(This post was originally mailed to subscribers on May 18th. If you wish to subscribe, email me!)

Looks like summer has finally arrived here in Bend and we missed spring. Maybe those 3 rainy days were our spring? Check the last section below for some summer tips for your home. It was also a sunny week in the Mortgage Backed Securities (MBS) Market. Unfortunately, much of that came at the expense of the stock market stalling. Many stock market watchers have been calling a correction, whether it is just letting steam off from the torrent rise since March or the continuing/final legs of the bear market that needs to finish off before a true bull market rally can take off. I read that the 4 worst years in the stock market were 2008, 1937, 1974, and 2002. In the year immediately following each of the prior occurrences (1938, 1975 and 2003) the stock market gained an average of over 32%. Welcome 2009, we expect much more from you before you are done.

The good run on MBS this past week made up for Friday May 8^th’s drop. Remember that when MBS prices go down (bad) mortgage interest rates go up (bad.) So we are looking for investors anxious to buy MBS, keeping the prices up (good) and interest rates down (good.) Fortunately, the Fed continues to buy MBS in large quantities and keep each of these measures very good. In fact last week the Fed purchased more than $27 million and intends to purchase up to $1.25 Trillion by the end of 2009. The Fed’s balance sheet, which was less than $900 billion last fall, is now over $2.1 trillion as they have moved significantly into buying various instruments to stabilize the credit markets. If you would like to learn more about the Fed’s purchasing program check out this website of the NY Federal Reserve Bank (where US Treasury Secretary Geithner recently presided.

During the coming week we will have limited economic news, but housing related news will top the items of interest. In a couple of hours, the home builders will release their measure of confidence, expected to be in the range of 16, up from an absolute low of 14 last month. The Housing Starts and Building Permits numbers on Tuesday should further speak to the housing market settling down. The chart at the very bottom of this email shows that the expectation for each of these is to be edging up from dismal numbers last month. Analysts aren’t outright calling this a bottom in the housing market yet, but they are talking about stabilization. News from today and tomorrow, if up as expected, should bring a flurry of stories on housing markets perhaps stabilizing. Let’s watch and see. In any event, the local demand picking up is an indication that your clients will have missed the Gold Lined Bottom (measured by a combination of willing sellers, lower prices and lowest interest rates) if they don’t start the process NOW. Let us help you get them to understand this and act before the shoulda-coulda-woulda factor makes them have regrets.

So there are exciting opportunities in housing and a bright future; the economy is at a favorable turning point, the stock market is poised for an upturn after a brief settling, and interest rates continue to enjoy the benefits of Fed purchases that are intended to continue on into the Fall. Other cheerful news: I attended the memorial services for Grover Fike on Saturday (what? cheerful and memorial service in the same sentences??) Grover lived a full live of serving others including his wife (who preceded him in death) and 4 children, his neighbors, his church and his community. He lived into his 90^th year and last summer he was still driving a ski boat including the run that became my son Josh’s first time up on water skis. 6 weeks ago he was scraping snow from the sidewalks at church before the services so “the old people” wouldn’t have trouble getting safely in. Here’s to you Grover Fike! And did you hear that a high school kid in Missouri high jumped 7 feet, 5 inches last month? He’s only 5 feet 10 inches so this represented jumping 19 inches over his own height! Let us take you and your friends, family and clients to new heights! Make it a great week! - Dave

(Originally sent to subscribers on May 11th - Subscribe by emailing dave@signetmortgage.com)

We continue to see the “green shoots” of a turnaround that have driven a stock market rally since March. And the nation’s biggest banks appear to be standing up under “The stress tests”. But what does it mean? Let’s look at a few economic data points. The jobs report came out on Friday and surprised some with a 539,000 loss number, better than the 610,000 expected. This is on the heels of 4 months that averaged over 700,000 losses per month. There have been over 6,000,000 jobs lost to date and the projection is to reach over 8,000,000 before this is over. Currently we are at an 8.9% unemployment rate, but when underemployment or undesired partial employment is added in, this number is now over 15% and certainly headed higher. The “green shoots” in all of this is that the other 91% representing employed people appear to be starting to spend just a little bit after having been completely absent for months. This is reflected in retail results that are starting to give just a bit of hope. Remember through the coming months that even as we do see recovery, the unemployment number will rise until there is significant enough confidence for employers to return to hiring.

