The Lake Team

Guaranteed Rate Report – Sims – March 8, 2010

Market news for the week.

10 Questions for Homebuyers Who Want to Go Green

For homebuyers, green is fast becoming a priority — whether it’s because they want to reduce their energy costs, minimize their carbon footprint or improve indoor air quality.

Here are 10 questions that prospective buyers or renters ought to ask to find out how green a house or apartment is.

1. How big is it?

The bigger the home, the more energy it uses.  The U.S. Green Building Council considers a “neutral size” home — basically what most people need, without what might be considered luxury space — to be 900 square feet for a one-bedroom home, 1,400 square feet for two bedrooms and 1,900 square feet for three bedrooms.  A 100% increase in the size of the home adds anywhere from 15% to 50% to energy use.

2. Where is it?

Can you walk to public transportation?  Are there sidewalks or easy places to walk in the neighborhood so you don’t always have to drive?  How close are shopping centers and other places you would frequent?  The Web site walkscore.com rates the walkability of cities, neighborhoods and individual addresses and shows the distances to stores, restaurants, schools and amusements.

3. How is it oriented?

South-facing windows can trim heating costs in the winter.  Shade from trees to the south and west can reduce cooling costs in the summer.

4. Is it well-insulated, and are doors and windows sealed tightly against air leaks?

The U.S. Energy Star Web site, energystar.gov, features a calculator to help determine how much insulation you need, based on your location.  To guard against air leaks, windows and exterior doors ideally should have an Energy Star rating, which indicates they meet a certain standard of efficiency in preventing the loss of heat in the winter and cooling in the summer.  You may be able to feel air leaks, or you can hire an energy auditor to conduct a “door blower test” — a big fan placed in a doorway sucks air out of the home, creating easily detectable drafts rushing in from outside wherever there’s a leak.

5. Has the indoor air quality been tested?

Well-insulated, well-sealed homes not only hold in heat and cooling, but also can retain toxins such as formaldehyde, mold, asbestos and lead.  A test will show whether any toxins are present in levels that exceed the safe maximums established by the Environmental Protection Agency.  You might also ask whether the home was constructed or renovated with nontoxic building materials and furnishings, such as low- and zero-emission paints.

6. If it’s an older home, have insulation, heating and cooling systems and appliances been upgraded?

Newer products are far more efficient than those bought several years ago.  Also, has higher-efficiency lighting been installed?

7. How efficient is the water usage?

Are the kitchen and bathrooms equipped with water-efficient plumbing fixtures?  If it’s a house, does it have a water-conserving irrigation system for the grounds, and landscaping that minimizes the use of water?  It may also have a rainwater collection and storage system, particularly in drier areas where water is increasingly scarce and costly.

8. What’s on the roof?

A lighter-colored roof reflects more heat than a dark-colored roof, which absorbs heat, putting more strain on the cooling system.  Does it have skylights that let in natural light?

9. Where did the home’s materials come from?

Recycled or salvaged building materials reduce the home’s impact on the environment.  Also preferable are materials that are locally available, can be processed with less energy and water, are reusable or recyclable, are durable and are abundant in the environment.

10. Has it been certified green?

The U.S. Green Building Council, the Environmental Protection Agency and others offer ratings on homes, based on inspections by trained third-party professionals.

By: Sari Krieger, www.wsj.com

Mon MMRecap for March 1

Last week began flat, but it turned out to be a good week for U.S. Treasuries.  Disappointing economic news, successful auctions, continued economic turmoil in Europe and another pledge from the Fed to keep interest rates low for an “extended period” kept buying in bonds steady to heavy.

On Tuesday traders learned that consumer confidence in February fell to 46 from a 16-month high of 56.5, igniting a huge rally.  Concerns about the economy and job prospects sent the index plunging far below the predicted 55.5, giving Treasuries their best day of the week.

They rallied again Wednesday when January new home sales plunged 11.2% to an annual rate of 309,000 units — the fewest since record-keeping began in 1963.  An abundance of foreclosures on the market and high unemployment were cited as key reasons for the downturn.

Fed chairman Ben Bernanke also addressed Congress and acknowledged that recovery had begun, but cited “jobs” as the main challenge.  He also said that economic recovery is not self-sustaining.  These statements were well received by Wall Street, which drew some money from Treasuries.

But bonds rallied once again on Thursday as first-time jobless claims rose by 22,000 to 496,000 for the week ended Feb. 20.  Some blamed the weather for the numbers, which were far higher than the expected 460,000.  Continued claims, people collecting benefits for more than one week, rose to 4.6 million.

Durable goods orders in January doubled expectations, rising 3%.  Aircraft accounted for the lion’s share of orders.  When transportation was excluded, orders fell 0.6%.  The unemployment numbers and fear that Greece may not be able to pay its debts sent investors fleeing to the safe haven of bonds.

