If you are in any segment of the Mortgage or Real Estate industry, please take a moment to read and sign this petition. This is the message I sent out to my sphere of influence here in the Seattle area.
Dear Fellow Agents and Loan Officers,
The new appraisal HVCC rule is now in effect for all FNMA and FHLMC loans and the speculation that it would lower service levels, delay loans and be more expensive to the consumer is proving to be true. I’m writing you to ask that you follow this link (www.hvccpetition.com ) and electronically sign this petition to repeal the new HVCC law.
It all started with a BANK (wamu) in New York, pressuring appraisers at Appraisal Management Companies (AMC's) to come in at value. There is and has been a process in place for appraisers to deal with these types of issues - we can clarify or adjust the current self-regulation – we don’t need new legislation.
Let me start by stating that this is NOT an Appraisal problem, it's an APPRAISER issue. Regulating the entire industry at a higher cost to the consumer is not a better answer than dealing with the "Few" appraisers or lenders who are not ethical and/or following the current rules. HVCC has created an environment where inexperienced appraisers are completing substandard work with a middle man (AMC's) adding no value to the process. The entire HVCC process results in poor service, poor appraisals and slower turn times for the consumer.
Interestingly enough, WAMU was a lender who was charged with a RESPA violation by negotiating lower credit reporting costs with national credit agencies because of their economies of scale - but did not pass on the lower costs to the consumer… I truly believe we are on the edge of what would be called a RESPA violation for lack of value added services the AMC's are being paid for.
In addition to poor quality work, there is a lack of communication from the AMC's and slower turn times for getting the appraisal back to be underwritten. This creates the need for longer lock periods and lock extensions which are again more expensive to the customer. (Example - A $417,000 conforming loan that needs a 1/4% lock extension or 15 more days to process due to the appraisal - costs the consumer an additional $ 1,042.50.)
Another issue that has surfaced is multiple appraisals being required if one lender cannot approve a transaction, or if the lenders pricing goes "out of the market" and the consumer goes to a different lender and HVCC requires another appraisal to be completed. (Artificially increasing rates above market is a common practice lenders use to temporarily slow things down when their processing and underwriting pipelines hit capacity.)
The mortgage industry is experiencing all of the above issues as a direct result of implementing the new HVCC at the cost to the consumer and economic recovery of the housing markets throughout the nation. Please take a moment to sign the petition to repeal this law and its unintended consequences.
Follow this link to sign the petition- just do it ! www.hvccpetition.com
Regards,
George CharlesPresident \ Designated BrokerLoanCentral
In a recent presentation to a group of realtors, HUD Secretary Donovan announced that borrowers would be allowed to use the $ 8,000 tax credit for their downpayment on HUD FHA Loans!
Then... S T O P, W A I T
On May 14th - two days later, the Mortgagee Letter 2009-15 has been put on hold by HUD.
HUD’s recently released Mortgagee Letter 2009-15, before it was "Pulled", allowed government agencies and other authorized entities, including FHA approved lenders, to offer either long-term secondary financing; or “short-term or bridge” loans secured by the anticipated tax credit for first time homebuyers established by the American Recovery and Reinvestment Act of 2009 (ARRA) for purchases and loan closings made prior to December 1, 2009.
My gut says the program will be BACK... but until further guidance is received from HUD LoanCentral has provided specific direction on using first-time homebuyer tax credits for the down payment, we will have to wait!
UNLESS you are in Washington State! Some states have already beat the U.S. Department of Housing and Urban Development to the punch on making bridge loans available to households who want to claim the First-Time Homebuyer Tax Credit.
The Washington REALTORS® association was able to convince treasury officials that the money loaned to home buyers would not only be paid back when tax credits took effect, but also increase the state’s funds. Once we can figure out how to circumvent the current IRS regulations that require the IRS to send all refunds directly to the tax payer... we may see the Tax Credit become available for borrowers to use as their downpayment!
