Cartoon from The Niche Report Magazine

(Bloomberg) –  A new analysis shows allowing Fannie Mae and Freddie Mac to forgive a portion of a troubled borrower’s outstanding home loan may actually save the mortgage giants $1.7 billion.

That still may not be enough to convince Federal Housing Finance Agency Acting Director Edward DeMarco, who oversees Fannie and Freddie, to move forward with such a program. In a speech today at The Brookings Institution, DeMarco offered several reasons he may not allow Fannie and Freddie to proceed with so-called principal forgiveness, including that it might encourage borrowers to strategically default on their loans. “Will some percentage of borrowers who are current on their loans be encouraged to either claim a hardship or actually go delinquent to capture the benefits of principal reduction?” DeMarco asked in his speech.

It’s no secret DeMarco is not keen on the idea. He has said time and again he believes other foreclosure mitigation tools are effective and will cost the mortgage giants less.

But the new analysis chips away at that argument. It incorporates new incentives being offered by the U.S. Treasury Department to pay Fannie and Freddie as much as 63 cents for every dollar of principal they forgive. That tips the economic balance in favor of principal forgiveness, versus principal forbearance (in which a portion of the outstanding balance is deferred until the homeowner can make good on the total amount).

Still, DeMarco appears unconvinced. He says fewer than 1 million households would be eligible and that savings from the forgiveness could be offset by the cost of implementing the program.

“All these cost factors would have to be carefully considered in coming to a decision on whether to employ principal forgiveness or not,” he said.

Ironically, he agrees that forgiving a portion of a borrower’s outstanding loan balance makes a person less likely to default. But he is putting the bottom lines of Fannie and Freddie ahead of troubled borrowers and the broader housing market, which is at risk of a foreclosure death spiral.

“Borrowers receiving principal forgiveness default less often than those who receive principal forbearance,” DeMarco said today. However, he continues, “the losses associated with the principal forgiveness write-offs more than offset the savings from lower re-default rates.”

Read full story from Bloomberg

The report by Freddie Mac looked at data collected during the first quarter of 2012. The percentage of fixed-rate mortgage refinances closed in the United States during the period was 95 percent. From that figure, 68 percent of borrowers who were paying for a hybrid ARM loan switched to the safety of a traditional fixed-rate product. Hybrid and option ARMs were very popular during the housing bonanza of the early 21st century, and they were a staple of subprime mortgage lending. Since the meltdown of the credit markets in 2008, borrowers have mostly stayed away from those ARMs, instead opting for the benchmark 30-year fixed rate mortgage, and in some cases choosing 15-year terms.

Thirty-one percent of the refinance transactions that closed in the first three months of the year involved term reduction from 30 percent down to 20, and sometimes 15, percent. Sixty-six percent of borrowers took advantage of better rates, but stayed with the same term.

The attractive low rates averaged 3.92 Annual Percentage Rates (APRs) for the benchmark 30-year fixed-rate mortgage. In the case of 15-year home loans, the average APR was 3.19 percent, a historical low. This low APR has prompted a higher percentage of applicants to look into shorter-term home loans. There is an additional incentive to borrowers who choose a shorter term under the Home Affordable Refinance Program (HARP) to rescue their homes from foreclosure: Some transaction fees are also waived.

Another trend observed in the report was that although recent economic reports in the United States have been positive, the credit crisis in the Eurozone has investors worried. As a result, fixed rates have been kept at some of their lowest levels. The Federal Reserve Bank also has Operation Twist in place to keep Treasury bond yields low enough to stimulate mortgage lending and help the housing market.

The above-mentioned data comes from the Primary Mortgage Market Survey, a weekly assessment of rates, points, and home lending product trends observed in the United States. The data collected is based on conventional and conforming mortgages that enjoy first-lien position and loan-to-value (LTV) ratio of 80 percent. This survey has been conducted by Freddie Mac since 1971, and it looks at home loans originated by major banks, mortgage brokerages and credit unions.

To ask loan officers to figure out every regulatory issue on their own—whether it involves loan compensation rules, changes to disclosure forms, HARP or anything else—is asking too much. The simple fact is we’re doing loan officers and the future of our industry a disservice by not putting more effort into training, especially when the best minds in the business are having trouble figuring out the new rules themselves. In my opinion, the responsibility of giving loan officers a practical framework for understanding what to do, how to do it and why begins with leadership.  

Give them the ‘why’

My company conducts a weekly company-wide phone call in which new initiatives or changes in procedures are addressed that relate to compliance. The real message behind this information is not “what,” but why.  In a rapidly changing business environment, it is essential that everyone—and especially new recruits—understands the reason behind the changes in our business. When we all understand, we are all more likely to “buy in” to the change in practice.

This same strategy is useful when working with consumers. We’ve all faced frustrated borrowers in my line of work, folks who cannot understand why they are being asked to jump through extra hoops in order to buy the condo they just fell in love with. But when I explain the impact that a risky or incomplete mortgage can have on others, such as the condominium association, the angry borrower begins to calm down.

Whether it involves loan officer compensation, Dodd-Frank, RESPA or new GFE/TILA and HUD-1 disclosures, teaching loan officers the “whys” behind these changes is a big responsibility. I always wanted to understand compliance issues. I’ve had colleagues that would say, “To heck with that, I’m just doing sales.” But I wanted to know.

So I read – a lot. I spend at least two hours a day absorbing as much as I can about my industry. Frankly, I would rather do this myself so my sellers can concentrate on selling. By learning what I can and slowly passing on only the most relevant “chunks” of information, I am   able to take a lot of worry off the shoulders of my team.

For example, recently enacted loan officer compensation rules were a very long, drawn out and difficult issue for lenders to get their heads around. From January to April, I read and spoke to everyone I could on this subject, but only passed on the most relevant and important material to my team, which made it easier to digest. It also had another benefit. When one of my loan officers had questions about a particular regulation, I could convey the “why” behind it.

Reconciling contradictory info

It would be great if our industry got to the point where everyone had a two-year degree in mortgage finance. As it stands, loan officers in my state take a 20-hour pre-licensing class that certainly teaches them an awful lot about rules and regulations. But part of learning how to be a loan officer is in the “doing.” It’s simply impossible to put into context all the information we learn in class until we are actually working our business and seeing the examples unfold before our eyes.

Of course, with so much happening in our industry, continuing education courses are more important than ever. But suppose someone attends a class and comes back with information that conflicts with what we are trying to do. What happens then? Complicating matters is the fact that there are usually dozens of possible approaches to different regulation—and just as many gray areas, too.

For example, when it comes to self-employed borrowers, certain deductions are allowed to be added back in to increase the borrower’s net income.  However, there is a variety of interpretations regarding what is allowable.  Some will tell you that mileage can be added back in, and in fact, several of my loan officers were told this at a training they recently attended.  Upon confirming this information with our underwriters, it was determined this in fact was not acceptable to most banks.

On-the-job training, in practice

The issue of training and education is made more complex by one of the biggest challenges our industry faces today: How do we bring young people into the industry? It’s no secret that many of us are “aging out” of the business, as the average mortgage professional is in his or her 50’s.

It might behoove us all to train loan officers much like stock brokerage houses of yore used to. It wasn’t unusual for a new college grad to join Morgan Stanley and spend eight weeks in the classroom before he or she was even given a desk and a pencil. But in our business, the real education starts when loan officers begin writing mortgage applications.

