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There was a lot of positive news this morning which has Wall Street investors happy, and therefore selling off bonds and buying stocks. The DOW is currently up more than 200 points, the highest level in 2009. The NASDAQ is also rallying up close to 50 points today.

• Home resales increased in June 3.6%, more than was forecast. This marks the third consecutive month of increased sales, and is attributed to lower borrowing rates, the $8000 tax incentive, and of course, the lower house prices. This gain in sales seems to confirm Bernanke's remarks to Congress this week, that the housing slump "appears to be moderating." Other economists agree. Michelle Meyer, an economist at Barclays Capital in New York commented that the "bottoming process is under way."
• The percentage of homes that were distressed sales or foreclosed homes fell to 31% last month which is a huge decline from the 45% - 50% we have seen in prior months. FAlling property values are both helping and hurting demand, because some people who wish to take advantage of low prices and move are unable to do so due to owing more than their houses are worth (making them unable to sell right now.)
• Earnings reports from some of the DOW 30 (biggest companies) continue to beat expectations, though most companies are reporting higher revenues based on lower costs, rather than on increased sales.
• The level of continuing unemployment claims decreased by 88,000 for the week ending July 11. This is the lowest number since April 2009. 41 states and territories reported increased claims while 12 reported a decrease.

There was other news today that apparently is already "priced into the market", including:

• Wells Fargo reported that bad loans jumped in numbers last quarter as more and more Americans are unable to keep up with payments. "Assets no longer collecting interest cimbed 45% as of June 30, compared to the first quarter of 2009."
• U.S. initial jobless claims increased by 30,000 last week.

With the stock market rallying so significantly today, and breaking through all sorts of points of resistance, there have been numerous comments by analysts on Wall Street that this rally could continue at least for the short term.

We are seeing the big investors (mutual funds, EFTs, etc.) moving back into the markets, and bonds are selling off. Mortgage rates have risen this morning along with the 10 year Treasury bond yield. The mortgage market opened with rates higher this morning, and we have seen at least 2 rate increases since the open. However, for those of you with investments in the stock market, this is a great day.!

Are you enjoying the cooler weather today? Get out and enjoy - we're in for a scorcher starting tomorrow and continuing into next week.

Have a fabulous day today. The week is almost over.

Best regards,

Shelby

Lic # ML-3604

Are you still waiting for a housing bottom? You may have already missed it. According to statistics recently released by Altos Research, housing prices have been on the rise in 21 of the 26 largest metropolitan areas for the last 3 months, while 22 of those areas showed increases last month. Yes, the Portland metro area did show an increase in median income prices for each of the last 3 months ending in June 2009. Our prices rose 0.5% last month, and 0.6% for the last 3 months.

Here are some highlights of the article:

• The largest price increases were in California, most notably in Los Angeles and San Diego.
• Housing prices continue to fall in Las Vegas
• Listed property inventory increased in 16 of the 26 markets, while it dropped in 10 of those markets. However, the rate of increase is slowing.
• In all areas, except Boston and San Francisco, the median period of time on the market was 100 days or more. In Portland, that number has increased to 110 days. Thank goodness we’re not in Miami where the median time it took for a house to sell was 262 days during the month of May 2009!
• The median price of homes listed in the Portland metro area as of the end of June was $342,133!
• The number of homes on the market in Portland, increased 1.8% for the month of June (these are houses listed by realtors, and does not account for homes for sale by owner). Total inventory as of the end of June was 14,336.
• Housing sales continue to increase, though most of the activity is in the lower end of the market (houses priced $250,000 and below.)

The article does mention that it is possible that median housing price increases peaked in June, and could even potentially drop again in the coming months.

All eyes remain on recovery from this economic crisis and the halt to increasing unemployment numbers. While most potential home buyers said they were waiting for the bottom before they buy, the truth is that many home buyers are still very nervous about losing their jobs, AND, many buyers either cannot qualify for financing, or think they cannot qualify. Because the media talks so much about how hard it is to obtain financing, many potential home buyers are not aware of the options that exist that might help them.

Please let me know if you have thought about getting into the housing market, but found you could not qualify for financing.  I can't promise to find a loan, but I will try. 

Best regards,

Shelby

I'm sure you all remember the "house flipping" phenomenom that contributed to the housing boom just a couple years ago. Guess what - it's back, but with a different twist. Investors are out there taking advantage of the glut of foreclosed properties on the market, and flipping these properties quickly, often without spending a cent on home repairs or upgrades.  Of course, the investor is making a profit on this sale, so, would you, as a home buyer, be getting a bargain? Possibly - that's really outside the scope of this "buyer beware." I do expect that most of you will do your own research to determine if these properties are a good value.

