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Is a Short Sales Boom Coming?

Banks are ramping up short sales thanks to government incentives and the realization that short sales result in lower losses than foreclosures. On average, banks lose 50 percent on a foreclosure, but only 30 percent on a short sale. 

Bank of America, the nation’s largest mortgage servicer, has dramatically reduced the time it takes to process short sales. Elizabeth Weintraub, a Sacramento, Calif.-based real estate practitioner who handles many short sales, said, “Bank of America approved [a short sale] in 24 days. That flipped me out.” 

The hang-up for many short sellers has been second liens, but the new government program gives first lien holders incentives to share and offers second lien holders and investors a $6,000 cash incentive. 

Under the new program lenders must tell the seller the minimum they’ll accept. When the seller comes back with a good offer, it must be accepted within 10 days. 

Chris Saitta, CEO of Equator, which produces short-sale software, predicts a boom in short sales. “The challenge will be handling all the volume,” he said. 

Source: CNNMoney, Les Christie (03/29/2010)

March 30, 2010 Posted by | real estate | , , , , , , , , , , , , , , , , | Leave a Comment

Market Comment for Week of March 29th

MARKET COMMENT  Mortgage bond prices fell last week pushing mortgage interest rates considerably higher. The Treasury auctions resulted in poor foreign demand for US debt instruments. Unfortunately that carried over into the mortgage backed securities market causing prices to fall and rates to rise. The data hurt us with weekly jobless claims coming in better than expected and existing home sales also beating estimates. Durable goods orders data was mixed with ex-transportation figures considerably stronger than expected. Rates rose about 5/8 of a discount point for the week.

The PCE inflation reading Monday will set the tone for trading this week. The employment report Friday will be the most important release. The bond market will close early Friday in honor of Good Friday.

LOOKING AHEAD

Economic
Indicator		 Release
Date and Time		 Consensus
Estimate		 Analysis
Personal Income and Outlays Monday,
March 29,
8:30 am, et		 Up 0.1%,
Up 0.3%		 Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Prices-Core Monday,
March 29,
8:30 am, et		 Up 0.1% Important. An indication of inflationary pressures at the producer level. Weakness may lead to lower rates.
Consumer Confidence Tuesday,
March 30,
10:00 am, et		 49.0 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
ADP Employment Wednesday,
March 31,
8:30 am, et		 Up 45k Important. An indication of employment. Weakness in payrolls may bring lower rates.
Factory Orders Wednesday,
March 31,
10:00 am, et		 Up 0.5% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Construction Spending Thursday,
April 1,
10:00 am, et		 Down 1.0% Low importance. An indication of economic strength. A significant decrease may lead to lower rates.
ISM Index Thursday,
April 1,
10:00 am, et		 57.0 Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Employment Friday,
April 2,
8:30 am, et		 Unemp. @ 9.7%,
Payrolls +150k		 Very important. An increase in unemployment or weakness in payrolls may bring lower rates.

PERSONAL CONSUMPTION EXPENDITURES   The personal consumption expenditures price index is a measurement of the average increase in prices for all domestic personal consumption. The Bureau of Economic Analysis creates the report. The release is the preferred measure of inflation of the Federal Reserve. The 2000 Monetary Policy Report to the Congress indicated, “the Federal Reserve Board’s semiannual monetary policy reports to Congress have described the Board’s outlook for inflation in terms of the PCE. Prior to that, the inflation outlook was presented in terms of the CPI.” The report went on to note “the PCE chain-type index is constructed from a formula that reflects the changing composition of spending and thereby avoids some of the upward bias associated with the fixed-weight nature of the CPI. In addition, the weights are based on a more comprehensive measure of expenditures. Finally, historical data used in the PCE price index can be revised to account for newly available information and for improvements in measurement techniques, including those that affect source data from the CPI; the result is a more consistent series over time.”

Be cautious heading into this release in the event signs of inflation begin to materialize.

Source:  Courtesy of Todd Kabel, US Bank, Nashville, Tennessee

March 29, 2010 Posted by | economy, real estate | , , , , , , , , , , , , , , , , , , , , | 1 Comment

LOL Friday: Priest’s Retirement Dinner

A Priest was being honored at his retirement dinner after 35 years in the parish. A leading local politician and member of the congregation was chosen to make the presentation and to give a little speech at the dinner. 

However, he was delayed, so the Priest decided to say his own few words while they waited:

‘I got my first impression of the parish from the first confession I heard here. I thought I had been assigned to a terrible place. The very first person who entered my confessional told me he had stolen a television set and, when questioned by the police, was able to lie his way out of it. He had stolen money from his parents, embezzled from his employer, had an affair with his boss’s wife, taken illegal drugs, and gave VD to his sister. I was appalled. But as the days went on I learned that my people were not all like that and I had, indeed, come to a fine parish full of good and loving people.’… 

Just as the Priest finished his talk, the politician arrived full of apologies at being late. He immediately began to make the presentation and gave his talk: 

‘I’ll never forget the first day our parish Priest arrived,’ said the politician. ‘In fact, I had the honor of being the first person to go to him for confession.’ 

