MARKET UPDATE - NOVEMBER

VALUE NO LONGER AN ISSUE ON CONFORMING REFINANCES

Whether you like his policies or not, if you are a home owner, you will likely want to take advantage of the new revisions President Obama recently made on the HARP Program.

The HARP program initially allowed homeowners to refinance up to 125% of the home’s current value. In States like Arizona, Florida, and Nevada, 125% was not enough, as most homeowners owe considerably more than 125% of the value of their home.

Next month, loan to value (LTV) will no longer be a factor. Under the new HARP guidelines, the loan to value “cap” has been removed. Regardless of the home’s value, homeowners that meet the revised guidelines will finally be able to take advantage of the low interest rates. Example: House is worth $150K, but you owe $250K, no longer an issue.

Important guideline highlights:

• No late payments in the last 6 months and no more than one late payment in the last 12 months.
• Loan must be guaranteed by Fannie Mae or Freddie Mac.
• No cash out.
• If there is a 2^nd mortgage, 2^nd mortgage lender must agree to subordinate.
• Loan must have been originated prior to May 31^st, 2009.
• The interest rates are based on credit and loan to value.

The HARP revisions go into effect as early as November 15^th, 2011, but may take a few weeks for lenders to implement.

Please contact me if you want to see if you can take advantage of the newly revised HARP program. (christiller@brett-tanner.com) 602-561-1346

FOREIGNERS WELCOME BUT ONLY IF YOU BUY A HOUSE

Senators Charles Schumer and Mike Lee introduced a bill this month that would allow foreign investors who invest at least $500,000 in U.S. real estate to obtain a three year visa. One stipulation is that at least half of the investment must be spent on a primary residence and the investor must live there at least 180 days and pay taxes.

Foreigners bought the housing debt we didn’t want, so why not sell them the actual real estate.

“Foreigners spent $82 billion buying up U.S. homes in the 12 months ended in March, up 24% from a year earlier.” (NAR)

FED CONSPIRACY OR JUST THE TRUTH

The Government Accountability Office made formal recommendations to the Federal Reserve board of directors to reform its reputation for holding severe conflicts of interest. The GAO found that although the Fed manages potential conflicts of interest, stronger and more transparent rules should be installed to prevent the appearance of some directors taking advantage of their Fed status. For instance, 18 former and current members of the Fed board were affiliated with banks and other companies that received emergency loans from the central bank during the financial crisis.

JPMorgan Chase CEO Jamie Dimon served on the Federal Reserve Bank of New Yorkboard at the same time Chase received these loans from the Fed. In March 2008, the Fed also provided Chase $30 billion in financing to purchase Bear Stearns. Dimon was able to persuade the Fed to grant his bank an 18-month exemption from risk-based leverage and capital requirements, the GAO said. The central bank also took on troubled mortgage assets off the Bear Stearns balance sheet before the acquisition.

Potential conflicts of interest ran the other way as well. At the end of 2008, the New York Fed approved Goldman Sachs as a bank holding company, providing access to bargain loans from the reserve. Stephen Friedman, then chairman of the New York Fed, also sat on the board of directors at Goldman and even owned shares of Goldman stock, which was prohibited by conflict of interest regulations, the GAO said.

Additionally, the GAO said the Fed should urge its group of regional banks to consider how to broaden pools of potential candidates. Officers below the senior executive level should be included, the agency said, in order to diversify their boards. For instance, of the 108 members making up the nine-member boards at the 12 regional Fed banks, 78 were white men, elected by banks to represent their interests. (cnnfn.com)

A PLAN TO REFORM HOUSING

The Progressive Policy Institute is devising a plan to reform housing and roll back Fannie Mae’s and Freddie Mac’s near monopoly on home loan financing.

The Progressive Policy Institute has proposed a five part plan:

1. Do no harm: PPI warned against a qualified residential mortgage definition in Dodd-Frank that would mandate a 20% down payment. It recommended restoring the conforming loan limits that expired Oct. 1.
2. Throw a lifeline to underwater borrowers: The paper recommends encouraging lenders to write down loans in exchange for a share in future appreciation and a mass refinance of GSE portfolio loans to lower rates, a topic under consideration now by the Obama administration.
3. Soak up supply by sparking new demand: A $5,000 permanent homebuyer tax credit would help low- to moderate-income families. It would require a dollar-for-dollar match by the homebuyer. The "HomeK" account would allow employees to segregate up to 50% of their retirement account into a housing specific sub account. Funds could be withdrawn without penalty and applied toward a down payment. The authors also support a bulk REO-to-rental program and "homeownership vouchers" that would be targeted toward lower-income, first-time buyers.
4. Fix Fannie and Freddie sooner rather than later.
5. Articulate a new national housing policy: For the last 30 years, housing policy has been driven primarily by the homeownership rate. That thinking needs to be broadened, according to the PPI paper.

