Important Video From Our MMG Analyst, Berry Habib

Hello!
Most of you know that J. Allston Mortgage uses very progressive and advanced market/mortgage analysis tools. Berry Habib is one of our MBS Market/Bond analyst's. Click on the link to see what he said about the market and mortgage rates. This aired on Fox Business yesterday. (Video Link)

New Government Web Site For Troubled Homeowners

The Obama administration introduced a Web site on Thursday to help troubled homeowners find out if they're eligible for any relief under its loan modification or refinancing programs. Here is the link: Making Home's Affordable

Federal Reserve Expand's MBS Purchase Program To 1.25 Trillion

Hello Gang!
Hope you are all doing well. Some great news today, the Federal Reserve announced today that the Fed would expand there MBS Purchase Program by 750 Billion; increasing it from 500 Billion to 1.25 Trillion. (300 Billion has already been spent) That is good news for mortgage rates; it should keep them low and stable for a longer period of time that we first expected. Here is a link to one of the many articles that were released today. Article Link. Now, nothing is a guarantee; there is a lot that could happen that could have rates going the other direction; however, the news in encouraging. Make sure that if you are thinking about refinancing that you are getting all of the things done that need to be done in order to refinance. (updated application, appraisal, disclosures, and income and asset documentation) If you have any questions, or need a list of the items that you will need in order to refinance, please email me at james@jallston.com. Have a great week, and I will let you know if anything changes.

Turn Times

Hello Everyone!
Just wanted to let everyone know that we are structuring, setting up, processing and closing your loans as quickly as we can; thank you all for your patience. The whole industry is have capacity issues, so turn-times are not where we would like them to be, but trust me, we are going as fast as we can. ALL loans are taking longer, however, loan's that have or require a 2nd Mortgage or Equity Line Of Credit are talking the longest. Loans with tight values and credit issues are taking longer too. As the Managing Principal of J. Allston Mortgage; if you ever have any questions, I am always available to talk to you. Please call me direct at 303-805-0335 or email me at james@jallston.com. If you get my voicemail, please leave a very detailed message and the best times to reach you, and I will call you back. Thanks again for your patience and support.

Article About Rate's In The Denver Post

Hello! Thought this was interesting, this article talks about the capacity issues that the industry is facing. This is one of many reason's most experts and analyst's do not believe that mortgage rates are headed down.

Letter To Clients

Dear JAM Clients,

I know you may be a little bit overwhelmed and frustrated right now with all the NOISE and confusion about all the new government interventions in the mortgage and housing markets. As a Certified Mortgage Planning Specialist™, I make it a priority to stay updated on developments in the mortgage markets that may impact my clients. I have spent a lot of time reviewing the latest Making Home Affordable government program, and here are some of my observations. If you think this information is useful, please pass it along. Feel free to forward my Blog link to anyone you know that may be impacted!

The Making Home Affordable government program is divided into two parts:
· Modification Program
· Refinance Program

Part 1 - Modification Program
Believe it or not, the details of this program are still being worked out. Despite all the hoopla and fanfare surrounding this program, it remains 100% VOLUNTARY, and mortgage servicers (the companies that actually collect borrowers’ mortgage payments) are not obligated by law to follow these rules and guidelines...YET. Oddly enough, if a financial institution has already received government funding, they are NOT obligated to participate. However, if a financial institution receives new or more government funding in the FUTURE, they WILL be obligated to participate.

In other words, the rules are still a bit sketchy and nobody really knows who will participate and how it will all work from a practical perspective. Most of what you read and hear about in the media will most likely be speculation at this point. In a nutshell, the program has three elements:

• The government is offering financial incentives to mortgage servicers who modify loans for borrowers.
• The government is offering financial reimbursement to investors if they allow servicers to modify loans and then take a hit on the borrower's re-default if the property declines in value after the loan modification.
• The government is offering financial incentives to borrowers who modify their loans and make their new payments on time.

Vacation homes and investment properties don’t qualify for the program; only primary residences are eligible. Only borrowers who have experienced some type of financial hardship can qualify. In other words, you will need to document that your financial situation is worse now than it was at the time that you originally got the loan. Your income needs to have gone down, and/or your expenses need to have gone up. Click on this link if you want to see if you qualify for at least the minimum requirements and also a Q&A document:

Minimum Requirements

Q & A

Remember, even if you do qualify under these minimum requirements, your servicer (the company where you send your payments) might not be participating in the program just yet.

Part 2 - Refinance Program
Here’s how it works:

• You need to be current on your mortgage payments (no late payments in the last 12 months).
• Your mortgage balance cannot exceed 105% of the current value of your home.
• Your mortgage needs to be owned or guaranteed by Fannie Mae or Freddie Mac.

Based on current market conditions, this might make sense for you if:

• You have an adjustable rate, interest only, or balloon mortgage that you want to convert into a fixed rate; or,
• You have a fixed rate mortgage where the interest rate is greater than 6%. In fact, contact me even if your rate is as low as 5.5%. I’ll put you into my rate watch program and let you know when rates get to the point where you would benefit by refinancing.

Other Recent Developments
There have been many other recent developments in the markets, as well as new government legislation. Here are just a few recent items that may impact you or someone you know:

• Home improvement tax credit
• First-time home buyer tax credit
• Reverse mortgages for home purchase transactions (age 62 or older)
• Suspension of required minimum distributions for certain retirement accounts (age 70 ½ or older)

Let me know if you’d like to discuss any of these items in further detail.

