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U.S. residential mortgage originations will likely drop to $1.46 trillion in 2006 from $1.49 trillion in 2005, the Mortgage Bankers Association estimated Wednesday. In its economic forecast, the group also said existing home sales will probably fall by 4.7% in 2006 and 4.4% in 2007. New home sales will likely drop 4.3% in 2006 and 4.9% in 2007, the group added.

Eastern Union Commercial, one of the fastest-growing commercial real estate mortgage brokerages in the country, announces the launch of RealProspex™, one of the most powerful online tools for automating buyer property searches at www.EasternUC.com.

“We developed this portal by capitalizing on the extensive deal-flow at Eastern Union,” said Ira Zlotowitz, President. “Our mortgage clients have always wanted to know what we have seen for sale and now they can get what they want, targeted just for them, through our website,” he added.

Clients of Eastern Union can go to their website, www.EasternUC.com, and register their property preferences at no cost. Buyers can be as detailed as they desire in building their profile, which will become the basis for matching buyers to properties. Highly select deals will be presented to buyers on a customized basis allowing them to see the most desirable properties available in the markets they choose.

RealProspex™ is one of the few applications to enable buyers to avoid the time and challenges of searching or managing an extensive databse of properties. Other popular sites in the real estate industry that present detailed property profiles enable buyers to search the database with select options that are market driven. But RealProspex™ is people-centric, and enables buyers who have criteria based on deal metrics and transaction analysis and preferences based on experience, to super-select only those properties that fall within those criteria.

“We are confident that bringing buyers together in an environment where they are comfortable knowing that are dealing with professionals who are experts at real estate financing, as opposed to just web developers, will attract the cream of the real estate professional buyers market,” said Michael Muller, from the Eastern Union Sales Division.

Eastern Union has begun an extensive media campaign to highlight the new launch and has promoted their sales division and RealProspex™ with the tagline, ‘What do you want to buy today?’

About Eastern Union

Eastern Union Commercial is one of the fastest-growing commercial real estate brokerages in the country, with ten offices nationally, specializing in multi-family, retail, office, industrial, healthcare, mixed-use, hotel and construction loans. Over the last 12 months, the company has negotiated over $1 billion worth of real estate transactions throughout the country. For more information visit: www.easternuc.com or call 866-862-4800.

McLEAN, VA —Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.37 percent, with an average 0.6 point, for the week ending November 17, 2005, up very slightly from last week’s average of 6.36 percent. Last year at this time, the 30-year FRM averaged 5.74 percent.

The average for the 15-year FRM this week is 5.90 percent, with an average 0.6 point, also up very slightly from last week when it averaged 5.89 percent. A year ago, the 15-year FRM averaged 5.15 percent

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.86 percent this week, with an average 0.6 point, up from last week when it averaged 5.81 percent. There is no annual historical information for last year since Freddie Mac only began tracking this mortgage rate at the start of this year.

One-year Treasury-indexed ARMs averaged 5.20 percent this week, with an average 0.6 point, up from last week when it averaged 5.12 percent. At this time last year, the one-year ARM averaged 4.17 percent.

“Recently released inflation indicators—the Consumer Price Index (CPI) and Producer Price Index (PPI)—brought down long term bond yields, flattening out the yield curve,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Consequently, the difference between the 30-year fixed-rate mortgage and the one-year ARM rate is the narrowest it has been since November of 2001. This will make the one-year ARM product much less attractive to borrowers.”

“Nevertheless, it’s good to keep in mind that current mortgage rates, overall, are still below the 1990’s average of around eight percent for a 30-year fixed-rate mortgage and six percent for the one-year ARM.”

Tuesday, November 08, 2005

By Robert J. Bruss
Inman News

DEAR BOB: I am a retired Realtor who began his real estate career in 1946. I have enjoyed your columns since they started in the paper many years ago. You write about current, practical topics I enjoy reading about. Recently, you wrote about “interest-only mortgages.” Back when I started selling homes, interest-only mortgages were strongly blamed for the many realty foreclosures during the Great Depression. The problem then was the value of the security often fell below the mortgage balance. That’s why the FHA was created to provide monthly amortized mortgages to slowly reduce mortgage balances. Do you think American borrowers (and lenders) are setting themselves up for a financial foreclosure debacle?—Guy C.

DEAR GUY: No. Most of today’s “interest-only” home mortgages, often called “option mortgages,” give borrowers the choice of paying (1) interest-only, (2) fully amortized, (3) partially amortized, and even (4) negative amortization (less than interest-only, with the unpaid interest added to the principal balance).

Purchase Bob Bruss reports online.

