Susan Templeton

HOT RURAL NEWS: New Country Home Loans for Hobby Farms: To date, the upside down value of land to homes in our area (due to high land values) have made funding a small hobby farm or home on acreage prohibitive. The rural, laid back beauty of our region has drawn many folks here for their 'patch of green' to grow a few apples or lavenders or just elbow room and a few horses. We've been hard pressed to find lenders for properties over 5 acres. At last we have some new options for home owners who intend to use their land for appropriate uses in rural zoned areas. The lenders we are dealing with are offering make sense underwriting. Naturally full doc and solid credit. This is very exciting news!

Terms and rates vary by credit risk, eligibility, location, and property type/use. Very competitive with residential rates. The minimum 15% down is great considering NO Mortgage Insurance is required.

Unlike USDA loans--also popular in our area--there is no ceiling on income or limits to business use as long as it's a legal zoned use for the land. It's very much a case by case underwriting decision.

Pass it on!

susan templeton mortgage planner www.loannetter.com

I recently attended an international conference on investing. Big deal, great folks from all around the world, all sharing their expertise, systems and philosophy. Why did I, a mere mortgage body, attend this event? Well for starters, I feel we all need different perspectives whatever the 'market' we trade. Here are a few thoughts I gleaned you might find useful in your practice:

1. Trade Prices: Given everyone wants a low rate and a low price. Price is what makes the 'trade'. However, prices in real estate are not the be-all. But ask yourself: when did price NOT make a difference? Only to someone for whom price was not an issue...not the majority of us living on real budgets in a finite income world. Price points are very big emotional boundaries for folks. I know how much that extra 5K may cause an application to be declined. We have come accustomed to stretching in real estate and now is the time to conserve, live within our means...get a little leaner. I am finding my clients appreciate my strategies for buying lower and not being 'sold' up.

2. Know Thyself: Successful investors know when to push the button and when to take a very long walk.

3. Ignore the Talking Heads: But watch your market, your sector, your turf. The 'news' is probably rigged anyway (how would we know) so it's best to do your own due diligence. Did anyone get rich watching Cramer? the guy said Bear Stearn was safe as houses less than 48 hours before it tanked. Folks are particularly wary now about the predictions we heard only months ago that the recession would be sharp and short...yea right. I bought into some of those 'trend sellers' myself. Yikes, we were predicting rates would go UP this year but hey that was actually before certain truths started coming out.

4. Timing is Everything: From how long you hold any investment to exactly when you sell...any market is driven on the wings of time. We try to take profits when things are high but in real estate we don't always have that choice. Our job takes us across the state and we either have to sell or become landlords... neither choice is fun when you need your money to support a move. Accept not all is within your control and accept your limits.

5. Pick a Method: What kinds of strategies, over time, might work better for your personality, temperament and stage of life? Is it best to borrow $50K to fix up your home in one fell swoop or do the projects one room at a time with your ongoing resources? The answer is different for each person. And if gold is your bag, grab some miner stock. Land works for some. Others like rentals...do what you love and know. As they say in New Zealand: "Whatever starts your tractor!"

6. Celebrate Your Wins: It's a pretty great time to be investing in real estate. Share the love. Study your correct assumptions and remember the trigger points. Learn to trust you gut.

7. Study your Losses: Otherwise how will you improve your game, tighten your reflexes and come out boxing the next round? Traders go over their charts, relive their decisions, keep rigorous notes on what strategy worked and what didn't. If you want to win, you need to know your weaknesses as well as you know your strengths.

OH, and what about that 'Rate Forecast"?-- they actually went down since my last prediction....fancy that!

(Thanks to Bill, Vadym, Pascal, Kaimu and others for sharing their pearls at the Cara Trading Conference 2009) For more inspiration: www.caracommunity.com

Happy Spring! Loannetter

susan templeton mortgage planner www.loannetter.com

And he could crack a few mortgage rates!
We all know what happens next: as the market rallies, safe money tends to leave the bonds stable as traders and investors leap onto the wild horse for the ride up. You can hear them yelling giddy-up around the world. You see, market traders have come to consider the market a quick in and quicker out place to do business. They don't call them 'day traders' for nothing. Buy your Citibank at 6, sell at 6.5 and dump before nightfall. Get back in the next morning at 5.75 and do it again. A few do fall off that famous Wall from dizziness.

CURRENCY CONTEXT: The general freak-out recently has been over the questionable value of our US Dollar, the race to Gold and the lack of consumers to consume. China, our biggest trading partner, is peeved and suggesting what the world needs now is an International Monetary Currency, i.e., not ours. Other countries equally concerned about trade balance have suggested moving to the Euro as the international standard, but it's just too new and unproven. To date, the US Treasury's response to tightening of credit has been to just 'print more'. Not surprisingly, this practice of value dilution has come under some scrutiny, prompting this joint Federal Reserve and US Treasury release on their commitment to Financial and Currency Stability (March 23rd, 2009). Their release backs up a commitment to protecting the availability of financial instruments (including mortgages) and access to them. So far so good. Well, if you believe the 'experts' that is.

Recent releases point out that January 09 remains the worst month for new-home sales since the government started tracking the statistic in 1963. Are we worried? That's one heckofa statistic.

