Take down the tree, put away the stockings and throw away the cookies you just can’t find any more room for in your belly. New Year’s Eve is will be here quickly and then…it’s on to 2011.

 “Much of the stress that people feel doesn’t come from having too much to do. It comes from not finishing what they’ve started.”

 — David Allen: Management consultant, trainer, and author

Late last week the Federal Reserve Board approved a new interim rule amending Regulation Z, which implements the Truth in Lending Act (TILA) and which clarifies a previous interim rule issued in September. The September regulations focus on implementing provisions of the Mortgage Disclosure Improvement Act (MDIA), which amended TILA to require mortgage lenders to disclose examples of how a loan’s interest rate or payments can change, and kick in at the end of January. Starting then, “lenders’ cost disclosures must include a payment summary in the form of a table stating the initial rate and corresponding periodic payment and, for adjustable rate loans, the maximum rate and payment that can occur during the first five years as well as a “worst case” example showing the maximum rate and payment possible over the life of the loan. The new interim rule clarifies that creditors’ disclosures should reflect the first rate adjustment for a 5/1 adjustable rate mortgage, and should show the earliest date the consumer’s interest rate can change rather than the due date for making the first payment under the new rate for interest-only loans. The rule also clarifies which mortgage transactions are covered by the special disclosure requirements for loans that allow minimum payments that cause the loan balance to increase” per law firm BuckleySandler. For a copy of the press release, check out RegZ but for a copy of the actual notice go to FedResRegZ

Check Out My New Profile on About.Me

“For here we are not afraid to follow the truth wherever it may lead…”
— Thomas Jefferson

Economists make their living off of forecasting the future, or explaining why their earlier predictions were incorrect. But by then, most have forgotten the earlier prediction, or at least, I usually do. Rarely do traders base decisions on what an economist will say, but in the mortgage banking arena, predictions by the MBA, Freddie, and Fannie carry a little more weight. (For example, in October the MBA announced its prediction that mortgage originations could be 30% lower in 2011 than in 2010.) Per Fannie Mae, the fourth quarter will not wind up being a memorable time for housing sales. Fannie has projected that existing sales will increase slightly, but that new home sales will drop significantly. Fannie expects 2010 housing sales to be down 7% from last year, and with slightly lower median prices across the nation. But it expects things to pick up in 2011.

Taxpayers will find $2.7 billion in their stockings after news broke that six regional banks have repaid TARP funds. Can you believe that it has been two years since our government invested $389 billion in the financial system? “Hats off” to companies who have already repaid the money.

Yesterday we learned that according to the NAR, Existing Home Sales rose 5.6% to a seasonally adjusted annual rate of 4.68 million in November from October, but are about 28% below late 2009’s levels. MBS prices finished the day roughly unchanged, and the 10-yr closed at 3.35%. The market opened up slightly better bid overnight and into the New York open aided by a weaker than expected GDP (2.6% versus an expected 2.8%), but then gradually faded throughout the day.

Today is a new day, and we finish the business week with Durable Goods, Personal Income and Consumption, Jobless Claims, and New Home Sales, along with the announcement of next week’s auction sizes for the 2-year, 5-year, and 7-year note auctions. Durable Goods, always volatile, was -1.3% in November, but ex-transportation it was strong. Jobless Claims came in at 420,000, down from a revised 423k. Personal Spending was +.4% in November, and Personal Income was +.3%. After the initial spate of news, the yield on the 10-yr is at 3.38% and MBS prices are roughly unchanged, maybe slightly worse.

I want to thank everyone for an incredible year.  2010 has come with challenges but all of you have stepped and call yourself a survivor.  No longer are you a survivor, you are a professional in a professionals market.  I am proud to support your business and thank you for all the support you have given my team and I.  I wish you and your family a wonderful holiday season and am excited to work with you in 2011.  So,  go home and be joyful with your family and know that I am grateful to have you in my life.  I have provided 5 Quick Tips for 2011 (see below).  Enjoy…

1. Realize only the GREAT agents are going to make it.

To truly be considered a great agent, we must realize good isn’t good enough any longer. We must commit to excellent service and an exceptional experience for our buyers and sellers. It is not about fancy logos or cute slogans. It is about making sure that anything that can be done to help, is done. That commitment separates us from the pack and enables us to be certain that our current customers will easily recommend us any chance they have.

2. Realize it is the MISSION, not the money.

One of the things that definitely separate ‘good’ agents from ‘great’ agents is the belief that, if we do the right things every day, success is guaranteed. Get up early, get dressed for work and then get to work. We must have faith that by doing so, the money is guaranteed. When we have that type of belief in our business, we concentrate on our mission, not the money. We can rest easily at night because we put in a good day’s work.

3. Know how to communicate points simply and effectively.

Seth Godin put it best: “That what you tell them, they will not believe. That what they tell themselves, they ALWAYS believe.”

