Hugh Fitzpatrick

Over the past few weeks, I have been monitoring the debate concerning the debt ceiling in our country. Particularly, I was trying to find out what impact, if any, that it had on mortgage rates. I even set a google alert for it. I am no student of economics, but I am trying to get an understanding of how this debt ceiling thing works because it appears that our country spends so much money and really does not care if we ever pay anything back. I saw a report today, written by Diana Olick, from CNBC, Entitled: “The Debt Crisis and Mortgage Rates”, where it discusses the impact of not raising the ceiling on mortgage rates. First, the article gets a position from some people who apparently know a lot about this stuff. First, Glenn Kelman, CEO of Redfin, takes the position that ” We see people being very sensitive to the cost of money; they’re very concerned about the debt crisis, they’re very concerned about all these rumors that the US could have a money supply problem, so we think that interest are the real X factor to watch. Next, Treasury Secretary Timothy Geithner made it clear ” Because Treasurys represent the benchmark borrowing rate for all other sections, default would raise borrowing costs. Interest rate for state and local government, corporate and consumer borrowing, including home mortgage interest, would all rise sharply. Equity price and home values would decline, reducing retirement savings and hurting the economic security for all Americans, leading to reductions in spending and investment, which would cause job losses and business failures on significant scale”.

My official position on this subject is that I really don’t know but I wanted to make a comparsion regarding the federal government’s spending and the operation on my small business. Back in 2008, our business, which is a real estate law firm, was impacted due to the housing mess. Unfortunately, we had to make some tough cuts in our budget and we were able to eventually get ourselves out of the mess by making these difficult choices. We stopped spending on many things and we were able to control it and rebound. However, it does not appear that the federal government works this way. First, both sides will blame each other. They will fight and at the last minute, they wil come to some compromise at the last hour, then claim victory on both sides. The moral of the story is that government does not run like a ordinary business that is concerned with p/l statements and financial reports, they choose to spend more money and no one, expect for a few, seems to really care. Even know that raising interest rates would hurt my business, I would like to see what happens if they did not raise the ceiling. I guess that we shall wait and see what impact, if any, it will have on mortgage rates.

For those of you who have not heard, there is another battle setting up for MERS. The controversy: assignments which John O'Brien (Register at Essex South Registry of Deeds) claims are due to the Commonwealth. Let me give you the background first. MERS, which stands for Mortgage Electronic Registration Systems, is a central registration point for a greater majority of the mortgages in this country. As you probably know, mortgages are bought and sold every single day. Accordingly, it is customary, when a mortgage is bought or sold, that the mortgagee record an assignment at the local registry where the property is located. The assignment basically states that BANK X is now the interest holder. In Mr. O'Brien's report, which can be located at www.salemdeeds.com, he states that MERS has recorded approximately 148,663 mortgage in the name of MERS. He continues to suggest that these mortgages have been assigned at least twice (Don't know where that number comes from) and comes up with a multiple. In total, Mr. O'Brien estimates that MERS owes the Commonwealth of Massachusetts 200 million dollars. My position on this subject is this. First, I do think that MERS should have recorded the assignments when these mortgages where being sold. Second, I don't understand why it took approximately 12-13 years to discover what MERS was doing. If the commonwealth is successful in recovering what they think that they are owed, I purpose that we "roll-back" the recording fees since we will be 200 million up. Also, I think that this guy is running for re-election next year. That's interesting

I saw this article today in Massachusetts Lawyer's Weekly blog. According to Mr. O'Brien at Essex County Registry of Deeds, MERS owes an estimated 200 millions dollars. Interesting story. I posted the link on our facebook page.

http://www.facebook.com/home.php#!/NewEnglandTitle

Tomorrow should be an interesting morning since the MBA is releasing their mortgage application information. Hopefully, mortgage appplications will be on the rise. Stay tune for more details.