Speculation. That's a scary word. I've been doing a lot of reading today on why rates have gone up the last few days.
Now remember, I usually believe that rates go up and down. You'll rarely see in a day to day chart that rates just go up and up and up, conversely you won't see them go down, down, down. News will be anticipated causing rates to do one thing, reality will set it and then rates will do the opposite and land a little bit more in the direction they're supposed to go into.
Since it doesn't really matter what I think and I'm just as accurate as the "professional" writers of the economy, here's my thoughts on rates. I think they'll stay LOW, that's right, low. Why? Well, we have to look at why people think rates will go up. It's a belief that the government will stop buying MBS (mortgage backed securities) in March / April as currently planned. Also, in the same time is when the temporary credits for home buyers will end as well. But that was all supposed to happen at the end of this year. The economy looked so bad that the government said, we have to extend these programs so to stimulate the housing market.
My question is, has anything changed? Look in your pocket, has them money grown? Let's see the sales data from the holiday season. I think we'll see a weak economy. This will lead to the extension of MBS buying by the Fed. The market is reactionary. That's why rates are rising months before the Fed actually stops buying these securities. What happens if all of the sudden the Fed comes out in January and says, we're going to extend these purchases and incentives that seem to be the only real stimulus that is working for the average worker further into next year if not the end of the 2010? You'll see rates drop back down and people to continue buying houses. I don't think it seems so far fetched that these programs could continue if the Fed shows / sees that this is what is stimulating the economy and if it where to stop things would only get worse.
I find it funny how people look at dates and schedules that have changed a million times before but this is the final time, "this is the time where the Fed will stop." (paraphrasing) "Rates hit a all time low and there is now where to go but up" - recent CNBC article. I've heard the same thing about rates for the past 6 or 7 years. Every time rates get low, someone will come out and say "That's it, rate have now where to go but up and here's the reason..."
How about this one? Rates go up and down. Yes we've recently hit a little low, and have now bounced back up but they can just as easily go right back down and possibly drop even the slightest bit further down. The people that say the rates are off from their historical trends of following the yields of the treasuries and we should have higher rate are telling the truth; but my issue is that right now we're experiencing very odd times. you can't judge what's going to happen. the yield was higher in the beginning of December was higher than it was in the summer but the rates in early December where lower than at any time during the past 3 - 4 months. Explain that. It doesn't follow conventional logic. You can't expect one part of this economy to be certain and stick to past rules while other parts are doing things you've never seen or expected.
I think everything right now needs to be less reactionary to what is supposed to happen in 3 - 6 months and more to what's going on now. If that means rates go up today, fine then the Fed will have to extend their buying policies and THEN the rates will come right back down. It's still reaction but it's current and actual reactions to what's happening. With so much in limbo how can people speculate on what's going to happen in the future? I remember at the end of 2008 we where supposed to be done with the depression and back to normal at the beginning of 2010. We might not technically be in a recession but it sure feels like we are and I don't see anything that says in six months we'll be anywhere different.
Only time will tell. Let's visit this in six months and see if everything that was "planned" actually happened.
Tuesday, December 22, 2009
Tuesday, December 15, 2009
News and expectations
Today's been an odd day for news. So odd that something is not feeling right and I hope it's not true. I'm seeing articles saying that we're slowly but surely coming out of the recession that we're in. Of course that's easy to say when you fall flat on your face, of course things will get better eventually. Slowly, I too agree with. But that's the kind of article that makes you think "things" are going to be ok sometime soon.
Then I read the dollar is inching up. Then I read home manufacturing is down. And in my gut and from what I saw from the results of Black Friday, we're not going to have great / good numbers from December, which is what will make or break many business's year.
The odd feeling that I'm getting is stagnation. Which is not good for anyone. I know it's hard to hear and unfair to say but if the housing market is going up or down, with low rates like they are, we can do something with it. But if you have everyone just holding and saving their money we're going to go into stagnation which is the worst thing that could happen on an unstable economy.
Rates are low and you're still seeing people buying and selling (be it short sale or foreclosure too) we've got a punchers chance to take on 2010. But if my gut is wrong, and I hope it is, let's hope stagnation of this economy doesn't set in. Only time will tell. Let's see what the rest of this week says because once we get into the second half of December, you're not going to be able to do much... except await the next Bear installment :)
Then I read the dollar is inching up. Then I read home manufacturing is down. And in my gut and from what I saw from the results of Black Friday, we're not going to have great / good numbers from December, which is what will make or break many business's year.
The odd feeling that I'm getting is stagnation. Which is not good for anyone. I know it's hard to hear and unfair to say but if the housing market is going up or down, with low rates like they are, we can do something with it. But if you have everyone just holding and saving their money we're going to go into stagnation which is the worst thing that could happen on an unstable economy.
Rates are low and you're still seeing people buying and selling (be it short sale or foreclosure too) we've got a punchers chance to take on 2010. But if my gut is wrong, and I hope it is, let's hope stagnation of this economy doesn't set in. Only time will tell. Let's see what the rest of this week says because once we get into the second half of December, you're not going to be able to do much... except await the next Bear installment :)
Monday, November 23, 2009
Thanksgiving showdown
Well, this is it boys and girls. This is the start of the of holiday buying time. This is where companies can make or break their year. Some have high hopes that this will be an lean year at best. But as you probably could guess, I'm thinking that this holiday season is going to be bad.
Sure you might see great sales but that leads to the question, who's going to buy these items. If you're broke, who cares if a TV is 1500, down from 3000? I've had my eye on a new TV and I've watched the price come down and down. If it wasn't for the fact I've got bills to pay I would buy it. I'm thinking that I'm in the same boat as a lot of other Americans this year. Even the family has said there will be no gifts, just a few for our family get together but no "big" holiday spending. I think that's what kitchen table talk is.
You're starting to see the numbers to support this. Even with everyone thinking that the government will extend their housing programs into next year, nothing official has come out which causes great anxiety. I can almost guarantee that these programs will extend but who am I, just some Broker (the best) but not the one who makes the rules.
I love Thanksgiving. It's my favorite holiday. I'm not one that goes out on Black Friday because I'm usually in a food coma for at least a day or two, but I'm going to be interested in what the stores do look like and the reports of how those store's earnings are doing in this most important of times. If stores don't do well, forget about seasonal hiring; how bad would it be for people to continue to loose their jobs at this time of year. That too will be a telling statistic of where the economy is at and where it's going.
I'm sure we'll talk again this week since I'll have time to pontificate, but if I don't, BEAR wishes one and all a happy Thanksgiving.
Sure you might see great sales but that leads to the question, who's going to buy these items. If you're broke, who cares if a TV is 1500, down from 3000? I've had my eye on a new TV and I've watched the price come down and down. If it wasn't for the fact I've got bills to pay I would buy it. I'm thinking that I'm in the same boat as a lot of other Americans this year. Even the family has said there will be no gifts, just a few for our family get together but no "big" holiday spending. I think that's what kitchen table talk is.
You're starting to see the numbers to support this. Even with everyone thinking that the government will extend their housing programs into next year, nothing official has come out which causes great anxiety. I can almost guarantee that these programs will extend but who am I, just some Broker (the best) but not the one who makes the rules.
I love Thanksgiving. It's my favorite holiday. I'm not one that goes out on Black Friday because I'm usually in a food coma for at least a day or two, but I'm going to be interested in what the stores do look like and the reports of how those store's earnings are doing in this most important of times. If stores don't do well, forget about seasonal hiring; how bad would it be for people to continue to loose their jobs at this time of year. That too will be a telling statistic of where the economy is at and where it's going.
I'm sure we'll talk again this week since I'll have time to pontificate, but if I don't, BEAR wishes one and all a happy Thanksgiving.
Friday, October 2, 2009
Keep 'um coming!!!
As I've predicted rates have stayed low, if not gotten lower. If you own a home and aren't thinking about refinancing then you're not doing the correct thing. At least check in and see what's possible.
I certainly can't guarantee that everyone will qualify. And with these new HVCC rules, who knows what value you are going to get? But if we don't explore the options, like run the credit and possible pay for an appraisal, then you'll never know.
If we think that there is a possibility to refi, I'm looking at rates in the 4's for a 30 year fix and have even seen some rates in the 3's, YES 3's on a 5/1 ARM even interest only!!!
Let me try to help you. I usually don't do adds here but when I'm seeing the trends like I have in the past, I don't want people to miss the boat because this truly could be the last chance. As always we can be reached at 818 264-0999.
Please be patient as well. Now the lenders are starting to get backed up again and so is everyone else. From appraisers to title and escrow and even us brokers. Each deal is now twice as hard and there is a lot of up front work that needs to be done so we know that we can get each loan done. The good part is eventually the loans are funding. It might take longer that the good old days but the loans are still funding. So call now and see what can be done.
I certainly can't guarantee that everyone will qualify. And with these new HVCC rules, who knows what value you are going to get? But if we don't explore the options, like run the credit and possible pay for an appraisal, then you'll never know.
If we think that there is a possibility to refi, I'm looking at rates in the 4's for a 30 year fix and have even seen some rates in the 3's, YES 3's on a 5/1 ARM even interest only!!!
Let me try to help you. I usually don't do adds here but when I'm seeing the trends like I have in the past, I don't want people to miss the boat because this truly could be the last chance. As always we can be reached at 818 264-0999.
Please be patient as well. Now the lenders are starting to get backed up again and so is everyone else. From appraisers to title and escrow and even us brokers. Each deal is now twice as hard and there is a lot of up front work that needs to be done so we know that we can get each loan done. The good part is eventually the loans are funding. It might take longer that the good old days but the loans are still funding. So call now and see what can be done.
Housing thoughts
Sorry I've been lazy with the blog.
I think we're getting closer to the bottom of the market. There may still be another 10% to drop in the average area. I feel that in the higher end homes you'll start to see a much larger drop. The financial crisis we're all experiencing is starting to hit the homes that are 900k and above. The homes that I think that will be hit the hardest are the ones that are 900k - 2 million. The reason being that the buyers of those homes that have a standard of 20 - 25% are still going to have trouble finding financing. Also, those seem to be the homes that the bank was less willing to foreclose on because, let's face it, there are not a lot of people that have 180 - 400k to put down on a house. I could go on, but I don't want to bore you with facts and numbers.
The people with homes in the 4 million and over, they're always going to be and have been a different breed. Unless they are hit with job losses, those homes won't need to sell and you'll see people sitting on those. But if you an average home buyer, now is a great time to be looking.
I know that the banks are sitting on a ton of inventory. Adding to that 60% of people who manage to get a rate mod are still going into foreclosure, so you've got that group that will start hitting soon. I'm seeing places that where going for 600k, going down as low at 350 - 400. Sure they where way over inflated but you can get good deals. And with rates this low it makes a lot of sense. Just be patient. At this very moment the inventory of houses is not very good. Anything that is worth looking at probably already has multiple offers on it. The key is to have the financing ready and save as much for a down payment as possible. If you're going against multiple offers and you can put a good down payment together, if it's a short sale or foreclosure where the banks are making the decisions, they want to go with the quickest and least hassle buyers.
