Do 10 Year US Treasury Note yields have an Influence on Mortgage Interest Rates?

Listen to my Podcast on this subject.

Yes, they have been an influence in recent years. But first a little economics discussion, history and then some current events….

When people/institutional investors invest money to make more money, they want not only the amount they invested but a little something “extra” for their money (i.e., that little extra is a return). What yield means is the Rate (i.e., percentage) of Return (ROR) on that investment. In strong economic times, investments flow to more risky, higher yield (ROR) investments.  To entice people to buy US Treasuries, the US Government may drop their cost to you (i.e., discount to a lower price). But the opposite is true in uncertain and bad economic times.  Since more investors wants safer investments in those times, demand increases the prices of those “safer” investment choices of treasury notes.  So you can see, depending on investors beliefs of the direction and changes in the future of our economy, different thoughts on the safety of each investment choice is the investors main concern.

Note: US Treasury Notes are sold to people/institutional investors online at auctions through www.treasurydirect.gov. See the image below on the notes.

Over the past 20 years, based on changes in employment, housing crisis, and other demographic and economic events, fewer people have remained in their homes over a 20-30 year period like they had in the past. In fact, more households were moving on average every 7 years.  Now, due to housing crisis fears of mid 2000’s and other factors, that demographic as changed a little to people wanting to stay in their homes for at least 10 years. Therefore, it is common belief that the 10 Year Treasury yield  more accurately predicts the movement of fixed rate conventional 30 year mortgage loan rates.

So, the answer to my question is both: YES and NO

Answer = YES:  Over the past 20 or so years, yields on the 10 year US Treasury notes have moved in direction comparable to the fixed rate conventional mortgage rates. Based on this article from The Balance: How Treasury Notes Affect Mortgage Rates.  U.S. Treasury bills, bonds, and notes directly affect the interest rates on fixed-rate mortgages. How? When Treasury yields rise, so do interest rates. That’s because investors who want a steady and safe return compare interest rates of all fixed-income products. They compared yields on short-term Treasurys to certificates of deposit and money market funds. They compare yields on long-term Treasurys to home loans and corporate bonds. All bond yields are affected by Treasury yields since they compete for the same type of investor.

Answer = NO:  Based on Mortgage Daily News articles:  Yes, Mortgage Rates are Lower and 10yr Yields are Higher Today & No, Mortgage Rates Aren’t Based on 10yr Treasury Yields…True, US Treasuries set the tone for almost any interest rate in the US. – it’s their yield that runs point for most other comparative investments. But when economic events change there could be a lag or movement in opposite directions…which is what we’ve recently experienced now that mortgage rates moved lower and 10 Year US Treasury yields moved up.

So for now, I lean to the side of common thought that YES, 10 year treasury note yields DO predict or influence mortgage interest rates and the current marketplace factors is just an anomaly.

Posted in Uncategorized | Comments Off on Do 10 Year US Treasury Note yields have an Influence on Mortgage Interest Rates?

Is the traditional residential real estate industry collapsing?

My podcast of this topic

If you search for residential real estate mergers and acquisitions in your favorite internet search portal, you’ll see many mergers are occurring.

We are seeing a drop on volume of “available” residential properties that agents can list for sale. This “shortage” of available properties that “Listing” agents can make available to purchase also hurts the “Buyer’s” agent on the other side of the transaction which severely limits the properties available for their “buyer” clients to purchase. I believe every market across the US is experiencing this problem.

Note: In case you’re asking, more than 95% of the transactions I’ve researched on the multiple listing services involve separate agents for both sides of each real estate transaction.

The growing threat of (a) iBuyers (ie, “instant” cash buyers / investors) scooping up thousands of homes before they hit the normal buyer market; (b) people using Airbnb and other rental services to rent their properties for monthly income and not listing them for sale; (c) vast number of millenniels with massive student loan debt, no desire to settle down, and lower paying salaries than they expected; and (d) many homeowners who have simply realized that if they sell their homes for a high price, they would just have to find another home for a higher price in today’s market….are all signals to the residential real estate brokerage companies that change and adaptation is in the wind.

One step of adaptation to this shrinking marketplace is through mergers and acquisitions of existing brokerage companies and consolidating the talent. This way, the brokerages can certainly keep and support the volume producers and the brokerage will survive, but what about those agents who don’t produce a lot of volume? Sure, they still hang in there, but the brokerage’s survival depends on the heavy lifters and preventing them from leaving the brokerage.

By merging two or more brokerages together, this better insures the survival of the brokerage at the expense of the low volume agent…which is basically capitalism and economic policies in action that will cause short term disruption in the 60,000-80,000 licensed real estate agents in Georgia (i.e., fewer properties to list, fewer agents are needed to list them).

