Aloha Friday,

Treasuries’ rose Thursday after a government debt sale drew strong demand and a weaker-than-expected housing report boosted demand for the safety of U.S. debt.

The government received bids totaling nearly $81 billion for the $29 billion worth of 7-year notes sold Thursday. The bid-to-cover ratio, which measures demand for the assets, was a robust 2.79. That compares with an average of 2.48 over the last seven auctions. This demand helps to keep our rates down as investors still scurry for the safety of US Treasury Bonds.

I have heard a lot of rumors this week about FHA/HUD not going to lend any longer. Many people have also ask if they have “run out of money”. These are all incorrect rumors. On Wednesday I attended a HUD function in which the director stated that their reserve level has dropped below the 2% threshold in their mandate. This simply means that the government will have to fund more money into their reserve account to bolster up the default reserves. Make no mistake about it, HUD is not going anywhere and FHA loans are now a larger portion of the lending industry as a percentage than they have ever been. With their 3.5% down payment, this loan is a lifeblood for first time buyers that will not be going anywhere soon.

Remember, starting this coming week all condo projects approved before October 1, 2008 will need to be re-approved and added to the FHA list again. What does this mean? Any FHA loan will most likely need to get project approval to make sure the project is FHA lendable. This approval DOES NOT have to be completed by HUD. It can be done by the Direct Endorsement underwriter (meaning our banks). We have three companies set up to help us get tracts approved but please plan for a small delay in your transactions as their will be a small bottleneck as we work through this new system.

On a positive note at the other end of the spectrum, my associate just received a 30 year fixed rate loan approval on a $5 million loan at 5.75% with only 1 point. This proves there is money for jumbo mortgages in the marketplace. Call me for details if you know anyone in need of a super jumbo loan as our company is now funding these unique products. Our track record and relationships have given us the opportunity to offer these products while other brokers/lenders do not have the ability to offer them yet.

I hope you have a great weekend planned. Please let us know if we can help in any way.

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