What I am Hearing in Markets

This Week; is Holy Week. Trade likely will be quiet with the religious holiday. Most all of the data points this week are centered on the housing sector; starts and permits for Mar, new and existing home sales, the NAHB housing market index Monday and the FHFA housing price index on Thursday. The only other releases are weekly claims on Thursday and the and the April Philadelphia Fed business index also on Friday. That’s it for the week. Markets closed on Friday.


Until a week ago the overwhelming consensus in the markets was that the US economy would have a strong Q1 and optimism for the rest of the year was being touted as continued improvement. Over the past week investors were beginning to re-think the economic outlook and lowering expectations. It started with the IMF saying it is revising lower GDP Q1 growth from 2.0% to 1.5%; markets had accepted growth in Q1 at +3.0%. The Fed’s Beige Book out last week, while remaining optimistic, showed indications that growth isn’t as powerful as markets were thinking. The National Federation of Independent Business overall index fell in April, taking the optimism that had improved since last Oct totally away. Small businesses account for the majority of jobs. This is also earnings season with companies reporting Q1; so far earnings have been a little disappointing. 


Consumer spending declining, until recently, have been ignored by investors. Even with gasoline and food prices increasing markets generally didn’t pay much attention—-until last week. $4.00+ gasoline and rapidly increasing food prices will, as we have continued to mention, slow consumer spending. Bernanke out there saying the increase in energy and commodity prices are “transitory” may not be; markets beginning to understand that. With consumer spending less than expected and the housing markets still showing no signs of stabilizing, let alone improving, investors are getting a little nervous.  


These fluctuations in the market place, will push mortgage rates down a little for the moment.  At some point as we have been saying right along, this economy has to turn to the positive side.  When it does, mortgage rates will edge up over 5 and may never look back.


If you have any questions, feel free to call or email me anytime!!



Bill Nickerson

Vice President Mortgage Network

179 Great Road Suite 214, Acton MA 01720


Bill’s Blog

Providing Mortgages Since 1991

NMLS # 4194

Commercial   Residential     Reverse FHA/VA

How To Kill The Economy

The proposed regulations governing the Qualified Residential Mortgage (QRM) exemption from risk retention rules constitute a “devastating, unnecessary and very expensive wrench (thrown) into the American dream” according to a white paper released Wednesday by a consortium of housing industry groups.

The paper was published in advance of a scheduled hearing of the House Subcommittee on Capital Markets and Government Sponsored Enterprises on “Understanding the Implications and Consequences of the Proposed Rule on Risk Retention”.  Two of the groups in the consortium, the Mortgage Bankers Association and the Center for Responsible Lending addressed the committee along with other trade groups and a panel of representatives of the regulatory agencies which drafted the regulations.

Under Dodd-Frank lenders must retain five percent of the credit risk on loans packaged and sold as mortgage securities.  However, certain qualifying mortgages will be exempt from risk retention, making loans with the QRM designation highly sought after assets by lenders.  Last month federal agencies including FDIC, the Federal Reserve, Securities and Exchange Commission and Federal Housing Finance Administration proposed QRM rules which will qualify FHA, Fannie Mae and Freddie Mac loans by definition and require non-agency loans to have down payments of 20% or more and Debt to Income (DTI) ratios of 28% / 36% or less.  QRM may not include products or terms that add complexity and risk to mortgage loans such as negative amortization or interest-only payments or present significant payment shock potential. While FHA and the GSEs currently dominate the lending landscape, they are expected to reduce their market share in the years ahead.  The argument presented in this White Paper is QRM rules will limit the ability of Non-Agency lenders to compete with the GSEs and FHA in the future, therefore limiting the incentive for private investors to enter the sector; making it harder for the government to reduce its footprint in the mortgage market in the process.

The White Paper takes particular exception to the 20 percent down payment requirement.   Based on 2009 home price and income data it says it would take 15 years for an average family to save the $43,000 down payment on a median priced home compared to only six years to save 5 percent to put down on the same house. This requirement, it says, would deny millions of responsible borrowers any access to the lowest rate loans with the safest loan features.

