Richard's Real Estate Thoughts

Senator Bo Watson speaks to the Woman's Council of Realtors

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Tue, 10 Aug 2010 08:04:31 -0400

Last Wednesday, Senator Bo Watson, the 11th District, spoke at the Chattanooga Women's Council of Realtors' regular luncheon. Primarily he spoke about our "challenges and opportunities" and our time for decision. He called for citizen activism as Chattanooga becomes a leader and a conduit to the South, which he expects to be the "economic engine of the US."

He looked at the Volkswagen plant and Alstom Plant growth as "game changers" because of "who else they will attract."

The challenge we have locally is to face the facts of our current situation. And those facts are that the Southeast is underemployed and undereducated. He announced the new TCAP tests scores were not be good, with over 50% 4th graders not reading at grade level. Some of these results is attributed to increased standards, according to a WRCB TV story. Senator Watson though called for facing the facts. "We cannot accept low standards and call them passing."

He cited the two foundational areas for progress to be education and meaningful employment. The two cannot be separated.

The question he offered is "What is our passion?" What can the Chattanooga area excel in, competing on a global basis? And that point must be recognized - Chattanooga and the Southeast must now compete globally.

Apathy does not work - face the facts of our situation and decide on our passion and take advantage of our opportunity to be successful in Chattanooga.

His remarks were encouraging and motivating.

For those interested, the next planning forum that I know of is on the proposed Tennessee River Bridge in central Hamilton County. Let's go see what is going on. Thursday, August 12 from 6:00 - 7:00 p.m. at one of the following locations: Soddy Daisy High School Ooltewah High School.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

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www.RichardSmithHomeLoans.com

Housing reform, including FNMA and Freddie, next on the agenda

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Tue, 27 Jul 2010 20:58:23 -0400

Housing and GSE reform conference announced.

We have barely finished RESPA reform. We have survived SAFE Act requirements and a housing industry contraction. We now face a massive Financial Reform with most of its regulatory particulars undefined - leaving small businesses and lenders in a state of uncetainty. We now are on notice that we are about to face major reform in the US housing industry. (And let us not forget the health insurance reform.)

Just received from the FHA Commissioner David Stevens' desk: "The Administration is strongly committed to comprehensively reforming our housing finance system. Work is well underway and by early next year, the Administration will deliver a comprehensive housing finance reform proposal."

It seems to me that the agenda and the goal are set. Most decisions on broad outlines already made.

My point is that a major "comprehensive and fundamental" reform is not needed for our housing industry. The combination of FHA, VA, Rural Development, FNMA and Freddie Mac has served exceptionally well our national home financing needs for decades. Our housing market has been generally strong, that is until Congress decides to relax banking restrictions inorder to encourage risk, which Congress has done on occassion to pacify big bank lobbies.

The basic housing system though is sound with each agency providing excellent options for particular segments of the population.

The memo states that the question about major reform of the housing industry "is not if but when." The question apparently is also not what.

Housing reform is coming.

The GSE's, Fannie Mae and Freddie Mac, were conspicuously absent from the recent Financial Reform legislation. And no doubt that changes are needed and that their reform is coming. I think the broad outlines are set. My fear is that the reformers are going to use the abuses of Wall Street, abuses by the way which I think were largely left unaddressed in the Financial Reform bill despite rhetoric otherwise - reformers are going to use the abuses of Wall Street to abuse the most efficient home financing system on Earth.

It is almost like the goal is to keep us distracted so we forget how bad unemployment is. Keep us so off balance and uncertain that it is impossible to focus on the business of rebuilding the housing industry.

Give us a breather from massive regulatory change. Let us, the industry professionals in the trenches, do the work needed to heal our housing industry.

One thing is for sure, like it or not, the Obama Administration will leave its imprint - the administration of unrelenting and massive regulatory reform in all areas of our personal and work lives.

As you are commenting about the forthcoming increase in FHA loan down payments, comment also on the coming massive housing reform. Write to your representatives. I will ask mine to slow this regulatory reform train down just a little. Let's first find out what will result from what has already been done. The NAMB has provided this survey about GSE Reform (primarily Fannie and Freddie) as a start to express your voice on the matter.

Housing shows little signs of recovery. Uncertainty about existing and new regulatory changes is not helping.

UPDATE 7/28/10 - several articles on the GSE reform point to a significant lack of concensus on the form of the reformed GSE's. Here is a good summary on the variety of proposals. It seems to me a change in executive compensation, oversight to ensure the GSE's do not return to purchasing portfolios that are outside their own published underwriting standards, restrictions on lobby contact with Congress will go a long way to restoring the GSE's previous success in building a stable and strong conventional housing market.

