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<strong>WASHINGTON (MarketWatch) - The following is the complete text of the statement released by the Federal Open Market Committee following its meeting on Tuesday.</strong>

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth was moderate during the first half of the year. Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy.

Readings on core inflation have improved modestly in recent months. However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated. Moreover, the high level of resource utilization has the potential to sustain those pressures.

Although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected. Future policy adjustments will depend on the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Michael H. Moskow; William Poole; Eric Rosengren; and Kevin M. Warsh.
 
<p>>>>No rate cuts by the Fed. . . inflation is still king after all.





Market not liking the news at all. . . <<<</p>

<p>You can't interpret the market liking or disliking the news after 30 minutes. It whiplashes around as the speculators who built up positions on the news unwind their positions.</p>

<p>In the end, the market knows the Fed can't help the credit market at this point. It may want a rate cut for temporary relieft but they know it won't help the credit market much. </p>

<p>If the housing market ever impacts the economy as a whole (ie. companies in all industries start announcing layoffs or it starts showing up in weekly economic data), then Bernanke will have to step up decisively instead of all this posturing.</p>
 
I so hope Cramer has another hissy fit. He is becoming comic relief in a scary market. Sometimes he wears props on his show. I wonder if he has a clown outfit.
 
<p>Awgee, </p>

<p> I just watched it, what a waste, it was entertaining though. I also saw that some companies immediately jumped their rates up .05% to .1%. I'm just waiting to see if we can get CD's up to 7ish% then i will go donuts! The market is not so scary, you just need to have a strong position and I think that most people here will have set themselves up into a strong position to do so....</p>

<p>good luck</p>

<p>-bix</p>
 
biscuit - Did you watch Bernanke or Cramer? Sorry, I didn't mean the market was scary for me. I am a short seller, both my nature and by position. I meant I find the market scary for the general public because they have all these bufoons pumping up stocks and there are so few resources to get accurate info. I fear the general public will once again get burned in the stock market, just as they getting toasted in the re market.
 
<p>PRICING EXPERIENCE TODAY.</p>

<p>I just priced out a 560K loan @ 78%LTV. (725k value). Stated income with verifiable assets. 788 FICO. Perfect credit history.</p>



<p dir="ltr">A 5/1 Interest Only ARM: <strong>7.5%</strong> with no discount fee (points) AND 3 year prepayment penalty</p>

<p dir="ltr">Full-Doc (which they can't do) <strong>7.25%</strong> with no discount fee (points) AND 3 year prepayment penalty</p>

<p dir="ltr">Ouch!!</p>



<p> </p>
 
<p>So...</p>

<p>"</p>

<p>I just priced out a 560K loan @ 78%LTV. (725k value). Stated income with verifiable assets. 788 FICO. Perfect credit history.</p>



<p>A 5/1 Interest Only ARM: <strong>7.5%</strong> with no discount fee (points) AND 3 year prepayment penalty "</p>



<p>---------------</p>

<p>This guy is in WAYYYY better shape than most of the people I see in the So. Cal market. He has equity, ASSETS, and GREAT CREDIT.</p>

<p>$560,000 @ 7.5% IO = $3500 a month. This is without taxes, insurance, HOA, etc. Add in taxes calculated @ 1% of 700K value = $7000 / 12 = $583.33/mo. I'm guessing HOA on a house of that value, so lets throw another $250 on there.</p>

<p>That's $4,333.33 out the door every month on that house. Add in his credit cards, auto payment, etc. and I guarantee you this guy has $6,000+ in recurring monthly expenses just on CREDIT. No auto/health insurance, gas, food, clothes, electricity, water, trash, cable, phone, cell phone, internet, etc, etc. included in there. Add those in and you are probably looking around $7500 - $8000 in recurring monthly payments... AT LEAST.</p>

<p>To pay that amount in your AFTER TAX dollars each month (and be in the black), you need to be pulling in $13,000-14,000 pre-tax PER MONTH. That's a yearly income of $156,000 - 168,000. This is assuming the applicable tax brackets (state and federal) for that income bracket - the interest writeoff. </p>

<p>Now, this is interest only, so you are NOT paying down the house on this either. LOL.</p>

<p>And if they want to SAVE any money, they need to be making MORE than the 156k-168k I am estimating. :)</p>

<p>What's the median <strong><u>household</u></strong> income in So. Cal again? 50-80K? :)</p>

<p>Thanks for playing!</p>
 
<i>"Full-Doc (which they can't do)"</i><p>

lendingmaestro - I apologize for my ignorance in advance, but every time I hear about No Doc loans, the same question keeps coming to mind. What type of income, not specifically to these folks, but in general terms, is not legitimally documentable? Do you have any examples of income for which one may have earned, but not have documentation?
 
