NHLA Blog

The chart below speaks for itself. 

While mortgage rates have increased slightly from lows never seen before... take a look at the chart below...  we are still at all-time historic lows.

Our rate survey yesterday reported the average 30-year fixed conforming loan would expect to receive quotes between 4.9% and 5.3%.

You can see below that the housing bubble was fueled with 30-year rates at or above 6%, albeit with much easier access to mortgage credit via lax underwriting guidelines.

What is CA signaling... a housing bottom?

In the summer of 2006 CA showed the first signs of the bursting housing bubble... which became reality on a large and national scale about 1 year later.

Now CA may be signaling the housing bottom. Everyone is watching CA real estate as the leading indicator for broader housing health.  CA was the leading indicator into the housing burst and will likely be the leading indicator out.

What forms a housing bottom in real estate cycles?

Increasing number of transactions as a result of declining prices... leading to declining inventory.

This is exactly what has been happening in CA as of late.

The National Association of Realtors just reported that the prices of homes in CA rose for the second straight month AND the inventory of homes on the market is now 1/2 of what it was this time last year.  This time last year CA single family residential inventory was at around 10 months and is now down to 5 months.  Around 6 months would be considered very healthy and CA has already dipped below this number.  During the housing boom the nation was running around 4 months supply at the peak.

Inventory for homes under $500,000 is all the way down to 3 months supply in CA, while inventory of homes over $1 million rose to 17 months (up from 10 months this time last year).

Why does CA matter?

1. It is the worlds 9th largest economy

2. It is the largest housing market in the US... accounting for 40% of the home loans during the housing boom. 

None of the experts a declaring a housing bottom just yet.  You must remember that the first signs of housing trouble started to show up in CA in the summer of 2006.  It wasn't until almost 1 year later that the depth of the problem was fully known.

If CA is signaling a housing bottom then we could expect the national housing market to stabilize by this time next year... unless this is only a head-fake in a market that still has further to decline with more foreclosures on the horizon to be absorbed.  Remember, lenders held potential foreclosures while observing a moratorium from late last year through April.  One national lender extended it through May.

It remains to be seen, but this is certainly a story worth watching as a leading indicator to the health of our nations housing market.

On a national average mortgage interest rates rose over .5% yesterday with some lenders raising rates as much as 1%.  This brings the average 30-year fixed rate to 5.34% from just below 5% just a few days ago.  This jump in rates raised the average monthly mortgage payment by $29 per $100,000 financed.

Yesterday's moves were not anticipated by the market. We will likely see further volatility today based on the response to the Fed's 7-year treasury offering this afternoon.  The 10-year yield has shed some of it's gains back to 3.61% today, which if it holds through the morning trading (and it appears that it is), will result in mortgage rates dropping -.25% in points or -.125% in rate.  Depending on how the 7-year offering goes this afternoon, this could move quickly after lunch today.

See our mortgage rates trends tracker:

http://www.nationalhomeloanadvocates.com/MortgageRateTrends

If you follow our updates by subscribing to our Daily Rate Advisory, you received several updates from us yesterday warning of the dramatic intra-day jumps in treasury yields... which drives mortgage rates.  If you aren't a subscriber, you can do so at the following link:

http://www.nationalhomeloanadvocates.com/DailyRateLockAdvisory

So what happened yesterday?  Overall it appears that traders are anticipating an end to the recession and fears of inflation coming as a result of the massive quantitative and credit easing by the Fed, and other foreign governments.  It is important to remember that the markets will typically trade 6 months in advance in anticipation of future events or trends.  Meaning, the market is anticipating a recovery and inflation by late Q3 or early Q4 of 2009. 

Whether this will hold remains to be seen.  The experts are split.

Either way...this reiterates our position and advice when shopping a mortgage....that is....you must get a "rate lock" in writing from you lender(s)  The faster you finish shopping and get a rate lock commitment from your lender(s), the lower the risk of losing low interest rates to new market conditions

Refinance Break-Even

The most fundamental consideration in whether a homeowner should refinance an existing mortgage is the break-even point that represents how soon the cost of the refinance will be recaptured through lower monthly payments. But while the break-even point is easy enough to calculate, other factors may also influence your decision and, if it's a go, the type of loan you'll select.

