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Last Updated:
October 15, 2009

September 2009 SummitCountyRealEstate.Net Notices

On September 2, 2009 at the North Metro Denver REALTOR Association in Broomfield, Oliver is teaching a 4-hour RESPA Compliance & Loan Fraud seminar from 12 noon to 4 pm.

Now you may think these topics don’t apply to you, but what do you know about referral fees? What are the rules as far as payments to and from clients for referrals? What about to and from mortgage companies? One person mortgage companies? The state and federal government goes after those bad apples that bring the real estate industry a bad name – do you know what schemes those bad apples are telling others are “how we always do business”? Is what they are suggesting completely disclosed, on the HUD-1, and known by all the players involved? At this class you’ll learn to recognize and avoid RESPA violations and Loan Fraud.

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For most of the country this is the hottest time of the summer but in Breckenridge we can feel fall in the air. We have had some mornings with frost and the evenings definitely require a jacket. The leaves have yet to turn but it is not far off.

Many owners have inquired about the problems surrounding Premier Resorts. Last week Lou Herman, Board President, sent out the following letter to the owners who have asked specific questions.

"The board of directors has been aware of the issues surrounding Premier Resorts since April and has taken several steps to protect Beaver Run. On Tuesday, August 4, the Association's legal counsel informed Premier Resorts that they were in default of the property management agreement. Per the terms of the property management agreement, Premier is allowed a period of time to cure these defaults.

The assets at Beaver Run are not in jeopardy due to the relationship we have with Premier. The owner's distribution and other cash assets can not be accessed by Premier. The property will continue to operate the hospitality and financial services as we always have. Due to the nature of the legal action between the Beaver Run HOA and Premier, we are not at liberty to discuss any additional information.

As new developments become available, we will certainly keep you informed as quickly as possible.

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Look at the Present...Pun Intended

Financially speaking, how have you fared this year compared to last year? Be sure to look at any changes in income as well as expenses. If your finances haven't changed and you're happy with last year's spending, then you're starting off in very good shape. If your overall financial status has declined, or if you were less-than-pleased with last year's performance, then you've got some work to do.

Begin by looking at the number of purchases you made a year ago. Which ones would you make again and which ones have you scratching your head? It may be time to reduce your gift-buying list or change the amount you spend on each purchase. The obvious way to accomplish this is to be less extravagant with your selections. A less obvious but often effective approach is to research your potential purchases. Sometimes you end up paying extra for the convenience of one-stop shopping, so look through the newspaper to find which stores are offering deals. Then look on the Internet to see if you can beat their prices by purchasing online. This practice will cut down on last-minute shopping which can be an expensive proposition.

Look Toward the Future

So, you've figured out how many purchases you need to make as well as which ones need scaling back in terms of price. Now it's time to create a budget. Once again, there is no magic formula. Creating a budget and sticking to it requires two main things: common sense and commitment. Let's take a closer look.

A budget should always be based on the money you have, not the money you can borrow. If you are still paying off charges from last year, then you need to avoid using credit cards to make gift purchases this year. The amount of money you decide to allocate toward holiday spending should be based solely on what you've saved or what you will save from now until the time you start shopping.

When drafting your budget, start by creating a list of recipients, along with columns for the gifts you intend to buy and the dollar amounts you expect to spend. As you make purchases, keep track of the results. If you overspend on one gift, it is imperative that you make it up somewhere else. Your diligence is one of the keys to staying within your budget.

It's also important that you watch out for potential pitfalls, including impulse shopping. Getting into the spirit of the holidays is one thing, but spending frivolously based upon a last minute decision is something else. You've got a list, and your job is to stick to it!

One final thing that may need an adjustment is your overall philosophy. It's easy to look at the budget you've created as a restriction. After all, it's nothing more than a set of rules. The flip side is that these rules are there for your protection. Sticking to them will not only help your feel comfortable about your finances before and after the holidays, it will free you from the stress that comes from accumulated debt. When you look at it this way, a budget can be downright liberating. Give yourself the gift of a financially stress free holiday, by planning in advance.

