Interest Rates Rise For The Fourth Straight Week
Interest rates rise for the fourth straight week despite the FED’s $600 billion bond buying spree to keep mortgage rates low. Conforming 30 year fixed mortgage rates jump .375% from a month ago to close out the month of November.

Are rates on the way up for good? Maybe. At the end of the year four of the Federal Open Market Committee’s voting members will rotate out. Three of the four new voting members that will be rotating in have been outspoken about the risk of inflation under the FED’s current monetary policy. “The move — known as quantitative easing – is meant to keep interest rates low and stimulate spending, but has recently come under fire, as some economists think the plan could boost inflation, and even create asset bubbles. The backlash is so widespread, it includes not only outspoken politicians like Sarah Palin and conservative economists, but even internal Fed officials.” – cnnfn.com 

Although inflation is currently nonexistence, a shift in monetary policy (i.e. the winding down of the FED purchasing bonds) could send mortgage rates soaring; and fast. If you are one of the few homeowners still able to take advantage of these historically low interest rates, you may not want to sit on the fence any longer.  

The FED’s Move To Price Fix
Unless deemed illegal, the FED’s “Final Rule,” which goes into effect April 1st, 2011, will fix mortgage pricing and potentially increase rates and fees for borrowers, while decreasing consumer options. If you wanted regulation, you got it; and it will cost you dearly. 

“Is the Federal Reserve Board price fixing the mortgage business in violation of law? The Fed has a rule that they are making active on April 1 where each mortgage brokerage and banker (excluding banks) set a fixed percentage that they can charge each and every customer regardless of loan amount.” 

Technically, the Fed is violating many laws and even their own mission. Why are they doing this? According to Marc Savitt, President of the National Association of Independent Housing Professionals (NAIHP)*, “In my opinion the why is because they want to help the banks. Stronger banks, less time and (more) money for them. Plus, it makes them look like they’re doing their job.” 

Savitt goes on to say “the fact the Federal Reserve Board doesn’t have the authority to restrict compensation, we at NAIHP knew for over a year. This has been long planned and it will make mortgages harder to come by and much more expensive.” 

“NAIHP is fighting this with everything we have, including a strong grass roots network”  Savitt added.  ”Since we represent everyone in the real estate industry including mortgage brokers, real estate agents, appraisers, title insurance, small banks and consumers, we must make sure that mortgages are provided in a fair way to the person buying a small starter home in Missouri and a mansion in Beverly Hills.” 

The solution?  Savitt has met with Elizabeth Warren, talked directly with the Fed, looked for guidance from other industry professionals and has had discussions with attorneys to possibly prepare a case or an injunction to stop the Fed from implementation. 

“It stinks that we as hard working small business people have to waste our time volunteering to stop the banks from doing what they did to us in the past decade all over again,” said Savitt. “You would think they would want to get their mortgage business from the (now) NMLS licensed mortgage people that have been scrutinized more than a patted-down airline passenger! But no, they keep attacking.”Savitt continues, “They have even started trying to limit what real estate agents can charge for commissions.  I wouldn’t be shocked if they wanted to try to get Congress to let them be in real estate business.” – agentgenius.com 

With only four months before the FED Rule takes effect, there is not much time to defeat it. We are fighting to protect consumer choice. Geneva Real Estate & Investments thanks you for supporting your local licensed mortgage professionals.

Shadow Inventory Increases Likely
The volume of bank-owned properties and potential foreclosures not listed for sale is up 10 percent to 2.1 million compared to August 2009, according to new estimates from research firm CoreLogic.

Together with the 4.2 million inventory of listed homes, which is unchanged from a year ago, CoreLogic estimates the supply of homes at 6.3 million or about 23 months at the current sales pace. 

Some experts say these numbers are conservative. Analysts at Barclays Capital believe there are another 3.76 million homes somewhere in the foreclosure process, down from a peak of 4.22 million at the end of February. Source: The Wall Street Journal, Nick Timiraos (11/22/2010) 

With CoreLogic’s estimate of 6.3 million supply of homes and 23 months of supply (and this is a conservative number) combined with Barclays number of 3.76 million, this is over 10 million homes that could potentially be available for sale. These numbers push the supply closer to 3 years. This is more homes than have ever been available and is absolutely frightening!!! Where are we headed?

Foreclosure Mess Leaves Some Buyers in Limbo
An increasing number of buyers of foreclosed homes are finding that they can’t close on the property because the foreclosure — and the sale — is derailed by a problem with the foreclosure paperwork. 

“Many of these transactions will probably never close,” said Greg Rokeh, a manager of bank-owned real estate in Longwood, FL, for Watson Realty Corp. 

Rokeh said he has about 25 pending sales that are tied up in the document reviews. He predicts that most of buyers will give up and purchase a different property. 

“We understand it is a huge inconvenience to buyers,” Freddie Mac spokesman Brad German said. Source: Bloomberg, David Henry (11/24/2010) 

What if the banks were more open to working with people to do more short sales? The title transfers in a short sale and the property can be resold under market price as a regular sale, with a profit for the investor, reduces shadow inventory, stimulates the economy and provides us all a way to work ourselves out of this housing mess.

NAR: MID Must Not be Targeted for Change President Obama’s deficit commission released its final report Wednesday recommending a host of controversial spending cuts and tax changes that would cut $4 trillion in debt over the next decade. Among the proposals is a scaled-back mortgage interest deduction (MID) for home owners. 

The NATIONAL ASSOCIATION of REALTORS® immediately challenged the recommendation to reduce the deduction. “As the leading advocate for housing and home ownership issues, NAR firmly believes that the MID is vital to the stability of the American housing market and economy,” said NAR President Ron Phipps.

Here is the remainder of Phipps’s statement: 
“The MID must not be targeted for change. NAR is actively engaged on behalf of the nation’s 75 million home owners and 1.1 million REALTORS® to ensure that the current deduction is not modified as was recommended in the Deficit Reduction Commission report released today.”  

“The tax deductibility of interest paid on mortgages is a powerful incentive for home ownership and has been one of the simplest provisions in the federal tax code for more than 80 years. In a new survey commissioned by NAR and conducted online in October 2010 by Harris Interactive of nearly 3,000 homeowners and renters, nearly three-fourths of homeowners and two-thirds of renters said the mortgage interest deduction was extremely or very important to them.” 

“Recent progress has been made in bringing stability to the housing market and any changes to the MID now or in the future could critically erode home prices and the value of homes by as much as 15 percent, according to our research. This would negatively impact home ownership for millions of Americans, including those who own their homes outright and have no mortgage.” 

“Any further downward pressure on home prices will hamper the economic recovery, raise foreclosures and hurt banks’ abilities to lend and likely tip the economy into another recession resulting in further job losses for the country. It will effectively close the door on the American dream.” 

“NAR will remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest.”

 The thought that this could happen makes me shake my head in bewilderment. There are many reasons anyone would want to own a home; the bundle of rights, including the right to quite enjoyment, pride of ownership, appreciation and an active tax write off. If the tax write off. is taken away, we will see a greater deterioration of consumer confidence. The thought of the tax write off being taken away is absurd. What could the Government possibly be thinking?

One is to revamp the Home Affordable Modification Program (HAMP) to empower housing counselors to modify mortgages using a standard formula, rather than leaving this task to the banks.

Second, banks could be given an incentive to participate in HAMP by empowering bankruptcy judges to modify the principal on mortgages.

Third, experts say that making mediation programs a mandatory requirement will give banks an opportunity to meet with every distressed home owner, look through the papers, consider the nuances of the situation, and make a good-faith effort to work out an arrangement.

And fourth, right-to-rent programs could be expanded for foreclosed home owners — like the one operated by Fannie Mae, which lets home owners rent their homes at fair-market value for five years. Source: Washington Post, Ezra Klein (10/15/10)

I really like Ezra Klein’s solutions. I see them all as viable and hope that the Government can get out of it’s own way and allow solutions like these to take place. The HAMP program has been a failure. The Obama administration says that fewer than 500,000 borrowers have received permanent loan modifications. The original plan was to help 3 million to 4 million home owners. I have heard many stories of how people that were put on trail modifications and made all their payments on time were denied permanent modifications. The $billions$ given to the banks was supposed to be targeted to help people. So far, it appears that the only ones being helped is the banks.
HUD: Banks Will Be Held Responsible
U.S. Secretary of Housing and Urban Development Shaun Donovan said Wednesday that the onus is on banks to fix whatever foreclosure-related problems are found.

