Marc's Mortgage Matter's

Repeat after me: Fed Funds are set by the Federal Open Market Committee, don't vary daily, and have no direct bearing on 30-yr mortgage rates. 30-yr mortgage rates are set by supply and demand through the bond markets, vary every day, and prices are adjusted by what investors & servicers want to see flowing into their portfolios.

A quick note on the House (not the Senate!) passing the Financial Overhaul bill: The legislation includes significant reforms to monitor systemic risk, improve stability of the financial markets, establish and administer a new agency, the Consumer Financial Protection Agency, that will be responsible for regulation and enforcement of consumer protection laws, and reform laws governing capital markets and credit reporting agencies. The House voted against an amendment that would have permitted bankruptcy judges to modify ("cram down") mortgages during Chapter 13 bankruptcy proceedings.

New York just enacted a new law that expands on the governor’s subprime lending reform law enacted last year in an attempt to assist homeowners on the verge of foreclosure and minimize the impacts foreclosures have on communities. It expands the 90-day foreclosure notice currently sent for subprime loans (however one defines those these days) to all home loans. It also requires the lenders who serve the notice to make a regulatory filing with the Banking Department within three days with specified information to allow it and the Division of Housing and Community Renewal (DHCR) to provide assistance to homeowners. The law expands the mandatory settlement conference to include borrowers of all home loans – not just subprime. The law requires that tenants receive written notice of the change in ownership of the property after foreclosure and allows them to stay for 90 days or the remainder of the lease. Under the law, plaintiffs in a foreclosure action who obtain judgment of foreclosure and sale must keep the foreclosed property. The law also prohibits distressed property consulting services from accepting upfront fees.

As expected, mortgage rates edged higher this past week. Some better economic news, some lingering glow from November's employment report last Friday, and light investor demand for new Treasury debt boosted rates a little. We may see some hangover from that next week, if the relationship between the 10-year Treasury yield and average mortgage rates holds true.

Numbers which suggest the economy is healing remain few and far between, but there is a growing number of sporadic signs that we're heading in the right direction. For example, the months-long drawdown in inventories to get stockpiles in better balance with weak final consumer demand does seem to be coming to an end. That augurs well for new orders to help lift factory activity, and production should continue to find new footing.

With the holiday season fully underway, mortgage rates probably have little room to wander, even if the economic calendar next week is more full than was this week's. Inflation reports in the form of the Producer and Consumer Price Indices are due, we'll get a look at the housing markets from the a builder and construction perspective, and a couple of indicators covering factory activity.

Blonde Diary & Cookbook:
It's fun to cook for Tom. Today I made angel food cake. The recipe said beat 12 eggs separately. The neighbors were nice enough to loan me some extra bowls.

Tom wanted fruit salad for supper. The recipe said serve without dressing. So I didn't dress. What a surprise when Tom brought a friend home for supper.

A good day for rice. The recipe said wash thoroughly before steaming the rice. It seemed kind of silly but I took a bath anyway. I can't say it improved the rice any.

I found an easy recipe for cookies. It said put the ingredients in a bowl and beat it. There must have been something wrong with this recipe. When I got back, everything was the same as when I left.

Tom's folks came to dinner. I wanted to serve roast but all I had was hamburger. Suddenly I had a flash of genius. I put the hamburger in the oven and set the controls for roast. It still came out hamburger, much to my disappointment.

GOOD NIGHT DEAR DIARY. This has been a very exciting week! I am eager for tomorrow to come so I can try out a new recipe on Tom. If I can talk Tom into buying a bigger oven, I would like to surprise him with a chocolate mousse.