Calculating Net Operating Income - 01/28/10 04:39 PM
The viability of commercial real estate properties is evaluated by looking at their net operating income (NOI).  The NOI is determine by  subtracting the operating expenses from the gross income to determine the net annual cash flow.  To calculate the NOI one does not deduct any mortgage payments.  For example if a property's gross rental income is $500,000. and its insurance, property taxes and expenses are $75,000., the NOI would be $425,000.  If there were $100,000.  a year in mortgage payments the positive annual cash flow would be $325,000.
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January 28th Mortgage Market Wrap-up - 01/28/10 04:27 PM
Mortgage backed securities (MBS) closed at 100.81 up 6 basis points today remaining caught betweeen the 200 day and 100 and 50 day moving averages.  The three Treasury auctions went well this week.  Traders breathed a sigh of relief that there would be no more auctiions through next week.  As I have discussed, the huge supply of treasuries and MBS bonds out there scares investors.  Bonds had been flirting with dipping below the 200 day moving average earlier in the day but the end of the week's last auction allowed them to move into the positive for the day.
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HUD Policy a Boon to Paper Manufacturers - 01/27/10 05:20 PM
For some reason the federal government must have a disdain for the environment.  In preparation for a class this morning on the new 2010 RESPA requirements, I discovered that there is a much more agregious assualt on our timber resources than the HUD 1 going from two pages to three and the Good Faith Estimate going from one page to three.  On page three of HUD's new Settlement Cost Booklet there is a sentence that reads, "..RESPA requires lenders and mortgage brokers to give you this booklet within three days of applying for a mortgage loan."  That booklet my friends is … (0 comments)

January 27th Mortgage Market Wrap-up - 01/27/10 05:11 PM
MOrtgage backed securities (MBS) closed down 19 basis points today and are still wedged in between support offered by the 200 day moving average and the double resistance at the 100 and 50 day moving averages.  MBS bonds were trading up this morning but turned downward when the Fed released its statement after this month's meeting.  Because the Fed did not fulfill traders' dreams of an extension of the MBS purchase program there was a slight selloff after 2:15.
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The Dark Side of the Loss Mitigation Spectrum - 01/26/10 04:58 PM
Balancing Mondays blog about the bright side of the loss mitigagtion spectrum is the dark side.  The first alternative to a short sale is foreclosure defense.  Although it may sound promising the odds of mounting a successful defense are miniscule.  Next is Chaper 7 Bankruptcy.  This certainly takes away the pain of owing your high monthly payments but it also takes away your house and any vestige of a credit rating you might have had.  Alternatively chapter 13 bankruptcy allows you to keep your house by allowing a restructuring of your debt but if you you have little or no income … (0 comments)

January 26th Mortgage Market Wrap-up - 01/26/10 04:48 PM
Mortgage backed securities (MBS) closed up 12 basis points today at 100.94 just 5 basis points below the 100 day moving average.  Although strong auction results at today's Treasury auction should have catapulted MBS bonds higher, there were more reasons to keep them in check.  The combination of the ever increasing supply of fixed income products and a strong Consumer Confidence reading once again kept bonds from breaking through the formidable double level of resistance above.
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This Week's Potential Market Movers - 01/25/10 04:12 PM
What are the economic reports that could move markets this week?  On Wednesday at 2 PM the Fed Market Committee will publish its policy as to whether they will continue their "accommodative" policy with interest rates.  The language contained in their statement is picked over carefully and any nuance of change can move markets.  For the remainder of the week the other high impact reports will be the Chain Deflator, the Employment Cost Index and the Chicago PMI.
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January 25th Mortgage Market Wrap-up - 01/25/10 04:03 PM
Mortgage backed securities (MBS) closed down 12 basis points today at 100.81 just over support offered by the 200 day moving average and just below the 100 and 50 day moving averages.  MBS bonds could remain stagnant for some time unless a significant economic report shakes things up.  The double resistance level above is formidable.  That combined with the tremendous supply of fixed income products in the market makes any progress without a major assist appear unlikely.
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Options Short of Short Sale - 01/22/10 05:15 PM
What are the options for homeowners who are unable to keep up with their payments?  We hear so much about short sales but there are some less painful solutions and some more painful solutions.  I will mention the less painful ones here.  The first is refinancing.  If you still have sufficient equity in the house you may be able to get a new loan with a better rate.  Next is forbearance which normally is utilized when a borrower has a short term income problem.  The bank agrees to hold off from foreclosing and let the homeowner catch up during a specified … (1 comments)