Donovan, who made the statement during a White House briefing about the matter, said problems found thus far haven’t appeared to be very serious, but the full investigation won’t be finished until the end of the year. If more serious problems are found, possible penalties could include fines and a ban against writing mortgages for more serious violations, he added Bank of America and GMAC Mortgage have ended their foreclosure freeze because they didn’t find significant problems. Donovan said the government wasn’t involved in those decisions. Source: Dow Jones Business News, Jared A. Favole (10/20/2010)

It has been proven that the banks have been rushing to sign foreclosure documents without thoroughly reviewing them. They say they haven’t found serious errors and will continue to plow forward. I would love to see HUD come down hard on the banks for abusing the system, I don’t know if that is realistic.

Rising Inventories Hurt Recovery Prospects
Housing economists are increasingly pessimistic about prospects for a recovery in the housing market before 2012.Half of the 109 economists and analysts surveyed this month by MacroMarkets LLC, a housing investment analysis company, believe home prices will bottom in 2011. The rest think it will take until 2012.

Housing inventories are rising in many areas and that is contributing to the pessimism. “We’ll see some additional price declines,” said David Berson, chief economist at mortgage-insurer PMI Group Inc. “The gains we’ve seen can’t be sustained given the current supply situation.” Source: The Wall Street Journal, Nick Timiraos (10/26/2010)

Declining values continue to plague our already battered housing market. We have been in a bad place for some time now and it appears we may not have seen the worst yet. Too many months of inventory to go through and percentage wise short sales and REOs are gaining in the market space. As the shadow inventory comes more into play this will contribute to the long timeframe predicted.

Wells Fargo Continues Foreclosures
Bank of America announced Sunday that no homes were foreclosed in error, but it did find a few technical errors in its investigation. As a result, it has combined the signing and notarization processes into a single step. Bank spokesman Dan Frahm said the bank believed this would prevent the possibility of further error as it restarts foreclosure actions beginning Monday.

Meanwhile, Wells Fargo & Co. is staying mum about the whole process and keeping foreclosures moving along. Foreclosure attorneys say that Wells Fargo is betting that its refusal to halt foreclosures will, in the long run, discourage more home owners from fighting foreclosure.

“My belief is it may be a strategic move not to admit anything,” said Richard Roth, founder of The Roth Law Firm in New York. “It’s a legal strategy – and it may pay off if no one refutes them.” Source: Reuters News, Elinor Comlay and Joe Rauch (10/22/2010), and The New York Times, Nelson D. Schwartz (10/25/2010)

This article appeared two days before the one below. Wells Fargo puffed up its chest and claimed they were so squeaky clean. Rush, rush, rush and push the foreclosures through the system is their mantra. I’m betting the banks are all guilty. Let’s see if the Feds do what they say they will.

Wells Fargo Says It Will Refile 55,000 Cases
Wells Fargo said Wednesday that it had made paperwork mistakes and it plans to refile foreclosure documents in 55,000 cases by mid-November, but the company said the mistakes were technical and it doesn’t plan to halt foreclosures.

Unlike other major lenders, Wells Fargo had previously refused to suspend foreclosures. It continued to maintain that the errors were inconsequential. “We don’t believe that there are instances in which the foreclosures would not have occurred otherwise,” said Teri Schrettenbrunner, a Wells Fargo spokeswoman.

In depositions, two Wells Fargo employees have said they signed large numbers of documents daily without verifying their accuracy. Source; The Associated Press, Alan Zibel (10/27/2010)

Oops, Wells Fargo is not so squeaky clean after all. In my opinion, any “error” needs to be addressed and be resolved. I guaranty you that Wells Fargo has more than two employees robo-signing foreclosure documents. Again, all the banks want to do is plow forward with little regard to the laws. Come on Feds, are you going to take some of these banks down?

FHA Streamline Refinance
FHA streamline loans do not require an appraisal. It does not matter how much you owe verses the value of the home. Anyone with a 5% interest rate or more should look into a streamline refinance. A streamline refinance allows the homeowner to lower their rate with little or no closing costs, and no appraisal. It will not solve your value issues, but it will lower your payment. Call today: 866-562-6585 and find out how much you can reduce your monthly mortgage payment.

Upfront MIP drops to 1.000% of the amount borrowed from 2.250%

Annual MIP increases to .85% (and up to .90%) of the amount borrowed from .50% 

For homeowners, this switch in MIP decreases the upfront cost of an FHA-insured mortgage, but increases the loan’s monthly and long-term costs.

For home buyers who plan on owning their new home for just a few years, the change will be of benefit. If they plan on owning the home for a longer period of time, this change will cost them more. It will however put more money into the FHA coffers.

FHA Streamline Refinance
FHA streamline loans do not require an appraisal. It does not matter how much you owe verses the value of the home. Anyone with a 5% interest rate or more should look into a streamline refinance. A streamline refinance allows the homeowner to lower their rate with little or no closing costs, and no appraisal. It will not solve your value issues, but it will lower your payment.

Call us today at 866-562-6585 and find out how much you can reduce your monthly mortgage payment.

Some Experts Weary of Government Intervention
An increasing number of economists and housing analysts are urging the government to step back and let the housing market fall where it may.

”Housing needs to go back to reasonable levels,” says Anthony B. Sanders, a professor of real estate finance at George Mason University. ”If we keep trying to stimulate the market, that’s the definition of insanity.”

”We have had enough artificial support and need to let the free market do its thing,” housing analyst Ivy Zelman says.

Even the National Association of Home Builders hasn’t been supportive of another tax credit, because its members believe that in order for one to have impact it would have to be worth at least $25,000 — an unlikely proposition.

”Our members are saying that if we can’t get a very large tax credit — one that really brings people off the bench — why use our political capital at all?” says David Crowe, NAHB’s chief economist. Source: The New York Times, Davie Streitfeld (09/06/2010)

I’m also against Government intervention when it becomes, “time and time again.” Sometimes you can’t fix things by continuing to throw our grandchildren’s money at it. You can’t have the same thing on sale everyday, people are smarter than that!

Rejected HAMP Borrowers File Lawsuits
Borrowers who were turned down by the government’s Home Affordable Modification Program (HAMP) are suing lenders in a variety of lawsuits, and several of them are seeking class action status.

Most of the lawsuits allege that the trial periods were contracts and lenders like Bank of America, JPMorgan Chase, and Wells Fargo broke the contracts when they refused permanent status to borrowers who made the trial payments on time and provided proper documentation.

Lenders are asking the courts to dismiss most of the cases, arguing that the trials aren’t contracts and they have discretion in deciding whether to approve modifications.

Nearly 620,000 trial modifications since spring 2009 have been canceled, according to an Aug. 20 Treasury report. Borrowers who are denied find themselves in worse positions because banks require them to immediately pay the difference between what they paid toward their mortgages during the trial period and what they would have owed without the trial reduction. Source: USA Today, Stephanie Armour (09/10/2010)

Although I believe the HAMP program was a good idea in theory, it has been proven to be a bust for most. The 3-month trials that are being granted by the lenders have often time turned into many, many more months as the lenders continue to “review” the file. The Government has given the lenders BILLIONS of dollars (which they never have to pay back) to help distressed homeowners. The banks are not helping the great majority of people that should get some form of relief. The banks are playing games with the homeowners and the left hand often does not know what the right hand is doing.

Fannie Warns Servicers About Foreclosures
Fannie Mae is cracking down on loan servicers that fail to follow through on foreclosures after it’s clear that the borrower doesn’t qualify for government or lender help.

Fannie has established a foreclosure schedule for homes in each state that reflects the regulations there. Loan servicers that fail to meet these timetables will be fined, Fannie said in a notice to servicers.

Mortgage data aggregator Lender Processing Services reports an estimated 2.02 million homeowners were in foreclosure in July nationwide. Another 5.02 million homeowners were behind on their mortgages.

Fannie warned in the company’s most recent quarterly report to investors that when servicers fail to deal with delinquent properties promptly they create “a shadow inventory putting downward pressure on both home prices and rents.” Source: Inman News (09/03/2010)

Looks like the lenders are being forced into a shorter timetable to complete foreclosures. Much more information regarding “Shadow Inventory” should be revealed in the next 90 days. With a worse case scenario of 7.04 million homes being foreclosed on (per the article above) the “Shadow” appears to be huge!

