Archive for May, 2014

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AP Photo/The University of Texas at Austin, Marsha Miller

Naval Admiral William H. McRaven returned to his alma mater last week and spoke to the graduates with lessons he learned from his basic SEAL training.

Here’s his amazing Commencement Address at University of Texas at Austin 2014 from Business Insider.

The University’s slogan is,

“What starts here changes the world.”

I have to admit—I kinda like it.

“What starts here changes the world.”

Tonight there are almost 8,000 students graduating from UT.

That great paragon of analytical rigor, Ask.Com says that the average American will meet 10,000 people in their lifetime.

That’s a lot of folks.

But, if every one of you changed the lives of just ten people—and each one of those folks changed the lives of another ten people—just ten—then in five generations—125 years—the class of 2014 will have changed the lives of 800 million people.

800 million people—think of it—over twice the population of the United States. Go one more generation and you can change the entire population of the world—8 billion people.

If you think it’s hard to change the lives of ten people—change their lives forever—you’re wrong.

I saw it happen every day in Iraq and Afghanistan.

A young Army officer makes a decision to go left instead of right down a road in Baghdad and the ten soldiers in his squad are saved from close-in ambush.

In Kandahar province, Afghanistan, a non-commissioned officer from the Female Engagement Team senses something isn’t right and directs the infantry platoon away from a 500 pound IED, saving the lives of a dozen soldiers.

But, if you think about it, not only were these soldiers saved by the decisions of one person, but their children yet unborn—were also saved. And their children’s children—were saved.

Generations were saved by one decision—by one person.

But changing the world can happen anywhere and anyone can do it.

So, what starts here can indeed change the world, but the question is… what will the world look like after you change it?

Well, I am confident that it will look much, much better, but if you will humor this old sailor for just a moment, I have a few suggestions that may help you on your way to a better a world.

And while these lessons were learned during my time in the military, I can assure you that it matters not whether you ever served a day in uniform.

It matters not your gender, your ethnic or religious background, your orientation, or your social status.

Our struggles in this world are similar and the lessons to overcome those struggles and to move forward—changing ourselves and the world around us—will apply equally to all.

I have been a Navy SEAL for 36 years. But it all began when I left UT for Basic SEAL training in Coronado, California.

Basic SEAL training is six months of long torturous runs in the soft sand, midnight swims in the cold water off San Diego, obstacles courses, unending calisthenics, days without sleep and always being cold, wet and miserable.

It is six months of being constantly harassed by professionally trained warriors who seek to find the weak of mind and body and eliminate them from ever becoming a Navy SEAL.

But, the training also seeks to find those students who can lead in an environment of constant stress, chaos, failure and hardships.

To me basic SEAL training was a life time of challenges crammed into six months.

So, here are the ten lessons I learned from basic SEAL training that hopefully will be of value to you as you move forward in life.

Every morning in basic SEAL training, my instructors, who at the time were all Vietnam veterans, would show up in my barracks room and the first thing they would inspect was your bed.

If you did it right, the corners would be square, the covers pulled tight, the pillow centered just under the headboard and the extra blanket folded neatly at the foot of the rack—rack—that’s Navy talk for bed.

It was a simple task—mundane at best. But every morning we were required to make our bed to perfection. It seemed a little ridiculous at the time, particularly in light of the fact that were aspiring to be real warriors, tough battle hardened SEALs—but the wisdom of this simple act has been proven to me many times over.

If you make your bed every morning you will have accomplished the first task of the day. It will give you a small sense of pride and it will encourage you to do another task and another and another.

By the end of the day, that one task completed will have turned into many tasks completed. Making your bed will also reinforce the fact that little things in life matter.

If you can’t do the little things right, you will never do the big things right.

And, if by chance you have a miserable day, you will come home to a bed that is made—that you made—and a made bed gives you encouragement that tomorrow will be better.

#1. If you want to change the world, start off by making your bed.

During SEAL training the students are broken down into boat crews. Each crew is seven students—three on each side of a small rubber boat and one coxswain to help guide the dingy.

Every day your boat crew forms up on the beach and is instructed to get through the surf zone and paddle several miles down the coast.

In the winter, the surf off San Diego can get to be 8 to 10 feet high and it is exceedingly difficult to paddle through the plunging surf unless everyone digs in.

Every paddle must be synchronized to the stroke count of the coxswain. Everyone must exert equal effort or the boat will turn against the wave and be unceremoniously tossed back on the beach.

For the boat to make it to its destination, everyone must paddle.