Moral : Never, Never, Never Be Late

March 26, 2010 Posted by | humor | , , , , , | Leave a Comment

No Authoritative Estimate of Total Foreclosures

How many foreclosed homes are really out there? No one can say for sure, but the number seems to be somewhere between 500,000 and 1 million. 

To date, no one has been able to track the total number of properties owned by banks, the U.S. Department of Housing and Urban Development, and mortgage investors. Here are a few approximations: 

  • Barclays Capital uses foreclosure data from mortgage securities to estimate that there are slightly more than 600,000 homes in the process of foreclosure.
  • RealtyTrac, which examines public records, estimates the number is closer to 700,000.
  • Independent housing economist Tom Lawler combines data from Fannie Mae, Freddie Mac, the Federal Housing Administration, Federal Deposit Insurance Corp., and securitization trusts to conclude that there are actually about 500,000.

Source: The Wall Street Journal, James R. Hagerty (03/19/2010)

March 24, 2010 Posted by | economy, real estate | , , , , , , , , , , , , , , , , , , | Leave a Comment

Market Comment for Week of March 22nd

MARKET COMMENT   Mortgage bond prices rose last week helping mortgage interest rates improve slightly. We started the week on a positive note with rates falling amid tame inflation readings. The producer price index fell 0.6% and the core rose 0.1%. The headline figure was the lowest since July 2009. Weekly jobless claims showed the employment situation remained poor. Unfortunately we saw the market fall a bit pushing rates higher Thursday afternoon following the announcement of the size of the upcoming Treasury auctions and amid fear of future rate hikes. Rates fell about 1/8 of a discount point for the week.

The durable goods and gross domestic product data will be the most important releases this week. Supply concerns will continue to weigh heavily upon the bond market with the continued record Treasury auctions. If foreign demand falters mortgage interest rates could be pressured higher.

LOOKING AHEAD

Economic
Indicator		 Release
Date and Time		 Consensus
Estimate		 Analysis
Existing Home Sales Tuesday,
March 23,
10:00 am, et		 Down 0.9% Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates.
2-year Treasury Note Auction Tuesday,
March 23,
1:15 pm, et		 None Important. $44 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders Wednesday,
March 24,
8:30 am, et		 Up 0.5% Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
New Home Sales Wednesday,
March 24,
10:00 am, et		 Up 1.5% Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction Wednesday,
March 24,
1:15 pm, et		 None Important. $42 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
7-year Treasury Note Auction Thursday,
March 25,
1:15 pm, et		 None Important. $32 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q4 GDP third estimate Friday,
March 26,
8:30 am, et		 Up 5.8% Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday,
March 26,
10:00 am, et		 71 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

GROSS DOMESTIC PRODUCT   The Gross Domestic Product (GDP) is one the most important reports during any given quarter. GDP is a measure of US economic output and spending. The report is significant in that it provides investors, analysts, traders, and economists with a comprehensive report of the direction of the economy. In addition, it also influences the decisions of Federal Reserve policy makers, Congressional budget employees, and corporate financial planners.

GDP is the sum total of goods and services produced by the United States. The initial report is often based on incomplete data. Therefore, additional revisions are released over the following two months. There are often substantial differences between the initial release and the revisions. The mortgage-backed security market generally responds favorably to weaker GDP growth.

While revisions generally don’t move the market like the original release, they still have the potential to cause market volatility if vastly different from the prior releases. Be cautious heading into the data this week.

Source: Courtesy of Todd Kabel, US Bank, Nashville, Tennessee

March 22, 2010 Posted by | economy | , , , , , , , , , , , , , , , , , | Leave a Comment

LOL Friday: Grandmas don’t know everything…

Little Tony was 7 years old and was staying with his grandmother for a few days. 

He’d been playing outside with the other kids for a while when he came into the house and asked her,

‘Grandma, what’s that called when two people sleep in the same room and one is on top of the other?’ 

She was a little taken aback, but she decided to tell him the truth. ‘It’s called sex, darling.’ 

Little Tony said, ‘Oh, OK,’ and went back outside to play with the other kids. 

A few minutes later he came back in and said angrily, ‘Grandma, it isn’t called sex. It’s called Bunk Beds. And Jimmy’s mom wants to talk to you.’

March 19, 2010 Posted by | humor | , , , , , , | Leave a Comment

Tips for Boomers: Benefits of Downsizing

For anyone approaching retirement now could be a great time to move.  Here are some tips for Boomers considering downsizing: 

  • Don’t miss out on the $6,500 move-up tax credit.
  • Consider a short-distance move if it provides savings and convenience.
  • Anyone moving out of state should figure the tax consequences in their new location.
  • Consider a property that offers features allowing Boomers to age gracefully.
  • Think about sharing space with a younger (or older) family member.
  • Insist on good security in the new property.
  • Look for homes that don’t require a lot of maintenance.
  • Go green. It will pay off down the road. 

