Lower fees for FHA – time to buy!

Will homebuilders benefit from lower FHA premiums?

Builders stocks surge on the news

House being built

Homebuilders are lauding the Federal Housing Administration’s news that it is reducing the annual mortgage insurance premiums by 50 basis point.

While the news isn’t good for private mortgage insurers who have been happily raking in market share gains at the expense of the government agency, the homebuilders are a different story, a Seeking Alpha article said.

The announcement is positive for first-time homeowners since it is projected that this reduction will translate into a $900 reduction in their annual mortgage payment.

Credit Suisse said KB Home (KBH) and D.R. Horton (DHI) most exposed to first-time buyers at approximately 50% and 40%, respectively, compared to Toll Brothers (TOL) and Meritage Homes Corporation (MTH), which see the least.

Most other builders have between 20-30% exposure, while Toll Brothers (~3%) and Meritage only see -3% and -10%, respectively.

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Is your lender being excellent?

How do borrowers define excellence?

Winning your next customer over requires innovative thinking

bright idea lightbulb

Calling the mortgage process “fun” may be a bit extreme, especially given the complexity. However, is the idea of making the mortgage process enjoyable, or at the very least painless, completely far fetched? Given the results seen in other industries, excellence is a concept that consumers are beginning to understand and relate to.

Few would argue that the commercial airline experience has been anything close to stellar during the last decade. Whether it’s long check-in lines, lost luggage or poor customer service, average fliers are finding themselves frustrated with the overall experience.

Yet one major discount airline leads the way in customer satisfaction year after year. By adding a little more legroom, treating people nicely, and giving them a screen with viewing options they control, the airline has done something remarkable. It’s given the customer, someone who is held captive throughout the flight, a small degree of control (while adding a little fun into the process).

In some ways, the airline and mortgage industries share common challenges. Once the decision is made (either boarding the plane or signing the application), the consumer is relatively helpless. But while the pilot will often manage basic expectations by communicating the route to be taken, potential weather delays, etc., few lenders have designed a process to manage their equivalent of this simple but critical step. Perhaps bankers should apply the same thinking to mortgage lending.

Why can’t the consumer have total transparency and track their loan (start to finish) through a smartphone application? Borrower surveys point to the time between application and approval as being the most stressful for borrowers. If anxiety is driven by the unknown, shouldn’t lenders take the unknown out of the equation? As it turns out, some lenders already have.

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Trending in $$$ in 2015…

Here are four of the trends and expectations that could affect you — and your wallet — in the new year.


With rents rising faster than most Americans’ paychecks, many consumers are stuck between a rock and a hard place when it comes to housing. With rent costs so high — and mortgage rates low — more millennials who have postponed homeownership in favor of renting will be buying homes in 2015, according to Zillow.

Others will be putting their pride aside and getting roommates to share the costs. This trend has been escalating for several years. Zillow analysis shows that the percentage of Americans living with someone other than a spouse or partner hit 32 percent in 2012 — up from 26 percent in 2000. It will continue to gain momentum in 2015, particularly since rents are projected to continue to grow around 3 percent this year.


A recent study by Freelancers Union and Elance-odesk shows that 53 million Americans are currently working as freelancers. That’s a whopping 34 percent of the workforce.

While for some workers this arrangement is a choice, companies are ultimately driving the trend. After all, temp workers and consultants are often cheaper because companies don’t have to pay them benefits.


Experts are predicting another good year for stocks in 2015. While it is expected to be a bumpier, more volatile ride than last year, there will be plenty of opportunities if you know where to look.

For example, some of the biggest beneficiaries of lower oil prices could be low-end retailers, which specialize in staples. A strengthening greenback favors companies that derive the bulk of their sales here at home.

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Love it or list it?

Your Best Real Estate Move: Flip or Hold in 2015?

A1D0GN House made of money Real estate and investment concept. Image shot 2006. Exact date unknown.
AlamyHome sales are projected to increase next year, which could work to the advantage of investors.

