Did you know that in Houston, sales are down, yes, but the average home price is up? That is economics at its best. Who would have expected that? I do not even pay attention to national stats anymore. Do they matter? Each housing market is in of itself, a statistic. Locally, I can report that for the first time in my entire career (14 years) I have noticed recently (this month) people holding back not sure what to do . Qualified borrowers. Maybe they are unsure about their job, or the down payment was coming from their stock that was losing money.
However, This week things did begin to pick back up for us. I reported last week that my desk was clean, well, it is dirty again, with papers disheveled and stacked. The phones have been ringing. I had 3 calls just this week to ‘save’ deals that were falling out with other lenders could not approve them. We are glad to assist! For you to know, we can close files in 48 hours if needed. But each of our realtors is only allowed 1 of those favors a month! That was, of course, a joke. Foreclosure filings have spiked 71%, nationally. In September, 81,312 homes were lost to foreclosure. Since a year ago, 851,000 have been repossessed by lenders.
This brings up a point I would like to share. Fannie and Freddie have of recent come up with some guidelines regarding homes that are being financed in areas with high foreclosures as a percent of the total sales in the last 12 months. If that number is greater than 15%, there is a problem. I had to turn down a borrower for that reason 3 months ago. He was purchasing a property in a neighborhood that had 27% foreclosures (as a % of total listings sold) in the last 12 months. I was mad, frustrated and quite frankly, baffled. How will we as a society ever get OUT of this mess, if the lenders will not even loan on properties they are foreclosing on? I understand that this ‘guideline’ is in place to avoid the lenders investing in areas that are on the decline, but when the homes are selling that should amount to something? There has to be a solution. But I have not been able to think of one, so stay tuned on that subject.
RATES ARE DOWN THIS WEEK! (.25%). The stock market took some heavy losses, and in anticipation of the Fed Funds rate possibly coming down another .500%, investors are pricing that into the market. Its about time we have some relief in rates. Now if we can convince Fannie/Freddie (aka the government, right?) to increase the conforming limit to $650,000 or so, we will be fine. It would be about time! There is a show on MSNBC called Mad Money. Cramer (the host) is just beside himself today. He is on right now, waiving his arms and screaming. Today’s headline is :‘The Dow is down 15 of the last 19 weeks. Down 36% total.’ MORE REASON TO PUT YOUR MONEY INTO REAL ESTATE! In my opinion, it is still the best investment there is.
Friday, October 24, 2008
Sunday, October 19, 2008
Smart people are buying
Well, my desk is organized, I have worked out 6 times this week, AND been on time to pick up my son from school five days in a row. While these methods sound ideal, I function better with my chaotic life of running around with not a moment to spare and my cell phone ringing off the wall. It’s productive and energizing. My point here is that things are a bit slow. Since the hurricane, phones are ringing less, understandably, as people are putting lives back together. One thing I am hearing a lot of, is comments from prospective buyers that the stock market turmoil are making them consider twice before buying a home. I could not disagree more on their decision. For any buyer (in the nation) that has funds for down payment, good credit, and have debt to income ratios that are in line, it is an EXCELLENT time to buy! Good credit and down payment knows no boundaries, my friends. There is plenty of lending going on, believe me. What we do not have are buyers. They are holding off, during the most opportune time in perhaps history when inventories are high (meaning there are deals to be had), and rates are still historically low! 30 Year Fixed for 6.0% ? Come on….. you cannot get much better than that.
This week we did have quite a scare as the mortgage rates shot up ½% in a matter of days. But today we are exactly where we were a week ago. No banks went bankrupt this week, that is encouraging. As I visit with friends in the industry, I try to gather details you can use to support your business. To give you words that are encouraging in these troubled times. How about : (1) MSNBC.com wrote that Texas topped the list for job creation. Houston-Dallas-Fort Worth are 1-2-3 in the latest rankings of the 100 largest metropolitan areas. (2) Houston is forecasted have added 50,000-70,000 jobs total this year – that means that 33,000 new homes will be needed (1.5 homes for every job added) (3) That job creation number will be similar in 2009! (4) Patriot Bank STILL is offering their 4.0% high yield money market, and (5) The elections are almost over!!!!!