No need for "fundamental and comprehensive reform." Just less lobby money for Congress.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

HUD and FHA believe lower seller concessions are needed to maintain reserves

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Mon, 19 Jul 2010 21:43:16 -0400

Last week FHA announced the beginning of the comment period about the anticipated change to reduce seller concessions

FHA announced began to discuss publicly back in December several considerations to tighten guidelines. The stated goal was to restore FHA capital reserves and to ensure that FHA financing was not at risk again because of large numbers of defaults. Capital reserves had fallen below mandated levels with great publicity.

Specific items included:

•· Increased scrutiny on the FHA loan portfolio

•· Effective measures against lenders with excessive default ratios

•· Increase mortgage insurance premiums

•· Improvements in appraiser independence

•· Tighter approval guidelines

•· More upfront investment from home buyers

Several of these changes were announced in January with more detail provided in a March statement. Here is a copy of the March statement from FHA Commissioner David Stevens. The details of the plan to restore FHA capital reserves were laid out in a May with the Commissioner's prepared testimony to Congress. All of these changes, including the reduction of seller concessions, are proclaimed as necessary to restoring and protecting the FHA capital reserve, as essential to maintaining an FHA mortgage program.

HUD/FHA explains their goals and understanding about the actions needed to sustain FHA loan program

In an NPR interview from December 2009, HUD Secretary Shaun Donovan mentioned "it's also important that we not pull back too far, which could blunt these early signs of housing recovery that we've seen."

In my mind we have already pulled back too far and are facing a housing double dip recession, despite the now expired tax credits and the historically low interest rates.

Secretary Donovan specifically stated his insights in the linked NPR interview - "we are going to require a somewhat more skin in the game from our borrowers to ensure that if we do get another decline in the market ahead of us, that we don't see foreclosure rates and delinquency rates rise in the FHA portfolio from where they've been."

Skin in the game

Many in Congress think along these same lines - that there would be less foreclosure if people invested more of their money - more skin - into their purchases. More skin has become a mantra that our representatives and regulators find much pleasure in reciting.

If we are going to change minds with this comment period, this conviction that the Secretary and many in Congress have needs to be understood. The belief that more skin from homebuyers is needed to keep FHA home financing away from future massive delinquencies.

We need to remember that HUD and FHA are armed with many studies and that they, and Congress, believe they have fully documented that delinquency increased with lower upfront investment and increased seller concessions.

"Experience to-date on loans insured from FY 2003 to FY 2008 suggests that claim rates on high-concession loans are 50 percent higher or more than those on low-concession loans."

The perspective from HUD and FHA is that seller concessions must be lowered in order to protect the FHA program.

Effective comments needed to change minds in HUD and Congress about changes to seller concessions and other FHA guidelines

Several points can be made to counter these conclusions by HUD regulators and some in Congress.

One point that I am discussion in this post is that the reduction to 3% will only hurt people buying lower priced residences - the middle income working class who might buy a $100,000 home.

To understand how this works, let's look at a hypothetical example. A typical amount of set closing costs might be around $3000. This covers mostly fixed fees for the appraisal, the lender underwriting/processing fee, the title attorney, title insurance and the recording taxes.

This amount is basically the same regardless of the loan size, and are the standard fees before any money is paid for the loan origination and processing. The fee for origination and processing can vary but probably averages to 1% of the loan amount.

The $3000 in costs also does not include any amount for home owner insurance and property taxes which will be escrowed with an FHA loan.

Considering only the $3000 fixed costs, without origination and T/I escrows, the costs that are the basically the same regardless of loan size.

Without a doubt the 3% restriction prejudices against the lower loan sizes.

With a $200,000 loan amount, the 3% seller concession more than covers the fixed closing costs, plus the origination fee and the amount necessary to set up T/I escrows.

With a $100.000 loan amount, the 3% seller concession will only cover the basic fixed amount of closing costs, with nothing left for the origination fee or for the T/I escrows.

With a $75,000 loan amount, forget about it. That buyer must pay up. The message is we need your skin if you are buying a lower priced home.

The new guideline hurts only buyers purchasing lower priced homes. It does not impact the larger loan sizes.

This seems to work directly against the FHA mission.

Will comments have an impact on HUD policy makers?

The comment period seems to be window dressing, a token concession to a mandatory procedure. The decision has been made, and was made last year. To quote from the NPR interview, "effectively what that means (more skin in the game) is that they would need to bring more cash to the closing table upfront. We're looking at exactly the way to do that and, again, to try to ensure that we're limiting the riskiest borrowers in our programs. So we'll announce by the end of January exactly how we're going to do that."

I will write more points in later posts. We need to change the made up minds of the policy makers. Comments, to be effective, must address directly the convictions and goals that the Secretary has publicly stated. There were many comments about the now lost seller funded down payment assistance. There were many comments about the RESPA changes. No effect. There will be many comments about the reduced seller concessions. The question is will there be an effect from those comments.

