Last Week in Review
"THE FACT THAT AN OPINION HAS BEEN WIDELY HELD DOESN'T MEAN THAT IT'S NOT UTTERLY ABSURD." Bertrand Russell. True words - and last week was one that was full of opinions that moved the financial markets - here are some highlights.
The week began with bank analyst Mike Mayo spewing out a negative forecast, which included his thoughts that loan losses by financial institutions would ultimately exceed levels from the Great Depression. This was followed by word from hedge fund giant George Soros that the US banking system is insolvent and that the economy won't recover in 2009.
However, as mentioned in many previous newsletters, the recent changes to mark-to-market should prove to have a positive impact on the economics and overall operations of financial institutions. Why? Because the recent ruling to look at mark-to-market accounting in a more relaxed light will free up the banks' capital ratios and allow them to do more lending, which will help their profitability, as well as ultimately help the economy unlock as businesses and consumers are once again able to borrow and use credit in a more normal fashion.
Lo and behold...as earnings season began last week, there was already evidence of this playing out as true, when Wells Fargo said Thursday that it expects record 1st quarter earnings and that their Wachovia acquisition was exceeding their expectations. In addition, the New York Times said Thursday that the US banking system overall may be in better shape than most people think.
As you can see in the chart below, Stocks hit an all time high in October 2007...until mark-to-market accounting practices were instituted. And notice also that Stocks reversed course, and have been on a strong rise since early March of this year, buoyed simply by the speculation that there would be a change in mark-to-market, which was finally announced on April 2nd by the Financial Accounting Standards Board.
-----------------------Chart: Dow Jones
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. And this is exactly what happened in the early part of the week when Stocks were plagued by the negative opinions mentioned above. However, Stocks rallied on the good news that ended the week, causing Bonds and home loan rates to give back some of the gains they had made, ending the week unchanged to slightly worse from where they began. The Bond market closed early Thursday and both the Stock and Bond markets were closed Friday in observance of the holiday weekend.
MOST PEOPLE SHARE THE OPINION THAT PAYING TAXES IS NO FUN, ESPECIALLY DURING TOUGH ECONOMIC TIMES. BUT FILING ON TIME IS IMPORTANT, EVEN IF YOU CAN'T FOOT THE WHOLE BILL ON TIME. CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR IMPORTANT FILING INFORMATION.
Forecast for the Week
Last week may have been a quiet one in terms of economic reports, but the middle part of this week will be jam-packed with reports. Tuesday will bring the Retail Sales Report for March. We know that consumers continue to watch their spending, but how much they are still doing so will be interesting to see.
There's also news on the inflation front coming both Tuesday and Wednesday. Tuesday brings the wholesale measuring Producer Price Index (PPI) Report, while on Wednesday we get the Consumer Price Index (CPI) Report. It will be important to see if these reports are inflationary or deflationary in direction. Given the low interest rate environment we are in, along with all the recent economic stimulus provided, it seems a foregone conclusion that inflation will become an issue that must be dealt with. These reports will give us clues on any significant changes to the rates of inflation, which is the arch enemy of home loan rates.
Thursday will be a busy day as well, as we will get a read on the Housing Market with the Housing Starts and Building Permits Reports. The Philadelphia Fed Report will also be released Thursday, and this monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports.
As you can see in the chart below, stocks' late week rally pulled money out of the Bond market, and caused Bonds to fall below a key floor of support. I will be watching closely to see if Bonds and home loan rates can reverse direction this week and find some improvement.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Apr 10, 2009)
The Mortgage Market View...