(Content: Housingwire.com)

Chris Tiller - Realtor

The Brett Tanner Team

Keller Williams Realty

4862 E. Baseline Road #103

Mesa, AZ 85206

Phone: 602-561-1346

Fax: 1-888-292-0678

christiller@brett-tanner.com

Website: www.phxrealty.com

Blog: http://tillersreupdate.blogspot.com/

Our team is closing 50 deals per month in Phoenix. Ask me how.

MARKET UPDATE

OCTOBER 2011

LOW RATES FOR EVERYONE

There has been much speculation that the Conforming “streamline” refinance may be coming in the near future to help home owners and stimulate the economy. The problem has not been interest rates, but equity. Unlike FHA “streamline” refinances that do not require an appraisal, Conforming loans (those guaranteed by Fannie Mae and Freddie Mac) do require an appraisal.

“Roughly 60% if borrowers in Nevada were underwater in the second quarter, the highest percentage of any state but down from 68% one year ago. It was followed by Arizona at 49% and Florida at 45%.” (housingwire.com) Low home values have eliminated many home owners from being able to take advantage of these historically low interest rates. That may all change soon.

In a recent speech, President Obama announced "We’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4%.” He went on to say "That's a step that can put more than $2,000 a year in a family's pocket, and give a lift to an economy still burdened by the drop in housing prices."

Last week Federal Reserve Chairman Ben Bernanke announced Operation Twist; a move by the Central Bank to buy $400 billion in long term Treasuries. Bernanke stated “By reducing the supply of longer-term Treasury securities in the market, this action should put downward pressure on longer-term interest rates, including rates on financial assets that investors consider to be close substitutes for longer-term Treasury securities.” After the introduction of Operation Twist, 30 year fixed mortgage rates fell to their lowest point in over 60 years.

Obama’s plan could benefit as many as 25 million borrowers, according to Glenn Hubburd and Chris Mayer, finance and economics professors at Columbia Business School. (cnnfn.com) The plan would have to create a new mortgage product, or revised guidelines of current mortgage products, and eliminate the valuation variable (i.e. appraisal), creating a conforming “streamline” refinance program available now only to borrowers with FHA mortgages.

“The Congressional Budget Office estimates such a program, if enacted, would require the federal government to spend $600 million.” (cnnfn.com)

The benefits may out weight the costs. Much of the money that would be saved on one’s mortgage would be money injected into the economy. Home owners would likely spend the monthly savings, not save it. Also, there are millions of homeowners that are underwater, but current. These homeowners could substantially lower their monthly mortgage payment and may be less likely to simply walk away from the property.

If President Obama’s refinance strategy comes to fruition, it will be for a limited time only and likely will only apply to those homeowners with a loan guaranteed by Fannie Mae or Freddie Mac. If you are interested in more information on this program as it become available, please email me at christiller@brett-tanner.com.

At this time, both Fannie Mae and Freddie Mac allow you to refinance your property up to 125% of the current market value. With good credit an assets, appraisal waivers (no appraisal required) are often granted. Many homeowners have not taken advantage of these programs, because they simply do not realize they even exist.

PHOENIX IS ON FIRE

Phoenix home sales in August were the highest in over 5 years. 9,657 homes were sold in the month of August. The median sales price, a whopping $118,000 (housingwire.com).

NEW HOME SALES DIP

New homes sales nationally dropped once in again in August. The 2.3% drop was better than economists anticipated.

DROWNING IN NEGATIVE EQUITY

“Nearly 11 million properties, roughly 22.5% of all U.S. homes, were worth less than the underlying mortgage in the second quarter, according to CoreLogic. The percentage of properties in negative equity declined slightly from 22.7% the previous quarter and down from 24% one year ago. Another 2.4 million borrowers held less than 5% equity in their home, what analysts call near-negative equity. CoreLogic also showed nearly three-quarters of all underwater borrowers are paying above-market interest on their home loans.” (housingwire.com)

"High negative equity is holding back refinancing and sales activity and is a major impediment to the housing market recovery," said Mark Fleming, CoreLogic chief economist. (housingwire.com)

NATIONAL DEBT REDUCTION AT A GLANCE

Last week, President Obama unveiled a plan to reduce the nation debt by $3 Trillion over the next decade.

