Well the week was a data junkies dream. We had tons of economic reports come out, and in the end, mortgage rates continued to decline. The stock market had about a 350 point drop in total for the week as of the writing of this report however the main reason is for concern in Europe.
It has been a while, but I feel today it is necessary for me to put my sarcasm hat on and report the week's happenings strictly for entertainment purposes. If I take the reports to seriously I may go postal. (I will have to go beyond a one page report - sorry). I just need to vent about the nonsense that is being reported by the government. Please understand nothing I write is a political statement, it is strictly about government nonsense and their belief that we are dumb enough to fall for their propoganda.)
As you may already know, The Wall Street Reform Bill is a done deal. The President is expected to sign it into law by July 4th. Exactly when everything will take effect, is uncertain. However what is for sure is that this legislation is one of the most powerful and largest changes to laws and controls ever executed by the government. I believe the Constitution, The Bill of Rights and The Declaration of Independence are still more powerful. However I believe Barney Franks wants to change that also. As far as our rights in business, if you work in the financial industry, bottom line is that you don't have many of them anymore with this reform bill.
I was speaking with a friend yesterday and we discussed the definitions of Democracy, Socialism and Communism.
• Democracy: Freedom of choice and the opportunity for the people of the country to be able to engage in making decisions on their own with minimal government intervention.
• Socialism: You still have the right to choose, however your choices must adhere to government rules that eliminate virtually every choice except for those the government wants you to make.
• Communism: You are not allowed to think for yourself or choose.
The Wall Street Reform Bill now places the business sector of the country somewhere between Socialism and Communism. Depending on which industry you look at, your view may vary. Buckle up my friends, the cost of doing business in this country has just been increased significantly and our liberties of freedom of choice in business are being taken away.
Ok I'm done - now on to the main report:
The housing news reported this week was dismal however not unexpected. I have been writing for weeks about the end of the tax credit and how it will impact May housing numbers. Well here they are:
• New Homes Sales Plunge 33% (largest drop ever measured since 1963)
• Existing Home Sales Drop 2%. Over 30% of these homes sold are foreclosures and shorts sales.
• March and April's New Home Sales Report was revised downward by 108,000 units making those months much worse than reported previously. Remember, the tax credit was active during that period of time which is now increasing concerns about housing.
• Single family home starts drop 17%
• MBA Purchase Applications dropped 1.2% and Refinances dropped 7.3%.
• Housing supply inventory increased from 5.8 months in April to 8.5 months in May (This does not includes the 3,650,000 homes that the nation's major banks are currently holding off the market to stabilize values. In case you think I made a mistake with the zero's, I wrote 3 million six hundred and fifty thousand homes not being sold by the banks)
As positively natured a person I am, I truly don't enjoy writing about all of the bad news - I really don't. However, I am a little bit disgusted in how are government is perpetuating so many lies to us about the state of the economy just so they can say we are not going to have a double dip recession. Actually they are right, we are not going to have a double dip because the first recession never ended!
The FOMC stated that economy is "proceeding". (What does that mean?)
Of course the economy is "proceeding"! - As long as there IS an economy, it has to "proceed"! - I failed economics in college but even I know an economy has to proceed.
Sorry I digressed - The FOMC has continued to keep interest rates at or near zero with no expectation of when they will need to raise them. Inflation continues to be a non-factor so the concern for rate increases does not exist.
Jobless claims dropped 19,000 last week, however the previous weeks jobless claims were revised upward by 4,000. Overall first time jobless claims remain somewhat stable with only a slight rise in the 4 week moving average.
What is supposed to be good news is that 45,000 people came off of the unemployment rolls last week. The only question that nobody in government will answer is did they get jobs? - or did they give up on finding a job - or are they no longer eligible for unemployment?