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More But after the first 10 years, most of these mortgages are “recast” and become fully amortizing for 20 years. More likely, the borrower will sell the home and pay off the mortgage.

Interest-only mortgages allow first-time home buyers to get started building home equity. They are also ideal for home buyers who expect to stay in their homes less than 10 years.

As a real estate investor, I love interest-only mortgages because (1) the monthly payment is rock bottom and (2) the payment is fully tax-deductible as interest expense.

I hope today’s versions of interest-only mortgages won’t have the same sad result that occurred during the Great Depression. Home mortgage money is much more abundant today than it was then. Also, Fannie Mae and Freddie Mac create secondary mortgage market liquidity that was not available in the 1930s. Frankly, I’m not worried.

AN ALTERNATIVE TO A REVERSE MORTGAGE

DEAR BOB: I am not yet 62 so I am not eligible for a senior citizen reverse mortgage. Is there any alternative to help me with my money problems? My house is free and clear, worth approximately $365,000—Carol P.

DEAR CAROL: There is no other mortgage program of which I am aware that does not require monthly repayments to the lender. If you have adequate income, you might consider a home equity credit line, which costs nothing until you use it.

For example, suppose you need to pay off credit cards and put a new roof on your house. A home equity credit line will be ideal. Most banks and other lenders should easily approve a home equity credit line for 50 percent to 75 percent of your home’s market value if you have decent income and credit.

When you become 62 (or later) you could then obtain a reverse mortgage to pay off the home equity credit line and be free of monthly payments as long as you stay in your home.

GETTING RID OF RENTERS PAYS OFF FOR CONDO COMPLEX OWNERS

DEAR BOB: I want to thank you for recommending, several years ago, that condominium-building owners restrict the percentage of renters. That’s what our homeowner’s association did about two years ago. We changed our CC&Rs to prohibit additional rentals (although existing rentals were “grandfathered”). At that time we had about 30 percent rental occupancy and the building was poorly managed. Gradually, we got our renter percentage down to about 10 percent today. The results have been amazing to have owner-occupants who care about properly maintaining the property. Also, our building is more attractive to condo buyers and their realty agents so prices are rising nicely—Everett H.

DEAR EVERETT: It’s good to hear the results of limiting rentals in your condo complex. The big problem of having more than 20 or 25 percent rentals is many mortgage lenders either refuse to make new loans or they charge higher interest rates.

The reason is the default rate on mortgages in condo complexes with a high percentage of renters is greater than where most of the units are owner-occupied. Also, condo owner-occupants usually have greater “pride of ownership” and take better care of the facilities than do absentee landlords.

The new Robert Bruss special report, “How to Earn Up to $250,000 (or more) Tax-Free Profits Every 24 months Buying and Selling Houses,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.

Down for second straight week as rates on home loans hit 16-month highs, industry group reports.

November 2, 2005: 7:47 AM EST

NEW YORK (Reuters) – U.S. mortgage applications fell for a second consecutive week as interest rates on home loans climbed to 16-month highs, an industry trade group said Wednesday.

The Mortgage Bankers Association said its index of mortgage application volume for the week ended Oct. 28 declined 4.8 percent to 646.7, its lowest point since the start of April, when the index was at 644.5. The index is down from the previous week’s 679.1.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.21 percent last week, up 0.15 of a percentage point from the previous week’s 6.06 percent.

It was the highest rate on the 30-year fixed-rate mortgage, the industry benchmark, since June 2004, when the rate hit 6.34 percent.

By index subcomponent, the MBA’s purchase mortgage index, considered a timely gauge on U.S. home sales, fell 6.2 percent to 437.6 from the previous week’s 466.4. The refinancing applications index dropped 2.8 percent to 1,862.8 from 1,916.8 in the previous week.

All the indices were seasonally adjusted.

SAN FRANCISCO – People desperate enough to own a home in this hyperactive real estate market have long resorted to a risky exercise in group dynamics: Sharing a multimillion-dollar mortgage on a small apartment building with a bunch of friends or even strangers.
The advantages of the increasingly popular route to homeownership known as “tenancies-in-common” are obvious in a city where three-bedroom homes average about $800,000. The hazards are also well-known and include deadbeat partners and the difficulty of extracting equity.

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That’s why a bank’s offer of individual mortgages to TIC buyers sent shivers of excitement and fear through the city this summer. By making TICs less codependent and more like individually owned condominiums, the Bank of Marin’s so-called fractionalized mortgages were designed to make the option attractive to even more first-time buyers.

But the move, expected to be duplicated soon by other lenders, also has exacerbated suspicions among the city’s powerful tenant’s lobby that the TIC tool is being used by developers to dump rent-controlled properties and get around San Francisco’s strict condominium conversion limits.

