MARKET UPDATE - DECEMBER 2010

HAPPY HOLIDAYS!

MORTGAGE APPLICATIONS ON THE RISE

Mortgage applications increased by 2.1% for the week ended November 19th. The most notable increase was in purchase transactions, which was up 14.4%; the largest increase since May. – Mortgage Bankers Association

"The increase in purchase applications last week aligns with other incoming data suggesting that consumers are feeling somewhat more confident with their financial situation," said Michael Fratantoni, MBA's vice president of research and economics. While the increase was magnified somewhat by the comparison to the holiday week, the level of purchase applications on a seasonally adjusted basis is now at its highest level since the expiration of the homebuyer tax credit." - HousingWire

Mortgage applications for purchase transactions, although up, are greatly outweighed by refinances which accounted for almost 80% of all mortgage transactions.

HOME SALES FALL ONCE AGAIN

October existing home sales showed another sign that the housing market is not yet on the mend. Existing home sales fell 2.2% from September according to the National Association of Realtors. Home sales are down nearly 26% from October of 2009.

LURKING IN THE SHADOWS

Banks are managing their portfolios of homes that have seriously delinquent mortgages. Failing to foreclose on these properties prevents the properties from going vacant, and minimizes reported loses on their balance sheets. This “Shadow” inventory will come to market eventually.

“Adding the shadow inventory (estimated at 2.1 million) to the visible supply of homes on the market boosted the total housing-market supply to 6.3 million units from 6.1 million in August 2009. At the current sales rate, it would take 23 months to go through the entire visible and shadow inventory of homes -- more than three times the normal rate of six to seven months.” – cnnfn.com

The increase in housing inventory will continue to weaken home values unless demand surges.

INTEREST RATES RISE FOR 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 from 3.875% a month ago to 4.250% 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. As an active member of the Arizona Association of Mortgage Professionals and the National Association of Mortgage Brokers, we are fighting to protect consumer choice. Geneva Financial, LLC thanks you for supporting your local licensed mortgage professionals.

RATE WATCH

Mortgage Type Interest Rate APR

30 Year Fixed 4.250% 4.294%

15 Year Fixed 3.375% 3.598%

5/1 ARM 2.625% 2.975%

Interest rates as of 11/28/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

Conventional Refinance: If you have a conventional mortgage (must be owned or guaranteed by Fannie Mae or Freddie Mac) without mortgage insurance, you may be able to refinance up to 125% of the home’s value. Owe more than 125%? With enough compensating factors (i.e. credit, assets, etc.), you may be able to get an appraisal waiver and slip into the 125% range you need to be in. Rates are slightly higher than a standard conventional loan, but with good credit, they are still quite low.

FHA Streamline Refinance: FHA streamlines 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.

MARKET UPDATE brought to you by:


Chris Tiller, Realtor
tiller34@hotmail.com
602-561-1346

Market Update - November 2010

MORTGAGE MONOPOLY

“Today 90% of the $14 trillion in outstanding residential mortgages is controlled by the Federal Housing Administration (FHA), the Department of Veterans Affairs, or Fannie Mae and Freddie Mac—with the latter two under government conservatorship.”- Wall Street Journal

SALES RISE – VALUES DROP

Existing homes sales gain momentum with a 10% increase in volume, marking the second month in a row for an increase in home sales. Of those homes that were sold in September, nearly 35% were in foreclosure. – cnnmoney.com

The increase of sales volume in existing homes was likely influenced by the drop in home prices. We are not at the bottom yet. Home prices experienced another 1.5% drop in August.

HISTORIC NEGATIVE YIELD FOR THE TREASURY

“The Treasury sold $10 billion of five-year Treasury Inflation Protected Securities at a negative yield for the first time at a U.S. debt auction as investors bet the Federal Reserve will be successful in halting deflation. U.S. debt gained even after data showed sales of existing homes rose 10 percent last month, more than forecast, the National Association of Realtors said today in Washington. Purchases increased to a 4.53 million annual rate from 4.12 million in August, the data showed. Economists in a Bloomberg News survey forecast sales would rise to a 4.3 million pace.” – Bloomberg.com

BANK OF AMERICA SHUTS DOWN MORTGAGE WHOLESALE DIVISION

Bank of America announced this month that they are exiting (once again) the wholesale mortgage business. Bank of America surprised many in the industry by re-entering the wholesale mortgage business shortly after acquiring Countrywide Home Loans. Bank of America will no longer accept mortgage broker business. This will create great opportunities for other wholesale mortgage banks as the world’s largest bank throws in the towel.

"Bank of America remains committed to purchasing and financing loans from Correspondent Lending clients, including those approved to originate loans from brokers. We intend to build upon our leadership position in the market to provide enhanced liquidity to the smaller financial institutions and independent mortgage companies that supply mortgages as our correspondent clients." – Statement from Bank of America

Bank of America will still offer mortgages at inflated rates at any one of their thousands of “retail” banking locations.

THE RACE FOR THE MOST FORECLOSURES

TAKE OUT A LOAN AND PAY FOR YOUR MORTGAGE

Having trouble paying for you mortgage? The Federal Government will soon be issuing loans up to $50,000 for homeowners that qualify, to pay for their mortgage. Not making this up. The loan will be forgiven if the home owners stay in the property for at least five years.

“The federal program, however, is relatively small. Congress gave the Housing Department $1 billion to spend, meaning it will help at least 20,000 people. But that's just a small fraction of those who need assistance.” – cnnmoney.com

RATE WATCH

Mortgage Type Interest Rate APR

30 Year Fixed 3.875% 4.005%

15 Year Fixed 3.375% 3.598%

5/1 ARM 2.625% 2.975%

Interest rates as of 10/27/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

Conventional Refinance: If you have a conventional mortgage (must be owned or guaranteed by Fannie Mae or Freddie Mac) without mortgage insurance, you may be able to refinance up to 125% of the home’s value. Owe more than 125%? With enough compensating factors (i.e. credit, assets, etc.), you may be able to get an appraisal waiver and slip into the 125% range you need to be in. Rates are slightly higher than a standard conventional loan, but with good credit, they are still quite low.