The uncertainty in the political leadership is touching every aspect of our economy. People naturally want to know what to expect. Then we can deal with it. Make a plan! In my opinion, that is why Wall Street has been so volatile, the mortgage rates are unpredictable, and buyers are adopting a wait and see approach. The smart folks are buying. They know opportunity when they see it.
Rates as of Friday, October 17, 2008 (net down for the week)
The following assumptions apply:
20% Down Payment
1% Origination Fee
Escrows Required (if no escrow, higher fees may apply)
Purchase Transactions,
Primary Residence
30 day closingCredit Score
720 +Full Documentation of Income/AssetsLoans
> 1 mm require 30% down for these terms Conforming
($250,000* - $417,000) Jumbo ($417,001- $1,500,000*)
30 year (fixed) 6.000% APR 6.130% 30 year ( fixed ) 7.005% APR 7.177% 15 year (fixed) 5.750% APR 5.966% 15 year ( fixed ) 6.350% APR 6.551% 3/1 ARM 5.600% APR 5.728% 3/1 ARM 5.600% APR 5.716% 5/1 ARM 5.375% APR 5.501% 5/1 ARM 5.500% APR 5.620%
7/1 ARM 5.625% APR 5.752% 7/1 ARM 5.750% APR 5.872%FHA/VA call for quote (max loan $270,000)
We do originate loans below $250,000. These amounts are chosen to show the most favorable rates. For other product options or for loan amounts less than $250,000 or above $1,500,000 please call for quote.We also do VA and FHA loans! Call for details! If you know of someone who would appreciate my services, please contact me with their name and number and I will be happy to help them!
Jennifer Hernandez
Vice President/Mortgage ConsultantPatriot Bank Mortgage
Office: 713-337-8400
Mobile: 713-446-7791
E-mail: jennifer@patriotbankusa.com
Web: www.loanwithjennifer.com
Information provided in this e-mail is intended as a tool for Real Estate Agents to be informed of the approximate rates available for home mortgages. It is intended for their sole use and purpose only and is not for distribution to the general public. Depending on the borrower's actual circumstances, such as credit, debt ratios, etc., rates may vary. Special niche products may also be available.
This email and any files transmitted with it are confidential and are intended solely for the use of the individual or entity to whom it is addressed. This communication may contain protected or privileged material and should only be viewed by the intended recipient(s). If you are not the intended recipient or the person responsible for delivering the email to the intended recipient(s), be advised that you have received this email in error and that any use, dissemination, forwarding, printing or copying of this email is strictly prohibited.
This week we did have quite a scare as the mortgage rates shot up ½% in a matter of days. But today we are exactly where we were a week ago. No banks went bankrupt this week, that is encouraging. As I visit with friends in the industry, I try to gather details you can use to support your business. To give you words that are encouraging in these troubled times. How about : (1) MSNBC.com wrote that Texas topped the list for job creation. Houston-Dallas-Fort Worth are 1-2-3 in the latest rankings of the 100 largest metropolitan areas. (2) Houston is forecasted have added 50,000-70,000 jobs total this year – that means that 33,000 new homes will be needed (1.5 homes for every job added) (3) That job creation number will be similar in 2009! (4) Patriot Bank STILL is offering their 4.0% high yield money market, and (5) The elections are almost over!!!!!
The uncertainty in the political leadership is touching every aspect of our economy. People naturally want to know what to expect. Then we can deal with it. Make a plan! In my opinion, that is why Wall Street has been so volatile, the mortgage rates are unpredictable, and buyers are adopting a wait and see approach. The smart folks are buying. They know opportunity when they see it.
Rates as of Friday, October 17, 2008 (net down for the week)
The following assumptions apply:
20% Down Payment
1% Origination Fee
Escrows Required (if no escrow, higher fees may apply)
Purchase Transactions,
Primary Residence
30 day closingCredit Score
720 +Full Documentation of Income/AssetsLoans
> 1 mm require 30% down for these terms Conforming
($250,000* - $417,000) Jumbo ($417,001- $1,500,000*)
30 year (fixed) 6.000% APR 6.130% 30 year ( fixed ) 7.005% APR 7.177% 15 year (fixed) 5.750% APR 5.966% 15 year ( fixed ) 6.350% APR 6.551% 3/1 ARM 5.600% APR 5.728% 3/1 ARM 5.600% APR 5.716% 5/1 ARM 5.375% APR 5.501% 5/1 ARM 5.500% APR 5.620%
7/1 ARM 5.625% APR 5.752% 7/1 ARM 5.750% APR 5.872%FHA/VA call for quote (max loan $270,000)
We do originate loans below $250,000. These amounts are chosen to show the most favorable rates. For other product options or for loan amounts less than $250,000 or above $1,500,000 please call for quote.We also do VA and FHA loans! Call for details! If you know of someone who would appreciate my services, please contact me with their name and number and I will be happy to help them!
