CMBS deals larger

Larger commercial mortgage-backed securities (CMBS) deals are starting to come back to the market just 15 months after a few smaller transactions priced following a period of dormancy, Standard & Poor's said in a research note this week. The return of the market, which is being referred to as CMBS 2.0, began in late 2009 with three single-borrower transactions that are not as complex as some of the more recent deals, S&P said. "Most recently, three $1.2 billion-plus conduit/fusion deals were issued this month, each of which included an average of 10 principal and interest bonds and two interest-only classes," said S&P analyst James Manzi. "Compared with late-2009 issuances, the newer multiborrower deals have higher leverage, less debt service coverage, and somewhat looser underwriting." The report noted that the 10 most recent CMBS transactions were valued well below peak levels reached in 2007, but the amounts issued in the more recent transactions trump the single-borrow
er deals valued at $453 million that came to market in 2009, said credit analyst Brian Snow. "Compared with the first two single-borrower deals in late 2009, issuer loan-to-value ratios are up about 10% and debt service coverage ratios are down quite a bit," S&P analyst Kurt Pollem said. "Additionally, rating agency stressed loan-to-values have shifted upward — to the low 90s most recently — and stressed debt service coverage ratios have trended down to about 1.2x from 1.5."

Obama wants big changes in mortgages

Obama wants big changes in mortgages

5-Ways To Close Anywhere, Anytime w/ Your New IPAD

IPad applications can streamline your business and help you get to closing quicker.
By Katherine Tarbox | January 2011
Since Apple Inc.’s iPad hit the market last spring, more than 3.5 million units have sold, beating the market’s expectations for the product demand by 162 percent, according to the manufacturer. The 1.5-pound device has also beaten the expectations of many real estate pros, allowing them to show listings, schedule appointments, sign documents, and ultimately get to closing more easily.

Users say you have to be realistic about the iPad’s capabilities. "You need to think of it as a consumption device, and not necessarily for writing documents," says early adopter Bill Lublin, CRB, CRS, CEO of Century 21 Gold Advantage and a partner with the Social Media Marketing Institute, both in Philadelphia. So while it may not replace your laptop or smartphone, the iPad can help improve your relationship with clients. Here’s how:

Schedule on the spot. "I survive in down markets because I never let a client leave without booking another appointment," says Lublin. These days, after buyers have looked at three properties and come up empty-handed, he brings out the iPad. "I have a large visual way to show them my free times, and we pick a slot." A built-in application called iCal syncs the device with an iPhone or Mac. For those looking to connect with Google Calendar or Outlook, there’s an app called SaiSuke ($9.99), which works with all three of those scheduling systems and also connects with social networking calendars such as those on Facebook.

Have listings at your fingertips. Although MLS capabilities vary, many are now accessible through an iPad. "I was able to get information on the road for my last two buyer clients without too much trouble. I know they appreciated that I had the data on hand," says Atlanta-based Tim Maitski, a sales associate with RE/MAX Greater Atlanta. Maitski accesses his MLS through an application called LogMeIn. "A couple of taps, and I’m showing clients what they wanted to see." Some MLSs have their own application; expect others to debut in 2011.

Don’t just tell, but show. Loreena Yeo, SFR, a broker with 3:16 Team Realty in Frisco, Texas, bought an iPad last spring with the primary intention of using it for listing presentations. "Before, I think my clients somewhat grasped my marketing plan, and I always followed up with an e-mail with links." Now, while she’s making the presentation, she can search for terms on Google to show her SEO power and demonstrate her neighborhood and property videos. "The key is for them to understand that I do what most agents haven’t even begun to realize yet," she says.

Get their autograph. DocuSign and other electronic signature applications have helped to streamline the closing process, but an iPad can take it one step further by allowing clients to sign on location. Although the device is designed to be a touch screen, clients can use an electronic stylus pen (around $10 at electronics stores) to put their John Hancock on documents. "It’s saving me lots of paper and time," says Michael LaPeter, a sales associate with Resonant Properties in San Francisco, who has used this method about 12 times with clients. "They appreciate the ease."

