Plymouth Title Market Update

The economy has been dealt another blow:  The job forecast has seen little light at the end of the tunnel for at the least the short term horizon.  Although unemployment has dropped to a six month low, many have given up altogether looking for work, and have dropped off the unemployment figure.  You also have to take into account the people who have run out of unemployment benefits altogether. Furthermore many companies have decided it not the best time to hire.  Some feel the sales are not stable enough to warrant an expansion which may later result in layoffs and unemployment insurance if business slows in the not-too-distant future.  Some others feel that taxes, inflation, and regulations will make business so expensive that the thought of hiring lasts as long as that planned European vacation you have been talking about for ten years but never get around to do.  Then there is the permanent elimination of jobs due to automation, outsourcing, and over-extension and efficiency of the current workforce.  Remember firing is the last thing small to medium sized companies do when business slows.  The reverse is also true;  Hiring is the last thing companies do when business activity resumes and stabilizes.  In a bad market,  business has picked up for BK's, foreclosures, payday loans, collection agencies, loss mitigation and modification companies, rehab companies for REO resales, and accountants and financial professionals who along with estate and corporate attorneys seek to advise clients on how to defer, offshore, minimize costs, and maximize their ability to protect their assets.  In any society, its not just what you make, but what you keep.  Giving handouts to people on the side of the road is one thing, giving them to the city, the state and Uncle Sam who are all in line trying shake you down is another.  Taxes, fees, paperwork, waiting periods, and thin margins have everyone taking pay cuts and wondering when happy days will be here again.  As baby boomers , who make up the highest percentage of population in any 15 years group up to 100, begin to near their withdrawal phase, many opportunities will begin to open to those that get ahead of the game.  Our economy is not nearing the beginning of the end, rather the end of the beginning. Here is why we will rebound, and why all those nations that are looking at emerging markets will come running back to the U.S sooner than you think.  
 
    Resources.  The top ten economies in the World have eight located in Europe and Asia, and only two in the Western Hemisphere.  In two nations alone, India and China over 43% of the World's population reside, while making up less than 7% of the land mass.  The top three nations in regards to resources are as follows;  Brazil, U.S., and Canada.  Everything from food, to fuel, to  raw materials can be found on our side of the earth, and someday will put us in a trading advantage.  Gold and money are great, food and fuel is better. Population density is very small here. In the U.S., we have less than 90 people per square mile.  In Canada, that number is closer to 9. Less than 8% of the land here has even been touched.  You find that hard to grasp, especially when you live in a big city.   Look at any of the top ten large states here, and you will find nothing but space once you get away from the ocean.  At some point, the resources we have been importing will put us in a position down the road to become the exporter, since we have been saving our fuel, food, and raw materials for a rainy day.   Europe (except Germany), Japan, even Russia have to import alot of food,especially when you look at the population densities there being much higher, and the terrain less favorable.  We will be in a position to call the shots, and, natural gas, nuclear, hydro-electric , geo-thermal, and bio-mass are all forms of energy we have access to and can turn on at any time. 
 
  Technology.  You name it, from engineering, to IT to  anything remotely related to science still comes from here.   That tall building in Dubai, which is a full 1000 feet higher than the Sears Tower, was the work of an architectural group from Chicago.  The one in Taipei(2nd Tallest),  is from Chicago as well.  We may have issues in our school system, where our average test scores fall short from Japan, Singapore, and South Korea, but our top ten percent still have the highest test scores of any school children in the world.   We push excellence here and it means that some will rise to the top,  others fall to the bottom, and most will stay in the middle.  Having an average child does not mean he or she will not do extraordinary things. 
   
    Education.  From private schools, to public ones, to universities, to specialized training, higher learning here is second to none.  The opportunities to get secondary education are there for those that choose to walk through the doors that open to them.  Grants, and scholarships are always available, even in this economy. Too often many do little research to see what they qualify for, and as a result never take that first step. For those that do however, the quality is higher, and even though college degrees have become very saturated, make no mistake, showing an employer you can finish school or training in a trade of labor exemplifies your commitment to attaining long term goals.
   
    Entrepreneurs. This includes competition as well. They say we make bad employees.  In a recent poll among American businesses, we actually ranked below the top ten when it comes to working for others in  regards to loyalty, and efficiency. I disagree with this notion because our average hours worked is still 152 hours more than the next industrialized nation, Japan.  Now when it comes to being the employer, here is where we have the edge.  Competition and the ability to own one's ideas and time is stressed more here than anywhere else, and the ideas that come out of here from Americans every single day never ceases to amaze me.   You show me something as arbitrary as paperclips, and I'll show you someone making millions doing it.  Competition is why we have the things we have.  When companies fail, those that can make the cut, which is less than 2% after 5 years, have been able to budget, market, and operate in a manner that kept them going when their competitors could not.  The result is a better product and service to the consumer.  You eliminate that, the quality, the service, and usually the product itself goes away. 
 
    The Dollar is still the best game in town.  Yes, we have a high debt in relation to GDP (10.5%).  Having said that, our currency is still the highest in purchasing power overall.  I know some will say the Euro is worth more, and it is in trading exchange power overseas, but this comes in handy only when they are spending that money outside of Europe.  Our lower dollar has decreased our trade deficit spread, and as we speak four nations (Spain, Portugal, Italy, Greece,) are on the verge of BK. This could threaten to bring down the Euro as those nations would have to pull away from the monetary policy of the Euro and all its restrictions and start up their old currency again.  This would reduce the overall reserve and GDP output of the Euro by 20%. Then there is the cost of living in Europe.  Inflation is very high, Food is generally double, clothes are triple, gas is triple, and space is five times more.   This seems to be a major reason why opening a business and getting up from the ground floor can be a daunting task there.  If your not already in, good luck trying to join the club.
 
    Open society.  I wish I did not have to keep repeating this one.  Our constitution is the oldest breathing document in the World still being used as a basis for laws and government in any nation that recognizes borders from her neighbors.  Even in our most heated debates, great points become validated.  Your argument, no matter how strongly you feel about it, is valid only because of someone else's opposite view.  That opposing view creates a balance, a justification of facts and figures, and a moderation in application.  To take that view away, by choice or by force, automatically brings down the credibility of your point.  To force one's views without listening to others no longer makes it a view, rather a law enforced by quiet contempt. In other words, your views are only as justifiable as the ones you argue against.  Through this debate,  better ideas are formed, honesty and integrity is maintained,  and progress continues.
 
Laws.  We are a system of laws.  We would rather let nine guilty people go free than convict one innocent one.  Our laws have protected people's rights, their property, their businesses, their names, even their legacy far after death.   We give more rights to non citizens and illegals than most nations give natural born citizens.  This is a testament to the rights we choose to give humans, and in our worst of times (9-11) we still seek out the ability to give the worst in society their day in court.  These laws will give always businesses and employees time to grow, adapt, and overcome.  Our laws, and those that fight to argue them, help protect the little guys, and the big guy.   Make no mistake, the power is not in the money, but in the control.  As corporate takeover and anti-trust can be dangerous, so can populism.  Both parties need their rights to maintain balance.  You hear this battle cry "give it to the people!"  Companies, no matter how large they are, are made up of people.  To tear them down, just like forgetting to help the man on the street who is starving are both equally as damaging to our economy, and our sense of well-being.  Never apologize for being great.  When you succeed, it lifts us all up, if even for a second.
 
