U.S. Existing Home Sales Rise on Record Price Slump

By Bob Willis

Jan. 26 (Bloomberg) — Sales of previously owned homes in the U.S. unexpectedly rose from a record low, propelled by the biggest slump in prices since the Great Depression as foreclosures surged.

Purchases rose 6.5 percent to an annual rate of 4.74 million from 4.45 million in November that was less than previously estimated, the National Association of Realtors said today in Washington. The median price dropped 15 percent from a year ago, the biggest decline since records began in 1968 and probably the biggest in seven decades, according to the group.

 

“You have to put it in the context of an even steeper decline for the previous month,” said David Sloan, a senior economist at 4Cast Inc. in New York, who had the highest projection in the Bloomberg News survey. “The net trend is still negative. It does seem that some cheap prices are attracting buyers. I don’t think it’s a clear sign of a revival in the housing market. The housing market is very weak.” 

To continue reading this article click here to jump to Bloomberg.com.

Now’s the Time to Buy a Home: 2009

We found this article on the FAR (Florida Association of Realtors). We felt it was worth posting here as well. 

7 Tips for Obtaining a Mortgage

WASHINGTON – Jan. 23, 2009 – Washington is doing all it can to get money flowing again in the housing sector. At around 5 percent, 30-year mortgage rates are at levels that haven’t been seen in, well, 30 years. If you want to buy a home or refinance your existing loan, money is there. But would-be borrowers face new challenges they didn’t have during the housing boom. These include much tighter credit standards, fewer types of loans, and sinking property values that erase home equity. To figure out how to surmount some of these obstacles, we asked mortgage bankers and other real estate professionals for their tips on how to get a loan approved. Here’s what they said:

1. Go to the government Bank of America (BAC) does it. General Motors (GM) does it. Even AIG (AIG) does it. For home buyers, the biggest source of new loans has been government programs such as those run by the Federal Housing Administration [FHA] and the Veterans Administration [VA]. You can get such loans from almost any lender. Government-run programs will accept borrowers with lower credit scores and allow them to put as little as 3.5 percent of the purchase price down. There are local loan limits that knock out high-end home purchases, however. And borrowers will pay slightly more than with conventional lenders, due to mortgage insurance requirements.

2. Get your paperwork ready No-documentation, low-documentation, stated-income, and “liar” loans are now – thankfully – relics of financial history. Gather all that documentation you hate to share. You’ll need to bring bank statements, brokerage statements, W-2 forms, and tax returns. Then, contact a lender to get prequalified for a new home purchase. That will help in your house hunting because you’ll know how much you can afford and you’ll look better to sellers who’ll know you have the financial firepower to close.

3. Get out of that adjustable-rate loan With rates lower, it’s an excellent time to ditch those hybrid, optional-payment, adjustable-rate loans that will likely have you paying a lot more down the road when interest rates rise, if they haven’t done that already. “If you’re looking long-term, rates are so ridiculously low, I would do everything in your power to get refinanced,” says David Reed, a mortgage banker in Austin, Tex., and author of An Insider’s Guide to Refinancing Your Mortgage. “Get into a fixed-rate loan and get that [adjustable] equation out of your head.”

4. Consider paying up front to lower rates With home prices sliding, having enough equity to qualify for the lowest rates can be an issue. David Kittle, a mortgage banker in Louisville, and chairman of the Mortgage Bankers Assn., says one of his customers recently missed qualifying for the lowest rate because an existing $7,000 home-equity loan knocked her from having 30 percent equity in her home to having 25 percent equity. By paying a $900 fee up front – 0.25 points, in industry jargon – she was able to get the loan that dropped her rate from 6.5 percent to 5 percent.

5. Boost your credit score Credit scores matter more than ever, says Jason Bloom of Elliot Bay Mortgage in Bellevue, Wash. A few points weren’t a big issue during the boom. Now they can make a significant difference in your payments. Bloom says some steps you can take to improve your score are as simple as making sure you don’t have more than one-third of your maximum borrowing capacity outstanding on one credit card. Rather than cancel that old Macy’s (M) or Chevron (CVX) credit card you’ve left lying around, use them to make a few purchases. “I consider that like rotating your tires,” Bloom says.

6. Keep making those payments There’s a school of thought that if you want to get your present lender to lower your payment – what bankers call a loan modification – the best way to get their attention is to stop making payments.  

7. Don’t get too excited Even with the recent dip in rates, if you’re thinking of refinancing you may find it easier just to keep your present loan. If your home fell in value, you may not have enough equity to qualify for the cheapest rates. If you’ve got an interest-only loan from a couple of years ago, notes Jeffrey Gundlach, chief investment officer of the TCW fund family, refinancing into a fully amortizing loan will likely increase your monthly payments.

©Copyright 2009 The McGraw-Hill Cos., Christopher Palmeri. All Rights reserved.

