First Time Homebuyer Tax Credit Update & Changes

THE FIRST TIME HOME BUYER TAX CREDIT IS BEING EXTENDED!

Here is the brief version, see below for all of the details

There have been some slight revisions “Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers — or anyone who hasn't owned a home in the last three years — would still get up to $8,000. To qualify, buyers in both groups have to sign a purchase agreement by April 30, 2010, and close by June 30. The credit is available for the purchase of principal homes costing $800,000 or less, meaning vacation homes are ineligible. The credit would be phased out for individuals with annual incomes above $125,000 and for joint filers with incomes above $225,000.”

Tax Credit for Homebuyers

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

Tax Credit Versus Tax Deduction

It’s important to remember that the tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.

Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.


Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

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Remember, the new tax credit program includes a number of details and qualifications. For more information or answers to specific questions, please call or email me today.

In addition, you may be able to benefit from additional housing related provisions, including the following:

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Tax Incentives to Spur Energy Savings and Green Jobs
This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings

This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing

This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly)

Grants and The Home Run Grant!

Condo changes coming, Hang on for the bumpy ride!

If you would like a copy of the full letter from hud on these changes, please email me or call me and I would be happy to get it to you.

What is the Mortgage Disclosure Improvement Act Policy (MDIA) and How does it effect you?

As many of you know there have been many recent new changes that have gone into effect as of July 30, 2009. One of those changes is the MDIA which is the Mortgage Disclosure Improvement Act Policy.

There are a few things that you have to remember for this new policy:

1) There are now waiting periods that the buyer has in order to review the documents of 3 days, each time they are disclosed or re-disclosed.

2) You cannot close a loan for a min. of 7 business days from the first set of documents signed

3) Nothing other than credit can be ordered until we have signed documents. If the documents were marked "mailed" we have to wait 3 business days and on the 4th day, we can order appraisal etc..

4) Anytime the Truth in Lending changes .125% higher or lower we must re-disclose and then wait 3 business days.

5) A business day is considered any day other than Sunday and Federal Holidays.

Basically, what this boils down to is that the fees disclosed to the borrower can not be .125% (eighth) higher or lower than what was originally disclosed. If it is an eighth higher or lower, than we will have to re-disclose those fees and wait 3 business days before closing.

So you ask, what are the fees that will be included in the TIL that can effect and trigger off the 3 days waiting period of re-disclosure? I have included the list of items below for your review.

Many Realtors have also asked what they can do to help this along and make it smoother for us to make sure our numbers are as accurate as possible. A few things that you can do to help your loan officer are:

1)encourage your buyer to get with the loan officer as soon as they can to sign the application.

2)ANYTIME you have an addendum done, please send it over as soon as you can. especially if there are any changes to the purchase price in any way. this will trigger a re-discloser.

3)Short Sales can be another one that can bugger up the closing and trigger off a
re-disclosure. We all know that we can wait months sometimes for the official acceptance from a bank. And usually when they finally approve the offer there are changes to the purchase price or the closing costs that they will pay. And, usually the bank wants to close ASAP. This is all fine and dandy but if we have to change any of the numbers that are included in the TIL, a new re-disclosure has to be signed and 3 business days starts.

4)If the lender gets the file done early and everyone wants to close early... A new re-disclosure will have to be sent out since less interest days will need to be collected and this effects the TIL. So, this can be signed and 3 business days later you can close early.(because the original one will include the amount of days going off of the REPC (purchase contract).

Do you see the pattern? There are a lot of things that can trigger re-disclosure.

I estimate that borrowers will sign re-disclosed documents at least 3 times before closing. (this is the minimum) The first time will be for the Pre-qual with a TBD address. The second will be once they go under contract and the address and purchase price etc. is established. And thirdly, we will send out a re-disclosure 5 days before closing just to be safe.

So 3 times min. they will re-sign docs (luckily it is only a few docs that need to be re-signed)

I am preparing my borrowers when I sit down with them of how many times they will get to sign things so it is not a surprise. The agents can assist us by letting the buyer know that this is normal and part of the new MDIA law that was effective July 30, 2009.