 

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Morrison Creek Moves Approves Proposal To Limit

Sewer Vaults

Outside Steamboat

Last Thursday, the Morrison Creek Water and Sanitation District (MCWD) approved a proposal that would limit the amount of sewer vault permits in Stagecoach from 600 to 30. There are roughly 1500 platted lots in Stagecoach that do not have access to sewer and water. MCWD is moving ahead with the proposal over concerns of the growing number of vaults when vaults are only approved by the state of Colorado for limited use occupancy, and there are many full time homeowners in Stagecoach. They are also concerned about traffic on roads from pump trucks, potential spillage, and treatment of the vaults. SSBR has been very concerned about devaluation of property values if landowners are unable to obtain sewer vault permits or have access to water and sewer. The Board had garnered legal advice from NAR’s land-use attorneys on the issue and were prepared to speak against the proposal last week but the Water District chose to take no more public comment. MCWD did make one change in their proposal. Instead of ending all permits by the end of 2011, the 30 permits will be available until they are all gone. The Board of County Commissioners will have a final say in the Water Districts actions, and SSBR will take the battle to the county. The land use attorneys recommended that SSBR argue that there will be a devaluation of property values in Stagecoach because of limited access to sewer and water under the new proposal. The attorneys also recommended that the County evaluate the effect of the proposal on property values, and also request that the District agree to undertake additional efforts to install water and sewer infrastructure in accordance with its responsibilities as a special district. Ultimately, the County Commissioners should postpone consideration of the proposal until the Stagecoach Community Plan update has been completed and adopted as a component of the County’s Master Plan. A date for a public hearing on the issue with the county commissioners has not be set. SSBR will be considering a political strategy with the County Commissioners over the next few weeks.

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Beaver Run Refurbishment Carpet Sale!

If replacement of carpet is in your refurbishment plans for this fall we have a promotion you should take advantage of! All Flooring in Breckenridge is having a Summer Sale good now through the end of October for all orders placed through the Refurbishment Department.

Two great carpets, both typically priced at $23.99 a square yard are available to our homeowners for just $20.99 a square yard. Both carpets "Changes" and "In the Mood" are manufactured by Shaw. In Beaver Run's ongoing effort to "go green" we have chosen to promote Shaw carpets because all Shaw carpets have been thoroughly tested by an independent certified laboratory and meet stringent criteria for low chemical emissions. As a result they have earned the Carpet and Rug Institute's Green Label Plus certification.

On a scale of 1-5 "In the Mood" scores a 3.8 on the Hexapod test - which evaluates appearance retention after simulated foot traffic and scored a rating. The 5 star rating assures a Shaw limited 7-year Quality Assurance warranty, Limited 7-year stain and soil warranty and 7-year limited texture retention warranty. "In the Mood" is 100% nylon backed with softbac® platinum which carries a 7-year no wrinkle no re-stretch warranty.

On a scale of 1-5 "Changes" scores a 4.3 on the Hexapod test where lowest rating of 1 means "severe change in appearance" and the highest rating of 5 signifies "no change in appearance" after simulated foot traffic. Changes also scores assuring you the same great warrantees that come with "In the Mood." "Changes" is also 100% nylon backed with softbac® platinum which carries a 7-year no wrinkle no re-stretch warranty.

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Governor Outlines Plan For 2010 Budget

On Wednesday, the Governor outlined his plan to cut $320 million from the state budget by next June. The plan comes on the heels of the state's announcement in June that there is a $384 million budget gap for the current fiscal year. Governor Ritter's plan will eliminate 266 state employees, require 10% budget cuts in state departments, and will make cuts to medical programs and prison services. The governor has the authority to make cuts himself under executive order, but some proposals will require legislation to do so. One such proposal is the plan to impose a new fee on gun-buyers for a statewide background check on the buyer. The state legislature will address these proposals when it reconvenes in January.

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Vail Continues To Discuss "Pay-As-You-Throw" Trash and Recycling Program

Last week the town of Vail continued its discussion of implementing a "pay-as-you-throw" trash and recycling program that would charge residents for trash pickup based on how much they throw away. Colorado is one of the the worst states in the union for recycling-only 12-17% which puts the state in the bottom fourth of the country. Vail residents are even worse, which has inspired the council to set goals to increase resident participation. their hope is to increase participation to 10% in 5 years and 25% within ten years. The program would allow residents to buy a certain sized trash container and pay more or less based on the amount of trash they throw away. The idea is to recycle more of trash, and ultimately pay less for trash pick up. Aspen has had a similar program in place since 2005 which allows residents to purchase containers in 32 gallon, 64 gallon, and 96 gallon sizes. The discussion with the Vail Town Council began in January, but at last week's discussion the council agreed it is time to have a public information workshop, as details continue to be hammered out at the town.

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GOVERMENT AFFAIRS ALERT & CALL FOR ACTION:

Breckenridge Moving Quickly On Home Size Limitations;

Voice Your Opinion Tuesday Night!

