Weekly Rates + Market Update

Mortgage bond prices remained nearly unchanged last week holding mortgage rates steady. Trading remained extremely volatile with daily movements in discount points often exceeding 1/2. The Treasury auctioned a total of $66B in two and five-year notes last week in the continuing effort to fund the massive bailout programs recently announced. While neither auction was "stellar," the indirect bidder participation, an indication of foreign central bank demand for US securities, was "decent". Traders remained concerned about the massive supply of new debt being created by the TARP program as the US Government battles the credit crisis.

The Year Ahead
This year begins in a similar fashion to last year. Last year at this time 30 year fixed rate mortgage interest rates were historically low. Most pundits predicted steady interest rate increases with little or no opportunities for additional refinancing. Mortgage interest rates did spike higher as oil prices and inflationary fears hit all-time highs this past summer. Then the global economic turmoil hit full force and economies across the world stumbled. The housing market continued to weaken and the Fed and US Treasury had to step in to buy mortgage-backed securities in an effort to push mortgage interest rates lower. Now, 30 year fixed rate mortgages remain low and once again future predictions are all over the board.

What will occur in the future, economic recovery or additional weakness will continue to be debated. There is no certainty in predictions. But most of the recent signs show the economy continues to struggle at least in the short-term. Data can be used to support both sides of the debate. What we can be certain of is the fact that until the economy gains some stability, mortgage interest rates are likely to be volatile. Historically, mortgage interest rates seem to improve slowly. In contrast, when rates increase, it is often fast and furious. One negative day often erases a month’s worth of improvements.

It is possible for mortgage interest rates to push lower considering the Fed continues to purchase mortgage bonds. However, we are in unprecedented times. While the Fed is trying to push rates lower there are no guarantees. The Fed isn’t the only player in the mortgage bond market and there are many others buying and selling the securities. Remember that the Fed does not directly dictate that mortgage interest rates will be at a certain percentage. Rates are determined by the supply and demand for mortgage-backed securities. As of late, every time the Fed comes in to purchase mortgage bonds, rates have headed lower, only to jump back up as others sell into the Fed buying.

Only time will tell if the Fed can accomplish the goal. With that said, it's a great time to buy or refi with historically low interest rates

Rates for December 26th, 2008 Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.875%, 4.988%APR
30 Year Fixed Interest Only 6.50%, 6.613%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 5.625%, 5.738%APR
5/1 LIBOR ARM Conventional 5.50%, 5.613%APR
5/1 LIBOR ARM Interest Only 5.75%, 5.863%APR
30 Year FHA/VA 5.50%, 5.726%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.75%, 5.851%APR
15 Year Fixed (to $600K) 5.625%, 5.726%APR
5/1 Treasury ARM 5.50%, 5.601%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
5/1 LIBOR ARM (Conforming) 6.375%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.75%, 7.257%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.
Prior to modification, a free one-time float down is available. (30 Year Amortization)

For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Bank Owned Bargain Listings

Weekly Rates + Market Update

Mortgage bond prices rose last week, which helped mortgage interest rates improve, but only slightly. We saw a huge rally following the Fed rate cut Tuesday. Unfortunately the gains were short-lived and most were erased the following day. Trading remained volatile throughout the remainder of the week. The White House stepped in to help the troubled auto industry Friday, which sent stocks higher that morning at the expense of mortgage and Treasury bonds. The Treasury auctions will set the tone for trading this coming week. Foreign demand for dollar denominated assets will be the focus. The bond market will close early Wednesday ahead of the Christmas holiday Thursday. Trading will resume Friday. This shortened trading week may lead to mortgage interest rate volatility

Rates for December 19th, 2008 Rates Change Daily. Call for current pricing. #0902429
PROGRAM
30 Year Fixed Conventional 4.875%, 4.988%APR
30 Year Fixed Interest Only 6.50%, 6.613%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 5.625%, 5.738%APR
5/1 LIBOR ARM Conventional 5.375%, 5.488%APR
5/1 LIBOR ARM Interest Only 5.125%, 5.238%APR
30 Year FHA/VA 5.50%, 5.726%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.875%, 5.976%APR
15 Year Fixed (to $600K) 5.875%, 5.956%APR
5/1 Treasury ARM 5.50%, 5.601%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
30 Year Fixed Conventional 6.375%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.75%, 7.257%APR
*60 Day Locks

6,9,12 and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

November Market Snapshot for Dynamite Mountain Ranch

Right now we are looking at an 8 month supply of homes, not too bad when compared with other areas of the Valley. $200K seems to be the magic number for an average sales price currently, average sold price per sf is $106.02 @ 61 days on market. Overall the homes are moving fairly well right now, hopefully the trend continues...

