Rate Watch 9/26/08: Carefully Floating

Liquidity is gone in the financial markets as Banks are not even lending to each other within the Federal Reserve System. All eyes are on the newly named "TARP", Troubled Asset Relief Program (the $700 Billion Bailout Program currently before Congress). You heard TARP from me first! Banks are failing, but immediate arrangements are made to keep depositors money safe and prevent a FDIC Insurance claim and payment. Washington Mutual's assets were purchased this morning by Chase, and Citi is in talks to take over Wachovia. Oil is down $2.14 to $104.83, the Dow is up 121 and bonds were flat and trading in a consolidating, sideways pattern for the past 3 days. Bonds and stocks are not making a move one way or the other until TARP is announced. The vote in Congress should be tomorrow (Saturday) and the announcement, as has been the pattern for the last 3 major financial announcements, on Sunday, September 28th. On the technical side, bonds continue to trade just above two levels of support of the 25 day and the 200 day moving average. For today, and for the past 3 days, I have recommended carefully floating while we wait on the sidelines to see what the decision is regarding the financial bailout package.

Manufactured Housing Financing update 9/25/08: Still have financing!

Clarification from my Underwriting Team today (which updates and corrects the update posted yesterday):

Okay….HUGE confusion on Manufactured homes!! Guidelines were changed regarding DAP’s (Down Assistance Programs) with Manufactured homes and the way that the new guidelines were rolled out, they led everyone to believe that Manufactured Homes went away (NOT surprising assumption in this market!!) HOWEVER, the guidelines were “re-rolled out” and the verbiage reworded and Manufactured Homes are STILL OKAY (but DAP’s with them are not!).

Rate Watch 9/25/08: Carefully Floating

Just as the past two days of advice has started, this morning I am recommending carefully floating as Stocks are up 190 points and Bonds are up 10 bps from open. Today's news which benefitted Bonds included a worse in 7 years Initial Jobless Claims Report reading which indicates weakness in the Labor Market. The Durable Goods Report also came in lower than expectations, showing again that we have inherent liquidity problems in our economy because it takes financing to build durable goods and expand inventories. These two reports are adding to the need to pass the $700B rescue plan, and quickly! Several key reports coming out of Capitol Hill from President Bush's National address last night, is that we will see action on the recue plan by Monday 9/29/08! For now, I recommend floating, but as we have seen recently, the direction can change quickly and I will advise you of a need to lock if the Bonds change direction with the additional testimony of Paulson and Bernanke today. On the technical side, Bonds are trading just above their floor of support at 100.06 (floor at 100). As previously mentioned, we have seen Bonds bounce off of this floor in the past, but in the event Bond Prices fall below this floor, we could see another .49 bps drop in prices (drop in price=increase in bond yield=increase in mortgage rates).

Rate Trend Index: 9/25/08

This week, 40 percent of the panelists believe mortgage rates will rise over the next 35 to 45 days. Almost half think rates will fall, and the rest believe rates will remain relatively unchanged (plus or minus 2 basis points).

Up:40%
Down: 47%
Unchanged:13%

Average Mortgage Rates: 9/25/08

NATIONAL OVERNIGHT AVERAGES

Conventional Loan: These averages include 1.75% discount point, origination fee of $795, $400 appraisal, Title Fees, assumes 20% equity, Loan size of $160,000, Credit Score of 720. FHA Loan: .35% higher in rate, 1.375% discount point, $795 origination fee, $150,000 Loan size, 600 credit score, 3% equity, $400 Appraisal, Title Fees

30 yr fixed mtg
5.98%

15 yr fixed mtg
5.66%

5/1 ARM
5.87%

Manufactured Housing Financing: FHA

From my Underwriting Team, today:

We had two investors left doing Manufactured homes. They both have pulled their Manufactured Homes financing this week…..so we have NO investors doing them! (and we can NOT broker FHA files)

FHA is working on rewriting the guidelines for Manufactured Homes, so I anticipate they will be back….but as of now, we can’t do them.

Let me know if you have any questions.

Daniel and Tia Johansen

Tony and Karen Thompson-Exit Realty Central in Layton, Daniel and Tia Johansen, and Marty Qualls. September 24, 2008 Closing at Founders Title Company with T.K. Fenner, Escrow
Closing Officer.