The down payment requirement will also present a sizeable bar to homeowners hoping to refinance.  Based on data from CoreLogic, the paper estimates that nearly 25 million existing homeowners lack sufficient equity in their home to meet the 80 percent loan-to-value requirement.  Even at 90 percent LTV, 34 percent or over 16 million homeowners could not refinance into qualifying mortgages.

Analysis of CoreLogic data on loans originated between 2002 and 2008, a period which includes the loans that recently defaulted at record rates, shows that raising down payments in 5 percent increments had only a negligible impact on default rates but significantly reduced the pool of borrowers that would be eligible for QRM loans.   For example, where borrowers already met strong underwriting and product standards, moving from a 5 percent to a 10 percent down payment reduced the default rate by only 0.2 to 0.3 percent but reduced the pool of eligible borrowers by 7 to 15 percent.  Jumping the down payment from 5 to 20 percent changed the default rate by 8/10ths of a percent while knocking out 17 to 28 percent of borrowers depending on the year of the loan.

Removing so many potential buyers from the pool of borrowers eligible for qualified mortgages “could frustrate efforts to stabilize the housing market,” the report says, and to date the regulators have not put a price on the cost of risk retention to the consumer.  “This should be done before finalizing a rule that imposes 5 percent risk retention across such a broad segment of the market.”  A JP Morgan Securities Inc. estimate put the cost of 5 percent risk retention at a three-percentage point rise in interest rates for loans funded through securitization.  While that estimate may be high, the report says, even a one percentage point increase in interest rates could be devastating to a fragile housing market.  The National Association of Home Builders (NAHB), another member of the consortium, estimates that every percentage point increase in interest rates means that 4 million households would no longer qualify for a median priced home.  Any QRM-related costs, the report points out, would be in addition to a general interest rate increase anticipated over the next 12 to 18 months.

Any of these effects will carry greater impact in those states that have already been hardest hit by the housing downturn.  For example, in the five states that have seen the most foreclosures and greatest price decreases (Nevada, Arizona, Georgia, Florida, Michigan) between 59 and 80 percent of homeowners do not have 20 percent equity in their homes.  Six out of ten homeowners would not be able to move and put 20 percent down on their next home.

These borrowers, the paper says, have already put significant “skin in the game” through down payments and years of timely mortgage payments, “but the proposed QRM definition tells them they are not ‘gold standard’ borrowers and they will have to pay more.”

With major regional housing markets ineligible for lower cost QRMs many states and metro areas that have seen the biggest price declines will now face higher interest rates, reduced investor liquidity, and fewer originators able or willing to compete for their business.  “These areas face long-term consignment to the non-QRM segment of the market.”

The paper concludes that the proposed rules will also negatively impact the private lending market.  The vast majority of loans will be non-QRMs subject to the higher costs of risk retention and without regulations that mandate sound underwriting standards.  The statutory exemption for FHA and VA loans will give them a significant market advantage over fully private loans.  This will delay or even halt the return of private capital into the market.

While the inclusion of GSE loans mitigates the immediate adverse impact of the rule on the housing market, it is not a viable long-term solution and does little to establish the certainty the secondary market needs.  “Rather than rely solely on a short-term fix the regulators should follow Congressional intent and establish a broadly available QRM that will create incentives for responsible liquidity that will flow to a broad and deep market for creditworthy borrowers.”

Risk-retention is not a viable option for smaller institutions and will reduce the ability of community-based lenders to compete in the mortgage market.  The top three-FDIC insured banks already control 55 percent of the single-family mortgage market and this consolidation will only intensify.  “In short, the proposal creates real systemic risk while doing little to relieve it.”