GET THIS - The Obama Administration stated that they are responsible for the 45.9% increase in national corporate profits that took place over the last 12 months. Wow- I thought that firing employees and cutting expenses is what increased profits during this period of time. I say that because unless sales increase, which they haven't, the only way for corporate profits to increase is by cutting costs. Like I said earlier, I failed economics in college but.... Am I missing something?
The great news for the week is that mortgage rates are at the lowest point on record. 30 year fixed rates are in the 4's and I am cautiously optimistic that this will increase activity in home buying and refinances. The government is currently considering extending the tax credit however that has not been decided as of yet.
Once again I apologize for the tone of this newsletter. It is not like me to do this, however I now feel cleansed and I can go and enjoy my weekend knowing that I have bestowed my frustration on my loyal readers.
News on tap for next week:
• Tuesday June 29th - Case-Shiller Housing Value Index
• Tuesday June 29th - Consumer Confidence
• Wednesday June 30th - MBA Purchase Applications, ADP Employment Report
• Thursday July 1st - Pending Home Sale, Weekly Jobless Claims
Your Mortgage Professional,
JJ Mack
916-517-1800
Friday, June 25, 2010
Friday, June 18, 2010
Weekend Mortgage Update - 06/18/2010
For anyone that is a market news junkie, you certainly got your fix this week. It has been quite some time since we have experienced a week with this much news and information on housing and the economy.
Housing Starts dropped 10% as home builders are showing caution as the tax credit expiration has seemed to place a damper on home purchase demand. The Mortgage Bankers Association reported for the first time in 6 weeks that home purchase applications have increased. Additionally, it was also reported that refinance applications jumped 21%.
The Senate and House have each passed a new amendment which would extend the time to take advantage of the tax credit. The current expiration occurs on June 30th. The current amendment is being reconciled between both branches of government and it is expected to be passed. The extension as proposed will extend the time home buyers have to close for an additional 3 months.
It was announced this week that an estimated 65 - 75% of all homeowners who have received loan modifications under the governments Home Affordable Modification Program will most likely default despite having lower mortgage payments. The main culprit causing the trend of high defaults is that many homeowners receiving modifications continue to have high balances on their other consumer debt with little or no reserves of cash in the bank.
The FBI announced a major crackdown on mortgage fraud. The FBI's program to fight mortgage fraud, called Operation Stolen Dreams, is in full swing with over 3000 investigations taking place nationwide. Already over 485 people have been netted in the operation. The driving force behind the FBI crackdown is that despite the lending industry tightening guidelines and underwriting criteria, studies have shown a significant increase in mortgage fraud from 2008 to 2009.
In other real estate news, the former CEO of failed lending institution Taylor Bean Whittaker was arrested this week while working out at his gym. He has been charged with defrauding the government and investors out of 1.5 billion dollars through the sale and transfer of bad mortgage loans.
Fannie Mae and Freddie Mac have both been delisted from the New York Stock Exchange due to their share prices continuing to remain valued below a $1. This does not impact the daily operations of these organizations.
The Consumer Price Index and Producer Price Index released this week continue to show that inflation is not an issue right now despite all of the government stimulus and low rates. Consumers have slowed spending on discretionary items once again due to uncertainty in the job market and economy. Jobless claims came in higher than expected this past week as well.
News on tap for next week:
• Tuesday June 22nd - Existing Home Sales
• Wednesday June 23rd - MBA Purchase Applications, New Home Sales, FOMC Meeting
• Thursday June 24th - Jobless Claims and Durable Good Orders
• Friday June 25th - Consumer Sentiment and GDP
Your Mortgage Consultant,
JJ Mack
916-517-1800
Housing Starts dropped 10% as home builders are showing caution as the tax credit expiration has seemed to place a damper on home purchase demand. The Mortgage Bankers Association reported for the first time in 6 weeks that home purchase applications have increased. Additionally, it was also reported that refinance applications jumped 21%.
The Senate and House have each passed a new amendment which would extend the time to take advantage of the tax credit. The current expiration occurs on June 30th. The current amendment is being reconciled between both branches of government and it is expected to be passed. The extension as proposed will extend the time home buyers have to close for an additional 3 months.
