Future for Texas Housing Market...2010

After reading an article in CNN this week, it sounds like the guru's of the housing market think that research on the cost of home owning versus the cost of renting, can determine what Americans can expect in the outlook for housing in America for 2010. Thats a sensible statement, right?

Lets start with the common sense reason why we can track the rent vs home price to do our homework on the future of the housing market. Plainly, people generally need a good reason why they might benefit from leaving their lease when they compare and contrast owning and renting for what they give up in monthly out of pocket costs each month. Shawn Tully wrote in the CNN article, "And the surest sign that prices have fully adjusted arrives when the ratio of what people pay in rent versus what owners spend on the same property returns to its historic average." So, that is where it starts.

Through research of rents vs homeownership, they found that in 1999 renters were paying 87% of what homeowners were paying monthly. All in all, Americans are ok with paying a little higher monthly when it came to the benefit of owning...13% higher to be specific in 1999 (the case study was called the REIT research team done by Deutsche Bank...REIT=Ratio of Rents to Ownership Costs). Later studies showed drastic changes in that ratio as the housing bubble was growing in areas like California. Home owners prices drop compared to what renters paid in the bubble times.

When the cost to own is "overpriced" by the rent to own ratio, when comparing out of pocket monthly costs, you typically will see that the housing market will tend to fall more until the ratio of rental to owning is more equal...like in the 1990's. In more recent studies, like the one in 1999, we see that the majority of Americans still pay an "over priced" amount for owning than renting today. This research leads the experts to believe we will see a hopeful and final fall in overall national housing market of 5% more in 2010. (My hypothesis is that Texas will not follow that statistic as close and we'll see much less or even small gain in 2010).

September 28, 2009 Frisco Mortgage Newsletter

Service First Frisco Mortgage Planner's Newsletter
SFMC Advocate's Cognition Circular
September 2009

As Your Mortgage Consultants for Life at Service First Mortgage,
we have teamed with, on purpose intent, alliances that help us provide the fullest of services for you. For example, have you seen an interesting home and wondered about the price?No need to wonder , and no need to call a high-pressure sales agent who will just make you feel obligated. The agents we align with are not the high pressure variety and our relationships with them make it possible for us to get the information on that home for you, for free and with no-obligation. Then, if you want to see the home, we can refer you to one of our Realtor friends that we know have a track record of happy clients.

Don't keep us a secret! (:

Sincerely,

Brad Lynch &
Michael GreinerService First MortgageBrad Lynch 469-450-2723 bl@fmillc.com
Michael Greiner 972-261-1055 mg@fmillc.com

How To Escape From The "Always More" Mind
You may know someone who skitters from one task to another, never enjoying an accomplishment before moving on to the next thing to be accomplished or mastered. And what does get done is never enough. In The Heroine's Journey by Maureen Murdock, this is called "The myth of never being enough." When you're stuck in this mindset, you're never satisfied with what you do, because something deep inside yourself tells you, "It's not enough." You're always thinking ahead. You agree that what you're engaged in currently is not enough. If you're gardening, you feel you should be working on your report, and if you're working on your report, you feel you should be gardening. Murdock recommends this exercise for overcoming this tyrannical way of thinking. Take a piece of paper and divide it into three columns. In the first column write, "I planted daisies." In the second column write, "I am satisfied." In the third column write, "And that's enough!" Though it's a simple exercise, Murdock says that if you practice it whenever you catch yourself being a self-critical, unsatisfied tyrant, that feeling of "not enough" will gradually disappear from your mind.

Write It/$ave it!!
Are you spending more money than you need to? It's a nagging worry, especially these days. Fortunately, you don't need an advanced degree in finance and accounting to analyze your spending. Try this: Keep track of your spending for one week. Just one week - longer, and you'll probably get too busy. But you can hold onto your receipts and add them up for seven days. At the end of the week, separate and categorize your expenses (use a spreadsheet if that helps you visualize better). You'll see what you're spending your money on, and chances are you'll find at least a few areas where you can cut back.

Bonus Block!!!!

