With the announcement of Quatitative Easing 3, interest rates are at their lowest levels of all time.
You can find First American Mortgage on the web at - www.FirstAmericanMortgage.net or give us a call 720-427-8130.
Whether you are an experienced investor or a first time homebuyer, we have the experience and the products to fit your needs and provide the BEST value. Call today!
Tuesday, September 25, 2012
Tuesday, August 14, 2012
To Privatize or Not?
The newly appointed running mate of Presidential Candidate Mitt Romney, Paul Ryan has proposed the following regarding Fannie Mae and Freddie Mac: "The housing-finance system of the future will allow private-market
secondary lenders to fairly, freely and transparently compete, with the
knowledge that they will ultimately bear appropriate risk for the loans
they guarantee. Their viability and profitability will be determined,
not by political favoritism, but by the soundness of their practices and
the value of their services."
Fannie Mae and Freddie Mac are companies that ensure (or are supposed to ensure) quality in mortgage loan files to be ultimately bundled and sold to investors. One of the biggest issues with Fannie and Freddie over the last ten years is they co-mingled the mortgages sold to investors. Sub-prime, commercial and A-paper loans were all bundled into the same investment and sold. Investors were mislead on the risks involved in the asset. When sub-prime loans started defaulting, it brought down "so called" A-paper securities and unraveled the implied trust in the securities outstanding and for sale. Currently former executives of Fannie are being sued by the SEC over these issues.
The main argument against privatizing (mostly from politicians) is that without a government guarantee, mortgages will become more expensive to the consumer. Well, over the past ten years we have seen interest rates go to ridiculously low levels because our government is purchasing these mortgage securities. It is a false market. So, are mortgages inexpensive now, or are they artificially low to stimulate our housing market. We can all agree the latter is the case. The free market will undoubtedly intervene and the costs will self regulate. Besides, over the last four years we have seen numerous companies receive government assistance that at no time had an implied guarantee.
Ultimately, it is the responsibility of these two companies (GSEs - Government Sponsored Entities) to ensure that the mortgage loans that are bundled into investments represent the implied quality of the investment. This is the strong hold - this is what creates investor confidence - designed to stimulate the purchase of these investments. Well...Fannie and Freddie have failed at this. So, if they failed once with their current structure, why will they not fail again if the same structure is left in place?
In the end, mortgage investments will get purchased because they are a good investment. Having the government behind them didn't prevent the mortgage meltdown and it will not help going forward. Our housing market would be much better served by privatizing mortgage securitization firms (Fannie and Freddie are securitization firms). Common sense lending could be a dream come true, the costs would self-regulate, competition and transparency would help ensure quality, and investors will purchase the securities because of return on investment.
Fannie Mae and Freddie Mac are companies that ensure (or are supposed to ensure) quality in mortgage loan files to be ultimately bundled and sold to investors. One of the biggest issues with Fannie and Freddie over the last ten years is they co-mingled the mortgages sold to investors. Sub-prime, commercial and A-paper loans were all bundled into the same investment and sold. Investors were mislead on the risks involved in the asset. When sub-prime loans started defaulting, it brought down "so called" A-paper securities and unraveled the implied trust in the securities outstanding and for sale. Currently former executives of Fannie are being sued by the SEC over these issues.
The main argument against privatizing (mostly from politicians) is that without a government guarantee, mortgages will become more expensive to the consumer. Well, over the past ten years we have seen interest rates go to ridiculously low levels because our government is purchasing these mortgage securities. It is a false market. So, are mortgages inexpensive now, or are they artificially low to stimulate our housing market. We can all agree the latter is the case. The free market will undoubtedly intervene and the costs will self regulate. Besides, over the last four years we have seen numerous companies receive government assistance that at no time had an implied guarantee.
Ultimately, it is the responsibility of these two companies (GSEs - Government Sponsored Entities) to ensure that the mortgage loans that are bundled into investments represent the implied quality of the investment. This is the strong hold - this is what creates investor confidence - designed to stimulate the purchase of these investments. Well...Fannie and Freddie have failed at this. So, if they failed once with their current structure, why will they not fail again if the same structure is left in place?
In the end, mortgage investments will get purchased because they are a good investment. Having the government behind them didn't prevent the mortgage meltdown and it will not help going forward. Our housing market would be much better served by privatizing mortgage securitization firms (Fannie and Freddie are securitization firms). Common sense lending could be a dream come true, the costs would self-regulate, competition and transparency would help ensure quality, and investors will purchase the securities because of return on investment.
