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During the first quarter of 2006 commercial and multifamily mortgage bankers’ loan originations increased 34.2 percent compared to the same quarter last year, according to the Mortgage Bankers Association (MBA). The year over year increase during the first quarter was led by solid gains among all property types while commercial mortgage-backed securities (CMBS) conduits and commercial banks led the increases among investor types. First quarter loan originations were down 37.4 percent compared to the fourth quarter of 2005.

“The first quarter is traditionally when originators recover from the flood of year-end activity and build the foundation for the year ahead,” noted Douglas G. Duncan, MBA chief economist and senior vice president of research and business development. “While it is unknown if the rate of growth seen in these markets during 2005 will continue at the same pace through 2006, first quarter numbers indicate no immediate signs of slowing.”

FIRST QUARTER 2006 34 PERCENT HIGHER THAN FIRST QUARTER 2005

The increase in commercial/multifamily lending activity during the first quarter was across all property types. The increase over the first quarter of 2005 included a 26 percent increase in loans for office buildings, a 23 percent increase in loans for multifamily properties, a 55 percent increase in loans for retail, a 33 percent increase in loans for industrial space, and a 123 percent increase for health care properties. The largest percentage increase in lending was for hotel properties which saw a 165 percent increase from the first quarter of 2005.

Among investor types, commercial banks, life insurance companies and CMBS conduits drove much of the overall increase, although lending activity increased among almost all types. Mortgage bankers’ originations for commercial mortgage-backed securities (CMBS) conduits increased 35 percent from the first quarter of 2005; originations for commercial banks increased by 64 percent; and originations for life insurance companies increased 2 percent. Originations for Fannie Mae and Freddie Mac increased 29 percent; originations for FHA increased 62 percent; and originations for pension funds dropped by 86 percent from the fourth quarter of 2005.

FIRST QUARTER 2006 37 PERCENT LOWER THAN FOURTH QUARTER 2005

First-quarter 2006 mortgage bankers’ originations were 37 percent lower than originations in the fourth quarter of 2005, reflecting the industry’s usual push to finalize deals before the end of the year, and the traditional and subsequent drop-offs in first quarter numbers. First quarter numbers show decreases in origination volumes across all property and investor types when compared to fourth quarter of 2005.

From Mortgage Bankers Association

Two more housing surveys were released this week with very contrary results and it seems ever more clear that the housing market is either going to take a long while to sort itself out and decide which way to head or it may just see-saw or drift without ever resolving the question of the housing bubble.

The National Association of Realtors issued their report on the sales of existing homes for the month of April and they showed that sales were easing off after two months of increases. But, a day earlier the Census Bureau in a joint release with the Department of Housing and Urban Development, announced that, to the surprise of almost everyone, new home sales had jumped nearly 5 percent above the March rate for total estimated annual sales of 1,198,000 units. See my blog post, Less to Sales Rise Than Meets the Eye for more analysis of this study.

The NAR numbers which include sales of previously owned single family houses, condos, townhouses, and co-ops slipped 2 percent from downwardly revised March figures of 6.90 million to a seasonally adjusted annual level of 6.76 million units. This was 5.7 percent below the pace of existing house sales in April of 2005 on a seasonally adjusted basis and -10.1 percent unadjusted.

At present there is a six month inventory of houses available for sale at the present consumption rate compared with 5.6 months of inventory indicated by revised March figures. One year ago there was a 4.3 month backlog of houses for sale. In spite of slowing sales, median and average sales prices were both up over March figures and year-over-year.

The median price nationally was $223,000 in April compared to 218,000 in March. This April figure was 4.2 percent higher than the median of $214,000 one year ago. The Northeast showed the greatest increase in the median price since last year, 5.6 percent. The average price nationally was $269,000, $4,000 higher than in March and 3.1 percent higher than last year. Average prices increased the most in the West where prices were up 3.9 percent year over year.

Census Bureau/HUD information on new house sales painted a brighter picture. Estimated new home sales for April totaled 1,198,000 (annualized) compared to the 1,142,000 projected in March, an increase of 4.9 percent. In spite of this good news, April 2006 sales are expected to be 5.7 percent lower than in April of 2005.