FHA Streamline Refinance: FHA streamlines 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.

MARKET UPDATE brought to you by:
Chris Tiller
Geneva Real Estate and Investments
tiller34@hotmail.com
602-561-1346
fax:602-595-5450

MARKET UPDATE - 0CTOBER 2010

STILL UPSIDE DOWN – REFINANCE OPTIONS MAY NOW BE AVAILABLE

There are still no miracle government programs to solve most homeowner’s woes if you owe more than your home is worth; but you still may have some options.

Conventional Refinance: If you have a conventional mortgage (must be owned or guaranteed by Fannie Mae or Freddie Mac) without mortgage insurance, you may be able to refinance up to 125% of the home’s value. Owe more than 125%? With enough compensating factors (i.e. credit, assets, etc.), you may be able to get an appraisal waiver and slip into the 125% range you need to be in. Rates are slightly higher than a standard conventional loan, but with good credit, they are still quite low.

FHA Streamline Refinance: FHA streamlines 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.

“Short’ Refinance: Starting September 7th, FHA will allow “short” refinances. The current first and second mortgage (if applicable) must agree to lower the amount owned to 115% of the property’s current value. The current mortgage(s) must be conventional, and can not be owned or guaranteed by Fannie Mae or Freddie Mac. The mortgage(s) can be negotiated down allowing the homeowner to lower the interest rate and/or improve the terms of the mortgage.

THE LONGEST RECESSION SINCE WORLD WAR II IS OVER – REALLY?

The National Bureau of Economic Research stated that the recession lasted 18 months and was officially over in June of 2009.

Things have been getting better, and for over a year? Did I miss the invite? Less than 10% of the jobs lost during the recession have returned (cnnfn.com). 27 states reported higher unemployment in August. Housing is still in crisis mode. Millions of people are out of work and can not provide for themselves. The economy is not retracting, but who is it expanding for? Statistically the recession may be over, but mainstream America sure doesn’t know it.

NEW HOMES SALES NEAR RECORD LOWS

“New home sales in August came in at an annual rate of 288,000, near record lows, the government says.” – cnnfn.com

AUGUST STATISTICS FOR ARIZONA HOME SALES

Short sales: 29% of all sales.

Median Home Price: $119,000

Closings in August: 7,358 (43% Cash / 28% Conventional / 25% FHA / 4% VA)

Historical:

Most homes sold: 06/2006

In June of 2006, 10,252 homes were sold with a median sales price of $250,000.

Least homes sold: 01/2008

In January of 2008, 2,912 homes were sold with a median sales price of $220,000.

As of 08/2010

In August of 2010, 7,358 homes were sold with a median sales price of $119,000.

Arizona home sales are only 30% off all time highs. Yes, only 30%. If you consider how out of control things were a few years ago; down only 30% is quite remarkable. First time homebuyers and investors are flooding the market. With the median home price now at $119,000, down from $220,000 just a few years ago, there are plenty of opportunities in the Arizona market.

- Statics from Fletcher Wilcox, Grand Canyon Title Agency

HOUSING IN RECOVERY – SLOWLY BUT SURELY

“Housing starts in August unexpectedly rose to their highest level in four months, the U.S. Commerce Department announced today. The 10.5% increase, reflecting a seasonally adjusted annual rate of 598,000 units, is the biggest rise in housing starts since last November.” – fortune.com

PROBLEMS WITH HOMWBUYER TAX CREDIT

“Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government. According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.”

“The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased. Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.”

“It is also taking a look at all those deceased taxpayers who received credits. The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.” – cnnfn.com

CALIFONIA STABALIZES

California home prices have increased month after month for the past nine months. California home prices are up nearly 10.5% in the last year, landing the median home price at twice the national average. The median home price for California homes is now at $315,000.

CHINA AND JAPAN CONTINUE TO HAVE AN APPITIETE FOR U.S. DEBT

“China resumed buying U.S. government bonds in July, but Japan bought more. Treasury said Thursday in its monthly international capital report that China, the biggest U.S. creditor, bought $3 billion worth of Treasury debt in July, bringing its total to $847 billion. The second-biggest lender to the United States, Japan, continues to close the gap with China. Japan expanded its purchases of U.S. bonds for the third straight month, adding $17 billion worth of Treasurys to its stash, now worth $821 billion.” – cnnfn.com

RATE WATCH

Mortgage Type Interest Rate APR



30 Year Fixed 3.875% 4.005%
15 Year Fixed 3.500% 3.729%
5/1 ARM 3.000% 3.018%

Interest rates as of 09/24/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

MARKET UPDATE
brought to you by:

Chris Tiller
602-561-1346
Email: tiller34@hotmail.com
Fax: 602-595-5450

MARKET UPDATE

September 2010

HOW LOW CAN THEY GO

Mortgage Type_______Interest Rate___________APR

30 Year Fixed____________3.875%_______________4.005%
15 Year Fixed____________3.500%_______________3.729%
5/1 ARM_______________3.000%_______________3.018%

Interest rates as of 09/01/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

FHA STREAMLINES CONTINUE TO SURGE

If you currently have an FHA mortgage with a rate of 5.000% or higher, you may be able to refinance with no appraisal, and little or no closing costs. The recent drop in interest rates have caused an influx of borrowers refinancing to take advantage of the FHA Streamline refinance option. Call today if you have an FHA mortgage at 5.000% or higher. 480-368-2000.

FHA NEEDS CASH

In an effort to increase cash reserves, FHA is modifying the upfront mortgage insurance premium and monthly mortgage insurance charge. Currently the upfront mortgage insurance premium is 2.25% of the loan amount, which is rolled into the base loan amount. The current monthly mortgage insurance fee is .55%, which is part of the monthly mortgage payment.

