Sam Suznevich

How long can rates stay at lowest point?

2010-08-02T12:15:00.001-07:00

We might be the wrong ones to ask if mortgage rates can go lower. We thought we would be looking at a 30-year fixed-rate loan quoted in the 5.5-percent vicinity by now when we were prognosticating back in January. In our defense, rate increases have been marginal and gradual along the way, which we thought they'd be (just not for so prolonged a period), and have had minimal impact on stimulating sales, which we've been saying all along.

Rates could go lower, though you have to ask yourself, if I'm looking at the lowest rates in a lifetime, how long can they continue to be the lowest? Liquidity issues – the unprecedented amount of money the Federal Reserve has injected into the financial system – lurks in the background. But if the economic recovery remains anemic and refinances dry up and purchases fail to pick up the slack, lenders could look to stimulate activity by dropping rates even lower.

To answer the question, we think another 20-basis point is not unreasonable, but we still question if the risk of holding out is worth the reward. After all, we're not even talking about a half percentage point, and let's not forget that it only takes a brief flurry of bullish economic data to get rates moving higher again.

Uncertainty begets opportunity

2010-07-26T13:28:00.000-07:00

It's been said that markets disdain uncertainty. Unfortunately, we're saddled with a lot of uncertainty these days, according to the newly launched Economic Security Index, which examines three key security variables: income loss, medical expenses, and debt. The inaugural edition shows that insecurity has risen to its highest level in 25 years.
Because the index is new, it hasn't been officially critiqued, so we can't say if it imparts any meaningful information or is just another compilation of alarmist gobbledygook. We don't think the index is telling us anything we don't already know. Through our own observations, we see heightened uncertainty, mostly due to implemented and proposed changes in regulation, taxes, business mandates, and fiscal policy.
But there's a silver lining to this cloudy perception: opportunity. When everything is jumbled, like it is today, the best opportunities avail themselves, because so few people are willing to seize the movement. Things eventually get worked out and recoveries always occur (though we don't always recognize them). In fact, recoveries are often marked by an influx of negative news and misery indicators, such as the aforementioned Economic Security Index, which, when we think about it, could be a contrary measure, portending more glee than gloom. www.sumnerhomemortgage.com

Economy needs to take more risks

2010-07-19T10:07:00.000-07:00

The Wall Street Journal recently published a cautionary tale on the putative rise of risky lending (“Signs of Risky Lending Emerge”). We only hope the tale is true, because a rise in risky lending reflects a rise in risk taking, and more risk-taking is what this economy needs to pull itself out of its doldrums.

Many people will reflexively respond “Wasn't it risky lending that got us into this predicament in the first place?” Actually, it wasn't. It was the mispricing of risky lending that got us into this predicament. If a loan is correctly priced – through interest rates, fees, or collateral – then, theoretically, all loans would be expected to generate the same return to investors. The problem wasn't the risky loan, per se; it was the pricing of the loan, which failed to fully account for risk.

Once the mispricing problem was realized, lenders tended to go the other way, shutting out borrowers with lower FICO scores and only lending to those with the highest scores. It was a case of throwing out the baby with the bath water. Obviously, we all want the borrower with the 800 FICO score, the 20 percent down payment, and the steady job, but we also want the less pristine borrower as well.

If the Journal is right, and more lenders are warming up to more risky borrowers (we find that's the case), that bodes well for the economy, because it means more risk taking, more housing-market activity, and more money to lend.

www.sumnerhomemortgage.com

When a house is not a home

2010-07-12T11:13:00.000-07:00

Last Sunday the Washington Post ran a story titled “Finding Gold in Them Thar Foreclosures” that focused on the rewards and risks of buying residential real estate in one of the country's hardest hit burgs – the metropolitan Phoenix area.
A couple days later, a writer on CalculatedRiskBlog.com followed up with an anecdote of an individual investor who had bought nearly 100 homes (focusing on single-family homes) over the past 18 months in the same area. The writer noted that the average purchase price was under $35,000, with one of the properties being bought for $20,000 after selling for $180,000 in 2006. Most of the homes were of the three-bedroom/two-bath vintage, and most were rented, with some even renting by the room.
There are at least two worthwhile takeaways from this anecdote: One, investors need to seize opportunities. Jittery markets are great for finding bargains if you are a long-term investor. Second, money is available for real estate investing. Though the writer fails to mention it, we doubt the investor paid cash for all those properties.
To be sure, rental properties aren't for everyone – they come larded with work and headaches, but they can prove highly remunerative when gotten at the right price. In today's market, there are definitely more right prices than wrong ones, especially for someone with a good credit history who is working with a creative mortgage professional with a strong knowledgeable of financing options.

Jobs Anyone?

2010-07-06T09:39:00.000-07:00

The monthly employment report is worth a little expatiation, because employment is key to opening the door to prosperity. But the report can be exasperating at times. The June report showed that payrolls declined by 125,000, while the unemployment rate dropped to 9.5 percent from 9.7 percent. It's a paradox, until you read the fine print and discover the rate drop was due to 652,000 people giving up their job search.
This latest edition of the employment report wasn't particularly well received by economists, with one particularly off-put fellow lamenting, "We need unprecedented rates of growth to get out of this hole in a reasonable amount of time. It's hard to overstate how deep the hole is."
Actually, it isn't hard. Bad news is always more titillating than good news: many of us simply enjoy wallowing in misery. We don't, which is why we have no compunction in pointing out that the employment situation really isn't as bad as all that. Yes, payrolls declined by 125,000, but only because 225,000 temporary census workers were given their walking papers. Glossed over in the report is the news that the private sector added 83,000 jobs. The private sector is where we want the growth, and we are getting it.
All in all, we still see a sustained recovery, which is why we continue to badger for home purchases and mortgage refinances today over home purchases and mortgage refinances tomorrow.

If you have equity, it's a GREAT time to refinance

2010-07-02T10:54:00.001-07:00

WASHINGTON — Mortgage rates have sunk to the lowest level in more than five decades, but consumers aren't rushing to refinance their loans or buy homes.
Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans sank to 4.58 percent this week.
That's down from the previous record of 4.69 percent set last week and the lowest since the mortgage company began keeping records in 1971. The last time they were cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.
Rates have fallen over the past two months. Investors wary of the European debt crisis and the stock market have shifted money into the safety of Treasury bonds, driving down yields. Mortgage rates tend to track the yields on long-term Treasurys.
On Wednesday, the yield on the benchmark 10-year Treasury note dropped to 2.95 percent. That was the first time it has fallen below 3 percent since April 2009, when the markets were beginning to recover from the financial crisis.
But tighter lending standards and declining home equity have made it difficult for many borrowers to refinance. Many who do qualify have already done so over the past 18 months.
Applications for mortgages rose nearly 9 percent last week from a week earlier, the Mortgage Bankers Association said Wednesday. But they remain at only about half the level of early 2009 and a far cry from the refinancing boom of 2003 through 2005, when home prices were soaring and borrowers were able to pull equity out of their homes to pay for home renovations, boats and vacation homes.
Many Americans owe more on their mortgages than their homes are worth and can't refinance through the usual channels. The Obama administration has launched programs to help borrowers refinance if they owe up to 25 percent more than their home's value and have their loans guaranteed by mortgage giants Freddie Mac or Fannie Mae.
About 291,000 homeowners have participated as of March — a small fraction of the estimated 15 million homeowners who are "underwater" on their mortgages.
"I expect to see pockets of re-fi activity versus an overall wave," said Scott Buchta, chief mortgage strategist with Braver Stern Securities. "The problem is, for many borrowers, they don't have the equity in their homes."

Have low interest rates run their course?

2010-06-28T10:53:00.000-07:00

We've stated that the benefits of low interest rates have run their course. We hold to our contrary opinion that low rates are actually hindering more than helping markets these days. Consider the mortgage market: Even though mortgage rates are dwelling in the basement, fewer people are applying for mortgages. The MBA reported that purchase activity declined 1.2 percent to the second-lowest level since 1997 last week, while refinancing activity slid 7.3 percent from its May 2009 highs.

The Federal Reserve's low-rate policy is hardly inspiring confidence. “Rates must be low because the economy is circling the drain,” so the man-on-the-street rationale goes. It's the wrong message to send, because promoting risk aversion also means promoting inertia. Risk-averse markets are simply less willing to engage in riskier, but worthwhile, economic activity.

This risk-averse sentiment is readily reflected in the capital markets, where the relatively non-productive assets of gold and Treasury securities continue to be the investments of choice. That's unfortunate, because we'd all be better off if there were more investment in the very productive (though riskier) assets of home purchases and renovation and mortgage lending.

www.sumnerhomemortgage.com

How Risky Is this Market?

2010-06-21T12:56:00.001-07:00

The May/June edition of the Financial Analyst Journal featured an article titled “Dimensioning the Housing Crisis” (available for download at CFAinstitute.org). The article is noteworthy for encapsulating the problems of the housing market in a mere 12 pages.
The article is replete with sundry graphs, most of which accentuate just how bad things got over the past two years. One graph features the spike in first-time defaults; another features the seemingly exponential growth in housing overhang; yet another features the precipitous drop in cure rates for 30-day, 60-day, and 90-day delinquencies. The author notes, in pointed prose, that “we have a housing problem that affects 11 million to 12 million units. If nothing is done, more than one homeowner out of every five will face eviction.”
It's a pessimism-inducing article, to be sure, but we remain upbeat nonetheless. Reason being, these problems are well documented today, which means there are few shocks left to rock the market. What's seen isn't what kills, it's what's unseen.
Savvy buyers know that the time to buy isn't when everything is dear but when everything is disdained. Everything in housing isn't disdained, but sentiment remains low. So, we ask ourselves, was it riskier to buy a house in 2006 or is it riskier to buy one today? The sentiment feels riskier today, but the data show that 2006 was overwhelmingly riskier

Up, Up, but not Quite Away

2010-06-07T14:36:00.000-07:00

We were expecting a little more, but at least it's trending in the right direction. We are speaking of the employment report, which showed payrolls rose by 431,000 last month.

