Northwest Indiana Mortgages - FHA VA and Conventional loans

Are you still on the sideline? Get in the game

2009-12-15T06:16:00.003-06:00

Have you ever wondered why all the talk about the Federal Reserve during times like this? Right when the economy begins a recovery, all of a sudden all the news is what briefcase the Fed Chair is carrying and other seemingly ridiculous topics.

WASHINGTON (MarketWatch) -- The Federal Reserve is going to opt for a strategy of playing its cards close to its chest after its closed-door policy meeting this week, unwilling to provide any meaningful insight into the road ahead for monetary policy out of a concern it would only roil financial markets, analysts agreed.

"A change in the Fed language at this time of year when markets are generally thin could lead to an outsized market reaction and hence be disruptive to the nascent economic recovery," wrote Joseph LaVorgna, chief U.S. economist at Deutsche Bank in a note to clients, succinctly summing up what many analysts said in interviews and in notes to clients.

While the Fed does have -- in the immortal words of Ricky Ricardo, "some explaining to do" -- economists are not holding their breath.

I am not exactly where Marketwatch is, I think the Fed is going to start hinting at a rate increase early in 2010. This means all rates will go up, including your mortgage rates. If you've been sitting on the sidelines with rates at 4.75 in November and even with rates a bit higher now, you are going to want to get in the game.

Steve Dalton

Sierra Pacific Mortgage - Residential Mortgage Group

219-465-8352

USDA loans in Northwest Indiana

2009-12-13T08:54:00.001-06:00

Contact me today 219-465-8352

(December 11, 2009) - Agriculture Deputy Secretary Merrigan Announces Over 84,000 Rural Families Have Achieved Homeownership Through Recovery Act Funding News Release

(December 4, 2009) - Secretaries Chu And Vilsack To Announce More Than $600 Million Investment In Advanced Biorefinery Projects News Release

(December 3, 2009) - Agriculture Deputy Secretary Merrigan Announces Partnerhsips With Fair Food Network News Release

(December 2, 2009) - Obama Administration Names Thomas Fern To Serve As State Director For Rural Development In Kentucky News Release

NW Indiana REALTORs - raising the bar

2009-12-07T07:12:00.003-06:00

Kathryn Weathersby sent me a Facebook message asking if I knew of anyone looking for a home like the one she is listing in Dyer, Indiana. Looks like a great house from the photo, since I built for quite a few years I can see that the bonus room is finished and a third car garage has been added to the plan. I wonder how many people she sent that listing to?

Who cares? You should

If you are a homeowner looking to sell your home and take advantage of the current rise in values and unbelievably low mortgage interest rates ... will your real estate professional be going the extra mile? What are you getting for your selling commission? Is it really worth 3 or 5 or 7% of your home's value for a sign in the yard and a "listing" on the local multiple listing service? If your home sells for $100,000 ... do feel like you'll be getting $3,000 or $5,000 or even $7,000 worth of value from your professional?

I'm sure this post will find a way to tick off some agents, since they aren't comfortable with the subject. The really successful agents don't really want the other 80% to catch on, and many of the long term agents have no desire to change their ways anyway. A list of services you "should" be getting for your sales commission (IMHO)

Sign in yard - or better yet multiple signs, directional signs leading to the home, have to love the radio signal program too where you can get information if you dial to a specific radio station for that house. I was talking to a technology geek the other day, what about an IPhone app that allows any Iphone user to get all the data about your listing just by pulling up and putting in a code from your sign? (Blackberry too of course)
Put listing in MLS - well of course but that's circa 1970 technology. Online marketing has widened the need to put your home in the hands of millions of possible buyers. Is your listing on Active Rain, Google Base, do you have your own blog or website for your listing, can your home be found by searching any number of websites that advertise homes? How about Craigslist or Homes.com? The top agents are using literally 100's of sites to advertise and make your home searchable.
Great photos - again this is the bare minimum, what about 360 degree video views of your home for out of town buyers that can't get to the open house? Are these photos and videos searchable for specific terms that consumers may use to find a home?
Open House - oh the frustration of an agent sitting in your house for 4 or even 6 hours on a Sunday without seeing a single possible buyer. But, don't you get frustrated too if they never offer to hold your house open, and your house is sitting on the market with monthly price cuts? Sure you do. What's the open house plan for marketing your home, does your agent plan to wait for someone else to sell it, or do they actually sell alot of their own listings?
Direct marketing to prospective buyers - what's the plan for direct mail, telemarketing, email marketing, and face to face networking to get your home in front of possible buyers? Does your agent work with buyers, does your agent's team work with buyers and keep an active and updated list of buyers in the market?
Transaction assistance - when the offers start to criss cross does your agent easily fall for the old tricks? Like my favorite, the one where the offer comes back at full price, but the home inspection is used by the buyer to renegotiate the price a couple weeks later when you're stuck? How about all those closing fees that can separate a good deal for you, from a deal that costs you so much you'll wish you didn't accept the offer?
I don't have all the answers - and I know some awesome real estate professionals read our site every day, what else "should" a seller be getting for their sales commission?

