Concierge Program - John Fernandez

Frost Mortgage Concierge Program on Display: John Fernandez

This home has been enrolled in our concierge program. Take a look and see how we are helping get this property sold.  Listed by John Fernandez with Bershire Hathaway Home Services.

http://5017paloduroavenuene.utour.me/

US Interest Rates vs World Interest Rates

U.S. interest rates seem very, very low, however they are higher than most other western industrialized nations.  While the 10 year U.S. Treasury Bill is trading at 3% here at home, the same instruments are below 1% in many countries and as low as ½% in a few.

What does this mean to U.S. markets?  A flood of foreign investment in U.S. Treasuries, which means a low 10 year bond, which means continued low mortgage rates.

My buddy, Barry Habib, is projecting a 2% Treasury Bill (possibly even 1.5%).  The end result of this occurrence would be a sub 3% thirty year mortgage triggering a significant refinance boom.

When I entered the mortgage business, upon graduation from college in 1972, mortgage rates were 7.5%.  I can’t think of one other thing, in the world, that has gone down in price like mortgages have.
Amazing!  Simply amazing!

Tax Breaks That Overwhelmingly Affect...

Economist Elliott Eisenberg, Ph.D. shares that personal income tax reform sounds great, but where can the tax cuts come from?  He looks at the five largest tax breaks in terms of dollar cost to the Treasury:

Employee Health Care = $207b
Employee Sponsored Retirement Plans = $103b
Mortgage Interest Deduction = $74b
Lower Taxes on Capital Gains = $69b
Deduction on Charitable Donations = $57b
Add it all up for a total of $510b

I believe that this years’ budget deficit was recently forecasted at about $480b.

Looks to Elliott like Congress can balance the budget, without cutting spending, by just getting rid of these 5 tax breaks.  Sounds too simple.

It is.  Problem is….these are tax breaks that overwhelmingly affect…THE MIDDLE CLASS.

Woops…..that would be me.

Breaking Down Millennials and the Housing Market

Here’s a thought on why “Millennials” are not buying houses at the pace of their predecessors, the “Baby Boomers”.

Bloomberg notes that College Tuition expenses have jumped 538% since 1985 compared to a 121% increase in the Consumer Price Index and a 286% increase in medical costs during the same period.

The high student loan balances of many college graduates (equivalent to a luxury auto loan or two) and their high repayment schedule, creates a mortgage qualification problem for “Millennials”, which equates to a qualification problem for “first time homebuyers”, which equates to an opportunity problem for “move up buyers”, which equates to a problem for entry level and move up home builders, which equates to a problem for...well, you get the picture.

How much can a psychology, sociology, marketing, elementary or secondary education major expect to earn upon graduation?  How many times their annual “take home pay” will their final student loan balances be?  What ratio of their gross monthly income?

How much of a mortgage payment will their new employment income qualify for, once you take into consideration a $50,000 student loan payment?

The answer is…not very much.

Something has got to give. Either tuition must come more in line with their value, or many liberal arts colleges must turn into engineering and/or medical professional trade schools, as their graduates appear to be those who are getting jobs.

A liberal arts college education is a luxury, certainly not a right, and no longer comes with the presumption of employability, as it once did.

Millennials….choose your degree carefully.

Frost Mortgage Concierge Program on Display: Buzz Biernacki

This home has been enrolled in our concierge program. Take a look and see how we are helping get this property sold.  Listed by Buzz Biernacki with Bershire Hathaway Home Services.

http://12423himalayanwayne.utour.me/

Capitalizing Fannie and Freddie

Fannie Mae and Freddie Mac have more than repaid the $188b they received in federal bailout monies in just 6 years.  Why are they still remitting 100% of their profits to the Treasury every quarter, prohibiting them from increasing their capital and net worth to offset potential losses due to future market fluctuations?

The Treasury needs to modify the 2008 agreement and allow Fannie and Freddie to re-capitalize.  In 2014 the combined profits of the two GSE’s will near $25b.  Once re-capitalized a case can be made to lower the higher fees being charged to consumers and make the GSE mortgage offerings less costly to taxpayers.

We need to insist that our government keep these agencies intact and allow them to refinance themselves, out of current profits, and continue to provide this most valuable government service to U.S. homebuyers, as they have for over 60 years.  The GSE’s, established in the 30’s to stimulate affordable home ownership, were a great idea then and still are today.

Remember...the $188b that was re-paid to the U.S. Treasury did not come from “all” taxpayers, as the politicians would have you believe.  Every penny has been re-paid by just those taxpayers who took out a mortgage, and paid higher loan fees, since 2008, which was a very small percentage of “all” U.S. taxpayers.

Frost Mortgage Concierge Program on Display: Mike Lizzi

This home has been enrolled in our concierge program.  Take a look and see how we are helping get this property sold.  Listed by Mike Lizzi with Bershire Hathaway Home Services.http://904ocatemeadowsdrivene.utour.me/

Independent Mortgage Banks

Ginnie Mae, Fannie Mae and Freddie Mac exec’s all applauded the efforts of independent mortgage banks, like Frost Mortgage, at their recent annual meeting, for stepping up since the mortgage melt down and originating government sponsored mortgage products.  While commercial banks were backing away from the residential mortgage business, independent mortgage bankers were increasing market share and becoming the premier residential mortgage resource to the consumer.

Independent mortgage banks now have a 50% share of Ginnie’s business, up from 14% in 2010, a 40% share of Fannie’s business and a 33% share of Freddie’s.

Once upon a time there was a Savings & Loan industry in this country that, in the early 80’s, enjoyed even higher percentages of Ginnie and GSE business…that is before they were legislated out of business by federal regulators pandering to the agenda of commercial bankers.

Beware of the “too big to fail banks” who may soon decide that they want back into the residential mortgage lending business, once we independent mortgage bankers show them, once again, how to profitably originate well underwritten home loans that perform.  Don’t you just long for a return to the 60 day loan processing & underwriting cycles that several of the “bigs” offered just a few short years ago?

We independent mortgage bankers need to fund our lobbyists and keep our faces in our legislators’s offices on capitol hill to insure that our industry doesn't get blindsided once again.