2008, 2009, and a Recommendation for You.

 

So much for 2008. No doubt 2009 will be much more predictable. (An excerpt from “Just Didn’t See It Coming” By: Howard Troxler of St. Petersburg Times)

Come on. Can you really say that back on Jan. 1, 2008, you had the slightest idea what the next 12 months would bring? -That jalapeno peppers, for goodness’ sake, would become Public Health Enemy No. 1? -That the entire global economy would come running home to mommy for a big fat bailout – and get it? -That a man with the middle name of “Hussein” would become the next president? That we’d be speculating at midyear about $6 gasoline – and at year’s end about $1 gasoline? -That the heads of the nation’s Big Three automakers would be reduced to – shudder – driving their own products to Washington to beg for money? -That one of the most perplexing problems in the world this year would be … pirates? -Tell you what. -If you foresaw Sarah Palin, every single one of Michael Phelps’ medals and the World Series in St. Petersburg, then go buy yourself a lottery ticket. Open a fortune-teller’s shop. Start picking your own stocks. -Just don’t expect anybody to believe you.  Dec. 28th, 2008

So, with the new year upon us, I’d like to first say thanks to everyone who considered us for their home financing needs in 2008, and thanks to those who referred us to their co-workers, friends, and families. As a small family owned mortgage company, we wouldn’t be successful without our customers’ best form of compliment: referrals. 

It’s 2009 and we’d like to return the favor by making an important recommendation for you:    

Marks&Marks confidently recommends Holifield Huntley Financial Advisors . Holifield Huntley offers independent financial advice and investment management to help you achieve your financial goals. They have a great monthly newsletter that can be read by following this link: http://www.holifieldhuntley.com/OurNewsletter.html  

Also, it’s important to know that Holifield Huntley is a fee-only financial advisory firm. This is important, because it means they’re not paid by large fund managers or brokerages, and therefore completely objective and will always have your best interests at heart.

Make it a great year! Marks & Marks Mortgage wishes you the best! 

Time to Refinance! (or better yet, buy a home)

Email me directly for quick quotes: marksmortgage@gmail.com
As of Dec. 16th, 2008: 4.875% 30 Year Fixed. Act fast!

Also, for First Time Homebuyers, here’s a good article by the NY TIMES: (Click Here!)

Thanks, – Marks & Marks

Ipod Winner : Vicky Britton of Clearwater Police Dept.

Congratulations to Vicky Britton of the Clearwater Police Department. She was the winner of the Marks & Marks Mortgage “M&M Challenge”, by guessing within 10 M&M’s at the Clearwater Employee Wellness Day. (Out of 5,310 total.)

Special thanks to Allen Del Prete and the Human Resources Department for allowing us to participate in this year’s Wellness day. We look to forward to next year.

Marks & Marks Mortgage is available for free consultations for anyone who has questions regarding their finances. We have the ability to broker Government Loans (VA and FHA), as well as all conforming and non-conforming mortgages. Contact us today to learn more. Thank you, -Marks & Marks

Email: marksmortgage@gmail.com

Phone: 727-698-7264 or 727-564-4377

Clearwater Employees: Rays Pendant Winner Announced

Congrats to Robert Hallett! He was our winner of the Rays pendant, compliments of Marks & Marks Financial, and Jeff the Jeweler. We enjoyed meeting everyone who participated in the M&M Challenge at the Clearwater Employee’s Wellness Day. We look forward to assisting Clearwater Employees with their financing needs.

Please remember, all employees are eligible for a $500 closing cost discount on new mortgages.

Plus, we’re available for “Loan Modifications”. If you’re behind in your payments, and need advice, please contact us immediately. tmarks3@gmail.com  or marksmortgage@gmail.com

For information on how to obtain a Rays pendant, or other jewelry from Jeff, email us: tmarks3@gmail.com

Thanks!  -Tim Marks Co-Owner, Marks & Marks Financial

Clearwater Employees: M&M Challenge Results

 

Thanks to everyone who particpated; we had over 230 registered “guesses” from the City of Clearwater Employees. As you know, the closest guess to the actual number, wins a free Ipod Shuffle. So, without further ado, here are the results:

Number of actual M&M’s: 5,310.

The Winner, with a guess of 5,320: Vicky Britton

Thanks to everyone who particpated! We enjoyed meeting all of you, and look forward to providing Clearwater Employees with expert mortgage advise.   -Marks & Marks Mortgage

Race for the Cure

Uncle Sam Wants You! (to buy a home)

 …. TO BUY A HOME!

