My Life as a Realtor.

Sorry it's been a few. I have been really busy. I picked up 4 more listings since we spoke last. One in magna that has already sold. One in Downtown that goes live today, one in Lehi that goes live Friday and one in West Valley that goes live Monday. I am working with a few new buyers and living the Dream. There is a LOT for you to read today. I hope you enjoy it all!

Call me if I can help you, your friends or family with any real estate related matters!

Market thoughts...

If you’ve even skimmed the content in this section over the past 12 months you know we have been bullish on the direction of the market in Utah. And you also know we feel the national outlook has unfortunately cast a shadow over what should be a consistent and climbing housing market here in Utah. Mortgage woes aside.

Well the national media is finally catching on to what we have been saying. If you link out this article from Forbes you’ll see the experts are now predicting that home prices are going to rise here in Utah sooner rather than later.

We are ranked number 6 out of 10 for markets they are forecasting growth from in the next year. This really means the drum we have been beating about homebuyers getting to buy now as opposed to waiting has been ‘pitch perfect’ as the pundits would say.

Utah has strong fundamentals and a great base for improvements in the housing market. As in the past we encourage you to tell clients this is not the time to hang on the edge and not make a housing decision. Now is the time to buy.

On a side note, there is a bunch of activity around re-instating Down Payment Assistance. Don’t be surprised if a new bill is passed and the President signs it into law shortly. The loss of DPA has caused more than a few ripples in the industry.


Real Estate Outlook: Recession Fears Put to Rest
by Kenneth R. Harney

The latest national economic growth numbers should finally put to rest
fears of a recession that could choke the real estate recovery now getting
underway. Second quarter Gross Domestic Product (or GDP) came in at an
upwardly-revised 3.3 percent -- far above the 1.9 percent the federal
government had previously estimated. Key reasons for the robust economic
performance: Exports, which have been riding the weak dollar to record
levels, and lower imports because the prices of foreign-made goods have
been priced higher. Why should anyone interested in real estate care about
GDP? Well, number one, when the economic growth rate accelerates, consumer
confidence in the economy rises. That, in turn, pulls potential buyers off
the sidelines and opens the door to higher housing sales. And sure enough,
the consumer confidence numbers for August, released last week by the
Conference Board, are up by 5 points. We're already seeing some impressive
jumps in home sales in places that haven't seen positive news in two to
three years -- central Florida and even some of the hardest-hit parts of
California. According to a new report from the real estate tracking firm,
DataQuick, sales in southern California jumped 16.7 percent in July over
June, and were 14 percent above the pace of July the year before. Another
encouraging sign: Last week's mortgage rates dropped to 6.39 percent for
30-year fixed rate loans, according to the Mortgage Bankers Association of
America. Fifteen year rates are still just under 6 percent. Applications
for loans to buy homes jumped by 6 percent for conventional loans and an
impressive 19.9 percent for FHA mortgages. The federal government's latest
quarterly survey on home prices reveals that the best price appreciation
performances are now coming from areas that barely got noticed during the
hottest years of the housing boom -- markets like Charleston, West Virginia
( up 6 percent for the year), Greenville, South Carolina (up 5.8 percent),
Tulsa, Oklahoma (up by nearly 5 percent) and Scranton, Pennsylvania, where
values were up by 4.7 percent.. All these markets -- and there are dozens
more spread through Texas, the Midwest and the South -- never experienced
the wild days of double digit appreciation. They offer affordable housing
prices and moderate - but steady and slow - price growth. They're not
flashy -- never have been, probably never will be -- but that's why they're
still producing positive appreciation numbers, while the boom to bust
markets are not.

Published: September 9, 2008

Frank says HUD supports compromise bill
By Matt Carter, Wednesday, September 10, 2008.

Inman News

STOCKTON, Calif. -- A last-ditch effort to head off an Oct. 1 ban on the use of seller-funded down-payment assistance with FHA-backed loans is picking up steam as a compromise bill, that would mend rather than end the practice, gains momentum.

HR 6694, which would allow home builders to continue funneling down-payment assistance through nonprofit groups to home buyers using FHA loans, is certain to pass the House of Representatives and has the blessing of the Department of Housing and Urban Development, Rep. Barney Frank, D-Mass., said at a hearing on foreclosures this weekend.

The influential chairman of the House Financial Services Committee urged those attending a committee field hearing in Stockton Saturday to lobby the Senate -- which shoehorned language banning seller-funded gifts into HR 3221, the sweeping housing bill signed into law July 30 -- in support of the bill.

HR 6694 would automatically allow qualified borrowers with credit scores of 680 or above to use seller-funded down-payment assistance on FHA-backed loans, Frank said. Borrowers with scores between 620-680 who relied on seller-funded gifts might be subject to higher insurance premium fees.