At present there is an inventory of new homes which is expected to take 5.2 months to sell at the current rate compared to a five month supply in March and a six month inventory in February. One year ago there was a 3.8 month supply of new homes on the market. Houses that sold this April had been on the market for a median period of 4.0 months compared to 3.9 months in March and 4.4 months one year ago.

The median price of a new home in April was $238,500, an increase of $6,500 since last month and the average price was $298,300, up from $291,200. Both median and averages prices fell significantly from February to March so it is hard to draw any conclusions about trends from the current figures.

Source: Mortgage News Daily

Buying a home - seven painful mistakes to avoid.
For most of us, buying a home is the biggest investment of our lives. You are likely to spend 25 to 40 percent of your income for many years to come, so it is much better to educate yourself to make good decisions, rather than feel the pain of mistakes; mistakes which could have been avoided.

1. Signing documents without reading them.

Since it is almost impossible to read all the forms and documents at the time when you are closing the deal, you should familiarize yourself with the standard paperwork that is commonly used, and make sure you understand it completely. Your mortgage broker can provide you with all standard documentation ahead of the closing.
2. Not being pre-approved.

In a situation where you compete with other potential buyers, it is essential to be pre-approved for a loan. It shows the seller your ability to get financed, and the seriousness of your offer.
3. Using the same agent who also represents the buyer.

The job of a seller’s agent is to negotiate the highest price. That simple fact causes a conflict of interest if you let the same person represent you as well.
4. Verbal agreements usually can not be enforced.

Whenever you have spoken agreements regarding the deal, but later are asked to sign papers that don’t include the details of these agreements, or say contrary things, do not sign them. What is written always has more validity in the eyes of the law, even if spoken arrangements were witnessed by other people.

5. Choosing the lender with the lowest interest rate.

Consider the full cost of the home loan, including the discount points and the loan origination points, as well as, other mortgage fees. By law, you should receive a Good Faith Estimate within a few days of turning in your loan application to the lender. It will outline all fees associated with the loan. When closing the deal you should not be tricked into paying more fees than what was stated in the original Good Faith Estimate.

6. Skipping home inspection.

You are not only going to be in a better position to negotiate possible repairs you would like to have done before closing, but you will also have a piece of mind knowing that the property has no major problems with plumbing, roof, termites, etc. Having a professional inspection done can save you money and headaches.
7. Not shopping for insurance ahead of time.

Home insurance premiums can be costly, and it takes time to find an affordable quote. Sometimes, insurers require some upgrading in order to underwrite the home policy. Start shopping for home insurance as soon as your offer gets accepted. You can check with the company that has the current policy, but get other quotes as well.

It’s not enough that you’re agreeing to take on the biggest debt of your life, one that represents two to three times your annual income. You’re also confronted with piles of paperwork, flurries of fees and a tidal wave of terms, from amortization to title insurance, whose meaning is fuzzy at best. “Whether it’s a professor at Stanford or a ditch digger,” said San Francisco mortgage broker Leon Huntting, “most people don’t understand the loan process.”

In this confusing and pressure-filled atmosphere, it’s easy to make some mistakes. Here are some common ones that lenders and mortgage brokers see, and what you can do to prevent them.

1. Not fixing your credit Mortgage brokers say they’re confounded at the number of buyers who apply for a mortgage with their fingers crossed, hoping their credit will allow them to qualify for a loan.

Before you even think about applying for a mortgage, obtain copies of your credit report and your FICO credit score. Your FICO score is the three-digit number that’s used in 75% of mortgage-lending decisions. You can order your FICO score on the Web for a fee of $12.95, which includes a copy of your credit report. (See link at left.)

Doing this at least six months in advance should give you plenty of time to challenge any errors on your report and ensure that they’re removed by the time you’re ready to apply for a loan. You can also see the legitimate factors that are hurting your score and do something about them, such as paying off an overdue bill or paying down credit card debt.

