The Weekly Rap! Friday Dec 13th, 2013

Good Friday Everone,

The National Debt is currently: $17,226,736,525,674.00  I post this so we will be aware of what we are leaving the next generation.

The Dow last traded at 15,772 a pullback of about 300 points from last week.  The S&P 500 is trading at 1,777.  Gold is trading at $1,234 an ounce, while oil futures at $96.94 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $3.25/Gal.

Yields on 10-year Treasury notes, which move inversely to prices, last traded at 2.86%.  30-year Treasury Bond yields last traded at 3.87%.  Rates on 30-year fixed-rate mortgages are a hair above 4.625% this week. MBS yields are interest rates at which banks sell their loans into Fannie Mae and Freddie Mac bond programs. Rising yields mean higher consumer-mortgage rates.

The FNMA 30-year fixed 3.5% coupon, containing 3.75% – 4.125% mortgages, pretty much the benchmark or how rate sheets are priced these days  is currently trading at 99.68 about a.25 points (fee) worse in price than where we were last Friday at this time.  Basically each percent change in the price of the security translates to the price (or points paid or credited) of the mortgage rate.  The higher the number (price), the better the rate.

In economic news this week; the reader’s digest version is Small business is a bit more optimistic, The federal budget deficit is getting smaller, inflation is still in check, and mortgage debt is on the rise for the first time since the recession began years ago.

The National Federation of Independent Business said its small-business optimism index rose 0.9 points to 92.5.  According to the survey, small-business optimism edged higher in November on plans to increase employment and to expand.

This is always an interesting topic: The Federal Budget.  The U.S. budget deficit dropped in November, supposedly another sign of an improving fiscal picture for the country.  The deficit for November totaled $135 billion, a 21% drop from the $172 billion gap recorded in the same month a year earlier, according to Treasury’s monthly budget report.  Revenues climbed 13% in the month, and spending fell 5%. Revenue has been increasing thanks to higher tax rates and a slowly recovery economy, and spending has been restrained due to automatic budget cuts known as the sequester.

House and Senate negotiators though just reached a deal to replace about half of the sequester cuts that are scheduled for 2014 with other savings from the budget, such as increased airline-ticket fees for passengers. The $680 billion deficit for fiscal 2013 represented 4.1% of gross domestic product, and was the first gap of below $1 trillion of Obama’s presidency.

Retail sales picked up in November, led by autos, as consumers took advantage of holiday season deals. Overall retail sales climbed 0.7% last month, the most since June.  Over the past year, retail sales have grown 4.7%.

The Department of Labor reported the producer-price index (wholesale prices) fell 0.1% declining for the third-straight month in November (0.2% drop in October and a 0.1% fall in September) but seemed to stabilize when measured on an annual basis. Prices last fell for three months in a row at the end of 2012.  The core producer-price index, which excludes food and energy, increased 0.1%.

On the Real Estate front: Home-mortgage debt in the third quarter rose for the first time since the Great Recession, according to the latest data showing consumers beginning to add leverage as the economy improves.  Home-mortgage debt rose at an annual rate of 0.9%, or $87.4 billion, in the third quarter, the first gain since the first quarter of 2008, the Federal Reserve reported.

The rise comes as home prices have been recovering and as the foreclosure crisis winds down. According to separate data from CoreLogic, prices are up about 13% year-on-year as foreclosures have dropped 30%.  The $9.39 trillion in home-mortgage debt is nonetheless down 12% from the peaks in the first quarter of 2008, before the bubble in the housing market burst, reflecting Americans both voluntarily and not voluntarily getting out of home ownership. The rise in mortgage debt comes as consumer credit, led by auto and student loans, continues to expand.  That led the total increase in household debt to reach 3%, the biggest rise since the first quarter of 2008.

On the Employment front:  Here’s a fresh bullish signal for the labor market: 2.39 million workers quit their jobs in October, the most in five years.  You see, when workers voluntarily leave their job that indicates that they see better career opportunities elsewhere, and are willing to make a move while giving up some job security.  This comes on the heels of last week’s surprisingly good jobs report, which said the economy added 203,000 nonfarm jobs in November, rebounding from a summer slump, with employment expanding in a wide range of industries.  The “quits” data comes from the U.S. Department of Labor’s monthly report on its job openings and labor turnover survey, also known as the JOLTS report.

The number of new applications for jobless benefits rose by 68,000 in the week that ended Dec. 7 to 368,000, reaching the highest level in two months.

I have been working with a great credit repair specialist for some time and she shares a “tip or the week” that I thought I would also share.  Please let me know what you think.  Her name is Pamela Standlee, Owner of CreditComeBack and can be reached at (916) 357-6700, Pam@CreditComeBack.org in Folsom Ca.

What one item has the most devastating impact on a credit score… More devastating than a bankruptcy or foreclosure?

Current Past Due Accounts:  Not the answer you expected, right?  But it’s true. 

This is not to be confused with a 30, 60 or 90 day late. When a creditor is reporting a current past due account (payment) it is a huge red flag to the scoring models that the consumer has not met their obligation to pay as of today (ie; they are currently defaulting on the account).

Within the delinquent accounts on your credit report, there is a “Past Due” column. If you see an unpaid amount in this column it means that the account is currently past due and it will cause the credit scores to plummet!  

How can you fix this?  Contact the creditor and pay the past due amount that’s being reported.  Always ask for a letter showing proof that you have paid and are now current on the account.  This letter can be used by mortgage professionals to do a Rapid Re-Score on that particular tradeline, within 3-5 days.  Without the letter you may have to wait up to 45 days for the creditor to update this information with the bureaus.

You can visit my corporate website at: http://bill.bartok.stanfordloans.com

Sincerely,

Bill Bartok

Mortgage AdvisorMLO# 445991

The nicest compliment I can receive is the referral of your family, friends and co-workers.

Thank you!

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