely to remember you the next time they have a real estate need or a real estate question?

Tip 4: Don’t be afraid to call them too often.

As long as you have a good reason to call, they will be happy to hear from you. Trust your own gut instinct about how often you should call. Many real estate gurus suggest calling people in your sphere of influence about once a month. You may choose that to do that with your “A list,” the people most likely to refer to you. Since you are sending an item of value each month, you can always ask them “did you receive the postcard?” You can follow that with, “so what event are you going to go to?”

Tip 5: Assume the positive.

Simply assume that they will be happy to hear from you. Why wouldn’t they be? They are receiving a wonderful colorful, informative postcard from you each month, then you are calling and offering them something, and you are conditioning them to want to hear from you. Assume that you have something valuable to offer, your friendship and your real estate expertise, and people want to hear from you.

Tip 6: Be excited about your business.

Remember, desperation does not sell, but excitement does. No matter what the current condition of your business, always say something like, “I am so excited about my business. I get to meet such wonderful people and I’m really in an expansion phase of my business. If you want to help out, just send people my way if they have a real estate question or issue, and I will be happy to help them.”

Tip 7: Use the law of attraction.

To successfully use the law of attraction, you need to be clear about what you want. Do you want your sphere of influence to send you several clients a month? If so, then set your intention, “I am now in the process of attracting several new clients from my sphere of influence each month.”

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10 REASONS PEOPLE DECIDE TO BUY A HOME

Renting is a very frustrating way of life. The money you pay every month disappears, leaving you with few benefits other than a roof over your head. Compared to owning a home, renting is a futile exercise that leaves you with nothing after your lease is up. It’s no surprise that people want to get out of the rent race, and here are 10 reasons why people decide to buy a home versus renting.

1. They Want to Build Equity

Homebuyers build equity as their property increases in value over time. This equity has many benefits, including the ability of a homebuyer to leverage equity in lines of credit to make repairs or additions to their home. Equity is a powerful thing and a natural consequence of home ownership. Renters never gain equity in their rental space, and at the end of their lease they are thrown out on the street with nothing to show for years of on time rental payments.

2. They Don’t Want to Throw Their Money Away

Without equity, what does paying your rent on time gain you every month? The truth is that paying rent guarantees a roof over your head for about 30 days and nothing more. In that sense, renting is like an extended stay hotel in that at the end of your rental period or lease you have nothing to show for the money you’ve paid. This makes renting a terrible investment when compared to home buying.

3. They Want More Space

It’s incredible how little you get for your rental payment each month. Most renters are lucky to have even a tiny balcony, let alone roomy closets o storage space. Many homes come with luxurious yards and spacious garages for storage. This makes buying a home an attractive option for those who prefer to stretch their legs.

4. They Want to Make Upgrades

Most leases forbid the renter from altering the rental space. For those do it yourselfers, this can mean a boring living experience. Home buyers are not only allowed to make upgrades, but doing so can be a great investment and raise the overall value of your home. From an investment perspective, this is a no brainer.

5. They Don’t Want to Pay Extra to Own Pets

For those pet lovers out there, renting can be a major financial undertaking Pet deposits can be very expensive, and some apartments add a monthly premium to rent just for having a pet, and separate deposits/premiums for each pet. These fees can add up fast! Homebuyers don’t have to deal with these sorts of fees, and they can also typically provide a better environment for their pets as well.

6. They Don’t Want to Be So Close to Noisy Neighbors

Have you ever lived on the second floor of a 3 story apartment complex? Wild partiers underneath blaring music at 4AM and home fitness gurus doing jumping jacks above you can make you realize just how annoying living so close to your neighbors can be. Homebuyers can sometimes deal with annoying neighbors as well, but at least they’re not rattling your chandelier when they stomp their feet down the hallway.

7. They Don’t Want to Deal With a Landlord

Sometimes dealing with a landlord can be tough. Some landlords are not very friendly or flexible, and won’t hesitate to throw you on the street if rent isn’t on time. Other landlords can be so distant that problems with rent or appliances don’t get resolved for months or even years. As a homeowner, there’s no landlord to deal with and you have the freedom and independence of conducting business on your own terms.

8. Their Hobbies Make Renting a Bad Idea

Drummers and musicians need a place to live, but do you want them living above you in a cramped apartment complex? For those renters who have hobbies or professions that are noisy or require space, renting just isn’t an option for them. Owning a home with plenty of space is their only way to go.

9. They Don’t Want to Deal With Deposits

Security deposits? These never seem to work out in the renters favor and come moving time it always seems like every little problem leads to forfeiture of the sometimes huge security deposits we have to pay just to sign the lease. Home buyers don’t have to deal with this as their home is more closely tied to their assets and their individual independence.

10. They Want to Live the American Dream

Owning a home is a big part of the American dream, and most people would say that the independence, autonomy, and sense of accomplishment that owning a home brings is an essential part of the American way of life. Does renting an apartment do the same?

Good Thursday Morning Team!

We’ve got some news to share as well as a 6 helpful tips regarding an e-mail overhaul that you might find useful for your business. More about the Obama Administration in the news today. Looks like we may have a beautiful Spring forecast ahead of us when it comes to home sales! I found a great blog that I wanted to share with all of you. As mentioned in my chatter yesterday morning we have seen a lot of activity within pre-approvals, contracts, and new client referrals. This positive news is being shared with you due to the services provided not only by myself, but my team. The blog below hits on exact points of how we continue to grow and maintain a “Winning Partnership”. I hope you find it relevant to what you’ve experienced with myself and my team so far. I’ll be in the office today, ready to take your calls, as mentioned WE ARE YOU REAL ESTATE PURCHASE HELP DESK. Prepared to take on difficult scenarios, fall out deals, appraisal issues, FHA questions, etc. Have a great day!

 

 

“If you do not conquer self, you will be conquered by self.” – by Napoleon Hill

 

The Wall Street Journal this morning notes, “The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America’s largest banks to pay for reductions in loan principal worth billions of dollars. Terms of the administration’s proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won’t be borne by investors who purchased mortgage-backed securities, these people said. If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers.”

FHA recently raised their premiums once or twice – but is the horse already out of the barn? FHA Streamline Refi’s have become the darling of the buyback crowd. And blame pricing, interest rates in general, weather, whatever, but last month the seasonally adjusted annual rate for FHA loan applications fell to its lowest level in over 3 years – an estimated 1,450,900, according to the FHA Single-Family Outlook.

According to a story that I noticed in Bloomberg, the Federal Reserve revised a rule related to home mortgage loan escrow account requirements and sought comment on a second proposed regulation change. “The Fed increased the annual percentage rate threshold for requiring a mortgage lender to create an escrow account for property taxes and insurance for so-called first-lien, “jumbo” loans. The escrow rule will apply to first-lien jumbo loans if their annual percentage rate is at least 2.5 percentage points higher than the average prime offer rate.” The central bank is also proposing expanding the minimum period for mandatory escrow accounts for first-lien, higher- priced mortgages to five years from one year, the statement said. The timeframe could be longer “under certain circumstances, such as when the loan is delinquent or in default,” according to the Fed.

The Existing Home Sales number (which jumped 2.7% in January) included data that showed all-cash sales rose to 32% last month from 29% in December. In fact, all-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15%. NAR’s president said the median price is being dampened by “Unprecedented levels of all-cash purchases, primarily of distressed homes sold at deep discounts.” Speaking of which, “distressed” homes enjoyed a 37% market share in January – about the same as last year. The overall Existing Home Sales number was up for the third straight month, and sales rose in the Midwest, South and West, but declined in the Northeast. The national median existing home price was $158.8k, down 3.7% from January 2010.

Both stocks and bonds closed in worse shape Wednesday. Oil went above $100 per barrel, the Dow was down about 100, the 10-yr T-note was down about .250 (yielding 3.49%), and MBS prices were roughly unchanged from Tuesday’s close. Traders and investors, not the same animal, weighed a weak 5-yr note auction (which would push rates higher) against higher oil prices leading to an economic slowdown (which would push rates lower).