As always, if you have any questions, give us a call. I'm happy to discuss all options with you.
818 264-0999
I think we're getting closer to the bottom of the market. There may still be another 10% to drop in the average area. I feel that in the higher end homes you'll start to see a much larger drop. The financial crisis we're all experiencing is starting to hit the homes that are 900k and above. The homes that I think that will be hit the hardest are the ones that are 900k - 2 million. The reason being that the buyers of those homes that have a standard of 20 - 25% are still going to have trouble finding financing. Also, those seem to be the homes that the bank was less willing to foreclose on because, let's face it, there are not a lot of people that have 180 - 400k to put down on a house. I could go on, but I don't want to bore you with facts and numbers.
The people with homes in the 4 million and over, they're always going to be and have been a different breed. Unless they are hit with job losses, those homes won't need to sell and you'll see people sitting on those. But if you an average home buyer, now is a great time to be looking.
I know that the banks are sitting on a ton of inventory. Adding to that 60% of people who manage to get a rate mod are still going into foreclosure, so you've got that group that will start hitting soon. I'm seeing places that where going for 600k, going down as low at 350 - 400. Sure they where way over inflated but you can get good deals. And with rates this low it makes a lot of sense. Just be patient. At this very moment the inventory of houses is not very good. Anything that is worth looking at probably already has multiple offers on it. The key is to have the financing ready and save as much for a down payment as possible. If you're going against multiple offers and you can put a good down payment together, if it's a short sale or foreclosure where the banks are making the decisions, they want to go with the quickest and least hassle buyers.
As always, if you have any questions, give us a call. I'm happy to discuss all options with you.
818 264-0999
Tuesday, September 15, 2009
Politics and Ecomonics
Watching Countdown tonight and one of the Margaret Carlson touched on something I feel is so big on how we come out of our economic problems.
We've got politicians trying to make laws and understand financial systems that they've never been apart of. The HVCC appraisal nightmare is a perfect example. Politicians like Andrew Cuomo of New York, could have the best intentions possible. But without intimate knowledge of how the industry works, you get a set of laws like the HVCC.
On another post I'll explain all that's wrong with these laws but just know that it is affecting current, new and future homeowners. Making it harder to get loans and driving values down isn't what will save the financial world. I try to step back and see all these things from an outside perspective so I'm not jaded by being in the trenches, but even then I can see that good mortgage brokers, bankers, loan officers and realtors should all be at the table helping to craft these tougher laws.
Politicians are politicians. Very few understand the complex world of lending, let alone how to regulate it. Something I learned that has been very helpful to me is, stick to what you know. There should be a panel put together just like when they want to find out other things. There can be a report that maybe, just maybe, will produce rules that help protect the public without hurting them as well. I don't come to your job and tell you how to do it and I certainly don't try to regulate it without knowledge of the job.
We've got politicians trying to make laws and understand financial systems that they've never been apart of. The HVCC appraisal nightmare is a perfect example. Politicians like Andrew Cuomo of New York, could have the best intentions possible. But without intimate knowledge of how the industry works, you get a set of laws like the HVCC.
On another post I'll explain all that's wrong with these laws but just know that it is affecting current, new and future homeowners. Making it harder to get loans and driving values down isn't what will save the financial world. I try to step back and see all these things from an outside perspective so I'm not jaded by being in the trenches, but even then I can see that good mortgage brokers, bankers, loan officers and realtors should all be at the table helping to craft these tougher laws.
Politicians are politicians. Very few understand the complex world of lending, let alone how to regulate it. Something I learned that has been very helpful to me is, stick to what you know. There should be a panel put together just like when they want to find out other things. There can be a report that maybe, just maybe, will produce rules that help protect the public without hurting them as well. I don't come to your job and tell you how to do it and I certainly don't try to regulate it without knowledge of the job.
Wednesday, September 2, 2009
FOMC geniuses
I sorry, but to read a headline like "Consumer spending softer than expected" just makes me laugh.
I literally don't know anyone who's doing "well". I know a lot of people and I've seen a lot of people's finances. I can tell you that no one is doing well. Maybe I'm reading into just a headline too much but I think it's so... almost insulting, either to us as people or to them as financial soothsayers.
1) What gave them the impression that we where doing well. More than that I wonder what level did they think we were going to come in at, as far as spending?
2) Or are we so broke that no matter what guess they could have had, we where lower?
I was having a discussion with a long time friend and client. He put it perfectly. All the people on the news or business channels or papers can only explain what happened. If the market goes up or down, they come in at night and say "Well it was because of this or that". None of them really know anything of use, like what will happen. Or at least they won't stick their neck out and give an educated guess.
It got me thinking. I'm no brilliant person but at least I read the FACTS and talk to the average person and can sit back and take an educated guess on what will happen. No one kills me if I'm wrong or throws me a party if I'm right. It's because if I told you rates where going to go up tomorrow, I'd back that up with what I believe are facts or guides. If I was right or wrong, I tried my best. It seems so many people base trillions of dollars and transactions on what the fed says or thinks. So you've got people reacting to other people's guesses (who never leave their desks or are surrounded by other rich people).
The market tanked today because the FOMC said consumer spending wasn't what they thought it would be. I could have told you that and have been for months. Why, today, would that seem to make the market drop. We all know that we're in hard times so this should have been a gradual decline, not just a one day selloff. But I guess if they new what was going to happen tomorrow, they wouldn't tell us anyway and they'd be rich.
I literally don't know anyone who's doing "well". I know a lot of people and I've seen a lot of people's finances. I can tell you that no one is doing well. Maybe I'm reading into just a headline too much but I think it's so... almost insulting, either to us as people or to them as financial soothsayers.
1) What gave them the impression that we where doing well. More than that I wonder what level did they think we were going to come in at, as far as spending?
2) Or are we so broke that no matter what guess they could have had, we where lower?
I was having a discussion with a long time friend and client. He put it perfectly. All the people on the news or business channels or papers can only explain what happened. If the market goes up or down, they come in at night and say "Well it was because of this or that". None of them really know anything of use, like what will happen. Or at least they won't stick their neck out and give an educated guess.
It got me thinking. I'm no brilliant person but at least I read the FACTS and talk to the average person and can sit back and take an educated guess on what will happen. No one kills me if I'm wrong or throws me a party if I'm right. It's because if I told you rates where going to go up tomorrow, I'd back that up with what I believe are facts or guides. If I was right or wrong, I tried my best. It seems so many people base trillions of dollars and transactions on what the fed says or thinks. So you've got people reacting to other people's guesses (who never leave their desks or are surrounded by other rich people).
The market tanked today because the FOMC said consumer spending wasn't what they thought it would be. I could have told you that and have been for months. Why, today, would that seem to make the market drop. We all know that we're in hard times so this should have been a gradual decline, not just a one day selloff. But I guess if they new what was going to happen tomorrow, they wouldn't tell us anyway and they'd be rich.
Wednesday, August 26, 2009
That was easy
Usually I have to think long and hard on what I'm going to say. Fortunately today I don't have to. This article about values pretty much agrees with what I've been saying.
Values
We haven't quite hit bottom yet. In some of the lower valued area, maybe, but the higher end is starting to feel the pain. You'll see the upper level homes starting to take some real hits, more than what they've already seen.
Then next.... Commercial. I really think that in the next few years, investors with the cash are going to find so great deals in commercial investments. If you own commercial now, get it rented for at least the next couple of years and don't worry about making money, just be happy to break even and not loose cash each month or the property all together.
Values
We haven't quite hit bottom yet. In some of the lower valued area, maybe, but the higher end is starting to feel the pain. You'll see the upper level homes starting to take some real hits, more than what they've already seen.
Then next.... Commercial. I really think that in the next few years, investors with the cash are going to find so great deals in commercial investments. If you own commercial now, get it rented for at least the next couple of years and don't worry about making money, just be happy to break even and not loose cash each month or the property all together.
Thursday, August 20, 2009
Funny, but it's not
As I rise and shine today I look at the headlines and it says, "U.S. Jobless Claims Unexpectedly Rise."
Without even reading the article I just can't believe that any job losses are unexpected. I've been saying for months that this "recovery" doesn't make sense. Just from talking to my friends and people that I know, there are no jobs out there. The people that do happen to find something, usually consists of Sales jobs or part time or underpaid jobs that when they take it, it's better than nothing.
I never understood what wizards think of the number that is OK for unemployment to be at. Why is it OK for 450,000 new claims but 475,000 is a surprise and sends the markets spinning. WHAT IS IT ABOUT THAT 25,000?? And like wise the other way, when the claims come in at 425,000, well then the recession must be over. Never mind that this is still 400k+ people that have lost their jobs. And this is only the 10th or 20th straight month.
It's just funny to me that We who work with the people on the ground see what happens when people don't have money and find jobs. But for the DOW to move or interest rates to change, it's unimaginable numbers that make them go up and down. For people to sit in little cubicles writing about the state of the economy, only able to do so because the Fed has dumped billions into their company (AIG, WELLS FARGO, CITI....). I wonder how many of these headline writers would say the same thing if they where fired like the workers at GM? When the number 1 means more than the number 450,000.
I've not heard one scenario for a long term recovery. Even when they report of possible recovery, I'm not hearing of any long term stability to go with it. All of this is still rattling in my head so hopefully I'll clear it up and post again, for my one reader to hear :)
Without even reading the article I just can't believe that any job losses are unexpected. I've been saying for months that this "recovery" doesn't make sense. Just from talking to my friends and people that I know, there are no jobs out there. The people that do happen to find something, usually consists of Sales jobs or part time or underpaid jobs that when they take it, it's better than nothing.
I never understood what wizards think of the number that is OK for unemployment to be at. Why is it OK for 450,000 new claims but 475,000 is a surprise and sends the markets spinning. WHAT IS IT ABOUT THAT 25,000?? And like wise the other way, when the claims come in at 425,000, well then the recession must be over. Never mind that this is still 400k+ people that have lost their jobs. And this is only the 10th or 20th straight month.
It's just funny to me that We who work with the people on the ground see what happens when people don't have money and find jobs. But for the DOW to move or interest rates to change, it's unimaginable numbers that make them go up and down. For people to sit in little cubicles writing about the state of the economy, only able to do so because the Fed has dumped billions into their company (AIG, WELLS FARGO, CITI....). I wonder how many of these headline writers would say the same thing if they where fired like the workers at GM? When the number 1 means more than the number 450,000.
I've not heard one scenario for a long term recovery. Even when they report of possible recovery, I'm not hearing of any long term stability to go with it. All of this is still rattling in my head so hopefully I'll clear it up and post again, for my one reader to hear :)
Thursday, August 13, 2009
home values
Here is an interesting article that backs up what I've been saying. I wonder how long it will take to have them bury this article.
"Underwater values"
It's not like I want this to happen or continue to 50%, it's just what the numbers are showing. The truth sucks but you should know it.
