New home sales rise 6.6 percent for September | Richmond Times-Dispatch.

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Mortgage rates remain at unbelievable low levels but ended higher at the end of last week.  It is time for those considering purchasing or refinancing to talk with a mortgage professional.  We are now close to Election Day, which history shows rates often hit low levels in the second half of October.

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This week brings us the release of four major economic reports for the markets to digest, but none of them are considered to be highly important to mortgage rates. However, this by no means leads me to believe we will have an uneventful week. This will be an extremely busy week for corporate earnings, which usually translates into stock volatility. The lack of important economic data on this week’s calendar makes it more likely that any significant swings in stock prices will influence bond trading and mortgage rates.

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Date Time (ET) Statistic For Market Expects Prior
10/18/10 09:15:00 AM Industrial Production Sep 0.20% 0.20%
10/18/10 09:15:00 AM Capacity Utilization Sep 74.80% 74.70%
10/18/10 10:00:00 AM NAHB Housing Market Index Oct 13 13
10/19/10 08:30:00 AM Housing Starts Sep 579K 598K
10/19/10 08:30:00 AM Building Permits Sep 565K 569K
10/20/10 07:00:00 AM MBA Mortgage Applications 10/15/10 NA 14.60%
10/20/10 02:00:00 PM Fed’s Beige Book Oct
10/21/10 08:30:00 AM Initial Claims 10/16/10 455K 462K
10/21/10 08:30:00 AM Continuing Claims 10/09/10 4400K 4399K
10/21/10 10:00:00 AM Leading Indicators Sep 0.30% 0.30%
10/21/10 10:00:00 AM Philadelphia Fed Oct 1.4 -0.7

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September’s Industrial Production will give  an indication of manufacturing strength by tracking output at U.S. factories, mines and utilities. It is expected to show a 0.2% increase in output from August’s level, meaning that manufacturing activity rose slightly. A larger than expected increase in output would be negative for bonds and mortgage rates as it would indicate economic strength. A decline in output would likely push mortgage rates lower tomorrow morning.
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September’s Housing Starts is the week’s second release, coming early Tuesday morning. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show a decline in new home starts between August and September. I believe we need to see a significant surprise in this data for it to influence mortgage rates.
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The only report scheduled for release Wednesday will be released during afternoon trading when the Federal Reserve will post its Beige Book at 2:00 PM ET. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve when determining monetary policy at their FOMC meetings. If it reveals stronger signs of economic growth from the last release, we could see mortgage rates revise higher shortly after its release.

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The last report is September’s Leading Economic Indicators (LEI) late Thursday morning. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for an increase of 0.3% from August’s reading. This would indicate that economic activity is likely to increase moderately over the next couple of months. That would be relatively bad news for the bond market and mortgage rates, but this report is considered to be only moderately important. Therefore, a small increase would not be of much concern to the bond and mortgage markets. Ideally, we would like to see a decline in the index.
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Overall, I don’t see a particular day that should be labeled the single most important. The week’s economic reports are all moderately important to the markets, so we can’t rely on any of them to drive rates. In fact, the biggest force behind any noticeable moves in mortgage pricing may actually come from the stock markets. There are many companies posting earning reports during the week, including some big names that include Apple and Citigroup. If the corporate earnings releases are generally weaker than forecasts, stocks may suffer, making bonds more appealing to investors. The end result would likely be an improvement in rates. The flip side though is stronger than expected earnings that drive stocks higher, pushing bond prices lower and mortgage rates upward.

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Considering whether to lock  a refinance or to buy that new home?  Now is the time consult your mortgage loan officer.

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www.PaulCantor.info

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“We applied for a refinance and have received 6 phone calls from other lenders”.

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“I went to get pre-approved for a mortgage to purchase my first home and had a message on my voice mail from some guy 800 miles away”.

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These are common complaints.  The credit bureaus are  selling information.  When someone applies for a mortgage to purchase or refinance a home and credit is pulled the credit bureaus will sell the names and contact information of those who had their credit report pulled by a mortgage company.  These names are called trigger leads and bottom fishers will often call prospects with a statement like :I am calling about the mortgage you applied for yesterday.  Direct mail is used and even email is sent by these deceptive loan officers.

