Real Estate Investments

U.S. mortgage rates fall below 4.5%

By Reuters | Posted yesterday at 10:48 a.m.

U.S. mortgage rates fell in the past week to the latest in a series of record lows amid concerns about the state of the economy, according to a survey released on Thursday by Freddie Mac.

Rock-bottom rates offer a glimmer of hope for a housing market struggling to gain traction since the recent expiration of popular home-buyer tax credits.

Interest rates on 30-year fixed-rate mortgages, the most widely used loan, averaged 4.49 percent for the week to Aug. 5, down from 4.54 percent a week earlier and 5.22 percent a year ago, according to the survey.

Thirty-year rates have fallen to fresh lows in six out of the last seven weeks. Freddie Mac, the second-largest U.S. mortgage finance company, started the survey in April 1971.

Fifteen-year fixed-rate mortgages averaged 3.95 percent, down from 4.00 percent last week, the lowest since Freddie Mac began surveying this loan type in 1991. Fifteen-year rates have hit fresh lows in five of the last seven weeks.

With rates near their lowest since Freddie Mac started the survey, demand for loans to refinance or purchase homes has picked up, boding well for the market and the economy.

“Yet again, interest rates for fixed-rate mortgages and now the hybrid 5-year ARM (adjustable-rate mortgage) fell to … record lows this week following the second-quarter GDP release,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Annual revisions cut cumulative growth in U.S. gross domestic product over the past three years to 0.6 percent from 1.4 percent, reducing inflationary pressures and allowing longer-term rates room to ease, he said.

Mortgage rates are linked to yields on both U.S. Treasuries and mortgage-backed securities.

Home sales have fallen since the expiration of government tax credits. To take advantage of them, buyers had to sign purchase contracts by April 30. Contracts originally had to close by June 30 but that was extended by three months.

Cameron Findlay, chief economist at in Charlotte, North Carolina, said the housing market is vulnerable, with a flood of foreclosures in the pipeline and high unemployment weighing heavily.

“The world essentially collapsed after the tax credits expired,” he said. “This baby cannot walk on its own without government intervention.”

Findlay said his biggest concern is that the economy is going to stall and believes there is a 30 percent chance of a double-dip recession.

“Low mortgage rates are certainly a positive, but jobs growth is more important and without that, a housing rebound will not emerge,” he said.

The U.S. Labor Department said on Thursday new claims for unemployment benefits rose last week to the highest since early April. On Friday it will release July U.S. payrolls data.

The Mortgage Bankers Association said on Wednesday U.S. mortgage applications to purchase homes rose last week for a third straight week as rates tumbled. See [ID:nNLL3JE6B4].

Freddie Mac said the rate on the 5/1 ARM, set at a fixed rate for five years and adjustable each following year, was 3.63 percent, down from 3.76 percent last week, its lowest level since Freddie Mac began tracking this loan type in 2005.

One-year ARMs were 3.55 percent, down from 3.64 last week. [ID:nWAL5JE6FO]

A year ago, 15-year mortgages averaged 4.63 percent, the one-year ARM was 4.78 percent and the 5/1 ARM 4.73 percent.

Preparing for deflation and inflation risks

Yes, we have prices going down in the Chicago and Southern Florida markets. Short term they might go lower (low income areas) but Long Term my estimate is that they will definetely go up. Am I concern about deflation? No, the guys handeling the economy understand how bad it is and they are sending the right signals to the market. The Japanese experience during the 90’s is something that everyone has fresh in their minds. 

Long term I am ready for the Inflation to come: trillions of paper bills in th economy. My strategy: plenty of rental housing and good stocks in leader companies in their category.