Face it, the buyers market of lowballing sellers and stealing a house is over in Northwest Indiana. I heard that one bank owned property this weekend had 8 offers, and sold eventually for more than the listing price! Does your selling agent go that extra mile?

Question from a real estate professional - reader

2009-12-06T13:52:00.003-06:00

I was emailed a question from one of my regular readers, who happens to also be a real estate professional in Northwest Indiana. As always, I'd prefer to be transparent and let us all work and learn together.

Q - "Steve, you are active on twitter and facebook and blogging and tweetups and meetups ... the list goes on and on. Aren't you just wasting your talking online all the time? What's the purpose, if any, and what do you get in return?"

A - Mike, first let me say thanks for being a regular reader for the last couple years. I thoroughly enjoy writing and engaging about all things real estate and homeownership with readers in Northwest Indiana. If my answer was only the engagement, I would still do all th above social connecting because I enjoy it so much.

But, there is so much more that I gain. A few thoughts, and an idea to ponder if you're interested:

Blogging is the best way I know to gain traction on search engines for keywords that matter to me, and that will help my customers find me. Because my customers are both real estate professionals like yourself and consumers, I have to carefully choose the keywords that I target and work to gain confidence from others online who will send me organic and legitimate links.
Facebook and Twitter allow me to gain traffic, to gain connections with other active online networkers whom I can learn from, and to gain new subscribers like yourself who use our RSS code here to add to their reader (or use the email subscription service)
Lastly, all this activity gives me some online credibility, so that when I meet customers and clients, they have a place they go and check me out. Our industry is often bad mouthed for being full of crooks and frauds, the best thing a customer can do is check out their mortgage advisor online in multiple places. Go ahead check me out! I'm a former home builder, in 2007 our home building company got decimated by the mortgage meltdown. We shut it down and I have refocused my efforts on helping people find homes and get them financed affordably.

Should you walk away from your home?

2009-12-05T13:36:00.002-06:00

There is a debate brewing on the ethics and viability of people who are underwater on their homes walking away.

"Millions of Americans would be better off financially if they did walk away," says White, who authored the paper "Underwater and Not Walking Away: Shame, Fear and the social management of the Housing Crisis." via Tampa Bay Online

White suggests that those who decide to walk away should consider getting a new car or house before they default on their mortgage, which will constrain their credit.

Whoa, that's controversial at a minimum, and it's going to make a lot of people angry. But after some quick thinking, I do wonder if a lot of people will be better off if they buy a home and car now, and walk away from their over-leveraged home?

Doomsayer Alert - housing in full recovery

2009-12-03T06:13:00.000-06:00

Market Watch December 3, 2009

Surprise! Pending home sales rise. Confounding analysts who had predicted a contraction, pending home sales rose for the ninth straight month in October. Pending home sales are considered by analysts to be an indicator of where the real estate market is heading in the near future.

According to the Pending Homes Sales Index posted by the National Association of Realtors (NAR) pending homes sales - which are based on sales contracts signed the previous month- rose once again in November by 3.7%. Economists had predicted a fall of approximately 1%.

This continuing surge in home sales suggests that the housing market, considered the main culprit in our recession, may be headed for recovery, following its 3 year decline. (As a side note for our local market here in NW Indiana - the recovery is on! If you aren't out looking, it's time to get out there, call your real estate professional and get moving)

The NAR’s Pending Home Sales Index is also up almost 32% from its figures in October of 2008. NPR reports the largest increase in homes sales contracts occurred in the Northeast, where pending sales bulled their way forward by almost 20%. In the Midwest, numbers were up by 11.6%, and in the south, by5.4%. In a bow to the rugged individualism for which it is famous, the west declined.

Meanwhile, in an effort to keep the housing market hopping, the Federal Reserve says it will do its best to maintain near zero benchmark interest rates (at least sub 5% right now) for as long as is economically feasible. Currently a 30 year conventional loan is averaging 4.78%, which Bloomberg says is the lowest rate since 1972, the year Freddie Mac began its record keeping process.

The housing market continues to post impressive stats. Current sales figures for new and existing homes stood at 6.5 million as of October, a level that has not been seen since June of 2007. In addition, the Census Bureau says that there was a 3.9% increase in spending on new residential construction in October. As a result, Reuters reported that housing construction actually made a contribution to the economy. This has not occurred since 2005.

In better news, the number of unsold homes has dropped down to a 7 month supply. One year ago, real estate shelves held a 10.3 month inventory of homes, waiting for buyers to adopt them.

Call me today at 219-465-8352 or Email Northwest Indiana Real Estate Assistance - Mortgages and Finance

Let's get started today.

Dec 2, 2009 - Market Briefs

2009-12-02T07:08:00.003-06:00

A quick rundown this morning, because for some reason (wink wink) we're swamped.

Interest rates were slightly higher yesterday, although stocks continue on a race back to 14,000 and gold saw all-time highs. Why did rates go higher? The dollar is still sliding ever so slowly into weaker territory, causing rates to have a natural push higher in anticipation of an eventual increase by the Fed.

Why would the Fed increase when we're still in the beginning stages of an economic recovery? Because their job is to keep a handle on inflation, and oil prices and commodity prices going into 2010 may put pressure on prices to increase.