That would be very good news, if not for the fact that 411,000 of the new hires were related to the census. Nevertheless, that still leaves a net positive for the private sector. The increase was enough to push the unemployment rate down to 9.7 percent (though some pundits argue the drop was really due to a lower participation rate).

You never want to read too much into a single month of data, but we remain encouraged: job growth and wages picked up from April to May, while the average workweek lengthened. And although moderate compared to past post-recessions, the recovery is looking more sustainable after consumer spending and business investment rose at a healthy pace in the first quarter.

Overall, we think this latest employment report provides another reason to act now in both the mortgage and housing markets.

A new take on mortgage rates

2010-06-04T15:19:00.000-07:00

Given further easing of mortgage rates over the past two weeks, we obviously think it's an opportune time to refinance. Rates have maintained record lows as investors seek safe-haven assets such as US Treasuries, to which rates on long-term mortgages are closely tied, and securities backed by mortgages that are guaranteed by the government.

While low rates are sending refinance applications up, many borrowers who would normally refinance already have. What’s less clear is the impact low rates will have on home purchases going forward. Yes, they’ll allow more borrowers to qualify for loans, and some potential buyers will find they are able to afford slightly larger loans at lower rates, but low interest rates by themselves aren’t a primary demand driver.

In fact, we have a contrarian view on low rates, believing they are actually harming sales more than helping them. Rising rates would not only be reflective of greater economic activity, they would spur more people into action. As it is now, too many people remain on the sidelines who shouldn't be there. A nudge from the prospect of higher mortgage rates would spur them into action. We still expect that nudge to occur.

www.sumnerhomemortgage.com

What Every Home-Owner Should Do If You Can't Pay The Mortgage...

2010-03-29T12:10:00.000-07:00

Big Bank Loan Modification Links:

Chase Bank

Wells Fargo

US Bank

Bank of America

www.REsource.tv

www.sumnerhomemortgage.com

Time's A Wasting!

2010-03-29T11:31:00.000-07:00

We might sound like hectoring parents, but there are times when it's worthwhile to keep pounding a point. Such is the case with mortgage rates. We know rates are low today, but we won't know if rates will be low tomorrow – and we're speaking literally: Only a few days remain before the Federal Reserve withdraws from the mortgage-backed securities market (an important funding source), leaving pricing to a much more profit-oriented private market.
Bankrate also pointed out that the spread between 10-year Treasury notes and 30-year fixed-rate mortgages is near a 10-year low. Government backing of Freddie Mac and Fannie Mae has made mortgage-backed securities seem comparable to Treasury securities in risk, but they are not. If risk appetite decreases, even slightly, we could see a noticeable increase in mortgage rates.
Finally, let's not forget that homeowners must be under contract by April 30 th and must close by June 30 th in order to qualify for the homebuyer tax credits. Is it possible the credits could be extended? Sure, but it's hardly certain, so is it really worth chancing?
In short, today we're faced with the possibility of expiring tax credits and the probability of higher mortgage rates. This is why we continue to hector for locking in a purchase or a refinance loan as soon as possible.

Reading between the lines

2010-03-22T09:14:00.000-07:00

There is something telling in the fact that mortgage rates barely budged last week. The Federal Reserve held the federal funds rate at 0%, while also stating that its interest-rate target would remain at this exceptionally low level for "an extended period.”
Meanwhile, inflation – a major variable in determining interest rates – appears non-existent. U.S. producer prices posted their biggest decline in seven months, falling 0.6%, in February. On the consumer side, prices were unchanged after rising 0.2% in January. Over the past year, core inflation, which excludes volatile energy and food prices, has risen only 1.3%, the lowest annual gain in six years.
And yet with all this favorable credit-market news, mortgage rates held firm, which tells us there is no going lower. It also tells us that when the news starts tilting toward more inflation and the Fed starts reconsidering its low-rate policy rates will move higher.
So, we'll continue to advise locking in at today's low rates, because at this point only an unforeseen, extraordinary event will move them meaningfully lower. We doubt the same can be said for the other direction. Indeed, we think it will take little more than a whiff of inflation and a little equivocating on the Federal Reserve's part to get rates moving north again.

2010-03-15T14:34:00.000-07:00

Don't Expect Too Much From Tax Credits

We are speaking of the federal homebuyer tax credits, in particular, which seem to be invoked as the blanket explanation for anything that does or doesn't happen in the housing market. We were more circumspect than most of their ability to sustain any market rally after being extended and embellished in November. That appears the case today. Credits are good at pushing demand forward, but not so good at sustaining demand over time.

We've also been circumspect over the ability of low interest rates to keep things moving forward in perpetuity. To be sure, low rates matter and low mortgage rates make more homes more affordable to more people, but it's still a matter of taking on new debt with a home purchase or lower-cost debt with a refinance. The only way debt can be serviced is with income, usually a job.

It's really all about employment at this point. Fortunately, the news is improving on that front based on the past three months of employment data. Things might be moving slower than we'd like, but for potential borrowers, that's actually good news. When employment shifts into gear, interest rates are likely to follow.

So, we've said it before, but we'll say it again: improving employment, low mortgage rates, and stabilizing home prices (which, by the way, we think will remain stable, even with the REO and foreclosure overhang) coupled with soon-to-expire tax credits suggest to us that now is not the time to procrastinate.

Still Expecting Better Days

2010-03-15T08:48:00.000-07:00

We don't often discuss the stock market, but sometimes it's worth discussing. The stock market is a leading indicator: investors invest on what they expect tomorrow, not what's happening today. Many investors are expecting a better tomorrow, particularly when you look at the Dow Jones Industrial Average, which has been on a 45-degree upward trajectory since last March.

In short, investors are expecting improved corporate earnings, based on an improving economy. If the case were otherwise, the stock market would be moving in the opposite direction. Of course, the stock market can change direction – and in a hurry too – but we think that's unlikely; corporate earnings are improving and consumers are growing more confident when you consider the recent trend in retail sales.

The economy is a complex tangle of interconnections and interrelations, which means good news on the corporate, employment, and consumer fronts will eventually translate into good news on the housing front. We think many investors in the stock market are expecting better news in the housing market in coming months, as are we.

New GFE shackles lenders

2010-01-20T15:32:00.001-08:00

The new, ultra-binding, federally required good faith estimates (GFE) have hobbled us lenders in the dawning weeks of 2010. The new GFEs were conceived as a cure-all for past, unscrupulous acts by lenders who’d use them as bait-and-switch tactics to offer a borrower one deal, only to surprise borrowers with hefty, unexpected fees at closing.

From on-high, the new standard, binding GFE agreements seem like a good idea.
Why not have a lender tell a customer exactly what they owe upfront?
For those of us with our boots on the ground, however, the rule is a nightmare.
The new GFE forces lenders, who are working on behalf of the borrower only, to list many costs that are always seller-paid. Those costs include excise tax and seller title.

Lenders also must disclose exactly how much the appraisal will be. A new, earlier mandate prohibited lenders from speaking directly to an appraiser. Pretty hard to ascertain a cost when you can’t speak to the vendor.

And the penalty for wrong disclosure? The misquoted fee comes out of the lender’s pocket.

Many lenders after the first of the year began working from “worksheets,” which give the borrower an approximate picture of the cost of the loan. At formal loan application, then, when everything has been firmed up, the final estimates are plugged in.

This practice was tagged as “exploiting a loophole in HUD’s new ‘good faith estimate’ rules” by the LA Times this past weekend.

“Exploiting” is too strong a word and the LA Times should be ashamed of itself for dragging out the beaten-to-death horse that seems to be everyone’s fixation on “lender-as-bad-guy.”

Most of the unscrupulous predators are out of the mortgage business now and have moved to greener pastures. That leaves the rest of us to pick up the pieces and deal with the nonsensical edicts from on-high.

Under the worksheet system, borrowers are not bound to those costs. Yes, they can “demand” a GFE, like the LA Times recommends. But if they do, what they will get are inflated figures by a lender trying to cover their you-know-what.

If borrowers work with lenders they trust, and with whom they can keep lines of communication open, the worksheet is a great tool that is just one step in the direction of a home loan that is fair and equitable to all.

New RESPA rules shake up lending process

2010-01-12T11:37:00.001-08:00

Major changes to the bedrock of our business, the standard Good Faith Estimate (GFE), are shaking up our industry this year.
The GFE was like a roadmap to lenders for a long time. We would map out on the GFE the charges we anticipated when the loan closed. Like a roadmap, the GFE was an intended path but many times took unintended detours.
Scrupulous lenders would keep the dialog open so that borrowers would know of any additional fees. But some lenders would come up with “garbage” fees and, taking advantage of the de-regulated nature of the business, line their pockets.
Any economic freefall is preceded by deregulation, then followed by much more regulation. We now find ourselves in the more heavily regulated phase.
The new regulations to RESPA (Real Estate Settlement Procedures Act) went into effect at the beginning of the year and will be heavily enforced after a short transition period. What are they exactly?
Lenders will be absolutely bound to the GFE. The GFE will not vary from the itemized costs borrowers will see on their HUD statements.
Lenders will be more reluctant to issue GFE’s. Because any variance will come out of the lender’s pocket, he or she will not issue GFE’s until much research has been done on the loan.
Instead of a GFE, a worksheet will be issues to borrowers getting pre-approved for a loan. The worksheet will be a non-binding compilation of costs; sort of a ball-park estimate, if you will. The GFE will come later.
Is this good news or bad news to borrowers? Well it’s both.
• It is good in that no surprise fees will materialize at closing. It is also good in that unscrupulous lenders will continue to be weeded from the business.
• It is not so good in that borrowers will have less clout when comparison shopping their loans because they will not have a binding GFE in hand. But what good was a GFE anyway, if lenders were not forced to abide by it? It was always a source of chagrin for me when a borrower would send me a GFE from another lender, asking me to match it. I would tell him or her I could not match it because I knew the fees were not realistic. Sadly, the borrower would find that out at the other lender’s closing table.