Fed Report: Real Estate Stabilizing in Key Cities So here’s what the Fed says in their “Beige Book” for economic activity yesterday (April 15, 2009)
They state that real estate among several other industries continues to remain week. This is true across all 12 of the Federal Reserve Districts (See Color Coded picture above of the 12 Federal Reserve Districts)
With that said - here is reason for being optimistic based on their recent report. On the east coast – The Boston Fed reports that there are “Early signs of improvement” in the residential real estate sector. They also stated that the news was good in other areas around the country – in fact, the Beige book reports that we are experiencing “the most widespread rise in demand for residential mortgages in more than seven years”
Pending home sales is an important leading indicator for home sales throughout the US and here in Washington State. Pending sales looks ahead at closing which will occur in the next 30 to 90 days. Often “Closed Home Sales” is reported by the media – but in my opinion, that number is important, but is like looking in the rear view mirror.
This latest report on Pending home sales have increased which means that sales activity in the next few months, including reports on “Closed Home Purchases” will reflect an upward trend. The National Association of Realtors reported increases throughout most of the country for Pending Sales written in February. It was a slight increase of 2.1 % over January – but we can take all the good news we can right now.
Remember that reports on home sales and “Pendings” is simply a report on activity. This leads to important psychological conditions in our housing markets as we’ve seen when the media reports on the doom and gloom – sales decrease as buyers sit on the sidelines. Good news like this could lead buyers down the path to home ownership but there are no guarantees. If we can take the emotion out of it, forget the reports about what other buyers are doing around the country… and focus on the incredible HOME BUYING OPPORTUNITY that we are currently experiencing – the early adaptors who see the benefits will likely be rewarded handsomely as these are the times when wealth transfers.
Watch for my next blog post which I will go into more detail on why now is such a great time to buy.
Mortgage Interest Rates hit ANOTHER record low
Monthly Freddie Mac tracks the national interest rates for mortgage loans in it’s Primary Mortgage Market Survey. This week mortgage rates hit ANOTHER RECORD LOW !
This is the 4th time in 2009 that Mortgage Rates for a 30 year fixed established a new record low.
The new record for the week ending in the first week of April was 4.78%, beating the previous record of 4.85%.
Remember that these are the average for rates nationally and LoanCentral has consistently beaten the average rates for our customers every single month since the inception of the company in 2006.
The housing market is looking healthier. Here are some reasons why the opportunity has never been better to purchase a home or investment property.
Mortgage Rates are at Historic Lows – As mentioned in a previous blog, interest rates on FIXED rate mortgages are at all time lows. Look at the graph below – the red arrow shows rates as of December 2008 compared to the recent market – and RATES HAVE DROPPED FROM HERE! (For a current interest rate chart click on the menu above “Interest Rate History”
Population Growth - I already covered this below in a prior blog post
It’s a HOME – we all have to live somewhere. - Kid’s happen. Deaths occur. Kid’s move out to college and get married. Married people get divorced. Job Transfers… Upsizing / Downsizing – these are all what I call “Life Events”. Every year there are 800,000 new households formed here in the USA. There is only a limited number of homes as the population increases and “Life Events” happen which means that even in a slow economy – houses are bought and sold.
What does low rates mean in terms of buying power? Did you know that if you are looking at a $500,000 home and think the price of the home will drop 5% ($25,000), that if rates increase only ½% while you are waiting – the end result will be that your payment will actually INCREASE at the lower sales price? Check out our interactive “Should I buy Now Calculator” and see for yourself!
CLICK on the above image to go to the "Should I Buy Now" Calculator
Leverage – know and understand the power
Caveat first – don’t EVER buy something you can’t afford. Now, with that said – leverage can be your friend. Tough times like these that we are in is when wealth can transfer. No doubt that the side do you want to be on is the receiving end… rather than the giving side right?
Simple analysis.
Option A - You buy $300,000 worth of stock – (it’s on sale right t now too right?)
Option B – You take your $300,000 and pay CASH for a home
Risks
Option C – LEVERAGE – Take 10% of your $300,000 which is $30,000… and buy a home with a value of $300,000. This 10% investment will be compounded as the home appreciates. Here’s a couple of examples
There is LOTs of inventory to pick from!