Mortgage money basics for today:

If a mortgage rate just under 5% works, and come on it is an incredible rate, lock so you don't have to worry about overnite markets
If you are looking for a home, make that offer you've been thinking about. In Northwest Indiana though, prices have stabilized quite a bit. You have missed the chance to lowball or steal a house, sorry. Get out there and buy that house, and give me a shout so we can get your loan rolling along. (219-465-8352) or Email me at Sierra Pacific Mortgage - Residential Mortgage Group.
Now if you want to talk home building, let's talk, there are still some great deals and I know of a few, let's talk right away though.
Lastly if you put off refinancing while waiting for a 3% rate ... come on ... it's time already. Let's get your appraisal ordered and get your refinance done.

Century 21 Alliance - Keep it in our Community

2009-12-01T05:34:00.002-06:00

Local effort - Keep it in our community

A great real estate office teams with one of my favorite local community groups, can't go wrong. Great work!

Jeanne Sommer/Century 21 Alliance Group donate to 'Keep it in our Community' program:

Jeanne Sommer of Century 21 Alliance Group presented two checks to Jennifer Peek and the Porter-Starke Services Foundation through Century 21's "Keep It inOur Community Program." Both donations are a percentage of Sommer's commission on real estate transactions conducted by Porter-Starke Services employees.

Lisa Lemmons, a day treatment specialist, purchased a Chesterton home brokered by Sommer. As an employee of Porter-Starke Services, Lemmons was able to take advantage of savings on closing costs and other perks offered by Century 21 Alliance Group. The partnership between Porter-Starke Services and Century 21 Alliance has shown a marked increase over the past few months.

'The Foundation has already received over $1700 through the Keep It in the Community Program,' Peek said. 'We are thankful for the ongoing support that Jeanne and the Century 21 Alliance Group has provided us and the programs that we serve.'

Porter-Starke Services is a not-for-profit community mental health center headquartered in Valparaiso, with offices in Knox and Portage. The Porter-Starke Services Foundation supports mental wellness initiatives throughout the community. More information about the Porter-Starke Services Foundation can be found atwww.porterstarke.org/foundation.

The Century 21 Alliance Group can be reached at (219) 476-4507. Further information about the 'Keep It In Our Community' program can be found at www.keepitinourcommunity.com.

Other posts of interest to Northwest Indiana residents:

PCBA and green building movement

Announcement - Joining Sierra Pacific Mortgage

Irene Tron - FC Tucker NW Indiana

PCBA and green building movement

2009-11-30T10:18:00.000-06:00

Jana Caudill's blog points out that the Porter County Builders Association right here in Northwest Indiana is right in the heart of the green building and green living movement. Kudos to our friends at the PCBA for looking ahead and down the horizon to a housing recovery and better homes.

Green Building Has Taken Off Nationwide! Buyers Want Green Homes!: "
Buying a green home is the popular thing to do these days. Everybody wants to do their bit for the environment. On the plus side, while being friendlier to the environment often means changing some habits, it can help you save some 'green' of your own, the kind that goes in your wallet! The push in real estate over the last few years has been towards more green housing - iin particular properties which have been constructed to green standards and have green features built in.
In fact, even this year (just a few weeks ago) there was the Living Green Expo 2009 presented by the Porter County Builders Association to promote green building and living in Northwest Indiana Real Estate!
In fact, according to a new study from the U.S. Green Building Council and Booz Allen Hamilton, construction in the green-building industry will support 7.9 million jobs over the next four years while pumping into the American economy $554 billion. Currently, 2 million American jobs are supported by the same industry and more than $100 billion in gross domestic product and wages is generated. From 2000 to 2008, $178 billion in gross domestic product was contributed to the economy and 2.4 million direct/indirect and induced jobs were created or saved which generated $123 billion in wages. Thats a lot of jobs nationwide and a good slice of the economy.
With buildings in the United States being responsible for 39% of CO2 emissions, 40% of energy consumption, 13% water consumption and 15% of Gross Domestic Product per year, making green building a source of significant economic and environmental opportunity to start to reduce those figures now and save some money in the process. With the goal of ALL building to be green.
What does all of this mean to the homeowner? Well, if your home has been modified to include some of the more efficient 'green' technologies, it could mean a little more green in your wallet, not just over time in savings from running costs, but also at the close of a sale.
In short, buyers are looking for more energy efficient and greener homes. Perhaps Northwest Indiana's Real Estate will lead the pack!

Announcement - Joining Sierra Pacific Mortgage

2009-11-25T15:16:00.002-06:00

On December 1, 2009 I officially start as Senior Mortgage Banker for Northwest Indiana with Sierra Pacific Mortgage (local Indiana affiliate Residential Mortgage Group).

Many of you know I have been providing assistance to small businesses in Northwest Indiana, especially those affiliated with mortgage lending and home building. Let's be honest if you've read this blog more than once you know that I am passionate about home ownership.

First time new home buyers
FHA loans and VA loans
Helping homebuyers fix credit blemishes through honest credit repair
Helping REALTORs use online tools to find customers and to sell homes quickly
and, helping home builders engage consumers

I will still be doing all those things, but now will be able to originate and work directly with consumers, home buyers, homeowners, and real estate professionals. I'm sure it will take a week or so to get all the details nailed down, but for now feel free to email me or call (219 465 8352) if you're ready to get started.