Jennifer Hernandez
Vice President/Mortgage ConsultantPatriot Bank Mortgage
Office: 713-337-8400
Mobile: 713-446-7791
E-mail: jennifer@patriotbankusa.com
Web: www.loanwithjennifer.com
Information provided in this e-mail is intended as a tool for Real Estate Agents to be informed of the approximate rates available for home mortgages. It is intended for their sole use and purpose only and is not for distribution to the general public. Depending on the borrower's actual circumstances, such as credit, debt ratios, etc., rates may vary. Special niche products may also be available.
This email and any files transmitted with it are confidential and are intended solely for the use of the individual or entity to whom it is addressed. This communication may contain protected or privileged material and should only be viewed by the intended recipient(s). If you are not the intended recipient or the person responsible for delivering the email to the intended recipient(s), be advised that you have received this email in error and that any use, dissemination, forwarding, printing or copying of this email is strictly prohibited.
Friday, October 10, 2008
Don’t look at your stocks today!
The stock market is depressing, I know. Most of you are not retiring tomorrow, right? Let’s joke so we can feel better…that we will now retire at 97. I certainly do not mean to make light of any of the losses we are all suffering in the markets. But lets us take a step back, and keep things in perspective. (1) You signed up for this the day you bought the stock- you knew the risk. It can go up, and go down (2) You have not complained at the gains you have made before 2007, certainly (3) TAKE A BREATH, stop ‘micro’ trading, and ride out the storm. Now for those of you that need the money now, I can certainly understand the wig factor you are experiencing. Talk to your advisor, put money in cash for a while. Take a break. But if you have a few months…sit it out. The market will rebound. The elections will pass, there will be confidence restored. History has shown us that.
Several clients this week were calling me about pulling out of contracts, or waiting until things calm in the markets. My question was ‘ Why?’ Real estate is the BEST investment there is. It is tangible. Furthermore, rates are still historically low, or at least average. By historically low, I mean in the last 20 years, not the last 5! Our problem is that we still remember the 3 month period back in 2003 when the 30 year fixed reached 5.0%. Those of us that really wanted to roll the dice, got a 7/1 ARM at 4.375%. As sexy as that may be, we know the end result, it was a pipe dream to think that would last. What has this thinking taught us? We as a society have a false sense of comfort in thinking that rates can stay low indefinitely, or that gains in stock will be there forever. Again, we have to step back and let things ride. Budget, spend wisely, save for a rainy day, or a down payment on a house or that matter.
As for mortgage rates, this week, the FED lowered the federal funds rate .50% . This is the overnight lending rate to banks – or the fed window as it is commonly named. Rock on! That means my mortgage rate on my pending purchase just went down! NOT THE CASE. In fact, mortgage rates went up at the news. Logical? Not to the average person. But economically, when the fed rate goes down, it is cheaper for banks to borrow, which increases profits, which translates to them spending hard dollars on things like wages, goods and capital expenditures. So the news on Wed made the stock market go up, confidence restored (temporarily, I know) and the investors took money out of bonds to purchase more stock. When this happens, the bond prices are pushed down..to attract more buyers back over, and the yields then go up…to attract more buyers. When bond yields go up, mortgage rates go up. There you have it, that is exactly what has happened. We are up .25% from last week.
Enjoy your weekend, and stay away from CNN. Go to the park instead, or go to the movies, just don’t buy the concessions, since we are now budgeting and all.
Several clients this week were calling me about pulling out of contracts, or waiting until things calm in the markets. My question was ‘ Why?’ Real estate is the BEST investment there is. It is tangible. Furthermore, rates are still historically low, or at least average. By historically low, I mean in the last 20 years, not the last 5! Our problem is that we still remember the 3 month period back in 2003 when the 30 year fixed reached 5.0%. Those of us that really wanted to roll the dice, got a 7/1 ARM at 4.375%. As sexy as that may be, we know the end result, it was a pipe dream to think that would last. What has this thinking taught us? We as a society have a false sense of comfort in thinking that rates can stay low indefinitely, or that gains in stock will be there forever. Again, we have to step back and let things ride. Budget, spend wisely, save for a rainy day, or a down payment on a house or that matter.
