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September 30, 1988
The bond market is having a good day today, and mortgage discounts are down about a half across the board.
The only meaningful data release this week was this morning's Leading Economic Indicators showing a pretty much neutral .4% rise against .2% expectations. The credit market improvement today is traceable to a selloff in oil; OPEC appears to have abandoned production discipline altogether. Gold prices continue to decline, approaching the $390 level.
Despite the absence of evidence of inflation, the bond market is nervous, and the quiet, preelection trading is causing an accumulation of tension. The market is focused on next Friday's release of unemployment and job creation data, and still fears the inflationary consequences of too much pressure on the labor market and production capacity.
The entertainment Friday, October 7, will be hard to beat. Boulder Cable channel 35 (CNN Financial News) will have the labor data release at 7:00am Colorado time, followed immediately by the opening of the bond market. The results will tell us what the market is likely to do at least until the election, and maybe until the end of the year. The market expects a .1% decline in the unemployment rate, and job creation in the high 200,000 range.
NEW PROGRAM: As more sellers are becoming sensitive to buyer credit qualification in assumptions and carry backs, Universal is now prepared to perform credit analysis and provide a written creditworthiness opinion on your buyers. We will take a normal loan application with verifications, requiring about three weeks for approval (less with verbal verifications), or with tax returns about three days.
The underwriting guidelines will be VA, and our fee for the service is $200. We will not know our program costs until we try it for a while, and our fee may increase.
Universal's credit opinion will not be a guarantee of performance, but will be a prudent exercise of due diligence by a large mortgage bank which is DEFHA, VA automatic, and underwrites most conventional loans for its investors. It seems to me to be a good idea to help real estate brokers stay away from credit approval liability.
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