Foreclosure Gaffs May Further Roil the Market
Uncovering deficiencies in the foreclosure process could potentially have serious implications for the market, said Stuart Saft, a partner at New York law firm Dewey & LeBoeuf, because it raises questions about the ownership of properties that have been resold.

Mortgage servicers, who asked for anonymity, say they anticipate more legal action contesting foreclosures.

Miami attorney Richard J. Burton, who specializes in foreclosure litigation, says he expects that class-action lawsuits will be filed against GMAC and other servicers, furthering slowing the foreclosure process.

The turmoil in the market also could encourage more voluntary defaults, said Cameron Findlay, chief economist at LendingTree.com, because overwhelmed lenders may simply ignore newly delinquent homeowners.
Source: Bloomberg, Bob Ivry, Prashant Gopal and Jody Shenn (09/27/2010)

And on 09/29/2010: Second Big Lender Stops Foreclosures – A second major mortgage lender, JPMorgan Chase, has stopped foreclosures so it can review loan documents for errors.

There will be more on this hot topic for sure! There are many homeowners that contest illegal documents (and even illegal loans) and they will seek relief via Mortgage Amelioration (The act of relieving ills and changing for the better.) While the Government is telling the lenders to hurry up, the public is challenging and slowing it down. Who will win this game of tug-o-war?

Obtaining a professional property manager is a good first step. Professional property managers charge 7 percent to 10 percent of the monthly rent in many areas. Two associations whose members manage small residential properties are National Association of Residential Property Managers and Institute of Real Estate Management.

Current rents may not be high enough to cover carrying charges, including mortgage, taxes, and insurance. Nevertheless, renting out the property may still make sense if property values rise in the next few years.

Offering a 12-month lease that converts to month-to-month is a good idea, if the owners are considering selling eventually. Include language in the lease that allows a real estate professional to show the home to potential buyers with 24 hours’ notice to tenants. Source: Money Magazine, Amanda Gengler (07/28/2010)

Renting is one idea. I have a better one! Renters generally do not take care of a property the way someone who has the bundle of rights. I have a program where I can bring someone to live in the home who will love it and hug it. They will pay the PITI payment, HOA dues, we’ll put a home warranty to help protect the current homeowner and in some cases we can actually provide the current owner with a positive cash flow. Call me today at 866-562-6565 and ask me how an Equity Holding Trust works. They are available in all 50 States.

Four Proposals for Reforming Fannie and Freddie:
The government is wrestling with what to do about Fannie Mae and Freddie Mac, which have needed a combined $148 billion since the government bailed them out two years ago.

There are many ways to restructure the system. Here are four that have the most support:

1. Fully private system. Eliminate Fannie and Freddie and let private lenders take over. The problem is that the market for mortgage securities issued without government backing is small – perhaps, nonexistent.
2. Semi-private system. Dissolve Fannie and Freddie and turn their function over to private companies that would pay for the right to issue government-backed mortgage securities. Small banks don’t like this plan because it would inevitably increase the role of the largest banks.
3. Hybrid system. Fannie and Freddie would compete against other companies that would also issue government-backed mortgage securities.
4. Government-run system. Fannie and Freddie would become part of the government. This is unpopular because it would expand the ballooning federal debt. Source: Associated Press, Alan Zibel (08/09/2010)

The likeliest solution is a complex one. The Mortgage Bankers Association is proposing a system where risk-based fees on a class of mortgage-backed securities would be charged in exchange for a government guarantee against losses. Whatever the outcome, it is unlikely that Fannie and Freddie will be able to pay back the nearly $150 billion in taxpayer bailout money that they have received since 2007.

Low Rates Finally Spark Refinancings:
Mortgage lenders have seen refinancing demand rise as the 30-year fixed rate tumbled to 4.4 percent — the lowest level in the nearly 40 years that Freddie Mac has tracked the statistic.

However, experts say borrowers who would benefit most from a refi likely will not qualify for new loans due to income cuts, unemployment, low credit scores, or insufficient equity. Borrowers who already refinanced in the last 18 months, along with borrowers whose adjustable-rate loans are ready to reset, will account for most of the refi activity; and many will move into shorter-term mortgages to more quickly repay their debt. Source: Wall Street Journal, Nick Timiraos (08/13/10)

With interest rates at historic lows, it makes sense to refinance if you can qualify. We are able to put some clients currently in a 30 year fixed into a 15 year fixed without raising their payment. Another hot refinance channel is FHA streamline. If your current FHA loan is at 5% or above, call us today at 866-562-6565 to find out how we can reduce your interest rate with little to no cost and a reduced paper gathering process.

Protest Rising Over Resale Charges:
In some newly constructed housing developments home builders are including a clause in the contract demanding a 1 percent transfer fee to be paid to them every time the property is sold over the next 99 years.

The fee isn’t for improvements or maintenance. It is just a payment to the builder.

“It’s of no benefit to consumers,” says Kathleen Day of the Center for Responsible Lending. “It’s another innovative way to price gouge. Every extra dollar they suck out of people’s wallets takes away from other spending. It’s not good for the economy.”

Freehold Capital Partners, which has developed the program, says it has enlisted thousands of developers nationwide. It argues that this is good for the economy because it will provide builders with more capital.

Meanwhile U.S. Rep Brad Sherman, a California Democrat, is pushing for approval of legislation to make these fees illegal. Also, in the past month, the Federal Housing Finance Agency has proposed rules preventing Fannie Mae and Freddie Mac from buying mortgages that include home resale fees. Source: CNNMoney.com, Les Christie (08/23/2010)

Gouging in this market? Where the heck do these builders get off? They should be giving away the farm to drive volume sales, not trying to collect money on a property for the next 99 years. Let’s all boycott Freehold Capital Partners for this horrible idea. Go Brad Sherman, let’s make these fees illegal.

Fed: Give Borrowers Time to Change Their Minds:
The Federal Reserve released a proposal Monday to give mortgage applicants three days to change their minds.

The proposal was part of a 930-page document that clarifies and finalizes the new financial reform law.

The Fed’s document says that for closed-end loans secured by real property or a dwelling, a creditor must:

• Refund any appraisal or other fees paid by the consumer (other than a credit report fee), if the consumer decides not to proceed with a closed-end mortgage transaction within three business days of receiving the early disclosures (fees imposed after this three-day period would not be refundable); and
• Disclose the right to a refund of fees to consumers before they apply for a closed-end mortgage loan.”

The Fed says this proposal will make it easier and cheaper for consumers to comparison shop. It also acknowledged that borrowers who want to close a transaction in a hurry would be handicapped because most lenders will delay sending out an appraiser for a few days.

Other proposals affecting home buyers included:

• A ban on yield-spread premiums, which encourage mortgage brokers to push buyers toward more profitable mortgages.
• A requirement for lenders to tell borrowers when their mortgage is sold or transferred.
• An explanation of the effects of balloon payments, adjustable loan payment fluctuations, and minimum payments on loan balances. Source: Bankrate.com, Holden Lewis (08/17/2010)

I sincerely have no issue with the Feds giving the yield spread premium (YSP) to the borrowers as they did as of January 1, 2010. YSP can be used as a viable tool to creatively structure mortgages to the cost advantage of the borrowers. Brokers (for the most part) became Brokers because they didn’t want to be confined by the banking structure and the narrow product offering of the banks. We Brokers tend to still think outside of the box and can offer more product selection to borrowers and will work with clients to help them fix their credit and hold their hand throughout the process. My experience is that the Loan Officers working in the banks have a one loan fits all or hit the road Jack mentality. Isn’t is enough for the Feds the independent Brokers are forced to get licensed through yet another licensing entity in the Nationwide Mortgage Licensing System (NMLS) when those who choose to work in the banks are not held to the same standard? One study showed that those who have failed the National and/or State test (45% fail one or both tests) are running to go work at the banks. Who do you want working on your loan?

• Lenders must prove that borrowers can afford their mortgages. Government guarantees will be voided if lenders don’t demonstrate that they have thoroughly investigated a borrowers’ ability to pay.

• Banks and other entities that pool mortgages and sell them to investors must keep at least 5 percent of the investments on their own books – an incentive to avoid poor quality loans.

• Low-risk mortgages, mostly 30-year fixed-rate loans, are exempt from many regulations. That should encourage lenders to put home buyers into “plain vanilla” mortgages.