Effective October 4th, 2010, the upfront mortgage insurance premium will be reduced from 2.25% to 1.0%. The monthly mortgage insurance fee will be raised from .55% to .85% - .95%; which will vary based on certain risk factors of the file.

Below is an average effect the changes will have on borrowers payments after October 4th.

Loan Amount_____Current Payment_____New Payment_____Annual Increase

$100,000_____________$563.92____________$582.58_____________$223.92
$200,000____________$1,127.84___________$1,165.17_____________$447.96
$300,000____________$1,691.76___________$1,747.76_____________$672.00
$400,000____________$2,255.67___________$2,330.34____________$896.04

*Numbers based on a 4.5% interest rate.

The changes to mortgage insurance is equal to an approximate 0.375% increase in interest rate.

This will impact some borrowers’ ability to purchase a property after October 4th, or help drive down home values further.

NATIONAL HOME PRICES UP FOR THE YEAR

“National home prices jumped a substantial 3.6% in the past year, according to the S&P/Case-Shiller Home Price Index released on Tuesday. Prices also climbed 4.4% in the second quarter compared with a 2.8% plunge in the first quarter.” – cnnfn.com
The tax credit is the largest contributing factor for the increase in home prices. Industry insiders predict that home prices will level off, and potentially see a decline in the coming months, now that the tax credit has expired, and employment is not dramatically improving. Without another stimulus from the Federal Government, the housing market will remain shaky for the foreseeable future.

HOME SALES TAKE A BEATING

Home sales hit a 15 year low.

“Existing home sales sank 27.2% in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units. Much of that drop is attributed to the end of the $8,000 homebuyer tax credit.” – cnnfn.com

TAX CREDIT 2010 & DOWNPAYMENT ASSISTANCE

The housing market is on the slide, and there is no hope in the foreseeable future; but there are rumors of help on the way.

A new buzz is stirring about the possibility of a new Government tax credit for home buyers to once again kick start the housing market. Numbers are now surfacing, and it is apparent that the tax credit had a much bigger impact on housing than many critics of the tax credit claimed.

Did someone say “Downpayment Assistance?” H.R. 600 FHA Seller-Financed Downpayment Reform Act of 2009 is not dead; not yet. Downpayment assistance allowed the seller to contribute the buyer’s minimum downpayment on FHA mortgages and was eliminated a couple of years ago when there was a push for everyone to have “skin in the game.” Downpayment assistance allows borrowers to essentially purchase a home with no money down. With the current housing market sputtering to a standstill, downpayment assistance may be making a come back.

If either the tax credit or downpayment assistance resurfaces, the housing market will once again erupt with new buyers coming off the fence and out of the woodwork. Yes, it may just be a short term Band-Aid, but the Government will want to stop the bleeding before there is hemorrhaging.

MARKET UPDATE
brought to you by:

Geneva Real Estate and Investments, LLC
Chris Tiller, Realtor-Investor
Phone: 602-561-1346
Fax: 602-595-5450
Email: tiller34@hotmail.com

AUGUST 2010 - MARKET UPDATE

INTEREST RATES REMAIN AT HISTORIC LOWS

Mortgage Type Interest Rate APR

30 Year Fixed 4.125% 4.255%
15 Year Fixed 3.750% 3.977%
5/1 ARM 3.000% 3.326%

Interest rates as of 07/29/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

FHA STREAMLINES SURGE

If you currently have an FHA mortgage with a rate of 5.250% or higher, you may be able to refinance with no appraisal, and little or no closing costs. The recent drop in interest rates have caused an influx of borrowers refinancing to take advantage of the FHA Streamline refinance option.

CONSUMER PROTECTION - FINANCIAL REFORM BILL PASSES

President Obama signed into law the most sweeping regulatory financial reform bill since the Great Depression. The Bill will take months, if not years to decipher and implement; and it will be even longer before all of the ramifications of the Bill are truly felt, by Wall Street, and the public. With news headlines that read “Wall Street Rejoices, Financial Reform Bill Passes,” you can only imagine who is going to control the implementation of the bill, and who will ultimately benefit from it. What is now known is that the Bill fails to address some of the most pressing concerns regarding the prevention of future financial crisis; and the consumer is likely to pay a dear price for government protection.

The bill does not address CEO and executive compensation. “Data shows that these are leading causes of the Great Recession.” – fortune.com

Reform of the two powerhouse institutions, Fannie Mae & Freddie Mac, both seized by the Federal Government, who are responsible for nearly half of all mortgages originated in the United States where not addressed in the bill.

Financial reform will likely further tighten credit requirements for consumers and increase costs on mortgage loans. If you thought that the mortgage process is difficult now, wait until this bill sets in. Added disclosures and more red tape is surely an outcome of the bill. The up to 50 page current loan application will not likely be deemed enough disclosure for the consumer. Added disclosures do not make a more informed consumer; it generally means the consumer will be less likely to read it.

“Consumers will see "safer" mortgages, but fewer of them will qualify. They will have fewer choices of mortgage lenders as concentration of mortgage lending by a few big banks accelerates. And virtually all mortgages will be government backed for the foreseeable future, with little chance of unwinding federal support. Uncle Sam will be the nation's mortgage lender for most of the next decade.” – The Huffington Post

Although it will take some time for the bill to be implemented, one thing is 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. Please stay tuned.

HOMES SALES IN PHOENIX – UP IN JUNE

“Home sales in the Phoenix Metro Statistical Area (MSA) rose 11% from May, but fell short of a year ago for the second consecutive month. A total of 10,430 new and resale houses and condos closed escrow last month in the Maricopa-Pinal counties metropolitan area, up 11.2% from May, but down 2.8% from a year ago, according to MDA DataQuick.” – housingwire.com

NATIONALLY EXISTING HOME SALES SLIDE AGAIN

Existing home sales were down just over 5% in June. Existing home sales were up 9.8% from June of last year according to the National Association of Realtors.

