Daily Real Estate News | Friday, September 30, 2011


Starting Saturday, many borrowers in pricey housing markets may find they’ll need a higher down payment or pay higher rates. The size of mortgages that the government will back in several high-priced regions is set to drop on Oct. 1, which some analysts expect will serve as another thorn to the housing market.

In 2008, Fannie Mae and Freddie Mac raised its cap on conforming loans up to $729,750 in some of the most expensive housing markets so that larger mortgages would be available to home buyers. But those caps are set to reset on Oct. 1, scaling back to a maximum of $625,500 in some areas of the country.

Housing analysts say the drop will make it more expensive and harder for some buyers to qualify for home purchases in expensive markets, particularly along the coasts.

“The down-payment issue is the most significant aspect form borrowers standpoint,” says Greg McBride, a senior financial analyst at “These changes will price some prospective borrowers out of the market.”

Source: “Big Borrowers Face Larger Down-Payments, Rates,” MarketWatch (Sept. 30, 2011) and “Big Mortgages: Harder to Get and More Expensive With Loan Caps,” CNNMoney (Sept. 30, 2011)

Read More:
On Loan Limit Drop, Middle Faces Hard Hit

House Fails to Vote on Extending Loan Limits

Loan Applications Rise for Refinancing, Home Purchases

Daily Real Estate News | Wednesday, September 28, 2011


Mortgage applications increased last week, with both refinancing and home purchase demand increasing, the Mortgage Bankers Association says in its weekly report.

Applications for U.S. home mortgages increased 9.3 percent for the week ending Sept. 23, according to MBA’s seasonally adjusted index.

Refinancing applications made up the biggest part of that increase, rising 11.2 percent last week. Loan requests for home purchases increased 2.6 percent.

Meanwhile, mortgage rates continue to hover near record lows, luring home owners and buyers who can qualify for the low rates.

“Mortgage rates declined last week, at least partially in response to the Fed’s announcement that they would shift their portfolio toward longer-term Treasury securities, and that they would resume buying mortgage-backed securities,” Mike Fratantoni, MBA’s vice president of research and cconomics, said in a statement.

Source: “Mortgage Applications Rose Last Week: MBA,” Reuters (Sept. 28, 2011)

Read More

Fed’s Latest Move May Send Rates Lower

Mortgage Rates Remain at Record Lows

Mortgage lending at lowest level since 1997

Despite near-record-low mortgage rates, a combination of factors is depressing the industry. Many people have simply decided homeownership isn’t for them.


  • Despite the confluence of lower home prices and rates, new mortgages are down by a third compared with 2010. Lenders will write about $1 trillion in home loans this year, the smallest total since 1997, according to the Mortgage Bankers Assn., which projects home lending will fall even lower in 2012.
Despite the confluence of lower home prices and rates, new mortgages are… (Seth Perlman, Associated Press)


August 06, 2011|By E. Scott Reckard, Los Angeles Times
Despite near-record-low mortgage rates and the cheapest housing prices in eight years, home lending has slipped this year to the lowest level since 1997.The laggard loan market can be explained in part by the slow economy, numerous foreclosures and the proliferation of “underwater” loans, those that exceed the value of the properties they secure.


But other factors are compounding the problem, including so-called refi burnout — how many times, after all, can one refinance a home? — and a wave of people who have simply decided that homeownership isn’t what it was cracked up to be.

Weary of a noisy tenant on the other side of a common wall, Bruce and Deborah Dennis sold their Arcadia duplex in April, banked a $600,000 profit and went looking for a quieter place to spend their 60s.

Bruce’s boss, a property manager, urged them to buy another home, saying they’d never again see prices and mortgage rates so low at the same time. The couple searched seriously for two months, even bidding on a home. In the end, they opted to rent a house, leery of tying up capital and taking on the headaches of ownership with the housing market so shaky.