This morning we’ve already learned that Jobless Claims dropped by 22k, going from 413,000 down to 391,000. Continuing Claims also dropped. Durable Goods were +2.7% in January, versus a drop of .4% in December. Of course, this was prior to oil moving above $100 per barrel. Later we’ll have New Home Sales for January, along with a $29 billion 7-year note auction. So far the 10-yr is sitting around 3.45% and MBS prices are better by about .125.

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6 TIPS FOR A REAL ESTATE E-MAIL OVERHAUL

If you want to be taken seriously by clients and agents who are technologically sophisticated, it’s time to set up your business e-mail address on a website domain that you own.

The reason is simple. People who have AOL, Gmail, and Hotmail addresses generally do not have their own website or blog. Furthermore, if you rely on your company’s domain for your e-mail and you leave the company, your past clients will no longer have a way to contact you.

If you’re ready to upgrade your business e-mail address, here’s how to do it:

1. HOW TO CHOOSE A GREAT DOMAIN NAME

The first step is to identify the domain name that you want to use. While it’s smart to own your own name if it is available (i.e., Bernice@BerniceRoss.com), this is a poor choice for the main e-mail address for your real estate business. Because people are bombarded by hundreds of names each day, they have trouble remembering them.

In contrast, most people remember functions pretty well. This is the difference between remembering your name vs. “the nice lady who sells downtown high-rises.”

The people who run real estate search sites report that users generally search for real estate information by street address, city and ZIP code. Consequently, as you consider various domain names for your website or blog, it’s important to consider using these components in the name you select.

You will also want to use words such as “real estate,” “properties” and “homes” that indicate you are in the real estate business. Moreover, don’t settle for the dot-net or dot-org URLs. If you can’t get the dot-com name for your chosen keywords, find another combination of keywords that works with dot-com.

2. “ALL THE BEST NAMES ARE TAKEN!”

A challenge many people face today is that many of the most desirable names are already taken. For example, unless you have a lot of money, it would be almost impossible to obtain the domain name, “Austin real estate.”

As search has changed, the real opportunity is in what is known as the “long tail.” This refers to using a longer domain name that incorporates the various pieces outlined above. For example, “AustinHighRiseCondos78747.com” or “LiveInWestlakeTexas78732.com.” Each of these domain names matches how people normally search for property — by property type, location and ZIP code.

3. IT’S OK TO HAVE MORE THAN ONE

When selecting a domain name, you don’t have to be limited to having just one. If you specialize in more than one area, purchase a separate domain name for each one. Using the examples above, you might have “LiveInWestlake.com” as well as “WestlakeHomesForSale.com,” or “WestlakeTexasHomeInfo.com.”

Set up information on each area. Include facts about the lifestyle, videos, plenty of photos, as well as access to current listings and comparable sales. Each of these pages can reside on your main site. The secret here is to have a different URL that takes users directly to a specific page on your site. To the user, these pages look like home pages on separate sites even though they all reside on your main site.

To illustrate, you may have “LiveIn90024.com.” Within that site you could include, “WilshireCorridorCondos90024.com” as well as “LittleHolmbyEstates90024.com.” Each site would show very different examples of what it is like to live in that ZIP code and would be targeted to very different types of buyers.

Remember, however, that all of these sites would reside on your main site. This maximizes your Web traffic as well as enhancing your Web ranking on the various search engines.

4. CREATE MULTIPLE E-MAIL ADDRESSES

Once you have your own domain name, it’s pretty simple to set up an e-mail address. You can use “YourName@LittleHolmbyEstates90024.com” or YourName@LiveIn90024.com.

It’s important to make sure the name is relatively easy to remember. The great thing about owning your own domain is that even if someone gets your e-mail address wrong, if they remember the website URL you’ll still get the e-mail.

5. KEEP YOUR OLD ACCOUNTS

You may regularly use my Gmail and Hotmail accounts — primarily to register on sites where you know someone may spam also. Also, these systems are great backups if your host’s server goes down for maintenance, is hacked, or has some other type of issue that stops your e-mail service.

Gmail and Hotmail exist in the cloud, so you can use them virtually any place where you have an Internet connection.

6. HAVING YOUR OWN DOMAIN IS GREAT FOR TEAMS

One of the challenges a team leader faces is having people join and leave their team. If a team member leaves and you own the URL, they cannot take their e-mail address with them. As a result, when an agent leaves your team, all the e-mails coming to that address will continue to go to your site rather than to the agent who left.

If you don’t already own your own domain, there’s no better time than right now to get started. Prices are generally less than $10 per year. Best of all, your e-mail address separates you from the huge majority of agents who are still relying on their brokerage URLs or e-mail services from AOL, Google and Hotmail.

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PENDING CALIFORNIA REAL ESTATE SALES BODE WELL FOR SPRING

Pending home sales were up 13.6 percent in California from December to January, with distressed properties accounting for more than half of pending transactions, according to a new index compiled by the California Association of Realtors.

CAR’s pending home sales index surveys more than 70 Realtor associations and multiple listing services, and uses 2008 sales levels as a benchmark. An index reading of 100 is equal to the average level of sales contract activity in 2008.

The index climbed to 93.6 in January, up from 82.4 in December but down 2 percent from a year ago, CAR said, noting that pending sales typically rise after seasonal slowdowns in November and December.

“January’s pending sales should be reflected in higher existing sales activity in February and March and serve as a precursor to the spring home buying season,” CAR President Beth Peerce said in a statement.

Distressed properties — short sales and bank-owned (REO) properties — accounted for 54 percent of pending sales statewide, up from 50 percent in December but down from 56 percent a year ago.

Distressed properties accounted for 70 percent or more of all sales in Kern, Sacramento, Riverside, San Bernardino and Solano counties.

Looking at all sales of single-family homes that closed escrow in January, the median price was $278,900 — down 8.6 percent from a revised $305,020 in December and down 2 percent from a year ago.

But at $265,500, the median price for short sales closing escrow in January was 28 percent less than the $367,150 median price for “conventional” properties. The median price for REO properties, at $198,000, was 46 percent less.

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WHAT IT TAKES TO BE A MORTGAGE EXPERT

In the choppy seas of mortgage finance, you need someone who can navigate the ever changing product guidelines, interest rate environment, and understands your individual circumstance. These professional mortgage originators are worth their weight in gold. Most people enter the maze of mortgages every five years or so, and the industry has evolved so much that it is barely recognizable (and its evolution continues and is likely to appear vastly different five years from now).

The must-have qualities in a loan officer (LO) today are:

1. Superior Product Knowledge

Knowing all the nuances of the loan product menu is crucial for a loan officer. How will your ability to be approved, your rate and your fees be impacted by your FICO score, Loan-To-Value, or liquid reserves? Being well versed in loan products and being able to see your personal situation as an underwriter is normally a function of experience.

2. An Educated Opinion On Interest Rate Movements

No one is right all the time. However, I couldn’t imagine working with a loan officer who didn’t have an opinion on where rates are likely to move. Your originator should be in the advice business. They should be able to express their point of view in simple, logical terms. They should site financial data and reports (like inflation and employment data). They should understand the impact of geo-political events. Ultimately, it is your responsibility to decide when to lock in your rate, but don’t you deserve access to the best information possible to make your decision? Shouldn’t your LO provide it?

3. Understanding Of The Credit Score Model

Your approvability and eventual rate and fees are determined by your Credit Score. You need a LO who knows how to help you get the optimal score. How will paying down a debt affect your score? Should you payoff a collection account before, after or even at all? How about those borrowers with limited trade lines or errors in their credit file?

4. A Good Working Relationship With The Real Estate Agent

In today’s landscape, with frequent appraisal challenges and the structuring (and re-structuring) of deals, there needs to be excellent communication between the lender and the agent. Great loan officers have an understanding of the position, the responsibilities, and the psyche of the buyer, seller and the agent. The coordination of everyone toward a common goal is important.

5. Impeccable Listening Skills

It is not a stretch to say every loan is different. You must search for a loan officer who is attentive and engaged. LOs need to ask questions, sometimes very personal questions. They need to understand your financing objectives, your strategy about this real estate acquisition, your current and future income, credit and so on, in order to truly give you the best advice.

