Municipal Bonds - 10/30/09 04:59 PM
Both Corporations and government can issue bonds.  A special category of government bonds are municipal bonds which are frequently offered tax free.  They are issued by cities, counties and states.  The principal and interest are usually insured and the minimum increment for investors is $5,000.  Interest is usually tax free  on a federal level and sometimes on a state and local level as well.  Bonds are traded publicly just like stocks.
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October 30th Mortgage Market Wrap-up - 10/30/09 04:52 PM
Mortgage backed securities (MBS) closed up 41 basis points today at 101.19 once again closing above the 25 day moving average.  Today was almost an exact reversal of yesterday's MBS selloff.  The core Personal Consumption Expenditure Index (PCE), the Fed's favorite measure of inflation, reported tame numbers while the Dow tumbled ending up losing 249 points on the day. 
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Treasury Offering Classifications Explained - 10/29/09 04:30 PM
The government's Treasury offerings are classifed by duration.  Treasury bills are products maturing in leas than one year, while notes mature in durations from one year up to ten years.  Treasury bonds have maturities greater than 10 years.  The varying maturies give investors an opportunity to spread their risk.  Longer term offerings normally reward investors with higher yields.
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October 29th Mortgage Market Wrap-up - 10/29/09 04:23 PM
Mortgage backed securities (MBS) were down 50 basis points today closing at 100.66 below the 25 and 50 day moving averages and just above the 200 day moving average.  When the government announced tha the Gross Domestic Product (GDP) had grown in the third quarter stocks rallied and money rushed from MBS bonds into the stock market.  The DOW closed up nearly 200 points in the biggest single day rally since July.
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What Is a Fixed Income Security - 10/28/09 05:09 PM
What are people talking about when they use the term "fixed income" securities?  They are talking about bonds.  Other than taxes governments have two ways to raise money either stocks or bonds.  Bonds are the preferred choice.  They are called fixed income because quite literally the interest rate is fixed.  The rate of return may vary, however, based on the price for which they are acquired.  Bonds normally pay out interest twice a year.
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October 28th Mortgage Market Wrap-up - 10/28/09 05:01 PM
Mortgage Backed Securities (MBS) closed up 44 basis points today at 101.16 above the 200, 50 and 25 day moving averages.  New Home sales unexpectedly fell and there was a general malaise in stocks worldwide as global earnings did not meet expectations.  As a result, stocks fell fulfilling a much anticipated correction.  The Dow closed down 120 points and crude oil was down over $2.00 to $77.46 per barrel.
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Fannie Mae Exec Sheds Light on Modifications - 10/27/09 04:59 PM
 Fannie Mae Vice President Jeff Hayward spoke yesterday about the Home Affordable Program.  The Program was put in place by Fannie Mae to set forth guidelines undeer which modifications might be made.  The banks are not required to utilize them, however.  In order to seek a modificataion, a borrower must go to the  Home Affordable web site and and determine whether or not he/she has a Fannie Mae loan.  If so, he/she may go directly to the lender to try to securs a modificaiton.  The negotiations are not for the lighthearted.  As Hawyard phrased it, "there is a lot of blocking … (0 comments)

October 27th Mortgage Market Wrap-up - 10/27/09 04:46 PM
Mortgage Backed Securities (MBS) closed up 47 basis points today at 100.72 just above the 200 day moving average.  Positive results at today's Treasury auction caused MBS bonds to rally at 1 PM and they closed near their highs of the day.  Consumer Confidence came in lower than expected which also help the bonds higher.
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Fannie Mae Leader Confirms Low Rates Are Fleeting - 10/26/09 04:42 PM
I attended a breakfast this morning in Connecticut sponsored by the Council of Churches of Greater Bridgeport.  The Panel discussion was entitled "The State of the Housing Crisis."  The lead speaker was Michael J. Williams, President and CEO of Fannie Mae.  He stressed the commitment of all Fannie Mae employees to making the loan process as smooth as possible.  Both he and Jeff Hayward, Fannie Mae's Vice President for Community Lending, agreed that rates are indeed about to rise as the FED eases off on its Treasury and MBS buyback policy.
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October 26th Mortgage Market Wrap-up - 10/26/09 04:21 PM
Mortgage Backed Securities (MBS) closed down 34 basis points today at 100.25.  The drop brought MBS bonds below both the 50 and 200 day moving averages and just above support at the 100 day moving average.  It was an unusual day in that bonds, stocks and oil all sold off on the same day.  The record Treasury sales and the end of the Treasury buyback caused the downwward pressure.
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The Wealthy Use ARMs to Reinvest for Additional Gains - 10/23/09 04:25 PM
Did you know that adjustable rate mortgages are still around.  They are, in fact, alive and well.  Many individuals involved in the financial markets in and around New York still use these products to access low interest rates on their homes.  This allows them to free up cash flow for other more lucrative pursuits.  A 5/1 Interest Only ARM is currently being offered at 4.625% for loans up to $1,000,000.  The monthly payment on such a loan is only $3,854. per month compared to a payment of $5,756. on a fully amortizing 30 year fixed loan at 5.625%.  That savings of … (2 comments)