• Bonuses for brokers based on the cost of a mortgage are banned.

Source: Associated Press, Daniel Wagner (07/21/2010)

It will take some time for the bill to be implemented and there is only one thing for certain. Consumer protection will come at a cost, and Wall Street will not be the one paying for it. We will be closely following the Financial Reform Bill and its fallout. Stay tuned…

Million-Dollar Borrowers Defaulting
More than 14 percent — one in seven — borrowers with mortgages greater than $1 million have stopped paying them. Slightly more than 8 percent of mortgages of less than $1 million are delinquent, according to real estate analytics firm CoreLogic.

“The rich are different: They are more ruthless,” says Sam Khater, CoreLogic’s senior economist.

CoreLogic points out that the wealthy don’t seem to be particularly worried about the concerns of lesser earners like being sued by their lender or prevented from getting a mortgage in the future. Source: The New York Times, David Streitfeld (07/08/2010)

The rich did not get rich by being poor stewards of capital or chasing housing bubbles. The bulk of those defaulting on million dollar mortgages (strategically or otherwise) are simply poor people, living in big houses they could never afford in the first place.

TALF Analysts Say Loan Mods Not Working
Officials charged with monitoring the financial bailout on Wednesday criticized the U.S. Treasury Department for its handling of the housing rescue program.

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, chastised Treasury for its unrealistic goals and expectations. “I fear that the growing public suspicion that this program is an outright failure will continue unless and until Treasury … comes clean with what its goals and expectations are.”

Elizabeth Warren, who chairs the bailout Congressional Oversight Panel, said, “It’s too small, it’s too slow. The program is based on the assumption that we will pay the servicers a bribe to make a deal between the homeowner and the investor who’s still holding the paper and it has not worked well.” Source: Reuters News, David Lawder (07/21/2010)

More homeowners have been bounced from HAMP than have received permanent relief. Although updated data is being worked on; through March, federal bank regulators report that about 7.7 percent of HAMP homeowners were 60 or more days delinquent on their modified mortgages three months after the modified mortgage took effect. Overall, 11.3 percent of modifications completed during the last three months of 2009 were at least 60 days late after three months, according to the June 23 report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

33,000 Media Outlets to Promote HAMP
The Kaplan Thaler Group, a New York-based advertising agency, in cooperation with the Ad Council, has created a pro bono campaign to persuade home owners to learn about the federal government’s program for helping troubled home owners modify their home mortgage.

The Ad Council will distribute the new public service announcements for the program, called the Making Home Affordable Program (HAMP), to more than 33,000 media outlets nationwide.

The campaign includes television, radio, print, out of home and web advertising. The PSAs will air in advertising space donated by the media. Source: HUD

Statistics prove the program does not work, the numbers don’t lie. The government, in their infinite wisdom, collectively thinks and comes up with…Let’s see, the program doesn’t work…hmmmm…how about we spend more tax payer dollars on promoting it. Brilliant!!!

Homeownership Falls to Lowest Level Since 1999
The homeownership rate fell to 66.9 percent in the second quarter, down from 67.1 percent in the first quarter, according to the U.S. Census Bureau. This was the lowest level since 1999.

The homeownership rate reached a record high of 69.2 percent in the second and fourth quarters of 2004.

Rising foreclosures are driving the decline. A record 4.6 percent of U.S. mortgages were in foreclosure in the first three months of 2010, the Mortgage Bankers Association reported in May. Source: Bloomberg, Kathleen M. Howley (07/27/2010)

I keep having the same thought over and over…We need jobs to help fix the economy and in turn fix the housing market. Until there is job creation, there is little hope of housing recovery.

…and finally this interesting article: It tells the story of Ralph Ronzio of Orange County, CA, who bought a condo, and then a house (when he and his fiancee had kids), tried renting out the condo, but then couldn’t cover the cost of the two mortgages. So what did he do?

The more he thought about the money he was losing, the more it stressed him out. Finally, Ronzio enlisted the help of a firm called You Walk Away and did exactly that from the remaining $319,000 on his condo mortgage. When the bank foreclosed, he says he felt a sense of relief. He also had more cash. He and his fiancee took the kids to Disneyland. Ronzio, 31, gave himself a treat as well.

“I bought myself an iPad,” he says.

How about this idea…Instead of a bank giving people “cash for keys” when a foreclosure takes place, they can give them an all expenses paid trip to Disneyland and an iPad. That should fix everything!

The average borrower in foreclosure is unlikely to be evicted for 438 days, says LPS Applied Analytics. LPS says more than 650,000 households haven’t paid their mortgage in 18 months, and in the case of 19 percent of those households, the lender hasn’t made any effort to repossess the property.

In some states like California and Texas, lenders can foreclose without a say-so from the courts. In those states, the action is likely to be quick. But in 19 states, including Florida and New York, the court must approve the foreclosure and resulting eviction and the process is slow.
Source: The New York Times, David Streitfeld (05/31/2010)
This is more prevalent than most people realize. I recently spoke to a homeowner who hasn’t made a payment in over 2 years and continues to live in their home. It shows me that we still have a long way to go to clean up this mess.

How to Boost Your Search Engine Rankings
The majority of real estate agents are missing out on a key strategy that will yield them much higher rankings on Web search engines. Most practitioners are competing with each other over short-tailed keywords, which are just a few words strung together that Internet users type in for searching purposes.

This is a misguided step on the part of real estate professionals, since as much as 80 percent of all search engine activity actually uses long-tailed keywords — phrases typically consisting of five to seven words. For property searches, many prospective buyers have very specific details in mind and therefore will not search under a broad term such as “San Diego real estate,” for example.

Rather, they are more likely to enter a phrase like “San Diego three bedroom home in gated community.” Because agents are focused on short tailed keywords, there are thousands of Web sites competing for those same terms; meanwhile, the competition of long-tailed keywords is virtually nonexistent.

To be effective and successful in using long-tailed keywords, an agent must write up and index dozens, possibly even hundreds, of them in order to generate traffic and results. The keyword phrases can be inserted in blogs, social media posts, YouTube videos, classified ads on the Web, and article marketing and portal sites.
Source: RISMedia, Sean Callahan (05/27/10)
Think broad terms with several relevant words and you will attract better traffic. Not more traffic, but traffic with genuine interest in what you have to offer.

Chinese Housing Bubble Is ‘Huge’
Anyone who thought the U.S. housing bubble was bad should take a look at what’s happening in China.

Official Chinese data shows real estate prices in 70 cities climbing 12.8 percent in April, an unsustainable rise for the country, according to Standard & Poor’s.

A typical 970-square-foot apartment in Beijing cost $278,160 in 2009, 111 times the average household annual income in the city of $2,514. In comparison, the average U.S. home sold for $316,800 in 2007, 5.4 times the median household income of $58,480.

“The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the U.S. and U.K. before your financial crisis,” Li Daokui, a member of China’s Central bank monetary policy committee, told the Financial Times.
Source: Daily Finance, Peter Cohan (06/02/2010)
This is not good news at all. The China housing market and economy had been climbing rather nicely. This will probably have an effect on the U.S. economy in the form of consumer confidence, or lack thereof. It has just started to effect our own propped up stock market.

Building a Home Is a Bargain These Days
Builders, designers, and architects say now is a great time to build a new custom home or remodel an existing one.

Not only are there plenty of unemployed and under-employed workers available, but also property is for sale at bargain prices and construction materials are at bargain levels.

“It makes a lot of sense right now,” said Stephen Melman, director of economic services for the National Association of Home Builders. “People are available to do the work. They are going to bid competitively so I’m sure that will drive the price down.”

The only problem could be financing, which can be hard to arrange.
Source: Investor’s Business Daily, Marilyn Alva (05/27/2010)
This is good news for those that are planning on buying a newly constructed home or building their own new home. Homes are less expensive to build than they have been in a long time. With property and construction materials at “bargain levels” you could find yourself with a fair amount of built in equity.

Fannie and Freddie Stock Delisted from NYSE
Quasi-governmental mortgage finance giants Fannie Mae and Freddie Mac have voluntarily delisted their stock from the New York Stock Exchange after their values fell to less than $1.

The other option was to present a plan to bring share value back above $1, but the federal regulator in charge of the firms opted against that because, according to a notice from Federal Housing Finance Agency, the government couldn’t be sure of success.