In the world today, too many loan officers are “order takers”. You need an advisor. You need an advocate who knows the programs; who has an educated opinion on rates; who can help you get the best credit score possible; who understands the team dynamic between the agent and the lender and who really listens to ensure that you get the best possible outcome.

“Everybody is like a magnet. You attract to yourself reflections of that which you are. If you’re friendly, then everybody else seems to be friendly too.” — Dr. David Hawkins: Physician, spiritual teacher, and lecturer

 

Homeowner and rental vacancy statistics, from the Current Population Survey via the Census Bureau, provide an interesting set of numbers indicative of the rent versus buy question. There are roughly 131 million housing units in the United States, with about 86% of them being occupied. Of those units, 57% are occupied by owners, 29% by renters, and 14% (about 18 million units!) are vacant.

Will they be filled with buyers? A top retail branch manager says, “We still have agents waiting for the great pumpkin.” Other managers had written to me last autumn saying, “If my agents can’t produce loans when rates are at 4%, I don’t know what makes them think they’re going to be doing any more when rates go back to 5 or 5.5%.” Well, here we are. We did see a jump in mortgage applications last week, up about 13% on an adjusted basis, with refinancing activity accounting for about 66% of total apps.

This leads to a discussion about overall trends in the mortgage biz. Last quarter Freddie Mac reported that 46% of refinance volume was “cash-in” where the principal mortgage balance is lowered as a result of homeowners paying-in additional money. Many households, like companies, are relatively liquid, and are deciding what to do with the money – and buying down debt during periods of low rates is a good option. (Companies face a slightly different set of options, including paying a dividend, buying another company, expanding existing facilities, etc.)

Yesterday we learned that the S&P/Case Shiller Home Price Indices, which track home prices throughout the U.S. on a two-month lag, declined 3.9% during the fourth quarter of 2010 on top of a 1.9 percent decline in Q3. Prices were 4.1% lower than one year earlier. “Despite improvements in the overall economy, housing continues to drift lower and weaker,” was a quote that I saw.

But the focus was on other items, namely a decent 2-yr Treasury auction and the violence and protests in Libya. MBS prices finished the day better by .375-.5 on roughly average volume, and 10-yr T-notes improved by about 1 point and moved down to a yield of 3.46%.

This morning we already had the usual MBA weekly Mortgage Application Survey (mentioned above) and later we’ll have Existing Home Sales for January along with the second leg of the Treasury’s latest auctions with $35 billion 5-year notes going off at 1PM EST. We find the 10-yr up to about 3.49% and MBS prices worse by about .125.

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FROM RPM MORTGAGE – REGARDING ADMINISTRATION’S PLAN ON US HOUSING REFORM

On February 11, 2011, the Obama Administration delivered a report to Congress detailing the Administration’s plan for reforming the U.S. housing finance market. The Administration’s plan is intended to wind down the housing GSEs Fannie Mae and Freddie Mac and shrink the government’s current footprint in housing finance.

The Administration’s report details the following plan:

1. Wind Down Fannie Mae and Freddie Mac and Help Bring Private Capital Back to the Market

· Phasing in Increased Pricing at Fannie Mae and Freddie Mac to Make Room for Private Capital, Level the Playing Field

· Reducing Conforming Loan Limits (Set to Reset on October 1, 2011) to Levels Set in HERA

· Phasing in 10 Percent Down Payment Requirement

· Winding Down Fannie Mae and Freddie Mac’s Investment Portfolios at an Annual Rate of No Less than 10 Percent Per Year

· Returning Federal Housing Administration (FHA) to its Traditional Role

2. Fix Fundamental Flaws in the Mortgage Market

· Helping Consumers Avoid Unfair Practices and Make Informed Decisions About Mortgages

· Increasing Accountability and Transparency in the Securitization Process

· Creating a More Stable Mortgage Market

· Servicing and Foreclosure Processes, Including Establishing National Standards for Mortgage Servicing, Reforming Servicing Compensation, and Focusing on Treatment of Lien Priority

· Forming a New Task Force on Coordinating and Consolidating Existing Housing Finance Agencies

3. Better Target the Government’s Support for Affordable Housing

· Reforming and Strengthening the FHA

· Rebalancing our Housing policy and Strengthening Support for Affordable Rental Housing

· Ensuring that Capital is Available to Credit-worthy Borrowers in All Communities, Including Rural Areas, Economically Distressed Regions, and Low-income Communities

· Supporting a Dedicated Funding Source for Targeted Access and Affordability Initiatives

4. Longer-Term Reform Choices

· Option 1: Privatized System of Housing Finance with the Government Insurance Role Limited to FHA, USDA and Department of Veterans’ Affairs’ Assistance for Narrowly Targeted Groups of Borrowers

· Option 2: Privatized System of Housing Finance with Assistance from FHA, USDA and Department of Veterans’ Affairs for Narrowly Targeted Groups of Borrowers and a Guarantee Mechanism to Scale Up During Times of Crisis

· Option 3: Privatized System of Housing Finance with FHA, USDA and Department of Veterans’ Affairs Assistance for Low- and Moderate-Income Borrowers and Catastrophic Reinsurance Behind Significant Private Capital

Key Takeaways

· There seems to be little chance of any reform legislation passing between the next 12-24 months

· Very little social policy discussion in the report

· Limited discussion on FHLB and FHA

· No tangible information included about second liens

· Positive to see that the Administration believes securitization is necessary to go forward

· Left room in the short term to curb GSE market share

· Higher loan limit will fall from 729 to 625

· 10% reduction in loan portfolios per year

· FHLB to be left in place – limited by smaller portfolios and greater oversight

· Mortgage prices will rise

· FHA 25 basis point increase

· Risk retention rule finalized this year and enacted in 2012

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MERS: A MESS We Should Know About

The greatest hurdle standing in the way of a complete housing recovery is the backlog of distressed properties that must be liquidated. The banks must release these properties to the market in a controlled fashion. If released too quickly, they will crush house values. If released too slowly, the recovery will be further delayed. However, the control of the flow may no longer be in the hands of the banks. The issue is rather complicated. It starts with the formation of Mortgage Electronic Registration Systems (MERS).

What is MERS?

According to a white paper by the National Association of Independent Land Title Association (NAILTA):

MERS is a creation of some of the most powerful forces in the real estate and mortgage banking industries. In the mid-1990’s mortgage bankers decided they no longer wanted to pay recording fees for assigning mortgages between institutions. This decision was driven by securitization – a process of pooling many mortgages into a trust and selling income from the trust to investors on Wall Street…To avoid paying county recording fees each time the mortgages were assigned, mortgage bankers and the title insurance industry formed a plan to create one shell company that would pretend to own all the mortgages in the country. By doing so, the mortgage bankers would never have to record assignments since the same company would always “own” all the mortgages. The company they created is now known as Mortgage Electronic Registration Systems, Inc. or MERS.

Why will this create a challenge with foreclosures?

We go back to the NAILTA report:

If MERS is just an agent or nominee, there are state land title recording acts that prevent shell companies, nominees or other forms of agents from holding title to real estate. Thus, however MERS “holds” a mortgage, the construction is, at best, problematic. Again, if it cannot hold title as a nominee, MERS and its lender assignees cannot enforce the mortgage.

A system designed to simplify a process might have instead complicated it further. Now the courts are uncertain as to whether or not they will recognize MERS as having the right to foreclose on said mortgages. Some have allowed it; some have not.

Can the courts actually prevent MERS from foreclosing on mortgages?

DSNews reported on one such case:

A New York judge has ruled that Mortgage Electronic Registration Systems, Inc. (MERS) does not have the right to transfer mortgages on behalf of its members, meaning it does not have the right to file foreclosures on behalf of lenders.

The company has recently been under fire for the practice, but the company defended its actions saying that borrowers are required to sign documents stating that MERS can assume rights and responsibilities on behalf of creditors…

But Judge Robert Grossman ruled MERS does not have the authority to act on behalf of its members, and the actions of the company are actually illegal, no matter what papers MERS requires members sign. In his statement, Judge Grossman said:

“The court recognizes that an adverse ruling regarding MERS’s authority to assign mortgages or act on behalf of its members/lenders could have a significant impact on MERS and upon the lenders which do business with MERS throughout the United States.”

