Real Estate Insight

How the financial markets are shaping up.

Recently we got an email from a Countrywide representative. It’s a well constructed email that explains some of the challenges of current financial markets. I’ll let you drawn your own conclusions.

Email

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I wanted to personally thank you for attending our Broker Preview Feb 13th.
I trust that the Short Sale information was valuable.

As a follow up to the loan limit increase news yesterday…it sounds like next Friday at midnight we will have our engines in place to begin originating in the new loan limit world. There is much to assimilate to in this ever-changing market atmosphere in which we serve, but I and my troops are dedicated to be a harbor of stability and committed to being a part of the solution. I will focus on personalized service for each individual client and all of my Premier Realtor Partners. Please feel free to pass along my contact information to your top clients that may want to discuss these recent events and the impact it may have on their mortgage financing options. I can also provide market updates weekly or monthly if they want to be a part of my Mortgage Market Update campaign.

The latest issue impacting interest rates now is the continued freeze of the secondary markets. Here’s what I understand so far: The Secondary Market for both Conforming and Nonconforming Hybrid ARMs is nonexistent.
Yesterday morning IndyMac tried to sell their hybrids. Because there were NO bids, they were forced to pull them off the market. UBS, one of the largest traders of Mortgage Backed Securities traded 70 cents on the dollar for their hybrids just to try and get them off of their books. In short, companies are flooding the market with hybrids that none are willing to buy. Due to this severe dislocation in the secondary market (there has been for some time, but this week it’s become much worse). Two investment firms, Thornburg (super jumbo investor) and the Caryle Group defaulted on a number of their financing agreements yesterday and this morning. That means these firms must de-leverage/liquidate their mortgage holdings in a large fashion. The impact of these sales into an already ill-liquid secondary market is putting tremendous strain on interest rates, and it particularly applies to conforming and nonconforming hybrids. It’s not so much due to credit performance, but a lack of buyers and an excess supply of mortgage debt.

I’ll keep you posted as I receive more information, but I can tell you that our competitive position is being addressed as a top priority at the highest levels within our organization. It is a good time to make certain your valued clients are connected with a professional mortgage consultant who is aware of what all is happening in today’s local and global economic theaters. My team and I are always available for private consultations.
If you need me to address your troops corporately, please get with me and I’ll make time on my calendar to attend one of your weekly routine meetings.

Have a great day!

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