O'Dette Mortgage Group - Market Update and Blog

Lending a Hand - OMG's $4,000 Grant to Local Non-Profit : May 3rd, 2010

During the month of April,  O’Dette Mortgage Group launched the Lending A Hand Campaign, in which business partners could pledge money to establish a grant for a local non-profit.  Teresa O’Dette and Ephraim Schwartz, partners at O’Dette Mortgage Group agreed to match all of the pledges. 

O'Dette Mortgage Group announced this morning that a total grant fund of $4,000 has now been established.  Non-profits can apply for this grant during the month of May.  The recipient will be decided the first week of June by everyone that pledged money. “We appreciate all of our local business partners who stepped up to make this happen.” said Teresa O’Dette.  “Now we start the exciting part of this process, working with our local non-profits.”

Local businesses who have made a pledge to this fund include:  Mark Guthrie and Trixie Schultz of Westface Financial Group, Linda Granger , Jean Ludwick and Trinkie Watson of Chase International, Kim Heslin of Tahoe Real Estate Group, Ken Gracey of Parallax, The Schaller Family of Dickson Realty, Truckee Tahoe Medical Group, Bill & Nora Leeder, and Karen Bremer of Prudential, Keller Williams Real Estate, Elaine   Durazo of Coldwell Banker, Susan Ewry of Keller Williams, Julie Motamedi of Rocky Ridge and Yvette Shipman of Keller Williams and the entire team at Pacific Crest Properties.

Non-profits must be a registered 501c in the Truckee/Tahoe community.  The grant must be for a specific project during the 2010 year.  For an application or further inquires, please email Stephanie McIntosh at Stephanie@omglenders.com  

New California Tax Credit - $10k : March 29th, 2010

O'Dette Mortgage Announces - Lending a Hand Grant : March 22nd, 2010

“As we looked at how we wanted to participate in community service this year, we thought it would be great to engage our business partners to establish a fund that would really make a difference,” said Teresa O’Dette, president and owner of O’Dette Mortgage Group. Throughout the month of April, O’Dette Mortgage Group will ask for pledges from business owners. once all of the pledges have been made, O’Dette Mortgage Group will match the total amount up to a maximum of $2,500.

Local registered nonprofits can submit an application form during the month of may explaining the needs of their organization. At the beginning of June, all businesses that pledged money will be asked to vote on which non-profit should receive the grant. the hope is to have a total grant fund of $5,000.

“There is a great need in our community right now to help our nonprofits. We hope other business owners will partner with us on this program. Our goal is to make this annual on-going service project.”

If you are interested in donating to the Lending A Hand project or would like additional information, please e-mail Stephanie@omglenders.com or visit www.omglenders.com. you may also find O’Dette Mortgage Group on Facebook.

Federal Reserve Keeps Rates Low : January 27th, 2010

Stocks finished the day slightly higher, while bonds were slightly lower.  When mortgage bonds drop, their rates/yields go higher.

To Convert or Not to Convert: Traditional IRA or Roth IRA : December 20th, 2009

Federal Home Buyer Tax Credit is Extended and Expanded : November 11th, 2009

• A "first time home buyer" is defined as someone who has not owned a home in the last three years. If you are a "first-time home buyer", your tax credit will amount to 10% of the purchase price of your new home not to exceed $8,000.
• A "long-time resident" is defined as someone who has lived in the same primary home for 5 out of the past 8 years. If you are a "long-time resident", your tax credit will amount to 10% of the purchase price of your new home not to exceed $6,500.
• The tax credit does not need to be paid back if you continue living in the home as your primary residence for three years without selling it
• The home must be purchased for less than $800,000 before May 1, 2010. If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit
• You cannot purchase the home from a related party like a spouse, direct ancestor, or direct lineal descendent (child or grandchild); however, you can still qualify for the credit if you purchase a property from siblings, nephews, nieces, and others
• If you are married, both spouses must qualify for the credit
• If more than one unmarried individual is buying the property, the credit can be split up among all the individuals who qualify. However, the total credit taken cannot exceed $8,000 (or $6,500 for "long-time residents"). Alternatively, if only one of the unmarried buyers qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit.
• The credit applies even if you have co-signers on your mortgage loan
• The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence - you could live in one unit and rent out the others

A tax credit is kind of like a gift certificate that you can use to pay your taxes - it reduces your income tax bill on a dollar for dollar basis. Imagine paying your bill at IRS Restaurant, and then later getting an IRS Restaurant gift certificate. Normally, you would need to go back to IRS Restaurant and buy more food in order to use your new gift certificate. But what if IRS Restaurant allowed you to just turn in your gift certificate for cash? That's how the home buyer tax credit works! All you need to do is file a form with the IRS after you buy your new home and they will send you a refund check for $8,000 (or $6,500) - just like the example of IRS Restaurant that allows you to exchange your gift certificate for cash! Remember though, you'll receive the $8,000 (or $6,500) from the IRS AFTER you purchase your new home, so you cannot use the funds to help with your down payment.

Home Sales Rise For 7th Straight Month : October 19th, 2009

U.S. Commerce Association’s Award Plaque Honors O'Dette Mortgage Group : August 28th, 2009

O'Dette Mortgage Group Receives 2009 Best of Tahoe City Award

U.S. Commerce Association’s Award Plaque Honors the Achievement

WASHINGTON D.C., June 8, 2009 -- O'Dette Mortgage Group has been selected for the 2009 Best of Tahoe City Award in the Mortgages category by the U.S. Commerce Association (USCA).

