Eric Murrietta

A little slow in coming - but I needed to chew on it for a while and decide what, if any of it makes sense.

You can see the new GFE that is to be implemented on January 1, 2010 - here.

After much thought the verdict is still out as to if this GFE is better than the current GFE we have. The goal is transparency and consumer satisfaction with the lending process. And while those items aren't bad goals to strive for, I am not sure the new GFE actually accomplishes this task.

Here are the drawbacks (in my opinion):

1. The first line comments on the length of time the interest rate is good for. With rates always fluctuating how is that even possible. You could put that it is good for one week but if rates are terrible the following week you are then forced to eat the difference. It doesn't seem like that first line is a viable line for all brokers and lenders.
2. The document is long and somewhat exhaustive. Yes, it does a good job of spelling things out but how many consumers take the time to read it. They usually ask the lender and it is their job to be honest and put on the paper the same information they relay to the customer.
3. Section A on page 2 is rather interesting. It doesn't list YSP, it only gives a place to give credit to the customer and/or charge origination fees. Does this foreshadow the end of YSP?

There are some positives. The language used on the GFE is easy to understand if the consumer takes the time to read it, the charts can help them compare loans between lenders and it clearly lays out the charges for the loan.

Outside of that I think the real issue is transparency. The point of the GFE is to keep things transparent so that predatory lending doesn't happen. I pose the question - is transparency a good thing for the industry, for mortgage professionals, for consumers. Is this the best way to do that?

Let me know your thoughts...

At least in Maricopa County and the majority of the remaining counties in Arizona, on January 1, 2009 the FHA max loan limit will change to $271,050 from $346,250. If you have a listing in that range, maybe the best move is to play up FHA. With rates in the mid-5's for FHA loans, it should/could make those homes more affordable. But you only have about a week to get the deal done, because any longer than that and the "window" will be closed. So put on your sales cap and lets find a buyer.

The last time rates went lower - into the mid 5's, they only stayed there for about three days. Since last Tuesday we have seen an easing on rates and it looks like this trend might continue and maybe even go lower. Unless you are a risk taker, I say, "If the deal makes sense for you, then pull the trigger." Live in the now and don't worry about what tomorrow holds, because they can always get worse just as quickly as they improved.

MARKETING TIP -- The marketing you do today won't be evident for four to six weeks. SO - when you get busy with deals, make sure you keep at your marketing. That will help avoid those months with no deals. Stick to it consistently and the marketing will pay off.

What a difference $800 Billion can make??? Or at least that is the sentiment when it comes to rates. If you are hesitating, then you might not be paying attention. So, spread the word that rates are in the low to mid-5's and it may be the time for your loved ones to be thankful for the Fed and their desire to print money because this might actually benefit them.

Here is what happened so far this week?

• $800 Billion -What does it mean? - Check out my post and my opinion on the many different articles that I read early this morning. I was so excited about rates that I couldn't even sleep last night...I know that people can benefit, if at the very least in the short term on these rates.
• Happy Thanksgiving - Bring on Black Friday. - I use to not enjoy the idea of waking up early to go shopping and then a funny thing happened. Last year I went with my wife, she really didn't even beg, I thought, "What the heck? I can experience it at least once." I found that I enjoyed it and this week I have been dreaming of shopping carts filled with the latest and greatest gadgets. If you know me, then you will know that is a stretch because I may be the cheapest person on the planet. Who knows maybe this year the big screen TV will find a place on our console??? (I highly doubt it but you never know.)
• Sports and Weather - The Suns won a squeaker last night but it was nice to see Nash playing with that passion and intensity we have come to know. Rained a bit this morning and is supposed to continue tomorrow. Stay dry if you can.

Top three things I am thankful for: My beautiful Wife (who I couldn't really function/live without), Parents that let me Coach their young men in Hockey (they really don't have to and at times I am under-qualified but I am grateful for the opportunity), All the wonderful people I met this year (I hope to meet more and build lasting relationships with those formed this past year.).

December is upon us but until then HAPPY THANKSGIVING!!!

Yesterday at around 8:15 AM New York time, the Fed announced a plan to pump $800 billion into buying Mortgage Backed Securities. Of that $800 billion, $200 billion is to be used for small business loans, consumer loans, student loans and credit card borrowers, $500 billion to buy mortgage backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae (authority to buy first granted in 1966), and $100 billion to buy the corporate debt of Fannie, Freddie and federal home loan banks.

The above helped initially in regards to interest rates on 30 Year Fixed Loans. This was the biggest jump in rates in over seven years and will hopefully have an impact on future buyers.

Here are some key points to consider:

1. Lower Interest Rates = Increased Refinance/Purchase opportunities.

Seems like a no brainer but remember when rates are up so is the payment amount per month and this affects the DTI (debt to income) ratios that are used to qualify potential buyers. This should help make homes more affordable for first time home buyers and save people up to $200 a month on their mortgage payment if they refinance.

2. Credit is to be more "easily" accessible.

With guidelines tightening considerably in the third quarter, it was continuing to become more difficult to find financing for buyers with any little discrepancy. Guidelines will not go back to pre-meltdown days, but with the money in the market, the Fed is hoping to entice lenders to make the money available to more consumers.

3. Risk to the tax-payer.

Buying the MBS's from the market may end up costing the taxpayer. As does everything if the securities that are purchased from the market default. The Fed will be pegged to pick up the bill and this flow's to the consumers.

Questions to Ask:

1. Will the flow of money increase home purchasing and help stabilize the markets?

There is still an unhealthy spread between supply and demand in the markets. Will the new lower rates (envisioning they stay at the recent levels) impact enough buyers and stave off enough foreclosures to bring the market to equilibrium. Only there will the bottom have been passed and house prices stabilize.

2. Will rates stay at these low levels?

The last time rates eased, when the government bailed out Fannie and Freddie Mac, the market quickly reverted to previous rates and didn't allow for much activity. The length of time rates stay at low levels will determine if market activity will increase. Short stay with lower rates, not much will happen...but a longer stay at lower levels will give people time to react positively and start buying/refinancing homes.

3. Will the securitization markets start to function?

Only the Bank of Japan has employed "quantitative easing". The result there was stabilization in the markets but "limited impact" in helping their economic stagnation because banks still wouldn't lend and companies wouldn't borrow. (Fed Risks "Spitting in the Wind" with new $800 Billion Pledge, Craig Torres and Scott Lanman - Bloomberg.com)

There is still a ton to be done to fix the market and this new plan will hopefully do just that. We are, however, still early in the game and since this is new for most in the treasury and government, I believe we are still feeling our way through a very tumultuous time. The moves they make will impact us and how the economy will respond in the upcoming months.

Fed decides to pump money ($800 Billion to be exact) into the markets to help "un-freeze" them leaving the mortgage market excited and rates extremely low.

For the most qualified borrowers - 5.500% and 0 PTS/ 0 Origination Fee.

Don't miss the opportunity for you or someone you know. Tell them to call me today!!!