    Charity.  Americans seem to give, not only to themselves, but to anyone around the World who needs the help.  Stop believing the hype that we are hated everywhere, it simply is not true.  I believe in Karma, and the fact that Americans are the first in line to give money, time, their homes, and even their lives, is a testament that when people are given the freedom to be the best that they can be, most will use that success to share it with others.  When money comes from you, rather than a forced deduction on your check, you are much more likely to make sure it is well spent.  We give because deep down inside we are grateful, even in our toughest times.   We know its tough, and we want to see others succeed, mainly because we know it can be done.
 
I apologize for not giving financial facts on this email but sometimes we need to remember the basics, stay positive, and good luck out there!
 
 
 
 
 
Ron Granado
Account Executive                                                              
Plymouth Title Guaranty                                        
C) 708-476-3142 
O) 630-300-3900
F)  630-300-3901 
 
For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM
 

02/16,2010 Posted to Illinois Title Insurance , Title Insurance , real estate title insurance , realestateloans.com , real estate loans home loans

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Market Update Plymouth Title

The American economy has already begun to see a rise in both the service and manufacturing sector.   For those that say we don't produce anything anymore, our GDP in the manufacturing side alone was over 4.5 trillion in 2009, which would make it the 4th largest economy in the World behind Japan, China, and Germany just by itself..  Having said that many jobs have been outsourced, mostly in unskilled labor, or automated labor, with the hopes they might some day return.  Once high paying union jobs have now been replaced by lower paying non-union jobs in right to work states with laws that favor employers, rather than employees.  Unfortunately many are still waiting for those jobs to come back to their respective states. The question now remains: what can we as Americans do to in source jobs? One idea is we have to be more competitive and less cumbersome than our European/Asian counterparts when it comes to regulations, taxes, licensing, and overhead.   Regardless of how we want to slice it, we are married financially  to China and Japan.  They own half our debt, we buy half of the products they manufacture.   Some see it as a deal made with the devil, others see it is the best way to keep the peace worldwide, as the now the largest superpowers have each other’s interests at heart.  For those that prefer we keep the jobs here, which I agree with, must first be willing to pay higher prices for goods made in America.  Quality over price is the only way to ensure future jobs stay, otherwise, get used to the layoffs

As for foreclosures, the overall nationwide percentage is at just under 2%.  That number is expected to jump by more than 1-1.1.5% this year as banks now see the time to foreclose on those that have been non-paying for over two years as beneficial and more cost effective than short selling.  I say this to illustrate that short selling still has been proven to save the banks more than 10% more than outright foreclosing.  Over 71% percent of all foreclosures in the last five years occurred in five states (Florida, California, Nevada, Arizona, and Michigan.)  
 

       As 2010 rolls along, you can expect a few things to happen, government programs will be cut, taxes will go up (social security, top rate and medicare tax), and the cost of living will rise, especially in high coststateswith underfunded budgets.  You can also expect a slow shift in population and employment migration to states in the southeast, southwest and plains.   As new job opportunities open, and they will, cities with rising population numbers and growing demands for college graduates will see an influx of transients from larger cities.  For years it was common for a brain drain to occur when smaller towns and cities lost their graduates to larger ones.  The kids would go to college, then instead of moving back to their home town, they would leave for good. An example would be in the 90’s almost half of all Ohio State graduates moved to Chicago for work. Now that trend has seemed to reverse a little.  

            Will new businesses continue to open?  Every month, in Cook County alone, over 7000 businesses open. I ask myself, how could someone open a restaurant here in Chicago?  Don't we have enough food?  Over 150 opened last month alone in the metropolitan area. There is always a risk taker who cares little of what is going on, but rather of what needs to be accomplished.  For every industry destroyed, it will be the job of competition itself to create new ones.  Government has spent all they could, and rather than continue to push further legislation, they would better spend time enforcing the laws we have on the books. One law they could bring back is Glass Steagall, which used to prevent banks and insurance/investment companies from commingling..  The question is when will the stability of the companies that will be affected be strong enough so that they can withstand a forced dissolution? When will these companies be able to conduct business in a more centralized niche format that solely focuses either on savings and loans, or insurance and securities, but not both?  Will energy be the new construction job of 2010 and beyond?  Is Nuclear the way to go?  When will banks stop acting like the people that refuse to use them and start leveraging again? 

        Are you doing buy downs (2-1, 3-2-1)?  This program allows first time buyers to qualify at lower rates for the first couple of years, which as we all know, is the scariest and riskiest time of default for home buyers.  This also allows the seller, whether its a builder, or a private individual to keep the sales price at or near where they want to sell, and they can use the money to buy down the rate, rather than reduce price. Keeping the sales price higher stabilizes the overall real estate environment and brings an uptick that is much needed to our economy. This helps by making the payment more attractive rather than focusing on value.  There is also a tax deduction in doing this on behalf of the seller.  You combine that with the tax credit the buyer gets, up to 8000 for first time, or 6500 for current owner (at least last 5 years), and the purchase market has alot of inventory they can now move.  In 2009 alone 75% of homes bought where either first time buyers or investment and second home purchases.    Bankruptcy filings, although up from 2008, were still way down from their high in 1999 and 2001 when over 2 million were filed each year respectively.   That may have something to do with tougher BK laws limiting how much you can write off in a BK depending on median income and previous BK history.  It may also signal people would rather struggle forever than call it quits and start fresh.  If this is true that may be a positive sign depending on who you ask.

        Reverse mortgages.   There is an estimated 10-15 thousand people a day who will be qualifying  for a reverse over the next ten years without pause.  Yes these programs are expensive, but they fulfill many needs: for one they allow someone who can't sell their current home and who wish to up or downgrade, take care of current liquidity issues.  They will get money upfront if there is enough equity, and they will not have to make a monthly mortgage payment back.  If you are currently in a foreclosure, you can still qualify.   These programs are good for people who solely rely on SS or a small pension, are disabled and need home assisted care.  Reverse also can assist someone who lives in a high cost state where taxes, utility and food costs are rising at a rate faster than their fixed income can adapt to.  This program is great for networking for it gives the estate attorney work to do if no will or trust is set up, it gives the accountant work to do as it addresses any tax issues in estate transfers and gifts to children while still alive. It gives the broker a loan, it can even give a realtor a loan since some reverses can be done on a simultaneous purchase with a reverse at closing.  But most of all, it gives the chance for the parents to live mortgage free and get some income out of their home, which currently pays them nothing. They say when you die, you can’t take it with you.  If an equity loan is what the parents wish to get, remember it is hard to qualify when they are on a fixed income, not to mention prime is at historic lows and will go up, as those types of loans are not fixed.  If they have no high interest rate money market or annuity that keeps up with inflation, that rising payment will be a problem. If the kids are a hassle, their are certain term policies that can address those needs to pay off balance once both parents pass so that qualifying for a new mortgage or selling will not become an immediate concern. The cost is low if there are two people being insured, since the claim only gets paid at the passing of the second insured. The death benefit can pay off any remaining balance, leaving a free and clear property. The heirs have twelve months to do so anyway so long as they ask for an extension after 6 months. 