Congress intended QRM to provide creditworthy borrowers access to well underwritten products, provide a framework for responsible private capital to support housing recovery and to shrink government presence in the market while restoring competition and mitigate the potential for further consolidation.  Instead the proposed rule is so narrow that it will force a majority of both homebuyers and homeowners to either forego purchasing/refinancing or pay higher rates, and will hamper competition and accelerate consolidation in the market.

In addition to MBA, NAHB, and the Center for Responsible Lending, the members of the consortium are Community Mortgage Banking Project, the Mortgage Insurance Companies of America, and the National Association of Realtors®.



Bill Nickerson

978-264-4803  office

866-741-2548  fax

978-273-3227 cell

NMLS # 4194

Providing Residential Mortgages Since 1991

Is now a great time to buy a house…..YES!!


As a mortgage professional, as well as an investor in real estate, the goal is always a buy and hold. In the case of buying a home to raise your family, you would purchase your home with the intent to own it for a period greater than 7 to 10 years which would shield you from the month to month movement of the markets and you could focus on the long terms gains.  We all know that in some areas of the country we are going to see a decrease in home values, while in other areas we will see an increase.  Here’s the catch, if you think you can catch lightening in a bottle…take the chance a home will drop 5, 10 or even 20% over the next year and hope that mortgage rates stay below 5%.  This is highly unlikely as the economy begins to build steam and move forward.  If rates move 1% higher, which is very likely, this will cost you $50,000 or greater in buying power.  For a home that is priced at $450,000 at a rate of 4.875%, is equal to a home priced at $400,000 at a rate of 5.875%.  So by waiting, you have lost time in the market place.  We do know rates will climb, that is certain, home prices in this immediate area will stay relatively flat over the next year and will.  In general, the economy is based on speculation on what economist think might happen.  Across the country, the average home price will drop.  Buyer Beware; there are always deals to be had, and now is a time where you are getting both low rates as well as low house prices.  If your intent is to buy and invest for the future, now is the time.  If you believe you can time the market and make a quick buck by flipping, you are in the wrong place. 

Bottom line…if rates go up by 1.00%, which they will, it will do no good to wait to see if house prices drop in order to get a better deal.

Don’t be an “April” fool…now is the time to buy!





Bill Nickerson

Vice President Mortgage Network

179 Great Road Suite 214, Acton MA 01720


Bill’s Blog

Providing Mortgages Since 1991

NMLS # 4194

Commercial   Residential     Reverse FHA/VA


Winter, it’s only a state of mind!

Winter, it's only a state of mind.
Winter, it’s only a state of mind.

This Week in the Markets

This Week; existing and new home sales are the main focus but unlikely to show any change in the trend of weak sales that has been the situation for two years. Japan’s problems with their nuclear reactors remain but the latest reports imply some progress on a couple of reactors while another reactor is weakening. In Libya the UN forces clobbered Libyan positions with heavy use of missiles but Qaddafi remains defiant. Treasuries and mortgage rates are likely to stay within a tight range as long as there is no change in the situations in Japan and in the Mideast.


The stock market, after the strong selling on panic moves is likely to rebound and recover most of the losses on the indexes. Gold and crude oil likely to increase in price after a volatile last week. Through the week as long as investors return to equity markets the bond and mortgage markets will see prices fall and yields increase. The week is very likely to be volatile from day to day with unfolding news out of Japan and the Mideast. We do not expect interest rates to increase a lot, but we also don’t see any major decline this week. Still suggest using the recent rate decline to get deals done and not get enthused about lower rates. Interest rates are not likely to fall much while the wider perspective is still bearish as the US economy improves and the ECB likely to raise rates.

What does all this mean?? 

Buckle Up!!!!! 

The month of March is coming in like a Lion….and it may leave that way too….

Courtesy: Sigma Research

Bill Nickerson has been providing mortgages since 1991 in New England.  If you ever have any questions about mortgages or the process of buying a home, feel free to call or email anytime.