DLGF Audit of Lake County books

2009-11-25T14:34:00.000-06:00

State audits, slams Lake County books - Post Tribune article

State audits, slams Lake County books
State auditors had a few simple suggestions for Lake County to do a better job of handling taxpayer money. Keep ledger books. Reconcile them with bank statements. Close the door to your safe.

Financial practices in the county received sub-par reviews in a host of State Board of Accounts audits for 2008 that were released this week. The county's overall bookkeeping received a rating of 'qualified,' said Tammy White, who supervises audit of county government units.

To learn more

To view the audit reports online, go to the State Board of Accounts Web site, www.in.gov.sboa, and look for Lake County reports posted Nov. 19.

The state's 'qualified' assessment of county financial controls -- as opposed to a positive audit that includes no qualifications or deficiencies -- could be a negative when lenders are considering whether to loan money or sell bonds on the county's behalf.

Auditors were not able to review records dealing with tens of thousands of dollars flowing through the Sheriff's Department, and noticed far smaller miscues, including $1,300 that went missing from the Parks Department after an office flooded and staffers left a safe door open for two days to dry the cash inside.

'That is obviously insufficient controls to safeguard the county's assets,' White said. 'We always are happy to make recommendations, but (in that case) obviously, it was not rocket science.'

The Board of Accounts annually audits all units of government, often turning up bookkeeping errors or problematic practices.

White said Sheriff's Department officials did not turn over ledger books showing how cash was collected and spent from the commissary accounts for county jail inmates, or records of spending for inmate medical fees and several other accounts.

Sheriff's attorney John Kopack said the department had the records, but the state auditor and department administrators were not able to meet to exchange the documents this fall because of miscommunication. Records have since been turned over to the state, and a private accounting firm has reviewed department records, Kopack said.

'They made their recommendations and the sheriff has followed them,' Kopack said. 'The records exist, despite what it says in the report. The problem is (with) the new auditor.'

White said her staff made multiple attempts to get the records, and would have spent several days at the Lake County Government Center while conducting the audit. Several items mentioned in the report, including complaints about the lack of supervision of who has access to county gas pumps, have been repeated from previous audits.

The state also requested that Calumet Township Assessor Booker Blumenberg repay $16,000 for a mass mailing his office sent to township residents before the Nov. 4 election, urging them to vote against a referendum eliminating township assessors.

'It was deemed self-serving, and it didn't help the taxpayers,' White said.

Blumenberg said other township assessors sent similar mailings with taxpayers paying the postage, and that county attorneys reviewed the materials and said they were appropriate.

'The state board of accounts and (Department of Local Government Finance) in recent years, under this governor, have become a political agencies,' said Blumenberg, who this week received a critical letter from DLGF Commissioner Tim Rushenberg.

'This was a nonpartisan issue. We weren't backing any candidate, and there was other information in the mailing.'

The County Council, the board that approves all county budgets and spending, also received a few criticisms including not properly reporting spending on millions of federal dollars that county officials had assumed were flowing from the state, Council President Larry Blanchard said.

The county has struggled to close a $17 million budget gap expected in 2010, and county officials are watching every dollar, Blanchard said.

'There are some departments that need a little bit of help, and I'm being nice,' Blanchard said. 'But when it's brought to your attention, you put corrective measures in.'problems range from missing money to no records at all

Home Builders beginning to sell again

2009-11-25T14:19:00.000-06:00

It would appear that new home sales and existing home sales improved in October. This will no doubt cause even more increases in consumer confidence, which is important for retail sales improvement, as well as reductions in inventories of homes will allow prices to level off or even increase in many markets.

New Home Sales Improve in October: "The Census Bureau and the Department of Housing and Urban Development today released New Home Sales survey data for October 2009. The survey is primarily based on a sample of houses selected from building permits. Since a “sale” is defined as a deposit taken or sales agreement signed, this can occur prior to a permit being issued. Changes in sales price data reflect changes in the distribution of houses by region, size, etc., as well as changes in the prices of houses with identical characteristics. It takes four months to establish a trend of new home purchases Last month, single family new home sales fell for the first time since March, snapping a five month trend of increasing sales. The pace of new homes sales was 402,000 sales per year, well below economist's expectations

Irene Tron

2009-11-25T06:49:00.000-06:00

Irene Tron from FC Tucker on the holidays

Grateful for God's Gift: "
I love this time of year! I love the cooking, baking, getting together with family and friends, excitement of Christmas getting closer, looking forward to snow and so much more. This year has been a fantastic year and there is so much to be grateful for.

I thought about making a list of everything I'm thankful for but I think it would go on and on and on! So, then I thought, "If I had to name only one thing that I am grateful for, what would it be?"

The answer to that question took about 2 seconds for me to consider. I am thankful that God is in control of everything, both good and bad, that happens in my life and around me. Even when things do not seem to be going as I think they should, it is still in God's loving hands. He knows the beginning and the end and nothing is a surprise to Him.