“A voluntary delisting at this time simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets,” said Edward DeMarco, the agency’s acting director.
Source: The Wall Street Journal, Nick Timiraos (06/17/2010)
Freddie Mac said it expects the delisting of its common and preferred stock will happen by July 8. Fannie Mae indicated it will be delisted in early July. The companies’ shares will now be traded in the over-the-counter market where they will be quoted on the OTC Bulletin Board, typically the domain of untested companies and more speculative stocks. They will still file disclosures with the Securities and Exchange Commission.”De-listing is the appropriate message: That these companies have no value and they shouldn’t be traded as if they’re real companies,” said Bose George, an analyst for Keefe, Bruyette & Woods Inc.

FBI Pursues More Mortgage Fraud Cases
The U.S. Justice Department said yesterday that it had charged 1,215 people over the last three years in mortgage fraud cases that resulted in estimated losses of $2.3 billion.

In a little more than three months, FBI agents have arrested 485 people for mortgage fraud and recovered more than $147 million. In that same span, 336 individuals have been convicted on this charge.

The FBI is still pursuing more than 3,000 mortgage fraud cases, twice the number under investigation in 2008.

”I can assure you that where we have allegations of fraud in larger institutions, we are continuing the investigations that we’ve started over the last several years,” says FBI Director Robert S. Mueller III.
Source: Reuters News (06/18/2010)
Many will look at this article and think negatively of the mortgage industry as a whole. I’m extremely proud to be a part of the mortgage industry and think that getting those who are committing fraud out of the business is great. That and those who fail or refuse to take the NMLS tests will thin out the industry rather nicely.

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Home Owners Seeking Help
If you owe more than your home is worth and do not know what to do, please give us a call. Geneva Financial Services. Inc. offers federally funded mortgage options that may allow you to refinance your current mortgage into a lower monthly payment. We do not offer loan modifications.

Need help with a short sale? Geneva Real Estate & Investments has many seasoned short sale real estate specialists that will help sell your home at no cost to you. Our two companies are working hard to help distressed homeowners. Contact us toll free 866-562-6565

If you’re finding your current Loan Officer isn’t getting it done for you, or you would like to compare pricing and service, call today for your individual scenario rate quote.

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Treasury officials say many modifications were cancelled because of loan servicers’ failure to verify homeowners’ income. Beginning June 1, the program requires that all modifications be based on verified income statements.

“We expect a much lower rate of cancellations going forward as the percentage of verified income modification increases,” said Herbert Allison, assistant Treasury secretary for financial stability.
Source: Los Angeles Times, Jim Puzzanghera (05/18/2010)
This is some good news that this program is finally starting to gain traction. It is sad it has been so long in coming. Many more people have lost their homes waiting for their lender to help them. I hope the trend continues and helps many more homeowners keep their home. For some, the HAMP program will only be a band-aid and unfortunately foreclosure will follow.

Housing Prices Could Rise 12.4 Percent by 2014:
Housing prices are expected to increase 12.4 percent between 2010 and the end of 2014, predicts MacroMarkets, which surveyed more than 100 analysts and market strategists.

Those interviewed didn’t all see the housing market in the same light. Joseph LaVorgna, a economist at Deutsche Bank predicts that home prices will rise 37 percent by the end of 2014.

On the most bearish end, both Anthony Sanders, professor of real estate finance at George Mason University, and investment adviser Gary Shilling, president of A.Gary Shilling & Co., expect prices will decline 18 percent.
Source: The Wall Street Journal, James R. Hagerty (05/19/2010)
“John S. Paulson, the hedge fund manager who made $15 billion shorting the real estate market, said Monday (05/10/10) that he expects housing prices to rise between 3 percent and 5 percent this year and another 8 to 12 percent in 2011.” – cnbc.com If either of these come true, it is good news for the Real Estate market!

5 Fixes to Gain More Clients:
Errol Samuelson, president of REALTOR.com®, identified ways real estate pros can make quick fixes to instantly attract more quality leads — that is, buyers serious about entering a transaction. His fast-paced presentation at REALTORS® Midyear Legislative Meetings & Expo on Thursday spelled out the problems and offered solutions for building a Web audience, making contact with leads, developing meaningful communication, cultivating leads and clients, and following up after the transaction.

Here’s a look at his top five:
1. Audience: A changing dynamic between the buyer and real estate pro is evident in NAR statistics: In 2001, 48 percent of buyers purchased properties their practitioners found for them. That figure dropped to 36 percent last year.
“You have a larger audience out there of people finding homes themselves and bringing them to their agents,” Samuelson said.
The Problem: Finding content and resources to add to your Web site that meets the needs of the audience you’re trying to connect with.
The Fix: You can look at real estate sites in three distinct ways. A “type A” site publishes content and news stories. It will generate lots of traffic, but visitors tend to read one article of interest and leave the site. “It’s a great way to build brand; a great place to build awareness,” Samuelson said.
The “type B” Web site offers a lot of market stats and trends. Again, this site will get hits, but often the visitors may not always be potential buyers, Samuelson says.
A “type C” site specializes in searches and listings. These sites tend to keep visitors engaged for longer periods of time — often the visitors are in the early stages of looking for a home.
Samuelson says the key is to know what to expect from these sites and create a blend of all three.

2. Contact: People are twice as likely to phone an agent rather than use e-mail when looking at homes online, Samuelson said. With a mobile app, the potential client is 10 times more likely to call vs. use e-mail.
Why is mobile so important? “This is one of the fastest product adoptions ever,” Samuelson said. There were more than 1 billion app downloads in the fourth quarter of 2009 alone.
The Problem: When a potential client does make a call, Samuelson said statistics show agents only answer 30 percent of the time. Furthermore, 45 percent of the calls go to voicemail (but over half won’t leave a message), 17 percent ring but voicemail never picks up, and 8 percent get the wrong number.
The Fix: With the shift to mobile devices, answering the phone becomes more important than ever, Samuelson said. If you can’t be there to answer, make sure someone can. And be responsive to voicemail right away.

3. Communication: First-time buyers made up 47 percent of the market last year. Your job is to communicate with relevance to the people who are buying.
The Problem: Call reluctance. The main reasons for call reluctance, Samuelson said, is that practitioners don’t know who they are calling or what to say.
The Fix: Approach communication as a way to help potential clients understand the home buying process. Realtor.com offers a first-time home buyers’ guide you can find at http://www.realtor.com/freetraining/midyear. Don’t forget to put your contacts into a database — it’s too hard to do it any other way, Samuelson said. Track who is opening your e-mails; list interest signs and personal interests, too. This way you’ll feel more comfortable engaging them on topics they prefer, Samuelson said.

4. Cultivation: To cultivate is to grow.
The Problem: Not tailoring your approach to grow relationships with potential clients in ways that are lasting and meaningful.
The Fix: Samuelson said that mixing up your forms of communication can make a huge impact on interest level. Sure, use regular phone calls and e-mails, but also send quick messages on personal matters. Use market trends as a conversation starter. Meet in person for coffee; introduce the human element.
And don’t forget to ask for feedback on the job you’re doing. The idea of authenticity is important when providing relevant information that’s fact-based.

5. Transaction: The close of a sale is not the end of an agent-client relationship – it’s just another phase.
The Problem: Practitioners get overwhelmed dealing with the transaction or don’t have a system in place to continue their interaction with a client. According to the 2009 NAR Buyers and Sellers Survey, 21 percent of home owners don’t hear from their agent again. Approximately 43 percent hear from their agent occasionally, 13 percent monthly, and 9 percent weekly.
The Fix: Continue your cultivation after the sale, which is becoming easier than ever with social networks and blogs.
— Erica Christoffer, REALTOR® Magazine
Some common problems and some good advice for fixes. 1. People are more often finding the homes themselves because of the Internet. They will (in most cases) still use the services of a REALTOR to complete the transaction. 2. Keep your phone on 24 hours a day or risk losing the client to someone else. 3. Be prepared to educate and have the patience to work with first time home buyers. 4. Keep communication flowing throughout the course of the transaction. You will strengthen the bond and create a better chance at referrals. 5. Have a system in place to continue to commuincate with your clients after the sale. You aim should be to keep working with your clients for life.

Borrowers Choose Default Out of Anger or Fear:
Some Americans are choosing default because they are fearful or angry, according to a new study by University of Arizona Associate Professor Brent White.

