The month of May was the third month in a row for stock market gains. I realize that many in my audience of real estate professionals have had a hard time enduring this market, but if you have anything left in the bank, my advice would be to throw it at stocks. Alright, it’s not that easy, but simply put, stocks have been appreciating as the credit freeze and bank liquidity crisis has settled down. The S&P 500 has gained about 34% since its March low, jobless claims are slowing down, consumer confidence is increasing and oil prices are rising. All good news right?
Not so fast. As one would imagine, this has not helped mortgage rates as of late. Follow the logic even further and you should be fearful that these higher rates will put a damper on our beloved housing market that was just finally starting to take off. The good news is that rates are only part of the “home buying equation”. Think about this for a second. Our industry does not thrive on appreciating markets, but rather transaction volume. Many houses are now more affordable, families are saving money for down payments, and rates are still relatively low.
As you know, the Federal Open Market Committee (FOMC) is meeting today and tomorrow to discuss the direction of interest rates. It will make a statement tomorrow at 11:00 AM PST. Here are my predictions:
-The Federal Funds (Prime) rate will stay the same
-The Fed will make a statement that inflation is “contained”
-And of course there will be some of ambiguous statement to the tune of “the weakness in the economy is still a major factor to be dealt with.”
What the mortgage market is looking for is some clue that the Fed will continue to inject money into the economy by buying Treasuries and mortgage bonds from Fannie Mae and Freddie Mac. If they make this statement, expect rates to drop dramatically for a few days. Who knows, we may see rates as low as 5% or below.
Ryan Ogata
Senior Mortgage Consultant
Tuesday, June 23, 2009
Thursday, May 28, 2009
Confucius says: “This is how the market finds balance”.
Is the party over? Anyone who has been in this business for any length of time has seen this before. Every now and again, rates drastically shoot up and down within the span of a few days. Yesterday, Mortgage Bonds had their worst single day performance since October of last, losing an astounding 206bp and rounding out the week to a grand total of 363bp.
So, what the hell happened and more importantly, what's next?
The main culprit for yesterday's sell off was supply. Remember Econ 101? The Treasury has literally had the money printers working nonstop to pay for the massive bailout. These hundreds of billions of dollars need to be absorbed by the market. The addition literally weighs on the entire market and drags bond prices lower. Now, also consider the impact of the high volume of refinance transactions. All those loans have been bundled, packaged, and subsequently sold on Wall Street. As those closed loans are now getting turned around and sold, this supply must also be absorbed. While the Fed has been a buyer, they simply can't buy enough to balance all the selling. It's Econ 101, “anytime supply exceeds demand, prices will move lower”. This is how the market finds balance.
Personally (DISCLAIMER: I’ve been wrong before), I think that the lowest rates are unfortunately now behind us. The US Government keeps borrowing (supply), and there are signs that the economy is slowly starting to recover. Unless the market continues to worsen (and it very well just might), I don’t know why rates would come back down to the levels of last week. We will definitely see some improvement from yesterday’s volatility, but the fundamentals will push us higher in the long term. Expect to see some lock opportunities every now and again.
As a friend of mine said yesterday: “I think I’ll take that razor blade to my arm now.”
In other news…
Durable Goods jumped more than forecast as a slow rebound in auto demand and surge in defense spending compensated for declines in general business equipment. The 1.9% increase reported by the Commerce Department was the largest since in over a year, and followed a revised 2.1 percent drop in March that was more than twice as large as previously estimated.
Jobless Claims dropped by 13,000 to 623,000. The number of people collecting unemployment insurance however rose to a record high for the 17th straight time. Who is hiring?
New home sales were reported to a projected pace of 352K, just under consensus estimates of 360K. Inventory is finally moving. I wonder why? Do you think decreased prices and cheap financing has anything to do with it?
More mortgage specific, delinquency rates are hitting record levels with almost 8% of loans currently delinquent. This figure does not count for loans currently in foreclosure, which represent another 3%, so add it up and the combined percentage of loans not current is more than 11%. FYI, this is a really big number! This should continue to weigh on the housing markets, as properties already in foreclosure or about to hit foreclosure will compete with any new listings. And if you were wondering how loan modifications are working? Not so well… According to the rating agency Fitch, mortgages that are modified typically only delay the inevitable and roughly 75% of such loans re-default inside of 12 months.
Ryan Ogata
Senior Mortgage Consultant
So, what the hell happened and more importantly, what's next?