THE ISSUE:

Tomorrow night, the Breckenridge Planning Commission will discuss whether to limit home sizes in specific Breckenridge subdivisions. The town is concerned about maintaing community character in specific single family neighborhoods. Last spring, the town proposed limiting home sizes based on a specific formula to each subdivision that would have limited most home sizes to less than 4000 sq. feet. After holding a number of public work sessions, and hearing outcry from residents, the town appointed a neighborhood preservation task force made up of residents of some of the affected subdivisions to develop a compromise proposal to present to the Planning Commission and Town Council. A number of REALTORS® were appointed to the task force. The proposal will be in the form of an ordinance at tomorrow night's Planning Commission meeting. Once the Planning Commission has voted on the measure, it will move quickly to the Town Council for approval.

 

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STATE UPDATE (from CAR's Government Affairs Division)

Get Involved in PSC And Make A Difference For Your Local Board

Applications are being sought for the newly created Political Survival Committee (PSC). The PSC was created by the Board of Directors at the Summer Board Meeting. The PSC will be comprised of 17 members appointed by the CAR President. It consists of at least one member from each CAR District plus eleven at-large appointments. In general, the PSC will aid the local boards in providing political contributions to local candidates and issues. The PSC will also make endorsements and political contributions to state-level candidates and issues; except that the PSC will only provide a recommendation to the CAR Board of Directors for statewide constitutional officer candidates.

These members are charged with distributing funds for local and state candidates and issues; supporting grassroots and lobbying efforts; and educating local and state members on REALTOR? matters of public policy concern. The PSC will achieve its objectives, in part, by transferring funds to the REALTOR? Small Donor Committee and the REALTOR? Political Committee. Additionally, the PSC will manage and distribute some mandatory dues.

President Dorsey has also created a Transition Team (TT) that will help promulgate a working set of policies and procedures to assist with the initial development and long-term execution of the Political Survival Committee. The TT will also help establish guidelines for the PSC appointment process to help recruit and select the most qualified members to serve. Additionally, the TT will help review applications and assist President Dorsey in the appointment process.

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Forecast for the Week

Be prepared for a jam-packed week of economic reports ahead! Tuesday brings both the Retail Sales Report, which is the most-timely indicator of broad consumer spending patterns, and the Producer Price Index (PPI), which provides information about inflation at the wholesale level. There will also be more inflation news coming on Wednesday with the Consumer Price Index (CPI). CPI is an important measurement of inflation (and deflation) because it measures the average prices paid by consumers for goods and services, and what the change is in those prices over time.

And things won't slow down then...Thursday will bring a read on the housing market with the Housing Starts and Building Permits Report, followed by a read on manufacturing with the Philadelphia Fed Report, which is one of the most widely-watched manufacturing reports. Thursday will also bring another Initial Jobless Claims Report. This weekly report continues to be important to watch as the job market plays a key role in our economic recovery.

 

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"BEFORE ANYTHING ELSE...PREPARATION IS THE KEY TO SUCCESS." Alexander Graham Bell. Very true words - and preparation is especially important these days, as several circumstances will make this fall a particularly successful time for prepared home buyers.

Rates for home loans remain low - but it won't last forever. The Fed continues on their purchasing plan of Mortgage Backed Securities, and the added demand has kept Bond prices high and home loan rates low. Last week, they purchased another $32.4B, bringing the total to $849B out of the $1.25T they committed to. While these Fed purchases have helped home loan rates stay near present low levels, remember that their buying program is set to be over near the end of the year. There is talk that the program will be extended - but there has also been talk that it will end early - so nothing is a guarantee, except for the fact that when the Fed purchasing program is over, home loan rates will assuredly rise.

In addition, given the current expiration date of November 30, 2009 for the $8,000 First Time Homebuyer credit, it's important for homebuyers to get prepared, and take action. In fact, many homebuyers are doing just that already. The Mortgage Bankers Association reported that home loan applications surged in the latest week to their highest level since late May, as more buyers are seeing the great opportunity that exists right now. Let me know if I can answer any questions for you, or perhaps a friend, family member, neighbor or coworker that might be thinking about a home purchase. The combination of reduced home prices, motivated sellers, low home loan rates, and the potential of a juicy tax credit is too great an opportunity to miss.

The Stock market is doing well - and as you can see in the chart below, the S&P 500 Index closed at its highest level of 2009 last Thursday. The S&P 500 is a basket of 500 Stocks that are considered to be widely held, and is considered by most market experts as one of the best benchmarks available to judge overall US Stock market performance.

In other economic news, Consumer Sentiment came in stronger than expected and Initial Jobless Claims were also reported better than expected, but still at a high level. Continuing Claims, which represent the number of people still receiving unemployment benefits, dropped a bit, but this realistically may be due to benefits expiring rather than people finding new jobs.

 

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Regarding the positions on the SAR Board of Directors, you will find attached a page from the SAR Bylaws, Article XI, Section I that describes the job descriptions for the Chair and Chair-elect, and the second attachment describing the Area Directors responsibilities.  You will want to look closely at item #3.