You can’t change the world alone—you will need some help— and to truly get from your starting point to your destination takes friends, colleagues, the good will of strangers and a strong coxswain to guide them.

#2. If you want to change the world, find someone to help you paddle.

Over a few weeks of difficult training my SEAL class which started with 150 men was down to just 35. There were now six boat crews of seven men each.

I was in the boat with the tall guys, but the best boat crew we had was made up of the the little guys—the munchkin crew we called them—no one was over about 5-foot five.

The munchkin boat crew had one American Indian, one African American, one Polish American, one Greek American, one Italian American, and two tough kids from the mid-west.

They out paddled, out-ran, and out swam all the other boat crews.

The big men in the other boat crews would always make good natured fun of the tiny little flippers the munchkins put on their tiny little feet prior to every swim.

But somehow these little guys, from every corner of the Nation and the world, always had the last laugh— swimming faster than everyone and reaching the shore long before the rest of us.

SEAL training was a great equalizer. Nothing mattered but your will to succeed. Not your color, not your ethnic background, not your education and not your social status.

#3. If you want to change the world, measure a person by the size of their heart, not the size of their flippers.

Several times a week, the instructors would line up the class and do a uniform inspection. It was exceptionally thorough.

Your hat had to be perfectly starched, your uniform immaculately pressed and your belt buckle shiny and void of any smudges.

But it seemed that no matter how much effort you put into starching your hat, or pressing your uniform or polishing your belt buckle—- it just wasn’t good enough.

The instructors would find “something” wrong.

For failing the uniform inspection, the student had to run, fully clothed into the surfzone and then, wet from head to toe, roll around on the beach until every part of your body was covered with sand.

The effect was known as a “sugar cookie.” You stayed in that uniform the rest of the day—cold, wet and sandy.

There were many a student who just couldn’t accept the fact that all their effort was in vain. That no matter how hard they tried to get the uniform right—it was unappreciated.

Those students didn’t make it through training.

Those students didn’t understand the purpose of the drill. You were never going to succeed. You were never going to have a perfect uniform.

Sometimes no matter how well you prepare or how well you perform you still end up as a sugar cookie.

It’s just the way life is sometimes.

#4. If you want to change the world get over being a sugar cookie and keep moving forward.

Every day during training you were challenged with multiple physical events—long runs, long swims, obstacle courses, hours of calisthenics—something designed to test your mettle.

Every event had standards—times you had to meet. If you failed to meet those standards your name was posted on a list and at the end of the day those on the list were invited to—a “circus.”

A circus was two hours of additional calisthenics—designed to wear you down, to break your spirit, to force you to quit.

No one wanted a circus.

A circus meant that for that day you didn’t measure up. A circus meant more fatigue—and more fatigue meant that the following day would be more difficult—and more circuses were likely.

But at some time during SEAL training, everyone—everyone—made the circus list.

But an interesting thing happened to those who were constantly on the list. Over time those students-—who did two hours of extra calisthenics—got stronger and stronger.

The pain of the circuses built inner strength-built physical resiliency.

Life is filled with circuses.

You will fail. You will likely fail often. It will be painful. It will be discouraging. At times it will test you to your very core.

#5. But if you want to change the world, don’t be afraid of the circuses.

At least twice a week, the trainees were required to run the obstacle course. The obstacle course contained 25 obstacles including a 10-foot high wall, a 30-foot cargo net, and a barbed wire crawl to name a few.

But the most challenging obstacle was the slide for life. It had a three level 30 foot tower at one end and a one level tower at the other. In between was a 200-foot long rope.

You had to climb the three tiered tower and once at the top, you grabbed the rope, swung underneath the rope and pulled yourself hand over hand until you got to the other end.

The record for the obstacle course had stood for years when my class began training in 1977.

The record seemed unbeatable, until one day, a student decided to go down the slide for life—head first.

Instead of swinging his body underneath the rope and inching his way down, he bravely mounted the TOP of the rope and thrust himself forward.

It was a dangerous move—seemingly foolish, and fraught with risk. Failure could mean injury and being dropped from the training.

Without hesitation—the student slid down the rope—perilously fast, instead of several minutes, it only took him half that time and by the end of the course he had broken the record.

#6. If you want to change the world sometimes you have to slide down the obstacle head first.

During the land warfare phase of training, the students are flown out to San Clemente Island which lies off the coast of San Diego.

The waters off San Clemente are a breeding ground for the great white sharks. To pass SEAL training there are a series of long swims that must be completed. One—is the night swim.

