Ask A New Jersey Closing Expert

Well, here are the facts from last week:

The U.S. consumer price index rose 0.4% in January, higher than analysts’ expected 0.3% gain, the Commerce Department said February 20. The core index, which excludes food and energy costs, increased 0.3%, more than economists’ expected hike of 0.2%.
On the same day, the Federal Reserve released the minutes of its Jan 29-30 closed door meeting. At that session, the Fed lowered its growth forecast for the year from a range of 1.8% to 2.5% to a range of 1.3% to 2%, citing “further intensification of the housing correction, tighter credit conditions … ongoing turmoil in financial markets and higher oil prices.”
The Conference Board said on February 21 that its index of leading economic indicators — an important gauge of future economic activity over the next three to six months — fell 0.1% in January. With the decline, the leading index has fallen 2% over the last six months, the biggest decline since early 2001.
Meanwhile, the Federal Reserve Bank of Philadelphia, one of the 12 regional Fed banks, said on February 21 that its index measuring factory output contracted to minus 24.0, well below analysts’ forecast of minus 11.0. It was the weakest reading since the 2001 recession. Housing starts picked up 0.8% in January from December, the Commerce Department said February 20. However, building permits — an indication of future construction — fell 3%.

 These stats show that the market is headed further south. This is bad news for the Real Estate Market. We need a true change along with decreased interest rates to help move towards a better economic and housing situation.

 Your friend,

AD, www.qualitycloser.com

 Resources:

Economic data compiled from government reports and news services Bloomberg.com, msnbc.com, cnbc.com, cnn.money.com and Yahoo Economic Calendar

Women control 91 percent of homebuying or remodeling decisions. This finding from a recent Harvard University study caused Doris Perlman, founder and president of Possibilities for Design, a Denver-based home design firm, to delve more deeply into the homebuying habits of female baby boomers (women born between 1946 and 1964).
Among her observations:
This target market is looking for practicality and comfort, which translates into demand for wider hallways and stairs, living areas on the main floor, and open-air floor plans with multifunctional spaces.
Both task lighting and natural light are of major importance to compensate for declining vision that many baby boomers are starting to experience.
For aging eyesight, any marketing material in smaller than 13-point type is “retail suicide.”
Seventy-five percent of female boomers will settle for a smaller house if that’s what it takes to get high-quality products and amenities.
Women buyers are looking for strong character in home design, such as cottages with a crisp and clean look, urban enclaves with rich colors and textures, and calming and contemporary Asian influences.
Women are attuned to colors, while men do not seem to care as much. In response, the color trends of 2005-2006 included brown becoming the new black; grayed-out greens; reds coming up orange; classic colors with such new names as Wasabi, Aero Blue and Vanilla; and textural effects suggesting copper, pewter and stone.
Female baby boomers now have more time to relax, engage in social activities and explore hobbies, making “special-interest” rooms an essential feature in their home selection. “Women shop with peripheral vision: They notice everything,” Perlman said.
Women 55 and over are cyber-savvy, and use their computers for ordering and correspondence.

A very interesting study looking into the thought pattern of how to market towards the decision maker who are an every growing class of women. Men of the world watch out. Just wanted this post to be light hearted.

 Your friend,

AD; www.qualitycloser.com

“When an asset like real estate becomes overvalued, even if you drop interest rates to zero, you can’t force consumers to borrow more, because they’ve already borrowed too much. Nor can you force lenders to lend, because they’re already puking on ‘bad paper.’ It’s called a liquidity trap.” -Bob Campbell, San Diego Real Estate Timing

This quote is shown to be hitting a nerve as keep as seen by the article titled, Fed Interest-Rate Cuts Fail to Lower Borrowing Costs:
“The Federal Reserve’s interest-rate cuts last month have failed to lower borrowing costs for many companies and households, increasing the chance of further reductions from the central bank. Companies are paying more to borrow now than before the Fed reduced its benchmark rate by 1.25 percentage point over nine days in January, based on data compiled by Merrill Lynch & Co. Rates on so-called jumbo mortgages, those above $417,000, have increased in the past month, making it tougher to sell properties and risking further price declines.” 