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Protect yourself from becoming a trigger lead register your phone on the national do not call list and also with tell the credit repositories that you don not want your information sold.  You may do this at www.optoutprescreen.com.  Some people even claim their credit scores have increased by registering here.

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A 15-year mortgage isn’t for everyone Amy Hoak’s Home Economics – MarketWatch.

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The House and Senate both approved H.R. 3081 which included the extension of the increased conforming loan limit in high cost areas. This extension covers conforming loans limits that are backed by Fannie Mae, Freddie Mac and FHA (Federal Housing Administration) and will be in effect through the new fiscal year which ends September 30, 2011.  The maximum amount of conforming and FHA loans will remain as high as $729,750.  Here are some of the conforming loan limits in Virginia:

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Richmond City MSA $528,750
Washington DC Metro $729,750
Charlottesville MSA $425,000
Winchester MSA $475,000
VA Beach/Norfolk MSA $428,750

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It is expected that President Obama will sign the legislation.

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www.paulcantor.info

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Beginning this week, Fannie Mae and Freddie Mac are trying to sell off 150,000 foreclosed homes by offering low down payments, no requirement for mortgage insurance, and up to $30,000 added to the mortgage for renovations. In addition, the real estate practitioner selling the property gets a $1,500 bonus.
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In some neighborhoods, these properties undercut the average listing by $100,000.
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Fannie and Freddie already have repaired the biggest problems with the property including roofs, plumbing, and electrical work.
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Buyers who plan to live in the properties get a 15-day chance to view the homes before investors can purchase them. Investors with cash will likely snap up any properties remaining at the end of the grace period.

“Our goal is to recover as much as we can to offset our loss and not to be low balling properties just to move them,” says a Freddie Mac spokesperson. “We absolutely have no motivation to be leading a downward spiral in home prices.”
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Source: Smart Money, Anna Maria Andriotis (09/28/2010

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Considering an FHA loans to purchase or refinance your home.  Contact your Loan Officer prior to October 4th.  We’ve been talking about, The new hidden price on FHA loans that is equal to a rise in the mortgage interest  rate of one-third of one percent.  This may make the difference on whether someone will be able to qualify to purchase a home or not purchase a home.  It will also make the payment on FHA refinances higher:

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Upfront Premiums (Case Numbers Issued 10/04/2010 and later):

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October 4, 2010, for FHA traditional purchase and refinance products, the upfront premium, shown in basis points below, will be charged for all amortization terms.

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Mortgage Type Upfront Premium Requirement
Purchase Money Mortgages and Full-Credit

Qualifying Refinances

10013PS
Streamline Refinances (all types) 100 BPS

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Annual Premiums

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Effective for FHA loans for which the case number is assigned on or after

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October 4, 2010, FHA will increase the annual premiums collected on a monthly basis. For FHA traditional purchase and refinance products, the annual premium, shown in basis points below, is to be remitted on a monthly basis, and will be charged based on the initial loan-to-value ratio and length ol’the mortgage according to the following schedule:

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LTV Annual Premiums for Loans > 15 Years
= or < 95 percent 85 BPS
>95 percent 90 BPS

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The annual premium for amortization terms equal to or less than 15 years remains unchanged and is collected according to the following schedule.

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LTV Annual Premiums for Loans = or < 15 Years
= or < 90 percent -None
>90 percent 25 131’S

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Cancellation of FHA’s Annual Mortgage Insurance Premiums

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The cancellation policies defined in Mortgagee Letters 2000-38 and 2000-46 remain unchanged.

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Mortgage Market Review

Sep 27, 2010

Mortgage rates ended last week pretty much unchanged from the beginning of the week.  As expected the Fed left rates unchanged and want to keep rates low for some period of time.  Mortgage bonds gained some ground in the mid week, which was lost due to some positive data and a rising stock market.  Generally speaking, stock market strength makes bonds less appealing to investors and leads to higher mortgage pricing.

