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JP Morgan to buy Bear Stearns? Get ready for a rough Monday!!

According to MarketWatch, J.P. Morgan Chase & Co. reportedly has agreed to buy Bear Stearns Cos. for $2 a share in a stock-swap deal. Evidently the set price will be $2 per share. It appears that both boards have approved the sale and are trying to put it together prior to Monday's Asian market opening.

Get ready for a rough Monday. The markets will not like this. It has the possibility of sending Mortgage Rates much lower since they generally move in the opposite direction of the Stock Market. However, since Bear Stearns is a strong player in the mortgage industry, Mortgage Backed Securities might not like it either.

While it's curious that a couple of days after a Fed bailout they are selling at a bargain, the "loan" was for only 30 days. Who knows what pressure the Fed put on them for a quick resolution to stabilize the markets. It will be interesting to follow.

Since we ended Friday in a nice position for Mortgage Rates, it might be prudent to lock rates tonight if you have a lender who allows weekend locks. If not, get ready for an interesting day!

Larry Morris is a Certified Mortgage Planning Specialist (CMPS) with Equipoint Financial Network in Newberg, Oregon. He specializes in financing for Senior Citizens and Rural Properties. He can be reached at larry.morris@equipoint.com. His website is www.PDX-Mortgage.com.

Posted by Larry Morris, Oregon Mortgages on 03/16/2008 07:03 PM

Comments (9)

mortgage market, oregon, bear stearns, jp morgan

Originally posted at: Oregon Mortgage News: JP Morgan to buy Bear Stearns? Get ready for a rough Monday!!

This post has been included in Oregon Information

9 Comments on JP Morgan to buy Bear Stearns? Get ready for a rough Monday!!

MAR

2008

That will be scary!

Could be. The Fed also just cut the Discount Rate another .25%. Interesting times!!

this industry has not been boring lately... it will be interesting to see what rates do Monday

Yes. I'll be tuned to CNBC bright and early!! I've got my hunch's about what would happen, but the knee jerk reactions should be interesting.

Hi Larry: Lately, I haven't really timed anything right regarding rates. Maybe tomorrow is my turn! We'll see.

Paul

It's been tough. Mortgage Market Guide has been indispensable lately. Not so much for the commentaries, but for the Mortgage Backed Securities updates. Market Watch Alerts also help. That's how I found out about the JP Morgan/Bear Stearns and Fed Discount Rate stuff...

Those who follow Rate Sheets or the T-Bill have had a rough couple of months...

MAR

2008

Larry - yes, I saw these reports too, and figured I'd let some buyers know who might benefit from a possible "flight to safety" move in rates today. Curious to see if this will last more than a day!

I heard the Bear Stearns building alone was worth like a billion dollars. But how did a company like Bear Stearns whose stock was like $170 a share last year tumble to $2.00 a share. What's really going on? Great post.

Karen - Yes, I agree. 150bps in a day and we're still floating?...

Lanre - There are a couple of things. First, Bear Sterans was buying a lot of subprime loans for the servicing aspect. There is a lot of money to be made in sending out the bills each month. Subprime loans have a lot of lates and late fees. So in theory, it's not a bad deal. But, Bear Stearns isn't a Federally Insured Bank, so a large part of what we saw was a good old fashioned run on the bank.

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