Mortgage Times

[Adam in CO]

Mortgage Times
Mortgage Market News for the week ending August 3, 2007

Compliments of
Colorado Real Estate Finance Group
Real Estate Investment Bankers
Lending in All 50 States


PHONE: 303-770-2262
FAX: 303-770-2276
adam@corefinancegroup.com
5310 DTC Pkwy
Greenwood Village, CO 80111


Events This Week:

Employment Weak
Inflation Steady
Manufacturing Down
Housing Mixed

Events Next Week:

Tues 8/7
FOMC Meeting
Productivity

Wed 8/8
10-yr Auction

Thurs 8/9
30-yr Auction
Jobless Claims

Fri 8/10
Import Prices

Unprecedented Change!


It was a wild, wild ride as the mortgage market experienced an unprecedented shift last week. What began as a disruption in the subprime sector a few months ago spread this week to almost all mortgage products, as investor demand for anything other than mainstream mortgages essentially dried up, forcing lenders to drastically scale back their product offerings.

Daily changes to program guidelines were common. Products offered one day were gone the next. A top 10 lender shut its doors. Rates increased. You name it, we saw it this week. The constantly changing market made it very difficult to find solutions to problems thought to be solved just the day before. Where non-conforming loans (Alt-A or Niche products) were found to be available, rates were considerably higher than just the week before.

All is not lost, however. Hardly noticed was that rates on conforming loans actually fell during the week. Demand for secure, agency-backed mortgages was still strong, as investors sought alternatives to the non-conforming market. Weak economic data released during the week also helped push conforming rates lower. Friday's highly anticipated Employment report showed that the US economy added fewer new jobs in July than the consensus forecast, and on Tuesday the Fed's preferred inflation indicator, the Core PCE inflation index, came in slightly lower than expected. In addition, the two national manufacturing indexes both were significantly weaker than predicted by economists.

• Also Notable:
• The July Unemployment Rate unexpectedly increased to 4.6% from 4.5%
• June Pending Home Sales jumped 5%, easily surpassing the consensus forecast
• The Fed lowered its forecast for economic growth in 2007
• As expected, the central banks of the European Union and England held interest rates unchanged

Average 30 yr fixed rate: Last week:-0.03%This week:-0.05%

Stocks (weekly): Dow:13,407+13NASDAQ:2,559-26

Week Ahead


Next week's main event will be Tuesday's FOMC meeting. No change in interest rates is expected, but the Fed's statement will be eagerly scrutinized for clues about future policy moves. In addition, investors will be looking for the Fed's perspective on the issues for non-conforming mortgages. The Productivity report will also be released on Tuesday. Productivity gains are important for limiting inflation and for the long term health of the economy. No other major economic data will come out next week. Treasury auctions will take place on Wednesday and Thursday.

But certain to command attention as well will be the state of flux in the non-conforming loan arena as the winds of change continue.

[Boss Hoss]

This has not been my favorite week of being a mortgage broker. ABConduit was one of my fav lenders so guess where most of my pipeline was?

[Boss Hoss]

How long till stated is history??? Bad news is my entire pipeline this month is jumbo, good news is i still have my hand in the conforming pot and rates are looking sweet!

[Adam in CO]

I sent ABC at least 10M/year, too.

The best part is that they sold all the files in their pipeline as leads to other mortgage brokers.

I got calls from every one of my clients that ABC had asking about some random call from another broker.

Pissed me off.

[Adam in CO]

Originally Posted by Boss Hoss

How long till stated is history??? Bad news is my entire pipeline this month is jumbo, good news is i still have my hand in the conforming pot and rates are looking sweet!

Stated = Hard money now, Boss.

All I can say is LOCK, LOCK, LOCK. That loan may not be there tomorrow.

[Interleukin]

I locked in 6.75% for 30 years 2 weeks ago, hope this was a good move.

[Adam in CO]

Originally Posted by Interleukin

I locked in 6.75% for 30 years 2 weeks ago, hope this was a good move.

Probably not. Rates edged down quite a bit this week.

I could be wrong. If you have a 400 credit score and you filed for bankruptcy in 2007 and you have no job and your bank account is overdrawn, and your Hummer payment is 1400/mo, etc. then it is a REALLY good rate.

[KenP]

You should really contact the site's owner for information about advertising on this forum. Do you need the link?

[CO Hummer]

Mortgage Times at Ridgemont High is a classic.

[KenP]

Originally Posted by CO Hummer

Mortgage Times and Ridgemont High is a classic.

Say again, Mr. Hand.

[Adam in CO]

Wouldn't mind letting Beals process loans for me.

[Boss Hoss]

My files were transitioned mostly to CW and locked two days ago. I knew what conforming would be safe but non conforming was for a hit. Crazy that the bonds havd had a nice ride the past couple days but the rates went up so drascticly. Not only do we have to lock but we have to close close close before the product disappears.

[Interleukin]

The 6.75% didn't drop at least 0.25% prior to my closing on 7/23 so I was stuck with it.

Probably got bent over, but it's done now.

[Boss Hoss]

IM not sure that you can ever say you got bent over with 6.75%....we brokers just seemed to be programmed to say i couldve done better for you. Adam is right, rates did drop but historicly you 6.75 is smokin.

[mikejr]

So who or how will the hole in the market that the b/c market shakedown be filled? As you know, there is a huge pool of people needing loans that cannot get them now. What are your thoughts?

Personally, being that I specialize in selling REO properties for well over 30 different lenders/servicers/PMI companies, I kinda like the loose lending policies of the past. Means higher default rates which means more REO's for me to sell.

[Adam in CO]

Originally Posted by mikejr

So who or how will the hole in the market that the b/c market shakedown be filled? As you know, there is a huge pool of people needing loans that cannot get them now. What are your thoughts?

Personally, being that I specialize in selling REO properties for well over 30 different lenders/servicers/PMI companies, I kinda like the loose lending policies of the past. Means higher default rates which means more REO's for me to sell.

Thoughts? Good news for our clients that on investment properties. Metro area rents have jumped from 70-80c/sq ft in the last few months. The people who can't get loans, will rent.

[mikejr]

good point....the lack of purchase money mortgages will increase the number of tenants in the market.

We have a steady stream of people that want to buy REO homes, but need to finance them. Problem is, 95% of these homes need work and will fail a conventional loan appraisal due to condition or freeze damage etc. Many of the buyers can and will repair the properties after closing, but cannot buy them due to lack of financing options. Do you have any products that would fit the bill? Doesnt seem that any of our local lenders/brokers/bankers have such a product.

[Adam in CO]

Originally Posted by mikejr

good point....the lack of purchase money mortgages will increase the number of tenants in the market.

We have a steady stream of people that want to buy REO homes, but need to finance them. Problem is, 95% of these homes need work and will fail a conventional loan appraisal due to condition or freeze damage etc. Many of the buyers can and will repair the properties after closing, but cannot buy them due to lack of financing options. Do you have any products that would fit the bill? Doesnt seem that any of our local lenders/brokers/bankers have such a product.

I would look into OTC improvement deals from a bank like IndyMac (headache) or some of their competitors.

It defintely can't be done conventionally.

[mikejr]

ERA Mortgage (PHH) has come out with an REO purchase product in the past week or so. Havent tried it out yet. But they still want everything functional in the property before settlement.

There is a need for a good loan product to allow people to buy these REO's, but as evidenced by the lack of such a product, it is likely its not a viable risk for the lenders to take.

The hard money guys in town are an option but they are only short term high interest rate loans and do not want to hold for more than 6 to 12 months.