AARON VANTROJEN

MARKET UPDATE - OCTOBER 2010

2010-09-24T08:07:00.000-07:00

STILL UPSIDE DOWN – REFINANCE OPTIONS MAY NOW BE AVAILABLE

There are still no miracle government programs to solve most homeowner’s woes if you owe more than your home is worth; but you still may have some options.

Conventional Refinance: If you have a conventional mortgage (must be owned or guaranteed by Fannie Mae or Freddie Mac) without mortgage insurance, you may be able to refinance up to 125% of the home’s value. Owe more than 125%? With enough compensating factors (i.e. credit, assets, etc.), you may be able to get an appraisal waiver and slip into the 125% range you need to be in. Rates are slightly higher than a standard conventional loan, but with good credit, they are still quite low.

FHA Streamline Refinance: FHA streamlines do not require an appraisal. It does not matter how much you owe verses the value of the home. Anyone with a 5% interest rate or more should look into a streamline refinance. A streamline refinance allows the homeowner to lower their rate with little or no closing costs, and no appraisal. It will not solve your value issues, but it will lower your payment.

“Short’ Refinance: Starting September 7th, FHA will allow “short” refinances. The current first and second mortgage (if applicable) must agree to lower the amount owned to 115% of the property’s current value. The current mortgage(s) must be conventional, and can not be owned or guaranteed by Fannie Mae or Freddie Mac. The mortgage(s) can be negotiated down allowing the homeowner to lower the interest rate and/or improve the terms of the mortgage.

THE LONGEST RECESSION SINCE WORLD WAR II IS OVER – REALLY?

The National Bureau of Economic Research stated that the recession lasted 18 months and was officially over in June of 2009.

Things have been getting better, and for over a year? Did I miss the invite? Less than 10% of the jobs lost during the recession have returned (cnnfn.com). 27 states reported higher unemployment in August. Housing is still in crisis mode. Millions of people are out of work and can not provide for themselves. The economy is not retracting, but who is it expanding for? Statistically the recession may be over, but mainstream America sure doesn’t know it.

NEW HOMES SALES NEAR RECORD LOWS

“New home sales in August came in at an annual rate of 288,000, near record lows, the government says.” – cnnfn.com

AUGUST STATISTICS FOR ARIZONA HOME SALES

Short sales: 29% of all sales.
Median Home Price: $119,000
Closings in August: 7,358 (43% Cash / 28% Conventional / 25% FHA / 4% VA)
Historical:
Most homes sold: 06/2006
In June of 2006, 10,252 homes were sold with a median sales price of $250,000.
Least homes sold: 01/2008
In January of 2008, 2,912 homes were sold with a median sales price of $220,000.
As of 08/2010
In August of 2010, 7,358 homes were sold with a median sales price of $119,000.

Arizona home sales are only 30% off all time highs. Yes, only 30%. If you consider how out of control things were a few years ago; down only 30% is quite remarkable. First time homebuyers and investors are flooding the market. With the median home price now at $119,000, down from $220,000 just a few years ago, there are plenty of opportunities in the Arizona market.
- Statics from Fletcher Wilcox, Grand Canyon Title Agency

HOUSING IN RECOVERY – SLOWLY BUT SURELY

“Housing starts in August unexpectedly rose to their highest level in four months, the U.S. Commerce Department announced today. The 10.5% increase, reflecting a seasonally adjusted annual rate of 598,000 units, is the biggest rise in housing starts since last November.” – fortune.com

PROBLEMS WITH HOMWBUYER TAX CREDIT

“Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government. According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.”

“The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased. Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home's purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.”

“It is also taking a look at all those deceased taxpayers who received credits. The inspector general reported that 1,326 single people listed as dead by the Social Security Administration claimed more than $10 million in credits. The IRS threw out 528 of those 1,326 claims, saving $4 million.” – cnnfn.com

CALIFONIA STABALIZES

California home prices have increased month after month for the past nine months. California home prices are up nearly 10.5% in the last year, landing the median home price at twice the national average. The median home price for California homes is now at $315,000.

CHINA AND JAPAN CONTINUE TO HAVE AN APPITIETE FOR U.S. DEBT

“China resumed buying U.S. government bonds in July, but Japan bought more. Treasury said Thursday in its monthly international capital report that China, the biggest U.S. creditor, bought $3 billion worth of Treasury debt in July, bringing its total to $847 billion. The second-biggest lender to the United States, Japan, continues to close the gap with China. Japan expanded its purchases of U.S. bonds for the third straight month, adding $17 billion worth of Treasurys to its stash, now worth $821 billion.” – cnnfn.com

RATE WATCH

Mortgage Type     Interest Rate     APR

30 Year Fixed      3.875%            4.005%
15 Year Fixed      3.500%            3.729%
5/1 ARM             3.000%            3.018%

Interest rates as of 09/24/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

MARKET UPDATE - SEPTEMBER 2010

2010-09-01T09:37:00.000-07:00

HOW LOW CAN THEY GO

Mortgage Type      Interest Rate      APR

30 Year Fixed       3.875%             4.005%
15 Year Fixed       3.500%             3.729%
5/1 ARM               3.000%              3.018%

Interest rates as of 09/01/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

FHA STREAMLINES CONTINUE TO SURGE

If you currently have an FHA mortgage with a rate of 5.000% or higher, you may be able to refinance with no appraisal, and little or no closing costs. The recent drop in interest rates have caused an influx of borrowers refinancing to take advantage of the FHA Streamline refinance option. Call today if you have an FHA mortgage at 5.000% or higher. 480-368-2000.

FHA NEEDS CASH

In an effort to increase cash reserves, FHA is modifying the upfront mortgage insurance premium and monthly mortgage insurance charge. Currently the upfront mortgage insurance premium is 2.25% of the loan amount, which is rolled into the base loan amount. The current monthly mortgage insurance fee is .55%, which is part of the monthly mortgage payment.

Effective October 4th, 2010, the upfront mortgage insurance premium will be reduced from 2.25% to 1.0%. The monthly mortgage insurance fee will be raised from .55% to .85% - .95%; which will vary based on certain risk factors of the file.

Below is an average effect the changes will have on borrowers payments after October 4th.

Loan Amount      Current Payment      New Payment      Annual Increase

$100,000             $563.92                      $582.58                $223.92
$200,000             $1,127.84                   $1,165.17             $447.96
$300,000             $1,691.76                   $1,747.76             $672.00
$400,000             $2,255.67                   $2,330.34             $896.04

*Numbers based on a 4.5% interest rate.

The changes to mortgage insurance is equal to an approximate 0.375% increase in interest rate.

This will impact some borrowers’ ability to purchase a property after October 4th, or help drive down home values further.

NATIONAL HOME PRICES UP FOR THE YEAR

“National home prices jumped a substantial 3.6% in the past year, according to the S&P/Case-Shiller Home Price Index released on Tuesday. Prices also climbed 4.4% in the second quarter compared with a 2.8% plunge in the first quarter.” – cnnfn.com

The tax credit is the largest contributing factor for the increase in home prices. Industry insiders predict that home prices will level off, and potentially see a decline in the coming months, now that the tax credit has expired, and employment is not dramatically improving. Without another stimulus from the Federal Government, the housing market will remain shaky for the foreseeable future.

HOME SALES TAKE A BEATING

Home sales hit a 15 year low.

“Existing home sales sank 27.2% in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units. Much of that drop is attributed to the end of the $8,000 homebuyer tax credit.” – cnnfn.com

TAX CREDIT 2010 & DOWNPAYMENT ASSISTANCE

The housing market is on the slide, and there is no hope in the foreseeable future; but there are rumors of help on the way.

A new buzz is stirring about the possibility of a new Government tax credit for home buyers to once again kick start the housing market. Numbers are now surfacing, and it is apparent that the tax credit had a much bigger impact on housing than many critics of the tax credit claimed.

Did someone say “Downpayment Assistance?” H.R. 600 FHA Seller-Financed Downpayment Reform Act of 2009 is not dead; not yet. Downpayment assistance allowed the seller to contribute the buyer’s minimum downpayment on FHA mortgages and was eliminated a couple of years ago when there was a push for everyone to have “skin in the game.” Downpayment assistance allows borrowers to essentially purchase a home with no money down. With the current housing market sputtering to a standstill, downpayment assistance may be making a come back.

If either the tax credit or downpayment assistance resurfaces, the housing market will once again erupt with new buyers coming off the fence and out of the woodwork. Yes, it may just be a short term Band-Aid, but the Government will want to stop the bleeding before there is hemorrhaging.

MARKET UPDATE - AUGUST 2010

2010-07-29T16:50:00.000-07:00

INTEREST RATES REMAIN AT HISTORIC LOWS

Mortgage Type         Interest Rate          APR

30 Year Fixed          4.125%                 4.255%
15 Year Fixed          3.750%                 3.977%
5/1 ARM                 3.000%                 3.326%

Interest rates as of 07/29/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

FHA STREAMLINES SURGE

If you currently have an FHA mortgage with a rate of 5.250% or higher, you may be able to refinance with no appraisal, and little or no closing costs. The recent drop in interest rates have caused an influx of borrowers refinancing to take advantage of the FHA Streamline refinance option.

CONSUMER PROTECTION - FINANCIAL REFORM BILL PASSES

President Obama signed into law the most sweeping regulatory financial reform bill since the Great Depression. The Bill will take months, if not years to decipher and implement; and it will be even longer before all of the ramifications of the Bill are truly felt, by Wall Street, and the public. With news headlines that read “Wall Street Rejoices, Financial Reform Bill Passes,” you can only imagine who is going to control the implementation of the bill, and who will ultimately benefit from it. What is now known is that the Bill fails to address some of the most pressing concerns regarding the prevention of future financial crisis; and the consumer is likely to pay a dear price for government protection.

The bill does not address CEO and executive compensation. “Data shows that these are leading causes of the Great Recession.” – fortune.com

Reform of the two powerhouse institutions, Fannie Mae & Freddie Mac, both seized by the Federal Government, who are responsible for nearly half of all mortgages originated in the United States where not addressed in the bill.

Financial reform will likely further tighten credit requirements for consumers and increase costs on mortgage loans. If you thought that the mortgage process is difficult now, wait until this bill sets in. Added disclosures and more red tape is surely an outcome of the bill. The up to 50 page current loan application will not likely be deemed enough disclosure for the consumer. Added disclosures do not make a more informed consumer; it generally means the consumer will be less likely to read it.

“Consumers will see "safer" mortgages, but fewer of them will qualify. They will have fewer choices of mortgage lenders as concentration of mortgage lending by a few big banks accelerates. And virtually all mortgages will be government backed for the foreseeable future, with little chance of unwinding federal support. Uncle Sam will be the nation's mortgage lender for most of the next decade.” – The Huffington Post

Although it will take some time for the bill to be implemented, one thing is for certain. Consumer protection will come at a cost, and Wall Street will not be the one paying for it.

We will be closely following the Financial Reform Bill and its fallout. Please stay tuned.

HOMES SALES IN PHOENIX – UP IN JUNE

“Home sales in the Phoenix Metro Statistical Area (MSA) rose 11% from May, but fell short of a year ago for the second consecutive month. A total of 10,430 new and resale houses and condos closed escrow last month in the Maricopa-Pinal counties metropolitan area, up 11.2% from May, but down 2.8% from a year ago, according to MDA DataQuick.” – housingwire.com

NATIONALLY EXISTING HOME SALES SLIDE AGAIN

Existing home sales were down just over 5% in June. Existing home sales were up 9.8% from June of last year according to the National Association of Realtors.

NATIONALLY NEW HOME SALES SPIKE UP

The sale of new homes spiked up nearly 24% in June over May figures. New home sales are down 17% from June of last year. New home sale prices did drop 1.4% in June.

“An estimated 210,000 new homes were for sale at the end of June, the lowest inventory level in nearly 42 years. At the current sales pace, the government expects it will take 7.6 months to sell through that inventory, down from 9.6 months in May. Six months of inventory is considered normal market conditions.” – cnnmoney.com

BANK BAILOUT 2010

As of July 27th, 2010, 103 FDIC insured banks have been seized by the Federal Government year to date. 140 failed in 2009. 25 failed in 2008. 11 failed between 2003-2007. – fdic.gov

Looks like we are on pace for a record setting year.

HOME OWNERSHIP LOWEST IN OVER A DECADE

“The Census Bureau said the home ownership rate fell to 66.9% in the second quarter of 2010, down half a percentage point from the previous year. The home ownership rate was 67.1% in the first quarter of the year.” – cnnmoney. This is the lowest home ownership has been since 1990.

MARKET UPDATE brought to you by:

Aaron VanTrojen

PRESIDENT
GENEVA FINANCIAL, LLC.
Mortgage Banker licensed in:
AZ: BK-0910215, CA: 603G564, ID: MBL6976, NV: 3195, OR: ML4799, WA: 510-MB-49323
Geneva Financial, LLC NMLS License: 42056
Loan Officer NMLS License:15420
http://www.genevafi.com/

PARTNER
GENEVA REAL ESTATE & INVESTMENTS, LLC.
Real Estate Brokerage licensed in: AZ, CA, WA.
http://www.genevare.com/

Office: 480-368-2000
Cell: 602-793-6383
Email: aaron@genevafi.com
Facebook: www.facebook.com/vantrojen

MARKET UPDATE - JULY 2010

2010-06-24T10:24:00.003-07:00

INTEREST RATE UPDATE

Mortgage Type Interest Rate (APR)

30 Year Fixed 4.250% (4.381%)
15 Year Fixed 3.750% (3.977%)
5/1 ARM 3.250% (3.407%)

Interest rates as of 06/24/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.

NEW HOMES SALES CRASH TO A RECORD LOW

New homes sales in May fall over 18% from the previous year. This is the slowest month for new homes sales since the Commerce Department started recording such data going back to 1963.