Take A Look Below At Rates!!

Posted By: Jon Tobias, Nova Home Loans

Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading remained volatile with wild swings in both stocks and bonds. The economic data released was within the estimated range and indicated the US economy continues to weaken. The meeting on Tuesday of the Federal Open Market Committee will be the most important event this coming week. Look for rates to be potentially volatile Monday as traders position themselves ahead of Tuesday's meeting.

All eyes will be focused on the Fed meeting next Tuesday. Most analysts predict another rate cut as the economy continues to struggle. As of trading late last week, futures contracts showed a greater than 80% chance of a 75 basis point cut.

The United States central bank, the Federal Reserve, coordinates the borrowing and lending activities of federally chartered banks. The principal reason the Federal Reserve was created was to reduce severe financial crises. One way of accomplishing this goal is to control the amount of money that flows through the economy. By manipulating the US money supply, the Fed influences inflation, unemployment, and the level of US economic activity. The Fed has a variety of tools that it uses to control the money supply, but its chief policy tool is the manipulation of short-term interest rates.

Keep in mind that a Fed rate cut does not automatically mean mortgage interest rates will improve. The Federal Reserve has direct control over the level of short-term interest rates. The Fed's influence over longer-term interest rates with rate cuts is less certain. However, the unprecedented recent direct purchasing of mortgage bonds is a strong effort to push longer-term rates lower as well.
Remember, rates are historically favorable. While there is a strong possibility rates could improve, there are no guarantees in these uncertain times. As a reminder, just a few months ago analysts overwhelmingly predicted gas prices would continue to rise.
If you have any questions over the weekend or need a 2nd opinion on a loan scenario, please call my mobile at 480-225-2987 or go straight to www.creativefinanceaz.com for urgent care files.

Rates for December 12th, 2008 Rates Change Daily. Call for current pricing. #0902429
PROGRAM / LOCK PERIOD
30 Year Fixed Conventional 4.875%, 4.988%APR
30 Year Fixed Interest Only 5.875%, 5.945%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 5.375%, 5.456%APR
5/1 LIBOR ARM Conventional 5.375%, 5.488%APR
5/1 LIBOR ARM Interest Only 5.50%, 5.613%APR
30 Year FHA/VA 5.50%, 5.726%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.875%, 5.976%APR
15 Year Fixed (to $600K) 5.875%, 5.976%APR
5/1 Treasury ARM 5.50%, 5.601%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
30 Year Fixed Conventional 6.375%, 6.882%APR
5/1 LIBOR ARM (Jumbo) 6.75%, 7.257%APR
*60 Day Locks

6,9,12, and 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.

Buying a REO (Bank Owned Property)

An overview of the process and what to expect as a buyer

By Dan Mullarkey, REO Specialist with Re/Max Excalibur Realty

So, you’re in the market for a home and you’ve heard the buzz about the tremendous deals available on REOs. First off, you’re asking yourself what is the heck is an REO? This is a term that you will hear often when discussing foreclosures and the next section will explain what this term means.

REO is an acronym meaning “Real Estate Owned”, a shorthand term for a foreclosed property. This is a property that was previously mortgaged and has reverted back to the bank after an unsuccessful foreclosure auction. REO is not a term that banks want to see on their books because after all, they are in the business of lending money for homes, not managing them.
Many of these properties do not sell at an auction for several reasons. First, the property usually does not have any equity to satisfy the loans and liens, as many homes bought over the past few years have negative equity. Most foreclosures do not even receive a bid because the minimum bid includes the loan balance, attorney fees, any accrued interest and all costs associated with the foreclosure process. To even bid on these properties, you need a cashier’s check in hand, ready to go, for the full amount of your bid. If you are the winning bidder, you receive the property in complete “as-is” condition-meaning someone could be still living in the home, other outstanding liens against the property, and possible structural or environmental issues with the home that could cause enormous problems for you later.

