Living In Tucson Blog

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Special thanks to Inman News and Matt Carter for the following information:

Beginning in January, The Federal Housing Administration will tighten the credit guidelines and make rule changes the appraisal process to minimize defaults.. FHA’s insurance fund is sufficient to cover future losses, Federal Housing Commissioner David H. Stevens said, but the tighter policies will ensure that the loan guarantees remain self-sustaining and continue to be funded by premiums paid by borrowers, not taxpayers. The rule changes for appraisals will be similar to the changes implemented by Fannie Mae and Freddie Mac this past May, known as the Home Valuation Code of Conduct (HVCC). There has been some push back to HVCC by industry groups, but I suspect that it is here to stay.

Other FHA changes include new requirements for streamlined refinancing such as income verification and demonstrating a tangible benefit  to the borrowers.

There will bill tighter restrictions for FHA approved lenders that will require us to submit audited annual financial statements. Another rule change transfers the risk of loans originated by mortgage brokers to lenders who fund the loans. This practice is already in place for Fannie and Freddie. Brokers won’t have to be individually approved to originate FHA loans which will potentially increase the number of lenders eligible to provide FHA loans resulting in more effective oversight per The U.S. Department of Housing and Urban Development (HUD).

HUD also proposes to increase the net-worth requirement for approved mortgagees from $250,000 to $1 million — a move that could exclude many smaller companies from FHA lending. The requirement has not been increased since 1993 and is currently below industry standards, HUD said. The Mortgage Bankers Association (MBA) issued a statement saying it has long advocated a higher net-worth requirement for FHA lenders, but noted that it “is just as important that any new requirements be reasonable and not unduly hamper competition.” MBA has proposed a $500,000 net-worth requirements.

I have 15 years of FHA lending experience. My company, PHH Mortgage is the fourth largest lender in the country and we specialize in government loans. Call David Wolsky at 520-275-2536. We are licensed in all 50 states. Email me at david@davidwolsky.com for all your mortgage needs.

 I like to share my thoughts on the mortgage industry as an insider on the from lines. It’s been a month since my last blog entry and that is too long!!

 As you may already know, the $8000 tax credit for first time home buyers (defined as an individual who has not owned a home for the past three years), expires on November 30th. Will it be extended? Let’s hope so! The tax credit has really helped sell some homes! There is speculation of expanding the program to include buyers who are not first time homeowners. Of course, Congress has a lot on their plate with health insurance reform as well as climate change legislation. In my view, extending the credit is crucial to our economy, especially in Arizona, Florida, California, Nevada and Michigan. The National Association of Realtors and the National Association of Home Builders are doing some intensive lobbying of Congress. Hopefully, they can get a few words in edgewise between all of the health care and energy lobbyists.

I have also heard first hand that banks are making a concerted effort to renegotiate mortgages and facilitate short sales. You know why? It’s because the government is putting a lot of pressure on the banks. They have received billions of dollars and have helped only a small percentage of homeowners so far. Even if you were already turned down, you may hear from your lender again. In some cases, homeowners were experiencing hardships like reduced hours of work when they attempted to redo their mortgages and were still declined. Many of these at risk borrowers have lost their jobs, but are still trying to hang on to their houses! If you or anyone you know fits into this situation, don’t despair and good luck!

There have been a few regulations implemented in the past month. The biggest change involves the Truth-In-Lending (TIL) disclosure. Mortgage originators have always had to deliver a TIL within three days of application (Sundays and bank holidays are not included). The new changes include an additional seven day period to coordinate the loan disclosures. Another change is if the final rate for the loan is one eighth (.125%) higher than the original TIL, a new TIL needs to be sent over to the borrower within three days before the closing. The minimum time to close a mortgage is ten days or thirteen days if the final rate is higher than the original disclosures. In case you are wondering why a rate might be higher for the final mortgage than the initial rate, there are a few scenarios which can affect interest rates. For example, if a borrower “floats” the interest rate and the market worsens, the final “locked” rate would be higher. Also, a rate could change if the credit score changes or the loan-to-value ratio changes.

Another change is FNMA (Fannie Mae) underwriting is the verification of a self employed borrower. Thirty days prior to the dates on the loan closing documents, third party employment verification must be done. Approved verifications include a CPA letter, a Yellow Pages ad or a website.

