Loren Johnson, CMPS

I spent my afternoon & evening yesterday at an "Emerging Homeowner" seminar in brooklyn Park, which was sponsored by the Minnesota Housing Finance Agency. There were 36 'vendors' of services there, from credit repair services to child care.......to mortgage & realtor services. 2 things really suprised me, however.

1.) Of those 36, only 4 were Realtors. I was very suprised. I would have thought there would have been more Realtors there. But more suprising......

2.) Almost every consumer I talked with was VERY confused and VERY nervous about buying a home. They really didn't know the 1st thing about buying a home. They were all very timid, and didn't want to say they had any questions. Then, once they started talking, they all had a LOT of questions!

Perhaps holding "1st time home-buyer" seminars isn't the best way to go. These folks would have not attended one, because they seemed a bit too overwhelmed. Perhaps a "5 easy steps to owning your own home" is a better name, and may put more people at ease. I think it may work. What brought them to this seminar/open house? The title was "Your Credit- how to understand it and fix it". Almost none of the attendees cared about their credit....they wanted to know how to buy a house!

Just thought I would share......hope it might help you all as you head into 2009 planning. Have a great weekend!

Since I see so many other folks filling their blogs with political thoughts, I just thought I'd add one comment of my own.

Tonight on TV, there was an unprecedented 30 minute 'ad' for a canadate that reportedly cost upwards of $4 million- just to buy the ad time on the networks.......not including what it cost to produce...and add a live feed at the end from a speech.

My question is...if any canadate says they want to help the "middle class" (and I am SO SICK of hearing those words!).....whay aren't they ponying up and donating that $4mil to a just cause?

I'm guessing it would get as much publicity...and be TRULY unprecedented!!!

Just make sure you go and vote next Tuesday! Remember what they say....if you don't vote, you can't complain!!

The activity in MBS (Mortgage Backed Securities) markets - and other financial markets - has been very unusual this month. The Fannie Mae Required Net Yield has already made two round trips from about 5.70% to 6.60% over the past few weeks, displaying a level of volatility rarely seen. Under normal market conditions, the vast majority of the significant rate movements are the result of fresh economic news. This month, however, it has been common to see large rate movements unconnected to any news announcements, for reasons I'll discuss below.

One reason is that the credit crisis has forced many investment funds and financial institutions to reduce their leverage and raise capital. In many cases, these big holders of MBS are selling assets across their portfolios. This explains why MBS, stock, oil, and other markets have frequently all been falling on the same days. The fundamental economic data clearly supports lower mortgage rates. Global economies are slowing, oil prices are down, and expectations for future inflation are moving lower. As long as these investment funds are forced to sell assets, however, there will continue to be upward pressure on mortgage rates. How long it will last is one of the biggest questions facing investors today.

A second factor is that many investors are seeking to reduce the level of risk in their portfolios. They are buying Treasuries, mostly shorter-term, which are considered the safest and most liquid investment. These investors are generally not turning to MBS, and MBS prices have performed worse than Treasuries this month, meaning that the spread between mortgage rates and Treasury rates grew wider. Agency MBS might appear to be a safe alternative to Treasuries. Investors seem to be fairly comfortable with the guarantee that the US government backs Fannie Mae and Freddie Mac MBS, as they are now trading very close in price to Ginnie Mae MBS. One fundamental concern remains, however. The question is not whether investors will get their money back, but rather when they will get it back. MBS yield more than comparable Treasuries because MBS have prepayment risk and Treasuries do not. The recent volatility and uncertainty in financial markets makes it more difficult to evaluate the prepayment risk, so investors are demanding higher yields.

I just thought you might like some extra explanation. If you have any other questions, feel free to call or e-mail me

I'm SO excited.....1 week until all those awful election ads are OFF my TV. I'm not even sure I remember the "good old days" of just ads for items to buy!!!

Can you imagine if we had to move homes & finance them the way folks are trying to get elected? But wait...some still do! I just had a client today who told me someone else was trying to 'win business' by slamming me.....not by providing their own GFE or a better rate....but just by saying they would match mine! Then they tried the old "we're a bank so we MUST be better" line.

Just like the elections...aren't people supposed to 'vote' for you after you show what you can do for them? Don't tear down the other person.....show why you are better...or have a better plan for the client.

"I'm Loren Johnson, and I approved this message"! Have a great day!!

Shall we take a quick look at the economic news that will drive mortgage rates this week? (I'd rather focus on that than the cold weather we're about to have!)

The biggest bond rate event this week will be Wednesday's Fed meeting. Investors have priced in a half-point rate cut, and they are waiting to see if the Fed will take any other actions to boost the economy. The most important economic data will be Thursday's Gross Domestic Product (GDP) report. GDP is the broadest measure of economic activity. In addition, New Home Sales will come out at 9 am this morning. Durable Orders, another important indicator of economic activity, is scheduled for Wednesday. Personal Income and Chicago PMI will be released on Friday. Consumer Confidence and Consumer Sentiment will round out the economic data next week.

If you have any questions about this information, please call or e-mail me. I'm glad to help. Have a great week!