The fall in new homes sales in May comes after good numbers in April which were likely inflated due to the first time home credit that ended for buyers not under contract by April 30th. Those that were under contract by April 30th must close on those transactions by June 30th. There are hopeful signs that the deadline will be extended until September 30th, as many homebuyers are struggling to close on time due to the slow and tumultuous underwriting process. Yes, you read that right. Home buyers that were under contract on or before April 30th may need until September 30th to close on their mortgage transaction; four plus months!

“The government report showed that the median price of new homes sold in May was $200,900, down less than 1% from April but a 9.6% drop from May 2009. An estimated 213,000 new homes were for sale at the end of May. At the current sales pace, the government expects it will take 8.5 months to sell through that inventory, up from 5.8 months in April. Six months of inventory is considered normal market conditions.” – cnnfn.com

Existing home sales, according to the National Association of Realtors, declined 2.2% in May. “The NAR report showed that the median price of homes sold in May was $179,600, up 2.7% from a year ago. Just under a third of homes sold during the month were distressed properties.” – cnnfn.com

HOME SHORTAGE

According to a CNN article published in June, the number of new homes started in April was 672,000. Based on the population growth of the United States, those housing numbers are less than 50% of the number of homes that would be needed long term to meet the demand of our Nation’s current growth. Until the job market recovers there may be an over abundance of homes on the market, but that could quickly lead to a housing shortage with an economic recovery.

BUY AMERICAN AND AMERICAN DEBT

The United States is buying what it seems to believe in; U.S. Treasury debt. The U.S. surpassed Japan and is now the second largest holder of Treasury debt. China still remains the number one holder of Treasury debt.

China currently holds $895 billion in U.S. Treasurys. The U.S. households own $796 billion. Japan places third at $785 billion.

The surge in U.S. bonds by U.S. households is once again a flight to safety, or perceived safety, as the U.S. stock market remains volatile and the financial crisis in Europe unfolds.
HOMEPATH REVISITED

Looking for good financing options on a new purchase? HomePath offers some of the best financing available if purchasing a home owned by Fannie Mae. HomePath allows a qualified buyer to purchase a Fannie Mae owned home with little money down, NO mortgage insurance, and no appraisal. That will save you both time and money. Fannie Mae will also credit 3.5% of the purchase price towards buyers closing costs.

Owner Occupied: 97% Loan to Value – No Mortgage Insurance
Non Owner Occupied: 90% Loan to Value – No Mortgage Insurance

Find properties at www.HomePath.com. For financing options, contact Geneva Financial, LLC for the most competitive HomePath financing options.
HOME OWNERS SEEKING HELP

Refinance up to 105% of your homes value. If you owe more than your home is worth and do not know what to do, please give us a call. Geneva Financial, LLC offers federally funded mortgage options that may allow you to refinance your current mortgage into a lower monthly payment. We do not do loan modifications.

Need help with a short sale. Geneva Real Estate & Investments, LLC has many seasoned short sale real estate specialists that will help sell your home at no cost to you.

Our two companies are working hard to help distressed homeowners.

MARKET UPDATE brought to you by:

Aaron VanTrojen

PRESIDENT
Geneva Financial, LLC
Mortgage Banker licensed in:
AZ: BK-0910215, CA: 603G564, ID: MBL6976, NV: 3195, OR: ML4799, WA: 510-MB-49323
Geneva Financial, LLC NMLS License: 42056
Loan Officer NMLS License:15420
http://www.genevafi.com/

PARTNER
Geneva Real Estate & Investments, LLC
Real Estate Brokerage licensed in: AZ, CA, WA.
http://www.genevare.com/

Office: 480-368-2000
Cell: 602-793-6383
Email: aaron@genevafi.com
Facebook: www.facebook.com/vantrojen

MARKET UPDATE - MAY 2010

2010-05-03T09:48:00.001-07:00

BAILOUTS AND BONUSES – BUT NOT FOR HOMEOWNERS

On Tuesday, April 27th, Goldman Sachs executives testified before a Senate subcommittee on investigations into potential acts of unethical and even fraudulent activities committed by Goldman Sachs.

Goldman Sachs sold pools of mortgages (which included a high percentage of subprime mortgages) which at the time were rated as high as AAA investments to investors. Goldman Sachs sold these investments “long” (meaning the investor would make money if the loans performed as they were rated). At the same time Goldman Sachs was selling those AAA mortgage pools to investors, Goldman Sachs was “shorting” (betting the investment would drop in value or default) those very same mortgage pools in anticipation that those mortgage pools would suffer losses through loan default. It was a great bet. Those mortgage pools rated AAA by Moody’s and Standard and Poor’s defaulted at an alarmingly high rate.

Creditors were wiped out. Stock holders suffered substantial losses. Millions of homeowners lost (and continue to lose) their homes. Several European countries are on the verge of default. The global economy is now awakening from a U.S. housing boom hangover.

Goldman Sachs on the other hand made billions of dollars betting against those mortgage pools they were selling to investors. The U.S. Government even paid $13 billion to Goldman for bets it made against the mortgage bonds that AIG insured, but was unable to repay. AIG was bailed out by the U.S. government to the tune of $180 billion dollars.

As Goldman Sachs gets grilled by the Senate subcommittee on unethical and fraudulent activity, Goldman Sachs stock price closed up $1.01 on April 27th as the Dow Jones falls $213.04. Shares finally tumble 9% on Friday as Goldman Sachs rating is finally cut.

Lehman Brothers and Bear Sterns were allowed to fail, but most of the large Wall Streets banks were bailed out or broker off by the U.S. Government. CEOs and top executives in most cases were not fired, and still received huge year end bonuses; for making disastrous bets.

As the dust begins to settle and the U.S. housing market begins to show some signs of recovery, there will be no bailouts or bonuses for homeowners. Tax payers will simply float the bill for one of the largest financial disasters to hit the U.S. economy; as Wall Street firms continue to make billions. A broken system or capitalism at its finest?

NEWS FROM THE ARIZONA ASSOCIATION OF MORTGAGE PROFESSIONALS

FHA has announced they are considering raising the annual fee from .55 to 1.5 percent. This is basically triple the current level.

HR 5107 Rural Housing Bill is taking shape in Congress. It has proposals taking the up front fee from 2% to 3.5% and adding an annual fee of .5%. This will allow them to be self funded.

The Dodd bill for Restoring American Financial Stability Act of 2010 has legs. The recent epiphany by Congress to investigate Goldman Sachs has pushed the odds of passage to over 80%. This is a very bad bill. There is language supporting the idea that no company can sell 100% of their originations. They must retain at least 5% just as the FED is considering. Next, there would be a great possibility that a new agency would be formed to take the place of the FED, OCC, FDIC, HUD and others. This could prove disastrous for community banks and small regional banks. The MBA (Mortgage Bankers Association) does not support this bill and put out a warning to the Senators. The Arizona Chapter of the MBA recently secured a meeting with both Senators Kyl and McCain to listen to their concerns about the bill. It is amazing that they can get both Senators to appear together in one room on the same day to speak with 50 bankers. They must be living right and writing big checks!

-Information provided by Jody Davis of the Arizona Association of Mortgage Professionals

FAIRWELL HOMEBUYER TAX CREDIT

The homebuyer tax credit is no more; at least for those not under contract as of April 30th. Those that are in contract must close by the end of June 30th.

There is no evidence that the government plans to extend the homebuyer credit beyond the June 30th date.

Those that are still interested in purchasing a home, but were unable to meet the deadline, do not fret. Homes are still very reasonably priced, and interest rates are hovering at historic lows. However, both home prices and interest rates are expected to rise in the near future.

NEW HOME SALES SKYROCKET

“New home sales improved in March at the fastest single-month rate in 47 years, according to a government report released Friday. New-home sales rose 26.9% to a seasonally adjusted annual rate of 411,000 last month, compared to an upwardly revised annual rate of 324,000 in February, the Census Bureau said.” – cnnfn.com

HOME PRICES ON THE RISE

“February home prices posted their first year-over-year increase since December 2006. The best performing market in February was San Francisco, which posted a double-digit gain over the past 12 months of 11.9%. San Diego home prices jumped 7.6% and Los Angeles gained 5.3%. The biggest loser continued to be Las Vegas, where prices dropped 14.6% over the past 12 months.” – cnnfn.com

EXISTING HOME SALES ON THE RISE

“Existing home sales jumped 6.8% in March. The National Association of Realtors reported that existing home sales rose last month to a seasonally adjusted annual rate of 5.35 million units, up from the revised rate of 5.01 million in February. Sales year-over-year was up 16.1%. Price and inventory: The median price of homes sold in March was $170,000, up 0.4% from March 2009. Distressed properties made up 35% of the houses sold during the month.” – cnnfn.com

INTEREST RATE UPDATE – AMAZING ARM RATES

Mortgage Type Interest Rate APR

30 Year Fixed 4.875% 5.011%
15 Year Fixed 4.250% 4.480%
5/1 ARM 3.250% 3.373%

Call today for your individual scenario rate quote.

Interest rates as of 04/30/10. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

HOME OWNERS SEEKING HELP

If you owe more than your home is worth and do not know what to do, please give us a call. Geneva Financial, LLC offers federally funded mortgage options that may allow you to refinance your current mortgage into a lower monthly payment. We do not do loan modifications.

Need help with a short sale. Geneva Real Estate & Investments, LLC has many seasoned short sale real estate specialists that will help sell your home at no cost to you.

Our two companies are working hard to help distressed homeowners. Contact us at anytime with any questions.

MARKET UPDATE brought to you by:

Aaron VanTrojen

PRESIDENT
Geneva Financial, LLC
Mortgage Banker licensed in:
AZ: BK-0910215, CA: 603G564, ID: MBL6976, NM: 3693, NV: 3195, OR: ML4799, WA: 510-MB-49323
Geneva Financial, LLC NMLS License: 42056
Loan Officer NMLS License:15420
http://www.genevafi.com/

PARTNER
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA.
http://www.genevare.com/

Office: 480-368-2000
Cell: 602-793-6383
Email: aaron@genevafi.com
Facebook: www.facebook.com/vantrojen

MARKET UPDATE - APRIL 2010

2010-04-02T08:44:00.002-07:00

HOMEBUYER TAX CREDIT ENDS THIS MONTH

To take advantage of the homebuyer tax credit, buyers must be under contract by April, 30th, 2010. The home must also close by June 30th, 2010 to qualify.
“There is little sentiment for continuing this program, especially because many consider the latest results to be disappointing. Even the Senate's biggest proponent of the homebuyer tax credit, Johnny Isakson, R-Ga., is ready to let it end. "He has no plans to introduce legislation to extend the credit," said Isakson's spokeswoman. "Part of the benefit of the tax credit was the urgency its sun-setting generated." – CNNMoney.com

FED HOLDS SHORT TERM RATES STEADY, BUT FOR HOW LONG

The Fed’s aggressive purchasing of mortgage backed securities to the tune of $1.25 trillion ended March 31st. Long term interest rates have remained stable with the 30 year fixed rates hovering around 5.0%. Long term rates will not drastically rise as long as investors step in to buy mortgage back securities.
“Fixed mortgage rates likely will rise less than a quarter of a percentage point in the next three months, the smallest increase for the second quarter since a drop in 2005, according to estimates by Fannie Mae and Freddie Mac.” - Bloomberg
The Fed also kept short term rates at historic lows; but for how long? The Fed held short-term interest rates unchanged in the range of 0.00 to 0.25 percent. The central bank stated that "economic activity has continued to strengthen and that the labor market is stabilizing." – CNNMoney.com
Short term rates will not likely begin to rise until there is solid signs of recovery in the economy; most notably the job market. Expect to see short term rates climb in the late third or forth quarter of 2010.

INTEREST RATE UPDATE

Mortgage Type Interest Rate APR
30 Year Fixed 4.875% 5.011%
15 Year Fixed 4.250% 4.480%

Call today for your individual scenario rate quote.
Interest rates as of 04/02/10. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

SALES DECLINE BUT PRICES STABILIZE

“Sales of existing U.S. homes fell in February for a third month and the number of properties on the market climbed by the most in almost two years, according to the National Association of Realtors. Purchases dropped 0.6 percent to a 5.02 million annual rate, the lowest level in eight months, and there were 3.59 million houses for sale, the biggest gain since April 2008.”
“At the same time, the S&P/Case-Shiller home-price index covering 20 U.S. cities showed signs that real estate values may be stabilizing. Home prices dropped 0.7 percent in January from a year earlier, the smallest annual decrease in three years, according to a report issued today. Measured monthly, the gauge rose 0.3 percent from December.” - Bloomberg

FASTEST APPRECIATING U.S. CITIES

CNN just reported the 25 U.S. cities with the highest estimated appreciation over the next year. It is not big percentage, but at least it is going the right direction.

Those cities in green are serviced by Geneva Financial, LLC and Geneva Real Estate & Investments, LLC.

Rank City Annual Increase

#1 Santa Rosa, CA 6.0%
#2 Cheyenne, WY 4.7%
#3 Kennewick, WA 4.6%
#4 Merced, CA 4.4%
#5 Fairbanks, AK 4.2%
#5 Bremerton, WA 4.2%
#7 Corvallis, OR 4.1%
#8 Tacoma, WA 3.9%
#9 Anchorage, AK 3.8%
#10 Bend, OR 3.3%
#11 Modesto, CA 3.2%
#12 Pueblo, CO 3.0%
#13 Bellingham, WA 2.9%
#14 Yakima, WA 2.8%
#14 Spokane, WA 2.8%
#16 Billings, MT 2.7%
#17 Olympia, WA 2.3%
#17 Napa, CA 2.3%
#19 Mount Vernon, WA 2.2%
#20 Glen Falls, NY 2.0%
#20 Great Falls, MT 2.0%
#22 Charleston, SC 1.5%
#23 Casper, WY 1.8%
#24 Medford, OR 1.7%
#25 Eugene, OR 1.6%

NEW UNDERWRITING GUIDELINES

In a bold attempt to reduce mortgage delinquencies and fraud, the following underwriting guidelines take effect immediately.

