“Every thought, action, decision, or feeling creates an eddy in the interlocking, interbalancing, ever-moving energy fields of life, leaving a permanent record for all of time. This realization can be intimidating when it first dawns on us, but it becomes a springboard for rapid evolution.” — Dr. David Hawkins: Physician, spiritual teacher, and lecturer

 

The First Question You Should Ask Your Listing Agent

What is the most important thing a seller should look for when hiring a real estate agent to sell their house? We are often asked this question. Is it the size of the company they are licensed with? Is it their marketing program? Their years experience in the business? Should you choose the agent who suggests the highest listing price?

There are many things that should be taken into consideration when hiring someone and giving them the responsibility for selling your home. In our opinion, the most important question you can ask a potential listing agent is a simple one:

Do you truly believe that now is a good time to buy a home?

Why should this matter when hiring someone to SELL your home? Buyers are nervous about purchasing right now. They want to know they are making an intelligent choice. We believe, especially in today’s market, you need to hire someone who realizes that this is one of the best times in American real estate history to buy. If an agent doesn’t believe that, how will they be able to convince a potential buyer to buy your home?

When interviewing a real estate professional, ask them to explain why purchasing a home makes sense today. They should be able to explain it simply and effectively. See how many of the following facts (which should be shared with every potential purchaser) the agent knows:

The Wall Street Journal last week stated:

“With home sales starting to improve, and with prices now possibly forming a bottom, real estate could well be the asset class that represents the best low-risk buying opportunity out there today.”

Donald Trump was just quoted saying:

“I’m pretty sure this is a great time to go out and buy a house. And if you do, in 10 years you’re going to look back and say, ‘You know, I’m glad I listened to Donald Trump’.”

John Paulson, a multibillionaire hedge fund operator and the investment genius who made a killing betting against housing a few years ago, is now bullish on residential real estate market. He recently said:

“If you don’t own a home, buy one. If you own one home, buy another one. If you own two homes, buy a third. And, lend your relatives the money to buy a home.”

A recent Gallup Poll showed that 67% of American’s think that now is a ‘good time’ to buy a home. The Gallup Organization went on to say:

“Overall, there is good reason for most Americans to think now is a good time to buy a house. Interest rates remain near historic lows. Home prices are down sharply, providing many incredible buys.”

The iconic financial paper in this country, the country’s most famous real estate investor, the most successful prognosticator of the housing market and 2/3 of all Americans say now is the time to buy a home. Shouldn’t your agent agree?

Bottom Line

Selling is nothing more than the transference of conviction. How can agents transfer that conviction if they themselves are not convinced? Find a listing agent who truly believes that someone should buy your home – TODAY! This is the single most important thing you should look for in a potential listing agent.

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New-Home Recovery Seen as Post-Super Bowl Selling Season Starts

Homebuilder executives and economists predict a post Super Bowl bounce in demand for residential construction as Americans turn their attention from football to another national pastime: house hunting.

The chief executive officers of six of the 10 largest U.S. homebuilders cited the potential of a sales comeback in the spring, traditionally their strongest season, during conference calls in the last four weeks. Housing forecasts from Fannie Mae and the Mortgage Bankers Association show the new-home market will begin a rebound that will last through at least 2012.

A revival in demand for new houses after record-low sales in 2010 may bolster a U.S. economy  that’s 19 months into a recovery. Residential construction is a key factor in gross domestic product because it requires the manufacturing of home components such as stoves, cement, tile and furnaces. Richard DeKaser, an economist at Boston-based Parthenon Group, said he expects the homebuilding industry will this year make its first positive contribution to GDP since 2005.

“The spring market is going to be the first test of the proposition that there’s an underlying improvement in new-home fundamentals,” DeKaser said in an interview. “If we don’t see the needle move, it will be very discouraging.”

CLICK HERE TO SEE THE ENTIRE ARTICLE

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Obama Due to Phase-Out Freddie Mac and Fannie Mae

The Obama administration will issue a proposal later this week recommending the gradual elimination of government-sponsored mortgage backers Fannie Mae and Freddie Mac, a White House official said Wednesday.

