Fannie Mae's chief economist, however, is warning that the United States has a 40% chance of slipping into a double-dip recession in 2012. Recently Doug Duncan predicted a 50% chance of a double-dip recession next year, due to persistently high unemployment and the ongoing housing slump. But an uptick in job growth and stronger automotive and retail sales forced Duncan to revise his dour forecast slightly upward. He does not anticipate the housing market to fully rebound before 2015. And he expects to see plenty of contagion from Europe. One of the major problems is the housing market, he says. In past downturns, home sales have led a recovery, but this time around low interest rates have not pulled mortgage lending or consumer sentiment out of the doldrums. Chronically high unemployment over the next decade and weak income growth will continue to expert pressure on housing prices, he says: "Until employment picks up, you won't see any improvement in housing."

Rarely do forecasts come true 100% of the time, however, and there were some from last year that did not. There was no double-dip recession in 2011, and the year is ending on a positive note with the U.S. economy is growing at an estimated 3.5-4% annualized pace in the fourth quarter. The European currency union did not come apart in 2011, although it had a few near-death experiences requiring multiple summits. The 11 countries that hitched their wagon to the common currency in 1999 and the 6 that joined subsequently are still together. About a year ago banking analyst Meredith Whitney's forecast of a large number of municipal defaults failed to materialize, fortunately, with less than $2 billion going into default according to a report from Merrill Lynch. In fact, the U.S. Census Bureau just reported that state and local government tax collections rose 4.1 percent in the third quarter from a year earlier, the eighth consecutive increase.

Anyone completing a course in microeconomics would find great difficulty applying what they learned about competition to the home mortgage market. The market meets the major requirement of a competitive market in having many buyers and many sellers, but the benefits associated with competitive markets are conspicuously lacking. Instead of the expected single price that barely covers the sellers’ costs and is available to all buyers, mortgage prices are all over the lot. Some borrowers pay competitive prices, but many pay more.

The inability of borrowers to shop effectively and the complex arena of mortgage loans is exploited by many lenders and originators using a variety of unsavory practices. One popular method that typically screws the borrowe(S) is Low-Ball Scamming. That is the practice of quoting a price to a borrower below the price the lender is actually willing to accept. The purpose is to be selected by borrowers who believe they can shop price. Low-balling is endemic on internet-based referral sites which display price quotes by dozens or hundreds of lenders. Rate shoppers beware!

IF your New Year’s resolutions include buying a house or refinancing, the Federal Reserve has you covered. It has committed to keep long-term interest rates low through next year, so a 30-year mortgage will be pegged about where it is now — 4.32 percent in New York — at least through spring, said Frank E. Nothaft, the chief economist at Freddie Mac.

Rates are very much at the bottom, and they may start inching up in the second half of the year. If you’re planning to refinance, do it sooner rather than later.

In order to cash in fully on some of the lowest interest rates ever recorded, buyers and owners need to start taking steps now, experts say. Rather than look for a house you really want, they suggest first finding out how much money you can afford to borrow, and what you can do in the next three to six months to improve your creditworthiness.

Sometimes it takes a few extra months to get your ducks in a row, particularly if there are mistakes or blemishes on your credit report. If your score is below 700, your mortgage interest rate could be a quarter to a half percentage point higher than for those with stronger scores, experts say.

Start by ordering copies of your credit reports and reviewing them for inaccuracies or disputes. Experts suggest doing this a few months in advance, if possible, to give yourself ample time to fix any issues, like an inadvertently missed payment or an address error.

Do not close any credit accounts now; doing so can reduce your score by as much as 60 points, banks like to see two to four accounts in the applicant’s name.

Once your credit score is established, identify a mortgage banker or broker whom you may want to work with. Ask friends, people in your religious or social circles, for recommendations. Someone that is highly recommended by such circles typically result in the most favorable outcome from beginnning to end.

Determine what your down payment and other out-of-pocket costs will be as you figure out what you can afford to buy. Use a mortgage calculator, or ask the mortgage officer to give you a range that would be comfortable.