How many mortgages are we talking about?

MERS currently is involved in almost half the mortgages in America. Can the courts stop foreclosures on all these mortgages? Judge Grossman addressed this exact point:

“The court must resolve the instant matter by applying the laws as they exist today. MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage recording process. This court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

How has MERS reacted to this ruling?

MERS, in an announcement on their website dated 2/16/2011, alerted their clients to not foreclose in their name for the next 90 days:

MERS is providing the following guidance to all Members to strengthen business practices, and minimize reputation, legal and compliance risk to MERS and its Members. In recent months legal challenges have arisen regarding alleged inadequacies and improprieties in the foreclosure process including allegations of insufficient or incorrect supporting documentation and challenges to the legal capacity of parties’ right to foreclose. MERS is committed to reevaluate and strengthen its systems and procedures to protect against these types of legal challenges…

MERS is planning to shortly announce a proposed amendment to Membership Rule 8. The proposed amendment will require Members to not foreclose in MERS’ name. Consistent with the Membership Rules there will be a 90-day comment period on the proposed Rule. During this period we request that Members do not commence foreclosures in MERS’ name…

We encourage Members to bring foreclosures only in the name of the holder of the note, in the name of the trustee or the servicer of record acting on behalf of the trustee.

This definitely will again slow down the banks’ ability to bring foreclosures to market. That will be good news for home prices in the short term. It will also delay the recovery of the housing market.

Bottom Line

It seems there will be further delays on many foreclosures. That gives sellers a window of opportunity to sell their home before many of these discounted, distressed properties come to market as competition.

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Build a better browser for your real estate business

There has been a huge shift from the desktop to the browser over the last few years. Real estate agents spend a tremendous amount of time working in the browser space, utilizing multiple listing service, e-mail, social media and other Web apps.

Here is a fun break down on some of the coolest browser extensions and add-ons that could be useful to the real estate industry.

Showcasing three add-ons from the top four browsers: Internet Explorer, Firefox, Chrome and Safari.

Whether you are a Mac or PC user, there are plenty of add-ons for your browser of choice. Internet Explorer offers three types of add-ons:

1. Accelerator: allows a user to utilize an online service when selecting text on a Web page. For example, highlighting a property address on a details page could launch a service such as Google Maps to access the location and directions.

2. Toolbar: a third-party app that is added to your browser’s graphical user interface (GUI) as a plug-in.

3. Web Slice: introduced in Internet Explorer 8, Web Slice is a feed technology that allows users to “keep up with updated sites directly from the favorites bar,” according to an online description. Internet Explorer is the only browser to support a Web slice natively.

Let’s take a look at some add-ons and extensions.

Firefox

WiseStamp: I love this add-on and have been using it for quite some time. The WiseStamp app allows you to enhance and customize your e-mail signature by including your social media profiles. You can also include dynamic content, such as news headlines or tweets, which is an excellent way to engage clients. The signatures are clean and lightweight.

TinyURL Generator and Bit.ly: Looking to generate short, clean URLs for Twitter, chatting or QR (quick response) codes for “just listed” cards? Both TinyURL Generator and Bit.ly offer Firefox add-ons to help avoid URL clutter.

Delicious: It’s been quite the saga for the popular social bookmarking service. Back in December, when rumors surfaced that Yahoo was planning on “sunsetting” the site, many users — including myself — began scrambling for alternative services. Despite the announcement that the service would not be shut down, many migrated to applications such as Diigo and Google Bookmarks. Until then, I never realized just how important bookmarking was to my workflow. Although the future of Delicious is still unknown, it is an essential add-on.

Browse all Firefox add-ons.

Chrome

TabJump: Chrome certainly offers some fantastic extensions, and TabJump just might be my favorite. “TabJump highlights frequently used tabs and related tabs so you can easily jump between them,” according to an online description. The best feature, hands down, is the ability to relaunch closed tabs.

Turn Off the Lights: I ranked video fourth in my “Top 10 tech trends of 2010,” and it may rank higher in 2011. With so many cool video services available on the Web, “Turn Off the Lights” is a nifty little tool that fades the entire Web page to dark to enhance the viewing experience.

Evernote: This add-on “makes it easy to remember and find all of the great stuff you see online. Save full pages, including text, links and images with a single click,” according to an online description. Evernote works extremely well and syncs from your browser to multiple devices, including smart phones and tablets.

Browse Chrome extensions.

Internet Explorer

Google Maps (Accelerator): Mapping is an essential tool in real estate and Google Maps is a valuable Accelerator add-on. Just select an address on a Web page and click the Accelerator icon to launch Google Maps. It’s a super quick way to obtain a location or driving directions.

Find on LinkedIn (Accelerator): In “Use LinkedIn for offline networking,”,” Inman News columnist Gahlord Dewald wrote, “LinkedIn sometimes feels like the forgotten stepchild of social media,” and noted how LinkedIn can be a powerful business tool. Find on LinkedIn is an extremely handy Accelerator tool. Just highlight a person’s name and click the Accelerator icon. You can quickly find the person on LinkedIn. IE users should definitely give this one a try.

StumbleUpon (Toolbar): StumbleUpon is a “discovery engine” that helps people find and share websites. It utilizes a rating system for content. I’m typically not a huge fan of Toolbars, but with over 8 million users, StumbleUpon is a resourceful add-on. Enter real estate-related keywords as a topic to StumbleUpon.

Browse Internet Explorer add-ons.

Safari

Twitter: The Twitter extension for Safari is an official release that integrates a ton of features, including search, trends and related tweets. The integration is seamless and, once authenticated, you can even tweet the page that you are viewing with a short URL included.

Bing: The Bing Safari extension functions similarly as the Google Maps Accelerator for Internet Explorer. It’s super easy to use: just highlight text on a Web page and get instant maps, translations, flight status, and more.

Amazon Wish List: The Amazon Wish List extension is quick and easy to use. Just “add any item from any website to your wish list with one simple click,” as the description states. I just recently installed the extension for Safari, and it works pretty well.

Browse the Safari Extensions Gallery.

Many add-ons and extensions support multiple platforms and browsers. Feel free to experiment with a few. I have discovered a few gems that you may not be able to live without. Have Fun!

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Real Estate: Like a Phoenix Rising from the Ashes

The real estate market has experienced difficulty over the last five years. From 2000-2006, house values climbed to unsustainable heights. Since then, we have seen much of this appreciation disappear. Now many look at the housing market as dead and lying in the ashes of its previous glory. However, there is growing evidence that, just like the Phoenix, there is a new market currently rising from those ashes.

Buyer activity is increasing

The first sign of an improving market is buyers again beginning to shop for a home for themselves and their family. That is taking place right now.

Pete Flint, CEO of Trulia said in a recent press release:

“We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors – which is more than 70 percent year-over-year growth… (We) are now experiencing 100,000 property views per minute.”

The latest Credit Suisse Monthly Survey of Real Estate Agents reports:

Our Monthly Survey of Real Estate Agents pointed to another month of improved traffic – the third straight month, and the highest level for our traffic index since April 2010, the last month of the homebuyer tax credit. The improved economy and stronger consumer confidence has translated into an increase in homebuyer traffic.

But have they actually started purchasing?

The best news is that buyers are not just looking. The latest National Association of Realtors’ (NAR) Pending Sales Report, which quantifies the number of homes going into contract, shows continued improvement:

Pending home sales improved further in December, marking the fifth gain in the past six months.

Bottom Line

Buyers are back out looking at homes and the number that are actually purchasing is steadily increasing. It appears the housing market is on the verge of a rebirth. The Phoenix is beginning to flap its wings.