Why my desperation to buy and buy more Cheap Rental Housing supply? Because you can lock payments for 30 years at interest rates below real inflation now. Those payments are FIXED for 30 years and rents only with the inflation effect will go up and up. Am I clear enough?–20100804,0,1127859.column

Fannie Mae announces program to boost Miami condo sales (sigue traduccion al espanol)

Miami I have 8 clients with over 700 credit scores, more than $15K in down payment and most of them make more than $50K a year. All of them want to buy in Miami “those great condo deals”. All of them are no cash investors and want to play vultures here in the “Ground Zero” of Real Estate. The problem was: No financing… in the buildings with those deals. In the expensive ones, where the price doubles there is financing. If you wanted to buy 20, 30 cents out of a dollar…. it needed to be cash.

Well, good news! Fannie Mae announced a new program to provide financing. Now, is Fannie Mae a bank? Is she a rich aunt from Europe?

Nop. Fannie Mae is a government-sponsored institution who re-purchase the loans that banks make. Bank of America or Chase “originate” residential home mortgages but they do not keep those in their portfolio, they originate and immediately turn around and sell the loan to Fannie Mae (or Freddie Mac) for cash. Banks do not like to keep loans (portfolio) because it drains their liquidity for 30 years. They rather turn around, sell the loans for a discount, make a profit and keep moving forward.

The problem was that if Fannie Mae did not repurchase loans in specific building due to their bad finances and number of foreclosures…. banks did not want to lend on those buildings. Then without being able to resell many sellers went to foreclosure or sold at ridiculous prices.

Now this might change. Email me to send you a list of buildings with the “Special Approval” designation of Fannie Mae. As you can see there are dates for some of those because this status might change… so do not procastinate again!!! This is a window of opportunity so take it.

Give me a call for questions, we can go into more detail over the phone.


847-962-0923 /



Tengo 8 clientes con mas de 700 en su score crediticio, mas de $15,000 para downpayment y casi todos hacen mas de $50K al ano. Todos quieren comprar esos “increibles deals” de Miami. Todos ellos no tienen cash pero quieren ser esos buitres que se levantan los mejores deals. El problema es que No Hay Financiamiento…. en los edificios donde esta lo bueno. Los edificios caros, donde los precios estan mas del doble alli si hay. Pero si usted quiere comprar a 20, 30 centavos por dolar, tenia que ser cash.

Bueno, buenas noticias! Fannie Mae anuncio un nuevo programa para proveer financiamiento. Pero, es Fannie Mae un banco? una tia rica de Europa? Quien es Fannie Mae?

No. Fannie Mae es un institucion sponsoreada por el gobierno americano que se encarga de re-comprar los prestamos que los bancos hacen. Banco de America y Chase “originan” prestamos hipotecarios residenciales pero no se los quedan en sus portafolios, ellos originan e inmediatamente se dan la vuelta y los vende a Fannie Mae (o Freddie Mac) por efectivo. Los bancos no mantienen estos prestamos en su portafolio porque les quita la liquidez por 30 anos. Ellos mejor se dan la vuelta, los venden a descuento, hacen una utilidad rapida y siguen para adelante.

El problema es que Fannie Mae no compraba los prestamos en determinados edificios debido a las malas finanzas y elevado numero de casas reposeidas de los mismos…. los bancos entonces no querian prestar en esos edificios. Lo que terminaba pasando es que la gente que queria vender en los mismo terminaba en foreclosure o rematando las unidades de sus edificios pues los compradores no podian conseguir financiamiento.

Ahora esto podria cambiar. Escribanme un email y les mando la lista con edificios con “Aprobacion Especial” de Fannie Mae. Como puede ver hay fechas pues este status puede cambiar en cualquier momento. No lo piense 4 veces y deje pasar esta oportunidad.

Deme una llamada si tiene preguntas y vamos sobre mas detalle.


847-962-0923 /

30-year interest rates hit a new record low

WASHINGTON – Dec. 4, 2009 – The average interest rate for a 30-year mortgage dropped to a record low of 4.71 percent this week, pushed down by an aggressive government campaign to reduce borrowing costs.