2. Not looking for first-time home buyers’ programs These programs, typically sponsored by state, county or city governments, often offer better interest rates and terms than you’ll find among private lenders, said mortgage consultant Diane St. James. Some are tailored for people with damaged credit, while most can help people with little saved for a down payment. Some of these resources are listed on St. James’ educational Web site, ABC Mortgage Consulting. You can also call the housing agencies for your state, county and city to see what they offer.

3. Not getting pre-approved for a loan Many first-time borrowers confuse being “pre-qualified” with being “pre-approved.” Pre-qualification is a pretty casual process, where a lender tells you how much money you probably can borrow based on how much money you make, how much debt you already have and how much cash you have for the down payment. Getting pre-approval, by contrast, is a much more rigorous process and involves actually applying for a loan. You typically submit tax returns, pay stubs and other information. The lender verifies the information and checks your credit. If all goes well, the lender agrees in writing to make the loan.

In a hot or even warm real estate market, the house hunter who is only pre-qualified is a cooked goose. Home sellers and their agents give much more weight to offers being made by buyers who already have a loan lined up.

4. Borrowing too much money Many people take out the biggest loan they possibly can, figuring that their incomes will eventually increase enough to make the payments comfortable. But few first-time buyers have any clear idea of how expensive homeownership can be. Not only will you shell out more for mortgage payments than you probably did for rent, but you’ll also need to cover property taxes and homeowners insurance, as well as higher bills for utilities, maintenance and repairs than you faced as a renter. Lenders are perfectly willing to let you overextend, knowing that you’ll probably forgo vacations, retirement savings and new clothes for the kids rather than default on your mortgage.

“Mortgage money … is way too easy to get,” said Ted Grose, president of the California Association of Mortgage Brokers. “People tend to overbuy … and that can really stress family life. It’s also a formula for foreclosure.”

Instead of going to the edge of affordability, consider limiting your housing costs — mortgage payments, property taxes and homeowners insurance — to 25% or so of your gross income. That’s a much more sustainable level for most people, financial planners say, than the 33% lenders are typically willing to give you.

5. Not shopping around for rates and terms Mortgage broker Allen Jackson of Bristol Home Loans in Bellflower, Calif., sees too many borrowers with decent credit getting stuck with loans meant for people with poor credit. So-called “subprime” loans are often more profitable, so less ethical mortgage brokers may push them. If the borrower doesn’t know what the prevailing interest rates are for someone with their credit standing, Jackson said, they can easily pay thousands of dollars more than they need to. You can see a listing of loan rates by credit score at MyFico.com, and a comprehensive listing of prevailing rates and fees can be found in MSN Money’s Banking area.

Even people with a few dings on their credit can often qualify for better loans than they’re typically offered, said Grose of 1st Mortgage Advisors in Los Angeles. He believes most of the people being shunted into government loan programs, such as Federal Housing Administration (FHA) loans, would pay less if they used mortgages now being offered by private-sector lenders.

6. Paying junk fees Lenders can boost their profits by adding on a variety of fees. Some may be legitimate, some may be inflated and others may be pure fluff. Lenders may charge for “document preparation,” for example, when all that involves typically is having a computer spit out a form. Or they may charge $150 for a credit check that cost them $15.The time to challenge junk fees is not when you’re about to sign the loan papers. Use a mortgage broker or call a number of lenders to compare their loans. Ask about the interest rate, the “points” charged to get that rate (each point is 1% of the total loan amount) and any other fees the lender charges. Then you can compare terms.

Once you’ve selected a lender, you’ll be given a good-faith estimate of closing costs, which should include any fees being charged. Ask about each fee, and try to negotiate down the ones that seem excessive.

If the lender won’t negotiate, “take that estimate to someone else,” St. James said. “I’ll bet they can beat it.”

Unfortunately, this doesn’t absolutely guarantee you won’t face junk fees when it comes time to sign the loan. Many borrowers complain that they still face higher costs than were originally estimated, and so far the federal government has done little to prevent the practice. You can try challenging junk fees at this point, but most likely you’ll have to bite the bullet and pay the fees to get your loan.