“Maybe you are here on earth to learn that life is what you make of it, and it’s to be enjoyed.”  — Dick Sutphen: Psychic researcher, hypnotist, author

Headliners & Other News

Case Shiller: National Home Prices Are Close to the 2009Q1 Trough. S&P/Case-Shiller index of home values in 20 cities fell 2.4 percent, the biggest year-over-year decrease since December 2009. The National Home Price Index declined by 3.9% during the fourth quarter of 2010. The National Index is down 4.1% versus the 4Q 2009. Eighteen of the 20 cities in the index showed a year-over- year decline, led by a 9.1 percent drop in Detroit. “We ended 2010 with a weak report. The National Index is down 4.1% from the fourth quarter of 2009 and 18 of 20 cities are down over the last 12 months. Both monthly Composites and the National Index are moving closer to their 2009 troughs. The National Index is within a percentage point of the low it set in the first quarter of 2009. Despite improvements in the overall economy, housing continues to drift lower and weaker.” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Unlike the 2006 to 2009 period when all cities saw prices move together, we see some differing stories around the country. California is doing better with gains from their low points in Los Angeles, San Diego and San Francisco. At the other end is the Sun Belt – Las Vegas, Miami, Phoenix and Tampa. All four made new lows in December. Also seeing renewed weakness are some cities that were among the last to reach their peaks including Atlanta, Charlotte, Portland OR and Seattle, where news lows were also seen. Dallas, which peaked late, has so far stayed above its low marked in February 2009.”

Housing Needs a Good Spring in Its Step  The brighter economic outlook is not helping as it is lifting interest rates with the 30-year fixed rate mortgages jumped to above 5% after a low of 4.17% in November.

Conference Board Consumer Sentiment increased to 70.4 in February, the highest since February 2008, from 64.8 the prior month. The share who said they expect their incomes to increase in the next six months rose to 17.3 in February from 15.3 a month earlier, and those who said jobs were currently plentiful rose to 4.9 this month from 4.6, the fourth straight gain. The present conditions index climbed to 33.4 in February from 31.1, the fifth consecutive increase. Says Lynn Franco, Director of The Conference Board Consumer Research Center: “The Consumer Confidence Index is now at a three-year high (Feb. 2008, 76.4), due to growing optimism about the short-term future. Consumers’ assessment of current business and labor market conditions has improved moderately, but still remains rather weak. Looking ahead, consumers are more positive about the economy and their income prospects, but feel somewhat mixed about employment conditions.”

 Treasuries Rise as Protests, Violence in Libya Spur Demand for Safe Assets.  Treasuries prices have rose, with the 10yr UST yield dropping to 3.48%, the lowest in more than two weeks, as violence in Libya bolstered demand for the relative safety of government debt. Also supporting the bond market is the Federal Reserve plan to buy $6 billion to $8 billion of Treasuries maturing from 2016 to 2018 today as part of QE2. The US will sell $99 billion in UST this week, beginning with $35 billion two-year notes Tuesday afternoon. MBS prices are up 12/32 on 4.5% coupons as of 11:30am.

Bond Market Swaps Back Bernanke’s Benign Inflation View Bond Market Swaps Back Bernanke’s Benign Inflation View. Prices of some “highly visible” items such as gasoline have “significantly” increased, “overall inflation remains quite low” and wage growth has slowed, according to Fed Chairman Ben S. Bernanke. The five-year, five-year forward breakeven rate the Fed uses to chart investor expectations for future inflation has fallen to 2.77 percent from a 10-month high of 3.28 percent reached in December. “Ten-year yields have gotten to an appropriate level given the pace of the economic expansion and inflation expectations. Housing and stresses in state and local government finances will be a drag on growth. If yields moved over 4 percent it would attract demand from investors, including foreign central banks,” said Gregory Whiteley.

BOE Officials May Give Signals on Momentum Toward Interest-Rate Increase.Bank of England policy makers may this week signal how quickly the momentum toward higher interest rates is building as inflation accelerates to more than twice the central bank’s target.

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Home prices hit post-bust lows in most big cities

Home prices in a majority of major U.S. cities tracked by a private trade group have fallen to their lowest levels since the housing bubble burst, and analysts expect further declines this year.

The Standard & Poor’s/Case-Shiller 20-city home price index fell 1 percent in December from November. Prices fell in all but one of the metropolitan markets tracked.

The only city to see a gain was Washington, where hiring by the federal government has helped boost the region’s job market.

Eleven of the markets hit their lowest point since the housing bust, in 2006 and 2007: Atlanta, Charlotte, N.C., Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland, Ore., Seattle and Tampa, Fla.

The housing sector is struggling even while the rest of the economy is showing signs of a slow but steady recovery. The latest evidence of this divide came Tuesday when the Conference Board said its Consumer Confidence Index rose in February to its highest point in three years. The index surveys how people feel about hiring and income, and how they see that changing over the next six months.

Some of the worst declines are in cities hit hardest by foreclosures and high unemployment, including Detroit, Phoenix and Tampa. A home that sold for $250,000 in the Motor City in 2000 now sells for roughly $163,150, according to the housing report. Homes in Las Vegas and Cleveland now sell, on average, for less than they of what they did a decade ago. Many people are holding off buying or selling homes because they fear the market hasn’t hit bottom yet.

The housing recovery is uneven across the United States. Coastal cities in California and the Northeast are faring much better than the Midwest and Southeast. That’s mainly because they benefit from expensive and somewhat recession-proof housing markets buoyed by low unemployment and limited new construction.

The Case-Shiller report measures home price increases and decreases relative to prices in January 2000 and gives an updated three-month average for the metropolitan areas it looks at.

Good Thursday Morning To You Team!

Aside from the gloomy grey clouds in our weather forecast today, I would like to lift up your spirits and have you know that there is some sunshine out there! Yesterday our team received our 6th contract just within the last 2 weeks!! As mentioned previously we have recently seen an increase in loan applications as well! I also told you about RPM closing a Jumbo Refinance for $1.2 Million within LESS THAN 25 DAYS (In-House Underwriting and Appraisers!!). We’re readily prepared to continue taking on new contracts, loan applications, and any new business – period! If you need to discuss any difficult scenarios, or inquire on our loan programs to include the Jumbo Loan, FHA, Fannie Mae HomePath, or Conventional you know you can always give me a call! I’ll be in the office today, and I look forward to hearing from you!  Have a great day!!

“When we direct our thoughts properly, we can control our emotions…” – by W. Clement Stone

 

FORECLOSURE DIPS, BUT REMAINS ELEVATED

According to the Associated Press fewer Americans fell behind on their mortgage payments in the final three months of last year, but foreclosures are still rising.

The Mortgage Bankers Association said Thursday 8.2 percent of homeowners missed at least one mortgage payment in the October-December quarter. The figure, which is adjusted for seasonal factors, improved from 9.1 percent in the previous quarter and from a high of more than 10 percent in the January-March quarter.

The percentage of homes in the foreclosure process rose to 4.6 percent from 4.4 percent, tying an all-time high for the survey. Foreclosures are expected to peak this year as 5 million troubled loans move through the process.

Typically, the percentage of seriously delinquent borrowers — those more than 90 days behind on their mortgages or in foreclosure — is just above 1 percent. In the fourth quarter, that figure was 8.57 percent.

An improving job market is behind the decline in the delinquency rate, said MBA Chief Economist Jay Brinkmann. He noted that the private sector added 1.2 million jobs last year and the number of people applying for unemployment benefits started to fall in the fourth quarter.

“It’s a sign we’ve turned a corner, that’s the good news,” Brinkmann said. “The bad news is loans in foreclosure are still very high.”

Foreclosures dipped in the July-September quarter as lenders addressed allegations of improper paperwork during the foreclosure process. But by the final three months of last year, many had resumed taking back homes.

Banks are on track to repossess more than 1 million homes this year, the most since the housing meltdown began, according to foreclosure tracker RealtyTrac Inc. That will drive home prices down because foreclosures are sold at deep discounts.

The foreclosure crisis started years ago when borrowers took out risky loans with adjustable interest rates that they couldn’t afford. Many also qualified for loans without providing proof of income. The crisis spread to homeowners with good credit who took out safe, fixed-rate mortgages, but are struggling in a weak economy.