While there is no rule of thumb for the maximum payback period, or break-even point, that makes sense for most borrowers, three years or fewer typically is considered reasonable if you intend to keep your mortgage at least that long.

To calculate a break-even point, you can use our "refinance break-even calculator" at:

http://www.nationalhomeloanadvocates.com/RefiBreakevenCalc

or you can manually calculate a basic break-even analysis... just divide the anticipated total cost of your refinance by the monthly savings on your loan payment. The result is the number of months that would be required to recoup the cost.


Example: Calculate break-even point


Cost of refinance: $2,125
Monthly savings: $125
Break-even point: 17 months


While the break-even point is a useful analysis, the decision to refinance can become more complicated by other factors:

1.) Your current loan has an adjustable interest rate.
2.) Your new loan will have a longer or shorter term than your current loan.
3.) Your new loan will require mortgage insurance.
4.) You're willing to pay points to lower the interest rate on your new loan.
5.) You want to cash out equity or consolidate other debts such as a credit-card balance or car loan. 
6.) ARM vs. fixed interest rate


The decision is a bit more complicated for borrowers who have an ARM and want to eliminate the risk of a higher rate in the future. In such cases, refinancing to lock in a fixed rate might make sense, even if the payback period isn't attractive.

Longer or shorter term

We talk to people who bought a house in 2000, refinanced in 2003, refinanced in 2006 and are now going to refinance again. They have owned their home for nine years, and they still have 30 years left on their mortgage.  If you keep focusing on the fact that the payment is lower, but multiply the payment times the number of (additional) years that you are going to have to pay it, and you are actually going backward.

Fifteen-year loans have been a popular choice for homeowners who want to refinance. Often these shorter terms are appropriate only for homeowners who have substantial savings and excellent job security. Without those safety nets there is a substantial risk that the significantly higher payments on a 15-year loan could become burdensome if you lost your job or suffered an illness or disability in the future.  A safer way to pay off a loan more quickly is to make payments on a 30-year loan as if the term were only 15 years.

Mortgage insurance
Nationwide drops in home values may present a challenge for homeowners who want to refinance because a higher loan-to-value ratio can trigger the need for mortgage insurance. If you'd like to refinance but are short on equity, you should still do the math because your mortgage insurance payments may be tax-deductible and could be eliminated if your equity increased in the future.


Debt consolidation
Homeowners who want to tap equity to pay off other debts, remodel their home or make other purchases face a more complicated decision to refinance, in part because other debts or options such as a home equity line of credit will involve various rates and terms. Debt consolidation may make sense if the refinance would strengthen your overall financial situation and you're disciplined enough not to run up more debts.

This week we get the most complete set of data and evidence of how the spring home-selling season is going.  This week should give us a better sense of whether the story some economists are telling, that the housing market price declines are tapering off, has any truth to it.  Of course, much of this data will reflect national prices or even by the top 20 metro areas, but as we talk to our clients, home prices and housing market health are very local...many times even by suburb or zip code.

All of this kicks off tomorrow with the release of the Standard & Poor's Case-Schiller home-price index for March.  You can review the report from last month on our website: http://www.nationalhomeloanadvocates.com/NationalHomePrices

A similar report from the FHFA - Federal Housing Finance Agency, comes out Wednesday.

Most evidence suggest that home prices have continued their year over year declines in March.  The Case-Schiller composite index of 20 large metro areas fell 18.6% in the year ended in February, and is expected to have declined by 18.4% in the year ended in March.  The FHFA index unexpectedly rose in February, but if it matches up with other data it will drop in March.

The expected continuation of home price declines nationally can be attributed to the number of bank owned foreclosure properties on the market - which is contributing to a stubborn 11 month supply of homes on the market.  Data suggests that 50% of existing sales are of bank owned foreclosures...which typically fetch only 70%-80% of the current market value for residential properties.  Banks are aggressively unloading properties they own which will continue to put downward pressure on existing sales prices. 

Additionally, we expect to see another massive wave of foreclosures hit the market for two reasons:  1) Lenders had moratoriums on foreclosures for the later months of 2008 through April of 2009.  Those moratoriums are now lifted and we should just see the first wave of these home hitting the markets in June... and 2) unemployment is starting to take a toll and families who are forced to find less expensive housing options...ie renting.