If we didnt have enough to think about, well there is the HVCC (appraisal) new law that we have to add on top of these deadlines too. That is another entry, another day.

Once again, please let me know if you would like further information and assistance.

Cindee Stone
801-381-3863
www.cindeestone.com

Here is that list that I promised you.

Fees that affect the APR on the Truth in Lending (TIL)

Administration Fee
Closing/Settlement Fee
Courier Fee (Overnight delivery, courier, messenger fees)
Discount Points
E-mail/E-Doc Fee
Final Inspection Fee
Flood Cert Fee, if Life of Loan
Loan Origination Fee
Mortgage Broker Fee
Mortgage Insurance Premium (MIP, PMI, VA Funding Fee)
Payoff Processing Fee
Prepaid Interest (until 1st of following month)
Processing Fee
Reconveyance TRACKING Fee
Tax Service Fee
Underwriting Fee
Wire Fee


Fees that DO NOT affect the APR on the TIL:
Appraisal or Appraisal Waiver Fee
Credit Report
Doc Prep Fee
Endorsements
Hazard/Flood Insurance Premiums
HOA Dues
Reconveyance Fees (Not Tracking Fee)
Recording Fees
Reserves (Taxes and Insurance)
Termite/Pest Inspection Fees
Title Insurance Premium

$100 HUD Loan Program

Economic Calendar for August 17-August 21 2009

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of August 17 - August 21

Date ET Economic Report For Estimate Actual Prior Impact
Mon. August 17 08:30 Empire State Index Aug 2.20 -0.55 Moderate
Tue. August 18 08:30 Building Permits Jul 576K 570K Moderate
Tue. August 18 08:30 Housing Starts Jul 598K 582K Moderate
Tue. August 18 08:30 Producer Price Index (PPI) Jul -0.2% 1.8% Moderate
Tue. August 18 08:30 Core Producer Price Index (PPI) Jul 0.1% 0.5% Moderate
Wed. August 19 10:30 Crude Inventories 8/14 NA 2.52M Moderate
Thu. August 20 08:30 Jobless Claims (Initial) 8/15 553K 558K Moderate
Thu. August 20 10:00 Index of Leading Econ Ind (LEI) Jul 0.6% 0.7% Low
Thu. August 20 10:00 Philadelphia Fed Index Aug -2.0 -7.5 HIGH
Fri. August 21 10:00 Existing Home Sales Jul 5.00M 4.80M Moderate

Volatility Accompanies Subdued Consumer Spending

Last Week in Review

There's no time like the present, so the famous saying goes. And that's certainly true when it comes to the good inflation news we saw last week. But, remember, things with inflation could change in the future as the economy continues to try to climb out of the recession...which could have a negative impact on Bonds and home loan rates. Here's what you need to know.

The Consumer Price Index (CPI) for July was unchanged, and, as you can see in the chart below, the year-over-year CPI fell 2.1%, the largest 12-month decline since 1950.

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Chart: Consumer Price Index


There was also good news on inflation last week from the Labor Department. Worker Productivity came in better than expected, rising at its fastest pace in 6 years, as companies cut costs and try to maximize output from their current workforce. This efficiency helps curb inflation, which is good for Bonds and home loan rates.

So how does this news tie in with the economy overall? For one thing, consider last week's Retail Sales Report, which showed that Retail Sales dropped in July by 0.1%, well below the 0.8% gain that was expected. This report negated the better than expected Wal-Mart second quarter earnings report and signals that consumers are still saving more than spending.

Although low consumer spending may seem like a bad thing, it is actually not such bad news in terms of inflation because of a little known (and rarely discussed) but critical facet of the economy called the velocity of money.

