Marc's Mortgage Matter's

Mark Twain said, “If you don't read the newspaper you are uninformed, if you do read the newspaper you are misinformed.” If one read the newspaper lately, you’d have seen that it's getting pretty crazy; we're bailing out Wall Street, we're bailing out banks, we're bailing out car companies...In fact, there was a special box on your tax form this year you could check if you want a portion of your taxes to actually go to running the government.


Yesterday Chrysler filed for Chapter 11 bankruptcy after talks with a small group of creditors fell apart. Analysts believe that this will give the company time to finish writing the partnership with the Italian car maker Fiat. The government, which is in effect you and me, has already poured $4 billion in loans into Chrysler and would provide up to $8 billion more to carry the company through bankruptcy. Our tax money at work. Oy!

The “Cramdown” legislation, which would have allowed bankruptcy judges to modify mortgages, failed to pass the Senate yesterday. Despite the administration’s attempts to negotiate with Bank of America, J.P. Morgan Chase and Wells Fargo for weeks in order to get their support, but the financial services industry refused to support it. Supporters argued that the measure would have kept 1.7 million borrowers in their homes, and would have allowed bankruptcy judges to lower the interest rate or principal balance on troubled mortgages. Bottom line is these banks really don't want to play ball - we see this over and over almost weekly now.

Treasury prices fell this week, and rates increased, for a 3rd straight day yesterday (and we could be there again today) and April may have the largest price drop since January. The yield on the 10-yr hasn’t been this high since around Thanksgiving. Stocks, however, seem to have had their biggest monthly gain in 9 years! Morttgage rates continued a slow rise this week again - so if your not locked in yet........

A poll says only 75% of Texans would vote to stay in the United States. The other 25% thought the U.S. was actually a part of Texas.

Over the weekend my daughter and a friend had a lemonade stand on the street. They weren’t selling much lemonade for 50 cents a cup, so they decided to increase the price to 75 cents a cup. I told them that is not how economics works. My daughter replied, “The price of a postage stamp went up to 44 cents a few weeks ago, and the Postal Service said they had to raise the price because fewer and fewer people are using the mail these days. Dad, that's government thinking: ‘Hey, nobody's buying our product. Let's raise the price.’”


When is the best time to add insult to injury? When you're signing someone's cast. What some may feel is along the same lines, do you remember how the former Countrywide Financial president formed PennyMac Mortgage last year to buy troubled home loans and related securities? And how people in the business cried foul: “First they originate the stuff, then give the mortgage business a bad name, and now they’re buying their loans back at 10 cents on the dollar?” Well, soon you may be able to buy stock in them. On Friday they filed with the SEC to sell as much as $750 million in stock to the public. PennyMac Mortgage Investment Trust would make some of its investments under a federal plan to offer financing to buyers of toxic mortgage assets from banks, the filing says.

Mortgage rates have been creeping up now daily - sure hope the climb stops so more folks can qualify. Rates seem to be moving comfortably into the mid 5's these days. Those that merited to lock in anything south of 5% are in a happy state of mind indeed, and did well!  Markets are really overreacting to a few positive reports as the economy is really in tough times still. That hurts the low rates we had and in the end of the day that sucks.

One trader said, “Mortgages are getting banged like a screen door in a hurricane.” I assume that he was talking about mortgages and bond prices in general. Anyone who has been in this business for any length of time has seen rates shoot up, or rates shoot down, dramatically in the space of a few days. Personally, and I have been wrong before, I think that we have seen the lows in rates. The US Government keeps borrowing, and there are signs that the economy is starting to revive in some areas. I don’t know why rates would go back down too far unless the economy deteriorates more. There are always dips as rates move back down, but I see the trend higher. But like I said, I have been wrong before. But the U.S. budget deficit is rising due to a combination of weak tax receipts and sharply increased spending, balanced against of deflation, weak demand, and slow global growth. What a market!

I noticed in the newspaper that this week marks the 54th anniversary of the invention of the credit card. I told my kids that before that, people practiced something called "living within their means" - a foolish, outmoded way of life. We’ve come a long way since then!


The problem with an investment bank balance sheet is that on the left side nothing's right and on the right side nothing's left.