Before the swim the instructors joyfully brief the trainees on all the species of sharks that inhabit the waters off San Clemente.

They assure you, however, that no student has ever been eaten by a shark—at least not recently.

But, you are also taught that if a shark begins to circle your position—stand your ground. Do not swim away. Do not act afraid.

And if the shark, hungry for a midnight snack, darts towards you—then summons up all your strength and punch him in the snout and he will turn and swim away.

There are a lot of sharks in the world. If you hope to complete the swim you will have to deal with them.

#7. So, if you want to change the world, don’t back down from the sharks.

As Navy SEALs one of our jobs is to conduct underwater attacks against enemy shipping. We practiced this technique extensively during basic training.

The ship attack mission is where a pair of SEAL divers is dropped off outside an enemy harbor and then swims well over two miles—underwater—using nothing but a depth gauge and a compass to get to their target.

During the entire swim, even well below the surface there is some light that comes through. It is comforting to know that there is open water above you.

But as you approach the ship, which is tied to a pier, the light begins to fade. The steel structure of the ship blocks the moonlight—it blocks the surrounding street lamps—it blocks all ambient light.

To be successful in your mission, you have to swim under the ship and find the keel—the center line and the deepest part of the ship.

This is your objective. But the keel is also the darkest part of the ship—where you cannot see your hand in front of your face, where the noise from the ship’s machinery is deafening and where it is easy to get disoriented and fail.

Every SEAL knows that under the keel, at the darkest moment of the mission—is the time when you must be calm, composed—when all your tactical skills, your physical power and all your inner strength must be brought to bear.

#8. If you want to change the world, you must be your very best in the darkest moment.

The ninth week of training is referred to as “Hell Week.” It is six days of no sleep, constant physical and mental harassment and—one special day at the Mud Flats—the Mud Flats are an area between San Diego and Tijuana where the water runs off and creates the Tijuana slue’s—a swampy patch of terrain where the mud will engulf you.

It is on Wednesday of Hell Week that you paddle down to the mud flats and spend the next 15 hours trying to survive the freezing cold mud, the howling wind and the incessant pressure to quit from the instructors.

As the sun began to set that Wednesday evening, my training class, having committed some “egregious infraction of the rules” was ordered into the mud.

The mud consumed each man till there was nothing visible but our heads. The instructors told us we could leave the mud if only five men would quit—just five men and we could get out of the oppressive cold.

Looking around the mud flat it was apparent that some students were about to give up. It was still over eight hours till the sun came up—eight more hours of bone chilling cold.

The chattering teeth and shivering moans of the trainees were so loud it was hard to hear anything and then, one voice began to echo through the night—one voice raised in song.

The song was terribly out of tune, but sung with great enthusiasm.

One voice became two and two became three and before long everyone in the class was singing.

We knew that if one man could rise above the misery then others could as well.

The instructors threatened us with more time in the mud if we kept up the singing—but the singing persisted.

And somehow—the mud seemed a little warmer, the wind a little tamer and the dawn not so far away.

If I have learned anything in my time traveling the world, it is the power of hope. The power of one person—Washington, Lincoln, King, Mandela and even a young girl from Pakistan—Malala—one person can change the world by giving people hope.

#9. So, if you want to change the world, start singing when you’re up to your neck in mud.

Finally, in SEAL training there is a bell. A brass bell that hangs in the center of the compound for all the students to see.

All you have to do to quit—is ring the bell. Ring the bell and you no longer have to wake up at 5 o’clock. Ring the bell and you no longer have to do the freezing cold swims.

Ring the bell and you no longer have to do the runs, the obstacle course, the PT—and you no longer have to endure the hardships of training.

Just ring the bell.

#10. If you want to change the world don’t ever, ever ring the bell.

To the graduating class of 2014, you are moments away from graduating. Moments away from beginning your journey through life. Moments away from starting to change the world—for the better.

It will not be easy.

But, YOU are the class of 2014—the class that can affect the lives of 800 million people in the next century.

Start each day with a task completed.

Find someone to help you through life.

Respect everyone.

Know that life is not fair and that you will fail often, but if you take take some risks, step up when the times are toughest, face down the bullies, lift up the downtrodden and never, ever give up—if you do these things, then next generation and the generations that follow will live in a world far better than the one we have today and—what started here will indeed have changed the world—for the better.

Thank you very much. Hook ‘em horns.

 

 

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images Author: Colin Robins

The Consumer Financial Protection Bureau’s (CFPB) mandates and deadlines are still the top concern for lenders, according to QuestSoft’s eighth annual compliance survey. More than 500 lenders responded to this year’s survey—62.2 percent ranked the Qualified Mortgage (QM) rule as a high concern.

