When it comes to roller-coasters, the more thrills, the more fun they are.  Most roller-coasters have a major flaw…they only last for a few minutes at most.  When it comes to mortgage backed securities, we have been on a wild roller-coaster ride for just over one month, with numerous “drops”, a few twists, and several inclines as well.  In fact, we are on yet another incline right now and it remains to be seen if there is yet another freefall waiting at the top of this one.

This last week set up an interesting chart pattern, one that holds a future yet to be determined, however, the future looks much brighter at the moment as we sit above the coveted 200-day moving average.  With inflationary pressures in check, even the slight signs of an improving economy couldn’t keep MBS pricing from breaking through the proverbial roof.  The problem is inflation will likely still be seen, so it is likely just a delay of the inevitable, and could be seen in the fact the Fed is stating they no longer see deflationary risks.  Some signs of an improving economy that were seen last week included Personal Income rising which brought increased spending as well, though the savings rate continued to climb as well.  Durable Goods and Consumer Sentiment also gave the improving economy viewpoint a boost, and every the Treasury Auctions were met with strong demand, though there is speculation of official involvement, even if not publicly stated.

With the breakthrough that mortgage bonds needed, the question remains about their ability to hold on to those gains.  We will get back to the charts in a moment, but let’s get down to the “motivators” for this week, the Jobs Jamboree in particular.  We have plenty of data this week to sway the markets, causing a greater rise in MBS pricing, or even the next death-defying plummet.  Here is what is on the list so far…

• Monday:  3-month T-Bill Auction (1:00), 6-month T-Bill Auction (1:00)
• Tuesday:  Case-Shiller HPI (9:00), Chicago PMI (9:45), Consumer Confidence (10:00), Jim Bullard Speech (12:00), 4-week T-Bill Auction (1:00), 52-week T-Bill Auction (1:00), Thomas Hoenig Speech (4:10), Janet Yellen Speech (9:00)
• Wednesday:  MBA Purchase Applications (7:00), ADP Employment Report (8:15), ISM Manufacturing Index (10:00), Pending Home Sales (10:00), Crude Inventories (10:30)
• Thursday:  Non-farm Payrolls (8:30), Unemployment Rate (8:30), Average Work Week (8:30), Hourly Earnings (8:30), Jobless Claims (8:30), 30-Year T-Bond Announcement (9:00), Treasury Announcements (11:00), Money Supply (4:30)
• Friday:  Take a break, you may need it!

Ready for the next set of thrills on this wild ride.  I hope so, because this week is sure to have some thrills, spills, and maybe even some chills in it.  With this slew of data, along with the volatility that comes from a shortened trading week due to the Fourth of July weekend coming up, wild “mood swings” are very likely to occur and they may even get scary at times, much like we had in previous weeks.

Ok, but what do the charts really show?  Well, there are some negative signs, along with some positive.  Which news do you like first?  I think most like the bad, so let’s start there.  Besides, we want to end this report with optimism, right?

Here’s the bad news…

Stochastic indications are moving into the overbought spectrum, indicating a growing need for an MBS selloff.  As the week came to a close, the 25-day moving average dipped below the 200-day moving average, causing a negative crossover to occur.  Currently, the 50-day moving average is rushing down to meet the rising mortgage bond prices.  Friday and today so far are showing weakness, meaning we are likely about to see a drop and test of the 200-day as support.  That will likely come from the Chicago PMI, at least that is my guess based on what I am seeing.  With improvements being seen in the economy lately, along with better than expected Jobless Claims lately, this week may not present a leg for mortgage backed securities to stand on, especially since there are no reports directly pointing toward tame inflation.

OK, here’s some good news…

Mortgage backed securities are above their 200-day moving average and that has typically proven to be a strong level to break.  With the 25-day moving average not too far below it, we have a virtual double floor, and those same levels were powered through (prior ceilings) last Thursday, after 4 straight days of attempts.  If MBS pricing acts like it did last week, or if we get some favorable data this week, mortgage rates will likely hold or even head lower.  Another good sign is that the downtrend has been broken, so the future has gotten brighter.