The highly-anticipated “white paper,” which is expected to be released Friday, will include three different options for reducing the role government plays in the mortgage market, the official said.

While the paper would mark an important development in the debate over what to do with Fannie and Freddie, a final decision by Congress is not expected any time soon.

After being rescued by the government in 2008, Fannie and Freddie have presented a major conundrum for policymakers in Washington.

The problem is that phasing out the two publicly traded companies could raise borrowing costs for homeowners and jeopardize the fragile housing market.

At the same time, Fannie and Freddie represent a major liability for taxpayers, who are on the hook for about $150 billion in federal aid the two institutions have received.

The issue has become politically charged, with some Republicans blaming Fannie and Freddie for contributing to the recent housing bubble. Democrats argue that the institutions help promote home ownership, especially among low- and middle-income Americans.

Given the political challenges involved and the threat to the housing market, any winding-down of Fannie and Freddie is likely to take place over a period of years.

A representative for Fannie Mae declined comment. Freddie Mac representatives did not immediately respond to a request for comment.

The three options in the administration’s white paper were outlined in published reports Wednesday.

The most conservative of the three options would involve no government role in the mortgage market beyond existing federal agencies, such as the Federal Housing Administration, according to the Wall Street Journal.

The two other options relate to the government’s place in the secondary mortgage market, previously filled by Fannie and Freddie. Under one option, the government would backstop mortgages during times of “market stress,” while the other recommends that the government be involved at all times.

In addition, officials could also reduce the maximum loan limit for mortgages that Fannie and Freddie are allowed to buy, and encourage them to raise the fees they charge banks to guarantee mortgages.

Other options that could be discussed in the white paper are gradual increases in the minimum down payments on government-backed loans, and an accelerated reduction in Fannie and Freddie’s loan portfolios.

CLICK HERE TO SEE THE ARTICLE – BROUGHT TO YOU BY YAHOO FINANCE

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Don’t forget, RPM Mortgage is your Fannie Mae HomePath Financing Lender

Make sure you’re aware of the First Look period with Fannie Mae HomePath homes. This is a perfect advantage for your owner occupied buyers against investors. I’ve provided a flyer below for more information. Now you have a HomePath Lender you can call!

 

“If we all worked on the assumption that what is accepted as true is really true, there would be little hope for advance.” – by Orville Wright

 The government has flown past its January 31 deadline for a proposal on the future of Freddie and Fannie, and things may drone on for a while. (For the folks at the agencies, it is probably like knowing your boss and your boss’s boss are talk about you in the office down the hall.) Rep. Scott Garrett, chairman of the House Financial Services Committee’s Subcommittee on Capital Markets, announced that he would hold a hearing Wednesday on Feb. 9 on reforming Fannie Mae and Freddie Mac. “This hearing will be the first in a series of hearings to examine the steps Congress can take right now to protect taxpayers from the ongoing bailout of Fannie Mae and Freddie Mac.” The hearing is titled “GSE Reform: Immediate Steps to Protect Taxpayers and End the Bailout,” and will focus on immediate steps that Congress can take to begin F&F’s transition out of Federal conservatorship and examine ways to end the $150 billion bailout.

Speaking of proposals, it is heavily rumored that the Obama administration will recommend reducing the size of mortgages eligible for government backing. If that happens, it will, of course, make obtaining a home loan in high-priced areas more expensive. The $729,750 figure, of course, is only temporary and only available in certain areas. (In the old days, conventional loan limits were set around Thanksgiving, with secondary marketing managers being hounded by producers leading up to the announcement.) “The administration is now likely to suggest that Congress allow the policy to lapse as scheduled in September, lowering the loan limit to $625,500.” Limits

So investors were watching closely Friday when the prepayment speeds were announced. The aggregate prepayment speeds for Fannie Mae 30-year securities dropped 24%, for example, and speeds dropped much more for recent vintages. For seasoned pools, prepayment speeds came in faster than many had projected. Prepayments are based on many things: age of the loan, maturity, original note rate, potential of using HARP for streamline refinances, etc. Barclays, for example, suggests that over the next few months 30-yr prepayments should continue to slow significantly, and that the “2010 “vintage” will likely prepay significantly slower than its 2009 counterpart, for multiple reasons. One factor that may not have been priced in by the market is that the 2010 vintage has a large concentration of HARP-refinanced loans, which should prepay much slower than average. The biggest risk to prepayments right now is a possible expansion of the HARP program to all GSE loans. That would lead to a sharp rebound in the speeds of 2009 and later production.”