<p>That is some serious dough for a depreciating asset.</p>

<p>My wife and I can afford those payments, but I think 750k now gives you only around 2000 square feet in an older neighborhood. I think I'll pass for now and wait until rates and/or prices settle down to more sane levels. I do want to do something else besides working to pay off my mortgage...like going on vacations, saving for retirement, funding my baby's future tuition at Stanford (he's paying his own way if he wants to go to Berkeley!) and eating steak every few weeks instead of ramen.</p>

<p>Where do y'all think the price/square foot will settle around older Northwood or the nicer area of Westpark (the ones with bigger lots that currently go for 995k listed near Harvard and Warner?)</p>

<p>R_H</p>
 
<p>Full-Doc = must verify with W2 if wage earner or tax returns if self-employed. Must verify 2 months PITI in the bank</p>

<p>Stated = Must verify employment without refernce to income. Income stated on application. Must verify 2 months PITI in the bank</p>

<p>No Ratio = No income stated on the application. Still verify employment. Must verify 2 months of PITI in the bank. This was created so to avoid the "liar loan". As a result the rates would be a little higher to the borrower. DTI is not a factor because income doesn't need to be stated.</p>

<p>No income/No Asset = Employment still verified, but no income stated and no assets stated either.</p>

<p>No Doc= No verification of employment. No assets verified.</p>

<p>These doc types are underwritten accordingly. No ratio loans exist so that a techer doesn't have to stated his.her income and lie on the application. Investors were still purchasing these loans left and right. Now our bank only offers full-doc and stated income for any loan over 417,000, regardless of credit score. We still have all doc types available if the loan is belwo 417,000.</p>

<p> </p>

<p> </p>

<p> </p>
 
recovering,





Your kid will at least be able to afford Berkeley when Stanford's tuition goes into 6 figures. All that money and still no football team to speak of. (Go Bears!)
 
Under the $417k limit, are high LTV products still available at a reasonable price? Can they still get a loan at 5% down if they are high-FICO, full doc, D/P is sourced/seasoned, 2 mos reserves, etc etc?
 
<p>oc_fliptrack </p>

<p>check out union bank, or any bank that doesn't sell the loans...I am pretty sure you can still get good rates with Union bank ifyou have good credit, full doc., etc.</p>
 
lendingmaestro - Thank you for taking the time to explain, but I fear my question was unclear. I will try and be more clear.<p>

<i>"Stated = Must verify employment without refernce to income. Income stated on application."</i><p>

Why would anyone who was employed no be able to document their income with W2s or ..., unless they were lying?<p>

<i>"No Ratio = No income stated on the application. Still verify employment. This was created so to avoid the "liar loan"."</i><p>

Again, employed but no documents? Huh? How? How does this avoid the "liar loan"? It would seem to an uninformed like myself that this "no ratio" would encourage rather than discourage liar loans.<p>



<i>"No ratio loans exist so that a techer doesn't have to stated his.her income and lie on the application."</i><p>

Under what circumstance would a teacher find it undesireable to state his or her income?<p>

I am not asking these questions to be confrontational or put you on the spot. I truly want to understand. I represent taxpayers and taxpaying entities in audits, and I can not think of a situation in which a person is employed at a salary level condusive to purchasing a home and is not issued a W2. Are we speaking of folks who are self-employed and operate on a cash basis only? If so, do they realize that making payments on a mortgage is evidence enough for the IRS to infer tax liability, and are thus negating their reasons for operating as cash only. I am not being rhetorical. These are real questions I have and would truly like to understand.<p>

Can I assume that anyone who applies for any less a than full doc loan is lying? Do you know of any examples of real income for which documentation is unavailable? Again, I am not trying to personally put you on the spot. There is just a huge hole in my knowledge.
 
<p><em>Under what circumstance would a teacher find it undesireable to state his or her income?</em></p>

<p>With an average salary of around $65k, younger &newer teachers making less, a single teacher is going to be pressed to qualify for a one bedroom condo in Irvine. </p>
 
<p>IrvineCommuter: I think Stanford waives the family contribution to tuition when you make under 60k/year...me thinks early retirement is in the works for me and da wife (or find a cash paying job!). Go Cards!</p>

<p>Awgee: I don't know the answer to all your questions, but I can think of several reasons why you have W2 but go stated income. Suppose you have good FICO, and your spouse has terrible FICO (hey...some people make mistakes, identity theft, etc.). You would be on the loan as the sole signer, and if your wife makes as much money as you, then your stated income will be true and double what you are making yourself.</p>

<p>R_H</p>
 
no_such - So what you are saying is that they must lie in order to qualify for the home they want? I am not putting a judgement on this. I just want to understand.<p>



recovering - Well, that is one situation.<p>

Does anybody have any others?
 
<p>You make a reasonable point. However I do believe that wage earners should never have been allowed to do a stated income loan. Stated income loans are for self-employed borrowers. If you are self-employed and want to qualify full-doc, you must supply your tax returns, all schudules. We all know that gross wages and the federally taxable "adjusted gross wages" are never the same.</p>

<p>If I am offering you a No-Ratio loan that you can qualify for based on assets, credit and job history then I am not asking you to lie about your income. On a No-Ratio loan, the income field is left blank. We don't care about your actual income, just the income source and its stability. You must have more assets, higher ficos and more equity to qualify. </p>

<p>If a teacher has to state his.her income @ 12k per month, an underwriter will deny the loan. You have to "state the income within reason." Just because they can't qualify on stated income doesn't mean that they can qualify for a no ratio loan however.</p>
 
<p>wow, money just got ALOT more expensive. Why on earth would you want to buy that much house? I can understand about making 165k (its not that hard), but spending the majority of your money on an depreciating asset as well as being "house poor".... sorry its a no go for me.</p>

<p>-bix</p>
 
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