White studied defaults in which the borrower could have avoided losing their home but went that route because they owed more than the home is currently worth.

White argues that deliberate default isn’t the result of thoughtful strategizing, but a response to anxiety. He called default “contagious” with people more likely to default if they know others who have done so.

White believes that the answer is a “rent-based loan program” giving underwater borrowers payments in line with the cost of renting a comparable home. That will give borrowers a sense that they are paying a fair price instead of “throwing their money away” on a loan that they’ll never be able to pay off, White says.
Source: The Wall Street Journal, James R. Hagerty (05/10/2010)
I agree that if a loan is going to be modified, the payment has to be in line with the local rent rates. If it is not and the borrower is upside down in the home, they have much less motivation to stay there. Rent becomes a make sense choice.

Home Owners Seeking Help:
If you owe more than your home is worth and do not know what to do, please give us a call. Geneva Financial Services. Inc. offers federally funded mortgage options that may allow you to refinance your current mortgage into a lower monthly payment. We do not do loan modifications.                

Need help with a short sale. Geneva Real Estate & Investments has many seasoned short sale real estate specialists that will help sell your home at no cost to you.  

Our two companies are working hard to help distressed homeowners. Contact us toll free at: 866-562-6565 at anytime with questions.

Tax Credits Have Been Pricey and Effective
As the home buyer tax credits near their end, analysts are concluding that the program was both expensive and successful.

The Treasury Department estimates that the credits helped 1.8 million people buy homes, but critics reply that two-thirds of the $12.6 billion in credits spent through the end of February went to people who would have purchased a home anyway.

Sen. Johnny Isakson, a Republican from Georgia, who worked as a real estate practitioner for 30 years and pushed through the 2010 extension and expansion of the program, says: “It’s true that a lot of people who got the credit might have bought without it, but they might have bought in 2012 or 2013. This got them to buy in 2009 and 2010, when we needed to shore things up.”

Economist Mark Zandi at Moody’s Economy.com agrees. “The tax credit helped to stanch the price declines, which had substantial benefit for the entire economy,” he says. “The home is still the largest asset on most people’s balance sheet, so when prices are falling, nothing works for most families. But now people can take a deep breath and think clearly again.”

Source: The New York Times, David Kocieniewski (04/26/2010)
If you did not have a signed purchase agreement by March 30 and close by June 30, you will have missed the boat on the first-time home buyer tax credit. I believe the $8,000 credit had a positive, yet small effect on the economy. It is going to take a turn around of the job market to get the economy back on the proper track.

Fed Reaffirms Near-Zero Interest Rates
The Federal Reserve reiterated its intention to keep key interest rates near zero for “an extended period” in a statement released Wednesday.

“Economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” the Fed statement said.

While some analysts questioned the Fed’s position, John Silvia, chief economist at Wells Fargo Securities, said, “There are questions about the pace of the recovery and the sustainability of the housing recovery. Therefore, it is too early to move. The extended period is still in force.”

Source: Bloomberg, Craig Torres and Steve Matthews (04/29/2010)
So far, the big rise in rates that many had expected when the Federal Reserve ended its mortgage-backed securities purchase program last month hasn’t materialized. In fact, the instability in Europe amid looming debt woes for Greece and Portugal has sent investors looking for safer assets such as the 10-year Treasury, to which fixed-rate mortgages are closely tied. That has helped to keep rates down. While the Feds investigation of Goldman Sachs continues to unfold, we will have to wait and see what effect (if any) their alleged criminal acts bring upon our economy and interest rates.

Economist Says It’s Time to Raise Rates
Some economists are saying that it’s time for the Federal Reserve to raise interest rates.

Ken Rosen, chair of the University of California Fisher Center for Real Estate, says the financial crisis is over and short-term rates today should be 2 to 3 percent. By keeping rates so low, “We are encouraging asset bubbles in the stock market, bond markets, and global real estate,” Rosen says.

Demand for housing will increase as employers hire more workers, Rosen adds.

Rosen predicts construction of new homes will remain well below the historical norm of 1.1 million homes a year for at least two or three years and foreclosures will set records in 2010. “The shadow inventory is real,” he says.

Source: Inman News, Matt Carter (04/26/2010)
It is only fair for economists to weigh in on what interest rates should do and it is also fair for me to disagree. If interest rates rise now, a domino theory will play out for the so called “double dip” for our economy. Housing would become less affordable, causing the amount of inventory to rise and what’s left of consumer confidence would further erode. These three things are only the tip of the iceberg. BTW, I do agree with Mr. Carter’s statement about shadow inventory, it is real. Who is going to buy all these homes?

Short Sale Rules Effective April 5
The federal government’s standardized rules and forms for short sales took effect April 5. The servicing arms of lenders who are participating in the government’s loan modification program, known as HAMP, have to participate in the standardized short sale procedures, because those procedures are considered a subset of the modification program. Learn about these rules in a 14-minute video walk-through with Jeff Lischer, NAR managing director of regulatory policy. For more info contact Jeff Lischer, jlischer@realtors.org, 202/383-1117. Review all the details on NAR’s Short Sales page.
The video player is somewhat slow to load. Once you get the player open, click on the video in the upper right. It is labeled: Understanding HAFA – Federal Short Sale Rules. There is some great information on short sales and the changes on short sales that started April 5.

Lenders Unload Mortgages to Collection Agencies
Lenders are selling second mortgages and home-equity lines in default to collection agencies that have the right to collect this money potentially for decades.

“It’s a big business, and investors are coming out of the woodwork,” says Sylvia Alayon, a vice president for Consumer Mortgage Audit Center, which analyzes mortgage documents for lenders, advocacy groups, and attorneys.

Real estate professionals will be doing their short-sale clients a big favor if they urge them to get professional advice before they sign agreements, Alayon says.

A new government short-sale program, which takes effect April 5, aims to prevent banks from reselling this debt. Sellers covered under the program will receive notice that secondary lien holders have received part of the proceeds of the sale “in exchange for release and full satisfaction of their liens.”

Source McClatchy/Tribune News, Jim Wasserman (04/19/2010)
A couple of other notes on the new Short Sale program; 2nd lien holders are no longer be allowed to ask permission of the 1st lien holder to ask for a larger payment. The 2nd lien holders are partially subsidized by the program. Also, negotiators will no longer be allowed to receive compensation via the commission.

Fannie Adds Incentive to Avoid Foreclosure
Beginning in July, Fannie Mae will allow financially troubled home owners to complete a “deed in lieu of foreclosure” or a short sale and be eligible to apply for a new Fannie-backed mortgage in two years.

Currently, borrowers who have completed a deed-in-lieu must wait four years to apply for a loan that Fannie will purchase. Home buyers who go through foreclosure must wait five years.

All these waiting periods can be reduced further, if the potential buyer can show extenuating circumstances. “We are beginning to think about post-recession, how you address borrowers who became unemployed through no fault of their own … and now deserve the right to re-enter the housing-finance system,” said Federal Housing Association Commissioner David Stevens.

Source: The Wall Street Journal, Nick Timiraos (04/26/2010)
I like the idea of a shorter (two year) period as it will allow many people who lost their homes through little or no fault of their own to become home owners again (as long as they are properly qualified) and therefore reduce the amount of inventory in the market at a quicker pace.

Borrowers Would Do Things Differently
Borrowers say they spend no more time researching a mortgage loan today than they did two years ago before the market meltdown, according to a survey by Zillow.com. And that’s unfortunate, says Zillow Chief Economist Stan Humphries

“The last few years should have driven home the lesson that understanding one’s home loan is critically important, but mortgages continue to be something that most people don’t want to spend time thinking about,” he says.

The survey found that of the 16 percent of U.S. adults who obtained or refinanced a home loan in the last five years, 65 percent would do things differently if they could.

• 58 percent would like to compare terms for loans on an apples-to-apples basis.
• 56 percent would like fees standardized and easier to understand.
• 52 percent would like it to be easier to shop around for rates.
• 50 percent would like to get more than one quote without sharing personal information.
• 19 percent would want to learn more about the mortgage process.
• 15 percent would want it to be easier to choose a lender based on other’s experiences.