Closing costs may be more difficult to estimate because they usually include prepaid real estate taxes and various fees for title insurance, mortgage taxes and more. Total closing costs in 2010 on a $200,000 mortgage were $3,843 in Connecticut and $6,183 in New York state, according to research by Bankrate.com in June.

Those figures exclude association fees, prepaid items and state taxes, which in New York City and five Boros can run 1.9 percent of the loan value for the mortgage recording tax.

It is a good idea to discuss your plan to buy a home with a financial planner or accountant. Your tax adviser may be able to guide you on tax deductions and decisions for your 2011 return. Some mortgages, including those offered by the Federal Housing Administration and those made to self-employed individuals, require two years of tax returns.

In those cases, taxpayers may want to be “a little less aggressive” with deductions so the income figure looks stronger.

Finally, keep an eye on those interest rates. We expect the 30-year fixed mortgage rate to end the year “well below 5 percent” — which could still mean a 0.75-point increase a year from now. 

Note: I tend to agree with all this relevant information here, and will simply add that you can contact me direct, and I will likely be able to assist you in advising what measures are needed to finance a new home or what needs to be done and addressed to down the road purchase a new home or/and refinance your existing mortgage.

Amidst other notable items -- crashing markets and tremendous natural disasters among them -- 2011 might also become known as "the year of record low mortgage rates". Not since the early 1950s -- perhaps beyond -- have mortgage rates plumbed these depths.

We begin 2012 with fixed interest rates almost a full percentage point below where we began 2011, at levels which not only promote affordability and refinance opportunities, but also at ones which are starting to warm up the housing market. Housing has been a drag on the economy for several years now; forecasts call for continued pressure on home prices in 2012, but that's to the benefit of potential homebuyers, if a detriment to sellers.

Mortgage rates should continue to be a strong support for housing, even if they don't set new records repeatedly in the coming year.

Next week is again a holiday-shortened affair, but unlike this week, is crammed full of fresh economic data. Auto sales, the aforementioned ISM and employment report, construction spending and more are due. Rates seem likely to start the week low but firm a little toward the end, perhaps, especially if the ISM and employment report are a little warmer than forecast. We will likely see a few basis point upward bias at best.

Here's wishing all associates, customers and friends a happy, healthy and prosperous 2012. 

A man had just settled into his seat next to the window on the plane when another man sat down in the aisle seat and put his black Labrador Retriever in the middle seat next to the man.
The first man looked very quizzically at the dog and asked why the dog was allowed on the plane.
The second man explained that he was from the Police Drugs Enforcement Agency and that the dog was a 'sniffing dog'.
"His name is Sniffer and he's the best there is. I'll show you once we get airborne, when I put him to work."
The plane took off, and once it has leveled out, the Policeman said, "Watch this."
He told Sniffer to 'search'.
Sniffer jumped down, walked along the aisle, and finally sat very purposefully next to a woman for several seconds.
Sniffer then returned to his seat and put one paw on the policeman's arm.
The Policeman said, 'Good boy', and he turned to the man and said, "That woman is in possession of marijuana, I'm making a note of her seat number and the authorities will apprehend her when we land."
"Gee, that's pretty good," replied the first man.
Once again, the Policeman sent Sniffer to search the aisles.
The Lab sniffed about, sat down beside a man for a few seconds, returned to its seat, and this time he placed two paws on the agent's arm.
The Policeman said, "That man is carrying cocaine, so again, I'm making a note of his seat number for the police."
"I like it!" said his seat mate.
The Policeman then told Sniffer to 'search' again.
Sniffer walked up and down the aisles for a little while, sat down for a moment, and then came racing back to the agent, jumped into the middle seat and proceeded to defecate all over the place.
The first man was really disgusted by this behavior and couldn't figure out how or why a well-trained dog would behave like that. So he asked the Policeman, "What's going on?"
The Policeman nervously replied, "He's just found a bomb."