Volatility in stocks leads to a mild bond rally.

Bonds are flat at the time of this post, but they weren't that way earlier.  We have been up and down and back to the middle today on a variety of financially related news.

Oil prices hit a new high this morning after an early spike of almost $5/barrel to push it over $147 for the first time.  This spike in oil caused a sell off in stocks, and a sell off in stocks went into the bond market creating a little upward movement this morning.

If you haven't seen the news yet, Fannie Mae and Freddie Mac (the nations 2 largest secondary mortgage market guarantors, and holders of over 50% of the total $6 trillion in existing home mortgages) are hurting.  Secretary of Treasury Henry Paulson had some possitive things to say about them yesterday and how the government can help to fortify their position.  Then, the New York Times reported that the government is considering a contingency plan to take over Fannie Mae and Freddie Mac.  This, of course, is not good news for anybody, and traders were lining up to sell stock in both companies today leading to a 40% decline in value.

Now, the bond market feeds on bad news, so there was a rally based on all of the above mentioned negativity.  Then, the report about US exports came out with a lower than expected trade deficit, and much better than expected foreign consumption of US goods.  Apparently, the weak dollar makes exports to foreign countries more palatable, and our friends across the pond are buying more of our goods as a result.

All in all, I will stick with my recommendation from yesterday to lock your mortgage rate if you have a short term mortgage in processing.  We are still facing a significant upside resistance level at the 200 day moving average, and it is not likely that any gains that may be obtained would be worth sitting with baited breathe and calling your mortgage banker 4 times a day.  Go ahead and lock, then enjoy your weekend.

Abbey has announced it will cut rates on two-year and three-year fixes from Monday.

The lender has also confirmed it will keep its five-year, flexible and tracker deals at the same rate.

Two-year and three-year fixed rates will be cut by up to 0.15%, and it will also launch a new three-year deal.

The two-year fixed range now starts at 6.24%, while three-year fixes are available for 75% LTV at a rate of 6.29%.

A new three-year fix will offer a rate of 5.99% with an arrangement fee of £1,695 and a maximum LTV of 70% up to £250,000.

Weekly jobless claims fall, market reacts.

The Weekly Initial Jobless Claims report came out today much better than forecast.  With 58,000 fewer claims, the report sank to 346,000, the lowest level since April.  This news, which is good for the economy, would normally be seen as bad news for mortgage bonds.  But, mortgage bonds appear to be remaining relatively flat on the news.

Treasury Secretary Henry Paulson and FED chairman Ben Bernanke testified before the House Financial Services Committee today to suggest ways that Congress could "fix" the financial regulatory system to prevent future crises.  I managed to make it through about 30 minutes of the meeting before the barage of stupid questions followed by equally predictable answers gave me a head ache.  At least they do agree on one thing...we need more government intervention.  AWESOME!!  Nothing says efficiency and dependability like putting it in the hands of the government.

Back to the matter at hand; if you are currently working on a mortgage loan, I would suggest locking your rate now.  Bond prices are currently testing the topside support level of the 200 day moving average.  Given the difficulty of crossing that major threashold, combined with the fact that no other significant economic data is due out this week, mortgage bonds are probably about as good as they are going to get in the near term.

Rates have stabilized to about the 6.25% rate for conforming 30 years. Another bank, Indy mac, a large national lender has ceased whole sale and limited retail operations this week.
Congress is trying to enact legislation eliminating all no income verification loans. Overall the availability of cheap money is still holding and combining with the lower cost of housing, I feel it is a good buying market!

Home Mortgages - Indymac Bank officially stopped taking new applications on both its wholesale and retail channels last week.  It plans to still close those loans which were issued commitments. 

Indymac had developed a reputation in the broker community for handling many different types of loans.  From conventional "A-Paper" loans to foreign nationals, to construction-permanent loans.  Their sister company, Freedom Financial is one of the leading originators of Reverse Mortgages in country as well. 

Wachovia, in the meantime, completed it's dismantling of the World Savings lending platform.  They are no longer offering the signature World Savings Option Arm, and waiving pre-payment penalties on all  existing Option Arms on the books - inviting borrowers to please refinance and pay them off.  So if you have a World Savings ARM loan with a pre-payment penalty, you just caught a break! 

Get "real-time" custom mortgage rate information using our Mortgage Rates search engine.

World Savings for years was known as a portfolio lender that offered ARM loans to foreign nationals, and those with equity.  In fact, there was a time that if you needed a stated income loan, or a foreign national loan, they were one of the only games in town. 

For many years they offered primarily one product, the much maligned option ARM.   Prior to the widespread offering of these loans by many lenders, World Savings was one of the only lenders offering this flexible loan program.   World Savings representatives claimed that because of the way their ARM loan worked, they never had a borrower experience the dramatic payment increases from a "recast". 

