Fed Drops the fed funds rate by an quarter of a point

The Federal Reserve Chairman Ben Bernanke announced today on a Sunday meeting that the central bank rate will be lowered a quarter of a point to 3.25% from 3.5%. The action was meant to provide additional liquidity to banks and lending institutions. The JPMorgan merger with Bear Stearns was also announced as well.

Should we just let the market handle the mortgage meltdown or should the government continue to act?

Hold on to your hats, this may not have any impact on mortgage interest rates at the consumer level. If you look at what this years fed cuts have done for mortgage interest rates, you will see that there really hasn't been any significant lowering of rates at all. Don't get lured into any fancy advertising that alot of the banks and lending institutions will be running.

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Citi Mortgage anounces mortgage cutbacks on 2nd mortgages

Citi Mortgage, a division of Citibank, is cutting their loan to value limits on second mortgages to 85% ltv in areas of the country that are deemed to have declining markets. This is just another symptom of the the mortgage meltdown this country is experiencing. Chase has cut their lending limits to 75% ltv on second mortgages. Six months ago both of these lenders would lend up to 100% of the value of your home.

Lenders are cautious now. You need to do your homework now if you are trying to get mortgage financing on a home. Just because you want to do something, does not mean that the banks will be willing to work with you.

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