FHA

MORTGAGE REVIEW:RATES,NEWS AND MORE.

***Smart Financial Weekly Mortgage Update May 8, 2009***

Interest Rates

It was another great week for rates even though they moved up slightly. 30 year fixed rates continue to be at historic lows. The reason for this is, as mentioned previously, the Fed is buying Mortgage Backed Securities (MBS) as part of its ongoing commitment to keep mortgage rates low. However, a key point gentle reader’s is that 99% of these purchases have been intended to keep rates at today’s levels not lower! So, do not look for significantly lower rates if the Fed continues its present pattern of buying MBS. Also, the 10 Year Treasury Yield finished the week at 3.29 up from last week.

Date	Rate
5/8/09	4.84
5/1/09	4.78
4/24/09	4.80
4/17/09	4.82
5/8/08	6.05
5/10/07	6.15

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

Mortgage Industry Update

We all know that the government is stepping up to help the mortgage industry by supporting FHA, Fannie Mae and Freddie Mac. I thought I would share some data with you to help put that support in some kind of perspective.

· FHA is asking Congress for $798 Million to help meet its reserve requirement.

· One in eight FHA loans is delinquent and 7.5% are 90 days or more delinquent according to the Mortgage Bankers Association.

· Fannie Mae lost $23 Billion in first quarter 2009 following $25 Billion loss in fourth quarter 2008.

· Fannie Mae has requested $19 Billion from the government for its capital structure.

· The Treasury has doubled its commitment to Fannie Mae to $200 Billion.

· Fannie Mae took over 21,000 foreclosed homes (single family) in fourth quarter 2008 and 25,000 in first quarter 2009.

No matter how you look at it these are big numbers!

Good News

· Pending home sales up 3.2% in April.

· Construction spending in March was up .3% forecast was for decline of 1-1.5%. This was first increase in 6 months!

· Initial jobless claims were 601,000 which was better than forecast of 635,000. Lowest number in 14 weeks!

· First quarter productivity was up .8% compared to forecast of .6%.

· Jobs report for April was 539,000 jobs lost in April compared to forecast of 610,000.

Statistics of Interest/Concern

· 30 day delinquency on prime loans was up slightly in April.

· Credit card delinquency in April increased 36% over March.

· Commercial delinquency in April was 2.45% compared to 1.00% a year ago.

· April unemployment rate increased to 8.9% in April from 8.5% in March.

· Consumer credit declined in March by $11 Billion more than three times the forecast.

· According to AP 4 million homes have been vacant for more than 90 days.

Commentary:

In testimony before a Congressional committee this week the Chairman of the Federal Reserve Ben Bernake said that he expected recovery later this year and that the economy will grow slowly going forward. He also said that he thought housing may be near a bottom. More and more of the data are pointing toward a recovery sooner rather than later albeit a slow one. Finally, if you believe as I do that it is all about jobs then you will take heart in Challenger, Gray and Christmas Inc. report that layoffs were down for the third consecutive month in April.

If you have any questions or want to get a rate quote please give Burt Carlson a call at (602) 803-9660 or e-mail me at burt@gosfm.com.