Mortgage Rates April 16, 2009 – Ready Set Foreclose
Mortgage Rates increased today as the FNMA 30 YR MBS 4% gave up roughly 9bp. This down tick in the MBS can be attributed to the late day mini rally in the equities market as JP Morgan Chase beats estimates as it releases earnings.
Both Building Permits and Housing Starts were released today. Building Permits were down over 61k from last month and Housing Starts down 62k..All though they are down this is a positive sign in the sense the supply is not increasing; it will take a tighter supply in order to clear the current inventory on the market. Given the Foreclosure Moratoriums have come to an end, the housing number are welcomed, as we will start to witness an increases in foreclosures given the temporary delay in now gone.
I have one REO Agent friend who informed me that just last week he received 48 BPO request from banks, if only half hit the market that is HUGE.
The finger has been removed from the dike!
In a recent post by my idol; Tyler Durden he points out that we can’t hide from the massive wave of California Foreclosures that is ominously approaching. While pointing out the fact he does not point to the reasoning.
Many borrowers in CA decided to take advantage of what we in the biz called the POA (Option ARM). Now that these ARM are set to adjust, the borrowers will need to refinance into a fixed. Given the deterioration in housing values they will not have the luxury. One item that is aiding in taming the massive amount of defaults is the fact that although the ARMS have adjusted the Index to which they are tied to has come down to the point they are paying less on their IO (interest only) payment then they would in a current fixed. This temporary lull will only be brief. Once inflation kicks in and rates shoot up, the defaults will recommence as the homeowners walk!
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