Eric Murrietta

Rates were higher today than they were for the majority of the week. The market is looking up though. There are bidding wars in the price range of homes under $100K due to the 2.2 months of inventory supply. There still remains over a 13 month supply on homes in the Scottsdale area and this is mostly attributed to the difficulty in affordability of those homes. Remember that Jumbo loans or loan amounts over $417K require anywhere from 20-30% down to secure financing. That is a far cry from the 3.5% required for FHA financing up to $346,250.

Week in Review:

• Value Checks on Properties are No More! - If you weren't aware, many of the larger banks have already adopted the policy of placing the appraisal order through a non-affiliated third party. As of May 1, 2009 all mortgage companies are required to be a part of the HVCC (Home Valuation Code of Conduct). This new code will affect single-family mortgages that are originated after May 1.
  • Nuts and Bolts
    • No communication allowed between loan originator and appraiser.
    • Appraisal is ordered by a third party from a licensed appraiser on the approved list.
    • Appraiser cannot be picked for a specific property, the approved appraiser list will have a non-affiliated "loan production" staff member choose based on a rotating schedule.
    • For Refinances cannot indicate value or LTV estimate for the property.

• Mortgage Applications on the Decline - Applications for mortgages declined this past week from the higher volume of last week. The trend over the past four weeks has been increased volume followed by a lower volume, followed by a higher volume. Which must mean that we are taking a week off after the high volume from the previous week??? Call that lack of consistency. Actually it probably has more to do with the Realtors?!?!?! NAH! It really is all about the numbers. I believe that you will see that mortgage rates are higher statistically next week and volume for applications will hold steady. Unfortunately as the summer approaches, we must work harder to make sure business doesn't go elsewhere because typically things slow down in June and July.

• Homebuyer's Seminar - Coming Soon! - A former colleague and myself are teaming up this month to put together a Homebuyer's Seminar for all of your potential leads. That's right!!! This is for you and your clients. You know them. They are the leads that insist a mortgage company won't contact them, or they can't decide if they want to buy because they aren't sure about the market. Well this is the seminar for them. What they will get is an education on the mortgage process, market statistics on homes for sale and historical rate averages, instant access to mortgage consultants willing to check credit and send them back to the YOU with LSR in hand. It is an opportunity to find more buyers ready to purchase with financing in place. Think of it like a one-stop shop. LOOK FOR MORE INFORMATION IN THE COMING WEEKS!

Rates stayed pretty consistent throughout the week with a few swings up .125% and down .125%, but for the most part it was right at where we ended last week. I can't stress enough that we don't know how long these rates will stay down in this range, so be on the lookout for those buyers and the affordability that the rates and prices of homes truly has for them.

On another note - some stories for the week:

• April 4^th the new DU Program will be available - Well not the entire Home Owner Affordable Plan refinance and loan modification programs will be up and running but DU (Desktop Underwriter - the program we lenders use to qualify borrowers) will be up and ready to go. Which means we will be able to run these potential scenarios to see "how many" people we can help. Call me a bit skeptical, but all the restrictions that they are laying out means the box and opportunity for people to refinance is really not all that much larger. I know it will help some, but probably not enough. There is no magic cure! (Repeat that phrase over and over - it will make you smile.)

• Borrowers need a few extra credit points - Credit score is everything in this market and in some cases it can mean the difference between 5.25% and 5.625%. Basically, I have a credit rescore option that might help some borrowers. For example, if they have a credit score of 697 and want to get above the 700 threshold, this credit tool will explain what the borrowers can do to improve the score. Once they complete the desired credit items, then we submit to the companies, wait 5-7 business days and if it goes through we can re-pull the credit report. Hopefully good news will be on the other side. Nothing is guaranteed in life, but everything is worth a shot in this market.

• Buyers looking to move - If you have clients asking, "Is now the time to buy?" - Move on. They don't get it. They will have already missed the boat. Look, it is time to stop asking when and just start doing. Flip the question on them and ask, "Is it the right time for you to buy?" Buyers are sometimes are so concerned with everything around them that they don't even consider their own situation. Buyer's can't be so concerned with the economy that it makes them stand their ground like cement was poured over their feet. I know it's a tough question and we don't have all the answers, but be assured if you work with them to find out their needs and earn their trust as a Realtor, I believe that people will begin to buy. They activity is increasing greatly from week to week. So, if they are still asking that question next year and you haven't moved on to the next serious buyer -just realize they may never be ready to buy

Rates this week dropped a bit on Wednesday when the government announced their plan to buy even more mortgage backed securities, but we've steadily seen increases since then so we ended right back where we started.

• $15,000 for Down Payment and Closing Costs in City of Phoenix - Our "Government Stimulus and Local Incentive Programs" continued to grow. The City of Phoenix released information about a program that loans homebuyers $15,000 for down payment, closing costs, and pre-paids when purchasing bank owned properties in Phoenix.

• Fannie Mae Home Affordable Refinance - More information regarding the Fannie Mae Home Affordable Refinance program that is to be in effect next month was made available. We now know that borrowers wishing to utilize this program must have put down 20% when they purchased the home. If they did not, they will have to contact their current lender who will have to work with the MI company insuring the home. As has become customary with this big rollout programs, we don't expect it will benefit as many people as it was intended to, but I guess anything is more than zero - right?

