Mortgage prices at 10:00 only fractionally better as mortgage rates are now confined to a very tight range.

Mortgage and Lending with John Tuggle, Senior Mortgage Loan Originator, Envoy Mortgage, Ltd. NMLS# 211187
8:30 economic data; weekly jobless claims were down 8K to 623K filings, about in line with forecasts. The 4 wk average, a smoother look was 607K +25K from the previous week; continuing claims, another new record at 4.81 mil people on unemployment. The surprise at 8:30 was Jan retail sales, expected to continue its 7 month decline of 0.3% was actually up 1.0%, ex auto sales up 0.9%. Overall retail sales on a year-on-year basis in January were down 9.7%, compared to down 10.5% the previous month. Excluding vehicles, the year-on-year pace improved to down 6.6% from down 6.9% in December. While up is better than down, a key point to remember about this report is that sales had become very weak, falling each of the last six months of 2008. There was an initial positive reaction to retail sales in the stock market trading, it lasted about 5 minutes before the key indexes continued to decline, pointing to a down open at 9:30. Dec business inventories, expected down 0.6%, were down 1.3%, Nov was revised lower, to -1.1% frm -0.7%. The Obama stimulus plan appears to be headed to his desk and signed, likely early next week according to current wire reports. The plan ended at $790B and according the administration will create or save 3.5 mil jobs. That is very unlikely however. Markets in general have never believed that many jobs will occur. The plan is flawed and markets realize it; even the CBO doesn't see it as a quick fix. Jobs generated from the plan will not occur rapidly, CBO says not until next year will we see any positives from it. Nevertheless it was ramroded through as a plan to turn the economy around quickly, not many believe it will do what was sold to America. The equity markets took a huge hit on Tuesday on deep disappointment in Geithner's highly anticipated announcement of his plan to get credit markets working and deal with those toxic assets sitting at banks. The administration bungled it, for two weeks leading markets to believe details would be announced, what we got was an outline. Never fool markets, you will pay a big price, the stock market dropped 382 points Tuesday (DJIA), yesterday barely held a minor 50 point gain and this morning opening down The Obama administration’s housing plan will use government money to help reduce interest rates for struggling borrowers, while asking lawmakers to approve more ways to modify mortgages, according to a person briefed on the proposal. U.S. Treasury Secretary Timothy Geithner intends to make the plan public in coming days, possibly within a week, said the person, who declined to be identified before the announcement. Some elements can begin immediately, and others must be considered by Congress. The government will subsidize interest-rate reductions by working with the servicers that handle mortgages, the person said. That way, servicers can lower monthly payments for households without shortchanging investors. The new plan, which isn’t final and could change, would be voluntary for lenders and investors, the person said. It is aimed at loan modifications that have a positive net present value, meaning that the cost of a foreclosure would be higher than that of adjusting the loan terms. (Bloomberg) At 9:45 the DJIA was off 150 points at 7785; looks very much like a coming test of the lows at the 7500 level. Since the close on Monday through 10:00 this morning the DJIA has declined 500 points. The bond markets are better this morning, ex the 30 yr which will see $14B in a new bond sale at 1:00. Mortgage markets are flat so far. At 10:00 the 10 yr note is trading about unchanged from yesterday, but is better than when it was sold yesterday at auction. The 10 yr auction went at 2.818%, at 10 this morning at 2.75%; the "old" 10 yr ended yesterday at 2.76%. Mortgage prices at 10:00 only fractionally better as mortgage rates are now confined to a very tight range. We will continue to hold rate locks to start the day. Stay close for FLASH message if we see a turn. Wholesalers are not only focusing on the markets but are adjusting their prices based on volume levels, making it more difficult to forecast how prices to the street from one lender to another will be set. -------------------------------------------------------------------------------- PRICES @ 10:00 AM 10 yr note 100.00 2.75% -1 BP * Mar 10 yr note contract 124.05 +15/32 5 yr note 100.07 +8/32 1.70% -6 BP 2 Yr note 100.00 +2/32 0.88% -3 BP 30 yr bond 118.26 -14/32 3.47% +2 BP * Mar 30 yr bond contract 128.31 +8/32 Libor Rates 1 mo 0.455%; 3 mo 1.234%; 6 mo 1.723%; 1 yr 2.018% 30 yr FNMA 4.5 Apr 100.26 +1/32 (+3/32 frm 10:00 yesterday) 15 yr FNMA 4.5 Apr 101.19 +1/32 (+3/32 frm 10:00 yesterday) 30 yr GNMA 4.5 Apr 100.25 -2/32 (+1/32 frm 10:00 yesterday) 15 yr GNMA 4.5 Apr 102.15 +2/32 (+4/32 frm 10:00 yesterday) Dollar/Yen 90.36 -0.07 yen Dollar/Euro $1.2745 -$0.0132 (dollar stronger) Gold Apr $943.70 -$0.80 Crude Oil Mar $34.53 -$1.41 Goldman-Sachs Commodity Index 335.29 +0.86 DJIA 7735.08 -204.45 NASDAQ 1501.04 -29.46 S&P 500 812.32 -21.42 Thursday, 2/12/09 10:30am John Tuggle Senior Loan Officer Freedom Mortgage Corporation 1625 Highway 42 North McDonough, Georgia 30253 Direct (Best) 706 315-2365 Office 770 957-8211 Fax 866 270-4840 Email

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