Buyer Thank You:

"Marty was an enormous help, not only in our loan application process, but in all the processes to get us to closing. We really appreciated how honest Marty was and the vast amount of time he spent explaining every step 0f the process to us. Everything couldn't have gone smoother, he worked with our busy schedule and helped speed everything along. We will refer everyone we know to Marty for home loans; no where will you find better service!" Daniel and Tia Johansen

Realtor Thank You:

"Marty worked on a loan for my clients this last month and I was very impressed with his knowledge of the loan programs and the current market conditions. Marty was extremely efficient, and made sure that my clients needs were met. The loan closed even earlier than we expected, and my clients were thrilled! We all enjoyed Marty's personal manner and sense of humor. I will recommend Marty to future clients as one of the loan officers they may use." Karen Thompson-Realtor Exit Realty Lakeview-Cell: 801-721-0791

Rate Watch 9/24/08: Carefully Floating

Bonds are improving slightly from yesterday's lock alert at midday. All eyes are on the Bailout discussion with Treasury Secretary Paulson and Fed Chairman Bernanke doing their best to sell the need for the program to the House and Senate Banking Committees. So far, it sounds as if the program would pass a vote in the House and Senate, but there will be some 'Politisizing' of the way it should be handled. Speed of the vote is critical. Credit is tightening daily and we continue to have a liquidity crunch in the Mortgage Market. I again say that the bailout move will help the Financial Markets, Stock and Bonds, over the LONG RUN, but for the short run, the market is looking at many bumps and volatility! For now I recomend carefully floating and will be watching the 4 critical reports and 3 meetings going on today which will have effect on the direction of rates.

Borrower Keeping Current Home: Guideline Change

As of Oct 1, 2008, all lenders and all programs (Conventional & FHA) will be changing the guideline regarding a borrower keeping their current home (usually as a rental that was documented by a lease agreement, which offset the payment) while purchasing the subject property. Listed below if the information regarding the change (call me with questions):

Pending Sale

If the current principal residence is a pending sale, but the transaction will not be closed (with title transfer to a new owner) prior to the new transaction:
· Both the current and proposed mortgage payments must be used to qualify the borrower

Conversion to Second Home

If the current principal residence is being retained as a Second Home:
· Must meet qualifications as a Second Home as defined in the Credit Policy Manual
· Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction
· Property has not been listed for sale in the past 90 days (unless evidence of job transfer is provided)
· Property has been owned at least 12 months (unless evidence of job transfer is provided)
· Reserves equivalent to:
o 6 months PITI for both properties is required; OR
o 2 months PITI if there is documented equity of at least 30% in the existing principal residence (as determined by an appraisal or AVM).

Conversion to Investment Property

If the current principal residence is being retained as an Investment property
· Both the current and the proposed mortgage payments must be used to qualify the borrower for the new transaction
· Property has not been listed for sale in the past 90 days (unless evidence of job transfer is provided)
· Property has been owned at least 12 months (unless evidence of job transfer is provided)
· Reserves equivalent to 6 months PITI for both properties is required.
· Up to 75% of Rental Income may be used to offset the mortgage payment if:
o There is documented equity of at least 30% in the existing principal residence (as determined by an appraisal or AVM); AND
o Provide a copy of the fully executed lease agreement; AND
o Provide evidence of receipt of a security deposit from the tenant and evidence that it has been deposited into the borrower’s account

Rate Watch 9/23/08: Carefully Floating

After a mid day reprice for the worse yesterday, after a Lock Bias yesterday morning, today the Bond market is trying to stabilize in the midst of the Fed's Testimony before Congress to sell the $700 Billion Bailout package. For now I am advising to Carefully Float and I will watch the market's reaction to the Congressional hearings today and will alert you of a change in direction.

Buyer Thank You

"We appreciated your promptness in handling all issues and problems." Greggory and Linda P., Loan#13743-992207

Buyer Thank You

"Thanks for everything you did to ensure our loan was processed. We certainly appreciate all of your efforts. We'll recommend you to our friends." Leo and Diane G., Loan#14051-992008

Buyer Thank You

"We appreciated Marty helping us take care of problems and we would recommend him to others" JD and Heather M, Loan#14560-993108

Buyer Thank You

"Marty was the best part of our Mortgage Experience and he did an excellent job of personalizing and simplifying the loan process for us." Clair and Sandy R., Loan#14450-003-992508

Buyer Thank You

"Friendly service-Always with a smile :-)" David and Melanie P., Loan#14373-003-99

Buyer Thank You

"Excellent service all the way around and I liked Marty's Stick-too-it-tiveness!" James and Teresa M., Loan#14257-003-99