To further clarify, the positions opened for the 09/2010 year are Chair-Elect and Area Directors for Frisco, Silverthorne, Keystone and Park County, as well as 2 CAR Directors.  The CAR directors are an appointed position and are not voted on by the membership.  The CAR Director positions requires that person to go to the CAR State business meetings, in February (Denver), June (Mountain Area chosen each year), and the October meeting in Colo Springs to vote on behalf of the SAR Membership at the state level.  The SAR board reimburses the CAR directors for their Mileage, Lodging and a little per diem.  There are no out of town meetings for the Area Directors.  All the directors are required to attend every BOD meeting, once per month, held at the SAR Office the 2nd Thursday of every month. 

The Chair and Chair-elect positions require travel to all the in state business meetings 3 times per year, as well as the National meetings twice per year, in May, Washington DC, and November at the NAR convention location.  These are also reimbursable items. 

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Denver Tops Rebounding Housing Markets Barbara Corcoran highlights Denver as the number one recovering housing market on NBC's Today Show saying, "Everything about Denver is pointing Up, Up, Up!"

Jobs May Recover First in Colorado: If you want to be in the right place when the recovery starts, that place may be in Colorado, Idaho, Oregon, Texas or Washington. The recession didn't start at the same time in every state, and it won't end at the same time either. A new forecast from Moody's Economy.com predicts that jobs growth will return first in those five states, starting in the last quarter of this year.

Colorado Business Conditions Improve, Goss Index Shows: A monthly indicator of expected business activity in Colorado improved in May to its highest level in several months, Creighton University economist Ernie Goss said Monday in his monthly regional Business Conditions Index survey.

City of Grand Junction Selected as Large Community of Year: GJEP nominates City based on economic development accomplishments. Each year EDIE awards are given by the Economic Developers Council of Colorado (EDCC) to acknowledge individual, corporate and community contributions to the economic development of Colorado.

Boulder Named “#1 Town to Live Well” by Forbes: Data came from ZoomProspector.com, a San Francisco-based consulting firm specializing in corporate relocation. It evaluated areas of the country with less than 100,000 people and named Boulder as number one town.

Pending Home Sales Increase Nearly 7 Percent: The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7 percent to 90.3 from a reading of 84.6 in March, and is 3.2 percent above April 2008 when it was 87.5.Lawrence Yun, NAR chief economist, says buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he says. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”

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As we've mentioned in recent issues of this newsletter, added supply has been one of the main culprits behind the recent sell-off in Bonds and corresponding climb in home loan rates. So where is that supply coming from? First, all those refinances you've heard about lately are actually turned into Mortgage Backed Securities after they're closed, which adds more Bonds to the market. Plus, government spending plans have to be paid for somehow.so record levels of Treasury Securities are being auctioned off these days. Although the Fed has a program to purchase some of these Mortgage Bonds, the number of new Bonds simply outweighs what the Fed is able to buy - therefore driving Bond prices lower and home loan rates higher.

There was some good news for the economy as Consumer Sentiment came in at its highest level in 9 months, and Retail Sales were inline with estimates, marking the biggest rebound for Retail Sales in 4 months. There was mixed news on the Jobs front: While Initial Jobless Claims were below estimates, continuing claims rose to 6.82 million, which is another new record. And US exports fell to the lowest level in almost 3 years, as the US Balance of Trade widened in April for the second month. However, US exports should improve a bit in the coming days, as the US Dollar recently sank against foreign currencies, which makes US goods cheaper and more attractive to buy. The flip side of that coin however, is that since oil is Dollar denominated, the price per barrel rises to compensate for the erosion in the Dollar.meaning higher prices at the pump and elsewhere.

Bonds and home loan rates were able to muster up some improvement on Thursday and Friday, helped in part by news that the Paulson & Co. hedge fund is purchasing distressed debt and Mortgage Backed Securities, which will help alleviate some of the supply mentioned above. However, home loan rates still ended the week .25% to .375% worse than where they began.

Since Bond prices react negatively to any news of economic recovery, it's important to work with a knowledgeable advisor who monitors the markets every move. Let me know if you have any questions about your situation.

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APR vs Effective Interest Rate- Why all of the hype?

At one time or another anyone associated with the Real Estate industry for any length of time has heard the story…a home buyer at the closing table suddenly realizes that the closing costs or interest rate are dramatically higher than what they were initially told to expect. Afraid that they could lose the home if they don't close right then, they sign and agree to the higher costs or rate. In some cases, they have chosen to walk away, adversely affecting all parties, only to start the process all over again.

