Mortgage Rate News

Over the weekend, President Bush announced that today will be the first day that tax rebate deposits will go out. This is actually a bit earlier than originally planned. And although it only applies to some of tax rebate direct deposits, others will follow shortly, depending on SSN and when the tax return was filed. Tax rebate checks will start going out soon as well, also early.

Tax rebate: pay down debt

Many Americans are thinking about using the tax rebate to pay down debt. The consumer spending spree that we have been on for the last decade and a half is coming to an end as the subprime mortgage crisis affects credit markets and the economy. And Americans are feeling less secure about their financial situations. All of this conspires against the debt-based economy as consumers start to think that maybe an abundance of easy credit isn’t all its cracked up to be.

Tax rebate: paying for neccessities

The other thing that is popular amongst Americans is planning for the increase in costs to necessities like transportation and food. Food prices are rising and gas prices have household budgets straining. Cheap oil is no longer something to rely on, and that is driving up all sorts of costs.

Rather than being an economic stimulus, this tax rebate is more likely to keep Americans afloat. Will your tax rebate actually be what saves your personal finances from folding under the pressure?

There are many different uses that the coming tax rebate may be used for, but the general consensus is that consumer spending is no longer at the top of the list. After all, there are many more pressing matters that need to be attended to.

What will you use your tax rebate on?

Tags: mortgage blog, pay debt, home mortgage loan, tax rebate,
cheap oil, personal finances, use tax rebate

Some mortgage bonds are struggling on the market right now. The solution? The United States Treasury thinks that the Federal Reserve should start buying troubled mortgage bonds. The New York Sun reports on the possible move for the Fed to start buying troubled mortgage bonds:

The only tool left may be for the Fed to help facilitate a Resolution Trust Corp.-type agency that would buy bonds backed by home loans, the manager of the world’s biggest bond fund at Pacific Investment Management Co., Bill Gross, said. While purchasing the some of the $6 trillion mortgage securities outstanding would take problem debt off the balance sheets of banks and alleviate the cause of the credit crunch, it would put taxpayers at risk.

Is the government really considering upping the taxpayer burdens already present in this country? It appears to be the case. While the Fed has said it’s not going to do as yet, one never knows. So far, the Federal Reserve under Ben Bernanke has shown that it will do whatever it takes to keep investors happy. And if it means more for taxpayers to worry about, or if it doesn’t truly benefit the pocketbooks of ordinary Americans, so be it.

Additionally, this is adding fuel to the fire in terms of the debate over how involved the Federal Reserve should be in terms of economic manipulation. The entire idea of instilling confidence in the market, and of economic stimulus, is one of manipulation and efforts to guide the economy. And, even though the Federal Reserve doesn’t print and mint money, it still has the authority — and the ability — in this modern age where information is more likely to be currency than actual currency, to “create money out of thin air.”

But, eventually, someone has to pay for it.

Tags: Fed buying mortgage bonds, money out of thin air, home mortgage loan, mortgage loan blog,
Federal Reserve mortgage bonds, economic stimulus, manipulate economy

Just two days after a $200 billion Fed plan was announced to help home mortgage lenders liquidate their mortgage back securities, a huge mortgage bond fund is going down. Carlyle Capital mortgage bond fund is in default, and this is bringing the entire financial sector to its knees on the stock market.

The Carlyle mortgage bond fund isn’t the only slumping investment among home mortgage lenders. Countrywide continues its struggles (along with Bank of America), and Bear Stearns, an underwriting company is sliding rather dramatically. American International Group is dropping, and Citi is also struggling, even as it offers to fund some failing municipal bond investments.

Bloomberg reports on the huge spotlight Carlyle Capital is putting on mortgage market problems:

Carlyle’s default “puts a spotlight on the magnitude of the problem that exists right now in the credit markets,” Liam Dalton, chief executive officer of Axiom Capital Management in New York, which oversees $1.2 billion, said in an interview with Bloomberg Television. “The real economy is becoming very affected by what’s happening in the credit markets.”

What began with losses due to subprime writedowns on the stock market is quickly snowballing to all areas of the economy as mortgage back securities bloody venerable financial institutions. Top home mortgage lenders are finding themselves exposed to large amounts of risk, due greatly in part to their models (especially in the case of the Carlyle Capital mortgage bond fund) that include highly-leveraged investing.

Where do we go from here? I’m not sure there really are too many places to go. Economic stimulus is just a pipe dream at this point. The best you can do is cut back on your spending, hold on, and hope for the best. Between high oil prices and serious stock market issues (that will begin to affect the portfolios and retirement accounts of “regular folks”), a recession seems almost certain. If we’re not there already.

Tags: Carlyle Capital bond fund, mortgage bond fund, home mortgage loan, home mortgage lenders,
mortgage loan blog, subprime writedowns, mortgage market problems