"Underwater values"
It's not like I want this to happen or continue to 50%, it's just what the numbers are showing. The truth sucks but you should know it.
Loan mods and values
The little under stated fact that I hear is that by the end of the year 50% of all home owners will be upside down on their mortgage. This includes A paper / Prime borrowers.
As always, I'm not trying to scare you but inform. This will certainly lead to more foreclosures and rate mods. I've made it a point not to get in the rate mod business because I see it as a short term dying business AND most people can do it themselves. I've helped a few people, including myself, work on their mortgage modifications. They're a pain in the ass, mainly because no one at these banks talk to each other. One side never knows what the other is doing.
Besides check this ARTICLE out about the CA gov trying to crack down on rate mod scams.
I'd much rather charge $500 for a few hours of my time and tell the borrowers how to set it up and do the mods themselves. For the average person it's not really that hard once you get a little advice. So if you know someone who's thinking of do a rate mod, have them call me first. I might save them from a scam and / or show them how they can do it themselves for a fraction of the going rate.
Bear Financial
818 264-0999
As always, I'm not trying to scare you but inform. This will certainly lead to more foreclosures and rate mods. I've made it a point not to get in the rate mod business because I see it as a short term dying business AND most people can do it themselves. I've helped a few people, including myself, work on their mortgage modifications. They're a pain in the ass, mainly because no one at these banks talk to each other. One side never knows what the other is doing.
Besides check this ARTICLE out about the CA gov trying to crack down on rate mod scams.
I'd much rather charge $500 for a few hours of my time and tell the borrowers how to set it up and do the mods themselves. For the average person it's not really that hard once you get a little advice. So if you know someone who's thinking of do a rate mod, have them call me first. I might save them from a scam and / or show them how they can do it themselves for a fraction of the going rate.
Bear Financial
818 264-0999
August info
I find it strange that all of the sudden things don't look as good as the headlines made the economy seem to be for the last few weeks. Headlines like the FOMC sees a leveling out. That sounds good but even if we are leveling out, we're leveling out with unemployment around 10%+ nationally!! How long will we stay at that. Some states are as high as mid 20% for un and under employed.
The worst news and what seems to be buried when it comes out is that we're starting to see the mortgage mess hit A paper / prime borrowers. I read a scary stat that said that by the end of the year 50% of the homeowners, 50%!!!, will be upside down across the country.
The DOW might be up, but these are speculative indicators. It's up because people have thought or have been lead to believe things are getting better. For example; Cash for Clunkers. The program is already out of money and needed more. The government is basically giving down payments for new cars to be bought off of lots that the existing cars where just sitting.
This made auto sales look good. Cars are moving off lots and then the lots need to replenish their inventory. But will the auto makers hire back full timers or just seasonal part timers to pump out what they need to until the Cash for Clunkers run is over. There never seems to be a shortage of people when the government is handing out free money. What happens when that ends. Cars will sit again.
The worst news and what seems to be buried when it comes out is that we're starting to see the mortgage mess hit A paper / prime borrowers. I read a scary stat that said that by the end of the year 50% of the homeowners, 50%!!!, will be upside down across the country.
The DOW might be up, but these are speculative indicators. It's up because people have thought or have been lead to believe things are getting better. For example; Cash for Clunkers. The program is already out of money and needed more. The government is basically giving down payments for new cars to be bought off of lots that the existing cars where just sitting.
This made auto sales look good. Cars are moving off lots and then the lots need to replenish their inventory. But will the auto makers hire back full timers or just seasonal part timers to pump out what they need to until the Cash for Clunkers run is over. There never seems to be a shortage of people when the government is handing out free money. What happens when that ends. Cars will sit again.
Friday, August 7, 2009
Jobs and Losses
I've come to believe that the reports of job losses and unemployment really mean nothing these days. A week like we've had would point to a turning economy but from the average man / woman, times suck. I don't know people that are doing better or their job prospects are turning around.
This article is interesting to read and gives a little bit better explanation of what these numbers actually mean.
Krugman
By the end I think he sums it up well (and I'll paraphrase), the crap storm might be slowing down but we're still standing and sinking in crap.
This article is interesting to read and gives a little bit better explanation of what these numbers actually mean.
Krugman
By the end I think he sums it up well (and I'll paraphrase), the crap storm might be slowing down but we're still standing and sinking in crap.
Wednesday, August 5, 2009
Values to A paper
I don't need to get into a lecture of what the subprime markets have done to values. I think we all know where we sit with that. This is about disturbing news that almost 50% of home owners are or will be "underwater" in the next year.
This INCLUDES the A paper and Jumbo loans that many thought had no problems. I don't know why people would think that an overall drop in value wouldn't eventually catch up to the Prime borrowers? I've got 5 - 10 loans that I can think of off the top of my head that would refi today if they could but we can't because of value issues. These are not subprime borrowers. These are grade A Prime borrowers. They're truly stuck. Luckily when dealing with Prime borrowers they have good jobs and savings to dip into to make sure they pay the mortgage but at anytime people can loose their jobs. If they're self employed their customers could stop coming back. We're over 10% unemployment and I believe over 20% if you add the under-employed to that.
Now the Prime borrower's who are at 100% or more on their Loan to Values are finding out that it's not so simple to just get a loan. This is the start of another dip in housing and if nothing is seriously done to work down the principal of the loans, we're going to have real problems in the future.
A normal rate mod will give you a few years of a low interest rate and make it easier, but the fact could remain the same for some time that the loans are higher than the values. what happens in 3 years when that lower rate comes back up? Are we going to see people walking again? Other than the "unfair" argument that I've heard, it seems that if you where to use the stimulus money to lower people's principals, that would help in the short them (because the payment would be less) and in the long term by allowing the markets to move because houses will have equity.
This INCLUDES the A paper and Jumbo loans that many thought had no problems. I don't know why people would think that an overall drop in value wouldn't eventually catch up to the Prime borrowers? I've got 5 - 10 loans that I can think of off the top of my head that would refi today if they could but we can't because of value issues. These are not subprime borrowers. These are grade A Prime borrowers. They're truly stuck. Luckily when dealing with Prime borrowers they have good jobs and savings to dip into to make sure they pay the mortgage but at anytime people can loose their jobs. If they're self employed their customers could stop coming back. We're over 10% unemployment and I believe over 20% if you add the under-employed to that.
Now the Prime borrower's who are at 100% or more on their Loan to Values are finding out that it's not so simple to just get a loan. This is the start of another dip in housing and if nothing is seriously done to work down the principal of the loans, we're going to have real problems in the future.
A normal rate mod will give you a few years of a low interest rate and make it easier, but the fact could remain the same for some time that the loans are higher than the values. what happens in 3 years when that lower rate comes back up? Are we going to see people walking again? Other than the "unfair" argument that I've heard, it seems that if you where to use the stimulus money to lower people's principals, that would help in the short them (because the payment would be less) and in the long term by allowing the markets to move because houses will have equity.
Demand?
I'm reading a lot today about the demand for products was up slightly more than expected. Some people will rally behind the fact that this has to do with the housing market possibly finding a bottom and people are spending more money. These would all be great things if they where true.
I personally see things a little different. It's always curious to me to hear people speculate on the market off of pure numbers and no where do they bring the human element into their calculations.
Let's touch on auto demand. Cash for Clunkers. Auto makers basically shut down production because no one wanted to buy cars. This in turn left a ton of cars on your local lot just sitting. All of the sudden the government comes out with this plan to give people free money for their old cars, which just happens to be enough for a down payment on a new car (when I say new, I mean one that's been sitting because no one else wants or can afford to buy it). Now you see a short term gain and demand for autos. Car lots are starting to need to refill their inventory. So car companies need to crank out some new cars again. Is this a long term solution or a short term fix. Will the people that they hire back be full time or only last a few months until the Cash for Clunkers is over, which that program has run out of money and the senate needs to approve another 2 billion dollars to keep it going.
This shows where you can have profits but in reality they are fake profits. This doesn't seem like a sustainable demand source. So I question the fact that this small spike in sales and demand is really a sign of an improving economy.
I personally see things a little different. It's always curious to me to hear people speculate on the market off of pure numbers and no where do they bring the human element into their calculations.
Let's touch on auto demand. Cash for Clunkers. Auto makers basically shut down production because no one wanted to buy cars. This in turn left a ton of cars on your local lot just sitting. All of the sudden the government comes out with this plan to give people free money for their old cars, which just happens to be enough for a down payment on a new car (when I say new, I mean one that's been sitting because no one else wants or can afford to buy it). Now you see a short term gain and demand for autos. Car lots are starting to need to refill their inventory. So car companies need to crank out some new cars again. Is this a long term solution or a short term fix. Will the people that they hire back be full time or only last a few months until the Cash for Clunkers is over, which that program has run out of money and the senate needs to approve another 2 billion dollars to keep it going.
This shows where you can have profits but in reality they are fake profits. This doesn't seem like a sustainable demand source. So I question the fact that this small spike in sales and demand is really a sign of an improving economy.
Wednesday, July 29, 2009
News Media's take
So three weeks ago we are in for a depression that will last for the next couple of years.
Last week all is good in the world and their is life in the markets!
This week, well not so much good news. In fact all the good news we told you, it was a lie.
THIS IS WHAT I'M TALKING ABOUT PEOPLE!!!! Whoever "they" are, are just talking out their collective asses. But your friend, the Bear, thinks he's figured it out. Not that hard to do.
I was checking out the web today and saw a video news headline from Fox News (if you can call them news) but it said "Home prices going up". I had to check it out. They brought on the COO of Zillow (which is so inaccurate it's a joke in our biz, but we all look at it anyway - figure that out). Even the head of Zillow stated that prices are not going up but falling and continuing to fall. For the same reasons I've been talking about. Higher end home are finally dropping prices and taking up more of the overall market which will off set the "median" price number. But in reality the values are still going down.
Zillow's CEO also said that he sees this continuing because of a backlog of foreclosures that the banks are sitting on AND what's worse is that of the people that don't need to sell due to foreclosure or financial problems, 1 out of 3 want to sell but are waiting. 1 out of 3! I don't know if that's accurate but who am I to dispute the great Zillow. Especially when they agree with my outlook on the rest of the market.
So what did we learn, the media needs a story and they don't want people to start killing themselves. So they say prices went up last month so that they can have their headlines, but it's not true. This talking head on Fox News did everything he could to make this guy from Zillow say we're doing better. Thank god he didn't cave. Fox even ended it with "we hope you're wrong". If that's so, why did you even have him on the show?
On a side note. I'm sure that you think I'm joking about people killing themselves. I wish I was. I happened to turn on the local news this friday and there where 2 stories about people who had either killed their families or just themselves and both where suspected to be because of economic issues, both homes happen to be in foreclosure or several months late. If these stories got the headlines instead of "home prices are up" maybe the government would actually do something FAST to help homeowners instead of banks. Don't they get it, if you helped the home owners it would in turn help the banks!!!
