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FREE WEBINAR  Finding, Selling & Servcing First Time Buyers Tomorrow, Weds, October 30 2:00 to 3:30 pm EDT Register Below   Register Here   First-time homebuyers are always an important segment of the home purchase market, but are even more important during times of economic stress as the low end of the market recovers first. Of all home purchases, first-time homebuyers account for 50% of the residential finance market because investors are more likely to pay with cash. Plus, rising rents will cause even more homebuyers to turn to purchasing in the coming year. Are you positioned to serve this hot market? Those who are going to service renters must understand that these people have special needs. The home-buying experience will be their most significant financial transaction and it is important for the experience to be a positive one instead of a nightmare.   What is the answer?  A marketing plan that targets and fills the needs of this segment. This means servicing Realtors and putting together a group of experts so that you can become a leader and can become known as the first time homebuyer expert.    *************************   Free Trial Here  What Do You Get With The Trial? Those who opt for our Free Trial get 14 days of free to the OriginationPro Marketing System and Certified Mortgage Advisor Webinars. There is no obligation to purchase or any automatic payments. You will receive the option to take a tour and double the term of your trial or skip the trial receive a discount.  Contact us for information on the discount-- success@hershmangroup.com Powerful and relevant content written by the industry expert-- ⇒ Weekly newsletters without recipes and handy-homeowner hints ⇒ Sales articles for real estate agents ⇒ Finance & real estate articles for open houses and prospect conversion ⇒ A complete email library including customer service, recruiting, Realtors, alternative referral sources, refis and more ⇒ Mobile alerts easily readable on your targets' cell phones ⇒  Print newsletters, flyers &, postcards  ⇒ Bonus: A complete advanced training/certification program. October 29, 2013   ⇒ Reasons for Optimism ⇒ Conforming Limits To Stay The Same? ⇒ 1 in 5 Would Fail QM Test ⇒ Getting Prospects Off The Fence ⇒ CFPB Publishes Reg Summary ⇒ NAMB Sees Momentum Words of Optimism Like the past few years, economic growth has not been strong in 2013. Yet, for some reason this year the country seems to have more optimism regarding prospects for the future. The obvious question is--why the optimism? To us it all boils down to two words --- household formation. The creation of households bottomed during the most recent recession--down to below 400,000 per year from an average of 1.2 million per year over the past 65 years. This lower average was a significant drag on the economy. In the past two years, annual household growth has soared back to 1.1 million in 2011 and 2.4 million in 2012. Kids are moving out of their parents' houses in droves. Why is this increase in household formation so important? It is more than just a direct relationship between formation and the need to build homes. Even if the kids move out and rent an apartment, this increases demand for multi-family housing and we have seen this market recover significantly. Some will purchase or rent single family homes. And starting a household requires the purchase of furniture, cars, insurance and more. If you look at the projections for growth in the next few years, it is no wonder that single family home starts are expected to double from the depths of the recession by 2015 (see the article in the news section). It is also no wonder that the job growth is predicted to increase substantially in the next six months according to a Federal Reserve Bank of San Francisco report. We may be in a pause now because of the effects of the government shutdown and the accompanying uncertainty; however, growth spurred by household formation is inevitable. There can always be intervening variables, but the numbers are there for a solid recovery moving forward from here. Breaking News:  Conforming Limits May Not Be Going Down for six months.  FHFA To Announce Decision Shortly.              Rates hit a four month low in the past week as the government shut down weighed on the markets. Freddie Mac announced that for the week ending October 24th, 30-year fixed rates decreased to 4.13% from 4.28% the week before. The average for 15-year loans also fell to 3.24%. Adjustable rates were mixed, with the average for one-year adjustables falling slightly to 2.60% and five-year adjustables decreasing to 3.00%. A year ago 30-year fixed rates were at 3.41%. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac -- "Rates on home loans slid this week as the partial government shutdown led to market speculation that the Federal Reserve will not alter its bond purchases this year. The weak employment report for September added to this expectation. The economy added just 148,000 jobs, which was below the market consensus forecast and less than the 193,000 jobs increase in August." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes. Current Indices For Adjustable Rate Mortgages Updated October 25, 2013   Index October 24 September 6-month Treasury Security 0.07% 0.04% 1-year Treasury Security 0.12% 0.12% 3-year Treasury Security 0.59% 0.78% 5-year Treasury Security 1.32% 1.60% 10-year Treasury Security 2.53% 2.81% 12-month LIBOR   0.653% (Sept) 12-month MTA   0.144% (Sept) 11th District Cost of Funds   0.956% (Aug) Prime Rate   3.250% The Ask The Expert Column is sponsored by NACSO. NACSO –- National Association of Credit Services Organizations -- advocates for strong industry standards, consumer protection, and ethical business practices for the credit repair industry. For more information of NACSO's Standards of Excellence and NACSO membership, Click Here. To read the latest blog article on NACSO's site, Why Disputing Credit Report Errors The Way The Experts Recommend Could Hurt, Not Help, Click Here I have several clients who are waiting for rates to come down before they either purchase or refinance. How do I get them off the fence? Elissa from Tennessee Each situation is different so I can't give you a "standard" answer. Obviously, purchases and refinances require a different approach. Let me give you a few points regarding your question... This is not about you predicting the future of interest rates. If you could do that---then you wouldn't need a loan officer job. This is about educating them on what a change in rates would mean--especially after taxes. You must compare the economics of this --to let's say waiting and then the home becoming more expensive -- again you can't predict that either. If a purchase your job is to get them "'in position" to purchase. This means a full pre-approval issued by an underwriter. This is akin to putting money in their pocked and will make them more inclined to purchase. For refinances, you will need to make them understand about the opportunity costs of waiting. More on that concept next week. Dave Interested in learning how to move your database of your sphere from a few hundred to a few thousand? It is simple, but not easy. I go over how in my Sphere Marketing Webinar. If you would like to listen to a recording,  Click Here for the free trial of the OriginationPro Marketing System which includes the Certified Mortgage Advisor Program and you will get access to the last two recorded CMA webinars, including Maximum Sphere Marketing. Do you have a reaction to this commentary or another question you would like answered? Email us at   success@hershmangroup.com. Breaking News.  One in five home loans originated today would fail the litmus test for obtaining heightened legal protections under the qualified mortgage rule’s safe harbor provision, according to a test trial conducted by ComplianceEase. Come January, the safe-harbor provision offered as part of Dodd-Frank’s QM standard will be the only thing that gives lenders absolute legal protection if an originated loan fails later on. But to get this important stamp of approval, lenders first have to show the loan meets certain underwriting provisions and new standards for points and fees. After crunching the numbers and data, ComplianceEase concluded that more than half of the loans falling outside QM do so because of charges exceeding the 3% points-and-fees threshold. In addition, those loans with fees that exceed the 3% threshold usually go at least $1,500 beyond the ceiling, ComplianceEase noted. Other loans that fall outside QM have APRs that are simply too high to qualify for safe harbor protection. Securing the QM designation is crucial since loans falling outside the guidelines may be ineligible for purchase, insurance or government backing. The new points and fees threshold also pushes more loans into the high-cost category, subjecting them to certain restrictions under the Home Ownership and Equity Protection Act, ComplianceEase explained. "With new, stricter points and fees thresholds in the amended HOEPA, close to three percent of loans in the study that previously weren’t HOEPA loans would move into the federal high-cost category," ComplianceEase pointed out in a statement. "On average, those loans would exceed the new HOEPA points and fees threshold by more than $1,000. ComplianceEase has designed the new capabilities in ComplianceAnalyzer to target these areas of high exposure." On or after Jan. 1, points and fees used in the 3% threshold calculation will include prepayment penalties on a loan. The new rule also includes exclusions for mortgage insurance premiums paid before closing, bona fide third-party charges and certain bona fide discount points, Vong said. Source: HousingWire Housing affordability hit a four-year low during the month after the market experienced gains in home prices in the spring and higher interest rates over the course of the summer. While the data released earlier this week show affordability has been dented, homes are still more affordable than any time between 1989 and late 2008, according to the NAR’s figures. At prevailing