Straight Talk About Mortgages and Real Estate http://straighttalkaboutmortgages.com A Place for Some Real Answers About Mortgage Loans Tue, 02 Feb 2010 13:44:50 +0000 http://wordpress.org/?v=2.9.1 en hourly 1 A Picture is Worth a Thousand Words http://straighttalkaboutmortgages.com/2010/02/02/a-picture-is-worth-a-thousand-words/ http://straighttalkaboutmortgages.com/2010/02/02/a-picture-is-worth-a-thousand-words/#comments Tue, 02 Feb 2010 13:44:33 +0000 Kenny http://straighttalkaboutmortgages.com/2010/02/02/a-picture-is-worth-a-thousand-words/

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]]> http://straighttalkaboutmortgages.com/2010/02/02/a-picture-is-worth-a-thousand-words/feed/ 0 National Debt http://straighttalkaboutmortgages.com/2010/01/14/national-debt/ http://straighttalkaboutmortgages.com/2010/01/14/national-debt/#comments Thu, 14 Jan 2010 13:59:00 +0000 Kenny http://straighttalkaboutmortgages.com/2010/01/14/national-debt/ An interesting and thoughtful analysis of the national debt that various countries have, how they are going to pay for it and the affects of that debt on their economies.   Lengthy but worth the time…..

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]]> http://straighttalkaboutmortgages.com/2010/01/14/national-debt/feed/ 0 Patience is a Virtue…. http://straighttalkaboutmortgages.com/2010/01/11/patience-is-a-virtue/ http://straighttalkaboutmortgages.com/2010/01/11/patience-is-a-virtue/#comments Mon, 11 Jan 2010 19:05:57 +0000 Kenny http://straighttalkaboutmortgages.com/2010/01/11/patience-is-a-virtue/ and we’re making very good progress on the upgrades and changes here at Straight Talk.    But they are taking longer than we’d like.

Please be patient.   It will be worth the wait.

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]]> http://straighttalkaboutmortgages.com/2010/01/11/patience-is-a-virtue/feed/ 0 Straight Talk will be quiet for the next few days….. http://straighttalkaboutmortgages.com/2010/01/06/straight-talk-will-be-quiet-for-the-next-few-days/ http://straighttalkaboutmortgages.com/2010/01/06/straight-talk-will-be-quiet-for-the-next-few-days/#comments Wed, 06 Jan 2010 14:21:11 +0000 Kenny http://straighttalkaboutmortgages.com/2010/01/06/straight-talk-will-be-quiet-for-the-next-few-days/ As we are undergoing some structural changes, some site changes, and some ideological changes as well.   Stay tuned and thank you for your patience.

In the mean time, if you have any mortgage or finance related questions, send them to Info at Straight Talk About Mortgages.

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]]> http://straighttalkaboutmortgages.com/2010/01/06/straight-talk-will-be-quiet-for-the-next-few-days/feed/ 0 Pending Home Sales Plummet http://straighttalkaboutmortgages.com/2010/01/05/pending-home-sales-plummet/ http://straighttalkaboutmortgages.com/2010/01/05/pending-home-sales-plummet/#comments Tue, 05 Jan 2010 19:25:44 +0000 Tom http://straighttalkaboutmortgages.com/2010/01/05/pending-home-sales-plummet/ November’s pending home sales (in other words signed purchase agreements) fell a dramatic 16% compared to October of this year.   A couple of thoughts:
  • I think the numbers for October were artificially inflated by the “scare tactics” that were used by many to encourage first time buyers to buy before the tax credit ended at the end of November.   Once that window was past (by the middle of Nov. you weren’t going to make the Nov. 30 deadline no matter how you tried), that let a lot of steam out of the market.
  • Sales were up 15.5% compared to November of 2008.   That’s good, right?   Yeah, that’s good, but let’s think back to November of 2008.   We thought the financial world was falling apart and it was Armageddon of the Financial Type.   It’s no wonder things were bad then.   Saying that things are up from November of 2008 is sort of like saying that someone with a 101 fever is doing well – because last week he had a 104.5 fever.   True, he’s better, but he isn’t healthy yet.

I’ll have more as the news justifies.