Last week all is good in the world and their is life in the markets!
This week, well not so much good news. In fact all the good news we told you, it was a lie.
THIS IS WHAT I'M TALKING ABOUT PEOPLE!!!! Whoever "they" are, are just talking out their collective asses. But your friend, the Bear, thinks he's figured it out. Not that hard to do.
I was checking out the web today and saw a video news headline from Fox News (if you can call them news) but it said "Home prices going up". I had to check it out. They brought on the COO of Zillow (which is so inaccurate it's a joke in our biz, but we all look at it anyway - figure that out). Even the head of Zillow stated that prices are not going up but falling and continuing to fall. For the same reasons I've been talking about. Higher end home are finally dropping prices and taking up more of the overall market which will off set the "median" price number. But in reality the values are still going down.
Zillow's CEO also said that he sees this continuing because of a backlog of foreclosures that the banks are sitting on AND what's worse is that of the people that don't need to sell due to foreclosure or financial problems, 1 out of 3 want to sell but are waiting. 1 out of 3! I don't know if that's accurate but who am I to dispute the great Zillow. Especially when they agree with my outlook on the rest of the market.
So what did we learn, the media needs a story and they don't want people to start killing themselves. So they say prices went up last month so that they can have their headlines, but it's not true. This talking head on Fox News did everything he could to make this guy from Zillow say we're doing better. Thank god he didn't cave. Fox even ended it with "we hope you're wrong". If that's so, why did you even have him on the show?
On a side note. I'm sure that you think I'm joking about people killing themselves. I wish I was. I happened to turn on the local news this friday and there where 2 stories about people who had either killed their families or just themselves and both where suspected to be because of economic issues, both homes happen to be in foreclosure or several months late. If these stories got the headlines instead of "home prices are up" maybe the government would actually do something FAST to help homeowners instead of banks. Don't they get it, if you helped the home owners it would in turn help the banks!!!
Friday, July 24, 2009
Knowns and Unknowns
There are a lot of headlines that indicate that the recession and mortgage crisis is over. We seeing the end and all is becoming well with the world, and why not the DOW is back to 9,000+.
That's all nice. Sounds good. But a lot of the reasons are not true. Worse yet, a lot of the truth isn't being given to the public. I truly believe we're in for another downturn in the market and for the economy. There is just no way that you have inflated all markets for close to a decade and in 6 months we've hit bottom and are ready to recover.
The median price rising that you heard last week is a joke. The truth is that there was a rise in sales in the High End homes. The high end sales took a larger percentage of the overall sales. So you might have an extra 10 - 20, 2 or 3 million dollar homes sold but that offsets hundreds of 200 - 300k home sales. Keep in mind those million dollar homes that sold probably lost about 1/3 - 1/2 of what the value was. This is a case where the median price can actually rise but home values are still going down. We haven't hit bottom yet.
I've got inside sources on the inner workings of big time lenders short sale, rate mod and foreclosure departments. Without going into detail, you wouldn't believe that these companies are still in business from the way their run. In reality there are so many delinquent borrowers that haven't even started to go through the process of short sales or foreclosures that there is a wave that's going to hit and hit hard. Especially with the employment problems only getting worse.
I've been told and seen that at many banks the rate mods are taking so long and putting people in such back situations that I feel there could be a rate mod bubble to burst. Unlike a bubble of prosperity I think it will be a break down of the system. Don't let this stop you from trying. I believe that modifications in anyway would be the only way to slow down the foreclosure mess (as we're structured now), but I'm hearing, going through and reading about horror stories. Between the fraud that's been in the paper lately and the way I've personally seen how these rate mods are run, it's a mess. Some lenders have got their stuff together so I won't unilaterally dis everyone. But I know of total incompetence from simple hangups and dropped calls to repeated requests for paperwork that they've already had, "it's just our screens aren't updated" or "I'm sorry, this screen showed we needed it again" to "No we don't know why someone called, you're fine". These I've all heard and been through.
What's worse is that many of these lenders, who initially said that you don't need to be late on your mortgage for help are now purposefully making you go late. I can go on but will leave you with one final thought for today.
Look at all that's going on. Take a step back and look at the ramifications of what we're going to be left with. There will be millions of people with bad credit. In many places you're going to see home values near 2000 levels. Inflation HAS to be a concern at some point which will only stifle any momentum in the real estate world. Financing will be so tight that it will almost be impossible for home owners, small businesses and even large companies to get loans. Commercial real estate and lending is the next shoe to drop. 30 - 40% vacancy wouldn't surprise me (I know that sounds crazy).
I would love to think that we are in the clear. But the truth is we are so far away and what's worse is no one knows the real answers. Read the actual article from these headlines. Picture the TV show The Office, think about the actual work that gets done. It's funny because it's true!! Starting next month the banks are going to initiate all types of new, incredibly stupid, lending regulations... but that's for my next post.
That's all nice. Sounds good. But a lot of the reasons are not true. Worse yet, a lot of the truth isn't being given to the public. I truly believe we're in for another downturn in the market and for the economy. There is just no way that you have inflated all markets for close to a decade and in 6 months we've hit bottom and are ready to recover.
The median price rising that you heard last week is a joke. The truth is that there was a rise in sales in the High End homes. The high end sales took a larger percentage of the overall sales. So you might have an extra 10 - 20, 2 or 3 million dollar homes sold but that offsets hundreds of 200 - 300k home sales. Keep in mind those million dollar homes that sold probably lost about 1/3 - 1/2 of what the value was. This is a case where the median price can actually rise but home values are still going down. We haven't hit bottom yet.
I've got inside sources on the inner workings of big time lenders short sale, rate mod and foreclosure departments. Without going into detail, you wouldn't believe that these companies are still in business from the way their run. In reality there are so many delinquent borrowers that haven't even started to go through the process of short sales or foreclosures that there is a wave that's going to hit and hit hard. Especially with the employment problems only getting worse.
I've been told and seen that at many banks the rate mods are taking so long and putting people in such back situations that I feel there could be a rate mod bubble to burst. Unlike a bubble of prosperity I think it will be a break down of the system. Don't let this stop you from trying. I believe that modifications in anyway would be the only way to slow down the foreclosure mess (as we're structured now), but I'm hearing, going through and reading about horror stories. Between the fraud that's been in the paper lately and the way I've personally seen how these rate mods are run, it's a mess. Some lenders have got their stuff together so I won't unilaterally dis everyone. But I know of total incompetence from simple hangups and dropped calls to repeated requests for paperwork that they've already had, "it's just our screens aren't updated" or "I'm sorry, this screen showed we needed it again" to "No we don't know why someone called, you're fine". These I've all heard and been through.
What's worse is that many of these lenders, who initially said that you don't need to be late on your mortgage for help are now purposefully making you go late. I can go on but will leave you with one final thought for today.
Look at all that's going on. Take a step back and look at the ramifications of what we're going to be left with. There will be millions of people with bad credit. In many places you're going to see home values near 2000 levels. Inflation HAS to be a concern at some point which will only stifle any momentum in the real estate world. Financing will be so tight that it will almost be impossible for home owners, small businesses and even large companies to get loans. Commercial real estate and lending is the next shoe to drop. 30 - 40% vacancy wouldn't surprise me (I know that sounds crazy).
I would love to think that we are in the clear. But the truth is we are so far away and what's worse is no one knows the real answers. Read the actual article from these headlines. Picture the TV show The Office, think about the actual work that gets done. It's funny because it's true!! Starting next month the banks are going to initiate all types of new, incredibly stupid, lending regulations... but that's for my next post.
Wednesday, July 1, 2009
The truth is coming out
Almost all the news today has been bad. Higher unemployment, lower sales and poor housing news. Basically all the stuff I've been talking about, the truth behind the headlines, is starting to poke it's head.
Next week will be an interesting one. The should be a few big sales of treasuries and depending on the demand we'll know where rates are going. I feel with this bad news out this week, people will buy up treasuries for safety which will bring the yields down and in turn hopefully the rates.
Again, I beg all of you to go to www.hvccpetition.com and sign this. What is going on with the appraisal process is going to kill this business and the value of your home.
Next week will be an interesting one. The should be a few big sales of treasuries and depending on the demand we'll know where rates are going. I feel with this bad news out this week, people will buy up treasuries for safety which will bring the yields down and in turn hopefully the rates.
Again, I beg all of you to go to www.hvccpetition.com and sign this. What is going on with the appraisal process is going to kill this business and the value of your home.
Tuesday, June 23, 2009
Appraisal issue
Here's proof that I'm not over reacting about this HVCC appraisal rule. This quote is strait from someone at NAR
As I always say, read the full article so here.
It's a lot of mix and mash info. If you take a step back, you'll realize that we're in for more troubles a head. The word from everyone that I speak to is that there is nothing good on the market. Most of the stuff that's priced correctly is all foreclosures or short sales, which doesn't leave a lot of quality to choose from when new buyers are looking. Most of the people who don't need to sell are taking their properties off the market or locking in at a price and not budging hoping that someone will come along and buy their house for the price they want. "You can hope in one hand and crap in the other, let's see what gets filled faster." - Ten points for who knows what movie that's from?
Yun said the appraisal problem is serious. “Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he said. “In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”
As I always say, read the full article so here.
It's a lot of mix and mash info. If you take a step back, you'll realize that we're in for more troubles a head. The word from everyone that I speak to is that there is nothing good on the market. Most of the stuff that's priced correctly is all foreclosures or short sales, which doesn't leave a lot of quality to choose from when new buyers are looking. Most of the people who don't need to sell are taking their properties off the market or locking in at a price and not budging hoping that someone will come along and buy their house for the price they want. "You can hope in one hand and crap in the other, let's see what gets filled faster." - Ten points for who knows what movie that's from?
Monday, June 22, 2009
The great slow down of 2009
This is a post about the lack of business. In fact, in many ways, business has never been easier to get. As you know I'm the best so it's not hard for Bear Financial to get new business. The slowdown comes from the banks.
I once thought that there was going to be a mass conspiracy to get rid of wholesale brokers all together and that the banks wanted to only have retail. But after all that I've seen in the last few weeks, I think if you asked the banks what do you really want, they'd tell you that they wouldn't lend another dime to anyone. Retail is running 75 - 90 days from some of my reports and this appraisal rule, HVCC (which I beg all of you to write your representatives to get rid of) is only making the experience harder for the borrowers.
Please hang in there. I do believe things will get worse before they get better but loans are still being funded, we just have to fight twice as hard and wait three times as long. Rates are slowing inching back down and hopefully someone will realize there is a lot of money to be made in the lending business. They just need someone who can look at files and borrowers as individuals and not lump everyone in these pigeon holes. There is money to be made and usually when that happens someone gets wise and figures out how to make that money. I just hope they do it sooner than later.
I once thought that there was going to be a mass conspiracy to get rid of wholesale brokers all together and that the banks wanted to only have retail. But after all that I've seen in the last few weeks, I think if you asked the banks what do you really want, they'd tell you that they wouldn't lend another dime to anyone. Retail is running 75 - 90 days from some of my reports and this appraisal rule, HVCC (which I beg all of you to write your representatives to get rid of) is only making the experience harder for the borrowers.
