Wow....Big day today huh?

In case you spent the last 2 days in the Amazon basin, I'll tip you off to some news from the weekend. Fannie Mae and Freddie Mac had operational control taken from them by the government following Sunday's announcement. The Federal Housing Finance Agency (FHFA) will be taking over the board of directors and management of the mortgage giants and the US treasury is providing up to $100 Billion in Capital for each (that's right, EACH) to ensure that they will be able to stay afloat amid their current debt obligations. Without coming right out and saying it, what this boils down to is a form of conservatorship similar to a Chapter 11 bankruptcy that will allow the two companies to reorganize their operations. However, both will be run by the FHFA for a period of time yet to be defined. This, as you can imagine has dominated the financial news and all financial markets today and doesn't show signs of stopping in the days to come as more of the finer details of the plan become known. Some predict (and I am in this particular camp) mortgage rates on a 30 year fixed rate mortgage could drop as much as 1/2 point over the next few weeks which would obviously provide borrowers a great opportunity to refinance at lower rates. The stock market also soared in response to the news with the Dow winning back 290 points to close at 11,510, the NASDAQ scooped up 13 points to finish the day at 2,269 and the S&P 500 notched a 25 point gain to close at 1,267.

The "issue" in the credit markets for the last year has been a question that investors can't shake....how safe is this investment? Bonds are "safe" and "soft" and all that comfortable stuff that have provided a nice little hiding place when things get ugly in the stock market. The problem is that for 13 months, almost to the day, the talk has been all but "safe and soft." With "declining property values", increasing foreclosures, an inability for borrowers to refinance for any number of reasons, etc, investors have backed out of the credit markets and that has helped spin property values lower, foreclosures higher, and that has pushed investors to tighten up more. It's a cycle and that wasn't breaking up like everyone kept expecting it to. If there is no guarantee that the money is going to be there later, (i.e. foreclosures), then it's no longer a safe bet. With the federal government basically saying, "The money WILL be there" in there move yesterday, the value and safety of mortgage backed securities returned and returned like a flood. The Fannie Mae 6%, our current benchmark, closed the day up 100bp to close at $102.47. It had actually been up as much as 153 bp to a price of $103 before running out of steam and retreating back to the 100bp gain for the closing. To give that some perspective, that is around the mark that mbs were closing the day at in early 2005....wow. So the chipping away that we've seen at the resistance levels ended up giving way to a gain the likes that we haven't seen in one day since March of this year. So even though we closed off the days high water mark with the late day retreat, we still closed well above the 200 day moving average and that's crucial to sustain this momentum. Hopefully this will generate some steam not just for financial markets, but for the consumer out there looking for a better deal on their mortgage (I worked up over $1,645,000 in new loan applications today alone and the bulk of that was in refinance loans.) This should also help jump start the buyers in order to take advantage of the low interest rates that are and will (hopefully) continue to be available as move into the fall.

This is my team email for the day, highlighting when one memeber can bring information to the table that will help kickstart business for the other members. In other words, get out your follow ups and lead sheets and hit the phones hard tomorrow if you haven't already started today. Call anyone you've house hunted with and get them off the fence and to the closing table. Hesitation on their part could be a very costly error. When you consider that rates are already moving toward historic lows, you can't assume they will be there forever. That's the mistake so many people made several years ago, taking the market conditions for granted and forgetting how they were really supposed to conduct business in order to sustain that business REGARDLESS of what the market throws at you. This could easily be that life line so many have been waiting for and afford you the opportunity to tread water long enough to get your 'best practices and procedures' better dialed in as we move forward.

As always, I'm more than happy to give more information if you want to email or call. I love what I do and I get excited when others want to know more because helping out others find success in their business is every bit if not more enjoyable than working up the loan applications that came across my desk today. Here's to hoping this rally continues and happy selling, I'm here when you need the financing.