Mortgage rates have been declining from their recent peak

Mortgage rates have been declining from their recent peak

The stock market has been eerily quiet as of late.  The markets have pulled back off of their most recent high’s and it appears that the decline is more about financial uncertainty than about specific economic events or data here in the United States, however Europe is playing a part in the declines.

Earlier this week the U.S. markets followed the European markets lower as political instability made headlines in Spain and Italy.  There are new allegations of corruption against the Prime Minister of Spain combined with a banking scandal in Italy.  (We should be used to this type of behavior shouldn’t we because here in the U.S. this is standard operating procedure isn’t it?)

Despite the recent increases in mortgage rates, purchase and refinance applications rose in the prior week.  Purchase application increased 2.0% while refinancing rose 4%.  You can expect that most likely next week’s MBA report will show even stronger gains in application activity because mortgage rates have been declining from their recent peak.

To no-one’s surprise, the government has sued Standard and Poor’s rating agency over what is believed to be their inaccurate ratings on investments that were tied to sub-prime mortgages.  Simply put, the government has taken issue with S&P on how they could rate specific mortgage backed securities as “safe” for investors when the security being evaluated was made up of mortgage loans in which borrowers…

·         Ability to repay the mortgage was never verified.  (No Income Verification loans)

·         Assets were never verified, and in many cases not even required.

·         Credit scores for qualification were on the lower range.

·         And to cap it off, the properties were financed at 100% to 106% Loan to Value.

The government is accusing S&P of disregarding investor protection in exchange for being paid hefty sums of money for favorable ratings on investments made up of these very risky loans.  One thing is for sure, the U.S. government doesn’t take on cases like this unless they know they are either going to win, or the company they are suing will settle the case by paying billions (with a “B”) in fines.. 

As if we didn't have enough in-fighting in this country, Texas Governor Rick Perry has launched a high-profile battle for California companies to move to Texas.  Perry has been running radio ads in California touting the Lone Star State's low taxes and favorable business climate.  The ads start with “Building a business is tough, but I hear building a business in California is next to impossible. This is Texas Gov. Rick Perry, and I have a message for California businesses: Come check out Texas."

JJ Mack
916-517-1800
JJ.Mack@apmortgage.com
www.apmcroseville.com