Please hang in there. I do believe things will get worse before they get better but loans are still being funded, we just have to fight twice as hard and wait three times as long. Rates are slowing inching back down and hopefully someone will realize there is a lot of money to be made in the lending business. They just need someone who can look at files and borrowers as individuals and not lump everyone in these pigeon holes. There is money to be made and usually when that happens someone gets wise and figures out how to make that money. I just hope they do it sooner than later.
Thursday, June 18, 2009
ups and downs
The Bear is back. Sorry for the delay.
Let's not waste time, let's get to work. First off, here is a quick link that just repeats everything that I've been saying for the past 2 months.
http://www.marketwatch.com/story/get-ready-to-pounce-on-lower-mortgage-rates
the bottom line is that the Market is crazy. I don't think anyone knows what they're doing and there is no clear answer or direction. It seems that even the people in the Fed that are supposed to be steering the ship are just hanging on to make sure we don't capsize.
I feel that we are in for a drop in the market and for news and REALITY peak its head. I don't know of one person or company that is doing well. I feel for every "good" economic indicator there are even more bad ones that are not talked about as much. For instance today it was said that the number of unemployment claims dropped, the fact is that new claims rose but people currently on unemployment have dropped mainly because their time was up. It's not like thousands of people got jobs last week. Their 12 months or 24 months or whatever the time frame they are under is up. That being said, yes there are less people on unemployment and now more that still don't have jobs and will be getting nothing. This should lead to more problems. Not very "good" after all, is it?
At least we can say, Go Lakers!!! Perfect scene yesterday. Ending the parade at the Coliseum is just like the government did during Greek times. Keep the masses in check by throwing a big party for them to go to. People must be out of work to have 500k+ show up on a Wednesday.
Let's not waste time, let's get to work. First off, here is a quick link that just repeats everything that I've been saying for the past 2 months.
http://www.marketwatch.com/story/get-ready-to-pounce-on-lower-mortgage-rates
the bottom line is that the Market is crazy. I don't think anyone knows what they're doing and there is no clear answer or direction. It seems that even the people in the Fed that are supposed to be steering the ship are just hanging on to make sure we don't capsize.
I feel that we are in for a drop in the market and for news and REALITY peak its head. I don't know of one person or company that is doing well. I feel for every "good" economic indicator there are even more bad ones that are not talked about as much. For instance today it was said that the number of unemployment claims dropped, the fact is that new claims rose but people currently on unemployment have dropped mainly because their time was up. It's not like thousands of people got jobs last week. Their 12 months or 24 months or whatever the time frame they are under is up. That being said, yes there are less people on unemployment and now more that still don't have jobs and will be getting nothing. This should lead to more problems. Not very "good" after all, is it?
At least we can say, Go Lakers!!! Perfect scene yesterday. Ending the parade at the Coliseum is just like the government did during Greek times. Keep the masses in check by throwing a big party for them to go to. People must be out of work to have 500k+ show up on a Wednesday.
Thursday, June 4, 2009
Random Thoughts
Random.
That seems to be the way I'd put this market. No one knows what's happening or really what's going on. I feel that there is a tremendous amount of sheep fallowing the blind leaders. Panic will drive a market up hundreds of points and the same blind fear of the unknown or belief in what others might be doing will drive the market into a tailspin.
I've been talking about a summer crash for weeks now. I felt that I was going just on a gut feeling but now there seems to be more and more people that are saying the same thing.
It's funny, because while rates have (and historically) been good, they where so low that there was a ton of pressure to get every one's loan done. All the lenders are backed up and many are even going past the RESPA 30 day requirement to have a decision. I could talk for hours on why and how this is affecting everything and one but maybe later. Back to my main point here, I was hoping that we'd get a small raise in the rates. "Give me a week or two with higher rates, just so we / I can get caught up." Well be careful for what you wish for. We got a spike in rates this week. Most people are trying to find a cliff to leap off of, but I've got to remind myself I asked for this. With my firm belief, and over the past few days this has happened, rates will come back down. Now is the time to get caught up.
Now is the time to get those apps in. Lenders truly are taking sometimes 60+ days to get some deals done. There are a lot of problems. For instance this new HVCC appraisal rule is HORRIBLE. I beg all that read this to write your congress, Senate and president to get rid of this rule or at least make it work within reality. I hope to put together an idea that can incorporate the "thought" behind this rule with some reality so that if this is what the law makers want, it can work. Back to my example, most every lender wants an appraisal to be submitted with a complete loan package. Well if they insist that the appraisal can't have comps past 90 days, but don't underwrite a file for 30 days, that's only really a 60 day window for comps. So often I'm finding that a lender will kick a loan out or charge the borrower with a review fee because the appraisal is old and the value has dropped or there are no current comps to support the file, so the lender would rather decline it than risk approving it and not being able to re-sell it on the secondary market. This is horrible for the borrowers and for us trying to work within the system and the long run for the lenders because they're not making as much money and passing up on helping lower people's payments and in turn stimulating the economy, which is what this is all about.
We've got so many problems right now. Even if and when we solve them, these answers will cause more issues that will need to be addressed. But if rates go up now, from mortgages to business loans, you'd might as well pack your bags because we're all going to be screwed.
It is late and I know I'm bouncing around here, but just be patient. As always read further than the first line of these financial articles. And call or write me if you have any questions.
That seems to be the way I'd put this market. No one knows what's happening or really what's going on. I feel that there is a tremendous amount of sheep fallowing the blind leaders. Panic will drive a market up hundreds of points and the same blind fear of the unknown or belief in what others might be doing will drive the market into a tailspin.
I've been talking about a summer crash for weeks now. I felt that I was going just on a gut feeling but now there seems to be more and more people that are saying the same thing.
It's funny, because while rates have (and historically) been good, they where so low that there was a ton of pressure to get every one's loan done. All the lenders are backed up and many are even going past the RESPA 30 day requirement to have a decision. I could talk for hours on why and how this is affecting everything and one but maybe later. Back to my main point here, I was hoping that we'd get a small raise in the rates. "Give me a week or two with higher rates, just so we / I can get caught up." Well be careful for what you wish for. We got a spike in rates this week. Most people are trying to find a cliff to leap off of, but I've got to remind myself I asked for this. With my firm belief, and over the past few days this has happened, rates will come back down. Now is the time to get caught up.
Now is the time to get those apps in. Lenders truly are taking sometimes 60+ days to get some deals done. There are a lot of problems. For instance this new HVCC appraisal rule is HORRIBLE. I beg all that read this to write your congress, Senate and president to get rid of this rule or at least make it work within reality. I hope to put together an idea that can incorporate the "thought" behind this rule with some reality so that if this is what the law makers want, it can work. Back to my example, most every lender wants an appraisal to be submitted with a complete loan package. Well if they insist that the appraisal can't have comps past 90 days, but don't underwrite a file for 30 days, that's only really a 60 day window for comps. So often I'm finding that a lender will kick a loan out or charge the borrower with a review fee because the appraisal is old and the value has dropped or there are no current comps to support the file, so the lender would rather decline it than risk approving it and not being able to re-sell it on the secondary market. This is horrible for the borrowers and for us trying to work within the system and the long run for the lenders because they're not making as much money and passing up on helping lower people's payments and in turn stimulating the economy, which is what this is all about.
We've got so many problems right now. Even if and when we solve them, these answers will cause more issues that will need to be addressed. But if rates go up now, from mortgages to business loans, you'd might as well pack your bags because we're all going to be screwed.
It is late and I know I'm bouncing around here, but just be patient. As always read further than the first line of these financial articles. And call or write me if you have any questions.
Sunday, May 31, 2009
GM Fallout
Sunday night and I really don't know what's going to happen with the GM BK. I'm curious to see what happens next week. This is so big, it's not really called a BK even though we all know it to be one. I've heard and read a ton of theories but at the end of the day I don't think anyone knows what all this will mean.
I do know that it looks like a lot of people are going to loose their jobs. My prediction seems to be unfolding about a summer crash. Almost everyone, except the government, seems to think we're going to be in trouble for at least another six months. Then, who knows about a recovery? That's a whole other mess.
It should be an interesting week. Just remember, like I always say, read the articles. You're going to see the headlines but the truth will be somewhere in the text. The roller coaster ride isn't over yet.
Just hold my hand and we'll get though this. Patience and a level head is the key.
I do know that it looks like a lot of people are going to loose their jobs. My prediction seems to be unfolding about a summer crash. Almost everyone, except the government, seems to think we're going to be in trouble for at least another six months. Then, who knows about a recovery? That's a whole other mess.
It should be an interesting week. Just remember, like I always say, read the articles. You're going to see the headlines but the truth will be somewhere in the text. The roller coaster ride isn't over yet.
Just hold my hand and we'll get though this. Patience and a level head is the key.
Thursday, May 28, 2009
Panic?!?! The roof is on fire but the ground is ice cold.
As you've probably seen, rates shot up this week. I say, and as always I could be wrong, it doesn't matter. First off, rates are still good and secondly, rates will come back down.
I've read many articles the past few days and what I've taken away is that the market is showing small signs of recovery. But that's what gets the headlines. I ask of you to read the whole articles because they paint a different picture.
For example, you'll hear home sales have gone up 3%, but you don't hear the values have gone down 15%. You don't hear that the current inventory for sale has increased 8% or that 45% of the sold houses are foreclosures / short sales (and this number is only going to rise).
If rates go up, we're seriously screwed. Some of the reasons for the "experts" to say that we're on the road to recovery is because of people refinancing and being able to purchase homes at low rates. An increase of .5 - 1% in rate will stop that in it's tracks.
Even if the government has to step in and buy up more mortgage back securities or treasuries, which we'll pay for it in the future, it will save us now. I can't tell you if that's the right thing to do in the long run, but it's the only thing to do in the short run. The Fed won't let this chance at recovery just slip away.
I've read many articles the past few days and what I've taken away is that the market is showing small signs of recovery. But that's what gets the headlines. I ask of you to read the whole articles because they paint a different picture.
For example, you'll hear home sales have gone up 3%, but you don't hear the values have gone down 15%. You don't hear that the current inventory for sale has increased 8% or that 45% of the sold houses are foreclosures / short sales (and this number is only going to rise).
If rates go up, we're seriously screwed. Some of the reasons for the "experts" to say that we're on the road to recovery is because of people refinancing and being able to purchase homes at low rates. An increase of .5 - 1% in rate will stop that in it's tracks.
Even if the government has to step in and buy up more mortgage back securities or treasuries, which we'll pay for it in the future, it will save us now. I can't tell you if that's the right thing to do in the long run, but it's the only thing to do in the short run. The Fed won't let this chance at recovery just slip away.