That knowledge is what takes the worry away when I get concerned and makes the pain lessen when things hurt. I am grateful for the things He teaches through all of life's circumstances. I am grateful for the love He shows me every single day in the people and things He places around me. I am grateful that I can talk to Him at any second and turn my concerns over to Him. I am grateful that God is concerned about insignificant me.

Irene Tron
Making Real Estate Enjoyable in Northwest Indiana
www.IreneTronREALTOR.com
direct 219-476-5459

Home Sales - Economist suggests recovery is on

2009-11-24T08:02:00.000-06:00

I am a regular reader of Professor Mark Perry's Carpe Diem blog. This is a bigger selection than I would normally take, and I hope he isn't offended. But the two graphs really tell the tale. Without government manipulation the markets have already begun to correct themselves. The best possible thing though going forward would be to stop the STIMULUS spending so that interest rates don't soar above 7% on mortgages.

This provides two insights: First, if you are still sitting on the sidelines waiting for better deals, you have waited too long, go look for a house. Second, interest rates are being held arbitrarily low by massive purchases of mortgage bonds by the government ... this will end soon ... they've already hit their debt limits. Watch for rates to increase generally next year to "normal" levels in the high 6's and low 7's.

Home Sales at Highest Level and Months Supply of Inventory at Lowest Level, Both Since Feb. 2007:

Highlights from today's report on existing home sales:

1. Existing-home sales – including single-family, townhomes, condominiums and co-ops – surged 10.1% to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5% above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.

2. The inventory of existing homes for sale in October fell to 3.57 million homes, the lowest level in more than a year. At the current sales pace, there is now a 7.0 months supply of existing homes, which is the lowest level since February 2007, more than two and a half years ago (see top chart above). Compared to the peak of 11.3 months supply of inventory in April, October's 7.0 months supply represents a reduction of 4.3 months.

Bottom Line: The national real estate market is gradually recovering as the balance between the supply and demand (measured by the months supply of inventory) has returned to the 2006-2007 levels, suggesting that the worst is definitely behind us.

Decision time - making a change

2009-11-23T08:28:00.002-06:00

Someday I'll sit down and write the long version of our saga, but since the truth is sometimes better than any fiction, I'll leave that for a time in the future when I have a whole bunch of free time. Right!

This is the week that my wife and I have chosen to make a final decision on my direction for moving forward out of the last couple years. For those needing a cliff-notes version:

We ran a successful home building company for 8 years, building about 250 homes in Northwest Indiana, and we loved it. We focused primarily on first time home buyers, FHA financing, and building with enough momentum to maximize cost controls.
The summer of 2007 was just plain awful, and the mortgage industry explosion affected us greatly to the extent that we were forced to shut down that company
In the meantime I have reverted to my former career providing strategic corporate consulting for a few great companies right here in NW Indiana: Cender and Company and First Financial Trust Mortgage
Oh, and yes I still write a ton on my political and real estate blogs of course

I won't divulge the whole plan today, since we are still working out details and Julie and I committed to wait until the end of the week to really get things kicked off. But to leak just a bit, I will be continuing to consult in 2010 and I will be ramping up my efforts in real estate mortgage lending beyond my current consulting and online marketing role.

On Wednesday I'll send a personal letter out to friends, family, and contacts interested in the details. On Friday after the Thanksgiving turkey is consumed, I'll be posting here and sending out information to a wider readership on the ways we can work together going forward. Please join us in our prayerful consideration of this exciting set of opportunities and challenges.

Since this blog will become a big part of that launch, please take the time to add your name to the email list, and/or subscribe via RSS reader. You can leave a comment too, with email if you'd prefer.

Steve

Rates are arbitrarily low right now

2009-11-21T16:54:00.000-06:00

I'll have a big announcement on Monday or Tuesday, for those of you care keep an eye on my twitter profile and facebook too, news there first.

Blogger Calculated Risk, typically pretty negative with predictions of woe and further market capitulation, does act a good question: How low are mortgage rates, and how high would they be if the federal government weren't buying all the mortgage bonds? One thing I'll agree on, rates are way too low right now and will go up over 5% and probably even over 6% soon. If you are sitting around waiting for some reason to buy, let's talk.

Earlier this year, Political Calculations introduced a tool to estimate mortgage rates based on the Ten Year Treasury yield (based on an earlier post of mine): Predicting Mortgage Rates and Treasury Yields. Using their tool, with the Ten Year yield at 3.356%, this suggests a 30 year mortgage rates of 5.33% based on the historical relationship between the Ten Year yield and mortgage rates.

Freddie Mac released their weekly survey Thursday:
Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 4.83 percent with an average 0.7 point for the week ending November 19, 2009, down from last week when it averaged 4.91 percent. Last year at this time, the 30-year FRM averaged 6.04 percent.
This suggests morgage rates are about 50 bps below the expect level ...

Here is an update to the previous graph. Sure enough mortgage rates have been below expectations for about seven months (recent months in yellow with blue outline at lower left).

Although this is a limited amount of data - and the yellow triangles are within the normal spread - this suggests the Fed's buying of MBS is reducing mortgage rates by about 35 to 50 bps relative to the Ten Year treasury.