Your choices have been increased as the number of available homes hitting the market increases. Two months ago, the inventory has changed directions and is starting to shrink – look now for the best options
Market Corrections can MAKE you money- There is no doubt that the entire country has suffered from housing prices decreasing. There are very few areas that have increased in price in 2008 (Clyde Hill for example). This presents the homebuyer with a great opportunity – If you purchase a home now while prices are low and inventory selection offers you many homes to choose from – when prices come back up you will gain instant equity in the home. The lower the prices have been driven down due to the credit crisis – the more potential for the prices to snap back giving the new owner far greater returns.
The FEDs are PAYING First Time Homebuyers! First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and the Federal Reserve is doing its best to make mortgage loans available
FIXED Rate Mortgage costs – P&I Payments don’t change. If you get a fixed-rate mortgage, the monthly payment stays the same – while everything else, including rent, goes every year.OWNERSHIP - By the way, yes you OWN it! Putting aside all the investment strategy, sometimes it’s just nice to know that YOU own the house. If you rent now, you know what I mean – it’s nice to have the freedom to fix up the house, colors and yard the way YOU want it. And if you are going to pay someone’s mortgage payment – why not let it be your own!
Housing values have remained in a fairly stable range once adjusted for inflation. Since 1890, (- at least that's when Yale economist Robert Shiller started tracking the data) there were a few exceptions when housing had significant drops in value - World wars I and II and the Great Depression. These created excellent buying opportunities for individuals who took advantage of those "Buyers Markets".
The most recent run up of housing prices has caused a long needed "Correction" in the market. Some markets, such as Las Vegas, Phoenix, Miami and parts of California were seeing double digit appreciation for years. These markets will see much larger corrections before their markets can stablize. Las Vegas had as high as 29% appreciate in 1 year. Simply stated -a correction was needed.
Seattle and Eastside communities such as Bellevue, Kirkland, Clyde Hill, Medina, Mercer Island, Issaquah, Sammamish and Redmond had its fair share of appreciation as well, but not to the extent of the cities mentioned above. Values in Seattle are also insulated from the limits to building which are caused by the "Growth Management Act", and even our geography. We are trapped to the west by Sea, and to the East by mountains. (Think of Vegas & Phoenix which can build out further and further into the dessert).
With population growth and the quality of life here in the Northwest, along with the lack of available land - it is expected that our housing values will be one of the first to stabilize.
See the "Should I buy now" calculator below - it's interactive!
That's exactly the population boom that we are for if the latest Census Bureau data is correct. Imagine what that will do for our real estate values! Supply and Demand will drive prices up with the added demand of population growth.
In June 2008, the Census Bureau released their projections for population growth in the United States. They are projecting an INCREASE of an additional 135 million people in the USA by the year 2050 - just 42 years from now.
When all is said and done, if the projections are correct - it's the equivalent of the entire population of Mexico and Canada moving here to the United States. Think of what that would do to home values in the next 30 to 40 years!
By the way, if you were wondering - the driving factor is primarily fueled by immigration and not new babies. In the past, FNMA projected that the typical immigrant purchased a home within 10 years of moving to the USA. The projections are estimated to create a need for 52 million NEW housing units, not to mention the boost to our housing market and other local economies that support population growth.
How Many People Have Ever Lived On Earth?
Year
Population
Births per 1,000
50,000 B.C.
2
-
8000 B.C.
5,000,000
80
1 A.D.
300,000,00
1200
450,000,000
60
1650
500,000,000
1750
795,000,000
50
1850
1,265,000,000
40
1900
1,656,000,000
1950
2,516,000,000
31-38
1995
5,760,000,000
31
2002
6,215,000,000
23
2006
6,525,486,603
20.05
2007
6,676,959,301
20.03
2008
6,840,413,507*
19.76
Number of people who have ever been born
108,767,671,166
World Population in 2008*
Percent of those EVER BORN who are living in the year 2008
5.99%
The above calculator works! Click on the calculator and move across the screen to see different numbers.
I developed this calculator for realtors, loan officers and borrowers who are "On the fence" thinking that housing prices may drop further to look at their personal situation to see the effects of the lower price and a higher interest rate.
