Rate Lock Advisory - Tuesday Jul. 7th

This from the smart folks at Mortgage Commentary


Rate Lock Advisory - Tuesday Jul. 7th

Tuesday's bond market has opened relatively flat with no relevant economic news on the agenda today. The stock markets are showing losses with the Dow down 78 points and the Nasdaq down 15 points. The bond market is currently up 2/32, but we will see an improvement in this morning's mortgage rates of approximately .250 of a discount point due to strength late yesterday.

There is no relevant economic news scheduled for release again today. The weakness in stocks will probably keep bonds from turning sour today. We have seen some improvements in mortgage rates over the past couple of days, but there is question as to whether or not they can hold. It currently appears that they may for the time being, but we know that mortgage rates will rise much quicker than they improve. Accordingly, if still floating an interest rate please be very cautious over the next several days. At least until we get the results of Wednesday's Treasury auction and a couple of the major earnings releases behind us.

There are only two monthly economic reports being posted this week and they both come Friday. There are also two relevant Treasury auctions left that may influence mortgage rates. 10-year Notes will be sold tomorrow and 30-year Bonds Thursday. These sales can influence market trading in bonds and possibly affect mortgage rates. If the sales are met with a strong demand from investors, particularly Wednesday's sale, we should see afternoon improvements in bonds that could lead to downward revisions to mortgage rates. However, if concerns over the amount of debt being sold keeps buyers on the sidelines, we may see bonds fall after results are posted at 1:00 PM ET and mortgage rates move higher during afternoon trading tomorrow or Thursday.

Tomorrow kicks off the earnings season when Alcoa posts their quarterly results. Market participants are anxiously waiting for these results to see just how hard the weak economy is affecting earnings. Just as important as this past quarter's results are their forward-looking estimates. If revenue, earnings and projections from the big-named companies exceed expectations, stocks will likely rally, making bonds less appealing to investors. But if results are weaker than expected, indicating that the economy is still stifling earnings, bonds will be more attractive to investors as stocks slide. This could help boost bond prices and lead to lower mortgage rates

©Mortgage Commentary 2009

This in the Boston Globe,  Interesting point economist Willen makes. …. Bill Powell….