Public and industry frustration over such occurrences has sparked the recent changes to the Truth in Lending (TIL) disclosure process in the way that the APR is disclosed to prospective buyers. The new timeframe in which they must be made aware of changes, and the time in which they now have to review these changes have also been impacted. These changes though could have an impact on when a real estate closing can now take place, based upon certain disclosure required timeframes.

So what is the difference between a person's 'Effective' interest rate versus their 'Annual Percentage Rate', or APR?

Effective interest rate is simply the rate calculated against a loan balance, over a specific number of years, to determine a person's monthly payment on that loan. This is the rate that a borrower will see on their monthly mortgage statement as well.

Annual Percentage Rate (APR) is the calculated effective COST, as a percentage, of securing a loan, over the expected term of the loan. It takes into account not only the effective rate, but also things such as prepaid interest, underwriting, processing, closing fee to the title or escrow company, all overnight charges for mailing by the title company and lender, flood certificates, points, upfront mortgage insurance, etc. Essentially, most other services required when financing is involved. The APR is calculated by taking the sum of all associated APR costs and subtracting them from the desired loan amount, then applying the effective rates monthly payment against this lower 'Amount Financed' to come up with the APR.

For example, John Doe is borrowing $200,000 on the purchase of his new home at an effective interest rate of 5.25%. His monthly payment for a 30 year term on this fixed rate is $1,104.41. John also has the following charges associated with the purchase and funding of his new home.

The resulting 'Amount Financed' is as follows:

Actual loan amount of $200,000 less APR calculated fees of $4.041 equals $195,959 to be shown on the final TIL for the 'Amount Financed'.

The APR is calculated by taking the monthly payment of $1,104.41 against the newly established 'Amount Financed', resulting in an APR of 5.433%.

So what can change the APR enough to cause the need for re-disclosure to the buyer? Many things.  For instance, if in the example above we assume that the closing took place on the last day of the month instead of the first, and no prepaid interest was paid, the APR would drop to 5.393%. Additionally, let's say that the interest rate market improved and the lender secured the same rate for the buyer WITHOUT the Origination Point. Now, the resulting APR is 5.303%.

These 2 simple changes have a net improvement to the APR of .130% and since the newly established tolerances only allow up to .125%, the lender would need to re-disclose to the borrower. Furthermore, the borrower must now be allowed 3 business days to review the new disclosures before the transaction can close.

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What other things can change the APR?

Change in closing date, resulting in addition or deduction of prepaid interest.

Change in interest rate

Change in loan term. For example, from a 30 year term to only 15 years

Increase or decrease in fees

The addition or deletion of mortgage insurance or Upfront Mortgage Insurance Premium on an FHA loan

A borrower decides to 'float' his or her interest rate from the initial disclosure time. Rate either goes up or down upon the final 'locked in' rate.

Credit scores change from initial application, resulting in better or worse interest rate.

Loan amount increases or decreases

Loan goes from fixed rate to ARM, or vice versa

Loan switched from one lender to another, resulting in different fees

So how can you assure your buyers and sellers of a smooth and effective closing?

Be sure that your lender effectively communicates these changes to your buyers.

Try to avoid changes to closing dates.

Encourage your buyers to 'lock in' their interest rate at least 10 days prior to close.

Get a preliminary HUD Settlement Statement from the closer at least 10 days prior to close.

Partner with experienced lenders and title/escrow companies

Give enough time to your contract closing dates to accommodate changes.

Encourage your buyers to complete a formal loan application as early as possible. Also ask them to forward requested loan documentation quickly.

The recent implementation of the HVCC (Home Value Code of Conduct) has resulted in the requirement of all lenders to utilize a national appraisal service when requesting appraisals on any Conforming loans (FHA/VA and Jumbo loans are excluded from this requirement). Lenders are no longer to communicate directly with appraisal companies, but only through the national appraisal service that has requested the appraisal. Once the appraisal is completed and sent back to the national appraisal service by the appraiser it is reviewed. Upon completion...and agreement of value....by the national appraisal service, the appraisal is finally forwarded to the lender. The impact of this policy is a delay in recieving appraisals by up to 10 days, as well as additional expense to the consumer.

Finally, remember that 'rush' closings can not close any sooner than 7 BUSINESS DAYS from the date that borrowers receive their initial loan disclosures from their lender. If a loan starts with one lender and is transferred to another the clock starts over. If the final APR on the closing Truth In Lending disclosure goes up or down by more than .125% the borrowers MUST receive new loan disclosures and another 3 BUSINESS days must lapse before the closing can take place.

It is more important than ever to partner with professional lenders and closers. Knowing the importance of compliance with these changes is paramount to ensure that your closings take place on the date expected by all parties. Communication between agents, the seller and buyer, lender and title companies is vital to providing a pleasant and professional experience by all.

