Legacy Mutual Mortgage of Houston

Job Market Labors On

Mon, 12 Mar 2012 07:32:21 -0500

In This Issue...

Last Week in Review: The Jobs Report for February was released - find out if the news was positive or negative for Bonds and home loan rates.

Forecast for the Week: A busy week is ahead, with key reports on inflation, consumer spending, and manufacturing. Plus, the Fed meets.

View: Think Pinterest is just for fun? Think again.

Last Week In Review...

Survey says? The Jobs Report for February was released...and overall the tone was positive. Here are the details, and what they mean for home loan rates.

On Friday, the Labor Department reported that 227,000 jobs were created in February, with 233,000 private job gains offsetting slower government job losses. Adding to the positive overall tone were upward revisions to both December's and January's job growth readings, which added another 61,000 jobs to what was previously reported.

In addition, the Unemployment Rate held steady at 8.3%. One thing that is important to note is that wage growth continues to lag even the tepid amount of inflation we are seeing right now. And negative earnings growth - compounded with consumers still deleveraging accumulated debt - makes it very hard for the economy to grow at a pace robust enough to significantly lower the unemployment rate. Also, a low Hourly Earnings reading also tells us there is no upward pressure to raise wages, which is sometimes a precursor to more hiring. This mix of news made the report an okay one overall...and since Stocks (not Bonds) usually benefit when there is great news, the "okay" tone actually was good for Bonds and home loan rates.

In news overseas, private investors in Greek debt were coaxed into forgiving more that 100 Billion Euros ($132 Billion) of debt in order to provide another bailout to the country. It's important to understand that this deal does not solve the problems in Greece, but only provides a hefty kick of the can down the road. New problems will emerge once the country has to meet austerity measures along with the "tighter fiscal union" guidelines and metrics set forth by Germany. And as uncertainty overseas continues, our Bonds (including Mortgage Bonds, which home loan rates are tied to) could continue to benefit from safe haven trading.

The bottom line is that now continues to be a great time to purchase or refinance a home, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

Several important economic reports will be released this week, including news on consumer spending, inflation and manufacturing.

A very important report that gauges consumer spending is Tuesday's Retail Sales data. Consumer spending makes up almost 70% of Gross Domestic Product, so spending decisions will surely influence the direction of the U.S. economy.
In the manufacturing sector, the Empire State Index from New York and Philadelphia Fed Index will both be released on Thursday. In addition, Industrial Production will be delivered on Friday.
Inflation data in the form of the Consumer Price Index will be released on Friday and carries a bit more weight than Thursday's Producer Price Index, which measures inflation at the wholesale level.
Initial Weekly Jobless Claims will be released on Thursday. The number of people filing for unemployment benefits is at four-year lows.
The last bit of data for the week comes Friday with Consumer Sentiment.

In addition to those reports, the Fed's statement will be released Tuesday afternoon after the FOMC meeting. Depending on what the Fed says in that statement, Bonds and home loan rates could be impacted.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As discussed above, when it comes to February's Jobs Report, the headline number and some of the sub-components of the Jobs Report were positive. However, overall the report is being viewed as an okay read and one of more modest improvement. I'll be keeping a close eye on this week's economic reports, and what they might mean for home loan rates.

The Mortgage Market Guide View

Pinterest…for Business?

Social media has been all the buzz the last few years in the business world. Facebook and Twitter have become important tools for connecting with potential clients…and LinkedIn has turned networking into a virtual reality.

But with all the new social media sites and tools popping up, it's hard to know what new sites to adopt. One site that may seem to fly under the radar as being less focused on business is the social media site Pinterest.

Pinterest is an image-based social network that lets you create a virtual bulletin board. In other words, it's an online "pin board" that lets you organize and share interesting things that you find on the Internet. While that may not sound very business like, the number of hits that the site has been getting may pique your interest.

For example, Pinterest is now one of the top 10 social networking and forum websites. In addition, Pinterest raised $37 million in funding last year and has an unconfirmed valuation of up to $200 million. And Pinterest has been reaching 7 million to 10 million visitors a month in the US alone.

Those stats are drawing more and more people to explore Pinterest as a business tool. And for people who work in the housing and financial industries, Pinterest can actually make a lot of sense. This is especially true when you consider the connection between images and the topics of homes, home improvements, decorating, and so on! After all, people are always looking for ideas and inspiration for their homes. Just imagine how many past clients and potential clients would follow your images related to housing.

That's why so many business people are now starting to use Pinterest as a way to engage with customers…to boost their social media presence by connecting their sites…and to get more out of their online marketing efforts.

It's the perfect way to connect with potential clients in a way that keeps you top-of-mind in a professional yet friendly way. If you're interested in Pinterest for business, take a look at the following links that can help you get started with ideas and tips:

Remember, if a picture is worth a thousand words, think about how many "words" you'll be able to share with potential clients on a site like Pinterest.

Oil Is Heating Up

Mon, 27 Feb 2012 11:59:52 -0500

In This Issue...

Last Week in Review: The markets were closed Monday but the rest of the week had its share of good and bad news.

Forecast for the Week: A plethora of economic reports will hit the wires, with news on inflation, manufacturing, the state of the economy and more.

View: “Thank you” may be two small words, but they carry a large significance.

Last Week In Review...

Every cloud has a silver lining. That popular idiom is one way to look at the headlines last week, both here in the U.S. and overseas. Read on for the details and what they may mean for home loan rates.

There was good news on Friday as Consumer Sentiment rose to 75.3, which is the best level since February of 2011. However, this news was tempered by the rise in oil prices that we have been seeing. There’s a good side and a bad side to higher oil prices.

On the one hand, high oil prices are very detrimental for the fragile U.S. economy, as consumers have to put more of their discretionary dollars into their gas tanks...meaning they have less to spend elsewhere. High oil prices are also inflationary as the added shipping and material costs apply upward price pressures on Producer or Wholesale goods that either have to be absorbed by the producer, thus hurting profits and the ability to expand or hire. Or the added costs get passed onto to the consumer...a la a rise in consumer inflation.