We’re all muddling through this new economy. I am happy to explain these new rules in greater detail. Please do not hesitate to contact me or my assistant, Nikki Rosdahl. Good luck and good lending!

A Look at the Past and a Look at the Future

2009-12-28T10:57:00.000-08:00

This time last year we predicted that 2009 would end a lot better than it began. We were right, though it wasn't a great accomplishment to be right considering how low the housing market, stock market, and overall economy had sunk during the latter half of 2008. As we've stated repeatedly over the past year, a low base and a dour outlook provide an excellent buying opportunity, so we weren't surprised when buyers stepped forward to exploit the opportunities.

Looking ahead to 2010, we see continued improvement in home sales and home prices. In fact, we wouldn't be surprised if the market turns to a sellers' market from a buyers' market by year's end. We are almost certain that will be the case if we see a two to three percentage point drop in the unemployment rate. Low mortgage rates and income tax credits are contributing factors in stabilizing the market, to be sure, but no factor is more important than employment in not only maintaining stability but stimulating activity.

We also think 2009 will mark the end of the sub-five-percent 30-year fixed-rate mortgage for the foreseeable future. Many economists predict rates quoted in the low sixes will be the norm for 2010. We agree. But that's not bad news. The higher rates will likely be accompanied by a more robust economy, with more jobs and greater consumer demand. We also think that higher rates will be accompanied with more relaxed underwriting standards, as banks and other lenders become less risk adverse.

In the meantime, mortgage rates are still very good, as are housing prices, which is why we continue to urge borrowers to refinance and buyers to qualify for a loan and buy. It's worth remembering that today's deals in both the mortgage and housing markets are the anomaly not the norm, and that the norm can return faster than many of us expect.

www.sumnerhomemortgage.com

Lock and Load or Float?

2009-12-22T10:30:00.000-08:00

It is a question we hear all the time, but it is not always so easy to answer. The answer depends on many factors, personality not the least of them. A few of us are legitimate risk seekers. We do not mind rolling the dice to see what comes up. We receive satisfaction in being right, but we do not beat ourselves up if we get it wrong.

Most of us are not legitimate risk takers, though. Most of us suffer regret and tend to beat ourselves up when we roll the dice and it comes up snake eyes, which is why we often recommend locking, especially in today's unprecedented low-rate environment – one we do not expect to remain unprecedented much longer.
Of course, we could be wrong. We did not expect rates to remain as low as they have for as long as they have. Nevertheless, one thing we have been right about are rate improvements, which have been incremental at best – measured in a few basis points at a time.

Most of us will not sweat giving up 10 or 15 basis points if it means avoiding losing 50 basis points in an upside move. We think that's today's scenario. If we were taking bets on rates moving 50-basis points higher or lower, we won't give very good odds on the latter. On the other hand, we would give good odds on a high number of people being satisfied a year or two down the road with the refinance or purchase mortgage rate they lock in today.

www.sumnerhomemortgage.com

Are We There Yet?

2009-12-16T10:46:00.000-08:00

We cannot say for sure, but we think we are darn close. Of course, we are speaking of the bottom in mortgage rates. Last week we explained how the Federal Reserve has influenced the market with its massive purchases of mortgage-backed securities. This week we offer statistical support for our contention that rates are at least close to bottoming, if not likely to reverse soon.

Calculated Risk, an insightful Web site that tracks the comings and goings of the housing and mortgage markets, supplied the evidence. Calculated Risk has noted (as have we) the close relationship between the 30-year conventional fixed-rate mortgage and the yield on the 10-year Treasury note. Based on statistical analysis reprinted on Calculated Risk's Web site, the 30-year conventional fixed-rate mortgage is expected to rise to 5.4% based on the current 10-year Treasury yield of 3.45%.

We must be careful; statistics imply a certitude that does not always exist, but it is worth noting that the aforementioned model has a determination coefficient (statistic-speak for predictive value) of 0.97, which is very high. Today's 30-year fixed-rate loan is lower than 5.4%, but Calculated Risk opines that the difference is due to prepayment speed and randomness and to the Federal Reserve's purchases of mortgage-backed securities, which we expect to taper off considerably in coming months – and that's key. When the Fed starts throttling back on theses purchases, look for mortgage rates to throttle higher.

www.sumnerhomemortgage.com

The Federal Reserve and Mortgage Rates

2009-12-07T11:17:00.001-08:00

There is another reason why we think saying “I told you so” is a bad idea: It can be thrown back in your face. For the past few months we've been forwarding an argument for rising mortgage rates, and yet they keep moving down. Should we toss in the towel? Not yet. We still think rates are destined to move up. The relationship between the Federal Reserve and the mortgage market might help explain why.

The Federal Reserve has done everything in its power to push mortgage rates down to record lows over the past year, and it has succeeded primarily by purchasing an unprecedented $1.5 trillion worth of mortgage-backed securities. This Fed-created demand has helped drive down mortgage rates. Some economists believe the Fed's purchases have resulted in a full percentage point drop in rates.

But the purchases won't go on forever. Last week the Fed stated that it would begin testing a strategy to shrink its portfolio of mortgage-backed securities. One variant is to taper off its purchases of mortgage backed securities. If that is indeed the case, the wheels toward higher rates will start turning.

We don't expect mortgage rates to spike, as any move will be gradual, but it's worth noting that as private operatives move in to fill the void, their objectives will differ from the Fed's: Their objective won't be to drive down mortgage rates, it will be to make money.

www.sumnerhomemortgage.com

FHA Now, Not Latter

2009-11-30T10:01:00.000-08:00

Last week we mentioned people often need to be nudged into action. The Federal Housing Administration's precarious financial position could be providing that nudge for many fence-sitting borrowers. A recent actuarial study found the FHA's insurance fund reserves are far below the congressionally mandated minimum. FHA officials confirmed they are actively exploring ways to replenish these reserves.

This means we're likely facing costlier FHA-insured loans. Raising lending standards is an obvious starting point. We also wouldn't be surprised to see higher minimum down payments: Proposals are being bandied about to increase the minimum to 5% from the current 3.5%. (We've heard some chatter suggesting 10% isn't impossible.) An increase in the up-front mortgage insurance premium to the statutory maximum of 2.25% is another option, as is increasing the monthly installment fee.

The generous allowance for seller contributions to borrowers to offset settlement and loan-related fees could also be on the chopping block. The current FHA limit is 6% of the house price, which critics argue is excessive. A few commentators have suggested Congress could order maximum concessions down to as low as 2%.

We can't say for sure what will happen, but we feel confident saying something will happen. So if anyone is contemplating a FHA-insured loan, now is the time to stop contemplating and start acting.

www.sumnerhomemortgage.com

An Argument for Higher Rates

2009-11-23T10:49:00.000-08:00

Our reasons for expecting mortgage rates to rise have been well documented: soaring gold prices, rising commodity prices, a weak dollar on the international stage, record federal deficits and a record low federal funds rate. To that, we will add the Federal Reserve's acknowledgement that household spending "appears to be expanding" and economic activity "has continued to pick up."

At this point, we would welcome rising interest rates. Rising interest rates are a byproduct of rising economic activity, and rising economic activity necessitates rising employment. If there is one thing our economy needs more than anything, it is rising employment. Low interest rates, low housing prices and tax credits are all well and good, but their impacts are dwarfed by employment. If you don't have a job, low interest rates, low housing prices and tax credits are meaningless.

What's more, rising interest rates would stimulate activity. Potential borrowers have grown languid over the past few weeks; there is no urgency to get out and buy or even refinance a home because of expectations for a prolonged low-rate environment. Rising rates would change those expectations and prompt many potential borrowers to act.

In the meantime, we still think prompting them to act before rates start rising is not such a bad idea.

www.sumnerhomemortgage.com

Still the Time to Borrow and Buy

2009-11-16T12:41:00.000-08:00

For the past four months, we have been forwarding the argument that housing prices have stabilized. Wells Fargo has provided another arrow for our quiver. To avoid defaults and foreclosures, the banking giant is offering homeowners with Alt-A ARMs the option to offset monthly payment increases with interest-only loans to defer amortization for six to 10 years.

It sounds like a risky move. After all, interest-only loans were a contributing factor to the housing meltdown. But many of those loans were originated in a much riskier era – near a market top. That is certainly not the case today, which is why Wells Fargo is betting that home prices have stabilized and that the economy will improve. We think it is a smart move.

We also think it is a smart move to refinance or buy today. Rates are very, very good (but they will not be forever, for sundry reasons we have previously stated). What's more, the purse strings aren't nearly as tight as borrowers might think. According to the Federal Reserve, the rate of banks that reported tightening lending standards for prime residential real estate loans was 25% in October, which is well off the peak of 75% reported in July 2008.