 This is a great post that I read on another blog that I wanted to share with you.  This blog is showing that the factors of borrower sentiment combined with banks willingness to lend will the true factors that will pull us out of this housing downfall. The Fed can keep shotting the interest rate bullets to drop the rate but it is only when the borrower sentiment rises and when banks start lending out to a little looser guidelines can the affect of these bullets be truly felt in the housing and credit markets.

Your friend,

AD; www.qualitycloser.com

Sources:

bigpicture.typepad.com  (The Big Picture Macro Prespective on Capital Markets)
Housing mess too big for a quick fix
Bill Fleckenstein
http://tinyurl.com/yqabfs
Fed Interest-Rate Cuts Fail to Lower Borrowing Costs
Scott Lanman
Bloomberg, Feb. 13, 2008
http://www.bloomberg.com/apps/news?pid=20601087&sid=a_c9_tQiZOLo&

Fair Isaac Corp.’s credit score— developed by engineer Bill Fair and mathematician Earl Isaac to help banks and department stores calculate their customers’ creditworthiness—has come to loom over consumer finance. “FICO is the wizard behind the curtain of the economy,” says Matt Fellowes, a scholar at the Brookings Institution, a Washington think tank.But with mortgage defaults surging and credit-card issuers bracing for more problems, the wizard seems to have lost some of its magic.In the past few years a group of “credit doctors” and mortgage brokers began devising tricks, some illegal, to help borrowers juice their FICO scores to qualify for credit cards and mortgages on homes they couldn’t afford. At the same time new, exotic mortgages were bursting onto the scene and Fair Isaac was slow to keep up with the changes. By the end of the housing boom in 2006, FICO’s accuracy in predicting the likelihood of a borrower’s repaying a debt had slipped.

This has caused Fair Isaac has announced a sweeping overhaul of the FICO score, its most dramatic ever. The firm promises FICO 08 will be a better predictor of consumer behavior. Who is really to blame the greed of Wall Street, Banks or Fair Issac, all  it provides the proability of someone being a good borrower (like I said in the statement it is only a proability); it is the responsbility of lenders to complete the due diligence checks in my opinion.

 Your friend

 AD; www.qualitycloser.com

Resources:

Credit Scores: Not-So-Magic Numbers - by Dean Foust and Aaron Pressman

The rise in the FHA insured loan limits from $200,200 to $271,000 (low-cost markets) and the rise in limits to $417,000 (high cost markets) coupled with the raise in the cap to $729,750 on jumbo mortgages that Fannie Mae and Freddie Mac can buy. This is expected to raise the new home demand by 10% according to research firm Zelman & Associates.

This move by Congress can help pay dividends in terms of helping to slow down the falling prices in home sales but I doubt that this will help bring about revival in the entire market. I believe that the Fed’s continued push to dropping interest rates and a increase in FHA backed loans will help fund more deals as those homebuyers who have been sitting flat may now consider making a move into the market.

 Your friend,

AD; www.qualitycloser.com

A quit claim deed is the legal way that one person (the grantor) transfers real property, such as a house or land, to another person (the grantee). As an example, a divorcing husband may quit claim his interest in certain real estate to his ex-wife. While the concept is simple and straightforward — relinquishing all ownership claims to a particular property — it’s also important to note what a quit claim can’t do.
In renouncing claim, the grantor makes no guarantee or promise that the property is free of debt. Another important distinction is that the grantor makes no promise that no one else claims to own the property. Tracing its origin to Anglo-Norma times (circa 1,000 CE), the quit claim deed says, in effect, that the grantor is signing over whatever ownership he or she may have in the property. It does not even guarantee that the grantor has any ownership interest at all. By accepting such a deed, the grantee assumes all the risks.
Furthermore, many title companies are reluctant to insure title when a quit claim deed was used previously to transfer title, and therefore, recommend use of a warranty deed instead. A warranty deed conveys full title to the property and warrants that title against defects such as tax liens, legal judgments and unpaid debts.
Point out the difference between a simple quit claim and a warranty deed to your clients and recommend that they consult a real estate attorney for more information

 Hope this gives some insight.

 Your Friend,

AD; www.qualitycloser.com

Resources:

David Quinones; www.dquinones.imbhomelending.com