The bottom line from my viewpoint is that MBS pricing, and thus mortgage rates, will be tested heavily this week.  I expect at least a pullback to the 200-day moving average, maybe more.  Beyond that, exactly what trend develops remains to be seen, but the future based on the current snapshot does not indicate mortgage rates rising, at least not significantly.  We should have a pretty clear picture before the week is done due to the increased volatility along with the plethora of data, speeches, and even Treasury actions.

Since our real estate agents are impacted by the Home Valuation Code of Conduct (HVCC) as well, I’d like to share an example of how loan officers can work with your referral partners to spread the word.

One of my tasks as a full-time mortgage blogger is to syndicate relevant content on other high traffic platforms for the purpose of reaching my target audience online.

Simply spamming the web with links back to my mortgage blog doesn’t always generate the qualified traffic that I need in order to accomplish a specific goal for raising awareness about certain messages.

However, my Las Vegas real estate agents command a much larger reach of home buyers and sellers than I can on my own.

One of my strategies to connect with agents to be seen, heard and appreciated is to post valuable content on their blogs.

How is this a win win?

1.  Real estate bloggers need content…. and a lot of it.

2.  Mortgage related content about the $8,000 tax credit, FHA appraisal guidelines, and First-Time Homebuyer info is best written by an experienced loan officer.

3.  Great content = more visitors = more contacts for the agent.

4.  Great mortgage content = a different type of traffic from a more targeted online search.  (see Long Tail)

5.  By the time the agents are ready to refer the new borrowers over to an LO for qualification, they’re already familiar with you.

How does this apply to HVCC?

I wrote an article on my agent’s blog about the impact HVCC will have on Las Vegas real estate.

Due to the strength of the real estate blog, I was found in the search engines within 24 hours and contacted by a local reporter for a story he was writing about appraisers low balling values.

By luck, his story was featured on Realtor.org and Trulia, as well as several other high traffic news and media platforms.

Since I’ve been writing about HVCC for a month or so now, I was more qualified to write it on the real estate blog than the agent was.

End result:

His team of 150 agents have printed or emailed my article to all of their people.

I even left a comment in the online version of the newspaper’s article with a link back to a follow up post on HVCC that I did which explained my quotes in more detail.

How much business did we get out of it?  A bunch, but that wasn’t my primary agenda.

How do you follow this model and find agents to provide HVCC content to?

If you don’t have an agent with a blog, start at www.mybloglog.com and search for local agents.  www.whostalkin.com and search.twitter are other great places to start.

If you use Google Reader, then put together a custom folder for all of the agents in your town.

Do you need a mortgage blog to post an article on first?

No.  If you don’t have a blog, don’t worry about spending the time setting one up just to show agents that you can write.  Instead, put the content together in an email and start looking for agents in your area who will post the content for you.

If you’re looking for an interesting article to write about on your agent’s blogs, listen to this podcast that Tim Davis did with Marc Savitt about HVCC.

In fact, through April, 153,292 VA Loans had been originated according to the Department of Veterans Affairs Home Loan Guaranty Department. That’s already more than the amount of VA Loans that were originated in all of FY 06 (142,700) and 07 (133,240).

Mark Bologna, director of the VA Home Loan Program, cites the surge in VA Loans to the refinance boom and the general attraction of the VA Loan – no down payment. Which, given the market, as Dean Eckes from the valuation office at the VA Office in Phoenix aptly put it, “the VA Loan is the only zero down game in town.”

Another major factor that has helped the VA Loan is the increase in VA Loan limits, which is generally $417,000 for most counties across the country. Now, for those folks in high cost counties in states like California, Connecticut and Virginia among other states, you can find VA Loan limits as high as $1,094,000, making the VA Loan a more suitable product in those places when as little as two years ago, a VA Loan would’ve been unthinkable because of the loan limit.

California is a good example of how the increased loan limits have made VA viable there. Through March of FY 2009, 10,901 VA Loans had been originated versus 7,725 for the entire FY 2008.

Bologna projects VA Loan originations to finish somewhere between 250,000 to 280,000 for FY 2009, as the refinancing boom starts to wane, yet the first-time homebuyer tax credit continues to bring buyers out. And the VA Loan is very popular among first-time home buyers.