NATIONALLY NEW HOME SALES SPIKE UP

The sale of new homes spiked up nearly 24% in June over May figures. New home sales are down 17% from June of last year. New home sale prices did drop 1.4% in June.

“An estimated 210,000 new homes were for sale at the end of June, the lowest inventory level in nearly 42 years. At the current sales pace, the government expects it will take 7.6 months to sell through that inventory, down from 9.6 months in May. Six months of inventory is considered normal market conditions.” – cnnmoney.com

BANK BAILOUT 2010

As of July 27th, 2010, 103 FDIC insured banks have been seized by the Federal Government year to date. 140 failed in 2009. 25 failed in 2008. 11 failed between 2003-2007. – fdic.gov

Looks like we are on pace for a record setting year.

HOME OWNERSHIP LOWEST IN OVER A DECADE

“The Census Bureau said the home ownership rate fell to 66.9% in the second quarter of 2010, down half a percentage point from the previous year. The home ownership rate was 67.1% in the first quarter of the year.” – cnnmoney. This is the lowest home ownership has been since 1990.

MARKET UPDATE

brought to you by:

Chris Tiller
Realtor
GENEVA REAL ESTATE & INVESTMENTS, LLC.
Real Estate Brokerage licensed in: AZ, CA, WA.
www.genevare.com

Cell: 480-368-2000
Fax: 602-595-5450
Email: tiller34@hotmail.com

MARKET UPDATE - JULY 2010

MARKET UPDATE - JULY 2010

INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 4.250% 4.381%
15 Year Fixed 3.750% 3.977%
5/1 ARM 3.250% 3.407%

Interest rates as of 06/24/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

NEW HOMES SALES CRASH TO A RECORD LOW

New homes sales in May fall over 18% from the previous year. This is the slowest month for new homes sales since the Commerce Department started recording such data going back to 1963.

The fall in new homes sales in May comes after good numbers in April which were likely inflated due to the first time home credit that ended for buyers not under contract by April 30th. Those that were under contract by April 30th must close on those transactions by June 30th. There are hopeful signs that the deadline will be extended until September 30th, as many homebuyers are struggling to close on time due to the slow and tumultuous underwriting process. Yes, you read that right. Home buyers that were under contract on or before April 30th may need until September 30th to close on their mortgage transaction; four plus months!

“The government report showed that the median price of new homes sold in May was $200,900, down less than 1% from April but a 9.6% drop from May 2009. An estimated 213,000 new homes were for sale at the end of May. At the current sales pace, the government expects it will take 8.5 months to sell through that inventory, up from 5.8 months in April. Six months of inventory is considered normal market conditions.” – cnnfn.com

Existing home sales, according to the National Association of Realtors, declined 2.2% in May. “The NAR report showed that the median price of homes sold in May was $179,600, up 2.7% from a year ago. Just under a third of homes sold during the month were distressed properties.” – cnnfn.com

HOME SHORTAGE

According to a CNN article published in June, the number of new homes started in April was 672,000. Based on the population growth of the United States, those housing numbers are less than 50% of the number of homes that would be needed long term to meet the demand of our Nation’s current growth. Until the job market recovers there may be an over abundance of homes on the market, but that could quickly lead to a housing shortage with an economic recovery.

BUY AMERICAN AND AMERICAN DEBT

The United States is buying what it seems to believe in; U.S. Treasury debt. The U.S. surpassed Japan and is now the second largest holder of Treasury debt. China still remains the number one holder of Treasury debt.

China currently holds $895 billion in U.S. Treasurys. The U.S. households own $796 billion. Japan places third at $785 billion.

The surge in U.S. bonds by U.S. households is once again a flight to safety, or perceived safety, as the U.S. stock market remains volatile and the financial crisis in Europe unfolds.

HOMEPATH REVISITED

Looking for good financing options on a new purchase? HomePath offers some of the best financing available if purchasing a home owned by Fannie Mae. HomePath allows a qualified buyer to purchase a Fannie Mae owned home with little money down, NO mortgage insurance, and no appraisal. That will save you both time and money. Fannie Mae will also credit 3.5% of the purchase price towards buyers closing costs.

Owner Occupied: 97% Loan to Value – No Mortgage Insurance
Non Owner Occupied: 90% Loan to Value – No Mortgage Insurance

Find properties at http://www.homepath.com/. For financing options, contact Geneva Financial, LLC for the most competitive HomePath financing options.

HOME OWNERS SEEKING HELP

Refinance up to 105% of your homes value. If you owe more than your home is worth and do not know what to do, please give us a call. Geneva Financial, LLC 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, LLC 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.

MARKET UPDATE brought to you by:

Chris Tiller
602-561-1346 Office
tiller34@hotmail.com
Fax : 602-595-5450

MARKET UPDATE - JUNE 2010

THE SMARTEST GUY IN THE ROOM IS BULLISH ON REAL ESTATE

“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

$15 billion with a B! Saying that he called the real estate market crash is a gross understatement at $15 billion. Let’s hope he is right once again this time around.

LIAR LOANS BANNED

“Liar Loans,” a negative spin created by the media to describe “stated income” and “reduced documentation” loans may soon become illegal. The Senate voted on May 12th to ban all reduced documentation loans that contributed to the housing crisis. The Senate bill passed on May 20th and will now go before the House, who has a similar bill drafted.

Reduced documentation loans have not been offered by the industry for years. Despite the negative connotations of “liar loans,” reduced documentation loans were popular with medical professionals, investors, and self employed borrowers due to how income documentation (i.e. tax returns) are underwritten. Many self employed borrowers now find it impossible to obtain a mortgage under “full documentation” guidelines, regardless of assets or credit score.

‘The legislation, part of the broader financial regulatory reform bill working its way through Congress, would require lenders to fully document a borrower's income before originating a mortgage. It would also mandate that lenders verify a borrower's ability to repay the loan.” – CNNMoney.com

HELP ON THE WAY FOR UNDERWATER HOMEOWNERS?

