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Mortgage Rate Update

Mortgage Rates have been updated.

Like I said earlier this morning when I took a “Look at Things” rates have inched up again today.

Recommendations and reactions:

The stock market is rebounding this morning on news that Citibank is discussing the idea of selling itself due to the problems it’s facing.   This has reversed some of the flow of money and has put pressure on mortgage rates.   In addition to that, a large part of Citi’s problems are due to the mortgage market and that has increased investor hesitancy in the mortgage backed securities market.

Recommendations:  Volatility continues - Lock all loans.

Stay tuned,

Tom Vanderwell

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2008 11 21 Tom Vanderwell Mortgage Rate Updates Comments (0) Permalink

Let’s Take a Look at Things…..

The stock market seems like it’s headed for a quick spike upward this morning.  Let’s take a look at what has changed since the sell off at the end of the day yesterday.

Have there been any new economic reports?  (As of 7:30 AM)  NO

Have there been any major government initiatives to bailout a failing industry?   Nope

So what has changed?

Let’s see really only one thing:

Citibank announced that it’s holding an unscheduled board meeting today to discuss the possible sale of part or all of the bank due to their 50% drop in stock prices this week.

Does the fact that they are going to sell part or all of themselves solve the problems they have?   Nope, at this point they are just talking about it.

Does the fact that they are talking about it mean it’s a done deal?   Nope.

So, don’t be too surprised if this market rally fades quite quickly.   In the mean time, expect upward pressure on mortgage rates because a LOT of Citi’s problems are due to the mortgage world.

Hang on, it’s going to be a wild day, I think…..

Tom Vanderwell

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2008 11 21 Tom Vanderwell banks Comments (1) Permalink

Fannie and Freddie to Suspend Foreclosures

In order to support the streamlined modification program announced on November 11, 2008, Fannie Mae (NYSE: FNM) today issued a notice to its loan servicing organizations and retained foreclosure attorneys directing them to suspend foreclosure sales on occupied single-family properties as well as the completion of evictions from occupied single-family properties scheduled to occur from November 26, 2008 until January 9, 2009.

The temporary suspension of foreclosures is designed to allow affected borrowers facing foreclosure to retain their homes while Fannie Mae works with mortgage servicers to implement the streamlined modification program scheduled to launch December 15.

Calculated Risk: Fannie and Freddie to Suspend Foreclosures

That’s nice that they aren’t going to kick people out on the street right before Christmas.

It will be interesting to see if there is a huge upswell in foreclosures in January.   Will it make a difference or is it just pushing things off a bit?

Time will tell.

Tom

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2008 11 21 Tom Vanderwell Market Musings Comments (0) Permalink

naked capitalism: Citi Considers Selling Itself, in Whole or In Parts (And is Barking Up Wrong Tree re Shorts)

Citigroup’s stock price fell another 26% today to $4.71, bringing the week’s decline to 50%…..

The Wall Street Journal reports that the sudden decay is driving management to consider a radical restructuring of the company or an outright sale, moves that were deemed by management to be off the table as of a mere week ago.

There are apparently rumors circulating that Citi is on the verge of bankruptcy….

It’s blindingly obvious that the latest deterioration in financial stocks was kicked off by Henry Paulson’s statement last week that the TARP would in fact not be used to buy troubled assets, which in turn led to a plunge in mortgage-related instruments…..

By the way, Hempton now believes Bair will take over Citi……

Tom here - what Hempton is referring to is that he believes that Citi will be taken over by the FDIC.   The largest bank in the country is going to fail?  Wow….

As one of my Japanese colleagues once pointed out, putting two sick dogs together will not produce a healthy cat

naked capitalism: Citi Considers Selling Itself, in Whole or In Parts (And is Barking Up Wrong Tree re Shorts).

I have to say that I’m having a hard time with a couple of things:

1. Wrapping my brain around everything that is happening and keeping up with it all.

2. Contemplating the rapidity that these issues are playing out…..

I’ll have more in my Mortgage Market Week in Review tomorrow.   If you aren’t signed up, fill out the box on the left and sign up, or send an e-mail to mortgagemarket@aweber.com to subscribe.