Treasury yields edged down early Friday on a mixed bag of economic reports.  Existing home sales in January fell 7.2% to an annual rate of 5.05 million units, the lowest level in seven months.  The inventory of unsold homes rose to a 7.8-month supply.  Separately, the first revision of 4^thquarter GDP edged up to 5.9% from 5.7%, indicating the economy is growing more quickly than expected.

The Chicago PMI of February manufacturing conditions rose to 62.6 from 61.5, but the University of Michigan’s final consumer sentiment survey for February edged down to 73.6 from 74.4, on jobs and the economy — the same concerns that affected the consumer confidence report.

Mortgage applications slowed during the week ended Feb. 19, according to the Mortgage Bankers Association.  Purchase applications were down 7.3% while refis tumbled 8.9%.

This week is busy, but it all leads up to Friday’s February employment report.  Analysts expect another 20,000 jobs to fall from nonfarm payrolls.  In addition, the unemployment rate, taken from a separate survey, could rise to 9.8% from 9.7%.  This would ignite buying in bonds.

In December the rate was 10% and a revised 150,000 jobs were lost.  Nevertheless, Treasuries should respond positively to the numbers, if they come in on target.  The answer to economic recovery is jobs, jobs, jobs.

The week begins with expected gains in personal spending and income for January.  Both should rise 0.4%, but core prices are expected to show only a 0.1% increase.  This indicates that inflation, an enemy of fixed-rate assets, is well under control.

Wednesday’s ISM index on February manufacturing conditions will make no waves if it falls to the expected 58.0 from 58.4.  A bigger drop, however, could rally Treasuries.  The afternoon release of the Fed beige book might also impact trading.  A report indicating weaker economic conditions in the 12 federal districts could boost Treasuries, while signs of strength would have the opposite effect.

Thursday’s firsttime jobless claims for the week ended Feb. 27 could influence trading, but recent volatility leaves uncertainty about which way it will go.  This report will be followed by a revision of 4^thquarter productivity and costs.  The advance numbers showing a 6.2% increase in productivity and a 4.4% decline in costs should remain unchanged.

Factory orders for January are expected to increase 1.0%, but this will have little impact.  Pending home sales for January, however, could put pressure on bonds.  The NAR expects a 1.7% increase, which would be dwarf the 1% gain the previous month.

The Future of Plastic: 5 Credit Trends for 2010

The CARD„Act goes into effect on Feb. 22 and with it come stronger consumer protections.  Banks will no longer be able to raise interest rates during the first 12 months after opening an account — or hike rates on pre-existing balances altogether.  Credit-card payments, if exceeding the minimum, will be allocated to the higher-rate balances first.  Monthly statements will become easier to understand and the ability to issue credit„cards to college students will be severely restricted.

But these new safeguards will come at a price.  Although card„issuers focused last year on making sure they’ll be in compliance with the new law, now they will have to figure out how to make money given the changes in their business, says Dennis Moroney, a research director at financial-services research group TowerGroup.  This “will be the year of transition for the banks,” he says.

Consumers have already gotten a hint of what’s to come.  As soon as President Obama signed the CARD Act into law last year, banks sprung into action, hiking interest rates across the board and switching their APR formulas from fixed to variable rates.  They’ve already found loopholes in the new law, including a creative way of charging a penalty APR as soon as a payment is one day late and continuing to implement the soon-to-be prohibited practice of double-cycle billing.

Here’s what else consumers can expect from their credit-card issuers in 2010.

1. Punishing inactivity

Using your credit cards wisely used to mean keeping your balances low relative to your available credit, and locking your cards in a drawer was deemed smart.  Today, the wise use of credit entails something entirely different: making sure those cards don’t stay in the drawer for too long.

As card issuers face growing restrictions in an economic environment that remains challenging, this year they will place an even stronger focus on inactive accounts, reducing credit„limits, introducing inactivity fees or closing them altogether, says Robert Hammer, the chief executive officer of R. K. Hammer, a bank-card advisory firm.  Why?  Inactive accounts are a losing proposition for card issuers: They’re not making any money off you from interest payments or interchange fees, but they have to spend money on printing and mailing you things like account notifications or statements.  More importantly, such accounts leave them open to the risk that you will lose your job, max out the card and leave the bank holding the bag.

To keep all your accounts active, Hammer recommends rotating your different cards each month.