As for mortgage rates, this week, the FED lowered the federal funds rate .50% . This is the overnight lending rate to banks – or the fed window as it is commonly named. Rock on! That means my mortgage rate on my pending purchase just went down! NOT THE CASE. In fact, mortgage rates went up at the news. Logical? Not to the average person. But economically, when the fed rate goes down, it is cheaper for banks to borrow, which increases profits, which translates to them spending hard dollars on things like wages, goods and capital expenditures. So the news on Wed made the stock market go up, confidence restored (temporarily, I know) and the investors took money out of bonds to purchase more stock. When this happens, the bond prices are pushed down..to attract more buyers back over, and the yields then go up…to attract more buyers. When bond yields go up, mortgage rates go up. There you have it, that is exactly what has happened. We are up .25% from last week.
Enjoy your weekend, and stay away from CNN. Go to the park instead, or go to the movies, just don’t buy the concessions, since we are now budgeting and all.
September 26, 2008
What a week ! We ended the week with a bang when news last night of Washington Mutual was seized by federal authorities as JP Morgan Chase takes over. There was a flee of deposits as customers worried about the banks solidity, and their capital base was eroded, making operations impossible. Buyout at a rock bottom 1.9 billion. That is a bargain for the buyer. The rest of the week has been consumed with the news of the ‘bail out’ and the looming debate. CNN even has a countdown until showtime.
Rates this week are UP. That is because there is uncertainty. BAD news for the market. We need warm fuzzies, reassurance everything will be ok. Reading the paper this morning did not help. I had flashbacks of my childhood days when I used to pride myself on tattling my older sister, or my baby brother. I am the middle child, the know it all, the perfect angel (I really was). I would not stop until I got my way. I WAS SEVEN! Our elected members of Congress are grown men and women. Are these discussions /arguments about a bail out really about what is best for America, or which party will look better on the eve of election day?
My final commentary is this: I am an optimist, always looking on the bright side of things. These days, that has been hard, where bad news looms everywhere. But there will be good that comes from these historically troubling times. Imagine a society that saves first, then spends. Taxpayers that actually pay the taxes on income they earned and not what they cannot hide. Or even homeowners that have property taxes based on the true value of their home, not a deflated, unrealistic amount. DON’T SHOOT YOUR BULLETS AT ME YET! You see, I am a firm believer that things will come back to haunt you. Why is it that rules apply to everyone else except us? We want full price for our homes, yet we have fudged about our values for years to the county? I myself am guilty of all of the above too! But there has to be balance. It is high time that our society owns up to the fact that we have to practice what we preach to our children: Always tell the truth, save ½ your allowance in the piggy bank, share, don’t hit and say please and thank you. Hang in there. We will get through this together.
Rates this week are UP. That is because there is uncertainty. BAD news for the market. We need warm fuzzies, reassurance everything will be ok. Reading the paper this morning did not help. I had flashbacks of my childhood days when I used to pride myself on tattling my older sister, or my baby brother. I am the middle child, the know it all, the perfect angel (I really was). I would not stop until I got my way. I WAS SEVEN! Our elected members of Congress are grown men and women. Are these discussions /arguments about a bail out really about what is best for America, or which party will look better on the eve of election day?
My final commentary is this: I am an optimist, always looking on the bright side of things. These days, that has been hard, where bad news looms everywhere. But there will be good that comes from these historically troubling times. Imagine a society that saves first, then spends. Taxpayers that actually pay the taxes on income they earned and not what they cannot hide. Or even homeowners that have property taxes based on the true value of their home, not a deflated, unrealistic amount. DON’T SHOOT YOUR BULLETS AT ME YET! You see, I am a firm believer that things will come back to haunt you. Why is it that rules apply to everyone else except us? We want full price for our homes, yet we have fudged about our values for years to the county? I myself am guilty of all of the above too! But there has to be balance. It is high time that our society owns up to the fact that we have to practice what we preach to our children: Always tell the truth, save ½ your allowance in the piggy bank, share, don’t hit and say please and thank you. Hang in there. We will get through this together.
