Marc's Mortgage Matter's

Did you ever wonder why earrings became so popular with men?
A man is at work one day when he notices that his co-worker is wearing an earring.
The man knows his co-worker to be a normally conservative fellow, and is curious about his sudden change in "fashion sense".
The man walks up to him and says, "I didn't know you were into earrings."
"Don't make such a big deal, it's only an earring," his friend replies sheepishly.
He falls silent for a few minutes, but then his curiosity prods him to ask, "So, how long have you been wearing one?"
"Ever since my wife found it in my truck." 

Wanna buy a house? Call the agencies - Fannie & Freddie's combined inventory of foreclosed residential property has quadrupled in just three years and now stands at $24 billion, and the number of properties on their books (over 241,000) has increased fivefold. That's roughly a third of the total U.S. portfolio of repossessed homes. And the numbers show no signs of declining, since it seems that nationwide foreclosures are going up faster than buyers can be found. Let me think about that supply versus demand curve...

Regarding the agency's glut of homes owned, and to be sold, I received a note: "If I owned 241,000 homes, I'd be thinking of renting them, and giving the lessee an option to purchase after 1, 2, or 3 years. 241,000 homes at a thousand per month works out to about $2.8 billion per year. Get some folks in there, using the plumbing, cutting the lawn. Although the agencies aren't geared that way, maybe they should think outside the box and set up a huge leasing program."

As the economy slowly heals, boosted to a degree by payroll-tax changes and government programs, interest rates in general and mortgage rates specifically may find some reason to begin an upward march. For the moment, the fragile and uneven state of the recovery should serve to keep things fairly stable, at least until mounting signs of entrenching growth begin to show. They aren't apparent as of yet.

The Federal Reserve Open Market Committee met this week, and the statement which closed the end of their two-day affair was much the same as the last one. The economy is firming gradually, inflation remains below levels they would like to see, labor markets are still weak and the program of purchasing Treasury securities remains in force. It is unclear how much benefit the program is adding to growth, but having started down this path the Fed is unlikely to discontinue it earlier than its scheduled sunset by the end of the second quarter of 2011.

That said, a lack of significant improvement in the residential real estate market is keeping growth lower than that observed during other recoveries, as the fallout from the housing and financial markets is yet on-going. New Home Sales have been affected to a greater degree than existing homes, and closed the year on a weak but improving note. In December, an annualized 329,000 new homes moved though the market, a nice bounce from a near-record-low 280,000 sold in November. The actual number of remaining units built but yet unsold eased by 5,000 to 190,000, which is a 6.9 month supply at the present rate of sale. That inventory number has been tricking down very slowly, and probably represents the most difficult to sell properties; the rest of sales are likely those properties more in tune with today's market realities.

Perhaps moods will improve as the labor market heals. New unemployment claims had been running at levels suggesting that a more durable break below the 400,000 level was in the offing, but wicked winter weather seems to have mixed up the numbers. During the week ending January 22, some 454,000 new applications for benefits were filed, up from 403,000 the week prior. With stormy weather from the deep south right up to Maine over the past couple of weeks, it may be that some folks didn't or couldn't file in a timely fashion, or that projects are on hold pending better weather. We may have to wait a little to see how the trend is actually progressing.

After last fall's changeable market -- preparing for the Fed's program and trying to understand how it fits into the broader economic puzzle -- the mortgage market was been waiting for some clarity on what may become of Fannie Mae and Freddie Mac. A study from the Treasury Department was due at month's end but was kicked back a couple of weeks. Regardless of any recommendations, it is sure to spark a contentious debate about the future of mortgages and housing finance in this country for some time to come. Depending upon the direction of the discussion and who is doing the talking at any given moment, there may be some or no discernable effect on mortgage rates.

A full plate of economic news is due out next week, ranging from the ISM surveys of manufacturing and service trends, personal income and expenditures, vehicle sales and construction spending, not to mention the January employment report. We expect that mortgage rates will probably increase by a few basis points, perhaps a bit more if the ISM services indicator moves higher or job creation comes in hotter than forecasts.

I never thought about this until an elderly acquaintance exclaimed, "I'm rich!
Gold in the Teeth
Silver in the Hair
Crystals in the Kidneys
Sugar in the Blood
Lead in the "rump"
Iron in the Arteries, and...
An inexhaustible supply of Natural Gas.
I never thought I'd accumulate such wealth."