File Your Taxes on Time. Even If You Can't Pay!
The deadline to file your taxes is practically here!
But what do you do if you've completed your tax returns only to find out that you owe way more to Uncle Sam than you were expecting - or worse, that your tax bill is more than you can possibly afford to pay right now?
Don't worry. If this is the case, you're not alone. especially in today's economy. And more importantly, you're not going to jail just for being a little short on cash.
Rest assured, the IRS only seeks criminal charges for those who the agency can prove intentionally chose not to file and pay taxes. So, even if you can't pay your bill right away, file your return on time, and not only will you stay off the IRS's bad side, you'll avoid some hefty financial penalties in the process.
Penalties
According to the IRS, the penalty for filing late is generally 5% per month, or up to 25% of the total tax amount due. Not to mention interest charges, which the IRS changes quarterly, and which range between 4% and 9%. This interest applies to the unpaid balance, penalties, and to any interest that has been charged to the account as well.
If no effort is made to pay back-taxes, the IRS can impose stricter penalties, including levying bank accounts, wages, other income, or taking other assets like houses and cars. A Federal Tax Lien could also be filed, which could ruin your credit history for years to come.
The penalty for filing on time but paying late, however, is only half of one percent or .5% per month, up to 25% of the total amount owed. If you choose an installment plan to pay your debt, interest will accrue on the unpaid debt amount only.
Therefore, when you file your return, pay as much as you can and cut down the penalties even more.
Extensions
It is possible to get a 30- to 120-day extension to pay your taxes after filing a return on time. Soon after filing, the IRS will send you a tax bill for the amount you still owe. Simply call the number on the bill and request an extension and explain your situation. If granted an extension, the penalties and interest will be much lower.
If you cannot pay any part of your tax bill, the IRS may temporarily delay collection until your financial situation improves, although interest and penalties will accrue throughout this time. But this extension is reserved for what the IRS calls "significant hardship."
The Week's Economic Indicator Calendar
Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.
Economic Calendar for the Week of April 13 - April 17
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. April 14
08:30
Core Producer Price Index (PPI)
Mar
0.1%

0.2%
Moderate
Tue. April 14
08:30
Producer Price Index (PPI)
Mar
0.0%

0.1%
Moderate
Tue. April 14
08:30
Retail Sales
Mar
0.3%

-0.1%
HIGH
Tue. April 14
08:30
Retail Sales ex-auto
Mar
0.1%

0.7%
HIGH
Wed. April 15
02:00
Beige Book




Moderate
Wed. April 15
10:30
Crude Inventories
4/10
NA

1645K
Moderate
Wed. April 15
09:15
Industrial Production
Mar
0.9%

-1.4%
Moderate
Wed. April 15
09:15
Capacity Utilization
Mar
69.7%

70.9%
Moderate
Wed. April 15
08:00
Empire State Index
Apr
-35.0

-38.2
Moderate
Wed. April 15
08:30
Consumer Price Index (CPI)
Mar
0.2%

0.4%
HIGH
Wed. April 15
08:30
Core Consumer Price Index (CPI)
Mar
0.1%

0.2%
HIGH
Thu. April 16
08:30
Building Permits
Mar
550K

547K
Moderate
Thu. April 16
08:30
Housing Starts
Mar
550K

583K
Moderate
Thu. April 16
08:30
Jobless Claims (Initial)
4/11
NA

654K
Moderate
Thu. April 16
10:00
Philadelphia Fed Index
Apr
-32.0

-35.0
HIGH
Fri. April 17
10:00
Consumer Sentiment Index (UoM)
Apr
58.5

57.3
Moderate
The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors.
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7 Steps to House-Selling Success
Step 1: Plan and Prepare to Sell Your House
Step 2: Get a REALTOR®
Step 3: Set the Price
Step 4: Market it
Step 5: Sell it
Step 6: Closing
Step 7: Moving

Current Listings

Awards, Accolades & Rankings for Colorado Springs
Colorado Springs consistently ranks at the top of a variety of national and international lists.

No. 1 - Men's Fitness, "Fittest City in America"
No. 1 - Money, "Big Cities to Live In"
No. 1 - Forbes, "America's Most Pet-Friendly City"
No. 1 - Men's Health, "Best Cities for Dogs"
No. 3 - Earth Day Network, “Best Places to Live”
No. 4 - Frommer's Travel Guide, "Cities Ranked and Rated"
No. 5 - Kiplinger's Personal Finance, "Best Cities to Live, Work and Play"
No. 5 - MSNBC, "Best Cities to Live, Work and Play"
Top 10 - U.S. News and World Report, "Green Places to Retire"
No. 11 - ERC & Primacy Relocation, "Best Places to Relocate"
No. 11 - The Boyd Company, "Best Places to Build a Data Center"

5 top blunders of Internet home buying
Here's some advice to help you avoid the common pitfalls of online real-estate searching.