The velocity of money concept is simple. It goes like this: when you buy a pair of shoes, the owner of the shoe store takes that profit and buys a big screen TV, then the TV store owner buys something else, etc. The same dollar passes through the economy over and over again, triggering growth, jobs and, ultimately, inflation. The latest Retail Sales Report tells us that the velocity of money effect has been stagnant...that shoe store owner is not running out to buy a big screen TV with the profits. Once consumer spending begins to increase and the velocity of money increases, inflation is likely to follow. This will be something to look for as the economy continues to stabilize.

Something else to look for is the approaching end of the Fed's Bond purchase program. Home loan rates have stayed historically low since the program began in January. So, this is another variable that could push Bonds down and home loan rates up in the future.

Bonds and rates did manage to end last week better than where they began, but there was a great deal of volatility along the way. Give me a call if you want to look at your situation and see if now is the time for you to act.

LAST WEEK MARKED MORE TREASURY PURCHASES AND ANOTHER RATE AND POLICY DECISION FROM THE FED. CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW TO LEARN EVEN MORE ABOUT WHAT THE FED DOES.

Forecast for the Week

While there will be a break in the Fed Treasury auctions this week, there will still be plenty of news that could affect the markets. Tuesday will bring more inflation news in the form of the Producer Price Index (PPI), which provides information about wholesale level price changes. We'll also get a read on the housing market with Tuesday's Housing Starts and Building Permits Report as well as Friday's Existing Home Sales Report.

Thursday brings both the Philadelphia Fed Report, which is one of the most-watched manufacturing reports overall, as well as the Initial Jobless Claims Report. We have seen three weeks of readings under 600,000 claims after 22 consecutive weeks of readings over that level. However, it may be that those numbers have dropped as a result of Claims benefits expiring, rather than people finding employment.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds and home loan rates were helped last week by tame inflation readings and a strong demand for Treasuries. I will be watching closely to see what this week brings.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Aug 14, 2009)

The Mortgage Market View...

What the Fed Does
By Steve Sampson

The Fed provides banking services to America's banks and to Uncle Sam. That's the nitty-gritty part of its job. On the more glamorous side, it also develops and implements the nation's monetary policy--and in the process influences interest rates.

Mighty Money Supplier


The media often suggest that the Fed "sets" interest rates--as if the Fed chairman just says "let the rate be 4 percent" and the nation's banks make it so. But that's not how it works. Banks determine interest rates based on all sorts of factors, from recipients' credit histories, to the current money supply, to how low their competitors are willing to go.

The Fed has no control over many of these factors, but it can influence the money supply--in three ways. First, it loans money directly to banks, though only on a limited scale. Second, it occasionally changes how much money banks must keep on reserve. Third, and most important, the Fed uses what it calls "open market operations" to move money into and out of the banking system.

We're Banking on You

To get an idea how the Fed's open market operations work, imagine you're the manager of Knowledge News National Bank (it's OK, we trust you). Your job is to make as much money as you can for the bank, and one of the ways you do that is by making loans, on which the bank earns interest.

The Fed requires KNB (and all banks) to keep a certain percentage of customer deposits in reserve at all times. As KNB's manager, you use deposits to make loans. But you must also maintain the required reserves--and you never know how much money customers will deposit or withdraw each day. When you're short on reserves at the end of the day, you must find a way to cover the difference.

Luckily, you know where to go. Other bank managers have extra money on hand, and they want to loan it out to earn interest. It's a perfect match. All you have to do is agree on an interest rate. If lots of banks have money to loan and not many are shopping for it, supply and demand dictates that rates will go down. On the other hand, if lots of banks want to borrow money and not many have it, rates will go up.

Smooth Open Market Operator

Recognizing this, the Fed influences interest rates by buying and selling securities on the open market. If it wants rates to go up, it starts selling lots of securities. The buyers of those securities pay the Fed millions, even billions, of dollars. That money comes right out of the buyers' bank accounts, reducing the amount of reserves in the banking system. Money gets "tight," and the rate banks charge each other for overnight loans--the "federal funds rate"-goes up.

The same supply-and-demand rules apply in reverse. When the Fed buys securities, it pays millions, even billions, of dollars into the sellers' bank accounts, increasing the amount of reserves in the banking system. With more money out there to loan, the federal funds rate goes down.