June 1st: Homeowners will have to verify income to qualify for loan modifications. This would require those that do not make enough income to qualify for a loan modification to actually prove that they do not make enough income to qualify for a loan modification.

July 1st: “The administration plans to roll out its new program for the unemployed on July 1. Eligible borrowers could enter a forbearance program, which either suspends their monthly payments entirely or reduces them to less than 31% of their pre-tax household income.” (CNNMoney.com) The unemployed may now be able to modify their mortgage if it is feasible to reduce their mortgage payments to 31% of…. $0?

MARKET SUPPLY

The number of homes on the market for sale is nationally at an eight month supply. A healthy real estate market is closer to a six month supply.

“In March, there were nearly 2% fewer homes on the market than there were a year ago, and 21.7% fewer than the record of 4.6 million in July 2008.” – CNNMoney.com

Demand in some markets is far greater. “In Denver, for example, supply has fallen to 5.7 months from 6.2. In Phoenix it has declined to 4.5 from 5.2; and in San Francisco inventory has halved, to 3.2 months from 6.5 last March.” – CNNMoney.com

TOP 10 FORECLOSURE CITIES

Foreclosures are down in the country’s hardest hit markets. Foreclose filings are down slightly in many of the foreclosure ridden cities in Arizona, California, Florida, and Nevada; those same cities that still lead the nation in foreclosures. Nationwide foreclosures are up 16% in the first quarter of 2010 compared to the first quarter of 2009.

Las Vegas, NV: 3.5%
Modesto, CA: 2.9%
Cape Coral, FL: 2.8%
Riverside, CA: 2.8%
Stockton, CA: 2.8%
Merced, CA: 2.8%
Phoenix, AZ: 2.6%
Vallejo, CA: 2.4%
Bakersfield, CA: 2.3%
Orlando, FL: 2.3%

-Data from CNNMoney.com

INTEREST RATE UPDATE – AMAZING ARM RATES

Mortgage Type Interest Rate APR

30 Year Fixed 4.500% 4.622%
15 Year Fixed 3.875% 4.084%
5/1 ARM 3.250% 3.355%

Call today for your individual scenario rate quote.

Interest rates as of 05/24/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

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, LLC 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, LLC 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 at anytime with any questions.

MARKET UPDATE brought to you by:

Chris Tiller, Realtor
Geneva Real Estate & Investments, LLC
602-561-1346

MARKET UPDATE

MAY 2010

BAILOUTS AND BONUSES – BUT NOT FOR HOMEOWNERS

On Tuesday, April 27th, Goldman Sachs executives testified before a Senate subcommittee on investigations into potential acts of unethical and even fraudulent activities committed by Goldman Sachs.

Goldman Sachs sold pools of mortgages (which included a high percentage of subprime mortgages) which at the time were rated as high as AAA investments to investors. Goldman Sachs sold these investments “long” (meaning the investor would make money if the loans performed as they were rated). At the same time Goldman Sachs was selling those AAA mortgage pools to investors, Goldman Sachs was “shorting” (betting the investment would drop in value or default) those very same mortgage pools in anticipation that those mortgage pools would suffer losses through loan default. It was a great bet. Those mortgage pools rated AAA by Moody’s and Standard and Poor’s defaulted at an alarmingly high rate.

Creditors were wiped out. Stock holders suffered substantial losses. Millions of homeowners lost (and continue to lose) their homes. Several European countries are on the verge of default. The global economy is now awakening from a U.S. housing boom hangover.

Goldman Sachs on the other hand made billions of dollars betting against those mortgage pools they were selling to investors. The U.S. Government even paid $13 billion to Goldman for bets it made against the mortgage bonds that AIG insured, but was unable to repay. AIG was bailed out by the U.S. government to the tune of $180 billion dollars.

As Goldman Sachs gets grilled by the Senate subcommittee on unethical and fraudulent activity, Goldman Sachs stock price closed up $1.01 on April 27th as the Dow Jones falls $213.04. Shares finally tumble 9% on Friday as Goldman Sachs rating is finally cut.

Lehman Brothers and Bear Sterns were allowed to fail, but most of the large Wall Streets banks were bailed out or broker off by the U.S. Government. CEOs and top executives in most cases were not fired, and still received huge year end bonuses; for making disastrous bets.

As the dust begins to settle and the U.S. housing market begins to show some signs of recovery, there will be no bailouts or bonuses for homeowners. Tax payers will simply float the bill for one of the largest financial disasters to hit the U.S. economy; as Wall Street firms continue to make billions. A broken system or capitalism at its finest?

NEWS FROM THE ARIZONA ASSOCIATION OF MORTGAGE PROFESSIONALS

FHA has announced they are considering raising the annual fee from .55 to 1.5 percent. This is basically triple the current level.

HR 5107 Rural Housing Bill is taking shape in Congress. It has proposals taking the up front fee from 2% to 3.5% and adding an annual fee of .5%. This will allow them to be self funded.

The Dodd bill for Restoring American Financial Stability Act of 2010 has legs. The recent epiphany by Congress to investigate Goldman Sachs has pushed the odds of passage to over 80%. This is a very bad bill. There is language supporting the idea that no company can sell 100% of their originations. They must retain at least 5% just as the FED is considering. Next, there would be a great possibility that a new agency would be formed to take the place of the FED, OCC, FDIC, HUD and others. This could prove disastrous for community banks and small regional banks. The MBA (Mortgage Bankers Association) does not support this bill and put out a warning to the Senators. The Arizona Chapter of the MBA recently secured a meeting with both Senators Kyl and McCain to listen to their concerns about the bill. It is amazing that they can get both Senators to appear together in one room on the same day to speak with 50 bankers. They must be living right and writing big checks!

-Information provided by Jody Davis of the Arizona Association of Mortgage Professionals

FAIRWELL HOMEBUYER TAX CREDIT

The homebuyer tax credit is no more; at least for those not under contract as of May 30th. Those that are in contract must close by the end of June 30th.