Friday topped off a bad week for rates with a very confusing Employment report followed by confusing price action. The headline drop in the Unemployment rate from 9.5% to 9% generated some large block selling, but a good percentage of analysts believe deep down this report looks pretty weak with only 36k jobs created and the rate plunge largely based on the unemployed giving up on their job searches. The BLS reported that bad weather kept over 700,000 Americans from work during the survey week, which certainly introduced a negative bias into things. The weather does not have as much of an impact on the Household Survey and the big story is the fact that the unemployment rate plunged 40 basis points to 9.4%.

Is the January Jobs Report Stronger Than It Appears? The confusing employment report on Friday reflected a dramatic drop in the unemployment rate without a strong uptick in job creation. Is the unusually large amounts of snowfall to blame for the negligible progress in job growth in January? The household survey reports a 117,000 rise in employment for January, much more than the 36,000 gain in payrolls reported via the establishment survey. The establishment survey has a smaller margin of error compared to the household survey because of its much larger sample size.

Bernanke Bets Commodities Won’t Fan Inflation Concern. Surging food and energy prices won’t accelerate U.S. inflation, allowing Fed to maintain easy money.

Fed Spends 40% on Benchmark Treasuries as Newest Prove Cheapest. The Federal Reserve’s Treasury purchases already have succeeded in driving investors to junk bonds and stocks. Now the are focus is on benchmark government securities, helping contain rising yields that set rates on everything from corporate debt to mortgages.

 

 

 

 

 

Happy Friday!  This is a pretty exciting weekend for you sports fans. Super Bowl XLV　Sunday is almost here (Halftime Gig Announced – Black Eyed Peas, Fergie says “No Wardrobe Malfunctions”, I wonder what she’s referring to?? Ahh Yes, Janet Jackson!)!　 Whatever your plans may be, be safe!　 For all of us keeping it local, those that will actually be at the game will be bundling up big time with the weather in Dallas!　 Can you say “Hello Snow!!!”.　 Hosting this Sunday? Here are a few Super Bowl Snack ideas! I’m here in the office today, going into the weekend let me know if you need anything.  I’ve provided Today’s Rates should you need a pre-approval before the weekend. I’ve also shared a few questions a Realtor should be asking an appraiser. Just a reminder, RPM Mortgage has it’s own in-house, local appraisers!　 Have a wonderful weekend!

“What could you not accept, if you but knew that everything that
happens, all events, past, present, and to come, are gently
planned by One Whose only purpose is your good?”
— Quote from A Course in Miracles

If you are wondering what to do on February 16^th, why not listen in on HUD’s webinar “HUD-approved Housing Counseling Operation and Funding Overview.” This webinar will provide information on operational requirements, record keeping & reporting, use of HUD electronic systems, overview of the new HUD Counseling Handbook, etc. It’s free, although registration is required as are computer & internet access. For more information visit: HudWebinar

 

Yesterday, after the daily commentary went out, we learned that Factory Orders rose 0.2% in December, and that the ISM Nonmanufacturing Index　rose 2.3 points to 59.4 in January, hitting　a new recent high. Federal Reserve Board Chairman Bernanke himself said yesterday that the low inflation rate combined with high unemployment would normally push the Federal Open Market Committee to cut rates, if they weren’t already near zero. “Although economic growth will probably increase this year, we expect the unemployment rate to remain stubbornly above, and inflation to remain persistently below, the levels that Federal Reserve policymakers have judged to be consistent
over the longer term with our mandate…” 

HEADLINE NEWS

 

Unemployment Rate Falls 0.4% to 9% in January; Payrolls Rise 36,000; both surprising in different directions as the Unemployment rate was projected to rise to 9.5%, and Non-Farm Payrolls 140k. Average hourly earnings increased by 8 cents to $22.86 and the average workweek for all private-sector employees edged lower to 34.2 hours in January. Payrolls in construction (-32,000) and transportation (-38,000), industries most affected by bad weather, dropped in January, while factory employment rose 49k, the most since August 1998. Private-sector jobs increased by 50,000 (private account for about 70% of the work force). The benchmark revisions show 2010 ended with 483,000 fewer jobs than prior to the revision.