FHA and Congress have already decided to require more skin, especially from lower income buyers. Our comments must change minds that are made up.

Here is the public notice for the proposed changes.

Here is the HUD press release about the comment period.

Here is the link to comment on the proposed changes to seller concessions for FHA home purchase loans.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Chattanooga purchase mortgages and housing market

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Sun, 18 Jul 2010 22:06:02 -0400

Chattanooga Home Purchase Market

The greater Chattanooga real estate market is divided into 16 areas. Over the last three months the overall Chattanooga market has undergone some impacting changes, as has the national housing market.

Expiration of the Home Buyer Tax Credit
General Loss of Rural Development Funds
Increase in foreclosure properties

Our local region has excellent prospects as we head into the remainder of 2010 and the start of 2011. The VW plant should begin production in 2011. The Alstom plant has already started production. Other area companies have indicated increased hiring or that they anticipate an increase in hiring.

The recent quarter trends in home sale activity point to stability, if not growth in our market.

Greater Chattanooga Area June, 2009 June, 2010 May, 2010 April, 2010 New listings 726 663 665 824 Units Sold 369 407 411 382 Median Sold Price 148500 142900 145000 141900 % SP/LP 96 96 96 95 June, 2010 Active Listings 3513 Median List Price 182900 Average DOM 169

The increase in units sold from June 2009 to June 2010 is likely attributed to the Home Buyer Tax Credit which required contracts to be signed by April 2010 and had required that the transaction close by June 2010. That closing deadline was extended at the last minute, but only for pending contracts.

Comparative YTD home sales shows an increase this year of over 250 homes more than last year at this time. Again much of this increase can be attributed to the tax credit. With the improving economic conditions in the local area, we can hope that the trend can be sustained.

The July sales numbers will give more indication of the local impact from the expiration of the tax credit.

Chattanooga Purchase Mortgages

FHA is a good financing option for homes in the Chattanooga market. Approximately 80% of the home sales in our area qualify under the FHA maximum loan amount. For many buyers with properties in Chattanooge city limits CNE can provide additional funds for closing assistance. Fro more information about FHA and CNE assistance call or email me. Contact information is below.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Hixson Park - a nice way to spend the afternoon

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Sun, 18 Jul 2010 18:26:13 -0400

The Hixson Park is nice and small. It is close to many neighborhoods and easy to find. It is the closest park to my home and it makes for a fund afternoon. Especially if you happen to have a grandkid around.

We have had many birthdays on the pavilion picnic tables. And if multiple parties are at the same time - great more fun. There is plenty of room and it just means more kids.

The bike path goes around the park. They are great for small children.

Swings are fun

Running around is fun too.

Hixson Kiwanis Playground

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Rates are all the talk - what about the recovery

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Sun, 18 Jul 2010 14:58:10 -0400

Mortgage applications not as strong as mortgage rates.

Rates are certainly at the lowest of the lows. We can get excited about these low mortgae rates, but where are the loans. The most recent MBA survey indicates that the number of mortgage applications have declined almost 3% for the week. Refinances were even down, but the purchase portion of the mortgage application is at its lowest since 1996,and is 43% lower that this time last year.

The slow pace of the recovery is driving our historically low mortgage rates, but it cannot drive the housing recovery.

Paul Krugman speaks of a defacto double dip recession - maybe not technically a double dip but:

"Let's be clear: a recovery that involves growth so slow that unemployment and excess capacity rise, not fall, isn't really a recovery. If we have only have 1 1/2 percent growth, that will amount to a double dip in all the senses that matter."

Last week began with encouraging news about corporate earnings, starting right away with Alcoa. And maybe all the talk about the recovery is sound.

But then the Federal Reserve published it downward revision of GDP growth and its upward revision of unemployment.

Retail sales fell .5%.

Consumer sentiment dropped a whopping 8 points. That I was not expecting.

And Friday 6 more banks closed - the total for the year is now 96. We will certainly hit 100 by the end of July.

The economic news locally in Chattanooga is a little better.

Wrigley expansion

Alstom is expanding

VW plant is nearing completion

And there are other good signs - a day care expanding, some stores opening new locations, some local manufactures winnind bids for new contracts.

But Chattanooga is not in a vacuum. For our growth, gains are needed in ther overall economy.

It will be another full week of economic reports this coming week. I will be looking for some good news, even if it does push mortgage rates up.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Better to rent or to own your home?

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Sun, 18 Jul 2010 13:05:59 -0400

Is Renting Your Home better than Owning Your Home?

Over the last several decades homeownership has been a given as a part of the dream and each family's goal for financial security. Has the recent housing crisis changed things such that the dream of homeownerships is not thought to be misleading?

