The first two important pieces of data this week will come Wednesday morning with the release of October’s Producer Price Index (PPI) and Retail Sales figures. The PPI measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used; the overall reading and the core data reading. The core data is the more important of the two because it excludes the more volatile food and energy prices.

If it reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and should drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should thrive and mortgage rates should fall. Current forecasts are calling for increases of 0.2% in both the overall index and core data readings.

October’s Retail Sales report is also due out Wednesday morning. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. If this report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall, assuming the PPI doesn’t show any significant surprises. Current forecasts are calling for an increase in sales of approximately 0.2%.

October’s Consumer Price Index (CPI) will be released Thursday morning. This index is similar to Wednesday’s PPI, except it measures inflationary pressures at the more important consumer level of the economy. The overall portion is expected to show a rise of 0.3% while the core data is expected to rise 0.2%.

Overall, look for Wednesday to be the most important day of the week with the PPI and Retail Sales reports being released. Thursday’s CPI may also cause significant movement in the markets and mortgage pricing. I think bonds can improve on the week as long as the PPI and CPI reports do not show much stronger than the expected readings.

Posted: November 12th, 2007 under Mortgage Industry.
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Tomorrow morning brings us the release of the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP). The GDP is considered to be the benchmark measurement of economic growth because it is the sum of all goods and services produced in the U.S. and is likely to have a major impact on the financial markets and mortgage pricing. There are three versions of this report, each a month apart. Tomorrow’s release is the first and usually has the biggest impact on the markets. Current forecasts call for an increase of approximately 3.1% in the GDP. I think we need to see a smaller increase for the bond market to rally and mortgage rates to drop. Just matching the estimate will probably bring a stock market rally and could cause mortgage rates to rise.

Posted: October 30th, 2007 under Mortgage Industry.
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A compromise has been reached on easing the Fannie Mae and Freddie Mac portfolio limits, with Democrats in the House and Senate agreeing to okay legislation that would allow the government-sponsored enterprises to boost mortgage holdings by 10 percent for a period of six months.

House Financial Services Committee Chairman Barney Frank (D-Mass.) who will introduce the bill in the House believes large-scale reform efforts will not be impeded by a temporary lifting of the portfolio caps. Of the combined $148 billion increase in mortgage holdings, $125 billion would be devoted to assisting sub-prime borrowers in refinancing out of costly adjustable-rate loans.

Posted: October 22nd, 2007 under Politics, Legal, Mortgage Industry.
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How would you feel if you bought a home that seemed perfect, only to find out you couldn’t use the property like you thought you could? One buyer bought a home with a good-sized yard that he thought would be perfect for his large dogs to roam free.

Soon after the sale closed, he hired a contractor to construct a fence around the property. The day the work started, a neighbor showed up to inform the new homeowner that he couldn’t completely fence the property because of an easement that ran across his property. An easement grants property rights to someone other than the property owner.

Common easements are for ingress and egress, utilities and sewers. Easements must be kept unencumbered. In the case above, the easement provided the neighbors access to their property. A fence could not be built over the easement because it would deny the neighbor their rights to access.The property owner had to revise his fence design, which was disappointing. But, easements can be even more problematic, particularly if you assume there is an easement in favor of your property but there isn’t.

HOUSE HUNTING TIP: Make sure you have a clear understanding of the title issues affecting a property before you buy it. Title companies check the record and issue a title report that includes such things as the recorded owner and liens, easements and encumbrances affecting the property. Buyers should hire attorneys to search the title record and produce a report.

Posted: October 16th, 2007 under Legal, Mortgage Industry.
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