If you're a logophile - a lover of words - you might find yourself cringing as you read these words! · Police were called to a day-care center where a three-year-old was resisting a rest.· When fish are in schools they sometimes take debate.· The short fortune teller who escaped from prison was a small medium at large.· The dead batteries were given out free of charge.· A dentist and a manicurist fought tooth and nail.· A calendar's days are numbered.· With her marriage she got a new name and a dress.· If you take a laptop computer for a run, you could jog your memory.· When she saw her first strands of gray hair, she thought she'd dye.· Acupuncture: a jab well done.

About Service First Mortgage
At Service First Mortgage, we work "By Referral Only". This makes it possible for us to spend 100% of our time with our current loyal clients for life, rather than chasing down our next "deal". If you or someone you know needs a mortgage consultant they can trust, please give us a call or email us.
"Don't Keep Us a Secret"!
Service First MortgageBrad Lynch 469-450-2723 bl@fmillc.com
Michael Greiner 972-261-1055 mg@fmillc.com

Frisco Home Buyer Breathes Easy After Close of Home

Press Release
Frisco Home Buyer Breathes Easy at Closing

Frisco, TX - August, 18 2009 - Laura was buying in a time where, so she heard, "nobody could qualify for a home unless you had $20k or $30k to put down"...that just simply was not true and she found out the EASY way.

Brett Arends of the Wallstreet Journal said, "...the closely watched Case-Shiller Home Price Index, which tracks home prices across 20 major cities nationwide, the three-year housing slump slowed sharply in April and May." The National Association of Realtors reported that the inventory of unsold homes has come down. Like me, you ask, "how is this the case if nobody could qualify for a home loan..."?

You like me, hear the nightmare stories on the news and in the paper, but major media is selling their news and over dramatizing it and Laura, one of my recent clients found that out after they brought under $10,000 cash to closing on her $166,000 home. The fact of the matter is, today's loans aren't that hard to qualify for if you have decent credit and a job, it's just that there are so few experienced Loan Officers that know how to utilize the tools and opportunities banks are offering.

Service First Mortgage strives to live up to its name as it provides a full range of mortgage financing services to its clients and the real estate community through the execution of excellent customer service via a highly knowledgeable staff and professional business environment.# # #

Frisco Home Sales and Average Prices...Expectations for Future Foreclosures

Home Sales up
Given what our market has been through, lets think with our common sense and jump to some apparent obvious conclusions about what we would expect. With the enormous number of foreclosures, and short sales that have a negative affect on house prices, and the fact that so many buyers were eliminated from the buying game when mortgage qualification guidelines tightened, we know why and where the drop in home prices on average came from. Right? That all seems like commons sense. Now that value of all homes in America just about are less than they were a year or more ago, anyone buying those homes today would be buying them at a lower amount then before...more common sense. So when we here reports that the number of homes sold in April or May this year is a little from last year, but the average price per home is less, we shouldn't be pessimistic and say, "who cares that the number of homes sold increased cause prices are down". That is not a fair statement because the homes sold today have to be less on average and the number of homes sold increasing is the best first sign we can expect. Right?
CNN reported, "Existing home sales rose 2.9% while the median sales price fell 15.4% to $170,200".

Average Sale price down
Lets not worry so much about the average sale price of homes just yet. America saw too many job losses and pay cuts for us to have a bustling appreciation on sales prices just yet. Let Americans get some placebo going in the right direction and as we start making an extra dollar, we'll get right back on into our good ole American ways...spend and leverage "babe"! Once that happens, then we can focus on home prices. Keep this note on your fridge though, over correction is in the forecast for 2010 and mortgage rates are expected to be in the high 7% range at best...they might have started that assent last week by the way the volatile market is playing out. We had two interest rate "worsenings" just today.

The foreclosure numbers haven't stopped, and there are more to be expected.
Forbes reported that in March the unemployment rate went to 8.5%, the highest in 25 years. Economic forecasters figure that we'll see a continued problem in foreclosures at least through this summer and fall.

Builders In House Mortgage Relationships Soon To Be Changed

Builders have been a big problem over the years with dangling incentives for potential buyers to use their affiliated mortgage company. Nothing was more aggervating than to lose a loan after I have been working with a buyer for months, because some builder claims to be giving some sort of incentive to use thier affilated mortgage company. We all know what was going on behind the scenes within the mortgage industry. I have been saying for years that builders need more regulation. Looks like it finally happened.


Ken Harney made note of some changes to come, and said the following.