As always, if you need any direct advice for mortgages, please contact me, David Wolsky at Mortgage Services by calling 520-529-7515. The email address is david@davidwolsky.com.

I ran across this article a couple of days ago and wanted to share it with real estate professionals. Tucson is a tough real estate market for the past couple of years and it is easy to be negative. Reading the article and following the advice will certainly help me with my mortgage business and it can certainly be adapted to many professions. I hope the author does not mind sharing her words on my blog!

8 Ways to Stay Positive in Today’s Market

So many real estate professionals today are wondering, “How can I stay positive in today’s market?” Like any discriminating real estate professional, you realize the value of a positive mental attitude. Here are eight ways that you can create and maintain a positive mental attitude in today’s market:

1. Avoid toxic people. Who are the toxic people? Toxic people can be well-meaning people, but when they talk to you, they are coming from a negative attitude about money, finances, and especially about the current real estate situation.

They may be fellow real estate professionals who want to gather around the water cooler, they may be relatives who are just trying to protect you; they may even be friends and family.

You will know if you’ve been around a toxic person, because you will begin to feel deflated.

Here’s your job: either change the subject or walk away. Better yet, speak up for yourself and mention that you want to think positively about yourself and about your business.

If you see one of them coming your way, find a way to avoid the interaction because it does not serve your highest good (or theirs).

2. Set an internal boundary. If you’ve tried everything and exhausted ways to avoid toxic people, then you may have to set an internal boundary. You can do this very simply by having your own inner conversation if someone is saying something negative to you on the outside.

A great example of an inner conversation when someone is complaining about their business or about the marketplace is to say to yourself, “that may be true for you, but it’s not true for me.” This can become your inner mantra.

3. Avoid the media. Why? Remember that the intention of the media is to sell newspapers and magazines. The more they can paint a negative and fearful picture, the more their sales go up. Why subject yourself to negative spins on the economy when you can find just as much information to point to the positive?

4. Successful real estate professionals do well in any market. Were you aware of that? Knowing that fact, none of us can continue to use the excuse about the market being bad. In fact, I am coaching several clients right now who in the last six months have doubled and tripled their incomes. In addition to the right marketing strategies and regular lead generation activities, you could help yourself with this empowered belief: “I now draw clients to me who are ready, willing and able to make a transaction in the next 30 days.”

5. Look for the opportunity in today’s marketplace. There are many opportunities in today’s market and successful real estate professionals are taking advantage of them.

Did you know that Donald Trump is buying up as much property as he can? Why do you think that is? He is a smart businessman, to say the least, and knows that this is the best time to buy.

Let your prospective clients know this and then say to them, “Let’s get you a deal.” Few could resist this invitation.

6. Remember that your success depends on your mindset, not on the outer conditions of the market. “If you believe you can or you can’t, either way you are right,” Henry Ford said.

What mindset do you choose to nurture inside yourself? Do you want to believe, “I can “or “I can’t.” Your beliefs create your reality; so whatever you choose to believe will become true for you.

7. Remember to engage the Law of Attraction as one of your most powerful tools. The law of attraction states that you get what you focus your attention on. Furthermore, your beliefs create your reality, so choose your beliefs carefully.

Here’s a tip: instead of saying “I can’t possibly succeed in today’s market,” choose instead to focus on one of these beliefs:

- “I achieve whatever I set my mind to.”

- “I am a money magnet in any situation.”

- “I attract clients who appreciate and respect my expertise.”

- “My success depends on my attitude, not on any outer circumstances.”

8. Be proactive. In any marketplace there are always people wanting to buy and sell homes. They need your help and they need your expertise. Your job is to become visible to them. In today’s market, they are not likely to fall in your lap.

However, with a good system of lead generation, you can contact them and use your intention to attract your ideal clients.

Clear out any self-limiting beliefs that stop you from picking up the phone. Follow the suggestions mentioned above, and you’ll be happy to notice that not only are you staying more positive, but your income is increasing as well.