The silver lining is that high oil prices could actually be good news for home loan rates, as the dampening effect on economic growth produces a sluggish economic environment in which Bonds (including Mortgage Bonds, to which home loan rates are tied) thrive. This is an important topic to continue watching in the weeks and months ahead.

In silver linings overseas, after seemingly endless negotiations, Greece, investors and central bankers came to an agreement to provide Greece with 130 Billion Euros ($172 Billion) in financial aid. This will help the country fund itself through March and into the future... as long as it institutes economic reform, austerity measures and meets deficit targets. Any deal with Greece will be very tough to implement and a default could still occur...which makes this another important topic to keep close watch on.

Between some of this uncertainty from overseas being lifted, a lower unemployment rate, and better than expected economic reports, home loan rates have struggled to improve beyond some of the best levels seen over the past two weeks. But yet another silver lining is that home loan rates remain near historic lows, and now continues to be a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

After last week's holiday-shortened week, there will be plenty of economic reports to watch for.

Pending Home Sales will be released on Monday and could have a relatively modest impact on trading.
Durable Orders will be delivered on Tuesday. This report gives a look at consumer spending for products that are expected to last at least three years.
Another important report will be Consumer Confidence on Tuesday, as the American consumer is a very important player in the U.S. economy.
In the manufacturing sector, the Chicago PMI and the ISM Index will be released on Wednesday and Thursday, respectively.
The all-important Gross Domestic Product report comes on Wednesday and will give a detailed view on the overall picture of growth in the U.S.
Weekly Initial Jobless Claims will be released on Thursday, and last week's claims remained near four-year lows, signaling that the jobs market could be healing.
Finally, the Core Personal Consumption Expenditure (PCE) report will be released on Thursday. This is the Fed's favorite gauge of inflation.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving - and when they are moving lower, home loan rates are getting worse.

To go one step further - a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, roller coaster trading in the markets continues. I'll continue to monitor this situation closely.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 24, 2012)

The Mortgage Market Guide View

7 Ways to Say Thanks

It's hard to go through the day without hearing the words "thank you" or "thanks." However, much of the time, people say those words quickly and without much meaning. Sure, a quick "thanks" is appropriate when someone holds a door for you or hands you something.

But when it comes to saying thank you to a client, partner, or friend for a more significant gesture, it's important to go the extra mile. This is even more crucial in today's business environment when success is so dependent on personal connections.

So how do demonstrate your appreciation? Here are 7 ways to say thank you…to strengthen your relationships…and to stand out in the mind of the person you're thanking.

1. Classic and Classy. Mailing thank you notes has dwindled in today's email business environment. That means you can really stand out and demonstrate your sincere appreciation by hand writing a brief thank you note and mailing it. Not sure what to write? No problem. Check out this simple advice for writing a thank you note.

2. A Little Surprise. Little surprises can be a fun way to thank a client, colleague, or friend. You may want to write a thank you note, but then slip it into a file that you hand the person. Or you could consider getting the person's jacket for them when they get ready to leave a meeting…and then slip the note into a pocket just before you hand it to him or her.

3. See You in the Papers. If you have a newsletter, social media page or blog, thank people publicly. A short "shout out" can go a long way.

4. Phone a Friend. There's something about hearing a person's voice…and it's even better when they call just to say thank you rather than to ask for something.

5. Face-to-Face. Dropping by to say thank you goes a long way to demonstrating your sincerity and to strengthening your relationships.

6. Time Is On Your Side. People seem busier than ever. That's why making time for someone means so much. One way to thank a person is simply to schedule some time for coffee or to chat. Then, turn off your cell phone and give him or her your undivided attention.

7. A Good Cause. Sometimes it's not appropriate to give money or a gift. That's ok. You may find that a unique and sincere gesture is to make a donation to a worthy cause that the person cares about. Then, let the person know about your donation as a way of saying thanks.

Infation Heating Up

Mon, 20 Feb 2012 13:51:12 -0500

In This Issue...

Last Week in Review: Good economic news, signs of inflation, and news from Greece all had an impact on Bonds and home loan rates.

Forecast for the Week: A holiday-shortened week is ahead, and the economic calendar will be light.

View: Drive a car for work? Be sure you’re using the latest mileage rates.

Last Week In Review...

A tale of three stories. That's a great way to describe last week's news, as a string of positive economic reports, news out of Greece, and hints that inflation is heating up all worked together to impact Bonds and home loan rates. Here are the details!

A breakfast buffet of better than expected economic data hit the wires last week. In the housing arena, Housing Starts came in better than expected, while both the New York Empire State Index and the Philadelphia Fed Index reported positive manufacturing news. There was also decent labor market news, as Weekly Initial Jobless Claims fell by 13,000 in the latest week to 348,000 - the lowest level since March 2008! Meanwhile, Retail Sales rose in January by 0.4%, the largest gain since October.

Remember, strong economic news often cause money to flow out of Bonds and into Stocks, as investors hope to take advantage of gains. That's partly what caused Bonds (including Mortgage Bonds, to which home loan rates are tied) to worsen late last week.

Also weighing on Bonds and home loan rates was the news that inflation is heating up. Despite the Fed's claim that inflation is moderating, the Core Consumer Price Index (CPI), which strips out volatile food and energy, rose to its highest levels since October 2008. Meanwhile, as you can see in the chart, the wholesale measuring Core Producer Price Index (PPI) rose double the expectations of 0.2%, coming in at 0.4%. Any hints of inflation can serve to spook Bond investors - causing both Bonds and home loan rates to worsen - as inflation can reduce the value of fixed investments like Bonds. This is one story to keep a close eye on in the weeks ahead.

The drama in Greece is another key story to monitor, as it also impacted Bonds and home loan rates last week. Greece sent the markets into the weekend with assuring messages that a deal for them to avoid default is close, and this sense of optimism weighed on Bonds and home loan rates. Our Bonds and home loan rates have benefitted from all the uncertainty in Greece, as investors have seen our Bond Market as a safe haven for their money. Time will tell whether this uncertainty and safe haven trading will continue.

