Existing Home Sales Rise More Than Expected:

Sales of previously owned U.S. homes rose more than expected in March, suggesting the housing market's downward trend may be close to hitting a bottom.

The National Association of Realtors said sales rose 3.7 percent month over month to an annual rate of 5.10 million units after an upwardly revised 4.92 million unit pace in February.
Economists polled by Reuters had expected sales to rise 2.5 percent to a 5.0 million-unit pace from the previously reported 4.88 million unit rate. Sales have now risen in six of the past eight months.

The median home price fell 5.9 percent in March from a year earlier to $159,600 which shows that the spike in demand for homes is mostly driven by the lower end of the price spectrum as new home buyers are finally entering the market.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +16 basis points week over week. But the real story is the activity during last week. As MBS lost -25 basis points from Monday's highs to Thursday's close (market was closed on Friday). This caused 30 year fixed mortgage rates to increase throughout the week as traders were unwilling to purchase MBS at the 100 day moving average. MBS also reacted to the stronger than expected Building Starts, Building Permits, Existing Home Sales, and the Leading Indicators.

What to Watch Out For This Week:
The following are the major economic reports that will hit the market this week.  They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages.  I will be watching these reports closely for you and let you know if there are any big surprises:

Date	ET	Release	For
25-Apr	10:00	New Home Sales	Mar
26-Apr	9:00	Case-Shiller 20-city Index	Feb
26-Apr	10:00	Consumer Confidence	Apr
27-Apr	7:00	MBA Mortgage Index	22-Apr
27-Apr	8:30	Durable Orders	Mar
27-Apr	8:30	Durable Orders -ex Transportation	Mar
27-Apr	10:30	Crude Inventories	23-Apr
27-Apr	12:30	FOMC Rate Decision	Apr
28-Apr	8:30	GDP-Adv.	Q1
28-Apr	8:30	GDP Deflator	Q1
28-Apr	8:30	Initial Claims	23-Apr
28-Apr	8:30	Continuing Claims	16-Apr
28-Apr	10:00	Pending Home Sales	Mar
29-Apr	8:30	Personal Income	Mar
29-Apr	8:30	Personal Spending	Mar
29-Apr	8:30	PCE Prices - Core	Mar
29-Apr	8:30	Employment Cost Index	Q1
29-Apr	9:45	Chicago PMI	Apr
29-Apr	9:55	Michigan Sentiment - Final	Apr

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are

Are you getting your money's worth with appraisal?

When you pay $450 to $550 for an appraisal on a home purchase or refinancing, do you assume that all or most of the money is going to the appraiser who comes to the house and performs the valuation?

That's logical, but probably not correct. Despite Federal Reserve regulations that took effect April 1 requiring lenders to pay appraisers fair fees, growing numbers of them say they are still being offered $200 to $250 — even as low as $134 — for work that gets billed to consumers at $450 and higher.

Last year's Dodd-Frank financial reform law mandated that appraisers receive fees that are "customary and reasonable" for their local market areas, yet the largest national appraisal organization — the 25,000-member Appraisal Institute — says that is not happening.

"The average fees across the country today are … nowhere near reasonable or customary" in most markets, says Leslie Sellers, a former president of the group.

Who's getting the difference between what consumers are billed and appraisers are paid? Management companies that connect lenders with local appraisers take a percentage for their services, but often lenders turn appraisals into a profit center of their own.

Should you care? Absolutely, for several reasons:

•Accurate appraisals are in your interest as a consumer. They can be deal-breakers if they're lowballed. But performed competently, they are accurate measures of your equity when you refinance or seek a second mortgage.

•Most experienced independent appraisers refuse to work for $200 to $250 because they can't pay their overhead at these rates. Less-experienced appraisers who sometimes have to travel long distances from their home markets tend to be more willing to work for the lower amounts.

