"THERE AIN'T NO CURE FOR THE SUMMERTIME BLUES..." Eddie Cochran And although Bernanke and the Fed can't do much to help you overcome the feeling of summer slipping away - their actions have helped to stabilize the financial markets, and calm some of the "credit crunch blues". Just over a week ago, the Fed made a decision to lower the rate at their "Discount Window", allowing banking institutions another method of providing assurance of liquidity to their clients, and also helping many institutions continue to fund home loans. Due to the Fed's action, the past week was somewhat calm in the financial world...at least calmer than has been seen in awhile. Both the Stock market and the Bond markets moved higher, and conforming home loan rates remained stable to very slightly improved.

SO YOU'VE SEEN THE HEADLINES ABOUT THE FED AND THE DISCOUNT RATE...BUT MANY PEOPLE ADMIT TO HAVING THEIR EYES GLOSS RIGHT OVER. HOW DOES THIS ALL IMPACT YOU? FOR A SIMPLE EXPLANATION, READ THIS WEEK'S MORTGAGE MARKET VIEW. YOU'LL GET THE WHOLE SCOOP, AND UNDERSTAND WHAT YOU SHOULD DO RIGHT NOW.

"A DAY MAY SINK OR SAVE A REALM." Lord Alfred Tennyson And indeed, many saw Friday morning's surprise action by the Fed as a move that saved the day in terms of the financial markets...at least for now. What was the surprise move exactly? It was actually a doubly good surprise, consisting of two specific actions by the Fed, designed to help ease some of the current fears in the financial markets.

First, a .50% cut to the Discount Rate, taking it from 6.25% down to 5.75%. This is the rate at which the Fed lends money directly to commercial banks, credit unions, savings & loans, and also including large mortgage bankers. Now this is a different rate than the Fed Funds Rate - which is the rate at which banks lend money to other banks, currently at 5.25% - and is the rate generally discussed in terms of cuts or hikes surrounding normally scheduled Fed meetings. Note, the Fed's move to cut the Discount Rate has no impact on mortgage rates or consumer rates like home equity lines of credit. The Discount Rate is generally above the Fed Funds Rate, which does make borrowing money from the Fed a last resort for lending institutions, as they would generally borrow from other banks at a lower rate. However, with the current liquidity situation making that more difficult by the day, the Fed's move will help provide lending institutions more liquidity at more desirable rates in the short term.

Next, the Fed extended the borrowing period on these funds from overnight to thirty days - which could allow some lenders to use this money for funding home loans, in case their other sources are backing off. It will also allow time for the credit markets overall to settle out a bit, and this move will help financial institutions better weather the current storm. In fact, Stocks loved the news - particularly financial stocks - and the Stock market rocketed higher on the good news. Bonds and conforming home loan rates were volatile throughout the week, but ended up unchanged to slightly improved overall.

For this weeks forecast read on.

IT WAS THE BEST OF TIMES, IT WAS THE WORST OF TIMES...Wait, maybe last week was just plain the worst of times, as far as the financial markets around the globe were concerned. French bank BNP Paribas — the largest bank in France and second largest in Europe — touched off a crisis in Europe on Thursday when it announced that it couldn't determine the values of three of their mutual funds due to their containing US sub-prime mortgage investments, and actually prohibited withdrawals from these funds until a valuation could be made.

This led to a lack of confidence not only with their customers and investors, but also among all European Union banks. These banks, not knowing the extent of each other's investment exposure in US mortgage backed securities, suddenly realized they couldn't trust one another enough to lend each other money via normal inter-bank loans. This created an instant "liquidity crisis" in Europe, and Stock markets across the world reacted negatively as a result.

