"THE FACT THAT AN OPINION HAS BEEN WIDELY HELD DOESN'T MEAN THAT IT'S NOT UTTERLY ABSURD." Bertrand Russell. True words - and last week was one that was full of opinions that moved the financial markets - here are some highlights.

The week began with bank analyst Mike Mayo spewing out a negative forecast, which included his thoughts that loan losses by financial institutions would ultimately exceed levels from the Great Depression. This was followed by word from hedge fund giant George Soros that the US banking system is insolvent and that the economy won't recover in 2009.

However, as mentioned in many previous newsletters, the recent changes to mark-to-market should prove to have a positive impact on the economics and overall operations of financial institutions. Why? Because the recent ruling to look at mark-to-market accounting in a more relaxed light will free up the banks' capital ratios and allow them to do more lending, which will help their profitability, as well as ultimately help the economy unlock as businesses and consumers are once again able to borrow and use credit in a more normal fashion.

Lo and behold...as earnings season began last week, there was already evidence of this playing out as true, when Wells Fargo said Thursday that it expects record 1st quarter earnings and that their Wachovia acquisition was exceeding their expectations. In addition, the New York Times said Thursday that the US banking system overall may be in better shape than most people think.

As you can see in the chart below, Stocks hit an all time high in October 2007...until mark-to-market accounting practices were instituted. And notice also that Stocks reversed course, and have been on a strong rise since early March of this year, buoyed simply by the speculation that there would be a change in mark-to-market, which was finally announced on April 2nd by the Financial Accounting Standards Board.

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Chart: Dow Jones

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. And this is exactly what happened in the early part of the week when Stocks were plagued by the negative opinions mentioned above. However, Stocks rallied on the good news that ended the week, causing Bonds and home loan rates to give back some of the gains they had made, ending the week unchanged to slightly worse from where they began. The Bond market closed early Thursday and both the Stock and Bond markets were closed Friday in observance of the holiday weekend.

MOST PEOPLE SHARE THE OPINION THAT PAYING TAXES IS NO FUN, ESPECIALLY DURING TOUGH ECONOMIC TIMES. BUT FILING ON TIME IS IMPORTANT, EVEN IF YOU CAN'T FOOT THE WHOLE BILL ON TIME. CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR IMPORTANT FILING INFORMATION.

Forecast for the Week

Last week may have been a quiet one in terms of economic reports, but the middle part of this week will be jam-packed with reports. Tuesday will bring the Retail Sales Report for March. We know that consumers continue to watch their spending, but how much they are still doing so will be interesting to see.

There's also news on the inflation front coming both Tuesday and Wednesday. Tuesday brings the wholesale measuring Producer Price Index (PPI) Report, while on Wednesday we get the Consumer Price Index (CPI) Report. It will be important to see if these reports are inflationary or deflationary in direction. Given the low interest rate environment we are in, along with all the recent economic stimulus provided, it seems a foregone conclusion that inflation will become an issue that must be dealt with. These reports will give us clues on any significant changes to the rates of inflation, which is the arch enemy of home loan rates.

Thursday will be a busy day as well, as we will get a read on the Housing Market with the Housing Starts and Building Permits Reports. The Philadelphia Fed Report will also be released Thursday, and this monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports.

As you can see in the chart below, stocks' late week rally pulled money out of the Bond market, and caused Bonds to fall below a key floor of support. I will be watching closely to see if Bonds and home loan rates can reverse direction this week and find some improvement.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Apr 10, 2009)

The Mortgage Market View...

File Your Taxes on Time. Even If You Can't Pay!

The deadline to file your taxes is practically here!

But what do you do if you've completed your tax returns only to find out that you owe way more to Uncle Sam than you were expecting - or worse, that your tax bill is more than you can possibly afford to pay right now?

Don't worry. If this is the case, you're not alone. especially in today's economy. And more importantly, you're not going to jail just for being a little short on cash.

Rest assured, the IRS only seeks criminal charges for those who the agency can prove intentionally chose not to file and pay taxes. So, even if you can't pay your bill right away, file your return on time, and not only will you stay off the IRS's bad side, you'll avoid some hefty financial penalties in the process.