Real Estate Office Mergers – information from the National Association of Realtors…One quick fact: 88% of firms reported that the number of mergers and acquisitions for the firm has remained the same from 2005 to 2010 and 2011 to 2017.

Millennials can’t afford real estate — destined to remain sad apartment dwellers

Some recent residential real estate company mergers and acquisitions

Merger mania… With pressure to stay competitive in an uncertain market, real estate firms (big and small) are scrambling to buy each other up at record rates …. REITs, residential and commercial brokerages and private firms alike are all hunting for companies to buy as a way to boost their bottom lines.

Another real estate merger: Red Oak buys East Bay rival Marvin Gardens

Better Homes and Gardens Real Estate Gary Greene merges with Heritage Texas Properties

Two of the largest real estate brokerages in Houston, Texas are merging

References to articles, sources, products, or services are not a specific endorsement and not guaranteed to be true or accurate. You should perform your own “due diligence and investigate” whether the information provided is valid, or the product or service is right for you. I welcome any or all comments that would help others.

Posted in Uncategorized | Comments Off on Is the traditional residential real estate industry collapsing?

Does FHA insure mortgages for nursing homes?

Yes…but, is this within the scope and purpose of the US federal government to insure mortgages for the construction or operation of nursing homes? How many FHA mortgages have been used to fund nursing homes and have there been any defaults of FHA loans to nursing homes? What other investment avenues are available to finance nursing home construction or operation?

$1 Million Penalty Brings Record Nursing Home Default Near an End… The federal mortgage insurance program has had few significant defaults in its nearly 50-year history, but a number of government watchdogs — including HUD’s own inspector general — have routinely warned that the department does not spend enough time monitoring the financial viability of nursing home owners and operators in the program.

SECTION 232 OF THE NATIONAL HOUSING ACT

Section 232 of the National Housing Act authorizes the Federal Housing Administration to insure mortgages made by private lenders to finance the development of nursing homes, intermediate care facilities, board and care homes, and assisted living facilities.

Section 232 Mortgage Insurance for Residential Care Facilities program and the Section 242 Mortgage Insurance for Hospitals

The Office of Residential Care Facilities (ORCF) manages the Section 232 program, which provides mortgage insurance for residential care facilities such as assisted living facilities, nursing homes, intermediate care facilities, and board and care homes. 


Section 232 may be used to finance the purchase, refinance, new construction, or substantial rehabilitation of a project.  A combination of residential healthcare uses is acceptable – e.g. refinance of a nursing home coupled with new construction of an assisted living facility.  The benefit to the lender is that the loan is insured by FHA.  The benefit to the borrower is that the loan is at a fixed interest rate, often lower than conventional rates, and is non-recourse.

SECTION 242 OF THE NATIONAL HOUSING ACT

Section 242 of the National Housing Act provides mortgage insurance for acute care hospital facilities ranging from large teaching institutions to small rural critical access hospitals.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Posted in Uncategorized | Comments Off on Does FHA insure mortgages for nursing homes?

Can You Answer These Top Five E&O Policy Coverage Questions?

Errors and omissions policy forms vary from carrier to carrier and all have their own list of exclusions.

Claims related to criminal, fraudulent, or dishonest act are normally excluded. Claims related to any type of liability which was assumed by the insured under a contract are also excluded. Another important exclusion relates to the insolvency or bankruptcy of an insurance carrier with which business was placed, unless such carrier had a certain AM Best rating when the business was placed (such as A- or better, or B+ or better). Other common exclusions include fee disputes, fines, penalties, sanctions, and disciplinary proceedings. You should always review the entire policy, including the actual exclusions and limitations, before binding your errors and insurance coverage.

While local or state laws may or may not expressly require some types of professionals to carry E&O coverage, other laws regarding their duty of care to clients make it a necessity. Additionally, you should seriously consider errors and omissions coverage if your business provides a professional service or regularly gives advice.

Here’s just a couple of the 5 questions:

I was showing a property and my client tripped and fell. Is that covered under my E&O policy?

Do I really need to protect my real estate firm against cyber theft and fraud?

Source: Pearl Insurance Risk Manager – 1Q2019

Posted in Uncategorized | Comments Off on Can You Answer These Top Five E&O Policy Coverage Questions?

What is an ALTA/NSPS Land Title Survey and why is it important in Real Estate Transactions?

In 25 words or less….or more:

Lenders won’t make loans for home purchases (hey – this is important even if you buy a property for cash) unless title is clean and title insurance policy can be issued on the property. This survey guarantees property can be insured.

However, it has been a recent practice for most lenders and closing attorneys in Georgia to require an “enhanced” level of title insurance be issued to cover losses and legal challenges for many of the possible disputes that a Land Survey would reveal. Therefore, many homes (except for new homes, larger lot sizes, and others lender identify) seldom require a land survey for lenders to make loans.