“We thought, ‘Is buying really what we want to do?’ I have no confidence that home prices are going back up any time soon,” Bruce Dennis said.

Opt-outs like the Dennises are one reason the mortgage business, which led the way into the Great Recession, is taking so long to come out of it.

Another factor is the slowing of the refinance market. Mortgage costs are near historical lows, with lenders offering 30-year fixed-rate loans at about 4.2% to Californians seeking $400,000 mortgages, online home-loan specialist Lending Tree said Thursday.

But most of the lucky homeowners who still have equity and solid finances have already refinanced once or more and have long since locked in annual rates of less than 5%.

In 2003, as the housing boom took hold and 30-year fixed mortgage rates fell below 6%, refinancings propelled home lending to four times the current volume. And as the rate tumbled toward 5% and then smashed that barrier in 2009 for the first time since 1956, there was twice as much mortgage lending as now.

“There is a burnout phenomenon,” said Mortgage Bankers Assn. economist Michael Fratantoni. In addition, many would-be refinancers have been stopped by the declines in home prices, now back at 2003 levels, which has left them owing far more than their homes are worth.

“Borrowers who couldn’t qualify for 4.5% mortgages last year for the most part still can’t qualify this year,” Fratantoni said.

And getting the purchase market up and running again would require “significant job growth,” he said, something that has failed to materialize in the sluggish recovery that is threatening to fall back into recession.



The result of all this: Despite the confluence of lower home prices and rates, new mortgages are down by a third compared with 2010. Lenders will write about $1 trillion in home loans this year, the smallest total since 1997, according to the Mortgage Bankers Assn., which projects that home lending will fall even lower in 2012.Some say the combination of falling home prices, tight credit in the aftermath of the financial crisis and the flood of foreclosure sales has undermined the traditional view of homeownership as the engine of financial success.

“The previous assumptions that housing is a good investment, or that home prices can only go up, or that all Americans should be able to buy a home, are being seriously challenged,” Morgan Stanley housing analysts wrote last month in a study titled “A Rentership Society.”

In the middle of the last decade, when the term “ownership society” was coined, the homeownership rate was nearly 70%, the report noted. If delinquent borrowers were excluded, it said, the current rate of 66.4% today would instead be 59.7%.

For those willing to take out mortgages despite all the grim news, the prospects are improving slightly. Lenders have eased certain terms for the first time since the mortgage meltdown took hold, and some on the front lines say banks are abandoning the scrutiny bordering on suspicion with which they had come to regard potential borrowers.

“All those granular issues we were beating people up about over the last three years seem to be going away,” Laguna Niguel mortgage broker Jeff Lazerson said. “The hassles over old credit inquiries. Having to explain every entry on a bank statement.”

Spokesmen for Wells Fargo & Co. and Bank of America Corp., the largest mortgage companies, said they recently eased standards slightly for loans backed by the Federal Housing Administration, which are attractive to first-time buyers because they require relatively small down payments.

However, among younger buyers, “there’s not much feeling that they need to buy right away,” Fratantoni said. “I expect that may change over the next couple of years, but certainly for the first-time buyer there’s less near-term demand.”

Older people can be ownership-averse as well, like the Dennises, who intend to work five more years before they retire.

“To buy another house, we were going to have to come up with a chunk of change for a down payment,” Bruce Dennis said. “Then there were property taxes, and of course maintenance — that gets expensive in a hurry.

“The glories of homeownership we no longer have to face.”

Will the S&P Downgrade Affect Interest Rates?

Daily Real Estate News | Monday, August 08, 2011


Standard & Poor downgraded the U.S.’s credit rating on Friday, despite Congress reaching a deal in the final hours on the debt ceiling crisis last week. And now many of your customers may be asking: What does this mean for interest rates?“The impact on your wallet of the Standard & Poor’s downgrade of the nation’s credit rating is similar to what would happen if your own credit score declined: The cost of borrowing money is likely to go up,” the Washington Post explained in the aftermath of S&P’s decision.