While the painful real-estate swoon appears likely to extend well into 2009 — at least — the number of Americans using the Internet to find the home of their dreams is poised to keep on climbing.
According to the 2008 National Association of Realtors Profile of Home Buyers and Sellers, 87% of homebuyers used the Internet to search for homes last year. That's up steadily from 84% in 2007 and 80% in 2006.
But despite its mounting popularity, the Internet home-buying process can present a host of pitfalls. To help make your online real-estate searching more effective, here's a look at the top five Internet home-buying blunders and what you can do to avoid them.

1. Assuming you can do it all yourselfThe Internet allows users to handle for themselves many of the tasks that could once only be performed by real-estate agents. The NAR profile, for example, found that the number of homebuyers who first learned of their homes on the Internet has been rising in recent years, to 32% in 2008, up from a tiny 2% in 1997. Accordingly, the number of homebuyers who first learned of their homes through agents has been declining, to 34% in 2008, down from 50% in 1997.
But although the Internet can provide heaps of helpful tips and research, it would be a mistake to assume that the Web is all you need to buy a house — unless you are an experienced real-estate investor. Purchasing real estate can be extremely complicated from a legal standpoint, and it's easy to make a mistake if you don't have an expert advising you. And when it comes to something as expensive as real estate, those mistakes could cost you thousands of dollars.
"Doing all the paperwork yourself is a huge mistake," says Joshua Dorkin, chief executive officer of BiggerPockets.com, a real-estate networking and information site. "There are so many things you can miss on a contract."

2. Looking too narrowlyThe sheer amount of information about the real-estate market online can be overwhelming. As a result, buyers can be tempted to stick to just one or two popular real-estate search engines, such as Realtor.com, for their research. The problem with doing that, however, is that you're missing out on the biggest advantages that the Internet offers. [Realtor.com is a partner of MSN Real Estate.]
First, you're closing yourself off to a smaller cross section of the homes that are out there. "A lot of the sites aren't comprehensive and don't have all of the new listings," says Pat Kitano, a co-founder of Domus Consulting Group, which works with real-estate brokerage firms on technology marketing strategies.
Don't assume that because a house is on one real-estate Web site, it is on all of them, says Greg Healy, vice president of operations at ForSaleByOwner.com. "It's still very fragmented," he says. Healy recommends using several Web sites to get a more complete picture.
Second, you miss all the breaking, up-to-the-minute information on the housing market that can make you a smarter consumer. Blogs have become a popular resource for real-estate agents and others to post information as it happens. "If consumers are interested in a local area, they should find local real-estate bloggers who know this breaking information," Kitano says.

3. Ignoring the independentsOne area that major real-estate search engines often overlook is the market for homes sold by the owners. "A lot of people forget to think how many homes are sold without agents," Healy says. The current estimate is that 20% to 25% of homes are listed by owner, he says.
Your dream house could easily fall into that 20% to 25%. So how do you bring homes sold independently into your online searches? "Craigslist is one of the best resources," Dorkin says.

4. Falling for fake listingsRemember, the Internet is a giant playground for scammers, and unfortunately they have penetrated the world of online home buying as well. Combine big dollars for online advertising and a lot of people searching for homes, and the result is a proliferation of fake home listings. There are a number of red flags to look out for.
"If there are no photos [of the house], that's a big warning sign. That's just people trying to collect page views," Healy says.
But even if the listing has photos, it's not guaranteed to be legitimate. Legitimate Web sites will put watermarks on their home photos to brand those photos as their own. If a home's photos have several different watermarks on it, then you can guess you are looking at the work of a scammer.