The USCA "Best of Local Business" Award Program recognizes outstanding local businesses throughout the country. Each year, the USCA identifies companies that they believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and community.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2009 USCA Award Program focused on quality, not quantity. Winners are determined based on the information gathered both internally by the USCA and data provided by third parties.

About U.S. Commerce Association (USCA)

U.S. Commerce Association (USCA) is a Washington D.C. based organization funded by local businesses operating in towns, large and small, across America. The purpose of USCA is to promote local business through public relations, marketing and advertising.

The USCA was established to recognize the best of local businesses in their community. Our organization works exclusively with local business owners, trade groups, professional associations, chambers of commerce and other business advertising and marketing groups. Our mission is to be an advocate for small and medium size businesses and business entrepreneurs across America.

SOURCE: U.S. Commerce Association

O'Dette Mortgage Group is voted #1 BEST Mortgage Company of North Tahoe and Truckee 2009 : August 20th, 2009

Freddie Mac Clarifies "qualified appraisers" and "comparable sales" : July 14th, 2009

A Perspective on the “Bottom of the Real Estate Market” and How Mortgage Rates Factor In : June 22nd, 2009

Get Your Paperwork Ready to Refinance : June 17th, 2009

1. Get started on paperwork. Once you've found the mortgage professional you'd like to work with, get started on the necessary paperwork.  Rates move regularly, and if paperwork has been started your file can be processed more quickly when rates hit a low. When you start the application process, your credit score will be pulled and you'll need to submit support documentation including W-2 forms and pay stubs. You might be asked for updated documents nearer to closing.
2. Make sure your credit is in good shape. Check credit reports and fix problems as soon as possible. Even seemingly small charges can haunt a borrower: A forgotten, unpaid parking ticket, for example, can noticeably affect a credit score.
3. Decide at what rate it makes sense to pull the trigger. If you have a 6% rate now, rates would have to hit 5% or lower for it to make financial sense to refinance. Talk with your mortgage professional about what's best for your particular situation.
4. Stick to your guns. Once you determine the rate you'd need to get, it's probably wise to stick to that decision. Consumers sometimes gamble that rates will go lower, and the plan can backfire if rates reverse course.

Rates Slightly Improved on the Week : May 18th, 2009

Making Home Affordable. The Saga Continues! : May 5th, 2009

In an effort to fill in some of the gaps exposed in the initial Making Home Affordable (MHA) program, Washington has stepped up its efforts to assist more distressed homeowners. In a press release on April 28th, the U.S. Treasury announced an update to the program designed to assist nearly 50% of those homeowners seeking relief from the MHA program.

What's New?

By some estimates, nearly 50% of all struggling homeowners actually have two mortgages. This is because many borrowers chose to split their mortgage in two to avoid an additional Private Mortgage Insurance monthly payment. The problem is, having two mortgages complicates attempts to refinance or modify home loans.

To minimize these complications, the new legislation is intended to assist mortgage servicers with new guidelines that give incentives for participation and help decrease payments for homeowners. These incentives have also been extended to homeowners enrolled in the program to assist them in making their future payments on time.

The news announcement also addressed the Hope for Homeowners (H4H) program created last year. The biggest news relating to H4H is that participating servicers will be required to look at H4H in tandem while considering a loan modification. In order to support more investor participation, incentives will be extended to the servicer and the Treasury will continue their buying program to help rates stay attractive as well.

What Does This Mean for You?

Despite these additional guidelines, the Making Home Affordable program is still best suited for helping a specific group of struggling homeowners.

If you're interested in refinancing or looking into a modification, we'd be happy to help you examine your options. Even if a modification isn't right for you, there may be an opportunity to refinance your mortgage and take advantage of today's historic lows.

Construction, Pending Home Resales Rise : May 4th, 2009

Pending sales of U.S. existing homes posted their first back-to-back gain in almost a year in March and construction spending ended a six-month slide.  Two of four regions saw an increase according to the report by the National Association of Realtors.  Purchases rose 8.5 percent in the South and 3.9 percent in the West, and fell 5.7 percent in the Northeast and 1 percent in the Midwest.  If you have been considering a new home purchase, it might be time to take action!  Contact O'Dette Mortgage Group for more information or to get pre-qualified.  www.omglenders.com or 800-404-2129.

Home Valuation Code of Conduct Starts Today : May 1st, 2009

Starting on May 1st, Fannie Mae and Freddie Mac will not purchase mortgages from Sellers that do not adopt the The Home Valuation Code of Conduct (HVCC). The intention of the code is to insure the independence of the appraiser.

Lender Requirements

Looking to Buy a Second Home? : April 21st, 2009

Good Credit Equals a Good Chance to Get Your Dream Home : April 7th, 2009

In these days of competitive real estate markets, the more financially prepared you are as a potential homebuyer, the more likely you will be to get the home you’ve always dreamed of.  A huge part of this financial preparedness is mortgage pre-approval.  The cleaner your credit report and the higher your credit score, the more likely you will become pre-approved for a mortgage at a low interest rate - and saving you thousands of dollars over the life of your loan.  To review a copy of your credit report and get pre-approved contact O'Dette Mortgage Group at www.omglenders.com or 800-404-2129.

