Jason Bernabei, TriCastle Realty: "Say Fiscal Cliff One More Time!"

Jason, Bernabei, TriCastle Realty

DEL MAR : December 17, 2012 – Goooooood Monday morning San Diego!!! … Mortgage rates going mad? Mitigated short sale balances to face taxation?  Somebody say “Fiscal Cliff” one more time! That’s where I’m at with it right now, and what its long, formless spectre of a shadow is doing to my clients who are closing on real estate and loans this January.

Yes the Fiscal Cliff continues to grow in scope, size, reality, and Legend, and forecasters are all over the place as to the prospects of what it means to go over. For all the hub-bub about mortgage rates exploding upward, I much rather this take by Matthew Graham, authored today on www.mortgagenewsdaily.com.

“To whatever extent markets perceive that a Fiscal Cliff deal is achievable or imminent, the implication is likely an initial move higher for interest rates.  How high and for how long, remain to be seen, but until we actually get a deal, bond markets have to be defensive enough to account for multiple outcomes.  There have been several pieces of news over the weekend and into this afternoon that seem to advance the prospects of a deal.  This is the 800-lb gorilla in the room as far as that "pervasive weakness" is concerned.”

“The silver lining is that MBS (the "mortgage-backed securities" that most directly influence lenders' rate sheets) are less-affected by the drama than their US Treasury cousins.  That doesn't mean that mortgage rates won't move higher if broader bond markets continue to move higher, simply that they may continue to do so at a gentler pace.”

Mr. Graham’s assessment seems spot on to me. Although there is no direct comp for this Fiscal Cliff, being that the many circumstances of multiple other markets and governments are not the same as they were the last time we flirted with disaster; our last fiasco is a basis for a broad comparison. Yes, our  U.S. credit-rating was downgraded last time Law makers couldn’t find a way to play nice while approaching the cliffside, and yes, that could happen again this time around.

What didn’t happen last time was an upward spiral of rates of the proportions that blew out loan officer’s pipelines like it was 2007 all over again, and it doesn’t stand to reason that a similar doomsday scenario will transpire should we go over this time around. Most pundits, left, right, and center expect an extension on existing financial policy, if no grand bargain can be reached to avoid going over. If we do go over, it will not be long before something is in place, and with the Fed. still at the helm of rates, with his 2 year assurance on keeping rates historically low circa August 2011, and in consideration of the last Cliff-dive, my better judgment does not have me panicked over loan-locks come the 2^nd week of January. 

Having said all that, I do feel the need for disclaimer, the paradigmatic "but" coming (and it's a big "but"). BUT, I wouldn't bet the farm on it, or my clients' rates. If we are close to New Year's, and you have to make a decision for your clients' rate's sake, lock em if ya got em is my best advice to Loan Officer Land.

Jay’s Outlook: thoroughly annoyed

 

Jason, Bernabei, TriCastle Realty

Jason Bernabei: "The Fiscal Cliff & Recession Redux"

Jason Bernabei, TriCastle Realty

DEL MAR : December 3, 2012 – Good Monday morning Saaaaan Dieeegggo!!! The Holiday season is soon at hand, and that means time off from school for the kids, and hopefully a little time off from work for moms and dads. One thing it definitely means is that Congress will be taking their usual holiday break, and this year that could mean leaving a lot on the table, from The Mortgage Debt Relief Act sunset expiration of Dec. 31 to the Bush Tax Cuts, and of course the looming, ominous Fiscal Cliff(which is taking on an identity all its own).

As for this week on the bond and mortgage markets: well, they opened weaker this morning than they did late last week, with US stock indexes following all of Europe’s key markets upwards. Last Friday the 10 year note moved to 1.60%, and this morning came in at 1.64%. The 30 year MBS was down over 20 basis points to start the day.

Overshadowing the market activity of the week is the dreaded fiscal Cliff. All eyes on this growing, darkening, and all-encompassing entity of Terror, from whose heights no one can see the bottom when looking over the side. How to slay this monster? Well we can make it go back to the Netherworld from whence it came with the power of our political process in Congress, right? … Right? … Anyone?

If recent history has taught us anything, the Dems and Repubs in Congress are unlikely to agree on anything until the eleventh hour, that is, if they come to any agreement at all. With the bases of both parties hunkered down and hardened on key issues that will impact the magnitude of the so-called Fiscal Cliff, and whether we face it at all, the political stakes when weighed will be detrimental to which side of the bed we as a Nation wake up on come January 1^st, that is, if the monstrous Fiscal Cliff allows us to wake up at all(gulp!) 