This is why mentoring becomes such a crucial piece of the loan officer’s training. It takes a long time to get comfortable in the sales process. And with so much emphasis up front on regulatory compliance, loan officers are often afraid to do something as simple as picking up the phone. Mentors, however, help ease the new loan officer into the process. At my office, I will pay for a loan officer to have an assistant if the loan officer can turn the assistant into a loan officer in a year’s time. This way, I have experienced loan officers helping new people cut their teeth and learning by example.

Another decision I have made is to not allow loan officers to work out of their homes. Of course, under certain circumstances they can work at home for a day—just not all of the time. Back in the day, many mortgage shops encouraged an at-home workforce because it lowered their overhead. Yet when my loan officers are at home, I lose touch with them. In order to lead by example, they need to see my example in practice, every day.

It sounds silly to me, but some companies do not have sales meetings – but a sales meeting is a perfect opportunity to talk about compliance and to allow your team to share strategy. By the same token, participating on the educational board of your local mortgage association is equally valuable, as well as working with real estate professionals to help them understand why the process has changed so dramatically.

Another educational resource that is largely—and perhaps, oddly—untapped is the regulatory agencies themselves. There is nothing stopping us from picking up the phone and calling regulators when we have questions about a recent rule or pending regulation. Even if you still don’t get the answer you want or need, at the very least it shows those who are responsible for enforcing rules that you care.

Some good news

The complexity of new regulations is a huge issue. It is extremely difficult for lenders and branches to figure out what to do. However, because there has been so much contraction in the industry, the lenders that are still in business are far more willing to share advice with each other. There’s a general sense that there is enough market for everybody.

Technology is also proving to be a very good aid for educating and training loan officers. My company frequently utilizes online educational programs offered by our investors as well as those operated by mortgage insurance, title companies and other educational organizations that provide online courses.

When it comes to ensuring regulatory compliance in the actual mortgage process, we put rules into our origination software so that the loans don’t get processed unless they meet certain criteria. While this in itself does not seem like an effort to educate the loan officer, the loan officer is still responsible for knowing why a transaction was halted and faces explaining the problem to the particular borrower.

 Five years after the beginning of the mortgage meltdown, I’m encouraged by the growing emphasis on compliance. At last year’s Massachusetts Mortgage Bankers Association conference, we had a panel on how to lead a compliant, thriving sales culture. Personally, I found it compelling that the word “compliant” was on the front end of that idea.

In this environment, we should all be concerned whether loan officers are receiving adequate training. While every loan officer has a unique identifier on every loan application, in the end, it is usually the loan officer’s company that faces the music when errors occur. For this reason, it is especially incumbent upon those of us who are in positions of leadership to explain the “new rules” to current and incoming loan officers – they are the ones who most need to know.

Amy Tierce is a regional vice president for Fairway Independent Mortgage.  She is based in Needham, Massachusetts, where she oversees the New England market. A former board member  of the Massachusetts Mortgage Bankers Association, Amy has more than 20 years of experience in the mortgage industry. She can be reached at amyt@fairwaymc.com. 

Fannie Mae reported a significant profit during the first quarter: $2.7 billion. The figure alone may be impressive, but what is more encouraging for the mortgage giant is that it did not have to ask the federal government for financial assistance from the United Stated Treasury. In the case of Freddie Mac, the GSE did not post a profit, but the amount of funds it needed from the government this time around was negligible in comparison to previous requests.

The federal government has come under fire from critics who think that both Fannie and Freddie should have been dismantled instead of bailed out. While both GSEs have not turned a profit in many years, and in fact have consumed a considerable amount of Treasury funds, they are vital components of the American economic recovery. The majority of mortgage loans extended to borrowers in the United States come from guarantees made by the troubled GSEs. Without Fannie and Freddie, there would be no interest from either lenders or investors in the mortgage market. Still, President Barack Obama has hinted at major reform of the GSEs.

Instead of reform, the editors at the influential financial media site Bloomberg suggest that Fannie and Freddie should be let down easy and a new independent agency should take their places. The proposal would call for the new agency to provide financial security to private mortgage lending enterprises and enable the American dream of home ownership, similar to what Fannie and Freddie do today, with one significant caveat: The new agency would only insure mortgage-backed securities, rather than actually guaranteeing home loans.

The above-mentioned proposal would encourage private lenders to provide the necessary liquidity to the American residential mortgage market, rather than depending on Fannie and Freddie to fuel that liquidity based on guarantees and investments. The current status of the mortgage GSEs ties them down to delivering sound financial results to investors and taxpayers. The new agency would not have to answer to either, just like the Federal Deposit Insurance Corporation (FDIC) guarantees monetary deposits in U.S. banks without having to worry about unhappy shareholders.

The concerns about the negative do not point to worst-case scenarios; instead, the concerns are mostly related to long-term economic effects and the possibility of some homeowners taking unfair advantage of the principal reduction process, a situation that can be compared to strategic defaults whereby borrowers stop paying for mortgages they do not consider to be financially sound.

The Moral Hazard

One of the problems associated with the mortgage principal reductions is that some borrowers who might be underwater on their home loans, but have not fallen into default, will not qualify for a write down offer from their lenders. This could be considered as unfair to homeowners who have not considered strategic default, even in the throes of the global financial crisis that essentially eroded their home values in relation to their mortgages.

Analysts who believe that the mortgage principal reduction program created a moral hazard mention the probability of homeowners willfully falling behind on their payments just to qualify. The fact that this principal forgiveness gives an advantage to delinquent borrowers has not been entirely lost on the mortgage lenders involved, but since these banks essentially agreed to something they would not have done on their own, it is unlikely that they will extend the mortgage reduction benefit to borrowers who are current on their payments –even if the appraised values of their homes have taken a dive in the last few years.

The moral hazard concept comes from the difficulty that financial institutions would endure if they had to place their borrowers into categories; for example, homeowners who ended up in default due to hardship or just because market forces turned against them.

The Cost to American Taxpayers

Edward DeMarco, acting director of the Federal House Finance Agency (FHFA), has voiced his opposition to allowing government-sponsored mortgage giants Fannie Mae and Freddie Mac participate in the principal forgiveness program. His rationale has been that since Fannie and Freddie are essentially owned by taxpayers at this time, reducing the values of their mortgage portfolios boils down to demanding more assistance from taxpayers in order to keep them afloat.

DeMarco’s reasoning for shutting out thousands of Americans who could benefit from mortgage principal reductions has been widely criticized, but the losses he mentions could extend beyond taxpayers. Pension fund managers whose portfolios include investments in mortgage securities could also see some losses; something that in the end will affect their clients who invest in retirement accounts. This would be a long-term effect that could grow to very negative proportions if the overall economy does not improve.

News Facts

• 30-year fixed-rate mortgage (FRM) averaged 3.79 percent with an average 0.7 point for the week ending May 17, 2012, down from last week when it averaged 3.83 percent. Last year at this time, the 30-year FRM averaged 4.61 percent. 
• 15-year FRM this week averaged 3.04 percent with an average 0.7 point, down from last week when it averaged 3.05 percent. A year ago at this time, the 15-year FRM averaged 3.80 percent. 
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.83 percent this week, with an average 0.6 point, up from last week when it averaged 2.81 percent. A year ago, the 5-year ARM averaged 3.48 percent.
• 1-year Treasury-indexed ARM averaged 2.78 percent this week with an average 0.5 point, up from last week when it averaged 2.73 percent. At this time last year, the 1-year ARM averaged 3.15 percent.  