In other words, 30-year fixed-rate mortgages are readily available at 5% (which for borrowers in the 28% federal income tax bracket works out to 3.6% after tax). Meanwhile, the 5/1 hybrid ARM presents an intriguing option for borrowers planning to move within the next few years. A 3.75% 5/1 works out to a mere 2.7% after tax for someone in the 28% tax bracket. Yes, rates could go lower, but not much lower.

www.sumnerhomemortgage.com

Continued Affordability....At Least for the Time Being

2009-11-09T14:25:00.000-08:00

Should we backpedal on our expectation for mortgage rates to rise, given the Federal Reserve's desire to keep lending rates low? For the immediate future, yes, though we still doubt they will go much lower. After all, there is a risk to lending, so investors demand a minimum return on their investment, and we think rates are at or close to that minimum return. Longer term (three months out), we remain convinced of the prospect for higher inflation: Gold is trading near $1,100 an ounce, hard commodity prices have surged, oil prices have doubled in the past seven months, and the spread between the 10-year Treasury note and the TIPs (a variable-rate Treasury security) has narrowed.

We have to admit, though, that the window for borrowers to act has likely widened, but that doesn't mean potential homebuyers should play the mortgage-rate waiting game. We can't forget the other half of the equation – home prices, which should get a boost from the homebuyer credit extension. Moreover, these credits are chasing a dwindling supply of homes. According to data compiled by Web-based real estate brokerage ZipRealty, listings of single-family homes and condominiums declined an average 2.8% across 27 major metropolitan markets in October. ZipRealty also noted that national inventory has declined month-over-month for 16 straight months to the point where there are now 28% fewer homes for sale than there were in October 2008.

In short, the stars remain aligned for refinancers and homebuyers to act today, but we don't expect them to stay aligned far into tomorrow.

www.sumnerhomemortgage.com

Possibly Overstated, But That's Okay

2009-11-02T12:04:00.000-08:00

Many kudos have been given to the federal homebuyer's credit for revitalizing the housing market. To be sure, the credit has moved people into the market who wouldn't have been there otherwise. However, are we overstating the impact? The question is worth asking, considering a recent analysis of the cash-for-clunkers program by Edmunds.com, which found the overwhelming majority of auto sales during the program would have occurred anyway. In other words, sales were simply moved up a little because of the credit.

Perhaps the same situation has occurred in the housing market. Perhaps too many of us are giving too much credit to the homebuyer’s credit while giving short shrift to important economic variables. After all, low home prices and low mortgage rates should be expected to lift the market. That said, no one could say which had the bigger impact, so it is understandable the industry is playing it safe and lobbying for the credit extension. Nevertheless, should its efforts fail (and don't get us wrong, we'd like to see the credit extended), it's worth noting that most decisions are based on economic reasons, not tax reasons.

And the economic reasons still suggest now is the time to buy: Home prices remain attractive, though we think they will become less attractive given the recent drop in inventory. Mortgage rates remain low, and we doubt they will remain low as well, especially when considering that gross domestic product posted a better-than-expected 3.5% annualized gain for the third quarter and that more market watchers are expecting the Federal Reserve to raise the federal funds rate in the near future.

www.sumnerhomemortgage.com

Pressure Will Grow

2009-10-26T12:07:00.000-07:00

Over the past two months, we have been beating the drum loud and hard on the probabilities of rising mortgage rates. We think it is worthwhile to keep doing so, not because we are pushing for higher rates but because of human nature and current economic data.

Behavioral economists have long noted persistent human foibles. One foible is to focus too much on the here-and-now and too little on the there-and-tomorrow. These economists note that we tend to extrapolate the present into perpetuity, meaning many of us believe a 5% 30-year fixed-rate mortgage is the norm and will continue to be the norm, even though it was rarely the norm during the past 40 years.

On the economic side, there really is no need for short-term rates to remain near zero. The economy is gaining pace, even if job growth is lagging: Gold is at an all-time high, oil and other commodities are rising, and the leading indicators are indicating more growth. Moreover, let us not overlook the stock market, which is surging. The move in the Dow Jones industrial average above 10,000 underscores the renewed health of the markets.

The upward movement of all these variables suggests higher interest rates. And if the first-time homebuyer's credit is extended, the pressure for mortgage rates to rise will only increase.

www.sumnerhomemortgage.com

A Realistic View of Prices

2009-10-19T13:52:00.000-07:00

S&P/Case-Shiller 10-City Composite Home Price Index rose 3.6% between April and July, following a decline of 4.8% in the previous period, between January and April. But that's nothing new. Robert Shiller, the index's co-founder, found a close parallel at the end of the 1990-91 recession, where home prices rose 2.3% from April to July 1991 after having fallen 2.1% from January to April that year.

Here is another interesting fact to suggest price volatility is the norm: Since 1979, residential real estate prices have had two 10-year long cycles where prices have risen significantly, then retreated approximately 15% to 20% over the subsequent two years. This tendency to increase then tumble back has kept housing appreciation more or less on pace with inflation over the past 100 years.

Mortgage rates have also demonstrated spurts of volatility. In 1977, the prime 30-year fixed-rate mortgage averaged 8.8%, spiking to 13.7% in 1980 before topping out at 16.0% in 1982. From 1984 through the present, mortgage rates have steadily trended lower to today's unprecedented levels, with no significant spikes in the interim. Does that mean mortgage-rate volatility is a thing of the past? All we can say is that it is worth heeding the late economist Hyman Minsky's admonition on stability. According to Minsky, the longer things are stable, the more likely they are to become unstable.

www.sumnerhomemortgage.com

A Confounding Interest Rate Environment

2009-10-13T09:43:00.000-07:00

What is going on? We keep warning that mortgage rates cannot go much lower, and yet each week they keep going lower. The phenomenon is difficult to explain: Gold – a traditional inflation hedge – is up over $100 an ounce in the past three months, yet over the same period, the yield on the 10-year Treasury note – a mortgage-rate base – is down nearly half a percentage point.

Meanwhile, Federal Reserve officials keep making a case for higher interest rates down the road, though they keep pushing the case further down the road. Federal Reserve Chairman Ben Bernanke says the Fed will reverse course and tighten policy when the economic outlook improves sufficiently, though he also said accommodative policy would be needed for an extended period.

Does that mean we have been off base on our prognostication for higher mortgage rates anytime soon? We still do not think so. Yes, the 10-year Treasury note's yield has moved considerably lower over the past 90 days, but we can't overlook the fact the U.S. dollar has taken a pounding this year from record-low interest rates and massive fiscal spending. We also cannot overlook record-high gold prices, the record-level of liquidity pumped into the economy, and the prospect of the economy improving quicker than many market-watchers expect.

Therefore, we feel confident in saying – yet again – that this is a darn-good mortgage-rate environment, but it is a mortgage-rate environment unlikely to be so good in coming months.

www.sumnerhomemortgage.com

Up, Down, or Sideways?

2009-10-05T11:54:00.000-07:00

We are speaking of mortgage rates, which continue to move down. Bankrate's latest survey had them averaging their lowest levels in over four months last week, with the 30-year fixed-rate mortgage averaging 5.25% and the 15-year fixed-rate mortgage averaging 4.64%. Given the recent qualms over unemployment, rates would seem likely to move down further.

And they could, but they could also move up. Last week, Dallas Federal Reserve President Richard Fisher said that the winding down of the Fed's stimulative monetary policies needed to start as soon as the economy shows signs of sustained improvement. "When it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation," Fisher said in a speech to the Texas Christian University Business Network of Dallas.

Until Friday, financial markets were heeding Fisher's words, with derivatives prices suggesting the fed funds rate will rise to 0.75% by mid-2010. (Since December 2008, the Fed has held the rate at a lowest-ever range of 0% to 0.25%.) Granted, the odds of an immediate increase dropped after Friday's employment report, but the May fed funds contract is still priced for a 72% chance of a 0.5% fed funds rate at the late-April rate-setting meeting.

We think it's worth heeding the Fed's intention to “move with an alacrity” once it determines the economy is fixed (and no one can be sure when the Fed will make that determination). We think it is worthwhile for potential borrowers to move with alacrity as well, particularly first-time homebuyers. After all, there is no guarantee that the $8,000 credit will be extended beyond November 30.

www.sumnerhomemortgage.com

What is Known Won't Kill You

2009-10-01T14:58:00.000-07:00

The foreclosure conundrum has been garnering more headlines in recent weeks, raising concerns about the sustainability of the summer rally. Fortunately, the conundrum has been known for a while, and what is known is rarely the problem. The unknown – the thing that appears unexpectedly – is what gets us, which is why we tend to be less concerned than most about the damage foreclosures could wrought.

Our concerns are further assuaged by history, which suggests a robust recovery lies ahead. James Grant, a prominent market bear, noted as much in the Wall Street Journal. Grant reasons that our recession bears comparison with the slump of 1981-82. Grant notes that in the worst quarter of that contraction, real GDP shrank at an annual rate of 6.4%. Yet the recovery, starting in the first quarter of 1983, rushed along at impressive quarterly growth rates. Not until the third quarter of 1984 did real quarterly GDP growth drop below 5%.

Our optimism is further buttressed by historical data collected by Michael T. Darda, chief economist of MKM Partners. Says Darda, "The most important determinant of the strength of an economy recovery is the depth of the downturn that preceded it. There are no exceptions to this rule, including the 1929-1939 period." Our depths have been fairly deep the past year.

Therefore, we remain upbeat, but not too upbeat, because times – good or bad – do not last. The benchmark 30-year fixed-rate mortgage is hovering near 5.3% while the benchmark 15-year fixed rate mortgage is hovering near 4.7%. These rates are very good, but ephemeral, and so is the median home price of $177,700, as January's $164,800 median home price proves. Buyers beware, but more important, buyers be aware that this market – and the deals it offers – won't last.

www.sumnerhomemortgage.com

We were very humbled to be mentioned in this fine blog by Frank Catalano

2009-09-24T16:02:00.000-07:00

www.sumnerhomemortgage.com

It's All (Mostly) Good

2009-09-21T10:36:00.001-07:00

Stock prices are up, housing prices are up, and mortgage rates are down. Unemployment remains the last confounding variable, and on that front, it might not confound much longer. We stumbled across an uncannily accurate forecast of unemployment posted by Michael Dueker at Econbrowser.com. Dueker's forecast (published in December 2008), has accurately tracked the ebb-and-flow of unemployment through 2009, even to the most recent month. Looking ahead, Dueker predicts job losses will slow dramatically through the remainder of 2009 before job gains start in early 2010.
That's good news for the overall economy, but not necessarily good news for mortgage rates. A full-fledged recovery is sure to ignite both inflation and a rise in interest rates. Moreover, let us not forget all the liquidity the Federal Reserve has pumped into the system over the past year. Speaking via satellite to a conference in Mumbai earlier this month, former Federal Reserve Chairman Alan Greenspan noted that failing to shrink central-bank balance sheets could lead to high price inflation. "I am not talking 3% to 5% inflation; I am talking double-digit inflation in the U.S. ,” he said.