Housing news give glimmers of hope. The Pending Home Sale Indicator rose for the second straight month and the local evidence is that the “green shoots” continue to respond to the warmth of near-record-low interest rates and exceptional values available in the home market. Commercial real estate financing is just on the front edge of what should be a very interesting 18 months of turmoil. Signet continues to build our stable of qualified lenders to help weather this coming storm. Our advice is simple: Refinance commercial properties now.

Banks’ stress test numbers came in a bit better than expected. This became clear on Thursday in spite of an early, misinformed report on Wednesday from the NY Times that significant all-new capital would be required. Some mix of new capital (Wells and JP Morgan already raised $11B on Friday) and converting preferred shares is happening already. This clarification drove a big stock market rally on Friday, a rally that pinned us right up against some overhead resistance. And today we are seeing stock market push back and people talking defensive strategies to maintain recent gains as opposed to find upside opportunities. There appears to be a lull in the rally for now. This is not unexpected as many have called for a break before the official bull market rally starts (and let’s hope soon.) Long-term interest rates have weathered well during the March to May stock market rally. This is where the Fed buying strategy has really benefited us. The Freddie Mac 30 yr fixed average is posted today at 4.84% and we have seen great deals getting done and priced even better than this. Conforming loan amounts continue to be approved at rates equal to or better than we have seen in our lifetimes. Property values continue to be tempting. Let us help your buyers get off the fence before the market opportunities run away from them. Bottom timing in housing is about to become a would-a, could-a, should-a.

One parting tribute to the Mothers I know and love. Thank you for the fabulous strength you provide. I share with all the comments spoken by my brother-in-law, Just Joplin, yesterday in a talk he gave at our Church:

"Mothers are special: NOT that they sacrifice for us, but that while doing so much for us, they find it to be no sacrifice at... about 10 hours ago"Mothers are amazing: NOT that they sacrifice for us, but that while doing so, they find it to be no sacrifice at all." JJJ 5/9/09

To all of you who are Mothers, YOU ARE AMAZING! Keep it up. Make it a great week! - Dave

(E mailed to subscribers on May 4th - become a subscriber by emailing me at dave@signetmortgage.com)

Bonds and interest rates are improving again today in spite of a stock market surge. Since the H1N1 flu scare hit the market early last week, stocks have been on a tear starting Weds and carrying on into today with the DOW up 150 and the S&P piercing through an important threshold of 875 now hovering at 893. Warren Buffett and co held the annual Berkshire Hathaway shareholder meeting over the weekend and there continues to be a general optimism about stocks. Remember that stocks are a good 6 months ahead of the general economy. The other generality floating about the stock market is that this is likely still a bear market rally and it will slide at least 5% at some point before converting into a bull market run. Today we’ve been up over 2% on the day though. When stocks rise, money generally gets drawn out of bonds and hits our MBS pricing and interest rates.

So why are Bonds up then? Only one reason: The Fed is buying MBS and Treasuries. The yields (interest rates) have been creeping up uncomfortably on treasuries for the past week and a half. This keeps all-important credit flows slowed to an uncomfortable level for the Fed, so they are buying. But how long can that keep up? They’ve opened the window pretty far and will likely keep at it long enough to hear people saying that the economy and not just the stock market has turned. Remember that the economy will turn long before unemployment turns and as we said before, roughly 6 months after the stock market turns which really began in March (see chart below.) And the pressures will be high on the Fed during this 6 months. With the natural rollover of Treasury Bonds from prior years and the addition of 100’s of billions of new debt just this year, the Treasury will have to float in excess of $2 Trillion this year. Just last week and again this week they are putting out $101B and $150B respectively adding further pressure on rates. Without the Fed purchases we would see treasury yields and mortgage rates both rising. But as it is, we are still enjoying lifetime record 30 year home mortgage rates in the 4’s. The Freddie Mac number announced last week was at 4.78% and we have locked loans with note rates lower than that in the same period.

