Specializing in Batesville Mortgages, Indiana Home Loans, Batesville Second Mortgages, Batesville Indiana Debt Consolidation

 Welcome to Flagship Mortgage Corporation's Mortgage Market Monitor

Jan 16, 2009

Good news in the mortgage rate department - rates continue to hover in the 5-5.25% range for 30 yr money with good credit.  Most experts see the range not changing a lot next 3-4 months then creeping up as Obama infusion of nearly A TRILLION dollars starts to drive inflation (oh and gas prices will probably head north again too :-(

BAD news - Fannie Mae and Freddie Mac are increasing fees and down payment required to get a "conforming" loan - down payments of at least 10-20% for credit scores under 660 are going to become the norm - FHA, VA and USDA continue to look like the safe haven for more and more people!

Refi boom underway and clogging the pipelines of most banks and wholesale lenders (good news, but nobody really wants a flood when they are praying for rain!) - be patient and be willing to take a longer lock at perhaps a slightly higher fee - that way you get protected if the process stays slow and the rates creep up.

Be on the look out for heated debate about Down Payment Assistance programs for FHA - these were eliminated last fall as part of the "modernization" act for FHA - but realtors and consumers groups are clammoring to have them reinstated.

As credit continues to tighten with lenders like JP MORGAN CHASE and CITIBANK be sure to protect yourself against cuts in credit lines or caps on your credit cards - FHA cash out refis to 95% could be a great way to preserve low rates on your debt.

Till next time!


Jan 9, 2009

Well 2009 is starting out with a BANG - mortgage rates are lower than ever in recorded history.  Who would have thought we might see 30 yr mortgage rates under 5%?  NOT this expert!

The good news is there is plenty of money to lend - don't believe for a minute that the "credit crisis" or mortgage bailout is limiting money for traditional mortgages!!

So if you are looking to buy a home or refinance one you have never seen rates this good before.

Property values in SE IN and SW OH are pretty stable at this point so refinancing should be straightforward in most cases - but it's good to get an expert's opinion on your credit situation and your home value- in some cases we are seeing values shrink by 5-10 since the peak in 2004.

Applications are up 5-6 times over what they were 45 days ago so be prepared for a longer than normal process - lenders are a bit shorthanded for this spike in volume after cutting back to severely during 2008.

As always, we offer free consultations and preapprovals.  And be aware - a rate quote over the phone or in a newspaper or website without knowing your COMPLETE picture of income, credit, home value, etc is NOT reliable.  Make sure you get it done right!!

Till next time!



ARCHIVES

The residential mortgage market is UNDER SIEGE and I am here to help you monitor it and guide you through it. 

First, a bit about our company relative to the current market mess.  Flagship Mortgage Corporation's Batesville, Indiana branch office is a relatively boring mortgage company.  Well over 90% of our lending is standard, vanilla mortgages that are supported by the Federal Housing Administration (FHA) or Fannie Mae.  These loans are fully documented and have a standard loan amount vs. home value ratio.  As a Company, our default rate, or the number of our loans that have ended in foreclosure is less that 0.02 or two tenths of 1%.  We do not place people into loans that they cannot afford and will come back to bite them.  Net, our business has been largely unaffected by the recent meltdown in the mortgage market outside of dealing with changes in mortgage interest rates. 

Thanks to our experience and expertise in staying out of risky home lending, we are well positioned to help people who are struggling with out of control mortgages or simply trying to take advantage of the outstanding buying market we are experiencing.

 

CAMERON'S MORTGAGE MARKET NEWS

For my $$$, the news feed below is the BEST for UNDERSTANDING what's happening in the mortgage markets vs. just reporting "news".   News is just set of facts.  These articles put learning around these facts.

Please read the articles below so you understand why the market is moving and how best to protect yourself or profit from these moves!

