The Federal Reserve Bank of New York announced Wednesday several additional days that it would purchase Treasury securities in April.

By
Mortgage and Lending with John Tuggle, Senior Mortgage Loan Originator, Envoy Mortgage, Ltd. NMLS# 211187

The Federal Reserve Bank of New York announced Wednesday several additional days that it would purchase Treasury securities in April. Besides a previously announced operation on Thursday, it will hold five more starting next week. The Fed specified what securities it may purchase on given days, including the first scheduled buyback of Treasury Inflation Protected Securities, or TIPS, on April 16. So far, the central bank has purchased about $23.5 billion in U.S. debt, as it continues plans to buy $300 billion in Treasury securities over the next six months to improve conditions in private credit markets and spur lending.

Comments (2)

Connor T. MacIvor
RE/MAX Gateway - Santa Clarita, CA
661.400.1720

Any idea where this might leave the Next Wave or Fannie/Freddie Foreclosure Releases onto the Market?

Thanks ahead of time John...

Apr 01, 2009 08:01 AM
John F Tuggle
John Tuggle, Senior Mortgage Loan Originator, Envoy Mortgage, Ltd. - Columbus, GA
Certified VA Expert Renovation Program Specialist

I realy do appreciate the readership and thanks for the comments. 

As far as your question goes we do not believe these actions by the Fed will have any impact on the impending peak wave of foreclosures.  With all that said I do think that these foreclosures are the the largest section of what we all have figured out to be very bad vesting by Fannie and Freddie.  They lost sight of their purpose when they accomidated these loans.

After this wave the increase has ended and the future will see a declining bulk of defaults.  If you recall, underwriting didn't go from loose to tight overnight.  The process has evolved to a more conservative posture and consequently the foreclosure volume will begin to decrease. 

Incentives such as short term lowering of mortgage rates, first time homebuyer tax credits on the Federal and also the state level (California, Georgia for example) and the Neighborhood Stabilization Program (NSP) will help also.  Of course, as I have always said, the number one incentive to the housing market is simply jobs, jobs, jobs.  During good job markets you see brisk home sales even with rates in the 7s, 8s, and even 9s.  On the other end of the spectrum, if there are no jobs then even a 0% interest rate will offer little to the markets.  It is our hope that if the Stimulus creates jobs then it works, if it dosen'  t then we are still in trouble.  We tend to lean to the optimistic side of that equation. 

God Bless America and keep the Faith!

Keep the comments coming, Tuggle. 

PS:  Freedom funds in your area, we took no TARP money, and we are the leader in Government guarrantee lending (FHA, VA, USDA RH, STATE BOND, Community Lending).  Please call if you need anything.

 

Apr 01, 2009 03:59 PM