Bill Nickerson

Vice President Mortgage Network

179 Great Road Suite 214, Acton MA 01720


Bill’s Blog

Providing Mortgages Since 1991

NMLS # 4194

Commercial   Residential     Reverse FHA/VA

5 Mortgage Myths, by Trulia.com

Valuable Information brought to you by Trulia.com



In a mortgage market that changes as quickly as this one, today’s fact is tomorrow’s fiction.  For buyers, misinformation can be the difference between qualifying for a home loan or not. Sellers and owners, knowledge is foreclosure-preventing, smart decision-making power! Without further ado, let’s correct some common mortgage misconceptions.


1.       Myth: Buyers with bad credit can’t qualify for home loans. Obviously, mortgage guidelines have tightened up, big time, since the housing bubble burst, and they seem likely to tighten even further over the long-term. But just this moment, they have relaxed a bit.  In the last couple of weeks, two of the nation’s largest lenders of FHA loans announced that they’ve dropped the minimum FICO score guideline from 620 (which allows for some credit imperfections) to 580, which is actually a fairly low score.


At a FICO score of 620, buyers can qualify for FHA loans at many lenders with only 3.5 percent down. With a score of 580, the lenders are looking for more like 5 to 10 percent down – they want to see you put more of your own skin in the game, and the higher down payment lowers the risk that you’ll default.  However, if your credit has taken a recessionary hit, like that of so many Americans, this might create a glimmer of hope that you’ll be able to take advantage of low prices and interest rates without needing years of credit repair.


2.     Myth: The Mortgage Interest Deduction isn’t long for this world.  Homeowners saved over $85 billion in 2008 by deducting their mortgage interest on their income tax returns. A few months ago, the National Commission on Fiscal Responsibility and Reform caused a massive wave of fear to ripple throughout the world of real estate consumers and professionals when they recommended Mortgage Interest Deduction (MID) reform, which would dramatically reduce the size of the deduction.


Fact is, the Commission made a sweeping set of deficit-busting recommendations to Congress, a few of which are likely to be adopted.  Fortunately for buyers and sellers, MID reform is not one of them.  Very powerful industry groups and economists have been working with Congress to plead the case that MID reform any time in the near future would only handicap the housing recovery.  Congress-folk aren’t interested in stopping the stabilization of the real estate market.  As such, the MID is nearly universally thought of as safe – even by those who disagree that it should be.


3.       Myth:  It’s just a matter of time before loan guidelines loosen up.  The US Treasury Department recently recommended the elimination of mortgage industry giants Fannie Mae and Freddie Mac. I won’t get into the eye-glazing details of it here, but the long and the short is that (a) this is highly likely to happen, and (b) it will make mortgage loans much harder and costlier to get, for both buyers and homeowners.   It’s possible that loans are as easy to get as they’re going to get.  So don’t expect that if you hold out, zero-down mortgages will come back into vogue anytime soon. Fortunately, Fannie and Freddie aren’t likely to disappear for another 5-7 years, so you have a little time to pull your down payment and credit together. If you want to get into the market, the time to get yourself ready is now!


4.       Myth: If you don’t have equity, you can’t refi. Much ado is being made about how stuck so many people are in their bad loans, because they don’t have the equity to refinance their way out of them.  If you’re severely upside down (meaning you own much, much more than your home is worth), stuck may be the situation. But there are actually a couple of ways homeowners can refi their underwater home loans.  If your loan is held by Fannie or Freddie (which you can find out, here), they will actually refinance it up to 125% of its current value, assuming you otherwise qualify for the loan.  That means, if your home is worth $100,000, you could refinance a loan up to $125,000, despite the fact that your home can’t secure the full amount of the loan.


If your loan is not owned by Fannie or Freddie, you might be a candidate for the FHA “Short Refi” program. While most mortgage workout plans are only available to people who are behind on their loans, the Short Refi program is only available to homeowners who are current on their mortgages and need to refinance up to 115 percent of their homes’ value.  So, if you owe $250,000 on your home, you can refinance via an FHA Short Refi even if your home’s value is as low as $217,000. If you think you’re a good candidate for a short refi, contact your mortgage broker, stat – there are some in Congress who think that this program is so underutilized (only 245 applications have been submitted since it rolled out in September – no typo!) that its funding should be diverted to other needy programs.