The rate, published Thursday by Freddie Mac, is the lowest since the mortgage finance company began tracking the data in 1971. The previous record of 4.78 percent was set during the week ending April 30 and matched last week.

The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring. The goal of the program is to make homebuying more affordable and prop up the housing market.

Despite the government support, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent downpayment.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders across the country. Rates often fluctuate significantly, even within a given day, often tracking yields on long-term Treasury bonds.

This week’s drop reflects a rush of investors into the security of government debt after concerns about financial trouble in Dubai drove investors to safe harbors. But rates climbed back later in the week, and analysts say they are likely to remain volatile.

“There are no guarantees that mortgage rates are going to stay at these low levels,” said Greg McBride, senior financial analyst at

And millions of American families have not been able to take advantage of them, particularly in the areas where home prices have fallen the most.

About 11 million households, or 23 percent of homeowners with a mortgage, owe more on their home loans than their house is currently worth according to First American CoreLogic, a real estate information company.

That makes refinancing difficult.

While the government has launched a program designed to help these “underwater” borrowers, only about 140,000 homeowners have used it so far.

In Orlando, mortgage broker Chris Brown says the low rates are a boon to first-time homebuyers who can qualify for a loan. But he says he isn’t getting much business from homeowners looking to refinance.

“Most of the people that could refinance probably have” done so, he said. “Rates have been artificially low for quite some time.”

The average rate on a 15-year fixed-rate mortgage fell to a record low of 4.27 percent, from 4.29 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.19 percent, up from 4.18 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.25 percent from 4.35 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans. The fee averaged 0.6 points for 15-year, five-year and one-year loans.

Buyers and homeowners who want to refinance are picking up their phones. Mortgage applications rose 2 percent last week from a week earlier, the Mortgage Bankers Association said Wednesday, driven by a more than 4 percent increase in purchase applications and a nearly 2 percent increase in applications to refinance existing loans.

Copyright © 2009 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved.

Some reasons to be optimistic in this economy

Freeway Sign - A Brighter Future
MIAMI – Nov. 30, 2009 – In a hopeful sign for the economy, the number of newly laid-off workers filing claims for unemployment benefits fell below 500,000 last week for the first time since January. In addition, consumer spending also picked up in October, and new-home sales hit their highest point in more than a year.

Combined, the news suggested that the economy should be able to sustain at least a modest rebound, even as some economists have worried that the country might be at risk of slipping back into recession.

There were no local or state figures released with the reports.

The number of people filing first-time claims for jobless aid fell by 35,000 to 466,000, the Labor Department said Wednesday. That was the fewest since September of last year.

Still, analysts noted that jobless claims would have to drop to near 400,000 for several weeks to signal actual growth in employment.

New-home sales rose 6.2 percent to a seasonally adjusted annual rate of 430,000 from an upwardly revised 405,000 in September. Economists had expected a pace of 410,000 and said the boost was driven by home shoppers acting before lawmakers decided this month to extend a tax credit for first-time buyers and expand it to some existing homeowners.

Consumer spending also rose 0.7 percent last month, following a 0.6 percent drop in September, the Commerce Department said. It was the best showing since a big 1.3 percent jump in August when the government’s now-defunct Cash for Clunkers programs enticed people to buy cars.

“When taken all together, the reports still paint a picture of a slow economic recovery,” said Mark Vitner, an economist at Wells Fargo.

One such sign was that orders for costly manufactured goods fell unexpectedly last month.

Much of October’s weakness came from a big drop for goods related to defense. Excluding those, orders for other types of manufactured goods rose slightly. Still, the overall performance was weaker than economists had expected.

Some analysts also cautioned against reading too much into the sharp drop in unemployment claims.

They noted that part of the improvement reflected large seasonal adjustment factors. Excluding those adjustments, claims rose.

Most economists say the recovery will remain so weak and job creation so slight that the unemployment rate could top 10.5 percent by mid-2010.