October 23rd Mortgage Market Wrap-up - 10/23/09 04:14 PM
Mortgage Backed Securities (MBS) closed down 19 basis points today  at 100.59.  The light selloff leaves MBS bonds below two critical levels of support consisting of the 50 and 200 day moving averages.  The next level of support is the 100 day moving average at 100.04. If bonds cannot rally on Monday the former levels of support could become resistance and interest rates could inch upward. 
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What You Might Deduct in the Loan Process - 10/22/09 05:00 PM
There are several items associated with a loan and a purchase that may be deductible.  Home acquisition p0ints, home improvement points an refinance points are all potentially deductible.  The previous years points from a refinance may also be eligible.  Prorated property taxes and mortgage interest are additional possibilities, but you should verify that they are truly within guidelines.  Prepaid taxes and mortgage interest, prepayment penalties and home construction loan interest round out the list.  It is imperative that you consult a well qualified tax accountant before signing your name to a tax return with any of these deductions on it.
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October 22nd Mortgage Market Wrap-up - 10/22/09 04:51 PM
Mortgage Backed Securities (MBS) closed down 3 basis points on the day closing at 100.78.  The 4.5% Fannie Mae bond is again wedged between the 25 day and 200 moving averages.  As a result, the conforming 30 year fixed rate is closing the day at 5.0% for a 30 day lock.  The bonds did well to hold their own after the Treasury announced they would auction a whopping record $123 billion in notes next week.
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You May Not Be Able to Deduct All Your Mortgage Interest - 10/21/09 04:50 PM
There are two maximums involved in the equation for determining how much mortgage interest you may deduct.  The first prevents you from deducting interest on more than $1,000,000. of the first mortgage as an acquisition limit.  The second limits you to an additional $100,000. for what is called home equity.  Even if you have no home equity loan or line of credit, you may still deduct inerest on an additional $100,000. of your first mortgage.  Finally, be careful of the acquisition indebtedness rule.  If you pay cash for a property and do not secure a mortgage within 90 days of the purchase, you … (0 comments)

October 21st Mortgage Market Wrap-up - 10/21/09 04:36 PM
Mortgage Backed Securitieis (MBS) were off 6 basis points today closing at 100.81.  After being off significantly most of the day, the MBS bonds came almost all the way back the opening price.  The Dow headed downward late in the day as Boeing and some financials came in with poor earnings reports.  Initial job claim and leading economic indicators will be released tomorrow.
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Having Good Credit Can Save You Thousands - 10/20/09 04:24 PM
Having a high credit score can save you thousands of dollars on a car loan and hundreds of thousands of dollars on a mortgage.  The lower the score the higher the risk of default.  Look at the compelling case for a high credit score built by the chart below.  It compares 30 year fixed rate on a $500,000. loan.
 Credit Score           APR Rate         Monthly Payment          Interest Paid 
720-850                 5.3%                $2,776.52                    $499,549. 
700-719                 5.9%                $2,965.68                    $567,647. 
680-699                 6.5%                $3,160.34                    $637,722. 
620-679                 7.6%                $3,530.37                    $770,937. 
560-619                 8.4%                $3,809.19                    $871,305. 
500-599                 9.9%                $4,350.95                    $1,066,352.
 The rates above are approximations to demonstrate the massive penalty … (0 comments)

October 20th Mortgage Market Wrap-up - 10/20/09 04:19 PM
Mortgage Backed Seccurities (MBS) were up 9 basis points today closing at 100.88.  Once again the MBS bond closely just barely above the 200 day moving average but well off the highs for the session.  The porducer price index reflected tamer inflation numbers than expected.  Housing start and building permits were weak.  The Dow was down 50 points.
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Be Careful about Frequent Credit Checks - 10/19/09 04:25 PM
The number of inquiries accounts for the final 10% of your score.  You should know that inquiries affect the score for one year.  Inquiries can cost from 0 to 50 points, but the average is about 5 points.  A score will only be reduced for the first 10 inquiries in a year.  Credit reports run by auto and mortgage companies are in a special category.  The bureaus realize that the size of the transaction merits your shopping with multiple vendors.  For this reason, a 45 day window is opened when your score is first run during which all the reports done by auto … (0 comments)

