Goldman Sachs Hearing

If you missed the coverage of yesterday's Senate hearings on Goldman Sachs, you owe it to yourself to take a look. There was a lot of political theatrics, but also some valuable information about their operations, and the backs they were creating derivatives for.

Click To Watch The Hearings

Continues Funding For USDA Guaranteed Mortgages?

Well it looks like there is finally some good news to report on this topic. As you may or may not know, the USDA Guaranteed rural housing program provides zero down payment loans for moderate income families in targeted "rural" areas. The House passage of HR.5017 virtually assures continued funding for these loans.

Full Story Here

Be Prepared For Processing Bottlenecks

Just a word of caution moving forward. Be prepared for delays in the mortgage process as the Home Buyers Tax credit deadline approaches. The number of property under contract seems to be climbing steadily as the we approach the April 30th cut off. In my conversations with appraisers and home inspectors, it seems their schedules are filling up rapidly. Make sure that you allow enough time in your purchase agreements to allow for third party provider scheduling delays.

You're Hired! Top Four Reasons Realtors Get The Nod

You're Hired! Top Four Reasons Realtors Get The Nod
by Jim Remley

Imagine for a minute you had the resources to send out 100,000 questionnaires to buyers and sellers from across the nation, people that had actually closed a real estate transaction in the previous 12 months!

What would you ask? You and I could probably think of countless questions but no doubt one of the most important for any agent would be this: As a real estate consumer what is your most important factor when choosing a real estate agent?

The good news is that when the National Association of REALTORS® released their 2004 Profile of Home Buyers and Sellers, it included this question (as well as many more). They sent out 100,000 questionnaires and received over 8,000 back, and their findings are downright shocking!

The top four reasons why a consumer chooses a REALTOR®:
Read The Complete Atricle Here

Super Cool Real Estate Search Page

So Key Realty Group Inc. just rolled out its new search engine. Wow, talk about a huge step up in technology! The new search tool not only searches for properties based on client criteria (lots of sites do that), but this one also maps them. Tying into MLS and Google maps allows the client to not only see the images from the MLS file but also the Google street view if available! The mapping feature also provides a ton of other data, including but not limited too location and distance to schools, shopping, bus lines, restaurants, etc. You really have to check it out and play around with it for a few minutes to appreciate what a powerful tool this is for a prospective home buyer!

Check it out Real Estate Search and Mapping Tool

Home Buyer Tax Credit Extension

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer’s principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual’s spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer’s principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

Interesting Confrence Call On Interest Rate Direction & Risk

I just finished a great conference call with Mortgage interest guru Barry Habbib. He had a pretty detailed rational behind his forecast for higher rates going higher as the year continues. As an industry insider I tend to take for granted that "everyone" understands what drives the interest rates and how the media puts out numbers on rates that are useful within their context but a little misleading when out of context. So I thought I would cover a few key points today.

The media tends to put out numbers without fully explaining the context. First off, the Freddie Mac rate survey and the MBA rate survey. These numbers are generated by the organization but have build in margin (.75% on the Freddie and 1.25% on MBA). What they don't mention is that these are rates from the PAST! The information is a week old when published and older than that when typically reported. Not to useful as a "shopping tool".

There are a lot of players in the mortgage food chain. The lender (bank) does not typically keep the mortgage (interest rate risk of keeping the mortgage is too great). So the lender then sells the asset, but retains the servicing. In the process they take a slice. They sell the asset to Fannie Mae or Freddie Mac. Fannie and Freddie don't want to hold these assets, so they pool them and create a mortgage backed security to sell on the bond market (and take a slice of the pie too). So say you have a mortgage at 5.25%, the end investor buying the loan as a mortgage backed security might only being seeing an actual yield of 4% or less after everyone has taken their piece of the transaction.

The Fed has been buying huge amounts of MBS at 4% and 4.5% range, holding the market down. Now they are no longer buying those securities and we have seen the price being offered at the MBS auctions decrease (price decrease equals rate hike). The government is sitting on about 1.25 Trillion worth the MBS. Now the government has said if they see inflation they will sell these securities to keep inflation under check. When they start selling this portfolio rates will rise as the market because of market saturation.

The long and sort of the call is that the upside for mortgages would be a decrease in rate of maybe .25% (best case scenario) but the risk of rate increase is significant and if they move they have the potential of worsening by 1% to 1.5%! Bottom line, he feels locking in rates (and profit) is the best course of action.

Quick News Of The Week

1. FHA mortgage insurance increased from 1.75% to 2.25%

2. USDA has indicated that they will be out of 502 guaranteed fund money by mid April

3. The Fed has withdrawn from the mortgage secondary market yet rates have only increased nominally.

4. Home buyer's tax credit ends this month. Contracts must be in place before 4/30/2010