MORTGAGE TIME Mortgage Market News for the week of Jan. 3, 2014

Compliments of: Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website IMPROVING ECONOMIC ACTIVITY The economic data released this week reflected continued improvement in the economy, but there was little market reaction. While some volatility was seen during the final days of 2013, mortgage rates ended the week with little net change. Heading into the new year, recent economic data has provided many reasons to be optimistic about the performance of the economy. The US has added an average of nearly 200K jobs over the past three months, and the Unemployment Rate has declined to 7.0%, the lowest level since November 2008. The ISM national manufacturing index held near the highest level since April 2011. Consumer Sentiment jumped to the highest level since July. Finally, Housing Starts were 30% higher than one year ago, at the highest level since February 2008. The Fed’s recent decision to taper its bond purchases reflects its confidence in the sustainability of the economic recovery. Mel Watt is scheduled to be sworn in on January 6 as the new Director of the Federal Housing Finance Agency (FHFA). The FHFA is the agency that oversees the operations of Fannie Mae and Freddie Mac. Since a large percentage of mortgage loans made today are eventually sold to or insured by Fannie Mae and Freddie Mac, Watt will have a very significant influence over mortgage lending. Watt has not made public much of what he will do differently from outgoing Acting Director Edward DeMarco, but his policies are expected to be more accommodating to housing finance. Watt has stated that he will delay the recently announced guarantee fee increases that Fannie Mae and Freddie Mac had planned to begin charging in March. ALSO NOTABLE • November Pending Home Sales increased slightly from October • Construction Spending rose to the highest level since March 2009 • 2013 was the best year for the Dow stock index since 1995 • The Treasury will auction $64 billion in 3-yr, 10-yr, and 30-yr securities WEEK AHEAD The important monthly Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, ISM Services and Factory Orders will come out on Monday. The Trade Balance will be released on Tuesday. The Minutes from the December 18 Fed Meeting will be released on Wednesday. These detailed Minutes provide additional insight into the debate between Fed officials, and it will be interesting to see the degree of support behind the decision to taper. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.

WHAT TIME IS IT?! that’s right….MORTGAGE TIME

MORTGAGE TIME Mortgage Market News for the week of Dec. 13, 2013

Compliments of: Patrick Gardner Mortgage Loan Officer NMLS ID: 378888 415-423-1424 Email me Visit my website FED MAY TAPER SOON Stronger than expected economic data and progress on a budget deal in Congress caused investors to move forward their expected timing for the Fed to begin to scale back its bond purchases. This hurt both stocks and bonds, and mortgage rates ended the week a little higher. Fed officials have revealed several conditions which will help them determine when to reduce their bond purchases. Recent economic events and comments from Fed officials suggest that those conditions may have been met. The performance of the economy may be sufficient to make Fed officials comfortable reducing the level of monetary stimulus. A broad range of recent economic reports revealed gains in the labor market, GDP growth, Retail Sales, and manufacturing. In addition, Congress moved closer this week to reaching a two-year budget deal. The proposed deal would reduce the level of uncertainty about fiscal policy, which is another concern of Fed officials. As a result, investors expect the Fed to announce in the near future that it will begin to taper its bond purchases, and some think that it may take place as soon as next Wednesday’s Fed meeting. Congressman Mel Watt was confirmed this week as Director of the FHFA. The FHFA is the conservator over Fannie Mae and Freddie Mac and as such has tremendous influence over much of the mortgage market. Director Watt takes over from Acting Director Edward DeMarco whose last act was to raise the fee Fannie Mae and Freddie Mac charge borrowers to guarantee loans. Unless reversed by Watt, the fee increase will be effective beginning early next year and will result in an increase in most mortgage rates of about 0.10%. ALSO NOTABLE • Core PCE inflation was just 1.3% higher than one year ago • US household wealth increased to a record high during the third quarter • The Treasury will auction $96 billion in 2-yr, 5-yr, and 7-yr securities next week • Euro zone employment levels held steady during the third quarter WEEK AHEAD The next Fed meeting will take place on Wednesday. The statement is scheduled to be released at 2:00 et, and a press conference will take place at 2:30 et. Whatever indications Fed officials reveal about the timing of the taper likely will produce a significant reaction. The most closely watched economic data next week will be the inflation indicators and the housing market reports. The Consumer Price Index (CPI), an influential monthly inflation report, will come out on Tuesday. Housing Starts will be released on Wednesday, and Existing Home Sales will come out on Thursday. Industrial Production, Philly Fed, GDP revisions, Empire State, and Productivity will round out a busy week.