Unlike condos, TIC partners do not own their apartments, but only a portion of the building, which leaves the city unable to regulate them as it does condo conversions. In some ways they resemble New York City’s co-ops, but smaller and with a decidedly “do-it-yourself” bent.

The San Francisco Tenant’s Union, warning that mass evictions would result if the main disadvantage of TIC ownership were removed, is picketing TIC open houses and lobbying the city supervisors to make it even harder for TIC buildings to be turned into condominiums.

“As we turn rent-controlled apartments to TICs which are getting close to $700,000 for a two-bedroom, we are displacing low- and moderate-income people,” said Ted Gullicksen, of the tenant union.

While TICs are common in commercial real estate, residential TICs have been a California phenomenon mostly limited to San Francisco, where there are two-and-a-half times as many renters as homeowners and the median price of all homes – single family, condos and TICs included – was $721,000 in September.

In keeping with strong political support for rent control, the city allows 200 apartments a year to be converted to condominiums through a lottery and those can only be in buildings with six or fewer units. The regulations were a turnoff for people who went in on TIC buildings – in many cases relying on mixers and online matchmaking services find partners – hoping they would one day be able to convert their units.

Ann Bassi, a mortgage broker with GT Financial in San Francisco, said residential TICs could spread outside California if state regulators permit them. Cities with expensive housing and condo conversion limits are particularly ripe.

“It’s only a matter of time,” Bassi said. “The more expensive things get, the more creative people get.”

Bank of Marin’s new product sparked a mild frenzy despite carrying a higher, variable interest rate and requiring a down payment of 25 percent; its initial $20 million investment was spoken for the minute it was unveiled, pledged to developers looking to transform rental properties.

“The phones were ringing off the hook,” said Keith Zimmerman, Bank of Marin’s senior vice president.

Randy Brasche, president of a TIC-owners advocacy group, predicted lenders won’t find a shortage of customers.

“If this becomes commercially viable, it puts the problem of everyone sharing the same mortgage out of the equation,” Brasche said.

Many people, Brasche included, have been willing to share a mortgage with people they met through a real estate agent because it typically shaves 15-25 percent off the price of a condominium.

But with the savings come potential headaches, such as having to cover for delinquent partners or trying to wrestle equity from the property if someone moves or wants to refinance for the cash.

“Not everyone has the stomach for it,” Brasche acknowledged.

The notion of buying into a TIC made Chris Freeman nervous. The 31-year-old product manager at biotech company Genentech paid $1,145 a month for a rent-controlled, two-bedroom apartment on Nob Hill for three years. He went to a TIC open house in his neighborhood last month to check out prices and ended up owning a three-bedroom apartment with his fiancee.

The five-unit, Edwardian-style complex built in 1909 turned out to be the first residential building Bank of Marin financed with individual loans. Freeman paid $715,000 and his monthly mortgage payments will be $3,500. The amount was calculated the way it would have been with a group loan, based on the square footage of his unit and a share of the building’s property taxes, utilities and other expenses.

“I was not interested in getting involved in a traditional TIC – the lack of control you have, the fact you are responsible for X number of strangers,” Freeman said. “We’ll have to cancel a few wine club collections, but we’ll be OK.”

Tenancies-in-common have started cropping up in cities where housing prices are high and growth is limited, such as Santa Monica and Laguna Beach in Southern California, said Andrew Sirkin, a lawyer specializing in TIC real estate. But with an estimated 6,000 to 8,000 TIC units in about 3,000 apartment buildings, San Francisco has the most.

Bill Del Monico, president of Integrated Mortgage Corp., said fears of eviction-happy developers are overblown and the popularity of fractionalized mortgages are exaggerated. He thinks many TIC buyers will stick with cheaper group mortgages, despite their complications.

“TIC buyers are no different from any other buyers,” he said. “If you ask someone, ‘Do you want 5.75 (percent) or 8?’ they will take the lower loan like everyone else.”

U.S. mortgage rates climbed last week for the sixth consecutive week, topping 6.1 percent, the highest average since July 2004.

The average 30-year fixed rate mortgage increased from 6.1 percent to 6.17 percent, Bankrate.com said Thursday. Freddie Mac put the increase at 6.1 percent from 6.03 percent the previous week.

Concerns about higher inflation continue to push fixed mortgage rates higher, Bankrate.com said in a statement.

In the past week, both the consumer price index and the producer price index showed sharp increases, precipitated by higher oil and energy costs. Higher inflation makes bond investors nervous because it erodes the fixed payments on bonds and cements the notion of more Fed interest rate hikes. Mortgage rates are closely related to yields on long-term government bonds.