   

 Commercial real estate, although seeing its bubble just beginning to burst, can present many opportunities for financial professionals.   Banks, especially local ones who did not get any TARP money, have been quietly trying to get commercial paper off their books. These loans are harder to sell on the secondary market, although the returns are much greater, due to the quicker repossession process and higher than market rates and fees charged.  These loans need to be refinanced so that the banks capital reserves become higher, and their outstanding serviced debt can become much lower.  This presents a chance for Refi's, hard money, non-traditional financing, Mez financing, as well as other banks and investors who may see that loan the current servicer does not want to do as a gem.  In the next three years, over 2 trillion in commercial paper will come due.  Vacancy, debt service, and the credit quality of both the business and personal guarantor are looked at with much more stringency than before.  Whereas the property used to be the star of the show, now the current situation presents its own sets of challenges as banks try to figure out the mindset and outcome of the borrower. This is a crystal ball no one has access to.  Having said all that, someone needs to help these people, and you can be that person. Typically owners of these mortgages have higher than average net worth, they are more concerned with monthly cash flow, liquidity, and overall liability protection., rather than with just rates and fees.

    This nation will prevail.  The nature to compete and excel is not just an American quality, it is a human one. Through our daily attempts to succeed, we put ourselves in a position to help others, and through that achievement, whether it is a financial one , or recognition and acceptance from our peers, we all take one step forward.   Make no mistake, blaming others who are doing well does nothing to bring us up, it only drags everyone down.   I have yet to meet someone who has turned down a pay raise, and look at those making it through this tough time  with admiration, and not envy.  This is not measured in dollars, rather it is measured in humility and persistence.   These people learned to live on cash, stuck to the basics, put family and community first.  They bought a home they could afford and lived in.  They invested in things they understood.  They found more than one way to bring in a check.  They never bought more when things were too good, or sold too much when things went bad.  They always saw things in themselves that others may have not seen.  A true game plan is sticking to something despite all the bad things that surround you, and sometimes come at you.  I look at it like driving in this bad winter weather, I may have to drive slower, pay more attention to the road and others around me, avoid my own distractions like a cell phone, radio, texting, even road rage.   I may even take side streets, but regardless of how and when I get there, I find a way to my house.  Find your game plan and stick to it.  If you love or hate your job, do not be ashamed to say it for fear it may bother others who currently are having a hard time finding one.  People need to hear a good story if and when there is one to be told.  Success only becomes believable to most when they can speak to the person going through it first hand. Your life is short, and the opportunities come around more than you think, so keep your eyes open and your mind focused.  Guess what, times will get better, and they will get worse again, so trying to figure out how long the ups and downs last is a waste of time itself.  The best thing you can do is the right thing, the 2nd best is the wrong thing, but the worst you can do is nothing.  Good luck in 2010!


 
Ron Granado
Account Executive                                                              
Plymouth Title Guaranty                                        
C) 708-476-3142 
O) 630-300-3900
F)  630-300-3901 
For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

01/11,2010 Posted to Illinois Title Insurance , Title Insurance , real estate title insurance , realestateloans.com , real estate loans home loans

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Plymouth Title Market Commentary

The state of Illinois has become an example of what is wrong with over-spending on any level..  We are currently operating at a multi-billion dollar deficit, and boy is it growing.  The federal government can print money and tax, the state can only tax.  It is easier to force people out of state then it is to force people out of the country.  Most here have no plans to leave, and why should they? Moving out of Illinois on the other hand, nothing more than a half hour drive. In a move that could force the state to pay an estimated $69 million more per year in interest charges, one of the nation's major financial forecasting agencies downgraded the state's credit rating Tuesday. Two other major bond rating firms also put the state on a credit watch, saying Illinois' precarious financial position should be a caution for investors. The downgrades come as the state is about to nearly double its outstanding debt by selling $10 billion in pension bonds to help pull the state budget out of its $4.8 billion deficit.

.         As far as banks is concerned, there is now pressure form the White House, to push these banks, especially the ones that received TARP help and FDIC assistance to buy other banks, to lend out money in both the business and private sector.  As one bank was quoted; why should we lend and take the risk if we cannot foreclose?  Another one quoted: (we will take a second look at loans we turned down.)

The government still is guaranteeing billions of dollars in bank assets, which along with debt guarantees from the Federal Deposit Insurance Corp., amount to ongoing subsidies that may mask the condition of the financial markets.  We truly don’t know what kind of money is lost and gained, since much of it is deferred to either be a true non-performing asset, or sold off for a profit in the future.   Our road to recovery will take years, especially in states where the highest number of people are underwater and little industry is truly in place.   You have to ask yourself when you buy a house what is the affordability there?   Is the median income in line with the taxes, cost of housing, food, etc.?  In Illinois for instance, 80% can fully qualify for a mortgage a debt to income under 50%.  In California, on the other hand, that number is closer to 28%.  This number has to become more reasonable for the inventory in those states to come down.  Only so many investors can buy all these homes and hold them, some have to buy these and live in them themselves.  Without that high number of owner occ’s, communities suffer, since no one is in it for the long haul. In other words, for a community to be stable, the mentality of the people living there has to be communal, and long term in nature.

 Mortgage rates have seemed to stay low, in large part due to a continue purchasing of guaranteed investments by the US government, who have securitized these loans as Ginnie Maes, then in turn selling them off on the secondary, and thus replenishing the billions in TARP money back into a commercial line of credit.   Inflation, which seems to be on everyone’s mind, seems to be some time away.   Here is why, many nations who compete with our currency on the futures market, still have yet to see their recovery see full steam.  China, relies mainly on the consumption demand of Americans who see their labor as low enough to translate to those cheap products you are currently buying online, in your malls, or in any local department store.  The stock market, which has grown way beyond analysts expectations, seems to be more dependant on speculation rather than true earnings.   Most companies are operating as private equity firms, which means they are slashing everything from inventory to personnel, which although profitable, is putting more and more people out of work.  This is hurting the consumption side of things, which makes up 70% of our economy. Those that are working are overextended, unhappy, and productivity is higher, but may peak at some point.  This is preventing many people from moving and relocating, since they who own homes are waiting for sales to go through.  Their companies are much less reluctant to buy their homes and sell it for them. 

The problem isn't just a soft job market - it's an oversupply of graduates.. In 1973, a bachelor's degree was more of a rarity, since just 47% of high school graduates went on to college. By October 2008, that number had risen to nearly 70%. They're looking for people who can do jobs that can't be outsourced, he says, and graduates who "don't require a lot of hand-holding.   The need for specialized schooling will someday replace the need to just get a college degree.  Those that wish to get into business, or liberal arts, or communications, and marketing, are much better off going to a short term training program, with a certification such as a series license in securities, rather than an ongoing 4-5 year school that has too many general electives, and does more to prolong and delay the work experience rather than supplement it.  If you’re a doctor, an engineer, or anything that puts multiple lives in your hands, please go to school as long as necessary.  On the other hand, if you operate in the gray, and need to fail, in order to succeed, stop studying and start working.  We spend a lot of time talking about big oil, and big insurance, but do little to refer to “big” school.  Colleges and universities have seen their tuitions grow at a rate five times ahead of inflation. The professors are making double what they did twenty years ago, the schools are generating millions more due to sports contracts with TV and merchandising, and yet the average income earned by a college graduate the first year out is 28k. This is coming from a person with a graduate degree who has just applied for a doctorate.  I love education, but it has to involve practice, rather than theoretical ideas never brought to an application format.  Having said all that,  there are many positive signs too look for, and some other reasons why the economy is shifting to put things in perspective for you. 