Download more to do more. As iPhone and now Android smartphone users have learned, an app exists, or is in development, for just about any function you can think of. Real estate practitioners, for example, may enjoy photo editing apps such as Amopic and Crop Suey (each under $10) for making quick crops to photos before sending them buyers. Even the NATIONAL ASSOCIATION OF REALTORS® has gotten into the act with NAR Express, an app that provides quick access to the latest headlines and market statistics. And NAR’s newest offering, MIDCalc, helps users quickly calculate the value of the mortgage interest deduction.

Mortgage Rates Little Has Changed

The volatility in mortgage rates continued during the first week of the year. Prior to Friday's Employment report, nearly all the economic data was stronger than expected, which was negative for mortgage rates. Rates improved after the Employment data, though, and ended the week nearly unchanged.

Over the last two months of 2010, investors began to focus on a trend toward stronger economic growth, which helped push mortgage rates higher over that period. Nearly every economic report released this week showed greater than expected improvement from last month, including Services, Manufacturing, and Construction. Stronger economic growth and job creation is positive for home sales, but it also results in higher inflation, which leads to higher mortgage rates.

The condition of the labor market is among the most important economic data every month, and this week there was some additional suspense. On Wednesday, ADP, a private payrolls firm, released its forecast for private sector job growth in December, and it was for an increase of an enormous 300K jobs. The ADP forecast has always been considered an imprecise labor market predictor, but the sheer magnitude of the ADP forecast caused many investors to increase their expectations for the government's monthly Employment report. Friday's data showed that the economy added 103K jobs in December, and revisions to prior months added an additional 70K jobs. The combined total of 173K jobs was close to the original consensus estimate, but was below the number that some investors expected after the ADP forecast, and mortgage rates improved after the news. Another big surprise came from a drop in the Unemployment Rate to 9.4% from 9.8% in November, far below the consensus forecast of 9.7%, and the lowest level in 19 months. Economists suggest that seasonal factors may have played some role in the large decline in the Unemployment Rate, so next month's results will be highly anticipated.

Inflation Risks Are Low; Same For Disinflation

Here is some of what the Fed discussed last month:

•On inflation : Core inflation levels "trend lower"; disinflation risks are low.
•On housing : The market is still "quite depressed"; demand is "very weak".
•On stimulus : The Fed will stick to its $600 billion support plan

The Early Years Of a Mortgage Are Interest-Loaded

For homeowners, a mortgage amortization schedule's most important trait is how it renders mortgage payments interest-heavy at the start. There is very little principal that's goes back to the bank each month.

If you've ever looked at your mortgage statement after a few years and thought, "I haven't paid this thing down a bit!", it's because of amortization. Amortization schedules are decidedly "bank-friendly".

At today's rates, it would take 20 years to reduce the 30-year, fixed-rate mortgage's amount owed by half.

Having said that, amortization schedules can benefit to homeowners, too. Because mortgage interest is often tax-deductible, the early, interest-heavy years of a loan can provide larger tax benefits than the loan's later years.

Furthermore, an amortization schedule can be accelerated with "extra" mortgage payments. Years can be shaved off a loan's life with just some basic planning.

Fannie Mae Guidelines To Change December 13, 2010

Mortgage Guidelines Are Changing

Conforming mortgages are loans that, literally, conform to the lending standards set forth by Fannie Mae and Freddie Mac.

What's New With The Guidelines : A "Cheat Sheet"
Effective December 13, 2010, Fannie Mae adds new bumps to the lending landscape, and takes others down.

Guidelines are changing across 9 separate areas of the mortgage approval process. Collectively, the updates figure to impact nearly everyone in want of a conforming home loan. They run the gamut from income and assets to documentation and reporting.

A few of the more major changes:

•The 97% "Flexible Mortgage" is eliminated, replaced by a standard 97% loan subject to loan-level pricing adjustments
•Borrower "minimum contributions" are eliminated for 1-unit purchases with at least 3% down. Gifts and grants are permissible sources for a downpayment.
•All revolving debt must be included in debt-to-income ratios, regardless of whether there's "10 Payments Or Less". If there's debt, it must be counted.
•A 5% monthly payment against the balance must be assumed when no minimum monthly payment can be verified via the creditor, or the credit bureaus.
Furthermore, the new guidelines contain a note that former homeowners with a foreclosure on record must wait 7 years before re-applying for a conforming mortgage.