5. Putting too much stock in home-valuation Web sitesSites such as Zillow.com and Cyberhomes.com have changed the way people buy homes by putting pricing information at buyers' fingertips. But they're not infallible.
Don't assume to know what the value of a home should be based on what these sites tell you about the neighborhood. There are many elements of a home's value that home-valuation sites cannot incorporate.
"Take their values with a grain of salt," Dorkin says. He recommends using this information merely as a range. Conduct other research to narrow that range. For example, walkscore.com can tell you the number of amenities within walking distance of a location — those are some of the factors that can raise or lower the value of a home.

By Matthew Bandyk, U.S. News & World Report

Market Insights: 1 -20 -2009

Chronic uncertainty over the impact of massive government stimulus efforts is creating an uncomfortable level of risk for investors -- strong enough to limit the ability of mortgage interest rates to move notably lower. With more than $1 trillion of borrowing by Uncle Sam in the works for this year alone – investors are looking at two different scenarios:
1. If the government stimuli work, an economic recovery may get under way relatively soon. As the engines of growth rumble back to life the demand for capital will rise – pushing interest rates higher across the board, or
2. If the massive government borrowing fails to revive the sputtering economy – how much more additional borrowing will it take and what impact will all this debt have on the sovereign creditworthiness of the United States? If Uncle Sam were to loose his AAA credit status mortgage investors are keenly aware that the cost of all credit – including mortgage credit – would rise notably higher.

Against this backdrop of worry, investors will be listening intently to president-elect Obama’s inauguration speech. If as expected, he presents a plan that contains viable measures for turning the labor market around and kick-starting the economy (think major government infrastructure spending) stocks will likely rally while mortgage interest rates will do well to trade near last Friday’s levels.

On the other hand, if market participants conclude the new president has yet to develop concrete courses of action and/or that his plans will likely encounter strong political pushback and delay from Congress -- look for stocks to move lower while mortgage interest rates remain steady to fractionally lower.


PROGRAM- Purchase 30 DAY RATE

CONFORMING 30 YEAR FIXED
80% LTV and >275,000 <= 417,000 5.0% CONFORMING 15 YEAR FIXED 80% LTV and >275,000 <= 417,000 4.75% CONFORMING 40 YEAR FIXED 80% LTV and >275,000 <=417,000 N/A CONFORMING 3-1 ARM 80% LTV and >275,000 <=417,000 4.75% CONFORMING 5-1 ARM 80% LTV and >275,000 <=417,000 4.875% CONFORMING 7-1 ARM 80% LTV and >275,000 <=417,000 5.125% VA/FHA 30 YEAR > $200,000
5.00%

CONV. JUMBO 30 YEAR FIXED
80% LTV and > 417,000
7.5%

CONV. JUMBO 5/1 ARM
6.625%

RATES AND POINTS ARE SUBJECT TO CHANGE WITHOUT NOTICE

What a REALTOR® Can Do for You
The REALTOR® you work with could be one of your most valuable resources. Unlike many real estate agents who are simply licensed by their state to do business, REALTORS® have taken additional steps to become members of the local board of REALTORS® and have agreed to act under and adhere to a strict Code of Ethics. Plus...
A REALTOR® can help you determine how much home you can afford. Often a REALTOR® can suggest ways to accrue the down payment and explain alternative financing methods.
A REALTOR®, in addition to knowing the local money market, also can tell you what personal and financial data to bring with you when you apply for a loan.
A REALTOR® is already familiar with current real estate values, taxes, utility costs, municipal services and facilities, and may be aware of local zoning changes that could affect your decision to buy.
A REALTOR® can usually research your housing needs in advance through a Multiple Listing Service--even if you are relocating from another city.
A REALTOR® can show you only those homes best suited to your needs--size, style, features, location, accessibility to schools, transportation, shopping and other personal preferences.
A REALTOR® often can suggest simple, imaginative changes that make a home more suitable for you and improve its utility and value.
A REALTOR® is sensitive to the importance you place on this major commitment you are about to make. Look for a real estate professional to facilitate negotiation of a win-win agreement that will satisfy both you and the seller.