One of the less-discussed provisions of the Department of Housing and Urban Development's controversial rule on mortgage fees and disclosures is expected to profoundly change lenders' relationships with builders next year.
The rule, which HUD finalized last month after years of revisions, stops, and starts, will overhaul how the Real Estate Settlement Procedures Act is enforced.
Most of the debate about the 86-page rule has focused on the standardized good-faith estimate lenders will have to start providing mortgage applicants in 2010. The industry is expected to spend millions next year preparing for that part of the rule.
Several other provisions will take effect Jan. 16. What many observers called the most significant one would bar builders from offering homebuyers discounts that require them to use an affiliated mortgage, title, or settlement company. The ban will remove a competitive advantage for the joint ventures many builders have with lenders like Wells Fargo & Co., JPMorgan Chase & Co., and Countrywide Financial Corp., now a unit of Bank of America Corp. Some observers said the rule could spell the end of such partnerships.
Also on Jan. 16, lenders will be allowed to charge borrowers the average fee for certain types of settlement services purchased on their behalf, rather than the actual fee the lender paid the service provider. Some consumer advocates said this provision could help lenders skirt other consumer protection laws.
One thing that is clear: a good deal of compliance work lies ahead. "The industry has been digesting this huge, complicated, massive rule, and we're only now coming to the stage of implementation," said Sue Johnson, the president of the Real Estate Services Providers Council Inc.
Mitchel Kider, a managing member at Weiner Brodsky Sidman Kider PC, said builder-affiliated mortgage entities "worked off the synergy that exists" because discounts and incentives are available. "What this rule does is make it difficult from a business perspective to run your operation. It changes the business model of affiliations."
Brian Levy, a senior vice president and general counsel at the $1.5 billion-asset Guaranty Bank in Milwaukee, whose Shelter Mortgage Co. LLC has partnerships with builders, said, "We're going to see less production from that source and lower revenue."
It will be hard to gauge how much of the drop will come from the rule and how much will come from the recession and housing slump, Mr. Levy said. (In October, the most recent month for which data is available, sales of new homes dropped 5.3% from September and 40% from a year earlier, to an annual rate of 433,000, according to the Census Bureau.)
After mid-January, Mr. Levy said, lenders will monitor capture rates - how much of a builder's business their joint ventures get - to measure the rule's effect.
Gina Harris, the president of Builder's Affiliated Mortgage Services, a Tampa correspondent lender, said she expects to gain more business after being shut out from competing for the business of home builders that had ventures with mortgage companies.
"The joint ventures with builders may not be as profitable anymore, and they may decide that they don't want to have them," she said. "And that's probably going to be a decision that the large mortgage companies doing the joint ventures are going to have to make."
Lenders that have mortgage officers working at builders' offices may continue to work with the builders but probably will bring their loan officers in-house as part of their retail staff, Ms. Harris said.
David Stevens, a former executive at Wells and Freddie Mac and now the president and chief operating officer of the Chantilly, Va., real estate brokerage Long & Foster Cos., said the real estate law does not prohibit companies from offering "a bona fide discount," but it must be one that any competitor could match. The problem is when "the only way you get the discount to the home is to use the affiliated business."
At the peak of the housing market, builders typically told customers that they could get $10,000 of upgrades or a bigger lot if they used a mortgage or title company affiliated with the builder, he said. "They basically cross-subsidized it" with revenue from the affiliate.
William Renner, the director of single-family finance at the National Association of Home Builders, said some builder-affiliated mortgage companies may still maintain "fairly high capture rates" next year, because not all builders offered incentives in exchange for using a certain service. But he conceded that the builders with affiliated mortgage companies "would in many cases have to change their marketing agreements."
Debora Blume, a spokeswoman for Wells' home mortgage unit, said many of the builders that have ventures with the lender "do not offer financing incentives, which have actually been a recent phenomenon."
Builders form such ventures because they "want to feel confident their customers are connected with a strong, stable mortgage provider able to make sure deals close on time and meet customers' expectations," Ms. Blume said. "And customers want the convenience of one-stop shopping with mortgage, title, and insurance services under one roof."
The right to charge an average fee at closing for things like credit reports, appraisals, and recordings is meant to make it easier for lenders to adhere to the three-page good-faith estimate they will have to provide beginning in 2010. Under the rule, actual charges at the closing table will not be allowed to exceed 10% of the estimate.
(Lenders currently must provide some sort of good-faith estimate to applicants, but there is no standard form for doing so. Many lenders use a one-page document. Charges at closing can vary widely from the estimate, creating the potential for unpleasant surprises for consumers and making it harder for them to compare loan offers.)
Rebecca Borne, a policy counsel at the Center for Responsible Lending, said settlement fees "are used to calculate the finance charge under the Truth-in-Lending Act and to determine if a loan has 'high-cost' loan status, which often subjects it to more protective standards under federal and many state laws."
Allowing lenders to charge average fees creates the danger that the triggers under those laws will be hit less frequently, Ms. Borne said.
The rule forbids the use of average charges for fees that are based on the loan amount or property value, such as transfer taxes, daily interest, reserves, escrow, and insurance.
Though full Respa reform implementation is more than a year off, some lenders are anticipating the impact of the expanded good-faith estimate, which will include details about whether the interest rate can change, the existence of prepayment penalties, and total closing costs.
The new disclosures "are all going to require extensive systems work, and you have to completely reprogram your settlement systems and up-front disclosure systems, which will affect lenders, third-party service providers, and settlement companies," Mr. Stevens said. "There are definitely costs involved."
Mr. Levy said wholesale lenders are concerned about shouldering the liability of a binding good-faith estimate submitted by mortgage brokers.
Often a borrower will change the details of a loan "as they're headed towards closing" - switching from a fixed rate to an adjustable one, for example, he said.
Whether lenders will be held to their original estimate in such cases is unclear, Mr. Levy said. "Almost every loan on average has a change where it needs to be locked in a second time, and that's normal for a loan to be changed, so would you run the risk that your original GFE is wrong? Will regulators be looking at GFEs and hold ... [lenders] accountable on a compliance issue?"