October 19th Mortgage Market Wrap-up - 10/19/09 04:17 PM
Mortgage Backed Securities closed up 6 basis points today at 100.78.  The bond, which had been trading in a tight range between support offered by the 50 day moving average and resistance from the 200 day moving average, managed to close just above that resistance.  If the bond can remain above that level, it will become a support and bonds and interest rate could improve.
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Watch Your Credit Mix - 10/16/09 04:29 PM
Your credit mix accounts for about 10% of your score.  An ideal mix would be to have the previously mentioned 3 to 5 credit cards, a mortgage account, an auto loan and an equity line of credit.  Please note that three or more mortgages will actually hurt your score.  The credit cards should have the lowest possible balance and the highest possilbe credit limit.  It is important to charge something on your credit card every few months and, of course, remember to pay the bill on time. … (0 comments)

October 16th Mortgage Market Wrap-up - 10/16/09 04:21 PM
Mortgage Backed Securities closed up 25 basis points today closing at 100.72.  IBM and GE reported lower revenues causing a sell off in stocks.  Typically during a down stock market money flows from stock into bonds and today was no exception.  MBS bonds were down 31 basis points for the week representing a change of less that one eighth of a percent for interest rates.
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Hang onto Your Credit Cards and Keep Them Active - 10/15/09 04:26 PM
The Average age of all the entires in your credit file makes up about 15% of your score.  The longer your credit history the better.  Hold on to old credit cards.  They will act like old friends helping you keep your score high.  Most people do not realize that closing accounts can actually cause your score to go down.
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October 15th Mortgage Market Wrap-up - 10/15/09 04:19 PM
Mortgage backed securities closed down 38 basis points today at 100.47, having fallen below 200 and 25 day moving averages.  Anticipated improved eearnings reports and rising stock prices took their toll.  The selloff will cause tomorrow's rates to increase by .125%.  In addition,  a slight uptick in core inflation and a vastly improved Empire State Manufacturing Index added downward pressure.
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Keeping Track Will Help Your Credit Score Stay High - 10/14/09 05:05 PM
Past delinquencies account for about 35% of your score.  Late payments with in the past six months are extremely harmful regardless of the amount due.  Mortgage lates within the past year are the worst lates you can have.  Collection accounts are damaging both to your score and to an undererwriter's overall perception of your worthiness to repay.  Judgments too will cause your score to tumble.  Your best plan is to schedule automatic payments for recurring accounts and watch your bills carefully.
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October 14th Mortgage Market Wrap-up - 10/14/09 04:58 PM
The benchmark 4.5% MBS bond fell 28 basis points today to close at $100.84.  The Dow Jones Average closed over $10,000. for the first time since October 3, 2008.  a strong earnings report from JP Morgan Chase and a surprisingly improved September Retail Sales Report help push stocks higher.  The Standard & Poors 500 and the NASDAQ also closed higher. 
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This Week's Economic Calendar - 10/13/09 04:22 PM
The most significant economic data this week will be the CPI monthly inflation report. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Thursday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales will be released on Wednesday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic activity, will be released on Friday. The minutes from the September 23 Fed meeting will come out on Wednesday. Import Prices and Consumer Sentiment will round out the schedule. Mortgage markets … (0 comments)

October 9th Mortgage Market Wrap-up - 10/13/09 04:20 PM
MBS prices are down -17/32 (FNMA 30-yr 4.5 at 100.91), below the initial price level at  -7/32. A low of -22/32 was reached and unfavorable repricing was seen. Today's Trade Balance data had little impact. MBS price reacted to yesterday's weak 30-yr auction and Bernanke's comments about eventual monetary policy tightening. The Dow is up 75 points. For the week, MBS prices fell about -11/32.
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Fed MBS Purchases Continue - 10/08/09 04:34 PM
The Fed purchased $20.0 billion in agency MBS during the weekly period ending October 7, from $20.0 billion the prior week. Freddie Mac reported that average mortgage rates fell in the week through October 8, with 30-yrs hitting 4.87%, from 4.94% the prior week.  The Fed has announced that it will continue MBS purchases through the first quarter of 2010.
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October 8th Mortgage Market Wrap-up - 10/08/09 04:31 PM
MBS prices are down -3/32 (FNMA 30-yr 4.5 at 101.81), below the initial price level at +4/32. It was a very volatile session. Weekly Jobless Claims came in lower than expected. September same-store sales at retail chain stores showed their first increase since August 2008. Despite the stronger than expected economic data, MBS prices rose during the first half of the day. MBS markets were later pushed lower following weak results for the 30-yr Treasury auction. The bid-to-cover ratio was 2.37 and foreign investors purchased 35% of the total. The Dow is up 60 points to 9,786. Tomorrow, the Trade Balance will be released at … (0 comments)