• March Madness - If you did or did not enter your bracket at least it gives us something to watch on TV. There is nothing more exciting than single elimination tournaments on one of the biggest stages. At least then you don't have to go out like the team I coached in hockey this past year. We lost our last two games; the first in a 14 person shootout and the second in overtime. We were one goal away from making it to the semifinals and playing for a chance at Nationals. It didn't happen. These boys will only have to feel heartbreak once. Lucky them.

"Good news travels fast, bad news travels faster." That principle alone makes it difficult to decide what to write in my weekly review. I think it's easier to write the bad news. Seemingly it's everywhere. (8.1% unemployment rate, Dow at lowest levels in over 12 years, and the tragic story of the three young men who died in the Gulf of Mexico). But today is different...for starters, it's a Friday, the 6^th of March and I have seen some funny and interesting things this week. (See: Jon Stewart bash CNBC and/or Woman Calling 911 of Chicken McNuggets).

I can't say for certain if the good news ever outweighs the bad news, based on the quote above I would venture to say no. However, we can choose to seek the positive news. We can also decide that we won't ignore the bad news, but instead learn from it. In light of all that has happened over the past 18-24 months, the good thing is that it can bring us down to earth. Back to reality, where family and friends are important and matter more than that new car or million dollar house. When we are stripped of what we have, who can we say that we are? It is not wealth that elevates; it is the character behind the wealth.

Week in Review

• On the good news topic - I googled good news and it gave me this link: http://www.goodnewsnetwork.org/. I believe the overall goal is to disseminate news that is positive. For example, there is an article about Community Banks going strong and an article about a puppy that was rescued from a pinned car. You can pay to join to get the good news. I guess even good news comes at a price.

• Cards re-sign Kurt Warner - Sure we could be negative and say that he should have accepted the Cardinals first deal and kept his mouth shut. But consider that all he wanted was what he believed to be a fair market price for his services. Look at his resume this past season: 401/598 completions (67.1% completion rate), 4583 yards thrown, 30 TD and 14 INT. When you compare it to other QB's in the league; both Manning's and Roethlisberger, Kurt is as elite as they come. His lowest completion percentage was 58.5% in an injury riddled year with St. Louis. When he plays 10 games or more he completes no less than 62.8% of his passes. Now, I think about my career. If I was closing 15-20 deals a month, wouldn't I have the right to work for a company and have them compensate me with fair market value? It isn't greed in Kurt's case. I was fortunate enough to listen to his interviews on the radio between appointments this week and discover that Kurt may be the most humble professional athlete ever. He screams of maturity, understanding and wisdom. He is the epitome of a team guy and when he discusses Leinart, his backup, it is with an air of hope that one day he will experience what Warner has experienced through the NFL. This is a good news story. Good character people deserve to be rewarded for their hard work, love and passion for what they do.

• Weather is nice - Enjoy Spring Training - That's right, spring training for baseball is here. What is more fun than having a little escapade from work with some friends to catch early season baseball in the beautiful AZ spring? Can't think of anything else at the moment. Hopefully you can catch a game an enjoy the action.

Today is March 4, 2009 and the new "Making Home Affordable" Refinance and Modification programs were unveiled today.

The Financial Stability website is a great place to locate the information regarding these two programs. It has everything from the full guidelines on the modification program to discovering which option may be the best for you, Refinance or Modification.

In summary, they ask four questions on the "Making Home Affordable Refinance Option" and four questions on the "Making Home Affordable Modification Option". If you answer yes, to all four questions, it then directs you to contact your CURRENT SERVICER OR LENDER and inquire about whichever option you need.

The "Making Home Affordable Refinance Option" doesn't have a lot of information on it regarding guidelines. Instead the main focus of this campaign is directed at the Loan Modification aspect of the Homeowner Affordability and Stability Plan. Here is a brief rundown on the

Homeowner Affordable Refinance Program - Borrowers guide and interesting information:

• Solid Payment History
• An existing Fannie Mae or Freddie Mac mortgage
• Financial documentation in order (though the GSE lenders and servicers should have this information so limited documentation may be needed)
• Appraisal may not be needed in some cases

Homeowner Affordable Modification Program - Borrowers guide and interesting information:

• For loans originated on or before 1/1/2009
• Primary Residence
• Full Documention needed, including a 4506T (allows lender to pull tax returns) and must sign affidavit of hardship
• Incentives to lenders and servicers who modify loans for those who are at risk but haven't missed a payment
• Program available through 12/31/2012

Within the loan modifications the servicer/lender will do the following:

• Reduce monthly payments to at least 31% DTI ratio of gross monthly income. They will accomplish this by reducting the rate to a floor of 2% (rate could be higher but never lower than 2%), extending the term of the mortgage for 40 years, and finally, if necessary, forgive a portion of the principal.

That is the quick and dirty run down for the new "Making Home Affordable" program that was unveiled today. I will give it a day or so and then share my opinion. Initially, I think it will help some, it really now depends on the servicer/lender.

**Any and all direct quotes taken from the following website: www.financialstability.gov