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for Regional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

• “The European debt crisis overshadowed improving economic indicators for the U.S. and allowed Treasury bond yields and fixed mortgage rates to ease for another week.  For instance, industrial production rose 1.1 percent in April — the largest gain since December 2010 — and consumer sentiment in May rose to its highest reading since January 2008, according to the University of Michigan.

There was also good news in the home construction industry.  Housing starts rose to an annualized rate of 717,000 homes in April, well above the market consensus forecast, and construction on one-family homes increased to its strongest pace in three months.  Moreover, homebuilder confidence in May reached its highest reading since January 2008 according to the NAHB/Wells Fargo Housing Market Index.”

Get the latest information from Freddie Mac’s Office of the Chief Economist on Twitter:@FreddieMac

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four homebuyers and is one of the largest sources of financing for multifamily housing. www.FreddieMac.com.

SOURCE  Freddie Mac

(NAHB) — May 17, 2012 – Nationwide housing affordability hit a new record high for a second consecutive quarter in the first three months of this year, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released today. Yet tight lending conditions continue to pose a major obstacle to many prospective home buyers.

The latest HOI data reveal that 77.5 percent of all new and existing homes that were sold in this year’s first quarter were affordable to families earning the national median income of $65,000.  This beats the previous record set in the final quarter of 2011, when 75.9 percent of homes sold were affordable to median-income earners.

“Homes in this year’s first quarter were more affordable than they have been at any time in more than 20 years, yet many potential sales are not happening because of overly tight lending conditions that are keeping hardworking families from obtaining a suitable mortgage,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Without this significant hurdle, the housing and economic recovery could be proceeding at a much stronger pace.”

The most affordable major housing market in this year’s first quarter was Indianapolis-Carmel, Ind., where 95.8 percent of homes sold during the period were affordable to households earning the area’s median family income of $66,900.

Also ranking among the  most affordable major housing markets in respective order were Dayton, Ohio; Lakeland-Winter Haven, Fla.; Modesto, Calif.; Grand Rapids-Wyoming, Mich.; and Buffalo-Niagara Falls, N.Y.; the latter two of which tied for fifth place.

Among smaller housing markets, Cumberland, Md.-W.Va. topped the affordability chart for the first time in this year’s first quarter. There, 99 percent of homes sold during the first quarter were affordable to families earning the area’s median income of $53,000. Other smaller housing markets at the top of the index include Fairbanks, Alaska; Wheeling, W.Va.; Kokomo, Ind.; and Davenport-Moline-Rock Island, Iowa-Ill., respectively.

Read full article from NAHB

Relative yields on top-ranked debt tied to property loans have climbed 14 basis points in May to 200 basis points more than Treasuries, the highest level in more than a month, according to a Barclays Plc index. Bonds that are perceived to be of lower quality were pressured the most, Credit Suisse Group AG analysts said in a report today.

The Federal Reserve Bank of New York and UBS AG sold $9 billion in bonds tied to skyscrapers, shopping malls and hotels, in two auctions, starting with the district bank’s record sale on April 26. Demand for the debt exceeded expectations, even while the deluge of lower-rated securities has reduced values, according to Credit Suisse.

“Macro concerns may be the initial impetus for the move over the past several days,” said the New York-based analysts led by Roger Lehman. “Renewed concerns over European sovereign risk, and specifically the future of Greece staying in the euro zone, have been a factor as has JP Morgan’s announced losses from derivative trading,” the analysts wrote. “Pressure has been exaggerated by the new supply.”

Investors “appear” to have started to sell bonds from the so-called Max deals, two collateralized debt obligations assumed by the Fed in the rescue of American International Group Inc. and held in its Maiden III LLC portfolio, according to Credit Suisse.

Read full story from Bloomberg

CHICAGO (May 17, 2012)

“Applications in Litigation Valuation: A Pragmatist’s Guide,” published this week by the Appraisal Institute, is intended to help appraisers who are new to litigation valuation or have experience, but want to expand their practice.

“Litigation valuation is undeniably an interesting and rewarding discipline of real property appraisal,” Appraisal Institute President Sara W. Stephens, MAI, wrote in the book’s foreword. “Most people dread the possibility of being called to appear in court, but many appraisers seek out assignments that will put them on the front lines of disputes between condemning authorities and property owners, spouses in divorce proceedings, or other parties involved in contentious legal situations.”

“Applications in Litigation Valuation: A Pragmatist’s Guide,” compiled by authors Jeffrey A. Johnson, MAI, and Stephen J. Matonis, MAI, MRICS, provides a compilation of case studies that allows professionals with an assignment in litigation (such as a lawyer, an experienced appraiser or possibly a person new to the field of litigation valuation) to develop a basic understanding of the real estate valuation principles and techniques for various litigation assignments by seeing how other appraisers have handled these scenarios. Actual appraisal litigation assignments covered in the book include eminent domain and condemnation, title issues, environmental contamination and taxation.

The book also presents an overview of the fundamentals of litigation appraisal, including a discussion of the appraiser’s engagement, execution of the assignment and expert testimony.

“Applications in Litigation Valuation: A Pragmatist’s Guide” (ISBN: 978-1-935328-27-8) is a 330-page soft cover book. It is available for $75 ($60 for Appraisal Institute members). Click here or call 888-756-4624 to order.

AUSTIN, Texas, May 16, 2012 –

Regional Contacts:

West:
Greg Fullmer, Regional Production Manager of the Western Region, at (303) 809-8210 or gfullmer@360mtg.com.

Southeast and Mid-Atlantic:
Brad Smith, Regional Production Manager of the Southeast and Mid-Atlantic Region, at (813) 397-3979 or bsmith@360mtg.com.

National Accounts:
Scott Stavinoha, Inside Sales Manager (866) 418-2997 or sstavinoha@360mtg.com.

BIRMINGHAM, Mich., May 17, 2012

 “We’re excited to offer ELITE to our valued broker community in order to exceed the expectations of their elite borrowers,” said Mat Ishbia, president of UWM. “These types of borrowers deserve preferred conventional rates and pricing, and since every UWM program is accompanied by our world-class customer service, ELITE offers the best of both worlds. Our brokers’ first-rate borrowers shouldn’t settle for anything less. Brokers are confident in knowing that UWM can accommodate their every lending need while providing the easiest loan process available.”

Recently, UWM launched a number of new products, which include: ‘The Big and Easy,’ a true jumbo loan on up to $2.5 Million; the HARP 2.0 changes; the implementation of HARP 2.0 with up to 175% LTV/Unlimited CLTV with DU®; USDA loans; and now ELITE. 

All of UWM’s products and pricing are available within its custom broker portal, EASE (Easiest Application System Ever), which offers a number of Web-based tools for originators. EASE is integrated with EQ (Easy Qualifier), UWM’s proprietary eligibility and pricing engine that instantly returns accurate decisions on up to twelve programs at once with the click of a mouse.

Loans that qualify for UWM’s ELITE program include:

• A 760+ FICO
• A 70 LTV or less
• $250k plus loan amount
• Acceptance of property inspection waivers
• Continued honoring of Fannie’s DU® findings 

Interested parties can learn more about UWM’s ELITE program by contacting the company at 800-981-8898 or by visiting www.uwm.com.    