October 7th Mortgage Market Wrap-up - 10/07/09 05:14 PM
MBS prices are up +98/32 (FNMA 30-yr 4.5 at 101.91), above the initial price level at +2/32, and at the high for the day.  No economic data came out today. MBS markets were helped by strong demand for the 10-yr Treasury auction. The bid-to-cover ratio was 3.01 and foreign investors purchased 47% of the total. The Dow is down 5 points to 9,725. Tomorrow, Jobless Claims will be released at 8:30 et. There will be a 30-yr Treasury auction at 1:00 et.
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Credit Score Tips - 10/06/09 04:23 PM
Each of the three national credit bureaus has its own scoring model.  Periodically these models are changed and some reporting services pick up the new model and some stay with the old model.  As a result of this, one mortgage company can run a bureau and get one score and another, using a different scoring model, might get a significantly higher or lower score for the same client.  Scores can range from 300 up to 850.
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October 8th Mortgage Market Wrap-up - 10/06/09 04:09 PM
MBS prices are down -3/32 (FNMA 30-yr 4.5 at 101.62), below the initial price level at unchanged. MBS prices held in a narrow range for the entire session. No economic data came out today. Demand was a little stronger than average for the 3-yr Treasury auction. The bid-to-cover ratio was 2.76 and foreign investors purchased 49% of the total. The Dow is up 130 points to 9,731. No economic data will be released tomorrow. There will be a 10-yr Treasury auction at 1:00 et.
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October 5th Mortgage Market Wrap-up - 10/05/09 03:36 PM
MBS prices are up 1/32 (FNMA 30-yr 4.5 at 101.72), below the initial price level at +3/32, and near the low for the day. MBS prices held in a range for the entire session. September ISM Services came in at 50.9, above the consensus forecast of 50.0. It was the first reading above 50 since September 2008. The Dow is up 112 points to 9,599. No economic data will be released tomorrow. There will be a 3-yr Treasury auction at 1:00 et.  
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This Week's Economic Calendar - 10/05/09 11:46 AM
This week will be a very light week for economic data, and Treasury auctions may have a greater influence on mortgage rates. The ISM Services index will be released on Monday, and the Trade Balance will come out on Friday. Tuesday, Wednesday, and Thursday will offer $71B in auctions of 3-yr, 10-yr, and 30-yr Treasury securities.
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Fed Officials See Higher Rates But Differ Over When - 10/02/09 03:51 PM
Several Fed officials delivered speeches during the week. What emerged was a good amount of disagreement over how soon they expect to need to tighten monetary policy. Some officials expressed concern that the time to begin to remove stimulus is close, while others see it as much farther down the road. There was a general consensus, though, that the Fed will be required to raise the fed funds rate while unemployment remains high. When the Fed eventually does indicate that rate hikes are imminent, the immediate reaction for mortgage rates is likely to be a move higher.
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Job Losses Abound - 10/02/09 03:41 PM
The Employment report, the biggest economic report of the month, was a little weaker than expected. Against a consensus forecast of -175K, the economy lost -263K jobs in September, and the revisions to prior months were negative as well. The Unemployment Rate was 9.8%, the highest level since June 1983. Average Hourly Earnings, a proxy for wage growth, increased at a modest 2.5% annual rate. The length of the average work week declined.
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October 2nd Mortgage Market Wrap-up - 10/02/09 03:39 PM
MBS prices are down -3/32 (FNMA 30-yr 4.5 at 101.66), below the initial price level at +5/32, and at the low for the day. The Employment report came in weaker than expected, and MBS markets initially rallied on the news. Profit taking then pushed MBS prices lower for the rest of the session. The Dow is down 21 points at 9,487. For the week, MBS prices rose about 18/32.
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Home Sales March Onward - 10/01/09 04:15 PM
August Pending Home Sales rose for the seventh straight month, increasing 6% to the highest level since March 2007. According to the NAR, a higher percentage of contracts are failing to close than in the past. The Pending Home Sales index measures the number of contracts signed during the month.  This continuing trend bodes well for a housing recovery.
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October 1st Mortgage Market Wrap-up - 10/01/09 04:11 PM
MBS prices are up +16/32 (FNMA 30-yr 4.5 at 101.75), above the initial price level at +6/32, and near the high for the day. A large decline in the stock market helped MBS markets. A wide range of mixed economic data had less impact. Most significant, the ISM manufacturing index fell a little short of expectations but remained above the 50.0 level, indicating growth in the sector. Fed Chief Bernanke suggested that lawmakers should cut back on spending if they want to support the US dollar. The Treasury will auction $71B in 3-yr, 10-yr, and 30-yr securities next week. The Dow is down 200 … (0 comments)