The VA Loan, which has plenty of critics and is widely considered cumbersome and lengthy to close when compared to other mortgage products, continues to plod along at a respective clip as it maintains a pertinent presence in today’s muddled mortgage market.

The Big Picture

Okay folks it is time to get in the fight again…

Time to make you voices and arguments heard. Barry Ritholtz, of the Big Picture, thinks that the NAMB and NAR efforts to fight against the consumer and industry impacts of ill-conceived HVCC legislation, “corrupt.”

Here is a brief excerpt from his post:

I called that a thinly veiled hint for “friendly” i.e., “corruptible” appraisals. I did some more digging, and I quickly discovered what this contemptible suggestion was all about: It is part of a broader lobbying effort by the The National Association of Mortgage Brokers (NAMB) and The National Association of Realtors (NAR) against honest appraisals.

Ironically, he uses the whole unsupported post to shill his new book:

Appraisal fraud was a huge contributor to the unsustainable run up in prices during the boom period. Realtors. Let’s go to the big book of real estate fraud, Bailout Nation

Here is what I would suggest:

I am not sure Mr. Ritholtz is going to allow a good honest debate in the comments, but I would sure try turning his flippant post into an honest debate - leave a comment on his blog post. I would say we could generate about a 100+!

Regardless, definitely below. Let’s show some action folks!

Source: The Bureau of Labor Statistics (BLS). Note: Data are 2008 averages of full-time workers over the age of 25.

It may not be surprising to you that people who possess doctoral degrees make more money and have a much lower unemployment rate than those who did not graduate from high school. However, what is disconcerting about the above chart is what it means to the uneducated lower classes.

With the unemployment rate at 16.4% (as of May 2009), the above chart tells us that people with an education are far more likely to have a job during tough times than the uneducated or undereducated. As the unemployment rate goes up, people with degrees who previously held white collar jobs will undoubtedly move into the blue collar sector as corporations lay off workers.

I have a cousin who is a degreed journalist. He has been a sports writer for a newspaper, and as a sports fanatic, it has been a good fit for him. Having been recently laid off, he has been unable to find a job in his profession, so he is getting ready to take a job that is … well, just a job. He falls into the category of a degreed professional who is moving into a non-degreed job because of tightening market conditions. He is, of course, more qualified than non-degreed people to work in a call center, for example. That person who would have gotten the job in the call center gets pushed lower down the job ladder.

But what happens to people on the bottom rung of the job ladder as market conditions constrict the employment market? Your guess is as good as mine. Some of these people will turn to grey market activities (mowing lawns for cash and not paying taxes, for example), others to black market activities (selling steroids — or worse), still others will become liabilities (living with family, for example).

Like mom and dad always said, it’s a good idea to stay in school. The BLS data shows that in tough market conditions, people with an education will be able to procure some type of employment, although not necessarily in their preferred line of work. Unfortunately, it’s a tough time to be a person who didn’t go to college.

by Wade Young

Last week saw the best news mortgage rates have needed in a long time, inflation being tame.  I must say have remain skeptical about the numbers, but traders react on them nonetheless and mortgage rates headed lower as both PPI and CPI came in indicative of low inflation.  But don’t expect that to hold as it essentially cannot with all of the government spending and, don’t forget the main reason for Thursday’s collapse, the Treasury Announcement of another influx of Treasury supply.  Adding to that fact, the Fed has noticeably cut back their MBS purchasing, so unless something else manages to drive mortgage rates down, the Fed better be back in the game or else.  Again, without dwelling to much on the past, news surrounding the economy was definitely mortgage bond friendly (for the most part), minus the Treasury Announcements.