Your Weekly Mortgage Time is Here…(better late than NEVER!)

MORTGAGE TIME Mortgage Market News for the week of Oct. 25, 2013

Patrick Gardner Mortgage Loan Officer 415-423-1424 Patrick.Gardner@EverBank.com NMLS ID: 378888 Visit my website JOBS FALL SHORT With the end of the government shutdown, investors turned their attention to the economic data. The September Employment report was weaker than expected, while the rest of the data released this week was mixed. As a result, mortgage rates ended the week a little lower. Delayed by the shutdown, the September Employment data was released on Tuesday. Against a consensus forecast of 180K, the economy added just 148K jobs. The Unemployment Rate unexpectedly dropped from 7.3% to 7.2%, the lowest level since November 2008. The decline was mixed news, though, since it was due to both job gains and to people who left the labor force, meaning that they stopped trying to find a job. Bottom line, the results were weaker than what Fed officials would like to see. Between the ongoing uncertainty about future fiscal policy and the slow pace of improvement in the labor market, investors now expect that the Fed will not begin to taper until at least the March Fed meeting. While the labor market data disappointed investors, the housing market continued to perform well. September Existing Home Sales were just slightly down from the four-year high reached in August, and they were 11% higher than one year ago. Total inventory of existing homes available for sale was unchanged at a five-month supply. Since the Existing Home Sales data is produced by the National Association of Realtors, it was unaffected by the government shutdown. The New Home Sales report, which is produced by the government, is delayed. ALSO NOTABLE • FHFA said Fannie/Freddie loan limits won’t be reduced for at least 6 months • Consumer Sentiment declined to the lowest level since December 2012 • Oil prices dropped below $100 per barrel for the first time since early July • The Treasury will auction $96 billion in 2-yr, 5-yr, and 7-yr securities next week WEEK AHEAD Next week will be packed with economic news, as the calendar includes many reports that were delayed by the shutdown. Wednesday will be the biggest day due to the Fed meeting. Investors will be looking for indications that Fed policy will not change any time soon. The crowded calendar includes Industrial Production and Pending Home Sales on Monday, PPI and Retail Sales on Tuesday, CPI on Wednesday, Chicago PMI on Thursday, and ISM Manufacturing on Friday. And that’s not all, as there will be Treasury auctions on Monday, Tuesday, and Wednesday.

How the Government Shutdown will Effect Financing

How the Government Shutdown will Effect Financing

 

Most Government Sponsored Entities like Fannie Mae and Freddie Mac and VA are operating as normal and continue business as usual. FHA is staffed with limited personnel and trying not to delay closings or have their business deterred but I would watch FHA loans and applications very closely(like you weren’t already) to make sure there is no funny business.

 

The big challenge at the moment for all in the industry is the IRS having its doors closed. On nearly every mortgage loan application borrowers are required to complete the IRS Transcript request form called the 4506-T. This form is sent by the lender to the IRS and they provide the lender with tax transcripts verifying income from tax returns for the previous years requested. This is how the lenders quantify borrowers W-2’s, 1040’s, business income and just about every other possible income from credible tax returns or reported income. The IRS will likely not be processing any 4506-T requests during this shutdown. Depending on the duration of the shutdown, requests may be delayed and there may be a backlog of requests that the IRS will need to process when they do re-open. Additionally the Social Security verifications from the Social Security Administration are not available.

