In this week’s “Good News”

Emergency Fed Rate Cut

As you may have already heard, the Federal Reserve cut the Fed Funds rate again this morning by .75% to 3.5%, sending financial markets worldwide into turmoil.

In an emergency move to stave off recession, the Federal Reserve has made one of the biggest cuts in the Funds rate since 2003. Also, it should be noted that there was also a cut to the Discount Rate of .75% to 4%. Hopefully, this will trickle down to you and I the consumer.

Mortgage Rates Nearing Historic Lows

There is no doubt that rates are as competitive, and in cases, better than 2+ years ago when the mortgage market rates hit historic lows. It seems that with the uncertainty of many of the nation’s financial markets, the remaining major mortgage lenders are trying to boost profitability by trying to make more loans. Any mortgage credit consumers who are considering a purchase or refinance transaction may want to consider acting now, as typical underwriting and closing times have increased due to interest rate decreases.

VA Interest Rate Reduction Refinances/Cash-out Refinances Loans Have Increased Loan Limits

In recent news, borrowers’ qualified for VA loans can now borrower loan amounts up to 1.5 million dollars. This applies to both current VA Rate Reduction Refinances and those with VA eligibility wishing to purchase or refinance for cash-out.

In this week’s “Take It How You Will News”:

Builder Confidence is On the Rise

With housing starts at the lowest level in 16 years, it looks like builder confidence is beginning to rise according to the NAHB (National Association of Home Builders).

Overall Home Starts for December 2007
Seasonally-Adjusted Annual Rate: 1.006 million units

One Month Change: Down 14.2%
One Year Change: Down 38.2%

Home Builder Outlook on the Future
Note: A score over 50 means more builders view conditions positively, a score under 50 means more view them negatively.

Overall Builder Confidence: 19
One Month Ago: 18

Single-Family Home Sales: 19
One Month Ago: 19

Sales Over Next Six Months: 28
One Month Ago: 24

Traffic of Prospective Buyers: 14
One Month Ago: 13

It appears that the changes are mainly due to the fact that builders’ are utilizing there current building permits, rather than acquiring new permits, thus allowing them to bring there existing inventories under control.

Lehman Bros Halts Wholesale Lending in the U.S.

In a decision that will result in another 1,300 layoffs, Lehman Brothers Holdings Inc. announced it was exiting wholesale mortgage lending in the America. This will, also, result in a $40 million charge to the investment bank.

Job centers that will be affected by closure are located in California, Florida and New Jersey.

Lehman Brothers did indicate, however, that it will continue to provide mortgage loans through Aurora Loan Services LLC platform, which originates both prime and subprime mortgages.

Bonuses Announced for Top Countrywide Executives

Calabasas, CA – based Countrywide Financial Corp. following its $4.1 billion merger deal with Bank of America, announced that it will compensate 5 officers of the Company.

These awards will be paid by of cash and cash-settled restricted stock units for five of its highest executives.

According to a filing with the SEC (Securities and Exchange Commission), the approved compensation plans will go to the president and chief operating officer David Sambol, executive managing director and chief financial officer Eric Sieracki, executive managing director of capital markets Ranjit Kripalani, and executive managing director of banking and insurance Carlos M. Garcia.

Countrywide chairman and CEO Angelo Mozilo, will receive a severance package of roughly 112 million, after the sell to Bank of America is completed. It is reported that he will also receive his country club membership and free rides on the corporate jet until 2011.

Over the last year Countrywide has seen its stock value drop 88%, and currently has a delinquency rate of 7.2% for its mortgage portfolio.

In this week’s “Wait and See” news:

The calendar this week is a slower than usual, but the indicators to be released this week could have a very large impact on markets despite today’s rate cuts.

Economic Calendar for the Week of January 21- 25, 2008

Date	ET	Economic Report	For	Estimate	Actual	Prior	Impact
Thu. January 24	08:30	Jobless Claims (Initial)	1/19	320K		301K	Moderate
Thu. January 24	10:00	Existing Home Sales	Dec	4.95M		5.00M	Moderate
Thu. January 24	10:30	Crude Inventories	1/19	NA		4259K	Moderate

Remember, typically weaker news is beneficial to a rate decrease and positive news will cause mortgage rates to rise 

In this week’s “Not So Good Right Now” news

First Horizon National Corp. Reporting Huge Losses

When Memphis-based First Horizon National Corp. recently reported a net loss of nearly $250 billion in the fourth quarter, it stood for a seven fold increase in its loan-loss reserves over the same time last year.

Fourth quarter losses of $248.6 million, compared to earnings of $76.4 million this time last year, contributed greatly to this number.

Delinquencies in the company’s residential mortgage portfolio stood at 1.46% at quarter’s end, jumping from 1.14% three months earlier. Many experts expect this to climb to a much larger number in 2008.

Big Profit Decline for JPMorgan Chase and Company

Forced to write down the value of its current portfolio due to subprime exposure, JPMorgan Chase & Co. saw profits drop 34% in the fourth quarter.

Due to the still deteriorating mortgage market conditions, the company is eliminating Alt -A loan programs, reducing loan-to-values, and raising credit score requirements.

The company’s delinquency on retail loans was 3.03% at quarter’s end, up from 2.39% for the third quarter and 2.02% one year ago.

IndyMac Closes Offices and Cuts Workforce by One Quarter

The company has announced that it expects to eliminate approximately 1,000 jobs during the first half of 2008. This accounts for nearly 2,400 positions, which will bring the company’s layoffs to approximately 4,000 over the July 2007 to July 2008 period.

"We have been as fair and objective as possible in the layoff selection process, taking into consideration an individual's quality of work as measured either by performance metrics in a compensation plan and/or performance rating, any recent performance counseling and the employee's cost per unit of output," said chairman and CEO Michael W. Perry.

The company also announced the wholesale lending offices that will be closed are located in Tampa, Philadelphia, Boston, and Columbia, South Carolina.

These changes are expected to result in a first quarter pretax charge of roughly $25 million, but the company expects $136 million in annual savings.