Uncle Sam has been working to come up with incentives to help stimulate the current housing market. The Housing and Economic Recovery Act of 2008 has a few incentives designed to help you, the homeowner or future homeowner, get back into the housing market. On July 30, George W. Bush signed into law the Housing Stimulus Bill H.R. 3221, as part of the Housing and Economic Recovery Act of 2008. The focal point of the bill is a $7,500. tax credit for eligible First Time Homebuyers. Contact us today at, 727-564-4377, or email us at marksmortgage@gmail.com to learn more. Meanwhile, here’s “Question and Answer” from HUD/Government Website:

Q:  How will the law help struggling homeowners keep their homes?
A:  Through the Federal Housing Administration (FHA), an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages.  The program offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to at least 90% of the property’s current value. 

Q:  When will the program begin?
A:  The program will begin on October 1, 2008 and sunset on September 30, 2011.  Homeowners in danger of losing their homes before October 1, however, should not wait to contact their loan servicers and should begin applying for federally insured mortgages now.

Q:  Who is eligible?
A:  To be eligible to participate in this program, a borrower must:

• Have a loan on an owner-occupied principal residence.  Investors, speculators, or borrowers who own second homes cannot participate in this program.
• Have a monthly mortgage payment greater than at least 31 percent of the borrower’s total monthly income, as of March 1, 2008.
• Certify that he or she has not intentionally defaulted on an existing mortgage, and did not obtain the existing loan fraudulently.
• Not have been convicted of fraud.

Q:  How can a homeowner access this new program?
A:  Homeowners or a servicer of an existing eligible loan need to contact an FHA-approved lender.  The FHA-approved lender will determine the size of a loan that a borrower can reasonably repay and that meets the requirements of the program.  If the current lender or mortgage holder agrees to write-down the amount of the existing mortgage and make the new loan affordable, the FHA lender will pay off the discounted existing mortgage.  Loans provided under this program must be 30-year fixed rate loans.

Q:  Are lenders required to participate in this program?
A:  No.  The program is completely voluntary for lenders, investors, loan servicers, and borrowers.

Q:  How does this law help neighborhoods that have been hit by the foreclosure crisis?
A:  The impact of the current crisis has not been isolated to individual borrowers or investors, but has been felt broadly by neighbors, communities, and governments across the nation.  The law strengthens neighborhoods hit hardest by the foreclosure crisis by providing $3.9 billion in Community Development Block Grants to states and localities to buy foreclosed homes standing empty, rehabilitate foreclosed properties, and stabilize the housing market. 

Q:  Will this law be a bailout for speculators, homeowners, investors, and lenders?
A:  No. It is narrowly tailored to keep families in their homes.  For example:

• Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced.
• Investors and lenders must take big losses first in order even to participate.  The owner of the old mortgage can get a maximum of 90% of the current value of the home (which presumably will be considerably less than the value of the original loan).  In many cases the loss will be significantly greater, but 10% is the minimum. 
• In addition, lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans.
• Most homeowners will have seen the equity in their homes disappear before being able to refinance under this program.  In addition, the FHA will get a portion of any future profits on the house, to make sure the government recoups its investment over the long run.

Q:  Will this law reward families who bought homes they could not afford?
A:  Many homeowners facing foreclosure were misled, were deceived, or were in other ways the victims of unfair lending practices. 
To prevent future abuses by lenders, this law will establish a nationwide loan originator licensing and registration system to set minimum standards for all residential mortgage brokers and lenders.  It also strengthens mortgage disclosure requirements to help ensure that borrowers understand their mortgage loan terms.

Q:  How will this law make it more affordable to own a home?
A:  There are a number of provisions that will make homeownership more affordable:

• Creates a refundable tax credit for first-time homebuyers that works like an interest-free loan of up to $7,500 (to be paid back over 15 years).
• Grants states $11 billion of additional tax-exempt bond authority in 2008 that they can use to refinance subprime loans, make loans to first-time homebuyers and to finance the building of affordable rental housing.
• Raises conforming loan limits for the FHA, Fannie Mae and Freddie Mac to $625,500.  Because of the high cost of housing in California, a majority of the state’s residents were previously shut out from these programs.  Raising these loan limits will lead to lower interest rates on some loans, greater refinancing opportunities, and enable more borrowers in high cost areas to avoid the type of nontraditional and frequently abusive loans that led to the current crisis.
• Provides couples using the standard deduction with up to an additional $1,000 deduction for property taxes ($500 for individuals).

Q:  Does the law provide help to those who still cannot afford to own a home?
A: Yes.  The bill includes a number of provisions to increase the supply of affordable housing, which has been a major problem in California pre-dating the current foreclosure crisis.  For example:

• The bill creates a new permanent affordable housing trust fund – financed by Fannie Mae and Freddie Mac and not by taxpayers – to fund the construction, maintenance and preservation of affordable rental housing for low and very low-income individuals and families nationwide in both rural and urban areas. 
• In addition, the legislation provides a temporary increase in the Low-Income Housing Tax Credit and simplification of the credit to help put builders to work to create new options for families seeking affordable housing alternatives

-Timothy Marks 

 727-564-4377 or direct email at: tmarks3@gmail.com

Making Sense of Problems at Fannie and Freddie – Recap of New York Times Report

The New York Times published this chart (above) of how Fannie Mae works. (July 11th, 2008) To see the full publication, click here.  Today, July 14th, 2008, Dan Green of the Mortgage Reports Blog, published an interesting follow up. Here’s an excerpt of the post; specifically what the Fannie Mae and Freddie Mac news means to consumers, and 12 discussion points that highlight a few issues.