Timing is everything. See the MBS chart towards the bottom below. You’ll see a big green bar about 5 days ago. That was the impact of the flu scare that became frenetic over the weekend. A number of our clients were the fortunate beneficiaries of a truly unfortunate circumstance. Signet was busy locking loans on Monday to take advantage of the improvements. We can’t guarantee anything but our best effort and attention and that is what we will give you and your friends and clients. Performance speaks for itself and remember: “These days - more than ever - experience counts!” ^sm Let us put that experience to work for you and your friends.

This week, Thursday, we will have the all important government announcement of “the stress tests.” Wells has already announced that they will need to increase capital. CITI and BofA successfully delayed the Treasury from making the announcement as they challenged the results. Thursday will be indeed interesting. As with any Wall Street spectacle, you can count on a “buy on the rumor, sell on the news” experience on Weds and Thursday. We’ll see. The other banking news is that the “excess reserves” of banks (capital over and above the requirements) grew from $300B three months ago to over a trillion dollars today. This is both good and bad – good for bank balance sheets and bad for business borrowing – this is cash that could be lent out keeping the economy moving. Another interesting development in the area of commercial lending is that now a record 30 banks have been shut down by the FDIC in 2009. This hurts the small businessman who counts on these banks for credit lines and basic banking requirements. One such bank closed on Friday (always announced on a Friday) was Silverton Bank of Atlanta, GA. Some had considered them too large to fail because of their back room business of being a bankers’ bank. But fail they did and the FDIC cost of this will be $1.3B paid for by remaining banks and their borrowers/depositors. We’ll keep an eye on these closures and their impact on commercial lending which will be “the new frontier” of financial hand wringing for the next 12 months.

On a bright note, the NAR announced this morning a 3.2% rise in Pending Home Sales v. an expectation of 0.0% (March ’09 v Feb ’09 contract signings see article here.) This is part of the good news sparking euphoria in stocks this morning and is attributed largely to record-low interest rates, tax credits and phenomenal buys available in the market (along with great Realtors out there selling the inventory) bringing buyers back into the market. Hooray for a little positive momentum coming into the historical busiest months of late spring and summer!

Let us know who we can talk to for you to help you ride this rising tide of buyer interest. We’ll be happy to get them pre-approved (ask us about the 10 points of a meaningful pre-approval), educate the potential buyers and keep you well informed. Let’s make this a great week and a great May! - Dave

p.s. a couple of feel goods: Happy 14^th birthday to my baby Josh. And we echo the tribute paid in the Bend Bulletin this morning to a 21 year old college student who attended high school here in Bend, taken early in an accident over the weekend. Stuart Robertson seemed to make everyone a bit happier when he was a round and a friend said this about Robertson when they were just 7^th graders. On this friend’s first day in a new school, Robertson sat next to her during lunch. Eventually, his friends joined them and, “by association made me look like I had friends.” As Robertson got up to leave at the end of lunch, he tuned to her and said: “You can sit with us every day if you want.” Is there anything better a 13 year old could do with a new kid on the block? Share this with a teen or pre-teen you know and if you are acquainted with the Robertson family, please pass on my heart-felt condolences as well as my thanks for his generous example. -DW

(Sent to subscribers on Apr 27 - email dave@signetmortgage.com to become a subscriber)

And it is an historic morning in Detroit as GM makes their big announcement. Congratulations! You, as an American Taxpayer, are now part of the 89% ownership of GM, along with the UAW. As a shareholder, you will want to know 2 important facts from the restructuring of our GM: 1^st we are now focusing on 4 key brands (Chevy, Cadillac, Buick and GMC) dropping or selling 4 other brands (Pontiac, Saturn, Saab and Hummer.) The second key number is 42% as we drop our dealers from 6,200 to 3,600 –ouch. This will take up to a year and dealers are just being notified – you have to wonder about smaller market dealers. But pruning is always necessary to foster healthy growth.

Overshadowing the GM announcement on Wall Street is the specter of swine flu global impact. Is it “a pandemic” or merely “an outbreak” as President Obama stated this a.m.? People, particularly in Hong Kong, are remembering the devastating effects of SARS. Stocks are down across the globe overnight and the Dow is starting off down this morning. Travel stocks including the cruise lines and airlines are off 15% out of the chute and banks and techs are down 5 and 2% respectively. Only vaccine companies seem to be up. There is of course a favorable impact on MBS and therefore interest rates as money bailing from the market seeks safe haven. Which serves as a reminder: take advantage of the great benefit we have enjoyed for months now as the Fed’s MBS buying is supporting the market.