Lenders also reported issues from the combined Truth in Lending (TIL) and Good Faith Estimate (GFE) disclosure forms as top concerns, with 54.8 percent of respondents marking the issues as a high concern.

“Compared to last year’s survey, lenders appear more weary than ever of the CFPB’s rules, as non-CFPB issues are seen as increasingly lower priorities,” said Leonard Ryan, founder and president of QuestSoft. “It seems the message of the survey is that for many lenders, the mortgage environment has become highly dependent on the box of lending that the CFPB rules are creating.”

CFPB rulemaking has grabbed the top spot in the survey every year since 2012, the first year the survey was available to comment on the newly created regulatory body. Furthermore, CFPB rules that haven’t even been finalized or publicized raised concerns among lenders.

“Recently introduced discussion points for proposed Home Mortgage Disclosure Act (HMDA) changes (57.5 percent high concern), and other CFPB-related rulemakings (47.7 percent high concern), both outscored any non-CFPB category,” the company found.

Vendor management was a growing concern for lenders, while RESPA fee tolerances (45 percent high concern) and Fair Lending exams (40 percent high concern) were also atop the list of lender’s worries.

“The timeframe in between regulatory rule announcements and implementation dates simply doesn’t allow enough leeway for lenders to rework processes and implement new technologies in order to achieve compliance,” Ryan said.

“Lenders will continue to seek counsel and integrate with venerable compliance providers, in efforts to prepare for audits and meet industry compliance standards.”

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Written by: Don Konipol
Private mortgage loans can provide professional real estate investors with quick and more flexible access to funding for investment properties. While typical private mortgage loans often come with higher interest rates, these loans are often easier to qualify for, require less paperwork and are based on the value of the property versus the borrower’s credit. See the following article from REIClub for more on this.
You’ve spent the last 4 months trying to get your client a mortgage on his investment property. You gathered all his personal, business and real estate financial information, for not only the property you’re trying to finance but for all his business and property interests. You’ve done projections, forecasts and read through 200 page appraisals. You’ve put together a loan package, sent it to numerous commercial mortgage lenders, only to find out each one needed the same information filled out on their particular unique forms. So you’ve spent dozens of hours more transferring the same information to tens of different applications. You’ve spent numerous hours obtaining “additional information” for each potential interested lender. And now you’ve exhausted all possible institutional mortgage sources and still no loan.

Sound familiar? Perhaps you’re new to the commercial mortgage field. You have been successful originating residential loans, took the NAMB Commercial Mortgage course and decided to expand your practice to include commercial and investment property mortgages. Or maybe you’re already a commercial mortgage broker, successful in obtaining financing for some clients, but feel you just spin your wheels trying to obtain financing for others. The key to spending your time more productively is to understand when institutional commercial mortgage money is NOT available for your client. The key to earning a commission from these same clients is to understand what type of financing may be available for this same client.

Private mortgage loans are loans secured by real estate made by a private lender instead of a bank, lending institution or government agency. Private mortgage loans are short-term (ranging from six months to three years) hard money or asset based loans made to the professional real estate investor for the purchase, rehabilitation or equity cash out of real property. This means that the decision to lend is based on the equity and value of the property being put up as collateral, not on the borrowers credit. The security for the loan is enhanced because the loan represents a maximum of 65% – 70% of the appraised value of the income producing property. On non-income producing property (raw land, lots, construction money) a maximum of 55% loan to value is lent. Investors can expect to pay interest rates of 12% to 14% on first liens and 16% to 18% on second liens in this current low interest rate environment. Historically first lien yield of six points over prime has been obtainable.

Why are real estate investors willing to pay high rates to borrow private money?

When interest rates of 14% to 18% are added to four-to-eight points, the real estate investor/borrower is paying 20% plus annually for the money borrowed. Its obvious why this is a good deal for the private mortgage lender, but why should real estate investors be willing to pay these high rates when conventional mortgage money costs 7% to 10%? There are many reasons, but all fall into four categories.

Qualifying Problems

The real estate investor/borrower and/or the real property does not qualify for an institutional mortgage loan. This can be anything from low borrower credit scores or too much borrower debt, to the borrower’s properties not producing a sufficient enough income. Further, the property itself may not support the type of loan the borrower wants. Many institutional lenders will not loan amounts under $500,000; many will not lend second lien money even if there is significant equity in the property. If major repairs or rehabilitation is necessary, institutional lenders will not be interested unless the project is very large and the borrower has an extensive track record. In these cases the private mortgage lender may be the only resource available for the real estate investor/borrower.

