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Foreclosures, Are they Mostly Over? 
Well, it doesn't appear that forecosures are done. I read the legal section in our local paper at the end of last week and found 17 foreclosures listed. That doesn't seem like many, but it's an increase from a few months ago. The information that I've gathered leads me to beleive that there are many more to come.

I know of many instances where a property owner hasn't made a payment in 36 to 48 months, but the lender still hasn't foreclosed. I do understand that once they foreclose, they have to take the loss and then carry the asset on their books until the property is sold. There are many other properties that have gone to foreclosure sale, but are not presently listed for sale with local Realtors.

I understand that the lenders, which are typically big banks (Chase, BofA, etc.) don't want to flood a market with too many of their REO (real estate owned) properties because they would be competing with themselves and drive the prices down even further. Drawing out the amount of time it will take to work through all of the foreclsoures is good for potential buyers, because it gives them a little more time to prepare to purchase that new primary home or the vacation home they've always dreamed about. It isn't good, however, for current property owners who would like to see some appreciation of their properties so they can withdraw equity to make home imnprovements, pay for college, or a myriad of other things.

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How Long Will Interest Rates Stay Low? 
"A very long time," according to Bryan McNee, vice president and senior bond analyst for MBSAuthority.com. "The market still widely believes that the Federal Reserve will be unable to begin tapering their massive bond purchases until at least June 2104," McNee told MBA. "That's quite interesting, becaue keep in mind we have our latest budget ceiling in February where (Congress) is going to have to renegotiate again, and the Fed will have to react to that."

I find McNee's comments refreshing. I'm glad that someone has decided to comment on the possibility that the will have to continue their purchase program for an extended period of time. Maybe now we can stop all of the hand-wringing over Tapering and we can all get back to buying homes and providing mortgages.

Stay tuned for more of McNee later in the week. I think I like this guy.

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Rates End Week Unchanged 
There was some upward pressure on interest rates this week, which is typically not good news. The good news is that the Conventional 30 year fixed rate remained at 4.125% at weeks end. This rate would be available for a borrower who has excellent credit (credit score of 740 or greater) and could be obtained with little or no points if you make the right size of down payment.

The Conventional 15 year fixed rate remained at 3.25%, assuming the same parameters as mentioned above.

SHOULD I LOCK OR FLOAT?
Market conditions became somewhat volatile since last Friday, but I thnik we may see the market become calmer next week. Unless you are going to closing and you have to lock, I feel that it is still relatively safe to float your rate. There may still be some volatility so don't put your blinders on and ignore the market, but overall the risk could be outwieghed by the reward.


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FOMC Minutes Drag Down Mortgage Market 
The FOMC minutes were releaed this afternoon and mortgage bonds sagged based on the content. The Fed's comments weren't overly exuberant about the economy, but apparently they weren't dire enough. It seems to me that we are splitting hairs here, but mortgage market particpants live in the future,not the past. So, looking forward, the quicker the economy improves and the employment numbers grow, the sooner the Fed will begin Tapering. The pundits took from the wording of the minutes that the Fed isn't quite as disappointed with the data as they wanted them to be.

Remember, tomorrow is another day, and the credit markets do not move in a straight line in either direction. I certainly don't think this is the beginning of the end of low interest rates.

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October FOMC Meeting May Move Markets Tomorrow 
The Federal Open Market Committee (FOMC) ends their October meeting tomorrow and the minutes could move the mortgage market. Concensus is that they will not change their current monetary policy and they will continue purchasing Treasuries and agency eligible Mortgage Backed Securities (MBS) at the current pace of $85 Billion per month. What if concensus is wrong?

Well, if they start Tapering, mortgage rates will immediately move higher and stocks will probably move lower. As i have said before, I just don't see any indicaton that this will occur. The jobs figures are underperforming and the economy isn't that strong, but I've been wrong before. Stay tuned.

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