For any further questions, or to have me come by your office to discuss this further please call or email me.

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The housing market continues to show signs of stabilization, and although home prices are not about to spike higher, the decline certainly seems to have subsided. Existing Home Sales came in better than expectations, reaching their highest level in two years.

And while the inventory of unsold homes remains lofty, it was reported at its best level in a year. In addition, while Housing Starts and Building Permits both came in slightly below expectations, they did rise in July - another sign of stabilization in the housing market. New Home Sales data will come out this Wednesday, so indeed we will soon find out if home buyers are coming out to buy those new built homes. With home loan rates still at exceptionally low levels - it presents a great opportunity to buy. Do let us know if you or one of your friends, family, neighbors or coworkers would benefit from learning more about buying a home in today's market.

On the wholesale inflation front, the Labor Department reported that the Producer Price Index (PPI) fell more than expected. However, the Core PPI - which strips out volatile food and energy prices - was inline with expectations. In the past year the Overall PPI has dropped by a record -6.8%...this going back to 1947, when data was first collected on PPI. This decrease in wholesale prices is certainly reflective of the recession, but also points to the power of the cost reductions through technology and productivity gains.

Remember, inflation is the arch enemy of Bonds and home loan rates. While it's good news that inflation is not currently an issue, with an unprecedented amount of government spending, no one really knows what the full impact will be down the road. This will be something to watch for in the weeks and months ahead.

T

he job market also continues to be something to watch. Initial Jobless Claims were reported at 576,000, which was a bit higher than expected, particularly after a string of better-than-expected reports recently. Claims readings will need to be in the low 400K's before the Unemployment Rate can stabilize and start to improve so we have a ways to go.

Although not all the news of the week was necessarily positive, Stocks found ways to take a ride higher, finishing last week on the plus side and at the highest levels so far this year. The Dow surged ahead by 155 points closing at 9,505, the S&P gained 18 points to 1,026 while the Nasdaq rose 31 points ending at 2,020. But Bonds and home loan rates were in turn under pressure, and found it hard to maintain any positive momentum. And with more Treasury auctions scheduled for next week - which have not been overly friendly for Bonds and home loan rates - the pressure could increase. Let us know if you have any questions about your own home loan situation, and how we might be able to help you.

Rate Review

In Freddie Mac Primary Mortgage Mkt Survey (for the week ending August 21) in which the 30-yr fixed-rate mortgage (FRM) avg. 5.12%  Last year at this time, the 30-year FRM avg 6.47%.

The 15-year FRM this week avg 4.56%. A year ago at this time, the 15-yr FRM avg 6.00%.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) avg 4.57%. A year ago, the 5-yr ARM avg 5.99%.

One-year Treasury-indexed ARMs avg 4.69%. At this time last year, the 1-yr ARM avg 5.29%.

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Bonds went to the extremes of their trading range, battling tough layers of technical resistance as they attempted to improve. Let's take a closer look, and understand the news of the week.

There was good news on the inflation front as the Federal Reserve's preferred inflation gauge, the Core Personal Consumption Expenditure Index (PCE), indicated that inflation remained tame last month. Generally tame inflation is a good sign for Bonds - but there is still concern, as inflation is certainly coming.it's just a matter of when.

As part of that same report, Personal Income and Spending were both reported inline with expectations. Interestingly enough, consumer spending has now risen three months in a row. However, this needs to be taken with a grain of salt, as this boost comes on the heels of the Government's "Cash for Clunkers" program, which likely boosted spending statistics. Until the labor market stabilizes, we won't likely see a meaningful pickup in consumer spending. Speaking of the consumer, the Consumer Sentiment Index was also reported in line with expectations.

There was also more good news on the housing front last week. The Case-Shiller Home Price Index showed home prices rose for the second straight month while New Home Sales surged 9.6% in July from June's reading, signaling that the housing market is stabilizing. Adding to the positive tone of the report was a drop in inventories, which now stands at a 7.5-month supply from last month's 8.8 month reading.

Keep in mind that some of the current buyers are adding a bit of what may be an artificial boost to the housing numbers, as they normally would have purchased in 2010 but have moved up their buying decisions to take advantage of tax credits and historically low rates. Let us know if you would like more information on these time-sensitive tax credits.

It's also important to note that the revised second Quarter Gross Domestic Product Report showed that the economy has now contracted for four consecutive quarters for the first time since the Great Depression. This is another area to watch in the coming months as we gauge the pace of recovery.

Remember, positive economic news typically causes money to flow from Bonds to Stocks, causing Bonds and home loan rates to worsen. However, even with the pressure of more supply from last week's Treasury auctions, Bonds and home loan rates were able to hold on to some improvements and end the week very slightly better than where they began.

