William Staney

MBS prices are down sharply this morning (FNMA 4.50 -27/32) on a better than expected Unemployment Report. Non-Farm Payrolls came in at -247k vs. the consensus estimate of -325k and unemployment came in at 9.4% vs. the slightly higher 9.6% expected. All bond markets have responded negatively to this print, as funds are being pulled out of bonds and thrown into stocks. The market traded sideways for most of the day yesterday (FNMA 4.50 -4.32), as participants awaited today's employment numbers.

Next week brings many notable events and releases, which we will explore in more detail next week. The FED is meeting on Tuesday and Wednesday, with a policy announcement on Wednesday, 8/12. The FED is expected to leave the funds rate unchanged, but look for text within the announcement to give clues as to the FED's leanings on the economy, rates, inflation, and their open market operations. With recent news leading some to believe that the economic tide is turning, look for the FED's take on this to move markets. Wholesale inventories will be released on Tues (est. -0.9%). The Trade Balance (est. -$28.5 Bil) and Treasury Budget (est. -129.5 Bil.) are set to roll Wed. Import/Export prices, Retail Sales (est. +0.3%), and Jobless Claims will be released on Thursday. Next week also brings several Treasury Auctions. Look for these to again be the center of attention as market watchers look for signs of weakening demand for US debt (rates up). 3yr Auction is Tues, 10yr's on Wed, and the longest term, 30yrs' go off on Thurs.

Will Staney

Sr. Mortgage Banker

WJ Bradley Mortgage Capital

12444 Research Blvd. Ste. 103

Austin, TX 78759

(512) 377-1468 Office

(512) 644-1587 Cell

(866) 953-0155 Fax

www.wjbradley.com

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Weekly Roundup

JULY 24, 2009

MarketWatch's top stories of the week

By MarketWatch

The first heavy week of quarterly earnings is behind us and the news is pretty good by the look of it. Even though many companies in the Standard & Poor's 500 are mostly reporting declines in profit and revenue, investors are reacting well.

Most U.S. stocks ended the day Friday higher and all three major indexes notched gains of 4% or more for the week.

Companies, you see, are using their mastery of the expectations game to make their results look better. Time will tell if significant drops in earnings and revenue coupled with forecasts for stabilization or, in some cases, an upturn in results amount to the beginning of a recovery in corporate earnings.

Even though the season is going better than expected, overall, S&P 500 earnings are down more than 23% from the year-ago period, according to Thomson Reuters. Some 40% of the index compone nts have reported so far.

All three of the major indexes gained 4% or more this week and they are all in positive territory for year, too. The Dow Jones Industrial Average (.DJI) rose 23.95 points or 0.3% to close at 9,093.24. For the week, the index gained 4%. The Nasdaq Composite Index (.COMP) fell 7.64 points or 0.4% to close at 1,965.96, bringing its win streak to an end at 12 consecutive days. For the week the Nasdaq gained 4.2%. The broader S&P 500 Index (.SPX) rose 2.97 points or 0.3% to close at 979.26 on Friday. For the week the index gained 4.1% and so far this year, it is 8.4% higher.

Stay tuned to MarketWatch.com over the weekend for all the news you need. Our weekend features include a look at whether consumers can drive an economic recovery starting next quarter, a story about the big mistakes job seekers make and a look at how you can use exchange traded funds to protect your portfolio from inflation.

Also, please have a look at our weekly videos looking ahead to what's happening next week.

U.S. Week Ahead: More Results, GDP Coming

Europe's Week Ahead: Earnings Season

Asia's Week Ahead: Finding Opportunities

-- Christopher Noble , assistant managing editor

Obama's push for reform

President Barack Obama reached out to the American public and skeptical lawmakers this week, saying a health-care overhaul is needed to bolster both the U.S. economy and families' finances. Obama insisted health-care reform will be done "this year," during a prime-time press conference that came amid doubts about his leadership on the health-care issue. Read about what he said .

What's at stake

Among the most contentious health-reform proposals being considered is the creation of a public plan option, a government health plan that would compete with private companies for customers in a new health insurance marketplace. Lawmakers remain divided over the idea. Many Democrats support it, saying it would impose discipline on private insurers and keep them honest. Many Republicans oppose the idea and say it would lead to a single-payer system such as Medicare. What does it mean to consumers? Read more about it .

Fed focuses on recovery

Interest rates must stay at historically low levels for the economy to get out of the ditch, but it isn't too early to discuss how the central bank will act once things get back to normal, Federal Reserve Chairman Ben Bernanke said this week. He also defended the Fed's independence in the face of Congress, many members of which are in a sour mood in the aftermath of the $700 billion financial bailout and stimulus package. Read more about what Bernanke said .

Profits remain evasive

Wall Street is doing great, except that it's losing money. Not just a little money, but boatloads of money. Taxpayer money. Your money. Don't let the recent profits reported by the big brokerages and banks fool you, says David Weidner -- the only place any cash is being made is on the trading floor. And there, the only winners are a bunch of traders who will get big bonuses for gambling the firm's money -- much of it borrowed from or given by the government. Read more of Weidner's column .

