Mountain Living: Observations

The Home Affordable Refinance Program (HARP) was exanded on Monday. New guidelines were promised that should allow more people to refinance.

I'm encouraged by the details of HARP II. The changes will allow more homeowners to refinance. However, until final details are disseminated by FNMA & FHMLC, it's impossible to know if all segmenst of the mortgage origination channel will have access to the changes.

Many of my colleagues are expressing doubts that they will be able to participate in originating these loans. When the original HARP program was announced, many features within the program were only available to the current servicer of the loan.

This left third party mortgage originators excluded from originating to the same standard as the current servicer. It's easy to understand why the numbers of homeowners taking advantage of the HARP program to date have been low.

Of primary interest to us will be the changes around mortgage insurance. Until now, borrowers with mortgage insurance (loans typically over 80% LTV) have been unable to take advantage of current low interest rates. The changes announced yesterday purport to address these issues.

We currently have two separate transactions on-hold as a result of low appraisals. One in particular has been in the same home for 15+ years and has a monthly household income of less than $3,500. For them, having a solution on the horizon will be welcome news.

The bottom line is that these changes mean more loans for people that currently can't get one. Before we get too excited, we'll have to wait and see how the changes are implemented and how much of the industry is given access to these loans. Until thne, it's difficult to speculate on the overall success or effectiveness of this announcement.

As always, if you have any questions or need anything, give us a call at 970.455.4131. ~ Regards, JB

It's always a good idea for real estate professionals to spend a little time each week browsing the state of real estate in other parts of the country. It helps shape your own personal views on where things have been and where they might be going.

A few links that caught my eye this morning...

• San Francisco: Bay Area homes sales up 6.6% in September as prices fall
• Maui: Maui County single-family home sales rise 20%, condo sales fall 22%
• Seattle: Jumbo loans may weigh on Puget Sound home sales

Things are selling but prices are easing down from 12 months ago. Personally, I think it's going to take 3% 30 year fixed rates for at least half a year to get this housing market really moving.

Have a great week folks. Interest rates inched up last week. This Monday morning is starting off with a slight improvement but we have a way to go to get back to the record lows seen two weeks ago.

We'll post an economic report tomorrow. As always if you have any questions, give us a holler at 970.455.4131. ~ JB

Here's the latest economic news as provided by our monitoring service. The trend the past 7 sessions in the bond market has been negative. Things are settling down across the pond which is bringing stability back to the stock market. For the time being, the best strategy is to get your applications in, consider options, and be ready to pounce the next time rates correct.

If we can help, give us a call at 970.455.4131. ~ JB

"The Institute for Supply Management reported that the monthly composite index of manufacturing activity unexpectedly rose to 51.6 in September after a reading of 50.6 in August. A reading above 50 signals expansion.

It was the 26th straight month of expansion. Total construction spending rose 1.4% to $799.1 billion in August, following an upwardly revised 1.4% decrease in July. Economists had anticipated a decrease of 0.2% in August.

Factory orders fell 0.2% in August to a seasonally adjusted $451 billion, following a revised 2.1% increase in July. Excluding the volatile transportation sector, orders also fell 0.2% in August.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending September 30 fell 4.3%. Refinancing applications decreased 5.2%. Purchase volume fell 0.8%.

The Institute for Supply Management reported that the monthly composite index of non-manufacturing activity fell slightly to 53 in September from 53.3 in August. A reading above 50 signals expansion. It was the 22nd straight month of expansion in the services sector.

Wholesalers increased their inventories 0.4% to $464.3 billion in August. This followed a 0.8% rise in July. Sales at the wholesale level rose 1% to $401.3 billion in August. On a year-over-year basis, sales were 15.2% higher since August 2010.

Initial claims for unemployment benefits rose by 6,000 to 401,000 for the week ending October 1. Continuing claims for the week ending September 24 fell by 52,000 to 3.7 million. The monthly unemployment rate remained unchanged at 9.1% in September.

Upcoming on the economic calendar are reports on international trade on October 13 and retail sales on October 14."

New home sales fell 2.3% in August to a seasonally adjusted annual rate of 295,000 units from a revised rate of 302,000 units in July. Compared to a year ago, new home sales were up 6.1%.