Conclusion
I know that all the NOISE you are hearing about the mortgage industry and government interventions can be distracting and confusing. That’s why I’m here for you! As a Certified Mortgage Planning Specialist™, my role is to help you make sense of all the chaos and confusion in the market, so that you can make smarter mortgage and home buying choices. Please send me an email or give me a call so that we can discuss how these and other recent developments may impact you and your situation!

James Allston Bonner, CMPS

Fed Expands Use Of Tools To Support Mortgage Bonds

This could be good news for Mortgage Rates. This will help keep rates low and stable. Read on!

Financial Stability Plan: Link To Information

Also, here is link to the press release from the Department Of Treasury about Loan Modification. Press Release

Getlit.org

Hello Everyone!
I wanted to give a shout out to an organization that is making a difference in people's lives; Git Lit-Words Ignite. Git Lit is an organization that is increasing teen literacy through classical poetry. The founder of Git Lit, Diane Luby Lane, is the sister of very good client and friend of J. Allston Mortgage, Richard Luby. Even though this organization is based in California, I still wanted to say thanks to Diane for all that she is doing to make a difference in the world.
Thanks Diane!

Read this LA Times article about Git Lit-Words Ignite (LA Times Article Link)

Economic Stimulus Plan Benefits the Housing and Mortgage Industries

Just signed and sealed…a $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II.

Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today...

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Higher Loan Amounts
More good news – there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard “jumbo” loan rates.

FHFA News Release -

Additional Housing-Related Provisions

Tax Incentives to Spur Energy Savings and Green Jobs — This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings — This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing—This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs.Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance—This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

The Economic Stimulus Plan is huge, and impacts a number of industries. I’ve highlighted some of the major provisions that may impact you now and in the future.

As always, if you have any questions or would like to discuss how this may specifically impact you, I’d be happy to sit down with you. Just call or email me to set up an appointment.

Special Report
02/10/2009

The number one topic of conversation among borrowers and loan officers right now is: "We hear that the government is working on a program that will make rates 4%. Is this true and should I wait to lock in my loan?" Last week some Republican Senators talked about getting something in the new stimulus package that could lower interest rates. The constant barrage of media coverage on this topic has only made it even more confusing for consumers. So what is going on? We have been in contact with our inside sources and our Washington D.C. contacts and have confirmed the following:

1) There are no provisions in the stimulus bill which the Senate passed today that addresses mortgage rates;

2) There is no official plan that has been put forth by the Obama administration or by any other government agency that addresses mortgage rates.

The current plan that we are in the middle of ($500 Billion MBS purchases) which I have been telling you all about, hasn’t been executed in a way that would maximize the affect and cause any meaningful reduction in rates. (See the article below) The bottom line is there is no official (or unofficial) plan to make rates 4%, and there is no silver bullet that can be used to make rates instantly lower. Also, any further action to purchase additional mortgage backed securities (if it ever occurs) may be negated by other potential legislation such as a Foreclosure Moratorium or Federal Bankruptcy changes. As always, please call me if you have any questions. Thanks!

MMG Weekly

Click here to read about what happened in the market last week, and what you need to know for upcoming weeks.

Inside Story: False Illusions and What You Need to Know
Last Updated February 4, 2009


The Fed's been at it again, offering words that sound encouraging at first blush, confirming that their buying program of Mortgage Backed Securities is in full swing and will continue as needed. Of course, the media will pick this up and offer their own interpretation, saying "Good news, the Fed's words on continuing their purchasing program mean that rates will continue to drop lower, and remain low into the summer..." But is this really what that means? Maybe Not.

Here's the truth.

Yes, the Fed has been buying Mortgage Bonds, but if you look at what they are purchasing in recent weeks, they are buying a lot of FNMA 30-yr 5.5% and 5.0% Bonds...which won't have much of an impact on present interest rates. Why? First, see the Fed's purchases for yourself by hitting this link: Direct Link to View Fed Mortgage Bond Buying - http://www.newyorkfed.org/markets/mbs/index.html.
So why is the Fed buying these Bonds? Well if you think about it, it's very smart of the Fed...and maybe even a little sneaky...because 5.5% Bonds actually represent outstanding mortgages with rates of 6 - 6.50%, which are precisely the loans being refinanced at today's great interest rates.
Stay with me here...

With rates at present low levels, many of the mortgages in these FNMA 5.5% pools being bought up by the Fed will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment. And this is likely a big reason why the Fed said they could continue this purchasing program beyond June, if necessary. Bottom line, the Fed buying these higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today's low rates.

Here's the most important part.

Sometimes I talk to clients who are in a situation where it makes sense to refinance right now, and save $250 per month for example. But when they hear the media throwing around teases of lower rates ahead, they decide to hold off on making the decision to save the $250 per month right now, in the hopes of gaining another $30 per month in additional savings with a lower rate than where we stand presently. Now clearly, rates could turn higher, and this window of opportunity could pass them by entirely.

The clincher is this:

Even if those clients ultimately are correct in timing the market, and eventually grab that lower rate and save another $30 per month - think of what they have lost by waiting. While they delayed, they lost the savings they could have gained by taking action sooner - or in the example used, $250 - for every single month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.

I don't want anyone to miss an opportunity by either waiting, or not understanding what is at stake. Let's talk further on this - call or email me and let's discuss what this might mean for you.

Hello Everyone! I Just wanted to post a link to the Federal Reserve Mortgage-Backed Securities Purchase Program. Click on this link to see the current weekly purchases. Please call me if you have any questions about this. Thanks! Jim

The J. Allston Mortgage Loan Sharks are starting there 10th season again in October, playing in the RMHL. To follow our season click here on Go Sharks. To all our friends and family who support the Sharks, we would like to thank you, we couldn't do it without you. Lets have a great season. Good luck Sharks!!!!