Building some strength

Home-builder stocks have been at the forefront of the market's recent charge on hopes the economy and housing markets are stabilizing, but the rally could be short-lived if second-quarter earnings reports disappoint. Housing-related stocks have been among the market's top performers since the March 9 market low. Read more about what's next for the builders .

Hard times for Mister Softee

Shares of Microsoft (MSFT) slid after the software titan posted disappointing results for its fourth quarter that reflected a sharp slowdown in software sales. In a conference call with analysts, Microsoft Chief Financial Officer Chris Liddell said the quarter marked the end "of one of the most difficult, but in some ways most encouraging years in the company's history." Read more about Microsoft's report .

Starbucks shares perk up

Shares of Starbucks (SBUX) enjoyed a rally after the company's cost cuts helped lead to a better-than-expected third-quarter profit and the coffee giant showed that its store traffic is improving even as the recession drags on. Starbucks also gave a full-year profit projection that beat Wall Street's expectations. Read more about Starbucks' results .

GE Capital may have to pay up

General Electric (GE) unveiled a plan to exit a program that helped its financial-services business issue more than $50 billion in government-guaranteed debt. Without such support, the GE Capital unit may pay more to borrow the money it needs to makes loans, potentially cutting into profits. Read more about GE's plans .

Flying high with Google

When a Dornier Alpha Jet was spotted among Google (GOOG) executives' air fleet in Silicon Valley last fall, speculation swirled over what use an Internet search company could possibly have for the sleek fighter plane. It now appears that the jet, parked at NASA's Moffett Field, may see its first action as part of an ambitious government field study targeting pollution and climate change. Read more about Google's fighter jet .

Standing-room-only flights?

Passengers would be willing to stand on short flights, according to a poll released this week by Europe's top no-frills airline. Ryanair Holdings (RYAAY)(UK:RYA) said two-thirds of the 120,000 passengers polled on its Web site said they would stand if they could fly for free. And at half price, 42% would do so. Read more about the survey .

Here are some of the recent changes to Fannie Mae that are rolling out:

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0919.pdf

In summary:

Across-the-Board Guideline Changes:

• Lenders must compare actual federal tax returns from the IRS to a borrower's supplied income documentation. Previously, this review step was at the lender's discretion.
• "Tip" income must be verified.
• Credit, income and asset documentation can't be more than 90 days old. The former guidelines allowed for 120 days.
• Trailing secondary wage earning is now prohibited. This means that P&G employees relocating to Cincinnati can't use a spouse's "expected" Cincinnati income until that spouse actually has a job.
• Stocks, bonds and mutual funds get assigned 70% of current market value. Formerly, this was 100%.
• Retirement assets get assigned 60% of current market value. Formerly, this was 70%.

These are real changes we must be aware of. Also there have been some updates to Duplexes or 2unit homes. The minimum credit scores are higher and maximum loan-to-values are lower.

When your 2-unit is your Primary Residence:

• Purchase: Max LTV lowered to 80%; 640 min FICO.
• Rate-and-Term Refinance: Max LTV lowered to 80%; 640 min FICO.
• Cash Out Refinance: Max LTV lowered to 75%; 680 min FICO.

When your 2-Unit is an Investment Property

• Purchase: Max LTV lowered to 75%; 660 min FICO.
• Rate-and-Term Refinance: Max LTV lowered to 75%; 660 min FICO.
• Cash Out Refinance: Max LTV lowered to 70%; 680 min FICO.
  

Overall, Fannie Mae's new 2-unit guidelines have restricted loan-to-value limits by as much as 15 percent and will raise minimum FICOs by up to 40 points. Going forward, fewer 2-unit mortgage applicants will qualify for mortgages and that should slow both purchase and refinance activity in the 2-unit market until the market returns to balance.

Fannie Mae has stated September 1 2009 as the effective date for these changes. That means it is expected that by Aug 1^st all of the lenders will be underwriting to the new rules.

Therefore, if you have a 2 unit home you are considering refinancing, you may need to consider moving your timeframe to the next week. Lenders will be adjusting to these and future guidelines and it might leave you without a loan option.

It is better to get a good rate today than to be ineligible for a great rate tomorrow!

For further information, pre-qualification, or to see if you can qualify to purchase or refinance before these changes take effect contact:

Will Staney

Sr. Mortgage Banker

W.J. Bradley Mortgage Capital

512-377-1468

will.staney@wjbradley.com

The $8,000 First-Time Home Buyer Tax Credit expires December 1, 2009!

If you're planning to claim use the credit and haven't started looking for a home, your clock is officially ticking. You must be closed on your new home on or before December 1.

Because purchase closings sometimes are 60-days standard, your $8,000 is in jeopardy unless you go under contract prior to October 2, 2009. That's only about 2 months from now.

Use it or lose it, as they say. Realtos, get the word out to anyone that may be thinking of purchasing a new home ASAP!

For more information contact Will Staney @ 512-377-1468 or will.staney@wjbradley.com