interest rates and credit scores and the economy, oh my!

As usual, this week was jam packed with news.

Rates are steady, and I have seen some revised forecasts for rates that anticipate 5.5% by year end. That is revised downward from the 6.5% I had previously heard. The reason? (1) Problems in Greece, Portugal, Spain, and Italy (2) the EU issues have caused a 'flight to quality' for investors that now are once again considering the US stock market a sound investment (3) Continued unemployment issues and stalled recovery (4) For the first time in history, mortgage backed securities are showing signs of written policies and procedures on how to trade them. This means regulation and oversight just may be working, as investors begin to regain confidence in our market.

***You can find out more about forecast of interest rates on www.financialforecast.org
Today's news (www.cnnmoney.com) was plagued with articles on the unemployment debate (99 weeks and counting) and new home sales regaining ground at the fastest pace in 47 years. Its catchy headlines like this that catch investors 'already challenged' attention spans. Read further, and you will be confused! Mixed signals from recovery in the housing market, to unemployed persons for 2 years and counting. In the end, the big picture is that we may enjoy these steady rates a bit longer. Who really knows though? That is my official disclaimer by the way.

Did you know.......................Fair Isaac (inventor if the FICO score) released a bit of the curtain this week and actually gave some insight to credit scores and how they may be affected by a foreclosure or short sale. 85-160 points. A bankruptcy is 130-240 points. All depends, of course, on your overall credit, and did furthermore say that those with an 800 score (one of the best) are the most at risk when an event like this happens (foreclosure, short sale, bankruptcy). You can read the article on www.cnnmoney.com
Quote from Jim Rohn: “Success is no more than a few disciplines practiced every single day”.

Discipline

The MS 150 was this weekend (watch the traffic on I-10 West!). My husband, Fernando, is riding for the first time. He has been training like a madman, working out 2 hours a day. Also, next weekend he is competing in his 4th sprint triathlon in Galveston! Am I married to a crazy man?! It’s quite interesting living with someone that can be so disciplined and driven. Having 2 of us in the household that are focused can be challenging at times. But all joking aside (really I am not)....good luck to you Fernando! You are my superhero.

Just like athletes, realtors and loan officers need discipline, training and focus. If not, what good would we be to our clients? What are you doing to improve your discipline? Personally, I have implemented in the last 6 months new tracking forms, daily disciplines, hired an additional assistant and hired a coach that coaches realtors and lenders specifically (The Core Training). We have already seen an increase in business as a direct result. Our goal is to create ‘Raving Fans’ of our clients and realtors! I know it’s working!

Quote from Jim Rohn: “Success is no more than a few disciplines practiced every single day”.

News You Can Use:

Rates: Ended the week on a great note with the announcement of the Goldman Sachs fraud charge. Bonds love scandal and bad news. The stock market took a nose dive, and ‘chaching!’ bond prices increased, leaving mortgage rates at nice levels for a Friday.

Is the Cap and Trade Energy Bill really true? This is HR 2454 that requires existing homes must meet new energy standards before they can be resold. According to Snopes.com : FALSE! The bill (not even passed by Senate yet) offers financial incentives for homeowners that do so, but does not mandate any such thing.

Will FHA go to 5% down minimum? No concrete approval of this yet. There are rumors, but I am not sure that HUD would be that daring. Would they? What REALLY is the difference between 3.5% and 5.0% anyway?

Can you get a FHA loan with a 580 min. score? Technically: YES. FHA publishes this is their ‘minimum credit score’. In REALITY: NO. Investors have what are called overlays. They chop and amend guidelines as they see fit. In this case, 99% of the investors require 620 score. But ask yourself, does a 580 credit score really deserve to buy a home right now?

Can the homebuyer credit be used at closing toward down payment? Again, Technically, Yes. Obama’s feel good plan at work. REALITY: no. There needs to be a local government agency to implement /advance the money. To date, I have heard of not one lender that has closed one. Have you? We encourage our clients to file an amended tax return immediately after closing, and they get the money in 4-6 weeks. That is what we call ‘sweet!’

Is HVCC really going away? It is supposed to ‘sunset’ in October 2010. However, most investors will probably keep the practice, just ‘because’. There are legislators trying to end the practice (ex: Congressman Childers), but nothing has been set in stone. (At Patriot, we have our own ‘short list’ and we rotate from that- we DO NOT use appraisal management companies! This is just one of the benefits of using us for your mortgage needs!)

Now….the million dollar question: Will the Tax Credit be Extended?……………drumroll……………ONLY for military personel that have served at least 90 days out of the US in the last year. The credit is extended 1 year. How is that for a specific demographic?



Hope you had a fantastic weekend! It was raining, so maybe you had time to get some projects done around the house. Stay disciplined!