Penalties

According to the IRS, the penalty for filing late is generally 5% per month, or up to 25% of the total tax amount due. Not to mention interest charges, which the IRS changes quarterly, and which range between 4% and 9%. This interest applies to the unpaid balance, penalties, and to any interest that has been charged to the account as well.

If no effort is made to pay back-taxes, the IRS can impose stricter penalties, including levying bank accounts, wages, other income, or taking other assets like houses and cars. A Federal Tax Lien could also be filed, which could ruin your credit history for years to come.

The penalty for filing on time but paying late, however, is only half of one percent or .5% per month, up to 25% of the total amount owed. If you choose an installment plan to pay your debt, interest will accrue on the unpaid debt amount only.

Therefore, when you file your return, pay as much as you can and cut down the penalties even more.

Extensions

It is possible to get a 30- to 120-day extension to pay your taxes after filing a return on time. Soon after filing, the IRS will send you a tax bill for the amount you still owe. Simply call the number on the bill and request an extension and explain your situation. If granted an extension, the penalties and interest will be much lower.

If you cannot pay any part of your tax bill, the IRS may temporarily delay collection until your financial situation improves, although interest and penalties will accrue throughout this time. But this extension is reserved for what the IRS calls "significant hardship."

The Week's Economic Indicator Calendar

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 April 13 - April 17

"LET'S GIVE THEM SOMETHING TO TALK ABOUT..." Bonnie Raitt. Better believe that last week's news gave us plenty to talk about.and even a few things to smile about. Here are the highlights.

You know this newsletter has been talking about the mark-to-market issue for some time now, and everyone was talking last Thursday about the Financial Accounting Standards Board's (FASB) favorable vote to relax mark-to-market accounting, which will help to unlock the continuing freeze in the credit markets. The big change is to allow financial companies to use alternate models, like cash flow analysis, in valuing their assets. This was great news for the financial markets and our economy at large, as this will help money and credit flow more normally in our economy again.

In fact, since the March 12th Congressional hearing on mark-to-market, Stocks have risen 23% just on the speculation a change could be coming. And just one short day after the FASB mark-to-market ruling, there were stories of banks already saying they may not need to sell assets to raise capital, as they will no longer have to take massive paper losses by pricing their assets to the "fire-sale" comps that were created in some of the illiquid markets. Capital ratios are now more in line for many institutions, which will also help their ability to lend - in turn helping consumers and businesses alike. Yesterday's ruling is a dramatic step towards unwinding the negative spiral created by mark to market, and in fact, the ruling on mark-to-market accounting could well go down in history as a turning point in the US financial crisis.

Speaking of turning points, while Friday's Jobs Report certainly had its share of the bad (the economy lost 663,000 jobs in March) and the ugly (there have been 5.1 million jobs lost since the recession began in December of 2007), there was also some good. For the first time in a very long while, there were no downward revisions to a prior month's reading, as February's number came back with no change. This, as well the actual job losses for this month being improved from January's levels, and not much worse than expectations, could mean there is some level of stabilization at hand for the labor market. Something else worth smiling over on the job front was Wednesday's news that Challenger, Gray & Christmas, an executive outplacement company, found that planned layoffs at US firms fell in March to their lowest levels in six months.

While Stocks were buoyed by the Mark-to-Market announcement and optimism that the G20 meeting in London will lead to an agreement on ways to pull global economies out of the current recession, Bonds were unable to hold onto recent gains. As a result, Bonds and rates ended the week .125-.25 percent worse than where they began.

A BIGGER PAYCHECK IS ALWAYS SOMETHING WORTH SMILING ABOUT.AND THE NEW "MAKING WORK PAY" TAX PROVISION COULD MEAN YOUR PAYCHECK IS GROWING. CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR THE DETAILS.

Forecast for the Week

There aren't too many scheduled economic reports to talk about this week, but don't expect the rest of the news to be quiet. First quarter earnings season begins, and while the change to mark-to-market take effect for the second quarter, it can be applied to first quarter earnings. In fact, rumors are already swirling that the change in mark-to-market will boost earnings of banks by 20% or more for the first quarter.