January 22nd Mortgage Market Wrap-up - 01/22/10 04:51 PM
Mortgage backed securities (MBS) closed down 9 basis points today at 100.94 just below the 100 day and 50 day moving averages.  There were no economic reports today to influence trading.  Despite another selloff in stocks, MBS traders were unable to push through these two formidable levels of resistance.  Often when this pattern takes place bonds have exhausted there upward trend.  If, however, stocks keep heading downward, bonds may still have some chance of advancing.
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Short Sale Seller's Are Under Great Pressure - 01/21/10 05:32 PM
As we see more and more "short sales" pop up in our communities, it is important to be aware of some of the conditions that swirl around the sellers.  First of all a short seller is in dire straights.  As he or she applies for a short sale, forms must be filled out showing all the assets available.  The bank rarely leaves any asset in the possession of the seller after the closing.  Secondly the short seller may also be in foreclosure proceedings.  Many times a short sale application in progress is short circuited by a law day being reached in … (0 comments)

January 21st Mortgage Market Wrap-up - 01/21/10 05:24 PM
Mortgage backed securities (MBS) closed up 25 basis points today at 101.01 solidifying yesterday gains over the 200 day moving average and crashing through the 100 day moving average.  These results follow the classic pattern of bonds rallying as stocks tumble.  The announcement about the addditional "fees" Obama intends to charge banks sent a shiver through Wall Street traders.  Higher claims for unemployment and a retrenchment in optimism signaled by the Philly Fed report also contributed to the favorable bond picture.
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The New Good Faith Estimate - 01/20/10 05:50 PM
The new Good Faith Estimate (GFE) is suggested by the government to be used as a shopping tool for your new loan.  On the first page all the elements of the loan program (e.g. loan amount, term, interest rate, prepayment penalty) are listed for the consumer's quick review.  The second page provides information on points to be paid, title cost, prepaid interest and insurance costs.  The third page discusses which of the charges cannot increase, those than can increase up to 10% and those charges that can increase.  Page three closes with a chart for recording the costs of the various … (0 comments)

January 20th Mortgage Market Wrap-up - 01/20/10 04:34 PM
Mortgage backed securities (MBS) closed up 16 basis points today at 100.78 wedged between support offered by the 200 day moving average and resistance at the 100 moving avergage.  Although, I mentioned earlier this week that closing above the 200 day moving average could portend better rates, we really need to see a close more than 12 basis points above to solidify the triumph.  MBS bonds were helped by a Producer Price Index showing low inflation and a big sell off in stocks.  Hopefully the upward trend will continue tomorrow.
 
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2010 Good Faith Estimate Clouds the Picture - 01/19/10 03:21 PM
The new Good Faith Estimate, which must be used with all loan applications completed beginning Janaury 1st, is intended to let borrowers shop for the best closing costs.  Because of the nature of the new form and its potentially punitive elements, however, it may reflect those costs in a magnified manner.  It order to be sure they will not be susceptable to overruns, banks and brokers must be coy in the way the costs are configured.  The result will be an appearance of higher closing costs.  Also beacuse different costs are packaged together. borrowers will need to go to a seperate itemization … (0 comments)

January 19th Mortgage Market Wrap-up - 01/19/10 03:11 PM
Mortgage backed securities (MBS) closed down 12 basis points at 100.62 wedged between support offered by the 25 day moving average and just 3 basis points below the all important 200 day moving average.  In order to see improvement in rates, MBS bonds will have to pass that resistance.  Any chance to advance will have to take place prior to Thursday's announcement of next week's Treasury auction amounts.  Of late these announcements have been taking there toll on bonds.
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The Importance of Responding Quickly - 01/15/10 04:44 PM
I have had a personal experience dealing with other Realtors during the last few days and it has been frustrating.  My day job is providing guidance and products to my clients as a Certified Mortgage Planning Specialist but I also hold a real estate brokers license.  I needed information about the availability of short term rentals in the area and reached out to a handful of agents.  If I were to respond as slowly to my clients as these realtors did to me, I would probably not write too many loans.  I know it was only a rental but to take two … (0 comments)

