Appraisals, Market Conditions & Greece…

February 16, 2010

Mortgage Market Conditions 

Markets were closed yesterday in observance of President's Day.
Today's market news was the manufacturing index which showed improved
numbers from last month, increase in business activity and business
leaders forcasting better economic conditions in the coming months.
Stocks off to a good start precipitated by the report with the DOW up
just over 100 points ( 10:00AM CST ).  Mortgage bonds relatively flat
and holding, providing some stability in mortgage rates for the time
being.  The recent trend of economic reports have been encouraging but
for all the fluffy forecasts to come to fruition, the job situation has
got to improve and some actual job growth created.

Interesting World news:

Greece is in dire financial straits...Why?  Because for many years they let their debt grow
completely out of control.   Wow...what a shock... anyone see any resemblance to what's going on here in the US?  And by the way, they
have hefty public entitlement programs that are adding to their significant financial burdens.  Now why would such a small country on
the other side of the world be of any concern to us?  Aside from the potential impact on currency strength of the US Dollar abroad, some of
the same problems that are creating problems in Greece could come to fruition here at home.  Just something to think about...

Mortgage rates remain stable with 30 year rates still hanging at or just below 5%.  Most likely rates will remain in this range in the coming
weeks.  Main variables that could cause changes are the stock market and economic reports - if reports continue favorable and stocks begin to
rise again, most likely this will have an adverse effect on mortgage bond prices and interest rates.  The Producer Price and Consumer Price
Index reports are due out end of the week.  These two indexes provide an insight to inflationary concerns and as we all know, inflation is
kryptonite to interest rates.

More FHA Changes Effective Today:  Lender Restrictions Imposed on Appraisal Requests

Seems like something new every day lately...actually, this ruling was supposed to go into effect January 1, 2010.  However, HUD postponed the
ruling until February 15, 2010.  We are all familiar with Fannie Mae's Home Value Code of Conduct ( HVCC ) and now HUD has started their own
version.  Mortgagee Letter 2009-28 reads as follows:

Historically FHA prohibited mortgagees from accepting appraisal reports completed by an appraiser selected, retained or compensated, in any
manner by real estate agents. To ensure appraiser independence,FHA-approved lenders are now prohibited from accepting appraisals
prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a
lender's staff who is compensated on a commission basis tied to the successful completion of a loan.

Long story short...neither loan officers nor processors may order FHA appraisals directly hence forth.  As with conventional appraisals, they
will order through our appraisal management company.
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