The European Central Bank, their equivalent of our Fed, took immediate action to stem the crisis by allowing their banks to borrow $131 Billion last Thursday and another $83.8 Billion on Friday. The amount borrowed shocked many analysts, as it was more than three times as much borrowed during the crisis created following the events of 9/11. Back in the US, the Federal Reserve Bank of New York intervened in the liquidity crisis here in the US by adding $84 Billion of liquidity to our own banking system. The Fed's intervention is designed to stabilize our financial markets by restoring confidence, and allowing the markets to continue to trade in an orderly fashion. And while the Fed left the Fed Funds Rate stable following their meeting last week, the current liquidity crisis will likely give the Fed the impetus to cut rates, and cut them aggressively. It may even happen before their next scheduled meeting on September 18th. For perspective, the last time the Fed made rate c hanges outside of a scheduled meeting was on September 13th and 17th, 2001 - just following the disastrous events of September 11th, 2001.

Amazingly enough, in spite of all the dramatic action, conforming home loan rates ended the week close to where they began.

For a look into this week's forecast read on.

GOOD, BAD OR UGLY? All of the above, if we're looking at last week and home loan rates. Good news came in the form of friendly inflation and employment news, which helped rates on conforming home loans improve by about .125% over the course of the week. "Conforming" home loans are those under $417K, and subject to very standard credit, income and asset qualifying, nothing exotic, outside the box or fancy - and there's a reason those are being singled out here as having improved. More on that later.

A little bad news came by way of the Bureau of Economic Analysis, revising previous personal savings rate estimates higher, but showing that Americans still save less than 1% of their income. If you're not sure that you are preparing effectively for your future plans, like retirement or sending your kids to college, please get in touch with me, and let's review your situation to see if I have an idea or referral that might help.

The ugly last week - well, it was really ugly. The media screamed all week about issues in the mortgage industry, particularly impacting what are called "non-conforming" home loans; those that are dollar amounts higher than $417K, or with credit, income or assets not falling under traditional guidelines. Many of those rates got excessively ugly, in many cases, overnight. Why? It's an interesting story, and not one that even the media seems to understand very well. But read on, as this week's Mortgage Market View unpacks all the details...and what you can do now to make sure you won't be impacted.

IN THIS WEEK'S MORTGAGE MARKET VIEW, THE REAL STORY BEHIND THE HEADLINES OF CRISIS AND DRAMA IN THE MORTGAGE INDUSTRY...DON'T MISS IT, AS YOU'LL LEARN WHAT IT'S ALL ABOUT, AND WHAT YOU SHOULD DO RIGHT NOW.

What is a credit score and how do I raise mine?  A credit score is an educated estimate of wether or not a borrower will have a 90-day late payment within the next 24 months. Credit scores are composed of 5 different weighted catergories, which are combined to give you your total point score.

35% (up to 300 points) come from your payment history. Your history is drawn from the frequency, severity, and recent history of your late payments. If you have a late payment within 6 months of when your credit is drawn, your credit score will take a significant hit.

30% (up to 250 points) comes from revolving credit card balances. Balances beyond 50% of the high credit limit will cause a deduction to your score. Pay down all cards to 30% fo the credit limit (but do not close them) to raise your score.

15% (up to 125 points) comes from credit history. New credit lowers your score, so pay off new accounts and keep the aged accounts when possible.

10% (up to 85 points) comes from the type of credit you have. 90 day same as cash loans are a major detriment to your score, so paying off all such loans and maintaining a good mix of credit is best.

10% (up to 85 points) come from inquiries. Each inquiry, excepting mortgage inquiries, counts as 5-15 points against your total credit score.

This article was provided by Integra Pacific Mortgage Inc. (425)697-5844

July is typically one of real estate’s slower months – vacations, good weather, and school just getting out all contributing to this condition. This year has been no exception! The real estate market is feeling the results of the sub-prime fall out, and many buyers are waiting to see what happens with this market and holding off on their purchases. As the start of school approaches and vacations are winding down, the market (historically) will begin to pick up. I’ll let you know next month!

Interest rates have risen to 6.375% for a 30-year fixed with no points.