Pitch Black; MDFA Extension
January 4, 2013
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My Schedule…and A Little Extra: Over the weekend we went to the movies with the kids and saw The Guardians. The premise is that Santa, the Sandman, the Tooth Fairy, the Easter Bunny and Jack Frost are “guardians” of children’s hopes and dreams. They fight Pitch Black (the bad guy) from depriving the children of their dreams and replacing them with only nightmares. In mortgage industry terms, Pitch Black is Congress. Anyway, this kid movie has frightened my kids enough that at least one of them has been in my bed every night since. But I continue to take these kids to movies like this so they will be prepared to deal with the frightening future of politics. They need to battle Pitch Black too some day.
My Schedule: I have a conference call at 10a and an appointment in Irvine at 11a. That means I will be unavailable until after noon. I’ll do my best to return calls and emails as quickly as possible.
My Advice: Watch this – guaranteed to make you smile. J
My Market Watch: Rates/Pricing are the same as yesterday but significantly less than Monday before the Fiscal Cliff deal was made. I’m really disappointed in our Congress who waited until the last second to act and then slapped a used band-aid on the sore. They acted just like a college student with a report due…they expertly procrastinated until the night before the report is due and then cut-and-pasted together a D+ effort before rushing to the classroom hoping to turn it in just before the teacher left for the day. But, they did manage to get a few important things for our industry into the mix. The one I’ve been mentioning in my previous posts is the extension of the tax reprieve for shortsales and foreclosures (Mortgage Debt Forgiveness Act). For example, a homeowner who sells their house for $100,000 less than they owed has forgiven debt by the bank. Normally the tax code would consider this forgiven debt as income and the homeowner would have to pay taxes on the $100,000. The extension of the MDFA means they don’t have to pay that forgiven debt income tax. This is a good thing. Anyway, we should be grateful in our business that the Fed continues to commit to buying more bonds and this month they look to buy billions each day. This will keep rates/pricing low and as one of my Broker friends pointed out, “it’s pretty obvious that the agreement to avoid the Fiscal cliff was weak; however it takes investors a little while for the brain to catch up with their mouth….meaning, they rallied this morning on news that we avoided the fiscal cliff (that’s the mouth), but as they start to understand the consequences of reaching this agreement, they will start to realize (the brain) that it wasn’t to our advantage. My opinion is that we will see rates decrease for a few more months, maybe 6-12 and then we are going to see an increase in rates to slow down home appreciation.” I like it! My Disclaimer