Lawrence Monterrosa

Loan Modification News

Imagine faithfully paying your rent month after month, and then having a sheriff at your door telling you that your family has to leave - immediately. While foreclosures have been hammering homeowners for months, they can be even more tragic for tenants in good standing who are blindsided when their landlord defaults on the mortgage. "Tenants are the ultimate victims in these cases," said John Taylor, president of the National Community Reinvestment Coalition (NCRC), a community development advocacy group. "Most have been paying their rents. They have no day in court, and in most states they have no recourse." The number of foreclosure rental victims is soaring. This year bank repossessions of multi-unit homes with two to four apartments jumped 150% to 22,386 through the end of October, up from 8,955. And these statistics don't cover every case of renter eviction; many single-family homes facing foreclosure are also rentals. In the Chicago area, foreclosure tenant evictions have tripled during the past two years to nearly 4,000 annually, according to the Cook County sheriff, Thomas Dart. It got so bad that he suspended all tenant evictions several weeks ago. He won support from the Cook County Circuit Court, which ordered that tenant rights be safeguarded. "We were seeing numbers of foreclosures like we had never seen before," he said. "It was alarming. There was chaos in the streets. In house after house, we came across people who were legally supposed to be there, who were paying rent and who had no notion a foreclosure was going on."

This week brings us the release of only two pieces of economic news that are relevant to mortgage rates. It is another holiday-shortened week with the New Years Day holiday Thursday, so the data may have a heavier impact on trading than usual if it varies from forecasts by much. The bond market will close early Tuesday and possibly Friday as they did last week. With that type of schedule, many traders will not be working Wednesday or Friday, so any unexpected news or data may lead to a larger than usual reaction in the markets.

There is no relevant news scheduled for tomorrow. Look for any significant changes in stocks to drive bond trading and mortgage rates. If the major stock indexes remain fairly calm, it is possible that bond prices and mortgage rates may follow suit. However, I still believe there is a possibility of seeing year-end weakness in bonds that may drive mortgage rates higher. Accordingly, I am still recommending to proceed with caution of still floating an interest rate.

The first important release comes late Tuesday morning when the Conference Board will post its Consumer Confidence Index (CCI) for December. This is a pretty important release because it measures consumer willingness to spend. If consumers are more confident in their personal financial situations, they are more apt to make large purchases. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely by market participants and can have a significant influence on mortgage rate direction. Current forecasts are calling for a minor increase confidence from November's reading of 44.9. Analysts are expecting Tuesday's release to show a reading of 45.2.

The financial markets will be closed Thursday in observance of the New Year's Day holiday. They will reopen Friday morning with the release of the Institute for Supply Management's (ISM) manufacturing index. This highly important index measures manufacturer sentiment. A reading below 50 means that more surveyed manufacturing executives felt that business worsened during the month than those who felt it had improved. Analysts are currently expecting to see a 35.4 reading in this month's release, meaning that sentiment fell from November's 36.2. A smaller reading will be good news for the bond market and mortgage shoppers while a higher than expected reading could lead to higher mortgage rates Friday morning.

Overall, I am still pessimistic towards mortgage rates, at least short-term. The week's two reports are both considered important and can influence mortgage rates. If they report weaker than expected results, we could see rates close the week lower than last Friday's closing levels. But, even if we get results that match forecasts, I suspect we will see selling in bonds and traders make year-end adjustments to their portfolios that could push mortgage rates higher for the week.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.