Data does suggest, however, that home sales are nearing a bottom as the government continues to do what it can to keep a lid on mortgage rates and incent first-time homebuyers into the market.

Wednesday and Thursday will bring us the April data for existing-home sales and new-home sales.  This should give us more evidence as to the effectiveness of low rates and other incentives to buy homes.  Most economists are expecting the volume of existing-home sales to rise 2% and new-home sales to rise 1.1%.

In summary, it does appear that the pace of home sales has hit a bottom, but there continue to be forces that will put downward pressure on home prices...albeit at a slowing pace.

How much do you know about the mortgage market and home loans?

Take our short quiz offered in partnership with Zillow.com® and see how you score!

http://www.nationalhomeloanadvocates.com/MortgageIQQuiz

1. Understand and Utilize the New Tax Credits. Many home owners are not aware that the latest government stimulus package gives them a special tax credit of up to $1,500 for making certain home improvements. Also, if you are buying a primary home and you have not owned a primary residence in the last 3 years, you may qualify for the new $8,000 first-time-homebuyer tax credit. And, a recent update from HUD allows the tax credit to be used for downpayment and closing costs for FHA loans.

2. Consider Paying Points for Your Mortgage Transaction. Mortgage “points” are upfront fees that you pay in order to lower your mortgage interest rate. One point is equal to 1% of the loan amount. In the past, it almost never made sense to pay points in most situations where you were refinancing your mortgage. However, enormous changes have taken place in the mortgage securitization process. Wall Street investors are demanding higher upfront fees for borrowers with credit scores below 740, and mortgage lenders don’t have as much flexibility when pricing loans. This means that the interest rate savings can be very significant when you pay upfront points.

If you are buying a home, negotiate into your purchase contract for the seller to pay points on your behalf. In addition to the significant interest and payment savings you will enjoy, you will also receive a tax deduction this year for points paid by the seller on your behalf. If you are selling a home, offer to pay points for potential buyers as part of your marketing efforts. This will make your home more affordable for potential buyers and help your listing stand out from the glut of available inventory in today’s market.

3. Carefully Structure Your Real Estate Short Sale Transaction. A real estate short sale is when a home owner sells their property for less than what they owe on the mortgage, and the lender gives their permission to do this by forgiving the difference and/or releasing the mortgage lien on the property.  Short sales are very common in many markets because of negative home owner equity due to the steep decline in house value.

If you are selling your home as part of a short sale transaction, make sure to negotiate for a release and full satisfaction of the mortgage from your lender. Depending on the laws of your state and your individual circumstances, lenders may be able to wait a year or two for you to improve your financial situation, and then file a deficiency judgment against you to try and recover the money that you still owe them. The only way for you to avoid this risk is to have the lender not only release the mortgage lien, but also agree in writing to a full satisfaction of the mortgage.

If you are a buying a home as part of a short sale you should take steps to make sure the deal is closeable.  It is estimated that approximately 30% of short sale listings are not closeable deals because the lender simply won’t approve it. In most of these cases that aren’t closeable, the first or second mortgage lender is expecting home sellers that have money to contribute something to the deal. One way to avoid getting caught up in the middle of this is to have your Realtor verify the status of the seller’s hardship package with their lender.

4. Utilize the Special Options Available for Seniors Age 62 or Older.  If you are 62 or older, you could use a reverse mortgage to buy a new home without making any monthly mortgage payments.  This is a fantastic opportunity if you are contemplating a move but are worried about trying to sell your current home into a down market. Additionally, reverse mortgages can be used to supplement your retirement income that may be declining due to unfavorable economic or financial market conditions.

5. Carefully Interview Your Mortgage Professional. With all the noise, confusion, fear and misinformation in today’s market, it is more important than ever for you to work with a seasoned loan originator who has the training and experience to guide you through the home buying or refinancing process. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way.

Among the many responsibilities of adulthood, managing personal finances is one of the most important skills you can learn. Unfortunately, many of us have had to learn this lesson the hard way, without any formal education on the subject. If you want to help give your kids a head start on the road to financial independence and success, there are many simple tips you can use to get them started early.