Brooklyn, NY – Councilman Simcha Felder (D - Brooklyn) urges New York’s anxious homeowners to be on the lookout for home foreclosure rescue scams. Scammers posing as mortgage and foreclosure “consultants” are offering to pay mortgages and rent homes back to the owner without contacting the lender. Often the homeowner is asked to sign over the deed to their property to the scammer. Payments intended for lenders are quickly pocketed, causing the lender to begin the foreclosure process. Unsuspecting homeowners become vulnerable to lost equity, eviction, rent increases, and the sale of their home.

“These scammers will stop at nothing to make a buck,” says Felder. “Even if that means ruining peoples lives.”

New York State law prohibits individuals from charging up-front fees for these types of services. Red flags include a promise to save the home and a request that the mortgage payment be sent to the rescue company, not the lender. Homeowners are encouraged to be wary of allowing others to make mortgage payments on their behalf. Those having trouble with mortgage payments should contact the lender directly. More often than not the lender would prefer to work out a payment plan than begin the foreclosure process. Homeowners facing foreclosure may contact a certified housing counselor at New York State Banking Department’s Consumer Helpline at 1-877-BANK_NYS. Additional assistance is available through the Homeownership Preservation Foundation at (888) 995-HOPE.

Let it happen or make it happen, it's up to you! Or, with mortgage rates, it is up to the Fed. The Fed’s buying mortgage-backed securities has kept mortgage rates low, right? And one way to attract private investors to buy mortgage securities is to make the yield attractive, right? Well, Credit Suisse is of the opinion that the Federal Reserve will probably slow its rate of mortgage-backed securities purchases this year to make room for private investors who have balking at buying low-yielding assets. Sure, low rates have helped during the recession, but according to CSFB the U.S. central bank may begin weaning the market from its support, at least in part, in a bid to raise yields and entice other investors. More insight to those higher rates lately - highest since mid-March.

The Economy Is So Bad...

CEO's are now playing miniature golf.

Women are marrying for love.

Even people who have nothing to do with the Obama administration aren't paying their taxes.

HotWheels and Matchbox stocks are trading higher than GM.

Obama met with small businesses to discuss the Stimulus Package: GE, Pfizer and Citigroup.

McDonald's is selling the 1/4 ouncer.

Parents in Beverly Hills fired their nannies and learned their children's names.

A truckload of Americans got caught sneaking into Mexico.

The most highly-paid job is now jury duty.

People in Africa are donating money to Americans.

Motel Six won't leave the light on.

The Mafia is laying off judges.

And finally ...
Congress says they are looking into this Bernard Madoff scandal. Hey, great idea ... the guy who made $50 billion disappear is being investigated by the people who made $750 billion disappear.

In the Great State of Texas, several foreclosure rescue companies have been sued by the state's top prosecutor, who accuses them of running mortgage rescue scams. “Texas Attorney General Greg Abbott filed a lawsuit against Houston-based Excel Loss Mitigation Inc., United Servicing LLC and some related assets held by Bell Investments & Developments LLC and key directors Frank Bell, David Bell and David Espy. They are accused of taking money from financially troubled homeowners and promising to help them with their mortgages but doing nothing for them.” Their assets have been frozen. The complaint states both companies used telemarketers with a high pressure script to contact homeowners in mortgage trouble and falsely promise to renegotiate their debt to help them avoid foreclosure or reduce monthly payments, and that they told homeowners who fell behind on their mortgage payments not to talk to their lenders even though that is what they should have done, according to the Houston Chronicle. Lots of similar shenanigans going on here in our own backyard too.

A guy goes to the post office to apply for a job. The interviewer asks him, '”Are you allergic to anything?” He replies, “Yes - caffeine.”

“Have you ever been in the military service?"

“Yes,” he says. “I was in Iraq for two years.”

The interviewer says, “That’ll give you five extra points toward employment.” Then he asks, “Are you disabled in any way?”

The guy says, “Yes...an IED exploded near me and I lost both of my testicles.”

The interviewer grimaces and then says, “O.K. You've got enough points for me to hire you right now. Our normal hours are from 8:00 A.M. to 4:00 P.M. You can start tomorrow at 10:00 - and plan on starting at 10:00 A.M. every day.”