Institutional lenders are concerned with both the appraised value of the property and borrower and property credit. Private mortgage lenders are only concerned with the appraised value, as long as the appraised value represents a fair market price. Hence, if a property is producing or can produce sufficient income to pay the note and the value of the property will fully secure the note and provide sufficient equity, then the borrower’s credit is not an issue for the private mortgage lender.

The Need For Speed

Speed of closing the transaction. Mortgage money obtained from banking or institutional sources, called conventional mortgage money, usually takes between 60 and 90 days to fund. Institutional lenders need not only obtain appraisal of the value of the property, but also require detailed examination of the borrowers credit history and current financial status, as well as financial statements and tax returns, not only for the property collateralizing the loan but for all real property and business interests owned by the borrowing entity and the borrower himself.

Private mortgage lenders on the other hand can usually complete a transaction within seven-to-10 days. Since the property itself is the main criteria to be used to determine loan eligibility, much less information on the borrower and the borrower’s other properties are required, resulting in a much quicker approval process. The private mortgage lender can make a decision within 24 hours of receiving information; institutional mortgage money must be approved by a loan committee that may only meet twice a month, and that may send the loan request back to the loan officer for more information, necessitating a further two week delay until the committee meets again.

Privacy Concerns

Borrowers may not want or be able to provide personal financial information or go through the hassles of the application process associated with obtaining an institutional mortgage loan. The borrower may be going through a divorce or business separation and may not want his wife, partner, government, lawyers, etc. to obtain his personal financial statement. Additionally the borrower may not have all financial information on all his real properties and businesses up to date or complete; he may have filed for an extension on his latest tax return; his accountant may be behind in preparing his financial statements. While all these would negate or at least delay his getting an institutional mortgage, it should have no effect on the borrower’s ability to obtain a private mortgage loan.

More Money

The real estate investor may be able to borrow more from the private or hard moneylender and therefore have less of his own capital invested in the property. Institutional mortgage lenders lend based on the lower of the cost of the property or appraised value of the property; private mortgage lenders lend based on the appraised value only. Hence the real estate investor utilizing a private or hard money loan is not penalized for purchasing the property at a significant discount to market value. Additionally, most private mortgage lenders do not have onerous seasoning requirements to make the loan.

Investment Parameters

The investment parameters for private mortgage loans differ considerably from those of institutional mortgage loans, as we partially discussed in the previous section. The most important parameter to be considered when evaluating a private mortgage loan request is loan to value. This is the ratio of the amount lent expressed as a percentage of the properties value. For example if an office building is worth $100,000 and we lend $65,000 total secured by this office building, then our loan to value ratio, or LTV is 65%.

Private mortgage lenders will typically lend up to 50% on raw land or undeveloped property; 65% on commercial income producing property such as office buildings, shopping centers, warehouses, etc. and 70% on residential income property such as a duplex or apartment complex. The key words here are up to; the maximum amount will be lent if all additional criteria are met and if the lender feels good about the loan, lower amounts can be lent if the loan or borrower is considered less than ideal. This is a gut decision made by the lender with an in depth understanding of the criteria being used and the experience of looking at many lending proposals.

The second parameter is the type of properties to lend on. This is often determined by the comfort the lender has in disposing of this type of property in case of default. All other things being equal, single use property which would take a year to sell is obviously less desirable than a multi tenant office building which would not only sell quickly at 65%-80% of market value, but which would be producing income with tenants paying rents while the property is up for sale.

The third investment parameter the private or hard moneylender is concerned with is the cash flow or income potential of the property being put up as security for the note. Although many private mortgage lenders are liberal in this area, the monthly interest payments to keep the note current must come from somewhere. If the property is rented out and is producing a cash flow after all expenses of an amount at least equal to the note payment, the monthly payments can be covered by the property income alone without the borrower having to come out of pocket. This adds a great degree of safety to the note. Cash flow from other income properties or other sources can be substituted for cash flow from the property being placed as collateral; however, the income to pay the mortgage payments must be available from some source.

The fourth major investment parameter the lender must consider is exit strategy. Very simply, this is how the borrower plans to repay the loan. Since most private mortgage loans are short term the private mortgage lender has a keen interest in finding out the borrower’s exit strategy and in analyzing whether this exit strategy is viable, and the risk of this particular exit strategy. The particular exit strategy must have a reasonable chance of success.