The odds of double-digit inflation are fairly low, but the odds of at least some inflation are fairly high. Of course, the Fed could effectively manage its balance sheet to nip inflation in the bud, but that is an extremely difficult task, which is why – despite interest-rate improvements in the past month – we still think rates are destined to rise further out.

Given the likely confluence of awaiting events, we are compelled to advise once again that homebuyers act now. Yes, uncertainty remains; then again, uncertainty never goes away. One thing is certain; we are looking at record-low mortgage rates, plenty of available funds for loans, and affordable home prices. Couple these certainties with a likely improvement in employment and economic growth and there is little reason not to refinance or buy a home today.

www.sumnerhomemortgage.com

Buyer (Still) Beware

2009-09-14T10:33:00.000-07:00

We warn once again that it will not be a buyer's market into perpetuity, though others have a different opinion. Some forecasters – Goldman Sachs being the most prominent – project the Federal Reserve will hold the fed funds rate low for “many years” in order to help U.S. consumers and companies pull out of their funk. If that were the case, then it would appear that mortgages rates ranging between 4.5% and 5.5% could be the norm deep into 2011.
Meanwhile, Reuters reports that homebuyers are still negotiating good discounts based on data released in July's Zillow Real Estate Market Report. Zillow notes that buyers paid 3.3%, or nearly $7,039, less than the last listing price on homes for sale during July. What's more, 22.8% of all homes listed for sale on Zillow during August were listed for a median 96 days, up from 91 in July.

It sounds like the trend will remain the buyer's friend through 2011 – until you dig a little deeper. Zillow also noted that the 3.3% discount is down from June's 3.5% discount and substantially down from January's 4.6% discount. It is also worth noting, yet again, that the usual hard-hit burgs in Nevada , Florida and California skew the data.

“Even if prices stabilize and rise, we can still finance at cheaper rates,” so the counter argument goes. Yes, that is the case today, but we think Goldman and others are underestimating how quickly an economy can turn and how quickly inflation can conflate. It is a buyers' market today, so buyers should take advantage of it today. As for tomorrow? We are much less sure.

www.sumnerhomemortgage.com

We Remain Bullish

2009-09-09T10:53:00.000-07:00

There are many reasons to remain bullish on housing; none more compelling than record affordability. The average middle-income family can now spend less than 25% of monthly income to buy a median-priced home, according to NAR lead economist Lawrence Yun, who adds that house payments as a percentage of income are at a record low.

Mortgage rates continue to contribute to Mr. Yun's affordability calculations. Last week, the benchmark 30-year fixed-rate mortgage fell 12 basis points to average 5.41%, the benchmark 15-year fixed-rate mortgage shed nine basis points to average 4.74%, and the benchmark 5/1 adjustable-rate mortgage dipped one basis point to average 4.94%, according to Bankrate's latest national survey. In other words, rates remain near historical lows.
How long they will remain there is anyone's guess. We have warned that it will be difficult for rates to sustain these low levels, and we still believe that, though they might be able to sustain them longer than we initially believed. Wage-induced inflation – a significant inflation source – remains a non-issue. In fact, worker productivity – the output of work per hour – increased at an annual rate of 6.6% during the second quarter, posting its best improvement since the summer of 2003.

When the economy picks up, and it will, rates will pick up as well, so it is unreasonable to expect to purchase a home for less than 25% of monthly income into perpetuity.

www.sumnerhomemortgage.com

How Technology Helped Avert Disaster

2009-08-31T09:49:00.000-07:00

The economy was never going to get as bad as many had thought, and by many we mean the doomsayers predicting a replay of the 1930’s. Reason being, markets are too efficient and too knowledgeable today; many people are following all segments of the economy, thanks in large part to today's information and communications technology.

A stock-market analogy is in order: Back in the 1930’s, Ben Graham, Warren Buffett's mentor, discovered that buying stocks trading at dirt-cheap prices proved highly remunerative. Graham would parse financial statements for companies with a lot of cash and little debt – a tedious and time-consuming endeavor at the time. Graham's modus was to buy companies for their current assets and get everything else – land, plant, and equipment – free. Graham's strategy can't be replicated today because information is so widely and cheaply disseminated that investors pounce before companies reach such levels.

Homes aren't homogeneous like stocks, but there are many more information-savvy buyers vetting housing opportunities today than there were in the 1930’s, so prices – on the national level – are highly unlikely to collapse. (They can collapse in niche, depressed markets – inner-city Detroit, for example – but that's always been the case.) Of course, there is always a risk of buying too soon, but buying too soon is still usually remunerative over the long run. The same can't be said for buying too late

www.sumnerhomemortgage.com

Wall of Worry

2009-08-24T11:48:00.000-07:00

“If it bleeds, it leads,” is an old journalism trope, meaning bad news sells. There is still plenty of bad news out there. Two weeks ago Deutsche Bank startled most of us when it predicted that nearly half of American mortgage holders would be underwater by 2011. Last week, the Mortgage Bankers Association startled a few more when it reported that 13% of mortgage-encumbered homeowners are either behind on their payments or in foreclosure.

Many pundits expect that percentage to increase, pointing a finger to prime mortgages, which are becoming delinquent at an accelerating pace: Among prime loans, 9% were past due or in foreclosure at the end of June, up from 5.35% one year ago.

More worries center on the $8,000 federal tax credit, slated to close November 30 – a mere three months from now. (But practically speaking, less than that when you consider you want to allow at least 30 days – and probably closer to 60 – for a normal transaction to go from contract to closing.) The credit has provided the greatest benefit to the low-end segment of the market. Many are worried the lower end will reverse course once the credit expires and begin mimicking the higher end ($750,000 and up), which saw inventory levels increase to a 16-month supply in July.

These worries are legit and often repeated, and that's okay. Sustainable recoveries need to climb a wall of worry. Worries don't make it any easier to sleep at night, to be sure, but they do make us more cautious and diligent. It's always a good sign when markets can still push ahead when populated with cautious and diligent participants. Besides, markets work best when opinions are heterogeneous, unlike the homogeneous opinions that prevailed in 2006.

www.sumnerhomemortgage.com

One Person's Misfortune, Another Person's Opportunity

2009-08-17T10:24:00.000-07:00

Foreclosure activity jumped 7% in July from June and 32% from a year earlier, as one in every 355 households with a loan received a foreclosure filing, according to RealtyTrac. It's not good news, but it's not a catastrophe either, since foreclosures, like real estate, are local: California , Florida , Arizona , and Nevada accounted for almost 57% of total U.S. foreclosure activity in July.
It's worth remembering that foreclosures, though bestowing misfortune on some, create opportunity for others. For real estate investors and home buyers, RealtyTrac's data can be a road-map to finding good deals. Not every foreclosed home is a gem, to state the obvious, but there are plenty of low-priced properties just begging for a qualified buyer.

What's more, foreclosed homes aren't the full-blown headache they used to be. “Foreclosed homes” used to be an off-putting term to many in the industry. Agents were unfamiliar with them and banks didn't always know how to dispose of them. But over the past 18 months, both sides have grown more comfortable with foreclosures. In turn, the process of buying a home in default has become both simpler and quicker.

It's also worth remembering that price isn't the sole determinate of affordability. Mortgage financing is the other important component. On that front, rates remain affordable, with the prime 30-year fixed-rate loan hovering around 5.5%. That said, we think mortgage rates are unlikely to fall much lower and that higher rates are in our future, so anyone considering a first or second home or an investment property should consider jumping aboard that bandwagon before it leaves the station.

www.sumnerhomemortgage.com

Small but Consequential News

2009-08-10T12:12:00.000-07:00

It's usually more insightful to stitch together little pieces of news to form a mosaic that arrives at a conclusion than to draw a conclusion from one big consequential piece of news. Reason being, market bottoms usually end in a whimper instead of a bang, and these whimpers are often marked by a surfeit of anecdotes of strife and struggle.

We've been seeing a surge in strife-and-struggle articles in recent months. But these articles often serve as contrarian indicators. Yes, they can be bothersome, but they tend to increase in multitude and amplitude just when the economy is poised for a sustained recovery.

Another seemingly small piece of news that can prove consequential is when someone of renown finally acknowledges an improving market. Such was the case last week when Robert Shiller, co-founder of the Case-Shiller Home Price Index, launched a new investment vehicle, the MacroShares Major Metro Housing Up fund. Shiller's fund essentially represents leveraged bets on housing prices. What the introduction of this fund tells us is that more investors are expecting more upside in housing prices.

On our end, we've been painting a mosaic of an improving housing and mortgage market over the past few months, and not because we wish it were so, but because the small, consequential pieces of news suggest it is so.

www.sumnerhomemortgage.com

Perfection is Impossible

2009-08-03T11:11:00.000-07:00

Bad news sells, which is why whenever a business reports starts off positively it's nearly always tempered negatively. You could call it being prudent, circumspect, and balanced, and that would be a legitimate argument. To wit: A report in Housingwire.com last week provided an example of good news being tempered by bad. Data from MDA DataQuick showed that sales in the very hard-hit Phoenix area have surged 72% this year. MDA DataQuick was quick to note, though, that “for the foreseeable future, the Phoenix region will continue to have many foreclosures to recycle, and that inventory of lender-owned property will weigh on home prices.”