This week, in the first of a two-part series, we’ll discuss six easy ways to help your younger children learn about the value of money and investing. In the second part, next week, we’ll go over another six tips, to make it an even dozen. Here are some ideas for you to consider:

Introduce kids to dollars and cents. Teach your kids how to count change, and help them understand the value of each coin. Explain how to pay for things. For example, if they find a toy at the store that costs $2.75, show how they would need two $1 bills plus three quarters to pay for this purchase. You can even let them make the exchange at the check-out counter.

Explain the concept of earning money. It’s important for your children to understand how you earn money when you go to work, and also how that money pays for housing, food and the many fun activities your family enjoys. Explain to them the benefits of having a job, and help them appreciate the reason you leave the house each morning.

Respect money. To set a good example for your children, don’t discard pennies or small change. Show them how saving even small amounts of change in a jar can add up to a significant sum. Count it out together every few months, and help them pick out something useful they can spend it on.

Give your children an allowance. By providing your children with a weekly allowance, you can teach them both how to save money, and also how to spend it wisely. You can also tie their allowance to weekly chores done around the house, to help them learn the concept of earning their money. It may also be a good idea to pay their allowance in small increments, such as five $1 bills instead of one $5 bill. Dividing their money in this way can help them see how they can use a portion of the money to spend on things they want, and also how to save a portion of their earnings as well.

Help set savings goals to work toward. If your child wants to purchase a video game or a new item of clothing, work with them to figure out ways to save for this goal. If the item costs $20, help them estimate how much of their allowance they will need to save and how long it will take to save that amount. You can also encourage your child to find ways to make some extra money by picking up additional chores around the house.

Match their savings. One way to encourage good habits is by matching a portion of your child’s savings. For example, you could contribute an extra 50 cents for each dollar they put away. Giving them extra incentive can increase their savings more rapidly and teach them good habits at the same time.

These are just a few ideas to get your kids started on the road to savings. Check back again next week for more thoughts on how to help them learn about personal finance.

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This article was written by Wachovia Securities and provided to you by NHLA Trusted Advisor Justin Latvenas CRPC®, Financial Advisor in Marlton, NJ at 800-395-8537. For More information please visit the team website at www.harmandharm.wbsec.com

You can also reach Justin at Justin.Latvenas@Wachoviasec.com

Wachovia Securities is the trade name used by two separate, registered broker-dealers and nonbank affiliates of Wachovia Corporation providing certain retail securities brokerage services: Wachovia Securities, LLC Member, NYSE/SIPC, and Wachovia Securities Financial Network, LLC (WSFN), Member FINRA/SIPC.

The accuracy and completeness of this article are not guaranteed. The opinions expressed are those of the author(s) and are not necessarily those of Wachovia Securities or its affiliates. The material is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Provided by courtesy of Justin Latvenas, a financial advisor with Wachovia Securities in Marlton, NJ for more information, please call Justin Latvenas at 800-3958537. Wachovia Securities LLC, member FINRA and SIPC, is a separate nonbank affiliate of Wachovia Corporation. ©2008 Wachovia Securities, LLC.

Investments in securities and insurance products: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE

Last week saw the official kickoff of Fannie Mae's and Freddie Mac's mandatory new system of appraisals nationwide, and some mortgage and appraisal groups are up in arms over sharply higher costs for consumers.

The "home valuation code of conduct" imposed by Fannie and Freddie puts most appraisal assignments in the hands of management companies, some of whom are owned by major lenders such as Bank of America, Wells Fargo, and Chase.

The Appraisal Institute, which represents 20,000 appraisers across the country, and the National Association of Realtors, which has thousands of appraiser members, both have been critical of the new code.

The Institute is particularly incensed at the expanded management company role in appraisals because those companies pay appraisers much less than their standard fees, and tack on thirty to fifty percent extra charged to the consumer.

For example, an appraiser who would normally charge $325 for a valuation ordered though a lender or mortgage broker, now might be required by a management company to do the same work for $175 to $200.

Meanwhile the consumer, who has no idea where the money is going, is charged $400 or more for the appraisal, and must pay for it up front by credit card, rather than at closing.

