Fed cuts half point as predicted. Let's Finance!

It's like a Brisk! The Federal Reserve cut a key short-term interest rate by a half-percentage point today, its second significant cut in just over a week, as the central bank tries to combat the growing risk of a U.S. recession.
U.S. stocks, which had been slightly lower ahead of the announcement, surged on news of the rate cut. I'm not going to toot my own horn here, but the Townsley rate-predictometer has been dead-on the money for months.
The "federal funds rate" is an overnight bank lending rate that affects how much interest consumers pay on credit cards, home equity lines of credit and auto loans, was cut to 3.0% from 3.5%. The rate had stood at 5.25% only four months ago. That's a lot of movement. Time to get busy. I'm never too busy for your calls to get it going now.: 415-485-1776, Pat Townsley, Mortgage Broker. http://www.ptre.net/

Online submission and automated desktop underwriting

When I first started in the business, I thought I'd write a super slick Excel program that would calculate every option for a borrow when I would get them on the phone. Of course, I would spend all my time working on the spreadsheet, never picking up the phone. This was Pre-Internet, Pre-Telemarketing laws, and Pre-dot-com where everyone became a licensed real estate professional. My mentors, Jim & Bruce said "All you ever need is a piece of paper, a pencil and a calculator. That still holds true in this information age: It's simple basics; financing fundamentals. All these computer models, so-called Online underwriting and automated loan submissions are still fueled by people...and if you don't have someone you can talk to about your loan, someone who understands your personal needs, explains the "costs" associated with a new mortgage, the pitfalls, etc, then you can find yourself at the signing table with pile of documents that you have no idea what is going on and you find yourself in a loan with excessive and un-anticipated fees. Make sure that when you get to the closing table that your mortgage broker is there with you. Don't waste money. This industry still required, now more than ever, solid personal attention: Pat Townsley, Mortgage Broker. 415-485-1776. http://www.ptre.net/

The market is on Fire, again. This is a rollercoaster of market activity, so I recommend that you get your ducks in row now. Overall, look for Wednesday or Friday to be the biggest days for mortgage rates. Wednesday's GDP and Friday's Employment and ISM reports are the most important pieces of data, but we may see quite a bit of movement in rates tomorrow or Thursday also. If we see weaker than expected results from the most important reports, we should see rates close the week much lower than last Friday's closing levels. If the data shows stronger than expected results, we may see mortgage rates move higher again this week. This is of course, assuming that Wednesday's Fed meeting adjournment doesn't reveal any surprises. Please contact me if you have any financing questions including the Fed's proposed increase in Conforming loan limits. Who do you know who has been considering refinancing? Please get them in touch with me ASAP: Pat Townsley, Mortgage Broker; 415-485-1776 and http://www.ptre.net/

Home Loan Time!

This morning the Fed surprised everyone by taking a .750 cut to the Fed Funds Rate - prior to the opening of the stock market the Dow futures were off over 500+, it then opened up almost as low and since has made a 350+ point recover to just off 150+. Bonds of course were the beneficiary of a massive flight to quality, but are starting to drop to the morning lows, which are still pretty high.

What does this mean in the terms of real estate financing? This will move "other markets" (bonds, treasuries) around and will absolutely help lower the fundamental mortgage rates. Now, it's up to the banks to play ball. They can still hide and recoil from the market due to fear, or they can loosen up a little. Conforming loans (those under $417,000) are the "sweetheart loans" that the banks are advertising. Watch out for misleading information in print, radio and TV. Just because they say that your payment will go down $1000 per month doesn't make it so. Start your new loan here with veteran mortgage broker Pat Townsley. 415-485-1776. http://www.ptre.net/

Fed Set To Cut Key Interest Rates By 1/2 point.

The Federal Reserve board could call for an "emergency meeting" at any time to announce a rate cut. We are in an official Recession. That in itself isn't a huge concern. If it goes on for three or four quarters, then we've got a problem. President Bush will announce, or attempt to announce, that the Federal Government is going to take action to help out the average American with some form of tax break or check...something to attempt to "stimulate the economy." It won't help (overall). Look for Ben Bernanke to announce a 50 basis point cut (1/2 point) at the next session. How will the markets react? They're already anticiapting it, so it's basically being priced into the economic models already. Mortgage rates and lenders are already ready. Now, if the Feds come up short with a 1/4 point cut, that will disapoint the markets; stocks will tumble, mortgage rates will rise. I will be here to take care of your real estate financing, regardless of where the market goes. I have been dead on with my finanical predictions, not that I'm a genius; far from it in fact, but when it comes to this stuff.... well, check the record! Pat Townsley, Broker. 415-485-1776. http://www.ptre.net/