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This Week:

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Date Time (ET) Statistic For Market Expects Prior
09/28/10 09:00:00 AM Case-Shiller 20-city Index Jul 3.30% 4.23%
09/28/10 10:00:00 AM Consumer Confidence Sep 53 53.5
09/29/10 10:30:00 AM Crude Inventories 09/25/10 NA 0.970M
09/30/10 08:30:00 AM GDP – Third Estimate Q2 1.60% 1.60%
09/30/10 08:30:00 AM GDP – Deflator Q2 1.90% 1.90%
09/30/10 08:30:00 AM Initial Claims 09/25/10 457K 465K
09/30/10 08:30:00 AM Continuing Claims 09/18/10 4450K 4489K
09/30/10 09:45:00 AM Chicago PMI Sep 56 56.7
10/01/10 08:30:00 AM Personal Income Aug 0.30% 0.20%
10/01/10 08:30:00 AM Personal Spending Aug 0.30% 0.40%
10/01/10 08:30:00 AM PCE Prices – Core Aug 0.10% 0.10%
10/01/10 09:55:00 AM U MI Consumer Sentiment – Final Sep 67 66.6
10/01/10 10:00:00 AM Construction Spending Aug -0.50% -1.00%
10/01/10 10:00:00 AM ISM Index Sep 54.8 56.3
10/01/10 02:00:00 PM Auto Sales Sep 3.8M 3.7M
10/01/10 02:00:00 PM Truck Sales Sep 4.9M 4.96M

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This week the bond and mortgage markets don’t have much data to look at until the end of the week; in the meantime Treasury will borrow $100B in 2 yr notes, 5 yr notes ands 7 yr notes on Monday through Wednesday. Interest rates on treasuries declined last week when the Fed said it would do more quantative easing to keep the economic recovery moving, if necessary. Markets jumped on the statement as if it is reality. Stock investors drove the DJIA up 253 points, sent the 10 yr note yield down 14 basis points in rate to 2.62%, while mortgage rates held generally unchanged.

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This week’s data has consumer confidence, the final Q2 GDP expected unchanged from previous reports at +1.6% growth, weekly jobless claims on Thursday expected to hold steady but down about 8K. Claims still hovering in the 450K a week range. Friday the critical Sept ISM manufacturing index is expected top have declined a little, from 56.3 to 54.5; the ISM report is one of the month’s more critical. With the Fed poised for more easing the 10 yr note, driver for mortgage rate direction, is likely to run out to test the low rate set back in August (25th) at 2.45%, trading at 2.62% at the end of last week. Mortgage rates however, are not likely to move much lower until the 10 yr can break into new low rates and that will require actual Fed easing. The elections so far haven’t had much impact on the bond market, but as the calendar ticks off investors will likely become a little more edgy—-both bullishly and bearishly

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Yesterday – The Fed.

Sep 22, 2010

The FOMC statement yesterday, that the Fed is increasingly concerned that inflation is too low and that the Fed is ready for another round of QE to boost economic recovery, is fueling a huge decline in the dollar, lower interest rates and strong increases in commodity prices. In the statement, for the first time, the Fed made clear its concern that inflation levels are too low and that the US may be on the edge of deflation ala Japan. While saying the economic recovery is moving along, but too slow and possibly stagnating, the obvious focus on inflation is moving the Fed into position to add to its balance sheet with more US treasuries in another easing attempt that may or may not help economic recovery. The first QE from the Fed, using pay downs on its MBS portfolio to buy treasuries, hasn’t shown much success, skeptics don’t believe any additional QE will do much either.

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It is highly likely now, based on the strong signal sent yesterday, that the Fed will increase its balance sheet with QE 2 at the next FOMC meeting in mid-Nov. On the heals of the US move the Bank of England will join in with its increase in QE. At the end of the day we are left with the question—-will easing rates more have anymore positive impact than QE 1 that did not help that much for the overall economy? We don’t believe it will, but doing something is better than fiddling while the house burns; the administration has been fiddling and the house is in danger.

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One of the benefits, likely a consideration by the Fed to signal more easing, is the impact on the dollar. The dollar took another hit yesterday and is weaker again this morning; the benefit of a weaker dollar is that it will help US exports to be more competitive in global markets, one thing the Pres has said is part of his plan for recovery. Theoretically a weaker dollar makes sense, practically however it won’t deliver much to increasing exports, global trade doesn’t adjust to swings much on currency movements unless the movements are structural and long lasting.

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