The Standard & Poor's/Case-Shiller 20-city housing price index — on a non-seasonally adjusted basis — rose 0.9% in July after a 1.2% increase in June. On a year-over-year basis, prices fell 4.1% compared with July 2010.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending September 23 rose 9.3%. Refinancing applications increased 11.2%. Purchase volume rose 2.6%.

Orders for durable goods — items expected to last three or more years — fell 0.1% in August after a revised 4.1% increase in July. Excluding volatile transportation-related goods, orders posted an identical monthly decrease of 0.1%.

In its third and final report for the second quarter of 2011, the Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at a revised annual rate of 1.3% in the second quarter of 2011, compared to the previous estimate of 1%. This follows a 0.4% pace of growth in the first quarter of 2011.

Pending home sales, a forward-looking indicator based on signed contracts, fell 1.2% in August after a 1.3% increase in July. On a year-over-year basis, pending sales are up 13.1%.

Initial claims for unemployment benefits unexpectedly fell by 37,000 to 391,000 for the week ending September 24. Continuing claims for the week ending September 17 fell by 20,000 to 3.7 million.

Upcoming on the economic calendar are reports on construction spending on October 3 and factory orders on October 4.

-------------

As always if you have any question about where rates are headed, please give us a call at 970.455.4131. Make it a great week.

In a welcome sign of strength, existing home sales rose 7.7% in August to a seasonally adjusted annual rate of 5.03 million units from an upwardly revised 4.67 million units in July. The inventory of unsold homes on the market decreased to 3.577 million, an 8.5-month supply at the current sales pace, down from a 9.5-month supply in July.

The National Association of Home Builders/Wells Fargo monthly housing market index fell one point in September to 14. An index reading below 50 indicates negative sentiment about the housing market.

Retail sales fell 1.2% for the week ending September 17, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 3.4%.

The combined construction of new single-family homes and apartments in August fell 5% to a seasonally adjusted annual rate of 571,000 units. Single-family starts decreased 1.4%. Multifamily starts fell 13.5%. Applications for new building permits, seen as an indicator of future activity, rose 3.2% to an annual rate of 620,000 units.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending September 16 rose 0.6%. Refinancing applications increased 2.2%. Purchase volume fell 4.7%.

The index of leading economic indicators — designed to forecast economic activity in the next three to six months — rose 0.3% in August, following a 0.5% increase in July.

Initial claims for unemployment benefits fell by 9,000 to 423,000 for the week ending September 17. Continuing claims for the week ending September 10 fell by 28,000 to 3.7 million.

Upcoming on the economic calendar are reports on new home sales on September 26, the housing price index on September 27 and pending home sales on September 29.

Treasuries remain under pressure as equity markets around the globe rally following yesterday's CNBC report that European authorities were constructing the framework for a rescue plan. Greek leaders appealed for support at home and abroad to avert default before key legislative votes as the U.S. criticized European leaders for moving too slowly to stem the debt crisis. In recent remarks from Tim Geithner and the President the heat is building around the world for something to be done, and quickly. Geithner said Europe has “not very much time” to act. Geithner called on euro-area leaders to beef up their 440 billion-euro ($594 billion) bailout fund, warning that failure threatened “cascading default, bank runs and catastrophic risk.”

Global markets rallied overnight as optimism increased that finally---maybe--Europe's leaders have gotten the message that continued delays will send the US back into recession along with all of Europe and drag down other regions with them. “What I learned in Washington is that Europeans finally get it,” Mohamed El-Erian of PIMCO said in an interview this morning; “they are going back and will try to do something about it. This was a very important wake-up call for Europe.”  A European Commission spokesman told reporters in Brussels yesterday that euro-area ministers are unlikely to approve the payment at their Oct. 3 meeting as originally planned. Greece has said it needs the money next month.

We are locking loans today. If you need any help or have questions, give us a call at 970.455.4131.

Today's news by the fed that lower rates may be around the corner stimulated some questions from clients that have recently locked with us.

Can I re-lock a lower rate while my loan is In-Process if the Fed drops rates?

Picking the right time to lock is tough. Fortunately, if there is a significant decrease in rates (.5% - .375%) while a loan is in process, many of our lenders will renegotiate. That is our primary remedy to take advantage of situations where rates drop further while a loan is locked and waiting to close.

While Fed actions may improve yields on the long end of the bond it is not a certainty and there are many variables that can change the climate fast. So we always recommend clients lock and remove the uncertainty if a deal makes sense for them.

