Marc's Mortgage Matter's

My clock radio went dead, so I was faced with the usual question, "Do I pay to have it repaired, or do I buy a new one?" I went to a local repair shop, and on the door was a sign that said, "WE CAN REPAIR ANYTHING. (PLEASE KNOCK - THE BELL DOESN'T WORK!)" Needless to say, I have a new clock radio. 

Monopolies are not dead. Once a week our garbage is picked up, usually early in the morning. (Sometimes, if I go outside, the garbage man will ask me what I am doing up at 4:30AM. Rather than embarrass myself by telling him that I write a commentary about the mortgage industry, I tell him I'm still liquored up.) In San Francisco, the cost for this service is $37 per can per week. That seemed pretty steep to one contractor, who canceled his service, had his neighbor do the same, and then took their garbage to the dump and paid $40. Word spread, and soon many neighbors were paying the guy $10 per household for him to take their garbage, saving everyone over a thousand a year. Unfortunately for free enterprise, the local garbage company and the union found out what was happening, and convinced the city to pass a law banning this type of activity.

Distressed home sales are once again approaching a one third share of the real estate market for existing homes, depressing home price trends and indicating that the housing market is not yet out of the woods. According to a report issued by First American CoreLogic, the sale of homes that could be considered distressed accounted for 29% of all home re-sales in January. This was the second highest share recorded for these sales, exceeded only by the peak of 32% reached a year ago, and compared to periods prior to the fourth quarter of 2007 when distressed sales constituted less than 5% of the resale market. Obviously these numbers are more in line with areas like California and Florida. The Tri-State area seems to be holding up with much better numbers.

Some time ago my daughter asked me what my FICO score was. Somewhat taken aback, I replied, "Eight". She glared at me as only a 15-yr old girl can glare, and volunteered that her math class had learned about them that day, and she wanted to know my score. I don't know what my score is, but it did remind me that FICO, like Band-Aid or Kleenex, has become a generic symbol of credit worthiness. Scores can range from 300-850 and is a statistical calculation which is based upon payment history (35%), credit utilization (30%), length of history (15%), credit type (10%), and recent credit checks (10%). Items stick around for seven years; bankruptcy for ten. Maxing out a card, a 30-day late payment, debt settlement, foreclosure (150 point ding) or bankruptcy (150-200 point hit) all negatively impact FICO. Sometimes folks wonder about whether or not a short sale hurts your credit score as much as a foreclosure, and apparently it depends on whether the borrower stays current on their payments and how the lender reports the sale (try for "debt repaid in full").

RealtyTrac, whose press releases never seem to bring good news lately, reported that 1st quarter foreclosure action on 932,000 properties was up 16% from a year ago and was up 7% from last quarter. Nevada residents can continue to chant "We're #1, we're #1" with the 13th straight month of leading the nation in its foreclosure rate: 1 in every 33 housing units in the state was subject to a foreclosure filing. Arizona was #2, Florida #3, and ten states accounted for 70% of the overall activity. California had 216,000 properties subject to a foreclosure notice and accounted for 23% of the nation's total. Yikes!

The average rate for FHA-backed 30-year fixed rates rang in at 5.25%. The FHA program is estimated to be capturing as much as 35% of new originations (mortgage loans), as it is the only market response available for less-than-stellar borrowers or those with small down payments.

Next week we'll see what happened to new and existing home sales in March. Will there be sufficient evidence to determine whether the tax credit deserves to be extended again? Joining that question will be durable goods orders, the Producer Price Index, and a few other nuggets of data. Rates spent the better part of this week on a steady-to-downward bent, relative to the last couple of weeks, and we should start next week on a low note. Most likely, we'll end up about flat at the end of the week.


Three blondes were all applying for the last available position on the Texas Highway Patrol. The detective conducting the interview looked at the three of them and said, "So y'all want to be cops, huh?"

The blondes all nodded.

The detective got up, opened a file drawer, and pulled out a folder. Sitting back down, he opened it, pulled out a picture, and said, "To be a detective, you have to be able to detect. You must be able to notice things such as distinguishing features and oddities like scars and so forth."

So saying, he stuck the photo in the face of the first blonde and withdrew it after about two seconds, "Now," he said, "did you notice any distinguishing features about this man?"

The blonde immediately said, "Yes, I did. He has only one eye!"

The detective shook his head and said, "Of course he has only one eye in this picture! It's a profile of his face! You're dismissed!"

The first blonde hung her head and walked out of the office.

The detective then turned to the second blonde, stuck the photo in her face for two seconds, pulled it back, and said, "What about you? Notice anything unusual or outstanding about this man?"

"Yes! He only has one ear!"

The detective put his head in his hands and exclaimed, "Didn't you hear what I just told the other lady? This is a profile of the man's face! Of course you can only see one ear! You're excused too!"

The second blonde sheepishly walked out of the office.

The detective turned his attention to the third and last blonde and said, "This is probably a waste of time, but..." He flashed the photo in her face for a couple of seconds and withdrew it, saying, "All right, did you notice anything distinguishing or unusual about this man?"

The blonde said, "I sure did. This man wears contact lenses."

The detective frowned, took another look at the picture, and began looking at some of the papers in the folder. He looked up at the blonde with a puzzled expression and said, "You're absolutely right! His bio says he wears contacts! How in the world could you tell that by looking at his picture?"

The blonde rolled her eyes and said, "Well, Hellooooooooooooo! With only one eye and one ear, he certainly can't wear glasses."