Austin Mortgage Blog

Archive for March, 2009

We see little change ahead until Friday when the Employment Report for March will be released

Mortgage backs unchanged, 10 year note unchanged, stocks up 150 on the big board, and the Naz up 43 points.  We see little change ahead until Friday when the Employment Report for March will be released.  Until then, we see mortgage rates and pricing to be as quiet as a church mouse.

Austin Mortgage Rates Hold Low Levels

The Fed announcement last week about an expansion of the mortgage-backed securities (MBS) purchase program pushed mortgage rates down to the lowest levels in decades, according to the weekly surveys from the Mortgage Bankers Association (MBA) and Freddie Mac. This week, mortgage rates held the improvement, ending nearly unchanged from last Friday. 

The Treasury unveiled a major new program on Monday which will establish public/private partnerships to purchase up to $1 trillion in troubled assets from banks. The program was well received by investors, and the news produced a large rally in the stock market. Significant to the mortgage market, removing these assets from banks’ balance sheets should free up room for additional investments in mortgage loans.

 

This week’s news in the housing sector was positive for a change. February Existing Home Sales rose 5% from January. Inventories of unsold homes were at a 9.7-month supply, about the same as last month. February New Home Sales also rose 5%. The Mortgage Bankers Association (MBA) revised higher its forecast for loan originations in 2009. The MBA now expects $2.8 trillion in mortgage originations this year, up from about $2.0 trillion in its prior forecast. The increase was due to a projected rise in activity as a result of lower mortgage rates.

 

Average 30 yr fixed rate:
Last week:	dn 0.30%
This week:	up 0.05%

  

Week Ahead   The important Employment report will come out on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Early estimates are for a loss of about 650K jobs in March. Before the Employment Data, the Chicago PMI and the ISM national manufacturing indexes are scheduled for Tuesday and Wednesday respectively. Pending Home Sales, a leading indicator for the housing market, also will come out on Wednesday. Factory Orders, Construction Spending, Consumer Confidence, and the ISM Service index will round out a busy week.

There’s an old saying among traders, “don’t fight the Fed.” Certainly fits in today’s market and maybe we should add “let the big dog eat.”

Fast market conditions exist as the 10 year note has gone from plus 9/32’s to down 9/32’s in the last 15 minutes.  Short term patterns that pointed to higher levels (rally), met their objectives and have slipped away from the best levels of the day.  

Earlier today, Personal Income hit the tape down .2% while Personal Outlays rose .2%.  After adjusting for inflation and taxes, real disposable income fell .4%, the first decline since August.  Michigan Sentiment Survey was also released, up .7 to 57.3.  The surprise improvement seems to have its roots in recent Fed and Treasury actions, building a little consumer confidence. 

Overall, the supply/demand of mortgage back security trading favor steady to slightly improved rates into the foreseeable future.  While mortgage banker types like us are selling 3 billion a day, the Fed is in buying 6 billion a day.  2 to 1 ratio is strong, giving traders panic attacks every time they try to short the market.  There’s an old saying among traders, “don’t fight the Fed.”  Certainly fits in today’s market and maybe we should add “let the big dog eat.”  Until their full, it’s steady as she goes. 

Have a great weekend.

City of Austin Requires Energy Audit Before Property Sale

Austin Energy Conservation Audit and Disclosure Ordinance

If you have questions about the Austin, TX Energy Audit requirement, please contact real estate expert, Crystal Guthrie (512) 422-3452.

You can also visit www.jimolenbush.com.

Please do not contact Max Leaman with energy audit questions – Crystal Guthrie is your expert in listing your home and avoiding the energy audit!

What is the Austin Energy Ordinance?
The Austin City Council approved the Austin Energy Conservation Audit and Disclosure Ordinance, which requires all residential properties to have an energy audit completed by a certified auditor before the property can be sold and closed. The Austin energy audit is required for properties that are 10 years or older, within the Austin city limits, and that receive services from the Austin Electric Utility.

What properties are effected by the new Austin Energy Audit Ordinance?

Austin Energy Audit Ordinance requirements differ by property type.

• Single-family (Residential) homes (four dwelling units or fewer)
• Multifamily (five dwelling units or more)
• Commercial (non-residential civic or commercial building, excluding industrial buildings)

Why was the new Austin Energy Ordinance passed?

The Austin City Council passed the new Austin Energy Ordinance to help meet one of the goals of the Austin Climate Protection Plan—offsetting 700 megawatts of peak Austin energy demand by the year 2020 and reducing the carbon footprint of the Austin, TX community.

When does the Energy Ordinance take effect in Austin, TX?

June 1, 2009, the new Austin Energy Audit Ordinance takes effect.