Friday, July 13, 2012
Running in the Mud for MS!
I have committed to run five miles in the mud up at Winter Park on August 4th to raise funding to end Multiple Sclerosis. The event is titled "MuckRuckus" and will consist of a five mile run through mud and many obstacle courses. Take a look at the website listed below. There are some pretty interesting pictures and descriptions of the event.
This is the link to my page. http://main.nationalmssociety.org/site/TR/MuckRuckus/COCMUCKEvents?px=11306591&pg=personal&fr_id=18837
I am asking you to join me in the movement to create a world free of MS by making a contribution (or join our running team) in support of my efforts. Contributions can be made on the web link above and any size contribution is much appreciated.
Thank you very much!
This is the link to my page. http://main.nationalmssociety.org/site/TR/MuckRuckus/COCMUCKEvents?px=11306591&pg=personal&fr_id=18837
I am asking you to join me in the movement to create a world free of MS by making a contribution (or join our running team) in support of my efforts. Contributions can be made on the web link above and any size contribution is much appreciated.
Thank you very much!
Monday, June 11, 2012
Dimon to Testify
This week the stage is set for James Dimon to testify before the senate banking committee regarding the $2 billion loss JP Morgan sustained from hedge trading losses in early 2012. Will the fall out from this reckless trading be the end of JP Morgan Chase (the losses are expected to far exceed $2 billion)? Some believe the majority of the top 5 banks in our country are on a predetermined path to extinction. I disagree with this notion.
The top 5 banks will prosper for some time ahead due to sheer size and scope. To date, the FDIC has shut down 28 banks thus far in 2012 compared to 45 banks at this time in 2011. Even though we are at nearly a 50% reduction, this is still far too many banks being forcibly closed. Once this number starts to level out to the pre-2008 figures (http://www.fdic.gov/bank/individual/failed/banklist.html), consumers will feel more secure and turn to smaller, more local financial institutions to handle their banking needs. This will put pressure on the top 5 banks, but will not force them out of business.
Regulation from legislation is the question to the existence of the top 5 banks. The political lobbies of the top 5 banks are too strong and too impor$ant to the politicians to propose legislature that will lead to their demise.
For now and for later, trust First American Mortgage with your real estate financing needs. We work with both large and small banks to ensure that you are getting the Best Value available.
Thank you!
The top 5 banks will prosper for some time ahead due to sheer size and scope. To date, the FDIC has shut down 28 banks thus far in 2012 compared to 45 banks at this time in 2011. Even though we are at nearly a 50% reduction, this is still far too many banks being forcibly closed. Once this number starts to level out to the pre-2008 figures (http://www.fdic.gov/bank/individual/failed/banklist.html), consumers will feel more secure and turn to smaller, more local financial institutions to handle their banking needs. This will put pressure on the top 5 banks, but will not force them out of business.
Regulation from legislation is the question to the existence of the top 5 banks. The political lobbies of the top 5 banks are too strong and too impor$ant to the politicians to propose legislature that will lead to their demise.
For now and for later, trust First American Mortgage with your real estate financing needs. We work with both large and small banks to ensure that you are getting the Best Value available.
Thank you!
Wednesday, May 30, 2012
If This Then That!
Posting here...makes it's way around the social media circuit. FB and Twitter are now victims of simultaneous posts! Mahalo.
Tuesday, May 22, 2012
Paul Volcker and Securitization
Earlier this month, Paul Volcker (American Economist and Chairman of the Fed under President Carter and President Reagan) stated that modern securitization causes banks to engage in speculative trading putting their customers and shareholders at too large a risk.
Gramm-Leach-Bliley tore down Glass-Steagall in 1999 under President Clinton. Glass-Steagall was a law that was in place to prevent diversion of funds into speculative operations and prevent the affiliation of banks, insurance, and securities companies. Political lobbying and economic pressure caused congress to overturn a law that had held our financial system together for over 66 years! Now we have banks, insurance and investments all under the same corporation - too big to fail.
The new financial reform bill (Frank-Dodd) has some provisions to abate speculation within financial institutions (ironically called "The Volcker Rule"). Will it be enough? JP Morgan Chase is under investigation currently for violating this rule and loosing over $2 billion due to speculative trading. Let's see what happens here.
Yes, Fannie and Freddie need to be overhauled with a serious dose of common sense (the ghost of Thomas Paine!) While modern securitization aids in allowing speculation by banks, it is not the reason the US banking sector almost collapsed in 2008. This was a direct result of the greed caused by enticement of lobbyists from banks, insurance companies, and securities firms to repeal Glass-Stegall and the fortune they stood to make (and have made).