Will the gridlock in Congress cause us to go over the Cliff, and tumble aimlessly to the untold depths below? It depends on who you listen to. If you listen to John Boehner over at the ole House of Representatives we are “just about nowhere” in realizing a compromise. One thing most everyone agrees upon is that going over the Cliff seems to mean Recession Redux, with tax hikes kicking in not only on just the wealthiest of the wealthiest Americans as the Dems propose, but on the middle and lower income earning classes as well. President Obama continues to wield the political capital earned over the recent Election season to insist on a bargain closer to his vision. The Repubs, and to no surprise, the Teapubs, are as obstructionist and obstinate as ever.

Jay’s Outlook: storm clouds rising out from over the Fiscal Cliffside

I'm going on record. There will be no “grand compromise” prior to the end of 2012. Expect a small extension(perhaps a fiscal quarter long?) on the Bush Tax Cuts and the Mortgage Debt Relief Act, and so another few months of duking it out, and watching the Fiscal Cliff grow in reputation, stature, and Legend. Until next time folks, Jason Bernabei, TriCastle Realty signing out...

Jason Bernabei, TriCastle Realty

Jason Bernabei, TriCastle Realty: "5 Major Mortgage Servicers Revisited"

DEL MAR, November 26, 2012 -- Goooood Monday morning San Diego! If you have refinanced in recent years through a mortgage brokerhouse, you very likely received a letter in the weeks after indicating that your loan(closed at XYZ Lender at a less-than retail wholesale rate) would be serviced by one of the 5 big banks that are easily accessible on any number of street corners across the United States. Those folks refinancing in today's climate will likely experience the same paradigm, and it may be a little confusing as to what is happening, what institution you are remitting mortgage payments to, and why. Below is an article I wrote earlier in the year that speaks to the mortgage "servicers," who they are, and what they are up to. Enjoy.

Jason Bernabei, TriCastle Realty

BANGKOK, February 20 2012 -- Gooood morning Thailand! Or is it good night San Diego? In any event, this vacation/business trip has proved to be quite an experience. As beautiful and enchanting as it is in much of SE Asia, seeing the third world up close and personal, off the beaten path of tourist spots, has made me realize once again how good we have it in the ole' U.S. of A, even during some of the worst of times. And while there has been a lot of good news to smile about in terms of jobs data and its implications on Housing in our great country, it may just be that more is coming, at least for past and present distressed homeowners stuck in challenging mortgages. But then again...

Last week, the "big five" mortgage servicers struck an accord with a host of federal agencies and state attorney generals on a $25 billion settlement effected to serve distressed mortgagors, and prevent similar circumstances from happening again. The big five include the usual suspects: Wells Fargo & Company, Citigroup, Inc., JP Morgan Chase & Co., Bank of America Corporation (think Countrywide), and Ally Financial, Inc. (think GMAC).  These five fine (heaping dose of of sarcasm) institutions service almost a whopping 60% of ALL mortgages in the United States! 

So what kind of haircut did the big, bad banks (ooooops, I mean good "servicers") agree to (somehow "agree" doesn't seem like the right word) over lunch in this landmark deal with the states and feds? For appetizers, they agreed to a $3 billion refi program for mortgagors that are upside down. Then, over salad, they agreed to fork over $5 billion to the various aforementioned coalition of State and feds. And for the main course?? A "minimum" of $17 billion to go directly to upside-down mortgagors, mostly in the form of principal reduction. For dessert, a host of new regs and unprecedented rights to future mortgagors to sue in civil court and pursue individual, institutional, and/or class action cases regardless of mortgage agreement. And then the bill came... Remember that aforementioned "minimum" of $17 million to be doled out? Well, that's going to look more like $32 million.

Now, after all is said and done, and we all get back to work after lunch, what does it all mean? It certainly sounds good, right? It certainly is getting interesting, right? But is there any reason to believe that the "servicers" will do any of the things that they say they agree to? Haven't we seen this movie somewhere before? Was anyone around for the last big bailout? It seems... so long ago. No, wait a minute, it wasn't. It was just a few years ago, just yesterday in the grand scheme of the collapse. Maybe this "agreement" with law enforcement authorities will disable the army of attorneys that will surely again be retained by the big 5 banks (sorry, I meant "servicers") to effect said servicers escaping doing what it is that they agreed to do. If not, it's simply more hot air, and a big bureaucracy that helps little to no one. We could call it Servicers II: "Attack of the Big Bank Clones." Or we could call it HARP II: The..." Alright, alright, enough already. I'll pick on HARP next week. 

In the meantime, contact me, Jason Bernabei, at jasonb@tricastle.com, and check me out each and every Monday on www.therealtyinsiders.com for more, and be sure to tune in to SD6-CW to see myself and co-host Greg Phillips on “The Realty Insiders” real estate show, THE ONLY real estate show in town! Ok, I'm headed for a guided tour through the Siamese jungle by elephant. Until next time San Diego, happy housing!

Jay's Outlook: dark n stormy