Obama administration releases info on Home Affordable Program : March 4th, 2009

The President's plan was created to help millions of homeowners refinance or modify their mortgages. The program could provide some borrowers mortgages with interest rates as low as 2 percent and there are also incentives that may pay down principal in some cases.

Refinancing: Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today's lower mortgage rates perhaps due to a decrease in the value of their home. A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage.

Modification: Many homeowners are struggling to make their monthly mortgage payments either because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.

Go to http://www.fanniemae.com/homepath/homeowners/in_foreclosure.jhtml for more information or contact O'Dette Mortgage Group at 800-404-2129 or www.omglenders.com.

Mortgage Rates Volatile Again : March 2nd, 2009

Bonds were able to regain some ground Thursday and Friday after their steep free fall on Wednesday, but even with the improvement, home loan rates ended the week .25% to .375% worse from where they began.

Home Buyer Tax Credits: Federal vs. California : February 28th, 2009

Under the federal plan, if you have not owned a home in the past three years and buy a new or existing home between Jan. 1 and November 30, you could get an $8,000 federal tax credit. This credit is refundable, which means you can get it even if you don't earn enough money to owe taxes. The credit phases out for individuals with income over $75,000 and couples over $150,000.

Under the state plan, if you buy a newly built home in California on or after March 1, 2009 and before March 1, 2010, you will be eligible for a state tax credit equal to 5 percent of the purchase price or $10,000, whichever is less. The credit must be spread over three years, and you don't have to be a first-time home buyer. You'll have to pay back the state credit if you live in the home for less than 2 years, and repay the federal credit if you move out before three years.

How the Economic Stimulus Plan Benefits the Housing & Mortgage Industries : February 19th, 2009

Just signed and sealed… a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.

Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...

Tax Credit for Homebuyers:

First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction — a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Additional Housing-Related Provisions:

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future:

Another thing to keep an eye on in the coming weeks is President Obama's plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That's because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries.
As always, if you have any questions or would like to discuss how this may specifically impact you, I'd be happy to sit down with you. Just call or email me to set up an appointment.

The Debate Continues: Banks vs. Brokers : January 30th, 2009

In response to an article in yesterday's Investors Business Daily, "Lending Is Changing; Getting A Mortgage May Take Bank Visit", O'Dette Mortgage Group Partner, Ephraim Schwartz disagrees - consumers just need to find the 'right' mortgage broker.

Schwartz was interviewed and quoted in the article, "We actually have more wholesale options today than we did a year-and-a-half ago. We've searched out many smaller lenders. And now one member of our team continually searches the market for new sources of money.". But, as the title of the article suggests, some journalists have their own angle. Here's Ephraim retort:

"My feedback: I disagree with the overall message leading consumers to believe mortgages are more difficult to obtain through brokers. To the contrary, a broker has the flexibility of having many different niche lenders, while banks can only sell their own products. Yes, many banks have pulled out of wholesale, but a good broker has backup lenders ready to fill in like shark teeth. Having gained significant market share as other brokers have left the business, we are as busy as ever and closing over 90% of the loans we pre-approve. I think more brokers would share our sentiment if they spent as much time exploring back end solutions, as they do prospecting business on the front. An A+ processing & support team doesn't hurt either.

Mr. Harris said "finding a half decent loan could take weeks"….if he has clients we need to help, feel free to pass along my number because we have plenty and rates are absolutely fantastic right now. Our team is closing ~30+ loans/month. The majority have been conventional, at fantastic rates, and have closed within 30 days.

Pat Townsley mentioned in the article that "bundled services are killing them"……I believe he is speaking with regards to the pricing of their rates/services….and not whether or not they can fund the loan. This obviously begs the conversation of how borrowers chose who they work with; a financial planning approach, advice, and service all factor in as well as rate. I do not recall the last time we lost a conventional loan to a brick & mortar retail bank outlet because of either rate, or ability to fund the loan. I believe this is because borrowers are wising up to the importance of sound mortgage/financial advice as opposed to the attraction to online billboards and junk mail.

Gordon Johnson is quoting an average of 60 days to close. Again, we are telling all our Realtors we can close in 30 days, and we are doing it. It's not as easy as it used to be….but as the saying goes; if it was, everyone would be doing it.

One other note regarding jumbo loans: we actually have a lender who specializes in loans over $3.0M, not up to. They will do loans up to $10M….and possibly higher on a case by case basis. We are currently working on a $6.8M construction loan….so it can be had.

There is a lot of doom & gloom out there and it's more about working with brokers who have sought out the tough to find solutions. Borrowers are less likely to get that tailored attention from large banks who have, as mentioned, laid off considerable staff. Anyway, just my 2 cents.

Feel free to reach me anytime if I can lend another perspective from the front lines."

Alert! Your Name is Being Sold - Take Action Now! : December 4th, 2008

Here's breaking news you need to know … and you need to let all your family and friends know right away as well.

Your information … a hot commodity

Having credit checked is an important and necessary step in the home buying process. But very few people realize that each time their credit is checked, the "inquiry data" that the credit bureaus (Equifax, TransUnion, Innovis or Experian) have on file have now become a commodity. This information is being sold by the credit bureaus to other lenders…and also to companies that sell and resell the same names and personal information.