7. Not planning for closing costs The day you’re scheduled to get your loan, known as closing, you’ll also be expected to write a check for a number of expenses, which typically include attorney’s fees, taxes, title insurance, prepaid homeowners insurance, points and other lenders’ fees. Together, these are known as closing costs, and the total can be eye-popping: somewhere between 2% to 7% of the selling price of the house. “Usually, when people see the closing costs, they’re like a deer in the headlights,” said mortgage broker Huntting, who works for Pacific Guarantee Mortgage. “It’s much more than they ever think it’s going to be. “Plan for closing costs by getting a good-faith estimate from your lender as early in the loan process as possible. Make sure you have the cash on hand (or rather, in your checking account) and that it doesn’t “disappear” before closing because of sloppy bookkeeping or a last-minute emergency.

8. Not having enough cash on hand after closing After borrowing too much, and scraping together every last dime for closing costs, many home buyers have nothing left in the bank to pay for anything unforeseen happening –and something unforeseen always happens.”It costs so much just to move in,” Grose said. “Then the water heater breaks.”

Some people are so tapped out by the process, Jackson said, that they’re not able to make their first mortgage payment on time. That’s why “more and more lenders are requiring [borrowers have] three months’ reserves after closing,” Jackson said.

That’s a smart idea for borrowers, anyway. Having three months’ reserves, which means a fund equal to three months’ worth of expenses, will help you handle the added costs of homeownership with much less stress.

From MSN Money

Less to Sales Rise Than Meets the Eye
According to an article on BusinessWeek Online, Peter Coy states the following:

“Don’t be overly impressed by reports on the Census Bureau report today that sales of new one-family houses in April rose 4.9%, seasonally adjusted, from their level in March. Economist Ian Shepherdson of High-Frequency Economics notes that the Census Bureau simultaneously revised downward sales in the past five months. Also, Shepherdson points out, the number of new homes available for purchase rose nearly 27% from April ‘05, the biggest rise in 33 years, while the year-over-year price increase was under 1%, the smallest increase since 2003. His bottom line: “In short these data stink; don’t be fooled by the headline.”"

The Census Bureau reported the following:

Sales of new one-family houses in April 2006 were at a seasonally adjusted annual rate of 1,198,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4.9 percent (±11.5%)* above the revised March rate of 1,142,000, but is 5.7 percent (±9.8%)* below the revised April 2005 estimate of 1,270,000.

The median sales price of new houses sold in April 2006 was $238,500; the average sales price was $298,300. The seasonally adjusted estimate of new houses for sale at the end of April was 565,000. This represents a supply of 5.8 months at the current sales rate.

For the complete news release please follow this link.

New Homes Sales Data from the Census Bureau can be found here.

The Mercury Rising - From BusinessWeek Online

“In city planning-speak it’s called adaptive reuse, but in the real world that means taking old structures of one kind and turning them into something else. A fine example of that is the old Getty Oil headquarters in the Koreatown section of Los Angeles. The 23-story building, now dubbed the Mercury by Cleveland-based developer Forest City, is being converted into 238 condos, priced from the low $400,000s to over $1 million. The original office tower opened in 1963. Many of the old Los Angeles buildings that used to be oil company headquarters have been turned into condos or boutique hotels. Cities create incentives for developers to do this. After all, the Getty building had been vacant for years.”

For more please follow this link

Matrix » Baby Boomers May Turn Out To Be A Bust

From the Matrix Real Estate Blog:

“The retirement of baby boomers will not only affect the US, but also many countries around the world. This has many significant public policy implications for the future.

A draft version of the baby boom study [SmartMoney] covering this phenomenon was recently completed by Decision Economics that found:

Over the next 10 years, the American work force will become increasingly tight as the approximately 77 million members of Generation Baby Boom retire, according to the report. When these folks leave their jobs, they’ll be so hard to replace that the U.S. economy will grow at a significantly slower pace than it has been in the last 10 years.