Over time, changes in the federal funds rate lead to changes in short-term interest rates, followed by changes in long-term interest rates. When the Fed nudges those rates down, it's hoping for some good old-fashioned economic stimulation. When it nudges rates up, it's hoping to fight inflation.

This article was provided to you through collaboration with Every Learner.
Copyright © 2002-2009 Every Learner, Inc. All rights reserved.

This week in review of announcements....

We have a very busy housing news week ahead of us.

This morning we have seen the NY Empire State survey. The median expectations we're calling for growth of 5.0 follow -.6 decline the month before. According to the index the Business conditions have expanded by 13 points up 12, new orders up nearly 8 points to 13.4 and shipments increasing 3 points to 14.1. The employment index improved, employee payrolls up -7.5 versus a reading of -21.8 the month before.

At 1 PM today we received the housing market index.

Tomorrow
We will se housing starts which is looking for another strong advance. As well as PPI (producer price index).

Thursday
Jobless Claims
LEI (leading economic indicator)
Philly Fed Manufacturing survey

Friday
Existing home sales

Should I Refinance Now?

The Fed's been at it again, offering words that sound encouraging at first blush, confirming that their buying program of Mortgage Backed Securities is in full swing and will continue as needed. Of course, the media will pick this up and offer their own interpretation, saying "Good news, the Fed's words on continuing their purchasing program mean that rates will continue to drop lower, and remain low into the summer..." But is this really what that means? Not so.


Here's the truth.


Yes, the Fed has been buying Mortgage Bonds, but if you look at what they are purchasing, they are buying a lot of FNMA 30-yr 5.5% and 5.0% Bonds...which won't have much of an impact on present interest rates. Why? First, see the Fed's purchases for yourself by hitting this link: Direct Link to View Fed Mortgage Bond Buying - http://www.newyorkfed.org/markets/mbs/index.html.


So why is the Fed buying these Bonds? Well if you think about it, it's very smart of the Fed...and maybe even a little sneaky...because 5.5% Bonds actually represent outstanding mortgages with rates of 6 - 6.50%, which are precisely the loans being refinanced at today's great interest rates.


Stay with me here...


With rates at present low levels, many of the mortgages in these FNMA 5.5% pools being bought up by the Fed will be refinanced and paid, thus giving the Fed a quick recoup on some of their investment. And this is likely a big reason why the Fed said they could continue this purchasing program beyond June, if necessary. Bottom line, the Fed buying these higher rate coupons will not necessarily help rates to move lower, as their actions do not impact the loans being originated at today's low rates.


Here's the most important part.


Sometimes I talk to clients who are in a situation where it makes sense to refinance right now, and save $250 per month for example. But when they hear the media throwing around teases of lower rates ahead, they decide to hold off on making the decision to save the $250 per month right now, in the hopes of gaining another $30 per month in additional savings with a lower rate than where we stand presently. Now clearly, rates could turn higher, and this window of opportunity could pass them by entirely.


The clincher is this:


Even if those clients ultimately are correct in timing the market, and eventually grab that lower rate and save another $30 per month - think of what they have lost by waiting. While they delayed, they lost the savings they could have gained by taking action sooner - or in the example used, $250 - for every single month they waited. So even if they got lucky and obtained the rate they were looking for, it could take years to make up what they lost by waiting.


I don't want anyone to miss an opportunity by either waiting, or not understanding what is at stake. Let's talk further on this - call or email me and let's discuss what this might mean for you.

TGIF!

This morning we've seen the Consumer Price Index (CPI) which came in roughly unchanged. On average consumer prices are down 2.1% the largest decent since 1950. With this news mortgage prices are roughly unchanged.

There is quite a bit of news that can move rates today. This morning we've seen the trade balance which reached a total deficit in goods and services of $27 Billion due to a jump in Oil prices following a forecast of $28.5 billion. This would normally be bad for rates as it revises the GDP better showing signs of stabilization globally, however we are in pretty much a holding pattern until the FOMC adjourns. The major market mover today will be the results of the $23 Billion in 10 year notes auction at 1 PM (EST) today.

