Robert's Blog

It is Official, The Fed announced they lowered the FED funds rate by the anticipated 50bps.

What does this mean for rates?  Well so far it is not good news. The Mortgage market was strongly in positive territory for most of the day, and now with just a few hours left in the day the gains are quickly eroding and the market is basically flat as I type this.

I think this may be a case of "buy the rumor sell the fact" that often happens on wall street.  Since this was the expected outcome today it is pretty much a no-news scenario that the markets are shrugging off and are looking for the next number.

You can take a look at my blog from Monday with the economic calendar to see what is up next in this busy news week.

I will keep you posted with any exciting news as it pops up.

Have a great week

Rob

Robert Rauf

This week's Economic calendar.

The markets are dysfunctional; they are totally unhinged and Economic fundamentals no longer apply.  So trying to predict what is going to happen next  is impossible, even for the seasoned analyst to figure out what the market will do from one day to the next!  This week's calendar is loaded up with quite a bit of information for the markets to digest:

• Monday 10/27:  September New home Sales, expected down 2.1%. It wasn't expected to move the market, it did not
• Tuesday 10/28: Day one of the Fed FOMC meeting
• Tuesday 10/28: October Consumer Confidence, Expected to be +52 Vs 59.8 last month. Consumer confidence is expected to be low, so we won't be likely to see any reaction to this news
• Wednesday 10/29: Durable Goods orders, expected -1.1%. This report will clarify the extent of the slow down, the weaker the number the slower things are... and the weaker the number the more likely we will see rates creep lower
• Wednesday 10/28 2pm: FOMC meeting ends, market expects a 50bp cut. The market seems to have priced in a 75% chance of a FED cut.  With a 50bp move we will not see any reaction in the markets, but if we see a 75bp move (which some predict) we will probably see a happy market with lower rates. BUT, if the FED stands still the market will show its disappointment with a sell off and higher rates.
• Thursday 10/30: GDP expected -0.5%.  If the slowdown in the 3^rd quarter is worse than the estimate, Stocks will sell off, and have an opposite effect than what we would normally expect: a simultaneous sell off in the Credit Markets with expectations of deteriorating employment and weakness in Mortgages... making it difficult for mortgage rates to drop further from current levels
• Thursday: Initial jobless claims for previous week, expected down 3,000. A modest decline will not be a recipe for a market mover.
• Thursday: 3^rd quarter employment cost index. Expected +0.7%. The forecast number is considered modest and not likely to be an inflation threat, so not a market mover.
• Friday 10/31. HAPPY Halloween! And September Personal income, spending , PCE. Expected +0.1%, -0.3% and +0.1%. This report  is expected to reflect a strong drop in Consumer Spending and weak income and consumption expenditure. In normal times these numbers would cause a rally and lower rates, but it is hard to say what will happen today.

The Biggie of the week is not on the calendar. Fed Chairman Bernake is making a presentation at a symposium on the Mortgage Meltdown, The Economy, and Public Policy. It is his opportunity to calm the nerves of the credit markets and help return some liquidity to the markets in the form of more confident investors buying fixed income securities like Mortgage Backed securities.

Well, That's my 2 cents worth for this week! Rates have climbed a bit from the beginning of last week, but the economic data suggests that we should actually see lower rates. As I started off this note, the markets are not acting in a predictable fashion. So Play it safe this week!

Robert Rauf

Real Estate Mortgage Network

This week's Economic calendar.

The markets are dysfunctional; they are totally unhinged and Economic fundamentals no longer apply.  So trying to predict what is going to happen next  is impossible, even for the seasoned analyst to figure out what the market will do from one day to the next!  This week's calendar is loaded up with quite a bit of information for the markets to digest:

• Monday 10/27:  September New home Sales, expected down 2.1%. It wasn't expected to move the market, it did not
• Tuesday 10/28: Day one of the Fed FOMC meeting
• Tuesday 10/28: October Consumer Confidence, Expected to be +52 Vs 59.8 last month. Consumer confidence is expected to be low, so we won't be likely to see any reaction to this news
• Wednesday 10/29: Durable Goods orders, expected -1.1%. This report will clarify the extent of the slow down, the weaker the number the slower things are... and the weaker the number the more likely we will see rates creep lower
• Wednesday 10/28 2pm: FOMC meeting ends, market expects a 50bp cut. The market seems to have priced in a 75% chance of a FED cut.  With a 50bp move we will not see any reaction in the markets, but if we see a 75bp move (which some predict) we will probably see a happy market with lower rates. BUT, if the FED stands still the market will show its disappointment with a sell off and higher rates.
• Thursday 10/30: GDP expected -0.5%.  If the slowdown in the 3^rd quarter is worse than the estimate, Stocks will sell off, and have an opposite effect than what we would normally expect: a simultaneous sell off in the Credit Markets with expectations of deteriorating employment and weakness in Mortgages... making it difficult for mortgage rates to drop further from current levels
• Thursday: Initial jobless claims for previous week, expected down 3,000. A modest decline will not be a recipe for a market mover.
• Thursday: 3^rd quarter employment cost index. Expected +0.7%. The forecast number is considered modest and not likely to be an inflation threat, so not a market mover.
• Friday 10/31. HAPPY Halloween! And September Personal income, spending , PCE. Expected +0.1%, -0.3% and +0.1%. This report  is expected to reflect a strong drop in Consumer Spending and weak income and consumption expenditure. In normal times these numbers would cause a rally and lower rates, but it is hard to say what will happen today.

