VanEd Newslog

Finance Friday: Banks seek cash infusion

This week many banks and brokerage firms obtained cash infusions from outside sources to prop up their balance sheet.  Banks must keep capital of at least 6% of their assets, and any major drop in their portfolio will cause them to be in violation of their banking charter.  Citi sold 4.9% of itself for $7.5 billion to Abu Dhabi, guaranteeing them an 11% return.  E-trade Financial sold 20% of itself to Citadel for $2.5 billion, paying 13.5%, with their underlying asset based securities selling for 27 cents on the dollar.  Freddie Mac raised $6 billion additional capital and only had to guarantee an 8.375% return.
Wells Fargo, supposedly immune from the sub-prime problem, put aside $1.5 billion to cover loan loss reserves for its second mortgage division.  They also announced that will only provide second mortgages to customers with underlying Wells Fargo first mortgages.

It is still uncertain if the government will be able to come to an agreement with several lenders to stop increases in their mortgage interest rates.  Remember, these mortgages are not only contracts between the lender and the borrower, but between the lender, the security dealer, and the end investor.  Many of these securities are divided into tranches and sold to several small investors.  A renegotiation of the mortgage may violate the contract with these investors.

Some state governments have stepped up with programs to help customers refinance out of bad loans, but most borrower's are not eligible because their mortgage balance was higher than their property value, or their pay history is unacceptable.

On the interest rate front, no point low fee loans finally dropped below 6.00%.  Conforming thirty year fixed rate loans are available at 5.875% today.

Guest Author Randy Kelly is a Mortgage Banker and Finance Author with Boulder West Financial Services. He can be reached on-line at http://www.boulderwest.com/.

Notes from the Field: Who is watching your retirement money?

On Monday, November 26, The US Supreme Court began to hear the case of James LaRue, who claims he lost $150,000 when his 401(k) plan administrators did not follow his directions to remove his money from a high-risk stock fund. LaRue’s case was thrown out of lower courts because the federal law over retirement benefits and pensions does not allow citizens to sue over loses in retirement accounts. This mind-boggling statement should be repeated. Right now, in the United States, if your securities-based retirement plan administrator doesn't follow your direction, you cannot sue the company.

Hopefully for the individual, the Supreme Court will overturn that law, but the fact that this case had to go to the Supreme Court is a prime example of why many people are choosing to move their retirement funds to a self-directed retirement account, which is exactly as it sounds – self-directed. Self-directed administrators are competing for business, which gives the individual freedom of choice, not only with their investments, but also when choosing the self-directed IRA administrator.

Whatever the Supreme Court decides, more and more people are choosing the route of self-direction, where only you are responsible for your retirement money.

Guest Authors Bill Humphrey and Catherine Wynne are Principals with Entrust New Direction IRA. Reach them online at www.newdirectionira.com.

Colorado real estate license renewal available now online

The Colorado Division of Real Estate has opened online license renewal for those whose licenses are set to expire December 31st, 2007 (the last of the "Annual" expiration dates) or anytime in January of 2008 (the first of the "Anniversary" expiration dates).

                    >>>>> click here for online renewal

If you are still uncertain about what the license renewal requirements are, VanEd offers our CE Requirements page online. Here you can read exactly what the requirements are to renew. The online renewal link is also located on that page. If you have any questions, you can email us directly from the CE Requirements page for Colorado and we'll be happy to answer those for you. You can also send us an email by clicking here.

                   >>>>> click here to view the CE renewal requirements page for Colorado

Finance Friday: Losses at Freddie Mac and Fannie Mae

Freddie Mac posted a $2.02 billion loss for the third quarter, triple the $715 million loss for the third quarter in 2006.  This is the largest quarterly loss in their history.  The fair market value of Freddie's net assets fell by $8.1 billion, which prompted a review of their preferred stock for a possible downgrade by some of the rating agencies.

Fannie Mae posted a net loss for the third quarter of 2007 of $1.4 billion, showing just how challenging the current mortgage market is.