Tom Vanderwell

Calculated Risk: Pending Home Sales Decrease Sharply

From the NAR:

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in November, fell 16.0 percent to 96.0 from an upwardly revised a 114.3 in October, but is 15.5 percent higher than November 2008 when it was 83.1.

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]]> http://straighttalkaboutmortgages.com/2010/01/05/pending-home-sales-plummet/feed/ 0 The Lost Decade – for employment and net worth….. http://straighttalkaboutmortgages.com/2010/01/04/the-lost-decade-for-employment-and-net-worth/ http://straighttalkaboutmortgages.com/2010/01/04/the-lost-decade-for-employment-and-net-worth/#comments Mon, 04 Jan 2010 19:05:00 +0000 Tom http://straighttalkaboutmortgages.com/2010/01/04/the-lost-decade-for-employment-and-net-worth/

A couple of interesting points to the graph that the Washington Post put together:

  • GDP was up by 17% in the 2000’s.   That’s good, but a far cry from the numbers that the 60’s, 70’s, 80’s, and 90’s did.    By the way, GDP stands for Gross Domestic Product and it’s basically a measure of how much is “created” by our economy.
  • Job growth in the entire decade is at 0.   That means that we’ve seen no net job growth in the last 10 years.  I know that the state that I live in has seen a negative job growth in the last 10 years.
  • The household net worth (when adjusted for inflation) is negative for the first time since the 1960s.

So, if you look at your own situation and say, “It’s been a tough decade,” I think it’s safe to say that you aren’t alone.

Tom Vanderwell

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]]> http://straighttalkaboutmortgages.com/2010/01/04/the-lost-decade-for-employment-and-net-worth/feed/ 0 Government Loan Modification Program – Delaying the Inevitable? http://straighttalkaboutmortgages.com/2010/01/04/government-loan-modification-program-delaying-the-inevitable/ http://straighttalkaboutmortgages.com/2010/01/04/government-loan-modification-program-delaying-the-inevitable/#comments Mon, 04 Jan 2010 14:05:00 +0000 Tom http://straighttalkaboutmortgages.com/2010/01/04/government-loan-modification-program-delaying-the-inevitable/ An interesting and thought provoking article in the New York Times about the mortgage modification program that the government has been pushing as their “remedy” to the housing problems.    A couple of main points:
  • It has failed to provide permanent relief for struggling homeowners and has therefore raised false hopes and encouraged people to avoid making the difficult decisions that they should be making.
  • By delaying people from making the difficult decisions, the government is prolonging the housing market’s necessary adjustment and working through the pricing adjustments needed to get back to the point at which incomes and house prices are in line.
  • With the unemployment situation as it is (I think it’s over 7 million jobs lost since this all started?) there are a lot of people who are in homes that they can’t afford any more.   The sooner we, as an entire housing and mortgage industry, can adjust to that fact, the more quickly we can return to health.

I think there are two things that this article doesn’t take into consideration:

  • One of the main reasons that the modifications aren’t working well is because they aren’t substantial enough to get to the point of people actually being able to afford to keep their house.    Whether your interest rate is 2% or 8%, if you don’t have enough income to make the payments, it’s not going to matter.    It’s called principal reductions.   Without principal reductions, the loan modifications aren’t going to work.
  • The “justification” of giving breaks to some people when they are struggling but not others?   According to the last statistics that I saw, 85% of the loans that Fannie Mae and Freddie Mac have are making their payments on time.   So how do you mesh those two statements?    How do you mesh the problems with those who don’t have problems?

Tom Vanderwell

Mortgage Modifications Are Seen as Adding to Housing Woes – NYTimes.com

The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good………

Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes…….

Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

The Treasury Department publicly maintains that its program is on track. “The program is meeting its intended goal of providing immediate relief to homeowners across the country,” a department spokeswoman, Meg Reilly, wrote in an e-mail message.

But behind the scenes, Treasury officials appear to have concluded that growing numbers of delinquent borrowers simply lack enough income to afford their homes and must be eased out.

