Looking for something interesting at the next foreclosure sale? Jose Canseco has abandoned his home near Los Angeles, leading to foreclosure. “He made a mathematical decision and just let it go,” said Gregory Emerson, Mr. Canseco’s lawyer. He bought the 7,300-square-foot home for $2.8 million in 2005, and his trust defaulted on mortgage payments in October & foreclosure was recorded in February.
When was the last time you bought sheets versus the last time you bought gas? The parent company of Linens ‘n Things has filed for Chapter 11 bankruptcy protection, citing the rough economy. The company will close 120 of its under-performing stores. Meanwhile, Exxon Mobil Corp. earned $10.89 billion in the first quarter of 2008. Definitely a sign of where people will be spending their money…
On Friday the Fed moved to further ease the credit crisis. The Term Securities Lending Facility, which can lend up to $200 billion to 20 different banks and investment banks known as primary dealers, will be able to accept as collateral student loans, car loans, HELOC’s, and credit card debt, in addition to mortgage-backed securities as collateral for these Fed loans. The Fed agreeing to accept this collateral will obviously help those instruments be assessed at a “sound and realistic value.” In addition, the Fed expanded the amount of credit that can be given to banks through the Term Auction Facility, which conducts biweekly auctions of $50 billion in 28-day loans. On Friday, the Fed authorized $75 billion for each auction, bringing the total outstanding loans at any given time to $150 billion.
Here’s some more good news, I guess: Warren Buffett, the world’s richest man believes, “The worst of the crisis in Wall Street is over…but…In terms of people with individual mortgages, there’s still a lot of pain left to come.”
It is generally believed that last week’s rate cut by the Federal Open Market Committee (FOMC) is probably the last for the next few months (the next meeting is not until June 25th). In their statement the governors mentioned acting in a “timely manner” which made analysts feel comfortable. Some Wall Street firms believe that overnight rates will stay until the end of 2009, although generally speaking the market anticipates rate hikes starting at the end of 2008. Friday’s unemployment data has been picked apart. It was obviously not strong, but still better than expected. There was little in the way of revisions, and the headline number – unemployment rate – fell back to 5.0%, reflecting the surge in the household gauge of employment. The wage information supports the belief that the labor market is weak, as average hourly earnings rose only 0.1% in April. This week is fairly light in terms of economic releases, although today we have the ISM Services Index. If it varies greatly from forecasts it could influence mortgage rates. However, it likely will have little impact on rates.
I noted this important trivia last year:
Most people don’t know that in 1912, Hellmann’s mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico, which was to have been the next port of call for the great ship after its stop in New York. This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was lost forever. The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great that they declared a National Day of Mourning, which they still observe to this day. The National Day of Mourning occurs each year on May 5th and is known, of course, as Sinko de Mayo.