Eric Murrietta

Interesting how perspective can change in just one quick second. As soon as news that the tax credit extension had been approved (see attached document), it seemed people weren't quite as pressured to buy a home, "right now". That isn't at all a scientific observation, but perhaps just a feeling since there were a lot of people, realtors and lenders included, who breathed a sigh of relief. As a result of the extension, a few borrowers that were concerned about the deadline can now take a bit more time to find the home that works the best for them without feeling rushed. Not to mention the added benefit of continuing to help first time home buyers with a lasting benefit in the form of cash back from the government (even if it sets the deficit nationally further in the red - yes the statement is too political for this email so no further mention will be made of it, excuse the lapse in judgement...HAHA). Again, it's that whole perspective thing.

Nevertheless, rates held steady through the week and at this point on Friday, the market is saying to "bail out", which just means to be patient to see how the market moves. Again, there isn't a better time to buy a home then when you are ready. And if you are ready when rates are historically low and the government is giving you money, then by all means...buy a home.

Besides the most important news (see above) there were some other interesting items:

•· Consumer Credit Fell - AGAIN! - For the eighth straight month consumer credit fell and people were borrowing money at a slower pace than in the past. It seems we are moving toward cash and away from credit. But if it is any indication on the upcoming Holiday season, many retailers may be in for some hard times. In some cases, there are stories of retailers beginning their "Black Friday" sales this weekend. Retailers such as Walmart (no surprise there J ), Sears, JC Penney, etc. are having blowout sales every weekend leading up to "Black Friday", all in the hopes of capturing some of that consumer spending which may be very muted this year. It will be an opportunity for many to find great deals throughout the end of the year and leading all the way up to Christmas.

•· Credit Policies continue to tighten - The question always looms: when will the easing on the credit markets occur? When will it not be a battle to the finish line, with the Loan Officer asking for the borrowers' blood to get the deals done??? It seems that in some areas changes are taking place, but not always for the good. For example, trailing secondary wage earner income is no longer eligible income for any conventional loan transaction. (Trailing Secondary income - if a borrower is relocating and the old job will end before the new job begins, the old income cannot be used to qualify). Investors are now asking for three months bank statements for retirement/pension income. There are more guideline changes and credit policy changes that will increase the paperwork needed for many borrowers. Surely one would think these are not standard with every investor, however, they are derived from Fannie Mae and Freddie Mac and will become commonplace as we move forward.

•· Phoenix Coyotes are 10-6, Phoenix Polar Bears work to raise money for Breast Cancer - If you are a hockey fan, which I am, then you will be pleased with the new brand of hockey the Coyotes are playing. They compete and battle all over the ice, it isn't always flashy but they seem committed to defense and playing the game with intelligence which has led to a decent start. Sure, it will still be a long shot to make the playoffs, but at least they are enjoyable to watch. So long Gretzky! If you are interested in continuing the donations for Breast Cancer, the Junior team that I am involved with is hosting a walk tomorrow morning. You can read more about it at the website: Making Strides for Breast Cancer. You can also check out the webpage at www.phoenixpolarbears.com to see our website and its facelift to commemorate Breast Cancer Awareness.

(P.S. We carry Breast Cancer awareness into November due to our season schedule - but, hey shouldn't we be aware of dangers to our loved ones at all times)

With the passing of Summer and the arrival of Fall; the Holiday season begins to quickly approach. There were a couple items of note this week within the mortgage market and within the real estate market. So let's get right to it.

• Government to continue buying Mortgage Backed Securities - The government stated earlier this week that they plan on tapering back the buying but will continue to buy Mortgage Backed Securities until March of 2010. This may not seem like much on the surface but if the government stops buying these Mortgage Backed Securities, we are most definitely in for an increase in mortgage rates. As such, the announcement they would continue to buy them and extend it out past the original October deadline had rates dropping at the end of the week. Again, another positive sign as people search for those affordable homes and secure low mortgage rates that will keep their home affordable for years to come.

• Housing re-sales were down 2.7% - In news that brought everyone back to reality a bit, the number of re-sale homes sold in August was down 2.7% though the projected number was for the re-sales to be up 2.1%. The reasoning behind the decrease in sales is partly due to the amount of foreclosures coming back on the market. If you will recall, I mentioned that this may happen back in May or June when discussing the market. Mostly this decline is due to increase in foreclosures back on the market and the slow-down as families move back to their normal routine of school, etc.

Of Note: the numbers may go back up as the end of the tax credit for FTHB's looms large.

• For Real or Just Pretending - That's right are the Cardinals for real or are they just pretending to be a good team. I guess in hindsight we can feel a bit better about the loss to the 49ers based on their performance against the Seahawks last week, but still, we should have at least won the game. I think this week against Peyton Manning and the Colts, though the season is only 3 weeks old, will be a nice test. We are definitely the beneficiary (or at least could be) of a tired Colts defense that played for 45 minutes on Monday night and had 80+ plays against them. Hopefully we can let it fly and end up with a nice win.

Lastly, as part of my work in the Ice Hockey community, I am the co-Chairman for our upcoming Golf Tournament to raise money for players within our organization who need scholarships. It is a great event and I have attached the flier for you to see. I would love to have some of you join me as we raise money for these kids and help them reach their dreams of playing competitive youth hockey and one day, for some, college hockey.

