Marc's Mortgage Matter's

Sometimes folks ask, "How can you spit out that mortgage & real estate commentary every weekend?" I usually reply that I enjoy educating folks, and that my attention span is pretty short so I try to keep it to a 1-2 minute read, and that I like bad jokes. Who I really feel sorry for, however, are the folks who write health magazines every month. Really, how many ways can one say, "Eat less and exercise more" in a periodical? Stay out of the sun, don't drink much alcohol, get plenty of sleep, have a balanced diet... this really hasn't changed for hundreds, if not thousands of years, yet every month they sell magazines that tell people to do those things. Then they put a photo of someone that I will never look like on the cover of it to make me believe if I ate less and exercised more, I could look like that. Conversely, mortgage banking and the real estate industry change every day, so usually there is too much to write about rather than not enough.

Lending was expected to be boosted by the TARP (Gov't/Fed) money lent to banks, but there continues to be concern about the TARP monies that were lent out and then paid back, or not paid back, depending. The Congressional Oversight Committee, whose duties include reviewing the execution of TARP and other facets of the financial services rescue, has reported that $205 billion was disbursed under the program to 707 banks. Seventeen of 19 banks with assets greater than $100 billion received 81% of those funds, and 690 banks with assets less than $100 billion received the rest of the money. All of the 17 large banks have repaid their TARP investments while less than 10% of the smaller banks have done so, and about 15% of the small banks have missed a payment.

With 17 of them, what does Florida lead the nation in? The answer: failed banks. Regulators have closed 96 banks so far this year, six last Friday. The FDIC was named receiver and found buyers for all of the failed banks, agreeing to absorb 80% of losses on the riskier asset pools acquired by other institutions. Heck, who wouldn't want that deal?

Who says that I am not well-read? In a story from the Highland Times (Southern California) comes a story stating that in the last 18 months, banks have sold more homes than home builders have! Statistics show that nationwide, in late 2006 New Homes accounted for nearly 20% of all transactions, but in early 2009 the new home share was down to 14%, and starting in that month there were more REO sales in the preceding 12 month period than new homes sold. So for the last year and a half, banks have sold more houses than home builders. However, despite the confidence numbers from last week, in some areas home builders with cash (Standard Pacific, Taylor Morrison, etc.) are now buying lots, which, given the lag time to build (1 ½ - 3 years) points to some optimism about building in the future.

History buffs know that the dollar slang term "buck" came about in the mid-1700's when deerskin were used for currency. Here in the U.S., during the Confederacy's existence, paper money was not only issued by the central Confederate government in Richmond but also by the individual Southern State governments, local municipalities, numerous private banks and even merchants. As in turns out, a recent NPR story stated that Germany now has 12 "local currencies" in circulation. The euro is now being used by 16 out of the 27 EU members, including Germany, but regional businesses are using local currencies in addition to the euro. Similar to script, the money is connected to a region - you can only spend it there - and thus promotes a "buy local" mentality. The currencies are not backed by any government, though some banks are offering loans and checking accounts in regional currencies. Obviously Germans are not wild about using their savings in bailing out less-economically responsible European nations.


I bring this up because this past Friday, the Committee of European Banking Supervisors will release the initial results of stress tests conducted on 91 banks. Investors, analysts and bankers worldwide are anxiously awaiting the results, with some industry observers saying the tests' success depends on details offered by regulators about how they came to their conclusions. And their opinion about it, especially on a day when there is no economic news here in the United States, may move both the stock and bond markets. In fact, the world had some strong economic news out of Europe Thursday night, causing our rates to ease higher on Friday morning. Well folks, it did come out and yup most European banks passed those stress test, many rather nicely.

Low mortgage rates are providing just a slight bit of cheer in what is an otherwise dull and sometimes downright gloomy pattern of recovery here in the US of A. The summer bummer of weak economic recovery should continue next week. Mortgage rates again stand at nice lows, and what's to stop the downward march? Will appetites for low-yielding mortgage paper continue to develop, even as new risks to home valuations may be forming and economic growth faltering? It's hard to come up with any sound reasoning why it should, but with stock markets finding a little footing, we might just hold rates pretty steady next week.

Two ladies were talking in Heaven.

1st woman: "Hi! Wanda."

2nd woman: "Hi! Sylvia. Imagine seeing you here - what happened?"

Sylvia: "I froze to death."

Wanda: "How horrible!"

Sylvia: "It wasn't so bad. After I quit shaking from the cold, I began to get warm & sleepy, and finally died a peaceful death. What about you?"

Wanda: "I died of a massive heart attack. I suspected that my husband was cheating, so I came home early to catch him in the act. But instead, I found him all by himself in the den watching TV. "

Sylvia: "So, what happened?"

Wanda: "I was so sure there was another woman there somewhere that I started running all over the house looking. I ran up into the attic and searched, and down into the basement. Then I went through every closet and checked under all the beds. I kept this up until I had looked everywhere, and finally I became so exhausted that I just keeled over with a heart attack and died."

Sylvia: "Too bad you didn't look in the freezer---we'd both still be alive."