There is no evidence that the government plans to extend the homebuyer credit beyond the June 30th date.

Those that are still interested in purchasing a home, but were unable to meet the deadline, do not fret. Homes are still very reasonably priced, and interest rates are hovering at historic lows. However, both home prices and interest rates are expected to rise in the near future.

NEW HOME SALES SKYROCKET

“New home sales improved in March at the fastest single-month rate in 47 years, according to a government report released Friday. New-home sales rose 26.9% to a seasonally adjusted annual rate of 411,000 last month, compared to an upwardly revised annual rate of 324,000 in February, the Census Bureau said.” – cnnfn.com

HOME PRICES ON THE RISE

“February home prices posted their first year-over-year increase since December 2006. The best performing market in February was San Francisco, which posted a double-digit gain over the past 12 months of 11.9%. San Diego home prices jumped 7.6% and Los Angeles gained 5.3%. The biggest loser continued to be Las Vegas, where prices dropped 14.6% over the past 12 months.” – cnnfn.com

EXISTING HOME SALES ON THE RISE

“Existing home sales jumped 6.8% in March. The National Association of Realtors reported that existing home sales rose last month to a seasonally adjusted annual rate of 5.35 million units, up from the revised rate of 5.01 million in February. Sales year-over-year was up 16.1%. Price and inventory: The median price of homes sold in March was $170,000, up 0.4% from March 2009. Distressed properties made up 35% of the houses sold during the month.” – cnnfn.com

INTEREST RATE UPDATE – AMAZING ARM RATES

Mortgage Type Interest Rate APR

30 Year Fixed 4.875% 5.011%
15 Year Fixed 4.250% 4.480%
5/1 ARM 3.250% 3.373%

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%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

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, LLC 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, LLC 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 at anytime with any questions.

MARKET UPDATE
brought to you by:


Chris Tiller
Realtor
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA.
www.genevare.com

Office: 602-561-1346
Fax: 623-215-8848
tiller34@hotmail.com

Market Update

APRIL 2010

HOMEBUYER TAX CREDIT ENDS THIS MONTH

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.

“There is little sentiment for continuing this program, especially because many consider the latest results to be disappointing. Even the Senate's biggest proponent of the homebuyer tax credit, Johnny Isakson, R-Ga., is ready to let it end. "He has no plans to introduce legislation to extend the credit," said Isakson's spokeswoman. "Part of the benefit of the tax credit was the urgency its sun-setting generated." – CNNMoney.com

FED HOLDS SHORT TERM RATES STEADY, BUT FOR HOW LONG

The Fed’s aggressive purchasing of mortgage backed securities to the tune of $1.25 trillion ended March 31st. Long term interest rates have remained stable with the 30 year fixed rates hovering around 5.0%. Long term rates will not drastically rise as long as investors step in to buy mortgage back securities.

“Fixed mortgage rates likely will rise less than a quarter of a percentage point in the next three months, the smallest increase for the second quarter since a drop in 2005, according to estimates by Fannie Mae and Freddie Mac.” - Bloomberg

The Fed also kept short term rates at historic lows; but for how long? The Fed held short-term interest rates unchanged in the range of 0.00 to 0.25 percent. The central bank stated that "economic activity has continued to strengthen and that the labor market is stabilizing." – CNNMoney.com

Short term rates will not likely begin to rise until there is solid signs of recovery in the economy; most notably the job market. Expect to see short term rates climb in the late third or forth quarter of 2010.

INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 4.875% 5.011%
15 Year Fixed 4.250% 4.480%

Call today for your individual scenario rate quote.

Interest rates as of 04/02/10. 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%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

SALES DECLINE BUT PRICES STABILIZE

“Sales of existing U.S. homes fell in February for a third month and the number of properties on the market climbed by the most in almost two years, according to the National Association of Realtors. Purchases dropped 0.6 percent to a 5.02 million annual rate, the lowest level in eight months, and there were 3.59 million houses for sale, the biggest gain since April 2008.”

“At the same time, the S&P/Case-Shiller home-price index covering 20 U.S. cities showed signs that real estate values may be stabilizing. Home prices dropped 0.7 percent in January from a year earlier, the smallest annual decrease in three years, according to a report issued today. Measured monthly, the gauge rose 0.3 percent from December.” - Bloomberg

FASTEST APPRECIATING U.S. CITIES

CNN just reported the 25 U.S. cities with the highest estimated appreciation over the next year. It is not big percentage, but at least it is going the right direction.

Those cities in green are serviced by Geneva Financial, LLC and Geneva Real Estate & Investments, LLC.

Rank City Annual Increase
#1 Santa Rosa, CA 6.0%
#2 Cheyenne, WY 4.7%
#3 Kennewick, WA 4.6%
#4 Merced, CA 4.4%
#5 Fairbanks, AK 4.2%
#5 Bremerton, WA 4.2%
#7 Corvallis, OR 4.1%
#8 Tacoma, WA 3.9%
#9 Anchorage, AK 3.8%
#10 Bend, OR 3.3%
#11 Modesto, CA 3.2%
#12 Pueblo, CO 3.0%
#13 Bellingham, WA 2.9%
#14 Yakima, WA 2.8%
#14 Spokane, WA 2.8%
#16 Billings, MT 2.7%
#17 Olympia, WA 2.3%
#17 Napa, CA 2.3%
#19 Mount Vernon, WA 2.2%
#20 Glen Falls, NY 2.0%
#20 Great Falls, MT 2.0%
#22 Charleston, SC 1.5%
#23 Casper, WY 1.8%
#24 Medford, OR 1.7%
#25 Eugene, OR 1.6%

NEW UNDERWRITING GUIDELINES

In a bold attempt to reduce mortgage delinquencies and fraud, the following underwriting guidelines take effect immediately.

