Marc's Mortgage Matter's

On Tuesday morning (12/21), or more specifically early Tuesday morning, the first day of northern winter, a full moon passes almost dead-center through Earth's shadow. For 72 minutes across North America, we will have a lunar eclipse to greet the winter, beginning tomorrow morning at 1:33 am EST (Monday at 10:33 pm PST). If you're planning to dash out for only one quick look -­ it is December, after all -­ choose this moment: 03:17 am EST (17 minutes past midnight PST). This is when the moon will be in deepest shadow, displaying the most fantastic shades of coppery red. And for more good news, today is the "shortest" day of the year, with the sunlight only lengthening after this.

The new loan disclosures specifically the totally revised Good Faith Estimate (GFE) has become a low point in mortgage history. It is almost always totally ignored and looked at as baseless and pathethic. "40% of consumers accept the first loan offered." As one vet wrote, "Gee - no borrower has time to get the stupid new GFE form and go around to 3 other lenders and compare all the forms and make a choice. And that's if they know how to read the darn forms. Who would have guessed? Now the industry and the consumer are stuck with a form that is not only stupid, it is not used as intended. I wonder how long it will take Washington to figure out it screwed up again."

Any lender involved with the Community Reinvestment Act (CRA) should know that the FDIC issued changes to CRA regulations to support stabilization of communities affected by high foreclosure levels. The final rule is substantially the same as the proposal that came out in June, encouraging "depository institutions to support eligible development activities in areas designated under the Neighborhood Stabilization Program (NSP) administered by the U.S. Department of Housing and Urban Development (HUD)."  If you want to print out the 41 pages for some bedtime reading, CRA 

Fading fears of a double-dip recession, tax deals which may foster additional economic growth and a deflation threat which is falling behind us are all conspiring to push mortgage rates to better than five-month highs. Already slowed in a usual holiday lull, refinancing activity has plummeted in the past few weeks.

Even with the rise, there can be no doubt that interest rates remain both low and favorable. However, at a 5% level -- one we've seen numerous times over the past year -- there is virtually no pent-up demand for refinancing. As such, the 5% level is a refi-killer.

Five percent 30-year fixed-rate mortgages shouldn't be a housing market killer, though. Unlike refinancing, the decision to purchase a home has many other components than interest rate, and those other conditions remain the greater obstacle to improvement than any 5% interest rate might present.

Given what seems to be a steadying recovery, it is an open question whether the economy will need such additional stimulus over time. President Obama signed an extension of the Bush-era tax rates for the next two years which also included a 2% reduction in payroll taxes, which should collectively put millions of additional disposable dollars in the hard where they will do the most good: taxpayers. Here's hoping that rising gasoline and food prices in 2011 don't wipe out the windfall.

In recent weeks, we've written about how it's important to retain perspective about increases in mortgage rates. Not all that long ago, a five percent 30-year FRM was little more than a pipe dream which ultimately became a reality. This week, in looking though some old newspaper and magazine clips from the 1980s and 1990s, it struck us how accustomed (addicted?) to low interest rates we've become as time has gone on. Other refinance booms and opportunities have come and gone, and most of them have featured interest rates above (and sometimes well above) these levels. Unbelievable rates have given way to "only" fantastic ones, and this is the price we pay for finally exiting a terrible economic period, once which continues for far too many.

Mortgage rates and financial markets take a back set to the holidays next week. In case we don't get another chance, we'd like to wish all of our readers, clients and supporters the happiest of holidays and a fantastic new year. If you care, and some might, rates are probably done rising for the moment, at least.

By the time you read my parental discretion warning about this joke, it will be too late. I think it is quick & funny, and some would say true. I can't tell if discretion is advised or not - you be the judge.

A 3-year-old boy examined his testicles while taking a bath.
"Mom", he asked, "Are these my brains?"
"Not yet," she replied.