Tough start to the week.  Bernanke testified that the economy is weaker than previously thought and is "close to faltering".  The European economic crisis won't go away and the euphoria several weeks ago that we were at the bottom of the European mess has evaporated.  Bernanke and Congress are starting to point fingers at each other about who is to blame for the faltering recovery.  Congress is blaming the Fed for the long run of low rates causing the excessive borrowing by Congress.  Strange angle even for a politician:  "The Fed kept the rates so low for so long, we couldn't help ourselves - we had to borrow!"  Bernanke answered the criticism by saying that the Fed can't solve the economic problems themselves, Congress has to take steps with the budget but also cautioned about too steep cuts in spending while the economy is so weak. 
 
Bernanke also addressed the Wall Street protests with some of the most straight forward talk we've heard in Congress and from the Fed in decades:
"Very generally, I think people are quite unhappy with the state of the economy and what's happening," he said. "They blame, with some justification, the problems in the financial sector for getting us into this mess and they're dissatisfied with the policy response here in Washington."  A long overdue comment in Washington.
 
The stock market is down overall, although up slightly at the close Tuesday and in mid-day trading Wednesday.  Treasuries are taking a beating mid-week as investors are moving to cash and staying there in increasing numbers.  The "protect my principal" thought pattern.
 
Bank of America, as was announced a couple weeks ago, is exiting the correspondent lending business and many brokers who used BofA for their primary investor and as their line of credit lender are struggling to establish new relationships.  NAMB is warning that a number of these brokers may go out of business as they are struggling to meet the new, much higher financial requirements that have been put into place over the past year by most investors.  The decreasing competition will not bode well for consumers or the industry. 
 
BofA has also announced that it will no longer allow cash out refinances on FHA/VA mortgages.  They seem to be looking at Texas.  Texas hasn't allowed cash out mortgages for many years and has had been the state that has weathered the downturn the best.  Cash out refinances fueled the economic boom of the late 90's and early 2000's as homeowners pulled cash out of their homes to live beyond their means.  Texas was criticized regularly for the laws restricting the taking of cash out of their homes.  Now many homeowners are praising their legislature for keeping them out of trouble.  Will cash out refinances become a thing of the past?  What is the irony of BofA leading the charge to very safe lending policy?
 
After reporting a significant drop in foreclosure filings during July and pointing to it as a sign of the improving economy, Augusts' filings were up 20%. The yoyo theory in full bloom.
 
Fifteen year mortgage rates are up slightly on all the uncertainty while 30 year rates are down slightly. Freddie Mac is reporting that the average 30 year rate is down 8 one hundredths over last week to 4.01% with .7 points, comparable to about a 4.25% rate.  15 year mortgages are running in the 3.375-3.5% range with Freddie showing the average at 3.28% with .7 points but the bond market showing 3.52%.  Great rates.
 
Hopefully Friday has better news.
 
  
 
Jed Marquis
 
Mortgage Consultant
NMLSR ID 274457
 
Colorado Capital Mortgage Co, LLC | 2425 Canyon Blvd Ste 110 | Boulder,  CO  80302
MAC M1313-021
Phone 720.833.7964| Cell 303.885.1532| Fax 855.387.7240
 
An Affiliate Of Wells Fargo Home Mortgage
 
Jed.Marquis@CoCapMtg.com