Spending cuts: $580 billion ($248 billion coming from cuts to Medicare).
Medicaid: $72 billion
Cuts in other mandatory programs: $250 billion
Includes $33 billion in savings from farm subsidies;
$42.5 billion from federal worker benefit programs, including those for civilian workers and military personnel;
$92.2 billion the administration estimates it can save from "restructuring government operations and reducing government liabilities."
Tax revenue: $1.5 trillion.
Includes $800 billion from letting Bush-era tax cuts to expire for high income households.
Capping Deductions and Limiting Exemptions: $400 billion
Closing Various Tax Loopholes: $300 billion
War savings: $1.1 trillion.
Reduction in spending in Iraq and Afghanistan over the next decade that will result from the planned drawdown of troops and the changing nature of the operations in those countries.
Interest savings: $430 billion.

Obama stated "I will not support any plan that puts all the burden on ordinary Americans.” Obama even introduced the "Buffett Rule" for millionaires -- named after investor Warren Buffett, who has frequently argued that the very rich are not taxed enough.

But the Obama plan has already drawn criticism from Republicans, who have been adamant about not wanting to raise anyone's taxes (cnnfn.com)

Chris Tiller - Realtor The Brett Tanner Team
Keller Williams Realty
4862 E. Baseline Road #103
Mesa, AZ 85206
Phone: 602-561-1346
Fax: 1-888-292-0678
christiller@brett-tanner.com
Website: www.phxrealty.com
Blog: http://tillersreupdate.blogspot.com/
Our team is closing 50 deals per month in Phoenix. Ask me how.

Why rent and pay more?

Least Expensive Cities to Buy a Single Family Home
Single Family Own or Rent Index Rank
City Own or Rent Ratio

If you are renting in Maricopa County you are paying more per month than it costs to own. The largest factor is that you are not building any equity for your future or taking advantage of historically low interest rates. Find your city below for an idea of how large the difference is and how much money you’re wasting every month on rent.

If you are interested to purchase feel free to contact me. Finding out if/what you can qualify for is free and our mortgage reps will give you a free consultation.

Ratio of 1-15: Owning less expensive than renting.
Ratio 16-20: Renting makes more sense but buying may make sense depending on circumstances.
Over 20: Renting less expensive than buying.

1 Florence 5.0
2 Coolidge 5.5
3 Phoenix 5.9
4 Casa Grande 6.3
5 El Mirage 6.5
6 Glendale 6.7
7 Tolleson 7.0
8 Avondale 7.8
9 Mesa 8.2
10 Buckeye 8.3
11 Maricopa 8.3
12 Laveen 8.7
13 San Tan Valley 8.9
14 Goodyear 9.1
15 Peoria 9.1
16 Tempe 9.1
17 Chandler 9.7
18 Surprise 10.1
19 Sun City 10.5
20 Gilbert 10.8
21 Litchfield Park 11.2
22 Queen Creek 12.8
23 Sun City West 14.9
24 Scottsdale 15.6
25 Fountain Hills 15.8
(Data for ratios from Arizona Regional Multiple Listing Services, Inc.
August data)

Chris Tiller - Realtor

The Brett Tanner Team

Keller Williams Realty

4862 E. Baseline Road #103

Mesa, AZ 85206

Phone: 602-561-1346

Fax: 1-888-292-0678

christiller@brett-tanner.com

Website: www.phxrealty.comBlog: http://tillersreupdate.blogspot.com/

Our team is closing 50 deals per month in Phoenix. Ask me how.

MARKET UPDATE

SEPTEMBER 2011

"Markets will rise and fall, but this is the United States of America. No matter what some rating agency will say, we will always be and always have been a triple-A country." – President Obama

Just because you say it, doesn’t make it so.

COMMONWEALTH PROPERTY GROUP, LLC UPDATE

Short sale fraud

Fraud in real estate? Freddie Mac, with the help of investigation and law enforcement agencies, is trying to crack down on short sale fraud.

Fraud with short sales typically occurs when a real estate agent fails to disclose to the other parties in the transaction all offers made on a particular property. The agent will submit only low bid offers from investors, who have a pre-arranged relationship with the real estate agent (non-arm’s length) forcing the value down. Once the property is sold to the investor, the investor then flips the property to one of the higher offers that were made, but were never disclosed to the seller, or Freddie Mac. This is not only happening to Freddie Mac, but all banks involved with short sales.

