Marc's Mortgage Matter's

It is a fact of life that after Monday and Tuesday even the calendar says "W T F..."  That's what I thought after last week.

"All real estate is local" as they say. How is the Lake Tahoe market in California? Well, for starters, the new Ritz Carlton has received a notice of default. The NOD came about a month after its developer put almost $1 billion worth of other real estate development in that area (Northstar) into bankruptcy - over-building in a luxury market. Units are being sold at steep discounts, and the hotel property (not the Ritz company) is behind on almost $19 million in payments. PuttinontheRitz And speaking of foreclosures, celebrities are not immune: NicolasCage's home is in foreclousre and up for grabs!

What do California, Florida, Nevada, and Arizona have in common? All 20 of the large metropolitan areas with the highest rates of foreclosures during the first quarter were located in these states. RealtyTrac's research showed that the four each had at least one metropolitan area with a population of 200,000 at the top of the 206 city list. California accounted for ten positions, Florida seven, Nevada two and Arizona one. On the "good news" side, however, 14 of the top 20 areas and eight of the top ten reported a decrease in foreclosure activity from the same quarter in 2009, mostly due to government intervention and other non-market influences.

Turning to Greece, since that situation is certainly impacting our markets, the fear that a) the problems will spread beyond Greece, b) Greece may leave the 11-yr old single currency "euro-zone, or c) this is the beginning of the entire euro experiment are causing a drop in the value of the euro and a rally in the dollar. (Not that the dollar should be in great shape, but hey, we'll take what we can get.) A general strike shut down Greek airports, tourist sites and public services and some 50,000 demonstrators marched against the planned public spending cuts and tax rises, demanding that tax cheats and corrupt politicians be put on trial. Off with their heads!


So what does it mean to our mortgage business (rates) if Europe "tightens its belt"? This would actually continue to help our rates since it would slow the recovery in Europe, reduce the chance of inflation around the world, and allow our Fed to keep short-term rates low (monetary policy to be more accommodative) for longer than expected. A stronger US dollar is good for keeping inflation down.

I'm always slightly terrified when I exit out of Word and it asks me if I want to save any changes - which I swear I did not make any changes to. Pressing an errant key on a computer's keyboard can lead to all kinds of issues, and this past Thursday that supposedly happened. Media reported that someone, or something, at a bank (CitiBank is most often mentioned) in what was supposed to be a $16 million sale on an S&P 500 futures-linked contract turned into a $16 billion sale. Darn those zeros. Once computers within the automatic trading systems saw that amount of selling, more selling kicked in, leading to a vicious cycle.

Within seconds Procter & Gamble, because P&G is one of the single largest components of the S&P 500 average, dropped about 10 points (from the low $60's to the low $50's), but by the close of trading it was back into the low $60's again. Given the crisis in Greece, will people really be buying fewer paper towels and Crest? Anyway, the issue is under investigation, but the Dow Jones Industrial average dropped 990 points (almost 10%) at its low point - was the biggest intraday point drop in its history of the Dow Jones industrial average. The major averages all closed down more than 3%. US investors lost, and then gained, more than $1 trillion in net worth.

A wild week in global markets overshadowed some good news about the American economy. The ensuing rush to safe-haven investments, including gold and US Treasuries, has provided considerable benefit for mortgage shoppers. Ten-year treasury yields dropped sharply this week, pulling mortgage rates back down. Average rate locks this past week were in the 5-5.25 range. Monday morning will likely find rates higher!

After a long runup over the past couple of months, stock markets have been a little uneasy in the last few weeks due to growing concerns about the Greek debt market crisis. Worries that these debt-default troubles would spread to Spain and Portugal, and possibly beyond, have all been permeating under the surface -- but with some benefit to US Treasury issues.

Thursday seemed like it would be a "normal" day, relative to the recent pattern of weaker equity markets, although into the typical mix was thrown an UK election and discussions on Capitol Hill about financial market reform. Fear and concern have certainly been a component of the marketplace of late, but no one could have been prepared for a nearly-1,000-point drop in the Dow Jones Industrial Index, apparently triggered by one (or more) incorrect 'program' trades. That cascade created outright panic, at least for a time, and wariness remains the order of the day today.

Posted this last year too - here ya go again - I love this classic!

Most people don't know that in 1912, Hellmann's mayonnaise was manufactured in England.

In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico, which was to have been the next port of call for the great ship after its stop in New York.
This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was lost forever.
The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great that they declared a National Day of Mourning, which they still observe to this day.
The National Day of Mourning occurs each year on May 5th and is known, of course, as Sinko de Mayo.