Here's the risk to you as a consumer. While there is probably no fraud involved in these transactions, as was the case during the housing boom, and while you may be getting a very good price for a very nice house, you may not be able to find good financing for your purchase.  Before you realize that financing options are scarce, you could jeopardize your earnest money deposit. FHA has had a 90 day "prior owner" rule for years, to discourage property flipping. They recently lifted that rule, but only for bank owned properties (foreclosures), and not even all bank owned properties will qualify for FHA financing. Fannie and Freddie do not have a 90 day flip rule, but they do look at "chain of title" to determine if the property you want to finance appears to be a flip. Most lenders will not finance properties that have not been owned 90 days by the seller.

So, how do you protect yourself? There are a few things you can and should do before you make an offer.

• • Chain of title - a record of who has owned the property and for what length of time, is a matter of public record, and is available to you through the county records.
• • If you are working with a realtor, your realtor can research the MLS for records of prior sales (assuming the house has been listed for sale).
• • Ask the seller. If the seller lies, he/she is commiting fraud and can be fined heavily, as well as be sentenced to jail time, so it is unlikely this information will be withheld. 
• • Make the 90 day rule a condition of your purchase offer, AND detail the type of financing you want, or require, as an additional condition of your purchase. (I strongly suggest you have a realtor or attorney write up your purchase offer, to protect yourself, if you suspect house flipping is part of the transaction you are entertaining.)
• • Talk to your lender, to determine IF financing is available, and what the terms of the financing will be.

When you limit your financing options, you may be forced to settle for higher rates, higher closing costs, and perhaps less attractive loan terms, in order to close your loan.

If any of you has experienced a problem with financing due to a 90 day rule, please comment on this post, to share your experience and to help others.

Make it a great day today. And, try to stay cool. We are in for a very hot week.

Best regards,

Mortgage rates are falling today! Almost all lenders now have "best" rates on the 30 year fixed rate mortgage a bit below 5% this afternoon. Rates on other types of loans are falling in tandem. Jumbo loans are making a comeback. Please call for more information on rates and terms available. Jumbo loans (since they are not regulated by Fannie and Freddie) tend to differ a lot from lender to lender, so we need quite a bit of information to determine which lender fits you best.

While the stock market closed up for the 7th straight day, based on better than expected earnings reports, there was also news that has put "fear" back into the hearts of some of the larger institutional investors, driving those funds back into bonds. The 10 year Treasury bond closed below 3.5% today for the first time in over a week.

Oil crossed over the $65/barrel price again this morning, but closed just below $65/barrel. Nevertheless, I noticed gas prices falling? I don't know what's going on there, since wholesale prices for gasoline are up. I have to confess that oil and gasoline are not areas that I follow closely, except to watch their effect on inflation (and therefore bond yields). I'm happy to see prices dropping at the pump though.

News that is driving fear into investors surrounds CIT group, one of the major lenders for small and mid sized businesses. The government has decided that CIT is "not too big to fail" and has left this financial giant to flounder, seeking private capital, and perhaps heading for a Chapter 11 bankruptcy. CIT did receive TARP funds in the original round of bailouts, so if they file for bankruptcy, those TARP funds will not be repaid to taxpayers. The reason for the investor fear though is if CIT collapses, it could deal a "crippling blow to an economy still bleeding hundreds of thousands of jobs a month..." Apparently CIT is a very big player in the clothing and merchandise industries.

In the meatime, we are hearing more and more that the recession is winding down and we should start looking for recovery mode in the next 1 to 2 quarters (by the end of 2009!). Your mantra today is "please let this be true." It would be so great to see our economy stabilizing, people back to work, housing prices stable and even rising? Is that too much to ask?

Fed Chairman Ben Bernanke was testifying before Congress today, giving his state of the economy speech, and trying to assure Congress that the Feds do have a handle on this runaway government spending, and can take on a "supercop role" if need be, in policing and monitoring the big financial institutions.

It's amazing and disconcerting to me that one body (the Feds) should have the power to control monetary policy, police the financial institutions, and is now getting involved in the policing of the mortgage industry as well. Fed Chief, Bernanke, is urging Congress to keep proposals to audit the Fed away from monetary policy duties. Excuse me, but does this man think he should have absolute power over the monetary policy of this country, without being subject to audit? OK - stepping off my soapbox, because I've wandered away from the subject of mortgages...

Say YAY today. With all this turmoil up on Capitol Hill, the investment community is nervous enough to be moving funds back into Treasury bonds and driving mortgage rates down. That's the crux of the news today, in a nutshell.