Thanks!

Tom Vanderwell

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2008 11 20 Tom Vanderwell banks Comments (0) Permalink

Toll Brothers: More housing support needed - Daily Briefing

CEO Robert Toll said that as late as September, the company was on track to post a flat quarter in terms of contract signings. But that trend, which Toll had pointed to in its third-quarter earnings call as an early and modest sign of stability after a three year housing slump was “upended by the past month’s financial crisis,” the company said. As a result, Toll said it won’t offer any financial guidance for 2009.

Tom here - essentially, that means that Toll has no idea what 2009 is going to be like……

…..“However, we believe that, if home prices are not stabilized, these efforts will be for naught, more mortgages will go under, and the taxpayers’ money will have been wasted,” Toll added. “We urge Congress to stimulate demand by reducing mortgage rates and fees and by providing incentives such as a buyer tax credit for the purchase of all types of homes. We believe these initiatives would offer the greatest benefit for the taxpayer’s dollar.”

Toll Brothers: More housing support needed - Daily Briefing.

Artificial stimulation of the housing industry, the auto indusry or any other industry at levels that aren’t supportable by the normal population demographics is merely going to prolong the adjustments that need to be made.   We’re adjusting to new fundamentals in terms of debt levels, house prices, income levels and any effort to artificially inflate will be expensive in the long run.

Tom

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2008 11 20 Tom Vanderwell Market Musings Comments (0) Permalink

Citigroup considering selling itself: WSJ

SAN FRANCISCO (MarketWatch) — Citigroup Inc. is considering auctioning off parts of the firm or selling the company outright, according to a media report late Thursday. The online edition of The Wall Street Journal, citing unnamed sources, reported that Citigroup (C:C 4.71, -1.69, -26.4%) executives are in preliminary stages of discussing a possible sale. The report said that the company’s management is still insisting that it has ample capital and a sound strategic direction, though its shares fell a further 26% Thursday

Citigroup considering selling itself: WSJ - MarketWatch.

I’m stunned.  They are the largest bank in the country.

More later.

Tom

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2008 11 20 Tom Vanderwell banks Comments (1) Permalink

Hank and Ben

This cartoon from Eric G. Lewis, a freelance cartoonist living in Orange County, CA. was inspired by Professor Duy’s post last night: Fed Watch: Policy Adrift

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2008 11 20 Tom Vanderwell Market Musings Comments (0) Permalink

Aid for Big Three falters in Congress - MarketWatch

WASHINGTON (MarketWatch) — Democratic leaders said Thursday there is no deal on aid yet for the Big Three U.S. automakers, and asked the chief executives of those companies to return to Congress with concrete plans on how they would use federal funds to turn their companies around before getting any money from Washington.

Aid for Big Three falters in Congress - MarketWatch.

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2008 11 20 Tom Vanderwell Market Musings Comments (0) Permalink

Mortgage Rates Have Been Updated Again….

Due to continued volatility in the market and news of an on again off again bailout agreement.   Today’s mortgage rates are now updated.

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2008 11 20 Tom Vanderwell Mortgage Rate Updates Comments (0) Permalink

Mortgage Market Update

Mortgage Rates Have Been Updated.

Recommendations and reactions:

The economic news is shall we say, grim with a capital GRIM.   Normally that would prompt a flood of money from the stock market into the bond and mortgage backed market.   However, we aren’t seeing that money heading into mortgage backed securities.   Why?   Because of deflation and the concern over how the government is handling the bailouts.   I’ll have more on the deflation issue in this week’s Mortgage Market Week in Review, but neither one is good for mortgage rates.

Because of that, my recommendation remains to lock all loans.

You’re probably saying, “Hah!  If you locked two days ago, you’d be .25% higher than today.”   Yes, you’re right.   My recommendations are about the overall direction and about minimizing risk.   I still believe that the downside potential is much smaller than the upside risk.   Does that make sense?

Stay tuned, it’s going to continue to be a volatile ride.

Tom Vanderwell

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2008 11 20 Tom Vanderwell Mortgage Rate Updates Comments (0) Permalink