Bank of America Concerns Drive Rates Down, But Promising Housing Starts and Encouraging Earnings Reports Shorten The Rate Rally

October 22, 2010

Daily Mortgage Updates

Doug Katz Mortgage Broker 22 October 2010 –As I began writing this week’s commentary, I realized I had exhausted my analogies for the ebb and flow of rates we have seen over the past months. That is until I thought back over the years to my Junior Year at West Point standing in a platform above a Long Island night spot with a bungee cord tied to my ankles preparing for the plunge. Then I remembered the jump into the void and the plummet to the bottom of my descent. As soon as I reached that point, I was pulled back violently into the air as the elastic reached its limit. Propelled to a new high-point, I again dropped. Up and down I went for several iterations with gravity and the bungee cords sending me up and down. This, more than anything I have written, describes our current volatile environment with competing forces pulling rates violently to and fro.

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This week we saw the same yo-yo rate phenomenon as the past weeks. We opened relatively flat on Monday, but then saw material drops in Fannie Mae and Freddie Mac conforming mortgage pricing on Tuesday. The main driver for the drop was concern over Bank of America and the possibility that they would need to buy back ~$47 million in loans from their acquisition of Countrywide. Favorable news in the areas of unemployment, housing starts and earnings shortened the opportunity for rate watchers to secure the best rates, however, as equities robustly recovered. At the time of writing this, some alarming news about continued need for billions more in support and capital infusion at Fannie Mae and Freddie Mac had been released and unrest over a proposed increase in the retirement age had spread more wildly in France, so there may still be hope for rate procrastinators.

I am recommending that my clients closing in 15 days or less from today LOCK their rates as the volatility is too great to warrant the risk. For those closing more than 15 days out, I would suggest FLOATING for now with a watchful eye on the markets for the best opportunity.

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About Doug Katz

As the Senior Mortgage Banker and Sales Manager for Chicago Bancorp, Doug not only originates loans for his personal business, but also oversees affiliations with banks and other financial institutions that depend on Chicago Bancorp to meet their client’s lending needs. In this role, Doug directs the day-to-day mortgage sales operations of over 25 branches in a multitude of Chicagoland’s diverse communities. He brings to these relationships a wealth of industry experience and a dedication to an exceptional client experience that has established Chicago Bancorp as Chicago’s pre-eminent mortgage solution providers. Prior to joining Chicago Bancorp, Doug attended and graduated from West Point. Upon graduation, he was commissioned as an officer in the United States Army Artillery, where served 5 years in numerous roles and in various deployments include service in Kuwait. In addition to his Bachelor’s Degree from West Point, Doug holds an M.B.A. from Loyola University Chicago, where he was also inducted into the Beta Gamma Sigma Honor Society. He also served as President for the West Point Society of Chicago from 2003 to 2005 and still serves on the Board of Directors. When not working, he spends his time with his wife and three children in their hometown of Oak Park, as well as pursuing his passions for fitness, cooking and the banjo. Doug can be reached by phone at 312.738.6079, by email at, on his own blogs, and Vet Money Matters. He's also on LinkedIn.

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