Home Owner's Association - Budget need revision

2009-11-20T07:25:00.000-06:00

I came across this post earlier today, and need to do some checking with our lenders to see how quickly this process is being implemented. I have to agree with the general assertion though. Property Owner's Associations are generally underfunded for reserves for things like parking lot and roof replacements. Hoping for a hail storm is not a plan for roof repair.

If you have a Northwest Indiana HOA or Property Owner's Association and need some help re-budgeting to meet these requirements let me know.

HOA Reserve Study Conundrum

Some states have specific legislation that requires homeowner associations to have and follow a 30 year repair and replacement plan known as a 'reserve study'. It is the kind of plan that all HOA boards should follow even if no law exists since that's what good businesses do: plan ahead. Failure to plan for these expensive events inevitably leads to inadequate maintenance, declining property values and dreaded special assessments.

But there are now several new twists that make the idea of a reserve study even more compelling. In most states, HOA boards are allowed to set the level of reserve funding (how much money is set aside each year to address future costs). The fairest approach is the 100% funding model which requires all members along the 30 year time line to contribute a fair share of future costs. However, some boards have for political reasons put less in reserves (sometimes much less) to placate current owners that want to the obligation paid by future owners who have no say in the matter (sound familiar).

Now enters several new 600 pound influences into the reserve funding debate. In December 2007, Fannie Mae and Freddie Mac (the entities that have in past years underwritten most condominium mortgage loans) enacted the following requirements for condominiums where their loans were made being proposed:

The condominium is required to have a reserve study.

At least 10% of the annual budget must be put into reserves.

FHA (the government agency that insures low down payment loans which have become a huge part of the current mortgage market) is proposing to establish even stricter requirements for condominiums including:

Developer controlled condominium reserve funds are required to 100% funded.

After developer turnover condominiums are required to be at least 60% funded.

Since Fannie Mae, Freddie Mac and FHA are the 600 pound gorillas in the current condo mortgage market, this means is that if your condominium does not 1.) have a reserve study and 2.) maintain the indicated level of reserve funds, these entities will not underwrite your buyer's or your refinance loan. Folks, this is HUGE.

Condominiums that have an underfunded reserve study need to take decisive action to comply or risk losing vital lending sources. Condominiums that have no reserve study need one as soon as possible and to fund it to indicated levels.

I would add that this doesn't only apply to condominium communities, although they are the most difficult, even communities with normal property owners associations for common areas are going to be on the radar for better budgeting for reserves. The communities that just bug me to death are the ones where the residents paid almost nothing for the years the developer was still in charge, and then throw a huge fit when they are in charge and realize how much reserves will cost. In almost every situation they try to sue the developer to get hundreds of thousands of dollars to put in their reserves account.

Anti-growth still alive and ugly in Porter County

2009-11-19T06:35:00.004-06:00

I seldom use this blog for political issues, we have a totally different site for Northwest Indiana Politics, but the issue of anti-growth really irks me and has had serious affects on construction and real estate values in our area.

Let's be frank, there is no reason whatsoever for Porter County to continue its anti-growth, Citizens Against Virtually Everything (CAVE) ways. Commissioner Harper and the Porter County Democrats have relentlessly focused on stopping construction, development, annexation, and infrastructure growth. We need jobs, economic growth, and risk taking developers, and we need them now, not 10 years down the road when the central planning committee deems it necessary.

I was reading the sad story of Tower Meadows in Center Township. The original developer and investor partners were able to sell about half the lots to Vision Homes before the county and the banks came down on them and basically closed the place down. Now the residents have seen a chance to get back, so they won't pay their POA dues. The county will sue the developer, force the bank to foreclose, then sue the bank to grab as much cash as possible. If the bank is smart they'll sell the project cheap and get out, Porter County anti-growth anti-builder anti-developer leaders are firmly in place and prepared to sue to keep the project ugly and half completed.

Tower Meadows could be finished even in a slow market in a matter of 9 months if the county, the bank, and the residents would let someone complete the project. Now, even worse when I was reading the comments on the story I noticed a trend of ugly anti-growth anti-developer comments and one commenter honestly suggesting that all development should be stopped until the economy turns around. Are you serious, you want Bob Harper to determine when we can start building again, when we can start hiring again? Stalin didn't have that kind of power.

Disclosure - I am not an investor, a consultant, or any party to the project. I was a long time ago an interested buyer, as my home building company would have enjoyed building in the project and I was sad to see it go the way it has.