Florida’s unemployment rate in October was 11.2 percent, and some economists expect the jobless rate to stay in the double digits through 2012.

Still, taken together, the reports on jobless claims, consumer spending and home sales were encouraging, and the Dow Jones Industrial Average rose 30.6 points on light volume to close at 10,464.

Wednesday’s figures seemed to blunt some fears that consumers would clam up, sending the country into a “double-dip” recession.

Copyright © 2009 The Miami Herald. Distributed by McClatchy-Tribune Information Services. Miami Herald business reporter Jim Wyss and the Associated Press contributed to this report.

US$8,000 First Tax Home Buyer Tax Credit extended until April of 2010

Couple giving two young children piggyback rides smiling
Congress has finally extended the first time home buyer tax credit into 2010. President Obama signed the bill into law yesterday. Here are the specifics so you can see if you qualify:

– You need to have your contract ready by April 10th, 2010
– You need to close on this purchase by July 1st, 2010
– First time home buyers are defined as anyone who has not owned a home for the past 3 years.
– If you will buy in 2009 you will get your US$8,000 tax credit after you file your 2009 Tax Returns in 2010.
– If you will buy in 2010 you will get your US$8,000 tax credit after you file your 2010 Tax Returns in 2011.
– If you own your home for more than 5 years and you want to buy a second one, you will receive a US$6,500 tax credit.
– The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.
– The purchase price of the home must be less than $800,000.

Text me or give me a call if you have questions 847-962-0923. You can also email me to:


“Be a millionaire with Real Estate in Half an Hour or your money back guarantee”, a quick comment about those midnight infomercials.

Retro TV Commercial

A few weeks after a tremendous amount of traveling, I couldn’t sleep very well so I started zipping the remote at 3 a.m. and I was amazed/annoyed!!! There were a bunch of guys talking about these “Magic Real Estate courses” with zero money down, no credit, and no income necessary to buy, rent, sell or flip showing all these amazing homes, cars, beautiful women, beaches, boats, all the “things that we dream about”. You just need to pull out your credit card and call now!!!

It came to my attention since I do Real Estate for a living. I bought a couple of those courses to see the “magic formulas” and I found out that there was a lot of marketing and not as much substance. The advertisement alone looks to me misleading: “you can buy even if your credit score is horrible, if you filed bankruptcy or if you do not have a job” It reminded me of the factors that caused the Real Estate bubble and of the “car salesmen” of Real Estate who are a disgrace to the profession. It reminds me of a happy family that is being cheated and disappointed by a “consultant” who has no idea of reliable advice.

So is anyone ready to deal with vacancies, evictions, liability issues and housing repairs with no money down and no reserves? Is anyone ready to find good financing, deal with appraisal issues and markets that go upside down?… A housewife who barely has a high school diploma or a guy who can barely handle arithmetic is ready to handle million dollar deals. Sorry, but I am little bit skeptical. Licensed Realtors and Mortgage Loan Officers, many of whom have college educations, got many people in trouble with loans that they couldn’t afford. I think it might be irresponsible to suggest Real Estate as an easy business for many people. Even if they tell you “Yes, but there is a 1-800 number and you can ask everything there to dedicated specialists”… oh really? Someone in some town of Arizona is going to tell me how to deal with problems in Waukegan, Illinois or in Hialeah, Florida?

The people who read my blog are people that I love: friends or clients. I do not want them or you to get ripped off. In the same way that there are no magical pills to make you lose weight, there is no secret $199 mail course that can teach you how to be a millionaire in 30 minutes. Let’s get real please!

Here are some points that you should consider when investing in Real Estate:

-Do you homework: understand all the specs of every single deal, since all are different!!! Crunch the numbers, study the market, statistics, trends, demographics, etc. Do not let computer software tell you an undisputable truth.