The main culprit for yesterday's sell off was supply. Remember Econ 101? The Treasury has literally had the money printers working nonstop to pay for the massive bailout. These hundreds of billions of dollars need to be absorbed by the market. The addition literally weighs on the entire market and drags bond prices lower. Now, also consider the impact of the high volume of refinance transactions. All those loans have been bundled, packaged, and subsequently sold on Wall Street. As those closed loans are now getting turned around and sold, this supply must also be absorbed. While the Fed has been a buyer, they simply can't buy enough to balance all the selling. It's Econ 101, “anytime supply exceeds demand, prices will move lower”. This is how the market finds balance.
Personally (DISCLAIMER: I’ve been wrong before), I think that the lowest rates are unfortunately now behind us. The US Government keeps borrowing (supply), and there are signs that the economy is slowly starting to recover. Unless the market continues to worsen (and it very well just might), I don’t know why rates would come back down to the levels of last week. We will definitely see some improvement from yesterday’s volatility, but the fundamentals will push us higher in the long term. Expect to see some lock opportunities every now and again.
As a friend of mine said yesterday: “I think I’ll take that razor blade to my arm now.”
In other news…
Durable Goods jumped more than forecast as a slow rebound in auto demand and surge in defense spending compensated for declines in general business equipment. The 1.9% increase reported by the Commerce Department was the largest since in over a year, and followed a revised 2.1 percent drop in March that was more than twice as large as previously estimated.
Jobless Claims dropped by 13,000 to 623,000. The number of people collecting unemployment insurance however rose to a record high for the 17th straight time. Who is hiring?
New home sales were reported to a projected pace of 352K, just under consensus estimates of 360K. Inventory is finally moving. I wonder why? Do you think decreased prices and cheap financing has anything to do with it?
More mortgage specific, delinquency rates are hitting record levels with almost 8% of loans currently delinquent. This figure does not count for loans currently in foreclosure, which represent another 3%, so add it up and the combined percentage of loans not current is more than 11%. FYI, this is a really big number! This should continue to weigh on the housing markets, as properties already in foreclosure or about to hit foreclosure will compete with any new listings. And if you were wondering how loan modifications are working? Not so well… According to the rating agency Fitch, mortgages that are modified typically only delay the inevitable and roughly 75% of such loans re-default inside of 12 months.
Ryan Ogata
Senior Mortgage Consultant
Thursday, May 7, 2009
“HVCC” my new best friend and $729,750 is finally here.
I am the first to admit that if I had to make a living as a day trader, I would be bankrupt within a month. I guess my fallback plan of being a mortgage consultant will have to do for now, but it seems as if common sense and fundamental laws are being broken every day. Yesterday was a perfect example. The “Bank Stress Test” results were leaked out to the public and further confirmed what everyone already knew. Citi, Bank of America, and Wells Fargo will all require additional capital to stay in business. So what happened? Citi and BofA stock went up 17%, while Wells Fargo went up about 16%. HUH???
The long awaited temporary $729,750 Jumbo Conforming loan amount program has been rolled out by lending institutions everywhere. There are some minor guideline differences from the permanent $625K limit, but all things considered this is a really good loan program to help stabilize the real estate market. Watch out for subordinate financing (2nd mortgages) on refinance transactions and if your client needs cash out, it’s very limited. Second homes and investment properties have been limited to 65% LTV and credit score requirements are stricter than ever. Like I said, minor differences, but the flip side is that it expands conforming pricing some $100K for the next 7 months. Go out and sell!
Last Friday the “HVCC” (Home Valuation Code of Conduct) was put into action. “No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner including but not limited to…” To summarize, lending professionals are no longer allowed to “interfere” with the appraisal process for all Fannie Mae and Freddie Mac mortgage applications, and there now exists a buffer between the appraiser and the loan officer. In my opinion, this latest reform to the lending industry comes way too late and is going to cause more problems than it will solve. Think about this for a moment. Here we are right in the middle of a refinance boom and we are about to start adding applications to the system, further impacting lender turn times, before value for the property has been established. Not exactly the brightest move, but only time will tell how this one plays out.