The bottom line is that now is a great time to purchase or refinance, as home loan rates remain near historic lows. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

The capital markets were closed on Monday due to Presidents' Day and the economic calendar is light the rest of the week with just a few reports.

On Wednesday Existing Home Sales will be released, followed by the New Home Sales report on Friday. The reports come after last week's positive Housing Starts data.
Thursday brings the weekly Initial Jobless Claims Report, which has steadily declined this year to a more job-friendly level.
On Friday, the Consumer Sentiment Report will be released.

In addition to those reports, a number of news stories may move the markets, including additional news out of Greece, the Treasury Department's auction of $99 Billion worth of government securities, and movement in the Stock Market. All of those news stories have the potential to negatively impact the Bond Market, depending on how they develop.

When you see these Bond prices moving higher, it means home loan rates are improving - and when they are moving lower, home loan rates are getting worse.

As you can see in the chart below, good economic news late last week reversed the improving trend Bonds and home loan rates experienced early in the week. I'll continue to monitor this situation closely.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 17, 2012)

The Mortgage Market Guide View

Mileage Rates for 2012

If you drive a car, truck or van for work, you'll want to make sure you know the standard mileage rates that the Internal Revenue Service (IRS) has set for 2012.

These mileage rates are used to calculate deductible costs for driving an automobile for business, charitable, medical and moving purposes. So when it comes to filing your taxes this time next year, you'll need to know these numbers!

New for 2012

As of January 1, 2012, the standard mileage rates are as follows:

Businesses = 55.5 cents per mile driven
Medical or moving = 23 cents per mile driven
Charitable organizations = 14 cents per mile driven

You'll notice that the rate for business miles is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

Make Sure You Qualify

Before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.

In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously. However, the IRS is accepting public comments on this policy.

Additional Option

Although the IRS provides the standard mileage rate for ease and convenience, you're not required to use it. If you prefer, you can calculate the actual costs of using your vehicle instead of using the standard mileage rates.

Remember, if you have questions or concerns, talk to a tax consultant or accountant to discuss your options and unique situation.

Job News Better Than Expected

Mon, 06 Feb 2012 08:08:58 -0500

In This Issue...

Last Week in Review: The Jobs Report for January is in - and the news was good!

Forecast for the Week: Stocks and Bonds will be battling over investing dollars as only two economic reports are scheduled.

View: President Obama has proposed a new plan to help homeowners refinance. Check out the details below.

Last Week In Review...

It's been said that no news is good news. But last week, the Jobs Report brought some good news for the labor market. Read on for the details...and what they mean for home loan rates.

The headline Jobs Report showed 243,000 jobs created, which was much better than expected. Meanwhile, a whopping 257,000 private jobs were created, also much higher than expected. Upward revisions to November and December added another 60,000 jobs to what was previously reported for those months. And adding to the euphoria was a 0.2% decline in the Unemployment Rate, bringing it to 8.3%...the lowest since February 2009.

Despite all this good news, the report did show a pretty sharp decline in the labor participation rate from 64% to 63.7%. We really need to have more people "participating," or working to help pay down our debt. Understandably, the demographics of baby boomers retiring does account for some of the decline. But is it the entire 0.3%? And the U-6 Unemployment Rate (which counts all persons marginally attached to the labor force, including those who are employed part-time but would prefer full-time) remains at a lofty 15.1%, with that figure dropping just 0.1% for the month.

And there was other good news to note last week as well: The Commerce Department reported that Personal Incomes rose in December by 0.5%, above expectations and well above the 0.1% reported in November. This marked the largest increase in nine months!

So what does all of this mean for the housing market and home loan rates?

While Bonds and home loan rates did worsen on the good Jobs Report news (remember good economic news often causes money to flow out of Bonds and into Stocks, as investor try to take advantage of gains), home loan rates remain near historic best levels. In addition, the problems in Europe remain…and as uncertainty reemerges, US Bonds (including Mortgage Bonds, to which home loan rates are tied) will benefit.

The takeaway from all of last week's news is that the pace of improvement in the labor market is choppy and muddled at best. But the trend is improving over time, and this is welcome news for the struggling housing market because as people feel more secure in their jobs, they are more willing to consider making major purchases like a home.

The bottom line is that now is a great time to purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

There are just two economic reports due for release this week and with earnings season winding down, the Stock and Bond markets will be battling over investing dollars.

Thursday brings the weekly Initial Jobless Claims Report. Last week people filing for first-time claims fell by 12,000 to 367,000, an encouraging sign now that claims have fallen below that dangerously high level of 400,000.
On Friday, we'll see the first reading on Consumer Sentiment for February.

In addition, the Treasury will sell a total of $72 Billion in Notes and Bonds this week.

When you see these Bond prices moving higher, it means home loan rates are improving - and when they are moving lower, home loan rates are getting worse.

As you can see in the chart below, Bonds and home loan rates worsened after the Jobs Report was delivered on Friday. I'll be watching closely to see what happens this week.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 03, 2012)

The Mortgage Market Guide View

New Proposal to Help Homeowners Refinance...

But Will It Ever Get Off the Ground?

The Obama administration has proposed a national refinance plan in an effort to stimulate the housing market by helping those homeowners who are underwater on their mortgages, or owe more on their loan than what the home is currently worth. Based on the proposal, the program would be available to responsible mortgage borrowers...and could save them up to $3,000 a year if they were to partake in the program.

However - and this is very important - the plan is currently just a proposal and would have to be passed through both the Senate and the House of Representatives.

President Obama first introduced the plan at his State of the Union Address on January 24th and stated just recently that this is a "make-or-break" moment for the middle class. The President said the program will cut through the red tape with no hidden fees.