 

 

 

Freddie Mac Survey: Mortgage Rates Show Mixed Results This Week     . The 30yr Fixed Rate mortgage averaged 4.81% 　up from 4.80%, the 15yr rate averaged 4.08% down from 4.09% the prior week.

ZILLOW FEEDING LISTINGS TO YAHOO REAL ESTATE

Zillow.com is now powering for-sale listings on Yahoo Real Estate and selling ads that feature real estate agents and brokers on both sites, the companies said as they flipped the switch on a partnership announced in July.

Zillow said it’s providing 4 million for-sale listings to Yahoo Real Estate, which continues to maintain its own separate databases of foreclosure properties, newly constructed homes and rentals.

The partnership allows real estate agents to place local ads on Yahoo Real Estate — a capability previously offered by Zillow, but not Yahoo Real Estate — and increases the number of listings and photographs buyers see on Yahoo Real Estate, the companies said.

 

The partnership effectively doubles the exposure agents and brokers who purchase advertising from Zillow.com receive, CEO Spencer Rascoff said when the companies joined forces to create what they touted today as “the largest real estate network on the Web.”

 

 

 

 

 

　

 

 

 

 

 

 

 

 

 

 

 “If we all worked on the assumption that what is accepted is true is really true, there would be little hope for advance” – Orville Wright

As was mentioned yesterday, ARM business is on the rise. Buried in the MBA’s weekly survey yesterday was a note: applications for adjustable rate mortgages posted a weekly jump of +17.8%.

Yesterday was not the best day for the fixed-income markets. They started off pretty well, in spite of the strong ADP number, and the yield on the 10-yr was sitting around 3.40% – comfortably inside the range it has been in for a few months. But by the end of the day the 10-yr had touched 3.50%, and MBS prices were worse by .125-.250, blamed on another better-than-expected economic report (ADP) and worries about inflation related to higher commodity prices. (Since last Friday’s close, 10-year Treasuries have dropped 1.25 in price with the yield increasing about .16 %.)

Today and tomorrow are busy days for economic news, which so far are showing strength. We’ve had Jobless Claims, Productivity, and Unit Labor Costs. Productivity was +2.6% (better than expected) and Unit Labor Costs were down .6%. Jobless Claims went from 457k down to 415k, down 42k. The 4-week moving average is +1k. Ahead of us, at 8AM MST, are Factory Orders and ISM Non-Manufacturing Index. And tomorrow we will have the Nonfarm Payroll number, expected to be +140k. But after this early news, the 10-yr is still sitting around 3.50% and MBS prices are a shade worse.

Top 10 free real estate apps for Android

Search giant Google unveiled a new Web-based mobile applications store for smart phones powered under its Android operating system Wednesday.

The Android Market, which had only been available on Android smart phones until now, is now accessible through any Web browser. The portal allows users to easily search for and install apps that can be set up to automatically download to a user’s Android device.

The following rankings come from the new store, which allows users to filter apps by popularity and price. There is no formal “real estate” category in the Android Market; these apps appear in a search of the phrase “real estate” on the site. All are free.

• Zillow Real Estate
• Realtor.com Real Estate Search
• Homes.com
• Real Estate 114
• Real Estate by Smarter Agent
• Real Estate Droid
• HotPads
• HuizenZoeker (Home search in the Netherlands)
• Funda Real Estate (Home and Apartment Search in the Netherlands)
• HOME’S (Home search in Japan)

HUD reports rise in ‘worst-case’ housing needs

Unemployment, the housing crisis and high rents have contributed to a rising number of households with “worst-case” housing needs, as defined by the U.S. Department of Housing and Urban Development in a report to Congress.