2. Looking beyond credit scores

Just a few years ago, the main factors in determining your credit-card interest rate and credit„limit were your credit score and payment history.  Now, issuers take a lot more into account when evaluating their existing and prospective card holders’ risk profiles.  For example, living in an area with high unemployment or working in an industry where job security is volatile can prompt an issuer to reduce your credit limit or introduce an annual fee to your account, even if your credit and payment histories are spotless, says David Robertson, owner of the Nilson Report, which tracks credit-card industry trends.  “Six issuers control 80% of the market,” he says.  “They use very sophisticated programs and are able to slice and dice their portfolio in many ways.”

That said, using sophisticated analytics may cut both ways.  Issuers may become more lenient in their lending decisions with consumers who have only recently seen their credit hurt by the loss of a job or home.  “Joblessness took down a lot of people who were good, solidly middle-class, good-score customers,” Robertson says.  “The question will be, when this person gets a job again, will he return to their profile of an honest, trustworthy customer, but with a lower credit score?”

3. Chasing after college parents

College students used to be among card issuers’ most sought-after customers.  They tend to charge beyond their limited means and stay loyal to the first bank with which they do business.  What will happen once the CARD„Act prohibits them from marketing on campus and restricts their ability to issue cards to anyone under the age of 21?  Rather than offering free T-shirts or digital music players to college students, banks will start campaigning to their parents.  This year, parents can expect to receive more offers of co-signing a child’s credit„card, and many of them will likely tout “parental control” features like the ability to monitor and limit spending.

If you’re a college parent, make sure you are aware of the consequences and risks of co-signing a credit card.  You will be liable for any unpaid balance and, in the event of a late payment or other negative account activity, a stain on your own credit record.

4. Reinventing secured credit cards

Secured credit„cards fell out of favor years ago, when banks started targeting low- or no-credit consumers with so-called subprime credit cards which were loaded with fees and high interest rates.  But with the CARD Act restricting the amount of fees a bank can charge relative to the available credit„limit, subprime cards will all but disappear.  Millions of consumers have seen their credit damaged by bankruptcy or foreclosure and will need a new way to start rebuilding their credit.  One way subprime issuers will continue targeting that demographic will be to look back to secured credit cards, says Odysseas Papadimitriou, the chief executive of Evolution Finance Inc., which publishes CardHub.com, a credit-card comparison web site.

A secured credit card works just like any other card, but it requires the consumer to make a security deposit (usually a minimum of $200 or $300), which then equals their credit limit.  Do not confuse these cards with prepaid or debit cards, however: While the bank will keep your deposit (and in some cases even pay you interest on it), you still have to make at least minimum payments to be in good standing, or pay the balance in full to avoid paying interest.  Card activity is reported to the three major credit bureaus.

5. Introducing debit-card fees

Mindful of their budgets and frustrated with the plethora of fees associated with credit cards, many consumers are turning to debit.  They may soon be disappointed to find out that fees are making their way into debit„cards, as well, says TowerGroup’s Moroney.  “Debit cards are a very thin-margin product.  And with the changes in overdraft fees, the banks are going to start charging annual and other types of fees,” he says.

The cards most likely to be subject to an annual fee are debit cards that have rewards programs.  Another possibility: the introduction of fees for using your PIN at the point of sale.  That’s because banks charge merchants more for signature-based purchases.  (Some retailers, including Costco, now allow signing for debit purchases.  As the battle between retailers and issuers heats up, others may soon follow.)  If you are among the growing number of consumers who are shunning their credit cards and turning to debit, make sure you are familiar with your issuer’s PIN and signature policies.

By: Aleksandra Todorova, www.smartmoney.com

See what Guaranteed Rate can do!  It’s so important to work with a lender that will provide you with excellent service and that is someone you can trust and count on.  It’s a bonus that we can still do so many things; even in today’s economy!  Call us today for a FREE mortgage consultation.  (See attachment with some of the available programs.)

Guaranteed Rate Newsletter – February 25, 2010

I just posted a bunch of information on some of the new legislation that has passed in the last year.  Dating back to the beginning of last year is the HVCC – Home Valuation Code of Conduct rule regarding appraisals.  Then there is the MDIA – Mortgage Disclosure Information Act.  And, most recently the RESPA Reform. 

Please check everything out and let us know your thoughts on the governments changes!  The Lake Team and Guaranteed Rate is doing our VERY best to make sure that all of these transitions are done as seemlessly as possible.  Please feel free to forward this message to your friends, family, or co-workers.  It is very important that everyone is educated on this.  Whether you are looking to buy or sell – now or later; or even refinance; these new rules and regulations can impact you.

For more information please feel free to contact our office @ 847-470-3357 or laketeam@jeffreylake.com.  You can also view more on our blog @ www.mortgagesolutionsforgenerations.com or our Facebook page @ http://www.facebook.com/photo.php?pid=11243644&id=82934540577&saved#!/pages/Skokie-IL/The-Lake-Team-Guaranteed-Rate/82934540577.   