In other news…
Looks like the FDIC is trying to come up with a politically correct term for “junk loans”. They don’t call bad loans “troubled assets” or “toxic waste” any more, instead, they are moving ahead with their “legacy loan” program. Part of the Financial Stability Plan, the Treasury Department has released the details of its public-private investment plan to remove “legacy loans” from bank balance sheets. It is hoped that $1 trillion can be sold using advantageous financing provided by the FDIC and the Federal Reserve (tax payers), including acquisitions of mortgages and mortgage-backed securities. Sales of “legacy loans” should free up obstacles to lending, while sales of legacy securities will unclog the secondary markets and help bring back jumbo financing.
MGIC (Mortgage Insurance) reported its seventh straight unprofitable quarter, posting a $184.6 million loss. Are you surprised? This loss has widened from the $34.5 million loss they posted in the same quarter a year ago, and makes you wonder just how much longer non FHA mortgage insurance transactions are going to be around for.
If you did not know, realtors now have their own credit union. REALTORS FCU serves the 1.2 million members of the National Association of Realtors (NAR), their families and staff. It will offer residential mortgages, along with lines of credit, consumer loans, and checking and savings accounts. The Web site for the credit union is www.realtorsfcu.org. Do you think mortgage lenders will get their own CU soon? I highly doubt it!
The long awaited temporary $729,750 Jumbo Conforming loan amount program has been rolled out by lending institutions everywhere. There are some minor guideline differences from the permanent $625K limit, but all things considered this is a really good loan program to help stabilize the real estate market. Watch out for subordinate financing (2nd mortgages) on refinance transactions and if your client needs cash out, it’s very limited. Second homes and investment properties have been limited to 65% LTV and credit score requirements are stricter than ever. Like I said, minor differences, but the flip side is that it expands conforming pricing some $100K for the next 7 months. Go out and sell!
Last Friday the “HVCC” (Home Valuation Code of Conduct) was put into action. “No employee, director, officer, or agent of the lender, or any other third party acting as joint venture partner, independent contractor, appraisal management company, or partner on behalf of the lender, shall influence or attempt to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, bribery, or in any other manner including but not limited to…” To summarize, lending professionals are no longer allowed to “interfere” with the appraisal process for all Fannie Mae and Freddie Mac mortgage applications, and there now exists a buffer between the appraiser and the loan officer. In my opinion, this latest reform to the lending industry comes way too late and is going to cause more problems than it will solve. Think about this for a moment. Here we are right in the middle of a refinance boom and we are about to start adding applications to the system, further impacting lender turn times, before value for the property has been established. Not exactly the brightest move, but only time will tell how this one plays out.
In other news…
Looks like the FDIC is trying to come up with a politically correct term for “junk loans”. They don’t call bad loans “troubled assets” or “toxic waste” any more, instead, they are moving ahead with their “legacy loan” program. Part of the Financial Stability Plan, the Treasury Department has released the details of its public-private investment plan to remove “legacy loans” from bank balance sheets. It is hoped that $1 trillion can be sold using advantageous financing provided by the FDIC and the Federal Reserve (tax payers), including acquisitions of mortgages and mortgage-backed securities. Sales of “legacy loans” should free up obstacles to lending, while sales of legacy securities will unclog the secondary markets and help bring back jumbo financing.
MGIC (Mortgage Insurance) reported its seventh straight unprofitable quarter, posting a $184.6 million loss. Are you surprised? This loss has widened from the $34.5 million loss they posted in the same quarter a year ago, and makes you wonder just how much longer non FHA mortgage insurance transactions are going to be around for.
If you did not know, realtors now have their own credit union. REALTORS FCU serves the 1.2 million members of the National Association of Realtors (NAR), their families and staff. It will offer residential mortgages, along with lines of credit, consumer loans, and checking and savings accounts. The Web site for the credit union is www.realtorsfcu.org. Do you think mortgage lenders will get their own CU soon? I highly doubt it!
Tuesday, April 14, 2009
Recently seen bumper sticker: “Honk if you are paying my mortgage”.
One by one, lenders are announcing their ability to fund loans under the new Fannie Mae program DU Refi Plus. This program is designed to assist borrowers that have demonstrated good pay histories on their mortgages but have been unable to refinance due to a decline in home values. Financing properties with a new first mortgage of up to 105%, the big question is what will happen to existing second loans recorded against the property. Under this new program, a lender in second position could be forced to subordinate to negative equity in the property (150% CLTV???).