What do Austin homeowners need to do to meet the Austin Energy Ordinance requirements?

For owner of a single-family home in Austin, you need to do the following before you can sell and close the home:

• A single-family home has from one to four dwelling units.
• If the home is 10 years old or older, the owner needs to have an energy audit before selling it.
• The owner needs to give prospective buyers a copy of the energy audit before the time of sale.
• The owner needs to provide a copy of the energy audit to Austin Energy no later than 30 days after the audit is complete.

For owner of a multi-family property in Austin, you need to do the following before you can sell and close the property:

• A multifamily property has five or more dwelling units.
• If the property is at least 10 years old on June 1, 2009, the owner needs to have an energy audit performed no later than June 1, 2011.
• For other multifamily properties, the owner needs to have an energy audit performed no later than 10 years after construction was completed.
• The owner needs to post the results of the energy audit on a form and in locations set by rule.
• The owner needs to give current and prospective tenants the energy audit results.
• The owner needs to provide a copy of the audit to Austin Energy no later than 30 days after the audit is complete.

For owners of an Austin High Energy Use Facility:

• Regardless of the property’s age, if the average energy use per-square-foot exceeds 150% of the average for multifamily properties in Austin Energy’s service area, the owner will receive a notice about the property’s energy use from Austin Energy.
• If the owner receive a notice, the owner must make energy efficiency improvements to bring the property to 110% of the average no later than 18 months after receiving the notice.
• The owner may apply to Austin Energy within 90 days of the notice for additional time to complete improvements. If approved, the owner may enter into a contract with Austin Energy indicating the completion date for the improvements.

For owners of an Austin commercial property, you need to do the following before you can sell and close the property:

• If the building is at least 10 years old on June 1, 2009, the owner needs to calculate an energy use rating for the building no later than June 1, 2011.
• For all other commercial buildings, the owner needs to calculate an energy use rating for the building no later than 10 years after construction was completed.
• For all commercial buildings, the owner needs to use an audit or energy use rating system approved by Austin Energy.
• The owner needs to give prospective purchasers a copy of the energy rating before the time of sale.
• The owner needs to provide a copy of the energy rating to Austin Energy no later than 30 days after the audit is complete.

Are there exemptions to the Austin Energy requirement?

Yes. The Austin energy ordinance includes the following variances for single-family, multifamily, and commercial property:

• Austin Energy may grant a variance if a permit to substantially remodel or demolish a facility will be filed no later than six months after the time of sale.
• In case of a remodel, Austin Energy may grant a variance if the owner and purchaser have entered into a binding agreement approved by Austin Energy where the purchaser agrees to complete an energy audit within a specified period after the remodel is complete.
• Austin Energy may grant a variance for a commercial facility if it is a data center or other high energy use facility that cannot be adequately evaluated using currently available audit or rating tools.
• A person may seek a variance by filing an application with Austin Energy. Austin Energy may require the applicant to provide information necessary to evaluate the request.

Exemptions for Austin Single-Family Homes:

• The single-family home was constructed fewer than 10 years before the time of sale.
• Owners of the home participated in the Austin Energy Home Performance with ENERGY STAR® offering or an equivalent Austin Energy offering fewer than 10 years before the time of sale and either performed at least three energy efficiency measures or received a rebate of $500 or more.
• Owners of the home participated in the Austin Energy Free Weatherization offering or an equivalent Austin Energy offering fewer than 10 years before the time of sale.
• The purchaser of the home qualifies for and has signed an agreement with Austin Energy to participate in the Free Weatherization offering or an equivalent Austin Energy offering no later than six months after the sale.
• The home is manufactured housing built on a permanent chassis and designed to be used without a permanent foundation.

The Austin, TX energy ordinance does not apply to transfers of real residential property due to the following:

• Through a foreclosure sale, trustee’s sale, or a deed in lieu of foreclosure.
• Through a pre-foreclosure sale, where the seller has reached an agreement with the mortgage holder to sell the property for an amount less than the amount owed on the mortgage.
• Through the exercise of or threat of eminent domain.
• From one family member to another family member without consideration.
• Under a court order or probate proceedings.
• Under a decree of legal separation or dissolution of marriage or property settlement agreement incidental to such a decree.

The Austin energy ordinance does not apply to owners of multifamily property (five dwelling units or more), if one or more of the following is true:

• Comprehensive duct remediation work was completed on the property through an Austin Energy rebate offering within 10 years before June 1, 2009.
• HVAC equipment was replaced in all facility units through an Austin Energy rebate offering within 10 years before June 1, 2009.
• HVAC equipment was replaced in all facility units with equipment meeting Austin Energy rebate offering requirements within 10 years before June 1, 2009.