Borrowers with scores below 620 would be excluded from using down-payment assistance until mid-2009, when HUD would be permitted to expand the program to include them if the Secretary of Housing determined it could be done without putting a dent in FHA's insurance requiring taxpayer subsidies.

HUD has sought to end the use of seller-funded down-payment assistance with FHA loans outright, claiming the practice artificially inflates home prices and that borrowers who relied on the gifts are more likely to default.

Although FHA loan guarantee programs have always been self-sustaining -- they are funded by premiums paid by borrowers, and not taxpayers -- HUD said the enormous growth in the use of seller-funded gifts and the poor performance of the loans threatens to put the insurance fund in the red.

Nonprofits that funnel payments from home builders to lenders to help borrowers meet minimum down-payment requirements on FHA loans dispute HUD's claims and have filed lawsuits that delayed HUD's implementation of a rule change banning the practice (see story). But the passage of HR 3221 made those court challenges moot.

Home builders -- many of whom relied on seller-funded gifts to close 20 percent to 30 percent of their sales in the second quarter -- have been bracing for the end of the program, and some lenders have already stopped processing such loans.

Frank said the bill that would give seller-funded gifts a reprieve, HR 6694, has the support of HUD Secretary Steve Preston because it also addresses an issue near and dear to the department's heart -- risk-based pricing.

In an effort to make FHA's loan guarantee programs operate more like private mortgage insurance, HUD on July 14 began giving borrowers with good credit a break on their upfront insurance premiums, while charging those with spotty credit more (see story).

Opponents of risk-based pricing maintain it places an unfair burden on low-income borrowers who rely on FHA loan guarantee programs. The Senate inserted a one-year moratorium on the use of risk-based pricing into HR 3221, which begins Oct. 1 and ends Sept. 30, 2009.

Under risk-based pricing, the upfront premium for FHA mortgage insurance ranges from 1.25 percent to 2.25 percent, depending on credit score. When the moratorium on risk-based pricing takes effect Oct. 1, FHA will begin charging all borrowers an upfront premium of 1.75 percent. Before the introduction of risk-based pricing in July, FHA had charged all borrowers a flat 1.5 percent upfront premium. In returning to a one-size fits all pricing structure, HUD said it was forced to raise premiums for all borrowers by 25 basis points to keep the program self-sustaining.

HR 6694 would allow HUD to continue risk-based pricing for borrowers with lower credit or FICO scores, but mandate refunds of some or all of the additional premiums paid if borrowers make timely payments.

HR 3221 had no provisions banning seller-funded gifts or risk-based pricing until it got to the Senate, Frank said, recounting the intense debate that took place around the massive housing bill. The bill's most hotly debated provision was a $300 billion expansion of FHA loan guarantee programs to help troubled borrowers refinance into more affordable loans (see story).

"The FHA loved the ban on down-payment assistance (but) hated the ban on risk-based pricing," Frank said at Saturday's hearing. "That seemed to me to offer an opportunity. So (HR 6694) will replace both bans with middle ground -- and it will pass the House, I can guarantee you. What you want to do now obviously is talk to your senators. We think it will go through there -- it has the approval now of the Secretary of HUD."

A HUD spokesman said he could not confirm that Preston supports HR 6694, and that HUD is still reviewing the bill.

"We understand that Congress is working on legislation related to seller-funded down-payment assistance, but our primary focus is on implementing the recently passed housing bill," the spokesman, Lemar Wooley, said in an e-mail. "Throughout this process, our number one priority is to ensure FHA's insurance fund remains sound and does not require taxpayer dollars."

At Saturday's hearing, Merced Mayor Ellie Wooten said the down-payment assistance program offered by Nehemiah Corp. of America was "heavily used" in Merced County.

"We are an agricultural community, and (farmworkers) are solid people, but many people don't have bank accounts with the 20 percent down payment," Wooten said. The minimum down payment for FHA guaranteed loans is now 3 percent, and is being raised to 3.5 percent on Oct. 1.

Wooten, a Realtor, said the Nehemiah program helped many borrowers get into homes, and "they made their payments and there was no monkey business. When the Nehemiah program was (banned), it knocked out quite a few very good qualified buyers. It has hurt us."

Democrat U.S. Rep. Dennis Cardoza, a former Realtor who represents Merced, Modesto and Stockton, also said down-payment assistance programs are "critical" in the region. "We have low-income folks who still have the ability to pay but don't have the ability to bring large down payments. When I was a Realtor, I had hundreds of folks tell me that's how they got into their house."

If Congress does take action to preserve FHA's ability to accept seller-funded down-payment assistance, it would have to move quickly. Although the ban mandated by HR 3221 doesn't take effect until Oct. 1, builders like Lennar Corp. have set a Sept. 23 deadline for loan applications involving seller-funded gifts.