It was announced this week that an estimated 65 - 75% of all homeowners who have received loan modifications under the governments Home Affordable Modification Program will most likely default despite having lower mortgage payments. The main culprit causing the trend of high defaults is that many homeowners receiving modifications continue to have high balances on their other consumer debt with little or no reserves of cash in the bank.
The FBI announced a major crackdown on mortgage fraud. The FBI's program to fight mortgage fraud, called Operation Stolen Dreams, is in full swing with over 3000 investigations taking place nationwide. Already over 485 people have been netted in the operation. The driving force behind the FBI crackdown is that despite the lending industry tightening guidelines and underwriting criteria, studies have shown a significant increase in mortgage fraud from 2008 to 2009.
In other real estate news, the former CEO of failed lending institution Taylor Bean Whittaker was arrested this week while working out at his gym. He has been charged with defrauding the government and investors out of 1.5 billion dollars through the sale and transfer of bad mortgage loans.
Fannie Mae and Freddie Mac have both been delisted from the New York Stock Exchange due to their share prices continuing to remain valued below a $1. This does not impact the daily operations of these organizations.
The Consumer Price Index and Producer Price Index released this week continue to show that inflation is not an issue right now despite all of the government stimulus and low rates. Consumers have slowed spending on discretionary items once again due to uncertainty in the job market and economy. Jobless claims came in higher than expected this past week as well.
News on tap for next week:
• Tuesday June 22nd - Existing Home Sales
• Wednesday June 23rd - MBA Purchase Applications, New Home Sales, FOMC Meeting
• Thursday June 24th - Jobless Claims and Durable Good Orders
• Friday June 25th - Consumer Sentiment and GDP
Your Mortgage Consultant,
JJ Mack
916-517-1800
Monday, June 14, 2010
Mortgage Market Weekend Update - 06/14/2010
The stock market rebounded nicely from its early week low's due to the strengthening Euro which has been beaten down over the last few weeks. The European debt crisis has been the primary reason for the devaluation of the currency and now that it seems like some stability is coming to the region, the Euro is gaining ground against the dollar.
Overall mortgage rates rose slightly for the week however nothing significant. The Mortgage Bankers Association reported that purchase applications dropped for the 4th straight week. This past week they fell 5.7% and overall in the last 4 weeks they are down 35%. Without question the expiration of the tax credit is having a major impact on housing.
Additionally, the MBA reported that refinance transactions have also dropped slightly despite interest rates being very low. Without a question, uncertainty in the economy and housing are continuing to slow home buyers, and even homeowners from taking action on financing for their current home.
It was reported on Thursday of this week that the number of foreclosure filings has dropped 3%. However what is very disturbing news is that the banks have significantly increased their repossessions of properties. In May, a new record was set for bank repossessions at 93,777.
The 10YR Treasury auction this week had modest demand. Given the uncertainty in the stock market, many are still investing in the safe haven of government securities.
In other news, Ben Bernake spoke a few times this week and has indicated that inflation continues to remain a non-issue and that he expects the Fed to keep rates the same possibly through 2012. However if inflation does begin to rear its ugly head anytime before, the Fed will certainly act to keep it under control by raising interest rates.
New filers for unemployment rose for the 4th straight week which once again exceeded analyst expectations. The perceived good news in the employment report is that continuing unemployment claims dropped a very large 225,000. The big question that remains is "are employers starting to hire, or is the drop related to many people becoming no longer eligible for benefits and they are being dropped from the calculations?" (I have my own opinion but I will let you draw your own conclusion about this)
Retail Sales unexpectedly dropped 1.2% in May, signaling consumers are focusing on boosting savings as the employment picture slowed and the stock market has been falling. Most of the economists surveyed expected a rise of .2%. Many experts believe that retail sales growth will be minimal in the coming months as signs of recovery are slower than anticipated.