Jo Ann Theriault-Fazio
Vice President of Mortgage Lending
The Lake Team @ Guaranteed Rate

RESPA Reform is the newest legislation to come out of Washington.  Attached is some information detailing what the reform calls for and changes. 

Here is some information about 2 of the newer regulations that have been impacting the lending industry in a big way over the last several months.

HVCC_flyer

mdia_flyer

MMRecap for Feb. 22

U.S. Treasury securities took a whipping last Wednesday and Thursday due to stronger-than-expected economic news, impressive corporate reports, the specter of huge auctions of government debt this week and a whiff of inflation.

This quadruple whammy sent the benchmark 10-year note yield, which moves inversely to price, up14 basis points in just two days as traders worried that better economic times would cool the demand for safe-haven assets.

The week began with Tuesday’s NY Empire State index on February manufacturing conditions.  It rose to 24.91 from 15.92, but traders didn’t flinch.

Treasuries sold early Wednesday.  January housing starts rose 2.8% to an annual rate of 591,000 units from 575,000, beating expectations, but permits plunged 4.9% to an annual rate of 621,000.  Separately, industrial production in January rose for the seventh straight month, while capacity utilization climbed to 72.6% from 71.9%.  Later, the minutes from the Fed’s Jan. 28 meeting noted that the Committee expects further economic recovery this year and it also adjusted its inflation outlook slightly upward.

Some economists say that economic troubles in Europe will keep demand healthy for some time.  Others see the 3.80% yield on the 10-year as a level that could institute heavier selling.

On Thursday first-time jobless claims rose by 31,000 to 473,000 for the week ended Feb. 13, when analysts expected a decline, putting pressure on Treasuries.  But the producer price index (PPI), which checks for inflation at the wholesale level, brought out more sellers.

The PPI rose 1.4% in January versus a December increase of 0.4% due to price hikes in gasoline and heating oil.  The core rate, which excludes food and energy prices, rose 0.4% as opposed to “no change” in December.  Separately, leading economic indicators for January, which look at the economy six to nine months ahead, slowed in January.  They rose 0.3% versus 1.2% in December.

The release of February’s Philly Fed index on manufacturing conditions ignited further selling, as it rose for the sixth straight month.  It climbed to 17.6 from 15.2 and new orders hit a five-year high.  This was followed by news of huge debt auctions set for this week.

Late Thursday the Fed announced it had raised the discount rate — what it charges troubled banks to borrow money — to 0.75% from 0.50%.  Economists regard this as a move toward normalcy, but also a precursor to a hike in the fed funds rate.  The Fed, however, stated: “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.”

The bond markets took the news well, with prices falling just slightly early Friday.

Traders were also cheered by the consumer price index, which checks retail inflation.  It rose 0.2% in January, while the more closely watched core rate fell 0.1%.

The Mortgage Bankers Association reported a decline in mortgage applications for the week ended Feb. 12, in spite of continuing low rates.  Purchase applications fell 4%, while refinancing declined 1.2%.

Tuesday’s release of February’s consumer confidence report begins the week.  It’s expected to drift down to 55.3 from 55.9.  This would please bond traders, but they wouldn’t be ecstatic.

On Wednesday new home sales are expected to rise to an annual rate of 351,000 units in January from 342,000.  The more closely watched existing home sales should also increase.  Analysts predict Friday’s report will show annual sales hitting 5.5 million units, up from 5.45 million in December.

Thursday initial claims for the week ended Feb. 20 are due, followed by durable goods orders for January, which could rise 1.5% from 0.3%.  This might add to bond woes if jobless claims fall significantly. 

Friday begins with the first revision of 4^thquarter GDP, but analysts don’t expect a major move.  The GDP should show economic growth at 5.6%, down from 5.7%.  This might disappoint traders hoping for a deeper revision.

It ends with the Chicago PMI index on February manufacturing conditions, which is expected to slide to 58.5 from 61.5.  That could generate a little buying in Treasuries.  The final Reuters/University of Michigan consumer sentiment index should hold at 73.7.

Here are a few key hi-lites from today’s daily briefing for National Mortgage News Online:

http://www.nationalmortgagenews.com

Freddie Exec: We Could Be a Buyer of MBS

As the Federal Reserve ends its purchases of mortgage-backed securities, Fannie Mae and Freddie Mac could become buyers if private investors don’t return to the market, a Freddie executive said.

California Tops Mortgage Fraud Index for Fourth Quarter

California now has the highest risk of mortgage fraud with an index value of 222, according to a report from Interthinx.

Home Affordable Modification Program Makes Progress

Mortgage servicers completed nearly 50,000 permanent HAMP modifications in January, up from 35,000 in the previous month, as the government’s Home Affordable Modification Program appears to be finally gaining traction.