 

In the meantime, EverBank’s policy for this is if tax returns were prepared by a third party, our Processor and/or Underwriter must independently validate the existence of the third party via an internet search and/or obtain verification of the CPA license. If the returns were prepared by an entity such as H&R Block, the office location should be verified. In general EverBank will not suspend loan closings due to the absence of 4506-T validation, however Underwriters still have the responsibility to conduct proper due diligence of the income documentation provided in loan files. Any red flags need to be addressed as thoroughly as possible without the assistance of the tax return transcripts at this time. Significant red flags in a loan file that cannot be addressed or cleared may warrant postponing a closing until a tax return transcript can be obtained from the IRS.

 

In general lenders are hopeful mortgage loans will not be delayed and optimistic the shutdown will not last more than a few weeks. Origination companies, correspondent banks, and warehouse lenders may react differently as they access the risks associated with an extended shutdown. If it does last more than a month we may be in for some rocky times on the mortgage side, for now let’s go with business as usual and be mindful when entering contract with an FHA buyer.

 

Hope this information is helpful and re-assuring.

Thanks, Patrick

 

Patrick Gardner
Mortgage Loan Officer
Office: 415.423.1424
Cell:  510.599.8499
Fax: 415.477.2146
patrick.gardner@everbank.com

 

Everbank.com/pgardner
NMLS ID: 378888

California REALTORS® Applaud New Law on Short Sales

By Leslie Berkman

RISMEDIA, July 26, 2011—(MCT)—Under a new state law, any lender who agrees to a short sale—which by definition will yield insufficient funds to cover the outstanding loans on a property—must accept it as payment in full for all loan balances. That is a good thing for upside-down homeowners who need to sell, says the California Association of REALTORS®.

In a prepared statement applauding Gov. Jerry Brown for signing SB 458 into law, the association observed that previously a first mortgage holder could accept an agreed-upon short sale payment as full payment for the first mortgage but a junior lien holder could still hound the seller for the full amount owned on the junior lien.

“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” says association President Beth L. Peerce.

“SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders—those in first position and in junior positions—will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property,” she adds.

Those shopping for a home in the $500,000 to $1 million price range should not tarry. That is because they will probably face higher interest rates and more strict underwriting standards and will need to make a larger down payment later this year when conforming loan limits increase, cautions California Association of REALTORS® President Beth L. Peerce.

“Would-be buyers on the fence need to act well before Sept. 30, when the conforming loan limit is set to be lowered, to avoid a higher cost of homeownership,” Peerce said in a prepared statement.

Lowering the limits on mortgages eligible for purchase by Fannie Mae and Freddie Mac could have a broader impact than on individual homebuyers, says Peerce. “As the housing market tries to gain a more solid footing, the decrease in conforming loan limits that is scheduled for later this year could adversely affect the market,” she says.

Copyright (c) 2011, The Press-Enterprise, Riverside, Calif.

What is Really Happening in the Foreclosure / REO Real Estate Process / Market? One Agent’s Point of View

Is it possible there is a corrupted process at the very top (wall street executives, wall street investors, bank executives, hedge funds, etc.) Here is a thought: We know banks are not willing to reduce the principle loan amount for owners under water. That can easily be measured by the number of completed loan modification that include a principal reduction. Very (very) few: About 49,000 of all the proprietary modifications completed reduced both
the loan principal and monthly interest payments. Out of how many foreclosures again? About 1.2 mil? The ones that are done are merely to keep the politicians at bay so the banks can say they are following their guidelines.

But…….banks are very willing to foreclose on any property, and sell the properties in REO bulk at 55-60% of current market value. This allows rich “investors” to buy these properties, and then turn around and sell them back to the consumers market at 85% of value and make 20-25% of the investment in about 4 months. We are talking about $60 – 100 million REO investment per deal (read “tape”) . You and I cannot take advantage of these incredible returns, as we have no “insider” at the bank who will give us that opportunity. These opportunities go to “connections” so they can make a ton of money on foreclosed properties. Pretty easy money, no? Then here is this question: If banks are willing to write down the REO to 60% of value, then why  can they not do a principal forgiveness for say 25% to the home owner? The write off to the bank is the same “loss” no? The big difference is that in the first scenario, the profit goes to the big investors at wall street. In the second scenario  the “advantage” goes to the home owners.