1. News and opinion often blend on TV: The hardest part about watching business television is that it’s tough to distinguish between fact and opinion, especially when it’s coming from the mouths of “experts”.  A good rule of thumb — if the expert is talking about something that hasn’t happened yet, it’s opinion.

2. Fannie Mae and Freddie Mac aren’t too big to fail: But, Fannie Mae and Freddie Mac are too important to fail.  This is an important distinction and it’s the reason why the Federal Reserve and the U.S. treasury issued statements to bolster the GSE’s standing Sunday.

3. Beware of colorful metaphors: TV producers and newspaper editors love good metaphors because they generate emotional responses.  When we hear phrases like “Fannie Mae is running on fumes“, it makes us scared.  Even if we don’t know what “Fannie Mae” is or what it means for a GSE to be “running on fumes”.

4. Same goes for the word “bailout”: Mortgage-related news is rife with negative connotation and has been since sub-prime became a buzzword circa 2005.  The reality, however, is that since 2005, mortgage rates have fallen in some pockets, even as mortgage guidelines have tightened.  For the well-qualified homebuyer, mortgage news has been anything but negative.

5. Fannie and Freddie are mortgage insurers, not mortgage lenders: This means that if you already have a home loan, any problems you face because of the GSEs will be indirect only (i.e. broader economic recession).  You will still pay your mortgage as agreed.

6. The government works weekends: Just because the Fed and the Treasury issued statements on a Sunday doesn’t mean that the issues with Fannie and Freddie are ones of crisis.  The reason the statements were issued on Sunday is because Sunday in Cincinnati is Monday in Beijing and the international credit markets are already open.

7. Fannie and Freddie probably saw this coming months ago: Because loan-level pricing adjustments made Fannie and Freddie’s mortgages too expensive, Americans with on-the-fence credit profiles have run to FHA-insured mortgages instead.  FHA responded with LLPAs of its own, ironically, in effect as of today.

8. Mortgage rates should benefit: The government’s support for Fannie Mae and Freddie Mac is an explicit guarantee of debt and elevates the GSE’s debt quality to near-Treasury levels.  In other words, the risk of buying Fannie or Freddie-issued debt is dramatically lower and yields should fall to reflect it.

9. The biggest reason why Fannie and Freddie matter to you: When your local bank branch lends you money for a mortgage, in theory, it is lending you deposits from its customer base.  Then, the bank sells the loan to Fannie or Freddie for its value plus a fee.  The “value” replaces the deposit money and the fee is a profit.  If Fannie and Freddie were to stop buying loans, banks have to get a lot more picky about the people they lend to, or would have to stop lending entirely.  This is why Fannie and Freddie are too important to fail.

10. 98.8 percent of Fannie mortgages are paid on-time: Let’s remember that the typical Fannie Mae borrower is well-capitalized, has sufficient home equity, and a strong credit score.  We’re not talking — and will never be talking — sub-prime loan quality.

11. The last time Fannie and Freddie were pinched like this, they raised fees: Different from loan officer fees, mandatory “delivery charges” pumped up the interest rates available to everyday Americans.  For some, the charges were cost-prohobitive, amounting to 2 percent or more.  It would be reasonable to expect additional delivery charges later this year.

12. Monday’s evidence that the news isn’t so dire: Today, Freddie Mac sold $3 billion of debt and it was well-bid by the markets.  This means that demand for the debt was higher-than-expected and that markets still have confidence in Freddie Mac.

The world is unpredictable and so are mortgage rates: Last Monday, few people predicted what had come to pass by Friday, and then again by this morning.  Unexpected events — or lack of expectation at all — are the biggest reason why mortgage rates have been so volatile this year.  If you have the chance to lock in a new mortgage rate, do it.  You can always remortgage to a lower rate sometime in the future.

Sources

Homeowners and Homebuyers: What the Fannie Mae and Freddie Mac Story Means to You.

The Mortgage Reports Blog, July 14th, 2008.
Making Sense of Problems at Fannie and Freddie
The New York Times, July 11, 2008

Freddie Auction Is Successful After Treasury, Fed Pledge Aid
James R. Hagerty, Deborah Solomon And Sudeep Reddy
The Wall Street Journal, July 13, 2008

For any questions, please email us at marksmortgage@gmail.com