All Borrowers’ Birth Certificates will be required with Pictures taken in the hospital with medical staff. Birth certificate with a live home delivery will not be eligible for first time home buyers.
Marriage certificate with bridal dress will be required if both husband and wife are required to qualify for the loan
GFE will not require signature but will require blood sampling from a recognized institution within three days of application
DNA test will be performed at closing to avoid any non-arms length transactions. Loan funding will be contingent upon satisfactory receipt of DNA results.
Verification of deposit will be acceptable only if Bank representative is present at the closing.
Copy of Pay stubs and W2 will only be acceptable through IRS and only with a wax sealed envelope mailed directly to the lender.
7 Witnesses from neighborhood will be required as proof of primary residence in case Borrower owns more then 1 property.
All appraisers will be required to use masks and ear plugs at the time of inspection to avoid any personal influence by the borrower for the appraised value.
In order to correctly calculate DTI and true housing ratio a list of grocery items, monthly usage and brand names will be required with receipts and projected 12 month consumption chart.
Closing will not occur without loan officer presence at settlement and loan officer picture will be taken at the closing in a mug shot format with loan number. Picture should meet standard guideline of 2 X 2 inch in color format with one facing and one side view.
Loan officer picture will be attached to the deed and note and will be made available for general public and security agencies in case borrower defaults on the loan.

It would be funnier if it wasn’t so true. -Author unknown.

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, LLC 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, LLC 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 at anytime with any questions.

MARKET UPDATE brought to you by:
CHRIS TILLER

Cell: 602-561-1346
Fax: 623-215-8848
Email: tiller34@hotmail.com


Realtor
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA.
http://www.greiusa.com/ / http://www.genevare.com/

MARKET UPDATE
FEBRUARY 2010

FANNIE MAE OFFERS ADDITIONAL INCENTIVES TO BUY NOW

Fannie Mae is offering a 3.5% incentive for buyers who purchase and close on a Fannie Mae owned home between January 28 and April 30, 2010. Buyers purchasing properties listed on http://www.homepath.com/ that are closed within this period may receive up to 3.5% of the final sales price for:
Closing costs;
The purchase of new Whirlpool® appliances by Fannie Mae; or
A mix of closing costs and appliances, at the buyer’s discretion, up to the maximum 3.5%.

To be eligible for this incentive:
Offers must be accepted on or after January 28, 2010
Property sales must close before May 1, 2010
Buyers must be owner-occupants, investors are excluded.

Content above directly from http://www.homepath.com/.

Geneva Financial, LLC offers HomePath financing. Contact me for additional information.

FHA ANNOUNCES ADDITIONAL REFORM

FHA is in desperation to reduce risk and increase its financial position. FHA recently announced steps it will take to strengthen its reserves and limit risk.
Up front mortgage insurance premium to be raised to 2.25% from the current 1.75%.
A minimum 580 credit score will be required of all borrowers to qualify with the minimum down payment of 3.5%. Borrowers with less than a 580 credit score will be required to put down a minimum of 10%. Note: Most lenders now require a 620 credit score, and many have increased the minimum credit score to 640; regardless of down payment.
Maximum allowable seller paid closing costs reduced from 6% to 3%.

Changes are likely to take effect by the summer of 2010.

FHA WAIVES 90 DAY SEASONING

In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure.
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:
All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Two appraisals will likely be required on most transactions where the property is resold by a private party within 90 days.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities. This action should help sell more homes at a faster pace and investors will still be able to flip.

WHO’S GOING TO BUY MORTGAGE BACKED SECURITIES

The cessation of the government program to buy mortgage-backed securities, set to end in a couple of months, will show whether the White House and Federal Reserve have effectively stimulated the lending market to the point that it is now on solid footing.
Keeping mortgage rates at record lows was a major component of the economic strategy during President Obama's first year in office. While it did not garner the kind of headlines that efforts to bail out banks did, the policy did help revitalize home buying in parts of the country and assisted millions of home owners who were able to refinance. – Washington Post

When the Federal Reserve stops buying mortgage backed securities, who is going to step into their place? Without a buyer, interest rates will spike, once again putting a damper on the housing market. 2010 will likely prove to be a very volatile year for interest rates, and the overall housing market.

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.

INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 4.750% 4.885%
15 Year Fixed 4.000% 4.229%

Call today for your individual scenario rate quote.

*Interest rates as of 02/02/10. 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. This information was taken from and provided by Geneva Real Estate & Investments, LLC.
For any additional information, call or email me at any time.

Sincerely,

Chris Tiller, Realtor

Geneva Real Estate & Investments, LLC

602-561-1346

tiller34@hotmail.com

January 2010

REGULATION RECAP

2009 was a remarkable year for mortgage regulation. It was Government intervention at its finest. In an attempt to curb the evil doings of mortgage companies from years past, the Government proved that over regulation can be just as damaging as a lack of regulation. New laws, new disclosures, and new procedures were cooked up by elected officials with an apparently limited knowledge of how the mortgage industry works. Mortgage brokers and bankers cried out and petitioned the government to reconsider the new regulations, which fell on deaf ears. Now borrowers, real estate agents, title companies and appraisers have joined the fight; maybe a little too late. This is a recap of the new regulation, its intention, and more importantly the outcome to date.

Home Valuation Code of Conduct (HVCC)

Effective Date: 05/01/09

Intent: The government wanted to create separation between the loan officer and/or mortgage company and the appraiser. The intention was to force mortgage companies to order appraisals through Appraisal Management Companies (AMC) which would randomly rotate appraisers and prevent direct contact between loan officer and appraiser. The goal was to prevent appraisal manipulation.

Outcome: Most of the AMCs are owned by the lenders that are ordering the appraisals, creating another profit source for the lenders and eliminating any separation which was the original intention of the HVCC. An appraisal now costs 30%-60% more than prior to the enforcement of the HVCC; a direct cost to the borrower. Appraisals which prior to the HVCC took 24-72 hours to complete, can now take weeks to complete. Appraisals are next to impossible to transfer from lender to lender which is commonplace due to one lender declining a file, and another willing to approve that same file. It is not uncommon for two or three appraisals to be ordered on one transaction.