The $200 to $225 extra goes to the management company. If the deal falls through and the mortgage doesn't close, that's the consumer's problem. The appraisal fee has already been pocketed by the management company.

Now evidence is circulating in Washington that not only are appraisal fees significantly higher under the new Fannie-Freddie code, but are being extended to FHA mortgages, despite the fact that FHA is not covered by the code.

The National Association of Mortgage Brokers has begun documenting the higher fees and other problems with the new code. In one case the association shared with Realty Times last week, a large lender, EverBank, circulated its list of new appraisal fees to be charged consumers through its "automated appraisal system."

Not only does the bank require credit payment for appraisals up front, but it now charges a flat $465 for FHA appraisals and $390 for standard single family conventional appraisals. Flat fees go up to $700 in Hawaii.

Roy de Loach, CEO of the brokers group, cited one member's experience -- where total appraisal fees for a routine FHA cash-out refi ballooned to $1,068 to the consumer.

Home buyers and realty professionals need to be aware of these sharply escalating fees -- and their controversial use on FHA loans that are supposed to be exempt from the Fannie-Freddie code.

Hud announced a decision to allow consumers to use the $8,000 first-time homebuyer tax credit for downpyament and closing costs for FHA loans!

The measure announced on May 13, 2009 by HUD Secretary Shaun Donvan would allow FHA approved lenders; federal, state and local government agencies; and FHA approved non-profit organizations to supply home buyers short-term or "bridge loans" up to the amount of the first-time homebuyer tax credit.

Longer term loans secured by second lines can also be used by government agencies and FHA approved non-profit organizations to facilitate home sales.  Several state housing finance agencies have introduced "jump start" programs and many others are still considering the same.

More information about these programs can be found on the National Council of State Housing Agencies Web site at www.ncsha.org/section.cfm/3/34/2920.

Previously, the home buyer would have been unable to access the tax credit until they filed their next annual tax return or an amended 2008 tax return and received the refund from the IRS.

10 commonly held myths surrounding credit scores:

Myth #1: A credit score is a credit report. The credit report is a detailed listing of all debts and payments, going back throughout an individual’s entire payment history, Ewing explained. For each entry, it shows the creditor’s name, amount owed, the highest balance owed, the available credit, whether the account is open or closed (and who closed it), the number of late payments and whether the account is in default. A credit score is a number between 300 and 850 that is based on complex formulas incorporating all the data in the credit report.

Myth #2: Those who are not in default do not need to check their credit report. Everyone should check his or her credit report at least once a year (quarterly is not a bad idea in today’s market) to be sure the report contains no erroneous information. Visit www.annualcreditreport.com for a free, no-obligation copy of the report.

Myth #3: Checking a credit report damages credit. Reviewing your own credit information has no effect on a credit score. Neither does a credit report review by a prospective landlord or employer.

Myth #4: Everyone has one credit score. Credit score calculations are compiled using data from three different credit scoring agencies (Equifax, Experian and TransUnion). The resulting scores might vary slightly among the three agencies if they have slightly different information, but they will be similar.

Myth #5: Married couples share a credit score. If all of a couple’s accounts are joint, their scores will likely be similar, but each individual maintains a unique credit record and credit score. On the flip side, after a divorce, ex-spouses need to follow protocol to have creditors remove either party from a joint account.

Myth #6: Shopping for a loan destroys credit. It is true that “hard inquiries” - examinations of a credit score in preparation for extending credit can have a small negative impact on credit. However, credit bureaus take into account that consumers might inquire about a loan from multiple mortgage companies or auto lenders. “If multiple inquiries are received from the same type of lender within a 30-day period, the credit scoring companies do not count each inquiry against the borrower. But, credit card account inquiries to open new accounts are counted individually.

Myth #7: To improve a score, close unused accounts. An important component of a credit score is available credit, or the unused credit that has been offered (on a credit card, for instance) but not used. Closing unused cards removes those available balances from the equation and can actually lower a credit score. Today, some banks are automatically lowering limits or closing accounts to reduce their own credit exposure. Individuals whose debt load is manageable should not experience an extreme effect on their scores.

Myth #8: To boost credit quickly, just pay off bills. Credit scores reflect performance over time. Scores will not change overnight.