That's right — the credit bureaus have found a way to increase their revenues at your expense….and without your permission.

These "inquiry leads" include name, address, phone numbers (including unlisted), credit score, current debt and debt history, property information, age, gender and estimated income. They are marketing personal, confidential information to competing creditors…and making millions. Your privacy is being sold, not just once, but over and over again.

And lenders that purchase these leads at a premium will then do everything they can to recoup their investment and turn a hefty profit. Super sneaky bait and switch tactics are being used to lure clients away from their reputable lender. Clients have even been called by disreputable lenders and told that the lender they had been speaking to previously "passed on" the information to them, because they knew that they'd be able to offer much better interest rates and terms. Ouch!

Just Say "No"

The consumer credit reporting industry has provided a way to "opt out" and remove your name from these lists. You can contact them by phone at 1-888-567-8688 or online at http://www.optoutprescreen.com You must opt out at least 48 hours prior to having your credit checked to make sure it is processed in time. You can choose a five year or lifetime option, and the lifetime option does require a signed form. If a credit report needs to be run prior to the 48 hour waiting period — at least you are aware and informed, and can be on the lookout for suspicious phone calls or mailers from someone who has purchased your data.

The good news is by opting-out you can make it stop right away and protect yourself from "pre-approved credit offers" arriving via mail, which is one of the leading causes of identity theft in the US.

Take Your Privacy Back

Save on Your Credit Score this Holiday Season : November 24th, 2008

With the economy slowing and holidays just around the corner, many consumers may be looking to credit cards to help them get through the heavy shopping season. While that may be a good short-term solution, you want to make sure you don't overlook the long-term impact on your credit rating. After all, the actions you take today could hang over your head for years to come--and may make it tough for you to get the home loan or car loan you want in the future.

To help you make sure you manage your credit cards--and your credit score--during the upcoming holiday spending season, follow these steps:

1) Double-check your card limits:
Many credit card companies today have started lowering credit limits. That means you have less credit available, but it also may mean that your credit score is about to take a hit. That's because approximately 30% of your credit score is based on the amount you owe in relation to your available credit. So, if a credit card company cuts back your limit, you may find that you're suddenly almost maxed out. That's not a good sign for your long-term credit score rating.

2) Ask, pay down, or move around: If some of your credit limits have changed or are nearly maxed out, you can take a few steps to help alleviate the problem. First, consider simply asking for a higher limit to your card...not necessarily to use up with spending, but to allow more unused credit line to be available and therefore boost your credit score. You can also pay more money to the cards that are near the credit limit, if you can. Or, if you have cards with little to no remaining credit line, transfer some of the larger balances onto the cards with lower balances. That'll give you a more... well... balanced financial picture.

3) Leave home without it:
One of the best tips for the holiday season is to: make a budget, identify specific items, and then leave home without your credit card. Instead, bring just enough cash to purchase the items on your list. That will help you resist the urge to impulse buy, and keep your credit card balances lower.

4) Pick a card... not just any card:
If you can't bring cash, make a credit card plan. Identify specific items that you'll pay for on specific cards. By making a plan and spreading your purchases to different cards, you won't overspend and you won't risk running up one or two cards that are near the credit limit, which will hurt your credit rating.

5) Resist card offers at the counter:
Retailers are famous for offering "savings" when you open a credit card. But those savings often don't outweigh the long- and short-term negatives. For one thing, opening a new account--or multiple accounts in a short period of time--can negatively impact your credit score. In addition, consumers often spend more than planned when a new card is suddenly available. So this holiday season, resist the temptation.

6) Stay active:
If you have older cards that you don't use, make sure you keep them active. For one thing, some of those older cards help establish a longer history of positive credit. For another, the available credit on those older cards can help keep your credit score higher because it improves your overall debt-to-credit ratio. To keep those cards active, make sure you charge one or two items on them throughout the year... like, say, when you go shopping for the holidays. Then, pay them off when the bill comes in.

7) Always pay on time:
Your payment record is a very large part of your credit score, so it's crucial that you have an idea how your holiday shopping will impact your credit card bills and that you make a plan to pay those bills on time. If you have trouble for any reason, contact your card companies right away to work out a plan that helps you pay down your debt... and save your credit rating from a huge hit.

New Loan Limits for 2009 : November 17th, 2008

U.S. conforming loan limit unchanged for 2009: FHFA
The Federal Housing Finance Agency (FHFA) earlier this week announced its 2009 conforming loan limits for mortgages owned or guaranteed by Fannie Mae and Freddie Mac.

MAKING SENSE OF THE STORY FOR CONSUMERS

· The FHFA conforming loan limit in many areas of the country will remain at $417,000, unchanged since 2006. Loan limits for high-cost areas, including California, will be capped at $625,500. The "new" limits are a decrease from the previous $729,750 limit, which was established earlier this year by the Economic Stimulus Act of 2008. In California, the new conforming loan limits for metropolitan areas range from $474,950 in the Sacramento-Arden-Arcade-Roseville metropolitan area, covering El Dorado, Placer, Sacramento and Yolo counties; to $625,500 in the Los Angeles-Long Beach-Santa Ana metropolitan area.

· The conforming loan limit determines the maximum size of a mortgage that Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac can buy or guarantee. Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan, increasing the monthly payment and negatively impacting affordability for households in California.