Wild fluctuations in the nation’s real estate cycle have taken investors on a roller coaster ride since the early part of this century. From overheated home prices to the housing crash to the post-recession era, investors have had to adjust and adapt their investment strategies to market conditions.

So which strategies are best for real estate investors next year?

The Big Picture for 2015

Looking at the nation’s housing and economic indicators, there is plenty of positive news to justify continued investor optimism in 2015. Home sales –- both existing and new — are projected to increase next year, which is welcome news for fix-and-flip investors.

At the 2014 Realtors Conference & Expo, Lawrence Yun, chief economist for the National Association of Realtors, predicted a rebound for existing home sales for the next two years and projected the national median existing-home price will rise at a moderate 4 percent in each of those years. On the new home front, David Crowe, chief economist for the National Association of Home Builders, said in an October webinar that multi-family housing starts were projected to hold steady in 2015.

“Multi-family housing starts have rebounded back to normal since the downturn, mostly due to the strong demand for renting,” said Yun, who also noted that renter households have increased by 4 million since 2010, while homeowner households have decreased by 1 million.

Two major concerns remain: tight lending standards, which continue to keep people who could otherwise afford to buy a home from qualifying for a loan, and interest rates, which could reach 5 percent by year-end.

Looking at the Numbers

Daren Blomquist, vice president at RealtyTrac, says he believes 2015 is going to be a better year for buy-and-hold investors than for flippers — with the caveat that real estate values vary from area to area and property to property, so investment strategies will have to adjust accordingly.

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New year’s resolution: Rehab your credit score.

5 Tips To Raise Your Credit Score in 2015

credit score chart diagram graph bar credit score rating paper document print financial bad credit good credit
Cassandra Hubbart/AOL

The new year is a time for resolutions, new beginnings and (hopefully) a higher credit score. It may be the last thing you are thinking about right now, but your credit score can affect your mortgage, your job potential and, ultimately, your life. So now is the time to start thinking about, monitoring and improving it. Make 2015 the year you improve your credit score with these five tips.

1. Check Your Current Reports & Scores

Before you try to improve your credit profile, find out where you stand. (You can get two of your credit scores free every month on Credit.com.) It’s also smart to check your credit reports from each of the three credit reporting agencies. (You can get these free once a year under federal law.) The information used to calculate your credit scores comes from these credit reports, so it is important to be sure they are accurate. If you see information that is not accurate, dispute it.

2. Reduce Your Debt

Your debt-to-credit ratio is a major factor in your credit score — the smaller the percentage, the better. It’s best to go no higher than 20% to 25%. So if your debt is higher than that, make it your goal for the new year to lower it. Look for ways to reduce your monthly spending or up your monthly income so you can put more money toward your debts. Total your debts and get a pay-down plan in place that you can comfortably follow. As your balances decrease, your score should rise.

3. Raise Your Limits

Credit agencies look at individual card limits as well as your overall level of credit. You can contact your credit card issuer about increasing your limit. Boosting your limits can reduce your debt usage ratio. It’s important to be sure you do not use the new, higher limit as an excuse to start spending more.

4. Pay on Time

Paying your monthly bills on time can help improve your credit score. If you have trouble with this, set up reminders or work with your bank to establish an automatic bill payment system. Your payment record accounts for approximately 35% of the score, so consistently paying on time can make a difference.

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Want to sell fast? Staging is key!

The secret to selling a home fast? Home staging

Real estate agents share best tips


Simply listing a home is not always enough to get prospective buyers to fall in love with it. Instead, real estate agents and sellers are turning to home staging in order to help a house feel like a home.

A feature in Entrepreneur magazine describes home staging as an interior designer “editing” and rearranging a seller’s furnishings, or bringing in better items, to help prospective buyers imagine the best possible version of the property.

“If a seller puts up pictures of a vacant home, or it looks cluttered or terrible, and you put that next to a staged home, at the end of the day the staged home will get more attention, more buyer leads and more money,” Linda Saavedra, with Showhomes franchise in Tampa, said in an interview with Entrepreneur.

