Smart Borrower Blog

Archive for December, 2008

Fed Moves Forward with MBS Purchases

On Tuesday, the Federal Reserve named four investment companies it has appointed to start buying up billions of dollars worth of mortgage-backed securities (MBS) during the coming months, in an effort to stabilize the national economy and mortgage market. The enlisted companies are BlackRock Inc, Goldman Sachs Asset Management, PIMCO, and Wellington Management Co. These parties will assist the Fed in purchasing between $80 and $100 billion of mortgage-backed securities every month in order to meet the goal of $500 billion of MBS by the middle of 2009. The Fed had announced plans in November to buy up MBS starting... more »

Refinancing Models Beginning A New Boom?

From reading my posts, you might think that I tend to dwell on the negative aspects of the banking and mortgage industry.   That isn’t really the case - my sources don’t really give me a lot to crow about.     Actually, I look for good news every post.   It is a bit hard to do lately.   Today, however, I have news that is a bit hard to believe, and I have to think that it might be best to take with a grain of salt. Richard Bove, a Ladenburg Thalmann analyst, states that “U.S. government programs... more »

Existing Home Sales and Prices Decline in November

As the economy continued to weaken, sales of existing U.S. homes fell in the latest month, as did the median home price, according to data released by the National Association of Realtors.  Existing home sales, which include single-family, town homes, condominiums, and co-ops, dropped to a seasonally adjusted rate of 4.49 million units in November, down 8.6 percent   from the previous month. The latest sales figures represent a 10.6 percent decrease from the November 2007 pace.  Lawrence Yun, NAR chief economist, blamed the decline on the broader economic turmoil. "The quickly deteriorating conditions in the job market, stock... more »

Refinancing May Be A Good Option Right Now

Things may be in bad shape right now, but bankers say that now is actually a good time to consider refinancing your home.     You of course need good credit, and your home must not have depreciated in value so much that your mortgage is under water.   Banks are willing to go for loans on people who meet their criteria, and any movement now in this sluggish economy is a blessing. Bankers warn that it is important that you check your credit scores, and also check closely the actual value of your home.   At this point in... more »

Blaming It on Bush’s Philosophy

Bob Dylan said it best - “When ya ain’t got nothin’, ya got nothin’ to lose.”   That can be applied to a lot of the subprime mortgages that have gone through foreclosure.   Homeowners did not have a vested interest in these homes, because they were bought with creative mortgages and in many cases no money down. Consequently, no equity was built into these homes in the first few years, and when things got tough, people simply walked away. On September 18th of this year, President Bush asked in meeting with Ben S. Bernanke, chairman of the Federal Reserve... more »

Mortgage Interest Rates Reach A 37 Year Low

We are seeing 30 year mortgage rate at their lowest levels in 37 years.   Now, what we need is for credit to loosen up so that people can buy.   It does little good to have low interest rates when the banks are being very tight with their cash.   Even with the Fed throwing money at the slumping market, it is doubtful that we will see much change in the near future. According to the NBC Nightly News, Project Hope was a loser.   Of all the counseling people that were interviewed, none could testify to the fact... more »

Federal Reserve Makes Historic Rate Cut Decision

The Federal Reserve made an unprecedented move Tuesday by resetting its target interest rate to a range of zero to 0.25 percent, down from 1.0 percent, citing continued weakness in the U.S. markets as the impetus for the dramatic decision. "Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined," said the Federal Open Market Committee in a statement. "Financial markets remain quite strained and credit conditions tight.   Overall, the outlook for economic activity has weakened further." The Fed has consistently lowered its rate... more »

Equity Loss In American Homes

I posted recently about the value of homes dropping in the United States.   I said in my post that trillions of dollars would be lost this year due to these drops, effectively putting many homeowners under water on their mortgages.   Today I did some searching for some figures, and found the stats I was looking for online at Zillow.com.   Zillow, a real estate site, has a lot of information for the home buyer and prospective owner.   Because I don’t like posting data without facts to back it up, I found that, according to an analysis of... more »

Home Values May Take 50 Years To Rebound

Many high end homes today are causes for concern in the economic struggle, because their inflated value means that the owners have ended up with an underwater mortgage, and find themselves in the unique position of owing much more than the home is worth.   For many years, homes in areas of certain parts of the country, such as SoCal, have been sold for an enormous price as compared to a like home in places like Ohio or Illinois.   Some of the tiny cracker box homes I have seen on Dr. Housing Bubble have stunned me due to the... more »

NAR Predicts Lower Mortgage Rates as Pending Home Sales Stabilize

The National Association of Realtors is forecasting lower mortgage interest rates into 2009 even though   its index of pending home sales has been relatively stable. According to a release Tuesday, the NAR Pending Home Sales Index slid down just 0.7 percent in October from the previous month and down 1.0 percent from October 2007. The index is based on signed sales contracts and is an indicator of future sales. "Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range," said Lawrence Yun,... more »