Myth #9: For a fee, vendors can fix a bad score. Again, credit scores show historic behavior. Be cautious about companies that claim to “fix” or “repair” credit. You yourself can remove inaccurate information. Beyond that, be aware that some companies send credit scorers a deluge of letters asking that they verify - and in the process, remove all past negative information. If and when truthful information is verified, however, it will quickly return to the credit report.  This is not to say that there are not legitimate businesses that can assist you with this process if you do not have the time or knowledge to do it yourself. We recommend that you first try Consumer Credit Counseling Service (CCCS) at www.cccs.net.  This is a not for profit, HUD-Approved credit counseling agency.

Myth #10: Never get help - it is too hard on credit. It is true that credit counseling, debt settlement and bankruptcy all can cause significant black marks on a credit report. “If you are in real trouble, however, you can and should seek help,” Ewing urged. “Which option you choose will depend on the severity of your situation. Credit counseling can help to manage bills, and lower interest rates and monthly payments to creditors. Debt settlement firms can negotiate to lower the principal amount of your debts, typically providing a faster path to debt freedom than credit counseling. Bankruptcy, an even more serious alternative, should be discussed with a bankruptcy attorney.”

As shown by the latest stats from RealtyTrac.com, more than half of the country's foreclosure actions from April were concentrated in just 3 states:

1. California
2. Florida
3. Nevada

Those 3 states are home to only 19% of the U.S. population, but account for 52% of foreclosures.

No matter in which state you live, however, it's important to understand the far-reaching ramifications of foreclosures.

Although real estate is local, mortgage lending is not.  Fannie Mae and Freddie Mac insure loans in all 50 states and when those mortgages go into default, the government entities often take losses. 

This is the primary reason both Fannie and Freddie asked for government aid to the tune of $19 billion and $6 billion, respectively, last week.  It's also the reason why loan fees have increased over the last 12 months -- another way to shore up balance sheets is to raise consumer charges.

Furthermore, downpayment requirements are larger than before foreclosures proliferated and private mortgage insurance is more expensive, too. 

These are important changes to homeowners in all states -- not just the 3 named above.  In some cases, they can be the difference between an approval and a turndown.

Search the complete April 2009 foreclosure report for yourself on RealtyTrac's website.

Senator Dodd, the chairman of the Senate Banking, Housing and Urban Affairs Committee believes the bill to be very controversial, as written now, in the Senate and there are other priorities that pose great systemic risks to the economy. 

This is good news for consumers and the housing market.  The title of HR 1728 - "The Mortgage Reform and Anti-Predatory Lending Act" sounds like a no-brainer; Yes...we can use some form of mortgage reform and Yes... we don't want predatory lending.  It appears that the Senate will be thoughtful and spend the necessary time to fully vet all of the components.  At least that is the indication for now and it is our hope.

HR 1728 did move through The House easily with a vote of 300-114 and 60 Republicans backed the bill.

The problem with HR 1728 as written now is that it contains many components that do as much to hurt the mortgage marketplace and consumers, as help.  As written, HR 1728 would likely  1) contract availability of mortgage sources for consumers and 2) increase the cost of being in the mortgage business- which will increase the cost to the consumer.

Follow this link below to read the bill and understand all of the details and components.  You can also vote your opinion on a tracker and write your Representative in Congress from this website. 

http://www.washingtonwatch.com/bills/show/111_HR_1728.html

Contact Uswith your opinions or questions.

http://www.cqpolitics.com/wmspage.cfm?docID=cqmidday-000003115337

CQ TODAY MIDDAY UPDATE
May 12, 2009 – 1:42 p.m.

Mortgage Overhaul on Back Burner in Senate, Dodd Says

Things you must know about HVCC

Lenders must order an appraisal through an Appraisal Management Company who in turn, assigns the appraisal order to ANOTHER appraiser- or the mortgage company’s independent person who has nothing to do with the origination of the loan.

1. What is an Appraisal Management Company?

Appraisal Management Companies (AMCs) are third party, independent companies formed for the specific purpose of being a middleman in the appraisal ordering process.   Regulators will tell you that AMCs are set up to provide a layer of “impartiality” between lenders and appraisers.  They’ll also find it difficult to argue that this additional layer of management is already resulting in increased appraisal costs.