In addition, the US is prepared to sell an estimated $59 Billion in notes and inflation-indexed securities this week, and it will be important to see what impact that supply has on Bonds and home loan rates. And as we continue to watch the labor market, it will also be important to keep an eye on Thursday's Initial Jobless Claims report to see if the news is good, bad, or ugly.

But remember: Strong economic news will likely cause Stocks to move higher, and Bonds and home loan rates may worsen in response as we saw last week. As you can see in the chart below, Bonds worsened on the heels of last week's positive mark-to-market ruling, as well as Friday's Jobs Report failing to meet the worst fears.

Rates remain near historic lows, but last week, Jack Koskinen, interim chief executive of Freddie Mac, said that he feels home loan rates are near a bottom. We should talk to discuss if the current rates may present an opportunity for you or someone you know.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Apr 03, 2009)

The Mortgage Market View...

What the "Making Work Pay" Tax Credit Means For You

The economic recovery package that Congress passed in February included a "Making Work Pay" tax credit that eligible workers will receive through their paychecks in 2009 and 2010. Employers will use new withholding tables to lower the amount of tax that is withheld from eligible workers' paychecks. And since the Obama administration has asked that employers begin implementing these changes this month, you may have already noticed an increase in your paycheck.

While single filers can receive up to $400 a year from these changes, ($800 a year for joint filers), just how much extra money you will get depends on a number of factors, including your salary, marital status, and the allowances or exemptions you claim. Here are the highlights:

• The full amount will be paid to single filers with modified adjusted gross incomes of $75,000 or less, ($150,000 or less for joint filers). Partial amounts will be paid to single filers earning between $75,000-$95,000, and to joint filers earning between $150,000-$190,000. Since the amount is based on modified adjusted gross income, any income earned in a foreign country, or in Puerto Rico or American Samoa, will also be factored in.
• Anyone who is claimed as a dependent on another person's tax return is not eligible, even if the dependent works and earns income.
• If lower-income workers do not make enough money to have taxes withheld, they won't receive any extra money in their paychecks but they can claim the amount when they file their 2009 tax returns.

In addition, it's important to make sure you aren't overpaid since you will have to repay the amount when you file your taxes next year, or have the amount deducted from your refund. Here are a few things to look out for:

If you are a joint filer and your spouse works... Both you and your spouse may receive extra money in your paycheck, resulting in an overage.

If you have more than one job... You may receive the amount from both of your employers, resulting in an overage.

If you receive investment or rental property income...If you are paid the amount from your employer, but the other income you earn increases your modified adjusted gross income above the eligibility limits, you may owe the IRS for the overage you receive.

Also, take note of when your company starts paying. The new withholding tables are structured so that payments starting in April will equal the appropriate amounts by the end of the year. If your payments started in your February or March paychecks, you may receive a bit more than you were due. And if your payments start later in the year and you receive less than you are entitled to, you can claim the difference on your 2009 tax return.

The above article is provided for informational purposes only. It's always a good idea to consult an accountant or tax professional if you have any questions about your specific situation. Let me know if you would like me to recommend someone.

The Week's Economic Indicator Calendar

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 April 06 - April 10

"IT REQUIRES A GREAT DEAL OF BOLDNESS AND A GREAT DEAL OF CAUTION TO MAKE A GREAT FORTUNE." Ralph Waldo Emerson. And last week's headlines contained a mix of items to inspire both boldness and caution. Here are the highlights.

Friday's news showed that consumers are being understandably cautious with their finances, as the Personal Savings rate remained above 4% once again in February and among the highest savings levels seen in a decade. The last five years can be seen in the chart. And notice it wasn't that long ago that the US had a negative savings rate - that's right, as a nation, we regularly spent more than we made.

Meanwhile, the government continues to make bold moves to help our economy. On Monday, Treasury Secretary Geithner unveiled a plan to remove toxic assets from financial institutions by using money from the $700 Billion TARP fund. The government will help mitigate the risk by offering private investors Billions of dollars in low-interest loans to help finance the purchases. Indeed, it's a bold strategy - let's see if it pays off!