Homeownership rate falling

Since 1960's the rate of homeownership in the US has risen from 63% to over 69% in the mid 2000's. In the last couple years that rate has dropped back to the level in 2000, around 67%. And the trend and economic reports seem to point towards even lower levels of homeownership.

The NY Federal Reserve recently made a distinction between the official homeownership rate and the effective homeownership rate.

The effective rate considers homeowners with negative equity - upside down in their homes. The idea is that these homeowners are effectively renters. This effective rate puts homeownership back to levels in the 1990's.

Home equity percentage falling

Worse, the percentage of homeowner equity is moving well below 50%. The first time equity fell below 50% since 1945 was in 2007. In June 2009, the blog Calculated Risk estimated the actual equity was even lower.

Even with the official estimate home equity has continued to fall since that 50% milestone was reached.

Data from the Federal Reserve June 2010 Flow of Funds Report (Z1)

This shows that since 2003 home equity has fallen from almost 58% to under 40% - a drop of almost 20%.

So Renting may be better than buying?

Home values have depreciated in most areas.

Many homeowners owe significantly more than their home is now worth.

Many homeowners cannot sell to move for new or better employment.

Many homeowners have mortgage payments that they cannot afford.

Renting would provide more flexibility to move, less impact on credit in the case of default, little requirement to maintain the home.

Is homeownership now seen as overrated? And renting is better?

Many stories are out today indicating that the decades long push to own a home may have been wrong, yet a recent survey indicates that despite all that is negative with the economy and with the housing market, 90% still are pleased with their decision to buy a home.

It is true that not everyone should own a home.

If you are likely to move soon, owning may not be the right choice, because of the initial cost of purchasing, the cost of selling, possibly any large ticket maintenance costs that might arise, and because being forced to sell an asset such as a home or a stock does not generally provide the best market for selling.

Stability is most definitely a consideration about buying a home - location stability and work stability.

"Not everyone should own. Some of us should. I do, and I certainly think it was a good decision for me, but it depends." Professor Joseph Guourko.

Is buying a home an investment?

In an NPR interview from December 2009 Professor Joseph Gyourko, Director, Real Estate Center, University of Pennsylvania's Wharton School, gives many arguments against the goal of homeownership. The article was entitled "Re-thinking the American Dream of Home Ownership.

Professor Gyourko says that real estate is not a "particularly good investment." It generally follows a little better than inflation. He states that after inflation, long term gain on real estate investment has been about 1%.

"You know, it is actually not a particularly great long-term investment. The RIOs(ph) are after inflation. So, adjust for inflation, average return in the United States since 1975 has been about one percent a year. So, it's - that's not zero. It's positive. That's a good thing. But it's not a particularly great way to build wealth. You would have done a lot better in a -even a one-year treasury bond index over that period of time, quite frankly. So, financially, no. It's not nearly as good as people think it is."

Well I find some fault with the professor's reasoning. The house payment is not an investment. The housepayment is a cost of having a roof over your head - whether renting or buying. The gain with buying is that overtime you gain equity and move closer to owning your home free and clear. That is not done with renting. This works with investors also purchasing rental property.

If you want to invest money each month, good. Go invest it. Dollar cost averaging can be a good technique.

We are talking about the right decision with your monthly housing expense. Rent forever? Build equity and eventually own your home free and clear? That is your decision, not whether the home is a good investment.

Not paying a monthly housing payment is a big step towards financial independence.

If the market adds better-than-stock market appreciation, then all the better. Even if the value does not appreciate, you, the buyer can still end with a free and clear home, and no housing payment each month.

The gain is that the homeowner is using housing expense to build equity, housing expense that will be spent regardless just to pay for having a roof. Buying a home means that that regular housing expense will also create for the homeowner a real asset, real wealth.

Get qualified and go buy your home.

Not everyone should own a home. Yes that is correct, but generally you may should not own if you will move soon or do not have stable employment. The arguments otherwise against homeownership so often tend to encourage lower income workers to remain renters. Sometimes the argument is subtle. "Owing a home is right for me, but maybe not for other people."

Mobility and job stability can be reasons not to own right now, but when a renter's employment and location are stable, it is time to buy a home.

The argument that some people cannot afford homeownership is just wrong. If they are renting, they are paying for homeownership. They are paying for the landlord's homeownership. The other costs associated with homeownership:

Taxes

Maintenance

Insurance

Repairs

All these are covered by the rent check to the landlord. The renter is paying those expenses, only the renter is not paying them towards their own asset accumulation, their own wealth, their own rent free future.

We should not let the current housing crisis change thinking so that people believe renting is better. It is not. Owning your own home is still the better choice.