Source: Forbes, Ashlea Ebeling (03/16/2010)

March 18, 2010 Posted by | real estate | , , , , , , , , , , , | Leave a Comment

Housing Experts Say Real Estate is Recovering

Some of the nation’s top economists believe the housing market has turned and better days are on the way for the housing industry.

Increases in jobs, credit, and affordable homes will overcome impediments such as rising interest rates, and the expiration of the Federal stimulus program to push the housing market toward recovery, says Dean Maki, chief U.S. economist for Barclays Capital.

“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” says Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College.

“The underlying trend is turning positive,” says Bruce Kasman, chief economist at JPMorgan Chase & Co.

Source: Bloomberg, Kathleen M. Howley and Rich Miller (03/15/2010)

March 16, 2010 Posted by | economy, real estate | , , , , , , , , , , , , , , , , , , , , , | Leave a Comment

Market Comment for Week of March 15th

MARKET COMMENT   Mortgage bond prices fell last week applying slight upward pressure on home loan rates. The market remained very volatile within a narrow range. With the lack of data the first portion of the week, oil prices factored into trading. Oil remained above $80 a barrel, which reignited inflation concerns. The retail sales report released Friday was much stronger than expected, indicating the US economy may be getting stronger.

Rates rose about 1/8 of a discount point for the week.

The Fed meeting Tuesday afternoon will be the most important event this week. The inflation data from both the consumer and producer sides will also take center stage. Signs of inflation are generally not received well by the mortgage bond market. If inflation remains in check, mortgage bonds could benefit.

LOOKING AHEAD

Economic
Indicator		 Release
Date and Time		 Consensus
Estimate		 Analysis
Industrial Production Monday,
March 15,
9:15 am, et		 Up 0.1% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization Monday,
March 15,
9:15 am, et		 72.3% Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower mortgage interest rates.
Housing Starts Tuesday,
March 16,
8:30 am, et		 Down 0.6% Important. A measure of housing sector strength. A larger than expected decrease may lead to lower rates.
Fed Meeting Adjourns Tuesday,
March 16,
2:15 pm, et		 No change Important. Few expect the Fed to raise rates, but some volatility may surround the adjournment of this meeting.
Producer Price Index Wednesday,
March 17,
8:30 am, et		 Unchanged,
Core up 0.1%		 Important. An indication of inflationary pressures at the producer level. Decreases may lead to lower rates.
Consumer Price Index Thursday,
March 18,
8:30 am, et		 Unchanged,
Core up 0.1%		 Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
Leading Economic Indicators Thursday,
March 18,
10:00 am, et		 Up 0.2% Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey Thursday,
March 18,
10:00 am, et		 17.5 Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

PRODUCER PRICE INDEX   The producer price index is a measure of prices at the producer level and is important because it is the first inflation report to be released each month. Investors are typically able to gain an initial indication of inflationary pressures from the release. If producer prices are increasing, there is a tendency for producers to pass the increases on to consumers in the form of higher priced goods. It is important to note that the PPI is only a measure of goods, while the consumer price index is a measure of goods and services. It is possible for the price of goods to remain stable, while the price of services increases. In this scenario PPI would do little to warn of a change in inflationary pressures, while the CPI report would provide an indication of the inflationary effects of the service component. This distinction between the two reports shows why most analysts view the CPI as a more accurate indicator of inflation. Nevertheless, market participants still gain valuable insight into potential volatility in the financial markets from the PPI release.

Be cautious heading into the inflation data and Fed meeting this week.

Source:  Courtesy of Todd Kabel, US Bank, Nashville, Tennessee

March 15, 2010 Posted by | economy, real estate | , , , , , , , , , , , , , , , , , | Leave a Comment

LOL Friday: 20 Dollars…

On their wedding night, the young bride approached her new husband and asked for $20..00 for their first lovemaking encounter.  In his highly aroused state, her husband readily agreed. 

This scenario was repeated each time they made love, for more than 40 years, with him thinking that it was a cute way for her to afford new clothes and other incidentals that she needed.  

Arriving home around noon one day, she was surprised to find her husband in a very drunken state. 

During the next few minutes, he explained that his employer was going through a process of corporate downsizing, and he had been let go.  It was unlikely that, at the age of 59, he’d be able to find another position that paid anywhere near what he’d been earning, and therefore, they were financially ruined..  

Calmly, his wife handed him a bank book which showed more than forty years of steady deposits and interest totaling nearly $1 million. Then she showed him certificates of deposits issued by the bank which were worth over $2 million, and informed him that they were one of the largest depositors in the bank.

She explained that for more than three decades she had ‘charged’ him for sex, these holdings had multiplied and these were the results of her savings and investments.

Faced with evidence of cash and investments worth over $3 million, her husband was so astounded he could barely speak, but finally he found his voice and blurted out, ‘If I’d had any idea what you were doing, I would have given you all my business!’

March 12, 2010 Posted by | humor | , , , , , | Leave a Comment

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