Nehemiah President and CEO Scott Syphax, who also attended the hearing, said he believes HR 6694 -- currently awaiting a hearing in Frank's Financial Services Committee -- can emerge from the House and Senate in time to beat the deadline.

In a telephone interview before the hearing, Syphax said there's been a grassroots effort to preserve down-payment assistance programs.

"What's happened with this is the people have taken this over from us," Syphax said. "We are not in control at this point. Across the country, folks are forming groups on their own, making their own fliers. These are everybody from homeowners who have received a benefit, to people working in the real estate space. They are the ones turning this around -- it's not us."

Nehemiah and other supporters of down-payment assistance programs, including the National Association of Mortgage Brokers, the National Association of Black Mortgage Brokers and the National Urban League are planning a rally in Washington, D.C., on Wednesday.

Bailout of mortgage giants should result in lower mortgage costs and make credit more available. But lending standards will stay tight and risky borrowers will still pay extra fees.

Sunday's federal takeover of Fannie Mae and Freddie Mac will likely translate into lower mortgage rates and greater availability of credit, experts said. Rates could drop by 1 percentage point from the stubbornly-high 6.39% for a 30-year fixed rate mortgage.

"This could be good for would-be homeowners," said Tom LaMalfa, managing director, Wholesale Access, a research and consulting firm. "It would reduce the cost of financing at the new and improved Fannie and Freddie."

But the news isn't all good. With Friday's report that foreclosures and delinquencies are at all-time highs, Fannie and Freddie are expected to maintain - if not ratchet up - tighter lending standards. And the fees they have introduced for borrowers with weaker credit histories won't go away anytime soon. Lenders are demanding credit scores above 700 these days, up from 620 in the past, and downpayments of 20%, up from zero in some cases, experts said.

F Y I:

Quick Analysis of GSE Takeover

As you know, in a truly historic event on Sunday, Treasury Secretary Paulson and Federal Housing Finance Agency Director Lockhart announced that “FHFA has placed Fannie Mae and Freddie Mac into conservatorship.” The government (FHFA) will now be managing Fannie Mae and Freddie Mac for the foreseeable future.

Below are our thoughts.

Overview

To stabilize and to stimulate the housing and financial markets, the Federal Government is taking the following key steps.

· The GSEs will be allowed to increase their MBS portfolios through the end of 2009

· Treasury will be initiating a program to purchase GSE mortgage-backed securities (through December 31, 2009)

· Treasury has established a new secured lending credit facility which will be available to Fannie Mae, Freddie Mac and the Federal Home Loan Banks

We believe that Treasury Secretary Paulson and the Bush Administration determined Fannie Mae and Freddie Mac were unable to perform their housing missions at a time when they were most needed because the GSEs were trying (unsuccessfully) to address safety and soundness issues associated with raising capital. As a result of this plan, Treasury has indicated that the GSEs will now not be under any pressure to sell assets.

In the short-term, we expect mortgage liquidity should improve. Rates should decline as the risk spreads built into the GSE pricing (due, in part, to fear of potential GSE failure) should be reduced if not eliminated. The extent of the decline will depend on what happens to Treasury yields in the coming days.

Without capital constraints in the near term and based on Secretary Paulson’s comments (see below) , we believe the new Fannie and Freddie will likely rollback at least some of their price increases and loosen underwriting requirements to some extent. It will be curious to see the MI reaction to this government intervention as their tightening of guidelines will now be “front and center” in the effort to expand mortgage financing availability.

We also believe Secretary Paulson’s call to examine the guaranty fee structure could lower those fees across-the-board. It will be interesting to see if the government-controlled GSEs will implement a Ginnie Mae-type flat fee structure and at what level.

On a longer term basis, there will be a “heavyweight” debate next year and beyond about the future size and structure of the GSEs (e.g. public or private entities). That debate will not occur until the new Congress and Administration take office next year.

Why did Treasury/FHFA take this action?

It appears to us that Treasury/FHFA lost confidence in Fannie Mae and Freddie’s Mac’s ability to support the housing recovery while, at the same time, addressing their safety and soundness responsibilities by preserving and raising capital. Below are some of Secretary Paulson and Director Lockhart’s remarks which lead us to this conclusion.