Typical exit strategies include property sale before the note is due, refinancing the property with a long term mortgage loan, packaging the property with other properties owned or to be acquired by the borrower and obtaining a blanket mortgage on all the properties, borrowing on equity in other property owned by the borrower and selling a partnership interest in the property to an equity investor. Each of these strategies has numerous variations. The lender must determine the viability of any particular exit strategy.

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Written by: Property Wire

The number of buyers in the US paying cash for properties has reached a new high with the latest figures showing that 42.7% of all residential sales were cash in the first quarter of the year.

This is up from 37.8% in the previous quarter and up from 19.1% in the first quarter of 2013, according to the data from RealtyTrac. It means cash sales are at their highest level since the firm began tracking all cash purchases in the first quarter of 2011.

The report also shows that the share of institutional investor purchases dropped to the lowest level since the first quarter of 2012. Institutional investors accounted for 5.6% of all residential sales in the first quarter, down from 6.8% in the fourth quarter of 2013 and down from 7% in the first quarter of 2013.

‘Strict lending standards combined with low inventory continue to give the advantage to investors and other cash buyers in this housing market,’ said Daren Blomquist, vice president at RealtyTrac.

‘The good news is that as institutional investors pull back their purchasing in many markets across the country, there is still strong demand from other cash buyers including individual investors, second home buyers and even owner occupant buyers to fill the vacuum of demand left by institutional investors,’ he explained.

He also pointed out that while the institutional investor purchase share declined in the first quarter in 18 of the top 20 markets for institutional investor share a year ago, home prices continued to appreciate in most of those markets, albeit at a slower pace in many cases.

However he added that there are a couple notable exceptions that could be cause for concern including Jacksonville in Florida where the institutional investor share of purchases was down to 13.5% in the first quarter compared to 18% a year ago and where median home prices decreased 1% from a year ago in March after 15 consecutive months of annual increases.

Another example is Greensboro in North Carolina where the institutional investor of purchases was down to 6.4% in the first quarter compared to 10% a year ago and where median home prices decreased 8% from a year ago in March following 14 of 16 months were median home prices increased annually.

Among metropolitan statistical areas with a population of at least 500,000, those with the top five highest percentages of cash sales were all in Florida. Cape Coral-Fort Myers had 73.6% cash sales, Miami 67.1%, Sarasota 65.1%, Palm Bay 64.1% and Lakeland 61.8%.

Other major metro areas with more than 50% all cash sales included New York with 57%, Columbia in South Caroline with 56.1%, Memphis at 54.9%, Detroit 53.5%, Atlanta 53.2% and Las Vegas 52.2%.

The data also shows that 15% of all cash purchases in the first quarter were properties in the foreclosure process, and 10% were bank owned properties while 52% of all cash purchases in March were sold to buyers with a different mailing address than the property address, indicating investors or second home buyers.

The average sales price of an all cash purchase in the first quarter was $207,668, some 13% below the average estimated full market value of the properties that were purchased which was $237,900.

 

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Author: Tory Barringer

Survey results show Americans—and Millennials especially—continue to have only a vague understanding of how their credit scores are calculated and used.

For the latest annual survey, the fourth of its kind, more than 1,000 representative American consumers were asked 19 questions designed to gauge their knowledge of credit scoring. The study was commissioned in partnership between VantageScore Solutions and the Consumer Federation of America (CFA).

While the findings illustrate respondents are aware of a handful of facts surrounding their credit score—for example, nearly nine in 10 know credit card issuers and mortgage lenders use them, and the vast majority know that a spotty financial history can affect their score—there are still some major gaps in their knowledge.

For instance, only half of consumers surveyed demonstrated a solid understanding of the three instances when lenders who use generic scores are required to inform borrowers of the credit score used in the lending decision: after a mortgage loan application, whenever a loan application has been rejected, or whenever the best terms are not available for the borrower.
Moreover, only 42 percent understand that a credit score actually measures the risk of not repaying a loan and is not a measure of credit attitudes or knowledge—a statistic CFA executive director Stephen Brobeck called “most troubling.”

“Consumers should be aware that they can take steps to reduce this risk and improve their scores, most importantly, by making all loan payments on time,” Brobeck said.

Calculating results by age, VantageScore and CFA found Millennials (those age 18–34) tend to have less understanding than older consumers. Among other findings, fewer than half of Millennials seem to comprehend that age is not a factor in calculating credit scores, and less than two-thirds know that the three main credit bureaus collect the information on which their scores are based (compared to three-quarters of older adults).

