Just received this via email:

Due to continued uncertain market conditions, effective as of 1 pm EDT (10am PDT) today, August 21, 2007, 1st National Bank of Arizona (FNBA) will focus on Retail originations and has suspended Wholesale and Correspondent originations.
Wholesale and Correspondent locks received prior to 1 pm EDT (10am PDT) today, August 21, 2007 will be honored.
Requests for Edits or Extensions to locks after 1 pm EDT (10 am PDT) today, August 21, 2007 will NOT be accepted.

Looks like the credit crunch on Wall Street is taking its toll even with the emergency move by the FOMC to lower the FFR by 500 basis points last week.  While making money easier to access for banks, there is still the main issue of the drastic changes in underwriting guidelines by Wall Street MBS investors which translates into entire product lines being eliminated by all mortgage lenders. This will continue.

[tags]Credit Crunch, First National Bank of Arizona, Closing, Mortgage, Economy, FNBA[/tags]

Looks like First Magnus Financial Corp. will be next to close up shop. An article in a local Arizona newspaper confirms the rumors I heard this morning and that is that First Magnus has stopped funding loans. Another victim of the credit crunch that should continue.

[tags]First Magnus, Lender, BK, Closing Doors, Sub Prime, Economy, Credit[/tags]

The US Department of Labor updated the Import Price Index this morning, up 1.5%. Here are some of the other vital economic stats that you frequently hear thrown around:

[tags]Economy, Economic Stats, Imports[/tags]

It seems I get new emails every day from lenders that are either 1) offering what everyone else is no longer offering or 2) telling me that they no longer offer entire lines of product.  I received emails from a local lender about a month or so ago and they were much more aggressive in a certain are than other shops. The last few days I have received a number of emails from our rep stating that parts of their programs have been suspended or changed. Today, I get an email saying that they are basically suspending an entire line of products…which is basically the only thing we could offer of theirs.  If you are a potential borrower, get your financial house in order.

[tags]Finance, mortgage, loan, lender, news[/tags]

I just received an email from one of our parent company’s execs stating that Aegis Mortgage will be ceasing operations.  Another email I received shortly after from another lender stated that they have filed for BK. I cannot find any news right now on their website or on Google News, but I am confident that no matter how they do it, they will be shutting down lending operations. This comes on the heels of some pretty serious turmoil in the secondary markets last week and I am sure that this week will see more big news (big as in more meaningful than some of the smaller operations that have gone under over the past few months). Barclays appears to be right at the front of the line when it comes to “underwriting” many of these bond deals. It will be interesting to see how much of the news this week involves them and their dealings.

[tags]Aegis, Barclays, Bonds, Mortgages, MBS, Subprime, Sub Prime, Lending[/tags]

Well, the hits just keep on coming. If you are planning on getting a pay option ARM loan anytime soon, you better hurry or make sure you have 750+ credit, 6+ months of reserves (of the fully amortized payment), a good salary, and no debt. Otherwise, you can pretty much forget about it.  Wall Street investors for MBS (Mortgage Backed Securities) are cutting their spending habits when it comes to these types of loans and it certainly appears that it is a matter of time before they disappear until the next big boom cycle or until someone with the cash in hand to pay off a loan like this walks in the door. AHM will be closing their doors tomorrow, ABC should be doing the same soon, IndyMac stated that their profits were hammered year-over-year this week and there has been similar news from other shops in the industry.  The scary part is that we are seeing the ALT-A market begin to crumble under the pressure.  There are some that think this is just a story the media is blowing up and there are others who think it means real trouble in the real estate lending market. I fail to see how the former can really form an opinion like that, especially if they are involved in home mortgage lending.