Home buyers in Chattanooga, Tennessee, and Georgia

In our local area the decision to buy is easy. Growth prospects in our area are strong. You get the positive goal of house payment free living, plus the very real likelihood that your home will appreciate as the region grows. For Chattanooga and it regional neighbors, home ownership is definitely the right choice.

Get qualified. Save you down payment. Find the location you want.

And buy your home.

If you have questions about how to become house payment free call or email me. We can set you on that path. Today's low rates make that dream of house payment freedom even more achievable. You can find a rent vs buy calculator here, but the real choice is the decision to own.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

TVA IRP - Integrated Resource Planning - Energy needs for Chattanooga, Tennessee, Georgia

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Sat, 17 Jul 2010 22:47:43 -0400

TVA is into the 18^th month of its Integrated Resource Plan a look forward to energy needs over the next 20 years. Last week TVA held an information session at Green/Spaces to inform the public about the IRP, its scope and its current status.

The idea of IRP is to determine future power requirements and to identify capacity structures needed to meet that capacity, covering its entire 9 million people and 7 state region.

TVA is determining what growth to anticipate and what combination of nuclear, coal, gas, or alternative enerty plants will best power that growth. Which alternative energy technologies may provide the best solution.

More detail is available here on the TVA studies to date.

The first question is Where are we now?

Followed by Where are we going?

The session last week focused much on the IRP process.

Where we are going is of course is difficult to discern. The IRP study team has developed 7 scenarios with various growth possibilities.

To meet these scenarios, the IRP is considering 5 strategies.

Combining these scenarios and the strategies gives 35 distinct 20 year expansion plans.

The expectation is to have the initial draft of the IRP published and available by September. The goal is to provide the right plans for cost, capacity, evironment, and economic. The combination of plans will need to be flexible enough to accomodate to new technology and shifting priorities.

Quarterly reviews will then be held. The first reviews have been tentatively scheduled for Bowling Green on 10/5, Olive Branch on 10/7, Knoxville on 10/13, and Huntsville on 10/14. There will also be internet access via a webcast to access these reviews. Questions and comments will be possible at the review session and via the website.

Smart Grid concepts were discussed in the question period, as part of the flexibility that must be incorporated into a 20 year plan, to be able to incorporate new technologies. Clean energy was also brought up at the session, especially from the audience questions.

While there were less than 20 people at the presentation, the questions were informed and challenging. This is an exciting project - to look at where our possibilities for the next 20 years. Exciting and demanding.

Take some time to learn, and then get involved in this discussion. It is our future that is the topic.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Impact of lower rates for your home purchase in Chattanooga, Tennessee, or Georgia

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Sat, 17 Jul 2010 14:37:07 -0400

Impact of lower rates for your home purchase in Chattanooga, Tennessee, or Georgia.

If you want to purchase a new home in the Chattanooga and North Georgia market, the currently low interest rates can boost your home purchase options. Rates continued to move even lower last week, especially after the Federal Reserve release suggested that the economic recovery was moving slowly enough that additional stimulus might be needed.

With these historically low interest rates combining with generally low home prices, home affordability makes for a great value in the Chattanooga area market for today's home buyers, whether you are a first time home buyer or moving to a larger home or downsizing.

Much of the media has focused on the loss of programs and the number of potential buyers who are no longer qualified. These problems do exist, but for the qualified buyer, there may never be a better time to buy your home.

Much as with mortgage refinancing, low interest rates give you, the home buyer, many options to plan your home purchase in terms your overall lifetime financial goals. In the past the marketed idea was to buy a home and let its appreciation create wealth for you. The payment did not matter, only appreciation in real estate values.

There are some inherent problems with that approach, as has become obvious to all.

Payment and debt liquidation do matter, and with these low interest rates you now today have multiple choices to plan your payment and your goal of House Payment Freedom.<

•1. Buy more house

Using the interest of 6%/6.259% APR that was the average for 2008, a $1000 principal and interest (P/I) payment would pay for a fully amortized loan of $166,790. With a 5% down payment your home purchase price would be $175,600.

Using that same P&I payment of $1000, with today's 4.25%/4.579% APR interest, you could have a loan amount of $203,275. Adding a 5% down payment you could purchase a home priced at $214, 975.

You could buy over $48,000 more home, plus in today's reduced market each home price dollar buys more home.

•2. Have a low payment for monthly savings or for other budget items

Using that same, purchase price which would have a $1000 payment with a 6% interest rate loan, from the above example, you could buy that same $175,600 priced home.

Only now, with the 4.25%/4.579%APR interest rate your home payment would be $820.51. You would have the same home, but not the same payment. You would save $180 each month, or over $2000 each year.

What would you do with $2000 more income? Save. Improve the home. Vacation. College plans. Pay your new home loan down quicker.

It would be your money, you decide.