You can change the sales price or discount the property you are looking at. Once you've lowered the "Future Property Price", you can increase the interest rate just like the FED... all in one calculator.
Click on the two combo boxes to
Download the Future Sales Price vs. Payment calculator in the following forms:
PDF Calculator Powerpoint Calculator
If this blog post is TOO WORDY for you – use the calculator above to see how interest rates affect your payment if you wait for a “Better Deal” and the interest rates go up on you!
Click here for a downloadable version of 18 years of housing appreciation in key markets to justify your decision to wait or to buy.
This is the strongest Buyers Market to hit the Seattle area since 1990-1991, maybe 1986 from what I can remember, and yet many buyers are waiting for the market to “turn around” before taking advantage.
The fact is, you are missing the best opportunity to buy a home in the last 20 years! First let’s discuss the definition of what happens in a Buyers Market like the one we are currently seeing and how buyers felt during the latest hot “Sellers Market”.
When real estate experts and economists talk about a “Buyers Market” they are referring to the fact that there are more sellers than buyers. When this happens, the BUYER gains control of the negotiation process & can find some fantastic properties “On Sale”. There is also excess housing inventory to choose from which allows them to find their perfect home at a great price. In a Buyers’ market – the Sellers become willing to work out deals to sell their home, things like paying discount points to lower your monthly payments, or paying closing costs, or fixing the squeaky floors, or drastically reducing their price if they must sell fast. Any of these items allow you to buy the perfect home today for a great deal.
In a typical “Sellers Market”, many of the buyers are frustrated and during the hot “Sellers Market” - they wished there were MORE homes to choose from. They complained that sellers expected full price (or higher) for their homes and many times buyers ended up in a multiple offer situations. Lastly, even the best agents couldn’t convince sellers to give assistance to buyers making it even harder for first time buyers to afford to purchase. These items all happened because during a Sellers Market, the seller is in control of the negotiation process.
The very distinct difference between the two types of markets shows why buyers should be buying today. The sad reality is that the average person always buy high and sell low. They buy and sell based on emotions that are steered by media hype. If you decide to follow the masses, I believe you will miss out on some opportunities. This is the time that wealth transfers, this is the time for smart move up buyers to save tens of thousands of dollars and it’s the perfect market for first time buyers to get the best pricing and incentives possible.
We don’t have room to go into all the further details of Fiscal and Monetary Policy by the feds, but ask yourself (or someone knowledgeable) what happens when the economy picks up and the Fed wants to slow it down. Yes, you are correct – they raise interest rates. Soooo… what really happens if you wait in an effort to save an additional 2% to 5% in sales price?
The first thing that happens is you have to guess when the Seattle/Eastside market “Hit’s bottom”. Oh, we can also wait for Microsoft to go public again so I can buy more of their stock. Seriously, when do you jump in? If you are looking at a $500,000 house – do you jump at $490,000? $480,000? Let’s say it bottoms out at $475,000 and you save an additional 5% and during that time – the Fed’s raise rates by ½%. Guess what – you’re payment just went up $1.80. Since most people buy on payment, not price – and since most people buy for a place to live as a HOME as well as the investment… and over the longterm real estate has been a great investment for building wealth – why are you waiting?
You have been warned that housing prices will go up and that interest rates will go up as well. You have been informed that this is the best buying opportunity in at least two decades.
So the real questions are:
The U.S. economy is closely watched by investors, borrowers and anyone in the financial or real estate business. The Federal Reserve is often in the news, but the mystery surrounding the FED is misunderstood by some. Some will think of the Federal Reserve as being Alan Greenspan, Paul Volker, Ben Bernanke and the Federal Open Market Committee (FOMC). While this group might be the most influential within the Federal Reserve System, it is a small part of the whole picture. Here is a brief overview of the Federal Reserve and its different parts.
The Federal Reserve System
The Federal Reserve System is basically America's central bank.
It was established in 1913 to maintain a sound and stable banking system throughout the United States and to promote a strong economy. The Federal Reserve System is composed of 12 regional banks in major cities around the country and the Central Bank, which is run by the Board of Governors and is based in Washington, D.C.