Tuesday, May 5, 2009
Something smells (2)
I just read that B of A (owner of Countrywide) needs 34 BILLION dollars. I told you all that there is something not right about the info that is being pushed out to us. There will be more to come, but you'll see. We're far from bottom and even if we are, it's going to be a long time to come out. Check out this article
http://news.yahoo.com/s/nm/20090506/bs_nm/us_bankofamerica_9
I don't know why, and I have no reason to say this, but I just don't trust in Bernanke. At least with Greenspan, you knew he was bullshit-ing. You'd watch his speeches and he would never answer a question strait. Bernanke says things that just feel forced. Like "We'll see a bottom in 2009." Why, where's the proof for that?
http://news.yahoo.com/s/nm/20090506/bs_nm/us_bankofamerica_9
I don't know why, and I have no reason to say this, but I just don't trust in Bernanke. At least with Greenspan, you knew he was bullshit-ing. You'd watch his speeches and he would never answer a question strait. Bernanke says things that just feel forced. Like "We'll see a bottom in 2009." Why, where's the proof for that?
Something smells
I had this great post sitting for a few days but got so busy now it's outdated. Fortunately, I've been busy, unforunately you've missed my words of wisdom. Well here's a quick doozy.
I don't believe all this good economic news. I hope to god I'm wrong but it can't be true. From someone that in the trenches I see nothing but lower values and hard to get loans. I'll address a few issues and feel free to discuss with me more but here we go:
"They" say that home sales have increased. Yes, that's true, but those are of sales of homes in Palmdale and Landcaster that are foreclosures selling for 100k. And a lot of these are being bought by first time investors hoping to cash in, which won't happen and that's a whole other speech.
"Values have increased for the first time in...", bull shit! I'm having appraisal issues everyday about values being too high and appraisal reviews are cutting values all over the place. If you under price a sale soooo low that you get multiple offers and the end value is higher than what you originally offered, then yes "value" went up. But did it really, no because you started so low. Almost every deal I've done or heard about from reps, we're all having value issues. So I'm still seeing a decline.
"We're seeing signs that we'll hit the bottom in 2009". If I fall down a well, eventually I'll hit the bottom. If I'm not dead, I'll have a broken leg / knocked unconsious / AND STILL BE AT THE BOTTOM OF THE WELL!!! Is that anything to cheer about? How do I get out? How fast will it take me to get out if all my tools are gone and I've got morons trying to figure out how to save me?
I know this is a little depressing but it's the truth. I've got inside sources that have said that Countrywide employees have been told that the company made more money in the first quarter of 2009 than 2008. This is impossible. They're either cooking the books, ignoring tremendous loss, or using TARP funds to mask the true loss. How can it be even possible for a bank to say this?
My theory is that they want to make sure that they don't have more people killing themselves and get people to come to work in the morning. Again, hope I'm wrong.
I don't believe all this good economic news. I hope to god I'm wrong but it can't be true. From someone that in the trenches I see nothing but lower values and hard to get loans. I'll address a few issues and feel free to discuss with me more but here we go:
"They" say that home sales have increased. Yes, that's true, but those are of sales of homes in Palmdale and Landcaster that are foreclosures selling for 100k. And a lot of these are being bought by first time investors hoping to cash in, which won't happen and that's a whole other speech.
"Values have increased for the first time in...", bull shit! I'm having appraisal issues everyday about values being too high and appraisal reviews are cutting values all over the place. If you under price a sale soooo low that you get multiple offers and the end value is higher than what you originally offered, then yes "value" went up. But did it really, no because you started so low. Almost every deal I've done or heard about from reps, we're all having value issues. So I'm still seeing a decline.
"We're seeing signs that we'll hit the bottom in 2009". If I fall down a well, eventually I'll hit the bottom. If I'm not dead, I'll have a broken leg / knocked unconsious / AND STILL BE AT THE BOTTOM OF THE WELL!!! Is that anything to cheer about? How do I get out? How fast will it take me to get out if all my tools are gone and I've got morons trying to figure out how to save me?
I know this is a little depressing but it's the truth. I've got inside sources that have said that Countrywide employees have been told that the company made more money in the first quarter of 2009 than 2008. This is impossible. They're either cooking the books, ignoring tremendous loss, or using TARP funds to mask the true loss. How can it be even possible for a bank to say this?
My theory is that they want to make sure that they don't have more people killing themselves and get people to come to work in the morning. Again, hope I'm wrong.
Tuesday, April 21, 2009
FEAR, boo!
Change is coming. So everyone just calm down.
The last two days I've spent my entire day calming down people, fixing and addressing errors and getting people through issues based on FEAR. Fear of appraisal changes, rate changes, program changes or any other change that seems to be happening.
I'm reminded of the latest Batman movie, The Dark Knight. The Joker has a scene where he says that chaos is caused by fear and fear is caused by chaos. If he says he's going to kill 10 people tomorrow and does it, everyone is fine BUT if he just says someone is going to die and no one knows who / what / why / when, then everyone flips out. This, in a strange way, is exactly what's happening with the real estate and mortgage business.
There is so much change happening and not a lot of people know how to handle this, which results in a lot of chaos. I don't want to sit here and give every example because I don't have the time or space. Just know that if you're a client, co-worker, associate, employee or partner just calm down and we'll get through this. I leave this vague because all of you have an unique issue but my answer is pretty much the same. We've got it under control and we'll work through your particular issue together. Whether it's a rate question, appraisal question, submission question, credit question.... It's all the same answer. We'll handle it. "Relax, We've got it covered." is our slogan and I plan on making sure we live up to that.
There is a reason I'm working 12 - 15 hours a day. Stay calm, let us do what we do best and you'll get the best result possible. Always feel free to email me willie@1bearfinancial.com to stay on top of me. I don't mind because we're in this together. We just need to be patient and not so frightened of change because in the end we can't stop change.
The last two days I've spent my entire day calming down people, fixing and addressing errors and getting people through issues based on FEAR. Fear of appraisal changes, rate changes, program changes or any other change that seems to be happening.
I'm reminded of the latest Batman movie, The Dark Knight. The Joker has a scene where he says that chaos is caused by fear and fear is caused by chaos. If he says he's going to kill 10 people tomorrow and does it, everyone is fine BUT if he just says someone is going to die and no one knows who / what / why / when, then everyone flips out. This, in a strange way, is exactly what's happening with the real estate and mortgage business.
There is so much change happening and not a lot of people know how to handle this, which results in a lot of chaos. I don't want to sit here and give every example because I don't have the time or space. Just know that if you're a client, co-worker, associate, employee or partner just calm down and we'll get through this. I leave this vague because all of you have an unique issue but my answer is pretty much the same. We've got it under control and we'll work through your particular issue together. Whether it's a rate question, appraisal question, submission question, credit question.... It's all the same answer. We'll handle it. "Relax, We've got it covered." is our slogan and I plan on making sure we live up to that.
There is a reason I'm working 12 - 15 hours a day. Stay calm, let us do what we do best and you'll get the best result possible. Always feel free to email me willie@1bearfinancial.com to stay on top of me. I don't mind because we're in this together. We just need to be patient and not so frightened of change because in the end we can't stop change.
Thursday, April 16, 2009
Thinking about rates
I want to thank everyone who's been calling and emailing. I know we're super busy and I really appreciate all the business. I'm doing the best to stay caught up and make sure I get my hands dirty on every deal.
These are amazing times. Everyday there is economic news, good and bad. There are changes happening all over with every lender and every program, some good and bad. And rates are really good still!
To everyone waiting for rates to drop, stop. We're at 5% or better on average, so what are you waiting for? Pay a point, pay two points, with money this cheap you don't want to miss it because over the long run no one has seen much better. Besides, I had an interesting conversation the other day. I was getting into rates and there was a realization (to which I could be wrong) that rates can't get much lower. You can't have 3% rates and here is why; investors can find that elsewhere. Our whole system is based on rates selling on the secondary market, even with all this Fannie and Freddie intervention, we're based on a secondary market. If you could get 1 or 2% in a bond or straight interest savings or money market from the bank, you would take that over a 3% government backed mortgage instrument. Your money would be liquid and there is no risk. So there has to be a natural bottom to where the rates will go. How low, I don't know? but somewhere there is a bottom.
I can't imagine that rates are going to ever be at 2%. I hope they do and I can refi everyone again, but I just don't think so. I often relate rates to the stock market and say "you never buy at the low and sell at the high, so we can just get close" and along with that stocks just don't go to 0, unless they go BK. Rates aren't a company, they're a tool or equation. You can't touch a rate so can it go BK? I will say no. I'm sure there is a flaw in my thinking but until I see it, this makes sense to me. Now, I'm getting a little too Andy Rooney, next thing you know I'll hate water because it's too wet.
These are amazing times. Everyday there is economic news, good and bad. There are changes happening all over with every lender and every program, some good and bad. And rates are really good still!
To everyone waiting for rates to drop, stop. We're at 5% or better on average, so what are you waiting for? Pay a point, pay two points, with money this cheap you don't want to miss it because over the long run no one has seen much better. Besides, I had an interesting conversation the other day. I was getting into rates and there was a realization (to which I could be wrong) that rates can't get much lower. You can't have 3% rates and here is why; investors can find that elsewhere. Our whole system is based on rates selling on the secondary market, even with all this Fannie and Freddie intervention, we're based on a secondary market. If you could get 1 or 2% in a bond or straight interest savings or money market from the bank, you would take that over a 3% government backed mortgage instrument. Your money would be liquid and there is no risk. So there has to be a natural bottom to where the rates will go. How low, I don't know? but somewhere there is a bottom.
I can't imagine that rates are going to ever be at 2%. I hope they do and I can refi everyone again, but I just don't think so. I often relate rates to the stock market and say "you never buy at the low and sell at the high, so we can just get close" and along with that stocks just don't go to 0, unless they go BK. Rates aren't a company, they're a tool or equation. You can't touch a rate so can it go BK? I will say no. I'm sure there is a flaw in my thinking but until I see it, this makes sense to me. Now, I'm getting a little too Andy Rooney, next thing you know I'll hate water because it's too wet.
Monday, April 13, 2009
Not all that shines is Gold
I'm learning and reading about the new Freddie and Fannie programs and the biggest problem that I see with them is that they don't help the people that need help the most.
If your loan is currently owned or backed by Freddie or Fannie, refinancing could be very easy. But if you where someone who got a subprime or alt-A loan you probably aren't backed by either of these two companies. So for all the people who have ARMs coming up or where on 2 - 5 year subprime / alt-a loans, you can't capitalize on these great programs with great rates.
For instance I got a 5 year ARM. It is now coming to the adjustable period. Out of easy 5 years ago I went through a subprime lender for less documentation. I do not qualify for either of these lender's new programs because who knows who backs my loan. I'm probably one of a million good, always have made my payment, borrowers that would love to get a lower interest rate and a long term 30 year fixed loan. I can't for right now. maybe they'll change the guidelines but not tomorrow they aren't.
As I predicted there are going to be some good things that come out with these programs but there are also some drawbacks. It's going to be a long process to help so many people out. I suspect a lot of changes in the coming months.
