"Simply stated"...

Last week mortgage rates dropped to their lowest level since 2005. Contrary to what's being reported, this drop had little to do with recent FED rate cuts and everything to do with the FED's decision to purchase up to $500 billion in mortgage-backed securities from Fannie, Freddie and Ginnie Mae, - a move that boosted the mortgage bond market driving interest rates down to the mid 5% range.

Lobbyists are now pushing for more FED intervention in hopes of pushing mortgage rates down to 4.50%. Their goal here is to stimulate the housing market by fueling home purchases.

Combine this news with a $7500 first time buyer tax credit and a large selection of reasonably priced homes... It's time to BUY!

Ok, it seems like everything is falling apart...

If you own stock in Lehman or AIG, you have suffered a potentially significant loss.

Otherwise, I see this as a necessary capitulation that every down market must go through before everything turns around.  We are experiencing the remaining effects of the credit market turmoil and seeing the players in those excesses pay their dues.  Some will no longer exist.  Others will consolidate into new firms with a stronger capital base and tighter standards, risk controls, and oversight.

On the plus side, oil has significantly backed off it's record highs to around $91/barrel.  The Fed will probably lower interest rates again this week.  Fannie Mae and Freddie Mac have been shored up by the Treasury.  And, credit lending standards are continually being tightened and further scrutinized.

So here's the good news as everything turns around...

1. Lower gas prices.

2. Lower interest rates.

3. Continued availability of credit to "qualified" borrowers.

4. A large selection of homes at fair market prices.

5. Select opportunities for investment in the equities markets.

Be ready to make some smart moves as the dust clears....

The Primary Mortgage Market Survey from mortgage finance company Freddie Mac said that rates on 30-year fixed-rate mortgages averaged 5.93% for the week ended September 11, with an average 0.7 point discount. That's down from an average 6.35% last week, and down from an average of 6.31% recorded during the same week last year.

Federal officials on Sunday unveiled a takeover of Fannie Mae and Freddie Mac, putting the government in charge of the twin mortgage giants and the $5 trillion in home loans they back.

This plan places the two companies into a "conservatorship" to be overseen by the Federal Housing Finance Agency. Under conservatorship, the government would temporarily run Fannie and Freddie until they are on stronger footing.

Fannie and Freddie have become virtually the only source of funding for banks and other home lenders looking to make home loans. Their ability to do so is crucial to the recovery of the battered home market and the broader U.S. economy.

Here's how they work: Banks loan money to home buyers. The banks then sell those mortgages - assuming they meet certain credit standards - to Fannie Mae or Freddie Mac.

Banks then use the money they get from the sale of those mortgages to make new loans. Fannie and Freddie, meanwhile, bundle those loans, attach a payment guarantee to them, and resell them as bonds.

Bottom Line: The rescue of Fannie and Freddie could go a long way toward bringing stability to the housing market while making it easier for consumers to obtain affordable mortgages.

WASHINGTON, August 25, 2008

Existing-home sales rose in July to the highest level in five months, although sales have hovered in a relatively narrow range over the past 11 months, according to the National Association of Realtors^®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – increased 3.1 percent to a seasonally adjusted annual rate¹ of 5.00 million units in July from a downwardly revised level of 4.85 million in June, but are 13.2 percent lower than the 5.76 million-unit pace in July 2007.

I found a simple website for information on this tax credit.  Please contact me to discuss more details...

 http://www.federalhousingtaxcredit.com/index.html

Steadily declining prices made the second quarter the most affordable for homes since 2004...

Sales of existing homes increased in February and remain within a fairly stable range, according to the National Association of Realtors®. 

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 2.9 percent to a seasonally adjusted annual rate (1) of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8 percent below the 6.60 million-unit level in February 2007.  The sales pace has been in a fairly narrow range since last September.

Lawrence Yun, NAR chief economist, said the gain is encouraging.  “We’re not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” he said.  “Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand.  As inventories are drawn down, prices in many markets should go positive later this year.”

Read more from the National Association of Realtors®

Rates on 30-year fixed-rate loans sliped to 6.26% on weak consumer confidence and other economic worries.