• All Borrowers’ Birth Certificates will be required with Pictures taken in the hospital with medical staff. Birth certificate with a live home delivery will not be eligible for first time home buyers.
• Marriage certificate with bridal dress will be required if both husband and wife are required to qualify for the loan
• GFE will not require signature but will require blood sampling from a recognized institution within three days of application
• DNA test will be performed at closing to avoid any non-arms length transactions. Loan funding will be contingent upon satisfactory receipt of DNA results.
• Verification of deposit will be acceptable only if Bank representative is present at the closing.
• Copy of Pay stubs and W2 will only be acceptable through IRS and only with a wax sealed envelope mailed directly to the lender.
• 7 Witnesses from neighborhood will be required as proof of primary residence in case Borrower owns more then 1 property.
• All appraisers will be required to use masks and ear plugs at the time of inspection to avoid any personal influence by the borrower for the appraised value.
• In order to correctly calculate DTI and true housing ratio a list of grocery items, monthly usage and brand names will be required with receipts and projected 12 month consumption chart.
• Closing will not occur without loan officer presence at settlement and loan officer picture will be taken at the closing in a mug shot format with loan number. Picture should meet standard guideline of 2 X 2 inch in color format with one facing and one side view.
• Loan officer picture will be attached to the deed and note and will be made available for general public and security agencies in case borrower defaults on the loan.

It would be funnier if it wasn’t so true. -Author unknown.

HOME OWNERS SEEKING HELP

If you owe more than your home is worth and do not know what to do, please give us a call. Geneva Financial, LLC offers federally funded mortgage options that may allow you to refinance your current mortgage into a lower monthly payment. We do not do loan modifications.
Need help with a short sale. Geneva Real Estate & Investments, LLC has many seasoned short sale real estate specialists that will help sell your home at no cost to you.

Our two companies are working hard to help distressed homeowners. Contact us at anytime with any questions.

MARKET UPDATE - MARCH 2010

2010-03-01T10:53:00.001-07:00

WHERE DID MY MORTGAGE BROKER GO

Not to worry, some of us are still here. I just returned from Washington D.C. in an attempt to do my part to make sure we will always be here.

The National Association of Mortgage Brokers (NAMB) had its annual national conference in Washington D.C. to rally the troops and lobby our Representatives to help support small business; i.e. your local mortgage broker. The showing was strong, although our numbers were down to a few hundred verses a few thousand of years past. Why do you care? Because, the decisions that are being made in Washington today will change the way you finance real estate now and in the future.

There were a numbers of things that were made clear.

1. The Department of Housing and Urban Development (HUD) supports the future of small business and your local mortgage broker. Ivy Jackson, the Director of the Office of RESPA and Interstate Land Sales (HUD) stated that mortgage brokers offer one of the best vehicles to bring product to the market and will continue to be competitive in this mortgage environment. She stated that brokers currently deliver 50% of all FHA mortgages. This statement may seem contradictory to HUD’s recent implementation of the new Good Faith Estimate, HUD-1, and changes to Yield Spread Premiums, which at first was viewed by those in the industry as another nail in the mortgage broker’s coffin. Two months after the implementation of the HUD rule and the greatest RESPA reform since its inception, mortgage professionals now know that it has not effected compensation or our competitiveness in the marketplace.

2. HUD is not going to raise the minimum down payment for FHA mortgages from the current minimum 3.5% to 5% as had been originally discussed. HUD determined that the default rate is not considerably higher with 3.5% down verses 5.0% down and that raising the down payment would create an unnecessary barrier for many first time home buyers. In an attempt to increase FHA reserves the upfront mortgage insurance premium that is rolled into the base loan amount will be increased from 1.75% to 2.25%.

3. Paul Mondor, Senior Attorney, Division of Consumer and Community Affairs (Federal Reserve Board) spoke and participated in a Q & A session regarding the FED proposal and its potential to change broker / banker compensation. It was apparent that the FED is disconnected from HUD policy and the mortgage process at the ground level. I will not bore you with details, but much of what Mr. Mondor said contradicted HUD policy and was either inaccurate or flat out not true with regards to how mortgages are originated and how small businesses generate revenue. The general feeling was of unease due to the fact that such individuals are making policy changes that have the potential to affect so many small businesses and so many homeowners. The FED needs to not overstep its authority and let the new RESPA reform implemented by HUD run its course. To date the majority of reform (i.e. HVCC, MDIA, HUD Rule), although long over due in some form, has come at a cost to the borrower.

4. On December 11, 2009, U.S. House of Representatives passed HR 4173 which has been labeled the “most significant reform of the U.S. financial system since the New Deal of the 1930’s.” Although there are a number of important aspects of this bill, one part eliminated mortgage options to the consumer and ultimately would hurt small business owners. With regards to mortgage origination, this bill would have potentially given Big Banks an unfair advantage over smaller mortgage brokers and bankers. It appears that this bill has been squashed by the Senate. The House and the Senate’s inability to agree on anything have proved to be a small victory for small business and the homeowner.

5. The National Association of Mortgage Brokers (NAMB) is not the National Association of Realtors (NAR) or the National Riffle Association (NRA). The NAMB does not have the political might of the NAR or NRA. Although I knew this going in, it was the first time of experiencing it first hand; money equals power in politics. I am confident that our lobbying efforts had an impact, although it would have been nice to have a war chest full of cash to buy their attention. For right or wrong, that is how things get done in Washington. Instead of meeting with staffers just out of college, we would have been talking directly to the Representatives who we voted into office; and who we can vote out of office.

In 2006 during the height of the mortgage industry and housing boom, mortgage brokers accounted for 65 percent or more of all mortgages. Today that number is estimated at just over 15 percent. The reason for our past dominance in this industry is that we have more options than the Big Banks. We have access to dozens of different lenders that have a diverse appetite for different types of loans, property types, and borrowers. Sweeping mortgage reform and regulation, a lot too late, has had an adverse effect on the industry as a whole, felt most by under capitalized banks, and small business mortgage brokers.

This year the mortgage broker will attempt to mount a comeback. Despite all that still stands before us (i.e. New HUD rules and the FED intervention) we still have the most diverse options of mortgage products. We still offer the most competitive rates and fees. The S.A.F.E. Act mandated that all loan officers and mortgage brokers not working for a FDIC insured bank had to go through classroom mortgage education, take a state and national test, and be licensed. Loan officers at Big Banks do NOT. Mortgage brokers are and will continue to be faster, more diverse, less expensive, and now smarter than the Big Banks.

Thank you for your continued support of small business owners, and your local mortgage broker.

FORECLOSURE ROLLERCOASTER CONTINUES
Foreclosures in January posted a 15% increase over last year with over 300,000. – cnnfn.com

Government programs and loan modifications have been slow at best to help homeowners who are under water or unable to make their mortgage payments actually save their homes from foreclosure. 25% of all homeowners currently owe more than the home is worth. RealtyTrac estimated that the number of bank owned properties may rise this year to over three million.

WARNING OF RISING INTEREST RATES
The Federal Reserve in an aggressive move to help stabilize the housing market has been buying mortgage backed securities since 2008, to the tune of over a trillion dollars in mortgages. The by product of this action has kept mortgage interest rates at near all time lows.

This month the FED has stated that it will stop purchasing mortgage backed securities.
Who is going to take the FED’s place? For the past couple of years institutional buyers of mortgage backed securities, i.e. private investors, Wall Street, hedge funds, and foreign governments have been hesitant to jump back into mortgage back securities due to the unstable U.S. housing market. Although it is uncertain who will purchase all the mortgage back securities now that the FED is pulling out of the position, one thing is certain; without buyers rates will likely rise.

HOMEBUYER TAX CREDIT ENDS SOON

To take advantage of the homebuyer tax credit, buyers must be under contract by April, 30th, 2010. The home must also close by June 30th, 2010 to qualify.

INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 4.625% 4.759%
15 Year Fixed 4.125% 4.335%

Call today for your individual scenario rate quote.

Interest rates as of 03/01/10. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. For any additional information, call or email me at any time.

MARKET UPDATE brought to you by:
Aaron VanTrojen
PRESIDENT
Geneva Financial, LLC
Mortgage Banker / Broker licensed in:
AZ: BK-0910215, CA: 603G564, ID: MBL6976, NM: 3693, NV: 3195, OR: ML4799, WA: 510-MB-49323
Geneva Financial, LLC NMLS License: 42056
Loan Officer NMLS License: 15420

www.genevafi.com

PARTNER
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA.
http://www.greiusa.com/ / www.genevare.com

Office: 480-368-2000
Cell: 602-793-6383
Email: aaron@genevafi.com

MARKET UPDATE - FEBRUARY 2010

2010-02-01T09:15:00.004-07:00

FANNIE MAE OFFERS ADDITIONAL INCENTIVES TO BUY NOW

Fannie Mae is offering a 3.5% incentive for buyers who purchase and close on a Fannie Mae owned home between January 28 and April 30, 2010. Buyers purchasing properties listed on www.homepath.com that are closed within this period may receive up to 3.5% of the final sales price for:

• Closing costs;
• The purchase of new Whirlpool® appliances by Fannie Mae; or
• A mix of closing costs and appliances, at the buyer’s discretion, up to the maximum 3.5%.
To be eligible for this incentive:
• Offers must be accepted on or after January 28, 2010.
• Property sales must close before May 1, 2010
• Buyers must be owner-occupants, investors are excluded.
Content above directly from www.homepath.com.
Geneva Financial, LLC offers HomePath financing. Contact me for additional information.

FHA ANNOUNCES ADDITIONAL REFORM
FHA is in desperation to reduce risk and increase its financial position. FHA recently announced steps it will take to strengthen its reserves and limit risk.

• Up front mortgage insurance premium to be raised to 2.25% from the current 1.75%.
• A minimum 580 credit score will be required of all borrowers to qualify with the minimum down payment of 3.5%. Borrowers with less than a 580 credit score will be required to put down a minimum of 10%. Note: Most lenders now require a 620 credit score, and many have increased the minimum credit score to 640; regardless of down payment.
• Maximum allowable seller paid closing costs reduced from 6% to 3%.
Changes are likely to take effect by the summer of 2010.

FHA WAIVES 90 DAY SEASONING
In aN effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure.
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.

• In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.

• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
Two appraisals will likely be required on most transactions where the property is resold by a private party within 90 days.
The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities. This action should help sell more homes at a faster pace and investors will still be able to flip.

WHO’S GOING TO BUY MORTGAGE BACKED SECURITIES
The cessation of the government program to buy mortgage-backed securities, set to end in a couple of months, will show whether the White House and Federal Reserve have effectively stimulated the lending market to the point that it is now on solid footing.
Keeping mortgage rates at record lows was a major component of the economic strategy during President Obama's first year in office. While it did not garner the kind of headlines that efforts to bail out banks did, the policy did help revitalize home buying in parts of the country and assisted millions of home owners who were able to refinance. – Washington Post
When the Federal Reserve stops buying mortgage backed securities, who is going to step into their place? Without a buyer, interest rates will spike, once again putting a damper on the housing market. 2010 will likely prove to be a very volatile year for interest rates, and the overall housing market.

HOMEBUYER TAX CREDIT ENDS SOON
To take advantage of the homebuyer tax credit, buyers must be under contract by April, 30th, 2010. The home must also close by June 30th, 2010 to qualify.

INTEREST RATE UPDATE
Mortgage Type Interest Rate APR
30 Year Fixed 4.750% 4.885%
15 Year Fixed 4.000% 4.229%

Call today for your individual scenario rate quote.

*Interest rates as of 02/02/10. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time

MARKET UPDATE - JANUARY 2010

2009-12-30T13:14:00.000-07:00

REGULATION RECAP

2009 was a remarkable year for mortgage regulation. It was Government intervention at its finest. In an attempt to curb the evil doings of mortgage companies from years past, the Government proved that over regulation can be just as damaging as a lack of regulation. New laws, new disclosures, and new procedures were cooked up by elected officials with an apparently limited knowledge of how the mortgage industry works. Mortgage brokers and bankers cried out and petitioned the government to reconsider the new regulations, which fell on deaf ears. Now borrowers, real estate agents, title companies and appraisers have joined the fight; maybe a little too late. This is a recap of the new regulation, its intention, and more importantly the outcome to date.

Home Valuation Code of Conduct (HVCC)

Effective Date: 05/01/09

Intent: The government wanted to create separation between the loan officer and/or mortgage company and the appraiser. The intention was to force mortgage companies to order appraisals through Appraisal Management Companies (AMC) which would randomly rotate appraisers and prevent direct contact between loan officer and appraiser. The goal was to prevent appraisal manipulation.

Outcome: Most of the AMCs are owned by the lenders that are ordering the appraisals, creating another profit source for the lenders and eliminating any separation which was the original intention of the HVCC. An appraisal now costs 30%-60% more than prior to the enforcement of the HVCC; a direct cost to the borrower. Appraisals which prior to the HVCC took 24-72 hours to complete, can now take weeks to complete. Appraisals are next to impossible to transfer from lender to lender which is commonplace due to one lender declining a file, and another willing to approve that same file. It is not uncommon for two or three appraisals to be ordered on one transaction.

Update: HR 4173, the Wall Street Reform and Consumer Protection Act of 2009, has passed the House and is on its way to the Senate. It is widely anticipated that this will pass, eliminating the HVCC. Hooray! Once passed, it is likely that the lenders will still require appraisals to be ordered under the HVCC rules. There is just too much profit and control for the lenders to give up. Boo…

Mortgage Disclosure Improvement Act (MDIA)

Effective Date: 07/30/09

Intent: The new Truth in Lending regulations increase the time needed to close loans to ensure that the borrowers understand their options and feel comfortable with the loan.