 The first is there is a new shift or migration back into the south and plains.    States like Tennessee,  Nebraska,  Texas, Utah, and Oklahoma, have seen their populations rise well over 20% in the last five years.  This will continue to increase as seniors look for better weather, lower population density, and lower cost of living as a desirable place to live out their final days. Unemployment in these states are under 7%,  Affordability is at 90%, and foreclosures  are well under 1.5%.  

What is an indicator an economy is growing?  For one new business filings. The next thing to look at, is there a diversity in jobs being created.  There has to be a good mix of blue and white collar jobs, as well as small business filings.   As we all have learned with Detroit, if you have too many eggs in one basket, and you lack competition, no one can be saved.  Protectionism did not work prior to NAFTA, and the question we need to ask ourselves is not how do we bring jobs we lost back.  Working two jobs may be the norm.  The days of great benefits with one company are gone for now.  Hey few have loyalty to the place they work, so why expect them to be loyal to you?  We need to become a resource based economy, we need to in-source jobs.  How can the U.S..  compete in the outside market for employment and business? The first is to rely on itself for resources.    Many of the construction and labor jobs we lost can be made up in energy creation here such as in the nuclear, natural gas, and solar and wind.   We must become more dependant on our own land for natural necessities like food, energy, and basic labor.  

          Offering further signs that the recovery was gaining momentum, a separate report from the Mortgage Bankers Association showed demand for U.S. home loans rose last week to the highest level in about two months.   As inventories drop, prices will stabilize.  A moderation in the rate at which businesses are drawing down inventories contributed to economic growth in the July-September period, the first expansion after four straight quarters of decline. Analysts reckon slower inventory liquidation and restocking will support the economy's recovery in coming quarters.  Much like a diamond, if everyone has one, what is it worth?   When space is limited, and jobs are in high demand, than the price of space will go up.  These prices rise and fall due to the transient nature of the people that occupy them.  The flip side is when suburban areas that have too much space, but rely heavily on schools and access to highways see their prices drop, and people wonder why.  This is in large part due to the lack of commercial influence, you ask yourself, how did prices in such a spacious area get of out control? 

Don’t panic!  Our economy was set to go through a decline.  With overinflated stocks in the 90’s, which had little to no earnings on behalf of the companies they represented, we had an overinflated housing sector with little to no earnings on behalf of the owners of those homes.   Real estate values doubled in ten years, while income only increased by 8%.  Our manufacturing sector, as well as many other jobs in retail, too many jobs in financial services and banking, and too many contractors in real estate, this all made for perfect storm in jobs that may now be permanently eliminated.  You coupled that with the height of the tech boom, and your left with a growing population trying to maintain work in an era where many machines were able to replace them. 

All you can do as a professional is to adapt and overcome.  More millionaires are created in a recession than an upturn.  The reason why is when making money is easy, people become careless.  For this reason, it never lasts.  We take the work, study, and careful financial planning it takes to become financially independent very serious.  Unfortunately in a great market, many treat the money they earn as a lottery ticket.  What percentage of people who win the lottery declare Bankruptcy in five years?  45%! Money not earned means no one has yet to learn.  In a tough market, where credit and money are at a premium, the decisions made by those who invest become more long term, more patient, and more forward thinking.  At this point we stop thinking like hunters and begin farming again.  We also work more honestly, smarter, and take our relationships in business and personal lives more serious.  We also value our time on this earth as it should be, like our ability to live, and not just earn, especially in America, is the true lottery ticket we have all been given.  Have a great holiday and good luck in 2010!

 Ron Granado

Account Executive                                                              

Plymouth Title Guaranty                                        

        C) 708-476-3142 
        O) 630-300-3900
        F)  630-300-3901 
        For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

12/17,2009 Posted to Illinois Title Insurance , Title Insurance , real estate title insurance , realestateloans.com , real estate loans home loans

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Plymouth Title Market Update

 The falling dollar has done what economists and politicians alike have been hoping for since the early 80's, which is the following; reduce the trade deficit to a surplus by making our goods cheaper to the outside world with currencies that are rising in value. Clothes, electronics, and other retail goods are now being bought at record levels. There is this perception that we don't produce anything anymore. The fact remains America was still the number one manufacturer last year in good produced within their borders in the World. Yes we have seen a drop in goods produced here, for the following reasons: high labor costs, high taxes, stiff environmental regulations, high turnover, and low retention. Many who complain about the jobs going overseas are the same ones who buy the cheapest items they can find, and say we need to go after corporations. Unions do not affect most corporations(GM and Chrysler are the exception) most large companies can afford to ship jobs overseas or to states with more favorable laws towards employers. Most of the states in the southeast, and Plains have seen a rise in new corporate filings in the last ten years. on the other hand smaller to medium sized companies, which make up 99.5% of all list corporations, cannot ship their jobs overseas. They either are too small, or feel that the risk of opening up shop in a nation like China with such a short track record of capitalistic success is way too high and would rather take their chances here.

        The stimulus has either saved or created 30-40 thousand jobs according to the Congressional Budget Office. That translates to roughly over 484,000 cost per job created or saved. Sounds like a great investment, spending almost half a million dollars to save a 50k job! This is why the private market, which along with the personal consumer, has been holding onto their wallets the last 1.8 years since they see the government as overstepping their spending boundaries. Our current deficit of 1.45 trillion, which is projected to double by the end of next year, accounts for 13% percent of our GDP (14 trillion dollars). This is the highest level since World War II (121% in 1944) Credit card payment defaults have actually been less than mortgage defaults, largely due to the fact people can still use their credit cards for money. Many mortgages have been tapped out on equity, and in some cases up side down. This all sounds like bad news right, but there are plenty of bright signs to pay attention to.

        First, the debt that has been guaranteed by the government with Companies like Fannie, Freddie (government sponsored enterprises), Citigroup, and AIG, come out to roughly 1.9 trillion dollars. This is tax payer owned debt, which means if people don't pay, you will. This also means that that debt, which has been sold off in bundles at a time, can still be held at a servicing released rate, which if performing well, will be sold off at a profit at a future. We can get this money back with interest. Mortgage backed obligations and CMO's roughly are at a 96.5% success rate of full time pay without delinquencies exceeding 60 days. If the underling value of that debt, which is the value of homes and commercial properties stabilize, then the demand on the secondary market here and abroad will rise. In some areas in the Midwest , Southeast, and northeast, they already have. The West, now that's another story. With FHA, the longer the loan stays on the books, the riskier it is, due to the inherent credit risk of the borrower, but on Fannie/Freddie, which makes up the bulk of the remaining debt, performs better the longer it stays on the books, since the credit criteria and ltv's are much better. Yes Fannie/Freddie should get rid of their score adjustments, especially when the score is over 700, and as time progresses, they will change that policy. The three credit reporting bureaus are working as we speak to adjust their criteria for recent lates in relation to overall scoring, so as to rate scores much more accurately as a whole.