January 15th Mortgage Market Wrap-up - 01/15/10 04:34 PM
Mortgage backed securities (MBS) closed up 38 basis points today at 100.75 having smashed through the tough double resistance offered by the 25 day and 200 day moving averages.  As we discussed yesterday, the Consumer Price Index showed low inflation readings while consumer sentiment drooped slightly.  These two economic reports combined with a stock market depressed by large mortgage losses reported by Chase, catapulted bonds over resistance.  If bonds can sustain the gains on Tuesday we could have a final refinance boom before rates go up in ernest. 
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Ecomonic Factors Help Determine Interest Rates - 01/14/10 04:50 PM
The interest rates we pay on our home loans are determined by economic factors, government actions and technical factors.  Commonly bad economic news is good for interest rates and bad for stock prices.  Today we had weak retail sales and higher that expected initial unemployment claims, both of which should moves rates lower.  The unusual condition in effect today was that stocks went up despite the bad economic news.  Tomorrow we will have new readings on consumer sentiment, the NY Empire State Manufacturing Index and the important Consumer Price Index.  If inflation is still in check, interest rates could improve.
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January 14th Mortgage Market Wrap-up - 01/14/10 04:40 PM
Mortgage backed securities (MBS) closed up 19 basis points (bps) today at 100.38 inching ever closer to the 25 day moving average just 9 bps above.  If MBS bonds can break through that resistance and the 200 moving average just above, we could have a short term improvement in interest rates and possibly see a 30 year fixed conforming rate in the 4s again.  If we do, it could be the last time we see the rates under five ever.
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High End Buyers Find Trouble at the Underwriter's Desk - 01/13/10 04:31 PM
Banks continue to adjust their underwriting guidlines to ensure that their loans do not become foreclosure statistics in the future.  In the wake of banks being subpoenaed for having high failiure rates on their FHA loans, national and local banks have tightened their practices.  Under particularly heavy scrutiny are bonuses.  Wall streeters and financial types are still receiving healthy bonuses, but banks are willing to use only a portion of them and in some cases none of the bonus money.  You should hear the response of someone who makes a million dollars a year when he is told his jumbo loan … (0 comments)

January 13th Mortgage Market Wrap-up - 01/13/10 04:14 PM
Mortgage backed securities (MBS) closed down 34 basis points at 100.19 today around 40 basis points below double resistance offered by the 25 and 200 day moving averages.  The market opened slightly down in anticipation of today's Treasury auction.  The closer we got to the 1 PM announcement of the results, the more jittery traders got.  When the announcement was finally made that the results were favorable, the market improved briefly but once again cowered at the resistance and closed near its lows.
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This Week's Economic Reports - 01/12/10 04:54 PM
Although the week began with almost no economic reporting, the pace quickens as we get deeper into the week.  Today the balance of trade numbers came in just slightly worse than expected.  Wednesday the Fed's Beige will come out.  Thursday the high impact reports will include retail sales with and without autos.  Friday we will get an updated read on inflation as the Consumer Price Index comes out.  Estimates are for a mild increase.  This index can always be a market mover.
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January 12th Mortgage Market Wrap-up - 01/12/10 04:45 PM
Mortgage backed securities (MBS) closed up 53 basis points today closing just a few basis points below a tough double resistance formed by the 25 and 50 day moving averages.  A poor showing by equities allowed MBS bonds to push forward again today.  The Dow closed down 36 points, the tech heavy NASDAQ closed down 30 points and the S & P 500 was down just over 10 points.
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Paying the Price for Low Credit Limits - 01/11/10 03:58 PM
Managing your credit is one of the most important activites in your economic life.  An item as simple as your credit limits on your credit cards can have a huge affect on your credit scores.  I had a client today who in his entire 10 year credit history had been late on only one payment and that was more than five year.  Yet his credit score was in the low sixes.  He had a few small credit cards with low limits and even though the balances were not high, they were above 50% of his limits.  This alone would prevent him from … (0 comments)