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]]> http://straighttalkaboutmortgages.com/2010/01/04/government-loan-modification-program-delaying-the-inevitable/feed/ 0 Mortgage Market Year in Review – The Big Three http://straighttalkaboutmortgages.com/2010/01/02/mortgage-market-year-in-review-the-big-three/ http://straighttalkaboutmortgages.com/2010/01/02/mortgage-market-year-in-review-the-big-three/#comments Sat, 02 Jan 2010 16:08:00 +0000 Tom http://straighttalkaboutmortgages.com/2010/01/02/mortgage-market-year-in-review-the-big-three/

Note – I originally sent this out by e-mail on New Years Eve to those who subscribe to my Mortgage Market Week in Review.   The response has been so positive that I’ve decided to repost it here as well.


So Long 2009! 

Rather than doing my normal Mortgage Market Week in Review, I thought I’d send out something a bit different.   I’m going to, instead, take a look back at what I think were the three biggest issues in the mortgage market in 2009.    On Monday, I’m going to take a look at the top 5 issues that I believe we’ll be facing going forward in 2010.

Neither one of them is going to be an extremely pleasant list, but I can guarantee you that they’ll be honest lists! 

Tom Vanderwell

E-mail Me 

   

 

 

 

 

1.

 

 

 

  Without a doubt, the number one issue facing the mortgage market the past year was the Fed’s decision to purchase $1.25 Trillion in mortgage backed securities.   We saw probably the most dramatic one day drop in mortgage rates I recall in the 22 years I’ve been in this business.   The mortgage industry ended up writing literally millions of new loans at lower interest rates because of what the Fed did and that changed the ball game for lenders (both individual lenders and financial institutions).

But this subsidizing of the the mortgage market hasn’t been without it’s costs as well.  We’ve gone from a market that was relatively “free” to a market that has become much more dependent on the government and that’s not healthy in the long run.    Plus it makes you wonder, “what’s going to happen when the government stops?”   (That’s a topic for Monday’s update).

   

2.

 

 

The second biggest issue that faced the mortgage world in 2009 was property values.    We started out the year being quite severely limited in terms of what we could do as property values fell.    Then Fannie and Freddie basically threw their rules out the window and essentially said, “If we have the loan, and we’re going to increase the customer’s likelihood of making their payments, then we’ll do the refinance.”    The program is saving Fannie and Freddie’s borrowers literally millions of dollars if not more.    But a couple of things that need to be said:

  • A lot of the clients that I talked to and did loans for weren’t really at risk of losing their home without refinancing.   Probably, (anecdotal reference only), no more than 10% of the people who took advantage of the new program were at risk of foreclosure.  But the vast majority of them were well over 80% loan to value even if they weren’t when they bought the house.   It showed how substantial the deterioration in values was.
  • The loan modification portion of the program (for those who couldn’t qualify to refinance) has been an abject failure.   Why?   I think mainly because of this one fact – the borrowers either can’t afford the modified payments any way (not a big enough incentive) or they are so far under water in terms of the value of the house vs. the balance owed that they said, “Here bank, you have the keys, I’m out of here.”
  • The property value issues started in the lower price ranges and it has crept up the food chain.   The higher price areas are now getting hit just as much if not more than the lower priced areas.

3.

 

 

 

  Government intervention is the third big issue that the mortgage world dealt with during 2009.  A couple of main points:

  • The First Time HomeBuyer Tax Credit supposedly generated 350,000 (depending on who you talk to) new sales, but since 1. 8 million homeowners are anticipated to take advantage of it for 2009, that works out to a cost of over $43,000 per sale generated for a $8,000 tax credit.   Ouch.
  • Give them the Checkbook – On Christmas Eve, the Treasury essentially gave Fannie and Freddie their checkbook and said they will back them for as much as it takes to keep them from going under.    They didn’t do it with any restrictions or controls of how they manage their business.    We’re going to see the ripple effects of that decision for a long time, I’m afraid.
  • HVCC – Home Valuation Code of Conduct – a set of rules that basically make it a criminal offense for a loan officer to talk to an appraiser.    Has it improved the quality of appraisals?  I don’t see it.   Has it saved the customer money?   Nope, cost them $50 or more extra per appraisal.   Has it sped things up?   Nope, it’s slowed them down.   I’ll agree that there were some issues of undue influence, but it’s not addressing it the right way.
  • Reg Z – what does Reg Z do?   It basically gives the customer a 5 day period to look over the paperwork and then decide if they want to do the loan.    What’s the end result?   It does give the borrower a little more control which is good, but it also slows the process down.
  • The Three F’s control everything.   I couldn’t tell you how many times I’ve told people that there are three sources of money in today’s market – Fannie, Freddie and FHA and if you can’t get them to give you the money, you are…… destined to fail.   :-)     In all seriousness, the non-governmental mortgage market is non-existent.   There are some big issues that are going to have to be dealt with going forward.   Will we have the guts to make the tough decisions?   I don’t know.