S&P downgraded the U.S.’s top-notch AAA credit rating for the first time in history, moving it down one notch to AA+; the rating reflects a downgrade in S&P’s confidence in the U.S. government’s ability to repay its debts over time. It’s not clear, however, whether S&P’s downgrade will instantly effect rates, analysts say.

The 10-year Treasury note is considered the basis for all other interest rates. And “the downgrade could increase the yields on those bonds, forcing the government to spend more to borrow the same amount of money,” the Washington Post article notes. “Many consumer loans, such as mortgages, are linked to the yield on Treasurys and therefore would also rise.”

Watch this video with NAR Chief Economist Lawrence Yun for more information.

While consumers who have fixed interest rate mortgages will be immune to any changes in borrowing costs, home buyers shopping for a loan or those with mortgages that fluctuate may see a rise in rates later on, some analysts say.

Mark Vitner, senior economist at Wells Fargo Securities, told the Associated Press that he doesn’t expect the downgrade to drive up interest rates instantly since the economy is still weak and borrowers aren’t competing for money and driving rates higher. However, he expects in three to five years, loan demand will be much higher and then the downgraded credit rating might cause rates to rise.

Analysts are still waiting to see if the other rating agencies, Moody’s and Fitch, follows S&P’s lead in its downgrade of the U.S. credit rating. If so, the aftermath could be much worse, analysts say.

The debt deal reached by Congress last week was expected to save the U.S. from any credit rating downgrade. However, S&P said lawmakers fell short in its deal. Congress’ deal called for $2 trillion in U.S. deficit reduction over the next 10 years; S&P had called for $4 trillion.

Source: “5 Ways the Downgrade in the U.S. Credit Rating Affects You,” The Washington Post (Aug. 8, 2011); Questions and Answers on Standard & Poor’s Downgrading of U.S. Federal Debt,” Associated Press (Aug. 6, 2011); and S&P Downgrade Will Shake Consumer and Business Confidence at a Fragile Time, Economists Say,” Associated Press (Aug. 6, 2011)

Read More

Real Estate OK in Debt Deal But Risks Remain

This is a brief window of opportunity….and every opportunity has a “shelf life”!


Rates are amazing right!!!  

We are locking rates in between 4.375 and 4.5%…..on NO COST refinances and purchases…..up to loan amounts of $729,000! The jumbo conforming refi applications must be received no later than August 15th….as jumbo conforming loan limits are being reduced to $625,000 come October 1st. All loan amounts between $625,000 and $729,000 must fund by September 30th to take advantage of the conforming rates and guidelines; after which time loans that fall into that category will be considered jumbo financing. FYI, the jumbo conforming 30 year fixed rates are about 1% lower than 30 year jumbo rates. That’s a BIG difference in a monthly mortgage payment of that size loan amount.





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8 Common Seller Problems (and How to Resolve Them)

If you’re working in real estate, you’re bound to run into one of these problems. But if you address them early and honestly, they shouldn’t present major obstacles for your transaction.
July 2011 | By Rich Levin

Do you ever clash with sellers on price, staging, or marketing? Has someone ever asked you to lower your commission? Has a seller’s personality ever rubbed you the wrong way?

If you work in real estate—and you aren’t exclusively a buyer’s agent—then the answer to those questions is almost certainly yes. But unless you’re working with someone who’s incredibly dense and obstinate, these problems don’t have to slow down the selling process.

The Problems

Note that the problems below don’t apply just to real estate professionals. In fact, they’re even bigger issues for sellers. These cost them time, money, and aggravation, and disrupt their lives far more than their agents’.

1. Sellers can be uncooperative on price.

2. Sellers frequently believe that the way they live in the house is the way they can sell the house.

3. Sellers are often unprepared for low appraisals.

4. Most sellers aren’t negotiation experts. They may bring expectations and anxiety that make everyone’s experience more difficult.