     A total of 7,675 new and resale homes sold in the nine-county Bay Area last month. That was virtually unchanged from 7,694 the prior month, and up 13.1 percent from 6,789 in April a year ago.

     Last month’s sales were the strongest since 2006, when 9,129 homes sold. Since 1988, when DataQuick’s statistics start, April sales have varied from 6,310 in 2008 to 14,430 in 2004. The average is 9,088.

     “It appears that the market is taking a step in the direction of normalization, but only a step. We’re still watching technical indicators more than top-line sales counts and median prices. The mortgage market is critical, as is market mix and the receding importance of foreclosure resales,” said John Walsh, DataQuick president.

     “The uptick in the median sale price was to be expected. It gets tugged up as foreclosure resales ebb and activity picks up in the move-up markets, especially in higher-cost coastal areas. We’re seeing the exact same trends with the median on the upside that we saw when it was coming down, just in reverse,” he said.

     The median price paid for all new and resale houses and condos sold in the Bay Area last month was $390,000. That was up 8.9 percent from $358,000 in March, and up 8.3 percent from $360,000 in April 2011. The year-over-year increase was the first since September 2010, when the $395,000 median was up 8.2 percent from $365,000 a year prior.

     The low point of the current real estate cycle was $290,000 in March 2009. The peak was $665,000 in June/July 2007. Around half of the median’s peak-to-trough drop was the result of a decline in home values, while the other half reflected a shift in the sales mix.

     Last month distressed property sales – the combination of foreclosure resales and “short sales” – made up about 40 percent of the resale market. That was down from about 44 percent the month before and 45 percent a year ago.

     Foreclosure resales – homes that had been foreclosed on in the prior 12 months – accounted for 21.7 percent of resales in April, the lowest since 18.8 percent in January 2008. It was down from a revised 25.5 percent in March, and down from 27.8 percent a year ago. Foreclosure resales peaked at 52.0 percent in February 2009. The monthly average for foreclosure resales over the past 17 years is about 10 percent.

     Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.1 percent of Bay Area resales last month. That was down from an estimated 18.9 percent the prior month and up from 17.4 percent a year earlier.

     Last month 37.6 percent of Bay Area sales were for $500,000 or more, up from a revised 33.4 percent in March and up from 36.1 percent in April 2011. The low for the current cycle was January 2009, when just 22.7 percent of sales crossed the $500,000 threshold. Over the past 10 years, a monthly average of 47.7 percent of homes sold for $500,000-plus.

     Government-insured FHA home purchase loans, a popular choice among first-time buyers, accounted for 18.4 percent of all Bay Area home purchase mortgages last month, down from 20.9 percent the month before and 25.0 percent a year earlier. Last month’s FHA share was the lowest since August 2008, when it was 14.7 percent. 

     One indicator of mortgage availability improved in April, when 14.7 percent of the Bay Area’s home purchase loans were adjustable-rate mortgages (ARMs). That was up from a revised 11.6 percent in March, and down from 15.4 percent in April last year. Since 2000, ARMs have accounted for 50.2 percent of all purchase loans. ARMs hit a low of 3.0 percent of loans in January 2009.

     Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 35.5 percent of last month’s purchase lending, up from a revised 30.7 percent in March, and up from 32.2 percent a year ago. Last month’s percentage was the highest since July 2010, when 36.4 percent of all purchase loans were jumbos. Jumbo usage dropped to 17.1 percent in January 2009. Before the credit crunch struck in August 2007, jumbos accounted for nearly 60 percent of the Bay Area purchase loan market.

     Last month absentee buyers – mostly investors – purchased 23.7 percent of all Bay Area homes sold, down from 24.2 percent the prior month and up from 21.1 percent a year ago. Absentee buyers paid a median $270,500 last month, up from $250,000 the month before and $257,000 a year ago.

     Buyers who appear to have paid all cash – meaning no evidence of a corresponding purchase loan was found in the public record – accounted for 28.8 percent of sales in April. That was down from 29.4 percent in March, and up from 27.4 percent a year ago. The monthly average going back to 1988 is 12.4 percent. Cash buyers paid a median $270,000 in April, up from $250,000 the prior month and $262,000 a year earlier.

     San Diego-based DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. Because of late data availability, sales were estimated in Alameda and San Mateo counties.

     The typical monthly mortgage payment that Bay Area buyers committed themselves to paying last month was $1,473, up from $1,359 in March, and down from $1,518 a year ago. Adjusted for inflation, last month’s payment was 47.4 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 61.1 percent below the current cycle’s peak in July 2007.

     Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but below peak levels reached over the last few years. Financing with multiple mortgages is low, down payment sizes are stable, DataQuick reported.

(chart)

All Homes           #Sold    #Sold     Pct.    $Median      Median      Pct.

                                Apr-11   Apr-12     Chng     Apr-11      Apr-12      Chng

Alameda                1,345    1,476     9.7%   $338,000    $335,000     -0.9%

Contra Costa         1,399    1,546    10.5%   $258,500    $288,750     11.7%

Marin                     241      292    21.2%   $660,000    $618,000     -6.4%

Napa                       122      120    -1.6%   $317,500    $317,500      0.0%

Santa Clara            1,645    1,862    13.2%   $470,000    $513,500      9.3%

San Francisco         422      509    20.6%   $655,000    $700,000      6.9%

San Mateo             584      783    34.1%   $550,000    $550,000      0.0%

Solano                568      557    -1.9%   $185,000    $175,000     -5.4%

Sonoma                463      530    14.5%   $295,000    $304,500      3.2%

Bay Area            6,789    7,675    13.1%   $360,000    $390,000      8.3%

Source: DataQuick, DQNews.com

TULSA, Okla., May 17, 2012 – Gateway Mortgage Group, a privately held mortgage company providing conventional, FHA and VA loans through 50 retail branches nationwide, has acquired its largest branch and entered the Omaha market with its newest location at 12020 Shamrock Plaza, Omaha, Neb.  

Mortgage industry veteran, Kent Geschwender will lead the newly acquired branch and its staff of eight seasoned loan officers representing more than 120 combined years of lending experience. Geschwender brings more than 25 years experience to his role and most recently was a branch manager with MetLife Home Loans. He has also held the position of branch manager and mortgage origination with First Horizon Home Loans. Originally established in 1989, the Omaha location has a strong local footprint and was previously a part of the MetLife retail branch network. It will continue to serve the greater Omaha area.

Geschwender and his staff chose to join Gateway due to the lender’s hands-on and service-oriented approach to working with borrowers.

    “Our business was on the verge of a large transition and we were being pursued by several major lenders across the country. We knew it was important to align ourselves with a lender that shared the same core values we deliver to our borrowers every day,” said Geschwender. “By joining Gateway, we are able to continue to process, underwrite, close and service our loans locally. Gateway’s business principles were a natural fit for us and allow us to enhance our borrowers’ experience through the life of their loan.”

    “Gateway continues to seek opportunities to expand its footprint and gain top-tier talent such as Kent and his team. Our business model attracts some of the best originators in the country and we are committed to delivering a platform that supports them in every aspect of their business,” said Kevin Stitt, president of Gateway Mortgage Group. “We are excited about our entry into the Omaha market and we are confident that Kent and his staff are ideal ambassadors for Gateway and will be successful in their efforts.”