There are, however, certain stipulations within the President's proposal. The candidates would have to be current on their mortgages for the past six months and could only have one missed payment in the six months prior to that. The candidate would have to have a credit score of at least 580. The loans would be backed into Federal Housing Authority (FHA) loans and would come from loans that are privately held, and would expand on the Home Affordable Refinance Program (HARP) that is currently open to loans that are backed by Fannie Mae and Freddie Mac. In addition, the loans would have to be 30-year conforming loans or loans that fall between $271,050 to $729,250, and the residence must be owner occupied.

The White House would also want lenders to take a "haircut" for those homeowners who are deep underwater. Homeowners that are deep underwater could be more susceptible to foreclosure or to just "walk away" from their commitment to repay the debt.

Here's an example of what the plan might mean to a homeowner, if the proposed plan were to be approved. On a $200,000 loan that is currently at 6%, the borrower would receive an interest rate of about 4.25%, which could amount to a savings of $216 a month on a 30-year mortgage. There would also be an option to move into a 20-year mortgage and - although the payments would not be lowered - it would provide an incentive to build equity and to pay off the loan in a shorter amount of time.

But before you get too excited or start making any plans, we have to remember that this is just a proposed idea at this time.

As with every new bill introduced to Congress, there could be pushback for the plan, which is expected to cost as much as $5 Billion to $10 Billion. The President said that the new plan would not add to the deficit; instead, the funds would come from a fee placed on large financial institutions. This has already gotten negative comments from Republicans in Congress. The White House said that other options to pay for the program would be considered.

This isn't the first time that Capitol Hill has tried to combat the problems of underwater mortgages in the past few years and they have not been too successful. One big question is will the banks and servicers go along with the plan if it were to get through Congress.

In addition, the loans will be backed into FHA loans. But, FHA is on very shaky ground right now and is in no better shape financially than Fannie Mae and Freddie Mac. Some experts even think that FHA may need a bailout in the near future.

The last thing this Congress wants to do right now is to pass yet another stimulus bill, so many pundits see the proposal as "Dead on Arrival."

In conclusion, an assortment of programs have been introduced to help struggling homeowners, and they have only had limited success. In order for this plan to get off the ground, it will need to be a joint effort by the White House, the lender, the servicer and the consumer... a feat that is always difficult to achieve when there are many moving targets and several different agencies involved.

A Gross Domestic Product

Mon, 30 Jan 2012 06:32:32 -0500

In This Issue...

Last Week in Review: The Fed met and a “Gross” Domestic Product was reported.

Forecast for the Week: A busy week is ahead, with important news on inflation, manufacturing, and the job market.

View: Ever wondered what the world was really like when you were born? There’s a fun way to find out.

Last Week In Review...

If at first you don't succeed, try, try again. Last week, that popular idiom could have applied to the Gross Domestic Product (GDP) Report. Read on to learn why...and how all the week's news impacted Bonds and home loan rates.

The Advanced GDP reading - or first of three readings - for the 4th Quarter of 2011 came in at 2.8%, a bit below expectations of 3.2%. This number will be revised two more times, but if the final GDP remains at 2.8%...then the overall GDP for 2011 would be a scanty 1.57%. That is certainly a "Gross" Domestic Product, when you consider that the government has underwritten more than half of that economic growth with the Payroll Tax benefit.

Also in the news last week, the Fed's Policy Statement after its regularly scheduled Federal Open Market Committee meeting was pretty much the same story as recent Statements, including stable long-term inflation expectations, a tepid economic recovery, and fragile job market. But there was one big exception to their norm. The Policy Statement said there will be "exceptionally low levels for the Federal Funds Rate at least through late 2014." This is a huge change from the previous statements of "low rates until mid-2013."

On the surface, extending the zero interest policy until 2015 tells us the Fed thinks the economy will just be slogging along, and accommodative monetary policy will be required to keep the economy growing at least at a modest pace. One could argue that recent economic data is better of late and that all this loose monetary policy is unnecessary. But the Fed has spoken, and as the old adage goes: "Don't fight the Fed."

In news out of Europe, yields in European Bonds have come down…and by quite a bit. This sparked some optimism that Europe's Long-term Refinance Operation (LTRO) has helped alleviate some pressure in the peripheral countries in the Eurozone, like Spain and Italy. So what's the takeaway? In honor of the upcoming Super Bowl, here's a football analogy: think of the LTRO as a super punt or "kick of the can" down the road. Europe needs to play a serious offensive line by creating a tighter fiscal union, implementing austerity measures, and developing growth strategies to help pay down the enormous debt.

The bottom line is that Bonds and home loan rates remain at historic best levels, which means now is still a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

Economic reports will be plentiful - and important - this week:

The week kicks off Monday with the Core Personal Consumption Expenditure (PCE), which is the Fed's favored gauge of inflation. This report will be closely watched, since any hint of an uptick in inflation could push Bond prices lower and, in turn, move home loan rates higher.
Manufacturing will also be in the spotlight with the Chicago PMI on Tuesday, followed by the ISM Index on Wednesday.
Consumer Confidence will also be delivered on Tuesday.
The ADP Private Employment Report will be released on Wednesday and comes before the government's total job's report on Friday.
As usual, Initial Jobless Claims will be released on Thursday. This week's report comes after an uptick of 21,000 last week.
Finally, on Friday the government's monthly Employment Report will be released. The Employment Report consists of Non-farm Payrolls, the Unemployment Rate, Average Workweek and Hourly Earnings. This is an important report that can have a big impact on the markets. So I'll be watching it closely.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates remain near their historic bests. I'll be watching closely to see which way they move next.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 27, 2012)

The Mortgage Market Guide View

Share This Site…And Try it Yourself

Every once in a while, you come across a website that's just plain fun. This is one of those sites.

We've all seen websites that provide stats about what happened the year you were born. The website whathappenedinmybirthyear.com/ takes it a step further. It doesn't just offer stats and facts. Instead, it provides a picture of the world you grew up in - including what it looked like and how it was different than the world we live in today.

But it's more than just a fun website.