Other reports last week were equally as tempered. One economist stated after the good news on new-home sales and housing prices that “a glut of grossly overpriced homes currently on the market and the possibility of climbing mortgage rates are among several potential challenges facing the market.” That sentiment was repeated often.

We are all for prudence, circumspection, and balance. After all, it's important to question the data you are being fed, because all markets offer the potential for risk, along with the potential for reward. But it's also worth remembering that there is no such thing as a “perfect market.” Home prices, mortgage rates, and the economy will never be “just right.” It's also worth remembering not to give one side of the argument more weight than it deserves.
In this market, we still think too many potential borrowers and home buyers are overweighting negative news while holding out for perfection. Unfortunately, perfection doesn't exist, which is why waiting for it guarantees missing opportunity.

www.sumnerhomemortgage.com

A Little Less Contemplation, A Little More Action

2009-07-27T11:46:00.000-07:00

For the past year, the housing market has been a buyer's market nonpareil thanks to a cascade of foreclosures that pushed prices down at an unprecedented rate. Indeed, prices are off $79,800 from the national trend in Los Angeles , off $72,400 in Las Vegas , off $69,900 in Phoenix , and off $53,000 in Miami , according to the Case-Shiller Home Price Index.

But trends – good or bad – don't last forever. In fact, the trend of falling home prices has ended in many markets, and will end in many more, leading to a new trend of rising home prices. Many parts of the country are already seeing bidding wars for homes, particularly in the lower-priced niche.

Granted, all real estate is local: Home buyers and sellers are less concerned with a few broad (yet important) data points and more concerned with where individual sub-markets are headed. After all, owning a home is an investment in a neighborhood – not necessarily a metropolitan area at large.

That said, psychology can go national, and go national rapidly. On that front, expect psychology to turn bullish. Yes, unemployment, currently posting at 9.5%, remains a concern, but corporations are posting higher earnings and higher stock prices. In fact, the Dow Jones Industrial Average broached 9,000 last week, reclaiming all its losses for the year. That portends good news for the economy ahead.

The bottom line is, anyone looking to buy a home or refinance a mortgage should probably stop looking and start acting. More often than not, holding out for that last dollar usually means suffering a much larger loss instead.

www.sumnerhomemortgage.com

Money to Spare

2009-07-23T15:01:00.001-07:00

All that talk about TARP recipients withholding their bailout funds appears to be just that – talk. Lending among the top 21 recipients of bailout funds through the Capital Purchase Program within the Treasury Department’s Troubled Asset Relief Program posted growth in May, with mortgage originations rising by 7% over April’s figures.

Furthermore, there is more money available to lend to more people. A few weeks ago we mentioned Fannie Mae's and Freddie Mac's home affordable refinance program. It's worth plugging again. The HARP affects millions of homeowners currently in Fannie Mae or Freddie Mac loans and permits first-mortgage loan amounts up to 125% of the home's current appraised value, with and without a second mortgage already attached. In addition, closing costs and as many as two payments can be rolled into the loan and up to $2,000 can be taken out of the mortgage.

More funds are available through use of the highly promoted $8,000 first-time home buyer's credit, though confusion among the public remains high, according to a recent RE/MAX survey. A leading confusion is what happens to the full $8,000 if a qualified individual or couple pays less than $8,000 in federal taxes? The answer is straightforward: They get a refund check for the difference. Another confusing aspect to many potential home buyers is the possibility of repayment. An earlier version of the first-time buyer tax credit did have to be repaid, meaning that it functioned like an interest-free loan. The updated version, approved this year, eliminates the need for repayment unless the home is sold within three years.

www.sumnerhomemortgage.com

The Truth of the Matter

2009-07-13T12:15:00.000-07:00

An enlightening op-ed piece by Stan Liebowitz, University of Texas ( Dallas ) economics professor, appeared in the July 3 rd edition of the Wall Street Journal, vetting the mushrooming rate of mortgage foreclosures since 2007. What Liebowitz had to say supports the old adage that a lie can get half way around the world before the truth gets out of the gate.

In short, Liebowitz debunked the myth that subprime mortgage lenders fooled hapless borrowers into taking complex, low initial rate loans. He noted that the focus on subprimes ignores the widely available industry facts (reported by the Mortgage Bankers Association) that 51% of all foreclosed homes had prime loans, not subprime, and that the foreclosure rate for prime loans grew by 488% compared to a growth rate of 200% for subprime foreclosures.

Liebowitz also found that interest-rate resets did not measurably increase foreclosures until the reset was greater than four percentage points. Only 8% of foreclosures had an interest rate increase of that much. In a nutshell, the overall impact of upward interest rate resets was much smaller than the impact from reduction in homeowners' equity.

The good news, according to Liebowitz, is the reduction in homeowners' equity appears to be ending. He notes that housing prices are likely to stop falling soon (an opinion we've been forwarding the past few months), because current prices are approaching their long-term, inflation-adjusted pre-bubble level. In turn, a perceived, and very real, end to the drop in housing prices will only stimulate further activity.

www.sumnerhomemortgage.com

A New and Better Deal

2009-07-06T12:06:00.001-07:00

The rising unemployment rate is a threat to recent housing-market gains. Offsetting this negative impact, at least to a degree, is a positive impact that should keep many borrowers from falling into foreclosure. HUD announced that it will expand its loan-to-value ratios for refinances; specifically the expansion will include borrowers who are current on payments but whose mortgages are worth up to 125% of the home's value. The primary criticism of the current 105% loan-to-value ratio is that it excludes borrowers who purchased their homes three years ago, when prices were just hitting their peak.

Freddie Mac is further sweetening the refinancing pot by encouraging borrows with 30-year fixed-rate mortgages to consider a shorter 25-year term by providing a special price incentive to lenders. The incentive only applies to Relief Refinance Mortgages with LTV ratios between 105% and 125%. Freddie Mac's Relief Refinance Mortgage allows borrowers to finance closing costs, financing costs, and prepaids/escrows up to $5,000 or 4% of the current unpaid principal balance of the mortgage being refinanced, whichever is less. What's more, mortgage insurance is not required if the existing mortgage does not require MI.

Many potential borrowers have been dissuaded from taking advantaging of a favorable refinancing market because they think they are too far underwater to bother. These new programs give them a powerful incentive to bother and get that money-saving lower-rate loan they need.

www.sumnerhomemortgage.com

We're Getting the Job Done

2009-06-29T12:47:00.000-07:00

Conservatives will say government has done too much, while liberals will say government has done too little. No sense in debating the argument; the differences are irreconcilable. But what isn't debatable is the recovery, which will fully bloom because of the efforts of the private section.

Former junk-bond king Michael Milken noted as much in the Wall Street Journal. One of the more pervasive myths is that money is in short supply, but it's really not. Milken noted that corporations worldwide have raised nearly $2 trillion in public and private markets this year, a clear sign the economy is improving. The fact that non-investment-grade companies, such as Harrah's Entertainment, Warner Music Group, MGM Mirage, and Rite Aid, are now paying down bank debt with newly raised funds shows the capacity of our financial markets to re-capitalize, thanks mostly to the efforts of private financiers.

More money flowing into capital markets isn't headline-making news, but it is important news. It reveals just how far along our economy is in the recovery process. Dour pundits have been comparing our economic situation to Japan , circa 1990, when that country was thrown into a decades' long funk. There is no comparison. Unlike Japan , we have been aggressively working our problems by raising capital and de-leveraging, and doing both successfully.
A full recovery will take time, but as with people, the tincture of time is often the best medicine for an ailing economy.

www.sumnerhomemortgage.com

Lower Rates Aren't In The Bag

2009-06-25T10:50:00.000-07:00

Last week's drop in mortgage rates was a welcome relief, and you would think that more relief should be forthcoming. After all, inflation appears to be a dead issue, given recent data on producer and consumer prices. Inflation and interest rates are highly correlated: When one falls, the other usually falls in tandem.

But there is more to the story than inflation. All interest rates are determined relative to risk-free market interest rates, with short-term Treasury bills serving as a proxy. But most interest rates are not risk-free. Mortgage rates are certainly not risk-free, which is why they are higher than Treasury bill rates. What's more, mortgage rates are heavily influenced by rates on mortgage-backed securities (MBS). MBS rates, in turn, are heavily influenced by yields on Treasury bills, notes, and bonds.

And there is the rub. Treasury securities prices tumbled last week after the government announced $104 billion in debt auctions. As rates on Treasury securities increase to attract buyers, there is a crowding out effect, because Treasuries compete with other debt instruments for buyers. If Treasury securities must raise their yields to attract buyers (which happened last week), then so do most other debt securities; hence, a possible increase in mortgage rates.

We can't be sure what impact this crowding effect will have. Rates could go higher, but they could go lower too, particularly if the Federal Reserve continues to implement its $300-billion program to create demand and keep a lid on rising rates. But why chance it? Thirty-year fixed-rate loans are still at a very good rates, as are the deals found on most existing and new homes on the market.

www.sumnerhomemortgage.com

The Whole Picture

2009-06-15T13:11:00.000-07:00

Yes, mortgages rates have risen substantially over the past three weeks, and we can't be sure when, or even if, they will come down. Mortgage rates are important, to be sure, but they are only part of the equation. Income and relative home prices matter too. On that front, average hourly wages continue to show incremental increases, while home prices continue to stabilize, and even rise, in many parts of the country.

