Weekly Economic Update August 22, 2007

In a way, it’s nearly exciting to read the newspapers these days (The Wall Street Journal and New York Times) and learn something new, every day–another facet of the world of lending that has become complex beyond most people’s understanding.
The way ahead, unfortunately, is likely to continue to provide this level of fascination and complexity–and financial confusion. But it is also likely to see a reconstruction project that will revolutionize real estate even further. And we will, not too far in the future, look at what we’ve been through with a sense of awe and, who knows, maybe even satisfaction. We will probably have a more efficient market in which to work.
Meantime, stay light on your feet, and keep building your market share by providing the service and knowledge that are so needed by a frightened public today.

                Chase Home Loans:                         Update on guidelines and approval time frames

In spite of the market changes, Chase Home Loans continues to offer stated income loans for clients with good fico scores.  

Underwriting time frames are very fast.  Last week, we received a loan application on Tuesday afternoon and had loan approval on Friday. Loan documents were delivered to the title company on Monday (Application to Loan documents at title in less than five days).  

Not every loan can be approved and closed so fast, but in most cases, it takes less than two weeks to get full loan approval (including appraisal).

Since Chase did not make some of the mistakes made by other lenders, our guidelines have not been effected too much by the current “credit crunch”.

Please call if I can be of assistance.
Steve Peterson

30-yr Fixed-rate Mortgage 6.97%

15-yr Fixed-rate Mortgage 6.59%1-yr ARM 6.44%[HSH average rates: 30-yr down 3 bps, 15-yr down 1 bp; ARM up 30 bps]Weekly Commentary Thumbnail Sketch: Consensus opinion now sees us settling into a longer-than-expected season of financial crises, with waves of disruptions coming as further problems in mortgage defaults (and, as a consequence, in the investments into which the ailing loans have been packaged) roiling the markets. London’s The Economist sees it as a painful but necessary process of “repricing risk” (or bringing the price and yields of higher risk investments back to the more solid earth where they belong). We suspect that, for the real estate market, it will be a lengthy season of slower sales as homebuyers and sellers, real estate professionals and real estate finance professionals all learn to work within a very different market atmosphere. The public will need a great deal of assistance with real-estate-related financial matters; the real estate and mortgage professionals who prevail in this market will be those who can best provide the needed help and can also market themselves credibly as capable and compassionate advisors in today’s confused and chaotic market. Meanwhile, several indicators deserve brief explanation this week: First, the number of applications for new mortgages climbed significantly in the two weeks ending August 10th. This is both encouraging and misleading. Encouraging because, yes, the requests for purchase money and refi loans remain strong; potentially misleading because one of the main reasons the number of such requests climbed is that today’s borrowers are applying at several lenders’ windows, trying to get a mortgage that will work and to avoid being hurt by lenders’ current inclination to shift requirements and to change available programs in midstream. Second, the yield on the 6-month Treasury bill, meantime, took a huge dive in the past week. The primary reason is the fabled risk-aversion technique of investors the world over—when in severe doubt, put your money in safe, stable U.S. Treasury securities, especially of the short-term variety. The more money bidding on short-term Treasury securities, the more expensive they become (and more expensive translates as lower yields to investors). Third, the Fed has lowered its interest rate at the discount window, generally a far more symbolic move than a palpable change in strategy for the banks who may take out short-term financing there. In this case, however, the Fed has made clear that it is accepting commercial paper and mortgage-backed securities as collateral for loans—so the move could conceivably be considered a means of saving companies like Countrywide from undeserved financial trauma and potential bankruptcies.


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