Mortgage Rates Are Sliding Up… Refi or Buy Now!

Tish Washington, the Honest Mortgage Pro, can be reached at 626-945-5987. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

30 Year Mortgages at %4.75

Newsletter, Chrisman (excerpt)

My boss told me that I should take an “anger management” class in 2010. I told her that I was already angry enough with management.

Although the death of the mortgage banker and broker is greatly exaggerated, a good share of their business has gone elsewhere. Community banks have seen their relative volumes increase, and some believe that they are well qualified to fill the void left by mortgage brokers. These banks are chartered to serve their local markets; their boards are typically influential in the market place, most have adequate capital and can fund their own loans, they have access to seasoned talent pool, inexpensive technology and are not over burdened by regulatory pressure. And many are entering the warehouse business. And what happens to the bulk of their production? They sell many loans to the usual suspects: Wells, BofA, Citi, Chase, etc.

Industry-wide, doesn’t everyone agree that it is a good time to be originating loans? The quality of loans being originated is higher than ever due to market driven property values, and conservative underwriting on simple loan products, with down payments. Not to mention that the lack of competition, historically low interest rates and the yield curve translate to high margins and profitable mortgage businesses.

As we thought, mortgage applications last week rose 8.2% after three straight weeks of dropping. Refinancing applications increased 14.5% for the week before Halloween, although purchase applications fell a seasonally adjusted 1.8%, the MBAA reported.

Remember the name “GMAC”? It is slowly going away. They told clients that “effective immediately, all note endorsements should be made to Ally Bank instead of GMAC Bank.”

The markets saw some volatility yesterday, with the stock market coming off its lows. Nonetheless, both the DOW and the bond market finished the day down. Factory Orders were up .9% in September, the fifth increase in a row. Rates were higher all day, and gold and oil prices increased. Something has to give: it is highly unusual to have commodity prices going up, leading to inflation, while rates stay low.

One area of concern is obviously the Fed’s continued purchase of mortgage securities, thus keeping prices high, rates low. The government is slated to end its purchases of mortgage securities in the first quarter of 2010 and some analysts are predicting that this will add as much as a full percentage point to mortgage rates. Are you ready for that in your forecasts? Indirectly this, and other government actions, has led to a slow down of foreclosures, but going forward this will depend more on employment and income as it traditionally has. Employment not improving and even worsening, will only add to foreclosures. We will have some help with the first-time home buyer tax credit extension.

Today could be interesting. Not only will the Treasury announce how much it plans to raise in note and bond sales next week, but we hear the results of the FOMC meeting. Overnight rates are expected to stay the same, but watch the language for the Fed’s future plans. The May 2010 fed-funds futures contract is pricing in about a 50-50 chance of the FOMC to raise the funds rate to 0.5% at its late April meeting. Friday’s employment data is still where most of the focus is. Expectations for Friday’s employment report include a rise in the unemployment rate to 9.9%, flat to slightly better hourly earnings, nonfarm payrolls to shrink by about 175K and the average workweek to rise slightly. With all this in mind, the yield on the 10-yr Treasury is back up to 3.50%, and mortgage prices are worse by between .125 and .250.

The bride was escorted down the aisle and when she reached the altar, the groom was standing there with his golf bag and clubs at his side.
She said: “What are your golf clubs doing here?”
He looked her right in the eye and said, “This isn’t going to take all day, is it?”

USB expands while CIT declares bankruptcy

Tish Washington, the Honest Mortgage Pro, can be reached at 626-945-5987. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

30 Year Mortgages at %4.75

Newsletter, Chrisman (excerpt)

What do Bank USA, National Association of Phoenix; California National Bank of Los Angeles; San Diego National Bank; Pacific National Bank of San Francisco; Park National Bank of Chicago; Community Bank of Lemont, Illinois; North Houston Bank; Madisonville State Bank of Madisonville, Texas; and Citizens National Bank, of Teague, Texas have in common? Their deposits and assets all became part of US Bancorp after being shut down by the FDIC on Friday. The FDIC and taxpayers (in a roundabout way) are out $2.5 billion. USB, who has not been immune to their stock sliding almost 20% in the last year, has repaid almost $7 billion in TARP money. Friday they added 153 branches with combined assets of $19.4 billion and deposits of $15.4 billion.

And what do Eddie Bauer Holdings and Dunkin’ Donuts have in common? They, along with literally one million other businesses, have both received loans from commercial lender CIT Group. CIT filed for Chapter 11 bankruptcy protection, which analysts say will help bondholders and customers but not stockholders and taxpayers. Apparently we’ve put about $2.33 billion of our money into CIT, which is now the largest firm to go bankrupt after getting a federal bailout. None of CIT’s operating subsidiaries, including Utah-based CIT Bank, were included in the filing, CIT said in a statement.

