Tri-Valley Mortgage & Market Update for August 9th

Economic News…was light for the week. Manufacturing and Employment data met expectations. Even though the market was calm, news in the mortgage world was more robust. Several cities have investigated the use of Eminent Domain to seize underwater mortgages within their jurisdiction, modify the terms of the loans and then resell them. While this sounds like a worthy goal there may be a backlash from those willing to lend in these areas in the future. Just in the last few weeks Richmond, CA has moved further than any other city regarding this issue by sending letters to mortgage servicing companies and has been met with staunch legal action from several industry groups. After putting this issue out for comment a year ago the Federal Housing Finance Agency (FHFA) released a memorandum this Wednesday which sheds some light on this issue from the Federal Government’s perspective. The salient points are that:

• This is a Federal versus State issue with respect to the Commerce Clause, Conservatorship as well and the International Commerce associated with the trading of Mortgage Backed Securities.
• Allowing this could result in limitations on lending in certain areas as well as higher costs associated with getting a mortgage loan.
• With 60,000 municipalities in question a patchwork of various rules and regulations would exist, dampening the attractiveness of the mortgage market for investors.

I have my opinion about how this could affect the housing market…but what’s yours?

Mortgage Markets…A quiet week in the bond markets with nothing substantial happening between the start and finish. The 10 Year Note closed trading at 2.582% versus 2.603% last week.

Next Week’s Market Moving Reports…Tuesday: Retail Sales Wednesday: Producer Price Index Thursday: Jobless Claims, Industrial Production, Consumer Price Index, Housing Market Index Friday: Housing Starts, Consumer Sentiment

While I do not originate mortgages, I make it a habit to keep abreast of market & home loan conditions. If you are thinking of purchasing a home the first step is to meet with a mortgage professional. I will gladly provide several top-notch Bay Area advisers for your review if you are in need of a referral.