Source: Zillow.com (04/29/2010)
I believe it was the Feds intention to make bullet points 2, 3, and 4 a reality with the new GFE. Unfortunately, they stumbled badly. Bullet point 1 is a reality via the new GFE, as it encourages borrowers to shop. I’m surprised by the low percentage in bullet point 5…I would think more people would like to learn more about the mortgage process. Looking at all this, wouldn’t it be nice for all of us to go back and do things over.  

Interest Rate Update
Mortgage Type         Interest Rate             APR
30 Year Fixed         4.750%                    4.910%
15 Year Fixed           4.125%                     4.399%
5/1 LIBOR ARM      3.250%                     3.397%

If you’re finding your current Loan Officer isn’t getting it done for you or you would like to compare pricing and service, call today for your individual scenario rate quote.

*Interest rates as of 04/30/10. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

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Jeffrey W. Markell
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Geneva Real Estate & Investments
4029 Westerly Place Suite 201-B
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“We will not be out of this crisis until home prices truly stabilize in the United States. They appear to have stabilized, but they are very fragile,” Greenspan said in a televised interview.

“Eventually housing will come back; it can’t get any lower,” he added.
Source: Reuters News (03/25/2010)
Housing and jobs must stabilize before we truly see our way out of our economic woes.

Markets Where Home Prices Could Rise Most
Money Magazine has released its latest home-price projections for the country’s largest metropolitan areas. Here are the 10 cities where it believes home prices will rise the most in the next year, and the 10 where it foresees the most substantial declines:

Where prices will rise:

• Santa Rosa, Calif., 6.0 percent
• Cheyenne, Wyo., 4.7 percent
• Kennewick, Wash., 4.6 percent
• Merced, Calif., 4.4 percent
• Bremerton, Wash., 4.2 percent
• Fairbanks, Alaska, 4.2 percent
• Corvallis, Ore., 4.1 percent
• Tacoma, Wash., 3.9 percent
• Anchorage, Alaska, 3.8 percent
• Bend, Ore., 3.3 percent

Where prices will decline:

• Miami, -22.5 percent
• Fort Lauderdale, Fla., -21.3 percent
• West Palm Beach, Fla., -18.5 percent
• Phoenix, -18.5 percent
• Las Vegas, -15.4 percent
• Tampa, -13.8 percent
• Pensacola, Fla., -13.6 percent
• Gainesville, Fla., -13.4 percent
• Suffolk, N.Y., -13.4 percent
• New York City, -12.9 percent
Source: Money Magazine (03/20/2010)
Nice to see some California cities on the expected to rise list. Some of the other sand States (Arizona, Nevada and Florida) have cities that are expected to continue to decline. Where is the bottom for them?

Investors to Pick Up Slack in Mortgage Backs
The Federal Reserve ends its purchase of mortgage securities this week and private investors are expected to step in.

The change probably won’t push mortgage rates up very much. Analysts expect they will rise less than a quarter of a percentage point in the next three months. That gain would increase a monthly payment on a $250,000 mortgage by $30.

In a statement released March 12, Freddie Mac predicted that mortgage rates would average 5.2 percent on a 30-year fixed loan after the Fed stops buying. Fannie Mae put the rate slightly higher at 5.13 percent.
Source: Bloomberg, Kathleen M. Howley (03/30/2010)
Keep an eye on this. My best guess would be that we will see higher rate increases then this article predicts.

Bank of America makes major step to right troubled mortgages, will reduce some loan principal
CHARLOTTE, N.C. (AP) — Bank of America is taking a major step to help some of its most troubled mortgage borrowers. The bank says it will forgive up to 30 percent of some customers’ loan principal.
The bank has said Wednesday it will start forgiving principal for homeowners who owe more than 120 percent of their home’s value. The plan, to begin in May, is among the first by a U.S. mortgage lender that takes a systematic approach to reducing mortgage principal when home values drop well below the amount owed. The effort is aimed at preventing foreclosures. Bank of America, based in Charlotte, N.C., is the largest mortgage servicer in the country. Ieva M. Augstums, AP Business Writer, On Wednesday March 24, 2010, 11:40 am EDT
Who will be the next bank to follow suite? When someone has a good idea, others like to copy it.

Wells Fargo Will Modify Second Mortgages
Wells Fargo & Co. has joined Bank of America Corp. as the first two banks to sign onto the federal government’s program to modify second mortgages.

Under the government’s plan, borrowers who have been extended loan modifications on first mortgages can now apply to reduce their second mortgages.

Analysts say banks have been reluctant to adopt this part of the government’s loan modification program because they continue to hold most second mortgages and forgiving them will be costly.
Source: The Associated Press (03/17/2010)
Same comment here…Who will be the next bank to follow suite? It makes sense for banks to modify instead of charging off and it going to a collection agency.

Loan Changes Could Alter Market
The FHA’s move to raise upfront mortgage insurance premiums takes effect next week, soon to be followed by a reduction in allowable seller concessions toward a borrower’s closing costs.

Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that “this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA’s assistance to purchase a home.” He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.
Source: Memphis Daily News, Eric Smith (03/30/10)
FHA raises their Upfront Mortgage Premium from 1.75% to 2.25%. FHA loans remain a tremendous tool for buyers who can afford the mortgage payment, but don’t have much money to put towards a down payment. This should not hurt too much.

Survey Shows Frustration With HAMP
Real estate practitioners mostly gave the Obama administration’s Home Affordable Modification Program (HAMP) a thumbs-down, according to a report from Market Pulse Survey for Homes & Land.

Only 10 percent of the respondents — 51 percent of whom had been in the business for at least 10 years — believed the administration’s program had done any good. Sixty-five percent said they didn’t think the program was working; and the remaining 25 percent weren’t sure.

“Clearly respondents to our survey don’t believe this program is helping to reduce foreclosures,” says Eric Adair, business development analyst for Homes & Land.
Source: Inman News (03/03/2010)
Foreclosure inventory is increasing, see below. HAMP is not working.

Foreclosure Inventory Is Increasing
The inventory of foreclosed homes that banks are sitting on is rising, threatening to push home prices down further in some parts of the country.

Analysts at Barclays Capital estimated that banks and mortgage investors held about 645,800 foreclosed homes in January, up 4.6 percent from December. That is down significantly from the peak of 845,000 in November 2008.

States with the largest number of foreclosures are Florida, Arizona, Nevada, California, and Michigan.
Source: The Wall Street Journal, James R. Hagerty (03/19/2010)
Just how big is the shadow inventory? A recent study indicated it was over seven million units, which is well over a full year’s supply at current levels. Only five years ago, the shadow inventory level was just over one million units.

HARP Receives a One-Year Extension
The Home Affordable Refinance Program (HARP), which was supposed to expire June 10, will be extended for another year, the Federal Housing Finance Agency said in a statement.

Since HARP began last April, it has refinanced 190,180 mortgages. It is administered by Fannie Mae and Freddie Mac and aimed at borrowers with little or no equity in their homes.

This program is a sister to Home Affordable Modification Program (HAMP), which was severely criticized by Congress last week for failing to help enough struggling home owners.
Source: Reuters News, Corbett B. Daley (03/01/2010)
That’s a far cry from helping the 4-5 million homeowners that the program originally promised. Another flawed Government program.

Option-ARM Rates Could Spike
Option-ARM loans represent fewer than 2 percent of all home loans, but those loans add up to nearly $300 billion because they were written to finance pricey homes, according to research firm First American CoreLogic.

So far, rates on many option ARMs haven’t risen because overall interest rates have stayed low. But if actions by the Federal Reserve push rates up, then option ARMs will go up as well.

Unless these option ARMS are quickly restructured, a large share of these borrowers will walk away, says Paul Leonard, director of the Center for Responsible Lending’s California office.
Source: Los Angeles Times, E. Scott Reckard (03/20/2010)
$300 billion is huge money any way you slice it. If these loans are not restructured (and most will not be) more people will walk away and the 1+ year of shadow inventory mentioned above will be pushed substantially higher.

Home Equity Loans Available Again
Banks are again offering home equity loans.

Lenders are expected to make about $36 billion in new home equity loans over the next year, according to Moody’s Economy.com. That’s actually more than the $34 billion in home equity loans made in 2008.

The difference will be the way the money is spent, says Frank Nothaft, chief economist at Freddie Mac. Most of it will go for necessary home improvements. “Consumers are better at managing their own personal balance sheet as a result of the difficult recession we went through,” Nothaft says.
Source: Bloomberg, Kathleen M. Howley, Prashant Gopal, John Gittelsohn (03/11/2010)
Yeah! Some good news. Banks are offering HELOCs again and look for them to start offering them in first position soon.