     As for the debt, much of the remaining mortgages on the books that were originally banked sub prime or Alt-A, over 85% have been refinanced or sold. The record defaults in FHA is due to the record market share FHA has, which is almost 40% of the mortgages done. They were at 18% throughout the 90's, but dropped to 2% in 2003. Most of their recent lates, which are in the streamline program, occurred from loans booked in 2006-07, which was coincidentally when their credit criteria was at the lowest level, and sub prime was becoming non-existent. This was also the year that My Community/Home Possible loans were changing their guidelines for the worst. Naturally FHA was a sub prime replacement for two years, and the nature of the defaults followed. Many brokers and bankers attempting to adapt and stay afloat did these loans, many banks who tried to shift wanted to bank them, and many borrowers needing relief and homes at a discount signed up. Here is the most important thing to consider: we outsourced most of our debt. Between the years of 1999(when Glass/Steagall was repealed,) and 2008, we sold roughly 50 trillion dollars to other nations through investments, junk bonds, credit swaps, and other futures contracts that had imbalanced high yields and inaccurate risk ratings. in other words, outsourcing can sometimes be a good thing

    Furthermore, 46% of homes in the U.S. have no mortgages. This is made up of baby boomers, cash buyers on investment and second homes, and homes that have been grand fathered in and left as an inheritance from prior generations. This means there is a whole market of reverse mortgages(10,000 new ones a day), that will need loans to build cash flow, attorneys to set up estates, wills, and trusts, and financial planners to set up annuities and cash value life policies. Banks, who seem to have been focusing on deposits rather than loans, are at record profit spreads, and at some point will either have to lend back that currency into the outside community, or face an accounting/regulatory backlash. There is this perception that if we do not give out free lunches, no one will eat. If people have to save and work harder to build their credit, they will do it so long as they get rewarded for their hard work. What bothers potential buyers and current home owners is how they get punished for the actions of a smaller percentage, and there is where the pull back in taking a risk happens. This is where you as a professional associated with the industry can help. in other words, if there is no failure, then there can be no success. Here are a couple of final things to consider.

.     Salary based employment with no regard to cost will become a thing of the past.   As our economy becomes more advanced, it will be easier to track individual achievement per employee, as it relates to cost and profit, and performance based marketing will take over salary based pay.  Bonuses, stock options, profit sharing will replace hourly, yearly, sick and holiday pay, You need to ask yourself if you are doing things to earn income residually, In other words if you miss work, will a check get there?. Are you doing things that will pay you residual income, retain clients at a higher percentage, and have new clients come to you? Or are you constantly searching for that next big meal, that next big check, and are not planting the seeds that take a while to grow, but when it does, will provide a lifetime of food? We have been striving for complexity ranging from derivatives, credit swaps, and other mbs products few could understand yet pushed like it was the best thing since the last best thing, we now know simplicity has to come back into the forum. These are just a few things to consider, remember, you have over 18 trillion in inventory to work with. Whether you are an attorney, a realtor, a broker, or a Cpa, this money will either be paid off, default, or in most cases be transferred like a hot potato, so make sure your there when it does. Good luck out there!!!

Tax Credit for Homebuyers

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to  $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call (708-597-8884) or email me today at NJC99@aol.com or ncoleman@envision3m.com

In addition, you may be able to benefit from additional housing related provisions, including the following:

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Tax Incentives to Spur Energy Savings and Green Jobs

This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance

This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties

 Ron Granado

Account Executive

Plymouth Title Guaranty

Title Guaranty                                        

C) 708-476-3142 

O) 630-300-3900

F)  630-300-3901 

For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

11/07,2009 Posted to Illinois Title Insurance , Title Insurance , real estate title insurance

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Plymouth Title Market Update

The BULL market economy is derived of two basic sectors; investors and employers.  The first side, investors, have seemed to regain some sense of confidence in both the equity markets (S&P, NASDAQ, and DOW JONES) and the overall bond market.  Many municipalities, once thought to be on the verge of bankruptcy, have cut costs and worked out pension and trust fund obligation arrangements with former and current employees to reduce overhead.  The FDIC fund, which funds insolvent banks, that is improperly capitalized banks, has been drained from 58 billion in March of last year to 13 billion now.  Employers on the other hand, fire last and hire last.  Many have seen their smaller workforce grow the efficiency of their output, and now may be reluctant to hire back anytime soon.  Many others have shifted to automation and overseas subcontracting in order to cut benefit costs and labor expenses here.  The question now becomes, what new industries can be created and how can we in-source jobs from other nations that see us as a cheaper, more productive and safer place to open up shop? 

    80% of the sale is made on the fifth sales call.  Only half make a second call after they fail to close on the first, 25% make a third call, and only 11% make three or more.  Hence when you hear 10% of people do 90% of the work, it is the persistence they had that conquered their resistance. Are you a sales person, or a teacher?  Do you work every deal with the idea of closing and financial reward being your main motivation, or do you actually look to educate your consumer on why they need to get out of debt, have a financial game plan, prepare an estate, and limit their tax exposure?
    Lenders have been doing two things in regards to short sales.  The first is this slow process of getting rid of inventory is slowing their lending of new loans back into the community, so as to maintain capital reserve requirements.  The second is while they are working with the buyer and current homeowner to short sale, they are also bidding that property on the open market somewhere else through an appraiser/realtor to see what the current fair market 90 day liquidation value is.  This in turns is what causes the slow response banks give to offers for new buyers, for the initial offers are usually lower than current appraisal they get back
    FHA is tightening up guidelines.  Guess what this is a good sign.  As they tighten up, the government will lean back on the private markets to take higher risk in loaning to consumers and businesses alike.  There needs to be a change in how credit is rated.  Trans-union has not update their reporting system since 1995, when annual revolving credit  was at 350 billion.  It is now well over 1.6 trillion revolving on an annual basis.   to be taken off the mI declining market restriction list. 
    Illinois, which is seen as a distressed market, needs three months of growth in value to be no longer considered a declining market.  Ohio is considered depressed, which means more than 20% drop in values.   More than 30%, which makes up Florida, Nevada, and Arizona, are considered severely depressed and need one year of growth month over month aggregate to be considered stable again.  These issues and the ability to overcome them is what will open up new MI lending to once volatile states.  Cash outs will resume to 90%, Fannie and Freddie will loosen their hit son credit scores under 740, and honoring DU?LP conditions will rule the day again.  Banks that currently sell directly to Fannie and Freddie, and own preferred stock in those companies, will see their investments come back to numbers that accurately reflect a GSE (government sponsored enterprise) stock value, rather than a value of an IPO that sells paperclips out of Rwanda. 
    If you are not one of the Fortune 50 companies listed as "Too big too fail"  then you fall into a different category 'too small to help" , and you are on your own.  Now that you know that, getting your consumers to loosen their wallets and live their lives by their own prism, rather than their neighbor, their media, or their competitors tell them is what speeds recovery and growth. Regardless of the job market, you never have job security, especially if you work for someone else.  No one can guarantee you good health and success, only the opportunity to attain it.  The more you fail, the closer you are to success.  90% of this country still works, 95% still pay their bills on time,  97% still own their homes, and the average credit score in the U.S.  is still 688.  Good luck out there!!!!!
   