RATE UPTICK: Yes, Home Loan Interest Rates, at an all time low during the last several weeks, are steadily creeping back up from .125-.25% across the board per day. Prior to the recent Wall Street rallies, we were locking best credit 80% Loan to Value transactions under 5%, and we are now closer to 5.25-5.5%. But wait! Now that the Fed Funds Rate is on the floor and Prime Rate is just 3%, just how low can banks go on interest rates and still make money? Will 3% ever come to pass? Unlikely. You see, the banks who were lending (and counting on) returns of 6-7% last year have projected their income accordingly. So when those loans pay off and refinance to a lower rate the banks holding those notes have to adjust their earnings downward. Bigtime. They have to explain to their investors why their money on deposit or invested in their mortgages is not making a bigger return in a riskier market. Investors are not that happy to have their money only returning 5% much less 3%! This creates a rush of investors and their back to the stock market which in turn makes mortgage rates go...UP! It's like a see-saw. Market up, bonds down, mortgage rates back UP. Against the backdrop of such uncertainty these changes are swift and unpredictable.

TOASTERS: One might ask how the global picture affects our domestic US banks rates. Consider this: most of the US mortgage lenders, banks and mortgage insurers have already sold the future of their mortgage loans to overseas investors, institutional and hedge funds managers who are banking on long term returns. So they, the banks, have to deliver the goods! They simply cannot afford to mark down mortgage rates much more or their heads will roll. Even the availability of zero % interest from the Fed's windows is not all that hot when your bank is underwater from losses in other arenas. Even the best, most conservative banks got caught holding builder/development loans that went under. Zero cost is not free...they have mouths to feed too.

THE PURGE: Given there are a certain number of loans that have or are failing and you see why banks have to raise the odds of at least some of their loans being profitable. And while the figures on just how many so called 'toxic assets' are hidden in the Mortgage Backed Securities is yet to be known the folks who created these gems are not even sure what unwinding them will reveal. (Seems odd to have the folks who created these devilish financial vehicles (credit derivative swaps, etc) unwinding their own handiwork but who else knows where the bad apples are hidden? ) Yet out they go. Clearing the decks for better loans.

BUY LOW: Consider your Mortgage Interest Rate a 'day trade', do your due dilligence, find a trusted banker or broker and lock a rate you like because waiters can't be choosers!

Happy Spring! Loannetter

susan templeton mortgage planner www.loannetter.com

Which way will rates go in 2009? Given a pervasive uncertainty means nobody is buying much of anything and home values keep plunging--how do we stop this merry-go-down? For starters, the Fed, the Treasury, the Securities and Exchange Commission and all the Kings Horses being trotted out to bolster confidence and not a moment too soon!

Low Now: OK, rates look great right now. Can they go lower? Unlikely. The jury is out on how long it will take to come up with a viable, actionable recovery plan and how long that plan will take to start working. Meanwhile, help for overextended borrowers who have Fannie Mae and Freddie Mac loans is a good start. Not perfect but a start. Naturally, those banks will benefit first. Fine. Somebody needs to get a leg up and over that horse and get it going. Ideally the fittest of our institutions will recover and live to lend responsibly again. Most of our better lenders are lending. They are just very, very picky.

Expose: Check out this MSNBC video series about the Mortgage Backed Securities and related Bonds, representing the so called risky loans. The interesting part is how the ratings companies who rated these bonds 'assumed' all was well. The video portrays one underwriter who refused to underwrite bad loans and later went to work investigating for the Wall Street investors and even they turned a blind eye to her warnings!

SO---while Fannie Mae/Freddie Mac/AIG and the Banking Industry all taking their lashings behind the woodshed, their public faces belie the real injury to their pride. Like good corporate soldiers the banks still standing are still lending money, albeit under MUCH tighter guidelines and MUCH more thorough oversight; tight lipped but getting on with it. No wonder our ability to borrow money at favorable rates is, well...something of a privilege these days! So if you are in a position to buy, borrow, refinance or invest...consider yourself very fortunate and do your own due diligence. From where we stand, it's a pretty great time to be investing in real estate. You've got to have nerves of steel to be investing on Wall Street right now and real estate is returning to favor with folks who have been on the sidelines.

OH, and what about that 'Rate Forecast"?-- get 'em while they're HOT!

Happy Spring! Loannetter

susan templeton mortgage planner www.loannetter.com

NEWSFLASH: Not ALL Mortgage Backed Securities Are Bad!

National Public Radio Podcast from the Planet Money Team 03/20/09: http://www.npr.org/templates/player/mediaPlayer.htmlaction=1&t=1&islist=false&id=102154567&m=102154705

The analysis is laid out on the actual payback of Mortgage Backed Securities over time vs. the value today (i.e., if you sold your holdings). If you sold them today, sure you'd get back 50 cents on the dollar of your investment. You see, the world has gotten the view lately that risk is bad. Lots of folks are buying these things and would continue to buy them today. According to Planet Money: because they are handled by the big money managers who consider them worth every dime of their original investment -- they are not selling them! Sure, the banks that have the ones that are not performing seem to be taking their losses and the rest of their businesses are doing well. Holding on seems to be the advice of the day.

This newscast points out that not everyone is suffering and many banks and investors continue to make money in this market. Good News!

susan templeton mortgage planner www.loannetter.com