You have got to check out The Mortgage Lender Implode-O-Meter.  It is a funny website to see at first, but then realty sets in.  I posted this because it allows you to keep an eye on the problematic companies.

Here is what has happened lately.  You go and try and get a loan through your broker, who “brokers” the loan out to First Magnus, for example.  Your closing date to buy and move into your new home is set for August 20, 2007.  You go through the loan approval process and you meet all of their guidelines for qualifying for the loan.  Underwriting even approves your loan, and August 16, 2007 comes and First Magnus announces that “First Magnus has been forced to stop accepting new loan applications or funding loans effective today.”

Guess what? You don’t get your loan or the home you want.

Why did I post this web-page?  So you can scroll down to the “Ailing/Watch List Lenders” section.  Beware of these guys.  if you have a loan with them, you may want to submit your loan to another broker just in case the above happens or switch to another lender if you have enough time left in your transaction.  The longer your transaction length the more likely you will experience problems.

I had a lender friend look at this list before he submitted the loan.  He saw one on the Ailing/Watch List and decided to submit to another lender as well.  Good thing.  A week later, he was called and told by the “Ailing” lender that they couldn’t do the loan and was shutting down effective immediately.  The loan carried through with the other lender and closed.

 Bond prices are showing volatility this morning, testing support at the 50-day Moving Average then bouncing higher from the worse levels of the day. Once again, bonds are trading at the mercy of stocks which are also trading lower and near their worse levels of the day.

Housing Starts and Building Permits were reported at their lowest rates in over 10 years, confirming the slower pace of sales we’ve seen in new construction.

Initial Jobless Claims was reported higher for the third week in a row and may indicate an increasing trend for weaker employment.

A potential market mover, The Philadelphia Fed Manufacturing Index for August, is scheduled for release today.

I’ll continue watching for a successful bounce in bond prices, while monitoring stocks and economic reports that might affect rates. At this time I am recommending cautiously floating conforming loans and continuing to lock non-conforming loans

There were rumors Countrywide Home Loans, the nations #1 lending company, was going to have to file for bankruptcy.  Arizona company, First Magnus, stopped issuing loans, and the Dow was down 343 points at 1:00pm.   It was looking very ugly. 

I had my DVR paused on CNBC with 35 minutes left until the market closed for the day.  I came back and pressed playing realizing there was 1 minute left until closing.  I pressed the live button, only to see the DOW was in positive territory as the market closed.  WOW!  I need a drink after these last two weeks. 

Is there promise from this, as Stocks Make Dramatic Comeback From Session Lows? 

A strong rally during the final half-hour of trading erased much of the market’s losses in another volatile trading session. The rebound was led by recently battered financial shares on optimism regulators may let Fannie Mae and Freddie Mac, the two biggest U.S. mortgage funding companies, play a bigger role in steadying the ailing industry.  At around 1 p.m. eastern time, the Dow had been down by more than 300 points.  Fannie Mae says it continues to talk with regulators about whether the housing finance company should increase the size of its investments in home loans as a means of stabilizing the rattled mortgage market.

Amidst all the bad news that has been going on, we finally got the good news I had been waiting for.  As I have been saying, inflation and interest rates are the two key components that I will keep an eye on in going forward in being able to develop a better picture of where our real estate market is headed.  We had wage increases of around 6% earlier this year, but the inflation rate was 5.9%, effectively giving us a no-growth situation.  This was a concern reflected by Paul Brewbaker earlier this year at the HDC Midyear Review. 

Now we see, the inflation rate slowed for the first half of 2007.  Definitely good news, but numbers that are definitely too soon to make judgements on.  This will hopefully help us maintain the stability we are seein gin the marketplace.

For those of you moving to or around the islands with children and schools are important, check out the article about Hawaii Public School Test Scores and to see the test scores, go to the Department of Education Website.

Ok… I read: Oahu Home Foreclosure Rate Rises and automatically knew I was going to have problems with this article.

O’ahu’s home foreclosure rate rose 68 percent in the first half of the year compared with a year earlier..

Yeah! Well then read the rest of the sentence:

but was still the fourth-lowest among large U.S. metropolitan areas.

Hawaii lenders were more cautious about putting clients in 3 year Arms and pay-option-ARM’s than most mainland companies, and most of the junk mail I receive about, “How XYZ company can reduce my monthly mortgage payment to $1,100 a month. Call now!” is from mainland companies.

I read somewhere, that Hawaii usually has a foreclosure rate that is 50% less than the foreclosure rate of the mainland U.S., and that right now our foreclosure rate is at 42% of what the mainland rate is. Read Mounting Subprime Loan Failures Seen In Isles As Well.

I will continue to send you updates daily as long as the market is in it’s current state as things settle down, so will my daily updates:)

Mortgage Bonds got some good inflation news by way of the Consumer Price Index, the CPI for July was reported at 0.1%, and the more closely watched Core CPI at 0.2%. The Report was in line with expectations and suggests that Core Inflation is stable to moderating. This is good news for Bonds and the Fed.

Yesterday, Bonds were able to make a successful bounce higher off of the 25-day Moving Average. For the moment, I advise cautiously floating, but be ready to take action if Bond prices turn lower.

Morning! Our market seems to be as volatile as our weather. Here’s what’s been happening in the market while we were sleeping….

Mortgage Bonds headed lower after the Producer Price Index (PPI), which measures wholesale inflation, showed a mixed read on inflationary pressures. Total producer prices rose 4% over the past year, which is pretty hot and Bonds didn’t like it! Meanwhile, the core rate of producer inflation rose by 0.1% matching expectations. Today’s surprising rise in overall producer inflation could keep bond traders on edge while waiting for tomorrow’s more significant release on consumer inflation.

Some bad news today from Wal-Mart and Home Depot may pressure Stocks lower and help Bonds improve. Mortgage Bonds have drifted lower the past few days, but are now approaching support at the 25-day Moving Average. I advise cautiously floating as long as the Bond can hold above support at the 25-day MA

Morning!

In today’s news….

Mortgage Bonds are edging higher this morning, as Stock markets around the world are sharply lower in the wake of spreading international concerns over banking and investment fund exposure to US sub-prime mortgages. Central Banks are again responding by making even more liquidity available, to help calm investor fears and prevent massive withdrawals from accounts and holdings around the globe. The other action the Fed could take is to consider a cut to the Fed Funds Rate. My sources feel that a Fed cut at the Sept 18th meeting is highly likely. The migration of subprime investing problems to Europe demonstrates just how widespread subprime mortgage investments are. As if more action was needed, the economic calendar sizzles next week. Even though Stocks have traded significantly lower the past couple of days, Bond prices have been unable to make a significant move higher. 

Prices are up almost 22 bps since lenders opened this morning with prices so we would advise locking any loans immediately in anticipation of an inter day price change.

So we are on a roller coaster ride for now.  For now, I will update you with daily news regarding the markets and how they effect rates since the market is so volatile right now.  To keep track of last weeks news read my news update: Good, Bad, or Ugly? 

Feel free to click on the link in the upper right hand corner to receive my newsletter regularly, and if you are looking to purchase or refinance, call me.  I can help you make the right mortgage decision in this ever changing market.
Keri Shepherd
Mortgage Broker
Office: 808-223-4118
Mobile: 808-223-4118
Direct: 808-356-5911
Email:keri.shepherd@charterfunding.com