Rates low..5%-ish still. MBS market level despite poor jobs report.
www.metChad.com update…
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Caution: Reading through these quickly each day may cause you to be informed and able to carry on intelligent conversations with your clients and peers. This may set you up as an "expert" or establish trust and credibility with current clients.
FNMA 4.5% TOTALLY level on the day with zero gained or lost. Still some time left in the session though. Jobs report noted 598,000 jobs lost…earlier month's estimates were adjusted UP as well. Hmmm…usually a poor jobs report triggers a great day for bonds…never know these days though.
DOW UP 217 points for now…NICE day in the stock market led by financials. There are STRONGER rumors going around that something will be done to limit "mark-to-market" accounting rules…and the effect has been really positive in the financial sector.
DJIA 8,280.59 +217.52 NASDAQ 1,591.71 +45.47 SP500 868.60 +22.75
What is it? "Mark to Market" Remember "mark-to-market" has to do with reporting of CURRENT value of assets. When we look at the value of assets vs. outstanding loans we like to see about 1 dollar in assets to 15 dollars in loans as "investors" in a particular institution. The feds consider a bank or financial institution in "trouble" when that number is skewed. Example: If a bank has only 1 dollar in asset for 20 or even FIFTY dollars in outstanding loans…that is kind of an uncomfortable place to be. The bank can actually be shut down if they do not enrich that asset position. The bank is then forced to sell some assets.
What has happened as explained this summer in the Market Insight I sent out: because of the phenomenon above (institutions needing to deleverage) assets were sold at "fire sale prices." Just like "comparable sales" in a real estate appraisal: when the "fire sales" were happening: there were comparable sales that FORCED a PERCEPTION of LOWER ASSET VALUE. SO: Banks that had say a 10 billion dollar asset portfolio…who needed to have the value assessed based on "the most current sales" of the "types of assets" the bank held…were finding that they were losing BILLIONS in "value" overnight.
This created a need for HEALTHY banks to de-leverage and get back to "acceptable" asset vs. loans levels to avoid getting shut down. If you can imagine…the downward spiral is pretty hard to stop. When "healthy" banks are having to deleverage…and sell assets out there along with the "fire sales" that are happening…the only way to "sell" is by taking "fire sale" prices.
Make HAY! Many of us have websites like www.metchad.com available to you or your clients 24 hours a day and seven days a week…however: don't hesitate to call us personally. Most lenders are like me: NEVER too busy for new client relationships.
Thanks Deb Gebhart! Deb let me know today that the current $7500 tax stimulus CAN be claimed on 2008 TAXES EVEN IF THE PURCHASE happened after 12/31/2008. Also: Renee Gaugler has a super .pdf file with some details on the program. Please reply if you would like me to send it to you.
Computers: "computerized trading" happens in the last hour of the session. It has been interesting to see the volatility that this has added to the markets in the last hour. Example: investors have a program that will "sell" or "buy" when stocks reach a certain point. Most of those transactions seem to take place all at once in the last part of the day because as the trigger is reached to "sell" for instance…it takes time to place the order. Then when the computer places the "sell" order…along with whomever else is selling…it can degrade pricing so that MORE people are selling…then as all orders come in at the end of the session we see a drop. Same thing can happen with gains in the market. Computers are programmed to "buy" or "sell" and massive selling can stimulate "buying" when pricing reaches a certain point as well.
Have a great weekend!
1. GOOD APPROVALS 2. Prompt underwriting 3. Return Calls/emails 4. Meet close date 5. Status Updates
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Chad Schauers
Have you metChad?
MetLife Home Loans
406.522.0922
406.522.0924 (fax)
1924 W. Stevens, Ste. 202
Bozeman, MT 59718
Cell: 406 799 8613
ccschauers@metlifehomeloans.com