5.       Myth:  If you’ve lost your job and can’t make your mortgage payment, you might as well mail your keys in.  Until recently, this was essentially true – virtually every loan modification and refinancing opportunity required that your economic hardship be over before you could qualify. And documenting income has always been high on the requirements checklist. But there are some new funds available in the states with the hardest hit housing and job markets, which have been designated specifically for out-of-work homeowners.


The US Treasury Department’s Hardest Hit Fund allocated $7.6 billion to the states listed below – all of which are now using some portion of these funds to offer up to $3,000 per month for up to 36 months in mortgage payment assistance to help unemployed homeowners avoid foreclosure.  Contact the state agency listed below if you need this sort of help:



•Alabama: http://www.hardesthitalabama.com/

•Arizona: https://www.savemyhomeaz.gov/

•California: https://www.keepyourhomecalifornia.org/

•Florida: https://www.flhardesthithelp.org/

•Georgia: http://www.dca.state.ga.us/housing/homeownership/programs/hardesthitfund.asp


•Indiana: http://www.877gethope.org/

•Kentucky: http://www.kyhousing.org/

•Michigan: http://www.michigan.gov/mshda/buyers/save_the_dream/helping+hardest+hit+homeo…

•Mississippi: http://www.mshomecorp.com/firstpage.htm

•Nevada: http://www.nahac.org/

•New Jersey: http://www.state.nj.us/dca/hmfa/home/foreclosure/homekeepers.html

•North Carolina: http://www.ncforeclosureprevention.gov/

•Ohio: http://www.savethedream.ohio.gov/

•Oregon: http://www.oregonhomeownerhelp.org/

•Rhode Island: http://www.hhfri.org/

•South Carolina: http://www.scmortgagehelp.com/

•Tennessee: http://www.thda.org/

•Washington D.C.: http://www.dchfa.org/



Bill Nickerson

Vice President

Mortgage Network

978-264-4803 o

978-268-5023 f

NMLS# 4194

The Final Walk-Through

I am not a real estate broker but I have been around this business long enough to know, the last thing you do prior to a closing is the Walk-Through.  This typically takes place the day before or the morning of the Closing.  To ensure that the home is presentable, broom clean and that no damage has been done to the home by the movers.  In most cases this can take anywhere to 15 minutes to an Hour, depending upon how detailed you want to be.  When spending this amount of money, take all the time you need!!

We have all heard stories of the new home not being “broom clean”, food left behind in the refrigerator or even a stack of firewood that was not removed.  With emotions running at high alert during the final stages of the buying process, the last thing the buyer wants or expects is to find problems during the Walk-Through. To a new homeowner, they do expect everything to be perfect, even if the home is 50 plus years old.

Well…today a new one.  On this “Royal” day, a very good and thorough Agent did the walk-through with his clients and proceeded to flush all the toilets one by one.  Yes, you guessed it.  In the process, the main sewer pipe in the basement let go.   YUP, it let go and it let go of everything inside.  With emotions already running high, you can imagine what the buyers were thinking and their reaction to the events that just took place. 

Many years ago an agent told me the Walk-Through should almost be like a mini home inspection.  Turn on everything in the home…crank up the heat, run the water, dishwasher, and…flush all the toilets!  Luckily all will end well.  The selling agent has informed the buyers that this will be resolved today which is a huge relief for everyone involved in the transaction.  So the moral of the story, don’t let this “Royal” flush cause problems for your next closing.  Make a checklist of to do’s for your next walk-through.


Do you have a standard check list of things you do

when performing a Walk-Through?



Please share your stories with us ….the Good, the Bad and the Ugly.





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