Rates improved slightly this week as we have seen swings of about .125% in either direction of the 5.5% mark over the last couple of weeks. These rates do help keep home owner affordability up, which in general is a good thing. As far as market news, check this out:

1. Housing Market set to enter new stage??? - I am not a person that entertains bad news easily. However, I do like to read different perspectives on the market so that I can be well versed in potential trends. For example, in this article, "Housing Crises set to enter new stage.", the author explores some very interesting statistics that might make some hold still before jumping into the market. The analysis was on how buying trends are not following a normal pattern, foreclosures are beginning to affect even prime borrowers, and the multitude of ARM loans set to readjust. Those three points could definitely have a drag affect on the market, and by drag I mean drag down affect. Nothing is certain but we have to definitely keep our eyes on the overall picture and not just a short snapshot of the last couple of months. It is the prudent thing to do.

2. Extend and EXPAND the tax credit? Are they crazy or smart? - That is right, apparently major lobbying is taking place to extend the tax credit and to even EXPAND it by way of the amount of tax credit and to more buyers (i.e. not just FTHB). Over the last week I have begun to see more and more of these articles/blogs discussing the possibility of extending the tax credit. I don't know if it is a right or wrong question as to whether or not we should take action to extend the credit, there is simply too much gray? We do know that it has helped many FTHB in getting a break for buying the home, but it hasn't had as much of an impact as say, Cash for Clunkers program. Namely because obtaining a mortgage is a bit more stringent than obtaining a car loan. Regardless, I believe an extension could help, but I believe expanding it will not help the market. Further, if the expansion of the credit is tied to the extension of the credit, it might be rejected all together. Just food for thought.

3. Ways to Beat the Slow Down - That's right, as football season begins and the holiday months roll in, typically the housing market slows down. So, in order to keep from letting the slow down affect you, here are some tips:

a. Revisit old contacts - There are a ton of people in our lives that may be able to help our business succeed and in turn you may be able to help their business succeed. Reach out to old contacts, past clients, etc. and get them excited about homeownership opportunities.

b. Amp up Marketing ­- That's right before you are slow, see it in front of you and be determined to keep it from happening. Come up with a seasonal slogan or something exciting that you can talk with people about so that instead of missing the boat, you find yourself on a cruise ship of opportunity.

c. Grind it out - There is something to be said for plain old grit. Understand that with the holidays and family pulling people in different directions it may be difficult but it isn't impossible. Be determined to keep business going strong and make it fun through competition or other means. Remember, sometimes a bit of elbow grease will get the job done. Nothing takes the place of old fashioned hard work.

As always, my number is 602-670-3272. Your referrals and business always makes me smile.

Just an FYI - there are only 104 Days left before the $8,000 First Time Home Buyer tax credit expires. We don't know for sure if it will be extended but as of now no news has come out stating that it will.

All purchases must be closed by November 30^th in order for First Time Home Buyers to take advantage of the credit. If you have any clients on the fence, now would be the time to get them off the fence and into their first home.

They can enjoy the benefits of:

• Historically low interest rates that helps the homes AFFORDABILITY.
• Real estate market with prices so low they are on SALE.
• Loan programs that allow for minimal DOWN PAYMENT. (FHA, USDA, VA, etc.)

That is just the tip of the iceberg. If the homeowner stays in the home for 10 years, their minimum investment can turn into a return of over 300%+. Now that's a great deal!

If there is anything that I can do for you and your clients, just give me a call at 602-670-3272.

Effective today the following changes have occurred, though the FANNIE MAE announcement came on June 8th they weren't effective until today.

The changes are:

• Credit Reports are no longer valid after 90 days. -- This means that if a report is pulled on the 10th of August, you have 90 days for the loan to fund and close. If that doesn't occur a new report will need to be issued. The new report may affect the loan status report.

EFFECT FOR REALTORS: Make sure the client that you are working with is continuing to manage their credit properly by staying in touch with the loan officer. If they are toeing the line with their credit, any small hiccup along the way can go from approval to denied.

• Credit Card financing of up to 2% of customary fees paid outside closing. -These fees include home inspection fees, termite inspection fees, etc. However, we as the lender must confirm they have enough liquid cash to cover the fees or recalculate the credit card payment to include the amount they have financed.

***Remember no part of the down payment can ever by financed using a credit card.

EFFECT FOR REALTORS: Make sure the client has sufficient funds to cover not just the total closing costs but any outside closing customary fees. It can mean they need more cash to close, they can't just "charge them" without it affecting the loan process.

• Tip Income: All tip income can only be used if it has occurred over the last two years and the borrower has documentation via tax returns from the previous two years to support the income. They must also have acknowledgement from their employer that it is likely to continue.

EFFECT FOR REALTORS: Think along the lines of self-employed borrower when it comes to tip income.

• Proof of Liquidation for Stocks, Bonds or Mutual Funds: In the past it wasn't necessary to prove these funds were liquidated. They just needed to be available. However, if the borrower is using these funds to qualify for down payment, etc. then we will need to prove the funds have been liquidated for the down payment. This percentage has also been lowered to only 70% of the total amount as allowable for down payment and closing costs.

EFFECT FOR REALTORS: Borrowers have to be willing to liquidate their stocks, bonds, and mutual funds. If they are not, then those funds can't be used as down payment. Further, if they say they have $10,000 we can only use $7,000 as allowable. Again they must prove they liquidated those funds. Make sure the client is liquid enough to purchase the home.

It doesn't get easier, but knowing what we are up against helps us properly communicate to the clients the necessary expectations, requirements and needs for the loan transaction. As long as we stay out in front and don't lag behind we will make the client happy and they will continue to refer that precious business.

Have a great Monday.