Gramm-Leach-Bliley tore down Glass-Steagall in 1999 under President Clinton. Glass-Steagall was a law that was in place to prevent diversion of funds into speculative operations and prevent the affiliation of banks, insurance, and securities companies. Political lobbying and economic pressure caused congress to overturn a law that had held our financial system together for over 66 years! Now we have banks, insurance and investments all under the same corporation - too big to fail.
The new financial reform bill (Frank-Dodd) has some provisions to abate speculation within financial institutions (ironically called "The Volcker Rule"). Will it be enough? JP Morgan Chase is under investigation currently for violating this rule and loosing over $2 billion due to speculative trading. Let's see what happens here.
Yes, Fannie and Freddie need to be overhauled with a serious dose of common sense (the ghost of Thomas Paine!) While modern securitization aids in allowing speculation by banks, it is not the reason the US banking sector almost collapsed in 2008. This was a direct result of the greed caused by enticement of lobbyists from banks, insurance companies, and securities firms to repeal Glass-Stegall and the fortune they stood to make (and have made).
Friday, April 20, 2012
Friday, March 23, 2012
FHA Changes MIP Premiums
On 4/9/12, President Obama's Temporary Payroll Tax Cut Continuation Act of 2011 is requiring FHA to increase the mortgage insurance premiums for newly originated loans. Currently, 30 Year Fixed FHA Mortgages require 1% of the loan amount paid upfront as mortgage insurance. This figure can be financed into the loan amount and is rarely seen on the borrower's bottom line. In addition to this, there is a 1.15% annual mortgage insurance premium that is paid monthly.
These fees have been going up at various intervals over the last few years. The demise of "sub-prime" lending has allowed FHA insured loans to flourish with their low down payment requirement of 3.5%.
The changes that are going to occur on 4/9/12 will make a big impact on the affordability of FHA loans. The upfront mortgage insurance premium is going to 1.75%. A whopping 75% increase. The annual mortgage insurance paid monthly will increase to 1.25%. .10% on $100,000 equals an $8.33 increase in monthly payment. This is quite low compared to the last increase of .25% in April of 2011.
What does this mean to you? - With the ample availability of 5% down payment conforming loans, not too much at the moment. FHA loans drive a very important sector of our housing economy right now. This sector is allowing the nation's banks, GSEs (Fannie and Freddie) and other holding companies to get out from under the massive amount of properties they own as a result of foreclosure and default. For these institutions, increasing the difficulty for borrowers to obtain FHA financing, is not good and results in a longer term holding non-performing assets. Fortunately, we are starting to see REITs coming alive again and buying up these non-performing assets due to the strengthening rental market. As investors step up to make up for the shortfall of FHA buyers, look for prices and interest rates to head north.
These fees have been going up at various intervals over the last few years. The demise of "sub-prime" lending has allowed FHA insured loans to flourish with their low down payment requirement of 3.5%.
The changes that are going to occur on 4/9/12 will make a big impact on the affordability of FHA loans. The upfront mortgage insurance premium is going to 1.75%. A whopping 75% increase. The annual mortgage insurance paid monthly will increase to 1.25%. .10% on $100,000 equals an $8.33 increase in monthly payment. This is quite low compared to the last increase of .25% in April of 2011.
What does this mean to you? - With the ample availability of 5% down payment conforming loans, not too much at the moment. FHA loans drive a very important sector of our housing economy right now. This sector is allowing the nation's banks, GSEs (Fannie and Freddie) and other holding companies to get out from under the massive amount of properties they own as a result of foreclosure and default. For these institutions, increasing the difficulty for borrowers to obtain FHA financing, is not good and results in a longer term holding non-performing assets. Fortunately, we are starting to see REITs coming alive again and buying up these non-performing assets due to the strengthening rental market. As investors step up to make up for the shortfall of FHA buyers, look for prices and interest rates to head north.
Monday, February 20, 2012
Jimmy Buffett's Long Lost, Clean Cut, Relative.
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| Hi Kaleah! |
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| Hi Uncle Brad! |
Thursday, February 16, 2012
Three's Company
Tuesday, February 7, 2012
Bank of America said to put off Refinancing Clients
Bloomberg.com reported today that Bank of America has started a reservation system allowing their customers to receive a call back in 60-90 days due to incoming call volume. So yes, incredibly they are saying "we are too busy for your money right now" during these historically low interest rates. Guess what? - First American Mortgage, LLC is open for business and we are not only originating refinances currently, we are providing great service too! Did Bank of America tell you to wait 60 days before they could help you? Well, don't think twice - go to www.FirstAmericanMortgage.com, fill out our secure online application and get a call from me, the owner, that very same day. I am never too busy for your referrals either. Thank you!
