Eric Murrietta

Life and our outlook on it, is sometimes dependent on how we Spin the situation.

It's the "Half glass full vs. Half glass empty" theory. But it is true, we can apply it to any situation.

For example, with mortgage rates increasing over the last couple of weeks there are two recurring thoughts:

1. "I can't believe rates have increased to the mid 5% range. That is outrageous.'
2. "Rates have increased but at least we aren't paying 6.5%-7.5% like the historical averages. A thirty year fixed rate in the 5% range, is still a great deal."

Two statements - Two completely different outlooks.

It's the same with gas prices. They have gone higher but they aren't at the highest levels we have seen them (think March/April of 2008)

The question remains: Does it make it any easier?

NO - Is of course the resounding answer.

We all want the best rate, the cheapest gas, the easiest road. But it usually doesn't happen. I locked my fair share of loans in the 4% range, but those people didn't hold out for lower rates, they seized the opportunity. Sometimes timing isn't perfect and we wait too long until what was great passes us by.

I think the goal is to do what you believe is best at the time: based on past experiences and using good decision making skills. They say that "hindsight is 20/20" but perhaps those that say that dwell too much on the past. Think of why you make the decisions at the times that you made them and you will find that you probably made the decision with the best possible information you had available and were okay with it.

Life changes: sometimes for the good and sometimes for the bad. But one thing remains, another decision is always around the corner. How are you going to Spin it so that you make the best decision at that time. Don't let negativity keep you from moving forward...that might lead to regrets you never want to experience.

On May 29, 2009, HUD released Mortgagee Letter 2009-15.

Initially this letter appears to help First Time Homebuyer's to use their $8000 Tax Credit as a part of their down payment before they actually receive the credit back from the government.

Based on my research this is not the case!

Currently their are 10 States that are participating in "First Time Homebuyer Tax Credit Loan Programs" - for purposes of this blog and since I work in AZ, please note that Arizona is not on the list.

In addition, if you read the entire Mortgagee Letter there is a very important Condition listed:

"Pursuant to 12 U.S.C. 1709(b)(9), the homebuyer's downpayment required for eligibility for FHA insurance may not consist of any funds (including funds derived from a sale of the homebuyer tax credit) provided by the mortgagee, the seller, or any other person or entity that financially benefits from the transaction(or by any third party or entity that is reimbured, directly or indirectly, by the financially benefiting persons or entity). Accordingly, the proeeds of the sale of the tax credit to FHA approved mortgagees, the seller , or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefitting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs." - See Mortgage Letter 2009-15, Page 2

Notice the first part that says, "including funds derived from a sale of the homebuyer tax credit". You cannot use the money in place of the 3.5% down payment, based on the comment above.

The secondary financing essentially works like this: A company could "purchase" your $8k tax credit, charge you $200 for lending you the $8K and put requirements on how you pay them back.

Important points on how they can be repaid:

• No Cash Back to the Borrower
• Second lien cant exceed the total amount needed for down payment, closing costs and prepaid expenses.
• Secondary financing can be "soft" - Meaning no repayment required until the sale or refinance of the property.
• Must include payments in qualifying ratios if they are required.

Basically the mortgagee letter is intended to let buyers use the $8K tax credit to help pay for closing costs and any extra down payment above the 3.5% required by FHA.

There is no way, up to this point and based on my research, to not be required to put 3.5% down into the new home, unless the money is gifted from a relative.

Hopefully that clarifies the new mortgagee letter. I don't know whether it is good or bad...I just know that it might not be what people were hoping for. Sure it would help get more 1st time homebuyers into homes, but the DPA programs were opposed by HUD for a while, why would they enact a new guideline to help bring DPA programs back???

Kind of makes you stop and think that the perception this might be available in the future is just that - perception and not reality.

There is good news though - 1st time homebuyers or people who haven't owned a home for the past three years, can still receive an $8000 tax credit on the purchase of their new home between now and December 1, 2009 (unless the bill is extended by President Obama).

Happy 1st week in June.