Friday, October 3, 2008
Show me the money!
Just as I am writing this, the House passed the Bailout Plan. No One has published details yet....but you can turn on any news channel this weekend, and I am sure, get the details. As this week was consumed with news of a bailout, no bailout, economic crisis if no bailout, our interest rates were holding steady, but higher than last week. Uncertainty kills the market. Both in bonds and in stocks. This next week will be interesting for sure as we see how the markets react to this (false?) sense of security. This decision to pass the bailout plan, whatever that means, is just a short term means to resolve the crisis. Long term effects are yet to come. Wells Fargo announced it will buy Wachovia for 15.1 Billion - or will they? Wachovia entered into an earlier agreement with Citgroup, or so they thought. That will be next weeks’ big newsline: Battle of the Banks. Another one bites the dust.
This week, I had a realtor friend forward me an article that a client sent her. The article focused on why it is better to rent than to buy. How does one respond to their client about this article written by an MBA graduate that has credibility and a title? (should I be scared?). NO WAY! You tell your client the truth. That if they google long enough, they will find many articles telling them what they want to hear. Well, this article did have some points to ponder, if you are a single person, no kids, no pets, travel 75% of the time, and have no life. That is about 1% of our population. In my honest opinion, this 'money' guru was trying to do one thing. Shake things up. Have a fresh point of view.
Homeownership is a choice. Personally, I did not buy my gorgeous (and best landscaping in the neighborhood) home in order to make a profit. This is where I raise my child, welcome my friends and family, and where I find peace and serenity after a long days work. So when a 'guru' writes an article about the fact that we should all become tennants and leave our 'investing' to the stock market, I say BLAH. I will play the 'Pride of Homeownership ' card any day. He can take his parque floors and brady bunch curtains and ....I don't know, take a hike into the real world.
Furthermore, while we are on the topic of buyer beware, another question I get often is: Should we wait to buy a house? Its hard to get a loan right now? My answer as an insider would be NO. Our business is running status quo. Sure, guidelines are tightening, and it is harder to obtain a loan (if you have no savings, and adverse credit). There are some borrowers that do get caught in the middle that would normally qualify. My answer to this is: If you feel that you fit in this category (you know who you are), call a lender 3-6 months before buying. This gives us enough time to plan, and advise of any credit changes/corrections you need before you fit into a program. Gone are the days you can call around for financing the day your earnest money becomes hard. In my experience, everyone, and I do mean everyone, has a special circumstance we need to accommodate for closing. We just need to plan ahead.
Also note, MONEY IS AVAILABLE! There are plenty of investors that are financing mortgage backed securities. Just look at the rates below! I can assure you that home loans will not disappear from the earth. Will rates go up a little? Maybe. Will they go down? It’s anybody’s guess. Act now. Times are good for buyers. SMART people are buying now and taking advantage of the buyers market mixed with low interest rates.
This week, I had a realtor friend forward me an article that a client sent her. The article focused on why it is better to rent than to buy. How does one respond to their client about this article written by an MBA graduate that has credibility and a title? (should I be scared?). NO WAY! You tell your client the truth. That if they google long enough, they will find many articles telling them what they want to hear. Well, this article did have some points to ponder, if you are a single person, no kids, no pets, travel 75% of the time, and have no life. That is about 1% of our population. In my honest opinion, this 'money' guru was trying to do one thing. Shake things up. Have a fresh point of view.
Homeownership is a choice. Personally, I did not buy my gorgeous (and best landscaping in the neighborhood) home in order to make a profit. This is where I raise my child, welcome my friends and family, and where I find peace and serenity after a long days work. So when a 'guru' writes an article about the fact that we should all become tennants and leave our 'investing' to the stock market, I say BLAH. I will play the 'Pride of Homeownership ' card any day. He can take his parque floors and brady bunch curtains and ....I don't know, take a hike into the real world.