Short sale fraud creates multi-million dollar loses to the banking industry. And when referring specifically to Fannie Mae or Freddie Mac, those loses come at the expense of the tax payer.

Goldman sachs ceo blankfein lawyers up

Goldman Sachs CEO, Lloyd Blankfein and other employees hired lawyers as they came under fire for allegedly misleading clients into purchasing subprime mortgages that the firm knew in advance where worthless; and were perhaps even betting against.

On August 23nd, 2011, CIFG filed a lawsuit against Goldman Sachs. CIFG is an insurer selected by Goldman to insure $275 million worth of securities tied to Goldman's securitization of 6,204 residential mortgage loans. This is the second lawsuit this month against Goldman pertaining to toxic mortgage backed securities and misrepresentation. This first was filed by Allstate Insurance earlier this month. (housingwire.com)

Unwind Fannie and Freddie? Back the government out of the mortgage industry, and hand it over to Wall Street? Those in favor may want to rethink that.

New home sales slip in july

New home sales fell 0.7% in July. Although new home sales posted disappointing numbers in July, housing inventory nears lowest level in decades, with a 6.6 month supply. (housingwire.com)

The next big bubble??

Gold prices hit an all-time high August 23, 2011, at a price of $1,917.90 per ounce. Historically gold is a hedge against inflation, which has averaged 2.4% on an annual basis over the last ten years. Gold has been on a 21% per year increase over the same period. (cnnfn.com)

Foreclosures on the decline in phoenix

A report from the W.P. Carey School of Business at Arizona State University shows that foreclosed homes account for less than 30% of the existing home sales. This is the lowest level in over two years.

Existing home sales in Phoenix dropped 13.2% in July. 9,050 homes were sold in the Phoenix market in the month of July. (housingwire.com)

Tax the rich, all 3% of them

The Federal Government has a budget problem. Spending exceeds income. The solution to the problem is simple, increase revenue (taxes), cut spending, or both. That is how every successful business in America operates. Yet, the working class does not want to pay more taxes. Corporations will just keep hiding profits overseas. Spending cuts are going to have a negative impact on someone; likely the poor, elderly, teachers and civil servants. The bottom line is that someone or everyone is going to have to take a little “pain for the cause.” But who?

President Obama and many in the Democratic Party have been proposing an increase of taxes for the wealthy. Now aren’t you glad you not one of those people. Statistically, you likely are not. As defined by the President, the wealthy are those whose income is $200,000 per year or greater.

“According to a recent report from the Internal Revenue Service, that leaves out about 97% of the tax-paying population. The report, which provides a complete breakdown and analysis of returns for the 2009 tax year, found that only a mere 3% of tax returns were filed by people earning a gross adjusted income of $200,000 or more. Americans earning $1 million or more were even more rare, comprising just 0.2% of total tax filers and accounting for a mere 236,883 of the 140 million tax returns received in 2009. The wealthiest taxpayers -- those earning $10 million or more in adjusted gross income -- are even less prevalent. There were only 8,274 people belonging to that elite club, according the IRS. Out of the nearly 4 million "rich" people making more than $200,000 a year, 1,470 didn't pay any income tax whatsoever in 2009. But the people who did pay taxes earned a total of nearly $2 trillion in income -- about 26% of total taxpayer income in 2009.” – cnnfn.com

“President Obama's tax proposals -- which many Republican's call "job-killing" tax hikes -- include getting rid of some corporate tax breaks enjoyed by oil and gas companies and corporate jet buyers, and restoring some Bush-era tax rates for high-income households. If the Bush tax cuts expire as planned in 2012, the top two income tax rates will revert to 39.6% and 36% from 35% and 33%, respectively.” (cnnfn.com)

Hedge fund manager John Paulson made more than $5 billion (yes, with a B), in 2010. Because his income is considered long term capital gains, he was taxed at a rate of 15%; verses 35% average income tax most American workers pay. The moral: Be rich.

RATE WATCH

MORTGAGE TYPE	INTEREST RATE	APR
30 YEAR FIXED	4.000%	4.113%
15 YEAR FIXED	3.250%	3.446%
5/1 ARM	2.375%	2.765%

Interest rates as of 08/25/11. 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.

Chris Tiller - Realtor The Brett Tanner Team
Keller Williams Realty
4862 E. Baseline Road #103
Mesa, AZ 85206Phone: 602-561-1346
Fax: 1-888-292-0678
christiller@brett-tanner.com
Website: www.phxrealty.com
Blog: http://tillersreupdate.blogspot.com/
Our team is closing 50 deals per month in Phoenix. Ask me how.