Here’s a draft of the study (pdf) [Brookings Institution]“

For the full article please follow this link

Google Earth Blog: See More Recent Aerial Photos in Google Earth

I love Google Earth as so many of you do. I recently blogged about viewing the 10 most expensive homes in America through Google Earth. Now there is a compnay that is updating the images in certain parts of the country - and its free - for 30-days.From the Google Earth Blog

Aerials Express has made a press release announcing a new service allowing you to see more recent aerial photography for a significant

portion of the populated US. The new service being introduced is called ViewGL (Beta). “ViewGL feeds Aerials Express’ premium aerial content directly into the Google Earth platform…” But, they have a

lso released examples as Google Earth network links you can try for six areas in the US: Atlanta , Chicago , Las Vegas , Milwaukee , Northern California , and Phoenix . After you pause over the selected area for a second it will begin loading an image for that view. Zoom down close to see better detail. If you live in one of these areas, you will probably want to go there now and check out your home area to see if there are more recent aerial photos. [NOTE: available only for about 30 days. See below.]. You can also see in GE the coverage areas of the US for photos from Aerials Express.

Details on the Service:

“Google Earth has had a very positive impact on our business,” states Bill Landis, CEO of Aerials Express. The press release indicates that ViewGL is targeted for “giving professionals access to the latest high resolution imagery available.” I imagine people in the real estate industry, property tax verification, and other government sectors will find this immediately interesting. However, I wonder if they are missing an even bigger opportunity. Why not offer this service to consumers who are hungry for more recent photos of their houses and communities?ViewGL access will cost $495 for regional access, and $1995 for access to the entire US, for a single-user license. The licensed access will be for a limited period of time, but you can take screenshots or print from Google Earth the areas you are interested. You will need Google Earth Plus or Pro if you want to print at higher resolution. Free access to the six example regions will only be provided for the next 30 days.

Mall-Building Industry Takes Stock To See How Long Growth Will Last - From the Wall Street Journal
As the retail real-estate industry launches for its big annual show — the International Council of Shopping Centers convention in Las Vegas week — one question is increasingly being asked in the business: How long will the strong sales and easy money last?

The shopping-center industry outlook remains solid, lenders are funding deals at record prices and retailers are looking to expand, while new construction remains restrained.

But retail real estate and the economy at large have been buoyed over the last several years by consumer spending, thanks to record run-ups in home prices and the home-equity loans used by owners to keep spending. Now those props could be weakening with a slowdown in the housing boom and consumers paying near-record prices to fill their gas tanks.

For the complete article, please follow this link

Fee Puts Mortgage Brokers On Defensive - From the Appraisal Institute

As the House attempts to craft a bill to curb predatory lending, the flourishing mortgage broker industry is on the defensive over a common fee used in the home loans of many subprime borrowers.

House Financial Institutions Subcommittee Chairman Spencer Bachus, R-Ala., has found himself stymied in his bid to move a consensus bill regulating a little-known lending practice referred to as a yield spread premium (YSP). Under the practice, mortgage brokers are eligible to receive fees from lenders for issuing a loan with a higher interest rate than the minimum rate the borrower would have qualified for.

For example, if a borrower could qualify for a loan at 7 percent, but was steered into a loan at 7.5 percent, the broker would be eligible for a payment of 1 percent of the total loan amount. On a $200,000 loan, for example, the fee would be $2,000.

Consumer activists and some lawmakers call YSPs nothing more than a kickback, part of abusive lending practices that are lightly regulated and cost Americans more than $9 billion annually.

Rep. Brad Miller, D-N.C., has sponsored a bill that would include YSPs as part of a trigger that would determine whether a subprime mortgage would be classified as a high-cost loan under federal law, would ban certain lending practices such as prepayment penalties, and would force more disclosure. But Bachus did not include similar language in a draft bill he released in March.

The mortgage broker industry strongly opposes such a move, said Roy DeLoach, senior vice president for legislative affairs for the National Association of Mortgage Brokers. The group contends YSPs provide consumers with more choice in mortgages, such as allowing the borrower to provide little or no money down for a loan in exchange for a higher interest rate. The industry argues that a YSP might provide the only opportunity for someone with poor credit to secure a loan.