Be your own super hero

My four year old, Diego, asked me the other day " Mommy, are superheroes real?" . Hmmmm. What should I tell him? Do I keep the spirit alive as we do with Santa? Or do I tell him the truth, so he won’t go jumping off buildings thinking that his spider web will shoot out of his wrist? I chose the latter. Break it to him now.

There really are SUPER HEROES though! Every day, we deal with that super closer at title that goes the extra mile to keep our deal together, or in our case, our underwriters at Patriot! God love them. They stay late, they work Saturdays when needed, and they sign off on conditions just minutes before closing so we can fund on time. In my book, that qualifies as a super duper hero. But some days, they can also be villains, making our life hard with conditions and paperwork and this and that. Villains!!!!!!! Worse than the Green Goblin himself! But its not their fault. Its the Big Daddy Fannie Mae and HUD that make these regulations. Underwriters are just the messenger. WHO ARE these guys anyway? Is it a board of suits sitting around a conference table spitting out do's and don'ts for millions of potential homeowners to comply with? Probably. That sure is refreshing.

So that is my job description now, shielding my clients and realtors from the painstaking regulatory requirements that lenders force on us. Does this make me a super hero? (SMILE) Some food for thought: What can you do for your clients to make you their super hero? Its a catchy concept, and one that can improve the homebuyers experience in this crazy, villainous world! That is my motto for 2010- BE A SUPERHERO for my clients.

A check-up on all things changing

Finally, the warm weather is here! We can play outside, wear less clothing (good if you are 6 months pregnant like me), and enjoy all Texas springtime has to offer! Spring is also a time for cleaning. You may want to keep reading……

FHA on April 5 (Monday) will increase the upfront mortgage insurance funding fee + .50%. That is $500 for every $100,000. Since it is rolled into the loan, and amortized, the payment increase is only $3.00/mo. Not too drastic. Also, the seller contribution allowable goes from 6% to 3%. This will most impact lower priced homes (example: under $150,000) where 3%, or $4500 will not cover all costs and escrows required. Any FHA case numbers that are obtained before the 5th will be covered, regardless of closing date.

There is a rumor that seller financing may go away. This is a topic I need to investigate more, but will surely keep you posted. That would truly put a dent in transactions. If any of you know anything about this, I would appreciate feedback.

Apparently buried deep within the Health Care Bill (Section 9015, p.2000) is language that would take effect on 1/1/2012, in which the Medicare tax (3.8%) would apply to capital gains, dividends, rents, royalties, interest, etc for those singles earning >$200,000 . TRANSLATION: a 3.8% tax on the capital gains from the sale of your home. Basically this confirms the rumor as we know it: those top earners will bear many of the brunt of mistakes from the past.

The Congress went on ‘break’ without passing the budget for FEMA! It was an oversight (????) and basically, if you are in a flood zone, and set to close before April 12 when Congress returns, you cannot close. Some lenders will allow closing, and some will not . So if you have a transaction in a flood zone, be sure to communicate with your lender quick, to see if this will affect you. At Patriot, we are covered on our transactions.

RATES ARE ON THE RISE- slowly but surely, as we anticipated, the Congress safety net for mortgage backed securities ended March 29. For the last week, rates have inched up slowly , about .25% total. What is more on the horizon to come? No one knows. Signals of recovery are still mixed (keeps rates low), while at the same time, it is obvious no one wants to buy our debt (tbill auction sales have been very weak- which is bad for the rates). We will continue to keep you posted.

One thing does remain the same among all this change! Patriot Bank Mortgage employs the best of the best loan officers and operations staff, and we strive every day to close on time, and even early! We can close in a min of 8 days (since we must allow 7 days for federal disclosures), and are very supportive of our local real estate community.

Looking for some guidance? I have an idea...

Remember to set your clocks ahead one hour Saturday night! Spring Forward……..

This week’s update is short!

Ø Are you looking to build a team?
Ø Are you looking to implement systems in your business that are consistent , and generate (a) more leads, (b) raving fans, and (c) less working hours?
Ø Are you looking to net more income?


Patriot Bank Mortgage is sponsoring a FREE 2 hour seminar for our realtors on Wed, March 24th. My coach, Rick Ruby, is flying in from North Carolina to visit my office, and at the same time, is willing to spend 2 hours with YOU, to talk about how to run an efficient business. Rick is President of The Core (www.thecore.tv), and coaches lenders and realtors. He has a strong message, and is an expert at building successful teams. Personally, after 15 years, I thought I knew everything… But my systems seemed stale, and my team was at a stalling point. Now, with Rick’s help, my team is focused more than ever, and we are concentrating of creating raving fans out of our clients and referral sources!!!!!!!

Please consider joining us for this 2 hour event. I promise you, it will be worth the effort!

When: Wednesday, March 24 (2-4 pm)
Where: Holiday Inn Express, 1300 N Sam Houston (Beltway and 45)


Rsvp to us this week – space is limited. Just reply to this email!