Make it a great afternoon.

Warm regards,

Shelby Bateson

503-819-6545 phone

Lic # ML-3604

* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.

Happy HOT Monday. If you love hot weather, you're going to love this week. It is forecast that we could hit 100 degrees by this weekend. For myself, I'll stay inside thank you. I melt in the hot weather.

The stock market is up again, for the 6th straight session. So far, the DOW is up approximately 7% since last Monday. Usually when we see the stock market up, we see investors running from bonds, so mortgage rates rise too. But, here's what we're hearing today. So far, 69 of the companies on the S & P 500 have reported earnings. 59 of those companies have beat estimates on earnings, so the investors on Wall Street are happy folks and buying. BUT, this is a huge earnings week with many of the major S & P players yet to report. Oil is up to almost $65/barrel, and most metal commodities, like gold, silver, etc, are way up as well.

Companies like Apple and Caterpillar are "biggies" that sometimes put a damper on earnings week, and have yet to report. While they may report good earnings, they tend to also add comments that earnings going forward are iffy. So, some investors are still buying bonds. Also, we have to keep in perspective that some of these great earnings are from banks and investment companies, that are cashing in on higher fees and stock issuance to cover their TARP loans. Others are retailers that are reporting better than expected earnings, but have slashed their workforces and inventories to bare minimums to survive. So, yes, investors are still nervous, especially as Fed Chairman Ben Bernanke will be testifying before Congress this week again about the state of the economy and an exit strategy from all this stimulus and federal spending, to keep future inflation at bay.

In addition to a proposed exit strategy, it is anticipated that Bernanke wants to keep interest rates low as long as possible to help our employment numbers. But, in order to be allowed that leeway, he will have to convince Congress that he also has a plan to keep inflation in check. (I wouldn't want to be Ben Bernanke right now, would you?)

So far, most economists are saying that "leading indicators signal the U.S. economy is nearing the end of this recession." However, the caveat is that unemployment is still way too high and housing prices, over much of the nation, have yet to stabilize. However, more and more economists are predicting that this recession could end by the end of this year! Of special significance are three factors:

1. The fantastic earnings reports by lenders indicates that credit is loosening up a bit - which is good news for both businesses and consumers.

2. Building permits for new home construction were up 8.9% in June. This will put many people back to work.

3. The Federal Reserve is sitting on $877.1 billion dollars in bank excess reserves. This is money that is "available for lending," but is being held by the Federal Reserve instead to keep banks from pumping those funds into the economy too quickly (which would result in inflation.) The Feds are paying interest on those reserves (with taxpayer dollars, of course), to incent the banks to not lend too much too quickly.

The end result is that mortgage rates are fantastic. Best rates on 30 year fixed rate loans are hovering around the 5% range again. 5/1 ARMs are way down in mid 4% range. However, we probably should not expect rates to stay this low for the long term. One of the leading indicators of a healthy economy is higher yields on long term treasury bonds, so savvy investors are watching for yields to rise as soon as possible. With economic recovery potentially around the corner, bond yields, and mortgage rates will begin to rise.

Have a fabulous week.

Best regards,

Shelby Bateson

503-819-6545 phone

1-866-626-2828 fax

Lic # ML-3604

* Best rates apply to borrowers with Loan to Value at or below 90% and credit scores of 740+. ** Best FHA rates apply to credit scores of 660 and up. There are upward rate adjustments for lower credit scores on all loan programs. All rates are subject to change without notice. These rates are NOT APRs - do not include closing costs.

Merrill Lynch analysts announced yesterday afternoon that the recession is OVER!! While that is certainly a feel good sentiment, perhaps Merrill is overlooking all those people still out of work, or still in fear of losing their jobs? What about the forecast, just this week, that unemployment could rise as high as 13%? A survey done by Realty.com just released this week, shows that more than 50% of potential first time homebuyers are reluctant to make that purchase for fear of losing their jobs.

Nevertheless, mortgage rates are on the rise today as business earnings continue to come in at or above estimates. Retailers, in general are reporting better numbers than expected (which is what prompted Merrill's remarks). The yield on the 10 year Treasury bond rose to 3.45% yesterday, a huge jump over the close Monday at 3.34%. Today the yield jumped to 3.61%, so yes, mortgage rates are definitely on the rise again! We have had several rate increases already today.

Last night, Intel reported much better than expected earnings, which has led to a huge stock market rally today. Intel earnings are considered very significant because they portend the trend in technology buying, which, of course, is very good news for the economy. In addition, there was some positive news about on orders and shipments in the manufacturing index, the first positive news we've seen in this sector is quite some time. The DOW closed up 256 points, while the NASDAQ closed up 63 points. The S & P crossed a critical point of resistance at 925 to close at 933.