The US government ended its program of buying Treasury securities on Thursday after hitting the $300 billion mark. In a similar vein, the Bank of Japan will stop buying corporate debt by the end of the year, as there seems to be no further need to prop up those markets. The mortgage-backed market, however, is still reaping the benefits of the US government purchasing those bonds, with several more months to go. Keep in mind that at some point it will end, and the markets know this. Occasionally rates will shoot up for a day, and someone will blame “the eventual ending of the mortgage purchase program”. This makes little sense, as it is well known by investors – but there is hope for an extension if the Fed doesn’t see secondary market interest.

We have yet another full slate of economic news this week. We begin slowly with “second tier” numbers like Construction Spending and the ISM Index today and Factory Orders tomorrow. Thursday we have the ISM services number, along with the Employment Cost Index and Jobless Claims. The biggest economic event this week will either be the Fed meeting on Wednesday or the unemployment data on Friday. So although overnight rates, which don’t directly impact mortgage rates, should stay put, the Fed may indicate future changes in monetary policy. Nonfarm Payroll is expected to drop 165K jobs for October. In addition, the ISM Manufacturing index and Pending Home Sales will come out today. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well. Ahead of all that the 10-yr is at 3.41% and mortgages are worse by about .125.

A story came out saying that “The National Association of Realtors thanked Congress for speedy action in passing a congressional resolution…that would extend the current higher Fannie Mae, Freddie Mac and FHA loan limits through 2010. The present loan limits would expire at the end of 2009 and revert to previous lower limits.” The resolution is not a law – it would extend the present conventional loan limits for Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. This legislation was approved by both the House and Senate late last week that extends the higher loan limits currently in place for agency mortgages. The higher loan limit measure was attached to a budget and appropriations bill that was approved by the House with a vote of 247-178 and passed by the Senate just hours later, 72-28.

A guy walks into a bar with a dog. The bartender says, “We don’t allow dogs in here.”
The guy replies, “Wait a minute. This is a talking dog. If I can get him to answer a question, can I get a free drink?”
The bartender thinks for a minute and says, “Well, ok. Go ahead.”
“Okay, Rex,” the guys says to the dog, “what’s on the top of a house?”
“Roof!” the dog replies.
“Oh, come on…” the bartender responds. “All dogs go ‘roof’.”
“No, wait,” the guy says. He asks the dog “what does sandpaper feel like?”
“Rough!” the dog answers.
The bartender gives a condescending blank stare. He is losing his patience.
“No, hang on,” the guy says. “This one will amaze you.”
He turns and asks the dog, “Who, in your opinion, was the greatest baseball player of all time?”
“Ruth!” goes the dog.
With that the bartender, having seen enough, boots them out of his bar and onto the street.
And the dog turns to the guy and says, “Maybe I shoulda said DiMaggio?”

Tax Credit Update and Daylight Savings End

Tish Washington, the Honest Mortgage Pro, can be reached at 626-945-5987. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

Attack of the FHA loan files? http://www.youtube.com/watch?v=voEeubnGY58&feature=related

30 Year Mortgages at %4.75

Most of the United States begins Daylight Saving Time at 2:00 a.m. on the second Sunday in March and reverts to standard time on the first Sunday in November. So by my calculations, that means that this Sunday here in the U.S. most of us “fall back” and it will dark by dinner time.

I doubt if this will impact the pace of the Fed buying securities backed by mortgages. For the week ending on October 28th (yes, they end their week in the middle of the calendar week) the Federal Reserve’s MBS program was a net buyer of $18 billion agency MBS, which was the similar to last week. For the year purchases of agency MBS stand at $977 billion. Recently the Fed has had an appetite for 30-year 5.0s and 5.5s (which include 5.25-6.125% mortgages). The Federal Reserve finished its $300 billion Treasury purchase program yesterday, and at this point the mortgage purchase program will end in March.

As one trader said regarding yesterday, “What a difference a day makes.” Bond prices went down and rates went up, the equity markets saw some nice gains, oil moved above $80 per barrel again, and the 7-yr auction went nothing like the 2 & 5-yr sales from Tuesday and Wednesday. Was all that due to a slightly-stronger-than-expected GDP number? Some of it was, although analysts quickly point out that a good portion of the increase is due to government spending. But as most know, markets are like springs: when they move far enough in one direction, they can snap the other way very quickly.

Fortunately for mortgage rates, relative to Treasury yields, locks and supply are down somewhat and there is decent demand for new production, so mortgage rates did better than other yields. The major earnings announcements are behind us, and many companies feel that they are done cutting costs and now are hoping for actual revenue growth. Imagine that!