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HEADLINERS & OTHER NEWS

Initial claims increased by 25,000 to 410,000 for the week ending February 12; and the prior week was revised from 383,000 to 385,000. Continuing claims increased by 1,000 to 3.911 million for the week ending February 5, and there are millions more on extended and emergency benefits not counted in this figure. That claims did not jump even higher is encouraging and indicates that the labor market recovery remains on track.

Conference Board’s Leading Indicators increased 0.1% in January after rising 0.8% in December Six of the 10 indicators in the leading index contributed to the increase, led by the interest-rate spread and the stock market. The interest-rate spread between the overnight federal funds rate and the yield on the 10-year Treasury note widened, boosting the index by 0.34 point. “With January’s slight increase, following two large gains, the U.S. LEI is still pointing to economic expansion in the coming months. Falling housing permits and weakening labor market indicators were barely offset by the continued positive contributions of the financial components. The LEI remains on a rising trend, with its growth rate picking up in recent months. However, current economic conditions, as measured by the coincident economic index, while improving slowly, remain weak.” Says Ataman Ozyildirim, economist at The Conference Board.

Treasuries Rise Amid Tension in Mideast, Increase in U.S. Jobless Claims,

with the UST rally pushing the 10-year note yield down to 3.56%, the lowest level since Feb. 4. This could possibly set the stage for a continued rally to test 3.50% resistance. The market has basically erased the selloff since the January nonfarm payrolls report and the 10-year yield has fallen from a nine-month peak of 3.77% on Feb. 9. Two Iranian warships will pass through the Suez Canal and the Iranian government is in contact with Egyptian officials to arrange passage, and pro-democracy protesters in Bahrain are demanding the government resign, boosting demand for safer U.S. assets. The Fed will be buying Treasuries maturing between 2018 and 2021 today, and the U.S. will also be auctioning $9 billion of 30-year Treasury Inflation Protected Securities today.

 

FOMC Minutes: Fed Forecasts Faster Growth as Economy Improves, expecting GDP to grow by 3.4 to 3.9 percent this year, up from the previous forecast, released in November, of 3 to 3.6 percent. The Fed’s outlook for the job market was largely unchanged: 8.8 to 9 percent unemployment this year. “On the one hand, the additional spending could reflect pent-up demand following the downturn, or greater confidence on the part of households about the future, in which case it might be expected to continue,” the minutes noted. “On the other hand, the additional spending could prove short-lived, given that a good portion of it appeared to have occurred in relatively volatile categories such as autos.”

 

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GOVERNMENT & HOUSING MARKET – REFORMING AMERICA’S HOUSING MARKET

Late last Friday – when the world was focused on the resignation of Egypt’s President Hosni Mubarak — the Obama administration sent Congress a white paper entitled ” Reforming America’s Housing Finance Market ” laying out its recommendations on how to “wind down” the role of Fannie and Freddie and “dramatically transform the role of government” in the U.S. housing market.

According to the Wall Street Journal, the government suggested these three options which could be slowly implemented over the next five to seven years:

Option #1: The first option puts the vast majority of the mortgage market in the hands of the private sector, where lenders would originate mortgages and securitize them without any government backing.

Option #2: The second option is the same as the first, but would also create a limited government backstop that would primarily become active buying or guaranteeing loans in periods when private lenders retreated during financial shocks.

Option #3: The third option would create new privately owned companies to buy mortgages from banks and sell them as securities. Those securities would be explicitly guaranteed by the government as long as they meet certain criteria.

These government-sponsored enterprises were initially created to offer homebuyers easy and better access to more affordable capital when purchasing a home. And for decades, Fannie and Freddie did help many Americans realize the American Dream of home ownership.

But times have changed since the financial crisis of 2008, which was spurred by the mortgage industry – Fannie and Freddie included – granting subprime loans with adjustable rates to borrowers who really could not afford to be purchasing a home.

In the last three years, Fannie Mae and Freddie Mac have received roughly $150 billion of your tax dollars to prevent their failure and an even worse collapse in the housing market.

So now, it looks likely that Fannie and Freddie will be dismantled for the same reasons they were created. In a press release, Treasury Secretary Tim Geithner said, “This is a plan for fundamental reform – to wind down the GSEs, strengthen consumer protection, and preserve access to affordable housing for people who need it.”

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REAL ESTATE CONSULTING

Recommended Reads: Julie Garton-Good (“Real Estate a la Carte: Selecting the Services You Need and Paying What They’re Worth”) and Mollie Wasserman (“The End of Six Percent: How to Get the Expertise You Want without Paying A Commission Unless You Want To”) – On Real Estate Consulting

First, it’s extremely important to note that like regular commissions, there is no fixed rate on consulting. Commissions and consulting fees are negotiable. Each agent has to determine the best fit for his or her business.

To understand how real estate consulting works, it’s important to differentiate between consulting and the normal commission sales model.

According to Garton-Good, a salesperson “tells and sells” as opposed to a consultant who “guides but not decides.” Her premise is that consumers want someone who is on their side and who is hired to represent their interests. She also believes that too many agents are working for free. She was one of the first experts to argue for the unbundling of real estate services.

Today, Gen X and Gen Y prefer to research information online or through their friends. As a result, a better approach is to be the “trusted resource” that supplies clients with the informational resources they need to make the best possible decision.

According to Garton-Good, most agents spend way too much time providing service and not being paid for it. “Free” doesn’t exist. In fact, her experience is that the typical real estate agent is worth between $75 and $150 per hour. Consequently, if your hourly rate is $100 per hour and you spent three hours doing an open house or any other activity that doesn’t generate any leads, you just cost your business $300.

Garton-Good says that agents who shift to the real estate consulting approach have a strong understanding of how much their time is worth. Tracking your return on various activities is critical. You must also determine which activities pay you your hourly rate or more. For the activities that are not generating a return, you have two choices: dump them or delegate them.

Wasserman draws the distinction between two types of real estate activity. “Functionary” activities include those activities that technology can handle, such as providing information about local areas, schools, and crime statistics. It also includes activities, such as holding open house events, that do not require a high level of expertise.

Wasserman also argues that the real estate consulting model is your best defense against commission-cutting. To illustrate, for-sale-by-owner sellers normally do not want to pay a listing commission. They may, however, be willing to pay an agent to provide them with comparable sales and to help them with staging their home.

Given that only 5 percent of all sellers successfully sell their own property to a buyer they do not know, there’s a high probability that the FSBO will ultimately list with an agent. As Wasserman points out in her training: “Consulting is the antidote to commissionectomies!” Once they have already paid you a consulting fee, they’re highly unlikely to list with another agent.

Good Morning Team!

It’s Wednesday, can’t believe how fast the week is going by. We’ve got some exciting news from RPM, as mentioned we have our new Jumbo Program and I’m happy to share that we’ve just closed a jumbo refinance for $1.2 million, closed in less than 25 days. Don’t forget, we have in-house underwriters and appraisers to help with this turn around! This service is not only for the Jumbo Program however our underwriting and appraisal service is for all loans through RPM. If you need to discuss a loan scenario or need a pre-approval, do not hesitate to contact me. And don’t forget about our open house flyers, especially for those of you that may have open houses during this 3 day weekend for most (Monday is Presidents Day)!! Have a great day!

“That which you resist stays.” — Dr. David Hawkins: Physician, spiritual teacher, and lecturer

 

FHA ANNOUNCES ANNUAL PREMIUM MORTGAGE INSURANCE INCREASE

With Mortgagee Letter 11-10, FHA announces an increase to the Annual Mortgage Insurance Premium on standard FHA loan programs and a change that affects case numbers.

Here are the 7 things you need to know about these changes:

1. These changes are effective April 18th, 2011.

2. The Annual Insurance Premium will increase .25% for standard forward mortgages. The Upfront Mortgage Insurance remains at 1.00%.

3. The Annual Premium is now 1.15% for LTVs GREATER than 95% on 30 year loans

4. The Annual Premium is now 1.10% for LTVs EQUAL to or LESS than 95% on 30 year loans

5. The Annual Premium is now .50% for LTVs GREATER than 90% on 15 year loans

6. The Annual Premium is now .25% for LTVs EQUAL to or LESS than 90% on 15 year loans

7. Case numbers with no activity for 6 months will automatically be canceled (includes case numbers pulled prior to April 18th, 2011.