Furthermore, while we are on the topic of buyer beware, another question I get often is: Should we wait to buy a house? Its hard to get a loan right now? My answer as an insider would be NO. Our business is running status quo. Sure, guidelines are tightening, and it is harder to obtain a loan (if you have no savings, and adverse credit). There are some borrowers that do get caught in the middle that would normally qualify. My answer to this is: If you feel that you fit in this category (you know who you are), call a lender 3-6 months before buying. This gives us enough time to plan, and advise of any credit changes/corrections you need before you fit into a program. Gone are the days you can call around for financing the day your earnest money becomes hard. In my experience, everyone, and I do mean everyone, has a special circumstance we need to accommodate for closing. We just need to plan ahead.
Also note, MONEY IS AVAILABLE! There are plenty of investors that are financing mortgage backed securities. Just look at the rates below! I can assure you that home loans will not disappear from the earth. Will rates go up a little? Maybe. Will they go down? It’s anybody’s guess. Act now. Times are good for buyers. SMART people are buying now and taking advantage of the buyers market mixed with low interest rates.
Thursday, September 25, 2008
September 19, 2008
Our sincerest thoughts go out to you and your families that may be affected by Hurricane Ike. We are here for any questions you may have about your current mortgage, or remodeling loan options as you navigate this complicated road to recovery.
Last Friday, I was all geared up to inform you about the details of the Fannie/Freddie bailout. Then the ‘evacuation’ news came. So although stale at this point, I will still recap, and move on to this weeks’ news, making last week look like baby steps. We all know by now that the government (now affectionately called Sugar Daddy) came to Fannie/Freddie’s rescue by placing them into conservatorship. The US Treasury bought their stock, fired the executives (and did not award them in 24 million in bonus’ due- boo hoo!) , assumed control of the Board and management, and then resumed the company to normal operations. It is thought that this ‘rescue’ will be great for emerging markets abroad (it renews confidence in the markets, and frees up their balance sheets to loan more money in their domestic countries), and kill us here at home, where we have yet to even conceptualize the tax burden all tax payers will have to pay at some future point in time.
The deal has added $5 TRILLION in debt to an already stressed balance sheet, therefore doubling the national debt. The US government will have to sell more US Treasury bonds in order to cover its new debt. This new debt will lead to higher yields (affecting rates on mortgages to go HIGHER). True, after the Fannie /Freddie news, we did see an immediate drop in rates. Then the honeymoon sizzled, and rates rose again. Now a new drama has hit the news line- the Bankruptcy filing of Lehman Bros this week, the failing of AIG, and the sale of Merrill Lynch to Bank of America. Wow……can it get any better than this? This is even better than Judge Judy or the OJ Simpson Trial. The news rooms are just beside themselves with excitement.
This Monday, after all this new news (Lehman, AIG, Merrill), the rates did go down. The past 2 days we have seen them inch up as the stock market has recovered from rebuilt confidence in the market. Will they go down again? We hope so. We think so. Does anyone really know? Not a chance. There is so much uncertainty out there, the slightest news could change the course of rates in an instant. If you are waiting to refinance it, lock it, and get with a lender that will float you down if rates drop (Patriot Bank Mortgage will!). If you are purchasing, do the same.
In Summary:
Lehman Brothers, one of the top brokerage firms in the nation, was DENIED a government rescue this week. The Fed said they finally have had enough. The banking industry needs to come up with its own solutions to its problems. They owe more than $157 billion to their 10 largest creditors, and no way of paying up anytime soon. They declared bankruptcy on Saturday, while we were suffering 110 mile /hr winds in Houston.
AIG – Their credit was downgraded this week from AAA status to almost the lowest possible level. This forces them to raise billions in new capital to cover its debt exposure, which they could not do. AIG is the worlds’ largest insurance company. They insure everything from trips, to cars, to bonds. They cover every sector of the economy. The traders and stocks/bonds that are sold/bought every day rely on them to insure. The government is on the verge of placing them in conservatorship as well. Why would they bail them out and not Lehman, is my question? The affect of AIG failing is far more widespread than Lehman. AIG probably insures Lehman. They cannot fail. No way. That would be beyond words.
Merrill Lynch sold to Bank of America for $50 billion. B of A stated that ML was attractive because its wealth management is the best in the world and would complement their existing operations.