Real Estate Bar Camp - Free Tuesday Online

2009-11-16T17:52:00.001-06:00

Mortgage markets mixed - be aware

2009-11-16T09:07:00.000-06:00

A great rundown on what's going on in mortgage rate markets this week:

MBS OPEN: Yield Curve Flatter. Rate Sheet Influential Prices Higher:

Recap of Last Week

Senior Loan Officer Survey indicates credit conditions still tightening. DU 8.0 will continue to contract credit availability in the mortgage market
Home buyer tax credit resources HERE
FHA Audit reveals FHA reserves at all time low READ MORE
Fed Purchases $13.5 billion agency MBS. Slowing pace of purchases still yet to affect MBS valuations
Purchase Mortgage Applications at 9 year low. Refinance apps +11.3%. MND Story
JP Morgan Chase hiring originators. READ MORE
Senator Dodd Proposes Financial Reform. Section 1503 encourages transparency in asset securitzation. Tall task for mortgage market to accomplish...READ Brian Montgomery's comments
BEWARE: GSEs Strictly Enforcing Loan Buyback rules. Lender's must have skin in the game. Tim Rood discusses
Wells Fargo reducing borrower payments to help struggling borrowers. READ MORE
2010 Loan Limits Announced. Temporary 'high cost' loan amounts extended. MND STORY

While data and events do indeed serve as a catalyst for rates directionality, the market's long term bias remains clouded by a great amount of economic uncertainty. This forces the market to focus on trade flow dynamics and supply and demand fundamentals:

Plain and Simple: The major mover of money in the markets continues to be the moving of money itself.

Last week, $40 billion 3s, $25 billion 10s, and $16 billion 30s were the obvious guidance giver in the rates market. With the Fed's withdrawal from the Treasury market complete, the Treasury reminding of their intentions to lengthen the duration of their debt portfolio, and the market confident the Fed remaining accommodative for an "extended period" , the obvious profit churning trade was to let the yield curve steepen. This move started after the FOMC statement was released on November 4 and carried all the way through the 30yr bond auction last week. The "steepener" trade did however start to unravel following the duration heavy auction cycle. The life of the recent "steepner" trade is apparent in the 2s/10s chart below. Notice how yield spreads began to tighten late last week after short covering profits were booked in the long end of the yield curve. Wider yield curve spreads = steeper yield curve. READ MORE on the shape of the yield curve and yield spreads

Generally when the long end of the yield curve sells off (bear steepens), rate sheet influential MBS coupons suffer and mortgage rates increase. However this has not been the case in the TBA MBS market lately. A lack of new loan production combined with ongoing official support (the Fed), call out nervousness (prepayment risk), and the Class A settlement process helped spark a massive tigthener in the agency MBS market.

Plain and Simple: Rate sheet influential yields outperformed those of their benchmark's....even as the long end of the yield curve sold off and benchmark rates moved higher (yield curve steepened)!. You can thank the Federal Reserve for keeping mortgage rates stable over the past two weeks. I should also add that I have been receiving a larger than normal amount of consumer 'lock/float' inquiries lately...I advised locking.

Here is a look at my spreadsheet...

I waited until the end of the week to give the 4.0 coupon a little extra weight...by Friday afternoon "rate sheet influential" yield spreads were at their tightest levels since May and the secondary market current coupon had fallen to 4.169%. If my spreadsheet is not spatial enough for you, here is a chart of the FN 4.5 with 10yr yields overlaid...

I dont usually overlay benchmark YIELDS on mortgage PRICES, but I think the inverse relationship, or lack thereof in early November, is demonstrated clearly enough to warrant the comparison. Notice how MBS prices and 10yr yields generally move in opposite directions? This wasnt the case in early November...check out how MBS prices continued to rise even as 10yr yields moved higher. This shows you how MBS supply/demand dynamics sheltered mortgages from the steepening bias that was controlling their benchmark big brother (guidance giver). Perhaps the best way to say it is...we disconnected from the benchmark lever?

The Week Ahead is busy, lots of data and Fed speakers. READ THE MND WEEK AHEAD for more. The trade tactic we anticipate to be a rates money mover...the unwinding of the yield curve STEEPENER trade. We expect the long end of the yield curve to recover some of the beating it has taken over the past two weeks and for MBS/TSY yield spreads to widen up as the long end of the curve outperforms "rate sheet influential" MBS coupons.

Plain and Simple: MBS profit taking is looming

Since its getting kinda late for the OPEN, I will continue this conversation later in the morning.

The long end of the curve and 10yr TSY note has been bid well so far this morning. Currently, yielding 3.395%. The FN 4.0 is +0-06 at 99-11 yielding 4.072% and the FN 4.5 is trading +0-01 at 101-25 yielding 4.283%. The secondary market current coupon is 4.146%.

The Realtor Property Resource (RPR) & You- A Call to Action

2009-11-15T11:30:00.000-06:00

The Realtor Property Resource (RPR) & You- A Call to Action: "

Realtor Property Resource (RPR)

Did you catch it? The whisperings of new platforms from NAR that surrounded their annual meeting have become a full blown roar. Houselogic and the Realtor Property Resource have now shed that cloud of secrecy and are now headed for the real world.

AG’s Jim Duncan and Benn Rosales explained it far better than I could here and poll results about RPR are all over the board. My hope today is to reemphasize how incredibly important it is for us to go beyond simply understanding what it is to contemplating what affect this 800 pound gorilla could be.

Will it be another plodding NAR program that has little impact on any of us? Doubtful. The one could be a game changer and it’s going to be up to us to be ready as our industry evolves in 2010.