To Read The Update in Full:  DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

FHA ANNOUNCES REFINANCE CHANGES

With Mortgagee Letter 11-11, FHA announces changes to refinance transactions. This ML provides guidance on the changes as well as clarification on existing refinance guides and it will be worthwhile to read this ML in its entirety as a refresher.

Here are the 8 things you need to know about these clarifications and changes:

Borrower must be current on their mortgage for the month of closing AND the month prior to closing (The payment due the month of closing CAN be included in the payoff).

Second liens must be subordinated to the new FHA first in their entirety.

For all case numbers on investment property refinances assigned on or after April 15th, 2011, the borrower must have occupied the subject property for the last 12 months to qualify for maximum streamline financing; if less than 12 months, a full credit-qualifying qualifying regular refinance is required with a maximum LTV of 85%.

Effective no later than April 15th, 2011, the following net tangible benefit scenarios must exist on all streamline refinances: A. The total of the new P&I and MI portion of the payment must decrease by at least 5% OR B. Refinancing from an ARM to a fixed product (See chart in ML).

Effective no later than April 15th, 2011, lenders may now use the short Uniform Residential Loan Application (URLA) for non-credit qualifying streamline refinances ONLY.

Effective no later than April 15th, 2011, lenders no longer have to certify employment and income on streamline refinances.

TOTAL Scorecard must not be used for streamline refinances.

Lenders CANNOT add closing costs, discount points, prepaids or other costs to the loan balance on non-credit-qualifying streamline refinances. Lenders CAN add closing costs and prepaids (not discount points) ONLY through a full-credit-qualifying streamline WITH an appraisal.

To Read The Update in Full: DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

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News & Headlines:

Let’s hope that they have some loans to fill those securities! Last week mortgage applications dropped 9.5% to a level last seen in November 2008. Refinancing activity was down 11.4%, and now accounts for 64% of new apps, and purchases were down about 6%. Braver Stern Securities wrote that, “with conforming mortgage rates at (these levels), almost 60% of the FH/FN mortgage universe does not have an economic incentive to refinance at the current time. For FHA borrowers this number is just over 85%.”

The cost of rescuing mortgage giants Fannie Mae and Freddie Mac is likely to sink to nearly half of the current cost over the next decade, for example. The budget estimates keeping Fannie and Freddie afloat will cost $73 billion by 2021, reflecting dividends paid back to the Treasury Department and is 45% lower than the $131 billion cost to date and much lower than outside estimates. Fannie and Freddie must pay 10% dividends on the quarterly cash infusions they receive from the Treasury, which some argue should just be forgiven, thus saving them a tremendous amount of ducats. In fact, the White House estimates that the companies will be paying back more in dividends by 2013 than they receive in cash infusions and from 2014 on, the companies are expected to need no more funding. Turning to HUD, the budget proposal outlines a $48 billion spending program for fiscal year 2012, an increase of more than $900 million from 2010.

For economic news today we’ve had Housing Starts were up 14.6%. But Building Permits were down 10.4%. The Producer Price for January was +.8%, as expected, although ex-food & energy it was +.5% – the biggest jump since 2008. The Consumer Price Index comes out tomorrow, and we’ll be able to see if these price pressures have come down the consumer level. We find the 10-yr at 3.63%, and MBS prices very similar to where they closed Tuesday.

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How To Avoid Real Estate Failure

Enough fatigue and the result is failure, be it a slab of concrete, a bungee cord — or a real estate agent.

Most of you have spent the better part of the past five years feeling like underpaid test subjects in an engineering science lab. In fact, in the best of markets our work is defined by compression and tension. Find a client, serve the client, then go out and find another. Lather, rinse and repeat.

One minute, you’re are on top of the world, flush with listings or buyer clients, reveling in the ecstasy that is positive cash flow. The next, you’re wondering how we will eat in 45 days. If you have been licensed for more than two closing cycles, you know this feeling too well. If you have lived through a couple hundred or more transactions, you know it can wear you thin.

Ten years ago, it was easier to bounce back. You were tested in a fairly controlled environment. You had our highs and lows, your successes and failures, but the laws of real estate assured you that hard work would pay off, commitment would triumph, and your down time and down moments would inevitably be followed by another opportunity.

Rather, you’re just as busy as you were five years ago, the difference being you used to get paid for our efforts.

Fatigue happens. How to overcome it and avoid all-out failure is the question for all the marbles. It’s our marbles at stake, and I don’t profess to have the answers, but I do know that stagnation is not one of them.

You can’t win if your head’s not in the game. Catch up on your industry reading, tinker with your website, retool your listing presentation, or rewrite your business plan. Preview homes, research and study market trends, write a blog post or comment on a post. Engage in a little group therapy at the office — or here.

Rethink how the challenges you face now might be — if not altogether avoided — at least mitigated in the future. Dare to lose a listing opportunity by being brutally honest, knowing that the people who respect your honesty enough to hire you will be most likely to respect you throughout the transaction and find success.

This market is going to be with us for a while, and what that means is that the opportunities will be fewer and more difficult. But it doesn’t mean that we can’t each survive and thrive — both professionally and personally.

We need to remember that our business has cycles, as do markets. We need to be ever aware of the warning signs of too much tension and compression, and we need to be prepared to deal with the occasional fatigue lest we are threatened with catastrophic failure.

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“Most people diffuse their psychic energy (attention) in hundreds of random ways. Those who flow focus their psychic energy intentionally upon the task at hand. It really boils down to knowing your goal, concentrating upon it, remaining determined, and having the self-discipline to complete what you are doing.” — Dick Sutphen: Psychic researcher, hypnotist, author

TWO ESSENTIAL TOOLS FOR ONLINE REAL ESTATE SUCCESS:

1. Most important tool for success online: your mind

It’s the most essential thing you need for online success. Here are some specific ways to use your mind as you approach the mess of software and vendors and consultants and platforms and so on:

1. Think about what you’re really doing online in the first place. What do you want other people to do online that helps your business?

2. Think about what other people are really doing online in the first place. What can your business do to help other people?

3. Map out the whole process, a sort of customer workflow, starting with a potential customer who has a problem and ending with you solving their problem. Bonus points if you use crayons to make your map.

4. Make a circle around the parts of this workflow that take place on platforms you don’t fully control (Facebook, Twitter, Google and so on).

5. Make a circle in a different color around all the parts of this workflow that occur on platforms that you fully control (your company website, your self-hosted blog on your own domain and so on).

Without using your mind, you’re more likely to fall victim to “shiny object syndrome” and vanity metrics. If you know about your customers, and you know about you, then you can evaluate and deploy technology.

2. Second most important tool for online success: the humble spreadsheet

If you’re going to do things online, you’ll want to observe what people are doing online. Then make some improvements to what you’re doing online. Then repeat. Unless you’re perfect.

If you’re perfect, then everything always works out the way you think it should and you’re free to avoid doing anything different. I’m not perfect, though, so I like observing.

One of the hard parts of using observations to make decisions is that there are so many platforms and ways to make observations. By this, I mean there’s no one analytics package to rule them all. And even if there were, it probably wouldn’t have the metrics that matter most to your business.

If you’ve taken advantage of the first tool for online success — your mind — then you should be able to develop a handful of metrics that really matter for your business. This is easier to do in a room that has no computers or screens in it. It’s probably even easier to do in a location that isn’t your office.

Your own spreadsheet is where you store and analyze that data. Your own spreadsheet lets you focus on your business instead of Facebook’s business or Google’s business. And hopefully, your own spreadsheet will tell you how you’re doing in terms of helping customers.

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Selling Your House? 5 Reasons To Do It NOW!

The conventional wisdom when selling a home has always been to wait until the ‘Spring Buying Season’. Over the years, that has seemed to make sense and is now accepted as a good strategy for those who want to sell their house and receive the best possible price. This real estate market has shattered many previously held beliefs. The wisdom of waiting for a spring market is another belief that is about to fall. Here are five reasons why?