Today is a “newsy” day, so we could see some continued volatility. We have already seen Personal Income and Consumption (Spending). U.S. consumer spending, as expected, fell in September for the first time in five months, down .5% with a slight upward revision in August. Personal income was flat last month after rising 0.1 percent in August, also as expected. Savings increased to an annual rate of $355.6 billion, lifting the saving rate to 3.3 percent from 2.8 percent in August – and some of that will go into stocks and bonds, right? Later we have the Chicago Purchasing Manager’s Survey, along with a revision to the Michigan Consumer Sentiment numbers. After the news we find the 10-yr at 3.46% and mortgages a shade better.

The expected extension and expansion of the tax credit, probably the last one, is expected to be voted on as soon as today and probably signed in the next few days, at best. The signing may happen in spite of the administration preferring a slightly different version. The latest version, and this has not been voted on by the Senate, would extend the credit to home sales that go under contract by April 30 and close by June 30, 2010. A new, $6,500 tax credit would be available for buyers of owner occupied primary residences who have owned during five of the eight years prior to the purchase. Although the House may have its own version, this extension includes a few items such as the home price limit would be $800,000, and the annual income limit to qualify for the tax credit would be $125,000 if you’re single and $250,000 for couples.

And regarding the loan limits: appropriations committees in the House and Senate are proposing to extend the temporary limits for conforming jumbo loans, keeping the $729,750 loan amount through 2010 in some markets. The committees recognize that the government must do what it can to not de-stabilize the housing markets, and are thus recommending this action. Of course, nothing is simple, and the proposal is attached to an appropriations bill to fund other initiatives – in other words, it is not standing by itself. The entire appropriations bill still face votes in both the House and Senate. As I see it, at this point there is no reason not to extend the limits – it just hasn’t been done yet.

Are print editions of newspapers dead? Not quite! For adjustable-rate mortgages based on a London Interbank Offered Rate (LIBOR) index, Freddie Mac wants their clients to use the print edition of the Wall Street Journal. “Seller/Servicers must inform borrowers in writing that the LIBOR value to be used in calculating the interest rate adjustment is the average of rates for six-month or one-year U.S. dollar denominated deposits, as applicable, as published in the print edition of The Wall Street Journal.”

So you think it is easy being a loan modification agent? Five people from Southern California, feeling they were victims of a loan modification scheme, took matters into their own hands and allegedly beat and tortured two loan mod agents. The defendants are charged with torture, false imprisonment by violence, and second-degree robbery. According to authorities, they live in a house in foreclosure, allegedly sought loan mod assistance from the victims but believed that nothing was being done and wanted their money back. The victims also were allegedly robbed of their loan paperwork (gasp – their loan paperwork!?!) and personal belongings.

CPI News This Morning

Tish Washington, the Honest Mortgage Pro, can be reached at 626-945-5987. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

Today’s rates:
Conforming Fixed
30yr. is at 4.857% no cost
Newlsetter,Chrisman (excerpt)

I sure am happy that I am not working in the mortgage business anymore! First, Bank of America won a restraining order barring Colonial Bank from selling or otherwise disposing of $1 billion in cash and loans held by Colonial. Colonial, who most think will be taken over by the FDIC any day now (and today IS Friday…), was sued by BofA Wednesday. It seems that Colonial, through a Taylor Bean commercial paper network named Ocala Funding LLC, may be holding the cash and loans as a custodian to the tune of more than 6,000 mortgages worth more than $1 billion. And Freddie Mac, as it turns out, bought some of the mortgages while Bank of America is acting as custodian for the deal. BofA’s lawsuit claims that cash sent by Freddie Mac to Colonial, which was acting as an intermediary and required to pass the money to Ocala Funding, wasn’t delivered.

The original complaint requested that Colonial not sell any of the proceeds that it received from Freddie Mac in exchange for mortgage and other loans, and which were owned by Ocala Funding. Colonial held the proceeds as a custodian, agent and bailee through bailee letters, but according to BofA when the bailee letters were terminated Colonial refused to return them to Bank of America. If Colonial fails, it would be the largest bank failure this year.

Second, in a related and just as ugly story, Housing Wire reported that “Michigan state regulators ordered Taylor, Bean & Whitaker Mortgage Corp. (TBW) to stop doing business in the state. TBW originated nearly 4,000 mortgages worth more than $500m in the state.” As it turns out, according to the story, TBW services about 10,000 mortgages ($1.2 billion) in Michigan, and the government wants the list. If every state does this…

StoneWater Mortgage “reassured” their brokers that they are able to accept loans that may have previously been sent to Taylor, Bean & Whitaker. They won’t, however, accept appraisals which were completed at the request of TBW, and brokers will be required to order a new appraisal in compliance with SWM appraisal policies. As with other investors, all transferred loans must be MDIA compliant. StoneWater sweetens the pot slightly by issuing “a $250 credit at closing for each file that has been transferred to SWM with an appraisal completed at the request of Taylor, Bean & Whitaker. In order to receive the $250 credit at closing, documentation must be provided at time of submission to demonstrate that the appraisal was completed at the request of TBW.”