· The CALIFORNIA ASSOCIATION OF REALTORS® hopes Congress will make permanent the current $729,750 conforming loan limit before the end of the year as one of the provisions in an economic stimulus package. Last week, the board of directors of the NATIONAL ASSOCIATION OF REALTORS® (NAR) formally signed off on a real estate stimulus proposal, which also supports a permanent increase.

· Many lenders recommend that home buyers who are applying for loans above $625,500, but below $729,750 complete the application process by the end of November. This will help ensure that the loan is processed and funded by the Dec. 31 deadline and that the home buyer does not have to qualify for a jumbo loan at a higher interest rate.

Fed Cuts Short Term Rates to 1 Percent : November 3rd, 2008

In a widely expected move, the Fed cut the short-term interest rate by 50 basis points, from 1.5 percent to 1 percent. The European Central Bank and the Bank of England are both expected to cut interest rates Thursday as they face sharply lower growth prospects as a result of the world's financial turmoil. In another move to increase liquidity, the Fed has established currency swap lines with Brazil, Mexico, South Korea and Singapore, all emerging markets after the slowdown in European and Asian countries. World stock markets have mostly rallied during the last week and were modestly higher on Monday ahead of Tuesday's U.S. presidential election.

A statement issued by the Federal Open Market Committee (FOMC) after the rate cut clearly indicated that the economic slowdown is likely to get worse. Though the Fed is trying to avoid a continued slowdown by cutting interest rates and pumping billion of dollars into the credit market, it looks as if it will take some time before the downside risks to growth mitigated. On a positive note, there was some improvement in the credit markets this past week. The overnight LIBOR rate, the rate used by banks lending money to each other, plummeted below 0.5 percent last Friday, a far cry from its peak of 6.88 percent reached on September 30th. Also last Friday, commercial paper rates fell for 90 day maturities to 3.08 percent from a recent peak of 4.59 percent, reached October 10th.

The investor fear factor tempered last week as the VIX Index (S&P volatility index) dropped from 79.13 to 59.76. Credit markets eased significantly during the week with Government assistance, inspiring investors put their money back in stocks. Stocks were trying to cover losses from the first half of October, as all major indexes (Dow Jones, NASDAQ and S&P 500) ended up by 10 percent. Even though most economic indicators were not good, the market rallied on the upbeat investor mood from the Fed and the Treasury actions. The Real GDP, a leading economic indicator, contracted by 0.3 percent but still finished at a better than expected 0.5 percent. The main reasons behind the contraction were declining consumer spending and mounting job losses. For the third quarter, consumer spending dropped by 3.1 percent, and jobless claims increased to 475,000. The troubled housing market got a boost from a 2.7 percent hike in new home sales.

The mortgage industry witnessed some good news in terms of the California sales figure, which increased by 6 percent from the previous month. JP Morgan Chase put a hold on foreclosures for 90 days until it can come up with a new loan modification plan, after it received $25 billion through the Treasury Department. The FDIC is also planning to modify $500 billion in distressed first mortgages with the help of the $50 billion from the TARP program. Loan application volume was up by 16 percent from the previous week and 30-year and 15-year fixed-rate mortgages were around 6.26 percent and 6 percent respectively.

The Presidential election on Tuesday will be at the top of investor's minds for this week. Labor unions are putting their support behind Democrat Barack Obama while the nuclear power and coal industries are backing Republican John McCain. Among the major issues will be taxes. While McCain promises to extend President Bush's tax cuts and offers a new corporate tax cut, Obama intends to raise income taxes on families making over $250,000 as well as implementing new corporate taxes.

Economic indicators to come this week will be auto sales, ISM, consumer borrowing and the unemployment report on Friday. The coming week will be closely followed across the globe with election anticipation reaching a fever pitch.

Thank you for your business and have a wonderful week.

Home Sales at Highest Level in 13 Months : October 27th, 2008

The big questions of where the bottom is, and how long this will last are certainly on everyone's mind. With crystal balls on back order, let's put some key data points in perspective and look at few things for the upcoming calendar.

Volatility in stocks this week concentrated near the closing hours of each trading day with a wild casino like atmosphere. Continuing to talk about volatility as we have for so long may seem at this point like white noise, yet note that stocks have the ability to correct quickly. A flush of opportunistic sentiment can spark sharp rebounds. Similarly, commodities can do the same. Housing markets on the other hand are different. Housing does not correct as quickly due to the obvious ties with the day to day aspects of people's lives. This is why housing makes a good buoy for how long a recession will last.

Remember building starts were down last week, which was good news for inventory. Friday's September existing home sales reported up 5.5% to their highest level in 13 months. This was the largest monthly percentage increase in 5 years. Up 1.4% from September '07, which was the first year-on-year increase in nearly 3 years. Distressed sales have brought prices down and this is bringing in opportunistic buyers back to the market. Moreover, inventory of unsold homes fell 1.6%. This indicates prices have come down enough to bring sufficient buyers back to the market place and absorb the number of homes coming on to the market. This offers hope the housing market may be near or at the bottom, and an increase in home sales will play a big part in getting the economy back on track.

Note: These are nationwide figures. Unique markets such as Lake Tahoe and the Bay Area will always be ahead of this curve.

