Big Banks Too Big To Fail / Worse Now Than Ever

If you have 5 minutes please watch this information about the banking industry.  http://tbwsdailyshow.com/2012/04/17/too-big-to-fail-worse-now-than-ever/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheTbwsDailyShow+%28The+TBWS+Daily+Show%29

Foreclosure Dam Ready To Break

Foreclosure News, a bit silly but worth the watch.
Please watch attached link.

Homebuyers Are Still Clueless About the Homebuying Process

Homebuyers Mortgages Still Clueless About
As the housing market continues to struggle with high inventory and a lack of demand, homebuyers appear unprepared to take out a mortgage, answering basic questions about mortgage information wrong 46 percent of the time, according to a Zillow Mortgage Marketplace survey. Approximately 44 percent admitted they are not confident in their knowledge of mortgages or the mortgage process. Zillow Mortgage Marketplace, with Ipsos, surveyed prospective homebuyers, asking them to gauge their own knowledge of mortgages, and asking basic questions about mortgage facts.

Fifty-seven percent of prospective homebuyers who were polled by Zillow do not understand how adjustable-rate mortgages (ARMs) work. When asked if interest rates on 5/1 ARMs always reset higher after five years, the majority of homebuyers answered yes. In fact, the interest rate will adjust to the prevailing rate after five years, even if rates have declined. Currently, many borrowers whose ARMs have recently reset have lower interest rates than they did when they took out the loan.

Thirty-four percent of the respondents who are prospective homebuyers do not understand that lender fees are negotiable and that they vary by lender. They believe lenders are required by law to charge the same fees for credit reports and appraisals, when in fact home buyers can save money by shopping for the lowest fees.

"Most people wouldn't jump out of a plane if they didn't know how to use a parachute, yet each year many buyers commit to the largest loan they will take out in their lifetimes without understanding essential information about mortgages," said Zillow Mortgage Marketplace Director Erin Lantz. "By simply spending a few hours researching how a mortgage works, and by shopping around for the most competitive rates and fees, buyers can save a lot of money."

The survey found:

►Forty-five percent of polled prospective homebuyers believe that they should always buy mortgage discount points when obtaining a mortgage. However, because mortgage discount points are simply prepaid interest, the decision should depend on how long you intend to own the home. In some cases, you may not plan to remain in the house for long enough to break even after buying points.

►Fifty-five percent of prospective homebuyers in the study do not understand that mortgage rates vary throughout the day. In reality, mortgage rates can change rapidly, similar to how stock prices can change throughout the day. To get the optimum rate, it is important to monitor rates and shop around.

►Thirty-seven percent of prospective homebuyers who were polled believe that "pre-qualifying" for a loan means they have secured financing. In fact, "pre-qualification" is used to describe the earliest step in the process when a lender approximates how much you can afford, but does not run your credit or request any sort of documentation to verify the information you provide. Although there is not a reliable industry standard definition of pre-qualification, it is not until a lender has approved your loan application without conditions that you can rest assured that the lender has committed to financing your loan.

►Forty-two percent of the polled prospective homebuyers do not understand that Federal Housing Administration (FHA) loans are available to all buyers. Instead, they believe only first-time homebuyers qualify. FHA loans can cost less for many buyers, including repeat buyers with low to average credit scores and with downpayments of less than 20 percent.

A Simple explanation Of the Federal reserve Statement 4-27-2011

A Simple Explanation Of The Federal Reserve Statement (April 27, 2011 Edition)


Earlier today, the Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent.

The vote was 10-0 — the third straight meeting after which the FOMC vote was unanimous.

In its press release, the FOMC noted that since its March 2011 meeting, the economic recovery is proceeding “at a moderate pace” and that labor markets conditions are “improving gradually”. Household spending and business investment “continue[s] to expand” but the housing sector remains “depressed”.

Furthermore, the FOMC’s statement discussed the Federal Reserve’s dual mandate of (1) Managing inflation levels, and (2) Fostering maximum employment. The statement acknowledged recent inflation pressures on the economy, but it expects those pressures — because they’re related to oil and food prices — to be “transitory”. Unemployment remains “elevated”.

The FOMC statement also re-affirms the group’s plan to keep the Fed Funds Rate near zero percent “for an extended period” of time, and to keep its $600 billion bond market support package — more commonly called “QE2″ — intact.

The statement’s verbiage suggests that a third support package may be created after QE2 ends in June 2011, depending on the needs of the economy.

Mortgage market reaction to the FOMC statement has been positive thus far. Mortgage rates in Sandy are unchanged, but leaning lower. And, as always, market sentiment could shift quickly. If you like today’s mortgage rates, consider locking in.