Distinctions matter as well. Much has been made of the fact that lower interest rates mean more money in the pockets of borrowers. More money in the pockets of borrowers, in turn, means more money to spend to stimulate the economy. But let's not forget that it's a two-way street: The lender on the other end receives less income; thus, he has less income to spend. In other words, refinances with no equity extraction are really a wash in terms of aggregate demand for goods and services.

Mortgages used for purchases are another matter. If the house purchased already exists and the seller pays off a mortgage of the same or greater amount of the mortgage taken out by the purchaser, there is an increase in aggregate demand of brokerage and other fees collected in relation to the sale. If the house being purchased is a new one, then there is a net extension of credit and the value-added in the construction of the home is an addition to aggregate demand. In short, purchase mortgages have the greater ability to stimulate the economy, and the good news is that we continue to see an increase in purchase mortgages.

www.sumnerhomemortgage.com

The Power of Marginal Thinking

2009-06-11T10:05:00.000-07:00

Here's a dilemma posed by economics professors: You bought two tickets to the NBA finals, which cost $300 a piece. You approach the arena entrance only to discover you've lost both tickets. Replacement tickets from the box office will cost you $400 a piece. What do you do?
Once the cursing has subsided, you have to consider what the game is worth. When considering the situation, most people mistakenly include the lost tickets in the equation, wondering if the game is worth more or less than $1,400. The correct way to approach the dilemma is to ignore the lost $600 – a sunk cost – and to only consider the $800. If the game is worth $800 or more, you buy the tickets. If not, you go home or to a local bar.

The point we are trying to make is that better decisions are made when people think on the margin, which means basing decisions on the reality of the situation from the current point forward. There is nothing we can do about last week's or the previous week's mortgage rates. We can only consider the rates from this point forward, which are still good, by the way. The same decision-making approach applies to home prices. Many people who want to sell are anchored to the price at which they bought, even if it has no basis in economic reality. And the reality is that home prices are darn low, which is why we think potential buyers shouldn't wait too long to pull the trigger, lest they suffer the same anguish that many procrastinating borrowers are.

www.sumnerhomemortgage.com

Maintaining A Healthy Optimism

2009-06-01T15:20:00.000-07:00

There are a couple of reasons why we tend to accentuate the positive in these newsletters: one, the bad news is already thoroughly accentuated in the media; and two, the bad news is much more impactive to the human psyche than the good news. Science proves it. Daniel Kahneman won the Nobel Prize for his work on Prospect Theory, a key component of which is “myopic loss aversion.” Simply stated, humans have an asymmetric risk-reward utility curve, meaning the pain of losses looms much larger than a comparable potential gain.

Nassim Taleb explicated the relationship in Fooled By Randomness. The problem, according to Taleb, is that people are simply overwhelmed by what he calls “noise,” often the bad news. Taleb quantifies the pain by assuming, like Kahneman, that losses are felt greater than pain. Indeed, Taleb notes that some psychologists estimate the pain of loss is 2.5 times the pleasure of gain.

Imagine if you were to examine the news and it was split 50/50 between good and bad (which it isn't, but we'll assume it is for argument's sake). If you were to examine the news each hour over 12 hours, you would receive six hits of good news offset by six hits of bad news. Even though the news was evenly split, you'd be feeling 2.5 times more displeasure than pleasure. For that reason alone, we think we are providing good, logical balance. But for even more balance, it might be worthwhile at times to turn off the news altogether.

www.sumnerhomemortgage.com

Bad News as Good News

2009-05-28T10:29:00.001-07:00

There has been no shortage of media coverage on the foreclosure market over the past six months. In fact, the foreclosure market seems to be the only growth market left in the country, if you listen to some accounts. The bad news is that foreclosure activity is up 32% from last year, with one in every 374 US housing units receiving a foreclosure filing in April, the highest rate yet seen by RealtyTrac, which has tracked activity since January 2005.

The good news is that demand for these homes is growing. Indeed, Housingwire.com ran an article that basically stated foreclosed homes are becoming the “hot-ticket” item in real estate. In a survey by Trulia.com and RealtyTrac, 55% of survey participants indicate they are at least somewhat likely to consider purchasing a foreclosed home in the near future, compared to the 47% who said the same in November 2008.

www.sumnerhomemortgage.com

It's Getting Better All the Time

2009-05-18T14:38:00.001-07:00

Federal Reserve Chairman Ben Bernanke has forecast an end to the US recession, which he believes will be kaput before 2010. Bernanke also told the Congressional Joint Economic Committee that the collapse in the housing market, which began three years ago, may have bottomed out, something we've been saying for the past month.

Forecasts, especially about the future, can easily go astray, so we don't want to put too much faith in the Fed chairman's prognostication. But many signs are appearing to suggest the recession won't go much deeper. The latest comes from Mr. Bernanke himself, who said last week that “early indications” show that investor demand for the central bank’s loans to buy asset-backed securities, including mortgage-backed securities, will rise next month from May’s total, suggesting confidence in so-called toxic mortgage securities is growing.
The banks are another sign all might be well. They have been loosening their purse strings of late. Mortgages are more readily available, and so is consumer credit. This tells us that the banks' balance sheets are improving, as has their outlook for the future. Our outlook, meanwhile, has already improved.

www.sumnerhomemortgage.com

Stressed, But Still A Success

2009-05-12T13:07:00.000-07:00

It's official: Our financial system isn't going to collapse after all. I think we all knew that, but the Federal Reserve went out of its way to prove everything was okay by “stress testing” the banks. The Fed's test measured bank reserves based on what's known as common equity, the value of a company's common stock and profits. The test revealed that some of the banks have sufficient reserves by traditional measures, which include other credit-related assets, but fall short by this narrower standard. The bottom line is the nation's biggest banks are regaining their health, which should translate into a greater willingness to lend.

The stress test was a part of the Obama administration's plan to fortify the financial system. As home prices fell and foreclosures increased, banks took huge hits on mortgages and mortgage-related securities they were holding. The stress test has been criticized as a confidence-building exercise whose rosy outcome was inevitable. But the information, which leaked out all week, was enough to provide a much-needed dose of market confidence.

The stress test result is yet another sign that we are well on our way to an economic recovery. We begin this year saying we expect January 2010 to look a lot better than January 2009. Our prognostication appears to be headed in the right direction. It's also worth remembering that recoveries mean markets start tilting more toward the seller’s side, so this unprecedented buyers market in housing we've witnessed over the past 18 months is less likely to last much longer.

www.sumnerhomemortgage.com

Confusing Averages

2009-05-04T12:01:00.000-07:00

Averages are an intricate part of data aggregation and dissemination. Commonly referenced, national average mortgage rates or average existing new or existing home prices are useful, because they project a large macroeconomic picture quickly.

But averages can also misinform. Picture a room with Bill Gates, Warren Buffett, and eight other people, each of whom earn $100,000 annually. If a statistician were to average the annual incomes of the 10 inhabitants, the average annual income would be several million dollars a year, even though eight of the 10 inhabitants make nowhere near that amount. It would be impossible to implement a successful sales strategy based on that average income. In other words, averages can be irrelevant.

Such is often the case with real estate. We noted that home prices in Phoenix tumbled an average of 51% from 2006 highs, while Dallas prices tumbled an average of 11%. Average these two numbers and you get an average decline of 31%, which makes the Phoenix market look more robust than it is and the Dallas market less robust. What's more, that average is even more misleading because it is based on an average of an average.
Point is, don't let national averages influence your opinion of the economy too much. Most business is local, and what's happening in one part of the country can be completely different from what is happening in another part of the country. What's happening in your part of the country is what's most relevant.

www.sumnerhomemortgage.com

An Impending Seller's Market

2009-04-27T13:08:00.000-07:00

The Wall Street Journal reported last week that falling home prices are starting to ignite bidding wars in some areas of the country, noting several real estate brokers who say multiple offers have become more common in parts of California, Arizona, Washington, D.C. and the Minneapolis-St. Paul metropolitan areas. The Journal even reports that some markets are running into shortages of moderately priced homes in middle-class neighborhoods.
A tighter housing market seems plausible, given that the Federal Housing Finance Agency reported that home prices nationwide rose a seasonally adjusted 0.7 percent in February from January. In short, all signs are signaling that the worst has ended and that a recovery is near, if it isn’t already occurring. Many housing economists remain cautious though, believing the market will gradually recover over the next year or two, with some parts of the country stabilizing before others.

But economists are often wrong. Recoveries, or deteriorations for that matter, almost never occur at the smooth, even pace economists predict. More often, recoveries move swiftly, and before you know it sellers are getting 10 percent more for their homes this month than the month before. It’s still a buyer’s market today, but today becomes yesterday a lot sooner than most people perceive. That’s something to consider for any buyers sitting on the fence.
www.sumnerhomemortgage.com

Focus on the Long-Term

2009-04-21T13:05:00.000-07:00

When times are tough, the first course of action is to cut back spending on personal and business expenses. In short, we are reacting to a distinction between risk and uncertainty, first noted by economist Frank Knight. Risk, according to Knight, describes a situation where you have a sense of the range and likelihood of possible outcomes.
Uncertainty, in contrast, describes a situation where it’s unclear what might happen, let alone how likely the possible outcomes are. Uncertainty is always a part of business, but in a recession it dominates everything else; no one’s sure how long the downturn will last or whether we’ll go back to the way things were.
Uncertainty overwhelms the economy with a sense of “short-termism.” We lose the ability to see the forest through the trees. Short-term considerations trump long-term potential, so we cut back on investment, advertising, and overall business activity. But there’s a trade-off for doing so: numerous studies have shown that businesspeople who keep spending and keep working to build their business do significantly better when the economy recovers than those who made deep cuts during the downturn.

Today, most people are far more worried about sinking the boat than about missing it, and that creates opportunities for those of us who are far more concerned about missing it.

