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Bad News Has Hidden Benefits for Mortgage Rates

November 20th, 2008

There has been plenty of bad news for the economy over the past week:

Though these developments are certainly bad news in the near term, it is important to recognize how each contributes to the self-correcting nature of the economic cycle, which allows recoveries to occur. Already, consumers can see some positive side effects of economic weakness at the gas pump and in mortgage rates, and each of the above stories will ultimately contribute to the next recovery phase of the cycle.

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Mixed Week for Mortgages Amid Grim Economic News

November 13th, 2008

Economic news was generally grim this week, highlighted — or lowlighted — by a sharp increase in unemployment. Unemployment figures are one of the most accurate signs that the slowdown is affecting the real economy. What’s worse is that unemployment can lead to further economic weakness, as consumer spending power is dampened.

Against this backdrop, mortgage news was mixed. Some prominent stories:

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Govt Support of Fannie Mae & Freddie Mac Important for Consumers

July 16th, 2008

The US Treasury Department’s plan to increase the two mortgage giants’ lines of credit and stabilize their liquidity is important to consumers looking for mortgage financing or refinancing. As long as Fannie and Freddie are able to purchase loans, banks and other mortgage lenders will be able to continue to offer mortgages to their clients  with reasonable terms and at relatively affordable rates.

According to MarketWatch, solid borrowers with good credit, reliable income, and substantial equity or down payments will be able to get loans with no problem anyway. However, Fannie Mae and Freddie Mac keep additional money in the mortgage lending pool, which allows more consumers to be able to obtain real estate financing at decent rates. This additional liquidity is needed to speed up the recovery of real estate markets in troubled parts of the country, dry up the oversupply of housing, get more first-time home buyers into the market, and allow homeowners to once again build equity in their property.

License Revoked! Cracking Down on Credit Cards

May 1st, 2008

Credit card companies have pretty much had a license to print money for a long time. And while associations like Consumers’ Union, publisher of Consumer Reports, have long spoken out against some of the industry’s most questionable practices, nothing has changed much in at least ten years.

Enter the election year and the soft economy. Finally the lawmakers are feeling the heat — and if they have to toss credit card companies into the fryer to keep themselves out they will do it! Naturally, banks and credit companies are gearing up to fight hard. Lobbyists are already spinning out claims that regulation will cost consumers more and make less credit available. It’s pretty funny, actually. The ABA claims that credit card issuers are better-regulated and more consumer friendly than mortgage lenders and so don’t deserve to have the spotlight turned on them. “Credit cards are a highly regulated industry,” Ken Clayton, counsel for the ABA said. “The parallel doesn’t work.”

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