So what would be the difference in the real estate market today (read values and prices), if we had used the second scenario? Well for sure there would be a lot less “distressed” properties. The home values would not have declined as much, which also means there would have been much less of a “recession” in real estate, and home owners would have felt very good about staying in their homes, so no strategic defaults, and thus a much “happier” consumer who might have been able to spend money on the economy.

When will we learn to do the right thing for all Americans?

Antoine E. Pirson, MBA, CCRM
Broker and Investment Consultant
Caldecott Properties
5251 Broadway, Oakland, CA 94618
Office: (510) 594 2400 x 234
www.investmentpropertyfirst.com
Fax: (510) 594 2424
Lic Nr: 01372814

Are Banks Hurting Real Estate Values? One Agent’s Opinion is “YES”

I am sure we all have experience in selling or buying short sales and REO’s. Maybe in your neck of the woods, it is different, but here in California’s Bay Area, it seems that banks are not making the right decisions and are not capable of communicating between departments and are indeed preventing real estate values from stabilizing or appreciating. Here are two examples:

1. I was representing a buyer in short sale, and had an accepted offer from the seller and bank approval.  Two  before close of escrow, the bank foreclosed, and the property was bought at the county court house steps for $50,000 less than the accepted short sale offer (this is a loss even with the costs of the sale). This is an example of a lender’s inability to communicate between departments.  Not only does this not make sense from a business / financial perspective, it also lowers the area prices by $50,000 on equivalent homes.  

2. I was representing a buyer in a REO condo purchase.  I had an accepted offer from the bank, and was going through the mortgage underwriting. The lender (for the buyer) decides NOT to do the loan, even after appraising the property at value, because the building does not meet a Fannie Mae guideline that was not designed for new construction.  The original developer  (whose name is on the Final Public Report issued by the California Department of Real Estate) still owns 40% of the total number of units.  This resulted in the buyer walking away after spending $400 for appraisal and $400 for inspections. The condo unit sold for $75,000 less than the short sale offer. All the condo owners in this complex  were negatively impacted by this sale which may result in these owners “strategically walking away” furthering the challenges faced in the current real estate environment.

You tell me the banks are NOT preventing real estate to rebound?

Antoine E. Pirson, MBA, CCRM, CCIM (candidate)
R.E. Broker and Investment Advisor
Caldecott Properties
5251 Broadway, Oakland, CA 94618
Office: (510) 594 2400 x 234
www.investmentpropertyfirst.com
Fax: (510) 594 2424
Lic Nr: 01372814

New Borrower Web Site Available ~ KnowYourOptions.com

 

Fannie Mae has launched KnowYourOptions.com™, a new consumer education Web site that outlines the choices available to homeowners who are struggling with their mortgage payments, and provides guidance on how they can contact and work with their mortgage company to find solutions.

The online resource, which offers reliable and easy-to-understand information in both English and Spanish, expands on Fannie Mae’s ongoing efforts to help struggling borrowers find alternatives to foreclosure. Key features of KnowYourOptions.com include:

• an interactive Options Finder to help homeowners identify options that might be right for their situation;
• calculators to help borrowers understand how many of the options work, including refinance, repayment, forbearance, and modification;
• videos featuring real homeowners discussing how they received help and housing counselors providing advice;
• a virtual assistant to walk homeowners through key areas of the site; and
• next steps and helpful forms, including a financial checklist and contact log to help borrowers be prepared when contacting their mortgage company or housing counselor.

KnowYourOptions.com provides homeowners who are having trouble paying or recognize they can no longer afford their mortgages with detailed information on

• refinancing, 
• repayment plans, 
• forbearance, 
• loan modifications, 
• Deed-for-Lease™,
• short sales, 
• deeds-in-lieu; and more.

Check out KnowYourOptions.com today!