Marc's Mortgage Matter's

Year to date statistics on Airport pat-down screening from the TSA:

Terrorist Plots Discovered 0
Transvestites 133
Hernias 1,485
Hemorrhoid Cases 3,172
Incontinence 6,418
Enlarged Prostates 8,249
Breast Implants 59,350
Natural Blondes 3

What do attorneys read about all day? LegalInfo. There is no word on whether or not the victim was in the mortgage business, but my bet is that attorneys will be involved in whatever results.

Fraud - in New Jersey? Say it ain't so. Taya Romano, a former New Jersey property developer, has admitted running a mortgage fraud scheme that generated $4.7 million in fraudulent loans. "Prosecutors say the scheme involved 13 distressed properties she acquired to resell in Paterson and East Orange. She recruited buyers and secured loans for them using falsified bank statements and other documents."

A trader from Cantor Fitzgerald wrote, "In order to win in 2011, you need to be right about the timing of the economy turning around. In my mind it's still all about the jobs market. Equities and commodities are bulled up. Wall Street research analysts are calling for stocks to be up about 10% in 2011. What a shocker - has Wall St. consensus ever called for a down stock market?"

Perhaps the biggest question facing the housing market in 2011 is, "Is this the year housing actually hits bottom?" Of course, all real estate is local, and many markets have rebounded. But some economists feel that, very broadly speaking, home prices are expected to fall another 5% in 2011. Last week the Wall Street Journal published four housing-related issues to keep an eye on in 2011, which really haven't changed much. #1 is jobs. "Who's going to buy a house when they're not certain they'll have a job in six months and when it looks like home prices are likely to fall another 5%?" #2 is delays in the foreclosure process. Much of this has blown over, but still regulators and state prosecutors are in the midst of a series of reviews and investigations that could shed more light on abuses, such as misapplied or excessive fees, by servicers, their attorneys and other third-party vendors. According to the WSJ, #3 will be whatever comes out of Washington DC in terms of Freddie & Fannie, the Dodd-Frank Act implementation, what does a "qualified residential mortgage" mean in terms of the 5% risk retention, etc., etc. And #4 on the list is underwriting guidelines. 90% of production now is related to some type of government agency - if those change, private lenders are going to have to step up lending without additional fees, government regulations, down payments, etc. It is a tall order, given the overlays already in place. Oy!

Another issue is the debt ceiling. The US currently has roughly $13.9 trillion in debt, so the current debt ceiling of $14.3 trillion will be hit early this year, which means that Congress will have to vote on raising the debt ceiling. Reducing deficits, whether it is with the United States, states like California, or with a family, is rarely easy to do. And of course this month we find out the first draft of the plan for GSE (Government Sponsored Enterprise) reform. But given the current state of the housing market, many analysts feel that the government will not suggest anything major.

The economy continues its trend of firming growth, but there are few indications that it is poised to rocket forward. After a late-fall and early-winter rise, mortgage rates have largely levelled off. The impetus for the rise has been a warming economic tenor after a late-summer swoon. However, in order for interest rates to continue to rise -- or even hold these levels -- we need to see continued upward progress or growing inflation concerns, or both. At present, we don't seem to have either of those conditions.

There can be no doubt that the economic climate improved as we closed 2010. November's data was of a better sort than was October's and December's reports are pointing to continued improvement, too. Interest rates spiked higher amid expectations of a considerably faster growth pattern, but that pattern has not yet emerged.

On Friday, then, there was a little disappointment when the Labor Department noted that just 103,000 new jobs were created during the month. The prior two months were moved upward by a total of 71,000 hires, and discounting the census-led bump (and subsequent decline) the pattern over the last three months is the best since before the recession got underway. The improvement in hiring is encouraging, but yet still mild.

A more curious note was that the unemployment rate fell by four tenths of a percent to 9.4%. This figure is determined by the household survey, where folks are counted as unemployed if they are looking for work (but not included if they have given up). The decline is probably a combination of factors: it is possible that some people found jobs at firms which aren't included in the establishment survey, coupled with some folks have stopped looking for jobs which aren't there and even some seasonal adjustments to the figures. The decline is of course welcome, but the size of the change does seem suspiciously large.

An improving economy is starting to see somewhat more borrowing by consumers. While revolving credit balances continue to decline, installment borrowing, used largely for autos and such, has begun to move higher. In November, consumer borrowing balances expanded by $1.3 billion, a downshift from the $7B seen in November. It was the first time in a long time that there have been consecutive positive numbers seen in consumer borrowing, and the gain came as installment debt rose by $5.6B for the month. Credit cards usage continues on a yet-unbroken downward trend, with another $4.2B retired during the month. Some of the decline in revolving usage since the recession began has been due to lower usage by consumers and some due to lenders charging off debt which isn't ever going to be repaid.

Mortgage rates appears to have found a new range in which to wander, awaiting clues to push them more strongly in one direction or the other. Given the increasing number of positive reports, upward is the more likely direction of the two, but there is little reason to expect much of that in light of the challenges which yet face the economy. As such, we don't expect much change in mortgage rates for next week.

While on a road trip, an elderly couple stopped at a roadside restaurant for lunch. After finishing their meal, the man paid, and they left the restaurant and resumed their trip.
When leaving, the elderly woman unknowingly left her glasses on the table, and she didn't miss them until they had been driving for about forty minutes.
By then, to add to the aggravation, they had to travel quite a distance before they could find a place to turn around in order to return to the restaurant to retrieve her glasses.
All the way back, the elderly husband became the classic grouchy old man.
He fussed and complained, and scolded his wife relentlessly during the entire return drive. The more he chided her, the more agitated he became.
He just wouldn't let up for a single minute.
To her relief, they finally arrived at the restaurant.
As the woman got out of the car, and hurried inside to retrieve her glasses, the old geezer yelled to her, "While you're in there, you might as well get my hat and the credit card".