Commercial Building Loans

I never thought that commercial deals would become easier than residentail financing, but it appears that the day has come. As a Wholesale Broker, I have access and deep relationships with the top lenders in the nation. Investors are scared of residential housing markets, not the commercail markets. It's a totally different animal, and properies are welll worth considering. Apartment buildings with 5 units or more, mixed use (business and residential combo), warehouses with office suites. Run your scenarios by me, Pat Townsley, Commercial Real Estate Financing for your Suite life. 415-485-1776. http://www.ptre.net/

Crisis Services Plan

Jan. 17 (Bloomberg) -- "Federal Reserve Chairman Ben S. Bernanke said fiscal stimulus of as much as $150 billion would help revive economic growth, while warning against any widening of the budget deficit in coming years." So what's the solutions when we are in a Recession? The US economy depends on AMERCIANS buying things. When they don't have money, they don't spend, the economy stalls. They're buying things on Credit that they can't pay back. Flooding the market with money doesn't help. Raising wages is always a disaster. I've got the answer. Please contact me for your Crisis Services Plan. Broker, Pat Townsley, 415-485-1776. http://www.ptre.net/

Loss Mitigation: The Short Sale

"I fell in to a burnin' ring of fire" rings in my head as I think about Short Sales. A Short sale is different from a foreclosure. Basically, a Short Sale, the Homeowner is still Selling their home on the open market, but the existing loan company must agree to forgive some of the debt owed against the home. And, the home has to SELL in order to get out from under it. Yes, it damages credit, but not as bad as a Foreclosure, where the Homeowner has failed to make the mortgage payments and the bank simply (well, it's not "that simple") takes the home away from the homeowner. In short, A Short Sale has to SELL in order for it to close. In a Foreclosure, the bank takes the home away from the owner and it becomes the property of the bank, sometimes called a Bank REO (Real Estate Owned). The banks have companies that negotiate the sales of these properties. In most cases, the bank will take a loss. These losses are analyzed by the Loss Mitigation Department of the bank. The Loss Mitigation reps determine if they’ll accept the terms of a Short Sale. They can also talk directly with the borrowers in some cases to re-negotiate an existing note. Banks do not want to own real estate. They want the interest. They’re interested in liquidity and ROI. Questions?
Ask Broker Pat Townsley, 415-485-1776, http://www.ptre.net/

Looking for Foreclosures?

Find forelcosed homes for two-dollars and help a family out. Hmmmm. Look at this happy family. Are they happy because they just got a screaming deal on a new home or are they happy because that Was their home and they got caught up in the financing overleveraged mess and now lost their home and someone magically "helped them out." Foreclosures on owner occupied homes are no fun. Someone is losing, someone is winning. There's no "feel good" in it for the ones getting foreclosed upon. That being said, Pay your mortgage at all costs. Foreclosures, short sales, bankruptcies....they'll ruin your credit regardless, so do everything to save your home. Now, If you are looking for Foreclosures, your local Realtor can help as well as many foreclosure websites (generally finder's fee based). One site is http://www.hudforeclosed.com/ and there are many more. Watch out for scams....and of course, call me to get financing for a home you're going to buy at 415-485-1776. Also, call be BEFORE you go upside-down on your existing home financing. Pat Townsley, Mortgage Broker. http://www.ptre.net/

Preparing for a Refinance (Purchase fundamentals too!)

Now is the time to prepare yourself for a refinance opportunity in the late spring or early summer. By preparing, I’m advising you to take some actions to ensure you get the best possible rate and program when it comes time to underwrite your loan. Banks are exceptionally tough right now and will continue to be a challenge:

> Credit: Make sure your credit rating is solid. A score of 720 is really desired. Improve scores by keeping credit debt under 30% of the available balance of any card. Don’t pile the debt on to one single card, spread it across a few and don’t open any new credit accounts, buy a car or anything that will ping your credit.
> Assets: Lenders like to see several months worth of “reserves”….so try to pad your accounts as best as possible; PERSONAL Checking, PERSONAL Savings, 401k, equity accounts….Liquidity.
> Tidy up: With more storms coming, keep the yard and home looking sharp so that when the appraiser does come, she’ll be able to show your house in GOOD shape and therefore be able to use the highest possible comps. Don’t open up any walls or have any construction going on when we go to appraise.
> Keep documentation: We’ll need copies of bank statements, recent mortgage and insurance statements when applying.
> Pay Attention to the market: " Tune in" to some of the different loan products to find the one that meets your needs. There are fixed rates, Option Arms, Home Ownership Accelerator loans, Hybrids. Notice if you’re cash-flow sensitive, rate driven or fixed rate oriented.