The FOMC’s next scheduled meeting is a 2-day event, June 20-21 2011.

New Mortgage Guidlines

End of a mortgage era

Fixed 30-year mortgage rates in the 5 percent range? Minimum down payments below 5 percent? Jumbo-size home loans for high-cost markets at regular interest rates? Kiss them good-bye -- possibly sooner than you might guess.

Take a snapshot of today's mortgage market conditions and frame it. It's highly likely you'll never see anything like these favorable combinations of rates and terms again. That's the inescapable conclusion emerging from the Obama administration's "white paper" on optional remedies for the two ailing giants of housing finance -- Fannie Mae and Freddie Mac -- along with events already under way in the national economy.

The administration's long-delayed housing report, released Feb. 11, drew a mix of catcalls and mild applause. Apartment developers praised the report's emphasis on expanding opportunities for people to rent their housing, as opposed to the idea that homeownership is something for everybody.

Big banks and their allies in Congress welcomed the prospect that Fannie Mae and Freddie Mac -- who together account for about 60 percent of the mortgage market but have cost taxpayers a net $150 billion in bailout money in the past three years -- will be heading into oblivion. Consumer and real estate industry groups lamented the phase-out of Fannie and Freddie, both of whom -- despite their recent crashes -- supplied steady streams of mortgage money for decades.

The report offered not only options for Congress to consider in winding down the two companies, but also recommendations on more immediate "transition" measures to achieve a smaller federal footprint in the mortgage market. Some of these transitional steps require no congressional approval, and therefore are likely to impact borrowers and home-buyers in the months immediately ahead. Factor these changes into the timing for any loan application or purchase being contemplated this year:

• Higher insurance fees on FHA mortgages -- another quarter of a percentage point on annual premiums. That's vitally important to consumers with moderate incomes and assets, especially in the African-American and Hispanic communities, where FHA loans are the dominant route to homeownership. The report also hints at a possible increase in minimum down payments for FHA -- currently just 3.5 percent -- but provides no specifics. Congressional approval would be required for any change.

• Significant reductions in maximum loan amounts later this year for both FHA and conventional loans eligible for purchase by Fannie or Freddie, unless Congress votes to retain the current statutory $729,750 limit for high-cost areas before its expiration on Oct. 1. Loans above each local market's limit -- whatever the reduced ceiling turns out to be -- will be considered jumbos, and come with higher interest rates from private lenders.

• Raising the fees Fannie Mae and Freddie Mac charge lenders to guarantee pools of their mortgages for resale to bond investors. Lenders will automatically pass those on to borrowers as a cost of doing business. The report also calls for raising down-payment requirements at Fannie Mae and Freddie Mac to 10 percent.

• Retaining the controversial and costly add-on fees now charged by Fannie Mae and Freddie Mac that can increase the expense of obtaining even a moderate-size mortgage by thousands of dollars. These add-ons now extend to applicants with FICO credit scores of 800 and above who are making substantial down payments. The white paper actually applauded the imposition of these fees, calling them one of several "first steps" on the path to weaning consumers off reliance on Fannie and Freddie for mortgage money.

The administration not only wants to wind down the two companies over the coming several years, but also wants to severely reduce the size of FHA's role -- cutting its market share from around 30 percent today to as low as 10 percent. Where will the buyers who depend upon FHA today for affordable financing turn when that sharp cut has been accomplished? That's not clear.

The white paper makes an oblique reference to a major issue bubbling on the back burner that could also push rates up: Regulators are debating what should and shouldn't be a "qualified residential mortgage" under the terms of last year's financial reform legislation. Loans that are not "qualified" -- in terms of down-payment size and other criteria --will require extra investments by lenders when they pool them into bonds; that, in turn, could raise rates for nonqualified mortgages by as much as two to three percentage points.

Among the proposals: Make 20 percent to 30 percent down payments the minimum to meet the "qualified" test. The worst-case scenario: If a buyer only has money for a small down payment, they'll be charged significantly higher rates.

Bottom line: Buyers should get ready to pay more for mortgages, no matter what ultimately happens to Fannie and Freddie.