The more important thing to discover is exactly where mortgage rates are headed, and this coming week will bring clarity in all likelihood.  With The FOMC Meeting happening this week, along with the Fed’s favorite gauge on inflation, the Personal Consumption Expenditures Index (PCE), not to mention the actual Treasury Auctions that wreaked havoc on the markets last week, mortgage backed securities will be put to the test.  Here is a rundown of the presently listed data and events…

• Monday:  3-month T-Bill Auction (1:00), 6-month T-Bill Auction (1:00)
• Tuesday:  Existing Home Sales (10:00), 4-week T-Bill Auction (1:00), 2-year T-Note Auction (1:00)
• Wednesday:  MBA Purchase Applications (7:00), Durable Goods Orders (8:30), New Home Sales (10:00), Crude Inventories (10:30), 5-year T-Note Auction (1:00), FOMC Meeting Announcement (2:15)
• Thursday:  GDP (8:30), Jobless Claims (8:30), Treasury Announcements (11:00), 7-year T-Note Auction (1:00), Money Supply (4:30)
• Friday:  Personal Income and Outlays (8:30), Consumer Sentiment (9:55)

Currently, there are no scheduled speeches, though that is likely to change as the week progresses.  The two main events are clearly the FOMC decision and the PCE on Friday (included in the Personal Income and Outlays report).  However, as we have seen in recent history, some other reports such as GDP and Consumer Sentiment have had increased effects on the markets, and the Treasury Auctions will surely have some impact as well.  Remember that when the FOMC makes its announcement, don’t focus on their decision regarding the Fed Funds Rate, instead you should dissect what they are saying within the released Policy Statement.

Looking at the charts, you can see the uncertainty surrounding exactly what will happen with mortgage rates, though we will likely have a clear picture before the end of the week.  MBS pricing has see-sawed back and forth across the 200-day moving average and is again testing as I write this report.  By the end of the week, chances are we will see this level finally hold as resistance or support, the question being which one.  Personally, I lean towards the resistance side, and that mortgage rates will again be climbing, but I cannot rule out the opposite at this exact moment.

The Bureau of Labor Statistics (BLS) actually produces six different unemployment numbers: U-1, U-2, U-3, U-4, U-5, and U-6. We are going to focus on two of those measures of joblessness:

U-3:  The official unemployment rate

U-6:  The actual unemployment rate

What is the difference between U-3 and U-6? Quite simply, U-3 dramatically understates the number of people who are unemployed. U-3 just leaves a bunch of people out of the calculation. Here are the people who are not included in the “official” unemployment rate:

• Marginally attached workers. These are people who have given up looking for a job. They have looked in the past and would gladly take a job now, but they have simply given up looking. They are not counted because they have not looked for a job in the past four weeks.
• People employed part time for economic reasons. These are people who have been forced to take a part-time job because they could not find a full-time position.

If you include the above-mentioned people, the unemployment number jumps from 9.4% to 16.4%. Unfortunately, it gets worse.

Yesterday I was told a story of a guy who used to make $70k interviewing for a $9/hour security guard job. I know another guy who was making $100k as a VP of operations who is now making $10/hour as a cook. I am sure that you have heard similar stories. Neither of these guys will ever have shown up in the unemployment numbers at any time because: 1. Neither guy was out of work for 15 weeks or longer, and 2.  Both got jobs. While these men did indeed get jobs, they are most certainly not employed to the extent that they were previously. This sad state that so many people are experiencing is not factored into the unemployment rate. So while the real unemployment rate is 16.4%, the actual situation is much worse.

Another group of people is excluded even from U-6. If you lose your job but don’t look for another one, you are excluded altogether. You are neither employed nor unemployed, so you don’t count. A good example of someone in this group would be a person who is over 55 but who isn’t ready to exit the work force. A good example would be a retail manager (an industry known to be age-biased). After being laid off, a 55+ former retail manager might simply downsize their lifestyle and move into an early retirement instead of face the rejection they know is coming if they attempt to look for another job in their industry. Even though such a person wants to work, they know that they are unlikely to get a job in the same industry, and they feel like they are too far down the road to start over in a new line of work. Because such a person does not look for another job, they are not included in any unemployment calculation — not even U-6 — which means that the actual unemployment rate of 16.4% is somewhat understated.