© Lani Rosales for AgentGenius - Real Estate Magazine, 2009. |
Permalink |
No comment |
Add to
del.icio.us

Post tags: politics

Housing will lead recovery

2009-11-13T14:54:00.001-06:00

From Calculated Risk, they take a pretty negative tone most of the time. I would disagree with their premise ... namely they suggest disagreement with the study ... I agree with the study and find that unemployment is already leveling off and that housing is beginning to make a come-back already. Watch for unemployment to drop as workers find work in housing related fields ... and for the Obama administration sadly to take credit even though they've been mostly in the way the whole time.

The solution is less government intrusion in a market that is correcting itself. If you are looking to buy a home, waiting around will cost you though. The government is borrowing recklessly and this can only drive up interest rates in 2010.

Employment lags the economy, and the following graph shows the relationship between starts and unemployment.

The graph is based on a talk by Jon Fisher, a professor at the University of San Francisco School of Business.

Click on graph for larger image in new window.

This graph shows housing starts (both total and single unit) and unemployment (inverted).

You can see both the correlation and the lag. The lag is usually about 12 to 18 months, with peak correlation at a lag of 16 months for single unit starts. The 2001 recession was a business investment led recession, and the pattern didn't hold.

This suggests unemployment might peak in Spring 2010.

Professor Fisher argued that unemployment will rise to about 10.4% and then fall rapidly. He is now projecting unemployment will decline to 8% by the end of 2010.

He is basing the rapid decline in unemployment on a "V shaped" housing recovery similar to previous recessions. I disagree with that point.

In most earlier recessions, the slumps were caused by the Fed raising interest rates to fight inflation. When the Fed cut rates, housing bounced back sharply (V shaped).

Although this recession was led by a housing bust - and that makes it look similar to some previous periods - this recession was not engineered by the Fed raising rates, rather it was the busting of the credit and housing bubbles, and all the related problems that led the economy into recession. Since there is still far too much existing home inventory, a sharp bounce back in housing starts is unlikely, so I think Fisher's forecast for a rapid decline in unemployment is also unlikely.

Good news - a new bank for Porter County

2009-11-04T06:01:00.002-06:00

We all watched as giant regional and national banks destroyed our housing market in 2007, cutting off access to credit and business funds, while borrowing billions from the government. Fools gold, because the banks that kept the money are now steadily losing their independence to a aggressive effort by the Obama administration to run those companies.

Good news for any local market is the formation of a new bank. "The third generation of the Welter family could be entering the banking business by July or August of 2010 if the bank's charter is approved by the Federal Deposit Insurance Corporation.

Charles Welter, whose father founded the First National Bank of Valparaiso and who was with the bank until 2006, a few months before it was sold to First Source in 2007, plans to form Welter National Bank. Its first location would be at the corner of Ind. 2 and Eastport Centre Drive."

Good news for all of us locally, congratulations to the Welters, I only hope the government doesn't continue to slow the process of approvals ... since they keep telling the media they are trying to get the economy rolling again.

Will tax credit be extending and expanded?

2009-10-29T09:43:00.002-06:00

I ran into two real estate professionals this morning (from Team Tezak) , and inevitably our conversation moved to the state of the real estate industry in northwest indiana. The comment though that jumped out at me was "I just heard the tax credit is going to be extended."

Well, not having heard that bit of news I posted on twitter asking for updates and links.

The three most sent links were: Senate Likely to extend tax credits for homebuyers, This just in Senators extend and Senators agree to extend homebuyer tax credits.

No, it's not law yet, still to be voted by the Senate and then the House and must be signed into law by the President. Looks like an extension until the end of June 2010 for closings, End of April for purchase agreements of the $8,000 and a new credit of $6,500 for people who buy a home and have owned their home for more than 5 years.

In my estimation, all good thoughts, if this credit costs the country $10 Billion it will probably create more jobs than the entire ill-fated and ill-advised stimulus bill and continue to build on the real estate value momentum we're already seeing in NW Indiana.

Indiana one of most affordable - closing costs

2009-10-19T06:16:00.002-05:00

From Marketwatch

There's "tremendous variance throughout the U.S.," said Tony Farwell, chief executive of ClosingCorp, the parent company of Closing.com, a Web site that helps people estimate the money they'll need to close a home purchase and allows them to comparison-shop for providers.
Buyers in Maryland, Delaware and Vermont typically pay the highest closing costs in the country, while Wisconsin, Colorado, New Mexico and Indiana buyers pay the lowest, according to the report. In general, buyers spend between 2% and 7% of the cost of their home on closing costs, Farwell said.
The calculations include taxes and fees that are set by state and local laws, and other costs that consumers have little direct control over -- including appraisals and credit reports. They also include costs of items such as escrow and title insurance, over which consumers typically have more flexibility to search for deals.

Good news again for Indiana, our costs are lower than in many over-regulated parts of the country. In some areas title insurance rates are forced higher by government manipulation of the markets. The single biggest reason that Indiana is lower than most is that our property taxes in Indiana remain some of the lowest in the nation due to leadership by our Governor.

Call us today at 219-762-7200, let's take a look at making those costs even lower by pricing your mortgage at a rate that eliminates all but the actual third party fees.

Warning - watch out for lenders who promise "no closing costs" which really just means you're paying a higher interest rate so they can pay your closing costs for you.

First Financial Trust Mortgage