Mortgage Blog

This week we saw the unemployment rate increase to 6.7% nationally with a monthly decline of 533,000 jobs for the month of November. This represents the single largest increase since December of 1974!! The Bureau of Statistics came out and said that our economy has been in a recession since December of last year and the FEDs announced that our economy is going to be very slow to recover. This news isn’t something that comes as a big surprise, if you have been following my updates and opinions.

In other news, some how our financial committee/government and Mr. Paulson think that they can mandate interest rates on mortgages to be at 4.5%!!! Honestly, so what! We are pretty close to that right now and the way things are going we WILL see rates below our 40 year lows without their so called “assistance”. I can’t even begin to think how in the world they plan on doing this when mortgage back securities are truly a free enterprise trading security that is influenced by foreign investors, the economy, and supply and demand which influence how high or low interest rates go. This can and will NEVER change!

Stop and think about this for a moment. If I am in investor in a mortgage back security and the government dictated what I have to pay in order to invest my money in something and limit what my return on my investment may be, why would I invest my dollar when the entity (government) who is slapping a “guarantee” on it, is so overleveraged that it has to borrow more money than it can produce, what happens when that entity (government) goes bankrupt? IE: If you have to borrow 1.4 trillion dollars to help a falling economy your so called “guarantee” on mortgage back securities becomes worthless in my mind because you owe more than what you are producing! Our government needs to let the free markets take care of themselves because they will find a way to survive. Additionally, it won’t matter how low rates go if you can’t get a loan anyway because of falling home prices and guideline changes we have ALREADY implement (those who have equity in their homes can refi those who mortgaged to the hilt – no way).

I wish our government will stop trying to “fix” everything because in reality they cant! What they can do is concentrate on bringing back jobs to America (over 1.9 million jobs have been lost this since 2002), cut our trade deficit, and STOP giving our money to countries who really don’t like us in the first place! I am sorry to be political here but enough is enough and we as Americans just need to worry about ourselves.

We are seeing ourselves in what I call a, “Modern Great Depression” and if we don’t start focusing on what we can control vs. what we have NO control over, this economy is going to last for a long, long time and there will be even greater repercussions than what we are experiencing today.

Tip for the Week: Concentrate on first time home buyers. They are continually making up the majority of transactions. I have come across an amazing Down Payment Assistance Program that even after 18 years in the business I didn’t even know about. It is totally better than any CHFA deal our there! Call me for more information.

Randy Reed

303.524.9191