Last Week In The News

On Monday, March 2, the Commerce Department reported that consumer spending rose more than expected in January after declining for a record six consecutive months. Consumer spending rose 0.6%, better than the 0.4% gain that economists expected. Consumer spending fell 1% in December 2008, after a 0.8% decline in November 2008.

Also on Monday, the Commerce Department reported total construction spending fell 3.3% in January, more than the 1.5% decline economists had expected. It was the fourth consecutive monthly decrease. Construction spending fell 1.4% in December.

On Tuesday, the National Association of Realtors reported that its pending home sales index, a forward-looking indicator based on signed contracts, fell 7.7% to 80.4 in January.

The Institute for Supply Management reported the monthly index of manufacturing activity rose in February to 35.8 from January’s 35.6. Economists had expected a reading of 33.8. Figures below 50 indicate contraction, making February the 13th straight monthly decline in manufacturing.

On Thursday, the Labor Department said that productivity fell at an annual rate of 0.4% in the fourth quarter of 2008. That’s down from the 1.3% increase in the third quarter and 3.6% growth rate in the second quarter.

The Commerce Department reported factory orders declined by 1.9% in January. It was a record sixth straight drop but much less steep than the revised upward 4.9% in December and the revised upward 6.5% in November.

The personal savings rate rose to 5% in January, a 14-year high. But that was bad news for U.S. auto makers. At Ford sales fell 48.2% in February. Chrysler saw a 44% drop in sales in the month of February. And GM reported vehicle sales decreased 52.9% in February.
Upcoming on the economic calendar are reports on wholesale trade on March 10 and retail sales on March 12.

Click here to visit my website and apply on line: www.dstolz.myprospectmortgage.com

What is happening to Fannie and Freddie?

Major Points
Fannie and Freddie have been placed in conservatorship. (Federal government has taken 79.9 percent of common stock and all dividends in return for buying $1 billion of preferred shares.)

Treasury Department says both are open for business with no major changes in operations.

Top Fannie/Freddie executives have been replaced.

Fannie/Freddie can grow their guaranteed mortgage book with no limits and grow their retained portfolios with limits. Ultimately, the government plans to shrink their portfolios (10% per year starting in 2010).

The federal government will provide capital to keep Fannie/Freddie’s net worth positive (up to $100 billion). In return, the Treasury will receive new senior preferred stock and warrants on the GSEs’ common stock.

The federal government will begin buying Fannie/Freddie mortgage-backed securities (MBS) on the open market.

Treasury Department will create a Secured Lending Credit Facility, a liquidity backstop for GSEs.

Initial Reactions

Rates drop half a point!

World markets respond positively to news: stocks up on Monday, September 8, 2008.

Federal Reserve Chairman Ben Bernanke: “These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets.”

Investor Warren Buffett: “Secretary Paulson has made exactly the right decision for the country. He is minimizing the problem of moral hazard and maximizing the benefits for the housing market and for the smooth functioning of financial markets.”

Anticipated Results

Increased confidence in financial markets.

Rates to possibly stabilize, due to reassurance given by government intervention.
Loan term changes possible (FICO, LTV).

More loan workouts possible due to increased government pressure on lenders to create solutions that prevent foreclosures.

If you have any questions about the Fannie Mae and Freddie Mac takeover, please call or email me at Darryl.Stolz@prospectmtg.com!

Click here to visit my website and apply online!

Contributor: Darryl Stolz - Prospect Mortgage

You Have A Choice

Do you have an escrow in process with a bank owned property that your buyers did not have the choice of the title and escrow company?



I have conversations everyday with agents that are in that position. Problems such as lack of communication, delays in title reports, demands not ordered for homeowners associations and overall lack of service are common issues. The volume these offices are dealing with is overwhelming and it shows. I have even had a few agents tell me the escrow officers are sending the signing package directly to them to coordinate the signing. I'm sure you as an agent want to avoid these problems when representing a buyer.



Did you know your buyer has the choice no matter who pays for the title and escrow fees?



Here's the exact verbiage from the Department of Insurance:



"The choice of which title insurer to use belongs to you. Federal law, the Real Estate Settlement Procedures Act (RESPA) of 1974 (Public Law 93-533), prohibits the seller from requiring you to purchase title insurance from any particular company."



The next time you write an offer on a bank owned property be assertive with your right to select the title and escrow company. In the best interest of your buyers choose Old Republic Title, Glendale where you will receive top service, competitive rates and a competent closing.



I understand it is difficult to change the industry practices so if you do have an escrow on a bank owned property here's a few tips:



* Make sure your buyer is receiving the enhanced CLTA title policy for extra coverage.