Since in today’s market most people who purchased in the last few years are upside down in their homes, very few of these auctions are successful. After all, if the owner had equity in the home, they would have sold it versus foreclosing. If the auction is unsuccessful, then the property reverts back to the bank. It is now referred to as a REO, and the bank wants it gone ASAP.

Now It’s an REO, What’s Next?

So now the bank owns the property and the previous mortgage loan is gone. Next issue is, “How does the bank sell their REOs?” Most banks hire an outside company, called a Default or Asset Management Company to handle the sale of the property. These companies usually take a percentage of the commission that they give to a local real estate broker or agent to sell the property. That broker in turn offers the buyer’s agent a portion of the sale, same as any other real estate transaction. The Default Management Company employs asset managers who may manage several hundred properties at once, in many different states. The local REO agent is their eyes and ears to the sales process and has many duties to make sure that the property is in saleable condition and being marketed aggressively.
The listing agent is in charge of arranging cleanup and even eviction if the former owner or a tenant is still occupying the property. After the home is vacant and cleaned up, the agent turns in their BPO (Broker’s Price Opinion) which is similar to an appraisal but completed by a Realtor to give the bank an idea of what the home will sell for. Finally, the home is listed on the local MLS and ready for offers.

Offer Received!

Once an offer is received, the bank may take several days to respond. It is customary with some banks to always counter the offer, even if received at full price---this practice is diminishing though as in many areas banks are competing with other REOs and becoming more motivated to sell. As a general rule of thumb, the longer the home has been on MLS, the more motivated the bank is to sell it at lower than list price. If more than one offer is received, the bank may request a “Highest & Best” from all parties- meaning that each buyer has 24 hours to submit their best offer, not knowing where the other offers stand. This is difficult situation for buyers and another reason to be working with an experienced REO agent to help advise you on how to proceed.

Offer Accepted!

Okay, so the bank has accepted your offer and now it’s time to order inspections, right? Well, it might take a few days to get the contract signed by the bank, even after you have an acceptance. During this time, they usually have a policy where they can still look at and accept other offers. So again, make sure your Realtor is working to get the contract signed ASAP, otherwise you could still lose out on the home. The bank will most likely have their own addendum to the purchase contract which supersedes the contract you submitted, SO READ IT CAREFULLY!!! They may change terms such as: length of inspection period, contingencies, per diem charges if buyer does not close on time, seller performance, seller concessions and various other items. The main purpose of the addendum though is to release the seller from any liabilities and warranties of the home since they have never occupied it. When buying from a traditional seller, the buyer is given a disclosure statement-with REO you will never see one.

Inspect, Inspect, Inspect!!!

I ALWAYS recommend getting a professional home inspection, no matter the age or condition of the property. This can be even more important with REO as items not seen with the naked eye may be huge problems in the future. Remember, you are not limited to just a general home inspection…you can use a roof inspector, HVAC specialist, plumber; whoever you feel will give you the best advice for the specific mechanics of the home. Home inspectors are not roofers or HVAC specialists, so their scope can be limited on some items. Get the inspections done early and quickly as time is of the essence, some banks limit the inspection period to 5 or 7 days.

As-Is, or Is It?

True, REO is sold As-Is at the time of purchase unless noted otherwise. But what if the A/C is inoperative or a leaky roof is discovered? Many banks will fix the mechanics of the home to qualify it for financing, especially now with FHA being used so often.
What if you have a laundry list of issues that are discovered that were unknown at the time of contract? Depending on the demand for the home and the length of time it has been listed, some banks will either make additional repairs or credit the buyer for repairs. Again, this is where an experienced REO agent comes in handy. They can truly save you money and negotiate with the bank to make the home acceptable to you. After all, the parties involved in the transaction want to see it close just like any other home, and you as the buyer may have more leverage than you think.

Loan Docs Are In, Ready To Close

After the bank has made any necessary repairs (the appraiser may need to visit the home again to confirm), the closing process is pretty much the same as any other home. Escrow length is typically 30-45 days but can be quicker depending on the buyer---I’ve closed cash deals in under a week and financing in less than 3 weeks. The seller usually signs the closing docs fairly quickly. Once the buyer’s loan funds and records, the home is yours! Now it’s time to get moving and go enjoy your new home!