5. Sellers can be uncooperative on commission and might even request a reduction.

6. Sellers regularly have unrealistic demands concerning showings, advertising, marketing, and communication.

7. Agents and sellers may have personality conflicts.

8. Sellers might not be aware of all the closing costs.

Solving these problems gets sellers’ homes sold faster, for more money, and with less stress.

The Universal Solution in Two Parts

Before we get into the solution, it’s important to point out that owners don’t fully understand the entire process of selling a home. These problems would occur far less or not at all if agents could give them a crash course on selling, in which the practitioners covered these issues in a frank way. If that happened, I believe that sellers would be more cooperative.

The universal solution in two parts is first to ask the seller specific questions over the phone and at the beginning of the listing presentation as the agent is establishing rapport. These include:

▪ “Have you done much research to determine the asking price or how to sell a house?”

▪ (If yes) “We’ll talk more when we get together, but what are some of the more important things you discovered?”

▪ “Why are you thinking of selling?”

▪ “Where are you going?”

▪ “Is there an ideal time frame to have the move complete?”

▪ “The tax records indicate that you bought it x years ago, is that correct?”

▪ “Have you refinanced?”

Similar to how a doctor asks patients about their health history, this process gives the sellers confidence in the thoughtfulness, thoroughness, and ability of practitioners.

The second part of the universal solution is for real estate pros to build a listing presentation that addresses each of these problems before they arise. Details on how to do that are below:

1. If they’re uncooperative on price, prepare a very thorough comparative market analysis. Show sellers all the research that you used to select the properties you chose for the final CMA. Offer your pricing recommendation, but let sellers choose — and “own” — the list price.

2. Sellers believe the way they live in their house is the way they can sell it. Ask sellers if they are planning to do any work to prepare it for the sale. If they are, use your judgment to determine whether they will follow through or not. Share examples and anecdotes of how house cleaning, reorganizing, renovations, and so forth have helped homes sell faster and for more money.

3. Describe the entire pending process, from offer acceptance to closing. As you go through this, cover other stumbling blocks and how you work to prevent or address them.

4. Go over the entire negotiating process, from interested buyers to accepted offer. Also, explain pitfalls and emotional turbulence and describe how you will be their advocate.

5. If they’re uncooperative on commission, sometimes you will simply have to walk away. When possible, build so much value into your marketing plan that sellers are reluctant to even ask you to adjust your commission.

6. Show proof that what you do works. Continuously check for agreement. If and when they challenge you, make a note and return to it after they are impressed with your entire effort.

7. When it comes to personality conflicts, make sure you’re self-aware. Determine your personality style, and your strengths and weaknesses. Learn to recognize others’ personality types, and figure out which will naturally conflict with yours. Learn strategies for adapting.

8. Get sellers’ mortgage balances. Find out what else they plan to pay off with the proceeds. Then complete a detailed net sheet. Use a conservative sale price. Inflate the numbers a bit, so you can assure them it will likely be more in their pocket.

All of these bases can be covered either in conversations with owners over the phone before making an appointment or during the listing presentation. Top practitioners have spent years interacting, building, rehearsing, presenting, adjusting, and improving. Solving these problems consistently comes out of that effort.

Housing markets

Will housing save America’s economy?

Jun 20th 2011, 14:35 by R.A. | WASHINGTON

BACK in February of 2009, Paul Krugman was worrying about an insufficient policy response to the recession and he pondered the question: if America is to muddle through with too little stimulus, then how will growth return?

[R]ecovery comes because low investment eventually produces a backlog of desired capital stock, through use, delay, and obsolescence. And eventually this leads to an investment recovery, which is self-reinforcing.