Out of Bloomberg comes the story that Joseph Murin, the president of Ginnie Mae (not the same as HUD!), will soon resign after about a year on the job. Gee, these top mortgage-related companies have trouble keeping CEO’s! As we’ve talked about, Ginnie Mae, who insures bonds made up of FHA and VA loans, has seen astronomical growth lately with the increase in volumes of these loans. Critics say that this is the next subprime debacle. To put it into perspective, debt explicitly backed through Ginnie Mae is almost $700 billion (from $360 billion two years earlier) versus Fannie and Freddie’s guarantee on about $5.3 trillion of U.S. residential mortgage debt.

What was the Fed up to last week regarding purchasing our mortgages? They bought another $20.4 billion for the week, mostly 30-yr 5.0% securities (which generally contain 5.25-5.625% loans). They bought very few GNMA securities, and nothing in the way of 15-yr bonds.

Just because a borrower has a 2nd mortgage, does that mean that they are a higher credit risk? Perhaps, although it is not the only reason. But by some estimates up to 50% of “at risk” loans have a 2nd on them. Thus the government’s program:

http://www.treas.gov/press/releases/reports/042809secondlienfactsheet.pdf

As summer winds down, with vacations increasing and “out of office” replies multiplying, we had the Consumer Price Index news this morning. The CPI was unchanged in July, as expected, and over the last year has fallen by over 2% – the most since 1950. Ex-food and energy, since no one uses either of those, the core rate was +.1%, as expected. The bond market liked the news, and is rallying: mortgage prices are better by about .125, and the yield on the new 10-yr is down to 3.58%. Expect a typical summer Friday in the financial markets…

Sex After Death
A couple made a pact that whomever died first would come back and inform the other of the afterlife, since they both wondered about life after death.
After a long life together, the husband was the first to die. True to his word, he made the first contact, “Connie ….Connie.”
“Is that you, Joe?”
“Yes, I’ve come back like we agreed.”
“That’s wonderful! What’s it like?”
“Well, I get up in the morning, I have sex. I have breakfast and then it’s off to the golf course. I have sex again, bathe in the warm sun and then have sex a couple of more times. Then I have lunch (you’d be proud – lots of greens) another romp around the golf course, then pretty much have sex the rest of the afternoon. After supper, it’s back to golf course again. Then it’s more sex until late at night. I catch some much needed sleep and then the next day it starts all over again.”
“Oh, Joe you surely must be in Heaven!”
“Well, not exactly. I’m a rabbit on a golf course in Arizona.”

Mortgage Double Talk

Tish Washington, the Honest Mortgage Pro, can be reached at 626-945-5987. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

Today’s rates:
Conforming Fixed
30yr. is at 5.00 no cost
Newlsetter, Rob Chrisman (excerpt)
I like attorneys, and feel that jokes about them are mean-spirited and unnecessary. (Like, “What happens when you give a lawyer Viagra? They get taller!”) Attorneys are certainly finding fruitful grounds in handling all of the recent mortgage fraud cases. Of course it takes the government a while to prosecute, and thus many of the cases involve things that happened between 2005 and 2008. Check out http://www.mortgagefraud.org/

Winston Churchill reportedly said, “If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.” The Wall Street Journal polled 52 economists, and 47 had the time to write back – there is beginning to be some optimism about the economy. Out of the 47, 27 economists said the recession had ended and 11 seeing a trough this month or next.

And regarding my comments, and those published recently in the Wall Street Journal, about possible future problems with FHA loans, one high producing broker wrote to me and said, “I lost a loan a few weeks ago to a company that originates FHA loans. The borrower had gotten divorced and had to make a very large payment to her husband by the end of the month. I couldn’t close her until the judge either gave her an indefinite extension on the payment or she sold her current home which was awarded to her in the decree, and then used the proceeds to pay him. The Realtor informed me that the borrower closed the deal using an FHA loan and the FHA underwriter said nothing about the payment. It is almost frightening to see how lax FHA underwriting and loans are – it wasn’t that way in the past.”

Back to something simple, like our gargantuan economy. Yesterday we learned that the Trade Gap increased 4% in May, but widening less than was forecast. Exports were up, with imports up a tad more due to the cost of oil. Most of the increase in imports and exports in June was driven by higher prices, not higher volumes, but in inflation-adjusted terms the trade deficit fell to the lowest level in nearly 10 years!

Yesterday’s FOMC minutes did…not much. “Economic activity is leveling out…inflation is subdued…conditions in financial markets have improved…household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit…businesses are still cutting back on fixed investment and staffing but are making progress…Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.” The statement goes on to say that Fed Funds will stay between 0-.25% for an extended period, and that “to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities. To promote a smooth transition in markets as these purchases of Treasury securities are completed, the Committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October.”