Residents in an estimated 7.1 million households in 2009 were very-low-income renters who did not receive any housing assistance and paid more than half of their income toward rent and/or lived in severely inadequate conditions — up 20 percent from 2007 and up 42 percent from 2001, according to the HUD report, released this week.

“High rents in proportion to renter incomes are an increasingly dominant cause of worst-case needs,” the report concluded.

FHA Extends ‘anti-flipping’ waiver

Homebuyers relying on FHA-insured financing will still be able to buy homes that have changed hands in the last 90 days, thanks to a decision by the Federal Housing Administration to extend a temporary waiver of its “anti-flipping” rule through the end of the year.

The anti-flipping rule — a 90-day waiting period implemented in 2003 to protect the FHA’s mortgage insurance program from losses — already included an exemption for homes repossessed by Fannie Mae, Freddie Mac, and state- and federally chartered financial institutions.

But last year, FHA took the additional step of waiving the waiting period for all resale’s — including homes purchased and rehabbed by private investors.

Since the broad waiver went into effect on Feb. 1, 2010, FHA said it has insured 21,000 90-day property flip loans worth more than $3.6 billion that would otherwise not have qualified for financing.

REAL ESTATE CONNECT – SF

JULY 27-29, 2011

For those of you interested in the Real Estate & Technology Connect this year click on the link above to register today!

Real Estate Connect® brings together the brightest minds in the real estate and technology industries for three incredible days every year in San Francisco and in New York. Each year, thousands of influential thought leaders gather at Real Estate Connect to discover emerging trends in technology, to network with top real estate leaders, to meet the up-and coming start-up companies, and to learn how to leverage the change that surrounds the real estate industry.

Founder Brad Inman says, “It was clear to me that the old industry was in fear and was doing everything it could to squelch innovation. I started Connect to give the new breed a platform to connect with enlightened members of the legacy industry. We created a safe place for the young entrepreneur to shout from the roof top to introduce their products.”

 

 

 

 

 

 

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 What Exactly Is Shadow Inventory?

I’ve heard about shadow inventory for years. Does it really exist?

 

Do banks have a backlog of properties that they currently own?

 

Why are banks holding this inventory?

 

Isn’t most of this inventory sub-prime and exotic mortgages?

Not any longer. A study 

 

recently done by Morgan Stanley shows that:

 

26.3% of the loans are sub-prime

17.4% are Alt-A

56.2% are prime mortgages

Right now, prime mortgages make up the majority of loans in this shadow industry.

Isn’t most of this inventory confined to CA, AZ, NV and FL?

…the shadow inventory is growing across all of the United States…” While hard-hit cities represent a more than fair share of shadow inventory, its distribution broadly encompasses all corners of the country,” said the analysts.

 

Bottom Line

Shadow inventory is real and will impact almost every part of the country. Make sure you ask a local real estate expert to find out how it may impact your market. 

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 A FEW HEADLINES IN THE NEWS TODAY:

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

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

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

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

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

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

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

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

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

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

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

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

Is owning a home good for a family?

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

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

Has owning a home been a positive experience?
 

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

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

Do renters aspire to own a home?

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

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

Is now a good time to buy a home?

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

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

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

Bottom Line

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

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WHAT’S IN THE NEWS?

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

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

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

5 Tips for 2011

1. Build Your Listing Inventory

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

2. Be Strong on Price

3. Develop a Great Buyer Presentation Manual

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

 

5. Realize This Will Be YOUR Year!

 

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4. Get Mobile With All Your Information  

1. Build Your Listing Inventory

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

 

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

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

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

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

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

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

 

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

 

 

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

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

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

DISTRESSED INVENTORY TO STEP OUT OF THE SHADOWS

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

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

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

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

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

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

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

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



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

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

SHOULD I WAIT TO PURCHASE?

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

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

Bottom Line

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

CO-BRANDING FROM RPM

BECOME A FAN IF HAVEN’T ALREADY-

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

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

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

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

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

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

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

Bottom Line

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

BUY OR RENT? PLAY CHESS, NOT CHECKERS

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

We must play chess, not checkers.

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

Renting

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

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

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

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

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

Buying

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

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

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

Bottom Line

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