That gap comes as worrying news for VantageScore Solutions CEO Barrett Burns, who notes that younger consumers tend to start their adult lives with massive amounts of student debts that pose a threat to their credit profiles.

“We know that education can help consumers improve their scores, and whatever the consumer’s age, our aim is to arm him or her with accurate, unbiased information and resources to help them become good credit managers,” Burns said.

To that end, VantageScore and CFA have partnered to launch CreditScoreQuiz.org, a website designed to mimic the survey and inform consumers about how credit scoring works. The organizations also announced plans to host an online question and answer session on Twitter. The discussion, scheduled from 3–4 p.m. Eastern on May 20, can be joined using the hashtag #creditknowledge.

“This year’s survey clearly demonstrates a need to deliver educational resources to younger consumers and we’re pleased to again partner with VantageScore Solutions on the survey and to our broader educational program,” Brobeck said.

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OPINION – THE NEW YORK TIMES

By TONY SCHWARTZ

THINK for a moment about your typical workday. Do you wake up tired? Check your e-mail before you get out of bed? Skip breakfast or grab something on the run that’s not particularly nutritious? Rarely get away from your desk for lunch? Run from meeting to meeting with no time in between? Find it nearly impossible to keep up with the volume of e-mail you receive? Leave work later than you’d like, and still feel compelled to check e-mail in the evenings?

More and more of us find ourselves unable to juggle overwhelming demands and maintain a seemingly unsustainable pace. Paradoxically, the best way to get more done may be to spend more time doing less. A new and growing body of multidisciplinary research shows that strategic renewal — including daytime workouts, short afternoon naps, longer sleep hours, more time away from the office and longer, more frequent vacations — boosts productivity, job performance and, of course, health.

“More, bigger, faster.” This, the ethos of the market economies since the Industrial Revolution, is grounded in a mythical and misguided assumption — that our resources are infinite.

Time is the resource on which we’ve relied to get more accomplished. When there’s more to do, we invest more hours. But time is finite, and many of us feel we’re running out, that we’re investing as many hours as we can while trying to retain some semblance of a life outside work.

Although many of us can’t increase the working hours in the day, we can measurably increase our energy. Science supplies a useful way to understand the forces at play here. Physicists understand energy as the capacity to do work. Like time, energy is finite; but unlike time, it is renewable. Taking more time off is counterintuitive for most of us. The idea is also at odds with the prevailing work ethic in most companies, where downtime is typically viewed as time wasted. More than one-third of employees, for example, eat lunch at their desks on a regular basis. More than 50 percent assume they’ll work during their vacations.

In most workplaces, rewards still accrue to those who push the hardest and most continuously over time. But that doesn’t mean they’re the most productive.

Spending more hours at work often leads to less time for sleep and insufficient sleep takes a substantial toll on performance. In a study of nearly 400 employees, published last year, researchers found that sleeping too little — defined as less than six hours each night — was one of the best predictors of on-the-job burn-out. A recent Harvard study estimated that sleep deprivation costs American companies $63.2 billion a year in lost productivity.

The Stanford researcher Cheri D. Mah found that when she got male basketball players to sleep 10 hours a night, their performances in practice dramatically improved: free-throw and three-point shooting each increased by an average of 9 percent.

Daytime naps have a similar effect on performance. When night shift air traffic controllers were given 40 minutes to nap — and slept an average of 19 minutes — they performed much better on tests that measured vigilance and reaction time.

Longer naps have an even more profound impact than shorter ones. Sara C. Mednick, a sleep researcher at the University of California, Riverside, found that a 60- to 90-minute nap improved memory test results as fully as did eight hours of sleep.

MORE vacations are similarly beneficial. In 2006, the accounting firm Ernst & Young did an internal study of its employees and found that for each additional 10 hours of vacation employees took, their year-end performance ratings from supervisors (on a scale of one to five) improved by 8 percent. Frequent vacationers were also significantly less likely to leave the firm.

As athletes understand especially well, the greater the performance demand, the greater the need for renewal. When we’re under pressure, however, most of us experience the opposite impulse: to push harder rather than rest. This may explain why a recent survey by Harris Interactive found that Americans left an average of 9.2 vacation days unused in 2012 — up from 6.2 days in 2011.

The importance of restoration is rooted in our physiology. Human beings aren’t designed to expend energy continuously. Rather, we’re meant to pulse between spending and recovering energy.

In the 1950s, the researchers William Dement and Nathaniel Kleitman discovered that we sleep in cycles of roughly 90 minutes, moving from light to deep sleep and back out again. They named this pattern the Basic-Rest Activity Cycle or BRAC. A decade later, Professor Kleitman discovered that this cycle recapitulates itself during our waking lives.

