Week in Review - July 5th - July 8th

Mortgage bond prices rebounded last week, which helped mortgage interest rates improve as the weaker than expected data resulted in positive rate movements. Factory orders and the employment report both failed to meet expectations. Factory orders rose 0.8% in contrast to the expected 1.0% increase. Unemployment came in at 9.2%, higher than the expected 9.1% mark. Payrolls increased 18k, considerably weaker than the expected 110k increase. Mortgage bonds ended the week better by about 5/8 of a discount point.

NOTE: The Treasury will auction 3Y notes on Tuesday, 10Y notes on Wednesday, and 30Y bonds on Thursday. If foreign demand falters rates may come under pressure.
Pressure eased on rates but it didn’t necessarily cause them to decrease, mostly because early in the week we had a strong upward pressure on rates. It’s all evened out this week and we are pretty much back to where we started…save for FHA and ARM loans that dropped about .125% in rate.

Week in Review

• Bank Fees – I feel like Bank’s can get mad like an angry hive of bees. Perhaps this time around they have a right to be…then on second thought…the government continues to cap other people and their pay structure (See: Loan Officers new compensation requirements), so why should they be any different. We continually strive to help the consumer, which makes complete sense, but aren’t Loan Officers consumers? Bank employees? If they, the banks, lose the revenue from fees they used to charge retailers, only in a perfect world do those savings actually pass to the consumer. More than likely the retailer pockets the difference and the consumer pays higher fees to the bank elsewhere. Either way, it’s just money switching hands with each player in between working to make a profit. Is that all bad? I say it’s not. It is just that some people go the extreme and take advantage of consumers…hence we are all made to suffer and have rules imposed on us that are “in the interest of consumers”. Perhaps transparency is the best solution.

• Foreclosures: Why they will never go away? – The answer is actually easy, because no one can ever predict what will happen in life. As long as there are 30 YR Mortgage loans there will be foreclosures. People get sick, pass away, lose their job, etc. in a good economy as well as in a bad economy. Either way, foreclosures will never completely go away. With that in mind…at least they, the banks, are getting their acts together. Doesn’t matter whether it is because they have to or choose to. At the very least, the sound practices should go a long way to proper communication in the event a foreclosure happens.

• QRM – Qualified Residential Mortgages - What are your thoughts?