[tags]Mortgages, Lending, Sub-Prime, Alt-A, Loans[/tags]

Let’s just start naming these Sub-Prime mortgage related posts with the same naming convention, ok? I am pretty confident there will be more than two on this here blog.  So, let’s get down to the nitty gritty shall we?  A few weeks ago, we saw home mortgage interest rates jump anywhere from a half to three-quarters of a percentage point in a matter of two to three days.   This was something that went unnoticed by John Q. Public, but was probably the defining economic moment of 2007.  We saw yields on the 10-year Treasury note jump to 5.4% when it seemed that it would never break the 5% barrier for many moons. Today, the 10-year note is trading at a yield of 4.80%…but, we have not really seen a comparable drop in home mortgage interest rates of similar maturity/length.  So, what gives? Well, the short of it is that there are a lot of mortgages that are not performing and lending institutions and investors are taking back properties at near-record levels.  When we saw the mortgage interest rates jump a few weeks back, the big news was really that underwriting guidelines for ALL borrowers changed dramatically. What most people have not taken notice of is that in addition to sub-prime loan programs getting slashed and trimmed into a small image of what they used to be, Alt-A and A paper underwriting guidelines have followed suit.  So, while lenders can borrow money, in theory, at cheaper prices (competing with bonds of similar maturities), mortgage interest rates have not moved down.  The investors that buy the MBS (mortgage backed securities) as well as the lenders (who can’t seem to sell their loan portfolios like they once could) are increasing the spreads they require to cover their asses.

The story here is, that credit is tightening in the mortgage markets.  This is not something that is simply affecting people with crappy credit scores.  Tightening credit is affecting all borrowers of all credit profiles.  Loan programs that were available 9 months ago, are no longer available today to the vast majority of borrowers.

What I find most intriguing at this point is that many of the non-performing sub-prime and other residential mortgages are owned by hedge funds.  In the late 80’s and early 90’s when the S&L crisis was in full effect, the RTC (Resolution Trust Corporation) was tasked with disposing of all of the non-performing loan assets.  The laws in effect at the time prevented banks from holding REO on their books for more than a certain amount of time. I am not aware of any regulation that would prevent hedge funds and non-banks from disposing of their REO.  What does this mean? Nothing other than it is different….and quite interesting.

[tags]Mortgage, Sub-Prime, Subprime, Home Loan[/tags]

FOMC chairman, Ben Bernanke, is scheduled to speak at 1pm EST today about inflation.  The DOW is off about 50 points this morning as I write this and the 5, 10 and 30 year bonds are all being sold off a little this morning, pushing yields higher.  My guess is that Bernanke will say that inflation is still a concern. At some point, the people that are supposedly in charge of the monetary policies of the US economy will start to say that oil and food prices (which are not included in core inflation numbers) is actually having an effect on US consumers and their negative savings rate.

Other interesting news this morning is a statement by Home Depot that earnings are going to be way off this year (by 15% to 18%) due to the slowdown in the housing market.  Of course, HD is trading higher right now, probably due to the announced stock by back by Home Depot.

[tags]FOMC, Ben Bernanke, The Fed, Inflation, Home Depot, Economy[/tags]

The yield on the 10 year note has steadily moved down this week as is trading under 5.1% this morning. This does not have any direct effect on mortgage interest rates, but it typically has acted as a good indicator. Hopefully, we will see lenders adjust their mortgage lending rates down on similar term products. The Securities and Exchange Commission confirmed it has launched several investigations into securities backed by subprime mortgage loans, and PIMCO Chief Investment Officer, Bill Gross, insists the turmoil in the funds managed by Bear Stearns is not an isolated event. This should be interesting, but I am sure that nothing big will come out of it in the end. Martha Stewart went to jail for making $200,000, sorry for purging herself…I am confident that nobody involved in any wrongdoing at these firms will do a day behind bars.

[tags]subprime, sub-prime, mortgage, loan, bear stearns[/tags]

Bonds are trading flat this morning, even as two pieces of economic data were reported weaker than expected. First, the Conference Board’s index of consumer confidence fell to 103.9 from 108.5 in May, and the Commerce Department reported new home sales fell 1.6% in May. We have seen stronger than expected new home sales recently and weak existing home sales. It appears that the builder incentives are starting to lose their strength at attracting buyers to new homes. Certainly the recent up-tick in home mortgage interest rates will have a similar effect. Persistently high gasoline prices and higher interest rates have put the damper on the mood of many consumers, consequently slowing the sale of new and existing homes.

The bond market has been relatively quiet the past day or two. Recent auctions have seen tepid demand from foreign central banks, which is another cause of the recent spike in U.S. interest rates. The Fed begins a two day meeting Wednesday, with their rate decision and policy announcement scheduled for Thursday, at the conclusion of the deliberations.

[tags]Interest Rates, Bonds, Mortgage Rates, Economy, Economics[/tags]