Mortgage and Housing at Seeking Alpha

  • REITs Are a Gateway to a Troubled Market
    Brian Rezny submits:
    This past week marked the one year anniversary of last year’s market low. Since that dismal day, the stock markets have staged a rebound (at least for now). So, too, has the market for REITs. That’s great news, right? It would be great news… if it were justified by market fundamentals.
    Real Estate Investment Trusts [REITs] are similar to mutual funds: capital is pooled and invested in real estate opportunities. REITs invest in commercial real estate: apartment buildings, shopping centers, office buildings, hotels. These products make the commercial real estate market easily accessible to investors. The good thing: by law, REITs are required to distribute 90% of their taxable income as dividends to investors.
    The problem: REITs, as an investment idea, are great… but that’s not a reason for investors to pile on board when the market doesn’t warrant it. The commercial real estate market is on anything but stable ground. How bad is it? At the end of 2009, commercial real estate mortgage defaults doubled to 3.8% (according to Real Capital Analytics Inc). This equals $4.5 billion in loans in default just in the last quarter. How bad is it going to get? Try defaults of 5.4% by the end of 2011.
    Banking officials have already said that losses from commercial real estate loans will be the greatest threat to banks this year. The banks in danger are the small, community and regional banks that hold the bulk of these mortgages. Tight credit will continue to weigh on the economic recovery; as banks absorb losses, lending will be reduced.
    In spite of economic reality, REITs have continued to gain ground (albeit shaky ground). Since the market low last March, REIT indexes have seen a 90% rise… yet property values are falling. This tells us that what is driving REITs is not an improvement in commercial real estate, but investors jumping into the market looking for dividends. The issue here: these dividends are not necessarily what you think. The IRS has made a temporary concession in response to conditions in the real estate market; rather than paying cash, REITs can issue additional shares as dividends. If this continues, expect prices to drop, because income investors won’t stick around for long after being paid in stock.
    If you are compelled to invest in commercial real estate, avoid non-public REITs. Why? Non-public REITs put you in a very inflexible position compared to publicly-traded REITs. Here’s how: non-public REITs are developed and marketed by the brokerage firm that sells them to you, and the internal cost structure is often as high as 16%. Even worse, once you buy into a non-public REIT, you are locked in. These REITs are entirely illiquid because you can’t sell them in the market if you don’t want to carry them anymore. Tying yourself into an investment with zero liquidity that is centered on an industry bound for trouble isn’t going to do any good for your portfolio.
    Because market fundamentals are not fueling the activity in REITs, they are a speculative investment, and should be treated as such by investors. So, if you decide to plunge in, be very careful. Commercial real estate is going to be a drain on the recovery… don’t let it drag your portfolio down.

    Author's Disclosure: none


    Complete Story »
  • Losses on RMBS Set to Rise as Support Programs Expire
    Research Recap submits:

    Loss severities on distressed U.S. residential mortgage loans are likely to rise this year as several key government support programs expire, according to Fitch Ratings.

    Low mortgage rates, homebuyer tax credits and government directed loan-modification programs have led to an improvement in home prices and loss severities since second quarter-2009. But the expiration in the coming months of both the homebuyer tax credit and the Federal Reserve’s $1.25 trillion MBS purchase program will increase negative pressure on home prices and loss severities, according to Senior Director Grant Bailey.


    Complete Story »
  • Homebuilder ETFs: It's What's Inside That Matters
    tom lydonTom Lydon (ETF Trends) submits:

    Real Estate. Thinking about the sector and its ETFs might be giving you mixed feelings. The sector has been beaten down and dragged around, but it also presents an opportunity for growth in the future.

    The housing sector is highly cyclical and sensitive to economic and credit conditions. Homebuilding ETFs have rallied nicely in the last year, up more than 100% since the market’s March 9 low. That doesn’t mean, however, that they’re done struggling. It might continue to be a year of fits and starts for the sector as unemployment stays high and homeowners foreclose, but you can use ETFs to diversify and mitigate risk while you wait for that firm recovery.


    Complete Story »
  • Mortgage Debt as a Percentage of Consumer Credit: Welcome to Hell
    Paco Ahlgren submits:

    See the green part of the graph below? That’s home mortgage debt up until 2008.