The difference is that during the day we move from a state of alertness progressively into physiological fatigue approximately every 90 minutes. Our bodies regularly tell us to take a break, but we often override these signals and instead stoke ourselves up with caffeine, sugar and our own emergency reserves — the stress hormones adrenaline, noradrenaline and cortisol.

Working in 90-minute intervals turns out to be a prescription for maximizing productivity. Professor K. Anders Ericsson and his colleagues at Florida State University have studied elite performers, including musicians, athletes, actors and chess players. In each of these fields, Dr. Ericsson found that the best performers typically practice in uninterrupted sessions that last no more than 90 minutes. They begin in the morning, take a break between sessions, and rarely work for more than four and a half hours in any given day.

“To maximize gains from long-term practice,” Dr. Ericsson concluded, “individuals must avoid exhaustion and must limit practice to an amount from which they can completely recover on a daily or weekly basis.”

I’ve systematically built these principles into the way I write. For my first three books, I sat at my desk for up 10 hours a day. Each of the books took me at least a year to write. For my two most recent books, I wrote in three uninterrupted 90-minute sessions — beginning first thing in the morning, when my energy was highest — and took a break after each one.

Along the way, I learned that it’s not how long, but how well, you renew that matters most in terms of performance. Even renewal requires practice. The more rapidly and deeply I learned to quiet my mind and relax my body, the more restored I felt afterward. For one of the breaks, I ran. This generated mental and emotional renewal, but also turned out to be a time in which some of my best ideas came to me, unbidden. Writing just four and half hours a day, I completed both books in less than six months and spent my afternoons on less demanding work.

The power of renewal was so compelling to me that I’ve created a business around it that helps a range of companies including Google, Coca-Cola, Green Mountain Coffee, the Los Angeles Police Department, Cleveland Clinic and Genentech.

Our own offices are a laboratory for the principles we teach. Renewal is central to how we work. We dedicated space to a “renewal” room in which employees can nap, meditate or relax. We have a spacious lounge where employees hang out together and snack on healthy foods we provide. We encourage workers to take renewal breaks throughout the day, and to leave the office for lunch, which we often do together. We allow people to work from home several days a week, in part so they can avoid debilitating rush-hour commutes. Our workdays end at 6 p.m. and we don’t expect anyone to answer e-mail in the evenings or on the weekends. Employees receive four weeks of vacation from their first year.

Our basic idea is that the energy employees bring to their jobs is far more important in terms of the value of their work than is the number of hours they work. By managing energy more skillfully, it’s possible to get more done, in less time, more sustainably. In a decade, no one has ever chosen to leave the company. Our secret is simple — and generally applicable. When we’re renewing, we’re truly renewing, so when we’re working, we can really work.

 

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Author: Tory Barringer

Despite performing far better than anticipated, April jobs numbers weren’t enough to prop up fixed mortgage rates this week, market reports show.

In its Primary Mortgage Market Survey, Freddie Mac clocked the 30-year fixed-rate mortgage (FRM) at an average 4.21 percent (0.6 point), down from 4.29 percent and the lowest level since late last year. A year ago, the 30-year FRM averaged 3.42 percent.

The 15-year FRM also moved down, dipping to 3.32 percent (0.6 point) from 3.38 percent in last week’s survey.

Adjustable rates were flat to down, meanwhile. For this week, Freddie Mac reported the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) remained unchanged at 3.05 percent (0.5 point), while the 1-year ARM slid down to 2.43 percent (0.4 point).

For its own weekly release, finance site Bankrate.com recorded the 30-year fixed at 4.37 percent, down from 4.44 percent, while the 15-year fixed was down to 3.45 percent from 3.51 percent previously. Also declining in Bankrate’s survey was the 5/1 ARM, which fell a basis point to 3.34 percent.

While a strong jobs report would typically give some lift to rates, analysts speculate that the underlying numbers beneath April’s report might have dulled any optimism the headline number created.

Surveyed for Bankrate’s weekly Rate Trend Index, Michael Becker, a mortgage banker at WCS Funding Group, explained: “The household survey, which is where the unemployment rate comes from, showed a loss of 73,000 jobs, and 806,000 people left the workforce. … When you combine tepid employment and income growth with geopolitical concerns in Ukraine, you get lower rates.”

For the next survey, 60 percent of commentators polled by Bankrate expect rates to remain more or less unchanged. The rest were split evenly between predictions of upward or downward movement.