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National Monthly Housing Survey

10-05-11
Anthony Razhas

New monthly indicators provide timely insights into key consumer attitudes driving sentiment about the economy, household finances, and housing choices

Fannie Mae's August 2011 national consumer attitudinal survey finds that Americans’ attitudes about the economy, household finances, and homeownership are growing more pessimistic – with 78 percent of Americans believing that the economy is moving in the wrong direction, while only 16 percent think the economy is moving in the right direction.Monthly Housing Survey Twenty-seven percent of Americans believe home prices will go down and 22 percent of Americans polled expect their financial situation to worsen over the next year – the highest levels of pessimism for both indicators since August 2010.
The most detailed attitudinal survey of its kind, the Fannie Mae National Housing Survey polls 1,000 Americans each month to assess their attitudes toward owning and renting a home, mortgage rates, homeownership distress, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts (findings are compared to the same survey conducted monthly beginning June 2010). Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future.
Fannie Mae’s monthly national consumer attitudinal survey report provides eleven indicators offering a window into the opinions of Americans across the country. These behavioral insights convey what consumers think about the outlook for owning and renting a home and about their household finances, and may serve as key inputs for determining the future course of investment across housing types.
On this webpage you will find a news release with details about the Fannie Mae National Housing Survey monthly release and the August 2011 data release highlighting eleven consumer attitudinal indicators.

Highlights of the August 2011 Monthly National Housing Survey

Homeownership and Renting
  • For the third month in a row, Americans expect home prices to decline over the next year. On average, Americans expect home prices to go down by 0.5 percent (compared to an expected decline of 0.3 percent in July).
  • While 69 percent of respondents say it is a good time to buy a home (up 3 percentage points since last month), only 9 percent of those polled say it is a good time to sell one's home (down 2 percentage points since July).
  • Similar to July, 46 percent of Americans believe home rental prices will increase in the next 12 months, while only 6 percent expect a decline in home rental prices (down by 1 percentage point since last month).
The Economy and Household Finances
  • The number of Americans who expect their personal financial situation to worsen over the next year increased for the fourth month in a row (up from 20 percent in July to 22 percent in August).
  • Forty-one percent of Americans report significantly higher expenses compared to one year ago (up by 1 percentage point since July).

Previous Surveys

July 2011 Monthly National Housing Survey

Monthly Survey: July 2011
Monthly indicators provide timely insights into key consumer attitudes driving sentiment about the economy, household finances, and housing choices.

June 2011 Monthly National Housing Survey

Monthly Survey: June 2011
National Housing Survey shows key changes in Americans’ attitudes toward housing and the economy over the last year.
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Bank of America Mortgage Shift