All Quotes taken from Mortgagee Letter 2009-15 from HUD Website: http://www.hud.gov/news/index.cfm

This week was the Scripps National Spelling Bee. I didn't watch all of it but on Monday, I happened to catch about 10 minutes of it on ESPN. What I found most interesting was the way the kids showed their pleasure or discomfort with the words immediately. One contestant looked as if she was about to begin dancing when the moderator (or whatever they call him) asked her to spell ____________. (Heck I don't remember the word, it's not like any of them are used in daily conversation anyway!!!)

However, it does bring me to the word of the week - Volatility.

Can I please get the definition? a. Tending to vary often or widely,

b. Tending to violence; explosive

Can I have it in a sentence? a. Mortgage interest rate volatility was very high this week

Can I have the language of origin? a. Yeah - It's frustration (doubt that's a language).

Can I have it in another sentence? a. Many mortgage consultants were volatile this week because interest rates were volatile.

Volatile - V - O - L - A - T - = "Oh, who cares, just tell me what is going to happen next week with interest rates."

I hope you get the idea. At one point, yields swung by a percent and rates jumped almost .75%. But then now, on Friday, only about .125% higher than where we ended last week! It's enough to make a person well...volatile.

Outside of that, nothing fantastic happened. D-backs are winning a bit more, Detroit and Pittsburgh are in a rematch for the Stanley Cup Finals (check out games 1 and 2 on NBC this weekend), and HVCC still stinks.

My last tidbit of knowledge...Hold the ones you love close and dear to your heart because life is fragile and we are only guaranteed today.

(My thoughts and prayers go out to the Swartz family as they lost their mom to a stroke at the age of 45 this past Sunday. She touched many lives. May we all hope to do the same!)

Rates have been trending upward over the last several weeks. Though they haven't jumped dramatically, it has been a steady uptick that is seeing rates over the 5% mark. As this begins to happen, it could lessen the urge for many consumers to refinance and/or buy a new home. If we don't keep the real estate market on the correction that has been occurring over the last couple of months, it may keep us in this financial funk the country has endured over the last year and a half.

Critics are saying that the Fed will potentially buy more treasuries, in order to keep rate low. Apparently back on April 29th, they made the statement that they were staying with their initial purchase amount of bonds and that has had a negative impact on rates to the tune of seeing the yield pushed up to 3.16%.

Basically, the Fed needs to continue to keep rates low so that good credit risk customers are purchasing properties and refiancing to free up capital. This will, in theory, continue to help the real estate market along.

Happy 100 degree weather! Man it got hot pretty fast. It went from gorgeous to unbearable in about two minutes. I guess that is AZ for you. Not much as far as rate changes. The market was pretty volatile this week and things fluctuate as is the norm, but we ended very close to where we started.

Week in Review

• Stocks end up for 8 of past 9 weeks - That's right, missed an opportunity about 10 weeks ago when everything looked bleak. Hopefully somebody out there jumped in at the right time. If you did and made a bunch of money, you could always take me to lunch. Nah, I just have to remember that age old adage, "You have to spend money to make money."

• Stanley Cup Playoffs are Great (Coyotes leaving AZ???) - That's right I like hockey. So sue me. Most people don't, which I may never understand. Mostly they don't like it until they learn the game. Think about it though, where else can you watch superior athletes skate at blazing speeds and fling dense rubber at somebody wearing a mask. It's a great game with speed, agility, quickness all wrapped in one. Not only that but they play really hard especially in the playoffs. With that said, I am a little bummed about the news regarding the Phoenix Coyotes. I can't say that they ever excited me, it has felt like they were a JV team playing a bunch of Varsity teams for the last six years. They aren't relevant. And since when has anything not relevant made money. But they could be relevant, if they realized it takes more in markets unaccustomed to the sport then pitting a JV team vs. VARSITY. Nevertheless, let's hope they stay, if only for the dream that one day they can be relevant.

• HVCC is a new four letter word - Don't believe me. Ask my client that just spent the money on an appraisal that came in 15% lower than we thought. Alas, I couldn't talk to a trusted appraiser for a rough estimate, I had to play Russian roulette and it came up bad for the client. Trust me. I am bummed about the loan, but more bummed that the client had to spend the money on the appraisal. Who knows, I may save the deal. But it won't change the fact that I will now refer to HVCC as H**C.