Freddie Mac and Fannie Mae, who own or guarantee 40% of the $11.5 trillion home loan mortgage market, are about the only players left in the mortgage securitization market, and these losses will make raising capital that much more difficult.  Their stock prices are less than 40% of their 12 month high.

On the interest rate front, the 10 year treasury bill dipped below 4.00% on Wednesday in light pre-holiday trading, bringing thirty year fixed rate loans down to 6.00%.

Guest Author Randy Kelly is a Mortgage Banker and Finance Author with Boulder West Financial Services. He can be reached on-line at http://www.boulderwest.com/.

Van Education Center wishes you a happy Thanksgiving Holiday Weekend!

VanEd will be closed for the Thanksgiving Holiday today, November 22nd and Friday, November 23rd. We will re-open on Monday, November 26th. We wish you and yours the best this holiday weekend.

While our staff is out for the holiday, our online courses are still available. Instructors will still be checking in, and students can still complete any educational offering, including continuing education courses online. For those students registering for Real Estate pre-license or Appraisal pre-license courses during the weekend, VanEd will be shipping textbooks and materials on Monday the 26th.

If you have any questions or concerns, please don't hesitate to send us an email by clicking here, and have a wonderful and happy Thanksgiving!

Colorado Division of Real Estate publication now out

The Division of Real Estate announced today that the Fall edition of the "Rocky Mountain Real Estate News" is now available. You can view a copy of the publication by clicking here, and a copy of their special notice is below;

The Fall edition of the "Rocky Mountain Real Estate News", a publication of the Colorado Division of Real Estate is now available. This new publication will combine the Colorado Appraiser Update, Colorado Real Estate News and Mortgage Broker Program into one comprehensive newsletter. Visit the newsletter section of the Division web site listed below to retrieve a copy of the latest newsletter.

http://www.dora.state.co.us/real-estate/newsletters/newsletters.htm

VanEd Presents: Colorado Contracts - updated for 2008!

Van Education Center has just completed our update of the Colorado Contracts course online to include all of the new forms required in Colorado. Beyond the CBS1, Contract to Buy and Sell, this course will also cover the new Source of Water disclosures, the revised Sellers Property Disclosure and changes to the Closing Instructions and the new Earnest Money Receipt form.

Students may take this course online today to prepare themselves for using the new forms. The forms are allowed to be used once promulgated on the Commission web site, and are mandatory January 1st, 2008.

Finance Friday: Lending Legislation

H. R. 3915, the "Mortgage Reform and Anti-Predatory Lending Act of 2007", legislation to combat abuse in the mortgage lending market, was introduced in the House this week.  This bill amends Section 103 of the Truth in Lending Act.

1.    The bill will establish a federal duty of care and prohibit loan officers from steering customers to loans that are not in the consumers best interest.
2.    Requires all mortgage originators to be licensed and registered in a nationwide data base.
3.    Requires all mortgage originators to act solely in the best interests of the borrower.
4.    Establish pre-licensing training and continuing education requirements.
5.    Lenders must make a reasonable and good faith determination based on verified and documented information that the borrower has a reasonable ability to repay the loan.  This includes taking into account interest rate and payment changes necessary to fully amortize the loan.
6.    Requires disclosure of the Fully-Indexed Accrual Rate based on the index and the margin at the time of the loan origination.
7.   The loan must provide a tangible benefit to the borrower.
8.   Places limitations on allowable interest rates on "high cost loans".
9.   Attaches limited liability to secondary market securitizers who package and sell mortgage loans.
10. Contains foreclosure protections for renters including honoring pre-existing leases. It also provides renters without leases at least 90 days to vacate a property after a foreclosure.
11. Prohibits pre-payment penalties after any reset of rates or terms.

On the interest rate front, the flight to safety is finally hitting the mortgage markets.  Low point no fee thirty year fixed rate loans are in the low sixes and may reach the high fives by the end of the year.

