Arizona Mortgage Rates & News - September 11, 2009

Smart Financial Weekly Mortgage Update September 11, 2009

A Day to Remember: September 11, 2001 is without question a day to remember. It does not matter what your politics are as long as you view yourself as an American we must remember this day. To not remember allows those evil persons responsible for the event to win and we cannot allow that! God bless America!

Interest Rates
Another great week for mortgage rates as 30 year fixed rates were stuck in a narrow range of just below 5% to 5%. One reason may be that yields on mortgage bonds dropped to a 3 month low which could also suggest slightly lower rates in the near term. However, unless the Fed decides to continue its support of lower rates look for rates to increase later this year.

When Rate
This Week 5.07
1 Month Ago 5.29
1 Year Ago 5.93
2 Years Ago 6.31

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.
Source: Federal Reserve Statistical H.15.

Mortgage Industry Update
• The Treasury Department issued its August report on loan modifications and only 12% of those eligible have been modified. The report went on to say that “millions more foreclosures are coming”. Department analysts estimated that six million homeowners will lose their homes to foreclosure in the next three years. See below for the performance of selected lenders.
Saxon 39%
GMAC 26%
Chase 25%
Citi 23%
Aurora 22%
Wells Fargo 11%
Bank of America 7%
National City 3%

Good News
• The markets finished Thursday up for the year. The Dow was up 9.7%, S & P up 15.6% and NASDAQ up 32.15%. The markets backed up a little on Friday as the Dow was off 22, S & P slipped 1.4 and the NASDAQ was down 3. Still, the year to date number’s are impressive.
• Reuters/University of Michigan consumer sentiment index for September was 70.2 up from August 65.0 and exceed expectations.
• Wholesale inventories declined for the 11th straight month.

Statistics of Interest/Concern
• Mandatory spending for Social Security, Medicare and Medicaid will be 37% of the FY 2009 budget. By 2012 they will be 47% according to the Office of Management and Budget (OMB).
• The OMB said this week that the FY 2009 budget deficit is estimated to be $1.58 TRILLION. From 1789-1985 (197 years) the TOTAL combined deficit was $1.5 TRILLION.
• Total U.S. consumer credit declined by $21.6 Billion in July. This was the sixth consecutive monthly decline according to the Federal Reserve.
• The U.S. poverty rate was 13.2% in 2008 the highest in 11 years according to the Census Bureau.

Foreclosure Headlines
• August foreclosure filings fell .5% in July to 358,471 which was an increase of 18% from July 2008. Also, this was the sixth consecutive month of 300,000 or more according to RealtyTrac.
• Rumors are floating around that the Treasury Department may issue guidelines later this month for short sales and deed-in-lieu of foreclosure in order to accelerate the time frame for doing these types of transactions.

Job Market Headlines
• The President’s Council of Economic Advisors said Thursday that the stimulus package created or saved one million jobs.
• Weekly initial jobless claims were 550,000 compared to forecast of 560,000.
• Continuing jobless claims were down slightly to 6.09 million. According to the Department of Labor the “Exhaustion Rate” for July was 50.7% the highest rate since 1972.

Commentary/Observations
• The biggest real estate deal in U.S. history may go bust soon according to the NY Times. Three years ago the biggest commercial real estate deal ever was completed for $5.4 Billion. The property is the Stuyvesant Town & Peter Cooper Village in Manhattan just off the East river. The project includes 110 buildings with 11,227 apartments. Currently valued at less than half of the purchase price and with $4.4 Billion in loans apparently the rental income is only covering half of the debt payments. Some believe the risk of default is so high that the property owners will be lucky to hang on until February.
• A Wells Fargo executive for commercial property foreclosures in southern California has apparently taken up residence in a $12 million mansion in Malibu. The property’s previous owner was caught up in the Bernie Madoff scheme. Wells had no comment except to say it handles these types of things internally. Really? Last time I checked Wells Fargo was a public company with a greater responsibility to the public than to one irresponsible employee.
• Iran rejected any compromise with the west over its nuclear program as the administration expressed concern in its strongest language yet. The President had said September was the deadline for Iran to start negotiating in “good faith”.

Finally, the purpose of this update is to provide some specific information so that you, gentle reader, can draw your own conclusions from the week’s events, data points and so forth. Rarely do I offer my opinion on anything as that would turn this into an editorial and that is not the goal. However, today I would like to digress from the format and offer an opinion. Am I the only person who thinks the Federal Reserve’s support of mortgage rates, the first time home buyers tax credit, cash for clunkers, and the coming program for appliances is artificially supporting the market and when, not if, these supports are over we will have only postponed the required pain for markets to correct themselves?

If you have any mortgage or related questions please contact me at (602) 803-9660 or by e-mail at burt@gosfm.com.

Tagged as: Arizona mortgage rates, Foreclosure information, Loan modification results report