At the same time, global confidence continues to drop to new lows as unemployment is surging worldwide. (Are you listening Merrill?) Government stimulus efforts are doing little to reduce unemployment as most of the stimulus dollars have yet to move into those "shovel ready" jobs out there. But, here's a green shoot for you...combined sales of both existing and new construction homes increased in May for the 4th straight month. Perhaps the housing market really is bottoming out finally at least nationally, even if we're not feeling it as much here in Portland.

So, are we in for another round of gains on the stock market, leading to ever higher mortgage rates? Mortgage applications were up the last two weeks, but then rates had dropped again. Currently, 30 year fixed rate mortgages are above 5%** again, though some lenders do still have ARM loans below 5%**. That still remains to be seen, as many of the "bellwethers" of the market have yet to report earnings. Any really bad earnings reports in the next week or so, could send the stock market tumbling again, with bond yields and mortgage rates dropping in tandem. As always, I'll keep you posted as news unwinds. In the meantime, mortgage rates in the 5% range are still very good rates, historically speaking. We all want to see those rates in the 4% range, but is that realistic long term? I'd love to hear your comments.

Warm regards,

Shelby Bateson

Town & Country Mortgage

503-819-6545 phone

Lic # ML-3604

Just time for a quick update - because this is news I think many of you are waiting to hear.

Mortgage rates are in freefall mode today. The stock market closed pretty flat today, very slightly in positive territory, but the bond market is being very kind to mortgages.

The yield on the 10 year bond is currently at 3.3% - down approximately 20 basis points from the close yesterday. Apparently our 10 year bond auction was very well received today.

The 30 year fixed rate mortgage has finally dropped below 5% again, for the first time in over 6 weeks. Adjustable rate mortgages are down in the mid 4% range, especially if your loan has already been approved and is ready to get docs out for signing. FHA loans are again in the low 5% range.

There is no way to know how long rates will remain this low. But, we'll take the good news anytime.

If you are one of those people who has been thinking this is a great time to buy, but you can't sell your current home, There has been one big change fairly recently that might help some of you.

Many lenders are now allowing you to offset the amount of the mortgage payment on your current house if:

1. You have 6 months reserves (PITI = principal, interest, taxes and insurance) in the bank that you can document for 60 days or more

2. You have at least a 1 year lease signed for your current house

3. You are allowed 75% of the lease payment amount to offset your current mortgage payment.

If all this is confusing, please call me. I'll be able to work if you qualify and for how much you can qualify. I know there are some of you out there looking to buy to take advantage of the low prices, but unable to sell your current homes.

Make it a great afternoon today.

Warm regards,

Afternoon! I hope you all had a fabulous 4th of July holiday weekend. We are now into the part of the year where we won't see another holiday until Labor Day, so the short work weeks have ended for the summer again.

On a happier note, it has cooled off today, for those of us who dread those 90+ degree days.

The stock markets took a major hammering on Friday with the higher than expected unemployment numbers. In addition, China was again talking about a "universal reserve currency, rather than the U.S. dollar, so the markets jumped into sell mode for fear that China would start dumping the $1.9 trillion dollars they are currently holding. Today, Russia indicated that a universal reserve currency should be something to be discussed, but for now the US dollar is still that currency and trading up today. So far, the 2nd quarter has not been kind to the rest of the markets.

The stock market opened down all the way around this morning, but is now trading up around 40 points for the DOW, and down approximately 10 points for the NASDAQ. Remember that 2nd quarter business earnings reports begin soon, so the market is skittish ahead of those earnings, though most analysts don't expect much. Also, potential market and rate movers are the big treasury auctions again this week.

Gas and oil prices are way down to levels we haven't seen in almost 6 weeks. Oil is down to around $64/barrel. Hopefully we'll see gas prices at the pumps follow shortly. In fact almost all commodities are trading way down today. Metals of all types, both precious, like gold and silver, and unprecious, like aluminum and steel, are way off recent high prices. Even fertilizers and seed are way down. Does this mean food prices might drop?

AND - Wine is cheaper than water!  according to winemakers in Australia.

The U.S. service industries (home builders, retailers) contracted at a slower pace last quarter than prior quarters which most commentators are jumping on as an indication that we are starting to see the economy turning slightly. Most businesses however, are saying that when they see housing stabilize, then they will start increasing their output. Again, it's that Catch 22 (Housing won't stabilize until employment stabilizes. Employment won't stabilize until businesses increase output, and round and round we go.) Which came first, the chicken or the egg? Hmmm.