For one thing, it provides you with a light-hearted reason to connect with your clients on a personal level. You can share the site with them on social media or in one of your outreach pieces (such as a newsletter or email).

In addition, this site offers you a unique way to better understand your clients. If you know when a client was born, you can simply type in the year. In return, you'll get a picture of that client's social influences that have helped shape him or her. And that's exactly the kind of information you need to put yourself in your clients' shoes and understand them a little better. Of course, it doesn't hurt that it's entertaining too!

Try the site today…and consider sharing it with your clients as a way to connect with them on a more personal level.

Greece is the Word Again

Sun, 22 Jan 2012 10:50:31 -0500

In This Issue...

Last Week in Review: Rumors were swirling out of Europe, while inflation news was swirling here at home.

Forecast for the Week: The second half of the week heats up with news on the housing market and the state of the economy. Plus, the Fed meets.

View: A fee increase is coming that will impact home loan rates. Be sure to read the details below.

Last Week In Review...

It's almost all Greek to me. Last week, more news from Greece hit the wires, as did several pieces of inflation news here at home. Read on to learn what happened, and what the impact was on home loan rates.

First, it's important to remember that back in October, a deal called for Bondholders to "accept" a 50% haircut on the face value of the Greek debt. Last week, rumors about this amount were swirling, saying that Greece is close to a deal that would entail a 68% haircut on the face value of their debt. And if that's not concern enough, a larger issue remains.

After the proposed austerity measures, wage cuts, and tax increases are instituted, will Greece - not to mention Italy, Portugal, and other struggling economies - be able to "grow" their way out of debt? Given that the World Bank lowered its 2012 global growth forecast to 2.5% from last summer's estimate of 3.6%, the odds sure seem tough. This is an important story to watch as the year unfolds.

Here at home, inflation was in the news twice last week...and the results were mixed. On Wednesday, the wholesale inflation measuring Core Producer Price Index (PPI) came in hot, elevating the year-over-year Core PPI rate to a lofty 3%...the highest since April 2009. Meanwhile, Thursday's Core Consumer Price Index (CPI) was inline with expectations and tame overall, though it is worth noting that the 2.2% Core CPI year-over-year reading is near the upper end of the Fed's tolerance level.

Remember, inflation is the archenemy of Bonds and home loan rates, like Kryptonite to Superman. That's because inflation erodes the value of the fixed return provided by a Bond, which causes home loan rates to rise. It will be interesting to see what - if anything - the Fed says about inflation after it's regularly scheduled meeting of the Federal Open Market Committee this week...as any talk or sign of inflation can move the markets and impact rates.

Even with all the news last week, it's still a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

The reports that will be released this week will carry some weight:

We'll see a double dose of housing news with Pending Home Sales on Wednesday and New Home Sales on Thursday.
As usual, Initial Jobless Claims will be released on Thursday. Last week's read came in at 352,000, a drop of 50,000. That's the biggest decline since September 2005!
We'll also see two important reports that will show us how the economy is doing. Thursday brings the Durable Goods Report, which gives us a read on big ticket items. This will be followed by the first reading on Gross Domestic Product (GDP) for the Fourth Quarter of 2011 on Friday.
Finally, Consumer Sentiment will also be released on Friday.

In addition to those reports, the Federal Open Market Committee will hold a two-day meeting this week. The meeting will begin January 24 and end with a policy statement at 12:30 pm ET on January 25. There is no chance of a rate hike, but I will be listening for any hint of a third round of Quantitative Easing (QE3).

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, some encouraging economic and company earnings news last week helped halt the improving trend Bonds had been seeing. I'll continue to monitor this situation.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 20, 2012)

The Mortgage Market Guide View

Fee Increase to Impact Home Loans

In December 2011, Congress reached a last-minute deal to fund the payroll tax cut extension. The payroll tax extension will provide a 2% tax reduction for individuals making up to $106,800, so the tax extension will be very helpful for many Americans who are struggling during these tough economic times. But like so many things in our tangled economy, there's a flip side. In this case, the tax cut deal has a rippling effect that will impact the mortgage world.

Here's what's happening and what it means to home loan rates:

What is happening and why? To put it bluntly, the passage of the payroll tax cut extension is being funded via a mandate to Fannie Mae and Freddie Mac (the nation's largest providers of mortgage money) to increase their guarantee fees or "g-fee's" by at least 10 basis points on the rate. So rather than giving a par rate of 4.00%, for example, the par rate is now increased by at least 10 basis points, or approximately 4.10%. But as you probably know…home loan rates are priced and offered in .125% increments, so this will most likely impact the consumer by .125% in rate. Whether you agree or not on the politics behind this cost being passed along to folks who are taking out mortgages, the Congressional Budget Office recently estimated that the increase will ultimately pay for about $35.7 Billion of the cost of the payroll tax extension.

What exactly is this "g-fee"? The guarantee fee or "g-fee" is an amount charged by mortgage-backed securities (MBS) providers, like Freddie Mac and Fannie Mae, to help protect against credit-related losses in the overall mortgage portfolio. In other words, it acts a lot like insurance and helps lower the overall risk…which means home loans can be offered at terrific interest rates to borrowers that have good - but not perfect - credit.

What exactly is the impact of the rate increase? For example, for a $200,000 home loan, the increased g-fee (assuming a .125% increase in rate) would equate to $250 more per year in interest, or $7,500 more over 30 years. Someone buying or refinancing a home can certainly choose to buy down the cost with cash up front - but most folks will not do this.

Who will this impact? The change will impact all new borrowers of Fannie Mae and Freddie Mac loans. The bill will also impact Federal Housing Administration (FHA) loans by increasing the annual mortgage insurance premium that borrowers pay by one-tenth of a percent.

When will it start? Officially, the increase to guarantee fees will begin on April 1, 2012. However, the increase is already starting to be seen in rate sheets right now, since home loans being originated now will likely not be closed, pooled and securitized until April…and therefore will need the increased g-fee priced in earlier.

How long will this be in effect? The increase will be effective through October 1, 2021.