 

I could go on for hours on each one of these topics, but I have to admit that time is running out on the year.   So consider this an overview of the things that I see have made a big difference in the last year. 

 

It has been a lot of fun and a distinct privilege getting to know and communicate with all of you over the year.    I’ll have an overview on Monday of what I see are the 5 biggest issues the mortgage world will deal with in 2010.

 

Until then, if I can help, let me know.

 

Tom Vanderwell

 

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]]> http://straighttalkaboutmortgages.com/2010/01/02/mortgage-market-year-in-review-the-big-three/feed/ 0 Jim the Realtor http://straighttalkaboutmortgages.com/2010/01/02/jim-the-realtor-2/ http://straighttalkaboutmortgages.com/2010/01/02/jim-the-realtor-2/#comments Sat, 02 Jan 2010 14:08:00 +0000 Tom http://straighttalkaboutmortgages.com/2010/01/02/jim-the-realtor-2/ I like Jim the Realtor’s analysis and insights into the housing market that he’s in…..

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]]> http://straighttalkaboutmortgages.com/2010/01/02/jim-the-realtor-2/feed/ 0 What are these guys at Barclays thinking? http://straighttalkaboutmortgages.com/2009/12/31/what-are-these-guys-at-barclays-thinking/ http://straighttalkaboutmortgages.com/2009/12/31/what-are-these-guys-at-barclays-thinking/#comments Thu, 31 Dec 2009 19:46:00 +0000 Tom http://straighttalkaboutmortgages.com/2009/12/31/what-are-these-guys-at-barclays-thinking/ Okay, you recall the chart I put up the other day about increasing delinquencies in Fannie’s portfolio?

And you recall the fact that Fannie Mae recently rolled out new guidelines that tightened down their underwriting guidelines (the memo took 20 pages).

And you know that FHA recently announced that they intend to go to Congress by the end of January with rules and changes to bring them back within compliance (that’s a fancy way of saying that they need a LOT more cash).

Oh and on Christmas Eve, the Treasury pulls the Thursday night massacre and essentially hands their checkbook to Fannie and Freddie and said, “Here, take how much you need so that you can stay above water.”

And now Barclays says that in the 2nd quarter of 2010 we’re going to see credit restrictions easing on mortgages?   How is that going to happen?

Oh, it does mention that there is a substantial portion of the population with low loan to value and good credit scores who aren’t being taken care of.    A couple of responses to that:

  • In certain areas of the country, prices have fallen up to 50%.    So, it takes a LOT of equity for someone to still have a LOT of equity in their house.
  • If you know someone who has a good chunk of equity in their house and needs a mortgage but isn’t getting taken care of, I’ve got two items of information I’d like you to pass on to them.   My phone number is (616) 292-7559 and my e-mail address is tvanderwell@straighttalkaboutmortgages.com.   I’d love to talk to them about how I can help them out.

Have a good day!

Tom Vanderwell

Origination Funding May Increase as Credit Restrictions Ease in 2Q10, Analysts Predict : HousingWire

A recent set of research focusing on 2010 strategies for investors of agency mortgage-backed securities (MBS) by analysts at Barclays Capital finds that credit availability for mortgage originations may increase in the next six to 12 months.

However, the situation will remain tight in the next three to six months, they add, as the market grapples with ongoing risk aversion sentiments, loan repurchases stabilization and new regulatory procedures that will need this time to take hold.

“In particular, in H210, there could be a meaningful extension of conventional credit to currently under-served segments,” write the analysts in their Agency MBS Outlook 2010, such as “the substantial population of borrowers with low LTV but only mid-range FICOs (700-740).”

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