And...there's room for cautious optimism on the economy, as good news was noted on several fronts last week. The housing market received good news when both Existing Home Sales and New Home Sales came in stronger than expected. Additionally, Durable Goods Orders for February came in better than expected, showing the first increase in six months, and the Core Personal Consumption Expenditure Index (Core PCE) showed inflation is presently at tolerable levels. Plus, the US Dollar received a boost when China said it will continue to purchase US Treasuries.

Bonds were jostled around mid-week, but home loan rates ultimately ended the week very close to where they began...near historic lows. Give me a call or email me if you want to discuss whether now may be the perfect time for you to add a bit to your own fortune through a smart purchase or refi.

WHEN IT COMES TO YOUR HOMEOWNER'S INSURANCE, GETTING THE MOST VALUE FOR YOUR MONEY IS ALWAYS A WISE CHOICE. CHECK OUT THIS WEEK'S SPECIAL MORTGAGE MARKET VIDEO VIEW FOR SOME IMPORTANT TIPS.

Forecast for the Week

A very important week is in store, with two important announcements due toward the end of the week. As you know, the "mark-to-market" accounting issue has been discussed in this newsletter many times, and this Thursday should be a big day on that front. The Financial Accounting Standards Board (FASB) is set to announce their ruling on whether to modify mark-to-market, and perhaps allow cash flow analysis to determine valuation of financial assets. Not a coincidence, the strength we have seen in Stocks over the past couple of weeks has been fueled by speculation that mark-to-market will be modified, thereby helping reinvigorate the financial system of our country. I will be watching very closely to see what happens and how the markets respond.

On Friday, the Labor Department will release their Jobs Report for March. Last month's report showed that 651,000 US jobs were lost in February, while revisions for the prior two months showed that an additional 161,000 jobs were lost between December and January. Given that last week's Initial Jobless Claims report showed that the number of people collecting state unemployment benefits has reached a record high - jumping to a seasonally adjusted 5.56 Million - it will be important to see what Friday's report reveals.

As you can see in the chart below, Bonds are currently trading between key technical levels, with a ceiling of resistance overhead, and a floor of support underfoot. But remember: Strong economic news - such as a positive change in the "mark-to-market" situation - will likely cause Stocks to rally, and Bonds and home loan rates may worsen in response. Please call me to discuss how the current rate situation may benefit or impact you.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Mar 27, 2009)

The Mortgage Market View...

Homeowner's Insurance: How to Get the Most for Your Money

The hurricanes and tornados we have seen over recent years have had an impact on homeowner's insurance rates, but there are several things you can do to make sure you get the most for your money. Check out this week's special video View for some great cost-saving tips.

Source: www.kiplinger.com

The Week's Economic Indicator Calendar

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 March 30 - April 03

"IF A WINDOW OF OPPORTUNITY APPEARS, DON'T PULL DOWN THE SHADE." Tom Peters. And last week, the Fed saw their regularly scheduled meeting as a window of opportunity to make a blockbuster announcement.

On Wednesday, the Fed announced that over the course of 2009, they will purchase an additional $750 Billion of Mortgage Backed Securities, as well as $300 Billion in long-term Treasuries, primarily to help shore up the housing market and keep home loan rates low. On the announcement, Bonds exploded higher, leaving Bond prices within whiskers of the best levels ever.

However, it's important to understand that while their actions may keep a lid on rates moving higher, they may not cause them to move dramatically lower... more on this in the Mortgage Market View article below. Additionally, due to many understaffed lenders and investors currently working at maximum capacity, we could once again see that improvements in Bond pricing may not all be passed through to our rate sheets.

Another factor that could impact whether Bonds and rates see significant improvement ahead are concerns of future inflation - the arch enemy of Bonds and home loan rates - brought on by all the recent aggressive moves by the Fed. While we know there is little inflation at the present time, the chatter of future inflation could have a negative impact on Bonds and home loan rates, or at least stifle any improvements.

Although the media is already spinning it differently, this is not a time to stay on the fence, hoping and waiting for lower rates. Home loan rates remain within inches of all-time historic lows, but may not necessarily move significantly lower based on this purchasing plan - waiting is a very risky move.

More good news last week, as Housing Starts for February came in better than expected and actually increased for the first time in eight months. In addition, Fed Chairman Bernanke stated the recession should end in 2009 and that he is confident of the long-term outlook for the US economy.