The Biggie of the week is not on the calendar. Fed Chairman Bernake is making a presentation at a symposium on the Mortgage Meltdown, The Economy, and Public Policy. It is his opportunity to calm the nerves of the credit markets and help return some liquidity to the markets in the form of more confident investors buying fixed income securities like Mortgage Backed securities.

Well, That's my 2 cents worth for this week! Rates have climbed a bit from the beginning of last week, but the economic data suggests that we should actually see lower rates. As I started off this note, the markets are not acting in a predictable fashion. So Play it safe this week!

Robert Rauf

Real Estate Mortgage Network

The Million dollar question as always.  What is happening with interest rates??? this is a more difficult question to answer now than it usually is since the markets are not reacting to news as one would expect.

In the past month we have seen a fairly significant run up in interest rates, bouncing from the high fives quickly into the 6's... At one point it looked like we were going to break into the 7's, luckily we have seen things settle down now and rates are slowly settling (just not that noticeably... it has been a slow move for the dust to settle.)

This is a quiet week in the financial reporting world, here is this weeks Calendar:

• Monday 10/20: September LEI, Was in line with expectations and was not a market mover
• Monday 10/20: Bernake spoke at the House Budget committee. This was considered a wild card of the week, but did not cause any hic-ups in the market
• Tuesday and Wednesday: No News... (I told you it was a slow week!)
• Thursday: as usual, the initial Jobless claims from the previous week, expected to be up 9000. not likely to move the market, but is supportive of the more important October number that is due out the beginning of November.
• Friday 10/24: Existing home sales for September, expected up .2%. This is priced into the market. If the number peaks above 1% we may see rates edge higher, and a low number would be supportive of steady to fractionally lower rates

The good news is there was buying in the mortgage markets today and we have seen some significant price movement in mortgages... (price up=yield down in the credit markets). The Market is in a confused state. Third quarter earnings are due from corporations, if these numbers are stronger than expected we may see some buying of stocks which is likely to pull some cash from the credit markets and push rates higher. In addition the markets will keep a close eye on the short term credit markets, if the liquidity crunch shows signs of going away it could signal that the Global injection of cash is working and we will probably see a rally in stocks.

Traditionally we would have see Big gains in mortgages and bonds with the turmoil in the stock market as money flows from stocks to bonds raising prices in bonds/mortgages thus lowering yields.  That did not happen in this most recent sell off as banks began to hoard cash as the liquidity crisis peaked. There is money out there, but on a corporate and Bank to bank level credit has dried up. There is still more than enough money to fund mortgages.. But the interest rate environment remains an unsettled one... So at this point the safe bet would be to lock since the swings up are much harsher than the swings down.

Have a wonderful week

Rob
Robert Rauf

If you have read any of my blogs you probably know that I am an Assistant Scout master for my sons Boy Scout Troop. Way back as we started this past summer I promised to post a picture of me in my Scout Uniform. it is about 4 months over due, but I finally have one to post. I should  be back packing this weekend with my boss and our sons on the AT, but Doug's Son sprained his ankle, so I have time to play with the computer ..  I picked up a new all in one printer/scanner/fax/copier/coffee maker and had to try it out on something, and I just happened to have this photo of my son and I from our week at Camp Ockanickin in PA this past July.

Not the highest quality of a photo, but heck, it is just a scan of a photo I got when at camp!

There were a few of you that asked to laugh at me see me in a scout uniform...

Have a great weekend

For the past week or two we have been receiving calls from our clients asking if they are still able to get a loan. These calls have been for clients who are buying homes, are approved and just weeks away from closing.  All of the negative articles and news has consumers running scared and has pushed some of them under rocks, like chicken little... except the Sky is NOT falling!

