Ask any loan agent who knows their stuff, and they will say, “I have a stack of files sitting on that table that, if rates drop a little, they’re going to fund!” Well, there is good news today as Treasury rates are relatively stable but the market is starting to help mortgage-backed securities. Where were you in June 2003? Not that it has mattered in the slightest lately, but the 10-yr Treasury yield hit its low of 3.10% on June 13, 2003. Today the 10-yr stands at 3.45%, but 30-yr mortgage prices are better by .5 in price, approximately.

Rising defaults and delinquencies effectively shut down the subprime and jumbo mortgage markets last summer, but borrowers with good credit could still get conventional loans that met the agencies’ criteria. Up until recently FNMA & FHLMC were fine, because investors continued to buy their securities due to the implicit guarantee. But then they went and lost a combined $6 billion in the fourth quarter as defaults rose. Darn. And when the size of the mortgages Fannie and Freddie can guarantee to as much as $729,750 was temporarily raised, the market got even more spooked: can they handle/guarantee this new block of business? Stay tuned…

Last week new appraisal standards were announced, reminding mortgage brokers why they might prefer to be with a mortgage bank like RPM. Now, speaking at the National Press Club, Treasury Secretary Paulson had some recommendations concerning the mortgage brokerage business. For all the details on this thoughts, see http://news.yahoo.com/s/nm/20080313/bs_nm/paulson_dc_4 Thank you Marc L.!

A few days ago Wells Fargo sent word out that they will begin accepting the new loan limits on Monday for FHA, FNMA, and FHLMC. “Wells Fargo will accept the higher temporary FHA loan limits, beginning March 17, 2008, with additional requirements that will be announced in a future communication. The loan limits for this program are based on the median house price for homes in a specific area as determined by HUD.” “Wells Fargo will accept the temporary higher Fannie Mae and Freddie Mac loan limits on one-unit properties only beginning March 17, 2008. The HUD Web site must be accessed to determine the maximum base loan amount for the selected market.” That being said, there still appears to be a lot of price confusion on Wall Street about just how to price this new jumbo FHA product.

Effective today at Downey , they are only allowing stated income for self employed borrower’s and maximum LTV 65%. We are reducing our LTV/CLTV 5% on all programs.

Wachovia (ex-World) reminds everyone that their fixed rate pick-a-pay loans, (i.e. 3 year and 30 year) are locked at commitment, not submission. One can lock at commitment if you add .10 bps to the rate.

Bear Stearns announced that they have secured Federal Reserve 28-day financing through JP Morgan Chase. There continue to be concerns about Bear, and other mortgage-focused investment banks, so this move is seen as yet another example of the Fed assuring the market.

The economic news today was major: it is the best inflation number that we’ve had in 6 months! Although gasoline and food prices have shot up recently, for February cheaper energy and transportation prices helped keep the overall CPI flat last month after rising 0.4 percent in January. Even more significantly, core consumer prices that exclude food and energy items were unchanged in February after climbing 0.3 percent a month earlier. Both were much lower than expected and low inflation certainly allows the Fed to lower overnight rates.

Paddy was driving down the street in a sweat because he had an important meeting and couldn’t find a parking place. Looking up to heaven he said, “Lord take pity on me. If you find me a parking place I will go to Mass every Sunday for the rest of me life and give up me Irish Whiskey!”

Miraculously, a parking place appeared.

Paddy looked up again and said, “Never mind, I found one.”

Rob Chrisman