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#11 U.F.O.

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Posted 03 January 2009 - 03:14 PM

http://news.yahoo.co...e_mortgage_debt

http://mortgage.free...ecurities/5128/

U.F.O.

Edited by U.F.O., 03 January 2009 - 03:16 PM.

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#12 IYB

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Posted 03 January 2009 - 03:47 PM

http://news.yahoo.co...e_mortgage_debt

http://mortgage.free...ecurities/5128/

U.F.O.

Thanks UFO!
>> Q. When will the purchases begin?
A.
Purchases are expected to begin in early January, 2009.<<

>>The Federal Reserve said Tuesday that it will begin purchasing up to $500 billion in mortgage-backed securities early next month ....The Fed first announced that it would purchase the securities, which consist of pools of mortgages that are bundled together and sold to investors, in late November but did not say when they would begin. <<

Hang onto to your hats! If "early January" means Monday, and if the size of the Feds operation is sufficient, we literally could see 4.25% (or even much less) overnight. :o

Combine this with the new "streamline" program which is being introduced- where >>market value is not considered<<, nor are several other normally tough qualifying factors, for non cash-out refinances- and the impact will be huge. I'll post some thoughts on this program soon.

I'll report real time "normal cost" mortgage rates here whenever I have time next week. As I've indicated several times- the premium rate (currently an anomalous full percentage point or more) required for "no-cost" loans does not render that alternative comparitively attractive right now- though that, too, could change rapidly. When that premium drops back to about 30-40 basis points, they will again make sense for those who expect to stay in the home for less than 5 years.

As to stock market outlook- I am a 100% TA purist, and make my decisions based on momentum, sentiment, cycles and the rest. Currently those are still IT positive, within what I regard as a cyclical bear market. I'm looking for a downturn soon- BUT, if fundementals change, so will, presumably, the TA signals that drive my trades. Either way, I'll let the market tell me.

Next week could be of huge importance, if the Fed truly moves from the talk stage to the action stage as promised! Thanks again, UFO. :) D

Edited by IYB, 03 January 2009 - 03:55 PM.

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.” Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds

#13 U.F.O.

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Posted 03 January 2009 - 04:20 PM

My pleasure IYB.

One thing I want to stress to all the readers who have been deeply concerned about the future impact of ARMs with adjustment dates going into 2010 and 2011 is this refi wave about to hit the beach offers an opportunity to take many of these potential problem loans into more affordable 30yr fixed. Most of these late reset loans were written with low teaser rates, so they're still in the affordable stage. The problems wouldn't have presented themselves until these loans reached reset at what could be much higher rates in the inflationary future. This refi wave actually has a good chance of saving the housing markets' collective butts.

A footnote: It's interesting that the syndicate the FED has chosen to handle their buy program doesn't include any primary dealers, only buyside juggernauts Pimco, GSAM, Wellington and Blackrock. I believe this was to avoid any potential conflict of interest where a dealer might be accused of self-dealing it's own interests over the fiduciary responsibility of representing it's client the FED.

U.F.O.
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#14 Data

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Posted 03 January 2009 - 04:32 PM

Five years of negative amortization and one to three years of housing price declines makes them unlikely candidates for successful refinance without the lender taking a big haircut on the loans.

#15 U.F.O.

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Posted 03 January 2009 - 04:41 PM

Freddie/Fannie are already being prepped to modify these type loans without appraisals. Don't think a standard refi where you have to write a check to cover any deficiency between the newly appraised (lower) value of your home and the higher loan amount. Upside down won't matter in this program about to commence. Who pays for it? We do...of course. U.F.O.

Edited by U.F.O., 03 January 2009 - 04:42 PM.

"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!"
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#16 IYB

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Posted 03 January 2009 - 04:58 PM

Freddie/Fannie are already being prepped to modify these type loans without appraisals. Don't think a standard refi where you have to write a check to cover any deficiency between the newly appraised (lower) value of your home and the higher loan amount. Upside down won't matter in this program about to commence. Who pays for it? We do...of course.

U.F.O.

What you say is true- on loan modifications, though they are very slow and a bit "tricky" to get done unless one is already in deliquency. But they are a Godsend for those who need 'em as well as for the institution who owns the paper. BUT I am referring to a {yet another} new streamline REFI program where you don't write a check for the deficiency, because there is no appraisal-and thus no assumed deficiency. It's a true refi program with very streamlined and easy approval process- basically like what FHA and VA have been doing for years. now Fannie and Freddie are firing up this refi program.
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.” Charles Mackay, Extraordinary Popular Delusions and the Madness of Crowds

#17 U.F.O.

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Posted 03 January 2009 - 05:04 PM

Yeah Don. I think what you just mentioned is what I read about a couple of weeks ago. That's the ticket. U.F.O.
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#18 OEXCHAOS

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Posted 03 January 2009 - 05:19 PM

This is very interesting stuff here. And I'm VERY glad I voiced my concerns. Thank you guys. I need to get more up to speed on this. It could be huge. Scary huge. Mark
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#19 U.F.O.

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Posted 03 January 2009 - 05:54 PM

The single, biggest reason for the economic crisis we have at hand is the demise of the housing market. This 12 trillion dollar domino has taken us to the brink. Markets function on perceptions. They discount our perception of the future. If this refi program starts meeting with the type of success I feel is possible, there's a very good chance that the market starts discounting an early rebound for housing and therefore for the broader economy. We may be seeing the earliest recognition of this potential right now. This, combined with enough cash in the system to float your way to Mars, should cause a huge rally before the FED can start draining reserves. If one as astute as OEXCHAOS needs to get up to speed on this you can book it that the vast majority of investor/speculators haven't studied up yet on what's about to happen. Huge may be an understatement.

U.F.O.
"Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!"
~Benjamin Franklin~

#20 zoropb

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Posted 03 January 2009 - 06:29 PM

The single, biggest reason for the economic crisis we have at hand is the demise of the housing market. This 12 trillion dollar domino has taken us to the brink. Markets function on perceptions. They discount our perception of the future. If this refi program starts meeting with the type of success I feel is possible, there's a very good chance that the market starts discounting an early rebound for housing and therefore for the broader economy. We may be seeing the earliest recognition of this potential right now. This, combined with enough cash in the system to float your way to Mars, should cause a huge rally before the FED can start draining reserves. If one as astute as OEXCHAOS needs to get up to speed on this you can book it that the vast majority of investor/speculators haven't studied up yet on what's about to happen. Huge may be an understatement.

U.F.O.



How does 11 month housing supply get absorbed over 1 year?

Even the happy camper absorb rate from current supply and build rate still puts an RE bottom out to late 2010 or summer 2011.

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