Rate Review

In Freddie Mac Primary Mortgage Mkt Survey (for the week ending August 28) in which the 30-yr fixed-rate mortgage (FRM) avg. 5.14%.  Last year at this time, the 30-year FRM averaged 6.40%.

The 15-year FRM this week averaged 4.58%. A year ago at this time, the 15-year FRM averaged 5.93%.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.67%. A year ago, the 5-year ARM averaged 6.03%.

One-year Treasury-indexed ARMs averaged 4.69%. At this time last year, the 1-year ARM averaged 5.33%.

Forecast for the Week

Friday will be a big day this week, and not just because people will be getting ready to celebrate the Labor Day Holiday. The Labor Department's Jobs Report for August will be released at 8:30am ET. July's report showed glimmers of hope for an improving job market: 247,000 jobs lost in July versus economists' expectations of 328,000 jobs lost, the smallest loss since August 2008. Even better, the Unemployment Rate dropped to 9.4%, from the prior month's reading of 9.5%, which broke a streak of 9 straight monthly increases. It will be important to see if these trends continue.

Speaking of the job market, it will also be important to keep an eye on Thursday's weekly Initial Jobless Claims Report. The recent trend of higher than expected Claims is disappointing after what appeared to be a steady decline in Claims earlier this summer. We'll want to take notice on Wednesday of the Meeting Minutes from the latest Federal Open Market Committee meeting. Any comments regarding future inflation could move the markets.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. Bonds and home loan rates faced an extremely tough triple layer of resistance at the end of last week. With no Treasury auctions ahead this week, we will be watching closely to see if Bonds and rates can bust through this resistance and improve any further.

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After a heavy dose of corporate earnings reports for the past few weeks, the week ahead will hold quite a few economic reports for traders to chew on. This week starts off with a report on New Home Sales, which is expected to rise modestly from June's reading of 342,000 to 355,000. Particularly following last week's decent Existing Home Sales Report - this will be one to watch closely.

Production and manufacturing will also be big headlines in the news this week. Durable Goods Orders, which is considered a leading indicator of manufacturing activity, could move the market mid-week - while Gross Domestic Product (GDP), which measures the total production and consumption of goods and services in the US, is due at the end of the week. The GDP read is expected to come in at -1.5% for the second quarter, which would mark an improvement over the previous quarter's reading of -5.5%. The Chicago Purchasing Managers Index is also due out at the end of the week, and although this report only surveys 200 purchasing managers in the Chicago area, it's used by traders to help predict the more important national Institute of Supply Managers Report, which is a leading indicator of economic health.

The Employment Cost Index rounds out the week, which gives an indication of total labor costs - and it has the potential to move the markets if it doesn't come in close to last quarter's reading of 0.3%. What industry experts are really looking for in this report are wage trends that indicate wage inflation and price pressures...and given the continued weakness in the labor market combined with fears of future inflation, you can bet Traders will be keyed in on this report.

Finally, the markets may be impacted by the Treasury Department's auction of $115 Billion in Notes this week. This auction was just announced last week and will be held in addition to the $90 Billion worth of T-Bills that are usually auctioned on a weekly basis. Just the announcement of the auction weighed on the entire Bond market last week, and could continue to be a factor this week depending on how well the additional supply hitting the market is received.

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The Federal Reserve Board's recent changes to the Federal Truth In Lending Disclosure requirements WILL change how quickly you can close a purchase transaction.

Effective July 31st, 2009 purchase contracts may still be written with a specific closing date in mind, but all parties need to understand that the ealiest any home purchase transaction can close is 7 BUSINESS days after the homebuyer is issued his or her initial mortgage disclosures from the lender. Saturdays, with the exception of Federal holidays, do count as a business day for the purposes of initial disclosures only.

Furthermore, if for any reason the final APR (Annual Percentage Rate) should change by more than .125% from the initially disclosed rate, the borrower must receive a revised TIL disclosure at least 3 business days before closing. Things that can affect the APR include, but are not limited to, a change up or down of the rate, the closing date, the loan amount, or a change in lender or some title fees.

IT HAS NEVER BEEN MORE IMPORTANT TO HAVE A LENDING PARTNER THAT KNOWS AND UNDERSTANDS THESE CHANGES, WILL ACCURATELY DISCLOSE TO YOUR BUYERS, AND CAN STILL ACCOMODATE QUICK LOAN DECISIONS AND CLOSINGS.

AS A MORTGAGE BANKER WHO PROCESSES, UNDERWRITES AND FUNDS OVER 90% OF OUR BUSINESS...WE CAN!!!