-Be on top of things. One of these gurus said that “collection is automatic”. Really? So if I put “any tenants” I do not need to worry that they won’t pay and that the income will flow from their checking account to yours. Again, Really? I wonder if he understands the word “lay off”, bad character or unemployment. Also, I did not hear anything regarding building reserves to cushion your vacancies or evictions or foreclosures.
Build a healthy portfolio of income generating properties takes time. It does not happen automatically or overnight.

-Be your own property manager “hands on” to get to know the business. If you never handled these matters you need to learn the trade like an apprentice. You cannot hire a Property Manager if you do not know what it is involved. Like all of the midnight TV guys… he might rip you off.

-Get a specialist who you trust and who has a verifiable success record in Real Estate Investment. You do not need to use me, but you need someone to walk you through the first deals so you can ride the bike alone on your own. If you get bankrupt on the first or second deal, there will not be many more to come.

Real Estate Investment is great. You can make a lot of money, but it is not for everyone. You need to be “hands on”, detail oriented, cost cautious, knowledgeable and hard working. I know these infomercial guys hate “hard work” (that is why they sell courses on TV) but there is no other magic way. You need to work hard and learn the trade before you will actually switch into automatic pilot. Four years ago in the middle of the Real Estate Forum I was called an “Old timer” and “Risk Adverse Old School Investor” by a bunch of South Florida’s fancy investors. Yes, I proudly am. Guess what??? My Real Estate portfolio in this current crisis has a positive cash flow… 2 out of 4 of those guys filed for bankruptcy last year, the other 2 are in serious trouble. Like Anthony Robbins says: “Massive Success is the best revenge”.

I would love to get a phone call from you to talk about Real Estate. I hope you are doing well with your investments and do not forget to have fun with them.

Have a great and profitable week!


Pssst…. Have you seen interest rates recently? I have an updated to the hour chart below on the right side of the blog, if you want to take the pulse to the 30 years-fixed.

Timing the market

I wonder why I did not buy Citibank stock when it went down to less than a dollar? Greed or fear? I was there in front of my E-Trade account did my fundamental and technical analysis, did all my home work, knew that the government will not let it die, my gut feeling was saying go for it!, I remember that afternoon… after 2 hours of thinking I stood up of my desk and said: Let’s wait.

You know the rest of the story. I regret that did not do it now. The opportunity is gone.
I have a few clients who asked me: Hey German when do you think the Real Estate market will bottom up? I usually tell them: “On Friday, September 4th, 2009 at 4.02 pm. There will be a huge thunderbult in the skies and the sun will come out shining! You will know exactly then that the recession is over and the prices will start rising after that exact moment”.

Point to make is there is no way to calculate the exact time to buy. You can analyze and then take advantage of a favorable environment. Do your homework, do some research and find out yourself if this is a good moment to do it:

– Interest rates are low. Yes 5% or 6% is not 4% but is less than 18%. Remember or read about Carter and Reagan times. I love the 80’s but I did not love this part.

– Inventories are still at all times high. Foreclosures makes the homes next door to decrease value and there are a lot of those so the prices are still cheap. Since developers are not building now and will not do it for the next 5 years (banks will not finance new projects), chances are that there will be a deficit in years to come when all the inventory dries up.

– Unemployment is at 10%. Not at 25% because that is a depression but with 10% people are “afraid” so there are less buyers out there. So if you are secure financially and confindent you will find less competition and find that great deal.

– Inmigration and a growing population rate is here to stay. In Chicago there is and will be lots of international inmigration and midwest inmigration. Just ask your neighbours in Michigan and Ohio where they kids will go to study or work. Florida will receive plenty of baby boomers and inmigrants from all over the world with the years to come. Location works also to decide what is the city that you will pick to live.

Yesterday we were looking at homes in Brickell with a few clients. The sweet deals, that corner units with that view to the bay at $180K are long gone… the whole tiers. The smart investors are almost done shopping. I am talking about the quiet ones, the ones with experience and money. They never make the news but own the prime properties in all the cities. The ones that buy “value” not fashion or price are buying now. Do you want to look for another “Sign of the Times”?

