November 19, 2013 Real Estate Report - Maybe It's Not a Fluke

Maybe It's Not a Fluke Two weeks ago we published a column entitled "Words of Optimism." Last week a surprisingly strong employment report was released. Was this a coincidence or was it an accurate prognostication? We do know that the jobs data can be tricky. What looks strong one month can be reversed the next month as the new month's data is always accompanied by revisions of previous numbers. Thus, we would need to see two or three months of strong jobs reports before we declare a turnaround and a great prediction (or a lucky guess). On the other hand, the words of optimism were based in fact and those facts included the important numbers regarding increased household formulation. As a matter of fact, household formulation and jobs data are clearly linked. As more jobs are created, more households are created as children move out on their own. This demand for housing -- both rental and purchase -- creates more jobs. This relationship created a vicious cycle during the recession. Today it could influence the start of a virtuous cycle in which the economy is buoyed by both factors working together. Again, our thoughts are not just the result of rampant speculation. A recent report by the Federal Reserve Board indicated that the employment rate was set to fall in the coming months -- "Across the board, these indicators show the pace of the labor market recovery has increased compared with a year ago," wrote Mary Daly, the San Francisco Fed's deputy research director, and colleagues Bart Hobijn and Benjamin Bradshaw. "We take this as evidence that the recovery in the labor market is robust, broad-based, and likely to continue, if not accelerate, over the coming months." (Reuters). So, perhaps the surprising jobs report was not a fluke. But we still need to see a few more months of data to really determine if this is the case. Keith Stewart 773-529-7000

November 12, 2013 Real Estate Report - Employment Report

Employment Report A busy week included both an Election Day and a release on the employment numbers for October, as well as numerous additional points of data. The employment report was surprising to say the least with the markets assuming that the government shutdown would have held a lid on hiring during the month while government workers were furloughed. Not only was the addition of over 200,000 jobs more than expected last month, but the previous months' data was adjusted higher as well. Economic data measuring activity in the manufacturing and service sectors also exceeded expectations. This strong data is important with regard to influencing measures of consumer sentiment which had turned lower during the month as the shutdown drama unfolded. From here, stronger consumer sentiment is critical. Why? Because it is shopping season. November is the start of the Holiday Season and market analysts will be at the malls more frequently. Perhaps they will be doing some shopping, but more than likely they will be measuring early data regarding how busy the shopping season will be. Each year, store traffic becomes less important because so many are shopping on line. We are approaching both Black Friday and Cyber Monday in a few weeks. Though the word is that many stores will be open on Thanksgiving Day and perhaps Black Friday will become Black Thanksgiving Weekend. Certainly on-line shopping is open on Turkey Day so why not the stores? Well, those who have to work Thanksgiving Day certainly will not be thrilled -- unless they don't like turkey and football. Let the games begin! Keith Stewart 773-529-7000

Real Estate Report - Election Day - November 5, 2013

Today is Election Day. With all the partisan issues we have had over the past few years, we do understand that many Americans are turned off by politicians. Plus today's Election Day does not focus upon national races such as the President and Congress. We believe that exercising your right to vote is what makes our nation great. And the people who are elected in local and state races are those who will be running for Congress in the not too distant future. In essence, this is our chance to stock up the "farm system" (baseball term) for a stronger future. Thus, even though off election years tend to have low participation rates, we believe that these years may even be more important for ours and our children's futures. Meanwhile, we are on data overload as our government gets caught up on economic data releases delayed during the shutdown. Two things about these releases. First, we are not sure if they are as accurate as usual. Second, weaker data released may be temporary due to the effects of the shutdown. For example the release regarding consumer confidence absolutely showed sagging confidence as a result of the shut down. The real story will be told after this data clears and we see how the consumer rebounds. A consumer rebound is all-important especially because of the time of the year. Yes, the Holiday shopping season is here. This season accounts for the results for many companies during the year. So we would like to wish you Happy Election Day and a great start to the season of purchasing! www.ChicagosMortgageChoice.com