Friday, January 20, 2012
SOPA/PIPA, did Google just shut down congress?
Anyone who's been on the internet within the last 24 hours most likely saw the banners asking for support to petition against SOPA and PIPA. SOPA and PIPA are two pieces of legislation that would restrict content on the internet and shut down websites that infringe on copyrights. Similar to what happened to Napster in 2001.
Viacom, Dow Chemical, CBS Corporation and Major League Baseball are a few of the companies that support the bills. Whereas Google, Microsoft, Yahoo, and Petzel are a sample of some of companies that oppose the bills.
I do not know whether these bills will pass or be re-written into another bill that will one day pass, but the fact that Google and a few other web sites collected enough public response in ONE DAY to force congress to halt the bills' progress is ASTOUNDING.
Think of what this could mean to our way of Government. Think what this could mean to our way of life as Americans. It is a very exciting time to be alive!
Viacom, Dow Chemical, CBS Corporation and Major League Baseball are a few of the companies that support the bills. Whereas Google, Microsoft, Yahoo, and Petzel are a sample of some of companies that oppose the bills.
I do not know whether these bills will pass or be re-written into another bill that will one day pass, but the fact that Google and a few other web sites collected enough public response in ONE DAY to force congress to halt the bills' progress is ASTOUNDING.
Think of what this could mean to our way of Government. Think what this could mean to our way of life as Americans. It is a very exciting time to be alive!
Wednesday, January 4, 2012
S&P/Case-Schiller...rounding out numbers for big statements
"According to David Blitzer, chairman of Standard and Poor's index committee, current home prices are back to 2001 levels when adjusted for inflation." - Housingwire.com 1/3/12
http://www.housingviews.com/2011/12/31/home-prices-corrected-for-inflation-at-2001-levels/real-house-prices/
Upon reading this and suddenly believing I could go buy my neighbor's house for two thirds of its value - I thought it might be best to take a look and see some REAL (local - not Detroit or Las Vegas) numbers:
1. 1070 Grant Place, 80302 sold in June of 2000 for $355,000 and is currently listed for sale at $599,000.
2. 345 S. 38th St, 80305 sold in August of 2000 for $332,000 and is currently listed for sale at $414,975.
3. 2343 Kalmia, 80304 sold in December of 1999 for $485,000 and is currently listed for sale at $734,900
Now - these homes are located in different neighborhoods within the City of Boulder and have shown an average increase of 48.33% since the 12 month period ended August 2000. Inflation has averaged 2.48% over that time period according to inflationdata.com. Taking into account the inflation variable and assuming the sellers get 90% of their list price, we are still looking at increases greater than 30%. Also, remodels or additions could be a factor for larger increases in value. But since the Case-Schiller does not take that into account, neither will we.
I would like to thank David Blitzer for proving once again, that real estate investing comes down to three things: location, location and location. Forecasting and investing models can always be skewed and shown to be inaccurate. Always do your leg work and due diligence before investing.
Happy 2012!
http://www.housingviews.com/2011/12/31/home-prices-corrected-for-inflation-at-2001-levels/real-house-prices/
Upon reading this and suddenly believing I could go buy my neighbor's house for two thirds of its value - I thought it might be best to take a look and see some REAL (local - not Detroit or Las Vegas) numbers:
1. 1070 Grant Place, 80302 sold in June of 2000 for $355,000 and is currently listed for sale at $599,000.
2. 345 S. 38th St, 80305 sold in August of 2000 for $332,000 and is currently listed for sale at $414,975.
3. 2343 Kalmia, 80304 sold in December of 1999 for $485,000 and is currently listed for sale at $734,900
Now - these homes are located in different neighborhoods within the City of Boulder and have shown an average increase of 48.33% since the 12 month period ended August 2000. Inflation has averaged 2.48% over that time period according to inflationdata.com. Taking into account the inflation variable and assuming the sellers get 90% of their list price, we are still looking at increases greater than 30%. Also, remodels or additions could be a factor for larger increases in value. But since the Case-Schiller does not take that into account, neither will we.
I would like to thank David Blitzer for proving once again, that real estate investing comes down to three things: location, location and location. Forecasting and investing models can always be skewed and shown to be inaccurate. Always do your leg work and due diligence before investing.
Happy 2012!
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