Outcome: Delayed closings. Borrower now has more time to understand the Annual Percentage Rate (APR). To date: Borrowers still do not understand the APR.

Update: No changes in the MDIA anticipated.

HUD’s Final Rule – RESPA Reform

Effective Date: 01/01/10

Intent: This is the single largest RESPA reform in the history of RESPA. In an attempt to add “transparency” and increased disclosure to the borrower in a mortgage transaction, HUD has officially implemented the new 2010 Good Faith Estimate and new 2010 HUD-1.

Outcome: The Good Faith Estimate (GFE) goes from one simple page, to four (not very “green” of the government). The new GFE fails to disclose total monthly payment and cash needed to close. Why did the government remove two of the most crucial pieces of information from the new GFE? Sorry, at a total lose for words. The new GFE requires disclosure of fees that are actually paid by the seller, but appear on the good faith estimate as a charge to the borrower. Mortgage brokers have to disclosure compensation in a Mickey Mouse fashion of charges and credits to the borrower; but banks do not. The new GFE still has to be disclosed to the borrower within three days of the application with accurate fees, which in many cases can now not be produced (i.e. title fees, inspection fees) within the three day window. Low and zero tolerances in fee changes lead some loan officers to over estimate fees, which will potentially lead to violations of MDIA (read above) creating closing delays.

Update: Too soon to tell. On a positive note, mortgage brokers will be the only institutions that will be required to be at full disclosure on the new good faith estimate. Banks will not be required to disclose all compensation. This may prove to benefit mortgage brokers once the public realizes that “Big Banks” are not required to disclose everything.

S.A.F.E. Act

Effective Date: 07/31/09 – 07/31/10 (varies by state)

Intent: “The new standards, as well as the uniformity and consistency of such standards, directed to be established nationwide by the SAFE Act present a significant step in the effort to increase integrity in the residential mortgage loan market, enhance consumer protections, and reduce fraud. The SAFE Act encourages states to participate in the Nationwide Mortgage Licensing System and Registry, and requires states to have in place, by law or regulation, a system for licensing and registering loan originators that meets the requirements of sections 1505, 1506, and 1508(d) of the SAFE Act.” – HUD

Outcome: The SAFE Act is long over due. We tip our hats to the government for implementing legislation that will in fact make the mortgage industry better. Unfortunately most states are broke and are struggling to implement the SAFE Act.

Update: The SAFE Act has already weeded many loan officers out of the industry. Loan officers that work for the “Big Banks” are not required to be licensed. Once again, if you wish to work with a loan officer who has taken the required education, passed a state and national test, and been officially licensed as a loan officer, you will want to contact us, your local mortgage broker.

EXISTING HOMES SALES SURGE

Fueled by historically low interest rates and the extension of the first time homebuyer tax credit, existing home sales were up 7.4% in November. The National Association of Realtors estimates that 51% of all sales in November were from first time homebuyers.

Existing home sales may see a dip down by the third quarter of 2010 due to higher interest rates and expiration of the first time homebuyer tax credit.

DROP IN FORECLOSURES

“Foreclosure filings fell by 8% in November, making it the fourth consecutive month of improvement in the housing market. There were 306,627 filings last month, according to RealtyTrac, an online marketer of foreclosed properties. That decline follows a 3% drop in October, 4% in September and 1% in August.” – cnnfn.com

Statically foreclosures are down but this is due in large part to market manipulation. Loan modifications and foreclosure moratoriums have influenced foreclosure rates. The drop in foreclosures does shine some positive light on the housing market although the market is a long way from being healthy.

In November 76,701 homes were foreclosed on, bringing the total for the year to a whopping 777,630 (stats from RealtyTrac). “Nevada, Florida, California and Arizona -- continued to amass the largest numbers of foreclosure filings with Nevada the hardest hit state of all. One of every 119 households had a filing in November, nearly four times the national average of one for every 417. Florida had one for every 165 households, California one for every 180, and Arizona one for every 186.” – cnnfn.com

SHORT TERM INTEREST RATES TO REMAIN LOW

Short term interest rates remain low as the Federal Reserve leaves the fed funds rate at an all time low, in hopes of a recovery in the housing and job markets. It is anticipated the FED will not likely change its stance on not raising interest rates for the foreseeable future.
Long term rates have seen a steady increase over the last few weeks, due in part buy the Federal Reserve’s commitment to purchase mortgage backed securities. The FED has stated that it will cease to purchase mortgage backed securities in 2010. To date the FED has purchased more than $1 trillion in mortgages. Wall Street and foreign investors have been hesitant to purchase mortgage backed securities due to poor performance during the housing crisis and it is not known who is going to step in to purchase mortgage backed securities once the FED pulls out of this role. That uncertainty has recently caused a spike in long term rates.

MARKET UPDATE - DECEMBER 2009

2009-12-01T15:21:00.000-07:00

Happy Holidays

THANKFULLY I HAVE AN ARM

Adjustable rate mortgages have gotten a bad rap over the last few years. Unfortunately for the mortgage industry, there were a handful of bad apples that sold certain types of adjustable rate mortgages to unsuspecting borrowers who trusted the loan officer enough not to read or question the loan documents that they were signing. There were also those that knowingly purchased “exotic” adjustable rate mortgage products that offered teaser rates which allowed them to purchase properties well outside their price range. Those to name a few are in trouble; loan officer and borrower.

For some reason the media has deemed all adjustable rate mortgages as bad, and of course the public as a whole believes that to be true. Prime adjustable rate mortgages are typically fixed for a term of 3 to 10 years at a rate 1% to 1.5% lower than a 30 year fixed rate mortgage. Prime refers to non subprime A paper mortgages. Today a 5 year ARM can go for as low as 3.5% (APR 3.545%). The first 5 years, the rate will be 3.5%. For individuals who will likely sell or refinance within 5 years, this loan product still makes the best financial sense. That being said, these loan products are rarely being originated due to fear; created by lack of understanding, media hype and misinformation.

For those that purchased an ARM during the boom and now find themselves upside down and unable to sell or refinance should now be thankful they have an ARM. Many “prime” ARM mortgages will adjust down once the fixed term is over; that is as long as short term rates stay low. Prime ARM mortgages will typically adjust to the current short term rate index (LIBOR, Treasury, etc.) plus a margin of 2.25% (can vary with lender). Most short term rates are trading from 1% to 1.5%. Add that to the margin and you have a low interest rate. For those that have an Option Arm mortgage, and have not been paying the negative amortization payment; your rate may currently be under 3%. To verify what your adjustable rate mortgage will do after the fixed term, review your adjustable rate rider in your loan documents, or contact your mortgage professional.

Short term rates will eventually rise. In the meantime, be thankful that you purchased an adjustable rate mortgage to help ride out the depressed housing market and economy. With any luck you will be able to refinance into another ARM or fixed rate mortgage once the market stabilizes.

EXTENDED TAX CREDIT

The first time homebuyer tax credit of $8,000 set to expire on November 30th, 2009 has officially been extended by President Obama. The extension allows homebuyers that qualify for the tax credit to be under contact by April 30th, 2010, and close before June 30th, 2010. The income levels have also been lifted to $125,000 for single buyers and $225,000 for married buyers.

The tax credit has also been expanded to homeowners that currently own a home or have owned a home as their primary residence five out of the last eight years. Those homebuyers may qualify for a $6,500 tax credit.

The extension and expansion of the tax credit will likely help the housing recovery by promoting new sales and stabilizing home prices; at least through June 2010. Eventually the Government will have to stop subsidizing the housing market through tax credits.

1ST TIME HOME BUYER CRAZE

A press release from the Nation Association of Realtors stated that first time homebuyers, or homebuyers that have not owned a home in the last three years, purchased 47% of all homes sold this year.

The $8,000 tax incentive and falling home prices has been credited with the first time home buyer craze.

"The credit is working better than first projected -- it now looks like we'll have 2.3 to 2.4 million first-time buyers this year," said Lawrence Yun, chief economist for NAR. "With expansion of the tax credit to additional buyers through the middle of next year, and no major unforeseen events impacting the economy, home prices should rise between 3% and 5% in 2010." NAR forecasts that existing-home sales will total slightly over 5 million in 2009, a 2% increase compared with 2008. Next year, they predict a gain of 13.6% to 5.69 million units. – cnnfn.coM

INTEREST RATE SPIKE IMMINENT

Mortgage interest rates are now nearly at a historic all time low. This is no accident and largely to do with the meddling of the Federal Reserve. Over the last year, the Federal Reserve, in an attempt to stabilize the housing crisis, has purchased or committed to purchase $1.25 trillion ($1,250,000,000,000) of mortgage backed securities.

To date, this has proved successful, artificially forcing down rates, and promoting home sales. Although the housing market continues to suffer, it would have likely been much worse had the Federal Reserve not been there to purchase mortgage back securities and drive rates down to historic lows.
The Federal Reserve has given notice that it intends to wind down its purchasing of mortgage back securities in late 2010. If another investor(s) does not step in to take the Federal Reserves place, interest rates will rise; potentially fast.

For the time being money is cheap. If you are one of the few that can refinance, now may be a great time. For homebuyers there likely no better time to take advantage of low prices, tax incentives, and cheap money. Our kids can pay for it later.

BEHIND ON YOUR MORTGAGE – YOU ARE NOT THE ONLY ONE

The Mortgage Bankers Association reported on 11/19 that in the third quarter of 2010, nearly 10% of all mortgages were delinquent. That is rapidly approaching five million borrowers, and is a 10% increase over the last two months.
“The delinquency rate includes all mortgage loans that are at least one payment past due but does not include loans in some stage of foreclosure.” – cnnfn.com
Arizona, California, Florida, and Nevada continue to have the highest level of delinquencies.

INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 4.375% 4.505%

15 Year Fixed 4.000% 4.226%

5/1 ARM 3.500% 3.464%

Call today for your individual scenario rate quote.

*Interest rates as of 12/01/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. ARM Margin: 2.25% ARM Caps: 5/2/5 ARM Index: 1 Year LIBOR. Rates and payments on 5/1 ARM will adjust up or down after 60 months based on current index at that time. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen

PRESIDENT

Geneva Financial, LLC

Mortgage banker / Broker licensed in:

AZ: BK-0910215, CA: 603G564, CO: LMB100021691, ID: MBL6976, MN: 40095265, NM: 3693, NV: 3195, OR: ML4799, WA: 510-MB-49323, WI: 700475

Geneva Financial,LLC NMLS License: 42056

Loan Officer NMLS License: 15420

PARTNER

Geneva Real Estate & Investments, LLC

Real estate brokerage licensed in AZ, CA, WA.

http://www.greiusa.com/
Office: 480-368-2000

Email: aaron@genevafi.com

MARKET UPDATE - NOVEMBER 2009

2009-10-22T06:50:00.001-07:00

LOST IN TRANSPARENCY

There are big changes coming to the mortgage industry starting January 1st, 2010; most at the cost of the borrower.

In an attempt to add “transparency” and increased disclosure to the borrower in a mortgage transaction, HUD has officially implemented the new 2010 Good Faith Estimate. Please hold the applause. And what goodies will the borrower get with the new 2010 Good Faith Estimate:

1. A new and improved 3 page Good Faith Estimate adding two more documents to read. The old 1 page document that clearly listed fees, rate, payment, and cash to close was just too confusing for those that didn’t complete grade school.

2. Have your pencils ready. The new Good Faith Estimate has a scratch pad were you can compare rates and fees from different lenders; or just doodle. Simply putting different Good Faith Estimates from different lenders side by side was too complicated.

3. Your monthly mortgage payment is in bold print. The payment will include principle, interest, and any mortgage insurance. However, the payment will no longer disclose property taxes, homeowners insurance, or HOA dues. TOO much information. The disclosed monthly payments in bold will now leave the borrowers feeling warm and fuzzy because it appears so low. Surprise; it is.

4. And finally, HUD didn’t want to burden the borrower with knowing how much money they would need at closing. Keep your pencils out; you will have to do the math yourselves.
The new HUD approved 2010 Good Faith Estimate will be disclosed by a mortgage company near you starting January 1st, 2010. Also, changes in yield spread premiums are likely to be implemented come January 1st, 2010 which will ultimately lead to higher fees to the borrower. The anticipation must be killing you.

1ST TIME HOME BUYER TAX CREDIT ENDS NOVEMBER 30TH

Reminder: The $8,000 first time home buyer tax credit ends November 30th, 2009. Although there are talks of extending the deadline, at this point in time, if you are not under contract by months end, you will not likely make the deadline.

SO SORRY – “DENIED”

“This is ridiculous; I could pay for the house in cash. Banks send me credit offers everyday; there must be a mistake. I have bought many homes in the past without any problem. But I have an 800 credit score. Who cares what my tax returns show my income is; it just appears low because of business deductions and write offs. How does anyone think the housing problem is going to get any better if I can’t even get approved?”
Today, lenders are approving some borrowers with questionable credit scores and low down payments, and declining others with large down payments and high credit scores. The reason for this is government intervention and the elimination of “make sense” underwriting. Although many would argue that “make sense” underwriting has been gone for some time; thus the lending mess we are currently in.

The fact is that one third of all home mortgage applicants were denied in the last year. The rate of mortgage application denials was up 29% from 2006 when approvals peaked at their highest levels. Denial rates were double for African Americans and Hispanics as they were for Whites. – The Associated Press

In December, Fannie Mae will be tightening its automated underwriting system (Desktop Underwriter) once again, further tightening debt to income allowable limits. Currently Desktop Underwriter will issue approvals with debt to income as high as 55% with compensating factors. It is rumored that this will be lowered to 45%. Some industry insides believe that is will increase denials as much as 20%.

