Welcome to the Market Matters Advisory, your weekly guide to responding to the market.

February 14, 2008




  San Jose Mercury News

How economic stimulus package addresses mortgage crisis

President Bush Wednesday signed off on the $168 billion 12 stimulus packaged approved by Congress last week, which, in addition to tax rebates for millions of working Americans and business owners, includes a vital, but temporary increase in the conforming loan limit.  The economic stimulus package will allow the Federal Housing Administration, as well as Fannie Mae and Freddie Mac, to offer mortgages above the current conforming loan limit of $417,000 to as much as $729,750 in high-cost areas using a formula that considers an area's median home price. The increase would only apply to loans originated between July 1, 2007 and Dec. 31, 2008. A host of details remain to be worked out, including how the median home price is established.

MAKING SENSE OF THE STORY FOR CONSUMERS

• · It could be several months before the impact is felt in the mortgage markets. Wall Street is still working out whether investors will want to bundle securitized loans above $417,000 with loans below that level, or if they will invest in them separately.
• · Rates for such loans might be higher because banks fear larger loans are riskier, but they'd still likely be lower than current jumbo rates.
  · Even though the proposal does not apply to loans made before July 1, borrowers with older mortgages could refinance into new loans that would be sold to Fannie and Freddie, because those loans would be considered new loans.

To read the full story, click here.

   Washington Post 

New program aims to forestall foreclosures

Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under "Project Lifeline," an initiative the Bush administration announced Tuesday.

MAKING SENSE OF THE STORY FOR CONSUMERS

• · The attempt to diminish the number of homes repossessed could have a broad impact since six of the nation's largest financial institutions are participating. Together they service almost half of the nation's mortgages. Fewer foreclosures improves the strength of the housing market.
• · The program will be available to borrowers of all types of mortgages, not just the high-cost subprime loans that previous relief efforts targeted.
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To read the full story, click here.

  Los Angeles Times

Southern California home sales drop to a 20-year low

Fewer than 10,000 homes were sold in the six-county Southern California region in January, DataQuick Information Systemssaid Wednesday. That's the first time sales have been at this level since DataQuick began keeping records in 1988.

MAKING SENSE OF THE STORY FOR CONSUMERS

• · The newly passed economic stimulus package could aid sales of more expensive homes previously encumbered by the higher interest rates of non-conforming jumbo loans.
• · Repeated Federal Reserve interest rate cuts continue to put downward pressure on mortgage rates, which are at about 5.6 percent.
• · Lower interest rates might boost sales and prevent foreclosures by allowing more homeowners to refinance.
• Declining home sales have contributed tolower prices, making homes more affordable.
•  

To read the full story, click here.

In other news:

  ABC News Countrywide to Aid More Borrowers

  Modesto Bee

Mortgage mess spawning lots of lawsuits


   CBS 5Suit Claims KB Home, Countrywide Inflated Prices


Tips on upcoming news stories, especially those that warrant a closer look.

  Redding Record Searchlight

"The Record Searchlight," based in Redding in northern California, is organizing bus tours to show potential buyerslocal properties in foreclosure.

For a link, click here.

Here's what to tell consumers.