Also, an update on Mark-to-Market - the accounting rule which has had a devastating impact on the financial markets - which we have discussed many times, including in last week's issue. The Financial Accounting Standards Board (FASB) agreed that it will propose to allow companies to use more "leeway" in applying the accounting rules they use to value their assets, and planned a final vote for April 2nd. If this rule change is approved, it could result in better first-quarter financial statements for companies that have been affected by this rule. Stocks have been moving higher lately in the hopes that Mark-to-Market will be fixed, and a resolution could help Stocks further improve.

WANT TO KNOW MORE ABOUT WHAT THE FED'S ACTIONS REALLY MEAN FOR HOME LOAN RATES, AND WHAT OPPORTUNITIES MAY BE AVAILABLE FOR YOU? CHECK OUT THE MARKET VIEW BELOW FOR THE DETAILS.

Forecast for the Week

This week will be busy from start to finish, beginning with an opportunity to get a read on the housing market via Monday's Existing Home Sales Report and the New Home Sales Report following on Wednesday. With rates near historic lows and the tax credits available for first-time home buyers - and lots of buyers potentially ready to come off the sidelines - home purchases are likely to be picking up in the coming months.

Also on Wednesday, we will get an update on consumer and business consumption and buying behavior via the Durable Goods Report which shows data on items that are non-disposable, such as cars, furniture, appliances, games, cameras, business equipment, etc. And stay tuned for Thursday's Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity, and Friday's Core Personal Consumption Expenditure (PCE) index, found within the Personal Income report. PCE is the Fed's favorite gauge of inflation, and given all the recent talk of potential inflation ahead, it will be interesting to see what this report shows.

Remember: Weak economic news normally helps Bonds and home loan rates improve, as money flows out of the Stock market and into the Bond market. As you can see in the chart below, Bonds were buoyed last week by the Fed's announcement regarding its Bond purchase program - but again, the improvements are not necessarily all making their way through to the rate sheets. As always, I will be watching closely to see what impact the inflation chatter and the news of the week has on Bonds and rates.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Mar 20, 2009)

The Mortgage Market View...

What the Fed's Latest News Means for You

As discussed above, the Fed announced last week that they are going to buy another $750 Billion in Mortgage Backed Securities, bringing their total commitment to $1.25 Trillion. But how does this really impact home loan rates?

The Fed's actions provide a demand for Mortgage Backed Securities, which should help keep the ceiling on home loan rates from moving much higher in the foreseeable future. That's good news for homebuyers who are seeing the bargains out there and understanding that now is the time to act.and also good news for those who can benefit from a refinance.

But.and this is very important.the Fed's actions do not necessarily mean home loan rates will move significantly lower.

It all depends on which Bond coupons the Fed purchases. If they purchase higher rate coupons - as they have been so far this year - their continued purchasing actions will likely keep a lid on rates, but not necessarily push them significantly lower. Rates are within inches of historic lows - so don't wait to miss a great opportunity to purchase the home of your dreams, or get more money back in your budget by a smart refinance.

There's never any pressure, so why not take five minutes to give me a call? We can discuss what makes sense for you right now - which might be just staying put in your current home loan. With a short conversation we can talk over the options, and you can then rest assured that given all the recent changes, you are making smart decisions on your home financing.

The Week's Economic Indicator Calendar

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 March 23 - March 27

"I DO NOT THINK MUCH OF A MAN WHO IS NOT WISER TODAY THAN HE WAS YESTERDAY." Abraham Lincoln. Now more than ever, it's important for our country's leaders to heed yesterday's lessons and make wise choices today for our banking system and the economy. There were several key developments that happened on this front last week - here are some highlights.

On Thursday, the Securities and Exchange Commission's (SEC) Chief Accountant, the Financial Accounting Standards Board's (FASB) Chairman and the Deputy Comptroller for Regulatory Policy in the Treasury Department testified in front of the House Financial Services committee on the "Mark-to-Market" accounting rule. This rule was created so that there would be more transparency in business dealings, but fell prey to the law of "unintended consequences", and has played a major part in our current financial crisis. If you've been receiving this newsletter for awhile, you know this has been discussed several times - and we've even sent you a great explanatory video that breaks down what it all means, and why it has been such a major issue.

