Please read below to hear what a large bank such as WAMU feels about the reactions on wall street to our current mortgage market. Again, conventional and government mortgages (FHA and VA) are going to potentially quintupial as a result of the drawback we are seeing on the market for mortgages.

Ray ~

read as follows

Folks,

We are in the midst of a mortgage  liquidity crisis. This is for ALL mortgage products, not just subprime or alt-a. We are seeing the credit markets now panic, on all mortgage debt, and loans are not moving through the financial systems of the US or world economy.

To be honest, I think the press has not even caught up with what is really going on as I type this email. Basically the pipelines have been shut off to the entire mortgage industry, and the only loans funding are loans coming from a temporary liquid sources such as a bank balance sheet(like Wamu), or a lender with a credit facility still open, etc.

This form of short term liquidity actually only has very short term life, even for the largest of banks. If Wamu for example has a 300 Billion balance sheet, believe it or not, it has liquidity constraints as well. Funding 40 Billion per month pipeline can add up really fast.

Even worse if you are say a 30 Billion bank-like Indymac or a 50 Billion bank like Countrywide funding 40-50B per month.

So I guess the question on top of everyone’s mind is what does this mean to me? This is what I would expect over the next few days, weeks, and possibly months.

Pricing– Pricing will be going up for all loans. This will be an industry issue not a company issue. Some of this pricing may seem amazing as far as how much it might go up. Lenders are not increasing pricing because there costs are going up. Lenders will be purposely raising pricing to slow production down(to keep the tap open).

Credit– Credit will be tightening across the board in the industry. Again credit may be tightened not because of loan performance, but because if lenders have only so much access to funds, they may only want to fund the best quality loans.

Small Lenders– The smaller lenders or non-banks will simply have no funds to fund loans. This could actually create a “run” at the banks for funds.

My suggestion to all is spread the word as fast as possible. If I were a broker, I would be locking and funding any loan I could anywhere I can get it. I think we may witness many lenders (particularly non-bank) lenders actually fail to perform on delivering loan funds.

Make sure your brokers understand this is not Wamu, this is industry issue.

More to follow, but I wanted to keep you all in the loop on current market conditions, and I hope you all will have an understanding of what and why certain events are happening to us, and our industry.

If you have been thinking about refinancing your home or will need to in the next 6 months due to an Adjustable Rate Mortgage give me a call so we can do a no obligation review of your mortgage ~ 303.779.0591

Ray