The guy is puzzled and says, “If the work hours are from 8:00 A.M. to 4:00 P.M., why don't you want me to be here until 10:00?”

“This is a government job,” the interviewer says. “For the first two hours we just stand around drinking coffee and scratching our nuts. No point in you coming in for that."

Ever heard of Metro Dream Homes? I hadn’t, until now – and it is rare when I pass up a chance to lose money. Federal authorities say the company, based in Washington DC, bilked $70 million from home owners by promising to pay off their mortgages. ”Metro Dream Homes was founded by Andrew Hamilton Williams Jr., who used some of the $50,000 minimum payments provided by home owners to cover the losses of an automated-teller-machine scheme he was ordered to shut down in 2001, according to the indictment unsealed Monday. Investors in Metro Dream Homes who forked over the $50,000 were told the company would pay off their mortgages…but the cash was used to pay off the mortgages of the original investors and cover other losses.” Some of the original investors, whose mortgages were actually being paid by later investors, would tout the program’s success during the seminars. Investors were encouraged to invest $150,000 or more through incentives offering cash rewards and positions on Metro Dream Homes’ board of directors.


Refinancing typically soars when long-term mortgage rates drop, and recent history is no exception — except in New York.

There was a 92 percent rise in mortgage-refinancing transactions nationwide in the first three months of this year over the corresponding period last year. But New York State had just a 6 percent bump.

In a state filled with expensive homes and big mortgages, the below-5-percent interest rates being dangled in front of borrowers are not available to many New York homeowners, for various reasons. Others may be deterred by the high mortgage tax.

“It’s shocking to see that New York fared so badly,” said Guy Cecala, publisher of Inside Mortgage Finance Publications, a provider of data and analysis in Bethesda, Md., which provided the state and national statistics.

Analysts at Inside Mortgage Finance recently looked at mortgages refinanced with loans backed by Fannie Mae and Freddie Mac, the government-sponsored businesses that buy mortgages from lenders. Those loans make up a vast majority of the nation’s mortgages, but have strings attached.

One is that the lowest rates are only for mortgages of up to $417,000 — rarer in New York than elsewhere, because of high house prices — made to applicants with stellar credit, plenty of equity in the home and a steady, documentable income. Mortgages of up to $417,000 are known as “conforming” or "conventional" loans.

Fannie and Freddie also accept bigger mortgages — known as agency-jumbo loans — in costlier areas like Manhattan and some New York City suburbs. In Manhattan and Hudson County, N.J., for instance, the loan limit is $729,750, and in Fairfield County, Conn., the limit is $708,750. The limits earlier this year were lower.

But even those who can refinance a home with a loan of $417,001 to $729,750 cannot get the best deals, because lenders view such borrowers as riskier than those below the $417,000 threshold. Lenders charge as much as a half of a percentage point more for such loans.

And that’s just a starting point. Fannie and Freddie will add other fees for borrowers who, for instance, have credit scores of less than 720, or for co-op owners with less than 25 percent equity, to name just two factors. Lenders typically build those fees into a loan’s interest rate — which is how an advertised rate of 4.5 percent can quickly turn into an actual rate of 5.50 percent or more.

But Connecticut and New Jersey also have substantial areas of high-cost housing, where agency-jumbo loans would come into play, and refinancing there has risen sharply. Connecticut’s refinance rate has jumped 73 percent from last year, according to Inside Mortgage Finance, and New Jersey’s 72 percent.

One explanation is New York State’s mortgage tax, which generally has to be paid each time there is a new mortgage, even to the same owner. That makes the cost of refinancing higher than it is in most other states. The tax varies by county; in New York City, it is 2.05 percent on loans under $500,000. Borrowers who refinance can sometimes avoid the tax if the lender agrees to treat the new loan as essentially an extension of the old one. These so-called “consolidation and extension” arrangements have been harder to arrange recently, however. Without one, a borrower refinancing a mortgage just under $500,000 in Manhattan would face about $10,000 in taxes.

One year, a husband decided to buy his mother-in-law a cemetery plot as a Christmas gift.

The next year, he didn't buy her a gift.
When she asked him why, he replied, "Well, you still haven't used the gift I bought you last year!"

And that's when the fight started.

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.