•3. Reduce the term of your loan when you purchase

Similar to option 2 but with a better interest rate, you could purchase the same price home that $1000 monthly would buy at 6% note rate, but finance the home purchase mortgage at today's low interest rates. Using a 15 year mortgage rate of 3.875%, that same $166,790 loan amount would have a 15 year payment of $1223.31 - just a little over $200 more each month and you same 15 years of house payment.

Wow. House payment free in 15 years. Now you need to decide what to do with 15 years of house payments you would not need to pay to the bank.

It would be your money, you would decide.

If you are looking for a home to purchase in the Chattanooga, Tennessee, or Georgia markets, you can start your home search here with some featured homes or here with a more general home search to see price ranges and a sampling of homes available in the market. Then contact a real esate agent to help you with a more thorough search and contract negotiation.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Impact of lower rates for you in your situation - Home Refinance Chattanooga, Tennessee, and Georgia

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Thu, 15 Jul 2010 22:30:58 -0400

With mortgage rates at truly historical low levels, the question is what does that do for you in your present situation.

You can truly benefit from these low rates, whether you are considering to refinance or looking to purchase a new home.

Home mortgage refinance for current home owners in Chattanooga, Tennessee and Georgia

1. Lower your monthly payment - Reducing your interest rate most often means to home owners that they can reduce their monthly payment. Lower payments are always better, but what can you do with that additional money.

How much money can you save?

As an example, a 30 year loan for $150,000 at 6%/6.250% APR would have a principal and interest (P/I) payment of $899.33. If that loan is 2 years old, your approximate payoff balance might be $146,800.

A new 30 year loan at 4.375%/4.520% APR with a loan amount of $151,000, adding back some for closing costs, would have a P/I payment of $785.76.

A monthly savings of $113.57. Would that help your budget? Maybe, but it would also add 2 years back to your home loan.

What if you kept paying the $899.33, but with the lower interest rate?

You now pay your home off in 22 years. Reducing your time with a house payment by 6 years.

Your goals may be better met with the monthly savings to boost your budget. Your goals may be better met to be house payment free 6 years quicker.

The key is with these rates - You have the unbelieveable opportunity NOW, to decide and to act.

2. Reduce you term

The above example showed how you might be able to boost your budget or find quicker freedom from a house payment.

For many homeowners, the goal of house payment freedom is top priority. With these rates you may be able to afford a house payment that will drop your loan terms to 15 years or fewer.

The same scenario, refinancing your balance with closing costs with a new loan of $151,000. Rates for 15 year mortgages have been as low as 3.75%/4.100% APR. For our example let's use 3.875%/4.200% APR.

You could become house payment free in 15 years with a P/I payment of $1107.50 - just over $200 more per month and House Payment Free 13 years sooner.

WOW! And this is actually real. All rates quoted here are fixed rates with full amortization.

Call to go over your options to achieve your financial goals.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Chattanooga Weekend July 15-18

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Wed, 14 Jul 2010 22:57:37 -0400

Nightfall

This weekend at Nightfall turn up the volume for the Bottle Rockets. The band's website has a page of YouTube videos with a good sampling.

Last week at Nightfall Raul Midon wowed the audience with his percussion guitar style.

Raul Midon last week at Nightfall

Chattanooga Market

At the Chattanooga Market we will have the Peach Festival with

Lockhart's Spicy Peach BBQ Sauce and Peach Dessert - Market Cafe

Peaches and Cream sundae's and Peach milkshakes at Penn's concessions

Peaches and Herb Ice Tea from Lee and Gordon's Greenhouse

Peach lotions, soaps, sprays and lip balm from Simply Can't Resist

Mayfield's Peach ice cream

From Daylillies there will be Peach Habanera Salsa (many kinds), Peach pie filling, Peach preserves, Peach jellies (many kinds) and much more!

Sunday's music will be Paul Edelman, the Jangling Sparrow at 2pm. Here is a sample of his music - Graveyard 76. At 12;30pm Morgan Bracy will take stage. Here is a listen to When the spell is broken.

TVA Integrated Resource Plan

For those who are interested, TVA's Integrated Resource Plan Information Session will be Thursday night at 6pm. This is a public hearing "to share information about the concepts, milestones, and upcoming public events related to the release of its Integrated Resource Plan called Environmental and Energy Future."

Try to make it to the meeting at Green Spaces downtown.

Maybe more on this meeting in a later post.

Have a great weekend.

UPDATE I forgot about the Chattanooga Zoo - Cocktails for Conservation, Friday, 6-8 PM. Visit Hank then go on to Nightfall.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Federal Reserve Atlanta SVP comments from June 2010 at Chattanooga Business Breakfast

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Wed, 14 Jul 2010 21:32:07 -0400

The Federal Reserve released its June FOMC minutes today and the shift in language seemed to cause a significant market reaction. The reaction was especially strong when added to the Retail Sales numbers released this morning (Tuesday) that were much worse than expected with a drop of .5%. Strong enough to offset what has so far been a very good week for corporation earnings reports.