Because so many of you have been asking about this topic and great video - I am including the information and video once again in this week's issue - keep reading for the full scoop in the Mortgage Market View article below.

During Thursday's hearing, Congress demanded an answer for repairing this situation within the next three weeks, so right now, it looks like we will see some sort of coordinated action by both the FASB and the SEC to address the Mark-to-Market situation soon. Stocks certainly reacted positively to this news last week, as well as to Citigroup's announcement that it will not need more TARP money from the government. Stocks also liked the remarks from Federal Reserve Chairman Bernanke that the recession would be over by year-end if the banking situation is stabilized, and that major financial institutions would not be allowed to fail.

Forecast for the Week

The middle of this week will be action packed with both scheduled economic reports and the Fed's next regularly scheduled meeting, including their policy statement and rate decision being delivered on Wednesday. With all the actions the government has been taking to stabilize our economy, it will be especially important to hear what the Fed has to say.and to see how the markets react.

This week also brings news on the inflation (or deflation) front, with Tuesday's wholesale measuring Producer Price Index (PPI) Report and Wednesday's Consumer Price Index (CPI) Report. Given China's concerns mentioned above about US spending to combat the recession and what that could mean for inflation, it will be important to see how these reports come in.

Also this week, we'll get a read on the new construction housing market with Tuesday's Housing Starts and Building Permits Reports. On Thursday, the Philadelphia Fed Report will be released. This monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports. We'll also have another Initial Jobless Claims report on Thursday, and with the number of people collecting unemployment reaching record highs as mentioned above, it will be important to keep an eye on this report, too.

Remember: Weak economic news normally helps Bonds and home loan rates improve, as money flows out of Stocks and into Bonds. As you can see in the chart below, Bonds were helped by important technical support and were able to hold onto recent gains even with the rally in the Stock market. I'll be watching closely to see how Bonds and home loan rates react to all of this week's events!

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Mar 13, 2009)

The Mortgage Market View...

The current economic crisis is the top news story for nearly every media outlet. But until recently, one of the most important factors that led to this challenging market has also been one of the least discussed.

By popular demand, I am again sending along this highly sought after video and article, unpacking the "Mark-to-Market" accounting issue - with some help from Barry Habib. Barry is a highly respected expert on home loans, who serves as Chairman of MSS, an organization that helps me to stay informed as your trusted advisor.

With the help of some easy-to-understand terms and illustrations, you will learn what it has taken the media and politicians many months to take seriously and begin to address.

Link here now to get the real story: www.mortgagesuccesssource.com/go/markmarket/

The Week's Economic Indicator Calendar

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 March 16 - March 20

"A good objective of leadership is to help those who are doing poorly to do well...And to help those who are doing well to do even better." - Jim Rohn. Let's hope that some of the actions that the Obama Administration took last week - intended to help millions of US homeowners - will show that kind of leadership for our country, as last week's Jobs Report and Stock Market losses showed that help is certainly needed.

Wednesday brought more details on the new "Making Home Affordable" program, which was created to help as many as 7 to 9 million homeowners who are making every effort to remain current on their mortgage payments. There are two important parts of this plan: The first of these is a program that is available to homeowners who have a solid payment history on an existing home loan owned by Fannie Mae or Freddie Mac, but who have been unable to take advantage of today's favorable rates because their homes have lost value. A second program, which involves loan modification, will help at-risk homeowners avoid foreclosure by reducing monthly payments. Give me a call, so we can help determine if either of these programs may be right for your situation.

Making it tougher for many to keep up with house payments, Friday's Jobs Report showed that 651,000 US jobs were lost in February, while revisions for the past two months showed that an additional 161,000 were jobs lost between December and January. December's decline was the largest since 1949. What's more, the US economy has now lost almost 4.4 Million jobs since the recession began in December 2007, which is the biggest employment malaise of any economic downturn in the postwar period. In addition, the unemployment rate soared to 8.1% versus expectations of 7.9%, the highest rate in over 25 years, as you can see in the chart below.