A few things to remember about REO:

1) Contrary to late night infomercials, they are not sold for pennies but are usually priced aggressively for a quick sale and can be a great bargain.

2) It may take some time to get an acceptance, so patience is a virtue.

3) Working with an experienced REO buyer agent does not cost the buyer and can save time, headaches and money.

4) Fully inspect the property as they are typically sold As-Is.

5) Many REO listing agents deal in volume and may have hundreds of properties listed. Their interests lie in selling as many REOs as quickly as possible so working in the buyer’s interest is not a priority---one more reason to use a REO buyer agent.

REOs can be a tremendous value but there are many things to consider. Working with an experienced agent can help guide you through the potential pitfalls and is absolutely a vital asset when considering these types of properties.

For more information or to search Phoenix Area homes, please visit www.DanMullarkey.com
Copyright 2008 Dan Mullarkey, Re/Max Excalibur Realty

Weekly Rates + Market Update + Website

You'll notice a new feature on my website www.creativefinanceaz.com my "Urgent Care" program, where my team will care for your urgent files immediately. As many of you know, much of my business consists of closing loans when others have not been able to do so. With that in mind, I created a feature to my site that serves the needs of your clients with the utmost urgency and care. Please click on the medical button on my site to be directed to a web application that will be sent to us immediately for review. We have the ability to close Government loans in less than a week and are here for you and your clients 7 days a week!

This Week in the News

Mortgage bond prices rose last week pushing mortgage interest rates lower. Mortgage bonds were initially helped by reports the Treasury would try to get rates lower. Unfortunately, a lot of the gains seen mid-week were erased Friday following mixed employment figures. Unemployment was not as bad as anticipated and average hourly earnings showed a surprise increase. The payrolls component was bond friendly but it wasn't enough to overshadow the headline figure. For the week, interest rates on government and conventional loans fell by about 1/8 of a discount point.
The retail sales data Friday will be the most important release this week. Look for any additional moves by the Fed, the US Treasury, and legislative developments to also result in mortgage interest rate movements. This will be the last full week of data before the next Fed meeting.
And some really good news, which may create more business for us all!...

The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal.
Under the initiative, the Treasury would offer to buy securities that finance newly issued loans for home purchases, according to the sources. But to participate in the government's program, mortgage lenders would have to set exceptionally low interest rates, for instance, no more than 4.5 percent for traditional, 30-year fixed-rate loans. See the below article:
http://www.washingtonpost.com/wp-dyn/content/article/2008/12/03/AR2008120302889.html

Rates for December 5th, 2008
Rates Change Daily. Call for current pricing.

PROGRAM / LOCK PERIOD
30 Year Fixed Conventional 5.125%, 5.238%APR
30 Year Fixed Interest Only 6.375%, 6.488%APR
15 Year Fixed Conventional 4.75%, 4.863%APR
3/1 LIBOR ARM Conventional 5.50%, 5.613%APR
5/1 LIBOR ARM Conventional 5.625%, 5.738%APR
5/1 LIBOR ARM Interest Only 5.875%, 5.988%APR
30 Year FHA/VA 6.00%, 6.252%APR
*30 Day Locks

JUMBO $417,001+
30 Year Fixed (to $600K) 5.875%, 5.976%APR
15 Year Fixed (to $600K) 5.875%, 5.976%APR
5/1 Treasury ARM 5.50%, 5.601%APR
7/1 Treasury ARM 5.625%, 5.726%APR
*30 Day Locks

ONE-TIME CONSTRUCTION
Conforming & Jumbo (to $8,000,000)
30 Year Fixed Conventional 7.25%, 7.482%APR
5/1 LIBOR ARM (Jumbo) 7.375%, 7.882%APR
*60 Day Locks

6,9,12 & 24 month construction phases available. Construction phase interest only rate = PRIME (5%) + up to 1.25%. Perm. rates guaranteed through construction.Prior to modification, a free one-time float down is available. (30 Year Amortization)
For Realtor purposes only; not for distribution to potential borrowers. Rates are calculated based on no discount points and one origination fee. Conforming rates based on loan amounts greater than $200,000, minimum FICO score 720.