Washington Mutual is rumored of a potential acquisition by JP Morgan Chase
So, let me get this straight, the banks take massive risks in credit and equity deals, pay themselves like kings, and then rely on the US government to bail them out when they have had enough? What kind of legacy are we leaving for future generations? Is this how we want to be remembered? The US politicians talk about family, and core values, and then we do the opposite. Our children are learning that there is no sense of responsibility or consequence. The culprits seem to always get away somehow with a slap on the hand. So the Fannie CEO got fired, big deal! He will make thousands by writing a book that will be gobbled up by the Americans dying to know how he did it. BUT……We have to maintain the façade of the most powerful country in the nation. Are we really that good? That smart? That savvy? Does anyone know what they are doing? It seems to me like one large ‘puff’ of smoke. Except when the taxpayers have to foot the bill, will it seem like play money then?
Last Friday, I was all geared up to inform you about the details of the Fannie/Freddie bailout. Then the ‘evacuation’ news came. So although stale at this point, I will still recap, and move on to this weeks’ news, making last week look like baby steps. We all know by now that the government (now affectionately called Sugar Daddy) came to Fannie/Freddie’s rescue by placing them into conservatorship. The US Treasury bought their stock, fired the executives (and did not award them in 24 million in bonus’ due- boo hoo!) , assumed control of the Board and management, and then resumed the company to normal operations. It is thought that this ‘rescue’ will be great for emerging markets abroad (it renews confidence in the markets, and frees up their balance sheets to loan more money in their domestic countries), and kill us here at home, where we have yet to even conceptualize the tax burden all tax payers will have to pay at some future point in time.
The deal has added $5 TRILLION in debt to an already stressed balance sheet, therefore doubling the national debt. The US government will have to sell more US Treasury bonds in order to cover its new debt. This new debt will lead to higher yields (affecting rates on mortgages to go HIGHER). True, after the Fannie /Freddie news, we did see an immediate drop in rates. Then the honeymoon sizzled, and rates rose again. Now a new drama has hit the news line- the Bankruptcy filing of Lehman Bros this week, the failing of AIG, and the sale of Merrill Lynch to Bank of America. Wow……can it get any better than this? This is even better than Judge Judy or the OJ Simpson Trial. The news rooms are just beside themselves with excitement.
This Monday, after all this new news (Lehman, AIG, Merrill), the rates did go down. The past 2 days we have seen them inch up as the stock market has recovered from rebuilt confidence in the market. Will they go down again? We hope so. We think so. Does anyone really know? Not a chance. There is so much uncertainty out there, the slightest news could change the course of rates in an instant. If you are waiting to refinance it, lock it, and get with a lender that will float you down if rates drop (Patriot Bank Mortgage will!). If you are purchasing, do the same.
In Summary:
Lehman Brothers, one of the top brokerage firms in the nation, was DENIED a government rescue this week. The Fed said they finally have had enough. The banking industry needs to come up with its own solutions to its problems. They owe more than $157 billion to their 10 largest creditors, and no way of paying up anytime soon. They declared bankruptcy on Saturday, while we were suffering 110 mile /hr winds in Houston.
AIG – Their credit was downgraded this week from AAA status to almost the lowest possible level. This forces them to raise billions in new capital to cover its debt exposure, which they could not do. AIG is the worlds’ largest insurance company. They insure everything from trips, to cars, to bonds. They cover every sector of the economy. The traders and stocks/bonds that are sold/bought every day rely on them to insure. The government is on the verge of placing them in conservatorship as well. Why would they bail them out and not Lehman, is my question? The affect of AIG failing is far more widespread than Lehman. AIG probably insures Lehman. They cannot fail. No way. That would be beyond words.
Merrill Lynch sold to Bank of America for $50 billion. B of A stated that ML was attractive because its wealth management is the best in the world and would complement their existing operations.
Washington Mutual is rumored of a potential acquisition by JP Morgan Chase
So, let me get this straight, the banks take massive risks in credit and equity deals, pay themselves like kings, and then rely on the US government to bail them out when they have had enough? What kind of legacy are we leaving for future generations? Is this how we want to be remembered? The US politicians talk about family, and core values, and then we do the opposite. Our children are learning that there is no sense of responsibility or consequence. The culprits seem to always get away somehow with a slap on the hand. So the Fannie CEO got fired, big deal! He will make thousands by writing a book that will be gobbled up by the Americans dying to know how he did it. BUT……We have to maintain the façade of the most powerful country in the nation. Are we really that good? That smart? That savvy? Does anyone know what they are doing? It seems to me like one large ‘puff’ of smoke. Except when the taxpayers have to foot the bill, will it seem like play money then?