See my Blog Post on Title Insurance.

Source: ALTA/NSPS Land Title Survey

Posted in Uncategorized | Comments Off on What is an ALTA/NSPS Land Title Survey and why is it important in Real Estate Transactions?

Spray Foam Bad for Termite Control

Why does spray foam insulation interfere with termite control?

Spray foam insulation unfortunately provides termites with a dense, spongy place to build their colonies, and it is very easy for them to tunnel through. It does not attract termites, but it does provide them a nice home if they find it.

Homes ravaged by termites hidden behind spray foam insulation

According to the pest control operator who provided the Fox 5 I-Team with video of this case, the spray foam in this two-year-old house is now home to termite tunnels going 15 feet up.

Improperly Installed Spray Foam Insulation Could Impact Ability to Inspect for Termites. Homeowners who have spray foam insulation currently installed in their home and have a pest control contract for termites should contact their pest control company to review their contract.

Posted in Uncategorized | Comments Off on Spray Foam Bad for Termite Control

Real Estate Open Houses – Good or Bad idea?


Reason it’s a bad idea (Hint: Theft!): One arrested in connection with thefts from real estate open houses in Kennewick

Only 3% of buyers visited open houses according to the 2018 Home Buyers and Seller Generational Trends Report published by the National Association of Realtor.

About 45% of female REALTORS® and 25% of male REALTORS® have experienced a situation in the past year that made them fear for their personal safety or safety of their personal information

Safety is an on-going concern for real estate professionals whether you are sponsoring an open house or conducting a private showing of a property.

Source: A Sales Tool or a Magnet for Trouble & Common Sense Tips for Safe Open Houses

Posted in Uncategorized | Comments Off on Real Estate Open Houses – Good or Bad idea?

Failure to Double-Check Your Work Could End in a Lawsuit

A lending institution engaged a real estate broker to list and sell residential property that went through the foreclosure process after its owners defaulted on the mortgage.

Situation: A lending institution engaged a real estate broker to list and sell residential property that went through the foreclosure process after its owners defaulted on the mortgage. As instructed, the broker arranged to have an asset management company “trash out” and dispose of the contents by sale or destruction. A for sale sign was then placed in the yard and the lock on the front door was changed. Problem: It was the wrong property.

Source: https://eo.pearlinsurance.com/acton/attachment/21966/f-aec890d4-7bae-423d-84f8-f2966c1ab983/1/-/-/-/-/Pearl-Insurance-Realtors-EO-Risk-Manager-March-2019.pdf?utm_term=192151-XL-EO-INT-E-MAR&utm_campaign=192151&utm_content=192151-XL-EO-INT-E-MAR&utm_source=Act-On&utm_medium=Email&cm_mmc=Act-On%20Software–email–James,%20Your%20E%26O%20Risk%20Manager-_-READ%20NOW&sourceCode=182028-XL-EO-INT-E-NOV&refer=Act-On&sid=TV2:BYulMqhAq

Posted in Uncategorized | Comments Off on Failure to Double-Check Your Work Could End in a Lawsuit

Mortgage Calculators


I found these on the web through different source and I am not sure how much use they will be or the simplest or you to use, but don’t feel obligated to use any services advertised on this website. I will also continue to post any others I encounter.

Simple mortgage calculator from Kim Komando – http://amortizationloancalculator.net/index.php

Realtor.com offers a mortgage calculator – https://www.realtor.com/mortgage/tools/mortgage-calculator/

Various mortgage calculators –  http://www.calculators4mortgages.com/

Determination to refinance an existing mortgage – http://www.bills.com/calculator-mortgage/

Zillow.com offers a mortgage calculator – http://www.domania.com/Calculator/default.aspx

Helpful tips and mortgage calculator – http://www.mtgprofessor.com/home.aspx

Lending tree (careful – you may get alot of ads) – http://www.lendingtree.com/mortgage-loans/calculators/loan-payment-calculator/

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.



Posted in Uncategorized | Comments Off on Mortgage Calculators

Georgia Landlord-Tenant Handbook (Georgia laws regarding residential rentals)

Do you know your rights as a landlord? As a tenant?

The Georgia Landlord-Tenant Handbook addresses each parties rights for residential rental properties.

For example:

Please see one of my related blog posts: Are tenants liable for HOA fees?

References to articles, sources, products, or services are not a specific endorsement and not guaranteed to be true or accurate. You should perform your own “due diligence and investigate” whether the information provided is valid, or the product or service is right for you. I welcome any or all comments that would help others.


Posted in Uncategorized | Comments Off on Georgia Landlord-Tenant Handbook (Georgia laws regarding residential rentals)