What are the penalties and enforcement for the Austin Ordinance?

The Austin ordinance includes the following penalties for single-family, multifamily, and commercial property:

A person commits a criminal offense if the person performs an act prohibited by the ordinance or fails to perform an act required by the ordinance. Each instance of a violation is a separate offense. Each offense is subject to a fine:

• Proof of culpable mental state is not required for a fine of up to $500.
• If a person acts with criminal negligence, a fine of up to $2,000 may be assessed.
• Proof of a higher degree of culpability than criminal negligence constitutes proof of criminal negligence.
• Prosecution of an offense and enforcement of other remedies under this chapter are cumulative.
• The owner of the property is presumed to be responsible for violations of this ordinance that occur at a facility on the owner’s property.

How can I learn more about the Austin Energy Audit?

Read the full Austin Energy ordinance (pdf) and the Final Task Force Report (pdf) to fully understand all the requirements.

• For Owners of a Single-Family Home
• For Owners of Multifamily Property
• For Owners of a Commercial Building
• Variances for All Property Types
• Enforcement for All Property Types

If you have questions about the new Austin Energy ordinance, or are considering a new Austin home purchase or sale, my consultation is always free. Please do not hesitate to contact me, Max Leaman at (512) 293-1239.

I continually monitor rates. For clients interested in a new home purchase or refinance, I alert them of interest rate changes so they are ready at the best time to lock in a new rate. I offer the absolute best Austin mortgage rates and lowest fees.

My consultation is always free and I want to make sure your questions are answered. Please call me today to discuss your home financing: 512-293-1239 (Cell) and 512-617-5636 (Office).

We’ll stick to our story that the worse in over with mortgage rates rising, pricing worsening since a week ago Wednesday so a little improvement should be in order

Weekly Unemployment Claims hit the tape plus 8K to 652K and Continuing Claims rose to 122K, a new record high 5.56 million.  Continuing Claims has risen a startling 40% in 4 months.  Stimulus plan, where are you?

Final 4^th Quarter GDP was also released, down 6.3%.  Although punishing, the number was close to expectations (previous -6.2%) with a large drop in private domestic investment pushing the figure lower by .1%.  This “should” be the worse quarter we’ll see as more and more stability/growth seeps back into the economy.

Treasury Secretary Geithner has gathered with Barney and friends on the hill, outlining financial reform to reduce systemic risk for non-financial institutions (think AIG).  Geithner proposes a single regulator with responsibility to maintain stability throughout the financial system.  Plans were also outlined to allow the government to wind down systemically important failed companies.

On the auction block, 24 billion of 7 year notes will come to market at high noon (CST) today.  The issue is the second seven year since reopening the “odd duck” which was shelved for many years.  Traders are a little apprehensive due to the failed 40 year Gilt auction in the UK.  What happened here was there were less bids than paper available, constituting a failed auction.  Interesting on our side of the pond, T-Bills actually traded negative today, meaning that you would have to pay the government to own them.  Maybe they slipped that in the Budget.

All of the above has done little to move a quiet, Thursday market.  Stocks up a C note on the big board, 10 year note up 3/32’s (yield 2.76%), and mortgage backs up 2/32’s and holding.  Technically, daily studies lean toward the bulls while hourly time frames remain bearish.  Buy signals are present on Stochastics and MACD, but recent failures to trend higher (rally) have not been present.

Kind of a Goldilocks market, not to hot , not to cold, but just right.  We’ll stick to our story that the worse in over with mortgage rates rising, pricing worsening since a week ago Wednesday so a little improvement should be in order.

Stocks off 17 on the Dow yet all markets have a high degree of volatility. This market is nothing to mess around with.

Although the Fed has been in buying the long end of the curve (10 year note/30 year bond), their bid has faded.  Currently, the 10 year note is off 37/32’s, trading at a yield of 2.79%.  The bond is off over 2 points.  Mortgage backs have started to fade as well, now off 6/32’s. 

Stocks off 17 on the Dow yet all markets have a high degree of volatility.  This market is nothing to mess around with. 

Sometimes you’re the windshield, sometimes you’re the bug!   Fly well.

We believe the slow grind to higher yields, worsening mortgage pricing has nearly run its course

Treasury traders have had to be quick as a cat , sidestepping the land mines such as China, Fed, Treasury, Capitol Hill, 98 billion in auction paper this week, and Barney Frank lifting their wallet.  Less than a week a ago, the 10 year note was trading near 2.50% post FOMC shock and awe.  Today, the note is off 15/32’s, trading at a yield of 2.71%.  Mortgage backs are down as well, off another 4/32’s from yesterday’s close.  Point being, trust is something that traders have little of due to the multitude of moving parts.  Kind of like the shell game where you had to guess which shell was covering the ball.  I could never win at that game. 

