Fed Lowers Rate a Quarter Point to 4.50%. Federal Reserve Says Economic Growth Will Likely Slow In The Near Term

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/2 percent.

Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance. However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction. Today’s action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time.

Readings on core inflation have improved modestly this year, but recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

The Committee judges that, after this action, the upside risks to inflation roughly balance the downside risks to growth. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Donald L. Kohn; Randall S. Kroszner;
Frederic S. Mishkin; William Poole; Eric S. Rosengren; and Kevin M. Warsh. Voting against was Thomas M. Hoenig, who preferred no change in the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 5 percent.

In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Richmond, Atlanta, Chicago, St. Louis, and San Francisco.

Happy Halloween

“If you wish to achieve worthwhile things in your personal and career life, you must become a worthwhile person in your own self-development.”

– Brian Tracy, Author

Today’s Current Mortgage Interest Rates October 31 2007. Fixed mortgage rates are UNCHANGED from Tuesday October 30 2007, while adjustable mortgage rates are UNCHANGED - Today’s 30 Year, 15 Year Fixed are UNCHANGED- while as the 5/1, the 3/1 ARM Mortgage Interest Rates are UNCHANGED as well . The 10 year bond is UNCHANGED slightly to 4.42%.

A properly designed bankruptcy bill with firm guidance for modifying loans could reduce the number of expected foreclosures by 500,000, Mark Zandi, chief economist of Moody’s Economy.com, has told a congressional panel.

Mr. Zandi warned that 2 million families could lose their home by early 2009 and that the current cycle of rising foreclosures and falling housing prices could lead to a national recession.

“There is no more efficacious way to short circuit this cycle than by adopting legislation to allow bankruptcy judges the authority to modify first mortgages by treating them as secured only up to the market value of the property,” he testified.

This program is currently being accomplished without legislation AND you do NOT have to go bankrupt! If you would like more information - see Foreclosure Prevention.

He suggested that this legislation should sunset after three years so Congress can review its impact. But he dismissed claims by the Mortgage Bankers Association that such a bankruptcy bill would force lenders to increase mortgage rates and fees.

The founder of Economy.com testified that current voluntary efforts by mortgage servicers to modify loans is unlikely to stop the increase in foreclosures.

If bankruptcy judges begin to reduce or “cram down” the principal amount of residential mortgages, Federal Housing Administration servicers would have to absorb the losses because the government cannot pay a claim on a cramdown, according to the Mortgage Bankers Association.

Passage of the bankruptcy bill (H.R. 3609) to permits cramdowns and loan modifications would make it riskier for lenders to originate FHA insured and Department of Veterans Affairs guaranteed loans, MBA chairman-elect David Kittle warned a House Judiciary Committee panel.

As a result, lenders would have to charge higher interest rates and fees. The MBA also noted that Fannie Mae and Freddie Mac would be required to purchase loans out of mortgage-backed securities pools if loans are modified.

“If this bill becomes law, we believe mortgage rates would jump significantly, going up 1 1/2 to 2 points for everyone taking out a loan,” Mr. Kittle told the commercial and administration law subcommittee.

The government is suppose to foot this???…that REALLY means you and I!

Just a thought, maybe the banks should absorb the costs, after all, the DID underwrite the mortgages.

The president elect of the National Association of Mortgage Brokers says the Department of Housing and Urban Development does “not care about true simplification” of the Real Estate Settlement Procedures Act, and he vowed to vehemently oppose HUD’s latest RESPA proposal.

The proposal, which had not yet been released officially, includes a four page good faith estimate instead of a one page GFE favored by the NAMB, Marc Savitt told attendees at the Southeast Mortgage Brokers Conference.

Mr. Savitt charged that HUD had bowed to pressure from other industry participants, contending that the RESPA proposal is about market share, not simplification. He said the new rule is similar to one HUD proposed back in 2004 but with the packaging provisions removed.

Mr. Savitt vowed that the NAMB would “hit them with everything we have.” In response to the 2004 rule, a grassroots campaign resulted in 45,000 letters of protest. “That is nothing compared with this time,” he predicted.

He called on mortgage brokers to contact their customers and have them write letters to HUD. Mr. Savitt told the conferees that the NAMB has attorneys in place ready to file a lawsuit against HUD as soon as the rule is formally published.

“Whatever we expect with confidence

becomes our own self-fulfilling prophecy.”

–
Brian Tracy, Author