Finally, the feds may have made a strong move to start thawing the credit markets. The FDIC’s TLGP is giving financial institutions the power to raise cash by issuing low-risk debt securities.
December 2008
US bank regulators continue to report escalating re-default rates on mortgage loan modifications. Data being assembled by bank regulators is showing a steady trend of rising month-over-month loan work-outs falling back into delinquency within six months.
The Federal Reserve and Treasury, faced with growing challenges and public outcry related to urgently needed bailout plans, are now attacking high mortgage rates. By doing so, they hope to help thaw credit markets, revive the dying real estate sector, and boost the overall economy.
The first lesson of personal finance is to budget your income and spend wisely. The second lesson is to get even more conservative about your spending when recession is knocking at the door.
Many critics-especially those who stand to lose money when mortgage restructuring occurs-say that loan modifications may only be delaying inevitable foreclosures. They argue that loan modification can mask problems temporarily, but can’t make those troubles go away.
President-elect Obama says he has his team working on a bold plan to create 2.5 million jobs by January 2011.
Those who think that the credit crisis put the brakes on mortgage lending this year may be surprised to see mortgage levels deteriorate even more in 2009. Many experts expect to see the pace of both commercial and residential mortgage loan activity grow even more sluggish next year.
Today brings the release of existing home sales, new home sales, and housing price data. All mortgage news that is not expected to excite investors or economist about recovery in 2009. However, Wednesday’s Mortgage Bankers Association’s mortgage applications data is likely to be a ray of hope with mortgage rates trending downward.
If the Federal Reserve keeps cutting rates until they hit zero, it might stimulate the economy by boosting the housing market. On the other hand, dropping Fed rates to zero also may put us into an even more precarious situation by driving down the prices of goods and the value of the dollar, inviting ugly economic deflation.
Former subprime masterminds are back in action, but now they’re targeting FHA loans.