Director Lockhart said:

(bold and italics added)

“Their market share of all new mortgages reached over 80 percent earlier this year, but it is now falling. During the turmoil last year, they (the GSEs) played a very important role in providing liquidity to the conforming mortgage market. That has required a very careful and delicate balance of mission and safety and soundness. A key component of this balance has been their ability to raise and maintain capital. Given recent market conditions, the balance has been lost. Unfortunately, as house prices, earnings and capital have continued to deteriorate, their ability to fulfill their mission has deteriorated. In particular, the capacity of their capital to absorb further losses while supporting new business activity is in doubt. Today’s action addresses safety and soundness concerns. … The result has been that they have been unable to provide needed stability to the market. They also find themselves unable to meet their affordable housing mission. Rather than letting these conditions fester and worsen and put our markets in jeopardy, FHFA, after painstaking review, has decided to take action now. “

Secretary Paulson said:

“I attribute the need for today’s action primarily to the inherent conflict and the flawed business model imbedded in the GSE structure and the ongoing housing correction”. He added that he has “long said, the housing correction poses the biggest risk to the economy”.

“Our economy and our markets will not recover until the bulk of this housing correction is behind us. Fannie Mae and Freddie Mac are critical to turning the corner” and that “the primary mission of these enterprises will now be to proactively work to increase the availability of mortgage finance including by examining the guaranty fee structure with an eye toward mortgage affordability”.

Comment

We have all seen the steps that Fannie Mae and Freddie Mac have taken to preserve and raise capital throughout this year. These measures have included raising prices on mortgages and tightening underwriting guidelines. As everyone is also aware, they have been aggressively trying to put back loans to seller-servicers who, in turn, are going back to originators.

Secretary Paulson in particular appeared to conclude that GSEs cannot serve two masters (i.e. its housing mission and its shareholders) during the housing crisis.

What does this mean?

To state the obvious, we are in uncharted waters. This plan is not a “silver bullet” that will address the underlying problems (i.e. record mortgage delinquency and foreclosures) that caused the need for this unprecedented action. MBA’s National Delinquency Survey last week indicated that over 9% of all mortgages are either delinquent or in the foreclosure process. While the new GSE approach to mortgage availability will increase the number of potentially eligible borrowers, it will likely not have any significant impact on affordability (borrowers must still qualify and make downpayments) in those markets where house prices increased the most during the “housing bubble” until house prices and borrower incomes are in line. With this as a caveat, below are our immediate thoughts.

· Short term goals

Two of the immediate goals of this action are: 1) “to increase the availability of mortgage finance” as Secretary Paulson said and 2) to lower mortgage interest rates through the Government guarantee of GSE debt.

· Long term objectives

On a longer term basis, the Government’s action yesterday raises the fundamental question about the government’s role in housing going forward. Secretary Paulson deferred the discussion of this question and the “flawed GSE business model” ( i.e. serving two masters ---public and private objectives) to the next Administration and Congress.

In this update, we will focus on short-term impact since the debate about the GSEs’ future structure and size will depend on who wins the election and the make-up of the Congress.

Short term Impact

For the housing industry, the short-term impact of the Government takeover appears to be positive.

· Mortgage rates should decline

· Liquidity should be increased

o GSEs should loosen standards (somewhat)

o GSEs should reduce fees including guaranty fees

· Some housing experts feel house price may stabilize sooner and the level of further house price decline will be moderated as a result

Potential Impact

· There could be a mini-refinance boom if the rate decline materializes.

o Hedging of servicing portfolios and pipeline problems will have to be addressed

· More aggressive GSEs could slow down FHA’s growth

o FHA appeared on the way to 50% market share later this year.

o What will be the impact on margins?

There are many questions to be answered in the coming days and weeks:

(Here are a couple)

· How will the MIs react?

o Their underwriting and pricing policies will be “front and center” if the GSEs take the actions we expect

· What will the new Fannie/Freddie management’s policy be on buybacks? Will they be more reasonable?

· On g-fees, will the GSEs a different approach (e.g. more like Ginnie Mae – uniform fees for all lenders)

Congress weighs reprieve for seller-funded gifts
Read Article


Here are the Quotes!



"We must develop and maintain the capacity to forgive. He who is devoid
of the power to forgive is devoid of the power to love. "
-- Martin Luther King Jr., Civil Rights Activist

"Tell a person they are brave and you help them become so. "
-- Thomas Carlyle, Scottish Essayist, Satirist, and Historian

"You must have long-term goals to keep you from being frustrated by
short-term failures."
-- Charles C. Noble

"Don't argue for other people's weaknesses. Don't argue for your own.
When you make a mistake, admit it, correct it, and learn from it
immediately. "
-- Stephen R. Covey, Author and Speaker

"A hunch is creativity trying to tell you something. "
-- Frank Capra, director

"Good people do not need laws to tell them to act responsibly, while bad
people will find a way around the laws. "
-- Plato, Philosopher

"We are what we repeatedly do."
-- Aristotle, Philosopher


"Management is doing things right; leadership is doing the right things."
-- Peter F. Drucker, Author and Management Expert

"Justifying a fault doubles it. "
-- Charles de Gaulle, French president