By: Maya Bailey, Ph.D., www.rismedia.com

The Mortgage Disclosure Improvement Act goes into effect on July 30th. The rules are designed to help borrowers to better understand the rates and fees they are paying when obtaining their mortgages. A lender cannot charge upfront fees other than a reasonable fee for a credit report until you have received a truth-in-lending (TIL) disclosure and the annualized percentage rate (APR). The TIL has to be provided to the borrower within three business days of application and as of July 30th, there has to be a waiting period of seven business days after the applicant has received their documents or they are mailed. This new changes gives the borrowers more time to review their loan and it will eliminate quick transactions. Additionally, if the APR is one eight (.125%) higher in rate than the initial APR on the application, a new TIL must be disclosed at least three business days prior to closing. For example, if you applied for a loan at 5.375% and decided to float the interest rate to play the market and then locked in a rate of 5.5% or higher, a new TIL must be provided. Rates are often due to changes in credit scores, loan-to-value ratios or adding or deleting borrowers in the transaction.

One more rule to remember, a borrower must receive a copy of their appraisal three days before closing or waive the requirement if they do not think it is necessary.

PHH Home Loans and Coldwell Banker Home Loans is an industry leader and a lender you can trust. We are committed to regulatory compliance and ethical lending standards -  and to managing these changes while providing you with excellent service.

For further information, call me, David Wolsky at 520-977-330 or please email me at david@davidwolsky.com.

I have joined Coldwell Banker Home Loans as a Mortgage Advisor last week! We are also known as PHH Home Loans. After completing a week of training at our Mt. Laurel, New Jersey headquarters, I was incredibly impressed by the depth of my training. It was great meeting the people who will be integral to my team, committed to always giving my clients the ultimate value in a timely fashion. Our mission statement is to treat customers like family.

Who are we?? Well, we are the fourth largest mortgage lender in the country! We are publicly traded under the ticker symbol of PHH. We are the largest “private label” mortgage company in the United States. We are the mortgage affiliate for Coldwell Banker, ERA and Century 21 real estate companies as well as the mortgage company for Merrill Lynch and Charles Schwab brokerage houses. Coldwell Banker Home Loans (PHH Home Loans) is a very stable company, thanks to a conservative and sensible approach to mortgage financing. For example, we did not offer sub-prime loans or option ARMs which helped to fuel the current financial woes. We are the only Top Ten mortgage company that is not associated with a traditional bank. I am excited about this opportunity to work with Coldwell Banker as well as the added value I can offer to my loyal clients who have worked with me and referred business to me over this past 15 years of my career as a mortgage consultant.

You can reach me, David Wolsky by calling 520.977.3300 or emailing david@davidwolsky.com. We are licensed in all 50 states.

 Monday, June 8, 2009 was another brutal day for the bond market. Bonds have been selling and yields have been climbing since May 21^st. We have seen 30 year fixed rate mortgages go up about .75% in rate from 4.75% to 5.5%! There are many reasons, opinions and theories explaining the sudden rise in mortgage rates. Here is some “expert” analysis:

According to Robert Lenzner for Forbes, The bear market ended March 9^th and the end of the worst recession since the 1930s or the mid 1970s is plainly in sight. The yield curve – the difference between short-term and long-term securities – usually widens in advance of an economic recovery, and it has done so. Housing, the genesis of the crisis, is showing signs of improvement and even amelioration. Pending sales were up 6.7% in April, even if prices are still in the tank.

“There are two legs to that story, both of them bad. As yields on the 10-year go higher, the more attractive that investment would be to equity investors, so there is an asset allocation argument to be made,” said Art Hogan, chief market strategist at Jefferies & Co. “And, the Fed would like to keep yields lower, or at a favorable rate to help the recovery,” said Hogan.

“Rising interest rates will probably begin putting modest valuation pressure on the equity market as the yield on the 10-year Treasury note moves above 4%,” wrote Fred Dickson, chief market strategist, Davidson Companies, in a research note.

“Mortgage rates are heading higher as measured by Bankrate’s 30 year mortgage which rose to 5.45%. Rates are up 45 basis points in the last two weeks as Treasury rates have spiked higher. The recent rise in mortgage rates will probably dampen home sales and will certainly threaten stability in the consumer and household sector,” said Dan Greenhaus, an analyst at Miller Tabak Equity Strategy Group.

Federal Reserve Chairman Ben Bernanke, on June 3^rd, “In recent weeks, yields on longer-term Treasury securities and fixed-rate mortgages have risen,” he told Congress. “These increases appear to reflect concerns about large federal deficits but also other causes, including greater optimism about the economic outlook, a reversal of flight-to-quality flows, and technical factors related to the hedging of mortgage holdings.” 

