Weekly Lender News from Dan Hrey of Chase

Although experts have speculated that the US may already by in a recession,the first hardcore signs appeared in Wednesday morning’s 3rd QuarterAdvance Gross Domestic Product report. The report showed that consumer spending declined at the fastest pace in 28 years. The report also reflected the largest quarterly decline since the end of the last recessionin 2001.

In other news, as expected, the Fed cut the Fed Funds Rate by .50% thisweek, lowering it to 1.00%. Initially, both Stocks and Bonds had little reaction to the Fed cut, but eventually Stocks had the second highest increase in history and Mortgage Bonds finished much lower on the day. Industry News According to Inside Mortgage Finance, new mortgage originations fell anestimated 33% between 2Q08 and 3Q08, to $300 billion; this is the lowest quarterly level in over a decade. On a year-over-year basis, 3rd quarter mortgage production was down 47%. IMF attributes the entire drop in the quarter to a decrease in agency loans – those ultimately sold to Fannie and Freddie.

FHA lending, on the other hand, continued to climb in the quarter, reaching a share of 25% of the total market. This compares to a14% share in 2Q08 and just a 3% share for all of 2007. During the first three quarters of this year FHA originations totaled $176 billion, up 225% from the same period in 2007. On a good note, there are pockets throughout the country that are starting to show increases in home sales. Dennis and Sunshine Smith, terrific realtors in San Diego California recently inserted this information into their September newsletter.“San Diego Home Sales Up Year-over-Year 2nd Month in a Row". The sale of single-family, re-sale homes rose 11.6% in August compared tolast August. This is the second month in a row home sales have been upyear-over-year.”