And what do we mean by use, delay, etc.? Calculated Risk had a nice piece on auto sales, which I find helps me to think about this concretely. As CR pointed out, at current rates of sale it would take 23.9 years to replace the existing vehicle stock. Obviously, that won’t happen. Even if the desired number of vehicles doesn’t rise, people will start replacing vehicles that wear out (use), rust away (decay), or just are so much worse than newer models that they’re worth replacing to get the spiffy new features (obsolescence).

He mentions automobiles, but there is another, somewhat surprising possibility—that housing will lead the way to a durable recovery. This may seem strange to suggest. An epic housing collapse following a massive housing boom helped to trigger the downturn. Residential investment has been a drag on growth for five consecutive years. And yet some writers, like Karl Smith and Calculated Risk, are hinting that a housing recovery may be on the way. Matt Yglesias hints at one reason why with this chart:

As Mr Yglesias notes, housing starts have been at an unprecedentedly low level for a strikingly long period of time. And during that period, America’s population has continued to grow. Eventually, whatever the economy is doing, Americans require new houses, new houses mean new construction, and new construction means new employment. Rising rents were one of the factors pushing core inflation higher last month, and increasing rents will soon translate into construction.

Meanwhile, there is a larger demand backlog than most people may imagine:

America doesn’t simply face a situation in which housing has failed to keep pace with the growth in population. Since the onset of recession, household growth has fallen short of population growth as families doubled- and tripled-up on housing to economise. There are now nearly 2m fewer households than one would expect given growth in population. As economic conditions improve, many individuals and families now living with others in order to save money will seek their own homes. That should spark a period of catch-up household growth, which should in turn spark a large rise in rents and new construction. A recovering construction industry would help soak up unemployed workers, continuing a virtuous cycle of recovery. After five long years, housing may finally start pulling its economic weight again, or so many Americans must hope.


The 20% solution: personal savings rates and homeownership

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This article analyzes the current rate of personal savings against the backdrop of the increase in mortgage downpayment requirements, and its affect on the California real estate market.

The return to downpayment fundamentals

QRM: if you’re in residential real estate, these three little letters mean more and more to you with each gloomy housing report released by the real estate watchdogs. QRM stands for qualified residential mortgage, the moniker given mortgages which pass muster under the new proposed rules for “prime” mortgages. If the QRM standard is passed into law as anticipated, one of the most significant changes it will bring about is a mandatory 20% down payment for residential loans with the most favorable terms (i.e., those loans which the originating lender may sell and retain no stake in). [For detailed information about the changes coming to mortgage qualification standards, see the May 2011 first tuesday article, How much medicine can the sick housing market stomach?]

The 20% down payment, once the gold standard of residential mortgages, became a quaint novelty during the fevered years of the Millennium Boom. Borrowers (and lenders) got used to the easy days of purchasing a home with 3.5% (in gift funds!) down, 0% down or even 0% down plus seller-paid or financed closing costs. The disparity between the huge financial burden of owning a home and the low barrier set by the borrower’s nonexistent initial investment was outrageously disproportionate, but seductively convenient. “No savings necessary!” became the message for those interested in future homeownership.

(Gray bars indicate periods of recession.)

Personal savings as a percentage of disposable income hit a 50-year low during the Millennium Boom, according to data released by the federal Bureau of Economic Analysis (BEA). Consider that from 1952 – 1990, the average personal savings rate was around 8-10%. Since then, the average personal savings rate has dropped to nearly zero, and bounced back during the recent recession to 4%.

Over the last few decades, savings has followed a path conversely proportionate to consumer confidence. When consumer confidence is running high, the rate of personal savings falls. When consumer confidence is relatively low, personal savings rises. A financial “comfort zone” is accommodated either way. [For more information about consumer sentiment, see the first tuesday Market Chart, Interest Rates Affecting Real Estate Transactions.]