Have a great Labor Day weekend all!


Loan Modifications: What is the effect on your credit score?

Playa del CarmenGood morning!!!
Last week I was working in Playa del Carmen, Mexico and several people asked me about the effect of the now popular “Loan Modifications” on their credit score. Here is a good note about that. Please do not hesitate to give me a call if you have questions: 847-962-0923. German

Sun Sentinel Editorial Board
August 21, 2009

Facing one of the worst housing markets in memory, struggling homeowners now have another incentive to walk away from an investment gone bad.

It’s hard enough to modify terms of a home mortgage, despite the federal government’s efforts to ease those procedures for individuals desperate to hold onto their houses. Unfortunately, the “Big Three” credit bureaus — Equifax, Experian and TransUnion — have issued new guidelines that allow lenders to report new mortgage loan modifications as “partial payment status,” a designation that could lower an individual’s credit score by more than 50 points.

A loan modification doesn’t reduce the principal, but makes it easier for homeowners to repay what’s owed by reducing the interest rate and stretching the length of the original loan. Credit agencies are paid to assess credit risks, and that includes people who can’t pay their mortgages. But these are extraordinary times. Penalizing a homeowner for successfully re-negotiating a loan could have the unwanted consequence of inducing more foreclosures.

First American CoreLogic, a real estate analysis firm, more than 15 million mortgage holders, or 32.2 percent, are “upside down” on their mortgages, meaning they’re paying more than their houses are worth. In Florida, the negative-equity picture is worse at 49 percent, and the figures are even higher in South Florida, hovering around 51.5 percent in the Miami- Fort Lauderdale area.

Now, thanks to the credit-rating agencies and an indifferent government bureaucracy of financial regulators, there will be homeowners who will unnecessarily become credit risks. While a loan modification provides a better outcome than a short sale, foreclosure or bankruptcy, punishing homeowners who work with their lenders is counterproductive.

If the credit bureaus won’t change the guidelines, the Federal Trade Commission should. If not, perhaps it’s time to consider President Obama’s proposed Consumer Financial Protection Agency.

BOTTOM LINE: Give homeowners a break.
Copyright © 2009, South Florida Sun-Sentinel

The recession is over. Find out when you will feel better.

Yep! It was released a few hours ago: the unemployment rate is only 9.4% and it was expected to be 9.6%. The free falling stopped so why aren’t you get a job yet? Or why don’t you have more money than a couple of months ago? Well, it takes some time… companies will not start hiring people like crazy overnight. They will be cautious since most of us learnt a lesson out of this mess. I think all of us will be more carefully from now on. This will determine an slow grow in the near future.

In past recessions the main economy drivers were housing, durables and exports. Internal demand accounted as much as 70% of the economy. Not this time, at least not in the near future. There have been structural changes with this crisis. People and companies will spend and hire much less than in the past. America looks like will become more frugal which I do not think is all a bad thing. Let’s keep ourselves focus and do not be over optimistic. All that I am saying is that it looks like we are not going anymore down. The way up will take a few years. That is my opinion.

Where are the opportunities in Real Estate in this new environment?

1. The “amazing deals” are almost gone so hurry up. Banks became smarter so they are not “writing off” bad loans and getting ride of the house for nothing anymore, now they learnt to “work things out”.

2. Rates are still low. Yes they are. Jimmy Carter was the Obama of the beginning of the 80’s. After his management rates went around 18% for a mortgage so please do not complaint when your loan officer offers you 6% 30 years fixed.

3. Now we have the Commercial Real Estate crisis which is a great opportunity for buyers like you. Because demand is low many retail businesses lost their properties. You can step in buying for cents out of a dollar… same like in residential. Buy mixed use properties, strip malls or whatever good piece you have in mind. Call me to analzyze it together.

Do not unbuckle! This road to recovery will be bumpy but we will be fine long term. Have a great weekend!