OFFICE VACANCIES SKYROCKET

“U.S. office vacancies rose to a five- year high in the third quarter, as job losses deepened and employers abandoned space in the recession, property research firm Reis Inc. said. Vacancies climbed to 16.5 percent from 13.7 percent in the year since Lehman Brothers Holdings Inc. filed for bankruptcy, New York-based Reis said in a report. Effective rents, the amount actually paid by tenants, fell 8.5 percent, the biggest year-over-year drop since 1995.” - Bloomberg

In Arizona, office vacancies reached 25%. In Phoenix, office vacancies are at nearly 40%.

FHA NEEDS A BAILOUT
The Federal Housing Administration, the U.S. agency that insures mortgages with low down payments, faces $54 billion more in losses than it can withstand, a former Fannie Mae executive said. “It appears destined for a taxpayer bailout in the next 24 to 36 months,” said Edward Pinto, a consultant who was chief credit officer from 1987 to 1989 for Fannie Mae. The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, a trend Pinto said has left it backing risky loans and exposed to fraud in a “market where prices have yet to stabilize.” – Bloomberg

FORECLOSURES HIT A RECORD HIGH

Reports in the third quarter show foreclosure filings at an all time high with Nevada once again leading the charge.

"They were the worst three months of all time," said Rick Sharga, spokesman for RealtyTrac, an online marketer of foreclosed homes. During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, the RealtyTrac report said. That means one in every 136 U.S. homes were in foreclosure, which is a 5% increase from the second quarter and a 23% jump over the third quarter of 2008. – CNNmoney.com

“A study of the trend by the Chicago Booth School of Business and the Kellogg School of Management determined that when home price declines drop home values 10% below the mortgage balances, people start to give up their homes. When "negative equity" approaches 50%, 17% of households default, even when they can still afford their mortgage payments.” – CNNmoney.com

INTEREST RATE UPDATE

30 Year Fixed: 4.750% APR: 4.882%
15 Year Fixed: 4.250% APR: 4.476%
5/1 ARM: 3.625% APR: 3.671%

Call today for your individual scenario rate quote.

*Interest rates as of 10/21/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. ARM Margin: 2.25% ARM Caps: 5/2/5 ARM Index: 1 Year LIBOR. Rates and payments on 5/1 ARM will adjust up or down after 60 months based on current index at that time. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen

PRESIDENT
Geneva Financial, LLC
Mortgage banker / Broker licensed in:
AZ: BK-0910215, CA: 603G564, CO: LMB100021691, ID: MBL6976, MN: 40095265, NM: 3693, NV: 3195, OR: ML4799, WA: 510-MB-49323, WI: 700475
Geneva Financial,LLC NMLS License: 42056
Loan Officer NMLS License: 15420

PARTNER
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA
http://www.greiusa.com/
Office: 480-368-2000
Email: aaron@genevafi.com

EMPLOYMENT OPPORTUNITIES

MORTAGE CONSULTANTS
Geneva Financial, LLC now hiring mortgage consultants in the following states: AZ, CA, NV, OR, WA

REAL ESTATE AGENTS & BROKERS
Geneva Real Estate & Investments, LLC is now hiring real estate agents in the following states: AZ, CA, WA. Hiring real estate brokers in all states.

BARNEY FRANK JUST DOESN'T GET IT

2009-09-24T05:59:00.000-07:00

"A mechanism for putting non-bank financial institutions out of everyones misery. There will be a DEATH PANEL enfored by legislation eventually adopted." - Barney Frank 09/23/09 Speaking out against Mortgage Bankers and Broker yesterday. So much for consumer choice and free markets.

MARKET UPDATE - OCTOBER 2009

2009-09-22T08:37:00.003-07:00

TIMES A TICKING - 1ST TIME HOME BUYER TAX CREDIT

Reminder: The $8,000 first time home buyer tax credit ends December 1st, 2009.

UPSIDE DOWN – NEW OPTIONS NOW AVAILABLE

Fannie Mae and Freddie Mac’s 125% refinance option is now available. If you owe up to 125% of the value of the home, you my now be a candidate for the new programs designed to help homeowners that are under water. Under the new 125% program, those that qualify would be able to refinance into a low 30 year fixed mortgage term. Borrowers must have decent credit, be current on their mortgage, and be able to qualify with documented income verification. The programs were initially rolled out up to 105%, which is now extended to 125%. Not sure of your home’s value or whether or not you would qualify; contact us today.

HR 1366 – FED PROPOSAL TO DRIVE UP COSTS TO BORROWERS

“Proposed amendments that would revise Closed-end mortgage disclosures to highlight potentially risky features such as adjustable rates, prepayment penalties, and negative amortization and prevent mortgage loan originators from "steering" consumers to more expensive loans.” - FED

The days of "steering" borrowers toward exotic mortgages because of high yield spread premiums paid by the lender are over. It was an abused and unjust practice committed by many in the industry that lacked professionalism and integrity. These loan programs that allowed for this, that were created and pushed by "Big Banks" and Wall Street have been eliminated from the loan options now available to the industry. Free markets have already regulated the mortgage industry. "Toxic" mortgages and the originators and banks that pushed those products with sophisticated terms and prepayment penalties have been forced out of the industry.

Yield spread premiums have always been used by good professionals in this industry as a means of offering the consumer options. I think that everyone can agree that a loan originator should be paid a fee for services rendered. Real estate agents have set an industry standard of 3%-6% per transaction, whereas loan officers now try to squeak out 1%-2% commission per transaction. YSP allows us to earn that fee from the lender, not the consumer. Through elimination of YSP, the loan officer will have to charge those fees to the borrower, vs. having the option of offering low or no closing costs loans. Also, it is imperative that if such a proposal goes into effect, as unfortunate as that will be, that it affects brokers, bankers, and banks. We all have a roll. As a broker, we have the ability to shop for the best product and rate for the consumer. Even today, I (as a broker / banker) am able to offer much lower rates and fees than the "Big Banks" and most bankers because of OPTIONS.

The FED propels is up for public comment. Please tell the FED to reconsider its current stance on YSP. What the FED is trying to accomplish has already been done by the industry. Remember what “free market” means. Over regulation will not only cost the industry, but most importantly, the consumer by reducing competition and options.

Voice your opinion by clicking the link below:

http://www.federalreserve.gov/generalinfo/foia/ElectronicCommentForm.cfm?doc_id=R-1366&doc_ver=1&name=Regulation%20Z%20-%20Truth%20in%20Lending%20-%20Closed-end%20Mortgages&date=20090723a

HOUSING IS RECOVERING

New home building in August reports positive. This is yet another sign that the housing market is improving as new home builders increase production of new homes.

“The Census Bureau reported Thursday that builders broke ground for 598,000 new homes during August, up 1.5% from a revised 589,000 in July. That was considerably higher than industry experts were predicting.” – cnnfn.com

GREAT NEWS FOR MORTGAGE BANKING

“A provision in a House resolution passed Tuesday directs Obama Administration officials to provide support and facilitate increased warehouse credit capacity for qualified warehouse lenders. The House resolution will now go to the Senate for consideration. The bill notes while warehouse lenders account for as much as 40% of all residential mortgage loans in the US and nearly 55% of FHA loans, warehouse lending capacity available to the mortgage lending industry has declined by nearly 90% to the current level of approximately $20 billion to $25 billion.”

SAY IT ISN’T SO – FHA & HVCC

HUD announced Friday, September 18th that starting January 1st, 2010, loan originators and mortgage brokers / bankers will no longer be able to order appraisals directly from the appraiser. Lenders will now be required to order the appraisal through a third party clearing house. Although HUD did not state that FHA had to go through the HVCC (Home Valuation Code of Conduct) which currently regulates conventional appraisals, it is likely that many lenders will implement the HVCC on all FHA appraisals.

Since the implementation of the HVCC, the National Association of Mortgage Banks and the National Association of Realtors have been outspoken against the HVCC; citing significantly increased appraisal fees charged to the borrower, low balled appraised values, slow turn times, and lack of experienced appraisers.

H.R. 3044 was introduced in June to call for an 18 month moratorium on the HVCC to determine just how much damage has been inflicted on the housing industry, consumers, and the appraisal industry. This bill is still pending approval.

CONDO APPROVAL PROCESS GETS REVAMPED

"In accordance with the passage of the Housing and Economic Recovery Act (HERA) of 2008, the Federal Housing Administration (FHA) is implementing a new approval process for Condominium Projects to insure mortgages on individual units under Section 203(b) of the National Housing Act. FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations. HUD will continue to maintain a list of Approved Condominium Projects. The requirements of this Mortgagee Letter are effective for all case numbers assigned on or after October 1, 2009" – HUD

The new condo approval process puts the burden on the lenders and gives them two options for processing the approvals:

1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined in this Mortgagee Letter. This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects."

Once the condo complex has been added to the FHA approved condo list, other lenders will not have to complete the process.

The other significant change is that HUD is eliminating spot approvals. No longer will individual units be able to be approved. Industry insiders speculate that this will be a slow cumbersome process at first.

Some of the requirements apply to all Condominium Project approvals:
•Projects consist of two units or more.
•Projects must be covered by hazard and liability insurance and, when applicable, flood insurance.
•No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes.
•No more than 10 percent of the units may be owned by one investor. This will apply to developers/builders that subsequently rent vacant and unsold units.
•No more than 15 percent of the total units can be in arrears (more than 30 days past due) of their condominium association fee payment.
•At least 50 percent of the total units must be sold prior to endorsement of any mortgage on a unit.
•At least 50 percent of the units of a project must be owner-occupied or sold to owners who intend to occupy the units.
•Projects consisting of three or less units will have no more than one unit encumbered with FHA insurance.
•Projects consisting of four or more units will have no more than 30 percent of the total units encumbered with FHA insurance.

INTEREST RATE UPDATE

Mortgage Type-Interest Rate-APR

30 Year Fixed-4.750%-4.882%
15 Year Fixed-4.250%-4.476%
5/1 ARM-4.000%-3.807%

Call today for your individual scenario rate quote.

*Interest rates as of 09/22/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. ARM Margin: 2.25% ARM Caps: 5/2/5 ARM Index: 1 Year LIBOR. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen

PRESIDENT
Geneva Financial, LLC
Mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.

PARTNER
Geneva Real Estate & Investments, LLC
Real estate brokerage licensed in AZ, CA, WA.

EMPLOYMENT OPPORTUNITIES

MORTAGE CONSULTANTS
Geneva Financial, LLC now hiring mortgage consultants in the following states: AZ, CA, NV, OR, WA

REAL ESTATE AGENTS & BROKERS
Geneva Real Estate & Investments, LLC is now hiring real estate agents in the following states: AZ, CA, WA. Hiring real estate brokers in all states.

480-368-2000
aaron@genevaFi.com

MARKET UPDATE - SEPTEMBER 2009

2009-08-25T12:30:00.000-07:00

1ST TIME HOME BUYER TAX CREDIT

Reminder: The $8,000 first time home buyer tax credit ends December 1st, 2009.

DON’T SHOOT THE MESSENGER… OR LOAN OFFICER

Despite what you may be reading or watching on the news these days, banks ARE lending money. Lending guidelines have gotten tighter and you will now be required to put more money down and verify income to qualify for a home mortgage (not yet requiring a blood sample or rights to your first born), but if you qualify money is readily available. So what is the problem?

1. Government
The banking and lending industry has already self regulated itself over the past few years by requiring borrowers to verify income, put more money down, etc. The government, slow to react is now implementing new regulations that seem to only create delays and increased costs that inevitably roll down to the borrower. The Home Valuation Code of Conduct (HVCC) is viewed by most in the industry as a total disaster. Mortgage Disclosure Improvement Act (MDIA) which allows the borrower three extra days to review a document they will not likely understand regardless of timeline has the potential to add to closing turn times.

2. Fannie Mae & Freddie Mac
The two now controlled government mortgage giants are increasingly critical of the mortgages that they will purchase. Banks and lenders that sell to Fannie and Freddie in turn have to scrutinize the loan files in underwriting so they do not get stuck with unsellable loans. This stringent underwriting is also being applied to government FHA and VA mortgages. What does that mean to the customer; slower underwriting turn times and you will be conditioned to death. Be prepared to document and disclose everything.

3. Bank Failures
On August 14th, Colonial Bank collapsed. On August 22nd Guaranty Bank was seized by the FDIC. Both of these institutions were major players in warehouse lending; which means they provided lines of credit to mortgage banks to fund loans with. This will inevitably slow turn times for many lenders as they lose lines once provided by Colonial Bank and Guaranty Bank.

Earlier in the month, Taylor Bean and Whitaker, one of the nation’s largest mortgage banks, failed. When the bank announced it’s closing, it orphaned tens of thousands of loans. If you were unfortunate enough to have a loan placed there when it failed, you got to start all over again with the process. All those orphaned loans needed new homes, which inundated an already overwhelmed system with new loans; that needed to fund yesterday. Banks are just not prepared to handle the volume.

81 FDIC insured banks have failed so far in 2009.

Conclusion
When your loan officer asks for condition after ridiculous condition, and you seem to hit every speed bump in the road, please do not shoot the messenger. Loan officers are not trying to make your life miserable with ridiculous demands and conditions. Loan officers do not write laws that slow an already inefficient industry. Loan officers can not predict bank failures. And loan officers only get compensated for their efforts when your loan funds. If you are working with a competent and experienced loan officer, these issues are not their fault. The process is as equally painful for us, and we choose to do this everyday. Have patience. Provide requested documentation in a timely manner. Do not schedule the movers until you fund. Remember, everyone wants your loan to fund; and it will.

