Saturday, March 03, 2007

Blithefully Pronouncing Mortgage Industry Misery

About 9 months ago I predicted that by the end of 2007, the economy, which economists and realtors had been blithefully pronouncing as robust and strong, would be so hammered that we'd finally agree that we were in trouble, rates would drop, and we'd see a drop in rates.l


1. The stock market tanked last week.
2. Countrywide is selling itself off to B of A.
3. The remains of Argent/Ameriquest is going to Citibank
4. ABN-AMRO, National City, Key Corp are selling subprime units.
5. New Century may collapse; facing shutdown after breaking covenants to its financial backers; A California US Attorney's Office is also conducting a federal criminal inquiry into trading and accounting irregularities.

The logic is simple: Mortgage companies lose money when consumers don't meet their obligations. Consumers don't meet their obligations because their personal economics have changed for the worse. Jobs decline, values decline, layoffs occur (I'd be surprised if this coming Friday's Employment report does not show this), the dollar declines.

Bernanke will act reactively to the damage which fed tightening has done to our weak economy. Rates will drop, but how much damage will have occurred before it happens?

Friday, March 02, 2007

Lock or Float: Mortgage Rate Market Advice

It is amazing how little daily mortgage rate market advice is available to the public. Understanding the market and knowing when to make a lock-in decision during the mortgage process is argueably more important than chosing a lender. Mortgage Market Daily provides daily, easy to understand commentary on what is happening in the mortage market and gives lock or float guidance to consumers based on current market conditions. Launched on yesterday, it is worth checking out.