I've been getting several emails this week regarding WAMU. The main question is "What will happen to my loan?" Well unfortunately, your loan won't be forgiven or swiped away....you get to keep making payments. Regardless of the lender who holds your loan, you will either continue to make payments to their servicing company or if that bank is bought or merged with another entity, you will start to make payments to a new servicing company. Another important note. If your lender goes under and/or you start to make payments to another bank, none of the terms and conditions of your loan will ever change.
I read this important article this morning written by Barry Habib and wanted to pass it on to you. There are some important things going on that you should be aware of:
"A historic week is being capped off with an incredible day of news events, with an enormous impact. Thank goodness the economic calendar is quiet today, as government announcements have taken center stage.
There are three huge announcements that are changing the financial markets around the world. First, we have been talking about the fear over the safety of money in savings for many Americans. Banks are either folding or on the brink of collapse, bonds are losing some or all of their value, and stocks are dropping at an alarming rate, all causing tremendous fear and anxiety for investors.
This fear caused a flight to quality of such magnitude that the return on Treasuries was actually negative. People are actually willing to pay money in order not to lose money...forgetting all about any type of return for their investment. And yesterday this panic lead to a modern day "run on the bank". There was $180 Billion taken out of money market funds due to a lack of confidence. This resulted in a "breaking of the buck", which means that the Net Asset Value or NAV of some money market funds dropped below $1. Virtually all investors consider money market funds very safe and do not expect any change in the principal value, so a $1 invested will always result in a $1 balance plus any interest. But once the $1 valuation was broken investors panicked and the flood gates opened. This caused the Treasury to step in.
#1 - This morning, Treasury Secretary Hank Paulson announced that the US government will guarantee money market funds. This action is helping settle the markets and as a result stocks around the world are marching higher.
#2 - Another big announcement that is helping to calm the global markets and regain confidence is the Fed's decision to create a market place for illiquid mortgage debt. As we know, the mortgage mess has buried many companies, some were previous giants with long histories like Lehman, Bear Stearns, Fannie & Freddie. The big problem is that there are no buyers for this debt in the current marketplace. So the Fed is stepping in to create a vehicle to make these purchases of mortgage debt and provide a liquid marketplace. This is a brilliant move which has been very well received and should do a lot of long term good to help the housing and lending environment. Stocks around the world have responded very favorably to this."
These steps will not fix everything, but it sure looks like a step in the right direction. And while interest rates are a bit worse this morning...who cares. The health of our financial system and confidence that our hard earned savings will not be wiped out is far more important. What good is earning a paycheck if there is no place to safely save that money?
Have a financially secure weekend.
=)
Warmest regards,
Kurtis Kooiman, CMPS
Certified Mortgage Planner
Silverstar Finance, Inc.
Society of Financial Awareness
Bus: (714) 892-1002 Ext. 313
Fax: (714) 892-1092
Parting Thought: It's better to regret having done something than regret never having done anything at all.
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