We know the Fed has stepping into the credit markets, but like a quarterback off the bench, is still trying everything to get players to work with them. The Fed will meet again Wednesday, Oct. 29th. Following the coordinated global cut earlier this month, we will likely see another slash to Fed Funds & Prime rates. Although short term interest rates are not the greatest challenge facing the economy, confidence remains the core issue and Fed's current mentality is an aggressive multi-prong approach. A 0.5% cut is likely, unless it's 0.25% to conserve ammunition for future cuts. This would drop Prime rate, to which Home Equity Lines are tied, to 4.0—4.25%.

In addition to the Fed meeting, several upcoming events of significance:

Markets do not like uncertainty, and simply knowing which economic policy is headed to the White House should be stabilizing. Putting the election behind us could help.

Agency jumbo (aka "confumbo") loan limits will drop effective December 15. The new limits will be based on 115% of an areas median price range, and capped at $625,500, down from 125% and $729,500, respectively. We will keep you informed as soon as the exact figures become available. If you have upcoming purchase/refinance plans that may be affected, the Dec. 15 deadline mean loan packages should be submitted by Nov. 15. Only 3 weeks away. The Emergency Economic Stabilization Act's Hope Program will facilitate short refinances. Upside-down homes may be eligible for refinance at 90% of current value, and the future appreciation would be split 50/50 with HUD upon sale of property, up the original loan amount. This should also help reduce distressed home sales. We will keep you informed on this as well.

Have a great weekend.

300 is the new 30 and Housing Starts Down ... Finally : October 20th, 2008

We hope the weekend treated you well. I expect the economy and housing continued to dominate coffee shops and dinner conversations. Let's consider perspectives on what we saw last week in none other than stocks and housing, where volatility has a regular seat at the table, and some bad news for housing is good news for homeowners.

We've talked about seeing great real estate investment opportunity while masses are fearful. Analogously, what about seeing the good news in last week's media blast? First a quick look at the stock market where 300 point days seem as typical as 30 once were! Thursday was action packed as the Dow climbed 400 points after being down 400. This swing of 800 points used to take months to occur but is now happening in hours. And through it all, in case you didn't notice, stocks not only closed up in the green for the first time in 5 weeks, but the 4.6% net improvement was the best in 5 years.

Globally, Asian markets and European shares are also responding well in early trading Monday.

Our preferred Financial Planner, Diane Morrison shared a great piece by Warren Buffet on strategy and buying American Stocks. This short write up embedded below includes one of my favorite Warren Buffet quotes on opportunism & fear perspective.

Two key housing figures were lower than economists had anticipated and were widely reported by the media as, "worse than expected". Housing starts fell in September by 6% to a 17 year low, and building permits saw an 8% drop to a 27 year low. Worse??? Worse for whom? Perspective check please! Worse for builders in the short term, but exactly what the overall market needs to improve and therefore good for us all.

Remember the sharp shift to lower home prices we've all seen was the direct result of an inventory flood. Many who got in at exceptionally low interest rates (2002 — 2004) after the dot come crash, took short term (3 & 5 yr) fixed loans, and then either looked to flip their investment, or listed to sell in the face of more conservative qualifications to refinance. Note how the timing of those loans coincided with housing/credit crunch. This, and similar scenarios, resulted in a massive flood of inventory. Simple supply & demand shifted a sellers market to a buyers market, and prices fell. The rate of new homes built is expected to continue to slow by 5% - 10% through the beginning of next year, and this will help work off the overhanging new home inventory. This is good because what is sorely needed in the housing market is a decrease in supply, not an increase.

Regardless of any misconceptions, mortgages are absolutely available, while rates & home prices are favorable. Markets ebb & flow, but the opportunity to make a good decision is there every day. Please let us know if we can be of service.

"Buy American, I am" - Warren Buffett : October 16th, 2008

Buy American. I Am.

By WARREN E. BUFFETT

Published: October 16, 2008

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I've been buying American stocks. This is my personal account I'm talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation's many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month €” or a year €” from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: "I skate to where the puck is going to be, not to where it has been."

I don't like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I'll follow the lead of a restaurant that opened in an empty bank building and then advertised: "Put your mouth where your money was." Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

Dow Jones Surges 936 Points! : October 13th, 2008

Market predictability the past two weeks has moved like a football bounces. It may be a few more good days before you hear optimistic pundits gamble credibility with an "I told you so"…..but those who calmly refused to participate in some of last week's irrational panic and searched against the grain for opportunity in Friday's wild 1,000 pt swing are smiling today.

The Dow Jones soared 936 points today. The greatest daily point gain ever. This type of day was almost inevitable after last week's downward plunge and it does not mean the markets are over the mood swings. Nonetheless, this is of course very good news. It's difficult to say if momentum will carry through tomorrow and outweigh day traders looking to cash in on today's gains, but the markets are feeling better about themselves after this confidence boost.

Following G-7 & International Monetary Fund meetings this past weekend, financial leaders wanted to make it clear that global solutions are in motion. Although details were not released, the guarantee of all bank deposits and a policy to prevent the further failure of major financial institutions, such as Lehman Brothers, is part of the game plan. We will keep you posted!

We hope the ramp up in market updates is helpful as this historic time develops.

Rates Cut Across the Globe : October 10th, 2008

We hope the weekend is enjoyable and providing a deep breath from the tumultuous week.