(TheNicheReport) — If Justin Timberlake can “bring sexy back,” then I’m “BRINGING SALES BACK!” It’s time that we return to the roots of what we really are – salespeople. That’s right, I said it, salespeople. Not Real Estate Agents, Real Estate Consultants, Account Supervisors, or Business Development Specialists. No matter what we call ourselves, no matter what our title says, at the end of the day we are salespeople. And it’s time that we bring the pride and professionalism back to the lost and ever-so-beautiful art of selling. 

Okay, now that I got that off my chest, let’s talk about the first challenge in getting back to “Sales Professionalism.” If I asked you for the first words that come to mind when I say “Car Salesperson,” what would you say? If you are like several thousand other people I have asked, you probably thought of words like “sleazy, pushy, dishonest,” and you might have even said “con man.” Ouch! 

The reality is that what you said about car salespeople is probably a pretty good reflection of how you subconsciously feel about salespeople in general. Sadly, you are not alone. Research shows that most people feel the same way. This fundamental belief means that no matter how great a case one can make for becoming a “sales professional,” no matter how much money someone would offer, nothing will make you feel okay with being pushy, sleazy or dishonest. 

So step one is to change our beliefs – our basic feelings – about being in sales. We need to realize again that we are here to solve our clients’ problems, to make our clients’ lives easier and to make a good living doing what we are passionate about. And we can only achieve all those goals if we sell, which means we have to close deals. Though faced with decades of negative stigma, I am confident we can make the necessary changes. 

True Sales Professionals

We’ve all experienced those rare but unforgettable moments of complete and utter surrender to the skills, technique and enthusiasm of a true “Sales Professional.”  We entered the scenario totally convinced that we were not going to buy. We even had the conversation in the car on the way over, making a pledge with our spouses that no matter how good it sounded, we weren’t buying! Then about half-way through the presentation you began to rethink your previous assumptions. You looked over at your spouse and shared a look that said “maybe there is something to this.”  By the end of presentation, you did not change your mind, but you made a new decision based on new information that made you want to buy what they were selling.

It was masterful: the timing of his questions, the tone of voice, the amazing ability to listen to what you were really asking for. It was like poetry in motion. It seemed like that salesperson could read your mind – and wow – even understood your pain! We were helpless and totally at the mercy of the Sales Professional’s defined sales process and perfect sequence, and the most fascinating part of it all, we loved every moment of it! The process was effortless and enjoyable, and we even spent more money than we had originally planned. 

Why?  Because the level of professionalism made us feel that our needs were safe and we could trust this person. We felt comfortable enough to be confident that this process would solve our problem and add value to our lives. You see, we love working with true professionals. We love buying from them because they make our lives easier. Even better, we love referring them because they make us look good. We tell their stories at dinner and we go out of our way to ensure that our friends and family uses them. 

So here are a couple of questions to consider. How many sales people do you know that are that good? My guess is that it’s a low number. Why is that?  I believe that the answer lies in the fundamental problem with the sales industry: there are few systems to create true “Sales Professionals.” There are often very few barriers to entry in the field, little real sales training and often poor management systems that fail to hold people accountable. The madness has got to stop!

Defining the problem

As a consultant, over the last decade I have consistently seen the following gaps with many salespeople. I encourage you to use this article as a springboard for discussion with your business partners to delve into ways to improve your business models.

1. Using marketing as a cop-out to selling
   Marketing and selling are both absolutely necessary to build a successful business, but very different. Struggling salespeople tend to prefer marketing because of the simple fact that it reduces the amount of rejection they need to face. Marketing, in its simplest explanation, attracts prospects to call us, while selling forces us to find people to call on and to risk rejection on a daily basis.
2. Lack of defined job descriptions
   This problem is worse in some industries than it is in others, but is widespread enough to warrant a look.  For example, ask 100 Real Estate Agents what their job is, and I would bet that all 100 would say something like “to sell homes.” Or they’ll give the textbook answer, “to help my clients.” The challenge with seeing the job as “selling homes” is that getting a client into or out of a home is a “result,” but not a “job.”
   
3. Confusing activity with productivity (results)
   This is a result of bullet point #2. If people don’t know what their job truly is, then any opportunity can seem like a good way to spend time. They live their work life like a feather in the wind, going in whatever direction the winds of “opportunity” decide to blow.  It’s easy to look “busy” while being broke. Perhaps this statement appears blunt, but the faster we can get real, the sooner we can solve the problem.
   
4. No Structured, Sequenced Sales System
   Not having a predefined, step-by-step process to take prospects from initial meetings to close, salespeople can find themselves eating up not only their time, but even worse, their clients’ time.  TheSalesBoard.com research showed that “80% of salespeople do not understand what the primary purpose of their sales call is.”  Their research goes on to say that by having a clear “commitment objective” you can cut your sales cycle by 25%. That equates to three extra months of sales time!
   
5. No “canned” presentation of value
   I have seen many people go into sales calls without a prepared presentation, resulting in saying something different at every sales call. You cannot depend on your ability to talk to save you from this one. Every successful salesperson you know has perfected their scripting and presentation. And the true “Sales Professional” can deliver his or her presentation on a napkin just as effectively as using a PowerPoint. The ultimate goal of having a “canned” presentation is to make it sound and feel natural.
   
6. NO TRAINING in the Fundamentals of Selling
   This was the first thing I noticed years ago. In many industries, either because of a very favorable market or because of a great marketing department, there was no great need for sales skills. Business was so abundant that anyone could make a great income. This was particularly true in the mortgage industry during the early 2000s.  I was challenged about this once by an originator who said, “Well I made $250,000 in the ‘Refi’ boom, so I must be a sales professional.”  My response was that a lot of people made $250,000 then. The sales professionals, however, made $700,000-$1,000,000 during that time.
7. Ashamed to be identified as salespeople
   This is at the core of the problem. People who are ashamed to be salespeople don’t engage in the habits of successful salespeople such as closing, driving commitment, countering objections, prospecting, etc. The Resurgence of the Sales Professional is about bringing true skill and pride back to the profession of sales.

Our industry, unfortunately, is full of “order takers” NOT “Sales Professionals.” A good friend and true sales professional, Scott Hardy, defines an “order taker” as someone who “facilitates a transaction that would have happened anyway.”  If the transaction would have happened anyway, then wouldn’t a computer suffice to get the job done? Isn’t that what vending machines are for?  The world has changed and technology will continue to become more advanced, which is why becoming a “Sales Professional” is becoming more and more crucial to long-term success.

What is a “Sales Professional?” 

 
My years of selling and studying successful sales professionals have resulted in the creation of the 7 Pillars of a Sales Professional™.  Professional sales people build a solid foundation in each one of these pillars and grow in each one on a daily basis. They are as follows.