Call or email with any questions. Lots of factors that you can start to control NOW so that you're good to go. Your call. Let me know how I can help. I've got the goods: Pat Townsley, Mortgage Broker. 415-485-1776. http://www.ptre.net/

Soft Market Policies: More challenges for loans

New and tougher underwriting policies are on the rise in markets where the trend is for declining property values. The banks, in order to avoid future over-leveraged properties (via continually decreasing values) and maintain a reasonable equity position in the loan to value (to protect themselves)n have identified many geographical areas as "Soft Markets" and will require either MORE down payment on PURCHASE or on a REFI, you may be out of luck, outside of lender guidelines or even "upside down" on your mortgage. If it's Money Down, Upside Down, or Goose Down Pillows...Soft Markets are on the rise. One more reason to TAKE ACTION NOW on any refinancing and to sock away more money. I'm here to help and advise. Don't get left down and out. Pat Townsley, Mortgage Broker. 415-485-1776. http://www.ptre.net/

Once Great, She didn't see it coming...

The greatest vessel of her time that ever remanded sea, she was the mighty clipper ship, the “Sovereign of the Seas.” East Boston 1852, her frame of seasoned white oak, 12,000 yards of canvas tall, she crossed the line and doubled the horn again and again. No ship to date had stowed so much down in the hold. “We’ll weather any storm” the captain always said. After a magnificent run of seven years, she wrecked up on the Pyramid Shoals. America has quite a bit in common with this ship: Built against all odds, breaking records, weathering storms, thinking she, like the Titanic, like Rome, would never fail. American homeowners have leveraged as much equity from their homes as possible to buy “things.” Tapped, America is still spending more that we’re earning. How is that possible? Credit Cards. Soon, those will be maxed out as well. We’re looking at an epic possibility: Foreclosures, plus credit card bankruptcies, plus increasing unemployment, plus rising prices. Americans are mirroring the US Government’s fiscal procedures as a role model. Not cool. Time to batten down the hatches, tighten up the rigging, stow the gear and prepare for rough seas. Get your finances organized, your debts cleared and some padding in your pocket for the incoming tides. Only an ark will withstand the lowland shoals ahead. Please contact me for a free debt consolidation consultation. http://www.ptre.net/ . Pat Townsley, Broker.

Thanks to David Coffin for his inspiring accurate & historical tale telling and shanties including The Sovereign of the Seas from "Safe in the Harbour."

Why REFINANCE now? !

There are many reasons to start to refinance your existing finance now. Even if you have 6 to 12 months left on your tasty current fixed rate mortgage, there are some critical motivators in play right now:
1. Falling home prices may dramatically effect your home's value, decreasing your "loan to value" and making it more costly to refinance.
2. Lenders are tightening up their offerings, making it much more challenging to qualify for loans, even for people with perfect credit and good loan to values.
3. Market Saturation: This summer, the few banks that are left will be so overloaded with refinances and purchases, that they can use the pressures of supply and demand to actually Raise rates, even in light of the coming Fed rate cuts. You'll be caught in the maelstrom.
4. I'll save the rest of the reasons for the next newsletter or in a personal phone call with you to 415-485-1776. Sign up for my online newsletter at http://www.ptre.net/

Today's Market.

The National Assoc of Realtors revised their home sales outlook. Both new and existing home sales should bottom in the first quarter of 2008, then rise for the remaining three quarters. The housing starts outlook may continue to decline through 2008. WHAT DOES this mean to you? General homes being built right now aren't going to do so well, but "Resale" homes and homes coming on the market Starting March/April should see the bottom of the market.

30 YR Bond +0.04 4.38%

10 YR Bond +0.05 3.88%

1 Year TBill 3.17%

11th District COFI 4.23%

Prime Rate 7.25%

Discount Rate 4.75%

Fed Funds Rate 4.25%

I believe that there will be a massive inventory at the beginning of the 2nd quarter of 2008. The Fed will have lowered the interest rates enough that it will be a good time for people to get low priced homes with great rates. The only Rub is that lenders aren't giving out loans like they have in the past: It is MUCH harder to qualify for a loan. The sooner you start, the better positioned you will be to Purchase. Likewise, Refinance NOW while values are still relatively strong in comparison with the potential value drops in many markets. More information at http://www.ptre.net/

Back to Work: 2008

Rate direction may be slightly up over last week. The bond market is losing some of last week’s price gains (prices falling, rates climbing) as global stock markets found buyers and money shifted from bonds to stocks. The posture in the stock market at the moment is toward purchasing, but it’s likely only technical, corrective trade will dominate today. There is little in way of economic reports this week which would otherwise create volatility.

2008 is going to be one of the greatest Real Estate Buying opportunities in our lifetimes. For those who are considering Real Estate investing, now would be a good time to Get Ready. Call me for free loan consultations and free loan pre-approvals for properties in California: Pat Townsley, Mortgage Broker. 415-485-1776. http://www.ptre.net/