News on tap for next week:
• Wednesday June 16th - Mortgage Bankers Association Purchase Applications
• Wednesday June 16th - Housing Starts, Industrial Production, Producer Price Index
• Thursday June 17th - Jobless Claims and Consumer Price Index
• Friday June 18th - Quadruple Witching Day which may lead to tremendous market volatility
Your Mortgage Consultant,
JJ Mack
916-517-1800
Overall mortgage rates rose slightly for the week however nothing significant. The Mortgage Bankers Association reported that purchase applications dropped for the 4th straight week. This past week they fell 5.7% and overall in the last 4 weeks they are down 35%. Without question the expiration of the tax credit is having a major impact on housing.
Additionally, the MBA reported that refinance transactions have also dropped slightly despite interest rates being very low. Without a question, uncertainty in the economy and housing are continuing to slow home buyers, and even homeowners from taking action on financing for their current home.
It was reported on Thursday of this week that the number of foreclosure filings has dropped 3%. However what is very disturbing news is that the banks have significantly increased their repossessions of properties. In May, a new record was set for bank repossessions at 93,777.
The 10YR Treasury auction this week had modest demand. Given the uncertainty in the stock market, many are still investing in the safe haven of government securities.
In other news, Ben Bernake spoke a few times this week and has indicated that inflation continues to remain a non-issue and that he expects the Fed to keep rates the same possibly through 2012. However if inflation does begin to rear its ugly head anytime before, the Fed will certainly act to keep it under control by raising interest rates.
New filers for unemployment rose for the 4th straight week which once again exceeded analyst expectations. The perceived good news in the employment report is that continuing unemployment claims dropped a very large 225,000. The big question that remains is "are employers starting to hire, or is the drop related to many people becoming no longer eligible for benefits and they are being dropped from the calculations?" (I have my own opinion but I will let you draw your own conclusion about this)
Retail Sales unexpectedly dropped 1.2% in May, signaling consumers are focusing on boosting savings as the employment picture slowed and the stock market has been falling. Most of the economists surveyed expected a rise of .2%. Many experts believe that retail sales growth will be minimal in the coming months as signs of recovery are slower than anticipated.
News on tap for next week:
• Wednesday June 16th - Mortgage Bankers Association Purchase Applications
• Wednesday June 16th - Housing Starts, Industrial Production, Producer Price Index
• Thursday June 17th - Jobless Claims and Consumer Price Index
• Friday June 18th - Quadruple Witching Day which may lead to tremendous market volatility
Your Mortgage Consultant,
JJ Mack
916-517-1800
Friday, June 11, 2010
Possible Tax Credit Extension?
NEW YORK (CNNMoney.com) -- First-time homebuyers looking to land an $8,000 federal income tax credit may have a little more time to close on their purchases if a Senate amendment unveiled Thursday makes it into law.
As it stands now, homebuyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years.
The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions -- especially short-sales, which is a more involved process.
"By extending the transaction deadline, we can ensure that everyone taking advantage of this credit can complete the purchase of their new home, Reid said.
It remains to be seen, however, whether the amendment will go anywhere. It's part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest.
As it stands now, homebuyers must have signed contracts by April 30 and must close the deal by June 30. They could be eligible for an $8,000 tax credit if they are first-time buyers or a $6,500 credit if they owned and lived in their previous home for five of the last eight years.
The closing deadline, however, could be pushed back to Sept. 30 under an amendment offered by Senate Majority Leader Harry Reid, D-Nev., Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn. The senators said they want to make sure banks have time to process the transactions -- especially short-sales, which is a more involved process.
"By extending the transaction deadline, we can ensure that everyone taking advantage of this credit can complete the purchase of their new home, Reid said.
It remains to be seen, however, whether the amendment will go anywhere. It's part of a controversial jobs and tax bill that may be radically changed before the Senate approves it. Lawmakers are not scheduled to vote on the bill until next week at the earliest.