 
Ron Granado
Account Executive                                                              
Plymouth Title Guaranty                                        
C) 708-476-3142 
O) 630-300-3900
F)  630-300-3901 
For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

09/18,2009 Posted to General , Illinois Title Insurance , Title Insurance , real estate title insurance

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Plymouth Title Insurance Market Update

The market has taken a small retraction, with a slight bounce back today, as the jobs report was better than expected.  A net 225k loss of jobs,shows a slowdown in layoffs.  Its a difficult pill to swallow, much like saying "well yesterday the high was -10 and cloudy with today reaching up to -5 and partly sunny. Any good news is better than the end of the world scenario we have been hearing about.   The spreads between mortgaged backed securities and treasuries seems to be closing to a number closer to 1-1.5%.  This will translate to a higher confidence in the real estate market, as China, Taiwan, South Korea, and Japan have now jumped back into the mix buying these treasuries.  This helps to widen the field as the US government is not the only player in town.  The recent failures in banks  such as the first bank of Kansas City brings the number this year to 85, and two year total to 141.  Illinois leads the way this year with 12.  Some predict the number may rise nationwide to 1000.  Sounds high right?  Well remember in 1990 that over 4500 banks, or roughly 71% of deposit banks failed within three years.  Some smaller banks have tried to close their mortgage departments down, which have opened up the floor for market share from other banks, credit unions, conduits, and brokers.  New laws, such as the TIL and HVCC, have shown what happens to turn times and downgrades because of over/late regulation.  Another example of a reaction to the changes in laws would be when Congress switched the tax liability law for short sales allowing sellers to sell and not pay taxes on that short fall as earned income.  Prior to 2007-08, these programs were unheard of, as banks could write off balances as paid income to the owners of these homes.  They would in turn sell a 250 loan for 200, and then receive a bill two years later for thousands they failed to pay in income taxes on that 50k.  Attorneys, now have seen a shift in control, of transactions that is in their direction.  For years it was realtors, then banks and brokers, and even consumers for a short while.  Now it is the legal portion of dealing with REO's, short sales, deeds in leau of, and "As is" homes that have given a rise in demand for negotiators who need to have a basic concept of laws and proceduresto these deals done quickly.  The banks play hardball, and their needs to be an opposite conflicting force or own side will get too powerful. 

    Consumer confidence has rebounded in some areas, and we are beginning to see a mixed bag of who has seen their business up, their business stay flat, and or their business continue to go down.  This is usually a sign of a bottom.  The recession, which was regionalized for the first year, then nationwide for the last year, has now begun to become more regionalized again.  States like Texas, Virginia, Arkansas, South and North Carolina, and even New Hampshire have seen a rise in second quarter economic growth, and home values as well. 
    Mortgage sales continue to rise, with the exception being in the condo sector, where rate hits, condo restrictions, and inventory have pushed investors and first time buyers away.  Even empty -nesters have chosen townhomes over condos.  This trend will only get better once builders have finished their projects and moved onto more lucrative projects, like golf or sailing for a year or two.   Attorneys, realtors, and brokers need to begin seeing each other as a necessary component to the puzzle, rather than a unnecessary bump in the road they can avoid in a detour.  As for consumers, you need to be educating them on the fact we have never seen prices and rates both hit record lows at the same time.  This can only mean one thing: we will rebound starting now!  Those who got burned the worst waited the latest to buy and paid the most. Buy now and buy often.  Good luck out there!
Ron Granado
Account Executive                                                              
Plymouth Title Guaranty                                        
C) 708-476-3142 
O) 630-300-3900
F)  630-300-3901 
For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

09/09,2009 Posted to Illinois Title Insurance , Title Insurance , real estate title insurance

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Big Corporations Actually Love Big Government...

Big corporations, who are frequently demonized, actually love big government.  Can someone explain to me how AIG, GM, and Merryl Lynch do not love the billions given without any real restrictions from Uncle Sam?  The smaller companies are the ones who prefer to be left alone when it comes to mandates by the state and federal levels.  For one, they cannot outsource to another country.  Small to medium size corporations, which have 500 or less employees and make up 99.6% of all listed companies in America, account for 76% of new job hires in the last decade. Rising health care costs, high tax states like New York and California, tougher environmental regulations, and extremely favorable employee laws push these companies to less restrictive and cheaper states like in the South, Plains, and Southwest.  "China is taking our jobs!", have you heard that cry the last ten years? Well actually, Arkansas, Texas, Alabama, and New Mexico are taking your jobs.  Do you know the Chicago area lost more jobs to the south following the 96/Atlanta Olympics in the five years following than it has ever lost to China since business relations have existed between the two superpowers? 

    Investors, both on the Bull and Bear side, have been anticipating a market retraction the last two weeks, but to no avail.   As tough a predicament as we are in, the rest of this planet is doing much worse. Many have left back to Europe, South America, even Asia, only to find that the situation there is like comparing a partly cloudy 85 degree day in July to a mostly sunny 20 below day in January.  This is still the best game in town.  The 109 billion in pending auctions of 2, 5, and 7 year securities should push rates downward, but the volume trading is thin, and some continue to swap treasuries to equities.  We will see.

 

    Why should you care if brokers get regulated out of the industry?  As a banker, who is say you are not next?  Just because SRP is not disclosed, many in power seek to increase the net worth for conduits to one million or higher.  That would shut down 90% of conduits currently int he business.  And for those that work at banks?  Once these people are out of business, why do the banks need you?  Do you understand that competition is why you have a job?  Yes I agree the market is over-saturated with those who had little ethics, knowledge, experience, or professionalism required to keep the market sane.  The quality of the borrowers reflects those that they seek to do business with.  You show me a person with a gambling debt, and I show you a payday loan store. You give me a neighborhood with financial hardship, and I open up more liquor stores.  People say there is not enough business to get.  If that is true, then why did we have a 7% increase in sales month or month, the highest jump in 11 years?  People who losing their homes now are not doing os because they are in a bad loan. Rather they are losing it because they lost their job and did not ave enough to hold them over, or their savings and unemployment ran out.  Even worse, there is a segment of the population who cannot deal with the trauma of being upside down, and is running for the hills, therefore ruining the neighborhood's comps.  Would they do that to their car, where they are upside down the moment they leave the dealership? 

 

    Finally, here are a couple of suggestions, first, take this year to learn very facet of your industry that you can, so that you become indispensable to your clients.  This includes all updates that revolve around the laws.  If you want to fight them, your clients need to be informed so that they can help. Second, work a forty hour work week. You would be surpised how many people still live in the mode of enjoying their summer, even in the middle of December!  Third, make physical sales calls.  We cannot live in this entitlement society where everyone comes to us, because for most, it won't.   95% of people working this year will not clear 100k.  The ones that liv emostly in areas where their purchasing power forces them to rent, or even worse, stay at home! Your income has to be residual.  Churning current clients on refis will be regulated ot the point where the fees will not be feasable, so new purchase business has to rule the day.   Is there enough space? 91% of this nation is rural.  We are 20 years into the software age, 13 years into the cell phone age, and 18 years into DNA.   These much to discover, many new mistakes to be made, and we are bring and attract the best, the brightest, and the hardest working this world has ever had to offer.  We still fight for the weakest, and praise the most successful at the same time.  There is no shame in that, keep your head up, and good luck out there! Here are a few updates on the near future to keep in mind.