Observe that the personal savings rate leapt up in conjunction with the Great Recession which began in 2008 — that uptick is a visual representation of the reality check experienced by many who were riding high on the tide of the Millennium Boom. The increased savings during the Great Recession can also be attributed on a smaller scale to those who have strategically defaulted on their home mortgage, been foreclosed on or sold on a short sale. No longer chained to their negative equity asset, they are able to save the money they would have wasted on a dead-end mortgage to saving for their new home, education and family emergencies. [For more information about strategic defaults, see the May 2011 first tuesday article, Short sale or foreclosure? The naked truth for underwater homeowners; for more information about recessions, see the June 2011 first tuesday article, Suspect behavior: why and how the Fed creates a recession.]

The quarterly chart displays a slight downward slide in savings over the last couple of years as a result of the recession continuing to deliver economic shocks (lost jobs, lower wages, low employment, teaser rates on adjustable rate mortgages (ARMs) resetting, etc.) to many households. The savings which were accumulated at the last minute for many will become depleted for some. Expect the up and down motion to continue as we navigate this rocky jobless recovery. [For more information about the shape of the economic recession and recovery, see the November 2009 first tuesday article, Diving the future: the letters game; for more information about California’s current employment numbers, see the first tuesday Market Chart, Jobs Move Real Estate.]

When the economy is doing well – or perceived to be doing well – people are less likely to tuck away money for the proverbial rainy day. The same flawed logic which soothed people into believing home values would appreciate ever higher told them the economy would always be rosy enough to support their rampant spending. This idea was happily buttressed by the abundant home financing practically given away by the financial gurus who decided it would be a good idea to allow people to make the biggest purchase of their lives with no financial stake in their property. It’s said people always pay the mortgage on their homes, but that was when they had skin in the game with a 20% down payment.

The dip in the rate of personal savings also reflected the attitude that the house, once purchased, could be used as an ATM machine. Who needed savings when a home was purchased for nothing, and taking out a home equity line of credit (HELOC) was a surefire way of getting quick cash – never mind the long-term repercussions of doing so. Much like the boom-time economy, it was taken for granted that real estate would appreciate ad infinitum and that equity buildup was all the savings one needed. Even Wall Street investors fell for it.

From 1952 – 1990, the average personal savings rate was around 8-10%. Since then, the average personal savings rate has dropped to nearly zero, and bounced back during the recent recession to 4%.

With the onset of the Great Recession and Financial Crisis produced by the real estate crash, and now the current jobless recovery, homeowners and those looking to become homeowners in the near future began to realize that personal savings are a necessity. Once this concept is understood (and that will come fast if it has not yet arrived) everyone who contemplates homeownership will save money. In but a few years, the habit will become engrained and single family residence (SFR) sales volume will return to normal levels as though the history of no down payment is just that: history.

It is all about expectations: do I need to save to become a homeowner, or not? Either way, most become homeowners. Thus, the issue of a down payment does not change whether or not they will buy. It will however, cause many to begin saving earlier on to meet their goal of homeownership.

The Dream, deferred

The disastrous consequences of the Millennium Boom precipitated the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The newly-established Consumer Financial Protection Bureau (CFPB) heralded the shift from the loose-lending era to one of protection for the consumer from abusive lending practices — both from the lender, and from himself. This is the first time in American history the government has positioned itself between lender and homebuyer as the kindly uncle giving a most beneficial nudge to send the homebuyer in the best direction, a direction the homebuyer’s agent would have otherwise suggested.

Consequently, since the housing crash, the media has been saturating the newswire with how mortgage requirements are now more restrictive than they were, how lenders are requiring full documentation, how ARMs, once the darlings of the industry, have given way to the more stable fixed-rate mortgages (FRMs), how borrowers must aggressively shop for the best mortgage deal, how Wall Street is balking at investing in non-government guaranteed mortgages, how underwater homeowners are meeting with little-to-no help from the government or their lenders. Nowhere is the media advising that mortgage lenders want to make loans and are waiting for applications to approve and fund. [For more information about ARMs vs. FRMs, see the January 2011 first tuesday article, The iron grip of ARMs on California real estate; for more information on shopping around for the best mortgage, see the February 2011 first tuesday Form of the Month, Get your buyer the best financial advantage; submit multiple loan applications and compare; for more information about the plight of distressed homeowners, see the May 2011 first tuesday article, Short sale or foreclosure? The naked truth for underwater homeowners.]