The bottom line is that the g-fees will be going up…and this will impact homebuyers looking to obtain a home loan through Fannie Mae, Freddie Mac and FHA.

The good news is that home loan rates are still at historic lows right now, and it's a great time to purchase a new home or refinance. If you or anyone you know has any questions, please call or email!

Happy Sentiments Abound

Mon, 16 Jan 2012 12:44:08 -0500

In This Issue...

Last Week in Review: Consumers are feeling good, but how good was last week's news?

Forecast for the Week: It's a holiday shortened week, but the economic calendar is full. News on manufacturing, inflation, and housing is ahead.

View: Wondering what the housing trends for 2012 will be? Check out 11 trends we saw in 2011.

Last Week In Review...

"Happy days are here again." Milton Ager and Jack Yellen. And while it seems that consumers are certainly feeling happier, not everything that happened last week was cause for song.

There was good news last Friday, as the first look at Consumer Sentiment for January came in at 74.0, which is the highest level since May 2011. However, there was also news last week that the holiday shopping season may not have been as robust as previously thought.

Retail Sales in December rose by a meager 0.1% from 0.4% in November, and when stripping out autos, sales actually fell 0.2%. Why did this happen? It seems that steep holiday discounting held down the value of goods sold, so sales were big, but only because of the heavy discounting.

The news out of Europe last week also wasn't too happy. German Chancellor Angela Merkel and International Monetary Fund Managing Director Christine Lagarde met to discuss and finalize the debt restructuring deal for Greece. Back in October, a deal called for Bondholders to "accept" a 50% haircut on the face value of the Greek debt - but as creditors and authorities have started to forge a final deal, the actual haircut back to investors is looking quite likely to be larger than 50%. This is simply because worsening financial conditions in the Greek economy make paying the debt back with "just" a 50% haircut highly unlikely...maybe impossible. What's more, the next reasonable question to consider is will Ireland, Portugal and even Italy ask for a similar haircut or deal on what may be unsustainable debt in their countries?

The happy news is that these problems are finally being addressed to make things better in the future. And in the short term, the uncertainty should keep money flowing into the relative safe haven of the US Dollar and US Bonds - including Mortgage Bonds, to which home loan rates are tied. In addition, Mortgage Bonds continue to be supported by the Fed's purchases, which are also helping to keep home loan rates at record low levels.

All of this means that now continues to remain a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

Despite the Bond Markets and all Capital Markets being closed on Monday in observance of Martin Luther King, Jr. Day, the rest of the week's economic calendar is full:

Manufacturing strong? The week's economic data kicks off on Tuesday with a manufacturing indicator from New York's Empire State Index for January. In addition, the Philadelphia Fed Index for January will be released on Thursday. Last month, both reports reached their highest levels in months. Remember: The Stock Market likes to see healthy economic growth because that translates to higher corporate profits. However, the Bond market prefers a moderate growth environment that won't generate inflationary pressures.
Speaking of inflation… We'll see inflation reports on the wholesale level in the Producer Price Index on Wednesday, followed by the Consumer Price Index on Thursday. Inflation has remained tame…and Bondholders will be closely watching these two indicators for any signs of an uptick.
Back on track this week? Initial Jobless Claims will be released as usual on Thursday. Last week's number showed an uptick in claims and broke the recent trend of decreasing claims. However, the rise could have been due in part to layoffs of seasonal holiday workers. So the markets will be watching to see if this report gets back on track with the recent positive trend.
No place like home! Housing data in the form of Housing Starts, Building Permits and Existing Home Sales will all be reported this week. Housing continues to troll around low levels despite record low home loan rates.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, Bonds and home loan rates are continuing their improving trend. I'll be watching this closely as we head further into the new year.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 13, 2012)

The Mortgage Market Guide View

Housing News: 11 Trends from 2011

The National Association of Realtors® surveys homebuyers and sellers each year to uncover housing trends and monitor changes taking place in the industry. This year's report highlights a number of trends that haven't been seen in years. Here are just 11 highlights from the 2011 report.

1. In 2011, 37% of homebuyers were first-time buyers - which was down from 50% in 2010.

2. Last year, 88% of homebuyers used the Internet to search for a home. That number was down slightly from a high of 90% in 2009.

3. The typical homebuyer searched for 12 weeks and viewed 12 homes.

4. The number of buyers who purchased their home through a real estate agent or broker climbed to 89% - a share that has steadily increased from 69% in 2001.

5. Nearly 1 out of 4 buyers said the application and approval process was "somewhat more difficult" than expected…and 16% reported it was "much more difficult" than expected.

6. About half of home sellers traded up to a larger and more expensive home…and 60% traded up to a new home.

7. The top 3 factors influencing neighborhood choice were: the quality of the neighborhood, the convenience to job, and the overall affordability of homes.

8. The typical seller lived in their home for 9 years. That number has increased from 6 years in 2007.

9. Although 61% of sellers said they reduced their asking price at least once, the average home sold for 95% of the listing price.

10. Only 10% of sellers sold their homes without the assistance of a real estate agent. Of those people, 40% knew the buyer prior to the sale.

11. The typical "for sale by owner" home sold for $150,000 compared to $215,000 for the average agent-assisted home sale.

Mortgage Market News for January 2012

Tue, 10 Jan 2012 00:43:31 -0500

In This Issue...

Despite what the Mayan calendar may say, the world probably won't come to an end in 2012. But like 2011, this coming year may bring some significant challenges here in the US...and around the world. Here are just a few important topics to keep an eye on in the new year:

Working for a Living – The labor market made modest improvements in 2011…but what should you expect in 2012? Here’s the answer!
Home Sweet Home – The housing market is still uncertain, but here’s something to celebrate!
What to Watch – Inflation is extremely influential. Read the article below to discover what to watch in 2012.
Q&A: The Bottom Line? – What’s the bottom line for 2012? The answer may surprise you!