    Complete Story »
  • Behind the Disparity in Sentiment: Main Street vs. Wall Street
    Dian L. Chu submits:

    According to a gauge derived from data compiled by The American Association of Individual Investors [AAII], bullishness on U.S. stocks is beginning to emerge after the market’s rally in the past year.

    The latest AAII Sentiment Survey reading shows optimists outweighed pessimists for the first time since January 2008, three months after the previous bull market ended. (See Chart from Bloomberg)


    Complete Story »
  • On Banning CDS: Sovereign Debt Isn't the Biggest Problem; Try Looking Closer to Home
    Bruce Krasting submits:
    A lot has been written and said in the past few weeks about CDS. Almost all of it has been bad press for the poor boys who write and trade this stuff for a living. Heads of State, leading academicians and economists, the MSM and even some of the financial blogs have all been pounding the table on this issue. The message has been pretty clear. “Something has to get done, or we are really really going to blow up next time.”

    The catalyst for the recent uproar has been Greece and to a lesser extent the other PIIGS. The perception has been created that somehow the existence of a CDS market for Greek Government Bonds has caused a crisis. Nothing could be farther from the truth. We now know that CDS had very little to do with the yield spike in GGBs. It was the movement by the low rent bond traders (aka global investors) that caused this hiccup. Greek CDS was the tail that got wagged. Not the other way around. But the vitriol continued. Wolfgang Munchau wrote on this topic last week. The following quote summed up his thinking:

    “The case for banning CDS is about as strong for banning bank robberies.”


    Complete Story »
  • The New Road to Serfdom
    Tim Iacono submits:

    In reading through some of the commentary about Friday's report(.pdf) containing the latest data for the government's Home Affordable Modification Program (HAMP), the item circled in red below sort of "popped out at me" as being one of the more important reasons why this program will, ultimately, be an even bigger failure than it already is.

    Even after mortgage payments were reduced to a maximum of 31 percent of gross monthly income, the median total debt service each month is almost twice that amount, which almost guarantees a high rate of default down the road.
    IMAGE Based on the note above, it seems there is no upper limit on the back-end debt-to-income ratio and borrowers coming in at above 55 percent are required to seek counseling, but, apparently, this doesn't stop their loan mod from becoming "permanent".


    Complete Story »
  • Shadow Housing Inventory Still Looming
    Tim Iacono submits:

    Renae Merle at The Washington Post throws cold water on the idea that the "nascent" economic recovery (is anyone still calling it that?) will continue much longer in this story about a subject that seems to slip further and further from the top of everyone's list of concerns - the growing backlog of foreclosures or soon-to-be foreclosures.

    The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.


    Complete Story »
  • Genesis Land Development: The Company That Values Itself
    Saj Karsan submits:

    Most investors in the market focus on earnings and earnings growth. As value investors, however, we spend a lot time valuing company assets, since earnings can be volatile whereas many types of assets (e.g. cash, trusted receivables, real-estate, re-usable inventory) can provide a margin of safety on an investment if the price is right.

    But determining the market value of certain assets can be rather difficult, as in many cases a company's balance sheet will state the assets at cost, even if they were purchased decades ago. This issue is particularly pertinent for companies that hold a lot of real estate, as while land values have appreciated over time, the gains have gone unrecognized on company balance sheets. As a result, investors can put hours or days of effort into attempting to value a company's portfolio of real estate holdings. When you consider that there may be several investors putting in this type of effort for companies with large land holdings, it is not inconceivable that years of effort (in the aggregate) are put into valuing such assets.


    Complete Story »
  • Stocks and Housing: Bells Will Ring When We Hit the Bottom
    Charles Hugh Smith submits:

    The cliche will be wrong--bells will toll at the bottom in housing and stocks.

    The Wall Street cliche is "they don't ring a bell at the bottom," meaning that there is no definitive signal that a market has truly hit bottom, as opposed to just another leg down in a longer slide.

    Guessing that "the bottom is in" sets up another cliche, "catching a falling knife" which describes impatient speculators buying stocks or houses in the conviction that "the bottom is in" only to lose their shirts as the market continues its decline after a brief head-fake of "recovery."


    Complete Story »

 

Today is 03/15/2010

 

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