Fed Implies Cuts Over, MBA Tightens Broker Regulation
When I was signing over my economic stimulus check to the ARCO gas station owner yesterday so I could fill up my tank, I asked him if the higher prices ($135/barrel this morning) had hurt his business. He pointed to the Loomis Armored Car truck pulling away, and said, “No, not really. If you don’t buy it at these prices, someone in some other country will!”
Going to church doesn’t make you a Christian anymore than standing in a garage makes you a car. The Mortgage Bankers Association released a new policy paper titled, “Mortgage Bankers and Mortgage Brokers: Distinct Businesses Warranting Distinct Regulation.” The MBA’s paper examines the different relationship and expectations that borrowers have with bankers and brokers, along with and the compensation structures, oversight, and incentives that each have. The MBA is recommending that borrowers receive clear disclosures of the brokers’ responsibilities and compensation, mortgage brokers who claim to be or act as borrower agents be treated legally as agents, mortgage brokers have sufficient financial resources – through a national minimum net worth requirement – to provide protection to borrowers and mortgage bankers where necessary, mortgage brokers be appropriately bonded to give consumers greater protection; and all loan originators, including brokers and bankers, be registered and appropriately licensed in accordance with rigorous standards.
What did yesterday’s FOMC meeting minutes say? The Federal Reserve appeared to shut the door to the possibility of further interest rate cuts, saying in April meeting minutes that the last rate cut was a “close call,” and that many officials think future reductions are unlikely even if the economy contracts. The Fed cut its growth outlook and raised its unemployment-rate estimate to between 5.5% and 5.7%. The Fed also raised its projection for inflation.
Weekly Jobless Claims moved from 374k down 9k to 365k, and continuing claims continues near its 4 year high, a tad above 3 million. Rates crept up, with the 2-yr hitting 2.49% the 10-yr hitting 3.88%, and mortgage prices worse by .250 in price. Yes, inflation is heading higher, but the economy just cannot “boom” with oil prices near $135 and apparently going higher and thus is impacting the stock market. Oil is up 39% this year and is more than double its price of 52 weeks ago. Can anyone ask how long it takes a nuclear power plant to be built? (Almost 10 years.) Solar? A grid 100 miles by 100 miles would take care of the US – but how to distribute it?
More good mortgage news: Following a similar decision by Fannie Mae, Freddie Mac has eliminated the requirement for borrowers to put up larger down payments in markets where home prices are declining. Everyone is hoping all of the middle investors and MI companies will follow.