1.) Interest Rates Are On the Rise

Interest rates have spiked up rather dramatically over the last ninety days and are now over 5%. Initially, an increase in rates has a positive effect on the market as it forces buyers off the fence. However, it also eats into a buyer’s purchasing power. As rates increase, the mortgage amount a buyer qualifies for decreases. This will eventually have a negative impact on prices.

2.) Your Dream Home Will Never Be Cheaper

If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.

3.) Buyers Are Out Early

There is mounting evidence that buyers are coming out earlier this year. A belief that now is a good time to buy coupled with the increase in interest rates has started the buying season early.

Pete Flint, CEO of Trulia:

“We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors – which is more than 70 percent year-over-year growth. We’ve are now experiencing 100,000 property views per minute.”

The National Association of Realtors just reported that the number of house sales increased 12.9% over last month.

4.) Inventory Increases Every Spring

Every year there is an increase of inventory which comes to market as we approach the spring. Here is the number of listings available for sale in 2010.

February – 3,531,000

March – 3,626,000

April – 4,029,000

We believe there will be an increase in these numbers in 2011 as there is a pent-up selling demand created by the weak market of the last few years. You won’t have to worry about this increasing competition if you sell now.

5.) We Are in the Eye of the Foreclosure Storm

While banks are trying to rectify their foreclosure procedures, there is a large supply of discounted properties which has been delayed coming to market. This inventory will be released sometime in the next few months. Foreclosures sell on average at a 41% discount. When released they will be competing with your house for the buyers in the marketplace. If you are looking to sell in 2011, you want to sell before this inventory becomes your competition.

CNN Money quoted the leadership Of RealtyTrac on this issue:

“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000,” said James Saccacio, CEO of RealtyTrac.

“Unfortunately,” he added, “This is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”

“We expect a spike in the first quarter,” said Rick Sharga, a RealtyTrac spokesman.

Bottom Line

These are five strong reasons to sell now instead of waiting until later in the year. Sit down with a local real estate professional today and decide the best options for you and your family.

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A Few Headliners & Other News

FHA’s New Premium Structure: “As part of ongoing efforts to strengthen the FHA capital reserves,” and to help push private money back into mortgages, the FHA came out with a new premium structure for FHA-insured mortgage loans increasing its annual mortgage insurance premium (MIP) by a quarter of a percentage point (.25) on all 30- and 15-year loans starting in mid-April. (The upfront MIP will remain unchanged at 1.0 percent.) The increase adds $30 to the average borrower’s payment and in total is estimated to add $3 billion annually to the FHA’s Mutual Mortgage Insurance Fund. It is the second increase since October.

Investors and Ginnie Mae: From an investor’s viewpoint, any investor holding Ginnie Mae securities just became much more comfortable with their holdings and with the odds of FHA-to-FHA refinancing going down. Those familiar with FHA loans realize that before October a 95% LTV 30-yr loan paid a 225 basis points up-front MIP with a 50 bps annual MIP. Now, that loan pays 100 bps up-front — but 110 bps annually. Investors believe that this change, given current rates, effectively removes any 5% and 5.5% FHA loans from being refinanced into new FHA loans.

Rising Interest Rates: The recent move up in interest rates wasn’t unexpected, as the rate markets have been technically bearish since Halloween. But what was not expected was the magnitude of the run-up. So, interestingly, many analysts believe that we have already seen the big move for rates (unless the world stops buying our debt, of course), so although rates are gradually expected to increase for much of 2011, don’t look for any big moves higher. Yesterday, on no real news, 10-year note prices drifted higher on the day and closed up 9/32s to yield 3.61%. It was a quiet session in mortgages as well, with supply around half the recent normal and MBS prices finishing the day about .125-.250 better. But, after a data-less session yesterday and a light week just past, we have had several reports today. Import Prices were +1.5% month-over-month, Export Prices +1.2%, Retail Sales were +.3%, ex-auto & gas it was +.2%, light but positive, and the Empire State Index came in at “15.43” – jump from the previous month’s. We have some minor news still to go, but after this early news we find the 10-yr at 3.63% and MBS prices worse by about .125.

Homebuilders View Of Housing Market Grim: Homebuilders are not seeing a turnaround in the housing market after the worst year for new-home sales in a half-century. The National Association of Home Builders says its index of builder sentiment for February remained unchanged for the fourth straight month at 16. Any reading below 50 indicates negative sentiment about the market. The index hasn’t been above that level since April 2006. Homebuilders are struggling to compete with millions of foreclosures that are forcing home prices down. Last year was also the worst in more than a decade for sales of existing homes.Weak sales mean fewer jobs. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the trade group.

OPEN HOUSE FLYER EXAMPLE (Call Me to get your Open House Flyer created today!)

Happy Friday! 

Good Morning Team! As mentioned in yesterdays chatter, we’ve received a lot of new pre-approval requests, opened new escrows and I continue to work with my referral partners to keep it going at this pace. If you haven’t called to chat on our strategy don’t hesitate to call me. My team and I are committed to growing with you in 2011. I’m in the office today contact me with any pre-approval requests, discuss a loan scenario or maybe even provide you with a flyer for your open house you’re holding open this weekend. Friendly reminder, Monday is Valentines Day! Call me direct if you need anything 925-295-9360. Have a great weekend!!

“As soon as you start to feel differently about what you already have, you will start to attract more of the good things, more of the things you can be grateful for.” — Joe Vitale: Hypnotic marketer and author

A FEW HEADLINES:

Fannie, Freddie Phase-out Proposed. The “white paper” presented to congress today by Treasury Secretary Tim Geithner proposes three options for what could take their place and will begin the long process of debate over the nation’s $10.6 trillion mortgage market, calling for changes to be phased in “responsibly and carefully” to avoid economic disruptions. The steps likely mean higher borrowing costs, and less access to home loans for consumers. Administration officials said the transition to a new system could take five years or longer. The paper also recommends gradually raising fees that Fannie and Freddie charge to lenders in order to make mortgages that aren’t government-backed more competitive, and calls for gradually reducing the maximum loan limits. Banks would be required to hold more capital to withstand future housing downturns, and the paper calls for “more conservative underwriting standards that require homeowners to hold more equity in their homes.” The paper also calls for reducing the role of Federal Housing Administration.

RealtyTrac: Foreclosure filings fell 17% in January from a year earlier, the fourth straight month of declines, and rose 1% from December.

Wall Street slips on unrest in Egypt U.S. stocks fell on Friday as market uncertainty over Egypt grew amid risks of spreading unrest in the Middle East.

 

CalHAFA – Keep Your Home California Initiative  The California Housing Finance Agency fully implemented the programs under its “Keep Your Home California” initiative, a nearly $2 billion endeavor funded by the U.S. Treasury’s Hardest Hit Fund.

 

New Altisource Short Sale Service capitalizes on HAFA & provides opportunities for agents Altisource, based in Luxembourg, with US headquarters in suburban Georgia, said the addition of short sales and deed-in-lieu services comes in response to the Home Affordable Foreclosures Alternative (HAFA) program, a Treasury Department initiative that offers cash incentives to loan holders, borrowers and servicers that complete short sale and deed-in-lieu transactions instead of foreclosures

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The Cost of Waiting for Prices to Fall

Many purchasers have been sitting on the sidelines waiting for home prices to hit bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about housing prices. They should be concerned about cost.

The cost of a house is made up of the price AND THE INTEREST RATE they will be paying. Two different pieces of news released yesterday highlight this point.

PRICES

The National Association of Realtors (NAR) released their 4th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.

A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released yesterday paints a different picture.

INTEREST RATES

The Primary Mortgage Market Survey was released by Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%. Frank Nothaft, vice president and chief economist of Freddie Mac said:

“Long-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week…As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.”

So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?

The price is the same. It just costs more.

By sitting on the sidelines for the last 90 days a purchaser lost:

$89.44 a month

$1,073.28 a year

$32,198.40 over the thirty year life of the mortgage

If you buy a $340,000 home, double all these numbers.

Bottom Line

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.

Todays Rates – RPM Mortgage