FED WORRIED ABOUT ECONOMY

 As recently as two months ago, the Federal Reserve sounded optimistic about the economic recovery. Now the central bank is taking a new step that shows it is clearly more worried, but economists say it probably won't help much.
The Fed said Tuesday that it would spend a relatively small amount of money -- about $10 billion a month, economists estimate -- buying government debt. The move is designed to drive interest rates on mortgages and corporate borrowing at least a little lower and help the economy grow faster.
In a statement after a one-day meeting, the Fed said the pace of the recovery "has slowed in recent months." After its last meeting in late June, the Fed was rosier, saying that the recovery was "proceeding" and the job market actually improving.
The decision to buy government debt, using proceeds from Fed investments in mortgage bonds, was a shift from earlier this year, when the Fed was laying out plans to roll back some of the measures it took during the financial crisis.
The Fed has decided to keep its benchmark interest rate near zero.
"I don't think they are going to raise interest rates until it is very clear that unemployment is moving definitively lower and that doesn't look likely until late 2011," said Mark Zandi, chief economist at Moody's Analytics.
Economists pointed out that buying $10 billion of government debt in a $14 trillion economy is a relatively small move, and they said they did not expect it to have a dramatic impact.
"The Fed talked loudly but carried a small stick," said Joel Naroff, president of Naroff Economic Advisors.
He said that while the financial system has the money to lend, banks are unwilling or unable to find suitable loans to make. Until they do, he said, "the recovery will be softer than anyone hoped for and there may be little the Fed can do about it."With interest rates so low, Congress, economists note, has more power than the Fed to stimulate the economy. But with midterm elections nearing, Congress is divided on whether the best move is short-term government spending, tax cuts or some combination.
On Tuesday, the House, called back from its summer break for a one-day session, pushed through a $26 billion bill to protect 300,000 teachers, police and other workers from layoffs this year. President Barack Obama signed it almost immediately.
The Fed action also came on a day when new figures showed worker productivity in the U.S. dropped this spring for the first time in more than a year -- a sign that companies that want to grow may need to hire more people.
Investors reacted positively to the Fed statement. Stocks were down sharply before the announcement but made up ground after it was announced at mid-afternoon. The Dow Jones industrial average finished down about 55 points.
Treasury prices rose slightly because the Fed plan would reduce the amount of government debt on the market for others to buy.
The Fed said it would buy two-year and 10-year Treasurys by using the proceeds from debt and mortgage-backed securities it bought from Fannie Mae and Freddie Mac. It said that it would buy additional government debt as its existing Treasury bonds mature.
In 2007, before the recession and financial crisis struck, the Fed balance sheet was roughly $860 billion. It responded to the emergency by flooding the financial system with cash, expanding the balance sheet to about $2.3 trillion.
Rather than rolling it back, as the Fed had hoped to do as the economy improved, the Fed will keep the balance sheet steady while shifting its holdings out of mortgage securities and into more government debt.
"The news is positive but not meaningful," said John Merrill, chief investment officer of Tanglewood Wealth Management in Houston. "The money is a pittance."
The central bank said it expects to start buying the government debt Aug. 17 and planned to publish details Wednesday.
From March 2009 to this March, the Fed bought up $1.25 trillion in mortgage securities and $175 billion in debt from Fannie Mae and Freddie Mac. The goal of these purchases was to drive down mortgage rates and bolster the crippled housing market. The Fed also bought $300 billion of government debt between March and October 2009.The Fed's balance sheet has stayed at roughly $2.3 trillion since March.
Economists are skeptical that cheaper credit or even more government aid will get Americans shopping more and businesses to hire. They also say some jobs in construction and other housing-related fields, and in manufacturing, will never return to pre-recession levels -- a shift in the basic structure of the economy.
High unemployment, lackluster income growth, sagging home values and tight credit are all restraining the pace at which Americans are spending, usually a major source of powering the economy.

AP Business Writers Martin Crutsinger in Washington, David Pitt in Des Moines, and Bernard Condon in New York contributed to this rep

Big Changes for Multi Family Properties:

Desk top Underwriting (DU) is making a BIG adjustment on the LTV limits for 2-Unit homes (DUPLEX) effective Dec 12th, 2009.


2-Unit Primary Residence Owner Occupied:
Purchases & Rate and Term refinances:
Old: 95% Loan to Value
NEW: 80% LTV

Cash out refinances:
old: 85%
NEW: 75%



2-Unit Investment Properties:
Purchases & Rate and Term refis:
Old: 85%
NEW: 75%

Cash Out refis:
old: 70%
NEW: Ineligible

Call me with any other questions on purchase or refinance of multi unit, owner or non owner, properties 801 668 2112

Real Estate Finance Update

Real Estate Finance Update:
For those of you who are considering buying or refinancing a home this year please be advised of the following. The Government Program to purchase Mortgage Backed Securities and keep mortgage interest rates low is scheduled to end by the end of the year. This will undoubtedly raise mortgage rates next year. Additionally the Government sponsored $8000 First Time Home Buyer tax credit is scheduled to end 12-01-09. With all the changes in program guidelines get your financing started now and avoid the upcoming rush over the next few months. Feel free to contact me at your convenience 801 668 2112.