Government Makes Ends (profit) AND Helps Banks With Toxic Mortgage Assets - Title Inspired by CNN Money

Ok, for the Layman's terms...that's how I "roll". I put it in terms YOU can understand.

Govie (Government, Washington, Uncle Sam, etc...) has got a plan. Treasury Secretary Henry Paulson (money organizer of Government) has suggested that Govie buys the "toxic" mortgage assets from American banks at a discount. This means that the banks can unload their risky mortgage assets to the government for less than what they are worth, but expectantly better than what those assets are worth after the next wave of defaults comes through...the bank can stand to loose a calculated amount, but possibly not an unforeseen/unexpected amount that might occur in foreclosure costs. This way, banks stand to have a higher probability to make it through this U-G-L-Y situation. Now, I like the idea of the plan for a simple reason. First, I'm not an economist and therefore it's my opinion. I like it because our government has taken on some major liabilities in the very recent past with the Fannie/Freddie help, bailing out big player lenders, war, etc... It's obvious that our government has the strength and money to help everyone when times call for it. A good example of a sign that might show that, is this; Me and you are not economists, so we have to look to signs of those people in our world that are, to see what confidence they have in our Govie for help. Well, when Henry suggested this option to help, stocks blew up like 400 points. If stocks are going up, that means the people who are economist and ARE in the "know", are momentarily confident. Back to why I like this. Since the government is buying these mortgage assets for "cents on the dollar", they stand to make a profit when the market turns around. You catch that? I'm ok with Govie making "ends" (ends=money or profit) on such a scenario so that they can reimburse themselves for the spending they have done to get our economy back to par, so that the next time our economy is against the ropes, they'll have the money power to dig America out again.

Oh by the way, rates terrible today because of all this. Remember, whats good for the economy isn't usually good for our mortgage interest rates. If you wonder why, search my archived blogs that explain that.

Brad

Wall Street News Provides Hope for Frisco Real Estate and Mortgage

There was a story out this week about Fannie & Freddie not needing an injection of capital from the US government, and that they have enough saved to weather the current problems.


Wouldn’t that be nice? I imagine that government and finance officials have found out that these companies, and their financing, are so much more complicated than anyone ever imagined. The public and banks own huge numbers of shares, with the banks holding preferred stock. If the preferred stock’s value goes to 0, it would put many of these banks out of business. So news like this morning’s is welcome.