Market Update from the Desk of Tisha Shaffer

As you know, I’m a big believer in maintaining a team of professionals who I consider to be exceptional.  Tisha is a senior loan consultant with Princeton Capital, and she is an excellent source of market information.  I received this little note from her today, and I wanted to share it with you.  Feel free to contact me or Tisha with any questions you have!






Bank of America this week made the decision to exit retail lending in six low volume states including Alabama, Alaska, Montana, Nebraska, Wisconsin, and Wyoming, per the National Mortgage News. I bet if Ken Lewis, or Brian Moynihan, could turn back time, they’d do it. “An inspector general for HUD has recommended that Bank of America face fraud charges relating to faulty borrowing data submitted to the agency in connection with its Countrywide unit. In his words “Countrywide did not properly verify, analyze, or support borrowers’ employment and income, source of funds to close, liabilities and credit information.” And isn’t that the basic problem, summed up in one little sentence?

One reader wrote, “We haven’t been able to do much with FHA streamlines since the 5% change. The .90 and 1.15 change just made it nearly impossible. People in FHA loans only put down 3 or 3.5 percent, we know values are dropping and they wonder why FHA loans have higher default ratios. Conventionally you have the HARP program but just as they moved the end date from 6-2011 to 7-2012 they need to move the purchase date for Fannie or Freddie to everyone can take advantage of the program or at least from 5-2009 to 5-2010. These things seem so easy to figure out. We see the problem but we aren’t taking the necessary steps to solve it. With rates this low something needs to be done immediately to help people refinance. Let’s not wait until rates begin to go back up. People being able to refinance and save money will allow for more spending which is what the economy needs.”

All real estate is local. In Manhattan, “The East Village one-bedroom, one-and-a-half-bathroom condo that he bought for $859,000 was a ‘tremendous value’ that he couldn’t pass up, he said.” Value? I am sure that any buyers would qualify for an FHA loan. Actually I don’t know that, but once again the FHA is the target of conjecture and theories about its business plan and long-term prospects. On the 19th, “Due to our commitment to focus on application volume that we can acceptably process and close on-time, Bank of America is temporarily suspending New Applications on selected Government Programs, Property types, and Products” for retail sales, centralized sales, and fulfillment channels. BofA told its agents, “The following FHA and VA Programs are being suspended: All “Off-Us” Refinances (Rate and Term, Cash-out and Streamline) All Cash-out Refinances, loans on the following property types are being suspended for FHA and VA Purchases and Refinances: Manufactured Housing Unique Property Types (Log Homes, Earth Homes and Earth Berm Homes).”

How long will our stock and bond markets go through the yo-yo caused by what happens in Europe? A long time, apparently. “Treasury prices lost ground yesterday after reports surfaced that EU was working on a plan to support imperiled European banks. This reoccurring story removed the luster from the flight to quality bid and sent treasury yields higher. Prices are continuing to edge lower this morning as investors wait for the actual details of the rumored plan.” They have a plan, then they don’t have a plan, they have one, and then they don’t… So yesterday treasuries sold off (the 10-yr worsened more than a point and closed with a yield of 1.90%) while equities gained. MBS prices were marked lower by about .375.

Today we had weekly Initial Jobless Claims for last week: the previous week’s was revised from 391k to 395k, and last week’s rose 6k to 401k. No big deal. At 8AM PST  the Treasury announces details of next week’s auctions of 3- and 10-year notes and 30-year bonds – estimated unchanged at $66 billion. Stay tuned for tomorrow’s unemployment data, but for now the 10-yr’s yield is up slightly at 1.94% and MBS prices are worse by .125.

Tisha Shaffer

Sr. Loan Consultant

NMLS #264826

Princeton Capital

Telephone  (916) 691-3640  |  Mobile  (916) 956-6549  |  Private Fax  (866) 395-2294

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