In the meantime, monetary policy makers are again urging and criticizing banks for sitting on all the funding they have been receiving from central banks, rather than lending out those funds to stimulate businesses and world economies.

Lastly, another bright note is that mortgage rates are down a bit today. We are definitely nearing that **5% mark for the 30 year fixed rate loan. The 5/1 ARM is dropping more dramatically and more quickly than the 30 year fixed and is solidly below that 5% mark today with almost all the lenders that are offering the product.**

From what we're hearing, there is no cause to rush to top off your gas tanks today. Oil prices have broken through a resistance level, and are expected to continue to drop to closer to $60/barrel for the rest of this month.

Low rates!! Low gas prices!! It's sounding better to me!

Enjoy the rest of your days today.

Best regards,

 Good morning and Happy Holiday.

I received a lot of response to my email yesterday about the new HARP loan limits as high as 125%. It is always gratifying to me to see that a lot of you read my emails. However, it was apparent that many of you are confused about the email, so I'd like to clarify.

As a reminder, the HARP program was initiated to make it possible for those of you who currently have mortgages owned by either Fannie or Freddie, to refinance your loans at the lower rates, in spite of the fact that you owe more than your house is currently worth. With HARP refinances, you are not permitted to get cash back. You are permitted to refi for the purpose of lowering your rate, and therefore lowering your monthly payments to help you through this economic crisis.

When HARP was rolled out in February, housing values had not fallen as much as they have now. The lending limit was set at a loan amount of up to 105% of the appraised value of your home. Since home values have continued to drop, the lending limit has been raised to 125% of the appraised value. This has been done to allow more of you to take advantage of this program. If you have not checked in the past, or if you checked in the past and got a NO response, please click on the links below to find out if your current mortgage is owned by either Fannie or Freddie now. Some mortgages were reporting incorrectly, and Fannie and Freddie have purchased more existing mortgages.

https://ww3.freddiemac.com/corporate/

http://loanlookup.fanniemae.com/loanlookup/

For those of you whose mortgages included mortgage insurance payments, technically you do qualify for a HARP refinance transaction. BUT, Fannie and Freddie are requiring that in order to get this refinance, you must still carry mortgage insurance on your loan. The problem is that there are no insurers willing to insure this loan, so the reality is that you still cannot refinance your loan. In my less than humble opinion, this is not fair. Many borrowers who DO qualify for HARP funding, have a 1st and 2nd mortgage, rather than mortgage insurance, and never had more equity than you.

We in the lending industry, are campaigning on your behalf, with Congress and with Fannie and Freddie, to have this mortgage insurance requirement deleted. In our opinion, you are being unfairly discriminated against because you perhaps bought your house later in the game, or you didn't have the 20% down payment when you purchased or refinanced, or you didn't get a 1st/2nd mortgage combo loan when you purchased. If you have good credit, a good payment history, and a steady source of income, why should some people have an opportunity you are being denied?

I urge you to take steps to try to help yourselves, because this affects a LOT of you. When we in the mortgage industry talk to our Congressional representatives, or lobby Fannie and Freddie, we are often perceived as looking after our own interests - more business. Of course we want more business, doesn't everybody? But, at the same time, we are the ones in the position of seeing, first hand, how many of you are being affected by this ruling. YOU have to speak out on your own behalf. Congress tends to "grease the squeakiest wheel," so if you make yourselves heard in huge numbers, perhaps someone will actually take notice. There is no reason why your loan, at 125% of appraised value, poses a higher risk to the lender than someone else, with the same, and potentially even less equity. Following are some speaking points I suggest you use, if you should decide to contact your Congressional representative:

1. My credit score is __________

2. I have owned my home for _______ years

3. I have NEVER been late on my mortgage payment

4. I have steady employment income and have been at my current job for _____ years.

5. So, why can't I refinance my ___% mortgage at today's lower rates, when someone else with all the same statistics can?

Be sure to start your correspondence or call with the fact that you want to qualify for a HARP loan, but have been denied because your current mortgage includes mortgage insurance.

To contact your Congressman, Senator, or Fannie Mae, click on the links below to be taken to their websites.

https://writerep.house.gov/writerep/welcome.shtml

http://www.senate.gov/general/contact_information/senators_cfm.cfm

http://www.fanniemae.com/contact/crc.jhtml;jsessionid=OKGECFH3RIXC5J2FECHSFGQ?p=Contact+Us

Please have a safe and happy holiday weekend.

Warm regards,