FED DROP RATES!!! 9/18/2007

Well it is official, the FEDS dropped rates and discount points today by .50 of a point. To most that doesn't seem to be too much, but being that is the FIRST decrease or rate reducing since June of 2003 it is is true blessing to us that deal with this on a daily basis. Now, stocks reacted well and bonds didn't, BUT the recovery came later before close.

Here is where we stand;

Discount Rate (Currently 5.25%)
Prime Rate (Currently 7.75%)
Federal Funds Rate (Currently 4.75%)
(courtesy of www.thetruthaboutmortgage.com)



You ask, "what do these rates mean?"

Here is the explanation for you.

Discount Rate:

The Discount Rate is the interest rate the Fed offers to member banks and thrifts who need to borrow money to avoid having their reserves dip below the required minimum. The higher the discount rate, the higher mortgage interest rates will be. When the discount rate goes up, the prime rate goes up as well, which slows the demand for new loans, and cools the housing market.

The opposite is also true. If the fed lowers the discount rate, the prime rate will come down, and mortgage interest rates will dip to more favorable levels. This can boost a slumping housing market.

Prime Rate:

Prime Rate is the interest rate offered by commercial banks to it’s most valued corporate customers. The prime rate is also the basis for many mortgage programs, including Heloc’s (Home Equity Line of Credit), which many banks offer to homeowners at prime plus X amount, prime minus X amount, or simply prime plus zero.

The prime rate always adjusts according to how the Fed changes the discount rate.

Federal Funds Rate:

The Federal Funds Rate is what banks charge one another for overnight use of excess reserves. Banks avoid dipping below their required percentage of money on reserve by borrowing from one another.

The Fed uses the federal funds rate to control the supply of available funds, essentially controlling inflation. If the federal funds rate is low, banks will be keen to borrow from one another, using the reserves to grant more loans which in turn feeds the economy. If the Fed feels the need to slow things down, they will simply raise the federal funds rate, which will curtail borrowing among banks and reduce the amount of new loans.

OK.... enough right?!
So know that we can relax a little bit about the rates, I believe that there is something good on the horizon, truly. I said 2 months ago that I thought that the FEDS would reduce rates, and I also said that SEPTEMBER we would see improvements in rates, and programs. I do see programs coming back, easier programs for clients in trouble. Today I was informed that 1 of my lenders is entertaining loans such as;

Minimum Fico for Full Doc Borrowers is now 525

· Minimum Fico for Stated Self Employed Borrowers is now 560

· Max 1x90 or unlimited 60 day mtg lates over last 12 months Full Doc

· Max 1x60 or unlimited 30 day mtg lates over last 12 months Stated S/E

· Max LTV 525 Fico Full Doc= 75%

· Max LTV 550 Fico Full Doc= 85%

· Max LTV 560 Fico and up Full Doc= 90%

· Max LTV 560 Fico Stated S/E= 75%

· Max LTV 580 Fico and up Stated S/E= 80%

That isn't that bad now is it?! It's a good day, remember that it had to get WORSE, before it could get BETTER! I am not saying that we are out of this yet, and we soon will, but after each storm there is a sunrise.

Have questions? Comments? Email me;

Corey.Mullin@gmail.com

http://mortgage-pro-opinion.blogspot.com

9/14/2007

OK, so not much has happened, BUT it is has been a REALLY weird week. First things first though, Colts... STOMPED the Saints, honestly looks like the Titans will have same same demise. I have one word for this season, CLICK HERE!

I know that the mortgage industry is tough, and mean right now, so HONESTLY why does a Pro Wrestler think that he should enter OUR world! You don't see Joe Shmoe off the street take on a 300 pound FAKER in the ring do you? I know that right now you are saying, "Corey, what are you talking about?" This has to be the DUMBEST stunt yet, HONESTLY! Check this out!

Other then that I know that the FOMC is meeting again next week. Honestly I think that it should be a NO BRAINER to lower rates a bit. Investor Confidence is low, Unemployment rates are continually raising (average about 130,000 new claims per week). Also, by the way Countrywide announced Friday that is would be borrowing another 12 BILLION form 40 different banks. Just food for thought... :) Have a safe weekend, GO COLTS!
Comments? Questions? Email me:
Corey.Mullin@gmail.com
http://mortgage.pro-opinion.blogspot.com

9/6/2007

Well I thought that I better get this blog out before kick off of the NFL tonight. The Colts open up at home against the Saints. That is just not a fair way for the Saints to open the season... 0-1.

Everyone knows that this market has decayed, and crumbled. Thus leaving only the strongest, the smartest or the dumbest? Seems to me to be like a forest that has been stripped of its trees. Why do I say that? Do you have ANY idea how many jobs where lost last month?

-In August, there were 79,459 mortgage jobs lost! CRAZY?! That is an 85% increase from the previous month of July. Layoffs, seem to be the next big thing. This week Citigroup, Lehman Brothers, and National City Corp are the big fat cutters.

Random Stats:
-Mortgage Rates improved AGAIN!
-Feds Predict in the next few months 1.5 MILLION homeowners cannot afford their mortgages
-Countrywide allows 65% DTI (debt to income ratio)


Questions? Comments?

Reply to my blogs or email me;

Corey.Mullin@gmail.com

http://mortgage-pro-opinion.blogspot.com

9/5/2007

So, our week is all screwed up due to the holiday, BUT HOW WAS IT?! College Football is back and in FULL ATTACK, poor Irish looked horrible, but they will do OK. Now, on to the news....