Best wishes to you and yours in the coming year. If you have any questions or would like to discuss your unique situation, call or email today. And please forward this newsletter to friends, family members and coworkers who may find the information helpful.

Working for a Living: The Labor Market in 2012

The mantra “I’m taking what they giving ’cause I’m working for a living” was made famous in the 1980s by the band “Huey Lewis and the News.” Today, the feeling is the same around much of the country as many Americans were able to find work in 2011. But we’re not out of the woods yet, as many more workers are still searching for employment.

The labor market made modest improvements in 2011, and that trend is likely to continue in 2012. As you can see in the bar graph next to this article, the number of new people claiming unemployment each week saw a drastic improvement by the year’s end compared to the high reported the last week of April 2011. Recently, the number of new claims has stayed below the important line of 400,000 new claims each week. That’s a welcome site compared to most of 2011.

That said, it’s a good bet that the official Unemployment Rate will remain north of 8% throughout 2012, as more gains in the private sector are offset by government jobs being removed with our belt tightening measures. Another factor to consider is that Baby Boomers who are headed into retirement will be removed from the labor force, and this continuing shift in our country's demographics will help add to the decline in the unemployment rate.

Rather than looking at the official Unemployment Rate, which always brings up controversy due to its methodology, we should start looking at the labor force’s "participation rate," as this may be a more accurate reflection of labor market conditions. This rate is a little more straightforward, since it simply measures the number of people eligible to work against the number of people actually working.

And get this: the current labor force participation rate is 64%, which represents the lowest level of eligible workers participating in roughly thirty years. One of the contributing factors to the decline in the rate is the aforementioned effect of the Baby Boomer generation retiring and leaving the labor force. However, that only makes up a portion of the decline in the rate as obviously, there are still lots of folks looking to "participate" in the workforce, but they haven't been able to find a job. With businesses still somewhat reticent to hire until they feel more confidence, estimates are for little to no improvement in the participation rate in 2012.

This is obviously a very important topic not only for people looking for work but also for the economy as a whole. I will continue to monitor the labor market and its impact on housing and home loan rates over the coming weeks and months.

Home Sweet Home

On the one hand, the housing market still remains uncertain. For instance:

Foreclosures will still be a concern in 2012 as a fresh wave will be hitting the market…and that will prevent a broad-based pricing recovery in housing. However, the good news is that the delinquency rates have declined and should continue to do so.
While some parts of the country are seeing signs of improvement in housing, others continue to struggle. Overall, home prices will likely decline modestly in the first half of 2012 and then recover in the second half of the year.
Rentals and investment properties will continue to be popular in 2012 as more people continue to rent.

On the other hand, we are closer to the bottom in housing and with historically low rates in 2012, it will be another incredible purchase opportunity for homebuyers.

In fact, it looks like home loan rates could move a leg lower in the first part of 2012, as rumors continue to swirl around the possibility of the Fed stepping in with a third round of Quantitative Easing (or QE3), and this could lead to the lowest rates ever. HOWEVER…like all windows of opportunity, this one may be short as well. History has shown that Bonds move higher in anticipation of Quantitative Easing, but then selloff once the official announcement is made. Think about the old investing adage: "Buy on the rumor, and sell on the news." So the best home loan rates may be seen leading up to any actual announcement.

If the Fed doesn't do QE3, rates will still be very attractive in the first part of year, before moving a bit higher in the second half of 2012 as the economy continues to pick up. Overall, the early part of 2012 looks to be a great environment for interest rate, which means lots of opportunity for homebuyers.

Regardless of what happens at the Federal level, I’ll be here ready to help you get the best home loan for your unique goals and situation. And if you have any friends or family members who could use some insight and help navigating a home loan, please forward them this newsletter along with my contact information. I’m always happy to help out in any way I can.

What to Watch: A Breeze of Inflation

Inflation, as measured by the Core Consumer Price Index, ran at 2.2% from November 2010 through November 2011. That was up rather sharply from the previous year and was closing in on the comfort range threshold of the Fed. What is interesting and a little disturbing to note is the increasing consumer inflation in the face of stagnant wage growth. Typically, consumer inflation increases are fueled by wage-based inflation, where wages move higher…but we are not seeing that just yet.

With US consumers still behaving conservatively, the political climate promoting uncertainty and the labor market only making modest improvement, inflation may still tick higher to possibly 2.5%. But that would still be considered within the tolerance limits of the Fed.

Of course, even if the inflation number is within the Fed’s comfort, any increase can negatively impact home loan rates. Remember: inflation is the archenemy of Bonds and home loan rates, so inflation ticking higher would not be good for rates. But inflation (and its impact on rates) doesn't exist in a bubble or an isolated test tube. Home loan rates are also impacted by other economic factors. Part of the magic in watching rates and how they behave is understanding all the competing factors at play. So the coming year will be an example of why it’s so important to work with a knowledgeable mortgage professional like me, who understands the complexity of the markets and can help identify opportunities for homebuyers.

As always, I’ll be watching the inflation news closely in the coming months…and I’ll continue to share any important news that may impact you or the economy as a whole. And if you ever have any questions, please just call or email.

Halls Decked With Some Good News

Sun, 18 Dec 2011 22:17:01 -0500

In This Issue...

Last Week in Review: Several reports brought good news to the Markets, plus there was news on inflation.

Forecast for the Week: The Bond Markets may be closing early Friday, but there will be plenty of reports on the housing market, inflation, and the state of the economy

View: Want to give a gift that keeps on giving? Check out this great idea below.

Last Week In Review...

"Whistle while you work." Snow White. That's something more people have been able to do lately, as Initial Jobless Claims have now fallen below 400,000 - a level that historically is associated with an improving job market - for five out of the last six weeks. And that wasn't the only bit of good news the markets saw last week. Read on for details.

Not only was last week's Initial Jobless Claims reading of 366,000 the lowest level since May of 2008, there was a double dose of good news in the manufacturing sector, as both the Philadelphia Fed Index and the Empire State Index were both well above expectations. Normally, good economic news causes money to move out of Bonds and into Stocks as investors like to take advantage of gains...and this would typically hurt home loan rates, as they are tied to Mortgage Bonds.