The mortgage investor offers a cash reward to borrowers to keep paying. The amount varies by borrower based on income, negative equity, geography, and other risk factors. The more likely a borrower will default, the bigger the carrot. The borrower can’t collect the payment until the mortgage is paid, although the rewards can be used to help pay off the mortgage if the property is sold.  The plan keeps lenders from having to mark properties to market and take big losses. Frank Pallotta, a founder of Loan Value Group and former executive at Morgan Stanley and Credit Suisse, says the program will pay for itself if only a few borrowers stay put and keep paying. Source: The Wall Street Journal, Nick TimiarosFannie, Freddie Go After Bad Loans
Accountants at Fannie Mae and Freddie Mac are auditing mortgage files to uncover loans with improper documentation about a borrower’s income, and then forcing banks and savings and loans to buy the loans back.   

Freddie required lenders to buy back $2.7 billion of loans in the first nine months of 2009. Fannie Mae won’t disclose its figures, but the mortgage trade publication Inside Mortgage Finance said Fannie made $4.3 billion in loan-repurchase requests in the first nine months of 2009. One result is that banks are underwriting mortgage loans even more carefully than they were last year, which can further slow the lending process.”If you’re being hit with a lot of repurchases very suddenly, the easiest thing to do is to tighten your standards rapidly,” said Glenn Boyd, a Barclays analyst. Source: The Wall Street Journal, Nick Timiraos  

Homebuyer Tax Credit Ends Soon
To take advantage of the homebuyer tax credit, buyers must be under contract by April, 30th, 2010. The home must also close by June 30th, 2010 to qualify. Warning of Rising Interest Rates
For some analysts, uncertainty is just around the bend. That’s because one of the government’s most successful programs is scheduled to end by March 31. That’s the Federal Reserve’s massive $1.42 billion dollar program to buy mortgage backed securities, MBS, and government agency debt.  The program, initiated about a year ago, lowered 30-year mortgages rates from roughly 6.00 percent to 5.00 percent and in the process narrowed the spread between 10-year Treasury note and long-term loans to more attractive levels. The program created much needed liquidity in the mortgage lending market because private firms were not lending. The Fed has been gradually slowing those purchases to create, as stated in its January FOMC statement, “a smooth transition” for the markets.  ”I do see headwinds in the housing market,” says Scott Anderson, senior economist with Wells Fargo. “The headwinds will intensify. The first real test of that will be the end of the MBS program at the end of March.  The government’s goal is have the private mortgage market pick up more of the lending.”If you stop doing it, mortgage rates will go up–we just don’t know how much, ” says veteran Fed watcher David Jones of DMJ Advisors.  Rates To Rise But How Much?
The market’s range for that increase is somewhat large–between a fifth of a percentage point and a full percentage point. A consensus, however, seems to have formed around half a percentage point. At the worst then, 30-year mortgage rates would be around 6 percent, which is still historically low and thus presumably attractive to borrowers.”It will have a negative impact, but not a great negative impact,” says Jed Smith, an economist with the National Association of Realtors. “I don’t think it will kill the housing market recovery.”Another uncertainly is what the Fed does after it stops buying. Does it begin selling its massive portfolio or does it hold it? Does it wait a short or long amount of time to sell? Does it sell gradually, regularly or more aggressively? Does it signal its intentions or not?”I don’t think the Fed wants to be permanently supporting the housing market,” says Gayer of Brookings. “The longer you stay in the harder it is for the private market to stand up again.” 

The problem is no one knows because it hasn’t been done before.   

“The Fed is going to be completely winging it,” says Jones of the Fed’s overall exit policy. The Fed is unlikely to change its plans at this point, unless a major negative hits the economy, although some say it should be willing to reconsider at this point.  ”The credit markets are still dysfunctional, the banking system is still in distress,” says Brian Bethune, chief U.S. financial economist at IHS Global Insight. “There’s no new credit flowing. The Fed is obviously getting too impatient about tightening credit.” Future Options 
Other economists say Fed Chairman Ben Bernanke signaled his concern about the housing market and implied the Fed was paying very close attention to it in his two appearances before Congress this week.  ”The Fed has said it is constantly under review,” says Robert Brusca, chief economist with Fact & Opinion Economics. “The Fed may have to revisit it.”  That could be as simply as re-entering the market, if interest rates too much. In addition, industry sources familiar with the thinking of Treasury Secretary Timothy Geithner and Bernanke about the MBS program say they are keenly aware of the downside risk. ”He’[Bernanke] is only going to remove that money if the real estate market can sustain itself,” said one source.”Geithner made it clear they’re not going to do anything stupid,” said another.  That may be, but there’s legitimate concern about the housing market recovery, even including those who rightly called its apparent bottom last spring. ”There’s an issue now as to whether we get a double dip in housing–and I think he will,” says Jones. YTD Banks Seized Count at 22
WASHINGTON (Reuters) – Regulators seized two banks in Nevada and Washington state on Friday, bringing the year total to 22 as small institutions continue to struggle with bad loans. The Federal Deposit Insurance Corp said Rainier Pacific Bank in Tacoma, Washington was closed, and its deposits were assumed by Umpqua Bank of Roseburg, Oregon. Carson River Community Bank in Carson City, Nevada also was closed, and its deposits were assumed by Heritage Bank of Nevada, Reno, Nevada, the FDIC said. The agency said earlier this week that the number of “problem” U.S. banks jumped 27 percent during the fourth quarter of 2009 to 702, the highest level since 1993 and a sign that the industry’s recovery remains uneven. The vast majority of those banks do not fail, but the size of the list indicates the number of institutions with significant weaknesses. Rainier Pacific Bank had about $717.8 million in total assets and $446.2 million in total deposits as of December 31, 2009, the FDIC said. It said Umpqua Bank would pay the FDIC a premium of 1.04 percent to assume the failed bank’s deposits. It also was buying about $670.1 million of Rainier Pacific Bank’s assets, and entered in a loss-share transaction on $578.1 million. Carson River Community Bank had about $51.1 million in total assets and $50 million in total deposits as of December 31, 2009, the FDIC said. Heritage Bank of Nevada did not pay the FDIC a premium to assume the deposits of the closed bank. It agreed to buy about $38 million of the failed bank’s assets and entered into a loss-share transaction on $28.5 million of the assets. The FDIC said Rainier Pacific Bank’s closing would cost the FDIC’s insurance fund $95.2 million, while Carson River Community Bank’s closing would cost the fund $7.9 million. The FDIC on Tuesday reported that additional provisions for expected bank failures sunk the balance of the FDIC’s insurance fund even further to a negative $20.9 billion at the end of the year. Despite a negative balance for the FDIC’s insurance fund, which safeguards accounts up to $250,000, the agency says it had about $66 billion in cash resources as of the end of the year to operate and back customer accounts. Smaller institutions are still struggling with deteriorating loan portfolios, especially with loans tied to commercial real estate. The FDIC set aside an additional $17.8 billion during the fourth quarter for expected bank failures. 

Since January 2008, 187 banks have failed. Regulators have said 2010 will likely be the peak year for failures in this banking crisis. (Reporting by Andrea Shalal-Esa and Karey Wutkowski; editing by Carol Bishopric)Thank You For Your Continued Support
In 2006 during the height of the mortgage industry and housing boom, mortgage brokers accounted for 65 percent or more of all mortgages. Today that number is estimated at just over 15 percent. The reason for our past dominance in this industry is that we have more options than the Big Banks. We have access to dozens of different lenders that have a diverse appetite for different types of loans, property types, and borrowers. Sweeping mortgage reform and regulation, a lot too late, has had an adverse effect on the industry as a whole, felt most by under capitalized banks, and small business mortgage brokers.   

This year the mortgage broker will attempt to mount a comeback. Despite all that still stands before us (i.e. New HUD rules and the FED intervention) we still have the most diverse options of mortgage products. We still offer the most competitive rates and fees. The S.A.F.E. Act mandated that all loan officers and mortgage brokers not working for a FDIC insured bank had to go through classroom mortgage education, take a state and national test, and be licensed. Loan officers at Big Banks do NOT. Mortgage brokers are and will continue to be faster, more diverse, less expensive, and now smarter than the Big Banks.  Thank you for your continued support of small business owners, and your local mortgage broker.