THE HOUSING MARKET TURNS

“More Americans signed sales contracts to buy homes in June than in May, the fifth consecutive month of increases. The National Association of Realtors said its Pending Home Sales Index rose 3.6% during the month. That was 6.7% higher than June 2008. It was the fifth straight month of increases, the first time that has happened since July 2003.” – cnnmoney.com
Sales of existing homes rose in July for the fourth consecutive month. According to the National Association or Realtors home sales were up 7.2% from June, which was the largest monthly increase on record.

The consumer needs to keep in mind that these are National figures. Hardest hit areas such as California, Arizona, and Nevada will likely see the fastest turn around as long as unemployment does not put continued pressure on the housing market. Phoenix is already experiencing a new housing boom. Las Vegas housing recovery is still combating the casino business downturn. Many states are just now experiencing drastically falling home values and will not see signs of recovery for some time.

FORECLOSURES SURGE

Foreclosures are up 32% from July 2008, with a reported 360,000+ new foreclosure filings. “In fact, one in every 355 U.S. homes had at least one filing during July. July marks the third time in the last five months where we've seen a new record set for foreclosure activity.” - RealtyTrac

Top Foreclosure States (based on foreclosure filings in July 2009):
1. Nevada 1 in 56
2. California 1 in 123
3. Arizona 1 in 135

THE SHRINKING SUPPLY OF CREDIT

Colonial Bank was the largest remaining player in warehouse lending. Warehouse lenders provide short-term financing to mortgage bankers. On August 14th, Colonial Bank collapsed. Days later on August 22nd, Guaranty Bank, another major warehouse line provider, was seized by the Federal Government at a cost of $3 billion to the FDIC. Guaranty Bank is the 11th largest bank collapse in US history, and the 3rd largest of the year. It was not long ago that these mortgage bankers originated more than 50% of all U.S. home loans using lines of credit provided by warehouse lenders.

“Today, the warehouse lending market is decimated. In 2007 it was worth an estimated $200 billion; now there is just $25 billion available -- 25% of which belongs to Colonial. With Colonial's failure, those funds could become even scarcer.” – Bloomberg

INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 4.750% 4.882%
15 Year Fixed 4.250% 4.476%
5/1 ARM 4.000% 3.807%

Call today for your individual scenario rate quote.

*Interest rates as of 08/25/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. ARM Margin: 2.25% ARM Caps: 5/2/5 ARM Index: 1 Year LIBOR. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen
President
Geneva Financial, LLC.
Office: 480-368-2000
Email: aaron@genevafi.com

Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.

MARKET UPDATE - AUGUST 2009

2009-07-25T16:29:00.002-07:00

FED RESTRICTS COMPENSATION & ADDS DISCLOSURES

Over the last two years, the mortgage industry has done a thorough job at self regulating itself. Guidelines have tightened, appraisals go through strict lender reviews, and complex loan products (i.e. option arms, balloon mortgages, etc.) have been eliminated. Full documentation is required on all loans and the term “stated income” is nothing but a distant memory. Most of the questionable characters in the mortgage business have been forced out. Today we only ask, 30 year fixed conventional, or 30 year fixed FHA. For the Federal Government, and now the Fed, that is just not good enough.

Effective May 1st of 2009, the HVCC (Home Valuation Code of Conduct) went into effect with the intent of eliminating value manipulation by the appraiser and/or loan officer. Three months later, after a devastating impact on the homeowner, a new bill to place an 18 month moratorium on the HVCC is on the table.

H.R. 1728 has passed the House which aims to mandate loan officer licensing (already implemented through S.A.FE. – legislation long overdue), eliminate yield spread premiums to mortgage companies thus reducing consumer options and increasing consumer costs, and potentially further reducing loan programs available to consumers.

Now the Federal Reserve Board wants to regulate mortgage companies’ compensation, and add one more disclosure to the nearly 50 disclosures already part of the mortgage application.

“The Federal Reserve Board Thursday recommended new disclosure rules for homeowners and compensation guidelines for mortgage brokers to correct some abuses of the recent runaway housing market.” – Reuters. “Prospective borrowers would receive a one-page notice of key questions about their loan and see a graph comparing their interest rate to that of a low-risk borrower, the Fed said. Mortgage brokers would not receive greater compensation if they put a borrower into a high-cost loan, under the rules.” - cnnfn.com

Yes, there were abuses in the past when loan officers that lacked integrity “steered” consumers into high cost loans in order to obtain increased compensation from the lenders, i.e. “Big Banks” that created these mortgage programs and paid those loan officers top dollar to sell those high cost mortgages. What the Fed failed to realize, right along with the Federal Government, is that those high cost loan programs have already been eliminated by the industry; and not through government over regulation. The Fed’s comment regarding “low risk” borrower just reinforces the fact that they are out of touch with today’s mortgage industry. “High risk” borrowers are not borrowers; they are renters!

It has also been stated that if yield spread premiums are eliminated that the loan officers could simply charge a 2% origination fee to the consumer instead of the current industry standard of 1%. I am sure the consumer will appreciate paying twice as much for a new mortgage.
The government also will implement new True in Lending regulation starting July 30th, 2009 (more below), and a newer “easier” to understand four page Good Faith Estimate, replacing the current relatively easy to read one page Good Faith Estimate starting January 1st, 2010.

NEW TRUTH IN LENDINGS LAWS GO INTO EFFECT

The Mortgage Disclosure Improvement Act (MDIA) goes into effect July 30th, 2009. The new Truth in Lending regulations increase the time needed to close loans to ensure that the borrowers understand their options and feel comfortable with the loan.

New Changes:

A seven business day waiting period is now required between the date the initial TIL disclosure is provided to the consumer and signing of the loan.

There must be a three business day waiting period between the date a final / redisclosed TIL is received by the consumer and the disbursement of the loan. Same day fundings have been eliminated.

No fees, other than the credit report fee can be charged prior to the Initial TIL disclosure being provided. Upfront fees may not be collected from the borrower until initial disclosures are delivered to the borrower. Therefore, appraisals may not be ordered until the borrower receives initial disclosures.

The final and redisclosed, and initial TIL disclosures shall contain the following statement: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."

An increase in Annual Percentage Rate (APR) by more than 0.125% requires the Truth in Lending Disclosure to be revised and delivered to the borrower 3 business days before closing.

To prevent delays in closings, everyone needs to understand the new MDIA. For example, if on the day of closing, the title company changes, adds or removes a fee that changes the APR up or down more than .125%, the funding will be delayed by at least three business days. Or, due to an unforeseen delay in closing, an interest rate lock expires, and the APR changes up or down by .125%, new disclosures will need to go out, and the closing will also be further delayed.

HOME SALES UP IN JUNE

Can we say bottom? Not so fast. That would depend on where you are located. Sales of existing homes were up 3.6% in June, nationally. The median price of existing homes fell to $181,800 from $215,000, down over 15% a year earlier. – National Association of Realtors

Markets hardest hit by the housing crisis seem to be on a faster rebound. Las Vegas Nevada and Phoenix Arizona are heating up, and we are not talking about the temperature. Spurred on by devastated values (both markets down over 50% since 2006), low interested rates and an $8,000 first time homebuyer tax credit, sales of homes reached near record levels over the last few months. Many homebuyers find themselves in bidding wars driving purchase prices well over list price.

Will this trend continue? Interest rates are likely to remain low for some time. The Fed has already stated that they are in no hurry to raise short term rates and the government will likely monitor long term rates to assist economic recovery. The $8,000 first time homebuyer tax credit expires December 1st, 2009 forcing many off the fence and into a home. Many in the industry anticipate the deadline to be extended and there are rumors that the tax credit could be increased to $15,000. Barring any unforeseen tragic global event, the housing market may be on its way back up; slowly but surely.

REALTORS FINALLY SPEAK OUT AGAINST THE HVCC

Months prior to the implementation of the HVCC, the NAMB (National Association of Mortgage Brokers) has been in an intense battle to put a stop to this new government regulation; including a law suit which was finally dropped. The NAMB was unsuccessful and the HVCC has been hammering real estate values for almost three months.

The government didn’t listen to the mortgage brokers, but after real estate agents commissions were evaporating what deals were going sideways due to low ball appraisals ordered under the new HVCC law, the much larger NAR (National Association of Realtors) makes a stance against the HVCC.

“The NAR reports that 17% of its members say they have recently lost one sale due to an appraisal coming in way below a purchase price, and 20% of members say they have lost more than one deal because of low appraisals. NAR’s chief economist Lawrence Yun blamed “faulty valuations that keep buyers from getting a loan” as the reason May home sales data weren’t stronger.” – cnnfn.com

It has also been reported that appraisal costs have risen 30% or more since the introduction of the HVCC; which is another increased cost to the homeowner.
To be added to the petition to stop the HVCC, click the link below. Your support is appreciated. HVCC Petition: http://www.hvccpetition.com/

INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 4.875% 5.008%
15 Year Fixed 4.250% 4.476%

Call today for your individual scenario rate quote.

*Interest rates as of 07/24/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen
President
Geneva Financial, LLC.
Office: 480-368-2000
Email: aaron@genevafi.com

Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.

MARKET UPDATE - JULY 2009

2009-07-06T13:13:00.000-07:00

PHOENIX IS ON FIRE!

The real estate market in Greater Phoenix is heating up. In May 9,290 homes were sold. The last time we saw that type of activity was in August of 2005 when just over 10,000 homes were sold.

Although those numbers were the result of low home values due to foreclosures and short sales, it is a good sign for home owners that the market is rebounding.

As the inventory of homes for sale on the market decline, home values will increase. The real estate industry as a whole anticipates that this will take some time. Phoenix saw a 53% decline in value since 2006 and those loses will take a while to erase.

This is not the best news for the new home buyer. Well priced homes under $200k do not sit on the market for long. Over the last few months, 1st time home buyers and investors have flooded the market looking for good deals; and there are a lot of them. Homes are getting swept up fast. It is not uncommon to find bidding wars with accepted offers well above listing price.

HELP STOP H.R. 1728 – WE NEED YOUR HELP

H.R. 1728 has already passed the House and is headed for the Senate. In its entirety, this bill has the potential to devastate the mortgage lending industry and cost the home owner lending options and added fees. Contact your Senators and demand that they vote NO to H.R. 1728.

A quick review:

The bill is dangerously vague and has the potential to:
Eliminate yield spread premiums. Mortgage companies will be forced to charge the borrower in upfront fees; up to 2% of the loan amount in origination fees. Currently mortgage companies can offer “no points” options. Consumers will pay more for mortgages with fewer options.
Mandate lenders to hold a 5% stake in mortgages funded. This could eliminate most if not all mortgage brokers and bankers. Brokers and bankers currently employ seasoned loan officers that can offer the most competitive products and rates to consumers. Most lending institutions do not have the liquidity to carry a 5% stake in the mortgages they lend on. This will greatly reduce consumers’ options to shop for the best mortgage programs and rates. It will also be very difficult to regulate and make the industry even less efficient. Mortgage companies already have a stake in the mortgages they fund through representations and responsibilities to investors.
Eliminate your ability to sell your property through creative financing options. This bill has the potential to make illegal, owner carry backs, lease options, and owner financing.
Eliminate reduced documentation options for self employed borrowers. Stated income and reduced documentation loans have already been eliminated; as you know if you are self employed and have applied for a mortgage in the last year or so. The possibility of a “make sense” option for self employed borrowers to be created would be unlikely; leaving a large segment of the population unable to obtain financing, regardless of credit score and history.

Please take action now. If it passes, it will be hard to ever get your options/rights as a consumer back. Email me with any questions or concerns. – aaron@genevafi.com

NO DOWN PAYMENT MORTGAGES

“After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts. Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment.” – cnnmoney.com
HUD did state that the tax credit could be used to cover borrower closing costs, but the 3.5% mandated down payment on FHA mortgages would still have come from the borrowers own funds, or as a gift from an immediate family member or employer. HUD felt that it is important for the home buyer to have at least some “skin in the deal.”
HVCC UPDATE

Representative Travis Childers (D-Mississippi) and Representative Gary Miller (R-California) who serves on the House Financial Services Committee introduced HR 3044 last week in an attempt to force an 18 month moratorium on the Home Valuation Code of Conduct (HVCC) which went into effect May 1st of this year.
The HVCC forced mortgage companies to order conventional appraisals through third party clearing houses know as appraisal management companies (AMC); many which are ironically owned by the “big” banks. The intent of the HVCC was to prevent all interaction between the mortgage lender and the appraiser. Since its implementation, the HVCC has had a devastating impact on many appraisal companies, forcing them from the industry altogether.

The HVCC is also showing a track record of undervaluing properties. “In the past month, we have suddenly been bombarded with many stories of, at the last moment, transactions falling apart because appraisals are coming in unrealistically low,” said National Association of Realtors Chief Economist Lawrence Yun. “As a result it opens up a new round of negotiations between a buyer and a seller or in many cases the buyer just steps away.” – cnbc.com

To be added to the petition to stop the HVCC, click the link below. Your support is appreciated.

HVCC Petition: http://www.hvccpetition.com/

HOUSING STARTS UP

“The nation's builders boosted their production in May, starting new housing units at an annualized rate of 532,000, up 17.2% from the revised estimate of 454,000 in April. The data release, a monthly report from the Census Bureau, also revealed that building permits jumped by 4% to a rate of 518,000 from 498,000 in April.” – cnnmoney.com
DOWN AGAIN? - INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 5.000% 5.288%
15 Year Fixed 4.375% 4.862%

Call today for your individual scenario rate quote.

*Interest rates as of 06/30/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen
President
Geneva Financial, LLC.
Office: 480-368-2000
Email: aaron@genevafi.com

Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.

*If you wish to be removed from this email list, please reply with “REMOVE” in the subject line.