* Check the demands on utilities and homeowners associations to insure proper perorations.

* Have Old Republic Title, Glendale act as the signing service to insure your buyers understand what they are signing. Mobile notaries can only notarize the documents not answer the question your buyers may have.

California Home Sale Price Medians By City For June 2008

Here is the latest and greatest on home sale activity for the entire state of California including comparisons from June of 2007. This is a great snapshot of how things are holding price wise and the amount of inventory that's actually moving.

Click Here To Get The Report

It Pays To Use A Reputable National Title Company

New Crew Acquires Historic Queen Mary Cruise Ship

The Los Angeles County office of Old Republic Title Company closed the $43,000,000 sale of the historic Queen Mary cruise ship to a real estate development group known as Save the Queen, LLC. The Queen Mary is moored in Southern California's famous Long Beach Harbor and is owned by the City of Long Beach, along with certain contiguous properties totaling approximately 75 acres. The Queen Mary is subject to a long-term leasehold and had been under the jurisdiction of the United States Bankruptcy Court, pursuant to a Chapter 11 proceeding for more than a year. By virtue of the bankruptcy court's competitive bidding process and its court order, Save the Queen, LLC became the successful bidder. Thus, the course was set for The Queen Mary to "sail away" with its new owners when the escrow was closed by the very capable commercial team at Old Republic.

The nature of such a monumental transaction involved a complex set of circumstances, sophisticated financing and unexpected delays along the way. Not only did Old Republic perform the escrow and traditional title services, it also issued UCC policies as part of the closing. The recipe for success: a cooperative professional team effort by all involved, positive attitudes in the face of seemingly impossible demands, and several 36 hour days. The positive "we can do this" environment was the essential hallmark of this multi-tiered transaction closing within the strict mandates of the Bankruptcy Court.

Save the Queen, LLC will give The Queen Mary a $6 million face lift to bring her back to her former glory and begin a new chapter to the Los Angeles Old Republic Commercial Team for a job well done!

Housing Market Key Indicator Alert

www.brokeragentpro.com


Fannie & Freddie on Rocks
Fears of a meltdown in the financial system have sent shockwaves across the markets in the past several days. Financials are still reeling from the effects of the meltdown in the mortgage markets. These issues have now brought into question the stability of the two large government-sponsored enterprises, Fannie Mae and Freddie Mac, which back or own nearly half of all outstanding national residential mortgage debt. The collapse of the two would be near catastrophic but is also highly unlikely. The real issue is if they have enough capital to ride out the current storm or will the Federal Reserve need to intervene in order to keep the two afloat.

While the Fed played a key role in the JPM acquisition of Bear Stearns, the question is whether they should OR can continue to bail out these faltering financial institutions. In the case of Fannie and Freddie, it’s reasonable to assume the federal government will not allow them to fail, but the ramifications in terms of regulation and fiscal burden for taxpayers could be significant.

Pending existing home sales figures released by the National Association of Realtors continued to show weaker conditions in the housing market. With the current distress in the financial markets, heightened inflationary pressures and the weakening economy, we can expect to see more downward pressure on housing in the near-term. After plunging over $9/barrel over a two-day period earlier in the week, crude prices rebounded on Friday to trade at new all-time intraday highs of over $147/barrel due to geopolitical concerns in Brazil and Iran. The markets seemed poised for a rough second half of the year as rising food and energy costs, stumbling housing and financial markets, and geopolitical concerns surround the upcoming Presidential election.

The Economy
The economy continued to shed jobs in June as non-farm payrolls have no declined in all six months so far this year. There was a seasonally-adjusted 62,000 jobs lost in June while payrolls have dropped by 438,000 since the beginning of the year. Non-seasonally adjusted total non-farm employment in June was 167,000 lower than in June 2007. Currently, non-seasonally adjusted total non-farm employment shows a figure of 138,624,000, a loss of 0.12% from over June 2007. The unemployment rate remained unchanged from the previous month at 5.5%.

Final estimates for first quarter gross domestic product were revised slightly higher to 1.0% from the preliminary figure of 0.9%.

First quarter growth was revised higher with each estimate during the first three months of the year. Many had expected the economy to contract during the first quarter due to the credit crunch and the continued troubles in the financial and housing markets. Slight positive revisions to both consumer and government spending along with increased exports helped to improve economic expansion during the quarter.

Housing Market
National average mortgage rates increased slightly to 6.37% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on July 10th. Rates have now posted weekly increases in six out of the past seven weeks. In the week ending July 4th, the MBA’s seasonally-adjusted Purchase Index increased to 365.8 from 342.8 in the previous week. This is the second straight week that purchase applications have increased while reaching their highest levels in a month. The latest figure reflects a 6.71 percent increase from last week but a 19.41 percent drop from the same period last year.