10-05-11
Anthony Razhas
B of A is Making Big Moves Away from Mortgages
What many thought was inconceivable is starting to materialize. Bank of America (BofA) is taking large steps in moving away from the mortgage business. In 2010, it closed down its wholesale channel (where mortgage brokers originate loans to be sold directly to the bank). In early August, it sold a half billion-dollar portfolio of loans that it was servicing, which was one of its core competencies. Now, it is discontinuing its correspondent business. If those three steps don’t indicate that the bank is seriously considering exiting the mortgage business, I don’t know what will.
The correspondent business is a major channel of distribution for many money center banks. Often, we hear that a mortgage house has its own money to lend and is a “direct lender.” While this is technically true, the majority of these “direct lenders” originate and fund loans with a warehouse line of credit, then they sell them to a BofA, J.P. Morgan Chase, US Bank, or a Wells Fargo and keep the spread. Therefore, when you see a sign on the wall stating ABC Mortgage Co. or XYZ Funding, chances are they are a correspondent lender with a variety of warehouse lines that they are using to originate, fund, and sell off loans to major money center banks. This is an example of the type of business that BofA is walking away from and it is a big chunk of business.
A lot of people may ask "just how much money does BofA generate from correspondents, and what portion of the bank’s total revenue is it?" Point blank, loans purchased from correspondents were responsible for 47% of the bank’s total mortgage volume in the first quarter of 2011. Dollar-wise this translates into $27.4 billion. So exiting the correspondent channel is no small thing for Bank of America to walk away from. This is a unit that produces over $100 Billion in revenue. Internally, it’s devastating as well. BofA has already announced 3,500 in layoffs. An additional 1,000 people will lose their jobs due to the discontinuation of correspondent operations. So as you can very well imagine a lot of correspondent lenders are scrambling, just as mortgage brokers were scrambling last year when the wholesale channel was shut down.
A bank spokesperson has been quoted as stating that correspondent lending “no longer fits with the long-term strategy for its mortgage unit.” I don’t know how a $100 Billion revenue producer wouldn’t fit into any company’s long term strategy. BofA has had mortgage issues, but by and large, the mass majority of those issues involve loans that were a part of the Countrywide portfolio and not through traditional BofA lines of business. So as opposed to rooting out the main problem, they are shutting down a whole operation. It feels like a corporate version of throwing the baby out with the bath water.
Love it or hate it, BofA has always maintained a tradition of being a stodgy capital source with reputation for being one of the most predictably conservative lenders on the block. These movements were unpredictable and down right out of the ordinary. However, with shareholders clamoring for answers from CEO Brian Moynihan after 50% drop in stock price, the predictable is probably the last thing that we can expect from the top brass when he is sitting on the hot seat. Accordingly, if the losses continue to mount, I can’t see BofA being in the mortgage business much longer. If the bank does stay in the mortgage business, it will be a significantly scaled back operation that is only provided at the branch level by personal bankers who won’t offer any expertise, but merely take an application, plug the data into a black box, and wait for an answer while they attempt to cross sell you on checking accounts, credit cards, CDs, and IRAs. Pardon the pun, but if this what happens, there will be no “thinking outside of the box,” as people at the branch will probably shrug their shoulders when the black box says “decline” and won’t be able to offer a creative solution to a borrower’s problem.
BofA is currently in a “no-win” situation. For the sake of shareholder pacification it has to shut down a distribution channel that has consistently brought it billions of dollars in revenue for years. Accordingly, with the loss of correspondent lending, it will be forced to pull back its mortgage operations into a computerized format at the branches that won’t offer unique solutions to deals that aren’t cookie cutter transactions. When such a large player retrenches it is bound to have reverberating consequences in an industry. This is similar to Microsoft leaving the software industry. Whether you like MS or don’t, they fill a need in the software industry as BofA does ours. Now the question will be which entity will fill the void? This may call for one of the remaining big players to step up to acquire market share. It may be an opportunity to bring in private funds looking to fill their portfolios with more predictable returns. This could also provide a means whereby credit unions, insurance companies, and regional banks broaden their scope of the market and enhance their product offerings. Whatever solution eventually falls out of the bottom of this situation, BofA will be a much smaller bank, a lesser force in the mortgage business, and an even less dominant figure in the world of banking and finance.
Preston Howard is a mortgage broker and Principal of Rose City Realty, Inc. in Pasadena, CA. Specializing in various facets of real estate finance.
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$5,000 Real Estate Grant For Military Buyers

09-22-11
Anthony Razhas

$5,000 Grants For First-Time Military Buyers

Active duty personnel, veterans, retired members of the military, and employees of the U.S. Department of Defense and the Department of Homeland Security are eligible to apply for up to $5,000 in down payment and closing costs in the purchase of a first home. The national nonprofit Pentagon Federal Credit Union Foundation is offering the assistance through its Dream Makers program and says the grants can be applied to a mortgage from any financial institution. More information is available at www.pentagonfoundation.org, click on the "Dream Makers" link.

In addition to this grant, Real Estate eBroker Inc. also supports all military homebuyer's and seller's in California with up to $9,500 rebate on buying/selling a home through REeBroker.** Please see above, restrictions do apply, or you can call our office at 760.599.4661 for more information.

*Promotion is only eligible to buyers/sellers who sign a Buyer/Seller Representation Agreement after 6/1/2011 and mention this offer prior to closing escrow. *Buyer/Seller is responsible for completing the IRS W-9 form to receive rebate. *Buyer/Seller is responsible for paying taxes on the rebate. *Buyer/Seller will receive payment in the form of a rebate after the close of escrow.

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Real Estate Deal-Killers

09-22-11
Anthony Razhas

The Top 3 Real Estate Deal-Killers - and How Buyers Can Avoid Them

Once upon a time,California homebuying was a much less dramatic affair then it is today. The house hunt was fun, if suspenseful, and then there was another exciting whirlwind of inspections, closing and moving in. Today, though, as soon as buyers get the gumption to jump off the rent vs. buy fence, they find themselves on another edge - the edge of their seats, through the entire escrow process waiting to see what obstacle will emerge next, and whether their transaction will survive it.