2. Can the lender or broker talk to the appraiser?

Lenders and mortgage professionals must provide appraisers with a copy of the purchase agreement but are prohibited from speaking with the appraiser about value.  However, there is nothing in the HVCC rules prohibiting real estate agents from discussing the transaction with the appraiser.

3. What’s the“value trending” that must now be include on the appraisal report?

In addition to traditional sales comps, appraisers must now provide a “trending analysis.”  It’s a new form where they must include the following information:

• Sales Price compared to Listing Price (shown as a percentage)
• months of housing supply
• days on the market
• sales activity compared to the overall sales
• seller concessions and
• number of sales of foreclosed properties

4. What if the value comes in lower than the sales price?

The real estate agent needs to provide additional information or comps to support the value to the lender.

The lender in turn, sends to the appraisal management company, who gives it to the appraiser.  Expect delays from this process.

5. Can an appraisal be assigned to another lender?

Yes, but the lender who ordered the appraisal must agree to the transfer.

Given the time and effort involved in jumping through the hoops, many lenders aren't likely to be real quick about assigning appraisals for use by their competitors.

6. Can the borrower/client pay for the appraisal at the door?

No, it must be paid by credit card to the lender ordering the appraisal.  The fee will then be added to borrower closing costs.

7. What’s the 3-day appraisal notice to the borrower all about?

The borrower has 3 days to “review” the appraisal and the loan cannot be closed until the 3-day waiting period has elapsed.  However, the borrower can sign a waiver if they wish to close earlier than the 3-day waiting period.

The appraisal report can be sent to them by email or if no email address, a printed copy by the appraisal management company.

8. Are FHA and VA Loans Required to Use the HVCC Appraisal Process?

No.  HVCC applies to conventional loans only. FHA, VA and USDA loans are exempt from this rule.

This said, Lenders that fund FHA loans have the option of requiring an appraisal to incorporate the HVCC process , so banks may choose to have the FHA appraisal orders routed through the same appraisal management companies they already use.

The retail price of gasoline is rising nationwide, now up 30% since the New Year.

It's a similar run-up to what we've seen for retail gas prices in each of the last 5 Spring Seasons.

For people trying to time the mortgage market's bottom, clues about the future of mortgage rates may be at the local gas station.

Rising gas prices are indicative of the rising cost of energy and, indeed, crude oil is closing back in on the 2009 highpoint.  As these energy costs grow, so do inflationary pressures on the U.S. economy.

Inflation, of course, is not good for mortgage rates. When it's present, mortgage markets deteriorate, bond market yields rise, and mortgage rates tend to rise -- often sharply and with little advance warning.

For today's homebuyers-in-process and would-be refinancers, prices at the pump may foreshadow bad news for the future of housing affordability.  Even a modest, quarter-percent increase would have a palpable effect on payments, adding $372 in annual costs to a $200,000 home loan.

Since last week, gas prices are already up by 10 cents per gallon.

So, keep an eye on the pump if you are wondering where mortgage rates are going.

Caveat to all of this is of course the amount of buying of treasuries that the Fed can provide.  Las week saw the first slip in organic demand.  There are a few auctions early this week.  How well the market bids and at what rates the Treasury must offer will give us a good clue to near-term rates.  Low demand and/or higher rates offered by the Treasury would indicate rates are continuing up.  If, however, we see strong retail demand, mortgage rates could retreat from here. 

Stay tuned to our Daily Rate Lock Advisory for up-to-date market rate information.

Building Your Financial Safety Net

Investing can be a powerful means to boosting income and enhancing the quality of life. Investment planners generally recommend these initial strategies be taken before beginning a plan:

· Establish a cash reserve to cover three to six months’ living expenses

· Do not spend more than 35 percent of your income to pay off debt (including your mortgage or rent)

· Obtain adequate life insurance -- generally eight to ten times your annual family income

When you’re ready to begin investing, sit down and put together a basic financial profile:

1. Determine your net worth -- your total financial assets minus your debts. To do this, add up the current value of all your assets -- real estate, vehicles, collectibles, savings and investments -- and subtract your liabilities -- credit-card debt, mortgage, car and college loans, etc. If your liabilities exceed your assets, perhaps paying down some of your debt should be your initial strategy. If a high percentage of your net worth is in real estate or savings, you may want to consider moving some of these assets into more diverse investments.