Before the Fed meeting, the government debt market grappled with buying several billion of 10-yr. notes. Coming in at 3.74% and a cover of almost 2.50, it was satisfactory. Today, however, is the $15 billion 30-yr bond auction. Currently the 30-yr bond is yielding 4.57%, and the question is, of course, what the demand will be like for investors who want to tie their money up for 30 years at that yield. We already had Jobless Claims and Retail Sales. Retail Sales unexpectedly dropped .1% in July from a revised +.8% in June. (Ex-autos it was -.6 %.). Import Prices were -.7%. In addition, Jobless Claims rose by 4k to 558k, whereas analysts expected them to drop. The number of folks collecting benefits fell to its lowest level since April, but the 4-week moving average rose by 8,500 to 565,000 – the first increase in almost two months. After the news we find the 10-yr down to 3.69% and mortgage prices a tad better than Wednesday afternoon.

More exciting tool definitions, for anyone who is handy…
BELT SANDER: An electric sanding tool commonly used to convert minor touch-up jobs into major refinishing jobs.
HACKSAW: One of a family of cutting tools built on the Ouija board principle. It transforms human energy into a crooked, unpredictable motion, and the more you attempt to influence its course, the more dismal your future becomes.
DRILL PRESS: A tall upright machine useful for suddenly snatching flat metal bar stock out of your hands so that it smacks you in the chest and flings your beer across the room, denting the freshly-painted fender which you had carefully set in the corner where nothing could get to it.
PLIERS: Used to round off bolt heads. Sometimes used in the creation of blood-blisters.
VISE-GRIPS: Generally used after pliers to completely round off bolt heads. If nothing else is available, they can also be used to transfer intense welding heat to the palm of your hand.
WIRE WHEEL: Cleans paint off bolts and then throws them somewhere under the workbench with the speed of light. Also removes fingerprints and hard-earned calluses from fingers in about the time it takes you to say, “Damn.”
ELECTRIC HAND DRILL: Normally used for spinning pop rivets in their holes until you die of old age.
SKILL SAW: A portable cutting tool used to make studs too short.

Tish Washington, the Honest Mortgage Pro, can be reached at 877-897-4831. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

Today’s rates:
Conforming Fixed
30yr. is at 5.00 no cost

Newsletter-Chrisman,Rob

Q: In these busy market times, how can you get the attention of your broker?
A: Say, “Hey, waiter!”

To tell us how the economy is doing, should we really look at the stock market? Probably not, as many experts believe that prices are more impacted by psychology than by fundamental items such as earnings – in spite of what reporters say. So although the markets have been rallying, and the majority of company’s earnings reports beating expectations, they are still paying a price. Companies are beating estimates due to cost cutting measures instead of growing revenue. In fact, of the companies recently reporting earnings, almost 75% reported year-over-year declines in revenue which does not bode well for economic fundamentals such as employment and ultimately for consumer spending.

Have you ever heard of Bayview Mortgage Capital? Me neither, until I read a report saying that they are a “newly formed” mortgage company, with their parent (Bayview, out of Florida) being owned by the Blackstone Group, and that they filed for a $500 million IPO (initial public offering). Per the report, they will be using the money to possibly qualify as a REIT and/or to use the money to buy distressed real estate loans from banks and other lenders and investors. “According to a filing with the U.S. Securities and Exchange Commission, the new company plans to use the real estate investment trust (REIT) tax structure…The company plans to buy and manage residential and commercial mortgage loans, mortgage-backed securities, real estate-related securities, real estate, and various other forms of real estate investment it believes are undervalued.”

What is Flagstar’s current stance on the “government-offered, investor-disinterested” $8,000 tax credit for first time home buyers? (ARRA provides a tax credit of up to $8000.00 to first-time homebuyers who purchase a home on or before November 30, 2009. Government entities and FHA-approved non-profit agencies that are considered instrumentalities of government may provide tax credit advances with a second lien. The tax credit advance may be used to make the down payment and pay closing costs, discount points and pre-paid expenses.) Flagstar will allow tax credit advances with second liens from eligible governmental agencies and instrumentalities of government as long as the organization is also on Flagstar’s list of eligible community second programs.” Check out this website to make certain a non-profit agency is both FHA-approved and an instrumentality of government, refer to the appropriate homeownership center’s list of approved non-profit agencies: http://www.hud.gov/offices/hsg/sfh/np/np_hoc.cfm

How about that New Home Sales number yesterday: up 11% in June, the biggest jump in eight years. Don’t worry about the fact that the median price decreased 12% in the last year, and that sales are down 21% from last June. Midwest sales were up 43%, but here in the South (I am in the Carolinas, GA, and AL for the next several days) sales were down 5%. Nationwide, it would take 8.8 months to sell all homes at the current sales pace, the lowest level since October 2007. We also had Deutsche Deutsche Bank post a better-than-forecast rise in net profit, although it sharply increased their provisions for bad loans. Deutsche is Germany’s largest bank by market capitalization, and their net profit shot up 68% versus their numbers a year ago.