Have a great day!

Jay Cain

In the news this morning worker productivity grew to its highest levels seen in six years as employers require more out of their remaining staffs. Labor costs fell by the most in nearly 8 years at a decrease of 5.8% with productivity jumping 6.4%. The average hours worked fell at 7.6% while compensation rose .2%.

U.S. Wholesalers decreased inventories for the 10th straight month, showing a decrease of 1.7% which is the longest series of decline since recording begun in 1987. Sales we're up .4%.

In Fed news, today's begins the 2 day FOMC meeting, however no changes are expected and 37 billion in 3 year notes to be auctioned today.

Auctions are as follows

Today - $37 Billion 3 year notes
Tomorrow - $20 Billion in 10 year notes
Thursday - $15 Billion in 30 year bonds

Have a great day and hope for great auction turn outs!

Jay Cain

In the news this morning, initial jobless claims decreased by 38k to the expected
550k pushing the four week moving average to 555,250. However continuing claims rose 69k to 6,130,000. With this being basically the only news on the day mortgage prices are worse by about .125.

The following script is intended to be used when speaking with your clients, prospects, and referral sources. It explains the current market conditions and will help solidify your position as a Trusted Advisor. You can even use it when you leave a voicemail message.


"Stocks opened to their worse levels since the mid-1990s, but are trading higher this morning.

There could be some good news later this week when Congress holds a hearing on mark-to-market. The Securities Exchange Commission Chief Accountant and the Chairman of the Financial Accounting Standard's Board will be testifying at the Thursday hearing. Hopefully, Congress can come up with a mark-to-market solution that will help the credit system flow again.

Currently, Mortgage Bonds are holding above the 25-Day Moving Average and the Falling Trendline. I recommend floating for now. But with rates already near 35-year lows, we may need to be ready to lock. I will keep you posted.""




© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved

"The morning began with Stocks lower and Mortgage Bonds pushing higher, as Traders anticipate a lousy Jobs Report tomorrow. The move higher in Bonds is important because it means they have managed to break above a difficult ceiling of resistance, at least for the moment.

In other news, Productivity in the fourth quarter dropped as the economy contracted faster than companies cut jobs and hours. And while the number of Initial Jobless Claims was slightly better than expected, the four-week moving average of Jobless Claims reached the highest level since October 1982.

Tomorrow's Jobs Report is expected to be dismal--estimates are for 650,000 jobs lost, but the number could be even higher. While this is unfortunate for our economy and those individuals, it could cause Bond prices to improve. I recommend floating ahead of tomorrow's report, and I will be watching closely to see how the markets react."




© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"Yesterday, Bond prices climbed to an important level of resistance at the Falling Trendline before being pushed back to the 25-Day Moving Average. These indicators are important because rates will not significantly improve unless prices can move above this ceiling.

In the news today, the ADP Report came in worse than expected--showing U.S. private firms shed 697,000 jobs in February. Adding to insult was a downward revision to January’s number, which erased another 90,000 jobs. Also today, the Obama administration released its Housing Rescue Plan designed to help responsible homeowners.

Currently, prices are in the midst of a trading range. Therefore, I recommend floating, but be prepared to lock if the situation changes."


© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"Stocks are looking to rebound today after yesterday's sell off that saw the Dow fall below 6,800 for the first time since October 1996.

On the radar today, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner will discuss the budget in front of separate Senate and House committees. They will try to shed some light on plans to bring the ailing US economy back to life.

For now, I recommend floating, as prices are near the middle of a comfortable trading range. If a change of course is required as information on the budget is presented, I will let you know."



© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"In early trading this morning, the Dow fell below 7,000 for the first time since 1997, as Stocks are trading lower on fears that the recession is getting worse.