 Here is this week’s forecast from the Mortgage Success Systems, LLC:

 “Bonds have traded lower recently, causing home loan rates to move higher. The reasons are many, but certainly due in part to all the extra Bond supply in the market. The Treasury has to have some way to pay for all the massive government stimulus plans, so Treasury auctions have been increasing dramatically – but the added supply is driving prices lower, with home loan rates moving higher. I will be watching closely to see if this trend continues.”

My observations… The bond market is way oversold and we should see a reversal soon as all of the impact from mortgage refinancing works its way through the system. There is a tremendous supply which is not keeping up with demand. Once all of the excess paper from the refinance boom is bought, the appetite for more supply will be there and yields will lower although more prognostications do not have rates as low as we have seen in recent months. Higher mortgage rates have had their impact on new mortgage applications. According to the Mortgage Bankers Association, refinance applications have dropped 24.1% to its lowest level since February 6. Purchase applications rose 4.3%. It appears that buyers are sensing prices leveling off and rates starting to climb. First time buyers want to take advantage of the $8000 tax credit before it runs out on November 30. The economy is showing signs of improvement. The stock market is up 37% since March! If you are interested in applying for a mortgage, call me, David Wolsky at 520-977-3300 during regular business hours. I have been origination mortgage since 1994 in Tucson, AZ.

For more infomation on the subject of T-Bills, read The Bond War – Why Paul Krugman and Niall Ferguson are hammering each other about T-Bill interest rates written by Daniel Gross and posted on www.slate.com. Article URL: http://www.slate.com/id/2219769/

Bonds took another beating today as investors shunned safe haven instruments in exchange for riskier investments. Mortgage Bonds did trade briefly higher at the open but fell off a cliff after news from China that manufacturing in that country was at a 3 month high signaling that the global recession may be coming to an end.

In the past week we have seen the average mortgage rate jump a half point higher! 5.25% is certainly a great low rate, but 4.75% was available only a few days ago. Bond yields are surging because the economy is showing signs of improvement such as the June 1st report showing manufacturing shrank as at a slower pace and construction spending rose. Let’s hold off on the champagne for now because manufacturing shrank, but not as much as expected. Another reason that bond traders are getting jittery is because of the fear of inflation. Bonds have fixed rates and their value erodes with inflation. Conversely to stocks, bond yields increase whenever bonds are sold and yields lower when bought. According to Nobel Prize winning economist, Paul Krugman in his May 28th column The Big Inflation Scare, the threat of inflation is unfounded in the current economic environment. Krugman points out the lack of inflation right now. Prices are down from a year ago and deflation has more potential than inflation (as I write this blog on June 1st, 2009). Krugman also indicates that even though the Fed is printing money and buying debt, there still isn’t a precedent for inflation as banks have been repaying the Fed. Plus the banks are sitting on reserves rather than lending out their money. Is the economy roaring back? Hardly! Maybe the eyes of the financial markets. Those guys read the tea leaves differently than the rank and file. I still see economic issues from my vantage point on the front lines of the housing market. Credit is still tight, property values are groping to level off and now rates are increasing. The job market is still lousy and the wave of layoffs continues to build.

As for the mortgage market, today’s Wall Street Journal suggests that low rates may be disappearing fast. The article goes on to suggest that the rise in interest could be ominous for the housing market at such a precarious time for our economy. The low rates and tax credits for first time home buyers has stimulated the housing market but higher rates could throw a wrench into the recovery. When rates go down signifcantly, refinancing your home could save hundreds of dollars a year. Will the lower rates come back? It’s hard to say. We saw some significant swing in bond yields last week. It could go down, just as fast as it went up so strap on your seat belts. It is likely that we will see rates settle down in the weeks to come, but it would be unlikely for them to reach the 4.75% we saw last week. Stay tuned and visit my site, www.livingintucson.com for timely commentaries on the mortgage market. Call David Wolsky at 520-977-3300 or email me at david@davidwolsky.com for all of your Tucson mortgage needs.