With all this negative noise in the market, it is no wonder prospective homebuyers have closed their ears and largely chosen to bide their time. Thus, they will wait until they begin to hear the good news side of the current story of cheap mortgage money and very low home prices — all the while accumulating the savings they now know they will need for their home purchase, and their subsistence.

Does saving for homeownership threaten the American Dream?

Hard times and hard rules pave the path towards more responsible homebuying, but are often met with resistance by those who think short-term and are not mindful we are in a difficult recovery after a bad recession topped off with a financial crisis. Opponents of the stricter rules claim that requiring prospective homebuyers to save for a 20% down payment is an insurmountable goal which will bar many from ever purchasing a home. This, in turn, will lead to lower rates of homeownership and a rip in the societal fabric. It’s all very bleak, and emotionally compelling. But is it true?

Not really. The recession and its many privations have not managed to strike the desire for homeownership from the American ethos. Americans still crave homeownership. They do so in spite of their own better judgment and financial wellbeing. [For more information on Americans’ staunch grip on the American Dream of homeownership, see the April 2011 first tuesday article, Americans dream for a home on unstable ground.]

Hard times and hard rules pave the path towards more responsible homebuying.

Thus, those in control of the real estate process and the mortgage monies have a responsibility to craft a sustainable path to homeownership, one good for both booms and busts. Part of this path is a healthy investment in the property purchased — the 20% down payment. It’s not the easy route, or the popular one, but the easy and popular route ended in an unprecedented number of foreclosures and negative equity assets, and cannot again be responsibly advocated. It has become overwhelmingly clear that the few controls remaining in place during the past decade were not adequate to build a healthy means of reaching a buyer’s long-term homeownership goals.

20% down is the wave of the future

Arguing that a 20% downpayment requirement will stifle homeownership is sophistry. It isn’t the downpayment requirement which is driving homeownership rates below the existing 30-year low, and it wasn’t an excess of downpayment requirements which caused the housing market to crash during the Great Recession, but the lack of them.

Opponents of the downpayment requirements attack the cure for the ailing housing market because it makes for an appealing soundbyte, but their arguments ignore the sickness behind the cure: the unsustainability of constantly pumping earnings and fees out of unsound transactions that eventually collapse.

The real argument made by the opponents of saving for a bigger down payment is not that the American Dream will suffer from a more responsible and restrictive lending policy, but that the real estate brokers trade union, homebuilders and lenders will. Ironically, while they rail against the 20% downpayment requirements as bad for the market, the true source of the dropping sales volume currently plaguing their bottom lines is their own bad practices during the boom. They will continue their deflections of guilt; meanwhile, prospective homebuyers weather the recession and begin to accrue the savings they now understand to be necessary to purchase a home.

The 20% down payment will become the norm, but it will take time to get to that level for this first batch of homebuyers – probably the length of the recovery into 2016. Thereafter, 20% will simply become a normal part of the real estate cycle, as it was prior to the instant-gratification period of the last decade.

– ftCopyright © 2011 by the first tuesday Journal Online –;
P.O. Box 20069, Riverside, CA 92516

Readers are encouraged to reproduce and/or distribute this article.

Copyright © 2011 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 20069, Riverside, CA 92516.

30-Year Rates Drop Slightly, But Still 5%

The 30-year fixed rate mortgage averaged 5 percent this week, after breaking the 5 percent mark last week for the first time in nearly a year, according to the Freddie Mac weekly mortgage market survey. Last week, the 30-year mortgage rate averaged 5.05 percent.