1. The Fundamentals of Selling
   The fundamentals of selling consist of a basic, foundational sales skill set. This includes features and benefits, hot buttons, closing, silence after asking for the sale, the law of averages, the 80/20 rule, the six money-making activities, open-ended questions, etc.  It is virtually impossible to build a career as a sales professional without this foundation.  Returning to the fundamentals is the secret to getting out of a selling slump.
2. The Art of Selling
   Anyone can draw a picture of an apple, but an artist draws an apple so beautifully that you might pay to put it on your wall. Learning the fundamentals is a great start and will make a dramatic impact on your sales career and pocket book. Now add learning how to deliver those skills in the same way an artist makes a painting, and see your results soar. The art of selling consists of the proper use of voice inflection, body language, presentation skills, timing of questions, use of silence, pace of speech, etc. Research shows that tone of voice and body language make up 93% of the impact we make on other people. Essentially, it’s NOT what you say; it’s HOW you say it that matters.
3. The Psychology of Selling
   All sales people face the same psychological challenges of facing rejection, insecurity, fear, call reluctance and procrastination. These are not logical problems but rather problems of emotional self-regulation. Pure will power can sometimes be sufficient, but when we fail to overcome these challenges it may be due to taking a purely logical approach (better time management) to solve emotional problems (lack of impulse control). The psychology of selling consists of coping strategies and tools to deal with the realities of being a salesperson, and creates the proper mindset and winning beliefs of a “Sales Professional.” This is a complex topic, which is why it is so difficult to master. 
    
4. The Science of Selling
   This pillar is exciting because it offers the opportunity to take a giant leap forward in generating results if applied correctly. By using key scientific methodologies understanding the role the human brain plays in making buying decisions, the Sales Professional can experience vast improvements in closing ratios and speed the trust-building process with clients and referral partners.  Plus, the results can be achieved on purpose every time by following the scientific process/methodology, versus crossing fingers and hoping that the gift of gab or instinct will get you by.
    
5. A Defined Sales Process
   Sales professionals know exactly what their job is on a daily basis. They know what their objective is on every sales call and are comfortable driving the sales process forward because they are crystal clear on what step is next. Their clients find it easy to do business with them because they reduce the number of decisions the client needs to make, allowing them to focus on their business. The foundation of a defined sales process is made up of what I call the Six Money Making Activities: Prospecting, Setting Appointments, Presenting Value, Closing, After Care/Follow-up, and Referrals.
    
6. Advanced Selling Strategies
   Advanced Selling Strategies consist of creating leverage and compression, preemptive selling to eliminate all objections before they come up, and consultative selling. In essence, here you begin moving from $25/hr. activity to $2,500/hr. activity. 
    
7. A LEAN Sales Accountability System
   All of the first six pillars are, fundamentally, subject matter and skills that can be learned and honed by committed sales professionals. However, the key to bringing them all together and turning them into more income is a lean system that ensures that all the right things happen, at the right time, every time, with minimal wasted effort and maximum benefit both to the customer and to the sales professional.  These principles are ones that have been applied for years and with great success in the manufacturing world, but have yet to really break through to the service world.  Essentially, this would apply a “Toyota-like” approach to your business, leading to tremendous efficiency and quality gains. 

Such a system should keep track of every one of your contacts as well as your current lead pipeline, and then drive each lead through the Defined Sales Process (Pillar 5) that you created to take advantage of best practices. Contact management and CRM systems can be helpful here, but a lean workflow automation solution is the way to get it done right. Such a system brings accountability to how you are handling the leads in your pipeline and whether you are moving them through your Defined Sales Process at a pace and conversion ratio that ensures that you are consistently making money.

With competition high and unskilled salespeople lowering their prices on a daily basis, Sales Professionals need to streamline their business, focus on highest payoff activities and still deliver more value than competitors. By defining your sales process and accountability system, you then can focus on creating the life and business you’ve always dreamed of.

A Foundation of Integrity

I purposefully waited until the end to talk about the importance of integrity in the world of selling.  Bottom line, we are fighting against the negative stigma because of the previous lack of integrity in our profession. Stanley Kubrick is quoted as saying, “If you can talk brilliantly about a problem, it can create the consoling illusion that it has been mastered.”  

Given all the general press, business publications, self-help books, research data and market analysis over the last decade, it is possible we have mastered the talk about integrity, but progress on the practical, applied “how” of integrity continues to confound even the best business leaders, managers and employees. There is much to be done to move the integrity rhetoric into a common business practice.

In conclusion I would like to call on you all to join me in bringing pride, integrity and professionalism back to the world of selling. Take pride in being a salesperson. Continue to educate yourself in your chosen profession. Go back to why you sell what you sell, and be willing to act on the care that you feel for your clients. Care enough to be unreasonable when they don’t understand the value of what you are offering and ask again for the sale. Your customers need the value you are offering.

I hope that the fire of pride and passion has been re-ignited inside of you. The world needs salespeople of integrity to sell the right things to the right people at the right time. I look forward to seeing you all out there in the trenches as we lead the Resurgence of the Sales Professional!  Now go make some sales calls and make us proud!

Rene Rodriguez

The 7 Pillars of a Sales Professional is a trademark of Rene F. Rodriguez. Rene is Chief Executive Officer of Volentum, (www.volentum.com) a Management Consulting Firm that specializes in sales training, employee engagement, professional influence & change management, with significant expertise in applying brain research to improving results. He has a trusted advisor to Leadership and Business Teams Bank of America, Coca-Cola, Liz Claiborne, Daimler Chrysler, dozens of mortgage and real estate companies and many other major corporations. As a highly sought after keynote speaker, Rene’s mission is to lead the Resurgence of the Sales Professional and to ignite the voluntary momentum within organizations to reach their goals. For more information on improving your sales process or how to become a more influential leader, please visit www.Volentum.com, www.FollowRene.us or call 612-310-4010.

     The median price paid for a Southland home last month was $290,000, up 3.6 percent from $280,000 in both March this year as well as April 2011, according to San Diego-based DataQuick.

     Last month’s median was the highest since the median was also $290,000 in December 2010. The year-over-year gain in the April median was also the first since December 2010, when the median rose a scant 0.3 percent.

     Although price pressures have no doubt formed in some areas, the year-over-year increase in the April median price also reflects two other trends: the decline in the share of sales that are foreclosed properties, which tend to sell at a discount and be concentrated in lower-cost areas, and a shift toward a greater portion of sales this April in the higher-cost coastal markets. In April last year, for example, sales in San Diego, Orange, Los Angeles and Ventura counties represented 68.0 percent of the region’s sales, compared with 71.5 percent last month.

      April’s $290,000 Southland median was 17.4 percent above the low point for the current real estate cycle – $247,000 in April 2009 – and 42.6 percent below the $505,000 peak in mid 2007. The peak-to-trough drop was due to a decline in home values as well as a shift in sales toward lower-cost homes, especially inland foreclosures.

     “The housing market continued its painfully slow crawl back toward normalcy last month. You can see it in the fading role of foreclosures, the uptick in median prices here and there, and the higher levels of sales in coastal counties,” said John Walsh, DataQuick president.

     “Of course, there are still a lot of things that make this market abnormal,” he said. “Investor and cash buying are still unusually robust. The jumbo loan market has yet to recover, and the use of plain-vanilla adjustable-rate mortgages, or ‘ARMs,’ remains far below normal. Lots of homeowners are ‘underwater,’ and the market remains awash in uncertainty over the economy, home prices, and the way lenders will handle the many thousands of homeowners who are behind on their mortgage payments.” 

     Last month a total of 19,284 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was down 3.4 percent from 19,953 in March, and up 5.1 percent from 18,344 in April 2011.

     The change in sales between March and April has varied widely over the years. On average, sales have risen about 1 percent between those two months since 1988, when DataQuick’s statistics begin. On a year-over-year basis, Southland sales have increased for four consecutive months, and for eight out of the last nine months. However, last month’s sales were still 21.0 percent below the average for all the months of April since 1988.