Deals get killed all the time, and buyers can't relax until they have keys actually in hand. Here are three of the most common real estate deal-killers, and some steps buyers can take to deactivate them.

1. Appraisal too low. Some buyers incorrectly believe that the best thing that could happen to them is for the property to appraise below the agreed-upon purchase price, expecting that a low appraisal forces the seller to bring the price down. In fact, so many of today’s sellers are barely breaking even, that a low appraisal is probably the most common deal-killer around. If an appraisal comes in just a tad bit lower than the contract price, usually the seller will come down if they can, or the buyer will kick in a few extra bucks. But when it comes in 5, 10 or even 20 percent low, most sellers can't - and most buyers won't .

Low appraisals also seem like the most difficult deal-killer to avoid, as this process is entirely out of both buyer's and seller's control. But there are two things buyers can do to minimize the risk. First, check the comps - i.e., recent comparable homes that have sold in the area - before making an offer; your agent will help you do this. Then, don't make an offer bizarrely above the average range of the comparables, even if the property has multiple offers, unless you're prepared to deal with a low appraisal a couple of weeks out.

Also, consider working with a local mortgage broker who also originates loans through its own bank (vs. walking into a large bank's branch off the street); these lenders have the ability to choose from a smaller pool of appraisers that they know are qualified and knowledgeable about your area.

2. Property condition dramas. When the market melted down, lenders found themselves with a lot of decrepit homes on their hands. This explains two things: (1) why lenders are more concerned about property condition now than ever, and (2) the raggedy condition of so many of the "distressed' homes on the market. Homes that have extensive wood rot, dangerous decks or electrical systems, or peeling paint and missing systems (sinks, stoves and the like) are highly unlikely to pass muster when the appraiser walks through, even if they do qualify as being worth the purchase price. And while an individual seller might be willing to do some work, many just can't afford to; short sale and REO sellers simply refuse to make fixes, 9 times out of 10.

Prevention is the best medicine for curing this transaction ailment. If you are buying a short sale or REO property, be aware that when the selling bank says as-is, it really means as-is. Ask your mortgage broker and agent to brief you on what sort of shape your lender will require your home to be in, at minimum, and keep that standard in mind during your house hunt. Your agent can help manage your expectations about which properties will and won't likely pass muster.

3. Loan approval takes too long. Every buyer knows they must get preapproved for a mortgage before they start house hunting, but many don't know that preapproval is just the first in a long list of steps that have to happen before the loan becomes a sure thing. In fact, it's common now for buyers to get their loan preapproval many months before they end up in contract, and lots can change in the interim - further extending the time it may take for their loan approval to come in.

It's common for contracts to include a standard loan contingency period of 17 days, give or take a few. But the appraisal might take longer than that to come in, or the underwriter might have lots of questions and seemingly random nitpicks about the appraisal, or about you: they want to see your driver's license, then your marriage license, then your divorce decree, and after that, a letter from your employer agreeing that you'll be keeping your job even though you're moving an hour away. It never seems like they ask for everything at once, thus it can take longer than 17 days to obtain all the requested items, turn them in and get the underwriter to sign off on them.

Until you get that green light, it's foolhardy to remove your loan contingency, as that step renders your earnest money deposit non-refundable, under most contracts. Many a buyer is forced to either secure an extension from the seller or to let the transaction die, rather than forfeiting their deposit funds. And again, some sellers understand and will play ball, but bank sellers can be particularly resistant to loan contingency extensions, especially if there are backup offers on the table.

Best practice for buyers to minimize the chances of an overtime loan approval process killing the deal? Be ready: be ready for lots of bizarre documentation requests, be ready to provide things you've already been asked for, and be ready to do so quick-like - without pushing back. The faster you can turn around the things the underwriter wants, the better.

Also, it can be very helpful to work with a mortgage broker and agent that have worked together before and have close communications, so that your agent can stay abreast of any and all loan process glitches and keep the listing agent apprised of the legitimate reasons you may need an extension throughout the contingency period, rather than assuring them everything's speeding along then having to ask for a last-minute extension.


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Transaction Coordination Services!

09-20-11
Anthony Razhas

Greatly recommended! Get yourself a TC, this will not only save you time and energy better spent on closing more transactions, but it will help you stay organized and highly efficent. Instead of spending all your time on making sure you have all the appropriate signatures and documents, get yourself a Transaction Coordinator.

If interested in TC, of course I would suggest our services....ASK FOR ANA!


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