September 5, 2008
Just when I thought the week would go by with no program changes ……….
Investors have pulled back on FHA and Conventional on the use of ‘alternate credit’. This means that if a consumer does not have 12 months of established history in the US, to generate credit scores, then they potentially will not be able to get a loan. This is potentially huge for relocating employees from overseas. Mind you, there may be no problem if the employee goes through some of the larger relocation companies. Just be sure they are pre-approved before you get under contract. One of our larger 2nd lien lenders made a new guideline that borrowers have to have 1 year with the same company to get approved. That was a new one. I have not seen that in about 11 years. Usually, as long as you are in the same industry for 2 years, but employed , it shows you are employable. And finally, our biggest issue continues to be that our investors are implementing policies ‘retroactive’. Gone are the glorious days of 30 days notice. Time to absorb. Gone Gone Gone. Once again, sign of the times. Do I sound like a broken record yet?
Foreclosures. We are sick of hearing about them, I know. But lets talk about reality. 39% of the foreclosures in the US are in CA/FL. Whew! 6.4% of Americans are behind on their mortgage payments, and 2 million homes are currently in foreclosure. Lets just all agree that it is not over yet, and do whatever you can to make your payments on time.
Rates are lower this week. Trending downward. Why? Recession fears due to a 5 year low in the unemployment numbers. Oil prices are down. Merrill Lynch is expected to post a larger than expected 3rd and 4th quarter loss. This is making the stock market go nuts! Good news for bonds, who love bad news. Remember bonds are the safe haven for investors that pull out of the stock market when ‘uncertainty and doom/gloom’ exist.GMAC, one of the top 10 US mortgage lenders, announced that 5,000 layoffs will come by year end. They will continue to originate loans directly to the consumer, but will cease all operations to the wholesale /broker market. Mike Larson, a real estate analyst for Weiss Research quoted to CNN Money this week that “We’re not confronting a credit crisis anymore. We are dealing with broad economic problems that are contributing to delinquency rates”.
Positive News…..yes there really is some! Patriot Bank has one of the most competitive local high yield savings accounts- 4.0% for deposits over $50,000! Call our main branch for details! 713.400.7100
Investors have pulled back on FHA and Conventional on the use of ‘alternate credit’. This means that if a consumer does not have 12 months of established history in the US, to generate credit scores, then they potentially will not be able to get a loan. This is potentially huge for relocating employees from overseas. Mind you, there may be no problem if the employee goes through some of the larger relocation companies. Just be sure they are pre-approved before you get under contract. One of our larger 2nd lien lenders made a new guideline that borrowers have to have 1 year with the same company to get approved. That was a new one. I have not seen that in about 11 years. Usually, as long as you are in the same industry for 2 years, but employed , it shows you are employable. And finally, our biggest issue continues to be that our investors are implementing policies ‘retroactive’. Gone are the glorious days of 30 days notice. Time to absorb. Gone Gone Gone. Once again, sign of the times. Do I sound like a broken record yet?
Foreclosures. We are sick of hearing about them, I know. But lets talk about reality. 39% of the foreclosures in the US are in CA/FL. Whew! 6.4% of Americans are behind on their mortgage payments, and 2 million homes are currently in foreclosure. Lets just all agree that it is not over yet, and do whatever you can to make your payments on time.
Rates are lower this week. Trending downward. Why? Recession fears due to a 5 year low in the unemployment numbers. Oil prices are down. Merrill Lynch is expected to post a larger than expected 3rd and 4th quarter loss. This is making the stock market go nuts! Good news for bonds, who love bad news. Remember bonds are the safe haven for investors that pull out of the stock market when ‘uncertainty and doom/gloom’ exist.GMAC, one of the top 10 US mortgage lenders, announced that 5,000 layoffs will come by year end. They will continue to originate loans directly to the consumer, but will cease all operations to the wholesale /broker market. Mike Larson, a real estate analyst for Weiss Research quoted to CNN Money this week that “We’re not confronting a credit crisis anymore. We are dealing with broad economic problems that are contributing to delinquency rates”.
Positive News…..yes there really is some! Patriot Bank has one of the most competitive local high yield savings accounts- 4.0% for deposits over $50,000! Call our main branch for details! 713.400.7100
Subscribe to:
Posts (Atom)