     The Southland housing market saw a modest uptick in mid-priced sales last month. But contrary to the general trend in recent years, sales of lower-cost homes fell. The latter is partly the result of the dwindling number of foreclosures re-selling and the overall decline in the inventory of homes for sale.

     The number of homes that sold for less than $200,000 in April fell 4.7 percent from a year earlier, while the number that sold for between $200,000 and $400,000 rose 5.5 percent. Sales between $300,000 and $800,000 – a range that would include many move-up buyers – increased 3.5 percent year-over-year. The number of sales above $800,000 fell 3.0 percent from a year ago.

     Distressed sales – the combination of foreclosure resales and “short” sales – made up about 47 percent of last month’s resale market. That was the lowest level since the figure was 45.1 percent in April 2008.

     Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 28.6 percent of the resale market last month, down from 31.5 percent in March and down from 33.8 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were also 28.6 percent of the resale market in January 2008. In the current cycle, the figure hit a high of 56.7 percent in February 2009.

     Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.4 percent of Southland resales last month. That compares with 18.9 percent the month before and 17.3 percent a year earlier. 

     Credit remained tight last month but the influx of more traditional home buyers this spring has brought slightly higher levels of adjustable-rate financing and “jumbo” loans.

     Adjustable-rate mortgages (ARMs) accounted for 7.1 percent of last month’s Southland home purchase loans, up from 6.4 percent the prior month and down from 8.5 percent a year earlier. Since 2000, a monthly average of about 36 percent of purchase loans were ARMs.

     Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 18.9 percent of last month’s purchase lending – the highest since December 2007. April’s figure was up from 16.4 percent the prior month and 17.4 percent a year ago. In the months leading up to the credit crisis that hit in August 2007, jumbos made up about 40 percent of the market.

     Investor activity held near a record-high level in April, and the share of buyers paying cash remained at double the historical average. 

     Absentee buyers – mostly investors and some second-home purchasers – bought 27.8 percent of the Southland homes sold last month. That was down from 28.2 percent the prior month and up from 25.4 percent a year earlier. The record was 29.9 percent in February this year. Last month’s absentee buyers paid a median $220,000, up from $212,000 the month before and $210,000 a year earlier. Absentee buying was greatest in the Inland Empire, where it represented 35.8 percent of all homes sold last month, up from 35.6 percent the month before and 33.1 percent a year ago. Since 2000, the Southland’s absentee buyers have purchased a monthly average of about 17 percent of all homes sold.

     Cash purchasers accounted for 31.5 percent of April home sales, down from 32.4 percent the month before and roughly even with 31.8 percent a year earlier. Cash buyers paid a median $225,000 last month, up from $215,000 the prior month and $210,000 a year ago. Since 2000, the monthly average for Southland homes purchased with cash is about 15 percent. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.

     Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 29.3 percent of all purchase mortgages in April. Last month’s FHA level, which was the lowest for any month since August 2008, compared with 30.0 percent the month before and 33.5 percent a year earlier.

     In April, 20.5 percent of all Southland home sales were for $500,000 or more, up from 19.6 percent the month before and the same as a year earlier. Last month’s level was the highest since July 2011, when it was 20.7 percent. The low point for $500,000-plus sales was in January 2009, when only 13.8 percent of sales were above that threshold. Over the past decade, a monthly average of about 28 percent of homes sold for $500,000 or more.

     DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

     The typical monthly mortgage payment Southland buyers committed themselves to paying was $1,096 last month, compared with $1,063 in March. Last month’s figure was down from $1,181 for the same month last year. Adjusted for inflation, last month’s typical payment was 53.6 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 62.0 percent below the current cycle’s peak in July 2007.    

     Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but is much lower than peak levels reached in recent years. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

(chart)

     All Homes                           #Sold            #Sold         Pct.              Median        $Median         Pct.

The share of home loans at least 30 days late dropped to 7.4 percent from 7.58 percent in the previous three months, according to a report today from the Mortgage Bankers Association. The rate peaked at 10.1 percent in the first quarter of 2010 and was last lower in the third quarter of 2008, when it was 6.99 percent.

“Delinquencies are clearly continuing to improve,”Michael Fratantoni, the group’s vice president of research and economics, said in a statement. “Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future.”

Falling delinquencies may help limit foreclosures and solidify a recovery in the housing market as low interest ratescombine with decreased prices to stimulate demand. Housing affordability reached a new high in the first quarter and sales of previously owned homes rose 5.3 percent from a year earlier, data from the National Association of Realtors show.

Read full article from Bloomberg

(CNBC) — Housing starts

While KB Homes and Toll Brothers are reporting sales increases, this does not erase the fundamental problem with the real estate market today; there are too many people wanting to sell and not enough buyers. In some neighborhoods in the United States, every other house is for sale and sitting stagnant with no takers. But this is the obvious sign that the real estate market is troubled; there are deeper problems below the surface.

What is more troubling is in every block in neighborhoods across the United States, there are huge numbers of potential sellers that would sell their house if they could get the price they believe their house is worth. This huge reserve of sellers creates a supply waiting to flood the market when any sign of recovery in real estate capital values returns.

Additionally, banks continue to hold huge inventories of foreclosed properties waiting for a rebound in the market before placing these properties into the real estate market. This phantom supply of houses is another headwind for the real estate market. In my discussions with bankers, they are mortified that they have now become wholesalers of properties and fear this will be the case for many years.

Read more from CNBC

(TheNicheReport) — In the very first article regarding the Mortgage Acts & Practices rules, I mentioned that this new advertising rule now applies to everyone involved in selling and marketing one- to four-family, owner-occupied homes.  In addition to Realtors® and mortgage companies, it also includes ad agencies, lead-generation companies and telemarketers. 

The Mortgage Acts & Practices rules have been in effect since August 19, 2011—so it’s been around for a while, but not many people know about it…YET!

A large part of the rule explains “definitions” and what they mean.  And the biggie here is the Fed’s definition of “commercial communications”— or the various ways real estate agents and loan officers communicate with potential home buyers. 

Why would you care?  Because the rule states that if you do place an ad that includes mortgage terms, you must keep a written or electronic version of it for 24 months, in case you are ever audited. 

Here’s what is meant by the term “Commercial Communications”: 

• Any written or oral statement
• Illustrations such as charts and graphs
• English or any other language
• Labels
• Packages
• Package inserts
• Radio
• Television
• Cable TV
• Brochures
• Newspapers
• Magazines
• Pamphlets
• Leaflets
• Circulars
• Mailers
• Book inserts
• Free-standing inserts
• Letters
• Catalogues
• Billboards
• Posters
• Public transit cards
• Point-of-purchase displays
• Film
• PowerPoint slides
• Audio transmitted over the telephone
• Telemarketing scripts
• On-hold scripts
• Upsell scripts
• Training materials provided to telemarketing firms
• Infomercials
• Internet
• Cellular phones/networks
• Web pages
• Email
• Direct mail
• In-person sales presentation
• …anything else considered “commercial communication”

To further clarify record keeping,

• You must keep copies of all advertising if “materially different.” 
  • If the same/similar ad runs in different areas, only one copy is required, but also a list of places where ad placed
  • Description of mortgage products offered to consumers
    • Including terms, conditions and any “unique
      names” given to the mortgage loan
    • Details of affiliated products, i.e., life/disability insurance 
      • If a home warranty is REQUIRED as part of the home purchase, it can be interpreted that this may also apply.  