Also pressuring Stocks lower is news that insurance giant AIG lost more than $61 Billion in the 4th quarter of 2008--which is the biggest loss ever for a US company. As a result, the government is preparing to provide AIG with a $30 Billion line of credit using money set aside from the TARP fund created last year.

Despite the drop in Stocks, Bonds are trading near unchanged levels. For now, I recommend carefully floating, but be prepared to lock if Stocks reverse higher."




© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

Inflation was back in the news today. Fed member Frederic Mishkin appeared on CNBC this morning stating that inflation could come to the forefront given all of the government programs. The news is keeping Mortgage Bond prices near unchanged levels.

The Federal Reserve Bank of New York reported they purchased $19B in mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae between January 15 and January 21, bringing its total purchases so far up to $52.6B, or around just 10% of their $500B commitment through the end of June. The program was instituted to shore up the slumping housing market.

For today, I am currently recommending floating as support seems to be holding just below where Mortgage Bonds are trading. With the Fed still buying Mortgage Backed Securities there is a potential that home loan rates could improve in the near term."


© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

It's been another wild and volatile morning for Mortgage Bonds after a slew of disappointing economic news and negative corporate earnings reports initiated an early sell-off in the Stock market.

Initial Jobless Claims reached its highest level since November 1982. In addition, housing remains weak as Housing Starts fell more than 15% in December and Building Permits also came up short.

Mortgage Bonds are attempting to trade above support. I recommend floating for now, but I will let you know if today’s volatility requires a change of course."



© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

Mortgage Bonds are trading just above important support at the Rising Trendline, and with no economic reports scheduled for release today, pricing could be influenced by action in the Stock market. After a rough start in 2009, Stocks are hovering right near important support as well, and could bounce higher from here.

Adding a slightly positive tone to Stocks this morning is news that IBM beat earnings estimates for the 4th quarter. The tech bellwether said it also plans to earn $9.20 a share in 2009 versus expectations of $8.70.

After a few days of pricing pressure, Mortgage Bonds are trading near oversold conditions, which could make prices ripe for a reversal higher. Couple that with the strong underlying support from the Fed and it suggests for the time being to float."



© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"This morning, the Consumer Price Index for 2008 was reported the lowest since 1954, indicating that inflation is not a problem. The big news of the day, however, is in the banking sector.

Citigroup reported a $8.29 Billion loss, completing its worst year ever since its inception in 1812. Bank of America also lost $1.79 Billion in the 4th quarter, making 2008 the bank's first yearly loss in 17 years. However, Bank of America received a lifeline late last night in government funds in exchange for preferred stock.

Currently, the Stock market is rebounding a bit higher, which is applying selling pressure on Bonds. However, prices have already improved since early lows. For now, I recommend floating, as we watch to see if prices can hold."


© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"There has been a barrage of economic data and news released today, yet Bonds have remained relatively steady so far this morning. Meanwhile, JPMorgan Chase surprised the market with an earnings report that beat expectations. It's been awhile since a financial Stock actually surprised to the good side.

In other news, inflation is virtually non-existent at the wholesale level as the Producer Price Index showed that prices fell in December for the fifth consecutive month. Tomorrow’s Consumer Price Index report will show how costs have increased or declined on the consumer side, and I will be watching to see how the markets respond.

Overall, Bonds continue to move in a sideways pattern, thanks in part to the Fed buying support of Mortgage Backed Securities. For now, I recommend floating.



© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"Mortgage Bonds improved and Stocks lost more ground today on the awful Retail Sales news. Sales plunged by 2.7%, far worse than expected. Even worse, when you strip out autos, the number declined 3.1% versus expectations of a 1.4% decline. Retail sales have now fallen for six months in a row.

In the banking sector, Deutsche Bank, which is Germany's largest bank, warned of a fourth-quarter loss of $6.3 Billion, and Chase announced they are pulling out of their broker wholesale lending. This has added to the selling pressure on Stocks.

The Fed's Beige Book will be released this afternoon at 2 pm and could influence the markets, so stay tuned. For right now, I recommend floating to see if prices can revisit resistance at the all-time price highs, about 40 basis points above present levels."



© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved

"Stocks are trading near unchanged levels after being under selling pressure yesterday due to Alcoa's 4th quarter loss of $1 Billion and rumors that Citigroup has more credit losses mounting.

In other news, Federal Reserve Chairman Ben Bernanke discussed the financial crisis this morning, saying that the highest priority is to promote global financial stability. On a positive note, he said that the US Federal Reserve still has enough policy tools to combat the current recession.

For now, I recommend floating. But I will be watching carefully to see if Stocks rebound after losing 500 points in the last 5 days. If that happens, Bonds could drift a bit lower and a change of course may be needed. I will keep you posted."



© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"Today kicks off the 4th quarter earnings season for the Stock market. No one expects any stellar reports to be in store, but many eyes and ears will be on what these companies say regarding future earnings.

In other news, Oil prices are tumbling this morning to near $38 a barrel on concerns that slumping demand will outweigh output cuts by OPEC. Due to the present economic slowdown, Oil consumption is expected to fall by 1 million barrels a day this year in the US alone.

Currently, Bond prices are down, but may rebound a bit later if the Fed steps in with some buying. Therefore, I recommend floating for now.


© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"The Labor Department reported this morning that there were 524,000 jobs lost during the month of December, this was worse than expectations of 500,000. All told, there were 2,600,000 jobs lost in 2008 and was the biggest job loss in any calendar year since 1945, when 2,750,000 jobs were lost as the wartime economy was demobilized.

Adding further sting to the report was the Unemployment Rate, which shot up higher than expectations to 7.2%, the highest reading in 16 years.

I will continue to recommend Floating for now, but be mindful that Mortgage Bonds are trading at all-time historic highs - so a pullback lower would not be a surprise."


© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved

"Mortgage Bonds are trading higher and at historic levels as the Fed was likely active in the markets continuing their purchase program this morning.

Meanwhile, Stocks are under selling pressure thanks to a rash of earnings warnings from the nation's retailers. Wal-Mart said today that 4th quarter profits will miss expectations after one of the worst holiday shopping seasons on record, while Macy's and Limited Brands cut their earnings forecast after the weak December sales readings. Macy's also said they are closing 11 stores.

In other news, the markets are bracing for a bad Jobs Report tomorrow and if the number is indeed bad, Mortgage Bonds could improve further as Stocks will likely come under selling pressure. Therefore, I recommend floating into tomorrow's report, but I will let you know if the news of the day requires a change of course."

© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"The Fed was back in the markets this morning aggressively buying Mortgage Backed Securities pushing prices higher as it tries to lower home loan rates. The Fed will be buying $500B of Mortgage Bonds - that equals approximately $4B in buying power each trading day...that is pretty good buying support, which could help mortgage rates move steadily sideways to lower over the first two quarters of 2009.

At 2pm ET the Fed will release the Minutes from the December 16 Meeting which may shed some light on the Fed's view of the economy and the reasoning behind the aggressive cut. The Fed lowered the Fed Funds Rate by .75% to a range of 0 to .25% at that meeting.

With the Fed providing underlying buying support to Mortgage Bonds, I am recommending to float longer-term, but on short-term transactions we should be ready to lock at a moment's notice to protect pricing. We will likely see the lowest rates in our lifetime during the first two quarters of 2009, so get this message to everyone who can benefit and have them lock in during this once in a lifetime opportunity."

© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.

"Happy New Year! Mortgage Bonds are off to a great start in 2009, as the Fed begins its planned purchase of Mortgage Backed Securities. This process will continue gradually through June and should help buoy Mortgage Bond prices. For today, there are no economic reports due out, so Mortgage Bonds will likely respond to today's Fed announcement.

In other news, President-Elect Obama's new stimulus package will reportedly be worth $775 Billion and will include hundreds of Billions of dollars worth of tax breaks and credits for individuals and businesses. This is good news for the economy and should help with consumer confidence over time
© Copyright 2001-2008 The Mortgage Market Guide, LLC. All rights reserved.