HP Headquarters

Good news for four Houston suburbs was released today.  Hewlett-Packard Co. purchased 97 acres just outside of Hockley.  The land purchase was 38 miles Northwest of downtown Houston and just 18 miles from the main Houston campus.  The land purchase was made in preperation for a new $250 million facility.  This expansion could mean reduced commutes for residents of Cypress, Tomball, Magnolia and Hockley.

HP bought the acerage from John Beeson of John Beeson Proerties and Monzer Hourani of Medistar Corporation.  HP is the first to buy land in a Northwest 389 acre industrial park that Beeson and Hourani are planning just Northwest of Houston.  The property is located near Highway 290 and Betka Road.   The development, which still does not have a name, is being established because of an increasing demand for industrial and light industrial space in the area, Hourani says.

I am very excited for tomorrows Real Estate Bar Camp which is being held in my neck of the woods or should I say my neck of the Woodlands.  Sorry couldn’t help myself the pun was just so easy.  Anyways tomorrows event is being held at the City of Shenandoah Meeting Facility which is located between exit 76 and exit 77 on I-45.  Registration begins at 8:00am sharp with the Keynote scheduled at 9:00am.  The event is to last all day ending around 6:00pm. 

The Real Estate Bar Camp is to be held on cutting edge topics for utilizing the web for Real Estate marketing.  A slew of big names will be at the event such as active rain, agent genius, zillow, trulia, Altos research along with other big name vendors.  I expect by attending the training session I will have a large number of new ideas to help get my seller’s homes sold and a few that will help me provide better service to my buyers. 

I am sure in addition to the great ideas that will be available there will be plenty of opportunities for agents to network with others all across the country.  As a large number of agents are expected to be flying in.  If you are an agent and reading this I hope to see you at the event tomorrow.

Wall Street Trading

With the mortgage bailout bill playing center stage on all of the national news stations, I thought it was the perfect time to release the second post in my basic mortgage education series.  The first post of this series covered the history of mortgages and mentioned that the second post would explain what the secondary market is, and who the major players in the secondary market happen to be.

To start with, we will cover some definitions. Since I always like to have examples to help me wrap my head around concepts, I decided to provide an example for each lender class.   

·         Commercial bank - Nongovernmental financial institutions. Sometimes called full-service banks because they provide a wide range of services including checking and savings accounts, credit and loan arrangements, consumer and business loans (generally short-term with full recourse to the Borrower), and safety deposit box rentals. Commercial banks also sell and redeem US savings bonds.  A good example of a commercial bank is Bank of America.

·         Savings and loan – A federally or state chartered financial institution that takes deposits from individuals, funds mortgages, and pays dividends.  These institutions are required by law to provide home mortgages as a certain percentage of their loans.  An example of a savings and loan would be the previous World Savings that was swallowed by Wachovia.  Not many of these banking entities exist as most of them failed during the early 90’s in what has been called the savings and loan crisis.

·         Thrifts - A depository financial institution intended to encourage personal savings and home buying.  Washington Mutual is a good example of a thrift.

·         Mortgage Brokerage – An organization that is hired by large institutional lenders, such as pension funds of large unions or commercial banks. Most mortgage brokerages are small independent organizations such as Lone Star Funding.

If, after reading these definitions, it is not clear to you what the difference is between these institutions, it is not an absolute must in order to understand the secondary market, and you are not alone.  In the end the differences are really in the legal regulations that govern them. 

Whether someone applies for a mortgage through a commercial bank, a savings and loan, a thrift or a mortgage brokerage, the institution is known as the primary originator of the mortgage. Companies that later purchase loans from primary originators are referred to as secondary originators, because they sell the loans in the secondary market.  Primary originators package a large number of loans together and then sell them off to one of the three main purchasers of mortgage loans:  Ginnie Mae (GNMA), Freddie Mac (FHLMC) or Fannie Mae (FNMA). Once one of these groups purchases the loans, they are split up into smaller pools, and the principal and interest payments made by individual home buyers are then combined to create mortgage-backed securities.  These securities are subsequently sold on Wall Street to individual or institutional investors as bond class investments. By selling off these bonds FNMA, GNMA and FHLMC refill their coffers, which allows them to purchase more loans from primary originators, thereby allowing the primary lenders to make more loans to consumers. 

The breaking of this chain is what has caused the subprime crisis, sending a shivering shock through the entire credit market. In my next post in this series, we will cover the rolls of secondary originators such as Fannie Mae and Freddie Mac.