For your buyers that are purchasing a new primary residence or vacation home, the maximum loan amount is now $729,750 for Conforming or FHA (still 96.5% LTV) High Balance loans in Summit, and many other counties.

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This week we'll get dialed into several economic fronts via a variety of reports. First, Tuesday brings a read on the housing market with the Housing Starts and Building Permits Report.

Tuesday and Wednesday should also bring us a clearer picture of where things stand on the inflation front. Tuesday brings the wholesale price inflation measuring Producer Price Index (PPI) Report, while Wednesday delivers the inflation news on the retail level, via the Consumer Price Index (CPI) Report. Remember: Inflation is the arch enemy of home loan rates, so it will be very important to see what these reports reveal.

Thursday also brings news from the manufacturing sector with the Philadelphia Fed Report. 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 overall. And with last week's continuing Jobless Claims reaching another record, this week's Initial Jobless Claims Report will be another important one to watch.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds were able to rebound and see some improvement late last week, and I'll be staying tuned to see if Bonds are able to continue in this direction.

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I have done some research that might be of interest.

In all of Summit County, there are currently 201 residential properties priced between $1.25 Million and $1.75 Million. In the past six months there have been 19 sales in this price range.

Within Breckenridge and Frisco, there are currently 137 residential properties priced between $1.25 Million and $1.75 Million. In the past six months there have been 11 sales in this price range.

And in Frisco alone, there are currently 19 residential properties priced between $1.25 Million and $1.75 Million. In the past six months there have been 0 sales in this price range. In the past 12 months there has been one sale in this price range which was a 3,778 Sq.Ft. Single Family Home in the Bill's Ranch subdivision which has .75 acres of land and was built in 2000. It sold for $1.56 Million on 9/12/08.

Overall, this information points to a very soft market in this price range which is consistent with the following chart which shows data for the market as a whole. I expect that most of the properties currently on the market in this price range will not sell this year. Those that do will be the ones that are priced the most competitively.

The following link will direct you to listing details for the other 17 properties in Frisco priced between $1.25 and $1.75 Million.

Frisco Listings $1.25 - $1.75 Million

In order to know how to price any property against the rest of the market, I will have to go look at these properties.

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In the news this morning, we learned that Taylor Bean has been cut off from FHA funds.  The reasons are not clear but there is mention of failure to comply with FHA filing requirements and questionable business practices.  This does not affect Cherry Creek Mortgage but I thought I would pass this on in case you are working with a broker or lender that does use Taylor Bean for FHA loans.    There is no mention as to when Taylor Bean will be able to fund FHA loans going forward.   If you have an FHA loan in process with Taylor Bean as the investor, FHA case numbers are transferrable and you may want to see if your lender can move the loan elsewhere.   Or give me a call if I can be of assistance.

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The Summit Combined Housing Authority invites you to attend a training on CHFA (Colorado Housing and Finance Authority),

USDA Rural Development and their programs!

Here is what the training cover:

*CHFA training – For 35 years, CHFA has been Colorado’s trusted resource for safe, secure, fixed rate home mortgages. CHFA loans offer down payment assistance, affordable fixed interest rates, and home buyer education to help borrowers prepare for and succeed in today’s market.

Attendees will learn the fundamentals about CHFA’s home mortgage products including CHFA JumpStart, a unique home finance program that can help your customers leverage the $8,000 first time homebuyer federal tax credit into down payment and closing cost assistance.

*USDA Rural Development – The Guaranteed Rural Housing Program offers 100% financing which offers tremendous flexibility to homebuyers.  The benefits of this program will be elaborated on and include but are not limited to the following factors:

• No downpayment

• No monthly mortgage insurance = lower payment

• No maximum loan amount

• Flexible credit guidelines

 *SCHA programs – Downpayment assistance programs will be highlighted.  Did you know that your buyers can get $10,000 in a down payment assistance loan, even if they make up to $102,160 as a couple?  Yes, then can…and it even is interest free for the first 2 years!  SCHA will also be offering rehab loans to income qualified applicants.  Come and learn about all the programs the SCHA has to offer!

You will receive 2 FREE CE classes for attending this class!!  Light refreshments will be served.

WHEN: Thursday, July 16th, 2009   1:00 – 4:00pm

WHERE:                    Hoosier Room, Summit County Community Center, 151 Peak One Circle, Frisco, CO  80443

PRESENTERS:       Pam R. Francil, CML; Colorado Housing and Finance Authority, Western Slope Office - Grand Junction, CO

Randy Morton, Area Specialist; USDA Rural Development-Colorado; Craig, Colorado

Joanne & Joy, Program Directors; SCHA – Breckenridge, CO 

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