Also, this is another sign that things are not going to get better anytime soon. A few good pieces of news last week and people are ready to proclaim the bottom is near. Not so fast my friends. We may be plateauing before another shoe drops.
If your loan is currently owned or backed by Freddie or Fannie, refinancing could be very easy. But if you where someone who got a subprime or alt-A loan you probably aren't backed by either of these two companies. So for all the people who have ARMs coming up or where on 2 - 5 year subprime / alt-a loans, you can't capitalize on these great programs with great rates.
For instance I got a 5 year ARM. It is now coming to the adjustable period. Out of easy 5 years ago I went through a subprime lender for less documentation. I do not qualify for either of these lender's new programs because who knows who backs my loan. I'm probably one of a million good, always have made my payment, borrowers that would love to get a lower interest rate and a long term 30 year fixed loan. I can't for right now. maybe they'll change the guidelines but not tomorrow they aren't.
As I predicted there are going to be some good things that come out with these programs but there are also some drawbacks. It's going to be a long process to help so many people out. I suspect a lot of changes in the coming months.
Also, this is another sign that things are not going to get better anytime soon. A few good pieces of news last week and people are ready to proclaim the bottom is near. Not so fast my friends. We may be plateauing before another shoe drops.
Tuesday, April 7, 2009
New Programs - UPDATE
I've been very busy trying to keep up with all the lenders and all their changes. They're starting to slowly but surely roll out the changes. I've got only one or two lenders that have pricing but almost all of them have been rolling out the guidelines. By next week I hope all the lenders will be set.
As I feared there are some hits that may take away the usefulness of the new programs but I still think that there is a lot of good that's going to come out of these programs.
Please make sure you contact your local congress person and senate person AND president to encourage them to get rid of this appraisal change that coming in May. It's going to be a disaster for you the consumer and for everyone involved in the loan process. Here is a link to find your representative http://www.usa.gov/Contact/Elected.shtml
Thanks.
As I feared there are some hits that may take away the usefulness of the new programs but I still think that there is a lot of good that's going to come out of these programs.
Please make sure you contact your local congress person and senate person AND president to encourage them to get rid of this appraisal change that coming in May. It's going to be a disaster for you the consumer and for everyone involved in the loan process. Here is a link to find your representative http://www.usa.gov/Contact/Elected.shtml
Thanks.
Monday, April 6, 2009
New Programs
I know many of you have heard me say that there are new changes coming. Now that April is here, we should start to see the new "stimulus package" guidelines. I've only received one set of guidelines from a lender so far and no pricing from anyone. We still have another week or two before you'll start to see the guidelines.
I still urge everyone to start the refinance process. Even though I don't know the exact guidelines or pricing yet, it's best to get started now. If you thought the lenders were backed up when just the rates dropped, imagine what's going to happen when they get flooded with a bunch of new loans with guidelines that no underwriter has ever used before.
Some of the features are loans that on just the first mortgage can go up to 105% loan to value, streamline refi's with little or no documentation, first-time purchase credits, no minimum credit scores, no mortgage insurance for loans over 80%, AND MORE. There will be changes along the way and each lender can overlay any additional guidelines they want. Assuming that pricing stays where it is and there isn't a lot of additional hits, this is going to be great for home owners.
Feel free to email me, willie@1bearfinancial.com , or call 818 264-0999 to find out more or just to see what you'll need to get ready. This is the first time I've been excited about up coming changes in our industry. I'm not and I hope that you all don't get too excited because until we see what really happens we don't know for sure... But even if this means one person can capitalize on these new programs it will help, at least me :) Seriously, these programs do look to help lower the average person's monthly payments.
I still urge everyone to start the refinance process. Even though I don't know the exact guidelines or pricing yet, it's best to get started now. If you thought the lenders were backed up when just the rates dropped, imagine what's going to happen when they get flooded with a bunch of new loans with guidelines that no underwriter has ever used before.
Some of the features are loans that on just the first mortgage can go up to 105% loan to value, streamline refi's with little or no documentation, first-time purchase credits, no minimum credit scores, no mortgage insurance for loans over 80%, AND MORE. There will be changes along the way and each lender can overlay any additional guidelines they want. Assuming that pricing stays where it is and there isn't a lot of additional hits, this is going to be great for home owners.
Feel free to email me, willie@1bearfinancial.com , or call 818 264-0999 to find out more or just to see what you'll need to get ready. This is the first time I've been excited about up coming changes in our industry. I'm not and I hope that you all don't get too excited because until we see what really happens we don't know for sure... But even if this means one person can capitalize on these new programs it will help, at least me :) Seriously, these programs do look to help lower the average person's monthly payments.
Friday, April 3, 2009
Bear's Method
There is a method to my madness. I speak to a lot of borrowers. I know I can get caught up in my craziness and will bounce from one topic to another. It's part of my charm. I have to toot my own horn and use it as an example.
Rates are bouncing all over the place. For weeks they can sway slightly back and forth or in a day drop or rise tremendously. As I've told many borrowers, let's get the loans into the system and be ready for the one or two days that rates drop. We can always flip the loan elsewhere or in some cases lender are renegotiating rates so that they can keep the loan.
I say this because not everyone listens to me. But I just did this for a borrower who did listen to me. We had the loan sitting at the lender for about two months. We set a goal for the rate and points that this borrower wanted to get and spend. The day that the market tanked a few weeks ago we where able to get that rate, in this case an even better rate than what our goal was. We were able to lock on a short term lock and close the loan out. The plan worked perfectly. It takes patience but this can work. Sure enough rates have gone up since that one day.
So if you want a great rate and want to make sure we can get that rate if rates drop for only a day or two, listen to my madness. Get your loan information in and let's set a goal for the rate. And keep the goal realistic, no 3% with no points. If you want 4.5 with one point cost, that's doable (hell, it might be doable now). Then when that hits, I don't have to track you down. I'm not lying when I say sometimes these rates are only around for a few hours or a day.
Rates are bouncing all over the place. For weeks they can sway slightly back and forth or in a day drop or rise tremendously. As I've told many borrowers, let's get the loans into the system and be ready for the one or two days that rates drop. We can always flip the loan elsewhere or in some cases lender are renegotiating rates so that they can keep the loan.
I say this because not everyone listens to me. But I just did this for a borrower who did listen to me. We had the loan sitting at the lender for about two months. We set a goal for the rate and points that this borrower wanted to get and spend. The day that the market tanked a few weeks ago we where able to get that rate, in this case an even better rate than what our goal was. We were able to lock on a short term lock and close the loan out. The plan worked perfectly. It takes patience but this can work. Sure enough rates have gone up since that one day.
So if you want a great rate and want to make sure we can get that rate if rates drop for only a day or two, listen to my madness. Get your loan information in and let's set a goal for the rate. And keep the goal realistic, no 3% with no points. If you want 4.5 with one point cost, that's doable (hell, it might be doable now). Then when that hits, I don't have to track you down. I'm not lying when I say sometimes these rates are only around for a few hours or a day.
Wednesday, April 1, 2009
Investments VS. Investors
A lot of people have been talking to me about investment opportunities and what may or may not be out there. Whether or not this is a good time to invest is a whole other post, but I wanted to make the clear distinction between investments and investors.
It's good to have investments. I think the only way to amass true wealth in this world is if you take some risks and invest your money. At some point you have to put your chips on the table and go all in or you'll never win. The key is knowing who and what to invest in. Just because you make an investment doesn't make you and investor.
An investor is someone who knows a certain business or program. Even having some knowledge of a particular market or area does not mean you are an investor. There are two examples that I'd like to give.
1) When the real estate market was soaring everyone and their mom thought that they could jump in and do a few loans and sell a few houses. People would jump in and do a few family members' loans or sell a house or two and they made a ton of money fast. Never learning the business, just put it through a broker or a processor who did all the work. Now all of those types have spent the money as fast as they made it. I can't find anyone who just "jumped" in, still in the business.
2) I love comic books. I read them all the time. I buy them every month and have a huge collection. I read at least one book each day if not more. It's ridiculous. I know the history of the books, characters and companies who make the comics. I'm by NO means a comic book investor. As much as I love them, I don't know anything about investing in them. I can tell you that the first appearance of Spider-man was in Amazing Fantasy but I couldn't tell you what it's worth or what condition a book is in. It takes someone who's job it is to know this stuff.
So my point is, with the drop in the market, there are a lot of people putting together plans and calling themselves investors but you have to be careful. I see all the time people wanting to buy an investment property just because it's in foreclosure. We've got some things in the works for people to invest in and this is a good market to look for good investments. Just be wary of people calling themselves investors and wanting to deal your money around, just because they went to a seminar or think that the word "foreclosure" means "bucket full of money".
I've heard and seen a lot of ideas lately, some good and some not so good. Just like anything else, if you're going to give your money to someone, make sure that you trust them and believe that they know what they're doing and what their knowledge is in what they're selling. I've known college grads who couldn't make a good investment work and I've seen high school drop outs know how to turn a bad deal good.
It's good to have investments. I think the only way to amass true wealth in this world is if you take some risks and invest your money. At some point you have to put your chips on the table and go all in or you'll never win. The key is knowing who and what to invest in. Just because you make an investment doesn't make you and investor.
An investor is someone who knows a certain business or program. Even having some knowledge of a particular market or area does not mean you are an investor. There are two examples that I'd like to give.
1) When the real estate market was soaring everyone and their mom thought that they could jump in and do a few loans and sell a few houses. People would jump in and do a few family members' loans or sell a house or two and they made a ton of money fast. Never learning the business, just put it through a broker or a processor who did all the work. Now all of those types have spent the money as fast as they made it. I can't find anyone who just "jumped" in, still in the business.
2) I love comic books. I read them all the time. I buy them every month and have a huge collection. I read at least one book each day if not more. It's ridiculous. I know the history of the books, characters and companies who make the comics. I'm by NO means a comic book investor. As much as I love them, I don't know anything about investing in them. I can tell you that the first appearance of Spider-man was in Amazing Fantasy but I couldn't tell you what it's worth or what condition a book is in. It takes someone who's job it is to know this stuff.
So my point is, with the drop in the market, there are a lot of people putting together plans and calling themselves investors but you have to be careful. I see all the time people wanting to buy an investment property just because it's in foreclosure. We've got some things in the works for people to invest in and this is a good market to look for good investments. Just be wary of people calling themselves investors and wanting to deal your money around, just because they went to a seminar or think that the word "foreclosure" means "bucket full of money".
I've heard and seen a lot of ideas lately, some good and some not so good. Just like anything else, if you're going to give your money to someone, make sure that you trust them and believe that they know what they're doing and what their knowledge is in what they're selling. I've known college grads who couldn't make a good investment work and I've seen high school drop outs know how to turn a bad deal good.
Monday, March 30, 2009
Funding
We are still funding. I just funded a purchase today. We've got another two refinances set for this week.