An article in The New York Times explained that staging is more work that just eliminating personal family photos and the eccentric souvenir sculpture in the living room. People can easily go too far with their attempts and instead push buyers away.

“A mantra among real estate agents and home stagers is that sellers need to declutter and depersonalize their homes before putting them on the market. But overly enthusiastic sellers may take this advice too far,” said Jarrod Guy Randolph, an associate real estate broker at Town Residential in Manhattan.

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Employment Growth = Good News for Housing!

Employment Growth Hitting Housing Sweet Spot

Jann Swanson | Mortgage News Daily | Dec 30 2014 | link

It has been a long time coming but CoreLogic says the improving employment numbers are strongest among precisely the demographic the housing industry has hoped for, the age group most likely to be first time home buyers.   The country has been waiting for several years for so-called Millennials – those born roughly between the early 1980s and the early 2000s – to begin forming households and buying homes, but impeded to some extent by poor employment prospects and high debt levels they have delayed both of those steps.

CoreLogic’s 2015 Housing Outlook notes that the post crisis economic expansion, just ending its fifth year, is now seeing steady improvement in the most important of the economic fundamentals, such as consumption and capital investments.  Among them employment grew at an average of 2.0 percent year-over-year in the three months ended in November, the strongest growth since March 2006.  One subset of Millennials, those now between 25 and 29 years of age, had employment growth of 3.0 percent.  Not only have their employment prospects improved more than the population as a whole, but CoreLogic says younger households exhibit more mobility and higher marginal tendencies to consume from income, so stronger employment growth should manifest itself in higher spending.

The company sees this playing out well for housing.  Home sales, it says, will increase by 9 percent in 2015 and housing starts by 14 percent while home price growth is expected to moderate.   CoreLogic sees overall housing sales increasing to 5.8 million from 5.3 million this year while there will be 1.1 million housing starts.  While the company calls the latter jump in construction “healthy” it says it is still 23 percent below the 1.45 million starts the county has seen on average over the last 50 years.

Plummeting oil prices, down about 45 percent since June, helped economic fundamentals and will be a tailwind for growth going into next year.  CoreLogic says U.S. households spend more than $1,800 on energy-related costs annually and 22 percent of that energy consumption is due to residential real estate so it isn’t just the driving-related savings that will put more money in consumers’ pockets, the drop will also reduce energy-related expenses for residential real estate.

Interest rates, despite some ups and downs over the last 18 months, remained relatively low but home prices did not.  “It is clear that the low-rate environment has benefited home prices,” the company says, “as price-to-income and price-to-rent ratios are high. This indicates home price growth going forward will be fairly muted.”

As to all of the talk about “opening the credit box,” CoreLogic says it has been just that, talk. “Analyzing the most recent data on the three main drivers of underwriting (debt-to-income ratio, loan-to-value ratio and credit scores) reveals that purchase underwriting remains modestly tight and is not loosening yet. While there has been clarification on GSE loan put-backs and new low down payment products, the impact of both will be fairly modest because the weak originations market reflects not just a modestly tight supply of credit, but very weak demand.”

CoreLogic said two clear trends are emerging as 2015 nears.  First, those markets with the strongest sales and the highest home price appreciation are those with the strongest economies, particularly those tied to technology and energy.   This, of course, makes dropping energy prices a two-edged sword.   Of the top 10 housing markets with the greatest price appreciation four, San Francisco, San Jose, Austin, and Seattle, have high concentrations of technology industries and employment growth of 2.8 percent.   Two others, Dallas and Houston, are being driven by strong energy economies and the attendant spurt in household growth over the past few years.

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Is credit too tight right now?

Current Credit Standards Tougher Than They Need to Be

Jann Swanson | Mortgage News Daily | Dec 31 2014 | link

What is an acceptable rate of mortgage delinquency?  A CoreLogic economist is using current delinquency rates to argue that delinquencies will always be with us and that today’s underwriting standards are tougher than they need be.

