Well this has definitely been a rollercoaster ride for the last few weeks.  Being able to obtain a mortgage is becoming more and more difficult and the news is changing daily, soooo, here is an update for the past weeks Mortgage Market News activity. 

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Ok….The title of an article in the Honolulu Advertiser says that Hawaii home foreclosures are up 60%, then the article says:

But the firm noted that the year-over-year change in Hawai’i may have been inflated because of expanded data coverage for the state last month.  RealtyTrac counts a range of document filings in the foreclosure process, from default notices to auction notices and bank repossessions. RealtyTrac said Hawai’i’s 85 foreclosure filings last month equated to one for every 5,777 households. That was sixth-lowest among states, and compared with a national average of one filing per 693 households. Hawai’i has maintained a relatively low foreclosure rate thanks in part to mostly stable home prices and a strong job market. Because of the methodology, RealtyTrac’s count can include more than one foreclosure filing on the same property. But the data also misses nonjudicial foreclosure notices that aren’t recorded publicly, and situations in which homeowners in mortgage default are working with lenders in hopes of avoiding foreclosure action.

Way to discredit your own articles title!

Are you into retirement and planning for years of taking the trips you have always wanted to, hobbies you never had time for, and enjoying that second home you never could get to due to work?  Maybe you are like Pete Perillo, who is still working at age 92. Well, this is also when you should take time to plan your estate.  Planning and communication is the key and here are tips for avoiding financial and personal headaches..

Ok….things aren’t that bad,…..yet, and Bernanke hasn’t done enough, in a lot of people’s minds, to help the current market situation.  We all know that one person (The Fed Chairman) has more power an influence over the markets than anyone else.  I did, however, read an interesting article about Fed Chairman, Ben Bernanke and the Great Depression, that I thought I would pass on.  Enjoy.

With all the problems going on in the mortgage industry currently, how does it effect you as a buyer looking to purchase a home by obtaining a loan?

As more lenders collapse, the skittish survivors are raising their rates and changing the rules for getting a loan every few hours as they scramble to stay alive. The upheaval has made it virtually impossible to secure financing for scores of borrowers who would have easily qualified for mortgages just a few months ago, creating a lending drought likely to deepen the housing slump.

And now we see the effect of companies that can do less loans.  Countrywide cut 500 jobs.  I figure there will be more than this to come. 

I am seeing more and more loan program options disappearing or changing daily.  You may be pre-approved for a particular loan program today, but come tomorrow, the lenders change the guidelines so you don’t qualify anymore.  This means more work on your lenders part to stay up on the latest news and information.  You will want to keep in constant contact with your lender, so when you find the perfect home you can make the best decision on which loan program will fit, and when to lock your rate.

Countrywide also cashed out it’s 11.5 billion dollar credit line the other day, here was another interesting article titled: Did Counrtywide Get A Hand From The Fed?

Breaking news.  Hawaii’s unemployment rate increased to 2.6%, and fell to number 2 in the country for the lowest unemployment.

The seasonably adjusted rate of 2.6 percent was a 0.2 percentage point increase from June and from the same period last year, according to figures released yesterday by the state Department of Labor and Industrial Relations. The increase dropped Hawai’i from the No. 1 spot it shared with Montana in June to No. 2 in the country.

Yes that is sarcasim in the beginning of the post.

One of Oahu’s more successful lending companies closed down due to the fallout of Arizona based, and the nations 15th largest mortgage lender First Magnus corp.  Now new news about the future of the company has finally surfaced.  This effected many people that are personally close to me.  To give you an update on the situation read: Charter Funding Shops For New Owner.

The Fed feels the downside risk to growth has increased significantly, and with the lastest bad news at the end of last week, has decided to lower the discount rate by 1/2 percent.

The Fed acknowledged that conditions had deteriorated and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward.  The central bank said it was monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy arising from the disruptions in financial markets. Markets worldwide have been pummeled by a rapidly spreading credit crisis that began with rising defaults in U.S. subprime mortgages – home loans made to people with weak credit histories. Now the problems are spreading to other borrowers.

This was surprise action by the Fed.  And indeed, many saw Friday morning’s surprise action by the Fed as a move that saved the day in terms of the financial markets…at least for now.

What was the surprise move exactly?
It was actually a doubly good surprise, consisting of two specific actions by the Fed, designed to help ease some of the current fears in the financial markets.
First, a .50% cut to the Discount Rate, taking it from 6.25% down to 5.75%. This is the rate at which the Fed lends money directly to commercial banks, credit unions, savings & loans, and also including large mortgage bankers. Now this is a different rate than the Fed Funds Rate - which is the rate at which banks lend money to other banks, currently at 5.25% - and is the rate generally discussed in terms of cuts or hikes surrounding normally scheduled Fed meetings. Note, the Fed’s move to cut the Discount Rate has no impact on mortgage rates or consumer rates like home equity lines of credit. The Discount Rate is generally above the Fed Funds Rate, which does make borrowing money from the Fed a last resort for lending institutions, as they would generally borrow from other banks at a lower rate. However, with the current liquidity situation making that more difficult by the day, the Fed’s move will help provide lending institutions more liquidity at more desirable rates in the short term.
Next, the Fed extended the borrowing period on these funds from overnight to thirty days - which could allow some lenders to use this money for funding home loans, in case their other sources are backing off. It will also allow time for the credit markets overall to settle out a bit, and this move will help financial institutions better weather the current storm. In fact, Stocks loved the news - particularly financial stocks - and the Stock market rocketed higher on the good news.  Also, read Fed Rate Cut Helps Markets Recover

As expected, the Honolulu Advertiser, reported that the Hawaii economy is expected to moderate this year and into 2008.

Personal income, total wage and salary jobs, and state gross domestic product are all forecast to increase, although below the unusually high growth rates experienced during the previous few years, according to the latest quarterly economic forecast released by the Department of Business, Economic Development and Tourism.

You can check out Bank of Hawaii’s economic report for July, prepared by Paul Brewbaker.

I was recently sent a pdf about how to properly manage your mortgage in trying to obtain financial wealth and to put yourself in a better financial position.  This is the best mortgage planning advice I have come across, and really paints a different picture as to how you should determine what mortgage will be right for you. 

I read somewhere, that 80% of people go with 30 year fixed rate mortgages, which is surprising because the average person either refinances their home or sells it within 5 years of obtaining it.  I have refinanced twice in 5 years.  I personally don’t do 30 year fixed mortgages anymore because of the thinking behind this advice.   I recommend reading this as it offers some good mortgage advice.  Feel free to contact me with any questions.