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“That’s Republican Advice”
A friend called me yesterday for some advice on a real estate transaction. Whenever anyone calls me for advice I am humbled and honored because I know what a serious decision it can be, especially in these uncertain economic times. But because I am in the business of mortgages I often receive calls from friends for advice. What made this call unique is that my friend and I have a relationship that extends more than two decades and who I would consider one of my best and most genuine friends but we couldn’t be more different politically and as a result we often have to put it mildly spirited debates. In spite of this it was still me that he called for advice.
The deal he wanted to engage with a long-term family friend of his involved my friend assuming a majority of the risk and very little reward. In fact the only way that my friend could benefit would be from his friends loss of initial principle investment with the deal going south and thus likely resulting in the loss of his friendship with that person.
After listening to him share with me his reasons for why he thought this was a good business opportunity (and there were numerous but none that didn’t end badly) I suggested that he pass on this deal altogether because of the following reasons in order of their merits;
1) There was no potential for profit without the loss of his friend’s principal investment and thus the relationship with that person.
2) The risk to him and his family was too great for the little profit potential existed.
3) Engaging in this deal would likely prevent him from being able to take advantage of a real investment opportunity which could actually result in profit without anyone that he knows, likes and trusts having to be injured in the process.
*Disclaimer – all real estate involves risk and sometimes people sustain losses in those transactions, hence the nature of a free market. But to engage in a for profit deal where the only way you make that profit is by someone else losing in my opinion is not a formula for success. In lending we call that Predatory Lending and it is illegal.
When I revealed to him these opinions, he said to me “because you are a Republican I figured you would say something like that”.
Recently the word Republican, like (fill in the blank) “Banker” has been used interchangeably to disparage (and is often incorrect) my business but what made this stand out to me was how he said it. It was almost as if it was a disparaging remark and he was sorry for having used it!
Given the context I understood that what he really meant to say is that he trusted me to give him the advice that was unpopular because when he called me that’s what he needed but what he really wanted was for me to tell him was it was a great deal and that I couldn’t wait to help him get started by making him the mortgage!
In the end I lost an opportunity to make a profit but I retained a friend and a friend also retained a friend and hopefully those friends will find other opportunities to profit that don’t require one of them to be injured in pursuit of those profits.
I don’t know if the advice was “Republican” advice or not, all I really know for sure is that was “Ricardo’s Advice”. If you or anyone you know would like to receive this kind of sincere advice from a friend in the business I always have time to make new friend.
Sincerely,
Your Friend in the Business,
Ricardo Cobos
Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
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Saturday April 24, 2010
The Inside Edge
The market commentary material provided is from a third party vendor, MBSQuoteline, and is not necessarily the opinions of the employees or staff of SunTrust Mortgage, Inc. This information is intended for educational purposes only and should not be construed as investment and/or mortgage advice. Additionally, the material is deemed to be accurate and reliable, but there is no guarantee it is without error.
Mortgage Rates Rise on Improving Economic Data
While inflation remained low, stronger than expected economic data released this week was negative for mortgage markets. As a result, mortgage rates ended the week a little higher.
The big news in this week's economic data came from the housing sector. March Existing Home Sales rose 7% from February, and existing home sales were 16% higher than one year ago. Inventories of unsold existing homes fell to an 8-month supply, from 8.5-months in February. March New Home Sales were even better, jumping 27% from February to the highest monthly rate since last July. This marked the largest single-month increase in new home sales since 1963. The chief economist of the National Association of Realtors (NAR) credited the homebuyer tax credit for the strong March housing data. Buyers must sign a contract by April 30 to take advantage of the tax credit, so the April data should benefit as well.
Friday morning, CNBC reported that support is growing among Fed officials to begin sales of mortgage-backed securities (MBS) from the Fed's portfolio. In a program which ended March 31, the Fed purchased $1.25 trillion of MBS to help lower mortgage rates and boost the economy. According to CNBC, "at least" six members of the Fed's policymaking committee support near-term MBS sales if the economy continues to improve. The selling could begin as soon as the third or fourth quarter of this year. Fed Chief Bernanke still views the likely time frame to begin MBS sales as next year, but his recent comments have indicated a willingness to keep more options open. With the next Fed meeting taking place on Wednesday, the 2:15 et release of its statement will take on added significance. If the Fed actually conveys an intention to begin to sell MBS soon, mortgage rates would be likely to rise on the news.