The result this afternoon of the pull back in Federal Reserve optimism was that the bond market had a mid-afternoon price jump. Good for rates, but what does it say about our recovery?

Back in June I reported briefly on the presentation given at the Chattanooga Mayors' Business and Industry Appreciation Breakfast by Dr. David E Altig, SVP and Director of Research at the Federal Reserve Bank of Atlanta. In that post reviewing his presentation, I had promised a follow up with more details about his economic projections. And while this is very late, it seems fitting to write this follow up today, in line with the release of the recent FOMC minutes.

At that breakfast Dr Altig was basically optimistic, stating that the "double dip recession" scenario is off the table of possibilities. With the recent FOMC minutes release, I thought it would be good to break out my notes on Dr Altig's speech and compare to the official statement published today.

Dr Altig projected a 3.2 to 3.7% GDP growth in 2010. This is fair growth, but he admitted that a recovery from a deep recession should really have growth more in the 7-9% range. He recognized that the recovery might be uneven in various regions because of differences in the regional employment picture.

He did not mention housing much, instead focusing on employment. Both major problems, but I certainly understand the need to focus on employment.

All regions last year in June had lost jobs over the previous 12 month and 3 month periods, with the Atlanta region one of the worst hit. In the most recent 12 months though the pace of job losses had slowed and in the most recent 3 month period there has been some regional job gains.

Tennessee was congratulated as doing relatively well in job creation.

The projection for 2010 unemployment is over 9%. And for 2011 about 8%. To put the employment problem in perspective, he reminded everyone that 200,000 new jobs are required to change the unemployment percentage by 1%.

Our present unemployment is around 9.6% and the unofficial rate ( the underemployed and discouraged worker) rate is over 16%.

The take home point here is that to fix these employment numbers requires a lot of new jobs.

He referred to our employment crisis as the Alice Cooper Labor Market:

I can't get a girl
cuz I ain't got a car
I can't get a car
cuz I ain't got a job
I can't get a job
cuz I ain't got a car
So I'm looking for a girl with a job and a car
Don't you know where you are

Lost in America

We are looking for a girl with a job and a car.

He put all this though in a positive spin. Our loss of jobs can be viewed as a gain in productivity. He said that the US led the world in losing jobs but the recession was not more severe. The 2007 to 2010 productivity fell in other countries while it soared in the US.

He offered 2 theories.

Theory 1

The US is mean and Europe is nice to workers. The US has shifted the risk of recession to the workers while Europe has shifted the risk of recession to companies.

Theory 2

Productivity difference is real. The recession has led US companies to work better, to find ways to improve the job. This short term pain will make for a stronger and more efficient economy. When the unemplo

You choose which theory you like best.

The answer for workers though is new job skills and education beyond high school. The demands of new industry and of established industry such as auto manufacturing require a skilled labor force. Dr Altig referred to an article about a potential labor shortage in the auto industry, even in the midst of steep unemployment. The labor shortage is from a lack of skilled workers.

It is interesting though that a follow up article on the difficulties of finding employment after job training told a slightly different story.

He gave a point by point program for "how to bring everyone along." His points are below with my interpretation in parentheses.

•· Solution is not monetary policy (Federal Reserve cannot help)

•· Solution is not at the federal level (stimulus cannot help)

•· Solution is to bring skilled labor force to local labor market is at local level (county and cities increase school budgets to support more technical training at high school and community college level)

These points of course leave me a little frustrated with the federal government that takes so much of our tax dollars and passes so many unfunded mandates and creates so many departments and so many regulations and then says "Hey local boys and girls, you need to fix this problem that we created after we took all that money from you." But that for another post. I really did not intend this to be so long.

Anyway the Dr Altig basically suggested that the unemployment can be seen as an indicator of increasing US productivity and local government and business should step up to develop a more skilled work force. He also said that improvements in unemployment will be slow, but will produce a more efficient economy.

Don't you know where you are. Lost in America.

Next I hope to compare his comments from June to the recently published minutes of June's FOMC meeting.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Liar loans back? Forbes headline says maybe so

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Sun, 11 Jul 2010 21:39:04 -0400

Forbes has run an article proclaiming that Liar Loans are making a quiet comeback. The headlines may cause concern, but the actual article does not. There needs to be room in mortgage lending for low and alternative documentation lending.

First of all, liar loan is a phrase that was quickly applied to all alternative documentation loans, unjustly in my opinion. It is especially handy for politicians who love neat catch phrases that suit their soundbite campaigns. Another catchy phrase that has caught on is "skin in the game."