MARKET UPDATE

MARKET UPDATE

AUGUST 2011

ARIZONA REAL ESTATE SALES HIT RECORD

The Arizona MLS reported 10,509 as the number of sales for June 2011. The previous record was 10,252 sales in June 2005. (Grand Canyon Title Agency) At the time of this publication, that number had not yet been verified, but if the number is remotely close, it is good news for the Arizona real estate market.

WELLS FARGO GETS THEIR HAND SLAPPED

Wells Fargo was fined $85 million by the Federal Reserve for loan fraud and steering customers into high cost loans. The fine by the Fed was the largest of its kind to date. Up to 10,000 borrowers were involved between 2004-2008. (housingwire.com)

This month (July) Wells Fargo posted record net income of $3.9 billion for the second quarter on more than $20 billion in revenue

U.S. HOME PRICES TREND HIGHER

“U.S. home prices continued to show upward trends in May, extending April gains for two consecutive months of positive price momentum, according to FNC Inc. Despite record foreclosure activity and rising unemployment rates in recent months, the single-family housing market continues to show signs of price stabilization in line with rising activities in new housing starts and building permits. Home prices rose 0.5% in April, according to FNC's RPI.” (housingwire.com)

DODD-FRANK ACT IS NOT THE SOLUTION

“According to the Grant Thornton bank executive survey released Thursday, nearly half of bankers believe financial reform under the Dodd-Frank Act will not effectively prevent another taxpayer-led bailout. The results are published in association with Bank Director Magazine. In the survey 48% of bankers polled said Dodd-Frank will not effectively detect broad risks capable of driving the economy back into a recession. Only 4% believe the sweeping reforms of the new law will be totally effective while 34% expect Dodd-Frank will only partially protect against economic risks.” (housingwire.com)

Once again, the intention is noble, regulation to protect the consumer, but the implementation is flawed. Dodd-Frank Act takes ahold of the mortgage industry in August. The Act will continue to drive up the costs to the consumer, slow the lending process, and prevent more prospective homebuyers from obtaining financing.

Without government regulation, the consumer will once again be thrown to the wolves (Wall Street) in our boom-bust economy. We the public forget fast and we will have another housing bubble. With the current government regulation, the consumer will only be slightly protected and at a cost; the financial cost to the consumer and the cost of a slower recovery. You just can’t have your cake and eat it too.

RISING COSTS & REGULATION

“Homebuyers who obtain mortgages in this environment of tightened lending standards are paying 8.8% more in closing costs than a year ago, according to Bankrate Inc. Origination and title fees are averaging $4,070 on mortgages for $200,000, according to the financial data firm's 2011 closing costs survey. That compares to average closing costs of $3,741 a year ago. The year-over-year change wasn't nearly as high as the 36.6% increase in closing costs between last year and 2009, when fees averaged $2,739 on a $200,000 home loan.” (housingwire.com)

The rising cost to homebuyers in 2011 is due to the Federal Reserve’s amendment to Regulation Z regarding loan originator compensation that went into effect April 6^th, 2011. In 2010, the increase in closing costs is attributed to RESPA reform that went into effect January 1^st, 2010. Dodd-Frank Act will drive costs up further starting in August 2011. The perception of protection comes at a cost.

Financing for High priced homes on the chopping block

Rep. John Campbell (R-Calif.) and Rep. Gary Ackerman (D-N.Y.) introduced a bill Friday that would extend the current conforming loan limit for government-backed mortgages for another two years. The Conforming Loan Limits Extension Act, or H.R. 2508, would allow the government-sponsored enterprises and the Federal Housing Administration to guarantee or buy mortgages worth as much as $729,750 in most neighborhoods. If Congress does not pass this bill, the loan limit will drop to $625,500, though the limit will vary by county. A recent report from the National Association of Home Builders showed 17 million homes would become ineligible for less expensive federal funding. The drop could affect as many as 669 counties across 42 states.

Federal Reserve Chairman Ben Bernanke, however, told the House Financial Services Committee this week that he believed the private market, including investors and insurers, was ready to take over for the government — albeit at a higher cost to the consumer. (housingwire.com)

Chris Tiller, Realtor
The Brett Tanner Team
Keller Williams Realty
3540 E. Baseline Rd., Suite 120
Phoenix, AZ 85042
Cell: 602-561-1346
Fax: 1-888-292-0678
christiller@brett-tanner.com