We got through the 20-yr TIPS auction yesterday, but today have $42 billion of 2-yr notes to sell later today. Obviously this supply pressure is not helping mortgage rates & prices, and yesterday things got a little worse. For news today we’ll see Consumer Confidence and the Case/Shiller Home Price Index, and of course the auction. >From what I have heard, no one expects rates to move up too much or down too much, so aside from a little intra-week volatility, perhaps mortgage rates will be at these levels for quite some time. Currently the yield on the 10-yr is around 3.68%, and mortgage security prices are a tad better.

NO joke today, it was R rated and not funny.

Bastille Day; mortgage volume forecasts dropping;

Tish Washington, the Honest Mortgage Pro, can be reached at 877-897-4831. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

Today’s rates:
Conforming Fixed
30yr. is at 5.00 no cost

Newsletter-Chrisman,Rob

I can tell that I am grown up because I get up at 4AM, not go to bed at 4AM, and I no longer consider a $4.00 bottle of wine “pretty good stuff”. The French, known for their wine, celebrate Bastille Day today. It is called Fête Nationale (National Holiday) in France and commemorates the 1790 Fête de la Fédération, held on the first anniversary of the storming of the Bastille: the Fête de la Fédération was seen as a symbol of the uprising of the modern French “nation,” and of the reconciliation of all the French inside the constitutional monarchy which preceded the First Republic, during the French Revolution. (The “Bastille” was the French prison where people were held merely at the king’s judgment.)

Economists focused on mortgage banking, most of who work for Freddie, Fannie, and the large investors, are all scaling back on their estimates of mortgage originations for 2009, and cutting them drastically for 2010. If you are a large company, who has invested extensively in “bricks and mortar”, how are you dealing with expected lower volumes? Recently the MBAA lowered its forecast for mortgage originations, for the fourth month in a row, in 2009 to about $2 trillion. Last week I heard a respected speaker in the business say that his company believes that companies may want to scale their operations toward purchase business, which has hovered around $1 trillion a year. If prices are stable, or slide further, the dollar volume of purchases will slide, and, in the perfect storm environment, rates move higher, refinancing will also drop. The current MBAA estimate of 2009 purchase business has dropped to $737 billion while refinances were reduced $1.3 trillion by the MBAA.

“In the old days”, the Fed influenced the economy through “open market operations”. What are those? The Fed would typically trade in safe, short-term T-bills, buying and selling them to impact the short-term, risk-free rate. Buying securities pushes the price up, and rates down. Although very short-term rates have dipped slightly below 0% a few times recently, usually rates can only go down to 0%, which limits the Fed’s activity and impact. (If a Treasury security goes below 0%, investors would rather hold cash.) So let’s hope that they keep buying, since right now they continue to be the only game (or close to it) in town.

Not only have mortgage rates fallen below 5.25%, but LIBOR rates continue to decline. So what? Basically it means that banks have become more comfortable with lending to each other, which is a key step toward banks being more comfortable with lending in general. And this is obviously a good thing. But even if banks are more comfortable, what about the consumer? Unfortunately the consumer is showing more signs of weakness, according to last week’s University of Michigan consumer sentiment report which worsened for the first time since February. And since the consumer accounts for about two thirds of GDP, it is not good news – or is it? If folks like you and me continue to hunker down, it leads to more saving and less spending IF the consumer actually has a job. Today we had two key pieces of information, after the overnight rallies that we saw in Asian and European stock markets and a release of strong Goldman Sachs earnings. The Retail Sales number showed a stronger-than-expected 0.6 percent in June, ex-auto +.3%. And U.S. producer prices jumped by twice as much as expected in June due to energy: +1.8%, the biggest jump late 2007. Taking out food and energy, core PPI was +.5%, also higher than expected. This news, combined with the strength in stocks, has pushed the 10-yr back up to 3.44% and made mortgage prices worse by .375-.5.

(Warning: R-rated.)
When Charles DeGaulle decided to retire from public life, the British ambassador and his wife threw a gala dinner party in his honor.
At the dinner table, the Ambassador’s wife was talking with Madame de Gaulle” “Your husband has been such a prominent public figure, such a presence on the French and international scene for so many years! How quiet retirement will seem in comparison. What are you most looking forward to in these retirement years?”
“A penis,” replied Madame deGaulle.
A huge hush fell over the table. Everyone heard her answer… and no one knew what to say next.
Charles leaned over to his wife and said, “Ma cherie, I believe ze English pronounce zat word, ‘happiness’!”

