Is this one of those barn door type of regulations?
by Tom on August 31, 2009
in Market Musings, Mortgage Matters
You know, like, “The horses are in the next county, let’s shut the barn door now?” Those type of regulations?
I mean yeah, it’s good that they put these things in place, but really, how much of a different result would we have had to this mess if advertisements had said, “Fixed rate and payments for 5 years and then the rate and payment probably will change” rather than just “fixed rate loan?
A little, but not that much….
Tom Vanderwell
Beginning October 1, mortgage lenders cannot advertise a mortgage product as having a “fixed” rate or payment if in fact the rate or payment is subject to change. Lenders must also disclose in advertisements whether minimum payments on specific mortgage products result in a lump-sum “balloon payment” due at the end of the loan term.
Then ask yourself a question…..
by Tom on August 31, 2009
in Atlas Shrugged, Market Musings
If 76% of economists say a second stimulus isn’t needed and that agrees with the government’s opinion, then what is the likelihood that we’ll see the tax credit for first time home buyers extended?
Short answer – only slightly better than zero…..
If the economy is supposedly recovering and the government and the talking heads (the economists) say that we don’t need it, we probably won’t see one.
Tom Vanderwell
76% of economists say second stimulus not needed – NABE – Aug. 31, 2009
An increasing number of economists agree with the government’s response to the recession, saying they believe the economy is on the road to recovery, according to a survey released Monday.The majority of respondents, or 76%, do not believe a second stimulus package is necessary, said the report from the National Association for Business Economics.
Another reason to question the numbers…..
by Tom on August 31, 2009
in Market Musings
Yves Smith over at Naked Capitalism raises another reason to question the numbers that you hear in the main stream media. Let me attempt to summarize and then go read the whole article if you want more information:
- The numbers according to the way that “they” show them is that the savings rate is up.
- But so are mortgage delinquencies, foreclosures, credit card defaults etc. So, there are a lot of people who don’t have enough to meet their obligations, let alone save.
- If the top 1% in income are saving an additional 20% of their income, it skews the numbers and makes it such that it appears that the savings rate for everyone has gone up.
Granted, there are no solid numbers that break the savings rate down by income percentile, but this does raise some questions about the statistics on savings rates.
Tom Vanderwell
Guest Post: “The Savings Rate Has Recovered…if You Ignore the Bottom 99%” « naked capitalism
It has become fashionable among equities managers of the bullish persuasion to argue that a strong recovery in GDP will occur in 2010 because the “structural adjustment period” of moving back to a more normal savings rate has been completed. We’ve gone from a savings rate of barely 1% in 2008 up to 4.2% in July (ok, so the argument sounded better when the number was 6.2% in May, but still…).The story goes something like, “consumers took a little time to recognize that their home equity had disappeared, but now they’ve adjusted their savings rates toward the desired level to reflect the fact that they need to save a larger proportion of income for retirement…so this effect will no longer be a drag on growth in coming quarters.”
This is the kind of conventional wisdom which could only emerge among folks in the 99th income percentile who spend their time primarily with other folks in the 99th income percentile. You don’t have to look at the data (mortgage delinquencies, foreclosures, credit card defaults, bankruptcies) all that hard to see a very different picture. In fact, it is almost certainly true that the savings rate for 99% of the US population is negative. These people (a/k/a “all of us”) are drowning. And to the extent that our savings rate is less negative than it was one or two years ago, that simply reflects the reality of reduced home equity and unsecured credit lines rather than any conscious effort to reach a “desired level” of savings.
Mortgage Market Week in Review
by Tom on August 31, 2009
in Market Musings, random
Didn’t get published over the weekend. Spent a majority of my time either with the family or working on an exciting fundraiser for God’s Littlest Angels in Haiti.
It will be completed within the next hour or so. Sign up now in the column on the left if you want a copy.
New underwriting guidelines are in place as of this morning. I plan on talking about a lot of those this week because there are some very important changes that are happening.
Stay tuned and as always, let me know how I can help.