Also Notable:
- The Producer Price Index (PPI) core inflation rate rose at a low 0.8% annual pace
- A popular measure of business investment rose at the fastest rate in 9 months
- First-time buyers accounted for 44% of existing home sales in March
- The Treasury will auction $118 billion in 2-yr, 5-yr, and 7-yr securities next week
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Week Ahead
The big story next week will be Wednesday's Fed meeting. No change in rates is expected, but investors will be closely watching for hints about future Fed moves to tighten policy or to sell assets. Friday's Gross Domestic Product (GDP) report for the first quarter will be the most significant economic data. GDP is the broadest measure of economic activity. The Chicago PMI Manufacturing index will also come out on Friday. Consumer Confidence and Consumer Sentiment will round out the schedule. There will be Treasury auctions on Tuesday, Wednesday, and Thursday.
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Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
CONGRESSIONALLY APPROPRIATED FUNDS TO GUARANTEE RURAL HOUSING LOANS WILL BE EXHAUSTED IN THE NEAR FUTURE- Loans Cannot Close or Fund Without a Conditional Commitment
USDA Rural Development has announced that Congressionally Appropriated funds to guarantee Rural Housing loans are likely to be exhausted in the near future. Rural Development will not issue Conditional Commitments once the funds are exhausted. Rural Development regulations prohibit lenders from closing and funding Rural Development loans without a valid Conditional Commitment.
Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
The Senate and House passed, and President Obama signed, bill HR 4851 extending funding for the National Flood Insurance Program retroactively, through May 31, 2010.
Borrowers are now able to obtain NFIP insurance to close, renew, or increase loans secured by property located in a SFHA.
Since this is a temporary extension, it is possible that another hiatus of the National Flood Insurance Program could occur on May 31, 2010.
Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
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Economic Outlook According to Chairman Bernanke
Before the Joint Economic Committee, U.S. Congress, Washington DC
April 14, 2010
If you have ever watched Chairman Ben S. Bernanke give testimony before Congress, it is to say the least just slightly more exciting than watching paint dry but 100% more fun than a root canal at your dentist who has jut run out of Novocaine! However in spite of the excruciating pain of it it every word, every nuance is carefully analyzed by experts in order to glean what is happening in the economy and what exactly it is that the Central Bankers are recommending to Congress and thus how it their decisions will impact their positions. In short; whether to buy. hold or sell.
For the rest of you I have read it and redacted from the testimony the rhetoric and hoopla and given you in this brief summary what stood out to me and what I assume that you would also want to know. These are not my opinions of what he said rather they have been lifted directly form the text which if you are so impelled you can read in it's entirety by clicking here.
Economic Outlook
"....To be sure, significant restraints on the pace of the recovery remain, including weakness in both residential and nonresidential construction and the poor fiscal condition of many state and local governments. Sales of new and existing homes dropped back in January and February, and the pace of new single-family housing starts has changed little since the middle of last year. Outlays for nonresidential construction continue to contract amid rising vacancy rates, falling property prices, and difficulties in obtaining financing. Pressures on state and local budgets, though tempered by ongoing federal support, have led to continuing declines in employment and construction spending by state and local governments."
Employment Outlook
"....However, if the pace of recovery is moderate, as I expect, a significant amount of time will be required to restore the 8-1/2 million jobs that were lost during the past two years. I am particularly concerned about the fact that, in March, 44 percent of the unemployed had been without a job for six months or more. Long periods without work erode individuals' skills and hurt future employment prospects. Younger workers may be particularly adversely affected if a weak labor market prevents them from finding a first job or from gaining important work experience."
Financial Markets Outlook
"....The Federal Reserve and other bank regulators continue to encourage the banks to build up their capital, ensure that they have adequate liquidity, improve their risk management, and restructure their employee compensation programs to better align risk and reward.
Despite their stronger financial positions, banks' lending to both households and businesses has continued to fall. The decline in large part reflects sluggish loan demand and the fact that many potential borrowers no longer qualify for credit, both results of a weak economy. The high rate of write-downs has also reduced the quantity of loans on banks' books. Banks have also been conservative in their lending policies, imposing tough lending standards and terms; this caution reflects bankers' concerns about the economic outlook and uncertainty about their own future losses and capital positions."