interest rates in August, the mortgage payment on the median priced home stood at $851, or around 16% of the median U.S. income. By contrast, the equivalent housing payment one year earlier, at $683, accounted for 13.3% of the median income. Source: The Wall Street Journal HOPE NOW has released its August 2013 loan modification data, finding an estimated 67,000 homeowners received permanent, affordable loan modifications from mortgage servicers during the month. This total includes modifications completed under both proprietary programs and the government’s Home Affordable Modification Program (HAMP). The total number of loan modifications for 2013 currently stands at approximately 580,000. This compares to approximately 438,000 foreclosure sales reported for the year to date. The total of 67,000 loan modifications for August represented an eight percent increase from the 63,000 completed in the month of July. The August 2013 total of approximately 67,000 loan modifications, combined with approximately 23,000 short sales, brings the total number of permanent non-foreclosure solutions to over eight million since 2007 (short sale numbers have been tracked since 2009). Source: NMP Daily The industry has been barraged with new rules this year, and the regulator behind the rules has created a centralized resource page. The Consumer Financial Protection Bureau finalized several rules in January that impact home loan originations and mortgage loan servicing. Now the new rules have been summarized in a central location that includes resources such as compliance guides and videos. The CFPB's Regulatory Implementation page lists seven rules: Ability to Repay/Qualified Mortgage 2013 HOEPA Rule Loan Originator Compensation ECOA Valuations TILA HPML Appraisals Escrows TILA and RESPA Servicing Links are provided to a PDF compliance guide for each rule. A video link is also provided for each rule. In addition, a number of quick reference charts are promoted as "an easy way to see which rules are likely to apply to certain products or businesses." A link to an even more in-depth table, Mortgage Rules at a Glance, provides additional resources such as Dodd-Frank citations, proposals and notices, and updates -- among other resources. "This page is part of a broader effort by the bureau to help you comply with the Dodd-Frank Act mortgage reforms and our rules," the Regulatory Implementation page states. Source: Mortgage Daily With home prices and household formations rising and household balance sheets healing, the ongoing housing recovery is expected to gain momentum next year even as several challenges remain, according to economists who participated in yesterday's National Association of Home Builders (NAHB) Fall 2013 Construction Forecast Webinar. NAHB is forecasting 924,000 total housing starts in 2013, up 18 percent from 783,000 units last year. "The cards are in play for a decent and fairly strong recovery in 2014 and particularly in 2015," said NAHB Chief Economist David Crowe. "From the standpoint of GDP growth, housing has been a plus, growing at two, three and four times the rate of the rest of the economy in recent quarters." Helping to spur the housing rebound was a double-digit increase in home prices over the past year, driven in part by tight inventories of new and existing homes for sale and gradual gains in employment. "We expect to see price increases moderate in the next few years as we see additional inventory on the market and investors back away as the bargains disappear," said Crowe. Another bright spot is rising household formations that were delayed during the downturn as college graduates and young professionals were forced to move back in with their parents or double up as roommates. At the height of the housing boom, the U.S. was producing 1.4 million additional households every year. That figure plunged to 500,000 during the depth of the recession and today is now back up to 700,000. Meanwhile, households across the nation have been increasing their savings and shedding debt. "They've corrected a lot of excesses and feel more comfortable about moving forward," Crowe said, noting that the University of Michigan Consumer Sentiment Index shows that the percentage of consumers who believe that now is a good time to buy a house is back up to levels last seen near the housing boom. However, Crowe cited several headwinds that are impeding the recovery. "Credit conditions are much tighter now, builders are increasingly facing labor shortages, lot supplies are tight, building material prices are rising and inaccurate appraisals are hurting home sales" he said. "You can't charge more than you can get an appraisal for," Crowe added. "Even though we are seeing price increases in labor, land and materials, 36 percent of builders recently said they had lost at least one sale over appraisals coming in below the cost of production." Single-family production is expected to rise 17 percent this year to 629,000 units, jump an additional 31 percent next year to 826,000 and surpass the one million mark in 2015. Source: NAHB