The Weekly Rap! Friday June 26th 2015

The National Debt is currently: $18,281,639,132,587.00  is Higher by another 9 BILLION.  The interest pay-out alone on the debt is 244 Billion per year!  I post this so we will be aware of what we are leaving to our children.

The Dow last traded at 17,900, lower by 950pts over where it was last Friday.  The S&P 500 is trading at 2,096.  Gold is trading at $1,173 an ounce, while oil futures at $59.54 a barrel.  Gas prices, (Regular in El Dorado Hills, Costco, AM/PM), are at $2.85/Gal.

The FNMA 30-year fixed 3.0% coupon (interest rates at which banks sell their loans into Fannie Mae), containing 3.25% – 3.625% mortgage rates, the benchmark or how rate sheets are priced these days is currently trading at 98.63 worse in price by about 1.40 over where we were last week.  Our current trading range has now shifted lower and is about 98.5 to about 100.5 and we are testing the bottom.  Each .50 change in the price of the security translates to about 0.125 in rate.  Todays’ drop appears to be related to the massive sell-off in the Chinese stock market. There is some talk about a liquidity crisis that could occur in China. It that were to happen, it could force the Chinese government to sell some of the $1.7 trillion in US Bonds they are holding. That is a big potential overhang for US to digest. Basically the 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 lower the rate.     

If you like this commentary please visit and “Like” my Facebook pageI put all of my prospective buyers through underwriting so that when they place their offer, it is as close to “cash” as you can get.  So to get your clients “underwriter approved”, please contact me and get your offer accepted!

I just learned of a great home improvement loan from Home Depot that is not secured.  In other words it is not a lien on your home.  Loan amounts are up to $40,000 and are based on qualifying with no documentation.  You have 6-months to spend the money (interest only payment period) and then the balance is amortized over 7 years at a fixed rate of 7.99%.  There are no loan fees or annual fees.  This is a great program for both Buyers who would like to do some improvements after purchasing the home, as well as Sellers who need to improve the home prior to selling.  Installation and labor can even be part of the project.  Contact me for additional information or click on the link above.

You really have to read not just the whole article, but between the lines.  An article in today’s Wall Street Journal is titled “The Mansion Bedroom Boom.”  In the article it says that real-estate agents say there is a pickup in activity for extreme second homes with 15 or more bedrooms. It goes on to say that reflecting this confidence is an uptick in listings of luxury homes loaded with bedrooms.  Excuse me, but when did an “uptick in listings” mean there is a boom in the market?  Now if they had said that there was a rise in sales, or even pending sales, or even offers being made, I “might” buy into it.  And another thing, an “uptick” is a writer’s term for a rise when there is barely any.   

The article uses an example that Real-estate developer Jeff Greene has his roughly 53,000-square-foot, 12-bedroom home in Beverly Hills, Calif., listed at $195 million. The property, called Palazzo di Amore, also includes 23 bathrooms, a guesthouse and 50-seat theater, a bowling alley, game room and ballroom with a revolving dance floor.  Ok that’s all well and good.  It goes on to say Mr. Greene spent more than $50 million expanding and renovating the estate, which he purchased in 2007 for $35 million.  Now let’s see…  Just when did $35 million (at the height of the recent RE boom by the way) and $50 Million add up to $195 million!  Really?  Ok on to the economic news.

In economic news this week; It was a lighter week of economic data, and the reader’s digest version is the economy is still trudging along.  Consumer spending is higher.  The housing market showed that total home sales are running at the fastest pace in eight years.  GDP was revised higher in the first quarter than previously estimated.  And Inflation is still running lower than normal.

Apparently the economy didn’t do as badly in first quarter as previously reported contracting in the first quarter by a smaller amount, mostly reflecting higher consumer spending and a lower drop in U.S. exports.  Gross domestic product (GDP), the value of everything a nation produces, declined by 0.2% annual rate as opposed to the previously reported 0.7% drop from January to March the Commerce Department said.  Economic growth in the first quarter was apparently hampered by a number of temporary headwinds such as unusually harsh weather, a major dockworker’s strike and a stronger dollar that made U.S. exports costlier to sell.  The good news is that growth has picked up in the spring and early summer, though perhaps not fast as hoped. In the second quarter, the economy is on track to expand by at least 2% and the Economites forecast a 2.8% increase.