Federal Government Spending (Pay close attention to what he said)
"...The federal budget deficit is on track this year to be nearly as wide as the $1.4 trillion gap recorded in fiscal year 2009. To an important extent, these extremely large deficits are the result of the effects of the weak economy on revenues and outlays, along with the necessary actions that were taken to counter the recession and restore financial stability. But an important part of the deficit appears to be structural; that is, it is expected to remain even after economic and financial conditions have returned to normal.
Thereafter, however, under the Administration's budget, the annual deficit is expected to remain high through 2020, in the neighborhood of 4 to 5 percent of GDP. Deficits at that level would lead the ratio of federal debt held by the public to the GDP, already expected to be greater than 70 percent at the end of fiscal 2012, to rise considerably further. The CBO baseline projection assumes that most discretionary spending grows more slowly than nominal GDP, that no expiring tax cuts are extended, and that current provisions that provide most taxpayers relief from the alternative minimum tax are not further extended. Under an alternative scenario that drops those assumptions, the deficit at the end of 2020 would be 9 percent of GDP and the federal debt would balloon to more than 100 percent of GDP.5
A credible plan for fiscal sustainability could yield substantial near-term benefits in terms of lower long-term interest rates and increased consumer and business confidence. Timely attention to these issues is important, not only for maintaining credibility, but because budgetary changes are less likely to create hardship or dislocations when the individuals affected are given adequate time to plan and adjust. In other words, addressing the country's fiscal problems will require difficult choices, but postponing them will only make them more difficult."
And here are some headlines following his testimony
Dollar extends losses after Bernanke testimony
US 10-Year Notes Fall After Bernanke Testimony, Beige Book
Bernanke brings deficit-cutting message to Dallas
So what do you think? Do you think he is right or do you think he's just another Central Banker crying wolf?
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Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
The Inside Edge
The market commentary material provided is from a third party vendor, MBSQuoteline, and is not necessarily the opinions of the employees or staff of SunTrust Mortgage, Inc. This information is intended for educational purposes only and should not be construed as investment and/or mortgage advice. Additionally, the material is deemed to be accurate and reliable, but there is no guarantee it is without error.
Low Inflation Benefits Mortgage Markets
This week's economic data and comments from Fed officials painted a picture of a gradually improving economy with very low inflation. March Core CPI inflation rose at a tame 1.1% annual rate. This economic environment is favorable for bond markets, and mortgage rates ended the week a little lower.
While mortgage rates have dropped over the last two weeks, the move lower has not been a straight line down. Mortgage rates have been fluctuating sharply from day to day, and even hour to hour this month. Volatility in mortgage markets has increased significantly since the end of the Fed's MBS purchase program on March 31. With the Fed steadily in the market in just one direction (purchasing, but never selling), other investors were generally reluctant to take opposing positions. Now that the Fed is on the sidelines, the market has returned to more normal conditions, meaning that investors freely react to economic news and changing sentiment.
This week's housing sector reflected improvement. March Housing Starts exceeded expectations, rising 2% from February to the highest level since November 2008. Housing Starts were 20% higher than one year ago. Building Permits, a leading indicator, also beat the consensus forecast. The April NAHB Homebuilder confidence index jumped to the highest level since September 2009 as home buyers take advantage of tax credits set to expire soon.
Also Notable:
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The Fed Beige Book report indicated improving economic conditions in all but one of the twelve regions
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Bernanke stated that he expects the labor market to slowly recover
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Goldman Sachs was charged with fraud on subprime mortgages by the SEC
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The Dow stock index reached an 18-month high
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Week Ahead
Next week, the economic data will be stacked at the end of the week. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Thursday. Existing Home Sales also will be released on Thursday. Durable Orders, an important indicator of economic activity, will come out on Friday, along with New Home Sales. Leading Indicators will round out the schedule on Monday.
Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
According to Forbes Magazine Raleigh North Carolina ranks number three in the nation for the best place for business and your career. If you are considering relocation to Raleigh North Carolina for a career move, when you consider Provo and Des Moines are just short of "are you kidding me cold" in the Winter, three ain't half bad!