However, the continued uncertainty out of Europe helped keep Bonds and home loan rates on an improving trend, as the US Dollar and US Bonds (including Mortgage Bonds, which home loan rates are based on) are benefiting from safe haven buying. Ultimately, Europe needs to provide a large financial backstop for their banks and sovereign debt in order to fix their problems longer-term. Until this happens, uncertainty should benefit the US Dollar and US Bonds, and keep home loan rates relatively low.

One factor that we can't ignore, though, is inflation. Despite the Fed stating again last week that inflation is moderating, core consumer level inflation has continued to inch higher every month. Also, last week's Producer Price Index showed that inflation at the wholesale level was slightly higher in November. Remember, inflation is the arch enemy of Bonds and home loan rates, because if inflation rises, investors in Bonds demand a higher yield to offset the lost buying power inflation imposes on a fixed payment. And as home loan rates are tied to Mortgage Bonds, this would mean home loan rates move higher.

The bottom line is that while the uncertainty out of Europe should continue to help Bonds and home loan rates, both inflation and continued good economic reports here in the US could temper these improvements. With home loan rates still near historic lows, now remains a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.

Forecast for the Week

The Bond Markets will be closing early at 2:00 p.m. on Friday for the Christmas holiday, but the week will be busy before then.

Housing Starts and Building Permits (Tuesday), Existing Home Sales (Wednesday) and New Home Sales (Friday) for November will be reported.
Weekly Initial Jobless Claims will be delivered on Thursday, and the Markets will be looking to see if the reading remains under 400,000.
Also on Thursday, we'll see the Consumer Sentiment Index for December as well as the final reading on Third Quarter Gross Domestic Product (GDP) for 2011. The second reading came in at 2%, down from the first reading of 2.5%.
Finally, Friday the markets will see reports on Personal Income and Personal Spending along with the inflation indicator Core Personal Consumption Expenditure (PCE). Durable Goods will also be reported.

In addition to those reports, the National Association of Realtors (NAR) will announce downward revisions for Existing Home Sales over the past 5 years - and the revision is expected to be "meaningful."

Finally, the Treasury Department will sell a whopping $99 Billion in 2-, 5- and 7-year Notes on Monday, Tuesday, and Wednesday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

As you can see in the chart below, uncertainty out of Europe continues to help Bonds and home loan rates, though they are facing resistance. I'll be watching this closely as we head into the new year.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Dec 16, 2011)

The Mortgage Market Guide View

Give the Gift of Charity this Holiday Season!

It's a Snap with THE GOOD CARD^® - a Gift Card for Charity

Network for Good has a fresh angle on gifting this holiday season: The Good Card^®- a gift card for charity - is perfect for everyone on your list. Good Cards have a stored value that can be redeemed as a donation to any of more than 1.2 million charities based in the US. Good Cards can be distributed via email or physical mail, or can be private labeled to meet your brand needs. Learn more at Network for Good.

A gift card for charity is an ideal reward for employees or thank you gift for customers and vendors that links their passion for a cause to your company's brand. A new study by researchers from Harvard Business School, the University of British Columbia and the University of Liege that was recently highlighted in the Washington Post confirms that a bonus employees get to spend on others is more motivating than a bonus they get to spend on themselves. A Good Card recipient can redeem their gift card as a donation to any of more than a million nonprofits, an easy way for employees to share their personal rewards with others.

Good Card purchases, including fees, are tax-deductible to your company and are a creative way to spend funds earmarked for philanthropy. In addition, because Good Card purchases are charitable donations, they do not fall under the IRS gift limit or policies around corporate gifts with cash value. Network for Good's charity gift card program is turn-key, customizable and easy to implement - even at the last minute. The program is recommended for any company looking to put a special spin on their gift-giving this year. What's more, the person GIVING the gift (i.e., the card purchaser) gets the benefit of a tax advantage for charitable donations as well.

The Good Card is a creative and constructive way to honor partners and prospects, friends and neighbors during the holiday season and throughout the year. Visit Network for Good for more details.

Thanksgiving and Starting the Holiday Season!

Mon, 28 Nov 2011 15:03:13 -0500

Wishing You the Best!

I hope you enjoyed a wonderful Thanksgiving weekend with friends and family. I know that I certainly have much to be thankful for, including many wonderful clients and friends like you.

In addition, I sincerely hope you've been enjoying your complimentary subscription to the Mortgage Market Guide Weekly. Your next full issue will arrive "hot off the press" next week. In the meantime, please enjoy the holiday article below.

The Mortgage Market Guide Weekly is the industry's leading publication of this type, and I'm pleased to provide this valuable resource to you. If you feel that any of your clients, friends, family members or associates would benefit from keeping up-to-date on market and economic trends with this easy-to-read format, please let me know, and I will be happy to add them free of charge.

Best wishes to you.

The Mortgage Market Guide View

Here's How to Start the Holiday Season

This time of year is all about reflection. Taking the time to consider the blessings in our lives - from family and friends to education and opportunity. But it's also a time to renew our spirits and souls, especially as we head into the holiday season and a new year. To help you make the upcoming holiday season feel a little less hectic and more reflective, consider dedicating specific times of the day or week to family activities that focus on the blessings of the season.

The website Kaboose.com can help. It offers a wide variety of word searches, crossword puzzles, mazes, coloring pages and more that you can download and print for free. Better still, those activities are available in different levels of toughness and subjects, so you can find the right activity for your family. Use the links below to start finding holiday activities that help you celebrate the meanings behind the holidays:

Chanukah - Download and Print Activities
Christmas - Download and Print Activities
Kwanzaa - Download and Print Activities
New Year's - Download and Print Coloring Pages

Here's to wishing you and yours the very best as we head into the beautiful holiday season. If you have any questions or if there's anything I can do for you or someone you know, please just call or email. I'm always happy to help in any way I can.