After an unfortunate last couple of years in the lending world, Thornburg Mortgage, long thought of as a “make sense” lender of money to people who don’t really need to borrow, is likely going to file for Chapter 11 bankruptcy protection. Assets will be sold off to reduce their outstanding debt and the highly prized servicing rights to their pristine mortgage pool of Jumbo ARMS with one of the lowest rates of default in the industry will be transferred. Once these sales and liquidations are completed, the company will likely discontinue operations. For a market like San Francisco, this represents a massive blow to finance options for multi-million dollar properties. Once hailed as the best financing available for Jumbo loans and TIC transactions, the collapse of the secondary mortgage market has left this institution with no place to securitize their financing. They almost made it…
Speaking of mortgage companies filing for bankruptcy, does anyone remember New Century? Based in Irvine, California, New Century disclosed accounting errors some two years ago marking the beginning of the mortgage banking collapse. The stock promptly plunged 90%, and they immediately went bankrupt. Now we have a new lawsuit to follow: The trustee for New Century sued accounting giant KPMG last Wednesday, blaming it for its demise and accusing KPMG of failing its public watchdog role by helping the subprime mortgage lender make misstatements about its finances and by filing "grossly negligent audits." Good luck with that one!
As mortgage banks try to offer better pricing for their agents and brokers, one solution is to move from a best-efforts platform to a mandatory platform. Since loan “pull through” is at the top of every executive’s watch list for maintaining profitability, one idea is to pass the cost of breaking a loan lock to the consumer in exchange for lower rates. Of course, there are inherent risks in doing so, but it is something to be considered as lenders are looking to squeeze every possible dollar of profit out of their fundings. Overall the spread is now around 1 point in price. In another example of cost cutting and subsequently going “green”, Franklin American, has given their clients an imaged file delivery option. After June 1 if they transmit closed loan files for review and purchase by FAMC via hard copy paper files, FAMC will charge an additional $25. Loans submitted via imaged delivery will not incur the additional expense.
In other news, mortgage applications in the U.S. rose last week to the highest level in three months: +4.7%. The Mortgage Bankers Association’s index of applications to purchase a home was +11% and the refinance index was +3.2%. Mortgage bankers who were selling about $1-2 billion a day in mortgage securities, now average about $4-5 billion per day thanks to the Fed who is buying the bulk of the debt and keeping rates low (roughly $6.5 billion per day).
Is anyone else sick of walking into your local bank branch and being assaulted by the staff? You can’t walk through the door without having a “greeter” ask you about your day and offer you a cookie (As if they actually care… And the cookies totally suck!). As service standards have fallen drastically since the invention of the ATM, the fierce competition for deposits these days has forced many institutions to redefine their customer service experience. Work harder guys, I expect to see more creativity especially since it’s my tax dollars that are keeping the lights on. I’m still counting the days until I can walk in and get back all the money I lost on the market.
Ryan Ogata
Senior Mortgage Consultant
One by one, lenders are announcing their ability to fund loans under the new Fannie Mae program DU Refi Plus. This program is designed to assist borrowers that have demonstrated good pay histories on their mortgages but have been unable to refinance due to a decline in home values. Financing properties with a new first mortgage of up to 105%, the big question is what will happen to existing second loans recorded against the property. Under this new program, a lender in second position could be forced to subordinate to negative equity in the property (150% CLTV???).
After an unfortunate last couple of years in the lending world, Thornburg Mortgage, long thought of as a “make sense” lender of money to people who don’t really need to borrow, is likely going to file for Chapter 11 bankruptcy protection. Assets will be sold off to reduce their outstanding debt and the highly prized servicing rights to their pristine mortgage pool of Jumbo ARMS with one of the lowest rates of default in the industry will be transferred. Once these sales and liquidations are completed, the company will likely discontinue operations. For a market like San Francisco, this represents a massive blow to finance options for multi-million dollar properties. Once hailed as the best financing available for Jumbo loans and TIC transactions, the collapse of the secondary mortgage market has left this institution with no place to securitize their financing. They almost made it…
Speaking of mortgage companies filing for bankruptcy, does anyone remember New Century? Based in Irvine, California, New Century disclosed accounting errors some two years ago marking the beginning of the mortgage banking collapse. The stock promptly plunged 90%, and they immediately went bankrupt. Now we have a new lawsuit to follow: The trustee for New Century sued accounting giant KPMG last Wednesday, blaming it for its demise and accusing KPMG of failing its public watchdog role by helping the subprime mortgage lender make misstatements about its finances and by filing "grossly negligent audits." Good luck with that one!