Just a heads up—the two federal agencies assigned the task of enforcing these rules are the Consumer Finance Protection Bureau and Federal Trade Commission.

Here’s the info if you’d like to read more about it (or you need help falling asleep): Federal Register, FTC 16 CRF Part 321

Next month we will outline the 19 “Prohibited Practices.” 

Correction to the February issue article called Advertising Rules (Reg Z) for Mortgage for Realtors/Builders Part 1: the disclosure rules apply if real estate agent co-advertises with a lender.  However, check with your state’s regulators because some states require Reg Z disclosure—even if you are not advertising in conjunction with a mortgage company. The Mortgage Acts & Practice rules in this article covers unfair and deceptive practices and plugs the loop holes that are not covered by Reg Z.

Written and contributed by Karen Deis. President of Foundation Marketing, Inc. which specializes in training real estate agents and loan originators on consumer direct-marketing strategies. You may email Karen with comments or questions to this column at karen@karendeis.com

SEATTLE, May 16, 2012 /PRNewswire/ — Zillow, Inc. (NASDAQ: Z), the leading real estate information marketplace, today launched the Zillow® Partnership Platform, developed to help Zillow, multiple listing services and brokers work together to display accurate, complete and timely listing information.

The Zillow Partnership Platform outlines Zillow’s commitment to work with its real estate industry partners to reduce the costs and time associated with listings management; and provide the best source of listing data to agents, home owners and home shoppers.

Under the Zillow Partnership Platform, Zillow’s pledges include:

• Update      active listings and remove stale information as frequently as the MLS or      broker allows.
• Always      show the listing broker, listing agent and the listing source.
• Never      re-syndicate, redistribute or sub-license listings without permission.
• Never      reuse listing data entrusted to one Zillow business to support another      Zillow business. 
• Allow MLSs      and brokers to choose Zillow’s listings data source.
• Honor all      intellectual property rights.

“Zillow is committed to partnering with MLSs and brokers to get reliable and timely information to its more than 32 million unique users each month,” said Bob Bemis, vice president of industry relations at Zillow. “We have a common goal to provide accurate listings for the benefit of agents and consumers.”

Starting today, the Zillow Partnership Platform applies to all renewal and future MLS and broker contracts. Each partner will have a dedicated Zillow account executive to address concerns and quickly solve problems. To learn more about the platform, email partners@zillow.com or call 206-757-4250.

PLEASANTON, CA – May 16, 2012 – Ellie Mae^® (NYSE MKT: ELLI), a leading provider of enterprise level, on-demand automated solutions for the residential mortgage industry, today released its Origination Insight Report for April 2012.  The report draws its data and insights from a robust sampling of the significant volume of loan applications—more than 20% of all originations in the U.S.—that flow through Ellie Mae’s Encompass360^® mortgage management software and Ellie Mae Network™.

MONTHLY ORIGINATION OVERVIEW FOR APRIL 2012

PROFILES OF CLOSED AND DENIED LOANS FOR APRIL 2012

More information and analysis of closed and denied loans, by loan purpose and investor, is available in the full report at http://www.elliemae.com/aboutus/about_reports.asp.

To get a meaningful view of lender “pull-through”, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the January applications) to calculate a closing rate for April.  Ellie Mae found that 48.1% of all applications closed in April compared to 46.9% in March (see full report).  

“As we move into the spring and summer buying season, there was a significant pick up in the percentage of purchase loans: 44% in April up from 39% in March,” said Jonathan Corr, chief operating officer of Ellie Mae.  “This is the highest level of purchase loans activity in the last nine months.

“In April, the average loan-to-value (LTV) for closed loans hit 80%, the highest we have seen since we started tracking in August 2011,” Corr added.  “The increase was driven by an easing of LTVs on conventional refinances (the average LTV was 69% in April compared with 65% in March) and what we believe to be the first surge in Home Affordable Refinance Program (HARP) 2.0 activity from correspondent lenders.

“Last month closed refinances with LTVs of 95%-plus, nearly doubled to 7.1% compared to 3.6% in March. This has been slowly increasing since the HARP 2.0 announcement in October 2011, but correspondent lenders have only recently been able to run these loans through Desktop Underwriter and Loan Prospector.”

“Recently, the Wall Street Journal and other media outlets have been reporting that the nation’s largest retail lenders are now quoting long timelines for refinances—in some cases as long as 60 to 90 days,” said Corr.  “While the average refinance going through our platform took five days longer in April than in March, it still only took 47 days. So, it appears that small and mid-sized lenders and community banks on our platform are providing faster decisions than the retail channels of some mega-lenders.”  

About Ellie Mae Origination Insight Report

In 2011, the total volume of mortgages that ran through Ellie Mae’s Encompass360 mortgage management software was approximately two million loan applications, or 20% of all U.S. mortgage originations. The Origination Insight Report mines its application data from a robust sampling of approximately 33% of all mortgage applications that were initiated on the Encompass origination platform.  Given the size of this sample and Ellie Mae’s market share, the Company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.

The Origination Insight Report focuses on loans that closed or were denied in a specific month and compares their characteristics to similar loans that closed or were denied in the prior three-month and six-month periods.  The closing rate is calculated on a 90-day cycle, rather than a monthly basis, because most loan applications typically take one and a half months to two months from application to closing. Loans that do not close could still be active applications, withdrawn by consumer, or denied for incompleteness or non-qualification.

The Origination Insight Report reports aggregated, anonymized data and does not disclose client-specific or proprietary information.

News organizations have the right to re-use this data, provided that Ellie Mae, Inc. is credited as the source.

About Ellie Mae

Ellie Mae, Inc. is a leading provider of on-demand automation solutions for the mortgage industry.   The Company offers an end-to-end solution, delivered using a Software-as-a-Service model that serves as the core operating system for mortgage originators and spans customer relationship management, loan origination, and business management.  The Company also hosts the Ellie Mae Network™ that allows mortgage professionals to conduct electronic business transactions with the lenders and settlement service providers they work with, to process and fund loans.  The company’s offerings include the Encompass^®, Encompass360^® and DataTrac^® mortgage management software systems. 

Under the plan, Bank of America (BAC, Fortune 500) will offer homeowners so-called relocation payments of between $2,500 and $30,000 if they sell their home in a short sale. In short sale deals, the sale price of the home is less than what the seller owes the bank.

The bank first tested the payments in a pilot program in Florida last fall. Under that initiative, Bank of America paid up to

Bank of America

$20,000 to borrowers who sold their homes in short sales.

“This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home,” said Bob Hora, an executive for the bank.

Chase (JPM, Fortune 500) started a similar initiative in late 2010 that pays as much as $35,000 to short sellers. Wells Fargo (WFC, Fortune 500) has also paid five-figure incentives to short sellers or to owners who turned over their deeds to the bank.

BofA said it has completed 200,000 short sales over the past two years. These sales are generally more cost effective for banks than foreclosures. By avoiding foreclosure, the lenders get distressed properties back from delinquent borrowers more quickly, which helps them to avoid property tax payments, maintenance expenses and legal fees that can build up for months, even years, as foreclosures work through the system.

Read full article from CNN Money