The new rules would force companies to show that customers can realistically afford their mortgages.
Permalink
Original Article
Showing posts with label The Fed. Show all posts
Showing posts with label The Fed. Show all posts
The Fed: Now What?
Now that the jobs numbers came in the odds of the fed cutting rates 75 basis points looks to be around 76% according to Fox News. I am currently at a loss of whether or not more fed action is going to make much of a difference or not. Hopefully it will stimulate the purchase market a bit! I don't think it's really saving too many people from foreclosure. I'm a little skeptical of Bernacke's grasp on this situation.
Principal Reduction: As a Means of Avoiding Bankruptcy
Proposal:
Fed Chief Ben Bernanke recently told a community bankers group in Orlando that reducing mortage balances, rather than cutting interest rates or extending payments, might be the better approach to helping borrowers.
Concept:
Conceptually, I think it makes sense. Not sure how realistic it will be for lenders? But it could work in some cases.
Concern:
My initial concern is plain & simple - is this option fare to those homeowners who are currently making there payments on-time(regardless of loan type). I am sure that there are homeowners struggling to make ends meet, yet maintaining their mortgage payments. What seems to be the most overlooked aspect of this crisis is personal responsibility of those individuals that took out these mortgages. Not every foreclosure is the result of an unscrupulous mortgage broker or lenient lending standards, for that matter.
Final Thoughts:
Many pieces went into making this mess and it is going to take many pieces to turn it around.
There's just no magic pill for the current ills of the housing market!
Fed Cuts Rates 0.50%
As anticipated the fed cut rates by 1/2. Also, bare with me on this blog. I'm revamping today!
What Will The Fed Do?
I think the market is looking for .50 and they could very well get it. Unless that is, Bernacke wants to flex his muscle and go with a .25. A quarter today will likely rile up the stock market - not in a good way! We'll see this afternoon I guess.
Market Turmoil - Fed slashes rates .75%
The Facts as of 11am January 22nd 2008 Wall Street to Washington
3.5% = Fed Fund Rate
4.0% = Discount Rate
Bush stimulus proposal = 150 billion although they are hinting at more
Stock Market - Dow dropped 465 early, but has managed to recover a good portion of that
Now, where things go from here is anybodies guess. It seems as though the proverbial tail is wagging the dog. Is Bernacke a day late and a dollar short? The markets probably would have preferred to see the fed do something more substantial sooner than today. In any case, here we are. I think we will know more between 1 and 2 eastern today. At least I hope the picture will be a little less muddy!
Dude, Where's My Recession : Why Mortgage Rates Can't Find A Balance
By Dan Green of The Mortgage Reports
Posted: 18 Dec 2007 08:59 AM CST
What the Federal Open Market Committee did last week may not be as important as what it didn't do. It didn't lower the Fed Funds Rate by 0.500%, opting instead for a 25 basis point drop. Context is important here....
LIBOR Buster - Fed Creates Temporary Auction Facility
LIBOR REVIEW
Let's start by a quick review of what the LIBOR is. LIBOR is an acronym for the London Interbank Offer Rate. In simple terms it's the rate that banks in the London wholesale market charge each other for loans. This market allows banks with liquidity requirements to borrow quickly from other banks with surpluses. The LIBOR is among the most common of benchmark interest rate indexes used to make adjustments to adjustable rate mortgages. As of late the LIBOR has been surging, a situation that is worsened by the resetting of Adjustable Rate Mortgages that use the LIBOR Index. Essentially, what this does is reduce the liquidity and increase the costs involved with bank to bank loans. It becomes difficult for them to raise funds.
Fed's Temporary Auction Facility
The Fed announced a deal with the European Central Bank, the Bank of England, the Bank of Canada and the Swiss National Bank to create a temporary auction facility to keep banks funded. In plain English, this should help with the credit markets, increase necessary liquidity, and bring the LIBOR back down to earth - or at least closer the the normal 10-12 basis point higher than the Fed funds rate.
Wrap-up
Getting the LIBOR back in-line should increase the liquidity needed by the markets. Furthermore, it may ease some of the mortgage pressures related to ARM's that use the LIBOR index for their corresponding interest rates. A nice addition to the latest 0.25 point cut in the Fed Funding rate.
Shannon Luscher VP Elite Mortgage Solutions, Inc. Visit the Elite Mortgage Daily Blog for Mortgage News & Insights at http://elitemortgagesolutionsdailyblog.com/ Wisconsin borrowers can find more information about rates and products by visiting my comprehensive website - http://www.elitemortgagesolutions.com/
Subscribe to:
Posts (Atom)