With the unemployment rate at 16.4% (or perhaps higher) , it seems clear that we are in a depression. If you compare the current unemployment rate to the infamous Great Depression, the numbers are frightening.  In 1930 — after the great stock market crash of 1929 — the unemployment rate was 8.7% (and back then they counted more people than does the current method). It took four years after the crash of ‘29 for the unemployment rate to reach it’s apex of 24.9% when one in four Americans who needed a job was without work.

At 16.4%, we’re certainly too close for comfort to the all-time-high unemployment rate. Let’s hope things get better. In the meantime,  shame on the government for reporting unemployment as 9.4% when they know good and well that it’s at least 16.4%. And shame on the media for reporting the spoon fed U-3 unemployment rate instead of the actual U-6 unemployment rate that is displayed prominently and explained thoroughly on the BLS’ own website for any reporter to see.

by Wade Young

]]> http://lenderama.com/mortgage-news/real-unemployment-rate-164/feed/ http://lenderama.com/marketing/social-networking-loan-officers/ http://lenderama.com/marketing/social-networking-loan-officers/#comments Wed, 17 Jun 2009 19:28:52 +0000 Chad Weber http://lenderama.com/?p=2775 So we’ve been chatting about social networking here on Day #3. There’s been alot of talk about sites such as Twitter, FaceBook, MySpace and others. (Active Rain and LinkedIn as well) The big question out there seems to be whetehr or not this is a profitable use of your time. Here’s my take on the subject:

- Anything that can expand your Sphere Of Influence gets a big thumbs up from me

- Anything that can become viral gets another thumbs up

- Any tool can be abused and drain your time - Smart time management is required

- Never try to use social networking as an excuse to ignore offline networking and prospecting efforts

I only recently began using these tools to market the Loan Officer Marketing Lab, but I’ve been using “the big 3″ for the last few years to market my web development firm. Let me tell you… It works - but it must be managed as a database tool.

I view people as my only true asset in business. If no one is there to hear my marketing message, then what is the point of being in business. If I have a group of people ready and willing to hear what I have to say, then no matter what I’m selling, I have a pre-built audience. The competion who ignores building a database, and online “audience” will always be 30 steps behind you since every time they wish to bring in more business, they have to market to cold groups as opposed to warm.

That’s the beauty of social networking - It builds your audience, it exposes you to more people you otherwise never would have had an opportunity to market to, and it’s relatively painless to build. Use these tools in a respectful manner, and you’ll soon grow to love social networking as well. Here’s a handy little guide we posted to the blog this morning:

http://www.loanofficermarketinglab.com/3unbreakablesocialmedia.pdf

Make it a great one!

CW - Loan Officer Marketing Lab

See, many loan officers focus their marketing efforts on trying to lure the agent in with promise after promise after promise, not realizing that most agents are not even close to taking you seriously. It’s a lot like spam. You get a bunch of claims that SOUND good in theory:

- 10k in 24 hours

- Quit your job next week and never work again

- Make 6 figures per month every month

- I need to transfer 100 million to a U.S. bank, I’ll give you 20% (I get so many of these!)

Admit it, 6 figures per month sounds good doesn’t it? But would you take that email serious for even a second? Why not? Because you know better. Just as realtor’s have learned to “know better” than to take most loan officers seriously.

As long as you’re not being viewed with respect, your marketing messages are flowing right into 1 ear, and directly out the other more often than not.
So how do you change this unpleasant sequence of events? Have a look at the script I used. Download it, feel free to use it or modify it to fit your own marketing tools.

Script: http://www.loanofficermarketinglab.com/realtorrespect.pdf

It’s meant to be used with the video, but have a look and pay close attention to why it worked. Respect… Make it a great one!

CW - Loan Officer Marketing Lab -

That’s over-simplifying it, but you can see how these goals can certainly contribute to the success of your marketing campaign. “1 at a time” marketing can really bleed your pipeline dry when you’re operating in a tough market such as this one. Group marketing is far more effective when things get “sticky.”

Here’s a free guide that walks you through a marketing strategy I applied years ago to get real estate agents to acutally take the time to speak with me instead of rushing me out of the office. Nothing complex, but it worked like a charm:

Here’s the sample

Enjoy, and make it your best week yet!

CW - Loan Officer Marketing Lab