Expanded HARP Refinance Eligibility

Fannie Mae and Freddie Mac have announced expanded eligibility for refinancing under their Making Home Affordable refinance program HARP. The expanded parameters allows for loans “Closed” (note date) prior to May 31st 2009 and currently owned by the agencies to be included in the program. The previous program required that your loan must have been “purchased” by Fannie and Freddie by May 31st 2009. Homeowners that had closed for example in February 2009 may not have yet been sold to the agencies and therefore NOT eligible. If your current loan closed prior to May 31st 2009 and your were previously not able to refinance under this program, you may now be eligible. There are also more options available to allow for higher LTV’s, (in some cases unlimited), transfer of existing PMI insurance, as well as condominiums that were previously not allowed. If you have been previously unable to refinance under this program and think you may now qualify, give me a call so we can check into it. Keith Stewart 773-529-7000

Short Sale vs. Foreclosure - Fannie/Freddie Waiting Periods

I have recently had several situation develop with Mortgage Servicers inaccurately reporting Short Sales as Foreclosures on credit reports. Per Fannie/Freddie guidelines the waiting period for a Short Sale is 2 years with a Foreclosure being 7 years.
I have had several clients that are 2 years after a short sale with the lenders reporting as a foreclosure. The issue is that the automated underwriting engine will not approve the loan because it sees a foreclosure. A lender can "Manually Underwrite' the file with documentation to support a short sale. The problem is that no lenders will manually underwrite and approve the loan leaving the borrower with having to get the lender to change the credit report. This could be a very tedious task to say the least. As of now, there is no code for a lender to distinguish between a Short Sale or a Foreclosure. Hopeful this will change in the future.

If you are having an issue with this give me a call.

Keith Stewart

773-529-7000

Sequestration

Only in America would we desecrate the English language to find a word to describe what our government is up to. Yes, March 1 is the official sequestration date. But don't expect the government to declare the next Federal Holiday to be "Sequestration Day." Here are a couple of points about this word. First of all, the word sequestration means confiscation or seizure of assets. No one is proposing a seizure of assets here. What we are talking about is automatic and severe budget cuts. In this case we will defer to the Congressional Research Service which has rewritten the dictionary to expand the definition to mean... the permanent cancellation of budgetary resources by a uniform percentage. Moreover, this uniform percentage reduction is applied to all programs, projects, and activities within a budget account.
Okay, now that we know what it means, the questions that follow are... will it happen and if it does happen, what affect may it have upon our lives and especially the economy? There have been many articles written regarding what could happen if the budget is cut by approximately 10% overnight. These cuts include all discretionary spending from jobless benefits to food inspections to defense. Not all cuts would happen immediately. For example, if there are furloughs of Federal workers, we have read that the furloughs may take 30 days or more to implement. That gives Congress and the Administration more time to come up with a solution. And you know what they do when they have extra time? Usually nothing. There is no doubt that dropping hundreds of millions of dollars out of the budget will take some steam out of the economy this year. This could lead to lower rates and oil prices. We just don't think that the cuts will be allowed to take hold all year. With a compromise of some kind, there will be some cuts, but how much remains to be seen.

www.ChicagosMortgageChoice.com

The Numbers Don't Lie

This week the markets were focused upon the all important employment report. While the number can be volatile from month-to-month, the dip in first time unemployment claims during the previous two weeks made the markets more optimistic regarding January's numbers. They came in at a lackluster 157,000 jobs created for the month with an unemployment rate of 7.9%. These numbers were worse than expectations; however, a revision of previous data added over 300,000 new jobs to the data previously released in 2012. The numbers don't lie. There have been additional reports released recently that show the economy is growing more quickly. For example, the December orders for durable goods were much higher than expected. Preliminary numbers indicated that the growth of the economy stalled in the fourth quarter, but this pause was attributed to temporary factors such as the weather according to commentary by the Federal Reserve released after the Fed meeting ended on Wednesday.
As we have pointed out in the past, a growing economy is great news. But it also means that we can expect higher prices to join the party. It is not a coincidence that home prices rose last year. More recently, oil prices are up around ten percent and interest rates have begun creeping up as well. All along we have warned that the Federal Reserve Board has no power to keep rates low in a stronger economy. Nor would they want to. There was more drama regarding the Fed meeting this week for this very reason and rates eased a bit when the Fed indicated they are continuing their support for low rates. Meanwhile, it is expected that those who have been on the sidelines may very well recognize that this is their last chance to purchase a home which is on sale. Rates and home prices are up slightly, but they are currently still a bargain. If the numbers keep rolling in like they have, this fact may no longer be the case.

Keith Stewart
www.ChicagosMortgageChoice.com