January 11th Mortgage Market Wrap-up - 01/11/10 03:49 PM
Mortgage backed securities (MBS) closed up 25 basis points today at 100.34 just 31 basis points below the 25 day  moving average at 100.65.  With no economic reporting today, MBS markets reacted to an adequate result from a Treasury 10 year TIPS auction and comments from various Fed speakers.  The comments included assertions that the Fed rate would be kept low until the employment starts to improve and that inflation would remain low.
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News flash: U.S. Dollar Gains - 01/07/10 05:19 PM
The dollar moved into positive ground today recording gains against both the British pound and the Euro.  Since commodities like oil and gold are traded in dollars, the rising dollar caused oil to end its string of improvements over the last week and gold futures followed suit.  The demand for oil, despite the cold weather is not nearly has strong as the supply.    Both natural gas and gasoline futures also joined the downward trend.
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January 7th Mortgage Market Wrap-up - 01/07/10 05:00 PM
Mortgage backed securities (MBS) closed down 25 basis points today at 100.12 sliding further below resistance at the 200 day moving average and sitting directly on the support level at the close.  The Fed's announcement that it would auction $44 billion in new Treasuries next week caused the market to slide from a neutral position to the lower close. 
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Fed to Keep Its Rate Low - 01/06/10 04:33 PM
The minutes from the Fed's December meeting were released today and confirmed that they intend to keep following the accommodative practices of keeping the Fed rate low.  This practice allows banks to borrow at lower rate in hopes that business and consumers find it cheaper to purchase the products that they need.  As a result inflation should remain tame and the recovery should inch along rather than the economy growing by leaps and bounds.  A side benefit is that all those with home equity lines will continue to pay low rates.
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January 6th Mortgage Market Wrap-up - 01/06/10 04:26 PM
Mortgage backed securities (MBS) closed down 25 basis points today at 100.38 a full 33 basis points below the 200 day moving average and above resistance at 99.75.  MBS bonds took a run up to the 200 day moving average but pedictably bounced back downward.  The ISM services report inched into the positive today with a reading of 50.1 further preventing bonds from continuing the progress that had been made over the past few trading sessions since December 29th.
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The Year in Commodities - 01/05/10 04:25 PM
A quick analysis shows us that gas prices rose $1.02 a gallon in 2009 up from a low of $1,62 at the end of 2008.  Oil, which  finished the year at $79.36 per barrel, was up 78% for the year.  Gold, which we are hearing so much about today, finished 2009 at a staggering $1,095. an ounce.  Surprisingly, that was only a 24% increase meaning that oil would have been the wiser investment in the year that was.  Oil could, however, approach the $1,400. level this year maintaining its role as an international safe haven for dollars.
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January 5th Mortgage Market Wrap-up - 01/05/10 04:18 PM
Mortgage backed securities (MBS) closed up 50 basis points at 100.59 today just 13 basis points below resistance at the 200 day moving average and well above support.  After sliding for more than a  month, MBS bonds have finally picked up some steam.  Stocks faltered early in the day and money starting flowing into bonds. November pending home sales fell a whopping 16% mostly in reaction to the end of the initial first time home buyer credit.
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End of MBS Slide May Portend Improving Mortgage Rates - 01/04/10 05:22 PM
After a slide of 231 basis points from November 25th through December 28th, mortgage backed seccurities (MBS) may be heading upward slowly over the coming weeks.  Our stochastic measurement tool shows us that the market is significantly oversold.  That means that there are opportunities to cash in on the month long sell off.  Traders will be looking to salt away profits.  Since as MBS bond pricing improves, interest rates decline, we may be in for one more re-fi opportunity.   
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January 4th Mortgage Market Wrap-up - 01/04/10 05:14 PM
Mortgage backed securities (MBS) closed up 25 basis points today at 100.09 above support at  99.75 and now only 64 bps below resistance at the 200 day moving average.  Despite broad advances in stocks today, MBS bonds were buoyed by construction spending's continued decline.  The pending home sales report will be the only economic offering for the day tomorrow.
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