Have a wonderful weekend and go out and enjoy this amazing Houston Weather!

Tick tock

Only 50 more days until the homebuyer credit deadline approaches! That means that by April 30, your borrowers must have an EXECUTED CONTRACT, and can close as late as June 30 to receive the credit of either $8,000 (first time buyers) or $6500 (current buyers owning 5 years or more). That is only 8 weekends , which is when most people look for a home.

Daily I have questions from prospects and realtors if the credit will be extended? Well, that is anyone's guess of course, just like when will the rates start going up? No one knows. However, if your buyers are waiting around for the 'too good to be true' 2nd extension of an already miraculous gift, they may be sadly disappointed. Currently I have heard no rumors at all of an extension. Don't get left behind!

Life is full of surprises! Imagine my horror to hear that Whole Foods imports its 'organic' vegetables from China? This is about a year old in the news, but it just made it accross my ears. I have tried to be as organic or 'green' as possible, incorporating small habits in my life that will make a difference (I hope). So should I really be concerned about this China organic thing? Is it my own fault that I did not read the label that has been there clear as day? What other things am I not paying attention to? With the media, and internet , and countless information at our fingertips, it is no wonder consumers are confused. We have too many outlets, too may choices, it is just plain overwhelming. So imagine shopping for a mortgage !!! A referral of 2-3 trusted sources for mortgage financing is the BEST GIFT you can give your client. People you know, and trust , and have had good experience with before.

Have you interviewed your lender lately? This week I had coffee with a realtor that has known me for years, but never referred me. That's ok, because I knew he had several long standing , deep rooted relationships. I respect that. He receives my weekly updates, and recently asked me to meet with him. His story is a tragic one, of 2 loan officers he has trusted for years, and they each ruined a transaction for him. One client understood, the other held it against him because it was guilt by association. In each case, it was not necessarily the loan officers fault, but it boiled down to (a) lack of control, and (b) lack of communication.

So we had coffee, and Mark and I discussed past , present and future. He asked me tough questions. How many A+ realtors did I already have, and where would he fit in to all that? Did I have the time to service him too? Would I be working after the baby? (YES!) He also wanted to know about my team and philosophies of customer service. What could I do to help him grow his business? I was so relieved (and flattered) that he was giving me an opportunity to get to know me! (That is also why my weekly updates have some personal tid bits, so you can know what makes me tick). So again, have you really ever sat down and gotten to KNOW your lender? The ones you trust and rely on to give the best experience possible for your clients? Call them for a cup of coffee, spend 30 minutes with him/her and ask the questions that are important to you. Develop a list of questions your CLIENTS should be asking lenders before they hire them. Its not all about rate. RELATIONSHIP IS EVERYTHING.

As for rates, they are there, steady, and waiting for your borrowers to pull the trigger on that home of their dreams. There is LOTS of money, waiting to be approved.

The WHY? of things

Lately, I have been playing alot of superheroes with my 4 year old, Diego. In fact, I think I may now turn into one. My choice would be Cat Woman, but I'm not sure how I would look in that tight black leather suit, especially 5 months pregnant. So its superheroes in the morning before school, and then the minute we get home, its superheroes again. So I happily endure, and play, even if just for 5 minutes, my sweetie is satisfied. His last waking breath the other night was ' Mommy, why does Wolverine not have hair? '. Well, because he has a mask on, that's why. 'I KNOW that Mommy , BUT WHY?'. Well, I was not sure how to continue that one, so I changed the subject.

WHY?????????????? Such a powerful word.

Why are there so many unemployed?? There are 4.6 million-that we know of, and on Feb 28, 1 million of those will run out of benefits. The $787 billion stimulus package was to create 4 mm jobs, and there have been about 2 mm created (source: Fox News). That is a cost of $393,000 per job.

Why are banks not lending to businesses? Could it be that they have no incentive to take risk at a 3.5% interest rate?

Why are more small banks going to the Fed's emergency 'window' to borrow short term/overnight funds at close to 0%? Could that be a sign of a yet weaker economy-the Fed won't say, nor release the bank names in fear of hurting consumer confidence.

Why is our economy not getting better? Could it be unexpected things like the meltdown of the Euro (being compared to the mortgage meltdown- since Greece is about to be downgraded for their credit. France and Germany hold much of their debt, so will they then fail? If you think the Euro economy has nothing to do with us here, think again. Or could it be the unexpected blizzard have destroyed business in the central US and East Coast, causing further layoffs? It has been said that the housing recovery will drive us out of recession. Well bring it on! The Fed is cautiously NOT rising rates yet, as they don’t want to further inflation. Mortgage bonds hate inflation, and if and when that happens, rates WILL rise.

So many ‘Why’s ‘ and so little time to answer them all. I think I would rather play superheroes.