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mtg rate update, "Know Your Options"

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Mortgage and Lending with Wells Fargo Home Mortgage 461452

From Think Big, Work Small

  

Always key; the employment data hit at 8:30 and overall it was disappointing for those that were sure we would see a big increase in private jobs The consensus was for an increase of 90K private sector jobs, as reported private sector jobs increased 71K. The headline non-farm payrolls were expected at -65K, as reported down 131K with 143K census jobs terminated. The unemployment rate remained unchanged at 9.5% against estimates of 9.6%; the unchanged unemployment rate implies more potential workers simply have withdrawn from looking for a job. In June non-farm jobs originally reported at -125K was revised to -221K; private job creation in June was originally reported up 83K, it was revised to +31K. Businesses have added new jobs for seven consecutive months, but the adds are small and suggest the economic recovery will drag slowly along.

 

The weaker than expected employment data sent stock indexes down and rallied the bond and mortgage markets. The initial reaction broke that solid resistance level on the 10 yr at 2.88% taking it to 2.86% by 9:00, mortgage prices improved 6/32 (.18 bp). While the rate markets have improved the magnitude isn't much given more confirmation that the job markets are still extremely weak; 8.5 mil lost jobs in the recession and are slow to recoup. Many of the lost jobs are unlikely to return as businesses have cut the fat to the bone and with consumer spending not rebounding new hires won't occur for a long time, possibly three more years to get back to acceptable employment levels.

 

Later this afternoon at 3:00 June consumer credit data will be reported; estimates are for a decline of $5B; our estimate is lower at -$8B. Normally an arcane series but these days with most debate centering on consumers it is a critical report for traders.

 

While interest rates are improving on the employment report, the day is long and subject to volatility. The stock indexes were hit hard on the 8:30 data but by the open the key indexes were off their lows. Overall however, the weak employment data will keep safety trades moving into treasuries and other high grade corporate bonds and into MBSs. Mortgages being originated now are some of the best underwritten loans seen in many years, investors should be taking note of that.

 

From Freddie Mac:  Mortgage Rates Down Again as GDP is Revised Lower

 

August 5, 2010


McLean, VA - Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), with the 30-year and 15-year fixed-rate mortgages reaching record lows for this survey. (The 30-year fixed-rate survey began in 1971, and the 15-year began in 1991.) The 5-year adjustable rate mortgage also reached its lowest level since Freddie Mac began tracking it in 2005.

News Facts

•·         30-year fixed-rate mortgage (FRM) averaged 4.49 percent for the week ending August 5, 2010, down from last week when it averaged 4.54 percent. Last year at this time, the 30-year FRM averaged 5.22 percent.

•·         15-year FRM this week averaged a record low of 3.95 percent, down from last week when it averaged 4.00 percent. A year ago at this time, the 15-year FRM averaged 4.63 percent.

•·         5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.63 percent this week, down from last week when it averaged 3.76 percent. A year ago, the 5-year ARM averaged 4.73 percent.

•·         1-year Treasury-indexed ARM averaged 3.55 percent this week down from last week when it averaged 3.64 percent. At this time last year, the 1-year ARM averaged 4.78 percent .

Quotes

Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

  • "And yet again, interest rates for fixed-rate mortgages and now the hybrid 5-year ARM fell to all-time record lows this week following the second quarter GDP release. Annual revisions cut the cumulative GDP growth in half over the past three years ending in the first quarter of 2010 from 1.4 percent to 0.6 percent. This reduces inflationary pressures and allows longer-term rates room to ease.
  • "More recently, housing investment picked up in the second quarter of this year as the homebuyer tax credit spurred new and existing sales and low mortgage rates encouraged remodeling. Fixed residential investment added 0.6 percentage points to second quarter real GDP growth following two quarters of decline."

 

Know Your Options

 

Great new website - check it out!  http://www.knowyouroptions.com/

 

Here are some of the topics you'll find within the website:

Frequently Asked Questions

•1.    Who is Fannie Mae?

•2.    I am worried about foreclosure. Where can I turn for advice? What will it cost?

•3.    I have an adjustable-rate mortgage (ARM) that's about to reset. Can I refinance through Fannie Mae?

•4.    I'm not behind on my mortgage payments yet, but worry that I will be soon. What should I do?

•5.    If I'm delinquent with my mortgage payments, what options do I have?

•6.    I am facing foreclosure. What are my options to save my home?

•7.    My house has been foreclosed. Is there anything I can do to get it back?

•8.    If my foreclosed home sells for less than what I owe, will I owe my mortgage company the balance?

•9.    Do I get any money back if my foreclosed home sells for more than what I owe?

•10.  How long do I have before I have to vacate my foreclosed home?

•11.  Is it best to walk away from my property if I can no longer make the payments?

•12.  How long will a foreclosure stay on my credit report?

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