As mortgage banks try to offer better pricing for their agents and brokers, one solution is to move from a best-efforts platform to a mandatory platform. Since loan “pull through” is at the top of every executive’s watch list for maintaining profitability, one idea is to pass the cost of breaking a loan lock to the consumer in exchange for lower rates. Of course, there are inherent risks in doing so, but it is something to be considered as lenders are looking to squeeze every possible dollar of profit out of their fundings. Overall the spread is now around 1 point in price. In another example of cost cutting and subsequently going “green”, Franklin American, has given their clients an imaged file delivery option. After June 1 if they transmit closed loan files for review and purchase by FAMC via hard copy paper files, FAMC will charge an additional $25. Loans submitted via imaged delivery will not incur the additional expense.
In other news, mortgage applications in the U.S. rose last week to the highest level in three months: +4.7%. The Mortgage Bankers Association’s index of applications to purchase a home was +11% and the refinance index was +3.2%. Mortgage bankers who were selling about $1-2 billion a day in mortgage securities, now average about $4-5 billion per day thanks to the Fed who is buying the bulk of the debt and keeping rates low (roughly $6.5 billion per day).
Is anyone else sick of walking into your local bank branch and being assaulted by the staff? You can’t walk through the door without having a “greeter” ask you about your day and offer you a cookie (As if they actually care… And the cookies totally suck!). As service standards have fallen drastically since the invention of the ATM, the fierce competition for deposits these days has forced many institutions to redefine their customer service experience. Work harder guys, I expect to see more creativity especially since it’s my tax dollars that are keeping the lights on. I’m still counting the days until I can walk in and get back all the money I lost on the market.
Ryan Ogata
Senior Mortgage Consultant
Wednesday, April 1, 2009
Former Treasury secretary, Henry Paulson, is writing a book about his role within the US economy. To my surprise, the book starts on Chapter 11.
It was the last day of the month and lending professionals everywhere were scrambling to fund loans. Lock volume continues to be strong and successful companies have made it clear that limiting fall out is critical to survival. I guess the old days of hedging your locks with one investor and floating with another are over, but as the industry continues to evolve, I expect to see more lenders charging upfront lock fees and employing other client retention strategies to keep their clients from straying.
After a seemingly long wait, Fannie Mae has announced that it will begin purchasing the new high balance loans of $729,750.00 for loan closings of May 1st and later. While the pricing of this long awaited "Jumbo Conforming" product is still TBD, the entire industry has our fingers crossed hopping for the best. My guess is that investors will figure out what to charge over the next month or so, but if recent changes to the overall lending system are of any indication, I would expect these loans to fall relatively in line with current $625K pricing. Fannie has revised loan-to-value ratios for certain loan types, implemented new minimum credit score requirements, and added additional appraisal requirements. (And no, I don’t know what they are, but hope for the best and expect the worst) More on this as information becomes available…
With all of the wonderful economic news circulating out there, it is hard to believe that rates could go up much in the near future. The Stock Market remains volatile to say the least and inflation threats are virtually nonexistent (at least for now). The Mortgage Bankers Association's applications index rose by 3% in the week ending March 27th. The purchase applications index was basically unchanged, and refinance index gained about 3.7 percent.
Ryan Ogata
Senior Mortgage Consultant
It was the last day of the month and lending professionals everywhere were scrambling to fund loans. Lock volume continues to be strong and successful companies have made it clear that limiting fall out is critical to survival. I guess the old days of hedging your locks with one investor and floating with another are over, but as the industry continues to evolve, I expect to see more lenders charging upfront lock fees and employing other client retention strategies to keep their clients from straying.
After a seemingly long wait, Fannie Mae has announced that it will begin purchasing the new high balance loans of $729,750.00 for loan closings of May 1st and later. While the pricing of this long awaited "Jumbo Conforming" product is still TBD, the entire industry has our fingers crossed hopping for the best. My guess is that investors will figure out what to charge over the next month or so, but if recent changes to the overall lending system are of any indication, I would expect these loans to fall relatively in line with current $625K pricing. Fannie has revised loan-to-value ratios for certain loan types, implemented new minimum credit score requirements, and added additional appraisal requirements. (And no, I don’t know what they are, but hope for the best and expect the worst) More on this as information becomes available…
With all of the wonderful economic news circulating out there, it is hard to believe that rates could go up much in the near future. The Stock Market remains volatile to say the least and inflation threats are virtually nonexistent (at least for now). The Mortgage Bankers Association's applications index rose by 3% in the week ending March 27th. The purchase applications index was basically unchanged, and refinance index gained about 3.7 percent.