Tish Washington, the Honest Mortgage Pro, can be reached at 877-897-4831. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

Today’s rates:
Conforming Fixed
30yr. is at 4.875% at -0.250
Newsletter-Chrisman,Rob

Congratulations to David Stevens. On Friday the U.S. Senate confirmed Dave to head the Federal Housing Administration (FHA). Stevens will take over the agency in the middle of their huge surge in business, and many feel that with the non-HVCC appraisals and the fact that the FHA insures mortgages with a small down payment for borrowers who meet its standards are creating the next possible “cause for concern” in the mortgage business.

Would a 3.75% mortgage make you buy a newly built house? TBI, the mortgage arm of Toll Brothers, is offering a 7/1 ARM for 3.75% for loans under that magical level of $417,000. After 7 years, the life cap is 8.75%, which isn’t too bad especially if rates head up. As usual, borrowers can decide to take the current market 30% rates, which have moved back down toward 5%, or below, or take a flier on the ARM loan (probably a good option if the buyer is going to move before seven years). The Wall Street Journal noted that back in January Toll Brothers came out with a 3.99% 30-yr loan, followed by Lennar’s 3.625%, but a few months ago Hovnanian Enterprises said its 3.99% rate sparked “underwhelming” interest from buyers.

Can Bank of America Corp saves its stockholders billions of dollars in fees, supposedly due to U.S. taxpayers for guarantees against losses at Merrill Lynch, by saying the rescue agreement was never signed and the funding never used? Apparently the legal agreement was never completed, possibly allowing BofA to pay nothing of the $4 billion fee it agreed to pay in January. (Do you remember the reaction of your boss when you forget to do something so simple, like sign a form?) Regulators say that the money is owed since BofA benefited from the Merrill deal. Bank of America received a total of $45 billion, plus $188 billion in asset guarantees, so that it could cover Merrill’s losses. Bank of America, by the way, comes out with earnings later this week – and does anyone really want to cross the government?

They don’t seem to be garnering headlines, but on Friday the FDIC closed their 53rd bank this year: the Bank of Wyoming. The BoW had $70 million in assets and $67 million in deposits, and is expected to cost the FDIC deposit insurance fund $27 million by the time it is taken over by Central Bank & Trust (based in Wyoming).

What is going on with the markets? Many expect stocks to continue their slide after Treasury Secretary Geithner agreed with what many analysts felt: that there are still “enormous challenges” for the economy. What do we have this week for economic news, given that, aside from the auctions, the news was fairly limited last week? It is a big news week. There isn’t much today, but tomorrow we have the Producer Price Index, along with the Core PPI, and Retail Sales. Wednesday we’ll see the Consumer Price Index, with Core CPI, Industrial Production and Capacity Utilization, and Business Inventories. Thursday bring weekly Jobless Claims, and the Philly Fed survey, and we end the week on Friday with Housing Starts and Building Permits. Whew! Currently the yield on the 10-yr Treasury note is at 3.30% and mortgages are about unchanged from Friday afternoon.

A woman went up to the bar in a quiet rural pub. She gestured alluringly to the bartender who approached her immediately. She seductively signaled that he should bring his face closer to hers. As he did, she gently caressed his full beard.
“Are you the manager?” she asked, softly stroking his face with both hands.
“Actually, no,” he replied. “Can you get him for me? I need to speak to him,” she said, running her hands beyond his beard and into his hair.
“I’m afraid I can’t,” breathed the bartender. “Is there anything I can do?”
“Yes. I need you to give him a message,” she continued, running her forefinger across the bartender’s lips.
“What should I tell him?” the bartender managed to say.
“Tell him,” she whispered, “There’s no toilet paper, hand soap, or paper towels in the ladies room.”

Mixed Bag of Investor News & Rates At 4.875%

Tish Washington, the Honest Mortgage Pro, can be reached at 877-897-4831. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

Newsletter-Chrisman,Rob

USA Today says that Chrysler is trying to make its cars more appealing by painting them in bright colors like orange and lime green. They’re also trying to make them more appealing by painting the name “Toyota” on them.

Knowing the right name is important. What is the difference, in government securities, between a “bill”, a “note”, and a “bond”? Usually “bills” are anything with a maturity of 1 year or less, a “note” matures between 1 year and 10 years, and a bond is longer than 10 years. Yesterday we had the Treasury auction off $35 billion of 3-yr notes. Simply put, it went well. On top of that, the government was in buying their usual amount of $4-5 billion a day of mortgage origination. And today we have $19 billion of 10-yr notes to buy.