2. Define your financial goals. Set short-, medium- and long-term goals so you can prioritize what's important to you. Generally speaking, the longer the timeframe for your goals, the more investment risk you may wish to take. Investments with the highest long-term growth potential, however, tend to be riskier for short investment horizons.

3. Talk to a trusted Financial Advisor. He or she can review your goals and help you design a sound plan for achieving them.

This article was written by Wachovia Securities and provided to you by Justin Latvenas CRPC®, Financial Advisor in Marlton, NJ at 800-395-8537.  Justin is a trusted advisor of National Home Loan Advocates LLC.

For More information please

visit the team website at www.harmandharm.wbsec.com

You can also reach Justin at Justin.Latvenas@Wachoviasec.com

Wachovia Securities is the trade name used by two separate, registered broker-dealers and nonbank affiliates of Wachovia Corporation providing certain retail securities brokerage services: Wachovia Securities, LLC Member, NYSE/SIPC, and Wachovia Securities Financial Network, LLC (WSFN), Member FINRA/SIPC.

The accuracy and completeness of this article are not guaranteed. The opinions expressed are those of the author(s) and are not necessarily those of Wachovia Securities or its affiliates. The material is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Provided by courtesy of Justin Latvenas, a financial advisor with Wachovia Securities in Marlton, NJ for more information, please call Justin Latvenas at 800-3958537. Wachovia Securities LLC, member FINRA and SIPC, is a separate nonbank affiliate of Wachovia Corporation. ©2008 Wachovia Securities, LLC.

Investments in securities and insurance products: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE

Thanks to record low mortgage rates and declining home prices, 55 million families - or half of all U.S. households - can afford today’s $200,000 median-priced new home, according to figures released by the National Association of Home Builders (NAHB). That’s an increase of 17 million households from conditions just two years ago.

Based on data from the U.S. Census Bureau comparing home prices, mortgage rates and minimum income needed to purchase a median-priced home in February 2007 and February 2009, a typical family today can purchase a house with $20,000 less in household income and save nearly $500 per month on their principal, interest, taxes and insurance. The number of households that can afford to purchase a home today is 55.4 million, compared with 38.4 million two years ago, according to figures compiled by NAHB.

With affordability up dramatically, reports from builders  indicate that foot traffic in new homes is on the rise and consumer interest is increasing.

Entering the crucial spring home buying season, there are other signs that buyers are starting to return to the market.

Single-family permits were up 11% in February 2009, new and existing home sales also posted gains and the huge inventory backlog is being slowly whittled down. In a survey for Century 21 Real Estate last month among prospective first-time home buyers who indicated they were likely to purchase a home in the next two years, a majority - 78% - said that now is a good time to buy a home. Of those responding to the online poll, 68% said that now is a better time to buy than six months ago.

Another sign that consumers are considering jumping back into the housing market is the growing interest in the $8,000 first-time home buyer tax credit included in the recently enacted economic stimulus package. During February and March 2009, 1.5 million visitors logged on to NAHB’s consumer website, www.federalhousingtaxcredit.com, to learn more about the tax credit. Further, a new survey commissioned by Move, Inc. found that nearly 20% of those who plan to purchase a home this year are doing so to take advantage of the tax credit, which expires at the end of November.

With home values in many markets at the lowest level since 2003, an $8,000 tax credit available to first-time home buyers, fixed-rate mortgages under 5%, and an outstanding selection of homes to choose from, buyers are starting to recognize that this has the makings for a one-time opportunity to break into the market.

Housing is a critical component of the U.S. economy, accounting for about 15 cents of every dollar spent in this country, so any upturn in the housing market should be viewed as good news for the overall economy, said Robson.


Additionally, another half-million housing starts would bolster the tax base for government, generating $45 billion in federal, state and local tax revenues. And the benefits go well beyond the completion of each home. Within the first year after buying a home, those half million households will spend about $2.5 billion more on appliances, furnishings and property alterations.

Source of data- Rismedia