Well that was an ugly week! The markets talk about the moment of capitulation and we have seen it. We are still beset by a government dead set on telling us how much we can pay our people even though they still don’t understand the mechanics of what it takes to run a mortgage business simply in the black AND “have skin in the game”. Which now even brokers do with the wording of most smart contracts with investors these days!
Once the government money runs out where will we be? Here is some scary math from Dave Rosenberg ex-economist from Merrill and others.
- 1 in every 10 Americans missed a mortgage payment in the first quarter – a new record!
- 1 in every 6 Americans are either unemployed or underemployed. Over 4 in 10 of those jobless Americans have been out of work for at least 6 months and there are 5 unemployed workers for every job opening available.
- 1 in 4 Americans with a mortgage has negative equity in their homes. Only one in 50 plan to buy a home in next 6 months.
- It is predicted that the majority of HAMP loans won’t make and go to foreclosure since HAMP allows 150% LTV with a 61.3% back end ratio!
- Building permits fell 10.7% last month.
- Mortgage apps fell 27% last week to the lowest number since 1997, even as rates hit the 4’s.
- The glut of inventory nationally still shows over 10% of rental properties and 2.6% of owner occupied vacant totaling 6.35M vacant homes sitting empty.
To drive this home visually please read this article below that comes from www.mortgagenewsdaily.com, a great site I recommend and a young man with some good clear views, Adam Quinones. His charts are alarming and tough to ignore; his observations are right on the money. http://www.mortgagenewsdaily.com/05192010_housing_industry_s_worst_fears.asp
The good news/bad news to this all is that Home Affordability – ratio of home prices to income – has eased to 2.44, the MOST affordable in 34 years!! The shadow inventory of homes is well matched with the shadow inventory of buyers who simply choose not to buy due to fear of values dropping or losing their jobs. The job part is tough to fight but the value is easy. A Simple flyer/spreadsheets, and especially Mortgage Coach TCA, can clearly demonstrate that a lower price at a higher rate can mean a higher monthly payment than if they bought with lower rates now. We need to get the word out to our local media and referral sources. NOW is the time to buy!
MAXIMIZE YOUR REFERRAL MARKET-SHARE BEFORE THE SUMMER, AND WORK YOUR DATABASE NIGHTS AND WEEKENDS IF YOU WANT TO RETAIN AND GROW YOUR CURRENT CORE BUSINESS. THIS REFI FLUTTER CAN ONLY LAST IF OUR WORLD ECONOMY GOES IN THE CRAPPER AND TAKES THE USA WITH IT. RATES IN THE 3’S ARE NOTHING TO WISH FOR …..
p.s. 1st Qtr numbers for retail/wholesale/correspondent are at records percentages! Why? Because broker volume is down to an all time low of 10.6%! Retail is at 50% and correspondent is at 39%! Regional mortgage bankers are growing equal to large retail. Large servicers need these partners more than ever….
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