Most people have heard the bail out plan that has been in the news this week is because credit has dried up and banks are not lending. While this is true on the commercial side, it could not be farther from the truth on the residential side:

• Residential lenders do have money to lend, and are more than willing to
• you CAN get a mortgage today, contrary to what you may hear
• Mortgage rates are at very reasonable levels

The Media has been spitting out all the bad with out telling any good. Do not get caught up in the negative! The fear of credit drying up is more on the corporate side:

• Banks are not lending to banks
• Corporate credit lines are being restricted or drying up all together

These are the problems that the bail out is dealing with. If businesses do not have credit lines they will not survive. American business runs on credit. Liquidity and faith in the banking system needs to be restored.

Last month Uncle Sam took over Fannie and Freddie. This was good news for the mortgage market, since a major source of residential money was now secure, one less thing to worry about. The FDIC has done a wonderful job of curing the failing banks and quickly shifting the nations deposits to stronger institutions with no more than a hic-up. The sky did not fall, and it probably will not fall. Real Estate has always been a great long term investment. The economy has always had its ups and downs and Real Estate has always rebounded.

So, Don't worry. There is money to lend, and at reasonable rates and conservative terms. You just need to find the right person that is not hiding under a rock that understands your needs and will be there when you get to closing.

Have a great week

Rob

Robert Rauf

The New "F-word"

As a consumer you need to do yourself a favor and STOP listening to the media! There isn't anything that will depress you faster than reading the paper or listening to the news. The word Foreclosure has been tossed around a little too much lately. It is a recurring theme that the media never reports positive information, it only knows how to hunt for the negative information. Here are some of August's numbers based on figures from Realtytrac, Inc.

There are pockets of truly "bad" and there are a few states that are bringing the national Foreclosure numbers up. CA and FL alone account for 39% of all foreclosures nationally. CA alone is currently responsible for 71% of the Notice of Defaults and 36% of the REO's Nationally. NV is currently ranked # 1 in Foreclosures (not a great place to be ranked #1) and in August of 2008 Foreclosure proceedings were started on 1 out of every 91 homes in NV, that is HUGE, but it does NOT represent the entire country.

The National number in August was 1 home in 416 had foreclosure proceedings started.  That does not mean the Sheriff knocking on the door and boarding up the house: That means 1 in 416 homes nationally got a letter that said, "YOU ARE LATE, Pay up OR ELSE!" I don't know what the 'cure rate' is on a foreclosure proceeding, but I would imagine that a fair percentage of people find a way to catch up, or sell the home prior to an actual foreclosure after receiving one of these letters.  In August 1/416 is the number for foreclosure proceedings nationally, or 0.0024, or .24%. 

Since I am a Die Hard NJ Guy, here are NJ's numbers: For the State of NJ;

• 1 in 536 homes had foreclosure proceedings started. That is not every county, it is the average. 
• Monmouth and Ocean counties together the number is only about 1/800 = 0.00125 or .125% (that is one eighth of one percent, a pretty small number when you chop it down, isn't it?)

So while the media is screaming about the huge numbers in parts of the country, keep in mind that they may not be that bad close to home. Do a little research on your own, you may be surprised at how good your area is:

• Some states have numbers as good as 1/20,000! 
• 21 states actually saw Foreclosures DROP in August of 2008 Vs July of 2008.

As I have always said: READ BEYOND the headlines. Form your own opinions. Do not allow a negative media to rain on your parade when the true figures may not be anywhere near as dismal as the headline leads you to believe.

Have a Great Week!

Rob

Robert Rauf

Read beyond the headlines

The word Foreclosure has been tossed around a little too much lately. It is a recurring theme that the media never reports positive information, it only knows how to hunt for the negative information. Here are some of August's numbers based on figures from Realtytrac, Inc.

There are pockets of truly "bad" and there are a few states that are bringing the national Foreclosure numbers up. CA and FL alone account for 39% of all foreclosures nationally. CA alone is currently responsible for 71% of the Notice of Defaults and 36% of the REO's Nationally. NV is currently ranked # 1 in Foreclosures (not a great place to be ranked #1) and in August of 2008 Foreclosure proceedings were started on 1 out of every 91 homes in NV, that is HUGE, but it does NOT represent the entire country.

The National number in August was 1 home in 416 had foreclosure proceedings started.  That does not mean the Sheriff knocking on the door and boarding up the house: That means 1 in 416 homes nationally got a letter that said, "YOU ARE LATE, Pay up OR ELSE!" I don't know what the 'cure rate' is on a foreclosure proceeding, but I would imagine that a fair percentage of people find a way to catch up, or sell the home prior to an actual foreclosure after receiving one of these letters.  In August 1/416 is the number for foreclosure proceedings nationally, or 0.0024, or .24%. 

Since I am a Die Hard NJ Guy, here are NJ's numbers: For the State of NJ;

• 1 in 536 homes had foreclosure proceedings started. That is not every county, it is the average. 
• Monmouth and Ocean counties together the number is only about 1/800 = 0.00125 or .125% (that is one eighth of one percent, a pretty small number when you chop it down, isn't it?)

