Mortgage News that Matters

There have been a lot of changes recently in our industry and we have not been immune to them. Equipoint Financial Network, our parent company will be closing their doors by months end. Technically, we were employees of Equipoint, realistically, we worked for ourselves. Hence, just because they shut their doors doesn't mean we are shutting ours.

We have aligned ourselves with Morgan Financial, Inc, which is owned by WJ Bradley. This is an extremely strong alignment and we are excited about the new opportunities open to us.

Our new company name is NW Lending Solutions. We are still operating from the same office in Newberg, OR.

One of the things that excites us the most is that we now have access to an extremely competitive banked product. Our FHA rates are better then what I'm seeing from many of the products I can broker, and our underwriting turn time for a decision is 24 hours!! Our Conforming rates are very competitive, and we have the same 24 hour turn time. But, what makes this great, is that if I need to RUSH a file I can bump it ahead of other files I have in the system. Granted, this will add a slight delay to pending files, and will only be used in an emergency. This allows us to provide Realtors and home buyers with the ability to close very quickly when needed!!

As with any change there are bugs that need to be sorted through, and changes that need to be made. I apologize for that, but am excited for the future.

Check out the website as it has also been tweaked.

Blessings to all.

Larry

According to MarketWatch, "Sales of new homes in the United States fell to a 13-year low in February, dropping 1.3% to a seasonally adjusted annual rate of 590,000, the Commerce Department estimated Wednesday. Sales have fallen four months in a row and are off about 30% in the past year. The number of homes on the market dropped by 2.1% to 471,000, the lowest since July 2005, an indication that builders are trying to work off their bloated inventories of unsold homes. The inventory represented a 9.8-month supply at the February sales rate, unchanged from January and the highest since 1981. The median sales price fell 2.7% in the past year to $244,100."

This sounds bad, and for the most part it isn't great news. However, until we can get the "bloated inventories of unsold homes" off of the market, we won't see real improvement. Builders are still sitting on homes they started before the credit crunch when it was easy to get a loan. Now, they are faced with unsold properties, paranoid borrowers (or bargain seekers) and construction loans now due. Many are still holding out for sales prices that they easily could have received last summer.

Once we get to a healthy level of homes for sale, both new and existing construction, we will see prices stabilize and a "normal" market.

In Oregon, we're lucky, existing homes are still appreciating in most markets.

According to MarketWatch, J.P. Morgan Chase & Co. reportedly has agreed to buy Bear Stearns Cos. for $2 a share in a stock-swap deal.  Evidently the set price will be $2 per share. It appears that both boards have approved the sale and are trying to put it together prior to Monday's Asian market opening.

Get ready for a rough Monday. The markets will not like this. It has the possibility of sending Mortgage Rates much lower since they generally move in the opposite direction of the Stock Market. However, since Bear Stearns is a strong player in the mortgage industry, Mortgage Backed Securities might not like it either.

While it's curious that a couple of days after a Fed bailout they are selling at a bargain, the "loan" was for only 30 days. Who knows what pressure the Fed put on them for a quick resolution to stabilize the markets. It will be interesting to follow.

Since we ended Friday in a nice position for Mortgage Rates, it might be prudent to lock rates tonight if you have a lender who allows weekend locks. If not, get ready for an interesting day!

Larry Morris is a Certified Mortgage Planning Specialist (CMPS) with Equipoint Financial Network in Newberg, Oregon. He specializes in financing for Senior Citizens and Rural Properties. He can be reached at larry.morris@equipoint.com. His website is www.PDX-Mortgage.com.

This material is copy protected 2008 by Larry Morris, Mortgage News that Matters. All Rights Reserved His opinions do not necessarily represent the views of Equipoint Financial Network.

I posted a blog yesterday on Activerain, a social networking site geared towards Real Estate on the above subject. It was interesting.

Click on the following for more information:

Are You Committing Fraud With Seller Paid Concessions? Pt 2

Are You Committing Fraud With Seller Paid Concessions?

Another wild day for mortgage bonds. Following worse than expected Durable Goods Orders (-5.3%) and New Home Sales (-2.8%) reports, bond prices began moving higher.

Further gains were then realized after Fed Chairman Ben Bernanke’s testimony before the House Financial Services Committee. Bernanke’s comments were biased more towards inflation and focused attention on a weakening economy. However, he gave a clear signal of further rate cuts to come and the Fed Funds futures have priced in an 88% probability the Fed’s FOMC will cut interest rates by 50bp when it meets on March 18.

Mortgage Backed Securities ended 53bp higher on the day.

Also released today, the government will let the two biggest U.S. home loan finance companies, Fannie Mae and Freddie Mac, invest more money in the weak housing market in a move that could help revive the economy.  As I was watching the news this AM, the talking heads were discussing this and one stated that "their belly is already full and now they are taking on more.."