Prepayment “speeds” were announced, and interestingly enough the higher mortgage rates are prepaying at a slower rate than was expected. As an investor this is good news (since no one wants to have their higher-rate mortgages prepaying too fast, and then have to invest the money at a lower rate). And if it is perceived that mortgages, in general, are going to prepay at slower rates (even if it is due to many folks already having a low rate, and those with higher rates don’t have the FICO, the value, or can’t qualify), and borrowers are making their payments, look of investor interest to pick up a little, helping mortgage prices relative to Treasury prices. See how simple this is?

Is your lock desk a little busier these days? Everyone’s is: mortgage applications filed last week were up almost 11% from the week before, according to the MBAA. Refinancing was up over 15% prior to the 4th of July weekend, and purchases were up 6.7%. And, in a statistic similar to that of Jobless Claims, the “four-week moving average” for all mortgages as tracked by the MBAA was down a seasonally adjusted 5.6%. Other than that, there is little in the way of news, and careful observers will note that the 10-yr has broken out of the 3.50% range and is now yielding 3.44%. Mortgage prices are also slightly better than yesterday afternoon.

Rates have dipped down again, today’s 30 year fixed is 4.875%
Call me!

Is this really how men think?
I received a phone call from a gorgeous ex-girlfriend the other day. We lost track of time, chatting about the wild, romantic nights we used to enjoy together.
I couldn’t believe it when she asked if I’d be interested in meeting up and rekindling a little of that “magic”.
“Wow!” I said. “I don’t know if I could keep pace with you now. I’m a bit older and a bit balder than when you last saw me.”
She just giggled and said she was sure I’d “rise” to the challenge.
“Yeah.” I said. “Just so long as you don’t mind a man with a waistline that’s a few inches wider these days!”
She laughed and told me to stop being so silly.
She teased me saying that tubby bald men were cute, and she was sure I would still be a great lover.
Anyway, she giggled and said, “I’ve put on a few pounds myself!”
So I hung up on her.

Inflation, Economic News and Rate Update

Tish Washington, the Honest Mortgage Pro, can be reached at 877-897-4831. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

ANNOUNCING !!! $97 Do It Yourself Loan Modification Kit www.97DIYLoanModKit.com

Newsletter-Chrisman,Rob

Ah, inflation – at all levels. During the life of a 30-yr fixed-rate mortgage, there are bound to be periods of inflation. It is debatable, in the market of mortgages, whether or not borrowers and lenders take inflation into account. Certainly ARM loans do to some extent. But bond prices (aside from TIP securities, some of which are being auctioned today) are not indexed to inflation. Yes, a bond holder who owns $1 million in bonds earning 4% earns $40,000 per year, but at the end of 30 years, that bond holder still has $1 million in bonds, which might be worth $500-600k in today’s buying power.

How is the week looking for economic news? Today at 10:00AM EST we have the ISM Services number for June. Thursday we’ll see our friend Jobless Claims. And on Friday we have Import and Export Prices, along with the Trade Balance figures and the preliminary University of Michigan Consumer Sentiment Survey. Currently Treasury securities and mortgage prices are worse by about .125 in price from Thursday afternoon’s levels (the 10-yr yield is around 3.54%).

But of greater importance, since data is limited, are the Treasury auctions, which begin tomorrow. (We also have an $8B 10-year TIPS auction.) Tomorrow is a $35 billion 3-year note auction, Wednesday’s $19B 10-year note auction, and Thursday’s $11B 30-year bond auction. Don’t look for much change in mortgage rates until or unless there is more substantial news about the economic outlook.

Here in California, the California Franchise Tax Board has turned off the $10,000 California New Construction Tax Credit after they reached the $100,000,000 maximum investment, as well as their maximum application status of 10,000. “The CA Franchise Tax Board did continue to accept additional applications – up to 12,000 total – to allow for duplications in faxes or for any home buyers that were not authorized for the tax credits, and to allow for any expected rejections. Both limits have been reached and applications for the California New Construction Tax Credit will no longer be accepted.” The state began accepting applications in March. http://www.ftb.ca.gov/individuals/New_home_Credit.shtml

A friend’s maid asked for a pay increase. His wife was very upset about this and decided to talk to her about the raise. She asked, “Now Maria, why do you want a pay increase?”
Maria: “Well, Señora, there are three reasons why I want an increase. The first is that I iron better than you.”
Wife: “Who said you iron better than me?”
Maria: “Your husband said so.”
Wife: “Oh.”
Maria: “The second reason is that I am a better cook than you.”
Wife: “Nonsense, who said you were a better cook than me?”
Maria: “Your husband did.”
Wife: “Oh.”
Maria: “My third reason is that I am a better lover than you.”
Wife: (really furious now): “Did my husband say that as well?”
Maria: “No Señora…the gardener did.”
Wife: “So how much do you want?”