Lots of great things going on out there! Fannie just announced that they will purchase non owner properties from investors with 5-10 properties. This is excellent news for the market!!! Property Investors (my Bread and Butter) have unfortunately been subject to the most extensive lending reform of any property owning demographic. Prior to today, in order to qualify for financing, borrowers were limited to a maximum of 4 financed properties. I guess that desperate times called for desperate measures, but the 4 financed property rule made absolutely no sense…

Next week will be a big week for the markets in general. The next stimulus package should be voted in and we will hopefully see the conforming loan limit raised back to $729,750. Treasury Secretary Geithner (spelling?) will be laying out the second half of TARP and further stimulus programs for mortgages. I expect to see rates go lower next week, all predicated however on the new stimulus plan getting through Congress.

In other good news, there is now a Republican amendment that would temporarily offer homebuyers a tax credit worth $15,000 or 10% of a home’s purchase price, whichever is less, with the option to utilize all in one year or spread out over two years. The credit does not have to be paid back. It would be available to all purchases of any home from date of enactment for one full year - no longer just a first time homebuyer credit, and borrowers would be able to claim the credit against the 2008 tax return.

Rates for a conforming 30-yr fixed rate are about 5.75% with no points, 5.00% with one point, and 4.5% for a cost of 1.5 points. As much as our clients have been taught to believe that points are bad, are they going to get a better return from their 1.5 points by investing it in the stock market???

Ryan Ogata
Senior Mortgage Consultant

From: Rob Chrisman Subject: Feb 6: Senate's version contains a $15k tax credit. The jobs number is ugly but rates haven't dropped – yet

How about this idea, from a mortgage industry veteran? “With the lending criteria becoming too strict, the stimulus program needs to include a conventional (FNMA/FHLMC) Rollover Program similar to what was done in the 1980’s for FHA. The only qualification is that the property be an owner-occupied primary residence, the payments are current, and the borrower has equity to cover closings costs and prepays. Peg the rate at the stimulus rate. Like the FHA programs, fees should be restricted and instead closing a whole new loan, maybe a modification or rollover agreement form could be recorded to keep the costs and loss of equity (what equity is left) down. Money can still be made and the customer is once again protected. A FNMA/FHLMC rollover plan could help those of us that are not delinquent, using our hard earned income and savings to keep making our mortgage payments. Yes, the “forgotten” group of us that deserves a break too!! Lower those rates through a Rollover Program so we can put that hard earned income or savings back into the economy.”

Citigroup is selling the billing-and-collections rights on 185,000 mortgages (face value: $37 billion of mostly subprime and Alt-A) to Wilbur Ross’s American Home Mortgage Servicing for $1.5 billion. The deal lets Citigroup wind down Citi Residential Lending, formed from the remnants of ACC Capital Holdings/Ameriquest. As of last autumn, Citi Residential held servicing rights on about 247,000 loans, compared with about 6 million for Citigroup’s consumer-banking division. The deal will increase the number of loans American Home services by 45% to 575,000.

The Federal Reserve Bank of New York released its "Agency Mortgage-Backed Securities Purchase Program" report for the period January 29th through February 4th. Purchases totaled about $22 billion with $10 billion in Freddie securities and $10.5 billion in Fannie’s. Approximately 60% of the Gold purchases were in 30yr 4.5’s (4.75-5.125% mortgages) while the Fannie purchases were more evenly distributed from 4.5% up to 6.5 securities.

The market is currently digesting the Unemployment data, which (this should be no surprise) points to a grim economy. Nonfarm Payroll was down 598,000 in January, the deepest cut in payrolls in 34 years, and the Unemployment Rate hit 7.6%. These numbers are worse than expected, and in addition we saw some downward revisions to December and November. "January's sharp drop in employment brings job losses to 3.6 million since the start of the recession in December 2007," Commissioner of Labor Statistics Keith Hall said in a statement, and "about half the decline occurred in the last three months."

Manufacturing was down 207,000, the worst since October 1982, construction industries were down 111,000 jobs, and retail businesses cut another 45,000. Normally, an economy as bad as this would push rates lower, but instead, due to the supply and demand concerns, we find the 10-yr back up 2.95% and 30-yr mortgages either unchanged or worse by .125.

Rob Chrisman