Still a Buyer's Market....

2009-04-06T12:56:00.000-07:00

The National Association of Realtors’ pending home sales index (PHSI) rose to 82.1, in February, beating consensus expectations for a 78.1 index reading. What's more, the PHSI's affordability index rose 0.9% to a new record high level of 173.5, which is 36.3% higher than it was a year ago.

Lower home prices obviously contributed to the record-high affordability index posting, and so did record-low mortgage rates, which are now regularly being quoted below 5% on the prime 30-year fixed-rate loan and near 4.5% on the prime 15-year fixed-rate loan. But good things don't last forever. We've been saying over the past few weeks that it's unlikely these rates will go much lower. Our opinion is supported by John Koskinen, interim CEO of Freddie Mac, who stated last week that home loan rates are near their bottom and that any further decreases will be small.

Some pundits have been speculating that deals are driving the housing market more than mortgage rates these days, and perhaps they are right. They also speculate that even better deals lie ahead because consumers are overly cautious. Buyers are certainly cautious, but they should probably be taking their cue from the stock market, which is hinting that the best deals might not be around much longer, instead of unreliable punditry.

The Tide is Turning

2009-03-30T14:29:00.000-07:00

It's a homebuyer's market and a refinancing market – a keen observation of the obvious. But let's remember that rates can only go so low, and by historical levels they are darn low.
These low rates are actually frustrating at times, because we constantly hear from people who say they won't buy a home or refinance a mortgage until rates fall to 4%, or even lower. It's an irrational extrapolation. There's no evidence that rates will hit 4% anytime soon. To the contrary, the Federal Reserve has been furiously pumping dollars into the U.S. economy, raising the probability of higher interest rates down the road. But if rates do continue to slide, refinancing is always an option. In the meantime, why not take advantage of today's already historically low rates?
Let's also remember that buyers' markets don't last forever. The inventory of unsold homes still remains high, at least on a national level. The NAR reports that the number of unsold homes on the market represents 9.7 months' worth at the current sales pace. But change can occur remarkably fast. To wit: The California Association of Realtors said existing-home sales in the state were up 83% in February from the previous year, helping to shrink inventories to a six months' supply from 15 months. When the sales pace dips below five months, the tide starts to turn, favoring sellers over buyers.
We all want the best price, and it's tempting to hold out for that price, but trying to time a market bottom is a Quixotic endeavor – one that often costs much more than it saves.

2009-02-12T12:06:00.000-08:00

Special Report
Fannie Mae Breaking News
Effective March 1, 2009

Fannie Mae will soon allow a single borrower to finance up to 10 individual properties. Previously the most a single borrower could finance was 4 properties.

The holders of such mortgages must, of course, meet guidelines and eligibility requirements, but this is a major sign that Fannie Mae is supporting high-credit quality, bona fide investors and is committed to providing stability, liquidity and affordability to the nation’s housing market.

Fannie’s current policy limits the number of financed properties in which a borrower has individual or joint ownership interest to four (4) when the mortgage being delivered to Fannie Mae is secured by an investment property or second home. The limitation on the number of mortgages currently being financed applies to the total number of properties financed, not just the number of mortgages sold to Fannie Mae. On March 1, that limit will rise to 10 properties.

This is great news and a sign that Fannie Mae has recognized the importance of the real-estate investor. Like all policy changes, this one has new underwriting guidelines. If you would like to find out the exact underwriting guidelines, please let me know; I'd be happy to email the full report to you.

Here at Sumner Home Mortgage, we have a bank behind us, so we can offer in-house financing. We also act as a mortgage broker, which allows us to shop the marketplace for the most competitive rates and very best programs. Let us help you today!

It felt good to do good

2008-12-15T13:54:00.000-08:00

On Saturday, Dec. 13, Sumner Home Mortgage conducted its seventh-annual food drive benefitting the Sumner Food Bank. We braved windy, cold weather to collect more than a ton of food from the neighborhoods of Tapps Island, Quiet Water and Skyline Estates. We worked jointly with Realtors Diane Geyer and Lauri McLeod from John L. Scott Real Estate. Neighbors are mailed a bag earlier in the week asking them to donate non-perishable food for our less fortunate neighbors. Each year we seem to collect more and want to thank our neighbors for their continued generosity. It always feels good to do something good for the community. This community has been wonderful to our business; it's the least we can do to give something back. Please see the photos below, to the left.

Recent headlines said the feds were dropping interest rates to 4.5%

2008-12-11T10:56:00.000-08:00

Many of you have asked if now is a good time to refinance or should you wait. No one knows for sure. But here are some things that I would like to point out:

First off, the feds cannot lower mortgage rates to 4.5%...at least not by themselves. The feds do set the federal funds rate (the rate banks lend to one another) and this influences long-term interest rates. But what decides long-term interest rates, the ones that you and I pay? The free marketplace...meaning the price that an investor is willing to pay for a fixed return into the future. Who are these investors? Pension funds that want a guaranteed return into the future. Also, foreign markets (China, Japan, etc) that view the US as a safe haven. So what can change this equation, or make it less likely that our debt will be bought? Quite simply, inflation, and what the future expectations of inflation are. With all the stimulus money that the government is throwing into the system, does anyone really believe that we won’t have to pay for this in some way? It is my strong belief that inflation will at some point re-emerge and when it does we will see interest rates go up.

Secondly, interest rates are changing all the time. By the time the media reports on it, it's old news. In the rapidly changing world of interest rates, what occurred two days ago may or may not be relevant. Many times clients call up and want to know what interest rates are and we respond by taking a snapshot of what they are at that particular moment. What could be more beneficial, though, is to work with a lender who will watch the rates and advise when the time is right for you. It is imperative to trust your lender and I have worked hard over the past 25 years to be that trusted source.

Two other observations:
Nothing goes in one direction forever, even though it's easy to believe it does. For example, housing prices couldn't keep going up forever; the stock market won’t keep going down; mortgage rates won't go down forever, either. At some point they will go the other direction. The old axiom, "Bulls and bears make money but pigs get slaughtered" is definitely true, so don't get greedy!

We have many fewer lenders in the mortgage industry than in the recent past. As rates come down, our phones are starting to ring in a big way. I have seen the same pattern over the past 25 years. Interest rates come down, word gets out, phones start ringing, lenders get busy. At some point, supply and demand kicks in and as lenders get too busy, they start raising the rates to keep from being overrun. I've seen this happen every refinance market that I have been involved in (1986, 1993, 1998, 2003) Oh, I forgot one: 1983. The year I got into the business, rates dropped to 12%...wow! If that doesn't seem like a lifetime ago!

So the bottom line is:
If it makes sense for you to refinance at the rates you are hearing about, talk to your lender. (We hope that's us!) Establish trust and a comfort level that you are in a position to get the very best terms possible.

Election Results

2008-11-07T15:49:00.000-08:00

Most of us were drawing weary by the time Nov. 4 rolled around and were happy to see election season come to an end. Whatever your party preference, whoever your favorite candidate was, I think we're all breathing a sigh of relief that it's over and we can move forward. This is what I predict:

Interest rates will fall due to the government bail-out of Fannie Mae and Freddie Mac. These former private institutions had been beholden to their shareholders. Now they're answerable to the citizens of this country. It can only mean good things for lending.
We may have seen the bottom of the housing market. Housing starts now lag housing formations, which means demand may soon outpace supply. That means more stable home prices.
I've seen a very positive trend toward more first-time homebuyers being able and willing to buy. Their investments (or lack of) were less vulnerable to the rollercoaster stock market, so they feel more inclined to buy.

Stay tuned; I'll let you know what I know as soon as I know it! Always feel free to give me a call at 253-569-2493 or at the office, 253-863-1113. Onward and upward!

Sam Suznevich

How long can rates stay at lowest point?

Uncertainty begets opportunity

Economy needs to take more risks

When a house is not a home

Jobs Anyone?

If you have equity, it's a GREAT time to refinance

Have low interest rates run their course?

How Risky Is this Market?

Up, Up, but not Quite Away

A new take on mortgage rates

What Every Home-Owner Should Do If You Can't Pay The Mortgage...

Big Bank Loan Modification Links:Chase Bank Wells Fargo US Bank Bank of America

Time's A Wasting!

Reading between the lines

Still Expecting Better Days

New GFE shackles lenders

New RESPA rules shake up lending process

A Look at the Past and a Look at the Future

Lock and Load or Float?

Are We There Yet?

The Federal Reserve and Mortgage Rates

FHA Now, Not Latter

An Argument for Higher Rates

Still the Time to Borrow and Buy

Continued Affordability....At Least for the Time Being

Possibly Overstated, But That's Okay

Pressure Will Grow

A Realistic View of Prices

A Confounding Interest Rate Environment

Up, Down, or Sideways?

What is Known Won't Kill You

We were very humbled to be mentioned in this fine blog by Frank Catalano

It's All (Mostly) Good

Buyer (Still) Beware

We Remain Bullish

How Technology Helped Avert Disaster

Wall of Worry

One Person's Misfortune, Another Person's Opportunity

Small but Consequential News

Perfection is Impossible

A Little Less Contemplation, A Little More Action

Money to Spare

The Truth of the Matter

A New and Better Deal

We're Getting the Job Done

Lower Rates Aren't In The Bag

The Whole Picture

The Power of Marginal Thinking

Maintaining A Healthy Optimism

Bad News as Good News

It's Getting Better All the Time

Stressed, But Still A Success

Confusing Averages

An Impending Seller's Market

Focus on the Long-Term

Still a Buyer's Market....

The Tide is Turning

It felt good to do good

Recent headlines said the feds were dropping interest rates to 4.5%

Election Results

Big Bank Loan Modification Links:

Chase Bank

Wells Fargo

US Bank

Bank of America