I have always thought the phrase "liar loan" to be misleading and misapplied in its common useage. The low documentation lending grew to unmanageable numbers and began to ignore any standard of underwriting and risk balance - with stated fixed income, stated W2 income, weak credit standards including credit depth as well as credit quality, high LTV, even high LTV investment and cashout loans, and other examples of underwriting neglect.

But the reaction evidenced by lumping all forms of alternative documentation lending under the name "Liar Loans," has added to the loss of the pool of qualified buyers which is creating the growing inventory of unsold homes.

Not all alternative documentation loans should be lumped under the name "liar loan". There are other underwriting criteria that might be used to qualify a mortgage - equity, liquid assets, future earnings, credit. There is a good market in strong borrowers who would qualify for mortgage loans with reduced or alternative documentation. We do not need to ignore this market because of the mistakes caused by a total lack of underwriting responsibility.

Secondly, the loans described in the article are not loans with low underwriting standards. The loans have very high underwriting standards. The standards just may not include income and debt ration, but there are strong balances to the lack of income documentation.

The Financial Reform Act includes strong incentive to offer only mortgages underwritten to traditional guidelines. The incentive is that a healthy amount of risk retention is required for loans that do not meet the standards in the legistation that define "qualified mortgage." This however omits a significant market of strong borrowers. It comes to my mind that a US Representative might not meet the standard guideline that income must be expected to continue for 3 years?

Anyway, not all alternative documentation loans were accurately described as liar loans. The media and Congress have attempted to paint with one brush, and I think have colored the housing market red using that one brush. I hope that the Financial Reform legislation does not make that red brighter and deeper.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Chattanooga Music this weekend July 10&11 - Nightfall and Chattanooga Market

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Thu, 08 Jul 2010 10:56:44 -0400

Some good music this weekend in Chattanooga at Nightfall and the Chattanooga Market.

Raul Midon is the headliner at Nightfall. He is a singer, songwriter and guitarist with a jazz sound and a great voice. Here is a link to his "Don't take it that way."

The Chattanooga Market brings some excellent country singers. Saturday at the River Market, Sammi Moore, who is from Whitwell, will start at 11am. Here is a link to a nice taste of her vocals. At 2pm the Spectrum Jazz Band plays.

Sunday is Ice Cream Social day at the Market. The country music flavor for the weekend continues with Joelle Maddyson and Wendy Jans. Click the links on their names to listen to some of their music.

The Ice Cream Social will be fun. $5 will buy 2 samples from each of the participating creameries.

Brewster's
Mayfield
Ice Cream Show
Rosie's
Clumpies
Nana's

You can vote for the People's Choice Awards given for Best Pure Flavor Ice Cream and Best Ice Cream with Inclusions.

Proceeds from the Ice Cream Social go to the Children's Home/Chambliss Shelter.

The Children's Home is "an Early Childhood Education and Care Program, that operates 24 hours per day, 365 days per year. This unique program serves children from six weeks to twelve years of age, with all fees based on the parent's income; a sliding fee scale. "

The Chambliss Shelter is a "residential program for children ages 6 to 18 who have been removed from their home for various reasons, whether it be drugs and alcohol or physical abuse."

As always, the Chattanooga Market supports buying local. They have the best in local produce and crafts.

Come out this weekend. Have fun and see your friends. Help a good cause.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com

Get Motivate Seminar comes to Chattanooga July 20

Richard Smith FHA VA USDA Chattanooga TN GA (American Acceptance Mortgage, Inc) — Wed, 07 Jul 2010 16:14:40 -0400

Several people have called me with questions about the Get Motivated Seminar that is coming to Chattanooga on July 20, because of my previous blog post linked above.

Yes, it is for real.

Yes, it is inexpensive.

Yes, the advertised speakers are confirmed.

General seating is $4.95 per person and $19.95 for an office group. There are higher price seats. Executive Level is $39 per person and $199 for a group of 10.

VIP Floor Seating, rows 21-40, is $59 per person and $499 for a group of 10.

Platinum Seating, rows 1-20, is $89 per person and $699 for a group of 10.

Pat Summit will speak via a teleconference. She is the only speaker who is not confirmed to be live and on stage.

The list of speakers is on the previous Get Motivated Seminar post.

I received my tickets for our office group yesterday. Along with some vouchers for the seminar booklet.

This information has been confirmed with the Get Motivated seminar and with the Convention Center. You still have time to Get Motivated.

I asked the seminar if cameras and video are allowed. Cameras are recommended. Video is not allowed.

Hope to see you there.

Richard Smith
NMLS 184479

Cell: 423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

Apply Here

Begin your Home Search here

Reverse Mortgage Calculator

Ask an Expert

www.RichardSmithHomeLoans.com