“Fixed mortgage rates eased slightly this week and continue to be very affordable,” says Frank Nothaft, Freddie Mac chief economist. “Prior to 2009, interest rates for 30-year fixed rate mortgages had never been at 5 percent since our survey began in April 1971. In both 1981 and 1982, the rates were over three times as high as they are today. … The housing market is struggling to regain traction despite still historically low rates.”

Here’s how other rates fared for the week:

  • 15-year fixed-rate mortgage averaged 4.27 percent, down from last week’s 4.29 percent.
  • 5-year adjustable-rate mortgage averaged 3.87 percent, down from last week’s 3.92 percent.
  • 1-year adjustable-rate mortgage averaged 3.39 percent, up slightly from last week’s 3.35 percent.

Source: “30-Year Fixed-Rate Mortgage Drops to 5 Percent,” Freddie Mac (Feb. 17, 2011)

Welcome To The Weekly Update And More


Dear Real Estate Rock Stars,


*Please see the special offer at the bottom of this weeks newsletter 



Oh those short sales, they take so darn long. Waiting 3 months is not unusual. So let’s imagine this scenario. You put in an offer the first week of October; rates achieve an all time low. The 10 Year Treasury, a good but not perfect proxy for how mortgage rates are doing registers a yield of 2.381% on 10/8/10. It is the beginning of December and you still have not heard from the short sale lender and the 10 Year Treasury yield today is 3.00%. Doing a little mortgage math that is a .619% rise in yield which translates to about a ½% increase in rate for a 30 year fixed. Let’s say the borrower was maxed out in their ratios back in October, they may be blown out of the water with the current rates today. This emphasizes one big dilemma with purchasing a short sale, no one knows how long this process is going to take and therefore we cannot lock a borrower in before the offer is accepted by the short sale bank(s). Having two separate banks always increases the time. Will the short sale bank(s) be willing to pony up some money for the borrower to buy down the points; our gut reaction is the short sale bank will probably say go pound salt. This is not fair to the borrower, oh well that’s life in the short sale lane, we don’t like it either. When this happens the borrower is always pissed at us because we made the rates go up. We wish we had that much control over the market.



It Quacks Like a Duck….


When is a car lease like and installment loan and when is it not? A car lease has a fixed term like an installment loan. However car leases cannot be paid down to be excluded from the borrower’s ratios and they must always be included in the debt to income ratios. We heard from one lender this week that they were not going to allow regular installment loans to be paid down through escrow in order to qualify. We are not happy about this change in the guidelines, it is not consumer friendly.


True Super Jumbo!


We don’t usually use this newsletter to tout programs, however we are one of two lenders in the area that are offering 30 year fixed 80% LTV to $1,5oo,000. Caveat the 80% to $1,500,000 is zip code specific. Allow for a 60 day escrow if you need this program. We are honored to be able to offer this program.     


CMG Mortgage is hosting a seminar “Advanced Business Development Skills” topics include: achieving your objective, engagement techniques, active cueing and listening, leadership skills and art of narration. We are going to treat you to this seminar and lunch too. If you would like to find out more about the company conducting the training for us click here Eloqui. The seminar will be held at our office 3160 Crow Canyon Rd. San Ramon 4th fl. training room on December 15th, 9:00 am – 3:00 pm

We think this seminar will be worth your time, we have experienced a mini presentation and they are very informative and practical. Please call us to reserve your seat. It is a good time of year to invest in your personal development; just do it! 




Kathleen & Erin

The Meredith Mortgage Team, CMPS®

Certified mortgage planning specialist

“We Will Always Have Your Best  

  Interest In Mind”   

 Erin & Kathleen

The Bay Area’s Premier

Mortgage Banker and Broker


(925)983-3048 office

(925)226-3215 efax

(925)918-0585 mobile


Apply For Mortgage Financing with The Meredith Team, Click Below:



The Home Ownership Accelerator  is helping people

pay off their mortgage in record speed…click here



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