    Don't fight the market, go with it. Make any adaptations

  • The Global Economy Remains Weak: For all the talk about how America is an import-dependent economy that doesn't make anything anymore, S&P 500 companies derived about 48% of their sales from overseas in 2008, . In other words, we need the globe to recover to sustain a rebound. I am concerned about global growth generally and, specifically, that Germany's second-quarter growth was a "dead-cat bounce."
  • Credit Markets Still Damaged: The current relative calm in the credit markets is likely to end next year as another round of foreclosures and debt defaults hits.. This will put pressure on bank balance sheets and lead to another round of credit tightening, putting further constraints on growth.
  • Small, Regional Banks Left to Sink or Swim I am confident big bank holding companies are reasonably sound today, in part because she has faith in the stress tests, for reasons detailed in the accompanying video. But she's worried that smaller and regional banks have been left to fend for themselves, meaning more failures are likely forthcoming.
  • FDIC Reserve Fund Being Depleted: Fewer banks have failed than in the 1980s but absolute losses have been bigger, putting the FDIC reserve fund under pressure. That could become a problem if/when more small and regional banks fail.
  • Big Banks Now Really Too Big to Fail: Related to nos. 3 and 4, the government's policy of forcing failed banks into mergers (vs. receivership) and bailing out the teetering giants last year has created even bigger behemoths who are "now the only game in town."
  • Regulatory Uncertainty:, I am a big believer in financial innovation and the benefits for a "reasonable" amount of leverage. Uncertainty on the regulatory front is putting constraints on the use of leverage and, hence, recovery. What does the financial world mean by regulations?  Higher taxes, health care reform, tariffs, import/export restrictions, and limitations on expansion are all just a few sticking points preventing many companies from hiring. 

Ilinois title insurance, real estate title insurance, title insurance


 
Ron Granado
Account Executive                                                              
Plymouth Title Guaranty                                        
C) 708-476-3142 
O) 630-300-3900
F)  630-300-3901 
For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

08/25,2009 Posted to Illinois Title Insurance , Title Insurance , real estate title insurance

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Mortgage Market Update

 Interest rates have risen recently, as the sell off in mortgage backed securities due to a shift back into equities has made floating loans a daily stress test many brokers and their clients would prefer to do without.   They should drop or remain steady as third quarter economic data looms. The new TIL law slows the already slow turn times brought on by HVCC, understaffed lenders,  undercapitalized lenders, and extremely consevative underwriting.  DU findings are not being honored, and appraisals are being undercutted.  The slow foreclosure process in many states, the squatter laws that prohibit quicker evictions, and inconsistancy of short sale offers has made the stabilization of values an ongoing concern.   

        What can you do as a mortgage or real estate professional to increase your business?   For one,  working with local banks to unload their REO's is the best way to build up a centralized network of a smaller bank that you can refer future savings/checking clients too, while getting any FHA or shaky conforming and jumbo business most of these banks do not offer, and prefer to send elsewhere.  Very few offer FHA, or jumbo, relying mostly on direct issue Fannie or Freddie depending on who they own their preferred stock with.  Commericial and ELOCs are reserved for existing clients, and some have preferred shutting their mortgage departments down and outsourcing to another bank or credit union.  Many do not offer reverse mortgage, but do offer passbooks and cd's, where 90% of the clients are over the age of 62.   Why aren't you that referral source?   Remember that every turn down a bank makes increases the liklihood that customer will pull their account and go somewhere else.  That bank manager will then have doubled his or her own quota for opening new accounts, which is the lifeline of a bank's business.
    How much networking have you done with CPA's to build up business for that 8000 tax credti good till the end of November?  It takes two months to close loans, so the process has to begin by early October.  The loan has to fund by November 30th or they will not qualify.  Think about it, they can get the tax credit refund within 4 weeks of closing, amend their 2008 filing, then file their taxes again for 2010 within a few months and receive more in refund, assuming they qualify and paid taxes in 2009. For an FHA first time buyer, which have at the most three months in reserves, this goes a long way to ensure some liquidity for more middle income earners under the age of 35.  
    Rates will continue to move up and down depending on daily and weekly housing numbers, retail sales, foreclosures, and energy numbers.  Our dollar has risen and fallen, and now faces some outside pressure to drop in value next year due to a deficit that is projected to surpass 1.8 trillion by the end of the fiscal year.  This equals a 13% relation to annual GDP, and is much higher than the 4-8% threshold foreign investors are comfortable with.  The cash for clunkers has helped, but at the same time, has made the U.S. government the consumer and supplier of its own product.  Hopefully the tide will last.   As for the deficit, remember that in 1944,  our deficit was 121% of our annual GDP and we managed to get out of it just fine with record growth and urban sprawl in the 50's.   Trying to figure out where rates and values will land in one, two, or five years is like picking the weather on any given day.  Some days its hot, some cold, but either way you can enjoy your day.   I can tell you this, values will eventually rise, as so will rates.  That is not a bad thing.  When rates rise, so long as personal income does as well, values will increase to outpace.  This helps you, and grows the economy.  What put us in this mess was a record low rate environment, coupled with record low standards for credit, and no income growth for almost ten years, and your left with a leveraging dilemma that could not sustain.  Good luck out there!!!

 
Ron Granado
Account Executive                                                              
Plymouth Title Guaranty                                        
C) 708-476-3142 
O) 630-300-3900
F)  630-300-3901 
For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

08/14,2009 Posted to Illinois Title Insurance , Title Insurance

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Mortgage and Economic News

There are signs this economy is hitting it's bottom.  Job openings closings % were down to their lowest level in eight months, which show a stabilization of many sectors.  Consumer confidance has already risen in nations like Australia, Canada, and Japan.   This is the first recession mankind has gone through in a true information accessible age.  Every bit of bad data, even if it is unjustified, send the stock values of otherwise stable companies to penny stocks within minutes.  Rates, on 10 year, 3, 5, and 7 all look to drop for at least the next month as third quarter economic data will loom as the true indicator of if inflation is near or far.  We will see unemployment push past double digits, but right now inflation concerns are steady as the money we are printing is not being put on top of money already inxistance.  Rather the money printed to push current and past policy has replaced the trillions in wealth wiped out from the drop in bond values asscociated in mortgages backed securities.  Inflation, which is a concern, but not in the near future, will remain stagnant so long as the ability to leverage has been taken away.  Credit based economies, which are all in the Western world, have seen a drop in prices since consumers are having to pay for more things out of their own pocket.  As cash becomes king, the cost is lower since the overall cost cannot be spread out through credit card or installment payments.  Inventory remains high in homes, and must come down to a level of 6-9 months.  In many areas they already have, but once you throw condos into the mix, the numbers get somewhat out of whack.  The fact is, the price of goods and services, as with the growth in sectors directly affected by credit may never be the same. We will have growth in the future, but 9-12% may be replaced by half that number, since real assets will be the main source of purchase rather than a borrowed one.  We will see a recovery this year, the real question willl be how good it is, and how long it will last.  Will we become a resource based economy, replacing manufacturing jobs lost forever with other ones based on the need for?  What will America do to new bring jobs here? We spend so much time trying to emulate Europe, when what we should do is follow Texas.  80% of the new jobs in America came out of this state last year.  Five of the top six cities for growth in America are here, their economy grew last year at 4.2%, their foreclosure rate is 34% of the national average, and yet we would rather look like England.  England's unemployment rate is at 17% and growing, one third of their hospitals are bankrupt, and affordability for home purchases is at 6%.  Their credit rating has also recently been downgraded to AA. 
 