Special Report
04.14.10, 06:00 AM EDT  
1 - 2526 - 5051 - 7576 - 100101 - 125126 - 150151 - 175176 - 200
| 1 |
Des Moines IA |
49 |
10 |
46 |
563 |
| 2 |
Provo UT |
20 |
39 |
38 |
556 |
| 3 |
Raleigh NC |
22 |
14 |
12 |
1,126 |
| 4 |
Fort Collins CO |
34 |
21 |
11 |
298 |
| 5 |
Lincoln NE |
14 |
72 |
30 |
298 |
| 6 |
Denver CO |
113 |
49 |
22 |
2,552 |
| 7 |
Omaha NE |
48 |
54 |
56 |
850 |
| 8 |
Huntsville AL |
112 |
2 |
37 |
406 |
| 9 |
Lexington KY |
25 |
32 |
39 |
471 |
| 10 |
Austin TX |
160 |
12 |
19 |
1,705 |
| 11 |
Ogden UT |
30 |
105 |
100 |
542 |
| 12 |
Colorado Springs CO |
90 |
50 |
29 |
626 |
| 13 |
Cedar Rapids IA |
44 |
1 |
118 |
256 |
| 14 |
Boulder CO |
136 |
17 |
1 |
303 |
| 15 |
Fayetteville AR |
22 |
35 |
133 |
465 |
| 16 |
San Antonio TX |
11 |
9 |
137 |
2,072 |
| 17 |
Charlotte NC |
42 |
31 |
53 |
1,746 |
| 18 |
Seattle WA |
158 |
83 |
14 |
2,611 |
| 19 |
Portland OR |
106 |
104 |
43 |
2,242 |
| 20 |
Salt Lake City UT |
62 |
70 |
70 |
1,130 |
| 21 |
Asheville NC |
10 |
114 |
87 |
413 |
| 22 |
St. Louis MO |
40 |
41 |
82 |
2,853 |
| 23 |
Durham NC |
107 |
84 |
10 |
501 |
| 24 |
Columbus OH |
77 |
55 |
48 |
1,802 |
| 25 |
Boise ID |
8 |
107 |
96 |
606 |
1 - 2526 - 5051 - 7576 - 100101 - 125126 - 150151 - 175176 - 200
Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
Saturday, April 10, 2010
The Inside Edge
Rates Lower After Strong Auction Demand
Although this week's economic data was generally stronger than expected, it was overshadowed by solid demand for the Treasury auctions and intensified concerns about the economic situation in Greece, which helped mortgage markets. After reaching the highest levels since August, mortgage rates ended a little lower than where they ended last week.
Recent increases in yields on long-term fixed-rate securities such as 10-yr Treasuries and mortgage-backed securities (MBS) appeared to have been sufficient to attract investors. Very strong demand from both foreign and domestic investors for Wednesday's 10-yr auction pushed Treasury yields lower, and mortgage rates followed. Increasing the appeal, renewed worries about the fiscal situation in Greece caused investors to seek the safety of US securities. Comforting statements from Fed officials that they expect inflation to remain low for a long time also added to the demand.
In the housing sector, February Pending Home Sales jumped 8% from January, far exceeding the consensus forecast. Pending Home Sales are a leading indicator of housing market activity. The chief economist of the National Association of Realtors (NAR) considered the data to be a potential sign of a "second surge of home sales this spring". To receive the homebuyer tax credit, contracts must be signed by the end of April, which likely boosted the results for February. As buyers seek to take advantage of the program, March and April pending sales may show strength as well.
Also Notable:
- Continuing Jobless Claims fell to the lowest level since December 2008
- The Fed lowered its forecasts for inflation in 2010 and 2011
- As expected, the European Central Bank (ECB) made no change in rates
- The Dow stock index reached an 18-month high
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Week Ahead
The most significant economic data next week will be Wednesday's Consumer Price Index (CPI), the most closely watched monthly inflation report. CPI looks at the price change for those finished goods which are sold to consumers. The Retail Sales report will also come out on Wednesday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic activity, will be released on Thursday. Housing Starts are scheduled for Friday. The Beige Book, Import Prices, the Trade Balance, Consumer Sentiment, and Philly Fed will round out a busy week.
Ricardo Cobos is a Mortgage Loan Officer with SunTrust Mortgage in Raleigh North Carolina and is a Relocation Expert. (919) 559-3384 www.RicardoCobos.com
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Ricardo Cobos
Raleigh,
NC
More about me…
SunTrust Mortgage
Address: 9208 Falls of Neuse Rd , Suite 101, Raleigh, NC, 27615
Office Phone: (919) 518-8058
Cell Phone: (919) 559-3384
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