Craig Garcia is a Managing Member of Bridge Capital Lending, LLC. A mortgage and investment firm specializing in Investor Loans that Use Private Lenders that fund Hard Money Loans. Craig can be reached at 877-8GO-GREEN or 954-217-9518.

Tags: mortgagerates, home mortgages, loans

Congress left town for the July 4 recess with a half-baked cake in its legislative oven -- one that has huge potential significance for the housing and mortgage markets.  The unfinished work is a major relief bill designed to rescue hundreds of thousands of homeowners heading for foreclosure, pull new buyers back into the real estate arena, and permanently raise conventional and FHA loan limits in high-cost markets.

The Senate is on the verge of final passage of its bill, and could do so as early as the week of July 7.  The House has already passed its version.  Final legislation could go to the White House later this month.  Though President Bush has threatened a veto, Capitol Hill analysts say strong bipartisan support - plus elections this fall - makes it highly unlikely he'd actually do so.

What's in the bill and what could it mean to you?  If you dig into this 631-page behemoth, you might find something that directly benefits you.  That's especially the case if you are:

Thinking about buying a first home.  The legislation offers federal tax credits up to $8,000 per couple - $4,000 per single - for qualified purchasers of newly constructed or resale houses.  There's no cap on the total number of buyers to be assisted, plus the definition of "first-time buyer" is more generous than a literal reading would suggest.  This provision alone could provide a significant stimulus and bring thousands of consumers back into the real estate marketplace.

Saddled with a debt-laden home heading for foreclosure.  The pending legislation may offer a way out for you - provided your lender agrees to participate.  Even if you're behind on your payments and your mortgage balance exceeds your property's value, you could end up with a new, affordable FHA fixed-rate loan.

Searching for a home in a high-cost market (that means us! -Kerin).  The new housing bill is certain to provide higher limits than the $417,000 cutoff for Fannie Mae and Freddie Mac financing that prevailed before the economic stimulus package's temporary increase of up to $729,500, set to expire at the end of this year.

The odds are the new maximum will be below $700,000 - the Senate bill calls for $625,000 for Fannie, Freddie and the FHA.  House negotiators reportedly have been pushing for $688,000.  But the final compromise number should be high enough to help out buyers in California, New England, and the mid-Atlantic states who otherwise could be forced to pay higher interest rates for jumbo loans.

Kerin's Comment: I know many buyers who are "waiting" to see if the market will go down even more.  If you are in the price range where you can take advantage of the current $729,500 "jumbo-conforming" loan, don't wait too much longer.  It appears that the $729,500 bump-up will be for 2008 only.  At that price range, the current combination of good interest rates, lots of inventory and dropping prices makes this an ideal time to buy, especially if you don't have to sell.  This combination of factors will not last forever, so don't miss out!

There are numerous qualifications and limitations to these programs -- please contact me, Kirk, or your mortgage broker for more information.

Kirk Thompson
Wall Street Mortgage Bank
818-648-9524
hardloans4utoday@yahoo.com

-- Kerin Cantwell, Pasadena Real Estate

Nothing.

Well, realistically, if you have steady income, decent credit (not perfect is okay), and some savings (even no savings), there is plenty of attractive financing available for you.

Rarely will the market not lend on reasonable risk factors.

The time is now to get a great deal on a San Diego short sale property. The sub-prime loan troubles have negatively impacted the financial market causing the numbers of San Diego homes approaching foreclosure to increase to record numbers. One technique for a homeowner, who is attempting to avoid foreclosure or bankruptcy, is to try to sell the property prior to foreclosure (San Diego Short Sale) even though the home is worth less than the loan amount. Hence, the term “short” in short sale.

More lenders are agreeing to short sales in San Diego with the hope of quickly recouping their losses and minimizing their costs associated with carrying a home without mortgage payments from the owner.

Because the lender is receiving less than the value of the home when the loan was issued, short sales do require the approval of the mortgage holder. For buyers, the bottom line is that they generally get a good deal on the property. The price is usually below current market’s asking prices because the lenders are motivated to sell the San Diego home quickly to avoid foreclosure and carrying costs. In addition, lenders tend to be more realistic about market values than homeowners who may have emotional ties to the property.

The downside of San Diego Short Sales are that banks can be very slow in responding to a buyer’s San Diego Short Sale offer or never respond at all. If you have patience.

Today is a good day to lock your mortgage rate if you haven't already.

The mortgage bond traded below the 25 day moving average on Thursday before the holiday (and well below the 200 day moving average), and the market is continuing on that downward slope today.  If you have a mortgage loan in process, it would be a good time to lock your rate and protect from any additional downside pressure in the near future.

This week there is no significant economic news expected, therefore, the bond market is expected to mimic the stock market.  However, earnings season starts tomorrow with stocks, and with earnings comes volitility.

This same volotility is expected to spill over to bonds as well.

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July 7, 2008

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