MARKET UPDATE - JUNE 2009

2009-05-29T11:55:00.002-07:00

MARKET UPDATE – JUNE 2009

HVCC UPDATE

What is the HVCC? A quick review:

In an attempt to reduce mortgage and appraisal fraud, the new Home Valuation Code of Conduct has received considerable blow back from those in the industry. The HVCC will prevent mortgage brokers and loan officers from ordering appraisals on conventional mortgages directly from the appraiser, in hopes of reducing value manipulation and fraud. The appraisals under the new HVCC would have to be ordered through a third party clearing house or through the lender directly. The HVCC went into effect May 1st, 2009.

“NAMB (National Association of Mortgage Brokers) is taking meetings this week with various officials to discuss potential avenues for removal of the HVCC. NAMB was successful in securing language in H.R. 1728 (passed by the House of Representatives) that called for an in-depth study of the effects of the HVCC. This bill has not yet been signed into law. NAMB has been requested by the Federal Housing Finance Agency (FHFA) to collect personal experiences from mortgage professionals and/or consumers of specific problems directly caused by the HVCC. NAMB is continuing to investigate other avenues by which to fight the HVCC. Please see below for what NAMB has been doing since April 2008 to fight the HVCC. NAMB will send weekly HVCC updates via News from NAMB (members only).”

“NAMB has been requested by the Federal Housing Finance Agency (FHFA) to collect personal experiences from mortgage professionals or consumers of problems directly caused by the HVCC. These problems can consist of increased costs, appraisal quality, portability issues, regulatory issues, etc. You must include specific, tangible evidence of how the HVCC has harmed your consumers and/or prevented you from conducting business.” – NAMB

A look at the first 30 days under the new HVCC rule:

Prior to HVCC: Under HVCC:

Appraisal Fee: $275-$300 $450-$550
Turn Times: 24-72 hours 5-10 days
Values: Market 10%-30% under Market

The HVCC has increased costs to consumers, drastically reduced values making it increasingly difficult for consumers to obtain mortgages, delayed lending turn times, and hurt legitimate appraisers ability to be in business. If you wish to voice a concern regarding the HVCC law, or have had a personal experience under the new HVCC law, please email me your thoughts, complaints and/or concerns. I will be forwarding all letters to our representatives in hopes to revise or eliminate the HVCC before it does any more damage.

Send to: aaron@genevafi.com

PRICES CONTINUE TO FALL BUT SALES ARE UP

“The S&P/Case-Shiller National Home Price index, a bellwether of real-estate market direction, plunged a record 19.1% during the quarter compared with the first three months of 2008. That followed an 18.2% drop last quarter. The Case-Shiller 20-city index dropped 18.7% year-over-year, also a record. It fell 18.5% during the last three months of 2008. This index has plummeted 32.2% from its July 2006 peak and has fallen 32 straight months.” – CNNMoney.com
Since the peak of the housing boom, Phoenix, Arizona has recorded the largest decline of 53%, followed by Las Vegas at just over 50%.

Home sales were up 3.2% nationally in April. Housing inventory nationally is at 10 months, down from over 12 months in January. Again, one month does not make for a rebound, but it may be a sign of light at the end of the tunnel.

So where are the best deals on housing; Phoenix and Las Vegas? Not only are the values down over 50% from there highs, it is commonplace to find properties for sale that are 50% off the cost of construction.

In the greater Phoenix metropolitan market we are now seeing bidding wars over lower cost housing. It is common to see multiple offers on the same home hours after being listed on the MLS, with contracts being accepted tens of thousands of dollars over list price. Investors have returned to the market making it increasing difficult for first time home buyers to find inexpensive homes. For first time homeowners, do not despair. There are thousands of homes on the market that are priced extremely well; it just may take several offers before you have an accepted contract in hand. There are still hundreds of homes listed for well under $100K on the market.

TAX REVENUE DOWN

“U.S. income tax revenues plunged 44 percent in April, compared with a year ago, the American Institute for Economic Research said. The reason is easy to find. About 6 million U.S. jobs were lost in the 12 months prior to April, USA Today reported Wednesday.”
“Dropping revenues are "one of the drivers of the ongoing expansion of the federal budget deficit," said John Lonski, chief economist for Moody's Investors Service. The Congressional Budget Office estimates the 2009 budget gap will reach $1.7 trillion for the fiscal year.” – CNNFN.com

FAILING BANKS

Bank United of Florida became the 36th bank in 2009 to fail on May 21st. Bank United oversaw $13 billion in assets, of which most were sold to private equity groups.

Bank United will not likely be the last bank in 2009 to fail. The Federal Deposit Insurance Corp (FDIC) just released a report that there are over 300 banks on the “endangered” list to date.

To put this in to perspective over “1,900 financial institutions went under during 1987-1991, peaking with the failure of 534 banks in 1989.” – CNNFN.com

INTEREST RATE UPDATE

“Late last week the bond market started worrying about inflation and servicing the federal deficit, and one thing led to another and the 10-year Treasury yield shot from 3.4% last Thursday to above 3.7% during trading yesterday (Thursday) before closing lower at 3.67%. Plenty of market watchers are expecting the trend line on the 10-year Treasury to keep moving up.” – CNNFN.com

Do I refinance and lock in now, or continue to watch rates? If the Federal Reserve continues to purchase Treasuries and Mortgage Backed Securities, interest rates will likely drop once again. If not, interest rates will continue to climb. The days of rates under 5% may be a thing of the past. Anyone have a crystal ball?

Mortgage Type Interest Rate APR

30 Year Fixed 4.750% 5.034%
15 Year Fixed 4.375% 4.862%

Call today for your individual scenario rate quote.

*Interest rates as of 05/29/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen
President
Geneva Financial, LLC.
Office: 480-368-2000
Email: aaron@genevafi.com

Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.

2009-05-19T08:19:00.002-07:00

MARKET UPDATE – MAY 2009

Foreclosures Hardest Hit Markets – Top 10

1. Las Vegas, Nevada: 1 in 22 homes
2. Merced, California: 1 in 24 homes
3. Fort Myers, Florida: 1 in 26 homes
4. Stockton, California: 1 in 27 homes
5. Ontario, California: 1 in 28 homes
6. Modesto, California: 1 in 29 homes
7. Bakersfield, California: 1 in 37 homes
8. Vallejo, California: 1 in 37 homes
9. Phoenix, Arizona: 1 in 40 homes
10. Port St. Lucie, Florida: 1 in 46 homes

Total foreclosure filings reached 803,489 in the first three months of the year, the highest monthly and quarterly totals since RealtyTrac began reporting in January 2005.

342,000 home owners received a notice of default in April. -Source: CNNMoney.com

Home Values Fall

Home sales in March were down from April, which saw an increase in sales and value.

“The National Association of Realtors said that existing home sales fell last month to a seasonally adjusted annual rate of 4.57 million units, 3% lower than the downwardly revised rate of 4.71 million in February. “

The report said first-time buyers made up 53% of existing home sales in March. And sales of "distressed properties" accounted for just over half of all transactions in the month. Foreclosed homes typically are selling for 20% less than traditional homes, according to NAR.

"The share of lower-priced home sales has trended up, indicating a return of many first-time buyers," said Lawrence Yun, NAR chief economist, in a statement. "Sales in the upper price ranges remain stalled because of higher interest rates on jumbo loans."

The national median existing-home price was $175,200 in March, up 4.2% from $168,200 in February. Still, the median existing-home price was down more than 12% since March 2008, when it was $200,100.

HR 1728 Mortgage Reform and Anti-Predatory Lending Act

HR 1728 passed the House on May 7th. Although the bill has many constructive elements, the bill also has the potential in its entirety to put undue pressure on the mortgage industry and increase borrowing costs to all potential borrowers. Below are some of the most controversial aspects of the bill.

Steering Incentives/Yield Spread Premiums: Yield spread premiums and other compensation that could cause mortgage originators (i.e., mortgage brokers and bank loan officers) to “steer” applicants toward more costly mortgages are banned for all mortgage loans.

Sounds good on the surface, but only to those that do not understand the function of yield spread premiums and the potential benefit to the customer. Yield spread premiums (YSP) is paid to the mortgage banker/broker when an interest rate is increased over the “par” rate. Example: 4.50% is the par rate (which nets $0 to the broker), 4.75% will pay 1% of the loan amount to the broker by the lender. If the customer chooses the higher rate, the mortgage broker can reduce loan fees or offer a no “points” mortgage. This may benefit the borrower by paying lower closing costs if they intend on living in the property a shorter period of time (in most cases < 5 years). By eliminating yield spread premiums, all borrowers will pay higher fees, and points. Consumer options would be limited.

Ability to Repay/Net Tangible Benefits: Every residential mortgage loan will subject to two new Federal standards that apply to creditors, assignees and securitizers. At the time the mortgage is entered into, the creditor must make a reasonable, good faith determination:
1. that the consumer has a reasonable ability to repay the loan at a fully indexed fully amortizing rate, based on verified and documented information including the consumer’s credit history, current and expected income, debt-to-income ratio, and other financial resources; and
2. for refinancings, that the loan will provide a net tangible benefit to the consumer, based on information known or obtained in good faith by the creditor.

David G. Kittle, CMB, Chairman of the Mortgage Bankers Association, while testifying before the House Financial Services Committee at a hearing on H.R. 1728 on April 23rd stated, “The bill’s provisions empowering the federal banking agencies to establish net tangible benefit rules for refinancings should require that these standards comprise bright-line tests such as a specific percentage decrease in loan payment or percentage increase in loan amount. If these standards remain subjective, credit will be far more costly, if it is available at all.”

Credit Risk Retention: Requires the Federal banking agencies jointly to issue regulations that require creditors, with respect to loans other than qualified mortgages to retain an economic interest in a material portion (at least 5 percent) of the credit risk of each such loan that the creditor transfers, sells, or conveys to a third party. A creditor may not directly or indirectly hedge or otherwise transfer the credit risk it retains under these regulations.

“We are just as concerned about the requirement that lenders retain at least five percent of the credit risk presented by non-qualified mortgages.”- David G. Kittle, CMB, Chairman of the Mortgage Bankers Association

According to Kittle, the risk retention provision would make it impossible for many lenders to compete, especially non-depository lenders who do not keep significant cash on hand but rather rely on warehouse lines of credit. This idea would ultimately narrow choices, lessen credit and significantly increase costs to borrowers. – mortgagebankers.org

The definition of “qualified mortgages” is so vague that it could eliminate most if not all mortgage brokers and mortgage bankers that do not have the capital to retain a 5 percent interest in loan originations.

According to Kittle, H.R. 1728 would raise costs on broad categories of safe mortgage products, including loans with adjustable rates, many jumbo loans, fixed 15, 20, 25 and 40-year loans, FHA, VA and Rural Housing loans, as well as some Fannie Mae and Freddie Mac mortgages. – mortgagebankers.org

“Lenders already have skin in the game by virtue of their representations and responsibilities to investors,” Kittle pointed out.

To view the bill in it’s entirety go to: http://www.house.gov/apps/list/press/financialsvcs_dem/1728.pdf

There are already 15 proposed amendments to the bill which still have to go before the Senate; who is working on a similar bill.

Financing Options for Home Buyers / Owners

Upside Down: If you currently have a mortgage that is more than your homes value, you may be able to refinance if you owe less than 105% of the homes value. If you exceed 105%, or have a Jumbo mortgage, you may not have any refinance options available at this time.

1st Time Home Buyer: $8k tax credit is still available. There are also rumors that HUD will allow this to be used as a down payment in the form of a bridge loan in the near future.

Currently have a FHA mortgage: If you currently have a FHA mortgage with a rate of 6% or greater, you may be able to do a streamline refinance to lower your payment, with little or no fees, and no appraisal.

Interest Rate Update:

Mortgage Type Interest Rate APR

30 Year Fixed 4.500% 4.780%
15 Year Fixed 4.250% 4.735%

Call today for your individual scenario rate quote.

*Interest rates as of 05/14/09. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

Aaron VanTrojen
President
Geneva Financial, LLC.
480-368-2000
aaron@genevafi.com

Another Failed Plan

2009-04-22T15:03:00.001-07:00

Is it a coincidence that President Obama came to Mesa Arizona, one of the hardest hit housing markets in the country, to give his pitch on the new The Homeowner Affordability and Stability Plan, or was it the weather, or just a gross lack of judgment and/or understanding of just how bad the housing market is for so many homeowners? For us in Arizona, it was just a slap in the face.

I watched the speech on TV, as did millions of Americans. I heard all those in attendance clap and cheer the new Plan; giddy over the prospects that their home would be saved. Relief was on the way. Initially I too was excited over the new mortgage opportunities and refinance business we in the mortgage industry would likely produce with this new Plan. We can now refinance homeowners who are upside down on their homes; all the way to 105% of the value of the home. Unfortunately Mr. President, in the last three months of 2008 the S&P Case-Shiller National Home Price Index reported that prices sank a record 18.2% nationally; Phoenix metropolitan fell a whopping 34%. California and Nevada experienced a similar drop in home values. Just who was the new Plan going to help?

Since President Obama’s speech in Mesa, Arizona a few weeks ago, I have been inundated with calls for help under the new Plan. To date, we have refinanced exactly 0 home owners under the new Homeowner Affordability and Stability Plan. Yesterday I took an application for a home owner who hoped to qualify under the Plan. The home was recently purchased for $175,000. Today it would be lucky to appraise for $95,000. What about them President Obama?

The Homeowner Affordability and Stability Plan will likely be another failed attempt, as was Hope for Homeowners before it, of offering any relief to homeowners that are underwater. Please President, if you are going to roll out a plan for homeowners that are in trouble, let it be one that actually can helps those in states like Arizona, California, Florida, and Nevada; the states that need it the most. If not, please stay focused on buying Treasurys and mortgage back securities. That at least helped rates, and may eventually help the flow of credit. That will provide some relief today; and our children can pay for it later.