Don’t let this temporary benefit pass you by. And learn a significant lesson from the auto bail out by watching what is NOT happening at FORD and why. News today is all about GM, but Ford not in the news is more interesting. Ford recently borrowed significantly when they did not need it, and when the crisis hit, they were ready. A good friend and private equity investor has long taught me that you “borrow money only when you do not need it, because when you need it, capital is NOT available”. If you can, but haven’t yet refinanced or established a home equity line of credit (HELOC), do not delay. Equity in your home can only help you if you sell or if you have tapped into it.

The FORTUNE 500 came out this week and it is not surprising news that the market capitalization of the nation’s largest companies fell by 37% from 2007 to 2008, more than $4 Trillion in just these 500 companies in only 1 year. More interesting is that this same market cap measure of the Fortune 500 from 1997 to 2008 in not up but also down 13%. So stock market investors have essentially sat on the sidelines for over a decade based on this measure. With that perspective, the view turning back towards real estate is again favorable. At Signet, we are ready to provide exceptional, professional financial services with your real estate needs. Please put us in touch with those you know who could benefit from experienced advice. These days, more than ever - experience counts. Make it a great week! - Dave

Happy Tax Day! (Sent to subscribers on april 15, 2009 - email me to become a subscriber!)

I hope your day is going smoothly and you are feeling some of the "good first steps toward economic stabilization" as Ben Bernanke said yesterday. At Signet we are feeling it and want to share the love. SBA lending has great news:

• 504 Debenture rates are now at an all-time low
• 7(a) funding has increased fully 20% since stimulus efforts
• SBA fees are on holiday while the stimulus cash is available (est. into winter)

A quick rundown on commercial rates available. Note that we are happy to work with investors and owner users, purchases and refinances, above a million and below ($200k loan recently committed) and we are right here in your back yard.

OWNER USER:

• i. To 90% LTV, SBA blended rates 5.91% Fixed for 20 and 5 yrs with maturities of 20 and 25 years. The debenture is at a record low 5.25% this month and SBA fees are waived!

• ii. To 65% LTV conventional. Rate at 6.5%. Fixed for 5 years with 25 year no call, no loan renegotiation - this rate is available both above and below $1MM loan amounts.

INVESTOR:

• i. Easier underwriting to 65% and 125 DSCR. Rates Fixed for 5 yrs, Full 25 yr am, No Balloon, 6.5%

• ii. Whistle clean deals to 75% and 120 DSCR. Rates Fixed for 5 years, 30 yr am with 6 year call, 6.55%

• iii. Alternative Full-am Hybrid, fixed for 5 years, 30 year with no call, fixed for 5 yrs and adjustable after, starting at 6.78%

• iv. Adjustable to 65% and 120 DSCR. Rates at Prime + 1.25% with floor of 6.0%. Full am 25 years, no Balloon.

MULTI-FAMILY:

• i. 10 yr Fixed at 5.44 - 5.95%, 30 yr am and 30 yr am. Balloon at 10 yrs, 75 LTV and 125 DSCR.

• ii. Range is 20 bps better over $3MM and 30 bps better with lower LTV.

BIZ OPPS:

• i. SBA 7(a) with LTVs to 90% depending on business type and continuity. Prime or LIBOR + margins of 1.0-2.75%. SBA fees waived (until the cash runs out...)

• ii. SBA 7(a) volumes have jumped up 20% recently

• iii. Signet is your one-stop shop for conventional and SBA loans right here.

BRIDGE FINANCING - both bank and hard-money bridge financing available. I'll break out more information on this in an email next week in advance of the CID education session on foreclosures.

An opportunity for an investor: An associate has an apartment building investment opportunity for $2 MM with 10% cash on cash return and an after-depreciation equivalent 20% return. Perfect for the 1031 investor currently in search mode. Let me know and I'll connect you to the right people.

Make it a great day, and keep us in mind. - Dave