Tom Kirchmeyer, president of Kirchmeyer & Associates Inc., an independent appraisal management company based in Buffalo, N.Y., with 8,000 affiliated appraisers around the country, says consumers often have no idea what they're really paying for because "there's no transparency" in the process. Kirchmeyer favors mandatory disclosure of how much the appraiser is receiving and how much is going to the appraisal management company that arranged the assignment. So does Richard Hagar of American Home Appraisals in Seattle, who says major lenders who own or are affiliated with appraisal management companies oppose it because they know that if the financial facts are disclosed, "consumers are going to riot."

In a hypothetical example, say the appraiser receives $250 and the management company receives $100, how can the lender, which is charging $500 for "appraisal services" on the HUD-1 standard settlement sheet, justify the $150 difference?

It can't, said Gary Crabtree, head of Affiliated Appraisers in Bakersfield. Worse yet, he says, employing "subprime" appraisers for low fees also often leads to lowballed valuations that are harmful to homeowners and buyers.

As a recent example, Crabtree says an unhappy homeowner showed him a valuation performed by a low-cost appraiser hired by the appraisal management affiliate of a large national bank. The house, located next to a country club, was 4,000 square feet and the owner had just spent $250,000 in renovations on the property.

Crabtree, who refuses to do appraisals for the low fees paid by the bank's affiliate, said the house should have been valued at around $600,000. But the appraiser hired for the assignment valued it at just $320,000, using distressed sales and properties outside the area as comparables.

How is this happening when Congress clearly mandated higher "customary and reasonable" fees? Appraisers say much of the blame goes to the Federal Reserve, which created a giant loophole for lenders and management companies that wanted to keep playing lowball games with fees. The Fed rule allows them to consider their own low payments in their calculation of what is "customary and reasonable" — a concept that was never part of the Dodd-Frank legislation.

The Appraisal Institute's Sellers says his group and others are seeking to persuade the Fed to tighten its regulations. But in the meantime, consumers should demand transparency: Of my $500 appraisal fee, who got what? And why?

Debt To Income

The debt-to-income ratio is, simply, the way

that mortgage lenders decide how much

money you can comfortably afford to borrow.

is the percentage of your monthly gross income

(before taxes) that is used to pay your monthly debts

(not your monthly living expenses). Two calculations

are involved, a front ratio and a back ratio, written in

ratio form, i.e., 33/38.

The first number indicates the percentage of your

monthly gross income used to pay housing costs,

such as principal, interest, taxes, insurance, mortgage

insurance and homeowners' association dues. The

second number indicates your monthly consumer

debt, such as car payments, credit card debt, installment

loans, etc. Other living expenses are not considered

debt.

So a debt-to-income ratio of 33/38 means that 33

percent of your monthly gross income is used to pay

your monthly housing costs, and 5 percent of your

monthly gross income is used to pay your consumer

debt - so your housing costs plus your consumer debt

equals 38 percent.

33/38 is a common guideline for debt-to-income

ratios. Depending on your down payment and credit

score, the guidelines can be looser or tighter, and

guidelines also vary according to program. The FHA,

for instance, requires no better than a 29/41 qualifying

ratio, while the VA guidelines require no front.

U.S. Economy Over the Worst

In another sign the American economy is on the comeback trail, a new survey from KPMG shows optimism is improving among U.S. manufacturing and service industry executives. Executives in both key sectors say the worst is behind us.

The survey shows 68 percent of manufacturing executives believe business activity will be higher in the next 12 months. That's up from 57 percent in October.

Forty-one percent of those same executives say they plan to hire more in the weeks and months ahead. That number was just 28 percent five months ago.

As far as revenue is concerned, 65 percent of manufacturers surveyed by KPMG expect revenues to rise in the next year.

This is of course, more good news for the housing sector.  As employment levels increase, so does demand for housing.

Mortgage backed securities (MBS) lost -65 basis points from Monday's open to Friday's close which helped to move mortgage rates upward. Mortgage Backed Securities (and mortgage rates) moved back into a more reasonable level after the Treasury Department announced that they would begin the process of selling their vast $1.25 trillion MBS portfolio into the open market.  Also, fears over Japan started to wane in the financial sectors which helped to remove a "fear factor" premium in MBS.