Tom Vanderwell
#83 – ONLY $95 MIllion
Calculated Risk: Bank Failure #83: Mainstreet Bank, Forest Lake, Minnesota
From the FDIC: Central Bank, Stillwater, Minnesota, Assumes All of the Deposits of Mainstreet Bank, Forest Lake, MinnesotaMainstreet Bank, Forest Lake, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. …
As of June 30, 2009, Mainstreet Bank had total assets of $459 million and total deposits of approximately $434 million. …
The FDIC and Central Bank entered into a loss-share transaction on approximately $268 million of Mainstreet Bank’s assets. …
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $95 million. … Mainstreet Bank is the 83rd FDIC-insured institution to fail in the nation this year, and the second in Minnesota. The last FDIC-insured institution to be closed in the state was Horizon Bank, Pine City, on June 26, 2009.
#82 – $97 Million
Calculated Risk: Bank Failure #82: Bradford Bank, Baltimore, Maryland
From the FDIC: Manufacturers and Traders Trust Company, Buffalo, New York, Assumes All of the Deposits of Bradford Bank, Baltimore, Maryland
Bradford Bank, Baltimore, Maryland, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. …
As of June 30, 2009, Bradford Bank had total assets of $452 million and total deposits of approximately $383 million. …
The FDIC and M&T entered into a loss-share transaction on approximately $338 million of Bradford Bank’s assets. …
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $97 million. … Bradford Bank is the 82nd FDIC-insured institution to fail in the nation this year, and the second in Maryland. The last FDIC-insured institution closed in the state was Suburban Federal Savings Bank, Crofton, on January 30, 2009.
#84 – $254 Million
Calculated Risk: Bank Failure #84: Affinity Bank, Ventura, California
From the FDIC: Pacific Western Bank, San Diego, California, Assumes All of the Deposits of Affinity Bank, Ventura, CaliforniaAffinity Bank, Ventura, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. …
As of July 10, 2009, Affinity Bank had total assets of $1 billion and total deposits of approximately $922 million. …
The FDIC and Pacific Western Bank entered into a loss-share transaction on approximately $934 million of Affinity Bank’s assets. …
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $254 million. … Affinity Bank is the 84th FDIC-insured institution to fail in the nation this year, and the ninth in California. The last FDIC-insured institution closed in the state was Vineyard Bank, National Association, Rancho Cucamonga, on July 17, 2009.
Mortgage Market Update
by Tom on August 28, 2009
in Market Musings, Mortgage Matters, Mortgage Rate Updates
Mortgage Market Update – and the Fed….
by Tom on August 27, 2009
in Market Musings, Mortgage Rate Updates
Okay, so what’s happening today? A couple of things:
- In a speech Thursday, Lacker said it was unclear whether the economy
needed so much rocket fuel now that conditions were leveling out. “I
will be evaluating carefully whether we need or want the additional
stimulus that purchasing the full amount authorized under our agency
mortgage-backed securities purchase program would provide,” Lacker said. What does that mean? My personal view is that it’s a “trial balloon” being floated by the Fed to find out what the market would say if one of the biggest buyers of mortgage backed securities would stop buying. Well, rates are up because of what he said. Imagine what will happen if the Fed actually stops buying mortgage backed securities? - The FDIC came out with their problem bank list and it was substantially worse than expected and worse than the 1st quarter. A sign that the overall banking mess may not be as wrapped up as we thought.
- Jobless claims came out somewhat mixed this morning. Not good but not totally abysmal.
- GDP reports came in down 1% which is pretty much what the markets had anticipated.
With all of those, rates came in a little higher today than they did yesterday. My recommendation remains to lock all loans. Don’t I almost always say that? Lately, I have. But the reason that I have is because, in my opinion, the risk of higher rates is significantly greater than the risk of lower rates. Between the Fed potentially stopping their purchase of mortgage backed securities, the increased risk of a W recession, rising mortgage delinquencies and increasing foreclosures, the risk of additional pressure on rates is higher than it’s been for a while.
I’ll continue to keep you informed, let me know if I can help.
Tom Vanderwell
P.s. Here’s a sampling of some of the rates that I’m quoting today:
Purchase, owner occupied, 30 year fixed, 20% down, under $417,000, 30 day rate lock, 5.000% with no points or 4.99% with .5 pts.
Refinance, owner occupied, 80% loan to value, 15 year fixed, under $417,000, 60 day rate lock, 4.75% with 0 pts or 4.625% with 1 pt.
Housing on the Mend?
by Tom on August 27, 2009
in Market Musings, Videos, house prices
I have to say that when I’ve listened to Diana Olick about housing lately, she’s been very “straight forward” about the good, the bad and the ugly…..