Guest Author Randy Kelly is a Mortgage Banker and Finance Author with Boulder West Financial Services. He can be reached on-line at http://www.boulderwest.com/.

Notes from the Field: Reduce your Carbon Footprint!

We all contribute to global warming every day. By calculating your carbon footprint, you can learn how much carbon dioxide your daily activities produce and the simple things you can do to reduce the impact you have on our environment. Get your kids involved with activities such as recycling and composting. Not only is it important to reduce your impact, but to teach your children how and why it is so important. Use the tools at the following address to begin making a difference:

                                                              http://www.nature.org/initiatives/climatechange/calculator/

You can also share this brief link to clients and help them to learn more about saving energy and money through "green" living.

Receive timely green information by signing up for EcoBroker's free newsletter. Click Here to sign up. This reliable green information is brought to you courtesy of the EcoBroker Certified(R) professional designation, currently being offered by Van Education Center. Find out more online by visiting:

                                                               www.vaned.com/EcoBroker.

Nebraska to join Nationwide Mortgage Licensing System

The Nebraska Department of Banking Finance (NDBF) announced in September plans to join the NMLS, or Nationwide Mortgage Licensing System. The system was created by a joint task force with members from over 20 states. The task force met regularly for more than two years to develop the groundwork for the program. The group then contracted with the National Association of Securities Dealers (NASD) to develop and manage the system.

The system allows a mortgage licensee to complete one set of application forms to apply to all participating states. The forms are all uniform and include a Biographical Statement, Branch office and even an individual registration and consent form.

The new system is also web-based, which will allow Nebraska mortgage brokers and lenders to apply, update or renew their license online. Regulators will have access to all licensing information. There is a two-part process to set up a record on the NMLS for licensees, according to a press release from the NDBF. The forms and notifications are available online at the NDBF web site.

Colorado Division of Real Estate issues Update Course Notice

On Thursday the Colorado Division of Real Estate issued a special notice concerning the CREC Annual Update Course requirements in an attempt to answer questions from licensees and confusion in the marketplace over the standards and requirements that licensees must follow.

VanEd students and members can be assured that VanEd has promulgated only the allowed and required courses online and in to our live presentation partners. VanEd also has made available our CE Requirements information page online. If you have any questions, please email us. We're happy to help.

The Notice that the DRE sent out on the 8th is below;

Special Notice From: The Colorado Division of Real Estate

On November 1, 2007 the 2007 Commission update course availability ended. The 2008 Commission Update Course is currently available. Commission rule B-2.(b) does not prohibit use of the 2008 course to meet the requirements for license renewal in 2007. 

(b) Beginning April 1, 2006 each licensee must take the 4-hour Annual Commission Update course twice during each license period. A licensee may not take the same version of the Annual Update Course more than once during each license period. If the Annual Commission Update course is taken three times during a license period, the licensee will receive elective credit hours for the third course.

Thank you,
The Colorado Division of Real Estate

Looking to take the current CREC Annual Update course?    >>> click here!

Finance Friday: Slowdown coming

Yesterday Fed Chairman Ben Bernanke finally admitted that the economy is slowing, and the housing industry is most likely in a recession.  Fannie Mae is predicting a 2.00% drop in home values for 2007 and a 4.00% drop in home values for 2008.  Fannie Mae also posted a $1.39 Billion loss for the 3rd quarter.  Washington Mutual, the lender that probably has the most risk from option ARM's is predicting a drop in mortgage applications of 35% for 2008.

The worldwide decline in equity markets has created a flight to quality for treasury securities, mostly short term.  Normally, this would translate to increased prices for mortgage paper resulting in lower rates, but mortgage rates are not sharing the wealth.  The investment community still views anything related to mortgages as toxic waste.  Even Ginnie Mae Securities that are backed the the Federal Government are not participating in the rally. The 10 year treasury security dropped to under 4.25% this morning, a drop of .20% since the Fed's last rate cut.  However, mortgage rates are still at 6.25% for 30 year fixed loans.