Ryan Ogata
Senior Mortgage Consultant
Wednesday, March 25, 2009
The economic downturn has more Americans shifting to smaller homes. For example, Bernie Madoff just traded a 3,500 square foot penthouse for a 9 x 10 windowless studio in lower Manhattan.
Are mortgage rates heading any lower?
I truly wish that I had a crystal ball to consult. My prediction is that conforming has most likely bottomed out for the time being, aside from the occasional market rally, and that jumbo is going to come down soon. As it stands, borrowers can pay a point or two and tie up a 4.5% 30-yr mortgage on a conforming program. This is because the US government continues to buy conforming paper. When other investors express an interest in owning mortgages, jumbo or conforming, we should see mortgage rates drop across the board. Keep in mind however that this may take some time as companies are continuing to grapple with staffing, processing, and funding issues. In the meantime, they will continue to keep their margins high and make as much money as they can. Consider this, commercial and retail banks are looking at overnight Fed Funds near 0%, but conforming mortgage rates are closer to 4.5 - 5%. The average spread between fixed mortgage rates and the 10-year T-note is 2.3%, the highest it has been in over 20 years. And rates still have not moved…
Does anyone know when the $729,250 loan limit will be rolled out? (Why didn’t they just make it 730K???) I guess I may be out of the loop on this one, as I have heard rumors that the big banks are already advertising the new limit. Since this information came from my “cousin’s friend’s uncle’s dog’s best friend’s owner”, (I have seen nothing tangible) I remain skeptic that anyone has access to the funds. FHA has already been raised, but not conventional financing. I guess we will just have to wait and see.
In other news…
We have witnessed firsthand the problems with residential loans – is commercial paper next? Banks are reporting increased loan delinquencies from owners of office buildings, casinos, and shopping malls. The country’s 10 biggest banks have $327.6 billion in commercial mortgages, and Wells Fargo and Bank of America account for about half of commercial mortgages owned by these 10. According to a study from research firm Reis Inc., commercial property prices are down almost 20% in the past year. Bank of Hawaii Corp., City National Corp., Comerica Inc. and Sovereign Bancorp Inc. were among the companies put on Moody’s list of lenders with a “negative outlook” last week, partly because of their “risk concentrations” in the commercial market.
Ryan Ogata
Senior Mortgage Consultant
Are mortgage rates heading any lower?
I truly wish that I had a crystal ball to consult. My prediction is that conforming has most likely bottomed out for the time being, aside from the occasional market rally, and that jumbo is going to come down soon. As it stands, borrowers can pay a point or two and tie up a 4.5% 30-yr mortgage on a conforming program. This is because the US government continues to buy conforming paper. When other investors express an interest in owning mortgages, jumbo or conforming, we should see mortgage rates drop across the board. Keep in mind however that this may take some time as companies are continuing to grapple with staffing, processing, and funding issues. In the meantime, they will continue to keep their margins high and make as much money as they can. Consider this, commercial and retail banks are looking at overnight Fed Funds near 0%, but conforming mortgage rates are closer to 4.5 - 5%. The average spread between fixed mortgage rates and the 10-year T-note is 2.3%, the highest it has been in over 20 years. And rates still have not moved…
Does anyone know when the $729,250 loan limit will be rolled out? (Why didn’t they just make it 730K???) I guess I may be out of the loop on this one, as I have heard rumors that the big banks are already advertising the new limit. Since this information came from my “cousin’s friend’s uncle’s dog’s best friend’s owner”, (I have seen nothing tangible) I remain skeptic that anyone has access to the funds. FHA has already been raised, but not conventional financing. I guess we will just have to wait and see.
In other news…
We have witnessed firsthand the problems with residential loans – is commercial paper next? Banks are reporting increased loan delinquencies from owners of office buildings, casinos, and shopping malls. The country’s 10 biggest banks have $327.6 billion in commercial mortgages, and Wells Fargo and Bank of America account for about half of commercial mortgages owned by these 10. According to a study from research firm Reis Inc., commercial property prices are down almost 20% in the past year. Bank of Hawaii Corp., City National Corp., Comerica Inc. and Sovereign Bancorp Inc. were among the companies put on Moody’s list of lenders with a “negative outlook” last week, partly because of their “risk concentrations” in the commercial market.
Ryan Ogata
Senior Mortgage Consultant
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