In other news from last week, the Dow fell below 7,000 for the first time since 1997, due to continued negative economic reports and headlines hitting the wires. Bonds and home loan rates were able to make some improvements last week as Stocks fell, and as a result, the week ended with Bonds and home loan rates slightly better than where they began.

At least we've got sunshine...And you know that daylight savings time happened on Sunday, March 8th. But do you know we're enjoying the extra daylight three weeks earlier than we used to? Learn why in this week's view below.

Forecast for the Week

The week ahead is a quiet one when it comes to scheduled economic reports being delivered, but with last week's plunge in the Stock market and the details of the Making Home Affordable program still being analyzed, it's unlikely the week ahead will be quiet overall.

In the way of economic news, Thursday will bring the Retail Sales Report for February. Consumers continue to rein in spending and many retailers continue to struggle, so it wouldn't be a surprise if this is a horrible report. It also wouldn't be a surprise for Friday's Consumer Sentiment Report to be a bit dismal as well. And given the current job market, Thursday's weekly Jobless Claims Report will be another one to watch.

Remember: Weak economic news normally helps Bonds and home loan rates improve, as money flows out of Stocks and into Bonds. As you can see in the chart below, Bonds and home loan rates reversed course and improved last week...and if the above mentioned reports are indeed negative, Bonds and home loan rates could build on their recent improvements during the coming week.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Mar 06, 2009)

The Mortgage Market View...

Spring Forward Began March 8

Daylight Saving Time (DST) began on Sunday, March 8, 2009. The way we refer to time zones also changes. For example, Eastern Standard Time (EST) becomes Eastern Daylight Time (EDT).

But remember, some areas of the United States don't use DST, such as Arizona, Puerto Rico, Hawaii, the US Virgin Islands and American Samoa.

More Sun... Daylight Saving Time Runs Longer

In case you hadn't noticed over the last two years, DST now begins earlier and runs longer. The extra time that we enjoy is actually the result of the Energy Policy Act, which President Bush signed into law in 2005 and went into effect in 2007. The Act changed the start date of DST to the second Sunday in March - three weeks earlier. It also moved the end date out one week to the first Sunday in November.

Benefits of Daylight Saving Time

Despite some concerns, Americans overwhelmingly like Daylight Saving Time. There is simply more sunlight in the evenings to enjoy the outdoors and get things done. Plus, additional hours of daylight can help save energy on a national scale - as much as 100,000 barrels of oil per day according to some estimates.

And brighter is safer. Studies have shown that the DST shift reduces traffic accidents. Additionally, a study by the US Law Enforcement Administration also determined that crime is consistently lower during DST, with violent crimes down as much as 10% to 13%. For many crimes, like mugging, darkness is a factor - so more light in the evening hours reduces these types of crimes.

Cons of Daylight Saving Time

Not everyone benefits from DST. For example, many farmers say that DST has a negative impact on their livestock's natural schedules. The airline industry also reports that it costs millions of dollars to adjust time schedules - and even then, airlines report numerous problems with international flight connections during the transition time since DST isn't followed uniformly worldwide.

Finally, since many electronic devices and computer programs are set to adjust to DST based on the old dates, they may not change automatically on March 8. So, you'll want to double-check all of your devices and confirm that the time is correct.

The Week's Economic Indicator Calendar

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 March 09 - March 13

"BAD NEWS GOES ABOUT IN CLOGS, GOOD NEWS IN STOCKINGED FEET." Welsh Proverb. And while last week did have some negative economic reports clomping through the headlines, there was also some good news tiptoeing around.

The unemployment line is getting even longer, as Initial Jobless Claims showed that the number of people collecting benefits reached a record high of 5.11 million. Not surprisingly, Consumer Confidence fell to its lowest reading since records began in 1967. The sour report indicates that the fear of losing one's job has made the consumer more reluctant to spend.

Gross Domestic Product (GDP) is the broadest measure of economic activity - and for the 4th quarter of 08, came in worse than expectations and at its lowest reading since 1982. You can see the comparison for the last four years in the chart below.

The news on the housing front was also gloomy; as New Home Purchases dropped to the lowest level since data collection began in 1963. Existing Home Sales for January came in lower than expected; however, that number was probably influenced by buyers waiting to see what the government's Stimulus Plan might have in store for them.