Death of the Short Sale

2008-11-18T08:39:00.001-07:00

I was asked just yesterday whether or not I thought the government bailout of the mortgage banking industry would put a end to short sales. My answer was unfortunately, no. The $700 billion initial proposal has already been scaled back, and we are now seeing some of that bailout that was intended for banks and ultimately home owners, now potentially going to the auto industry. In an ideal situation, the money would flow into the banking system, allowing banks to loosen lending guidelines and proactively and aggressively modify as many mortgages as possible, slowing foreclosures and ending short sales. Although short sales have been an important part of weeding out foreclosures and ultimately stabilizing the housing market, there has been a greed factor that has put additional and unnecessary strain on the housing market. The greed factor happens when seasoned professionals turn larger profits in a short sale scenario when others, banks and home owners, suffer the greatest losses. I anticipate big changes in the first quarter of 2009. The new administration has the ability to radically effect our current housing and banking meltdown. Regardless of what side of the fence you are on, hope that they get it right. You will be affected.

What about Me

2008-11-03T20:03:00.004-07:00

With the election only hours away, I sit and reflect on which one of these candidates will be better for my business. Selfish maybe; but if my business is going good, people are buying houses and we are lowering homeowner interest rates. Home prices are stabilizing, maybe even appreciating. My business is good for the country. It is what it is. Right McCain? Right Obama?

McCain's history states he would be good for deregulation of big banks and the lenders who fund my loans. This is appealing because the industry has over reacted and tightened up far too much. The government has taken control over Fannie Mae and Freddie Mac. The government has seized Washington Mutual and Wachovia. Stated income loans have been banned and down payment assistance has been abolished. What's next? Certainly McCain cannot be in favor of such "big" government intervention. Maybe McCain as President of the United States would ease governments control over Fannie and Freddie, loosen lending guidelines and let us get back to free market capitalism. That would certainly be good for business; although isn't that what help caused the mortgage meltdown?

Obama is all about the "little" guy; Middle class America. Obama would potentially tax the wealthy at higher rates, and maybe pass that on to the middle class by adding some tax incentives when buying or selling a home. I need not worry about the other tax breaks if it does not encourage people with little or no down payment to purchase a home. Obama would likely help bring back down payment assistance, regardless of the higher default rate. If the borrower can't make the payment, the government can with the additional money it is collecting by taxing the rich; and we are not talking about plumber rich.

So tomorrow it will all be decided. The question is, what will the next President of the United States do? Capitalism allows for free markets, and for free choice. It allows me to make loans to those that in good faith can pay them back. Deregulation gets the government out of private enterprise, and allows for people to make their own decisions. Going above and beyond to help the less fortunate, the middle and lower classes of the economic food chain, the ability to better live the American dream of home ownership. When did both concepts become so separated, so completely removed from one another. The mortgage industry cherishes both ideologies; doesn't America? So whoever is the next President, deregulate the mortgage industry and bring back down payment assistance. With the increase of volume of mortgages being funded, I can get rich. Then tax me more to help pay for the increase in defaulting loans. If I am rich, I will gladly pay more to help the middle class buy houses they may not otherwise be able to afford.

RATE CUT 101

2008-10-28T11:41:00.002-07:00

In all likelihood the Fed is going to cut the Fed Funds rate tomorrow. The last cut came on October 8th in an emergency session, dropping the rate to 1.5%. This new cut may bring the Fed Funds rate under 1%; for the first time in history. The concept of the rate cut is to get banks leading cheaper money to businesses and consumers on "short term" loans; such as car loans, business loans, and credit cards. This would also lower the rates on home equity lines of credit; which no one can qualify for any more. This move by the Fed is the same thing that Alan Greenspan has been criticized for. After 9/11, Greenspan cut the short term rates so low, banks essentially could borrower the money for free, so there was great incentive to lend as much as they could, to whomever they could. The depressed interest rates is part of the reason we experienced a rapidly appreciating housing market.

This time around, things may be a little different. Banks are still shell shocked by their recent losses in the credit markets. So although the banks may be borrowing the money at a low cost, they may not be lending it to the consumer at a low cost. Also a cut in the Feds Funds rate, may send long term rates, i.e. 30 year fixed mortgages up. After a Fed rate cut, long term rates traditionally spike up, at least initially. Regardless, this likely move by the Fed will not have an immediate positive effect for the struggling homeowner, or home buyer. We will just have to wait and see what else they have in their bag of tricks.

SALES UP VALUES DOWN

2008-10-27T08:54:00.006-07:00

I long for the day when the news headlines state "Home Sales are Up." That's it. But unfortunately everything comes with a "but, however, or although." Today's headlines for housing news states that new homes sales are up almost 3% in September; however they are down 33% from September of 2007. The increase of new homes sales may be a sign of a recovering housing market, although home prices were down another 9%. New home sales inventory was down, but there are still 394,000 new homes on the market (cnnmoney.com).

What the news headlines also fail to point out is why new home sales were likely up for September. New home builders and new home buyers alike have relied heavily on down payment assistance since the elimination of 100% financing mortgage options. A recent bill that was passed eliminated down payment assistance as of October 1st, 2008. There was in increase in volume of home purchases using down payment assistance in September as a result of the elimination of this program. Many homeowners still missed the deadline, losing their financing and their new home. Did this account for the increase in new home sales? We will likely find out when the numbers are reported for October.

It is always nice to see some encouraging news in the media regarding the housing market; although it would be far more encouraging to read simply "Home Sales are up!," or "Down Payment Assistant Reinstated!" It is unlikely you will get one without the other.

GET PASSIONATE

2008-10-22T09:30:00.004-07:00

"I read this article a while back, that said that Microsoft employs more millionaire secretary's that any other company in the world. They took stock options over Christmas bonuses. It was a good move. I remember there was this picture, of one of the groundskeepers next to his Ferrari. Blew my mind. You see sh@! like that, and it just plants seeds, makes you think its possible, even easy. And then you turn on the TV, and there's just more of it. The $87 million lottery winner, that kid actor that just made 20 million on his last movie, that internet stock that shot through the roof, you could have made millions if you had just gotten in early, and that's exactly what I wanted to do: get in. I didn't want to be an innovator any more, I just wanted to make the quick and easy buck, I just wanted in. The Notorious BIG said it best: "Either you're slingin' crack-rock, or you've got a wicked jump-shot." Nobody wants to work for it anymore. There's no honor in taking that after school job at Mickey D's, honor's in the dollar, kid. So I went the white boy way of slinging crack-rock: I became a stock broker." In my case, a mortgage broker. (famous quote from the movie Boiler Room).

Unfortunately today, there is no quick buck int he mortgage business, or in most businesses. I realized after giving an hour and a half webinar last night to a large number of investors, is that regardless of how painful my business is, I am passionate about it. I didn't get into the mortgage and real estate business to make a quick buck. I didn't launch a new mortgage bank during one of the greatest financial crisis of our time for the easy dollar. I did it because I am passionate about what I do; and I am good at it. I then realized that if everyone else got passionate about what they did, not only in career, but in life; we may all turn this economy, and more importantly this country around. Find your burning desire in life, and get passionate about it. It is not easy and we will all have to work hard for it. So whether your goal is to own a VW or a Ferrari, go get. It is yours to have. You are just going to have to work for it; and there is nothing wrong with that.

PLUMB THIS!

2008-10-17T12:49:00.002-07:00

Now that the cat is out of the bag that Joe the Plumber does not make $250K per year and will be unaffected by Obama's proposed tax plan; can we now start talking about reality. I understand that it would be political suicide for either candidate to have a "come to Jesus" talk with the American people and let them know that taxes are going up, in some fashion or form, for someone and likely everyone. The national debt is now over $10 trillion and climbing. The government just voted to pump $700 billion into the banking system, which some critics believe will exceed $2 trillion before the financial crisis is over. The war in Iraq is costing the United States over $300 million a day. How can anyone cut taxes when spending is increasing? Regardless of what side on the political fence you are on, if you hear increased spending, and reduced taxes, you have a mathematical problem on your hands. Can we all agree that somebody is going to have to pay more? It will hurt the economy if Joe Six Pack is burdened by higher taxes. You do not want to tax middle America (what's left of it) in a recession. But then why should financially successful individuals and companies pay a higher share; that doesn't seem fair. I do not have an answer, but I can tell you that I don't want to pay any more taxes either, but will if it is for a good cause. Two things before I start my weekend and cash what is left of my check. 1st: Warren Buffet, who Forbes recently ranked as the world's richest man, while speaking at a $4,600-a-seat fundraiser in New York, said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.” 2nd: When did paying taxes for a good cause become so unpatriotic?

WHAT CAME FIRST THE CHICKEN OR THE EGG

2008-10-16T16:01:00.003-07:00

Because I am in the mortgage banking and real estate business, I am often asked, "When will this market turn around." My optimistic answer is typically 12-18 months; which I have been saying for the last 12-18 months. I am not talking about appreciation, but simply a flat market. That would be worth celebrating.

Here's what needs to happen. Home prices need to stabilize, and they will not stabilize until lending guidelines loosen. Lending guidelines will not loosen, until home prices stabilize.

Since the government intervention, guidelines have choked off mortgage banks ability to lend; at least lend to most people. In an attempt to stop losses and prevent future losses, they have restricted or eliminated all mortgage programs that we considered the least bit risky, mortgage programs that had a higher than average default rate. In doing so you eliminate a large cross section of borrowers/buyers, thus reducing demand. Once demand drops, prices have to follow. Now "good" borrowers begin walking from their homes that are terribly upside down, driving values down further. Now so called "good" mortgages start defaulting, and the guidelines tighten again. It is a self fulfilling prophecy.

The government needs to bring back down paymnet assistance for FHA buyers, or create a 100% FHA program. Throw in risk based pricing to pad the increase risk of default. Bring back "stated" income loans (income not verfied) for self employed borrowers with high assets and good credit. Increase the allowable number of financed properties back to 10, instead of 4 which it was just reduced to; allowing investors to buy up some of these distressed properties. Or if you think that is a bad idea, lets just keep doing what we have been doing. In no time at all home values will have fallen so low, you will not even need financing; you will be able to afford to pay cash.

STOP POINTING FINGERS

2008-10-15T07:51:00.003-07:00

As I prepare myself for another brain damage presidential debate tonight, I wonder who is going to blame who for our real estate and financial crisis. What we now know is that Clinton is responsible because he put pressure on Fannie Mae and Freddie Mac to loosen lending guidelines to allow more lower and middle class families qualify for a house. Greenspan cut rates so low that money was essentially free for banks to lend which encouraged them to lend to just about anyone that could fog a mirror. McCain is guilty for deregulation of the banking industry. Bush is guilty, well do I need to say more. Mortgage brokers are guilty of selling "toxic" mortgages. The homeowner is guilty of not reading the fine print. Instead of pointing fingers, everyone should blame themselves. We as a whole caused this problem. When banks were making a killing lending Alt A and sub prime mortgages, people cheered as there stock and 401(k) accounts soared. We bragged over cocktails about how our home values double in the last 12 months. We showed off our new cars and boats that we purchased with the equity in our homes. No one wanted to believe that the low rates, excessive lending, and rapid appreciation of home values was an anomaly that would not last. Now we find ourselves at a time of correction, and unless we take responsibilities for our own actions, the road to recovery will be a long one. We have reached a dark time in our country's history where people think it is OK to walk away from their house, that they agreed to buy, that they can still make the payment on. A time where people think the bank, and now government should share their pain, because they did not read the fine print. Be mad, get angry, but stop pointing fingers. The sooner we take responsibility, the sooner we can focus on the future. Your home value will go back up. Your 401(k) will survive. The economy will get better. But when it does, lets all be better than we were when our homes doubled in value in less than a year.

THE BANK BAILOUT CONTINUES

2008-10-14T08:52:00.002-07:00

Today the United States announced that it would inject $250 billion into the banking system in attempts to free up frozen credit markets. The goal is to get banks to start to lend to one another again. Nine banks will initially reap the rewards of the cash infusion. $250 billion to help BANKS. Bank stocks soar on the news. In anticipation of the cash injection into the banking system, the stock market posts its biggest one day percentage gain since 1932, up 936.42 on Monday. That is good news for your 401(k). The surge in the stock market was countered by a massive sell off of the 10 year T-Bill, forcing long term interest rates, i.e. 30 year fixed mortgages to yearly highs. The 10 year T-Bill continued to sell off Tuesday morning, sending yields to just over 4%. Now that the banks are happy, when can the consumer have some relief. It is not likely to happen anytime soon. Banks can now lend to banks, but they are not lending to you. Mortgage guidelines continue to tighten, and interest rates are climbing. Don't shoot the messenger, I am just telling you what it is. To date, nothing the government has done has helped the consumer. I assume that it is on the way, but in what form is yet to be seen. My bank just got $25 billion. I wonder how much they will lend me.

TOO BIG TO FAIL

2008-10-13T15:38:00.003-07:00

Over the last several weeks we have heard repeatedly that certain banks and insurance companies are "Too big to fail." On September 8th, the US government, in an unprecedented socialistic move, took over struggling mortgage giants Fannie Mae and Freddie Mac. AIG, Wachovia, and Washington Mutual were all just recently bailed out by the US government for fear of the alternative. The $700 billion dollar bailout plan, which will likely exceed $1 trillion was the biggest bailout yet; and it is not bailing out you. You are not too big to fail. There is another institution too big to fail, called the United States. Just as the US government pumps money it does not have into the financial system to prevent it from crashing down around us all, the rest of the world will continue to pump money into the US. The United States is "Too big to fail," because if the world allowed free markets to be free, we may just fail. US treasury bonds are already performing as if there is risk the United States may default on its debt. The United States will not fail because it would be far too costly to the world. Sometimes intervention is a necessity, despite the grave costs to everyone.