The housing sector has rebounded, consumers are spending a bit more and the value of the dollar has come off a 10-year to give U.S. exporters some relief.  Consumers spent at a moderate pace in the first quarter. The increase in household spending, the main engine of growth, was revised up to 2.1% from 1.8%. Consumers spent more at restaurants and on takeout, the government said.  Spending on transportation was also higher than previously estimated.

The economy was still running below trend in May, according to the Chicago Fed’s national activity index released Monday. The index, a weighted average of 85 different economic indicators, edged up to negative 0.17 from negative 0.19, and the three-month average edged up to negative 0.16 from negative 0.20. A zero reading shows the economy is running at its trend rate of growth, and readings in the three-month average below negative 0.70 indicate a recession has likely begun.

Americans splurged on new cars and trucks in May and spent more to fill up their gas tanks, boosting consumer spending last month at the fastest pace in six years.  Consumer spending rose 0.9% in May to mark the biggest gain since 2009, the government reported.  The amount consumers spent in April and March was also a bit stronger than initially reported. Most analysts believe Americans are in the best financial shape in years, but so far the recovery has been marked by an up-and-down pattern in consumer spending.

Inflation, or the “core” PCE index that excludes food and energy, edged up 0.1% in May.  The core rate rose at a 1.2% pace year over year, down from 1.3% in April.  The low level of inflation is a big reason why the Fed has refrained from raising interest rates. The Fed believes an inflation rate of 2% would be healthier for the economy and a persistently low rate could prompt them to wait even longer to raise rates.

On the Real Estate front:

Sales of existing homes rose 5.1% in May to an annual rate of 5.35 million, hitting the fastest pace since November 2009 and rebounding from a drop in April, the National Association of Realtors reported Monday.  First-time buyers stepped up their purchases, supported by a strengthening jobs market and greater access to mortgages, according to NAR.  A greater number of homes on the market also supported more sales, NAR said. This year is on track to be the best for home sales since 2007, NAR said. On Monday NAR revised April’s pace to 5.09 million.

Sales of new single-family homes in May reached the fastest pace in more than seven years, according to data released Tuesday that signaled strength during the hot spring housing market.  New single-family homes sold at an annual rate of 546,000 in May, the most since February 2008, with growth in two of four regions, the Commerce Department reported.

The housing market has actually been underperforming for years. In the first quarter, fixed residential investment made up about 3.1% of real GDP, below an average of more than 5% over the past five decades.  But key factors are improving. Young families and other first-time buyers are making more home purchases. The jobs environment is steadying. And with the beginnings of a pick-up for wage growth, there’s rising demand and ability among borrowers to take out a mortgage.

Rising home prices should help some struggling borrowers and firm their financial footing. The Federal Housing Finance Agency (homes backed by conventional loans FNMA & FHMAC) reported that home prices rose 0.3% in April, and were up 5.3% from a year earlier.

On the Employment front: The labor market is still showing plenty of vigor, the latest look at layoffs shows.  The number of people who applied for unemployment benefits last week rose by 3,000 to 271,000, the Labor Department said Thursday.  Initial jobless claims have been under the key 300,000 level for 16 straight weeks, the longest stretch since 2000-2001.

Useless Trivia:  And no, I did not fact-check every one of them.

A dime has 118 ridges around the edge.

A cat has 32 muscles in each ear.

A crocodile cannot stick out its tongue.

A dragonfly has a life span of 24 hours.

A goldfish has a memory span of three seconds. Reminds me of voters!


Fun for the day: 

An engineer dies and reports to the pearly gates. St. Peter checks his dossier and says, “Ah, you’re an engineer – you’re in the wrong place.”

So the engineer reports to the gates of hell and is let in. Pretty soon, the engineer gets dissatisfied with the level of comfort in hell, and starts designing and building improvements. After a while, they’ve got air conditioning, flush toilets and escalators, and the engineer is becoming a pretty popular guy.

One day God calls Satan up on the telephone and asks with a sneer, “So, how’s it going down there in hell?”

Satan replies, “Hey, things are going great. We’ve got air conditioning, flush toilets and escalators, and there’s no telling what this engineer is going to come up with next.”

God replies, “What??? You’ve got an engineer? That’s a mistake – he should never have gotten down there; send him up here.”

Satan says, “No way! I like having an engineer on the staff, and I’m keeping him.”

God says, “Send him back up here or I’ll sue.”

Satan laughs uproariously and answers, “Yeah right. And just where are YOU going to get a lawyer?”

You can visit my corporate website at:


Bill Bartok

Mortgage Advisor MLO# 445991

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

Thank you!

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