Garrick Werdmuller

Mortgage backed securities (MBS) prices are higher, FNMA 4.5% coupon 101.80bps, +10bps (rates lower) as the Treasury prepares to sell $24 billion 7yr notes, the third auction this week of a record $98 billion in notes. The U.S. is selling record amounts of debt to revive economic growth, service deficits and cushion the failures in the financial system. 4th quarter Gross Domestic Product (GDP) was revised downward to -6.3%, reflecting sharply lower estimate for inventories and exports. The revisions were minor and does not change the view that the economy is mired in deep recession. GDP is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Jobless Claims rose 8k to 652k while the total benefit rolls jumped 122k to a record 5.56 million, indicating more people are spending longer periods out of work and point to steady and severe erosion in the labor market. After the run of above average supply offerings, we may be in store for a period of strengthening MBS which would allow lenders to pass along secondary market gains with a little less anxiety over their ability to protect their pipelines from interest rate risk.

I have had several requests for reverse mortgage all over the Bay Area recently. The scenario today was a gentleman aged 70 had a retirement of 400K in 2005 which is now worth 120K. He told me he was "practicing jumping from his kitchen chair". He said it jokingly but it made me wonder.

For him, the reverse mortgage is the perfect solution! New guidelines value reverse mortgages up to $625,500 and NO HIGHER (up fro $417,000). So despite his house appraising at over 1 million the property value is $625, 500 for our purposes. He wanted to get an extra $500 a month or an extra $100K credit line which he won't have to pay back unless he moves or sells the property.

When I ran the numbers I found I could get him a $95K credit line or an additional $574 a month! Nothing has to be paid until he is no longer living there or he is no longer living anywhere. With elderly people losing there ritirements and home equity a reverse mortgage is the perfect solution.

For more information on reverse mortgages email me at info@garrick.biz and I can send you an FAQ.

Mortgage backed securities (MBS) prices are near unchanged (rates stable) in volatile trading; FNMA 4.5% coupon 101.81, -2bps but had been down 16bps earlier. Durable Goods Orders unexpectedly rose 3.4% in February on a rebound in demand for machinery, computers and defense equipment; the biggest gain in over a year and the first in 7 months. However, there were large downward revisions to January and December basically offset the positive report. New Home Sales surprisingly rose 4.7% in February from a record low as plummeting prices and cheaper mortgage rates lured some buyers. Mortgage applications surged 32% as 30yr fixed rates fell to 4.63%, the lowest in 60 years. The drop in borrowing costs helped spur a wave of refinancing. The Fed starts purchasing long term Treasuries today, aiming to bring down consumer loan rates further. The strategy carries risks of higher inflation in the future. The Treasury auctions $34 billion 5yr notes today, raising concern record amounts of government debt will overwhelm demand. Stocks are higher with the DOW, S&P 500 and NASDAQ up over 2%.

Mortgage backed securities (MBS) prices are near unchanged in quiet trading with no economic data released today; FNMA 4.5% coupon 102.11bps, -3bps. The U.S. will sell a record $94 billion of notes next week as it seeks to fund spending aimed at reviving economic growth. Fed's recently purchased $28 billion MBS, mainly 4.0% & 4.5% coupons, and sold $8 billion of mostly 5.5% & 6.0% coupons in its campaign to lower U.S. home loan rates. With the target rate at 0%, the use of monetary inflation as a policy tool raises the risk price inflation may take off before policy makers can reverse the process. Inflation risk is sweeping commodity prices higher on speculation the Fed's measures will revive the economy; oil traded above $50 a barrel and closed at a 3 month high. Fed Chief Bernanke speaks at 9am pt, always a potential market moving event. TGIF!

This was written Jeff Mifsud for the Loan Tool Box Community - I thought it was interesting and thought I would share...

Congress created the Federal Housing Administration in 1934. At this time, neary two million construction workers were laid off. Only four out of ten people owned their own home. In addition, mortgage loan terms were outrageous. Borrowers had to put 50 percent down, and the note ballooned in 3 to 5 years. So the mission of the FHA was to encourage home ownership.

The FHA became a part of HUD, which is the Department of Housing and Urban Development, in the year 1965. In the mid-1980's, the FHA transitioned to what we call direct endorsement and began approving lenders to underwrite and close their own loans. Prior to this time, the FHA did have a hand in the process of the loan.

It's amazing to me that after 20 years of this direct endorsement program being in effect, nearly eight out of ten real estate agents I speak with still think that the FHA has a hand in the process of the loan. This is something that's very important for you to know. When you're working with real estate agents, you need to make it clear to them that the loan will be processed like any other loan.

It's also very important to know what the FHA actually does and does not do. First, let's start with what the FHA doesn't do. The FHA does not buy loans, they do not originate loans, and they do not service loans. What the FHA does do is provide insurance on loans made by FHA-approved lenders. It is actually the pioneer in mortgage insurance. As you know, mortgage insurance protects the lender in case of default on that loan.

Here are a couple of additional FHA facts. The FHA is the only government agency that operates entirely from its own income, and costs the taxpayers nothing. It is also the largest insurer of mortgages in the world, insuring nearly 30 million properties since its inception in 1934.

My branch has over 28 years of FHA originating experience and can finance FHA loans in Ca.