The sales process has changed forever. Top achievers realize that it is no longer how well we ‘sell’ our proposition. Instead, it now is about educating the consumer so they can pick the proper option for themselves and their families. If we agree that educating the consumer is the key to success, we must communicate with so much more than words today. Visual depictions (graphs, charts and tables) of the information make it much easier for the consumer to comprehend. Top real estate professionals spend hours on making sure that their four presentations (listing, buyers, price adjustment and presenting the offer) are true learning experiences. They load each presentation with great graphic examples of each and every point they make.

4. Have a ‘talking point’ every day.

People are so thirsty for good, current information on the housing market. If we are the resource of that information, we will be seen as the expert in our market. Visit the KCM Blog (www.KCMblog.com) and read it every day with your morning coffee. Share the posts when appropriate.

5. Build your listing inventory.

The first few months are crucial in determining how you will finish 2011. If you owned a shoe store, you would want it to be well stocked so that every customer could find something that fits. It is no different in real estate. Make sure your real estate ‘store’ is well stocked

“Babies don’t need a vacation but I still see them at the beach. I’ll go over to them and say, ‘What are you doing here, you’ve never worked a day in your life!’.”

~ Stephen Wright     I have attached a flier of questions that you should be asking your non RPM appraiser before allowing them access to the subject property.  With the new appraisal changes I am hearing and reading nothing but heartaches related to out of area appraisers.  The appraisals are done incorrectly with the wrong comps and adjustments.  Values coming low, poor service, etc. etc.  Use this sheet when scheduling your next appraisal.  Remember I can almost co brand any flier you want with your picture and contact information.  If you have a need for a special flier with current market info let me know.  Make it a great Friday and let me know if I can be of service.    

My father used to say, “It’s OK to kiss a nun, but don’t get into the habit.” Speaking of habits, the bond market has become accustomed to the Fed buying 
mortgages. What if they stopped? Federal Reserve President Lacker suggested the Fed may not need to spend the full amount it pledged ($1.25 trillion, 
for folks keeping score at home) to buy mortgages. So when someone like that suggests ceasing the program, it probably means a) the economy is seeing 
enough of a rebound that rates may move higher, or b) the demand for mortgages (artificial, yes, but demand nonetheless) will be lower, pushing prices 
lower and rates higher. So prices indeed did move down after his comments. 

Interestingly, it was reported that net purchases by the Fed totaled over $25 billion in the week compared to the 2009 weekly average of $23.3 
billion. For the six weeks prior to this, the Fed’s weekly totals were below $23 billion. Once again, where would mortgage rates be without the Fed 
having stepped in and been buying production? Would other entities have picked up production of roughly $4 billion a day?

The other day Existing Home Sales were up over 7%. That is great news. But as I mentioned earlier in the week, the “recovery” is not impacting every segment in the same way, and in fact most of the housing price boom has been in the lower-priced home market. For example, sales of houses priced at less than $100,000 were up almost 39%. But sales of homes with a price tag of over $250,000 were actually down, and in fact for anything more than $1 million sales were down 25-30%. 

Who are the large servicers of commercial and multifamily loans, which is supposedly the next big shoe to drop? Coming in first, according to 
the MBAA, is Wells Fargo/Wachovia Bank, with $476 billion in U.S. master and primary servicing at the end of June. PNC Real Estate/Midland Loan 
Services came in second, with $308 billion; Capmark Finance finished third, with $249 billion; KeyBank Real Estate Capital took fourth place, with 
$133 billion; and Bank of America finished fifth, with $132 billion. Add ‘em up to get $1.3 trillion. The MBAA breaks down the servicing into several 
categories, such as largest servicer for commercial securities, largest servicer for life insurance companies, etc.  
And speaking of servicing, Bank of America has completed the transfer of 180,000 FHA and VA loans (mostly held in Ginnie Mae securities) from Taylor, 
Bean and Whitaker. I imagine their IT department put in some overtime on that little project. 

 
Today we had Personal Income and Personal Consumption, and later this morning we’ll have the University of Michigan Consumer Confidence figures. Consumer spending (“Personal Consumption”) was up .2%, as expected, in July, mostly attributed to the "cash-for-clunkers" program. June’s spending number was revised to +.6% from +.4%. Unfortunately for people earning incomes, Personal Income was unchanged in July, and thus with spending rising faster than incomes, the personal savings rate fell to 4.2% from 4.5% in June. These numbers, combined with what looks like another day of improving stocks, have pushed the yield on the 10-yr up to 3.51% and pushed 30-yr mortgage prices down (worse) by about .125.

“Every action of our lives touches on some chord that will vibrate in eternity.”