New and existing home sales moved in opposite directions again in May but it was the existing home market that showed improvement while new home sales faltered. New home sales declined in May after posting its first monthly gain since October 2007 last month. Sales fell 2.5% in May to a seasonally-adjusted 512,000 homes, down from a revised April figure of 525,000. At the current sales pace, there are 10.9 months of new homes supply on the market. New home inventory declined to 450,000 which is the lowest it has been since May 2005. In May, median new home prices fell back to their lowest levels since March to $231,000 after posting a strong rebound in the previous month. Lower prices helped to increase the new home affordability ratio to 48.8% in May.

Annualized sales of total existing homes in May increased for the first time since February, rising 2.0% from April levels to 4,990,000 units. Sales of existing homes are still down 15.9% from the 5.93 million units in May 2007. Median existing home prices in May increased for the third straight month to $208,600 from a revised $201,200 in April. This is the highest median existing home prices have been since November 2007. The number of existing homes for sale declined 1.4% to 4.485 million units in May. At the current sales pace, there are 10.8 months of existing homes supply on the market. Existing home affordability declined for the third straight month due to increases in both mortgage rates and existing home prices in May.

Credit 101

The subject of credit and what is included on a consumer’s credit report can be a source of much debate, confusion and sometimes frustration. Outlined below are some of the more important facts relating to credit to gain better insight into a person’s credit report and history.

What is included in a credit report?

First and foremost the credit report will contain specific account information that is associated with the consumer, meaning an account that the individual has opened, cosigned, authorized or filed jointly with a spouse or relative. This information, commonly know as trade-lines, includes the date opened, original account balance, current balance, credit limit, monthly payment, and payment history. Additional things that may be included within a trade-line are account numbers (often times incomplete or scrambled for security) and contact information for the creditors.
In addition to creditor trade-lines, a report can include:

• Public records – Tax liens (state or county court records), judgments,
federal district bankruptcies

• Identification information – Current name, Social Security number, full
name, address, and possibly date of birth and employers past and present.

In addition, the report will show variations of name, social and address
based upon individual bureau’s creditor reporting and inquiries

• Inquiries – Individuals or companies that have “inquired” into an
individual’s credit history and obtained a copy of a credit report

• Statements -- Text that describes disputed information or possible
reported fraud. Statements are listed following a no-resolution dispute
between a borrower and creditor

• Additional Information – Many reports will also include fraud
statements from fraud detection products and/or OFAC (Office of Foreign
Assets Control) which searches a national terrorist data base
Active and “good standing” credit may last on a consumer’s credit report for an indefinite amount of time while the majority of derogatory or negative information remains for seven years. Following is a basic guideline for how long a trade-line will remain on the credit report:

• Late payment accounts/delinquencies – 7 years from the initial date of
missed payment

• Charge-Offs – 7 years from the initial date of missed payment regardless
of whether or not the account has since been paid. “Paid charge-off” will
be reflected if paid

• Collections – 7 years from the initial date of missed payment regardless of
whether or not the account has since been paid. “Paid collection” will be
reflected if paid

• Closed accounts – Accounts in good standing will remain for 10 years
while derogatory accounts will be removed after 7 years from the date of
closure. This applies to accounts that were closed by either the consumer
or creditor

• Bankruptcies – Chapter 13 remains for 7 years from the filing date.
Chapters 7, 11, and 12 remain for 10 years from the filing date. Accounts
included in bankruptcy will remain for 7 years from the date reported in
bankruptcy

• Tax liens – 15 years from the date of filing. If lien is paid it will remain
for 7 years from the date of payment

• Judgments – 7 years from date of filing regardless of payment status

• Child support judgments – 7 years from date of filing regardless of
payment status

• Lost credit card – 2 years from date reported lost as long as there are no
delinquencies. In the case of delinquent accounts, 7 years from the date of
delinquency

• Inquiries – The majority of inquiries will remain and be factored into the
overall credit history for 2 years, even though many credit reporting
companies will only display 3-6 months worth of inquiries

An individual is responsible for any account opened in his or her name, accounts that
have been cosigned by the individual, any joint accounts, and potentially any account that has been guaranteed by the individual, even if it is a business account. In the case of a divorce, a divorce decree does not impact any account that was contracted during the marriage. BOTH individuals are responsible for the account even if one person has been deemed responsible by decree. Only the creditor can change the status of an account. It is recommended that following a divorce, creditors be contacted immediately to change account status.

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