Update: HR 4173, the Wall Street Reform and Consumer Protection Act of 2009, has passed the House and is on its way to the Senate. It is widely anticipated that this will pass, eliminating the HVCC. Hooray! Once passed, it is likely that the lenders will still require appraisals to be ordered under the HVCC rules. There is just too much profit and control for the lenders to give up. Boo…

Mortgage Disclosure Improvement Act (MDIA)

Effective Date: 07/30/09

Intent: The new Truth in Lending regulations increase the time needed to close loans to ensure that the borrowers understand their options and feel comfortable with the loan.Outcome: Delayed closings. Borrower now has more time to understand the Annual Percentage Rate (APR).

To date: Borrowers still do not understand the APR.

Update: No changes in the MDIA anticipated.

HUD’s Final Rule – RESPA Reform

Effective Date: 01/01/10Intent:

This is the single largest RESPA reform in the history of RESPA. In an attempt to add “transparency” and increased disclosure to the borrower in a mortgage transaction, HUD has officially implemented the new 2010 Good Faith Estimate and new 2010 HUD-1.

Outcome: The Good Faith Estimate (GFE) goes from one simple page, to four (not very “green” of the government). The new GFE fails to disclose total monthly payment and cash needed to close. Why did the government remove two of the most crucial pieces of information from the new GFE? Sorry, at a total lose for words. The new GFE requires disclosure of fees that are actually paid by the seller, but appear on the good faith estimate as a charge to the borrower. Mortgage brokers have to disclosure compensation in a Mickey Mouse fashion of charges and credits to the borrower; but banks do not. The new GFE still has to be disclosed to the borrower within three days of the application with accurate fees, which in many cases can now not be produced (i.e. title fees, inspection fees) within the three day window. Low and zero tolerances in fee changes lead some loan officers to over estimate fees, which will potentially lead to violations of MDIA (read above) creating closing delays.

Update: Too soon to tell. On a positive note, mortgage brokers will be the only institutions that will be required to be at full disclosure on the new good faith estimate. Banks will not be required to disclose all compensation. This may prove to benefit mortgage brokers once the public realizes that “Big Banks” are not required to disclose everything.

S.A.F.E. Act

Effective Date: 07/31/09 – 07/31/10 (varies by state)
Intent: “The new standards, as well as the uniformity and consistency of such standards, directed to be established nationwide by the SAFE Act present a significant step in the effort to increase integrity in the residential mortgage loan market, enhance consumer protections, and reduce fraud. The SAFE Act encourages states to participate in the Nationwide Mortgage Licensing System and Registry, and requires states to have in place, by law or regulation, a system for licensing and registering loan originators that meets the requirements of sections 1505, 1506, and 1508(d) of the SAFE Act.” – HUD

Outcome: The SAFE Act is long over due. We tip our hats to the government for implementing legislation that will in fact make the mortgage industry better. Unfortunately most states are broke and are struggling to implement the SAFE Act.
Update: The SAFE Act has already weeded many loan officers out of the industry. Loan officers that work for the “Big Banks” are not required to be licensed. Once again, if you wish to work with a loan officer who has taken the required education, passed a state and national test, and been officially licensed as a loan officer, you will want to contact us, your local mortgage broker.

EXISTING HOMES SALES SURGE

Fueled by historically low interest rates and the extension of the first time homebuyer tax credit, existing home sales were up 7.4% in November. The National Association of Realtors estimates that 51% of all sales in November were from first time homebuyers.
Existing home sales may see a dip down by the third quarter of 2010 due to higher interest rates and expiration of the first time homebuyer tax credit.

DROP IN FORECLOSURES

“Foreclosure filings fell by 8% in November, making it the fourth consecutive month of improvement in the housing market. There were 306,627 filings last month, according to RealtyTrac, an online marketer of foreclosed properties. That decline follows a 3% drop in October, 4% in September and 1% in August.” – cnnfn.com
Statically foreclosures are down but this is due in large part to market manipulation. Loan modifications and foreclosure moratoriums have influenced foreclosure rates. The drop in foreclosures does shine some positive light on the housing market although the market is a long way from being healthy.

In November 76,701 homes were foreclosed on, bringing the total for the year to a whopping 777,630 (stats from RealtyTrac). “Nevada, Florida, California and Arizona -- continued to amass the largest numbers of foreclosure filings with Nevada the hardest hit state of all. One of every 119 households had a filing in November, nearly four times the national average of one for every 417. Florida had one for every 165 households, California one for every 180, and Arizona one for every 186.” – cnnfn.com

SHORT TERM INTEREST RATES TO REMAIN LOW

Short term interest rates remain low as the Federal Reserve leaves the fed funds rate at an all time low, in hopes of a recovery in the housing and job markets. It is anticipated the FED will not likely change its stance on not raising interest rates for the foreseeable future.

Long term rates have seen a steady increase over the last few weeks, due in part buy the Federal Reserve’s commitment to purchase mortgage backed securities. The FED has stated that it will cease to purchase mortgage backed securities in 2010. To date the FED has purchased more than $1 trillion in mortgages. Wall Street and foreign investors have been hesitant to purchase mortgage backed securities due to poor performance during the housing crisis and it is not known who is going to step in to purchase mortgage backed securities once the FED pulls out of this role. That uncertainty has recently caused a spike in long term rates.

The information contained in this blog post was compiled from, and for business purposes, related to Geneva Real Estate & Investments, LLC and is not be copied or used without the consent from it's owner's.

For any additional information, call or email me at any time.
Sincerely,

Chris Tiller
Realtor/InvestorGeneva Real Estate & Investments, LLC
Email: tiller34@hotmail.com
Cell: 602-561-1346
Fax: 623-215-8848