So while the media is screaming about the huge numbers in parts of the country, keep in mind that they may not be that bad close to home. Do a little research on your own, you may be surprised at how good your area is:

• Some states have numbers as good as 1/20,000! 
• 21 states actually saw Foreclosures DROP in August of 2008 Vs July of 2008.

As I have always said: READ BEYOND the headlines. Form your own opinions. Do not allow a negative media to rain on your parade when the true figures may not be anywhere near as dismal as the headline leads you to believe.

Have a Great Week!

Rob

Robert Rauf

The Bail out of the financial markets has failed to be passed by Congress.  What does this mean?

I wish I had that answer for you.... But rest assured that it will not hurt residential lending.  Yes, we have less product to offer our clients now than we did a year or two ago, but most of what we have lost was the riskier loans.  The True NO-Doc loans are gone. There are significant restrictions on Stated Income loans, and this is going to sound silly: YOU NEED A JOB to get a mortgage!

The biggest fear of the bailout failing would be potential recession, Job growth could stall and jobs could be lost. The bailout was to add liquidity into the markets. Banks stopped lending to other banks. Corporate credit lines are at risk. It got so bad a week or so ago that fund managers were only putting cash into short term T-bills. (To the point that the 3 month bill had a rate so low that Uncle Sam was almost borrowing the money for free). There is no trust in banks, which is a huge problem. Add to that the fear of credit lines drying up and it could bring business to a screeching halt.

Personally I have mixed feelings on the subject.  On one hand  it turns my stomach to see our money being used to reward someone for bad behavior.  But I also do not want to see a deep recession.

Keep in mind that the government has always pushed to have programs available for people that would not qualify for loans traditionally. So in a way you can point a finger at the government for pushing for certain program types. You can also point an army full of fingers at the boom market. No one ever thought it was possible for Real Estate values to decline.  So why would a mortgage ever go bad? That was the mentality of the Ratings industry when they rated low credit score No-Doc  the same as a 20% fully verified loan with a high credit score. This allowed banks to pool all mortgages together and sell them as a pool of loans. Investors did not know what was in these pools and were afraid of defaults. That's how "Mortgage" became a bad word.

On a positive note considering the record 777 point drop (Not a lucky number at all) today:

•·         The fall in stocks has helped the credit markets, and Mortgage rates did NOT go up

•·         Uncle Sam b ailed out Fannie and Freddie adding some credibility to mortgages again

•·         If we do end up in a recession (I hope not!) it WILL bring interest rates down. The biggest enemy of a long term interest rate is inflation, so Recession would be a friend of rates.

Other than the market digesting what is happening in the stock market and what did not happen in Washington today the biggest news of the week will be Fridays Employment report. The market already has a pretty weak number priced in, with a loss of 100,000 jobs and a jobless rate of 6.1%. If there is a significant difference in this number we will see movement in the markets.  A significantly stronger number will bring rates up and possibly a weaker number will move rates lower...

This is uncharted territory, and there aren't many answers out there. I hope this helps explain some of what is happening today.

Have a great week.

Rob

Robert Rauf

Real Estate Mortgage network

www.RobertRaufHomeloans.com

(732)740-0175 Cell

(732) 223-1630 x102 Office

RRauf@remn.com

About 3 weeks ago I had a chance to go Tuna Fishing with friends.. we left the dock at about 5am and had a perfect ride out to the Mud Hole.

There was a beautiful moon that morning, I took a photo, but it did not come out so I will not post it here.  The Mud Hole is about 14 miles off of the Manasquan Inlet. We had a perfect trip out, The ocean was flat and we were able to make the trip out comfortably and quickly.

As we got to the edge of the Mud Hole this is what we saw:

At this point we got the gear together and began trolling for tuna.  Unfortunately we did not have any tuna bites... As we went out into deeper water we saw a boat catching small Mahi Mahi by range markers. (Mahi are known to hang around anything floating in the water) we made a few passes near some lobster pots and filled a cooler with Mahi

Mahi have some unbelievable colors when you first catch them, unfortunately the color fades quickly when you toss them on ice, but they sure taste good!

After a hand full of Mahi we went hunting Tuna again, unfortunately with out any luck.  We did get to see a whale which is always a great site, but no Blue fin. No sushi for us that day!

This is just another reason I love NJ. There is so much this state has to offer. Most people do not realize that you can catch Mahi Mahi in NJ waters... They are seen more as a game fish much farther south of NJ latitudes.

The stripped Bass should be coming soon with the water temp dropping, hopefully you will see a post with some big stripers if I am lucky enough to get out again!

There is nothing like taking a day out to clear your head with friends.

Have a great week

Rob

Robert Rauf

REMN