The biggest question I seem to get these days is, "Are lenders still funding?" The answer is yes. They try everything they can not to, but they are still funding. I know it seems silly to write a post about it, but I get the question all the time.
I won't lie. It's not easy and the loans can take some time to get done. But the lenders are funding loans. With the new guidelines coming out very shortly I expect even more issues but more fundings. The more we can continue to fund loans, the sooner we'll hit the bottom.
The biggest question I seem to get these days is, "Are lenders still funding?" The answer is yes. They try everything they can not to, but they are still funding. I know it seems silly to write a post about it, but I get the question all the time.
I won't lie. It's not easy and the loans can take some time to get done. But the lenders are funding loans. With the new guidelines coming out very shortly I expect even more issues but more fundings. The more we can continue to fund loans, the sooner we'll hit the bottom.
You tell me what to do.
Attached is the graph for the last 5 days on the treasury again. When I woke up, I see the market going in our favor big time. Then I get into the office and I see the yield up. Then right before the close, I see it back down. All this in one day. I didn't get one rate change, I think the lenders have given up also. All this up and down and we're right back where we started.
As you can see there is a gradual decrease. All this talk of rates dropping, it's like I've said in previous posts. Yes, I think rates will drop, but not over night. It will take time. Sure there will be some great days and not so great days. You need to step back and be patient. With rates in the 4's and low 5's now, I urge everyone that can, to lock in and take advantage now. We can always refi again down the line if they continue to get better. I'm seeing rates lower now than any other time I've been doing this.
Keep in mind one thing I've noticed. The yields where even lower earlier this year, but the rates where not better. There has to be a bottom that the lenders can do these mortgages where investors see them as a viable investment. Rates CAN NOT go down to 2 or 3% because who's going to buy that on the secondary market? If all an investor is going to make is 3%, than why not put it in bonds or even is a money market fund and make the same amount with no risk? So if you have ideas that rates will just keep going lower and lower and will never find a bottom, think again. If the lender can't sell the rate, it's the same thing if the loan is a stated loan or subprime loan, it just doesn't have a market.
Friday, March 27, 2009
The Value of a good Appraiser
There are changes coming to the lending world regarding appraiser / broker relationships. Starting in May, there could be new rules that state that only the lender that receives a loan application may order the appraisal and the broker is to have no say or contact with the appraiser.
No one wants this. Not the Lenders, not the Brokers, not the Appraiser's and most importantly not the BORROWERS!! Essentially this will eliminate a fair market. The new rule would mean that if we submit your loan to Wells Fargo, they would order an appraisal and make you pay for it. If we then submitted the loan to MetLife, they would order an appraisal and make you pay for it. Just to shop the loan around and get the best rate, could cost a fortune in appraisal fees. This is unfair to the borrowers and hurts their right to get the best rate.
Also, if they don't allow us Brokers to talk to the appraisers, you are putting entire files at risk. How can we know what a property is going to appraise at? What if I think a property is worth 1 million dollars but the appraiser comes in at 900,000? That difference could change the loan, if not cancel it completely.
I understand there was a lot of fraud that went on in the past, but most of that was perpetrated by the LENDERS ordering the appraisals. Even in the easy days, a few years ago, when a Broker submitted a loan with an appraisal, it would get reviewed by the lender. But a lender who ordered an appraisal directly didn't get it reviewed. There are people sitting in jail right now that abused the lender / appraiser relationship to push values and get loans off of inflated values. So let's not pretend like it was just us Brokers who did all the damage and should never talk to the appraiser because of the possibility of fraud.
The relationship between me and my appraisers is very special and is meant to help our borrowers. I'm working on a deal right now that needs the appraiser and myself to work together and be on the same page. This is not just a value issue. I, as just the loan broker, rely on what the appraiser sees and their expertise in area / location and condition to know what the value of the home is. If this relationship is taken away, it won't be the Brokers or the Appraisers who suffer, it will be the Buyers and Borrowers. You'd be shocked to know the amount of bad appraisers there are out there. If you are unlucky enough to get one hired by the lender, you could be out money, a loan or a home. I've been doing this a long time and I've worked with a lot of appraisers. I only TRUST two of them. I'll use others and some are good and some aren't so good but my appraisers are great and we've been able to help many borrowers.
When you hear of any new rules that will limit the interaction between Brokers and Appraisers, please vote or speak against it. You're home and loan may be at risk. Regulation is fine and probably needed now more than ever. But don't cut off one of the most important aspects of the Real Estate and Mortgage business.
No one wants this. Not the Lenders, not the Brokers, not the Appraiser's and most importantly not the BORROWERS!! Essentially this will eliminate a fair market. The new rule would mean that if we submit your loan to Wells Fargo, they would order an appraisal and make you pay for it. If we then submitted the loan to MetLife, they would order an appraisal and make you pay for it. Just to shop the loan around and get the best rate, could cost a fortune in appraisal fees. This is unfair to the borrowers and hurts their right to get the best rate.
Also, if they don't allow us Brokers to talk to the appraisers, you are putting entire files at risk. How can we know what a property is going to appraise at? What if I think a property is worth 1 million dollars but the appraiser comes in at 900,000? That difference could change the loan, if not cancel it completely.
I understand there was a lot of fraud that went on in the past, but most of that was perpetrated by the LENDERS ordering the appraisals. Even in the easy days, a few years ago, when a Broker submitted a loan with an appraisal, it would get reviewed by the lender. But a lender who ordered an appraisal directly didn't get it reviewed. There are people sitting in jail right now that abused the lender / appraiser relationship to push values and get loans off of inflated values. So let's not pretend like it was just us Brokers who did all the damage and should never talk to the appraiser because of the possibility of fraud.
The relationship between me and my appraisers is very special and is meant to help our borrowers. I'm working on a deal right now that needs the appraiser and myself to work together and be on the same page. This is not just a value issue. I, as just the loan broker, rely on what the appraiser sees and their expertise in area / location and condition to know what the value of the home is. If this relationship is taken away, it won't be the Brokers or the Appraisers who suffer, it will be the Buyers and Borrowers. You'd be shocked to know the amount of bad appraisers there are out there. If you are unlucky enough to get one hired by the lender, you could be out money, a loan or a home. I've been doing this a long time and I've worked with a lot of appraisers. I only TRUST two of them. I'll use others and some are good and some aren't so good but my appraisers are great and we've been able to help many borrowers.
When you hear of any new rules that will limit the interaction between Brokers and Appraisers, please vote or speak against it. You're home and loan may be at risk. Regulation is fine and probably needed now more than ever. But don't cut off one of the most important aspects of the Real Estate and Mortgage business.
Thursday, March 26, 2009
How to use the day?
Slow but Busy, that's what I call a day like today. Rates aren't doing much, maybe down slightly, I see a possible mid day coming, nothing big. No new programs or guidelines today. So that's where we get the slow from.
Slow news means Busy work day. I'm not getting a million calls about what's happening. I need to focus on getting files worked on. Set up new files and call old clients and get new ones. You might just get an email or call from me today, if we haven't talked in a while. I can annoy the UW, Funders and Reps, push them to get my files done. These are the days I hope for so I can get stuff done. It's always important to me to use these days to their fullest. It'd be very easy to get distracted with such a beautiful day out today, but one must focus. I'll have something more later. Maybe today I'll get into some of the new Fannie / Freddie guidelines....
Slow news means Busy work day. I'm not getting a million calls about what's happening. I need to focus on getting files worked on. Set up new files and call old clients and get new ones. You might just get an email or call from me today, if we haven't talked in a while. I can annoy the UW, Funders and Reps, push them to get my files done. These are the days I hope for so I can get stuff done. It's always important to me to use these days to their fullest. It'd be very easy to get distracted with such a beautiful day out today, but one must focus. I'll have something more later. Maybe today I'll get into some of the new Fannie / Freddie guidelines....
Wednesday, March 25, 2009
Bear-stradamus!!!
I'm not always correct but sometimes I know what I'm doing. I truly wish the market wasn't like this, but this is the world we're living in. It makes it very hard to predict or give great advice when things change and swing every 24 hours.
Meanwhile, the rates are the same as they where 2 days ago. All this up and down, just to be back where we started the week at.
Tuesday, March 24, 2009
Rate Drop??
Above is a 5 day snapshot of treasury yields. This used to be a good barometer of where the rates would go. 5 days ago was when the Fed said they where going to buy up assets over the next few months. The yield tanked and everyone called to see about this huge rate drop they heard about. As you can see, the yield when right back up and the low rates lasted no more than 24 hours.
Today, the same thing happened only later in the day. I can see rates being lower tomorrow and then going back up. I think gradually rates will come down slightly, but not overnight. The yield has been creeping up over the past few weeks but rates have stayed in the 5% range. Now that the yield is going down, I don't see why there would be a massive rate cut, since there wasn't one on the way up.
The main lesson to be learned is, what I've been preaching to so many, to get your loan in and let's get it going through processing. We can set a goal and when the rates hit that goal we are able to lock. Lenders are swamped and overloaded. From a time frame standpoint it's very hard to get loans closed in 30 days. If we can get the loan in, get it underwritten and then be ready to move when the rates do, we'll be much more successful than to wait until the rates get to where we want and then start the process.
As you can see, a rate might only be available for a moment or two.
Monday, March 23, 2009
The Bear's first post
Hello world! My name is William Kinoshita. I'm the owner of Bear Financial. We're a Real Estate and Mortgage company. In this particular blog I'll be discussing anything and everything that I feel that needs to be said about this business and the economy. I'm hoping that who ever reads this will enjoy it, learn a little and help you understand the business better.
I feel the best way to do business is to be honest. I'm good at what I do and deserve to get paid for it. It's in my best interest to give all my clients the best and most honest advice possible. Most of my clients come from referrals and my reputation is how I make a living. I'm looking to make life long relationships with people. I'll always tell you the truth because that's what I expect from everyone else. Whether it's good, bad or ugly the truth will always set you free, and will allow you to make the best decisions for you and your family and your finances.
At times this can be a very complicated business and at other times be very simple. It just takes someone to explain how things work and everything will be fine. I'm not always right, but I'm rarely wrong. In this blog I'll try to explain what's happening in the world the best that I can, which will hopefully help us make the right decisions together.
I look forward to writing this. I also look forward to hearing what you have to say, so feel free to comment.
I feel the best way to do business is to be honest. I'm good at what I do and deserve to get paid for it. It's in my best interest to give all my clients the best and most honest advice possible. Most of my clients come from referrals and my reputation is how I make a living. I'm looking to make life long relationships with people. I'll always tell you the truth because that's what I expect from everyone else. Whether it's good, bad or ugly the truth will always set you free, and will allow you to make the best decisions for you and your family and your finances.
At times this can be a very complicated business and at other times be very simple. It just takes someone to explain how things work and everything will be fine. I'm not always right, but I'm rarely wrong. In this blog I'll try to explain what's happening in the world the best that I can, which will hopefully help us make the right decisions together.
I look forward to writing this. I also look forward to hearing what you have to say, so feel free to comment.
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