Friday, June 4, 2010
Mortgage Market Weekend Update - 06/04/2010
The week has been a reprieve from the crazy roller coaster ride we have been experiencing over the last month or so. The reality is that movement in the stock market of 100 to 200 points in a day, or a few hours for that matter, is now being seen as somewhat common place. (It is amazing what used to be crazy, is now the new normal)
Overall the economic news this past week has been quite positive in nature. Construction spending rose 2.7% in April from the previous month. What is especially optimistic about this increase is that the rise was driven primarily by investment in building single family residential properties.
Additionally, pending home sales in April rose another 6% from the 7.1% increase in March. The mad run for people to purchase prior to the tax credit expiration on April 30th seems to be the driving force behind the large increases. As always, not to be negative, we need to see what the numbers will be like for May. Many experts are predicting that we will see a reversal of the upward trend however that is to be expected.
Despite mortgage rates remaining below 5%, the Mortgage Bankers Association reported that purchase loan applications have declined for the 4th straight month. (Can anyone say "tax credit expiration"?)
Unemployment continues to remain an issue despite the fact that the national unemployment rate dropped from 9.9% to 9.7%. Although the drop is positive, the reality is that the bulk of the job additions for the month were related to the temporary hiring of 411,000 Census workers.
Outside of employment, there is economic news to be optimistic about that continues to point to slow and gradual growth of the economy. The increase in the ISM Manufacturing Index shows that employment and production in the manufacturing sector continues to grow at a healthy pace. In addition, factory orders continue to grow as well for both durable and non-durable goods orders at a strong rate showing that consumers and businesses are slowly starting to spend.
Economic news and activity next week has the potential to impact mortgage rates significantly. The 10YR Treasury Note Auction on Wednesday will shed light if investors are still seeking the quality and security of government treasuries, or if the appetite for stocks is returning - stay tuned!
News on tap for next week:
• Wednesday June 9th - Mortgage Bankers Association Purchase Applications
• Wednesday June 9th - 10 Year Note Auction
• Thursday June 10th - Jobless Claims
• Friday June 11th - Retail Sales
• Friday June 11th - Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
Overall the economic news this past week has been quite positive in nature. Construction spending rose 2.7% in April from the previous month. What is especially optimistic about this increase is that the rise was driven primarily by investment in building single family residential properties.
Additionally, pending home sales in April rose another 6% from the 7.1% increase in March. The mad run for people to purchase prior to the tax credit expiration on April 30th seems to be the driving force behind the large increases. As always, not to be negative, we need to see what the numbers will be like for May. Many experts are predicting that we will see a reversal of the upward trend however that is to be expected.
Despite mortgage rates remaining below 5%, the Mortgage Bankers Association reported that purchase loan applications have declined for the 4th straight month. (Can anyone say "tax credit expiration"?)
Unemployment continues to remain an issue despite the fact that the national unemployment rate dropped from 9.9% to 9.7%. Although the drop is positive, the reality is that the bulk of the job additions for the month were related to the temporary hiring of 411,000 Census workers.
Outside of employment, there is economic news to be optimistic about that continues to point to slow and gradual growth of the economy. The increase in the ISM Manufacturing Index shows that employment and production in the manufacturing sector continues to grow at a healthy pace. In addition, factory orders continue to grow as well for both durable and non-durable goods orders at a strong rate showing that consumers and businesses are slowly starting to spend.
Economic news and activity next week has the potential to impact mortgage rates significantly. The 10YR Treasury Note Auction on Wednesday will shed light if investors are still seeking the quality and security of government treasuries, or if the appetite for stocks is returning - stay tuned!
News on tap for next week:
• Wednesday June 9th - Mortgage Bankers Association Purchase Applications
• Wednesday June 9th - 10 Year Note Auction
• Thursday June 10th - Jobless Claims
• Friday June 11th - Retail Sales
• Friday June 11th - Consumer Sentiment
Your Mortgage Consultant,
JJ Mack
916-517-1800
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