Marc's Mortgage Matter's

The FBI is investigating a possible cyber attack on Citigroup. This is a serious issue, because next time the hackers might target a bank that actually has money. (Just kidding!)

But seriously folks, JPMorgan Chase & Co., the second-largest U.S. bank by assets, announced last week that its fourth-quarter profit more than quadrupled. Net income increased to $3.28 billion. JPMorgan was the #1 underwriter of stocks and bonds in the US last year, and income from that more than helped offset loan losses in consumer banking and credit cards. And we all know the impact that they’ve had on mortgage lending. Jamie Dimon told investors last month that the credit-card unit could lose about $1 billion a quarter in the first half of 2010, since defaults typically track unemployment. 

So what are brighter minds than mine saying about the economy? Well, private payrolls are still contracting, the Fed has not changed its stance too much in several months, manufacturing is picking up a little as opposed to construction spending which is not, and auto sales are picking up a little, as is service sector activity. Most believe that rates will move up, but not much, in the first part of 2010! Last week rates were a tad lower at best but still tough as stellar credit is needed for best rates or a no point mortgage. Loans locked/closed this past week averaged 5.50% nationwide after the dust settled.

As mentioned last week, everyone is chewing on that unemployment data. We have over 15 million unemployed here in the US, and the length of time of unemployment continues to climb – it is now up to 20.5 weeks. Would you hire an underwriter who had been out of work for the last 5 months? (Well, maybe they could use the break…). The longer a worker is unemployed, the less relevance their skills have to employers looking to hire, and this can become a big problem.

Right now, the futures market is pricing in an 85% chance that the Fed keeps rates somewhere between 0% and .25% through the end of April. With all of the deficit spending going on, not to mention the flood of money that the Federal Reserve has put into the economy, why isn’t inflation (and interest rates) out of control? The deficit spending money has primarily gone into counteracting the sharp decline in consumer and business activity. Our government is borrowing more, but folks like you and me, and businesses, are borrowing less. Besides, many banks are holding on to the money rather than releasing it into the economy in the form of loans. On top of that, productivity is high, wages are stagnant, and overall there is slack in the economy – so sky-high inflation and rates are a long way off. And, if you think about it, in almost the last 100 years here in the United States, inflation has only been a big issue in the 1970’s.

ESPN has announced that they are launching a 3D sports network. Industry analysts say this will absolutely revolutionize the way Americans don't watch soccer.

After being interviewed by the school administration, the prospective teacher said, “Let me see if I've got this right.
“You want me to go into that room with all those kids, correct their disruptive behavior, observe them for signs of abuse, monitor their dress habits, censor their T-shirt messages, and instill in them a love for learning.
“You want me to check their backpacks for weapons, wage war on drugs and sexually transmitted diseases, and raise their sense of self esteem and personal pride.
“You want me to teach them patriotism and good citizenship, sportsmanship and fair play, and how to register to vote, balance a checkbook, and apply for a job.
“You want me to check their heads for lice, recognize signs of antisocial behavior, and make sure that they all pass the final exams.
“You also want me to provide them with an equal education regardless of their handicaps, and communicate regularly with their parents in English, Spanish or any other language, by letter, telephone, newsletter, and report card.
“You want me to do all this with a piece of chalk, a blackboard, a bulletin board, a few books, a big smile, and a starting salary that qualifies me for food stamps.
“You want me to do all this and then you tell me. . . I CAN'T PRAY?”