Guest Author Randy Kelly is a Mortgage Banker and Finance Author with Boulder West Financial Services. He can be reached on-line at http://www.boulderwest.com/.

HUD ban on private down-payment asisstance put on hold by court

A Federal court issued a temporary order on October 31st that halts implementation of a ban by the Department of Housing and Urban Development, or HUD, on private Down Payment Assistance companies. In the ruling the U.S. District Court states that HUD's ruling lacked a "reasonable analysis"/ The new rule might put some companies out of business.

This temporary order will allow all Down Payment Assistance programs, such as Nehemiah and AmeriDream, to continue to operate and offer assistance to FHA borrowers while the lawsuit is heard in court. Both Nehemiah and AmeriDream filed suit in U.S. District court to overturn the HUD rule back in the beginning of October. Other plaintiffs include The Genesis Foundation and the Sovereign Grant Alliance. The rule had been set to take effect October 31st until the injunction was issued by the court.

Presidential Candidate Health Care Plans

As the presidential candidates from both parties begin presenting their health care plans, ask yourself, are you happy with your current health care situation?  Imagine a politician telling you about a plan in which you contribute tax-deductible cash into an account, invest that money in real estate or many other opportunities, and watch that money grow tax free.  In addition, if you hold onto the receipts for any health-related expenses, you can pay yourself back from the account at anytime in your life.

This is not a crazy scheme cooked up by some candidate’s health care plan consultant, it’s a Health Savings Account (HSA), available now to anyone in America.

You can learn more about the possibilities and rules associated with a self-directed Health Savings Account in a variety of classes offered by Van Education Center.

Guest Authors Bill Humphrey and Catherine Wynne are Principals with Entrust New Direction IRA. Reach them online at www.newdirectionira.com.

Colorado Division of Real Estate clarifies position on Mortgage Broker Contracts

On November 2nd the Division of Real Estate issued a Position Statement on Mortgage Broker Contracts. In the statement, Position Statement MB 1.2, the Director of the Division answered questions related to 12-61-913(1), C.R.S. and 12-61-913(2), C.R.S.

The first issue was the section in the law that states every contract shall be in writing. The industry question was if that meant that a contract was required in every transaction. The Director has determined that is not the case, but rather that any contracts that exist must be in writing. The second question was if individual mortgage brokers need to maintain written correspondent or loan broker agreements with a lender prior to soliciting a contract with a member of the public. MB 1.2 clarifies the requirements for compliance with regards to written correspondent or loan broker agreements between mortgage brokers and lenders.

         >>>Click Here to view the entire Position Statement notice

Finance Friday: Fed cuts rate. Again.

Trying to understand this market is almost impossible.  On Wednesday, the FED cut the fed funds rate another .25%.  This morning we had the monthly jobs report showing we have created 166,000 new jobs for October, which is much higher than expected.  Oil has reached $95.00 per barrel.  The dollar has reached record lows against almost every currency (The euro has increased in value 50% against the dollar in the past five years).   One out of every 200 homes in this country is in some stage of foreclosure.  There are over 2,000,000 mortgages with interest rate resets in the next two years that are potential foreclosures.

Now the fear on Wall Street is that mortgage insurance companies may not have the resources to cover the coming losses. MGIC (Mortgage Guarantee Insurance Corporation) stock is trading at $17.00 per share, down from a high of $70.00.  Most other mortgage insurance companies are trading at between 25% and 50% of their yearly high.  There is a flight to quality as the ten year treasury security has dropped below 4.3%. This has not been reflected in mortgage rates yet.  The rate for no point low fee fixed rate mortgages is still about 6.125% to 6.25%.  I still expect mortgage rates to dip below 6.00% by the end of the year.

Guest Author Randy Kelly is a Mortgage Banker and Finance Author with Boulder West Financial Services. He can be reached on-line at http://www.boulderwest.com/.