    Here are some marketing tips: work with banks.  The smaller local ones have much less red tape to go through, meet with the local bank manager or vice-president and ask them if they have any bank owned.  Here is where you can network with a realtor, and maybe an attorney to help them get rid of inventory.  This also puts your clients in a position to get a big discount, since essentially this will be more of a bulk purchase.  Where do you find the buyers?  Hospitals, credit unions, unions themselves, local municipalities,  anywhere in that area where there are companies based, and jobs available.  The best way to market to a local company and be their "go-to' is to attract people to live near the area where they are going to work.  The closer the proximity people are to their work, the more likely they are to stay and the more efficient they will be.  Companies know this and embrace the idea. 
 
    Are you doing Reverse?  Every day, 10,000 new people qualify for this type of mortgage and here is why it has some potential to assist in eocnomic recovery.  First, 76% of homes owned by people 65 and over are paid off.  The equity they have accumulated is free and clear, earning them no income or interest and sitting there waiting for them to pass, so their kids can fight over it in probate or in the will.  Why not take some of that money out to pay expenses?  Real estate taxes is the number one reaosn why people over the age of 65 lose their homes, coupled with health issues Medicare and Social Sec. cannot cover.  Estate attorneys love this product because it forces elders to address the Will concerns over their estate.  Small estate transfer exclusions expired this year, and now will be taxed like everything else.  Those who look to sell their homes now may be forced to take a big pay cut since they will be competing with the bank owned homes I spoke of earlier.  Take the money out now and buy that second home if you want to. If your kids is your concern, take the money now and give it to them.  Money today is more important than money tomorrow.  If Americans have concerns over Medicare and Social Security, and they should, then home assisted care and supplemental income needs to be looked at as another option for financial and health support.  Americans will have to rely more and more on home care, and SS and medicare wll not cover all the costs. We were taught to pay our homes off, so our pension and social security would take care of us.  What are we going to do if pension plans and social security become non-existent?  Insurance people like this product for it creates cash-flow for annutities, and second-to-die policies which ensure that home balance wll be paid off at the death of the second insured.  This policy is cheap even for older people since it insures two, and only pays when the last one passes. This allows the heirs to get the estate with no balance, and will not be forced to sell or qualify for a mortgage themselves. You should not sell this as a feature up-front, since monthly cash flow concerns must be the primary objectivefor a reverse mortgage candidate.  This is a quesiton asked to them when they do their counseling.  This does however take the objections of the heirs away alot easier.
 
    Now commerical loans are products 95% of brokers stay away from.  That makes so much sense, since RESPA does not come into play, fees are easier to collect, and cash flow is the main objective. If you offered residential to busines owners but failed to do their commerical loans, or business loans, then you may have missed out on 100k a year for the last decade. Is the learning curve a concernfor commercial?  Of course it is.   You have learn about different things like debt service, types of property, special use, types of business, and liquidity of that business and borrower. Should you follow a lead system, with mailers and inbound calls? Sure. Make sure the package is sent out by the same person who will be closing the deal, so the HUD and fees are sold upfront.   Should you also make physical sales calls when necessary?  Many realtor offices and attorneys say they have not seen a broker in six months, and are wondering if brokers are still in the game.  Affordability in many areas has now risen to a level of 70-75%. This means that 75% of the homes in a given region fall within the 3.5 times the median income for that region.  This helps with first time home buyers, which look to be the largest percentage of buyers this year.  If you live and work in an area where transients are coming from out of state, then networking with the businesses bringing them here to work will be your best referral source.  As you work with your current client list, remember that as 85% of your industry is gone, and growth in mortgages is up 42% from last year, there is alot more market share to grab.  Now go get it!  Good luck out there!!
   
Ron Granado
Account Executive                                                              
Plymouth Title Guaranty                                        
C) 708-476-3142 
O) 630-300-3900
F)  630-300-3901 
 
For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

07/29,2009 Posted to General , Illinois Title Insurance , Title Insurance

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Plymouth Title Market Update

As it stands now, inflation is somewhat contained. 2,3, and 5 year notes were sold off in record numbers, which may push ARM rates much lower.  Although the debt this nation has accumulated has far exceeded the natural threshold, the lower demand for goods has kept most prices stable. Americans are becoming what their grandparents were, savers.  Many now look at their check as it if it will be their last, and are saving up for a rainy and a sunny day.  The first rule of self-financial planning is to pay yourself first. Always find a way to stash a few bucks away for you, because you have earned it.  Remember that the time you have on this earth is short, and the time you spend with those you care about is even shorter than that.   Take this tough economic time to learn about what mistakes have been made, and how they can be avoided in the future.  In saying that also take time to see how many high school graduates benefited from a good Real Estate economy, and pat yourself on the back.  The problem arises when making money becomes too easy, we become irresponsible, and forget the time tested values that have pushed civilized society to what it is today.  There is no free lunch, if you can't afford it, you don't deserve it, and you the consumer bear the ultimate responsiblity for the decisions you make. 

    Real Estate purchases are in full swing.  Are you seeing any?  Are you dealing with realtors and or attorneys that have direct access to foreclosures and bank-owned homes?  Are you trained on 203k?  This loan is a pain to close, but it attracts realtors, for it puts first time home buyers, our saving grace, back into the market. This also helps banks make quicker decisions for their as-is homes will be easier to move and be approved for outside financing.  As for baby-boomers, they will buy, for their 401k, IRA, and Pension withdrawals will be in record numbers over the next 7-10 years.  90 million people will reach the age of 65, as reverse mortgages,  whole life, annuities,  second homes, and estate planning will be the services most requested.  Make sure you are networking with the attorneys, accountants, and real estate professionals who still see you as a necessary component to making this industry work.  All these things are different sides of the same coin.  If we are all working against one another and giving clients mixed signals,  then how can we expect to help them grow and retain their business?
    The last thing you need to ask yourself is if you are a hunter or a farmer.  Do you look for the quick sale, or are you willing to plant seeds which will eventually lead to compounded business down the road?  The first type brings in a quicker buck, and usually a larger one.  The second one pays little upfront, but eventually grows to a point where that farmer will not have to go out and call on new business.  One involves sales and self-employment.  The second involves running your business.  I am not saying go out and get your license to run your own shop. I am simply trying to illustrate that everything you do needs to be looked at as your own business.  Your name and reputation is what you sell, not your rates, fees, programs, or name affiliation.  Learn everything and anything about your business so you become indispensable to your clients and this economy.  Do that and no one, not even Lisa Madigan will be able to fire you.  Good luck!!!!
 
Ron Granado
Account Executive                                                              
Plymouth Title Guaranty                                        
C) 708-476-3142 
O) 630-300-3900
F)  630-300-3901 
For online ordering, please visit: WWW.PLYMOUTHTITLEINSURANCE.COM

07/01,2009 Posted to General , Illinois Title Insurance , Title Insurance

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07/01,2009 Posted to General

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