The issue is that Fannie and Freddie have absorbed a lot of poor risk loans and financially are not in the best of shape. Who knows exactly how many of their loans will go into foreclosure.

The difference is that now, guidelines have tightened considerably. The new loans that they are taking are much less likely to suffer adverse risk. Therefore, I see this as good for the economy, and will hopefully allow for more good loans to be financed.

Mortgage rates should be slightly lower tomorrow.

What a roller coaster we've been on. The last few weeks have seen us go from a low of 5% for a 30 year fixed rate mortgage at par to a high of 6.375% 2 days ago. We are currently back down to 6% with the possibility of a slight improvement again today.

We've gone from "fear of inflation" (bad for bonds) to "fear of recession" (good for bonds).

The Philadelphia Fed Manufacturing Index for February was reported at -24.0, which is well below expectations of -10.0. The last time it was this low was on the eve of recession.

The Index of Leading Economic Indicators (LEI) for January met expectations by declining -0.1%. Weaker housing data and stock market performance led the LEI to its fourth consecutive monthly decline.

Initial Jobless Claims were reported at 349,000, which was slightly higher than expectations of 345,000. The more closely watched four week moving average climbed by 10,750 to 360,500. In each of the last two recessions, the four week moving average of Claims moved above 362,000, so this morning's report does suggest the economy is teetering on recession.

All in all, things could be better for the economy.

Rates are still at historic lows... if you can qualify for a loan. Depending on whether you feel that we have a greater risk of inflation or recession would depend on whether or not you should purchase or refinance now. If you feel that the risk of inflation is greater, then lock in at today's great rates. If you feel that we're heading for a recession, then you should hold off and wait for rates to lower.

My take? My guess is that the economy will get worse (or at least appear to) as we get closer to the election. The Fed will step in and lower the Prime again in an attempt to stimulate the econony. This could also stimulate inflation, which will then require a fast rate increase like we saw a couple of years ago.

The stock market is having a nice morning due to WalMart reporting better then expected earnings AND Cuba's President, Fidel Castro, stepping down from power. Bonds are taking a beating and we can expect to see mortgage rates worsen yet again. I haven't seen rate sheets yet, but we're probably around 6% again for a 30 year fixed rate loan at par.

So what does Cuba's power shift have to do with mortgage rates? It's widely held that when Castro resigns, Cuba will become more open to business with the US...something that hasn't happened in over 40 years... The stock market loves this as it could open up new markets, both here and there.

Tomorrow the CPI (Consumer Reports Index) report comes out and we could see more volatility if the numbers are inflationary.

We had a nice little window of opportunity to take advantages of interest rates in the low 5% range. My guess is that we will get back there again, just not sure exactly how soon. It all depends on the reports. The Recession word is good for Bonds, but the Inflation word is bad...very bad...

Yesterday's comments by the Fed has continued to have an effect on the markets. Both Stocks and Bonds are lower as Traders are still sorting through the details of the comments.
We heard both of fears of inflation (the Fed's willingness to cut rates further) and fear of recession (Fed's belief that we won't see a major economic change until later this year).

In addition, Moody's has downgraded FGIC, one of the largest bond insurers. This has also put some fear into Bond investors as the assumption is that if the Bond insurer is risky, so must be the Bond.

It being a short session with the holiday coming up, don't expect to see much happening. My belief is that they will keep their money liquid and wait until Tuesday to figure out where to invest.

We have seen a worsening of mortgage rates by about .5% over the last week. But, rates are below 6% which is still great!!

After a major sell-off yesterday, mortgage backed securities are fighting back and are currently at positive levels. Yesterday's sell-off was in part due to Dallas Fed President Fisher's statements in Mexico City regarding the monetary actions of the Fed.

He was correct in stating that the Fed policy always lags. It takes several months for a rate cut or hike to take effect. His feeling is that the Fed was too rash in the size of the cuts that taken place over the last month and that they should have waited a few months to see what effect the earlier rate cuts would have on the economy.

His comments were very inflationary in tone and the bond markets did not like it at all. Hence we saw the sell off. We actually had 2 rate changes for the worse yesterday with several of my lenders.

In other news, the odds on a national recession are now 50/50.

Today's 30 year fixed rate mortgage is around 5.5% at par. This is a whopping .5% higher then we saw 2-3 weeks ago. This just shows how volatile our market is today.

My advice if you are looking at refinancing is to get all of your ducks in a row and be ready to pull the trigger at any given moment. Again, several weeks ago, I had a 4 hour window where I was able to lock a 30 year fixed rate loan at 4.875% at par!