Whenever possible, it's considered wise to avoid making important decisions while upset or under duress. However, there are times we are not afforded such luxuries and swift action is needed to protect interests. No better example than this past week. To say our markets are under duress is putting it lightly, yet in order to have a clear headed perspective how to respond, it's absolutely critical we understand how the emotionally driven market psychology has outweighed technical indicators during this vicious cycle.

As it applies to what we have seen, the mere act of actually passing of the $700 billion Emergency Economic Stabilization Act was more a therapy session than remedy pill. The desired impact of the $700 billion can be thought of as having 2 stages of potential affect: First to provide an immediate jolt of investor confidence to loosen credit markets. And second, actually putting that money into play, which could take several weeks, or more. The biggest problem right now is the credit markets, not the stock market. What happened to the $700 billion solution? Well, that first stage jolt to investor confidence was simply overcome by other factors and a somewhat irrational dizzying panic snowballed into the massive sell-off. It really is all about confidence.

Let's look at how this week progressed:

Monday: The much anticipated renewal of investor confidence to the credit markets from the $700 billion was stymied by a weekend emergency bailout of European banks, and investors realized the credit freeze had gone global. The Dow dropped 370 points because business, big & small, rely on lines of credit for operational needs….and the big "what if" swells in investor psyche.
Tuesday: The fed took another step towards expanding it's role as a last resort lender by offering to buy commercial paper directly from issuers because companies that depend on commercial paper to finance short term operations have been starved for cash. S&P 500 took it's turn with a historically bad day.

Wednesday: In a rare move, central banks across the globe & the Federal Reserve coordinated to cut key short term interest rates by .5%. Ordinarily, this would send markets soaring….but not in this case. Stocks fell for the sixth consecutive day, albeit significantly less than Monday & Tuesday.
Thursday: Iceland's financial system collapsed in short because their banks relied heavily on external financing. Meanwhile, back in New York the contagious panic continued and the market fell 679 pts for the 7th consecutive day. The stock market drops below 9000 for the first time since 2003 and regardless of what action was take by central banks & policy makers, irrational fear starts taking over. "It's beyond a panic," said Dave Rovelli, managing director of equity trading at Canaccord Adams. "As soon as we start to rally, sellers come back into the marketplace." Friday: This was a telling day. The markets opened down almost 700 points, traded within a wild 1,000 point range, and finished with a strong rally and closed only 168 pts down. This is a day we begin to hear experts express how irrational this has all become. A day with this type of pendulum may very well signal a bottom. We hear opportunistic buyers in the markets talk of firesale prices and opportunism.

Friday's late rally may be an important sign of life. "Nobody wants to miss the bottom," said Anton Schutz, president of Mendon Capital Advisors, who said of the Dow's performance, "I view it as a victory that we only finished down 100." The stock market, like the housing market, is a self fulfilling prophecy. When confidence returns, so will the markets. It's important to keep a level head and a big picture perspective as we're all forced to make important decisions in this time duress. Baron Rothschild said "you buy when there's blood in the streets"….and much like the great opportunities to invest in real estate right now, there's a lot of blood in both the stock & bond markets today. Great investors know the best time to buy is during times of maximum pessimism, and we may be very close, if Friday didn't take us already there.

I know it's very frustrating to watch hard earned dollars evaporate, but a historical perspective may be of help. We are clearly in the midst of a brutal bear market that began in October 2007. Since that time, stocks have declined by a staggering 41%. Note: a 10% decline is a "correction", and a 20% decline constitutes a bear market. The last bear market occurred between 2000 and 2002, and saw a 49% drop. Historically, the average bear market lasts for 12.3 months, with an average decline of 32%. The current bear market is right in line with average historical time frames, and we're slightly better than the bottom in 2002.

What of mortgages you ask??? Yes, there are still very much available and rates are favorable. For the opportunistic looking to invest in real estate, or those looking to refinance current loans, it's my responsibility to tell you what the media is not; that is mortgages are absolutely still available. We are funding loans daily and working with our clients to put a mortgage strategy in place that cooperates with long & short financial goals. In fact, the mortgage industry got some good news this week. Fannie canceled its plan to increase the adverse market delivery charge by 25 bps. Interest rates on Conforming Fixed Rate 30-year and 15-year were steady, averaging 6.07 percent and 5.84 percent, respectively. The rescue plan also gave extensions to some tax breaks, like deductibility of forgiven mortgage debt.

Please let us know if you have any questions or concerns you would like to discuss. Please take care and keep it all in perspective. We will not only get through this, but there will be tremendous opportunities abound.

Letter from C.A.R. - California Association of Realtors : October 4th, 2008

Dear C.A.R. Member:

Earlier today, the U.S. House of Representatives approved the Emergency Economic Stabilization Act by a 263 to 171 vote. The legislation was quickly signed into law by President Bush, capping what has been a very tumultuous two weeks for the credit and financial markets.

This was a difficult decision for our elected representatives to make, especially given the abbreviated time period for review and debate that the gravity of the situation warranted. While passage of the Act should enable the credit markets and the U.S. financial system to set the stage for their eventual recovery, this was only the first step in what will likely take weeks and even months to wend its way through the system before reaching Main Street.