Mortgage bonds have seen steep sell-offs for the past four days which will impact the housing recovery and slow down the pace of refinances! We have had multiple rate increases since last week. The sell-off will put added pressure on an overloaded system to close loans before rate locks expire. As I write this update on May 27th (around 11:00 A.M.), mortgage bonds have dropped over 350 basis points since May 20th. The bonds are at the levels we saw in March when the Federal Reserve announced their strategy to purchase mortgage bonds and push rates lower which ignited a mortgage bond rally dropping bond yields. Let’s see if the Fed will try to calm the markets by purchasing more bonds and stopping the bleeding. Eventually, the bond market will find a floor of support and bounce back. Keep in mind, rates are still near historic lows and the conditions for buying a home are still excellent. I am only trying to point out the drastic selling of mortgage bonds within the last week.

Here’s an article from Bloomberg by Jody Sheen:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aw90LMfkBOeU&refer=home

If you are interested in buying or refinancing a home, contact David Wolsky (that’s me!) at 520-977-3300 for all your mortgage needs in Tucson, Arizona. I am licensed throughout the state.

HVCC (Home Valuation Code of Conduct) is a work in progress. HVCC is the new legislation that went into effect on May 1^st, 2009 for the appraisal process which forbids loan originators (that’s fancy talk for loan officers) and loan processors from having any direct communication to the appraiser. The original intent of the program sounded good on paper. Unfortunately, the implementation of this program leaves much to be desired. Of course, this is coming at the worse time for our industry as real estate sales are extremely sluggish and credit is already tight.

When appraisals are ordered for a refinance, the loan amount and estimated value are not furnished to the appraiser. A contract is submitted to the appraiser for a purchase transaction. Appraisals are obtained from appraisal management companies which can potentially add extra expense to the cost and quality of an appraisal. For example, some appraisal management companies charge borrowers a flat fee, such as $400 and then pay the appraiser only $200. These appraisers were receiving $325 for the same work prior to HVCC and they may decide to opt out of certain appraisal management companies leaving behind less experienced appraisers that are willing to work for reduced fees plus the quality is potentially worse thanks to inexperience. Ultimately, the consumer suffers. The program is only a few weeks old and we are already experiencing delays and lower values than expected. A borrower can try to get a second appraisal if they are unhappy with the results, however the appraisal management company may assign the same appraiser to the property or the value could be even worse from different appraiser! If the borrower wants to switch to another mortgage company for their loan, the appraisal in not transferable which means an additional expense for the consumer.

Check out this article by Kenneth Harney for more information on this subject: http://realtytimes.com/rtpages/20090511_washingtonreport.htm

Hopefully the program will be tweaked and improved. If you are unhappy, an email or phone call to your senator or congress person could help.

If I can assist you with your mortgage needs, please contact me, David Wolsky at 520-977-3300. My email address is david@davidwolsky.com.

The Arizona Daily Star published a good article last week by Adrian Sainz about mortgage rates that you can access by clicking here:

Puzzled by mortgage rates? Here’s Q & A help

According to the May 7th Freddie Mac survey the national average for 30 year fixed rate conventional mortgages is 4.84% with .7% in points. Wow!! Great rates!! Why is my quote higher or lower? Well…rates are not one size fits all. They are tiered based on your loan-to-value ratio (LTV) and your credit score. If you are purchasing a home and have a 10% down payment and a 680 FICO score, your rate will be slightly higher than a buyer with a 25% down payment with a 740 score. If you are refinancing your home and your LTV is over 70% and your score is under 740, you will likely be quoted a higher rate or higher points.

Fannie Mae (FNMA) and Freddie Mac have changed the rate or point structure significantly in the past eighteen months for borrowers with lower credit scores and higher LTV ratios. At the same time, credit guidelines have also tightened. Another recent change in mortgage rates is points! In the past fifteen years, lenders paid premiums or rebates to the originator in lieu of the borrower paying points to get a mortgage with low rates and fees. This year, the rebates are smaller and lenders are charging borrowers points. Here in Tucson at Sunstreet Mortgage, LLC, we have not seen as many zero point refinances or no cost refinances of conventional loans. One reason for this dynamic is because borrowers were refinancing the loans frequently and the lenders were not getting their money’s worth for the larger rebates. One positive aspect of the current rate and fee environment is the costs seem to pay for themselves within three years in most cases due to the historically low rates we are currently experiencing.

I would be happy to personally answer any mortgage related questions and concerns that you may have. I can be reached by calling me — David Wolsky – at 520-977-3300. I offer conventional, FHA and VA mortgages. I have fifteen years of experience originating mortgages. In fact, rates were double in 1994 than the current rates.