Finally, the primary reason we sell no closing cost loans is that even if you don't time the market at the bottom, if the market continues to move lower, you can continue to step down with no closing cost loans.

Since there is nothing being added to your loan balance on a no cost loan, you have nothing to lose if/when you choose to pursue another financing at a later time.

As always, if we can be of assistance, please call at 970.455.4131 - We are still getting loans done in three weeks!

Hurray Beer!

Frisco's Oktoberfest is back after a few years hiatus. The event was on-hold because Main Street vendors & residents felt the event created too many problems. Road closures, long hours, and excessive noise & drinking resulted in a decision that the 'party' be moved.

With the recent development of the Frisco Peninsula area, Oktoberfest was reborn.  A picturesque mountain landscape in a location that makes everyone happy.

I'll be in attendance volunteering Friday evening and definitely NOT volunteering on Saturday. :) If you are in the neighborhood, stop by for some beer, music, food & fun. The event kicks off tonight with Denver's Polkanauts.

Want to attend? Check out the following links for more info about Frisco Oktoberfest:

Getting to Oktoberfest

TwitPic of a Polka band via @bberwyn

Writeup in the Summit County Voice

Official website - Great video of organizers discussing the event on Summit Sunrise

Summit Sojourner - Frisco Oktoberfest – Labor Day Weekend Prost!

Summit Daily - Authentic Frisco Oktoberfest offers echoes of Munich

Have a good weekend. As always if you need help with your purchase pre-approvals, we are on-call and ready to help. 970.455.4131.

Prost! ~ JB

I received this from one of my account executives with his permission to re-post here. I thought this was an interesting report in that it focused primarily on inflation commentary. As always, if there is anything we can do to help you with financing, don't hesitate to contact us at 970.455.4131.

Inflation Climbs

Concerns about the pace of global economic growth continued to drive financial markets, causing investors to shift to less risky assets. This trend was favorable for mortgage rates, which ended the week lower.

Debt troubles in Europe, worries about the health of European banks, and weaker than expected economic data in the US have contributed to an outlook for slower global economic growth. The reaction from investors has been to shift from riskier assets such as stocks to relatively safer assets such as gold and bonds. Despite the S&P downgrade of US debt, US government-guaranteed bonds, including mortgage-backed securities (MBS), have been a primary safe haven for investors. During the week, 10-yr Treasury yields reached a low below 2.00% for the first time since 1945, and MBS prices climbed to new highs. At these levels, though, it may be difficult for yields to move much lower.

Adding to the concerns of investors, the economic data released this week showed that inflation rose faster than expected in July. The July Consumer Price Index (CPI) increased 0.5% from June, above the consensus forecast of 0.2%, and was 3.6% higher than one year ago. Core CPI, which excludes food and energy, rose 1.8% from one year ago, which was also higher than expected. Core CPI was at a level of 0.8% at the end of 2010. The July Producer Price Index also increased at a faster than expected pace. Rising inflation makes the Fed more reluctant to provide additional monetary stimulus. The inflation data may have prevented mortgage rates from dropping even further this week.

Retail sales fell 1% for the week ending August 20, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 3%.

New home sales fell 0.7% in July to a seasonally adjusted annual rate of 298,000 units from a downwardly revised rate of 300,000 units in June.

Orders for durable goods — items expected to last three or more years — rose 4% in July after a revised 1.9% increase in June. Excluding volatile transportation-related goods, orders posted a monthly increase of 0.7%.

The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending August 19 fell 2.4%. Refinancing applications decreased 1.7%. Purchase volume fell 5.7%.

The Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at a revised annual rate of 1% in the second quarter of 2011, compared to the initial estimate of 1.3%. This follows a 0.4% pace of growth in the first quarter of 2011.

The Reuters/University of Michigan consumer sentiment index for August's final reading rose to 55.7 from a preliminary reading of 54.9, which was the lowest level since May 1980.

Initial claims for unemployment benefits rose by 5,000 to 417,000 for the week ending August 20. Continuing claims for the week ending August 13 fell by 80,000 to 3.64 million, the lowest level since September 2008.

Upcoming on the economic calendar are reports on pending home sales on August 29, the housing price index on August 30 and construction spending on September 1.

JBerman Group Prognosis: Rates stay low this week. Lock em in. We are turning clean files in under three weeks right now. Full Pre-approvals in 24-48 hours.