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Lenders avoid redoing loans, Fed concludes Study cites lack of profit in aiding the distressed By Jenifer B. McKim, Globe Staff  |  July 7, 2009 Mortgage lenders don’t try to rework most home loans held by borrowers facing foreclosure because it would probably mean losing money, a study released yesterday by the Federal Reserve Bank of Boston concludes. The Boston Fed’s findings suggest the Obama administration’s major effort to solve the foreclosure crisis by giving the lending industry $75 billion to rewrite delinquent loans to more affordable levels is not likely to work. One of the study’s coauthors, Boston Fed senior economist Paul S. Willen, said the government would be better off giving the money directly to struggling borrowers to help them with their payments, rather than to lenders that are averse to working out the troubled loans. “Loan modification is not profitable for lenders,’’ Willen said. “If it were profitable, they would go out and hire staff.’’ US Representative Barney Frank, head of the House Financial Services Committee, said the study results may provide answers about why so few struggling homeowners have been able to get help. Frank, a Newton Democrat, said he is holding a hearing Thursday on his proposal to provide government loans to homeowners who have lost their jobs and can’t qualify for loan modifications and other help because they don’t have income. “The problem is worse than we thought,’’ Frank said. “The failure to do these modifications means the whole situation stays bad longer.’’ The Fed’s study found that only 3 percent of seriously delinquent borrowers - those more than 60 days behind - had their loans modified to lower monthly payments; about 5.5 percent received loan modifications that did not result in lower payments. The study focused on 665,410 loans that were originated between 2005 and 2007 and subsequently became seriously delinquent. It also followed about 150,000 borrowers for six months after they received help, through the end of 2008. The lenders may have compelling reasons not to find new borrowers to help, according to the study. For example, up to 45 percent of borrowers who did receive some kind of help on their loans ended up in arrears again, the study found. Conversely, about 30 percent of delinquent borrowers are able to fix their problems without help from their lenders. “A lot of people you give assistance to would default either way or won’t default either way,’’ Willen said. “They are trying to maximize profits, and at this point maximizing profits does not mean modifying loans.’’ Officials from Hope Now, the private-sector alliance of mortgage servicers and investors, were unavailable for comment yesterday. US Treasury officials declined to comment on the Fed study, but noted in a statement that more than 240,000 homeowners have received loan modifications this year under the president’s program. Moreover, federal regulators said the pace of loan modifications has been increasing steadily since last year. Given the findings, Dean Baker, codirector of the Center for Economic and Policy Research in Washington, D.C., said Willen’s suggestion to give money to borrowers rather than lenders makes sense. The number of foreclosure proceedings increased to 844,389 during the first quarter of 2009, up 73 percent from the first quarter of 2008, according to the Office of the Comptroller of the Currency. “You have more money going to the banks and the servicers than you do to the homeowners,’’ he said. “It would make more sense to just give money to the borrowers.’’ The $75 billion Obama administration plan, announced in February, provides incentives to motivate companies that service mortgages to make loans more affordable, including $1,000 bonuses for each modified loan and an additional “pay for success’’ fee of $1,000 a year for three years if borrowers stay current on their new terms. Willen said the success bonus could have the unintended effect of steering loan servicers away from those who need help the most, and toward only those borrowers most likely to recover on their own anyway. He said that if modifications increase, it won’t be by much. “My guess is they are going to help people who are OK, and they are not going to help people who are deep trouble,’’ he said. Alan White, a professor at Valparaiso University School of Law in Indiana, said lenders could cut down on the number of borrowers who end up defaulting again by giving them more help in the first place. He said too many modified loans don’t result in low enough payments. Also, he said, there may be fewer borrowers who can get out of trouble on their own because of continuing difficulties in the economy. “The servicers are making assumptions that are much too anti-modification,’’ White said. “The servicers have the authority’’ to help borrowers, “they just don’t want to use it.’’ The study, coauthored by Manuel Adelino and Kristopher Gerardi, also rebuts a widely held suspicion that the holdup in modifying loans is because of investors who control them through mortgage-backed securities. The Fed found no difference in the rate of aid between investor-controlled loans and those that lenders own directly. Jenifer McKim can be reached at jmckim@globe.com.

© Copyright 2009 The New York Times Company
 

 

Rate Lock Advisory - Thursday Jul. 2nd

This from the smart folks at mortgage comentary. Nothing much new here but I share. Bill .......... ......... .....

Thursday's bond market has opened in positive territory following a weak opening on stocks. The stock markets are posting sizable losses with the Dow down 174 points and the Nasdaq 43 points. The bond market is currently up 9/32, which, with yesterday's late strength, should improve this morning's mortgage rates by approximately .375 of a discount point compared to yesterday's morning rates.

This morning's economic data gave us mixed results, beginning when the Labor Department reported that the U.S. unemployment rose 0.1% last month to stand at 9.5%. This was slightly lower than the 9.6% that many analysts and market traders had expected and can be considered negative for bonds because it fell short of forecasts.

However, the other two headline numbers from this report gave us favorable results and are making the biggest impact on bond trading this morning. The report showed that 467,000 jobs were lost during the month, exceeding forecasts of approximately 365,000. In addition, the reading that gives average hourly earnings showed no change from May's level. This means that earnings did not rise when they were expected to move higher 0.1%. While the earnings data may not be good for workers, it shows that wage inflation is little threat at this time.

May's Factory Orders data was released late this morning by the Commerce Department. It showed that combined orders for durable and non-durable goods rose 1.2% last month. This was also stronger than analysts' forecasts and hints that manufacturing activity was better than expected. Fortunately, this data is not one of the most important reports we see each month and has not derailed this morning's momentum from the employment figures.

Overall, the Employment report was favorable for bonds with the larger than expected decline in jobs taking center stage. The unemployment rate was somewhat of a disappointment, but it was still an increase from May's rate. The average hourly earnings reading is the least important of the three but still gave us favorable results. The Factory Orders report was not favorable to bonds or mortgage rates, but it also has nowhere near the level of importance as the monthly Employment report. Therefore, today's data can be considered good news for bonds and mortgage rates.