The Board of Governors is made up of 7 members that are appointed to 14-year terms by the President and approved by the Senate. Almost all banks are a part of the Federal Reserve System, which requires that those banks maintain a certain percentage of their assets deposited with the regional Federal Reserve Bank. These "reserve requirements" are set by the Board of Governors and by changing the requirements, the Federal Reserve System can greatly impact the amount of money supply in the economy. Because of the great impact of changing the reserve requirement, the Federal Reserve rarely does this.
The Federal Reserve System wears a great number of hats.
For 28 years I've been involved in real estate and lending and watched the cycles come and go. Now, as the challenges of real estate intensify here in the Seattle / Eastside area - daily I hear of many loan officers and agents that are thinking about leaving the business.
GREAT! - We need to weed out some of the individuals who don't contribute in either a productive or professional way. This clears the stage for YOU to flourish – IF you have the right tools and work for the right companies - and there are plenty of them left.
The Compass of Change Over the past few years, the real estate industry has fluctuated significantly. First, there was an unprecedented increase in the real estate values and volume of transactions. This increase drew many people to work in the real estate industry for the first time. In many markets this was followed by an extraordinary fall in home values and market volumes. It is well known that real estate is cyclical, but even the veteran loan officers, brokers and investors are surprised at the seriousness of this downturn. If you’re one of the individuals who started a real estate career in the last five years, this set of market conditions and developments can be puzzling. Can you survive in a "Normal Real Estate Market"? Are you ready to ride it out and pick up market share from your competitors who are leaving the business? These are all important questions for which you’ll need answers in order to make informed career decisions in the months ahead. Change is upon everyone in the real estate industry. Do you have someone who is helping you navigate this change and take advantage of the opportunities that will emerge as the industry gets shaken up?
In addition to cutting expenses, most individuals in the business need additional support and guidance during these turbulent times. Many see themselves at a crossroad: Should you throw in the towel and go get another job, or is it necessary to persevere through the difficult times in order to realize a long-term success?
If you are interested in joining one of our loan officer or agent 'MASTERMIND GROUPS" that share ideas and work together to support each other's success - contact me at George@GeorgeCharles.com
A safe harbor may help you find the answer to this question. Surrounding yourself with supportive people who have the experience, knowledge, and interest in helping you make insightful career decisions is one of the best things you can do during a time of change... I'd like to help
Fannie Mae cuts higher down payments requirements
FNMA or "Fannie Mae" (Federal National Mortgage Association) says it is doing away with higher minimum down payment requirements for borrowers in distressed real estate markets. FNMA is a government-sponsored mortgage financier and starting June 1, 2008 it will require minimum down payments of between 3 percent and 5 percent for all loans that it guarantees of single-family, primary residences. The move is part of their Keys to RecoveryTM initiative to help resuscitate the mortgage market by equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions. The new down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining. They stated that "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover. We recognize that down payment assistance programs remain a viable tool for borrowers who can afford a mortgage long term, but might need a little help getting started".
I am hearing more and more from loan officers and real estate agents that don't know what to do since the market shifted. The fact is, we have shifted from a "Sellers Market" to a "Buyers Market". We can survive if we shift our thinking and our toolbox to match the market.
Remember, to increase determination, focus on the solutions, not the problems; target the destination, not the obstacles. What tools do you need to overcome your buyers and sellers objections and be successful in this market?
Problems proclaim themselves on their own; it's the solutions that need our attention.
Housing Appreciation for 2007
Rollover the above image for a larger graph. Click on the graph to download a "Printable Version"
Download a short presentation on this series of informative slides explaining the "Subprime Meltdown". This is the first of several presentations to give you the background behind the turbulance in the housing market and the effects of the subprime on our industry.
Click on the image above to download this months current interest rate history graph from LoanCentral. Rates are at a two year low!
LoanCentral LLC 10800 NE 8th Street Suite # 330 Bellevue, WA Loan Central 98004
Washington Mortgage Broker # 510-MB-30751Phone: 425-709-7900
Copyright © 2009 LoanCentral LLCPortions Copyright © 2009 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site Map