The Treasury Department announced on Friday that they plan to take a 36% stake in Citigroup by converting $25 Billion of preferred shares into common stock. The move will dramatically dilute shareholder value, but should help bolster the struggling bank's capital base.

Some good news from Reuters, as they released the results of a survey of 47 professional forecasters, predicting that the economy will begin to recover in the second half of this year. Additionally, the Chicago Purchasing Managers Index was better than expected, and being a forward-looking indicator, gives another bright spot of hope down the road.

Despite the negative news, Bonds and home loan rates were not able to make improvements over the course of the week, and ended a bit worse than where they began.

MORE CLARIFICATION ON THE ECONOMIC STIMULUS PLAN...AND HOW IT MAY BENEFIT YOU! READ THE WEEK'S MORTGAGE MARKET VIEW BELOW FOR MORE DETAILS.

Forecast for the Week

The week ahead will be bookended with two very important economic reports, and could be volatile in between with more details on the Homeowner Affordability and Stability Plan due to be released on Wednesday.

Among the details to be released is information on whether loans that are in good standing, and which are already guaranteed by Fannie Mae and Freddie Mac, will be able to refi, even if the loan balance is 5% greater than the home's current value. This will determine the ability of many homeowners to benefit from lower rates.

Currently many homeowners would love to cut their monthly expenses with the lower home loan rates available today, but are unable to due to the drop in home values. This new provision could help many people solve that dilemma.

I will be watching this closely and would enjoy speaking with you more about this as details are released to see if this can benefit you.

Monday brings the details on the Fed's favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) index, found within the Personal Income report. Given the recent concerns on deflation, it will be interesting to see what this report shows.

On Friday, the Labor Department releases its Jobs Report for February. Last month's report showed that 598,000 jobs were lost in January, and that about 3.6 Million jobs have been lost since December 2007. Given the number of new Initial Jobless Claims filed last month, Friday's Jobs number probably won't be a pretty one.

Weak economic news normally helps Bonds and home loan rates improve, as money flows out of Stocks and into Bonds. However, Bonds and home loan rates worsened last week, despite the weak economic news, due to tough technical resistance and the enormous supply of Bonds being put out on the market. But as you can see in the chart below, an important floor of support kept Bonds and home loan rates from worsening further. I will be watching closely to see if Bonds and home loan rates can reverse course and find some improvement in the coming days.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Feb 27, 2009)

The Mortgage Market View...

Higher, Non-Jumbo Loan Amounts Extended

For those who are considering taking advantage of the $8,000 tax incentive for first-time homebuyers which is included in the president's economic stimulus bill, there is some more good news that could make doing so easier and more accessible.

An extension is now officially in place on the higher loan limits for mortgages in the tier that lies just below what is considered a "jumbo" loan.

First established last year, and now extended through the end of 2009, limits on this additional tier provide opportunities for many who are looking to either refi or, better yet, take the plunge into first time home ownership and grab a piece of the highly publicized $8,000 tax incentive.

Here are some key points about this higher loan limit extension, announced by the Fair Housing Finance Agency this past week:

• The non-jumbo, middle tier of home loans begins at loan amounts greater than $417,000 for single-unit homes.
• The top end for this tier is $729,750 for single-unit homes.
• The rates for these loans will again be slightly higher than conforming loan rates, but less expensive than the standard "jumbo" loan rates.
• This higher limit on the non-jumbo tier is available in 250 counties across the United States.

I can provide you with information about qualifying for the opportunities that are provided by the stimulus plan.

Speaking of qualifying, if you are not sure if you if you can take advantage of the $8,000 tax incentive, here are some examples to help you better understand the income limits and phase-out structure.

The $8,000 incentive starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000 and is phased out completely at incomes of $170,000 for couples and $95,000 for single filers.

To break down what this phase-out means, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phase-out threshold is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer incentive to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual home buyer has a modified adjusted gross income of $88,000. The buyer's income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible to reduce the tax liability by $2,800.

Remember, these are general examples. Borrows should consult a tax advisor to provide guidance relevant to their specific circumstances.

The Week's Economic Indicator Calendar

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 March 02 - March 06