The financial markets will be closed tomorrow in observance of the Independence Day holiday and will reopen Monday morning. There will not be an early close in the bond market today, but I suspect that trading will be thin during afternoon hours as market participants head home for the holiday weekend. This means we should see a fairly quiet afternoon in bonds and mortgage pricing as long as no unexpected news surprises the markets.

Next week is very light in terms of relevant economic data being posted. This could leave the bond market and mortgage rates to the mercy of outside influences.

©Mortgage Commentary 2009

Home loan rates poised to decline

Rates are pretty good right now but some think there may be a further drop. Bill P.

 

Home loan rates poised to decline

 

By BLOOMBERG NEWS  |  June 26, 2009

Yields on Fannie Mae and Freddie Mac mortgage securities have declined to the lowest in more than three weeks, signaling that interest rates on new-home loans will fall, too, helping to ease the housing slump.

Yields on Fannie Mae’s current-coupon 30-year fixed-rate mortgage bonds tumbled 0.18 percentage point yesterday to 4.53 percent as of 3:53 p.m. in New York, the lowest since June 3, amid a plunge in rates on benchmark Treasuries, according to data compiled by Bloomberg.

Treasuries extended price gains after the government sold $27 billion of seven-year securities in the last of three auctions this week that totaled a record $104 billion, dragging yields on so-called agency mortgage securities lower. The rally followed data showing the employment market is weakening, suggesting inflation will remain subdued.

“People are still losing jobs,’’ Michael Franzese, head of government bond trading at Standard Chartered in New York. “Until we start getting that number down, it means the economy is not doing as well as people thought it was.’’

The difference between yields on the Fannie Mae bonds and 10-year Treasuries contracted 0.03 percentage point yesterday to 1 percentage point, Bloomberg data show. The gap, which grew to as much as 2.38 percentage points last year, narrowed to 0.7 percentage point on May 22, the lowest since 1992.

The average rate on a typical 30-year fixed mortgage soared to 5.59 percent earlier this month, the highest since November, before slipping to 5.42 percent in the week ended yesterday, according to Freddie Mac.

In April, the rate fell to 4.78 percent after the Federal Reserve’s plan to buy $1.25 trillion of mortgage bonds succeeded in reducing their yields. In the week ending June 4, the rate averaged 5.29 percent.

Initial jobless claims rose by 15,000 to 627,000 in the week ended Saturday, the Labor Department said. Economists had forecast a decline to 600,000, according to a Bloomberg survey. 

 

Sell that home quicker! Tips for agent & sellers to bump up that curb appeal.

Some hints from a local real estate agent that should be useful everywhere.

 

 

Sell that home quicker! Tips for agent & sellers to bump up that curb appeal.

In a slow market, sellers need to do everything possible to help get their home looked at. Here are some basic tips.

1. Beware of grand gestures:Exterior improvements should be in keeping with the scale and proportion of your house and fit in with the neighborhood. So as lovely as a formal colonnade might look on the front of your boxy Colonial Revival, it may seem over the top when viewed in context with the simple salt box next door.

2. Don't stand out like a sore thumb: When picking paint colors, it's best to match the intensity of your neighbors' shades. If pale blues are the norm, try a creamy yellow. Contrast that with a more saturated accent color for shutters and doors, and a lighter one for windows and trim.

3. Be a tree hugger:If an old maple is obscuring the front of your home, don't cut it down. Hire an arborist to trim it instead. Eighty-three percent of Realtors say that mature trees enhance the value of a home.

4. Plant for all seasons: Your landscape should be eye-catching year-round, even in the dead of winter. So choose a mix of plants to provide four seasons of interest-spring and summer flowers, bright fall foliage, and colorful berries or showy bark in winter.

5. You can have too much of a good thing:Over-improving your facade can mean recouping less of the cost when it comes time to sell. Gauge how much to spend on renovations by checking home values to see what gussied-up homes are going for in your community, and stay under their bar.

6. Do sweat the small stuff: New house numbers, a special light fixture, and potted plants are inexpensive and go a long way toward dressing up an entry.

7. Preservation pays: Before you apply stucco over those weathered clapboards for a clean, low-maintenance look, consider that restoring architectural details may offer more bang from your renovation dollar. In some areas, the value of homes in historic districts where preservation is required has risen up more than in non- historic areas.