Here's what the legislation does:

Helps American families keep their homes by requiring the Treasury Dept. and any federal agency that owns or controls troubled mortgages to modify those mortgages wherever possible; this may include reducing the principal or interest rate; and extends till the end of 2012 the exclusion from federal income tax of mortgage debt forgiveness.

Addresses the credit crisis by allowing financial institutions to immediately sell $250 billion in troubled assets to the U.S. Treasury Department under the newly created Troubled Assets Relief Program (TARP). Another $100 billion would be made available upon the President's request. Should the President deem it necessary, and with Congressional review, the Treasury Dept. may utilize the remaining $350 billion;

Protects taxpayers by allowing the Treasury Dept. to take an ownership stake in participating companies. In addition, if after five years TARP has incurred a net loss, the President must propose legislation that would force participating companies to reimburse the government to make up the difference;

Sets up an insurance program, funded by the financial industry, to guarantee companies' troubled assets, including mortgage-backed securities purchased prior to March 14 this year;

Curbs executive pay for companies utilizing TARP;

Sets up two oversight committees, a Financial Stability Board, and a congressional oversight panel, to which the Financial Stability Board would report;

Creates renewable energy tax breaks for individuals and businesses, including a deduction for the purchase of solar panels; as well as continuing other tax breaks that were set to expire; and extends relief from the Alternative Minimum Tax (AMT) by another year;

Allows the SEC to suspend the required mark-to-market accounting standards and orders a study to be done on the rule's impact on financial institutions;

Shields bank deposits by temporarily raising the FDIC insurance cap to $250,000 from $100,000; and temporarily increases the federal insurance level for credit union savings to $250,000, both till the end of 2009.

We're appreciative of the efforts of our congressional leaders in both houses as well as of our peers at NAR. Their efforts helped secure adequate protections for both consumers and taxpayers, as well as stricter oversight protocols than what were initially contained in the legislation. C.A.R. will continue to study and report to you additional information and analysis through our weekly "C.A.R. Newsline" and "Market Matters" e-mail newsletters.

Sincerely,

William E. Brown
2008 President
CALIFORNIA ASSOCIATION OF REALTORS

Market Update - "The Bailout" : October 4th, 2008

As we're all obviously well aware, the economy is in the midst of unprecedented times. The liquidity infusion of $100 billion to both Fannie Mae & Freddie Mac only 20 days ago feels like ancient history as we ride the daily wave of events, each day seemingly filled with a month's worth of headline worthy news. We understand that keeping up with the ongoing media blast can be overwhelming and time consuming, and we are committed to helping you stay informed. So, we are going to step up the updates throughout the days/weeks ahead as this situation continues to develop. Recaps will focus on developments/news of significance and how it pertains to our industry. We hope you find the temporary ramp up helpful!

A quick recap in case the media has not quite explained a few things clearly. We have seen 3 substantial allocation of tax dollars in the past month; Fannie/Freddie, AIG, and the passing of yesterday's Emergency Economic Stabilization Act.

Why $700 billion is the number: There are approximately $12 trillion in mortgages held in the United States. We typically have an approximate 1% foreclosure rate. Currently that is between 3.0 — 3.5%. Many believe that worse case scenario we may hit 5.0%. $700 billion is approximately 5% of that $12 trillion.

The key to solving the current situation is to loosen the credit markets so banks, business, and individuals can all borrow money allowing business to thrive. Investor confidence is paramount to returning that liquidity. The $700 billion is intended to revamp a marketplace for all these bundles of mortgages. This money will not be spent, it will be invested. It will take years before we know what the return looks like, but if this works as hoped the win-win scenario of resuscitating the economy and making a return on tax payer money is likely. The $700 billion will be tapped for investment in increments, and will not necessarily all be used. I met with one of our industry's sharpest financial minds on Friday, Barry Habib who has been featured on CNBC & Fox, and he believes ~$250 billion will actually be tapped.

Despite some misconceptions, mortgages are absolutely still available and have not missed funding a single loan as a result of the current situation. The $100 billion each to Fannie & Freddie 3 weeks ago has not been changed. Fannie & Freddie will undergo changes in the near future as the FHFA directs the current conservatorship. We should have a better idea of how they will look going forward in early 2009, but I anticipate reduction and privatization are likely. While many react with fear & paralysis, the opportunity to invest in Real Estate at low prices, low interest rates, and a buyer favorable environment is as good as ever. The AIG bailout was made a priority because they insure everything from oil rigs to Hollywood movies. Their stability has an immense impact on almost every industry imaginable and can be likened to that of a major auto maker who creates the market for the manufacturers of brakes, tires, mufflers, windshields, and much more. AIG and the economy overall are uniquely interdependent.

The solution to the current economic situation, analogous to so many others, is very much a self fulfilling prophecy. Confidence is an absolute necessity and the media generally does not help. Think about the foreclosure statistics above… is this likely to have been presented in the news as foreclosures "at 3%", or "up 300%"??? Think about the difference in emotional reaction the two statistical representations have for millions of Americans. 3% means 97% are making their mortgage payments each month. If it bleeds, it leads, and economic issues are no exception. These are historic times. Let's all do our best to avoid participating in the viscious cycle of gloom & doom, think opportunistically, and we will get through this!

As always, if you have any questions, concerns, or we can be of any help, please feel free to reach us! I've embedded a letter from CAR below outlining the key points of focus of Friday's Emergency Economic Stabilization ACT.