~Sean O’Casey

I guess this is how some borrowers feel when they lock a loan in a volatile market: http://www.megawoosh.com

Or maybe that is how any agent who has a lock with TBW feels. Today is the anniversary of the bombing of Hiroshima, and the date that some are finding out yesterday’s news that a large lender is gone. “TAYLOR BEAN MUST CEASE ALL ORIGINATION OPERATIONS EFFECTIVE IMMEDIATETLY”. Taylor, Bean & Whitaker Mortgage Corp. (“TBW”) received notification from the U.S Department of Housing and Urban Development, Freddie Mac and Ginnie Mae (the “Agencies”) that it was being terminated and/or suspended as an approved seller and/or servicer for each of those respective federal agencies. “Regrettably, TBW will not be able to close or fund any mortgage loans currently pending in its pipeline. TBW is cooperating with each of the Agencies with respect to its servicing operations and expects to continue to service mortgage loans as it restructures its business in the wake of these events.” Supposedly TBW is returning all original notes to the appropriate warehouse lenders and returning any closed files delivered via hard copy to the lenders/banks.

With the unraveling of Taylor Bean, who are the better-known wholesale lenders out there receiving business from brokers? Wells Fargo is still in the game, as is ING, Flagstar, and Fifth Third. Citi is buying broker loans from their larger clients. United Mortgage, Security Atlantic, Provident, Platinum Mortgage, Luther Burbank, Stearns Lending, First Cal, Union Bank of CA, Assurity, and Bank of Ann Arbor are some of the other players that are still left standing.

Hey, is too late to buy stock in AIG, CIT, Fannie, or Freddie because they’re cheap? Their stocks all shot up yesterday: AIG’s +63% (a new CEO takes the helm Monday), CIT up 38%, Freddie was +31%, and Fannie was +30%. AIG, who owns Radian Group, announced that Radian made a $231.9 million profit. Why did analysts guess that Fannie Mae and Freddie Mac climbed? On a rumor that James Lockhart, the director of the Federal Housing Finance Agency that oversees them, will resign soon. Not to be outdone, Citigroup set a record yesterday of 347 million shares trading in the stock market. Citi’s stock was up over 10% yesterday.

GMAC Financial Service’s mortgage division, which includes Residential Capital, saw its pre-tax loss widen to $2 billion in the second quarter. “The distressed mortgage market led to increased credit costs”. GMAC’s total after-tax loss for the quarter totaled $3.9 billion, down from a loss of $2.5 billion in the year-ago period. Company officials attributed the widening loss to a series of charges: the sale of its international mortgage assets, a goodwill impairment related to its insurance division, etc.

Short sales (where the house is sold for less than the outstanding debt) continue to increase. From the buyers point-of-view, although the time-frame involved is variable, lenders appear to be improving their service and turnaround time in dealing with approving short sales. From the seller’s point of view, a foreclosure impacts their credit rating for much longer than a short sale. At this point, the seller is probably going to be liable for any taxes, taxed at ordinary income levels, on the amount of debt that is forgiven by the original lender.

How are brokers dealing with the new TIL issues? It is another hurdle, and they will survive, but here is one question that has come up: “If MDIA applies to creditors collecting money only after making proper disclosures and a waiting period of 3 days, would a brokers’ collection of money be an issue? Although a broker may not be a creditor, brokers may not collect any fees from the borrower, aside from a reasonable fee to receive a credit report, until the borrower has received the initial TIL disclosures. And does this impact the HVCC rules, where brokers must place any appraisal orders through the lender’s approved HVCC compliant process and enter a credit card & pay upfront? The borrower may not be charged a fee, including an appraisal fee, aside from a reasonable fee to receive a credit report, until the borrower has received the initial TIL disclosures. To expedite the process of ordering the appraisal, if permitted by the HVCC, the broker should be able to give the borrower the option of providing his or her credit card information to the broker (for delivery to the creditor) and tell them that the borrower’s credit card will be not be charged until the borrower has received the early TIL disclosures.

Back to something simple, like interest rates. Yesterday we found out that the Non-Manufacturing ISM survey surprisingly declined, which helped rates, and in addition the Fed continues to buy about $4 billion a day, $20 billion a week, of mortgage originations which is expected to continue into the future. How can that hurt? Of course, on some days the markets think that the recession is over with, and that tends to push stocks and rates higher – until it doesn’t, and then both head the other way. And on other days the market focuses on the supply: the Treasury announced they will auction $75 billion next week, $37 billion of 3-yr notes, $23 billion in 10-yr notes, and $15 billion of 30-yrs. All were about as expected, but that doesn’t mean the market won’t go through its usual gyrations next week during the sales.

This morning the news has pretty much consisted of Jobless Claims. Workers filing claims dropped more sharply than expected last week. Initial Claims were down 38,000 to 550k, lower than the 550k expected. The number of people collecting long-term unemployment benefits, however, rose by 69,000 to 6.31 million in the week ended July 25th. (Continuing claims had dropped for three straight weeks.) And the four-week moving average for new claims fell 4,750 to 555,250 in the week ended August 1, which is the 6th consecutive week of dropping. After the news the yield on the 10-yr is up to 3.77% and mortgages are worse by about .125.

“Be patient with yourself. Self-growth is tender; it’s holy ground. There is no greater investment.”

~Stephen Covey
   

                                      Recently several people were seriously injured during the Running of the Bulls in Pamplona. As it turns out, unleashing angry bulls onto a narrow crowded city street is dangerous. Incredible!