Maybe President Lincoln said it best; “ you can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time”.   Our market seems to be caught in a period of congestion, trying to thread the needle between auction consolidation and Fed buying of treasury paper and MBS.  None of the latter has surfaced so far this week.  We believe the slow grind to higher yields, worsening mortgage pricing has nearly run its course.

Overlapping patterns suggest that the selling last Wednesday (afternoon), Thursday, and Friday was corrective in nature so the possibility of lower mortgage rates/better pricing has a high probability

Lots to talk about on this Monday morning. Overseas, it appears as if Treasury Secretary Geithner smoozed the Chinese, helping to smooth relations with their ongoing appetite for Uncle Sam’s debt. China came out endorsing the continued purchase of Treasuries even in spite of our dollar’s weakness. Hum. Wonder what he promised to buy?

Speaking of the Treasury Secretary, his plan for the Public-Private cooperative to buy toxic assets (subprime, Alt A, etc.) is taking shape. For once, he has put forth some details that show a 6 to 1 leveraged partnership with Private investing 1% and Uncle taking the other 6% of the equation. 85% will be funded by the FDIC, 12% by the Treasury, and 3% by Private funds. Private funds will be limited to their exposure within the “non-recourse” program. The Treasury will be hiring (approving) a number of investment managers and funds to manage and purchase the assets. Bill Gross, bond god extraordinaire, has already come out and said that his fund, Pimco, approves the program and will be an active participant. Let me tell you that if Bill Gross loves this deal, there’s money to be made. Given a 6 to 1 leverage and 3% exposure on his side, this thing is a no brainer. If he opens a fund within Pimco to invest in, buy it (my opinion).

Stocks have loved all the action; overseas trade, Geithner, mark to market reform, and Existing Home Sales posting a plus 5.1% gain. The overhang from all the news is the continued movie playing out in Washington. Instead of “ Gangs of New York”, the 2002 movie directed by Martin Scorsese, let’s call the new version “Gangs of D.C.”, directed by President Obama, pitting angry government against the evil people on Wall Street. Stars of the show are Bill the Butcher (Barney Frank) and Amsterdam Vallon (Ben Bernanke). I thought the Constitution was the basis for a government by the people, for the people. Not a government of angry people against capitalism and it’s evil army.

The week ahead will provide a number of high powered economic releases including:

• Durable Goods, 
• New Home Sales, 
• Weekly Unemployment Claims, 
• GDP (final for Q2), 
• and Personal Income/Outlays.

As we speak, stocks are up 309 points on the big board, 10 year note down 4/32’s to yield 2.64%, and mortgage backs off 1/32nd, holding steady in quiet action. Overall, our technical chart work still leans to the bullish side as Friday’s retracement (selling) could not take out the 38% Fibo level. Bond bulls will however need to take out the upper regression line that sits at 2.60% yield on the 10 year note for any significant rally to develop. Overlapping patterns suggest that the selling last Wednesday (afternoon), Thursday, and Friday was corrective in nature so the possibility of lower mortgage rates/better pricing has a high probability.

Austin Jumbo Loan Mortgage Rates Below 7%

 

PrimeLending is offering this amazing opportunity to your luxury home clients. This is a PrimeLending product.

 

Call Max Leaman now (512) 293-1239 or email MaxLeaman@aol.com to get today’s LOW jumbo rate.

 

Jumbo Loan Offering:

• Loan amounts up to $1,000,000,
• 90% CLTV,
• Up to 3% seller concessions allowed.

Given the firepower the Fed is willing to throw at the market via Quantitative Easing, we would not expect to see mortgage rates rise much further. We are however very close to a worsening price change

Both bonds and stocks have slumped today after the Wednesday/Thursday stealth rally.  Speaking of the rally, it was straight up until late morning (yesterday) and then started to give back gains, closing in negative territory by day’s end.  Today has seen follow through in both bonds and stocks with the Dow currently down 125 points and the 10 year note off 13/32’s (yield 2.64%).  Mortgage backs has followed suit, down 11/32’s today and over 3/4^th from yesterday’s early morning pricing. 

Market wise, we see this as a period of consolidation, one that is more about fatigue.  So much has been going on with TARP, TALF, AIG, FOMC, and U and ME that  the market is simply wore out.  Given the firepower the Fed is willing to throw at the market via Quantitative Easing, we would not expect to see mortgage rates rise much further.  We are however very close to a worsening price change. 

Have a great weekend.