Has anyone heard? Argent and Citi merger? Products are on hold until 9/15/2007, but I think that it is going to be a good thing. Argent's products have been horrible for the past few months. They took all their STATED programs away, lowered LTV maximums.

Well like a said a while ago, RATES HAVE DROPPED! The stock market has not returned very well, meaning better rates and lowered tension on the broker front line. The conforming loan seems to be the newest trend ($417,000 or under).

Here is what I see happening shortly...

-JUMBO pricing, comes back in the next few days/weeks...
-Rates continue to drop slowly....
-FOMC lowers rates ...
-LSU Stomps VT

I better stop before I get ahead of myself.

The Federal Reserve released the Beige Book today. You ask what the Beige Book is? The report details the current economic condition of each US region. This is a HUGE impact on our industry. This will truly sway the market some how, hopefully for the better. We shall see what the crystal ball shows by Friday.


Thanks Everyone

Keep the questions coming!

Email me:

Corey.Mullin@gmail.com

http://mortgage-pro-opinion.blogspot.com

8/30/2007

Well it is technically the end of the month. How did ya do? Oh I saw you roll your eyes! :) Don't worry, things are shifting around, BUT rates are getting better. I didn't Post yesterday, BUT some major things are happening.



Oh....by the way, rates dropped a bit today! On a second note, the FEDs I BET are going to Nationally drop rates. With the release of the FOMC minutes, the feds are not too concerned about the credit issues in the markets but on the other hand they are concerned that if the conditions continue to worsen, they hinted that lowering rates would be an easement. WOW! This SOUNDS REALLY FAMILIAR! Oh that is right, I wrote that a few weeks ago!



Option One Mortgage Corp (OOMC) MIGHT actually shutdown. The Mortgage company that is owned by H&R Block was talking about selling back in April 2007 for 1 billion. With the quarter losses of 302.6 million, 1 billion is a STEAL! I know that OOMC is dropping rates a bit in the next day or 2, but that may be to have a little last horraa! Last stand? More like last of the Mohican's!

Quote of the day was emailed. Countrywide with the silver tongue today apparently.

"...most difficult period on the history of mortgage lending".

The only other news that I have is that it is interesting to me that Indymac seems to be buying up branches. Something about American Home Mortgage branches put a good taste in Indymac mouth. They have purchased and taken over 90 branches thus far. I have 2 immediate questions.

1st: WHY?!
2nd: If you have the money to do that, and not be frugal with your money (assuming it's yours) what is it on the horizon that you see coming?


That is all for now!

Questions? Email me:

Corey.Mullin@gmail.com

http://mortgage-pro-opinion.blogspot.com/

8/28/2007

Sorry I missed yesterday, a bit under the weather i guess you can say. OK as I wrote over the weekend this week is ALREADY turning out to be something else huh? Why you say?.... here's the quick dip:

Mortgage IT (MIT) Halted ALL SUBPRIME, ALT A, and OPTION ARM production, and origination. Hmmmm... so you are telling me that the leader in option arm is getting cold feet? Maybe they are not big enough to ride THIS ride. Is MIT the type of lender that gets in while the gettin' is good?

CIT is no longer. I honestly can't say anything too much about them but too bad!

American Home Services Beat out Fannie Mae in court to continue servicing mortgages, even though they went Bankrupt this month. What does BK mean anyways right? I can refi someone 1 day out, keep the house, credit boost, SO what it stays on your record. I should probably stop talking about that. Shortly, BK is JUST a slap on the wrist! And should have NO bearing on your mortgage rate (unless you are late). It is EXACTLY like American Home Services states on their website; "restructuring".

It's going to be a bumpy ride this week, as you can tell already, but I truly believe that it will pan out for the best for us hopefuls in the business.

Inflation Report and New Homes Sales Report both came out today. I will most likely comment on those tomorrow along with the FOMC (Federal Open Market Commitee) meeting minutes.

Quick thought, remember.. when the Economy is GOOD, that is BAD for Bonds and Home Rates and visa versa. Some people asked me the other day HOW I know what rates are going to do or what they did, so that is why I am including that.

Sorry I seem a bit long winded today, most likley form missing Monday's gab-fest.

Questions?Comments?
Email me:

Corey.Mullin@gmail.com

http://mortgage-pro-opinion.blogspot.com

8/25/2007

OK, so I missed yesterdays posting due to mere volume of work that is coming in now. Want to know about the marketing strategies? Email me.

SO... this month California is up at a 93% jump in foreclosures WOW! Nationally it is up 3%

Ironically with 180,ooo NEW foreclosures THIS month in California alone, the luxury sales are still consistent. Even with the market as rough as it is, people still buy extremely expensive homes. Odd isn't it? Well no... if you have the money to spend, and you don't need the HUGE loans, then that would make sense. When I say luxury home purchases I am meaning OVER 2 million.

For the upcoming week:

Expect a VERY busy week in the market. 4 out of the 5 market days there are significant reportings. The FMOC is meeting, and the release of the minutes will help understand where each member is leaning.

On a side note: watch for a Etrade and TDAmeritrade merger

Good Luck to everyone this coming week, it is going to be an interesting one ....as usual.

Email me your Questions or Comments: corey.mullin@gmail.com

http://mortgage-pro-opinion.blogspot.com