Molly Boesel, a senior economist with the company says the serious delinquency rate (SDQ) in February 2010, near the height of the housing crisis, was 8.6 percent.  Recent figures from CoreLogic show 1.6 million SDQ mortgages – those 90 days or more past due or in foreclosure, a rate of 4.2 percent.

The overall SDQ rate is on the decline and loans originated in the last four years and especially in contrast with their immediate pre-crisis predecessors are among the most pristine loans made in the last 15 years.  Perhaps, she says, this indicates that credit standards have been tightened too far.

While the current SDQ rate is 4.2 percent not all origination years are contributing equally to that number.  Originations made between 2004 and 2008 accounted for about 25 percent of active mortgages at the end of September but were responsible for about 77 percent of those with serious delinquencies.  When those mortgages are eliminated the current SDQ rate drops to 2.1 percent.



Boesel also presents the mortgages by year of origination in a more graphic manner, vintage curves or default fingers which control for or remove time varying effects.  The figure below shows the SDQ rates for loans originated between 1999 and 2013 at quarterly intervals over their first 5  years (although the new loans have not aged sufficiently for full analysis.)  The data is displayed in three panels for ease of analysis.

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Feeling tropical? Now’s the time to buy on the beach!

The Market Is Heating Up in the U.S. Virgin Islands

USVI Sotheby’s International RealtyVilla Whydah, a nearly four-acre estate on St. Thomas, recently sold for $8.9 million at auction.

With cold weather brewing across most of the country, getting away to a warm spot like the U.S. Virgin Islands sure does come to mind.

Single-family home sales on the island of St. Thomas are up 25 percent year over year in number of units sold, Lee Steiner, president of USVI Sotheby’s International Realty, told AOL Real Estate. Condos on St. Thomas are up 19 percent in number of units. On St. Croix, condos are up 70 percent with single-family homes up 30 percent.

“St. John has not caught up quite yet, but is poised to experience similar recovery over the next 12 months,” Steiner said. “After bottoming out in 2013, our market is experiencing a recovery led by high-end buyers, where sales over $1 million in the last 12 months have exceeded the four previous years combined by roughly 500 percent.”

One homebuyer recently snatched up at auction what sellers called a pirate-themed property on the island of St. Thomas. Platinum Luxury Auctions, a specialized auction firm with a long track record of multi-million dollar property sales, announced recently that Villa Whydah, a four-acre property sitting on the westernmost tip of St. Thomas, sold well in excess of the auction’s $6 million reserve and set a record for residential properties on the island of St. Thomas. The company’s web site pinpoints the sales price at $8.9 million.

Villa Whydah consists of seven buildings spanning more than 15,000 interior square feet and 4,000 exterior square feet. The structures include a main residence with an in-law suite, an outdoor entertainment complex, a stone gazebo, two guest cottages, a stone tower, caretaker’s quarters and a four-car garage. There are a total of eight bedrooms, nine full bathrooms and two half baths, in addition to three outdoor showers.

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Good news at tax time for short sellers…

Short sale tax break signed into law

President Obama makes it official

white house and dollar

Homeowners who had short sales in 2014 can now breathe a giant sigh of relief, as the Mortgage Debt Forgiveness Act was signed into law by President Barack Obama.

Under the Mortgage Debt Forgiveness Act, any mortgage forgiveness achieved in a short sale is not counted as income for homeowners whom banks allowed to sell their homes for less than the amount of their mortgage.

The Act was due to expire in 2014, but was extended by recent votes in Congress.

The Mortgage Debt Forgiveness Act passed by a wide margin in the House of Representatives three weeks ago and passed 76-16 in the Senate two weeks ago.

But the Act wasn’t made official until President Obama signed it into law, which he did last week.

The extension only applies to short sales conducted in 2014. Any further extension of the short sale tax break would need to be taken into consideration by the newly elected members of Congress when the Congress begins its 2015 session in January.

According to a recent estimate from RealtyTrac, the average short sale has an estimated mortgage forgiveness of $88,456.

And according to a further data provided by RealtyTrac, there have been more than 121,700 short sales through October of this year, with a total mortgage debt forgiveness of nearly $10.8 billion.

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