Weekly Comments and what my 7-year old taught me

Tangent: What my 7-year old taught me:

My 7 yr old, Merrick, has expressed his interest to run a lemonnade stand business this summer.  He went on to mentioned that he would like the money he makes from the 1st lemonnade stand to have more lemmonade stands and cookie sales.  It blew me away that this kid understands the concept of re-investing without ever hearing the term "re-invest".  He then went on to tell me about his idea to give his best customers a Wii video game at the end of the summer to thank them for being such good customers.....

In 13 years of mortgage lending, I never thought about a VIP program for the repeat business partners and their clients!? My seven year old conducts one lemmonade stand and figures this out!?  While I always felt that I worked hard to provide the best service I could and provide the most aggressive financial packages I could, I came to the realization that this should be implemented in my practice.  1 expect to roll out a program in the next 45 days that mirror's my son's...probably not a Wii video game though. 

Financial Markets

The Dow Jones saw its streak of 8 weeks of gains snapped on Friday, as it fell over 166 pts, and ended the day at 11,823.   The riots and political unrest in Egypt is deemed to be the scapegoat for sell-off in stocks.  I say scapegoat because many felt that the Dow had reached a “technical ceiling” at around 12,000, and that a pullback was inevitable. 

Commodities and of course the bond market reaped the benefits of the market shift, and mortgage rates generally speaking improved by about .125%.  The rise in the price of oil is getting notice for obvious reasons.  Oil is now trading for over $89 per barrell.  As gas prices increase, the cost of shipping goods increases therefore the cost of goods we buy increases, which is a catalyst for inflation.  

Local Economy and Real Estate Market

The number of foreclosures dropped in 2010 from 2009 by 19%, according to an article in the RJ.  Hubble Smith and Larry Murphy contribute the drop to loan modifications, a higher success rate of short sales getting approved and the Making Home Affordable Program as viable deterrents of foreclosures.

http://www.lvrj.com/business/foreclosures-decrease-in-2010-due-to-short-sales-and-modifications-114744519.html

Clark County taxable sales had a year-over-year increase for the month of November by 1%.  The report is another signal that the recovery in Nevada is continuing, but slowly.

http://www.lasvegassun.com/news/2011/jan/27/clark-county-taxable-sales-see-small-boost-novembe/

Products of mention to help you sell more homes:

·         FHA Choice Plus (Now, PRMI will allow FICO scores as low as 580)

·         95% conventional financing with FICO as low as 660

·         90% financing for 2^nd homes

·         90% financing for jumbo loans up to $600,000

 

Weekly Comments

Financial Markets
Stocks continue to climb this week, as the Dow gained another 100 pts in 4 days of trading.  Mortgage bonds continue to be sold, resulting in mortgage rates inching up.  In many instances, 30 yr fixed mortgage products require the buyer paying points in order to lock in at an interest rate south of 5%.  The weekly Jobless Claims Report was the primary catalyst for the stock market gain, as much of the week’s gains occurred after the report announced.  The weekly jobless claims dropped by 37,000 to 404,000, which was 20,000 less claims than expected.     


Local Economy and Real Estate Market
The Building Jobs Coalition has a proposed a program to the Nevada state legislature that would generate up to 27,000 jobs over the next two years, and over 100,000 a number of years later.  The program would be funded by minor increases in taxes.  Applied Analysis head Jeremy Aguero staunchly supports the plan and feels that it has a chance to become a reality.  The funds would go to various public works projects such as construction of roads, schools, and other government facilities. 
http://www.lasvegassun.com/news/2011/jan/20/construction-industry-raise-taxes-jobs/

Below is an article from the RJ that summarizes home sales in Southern Nevada for 2010.  In total, just over 48,000 home sales occurred, with 5,341 of those sales belonging to new homes. 
http://www.lvrj.com/business/las-vegas-new-home-sales-up-in-2010-resales-down-113916814.html

Program Change 

·   Primary Residential Mortgage will be rolling out its FHA program for buyers with less than a 620 FICO score in the next 30 days

·   We now offer 90% financing for buyers purchasing a 2^nd home

Primary Residential Mortgage continues to strive towards offering true agency guidelines, which enables its loan officers to assist home buyers that are getting declined by other lenders with extraordinarily conservative "overlays". 

Weekly update- No tangent this week

Financial Markets
The Dow Jones posted another strong week, closing on Friday over 11,730 which is up nearly 150 points for the week.  Mortgage backed securities inched higher for the week, but could have been much worse as inflation reports came in at a tame number.  December’s Consumer Price Index (CPI) increased .5%, but .4% of the increase was due to increased food and energy costs.  With food and energy costs backed out, the rate only increased .1%.  This loosely translates into an annual inflation rate of 1 to 1.5%.  The Federal Reserve’s ideal inflation rate would be probably somewhere around 3%. 

This upcoming week could be volatile for mortgage rates because many companies will be releasing their earnings for the 4^th quarter of 2010.  If earnings meet what was projected, we could see mortgage rates increase, as more investors look to move their money from the safe harbor bonds to the higher yielding stock market.  If earnings miss, the exact opposite will occur.    

Local Economy and Real Estate Market

The Center for Business and Economic Research released its Southern Nevada index of Leading Economic Indicators report for the month of December, and it saw an increase of nearly ½%.  This index is considered to be a predictor of job growth 4-6 months down the road.  Below is the link to the actual site and the report itself.

http://cber.unlv.edu/snindex.html#table

Tip of the Week:

Tax Returns

If you have a client that is considering purchasing a home, you may want to have them speak with your trusted loan officer before they file their tax returns.  Often minor tax write-offs such as: meals and entertainment, mileage, uniforms, tools for their trade etc result in a slightly higher tax rebate for your client, but could also be the difference in qualifying for a home loan.  There are many other examples in which a client’s filing will affect how an underwriter will review their income, so have them meet with your lender, before they meet with their accountant.

Program Change 

Primary Residential Mortgage is now able to offer 95% financing on conventional loans with a FICO score of 660!  PRMI recently re-engaged with a mortgage insurance company that has agreed to insure these loans in Clark County, and are now able to offer the product to your clients.