THE BASIS POINT

Tax On Small Business, Rates At TARP Banks, End of 2nd Mortgages?, Private MBS Volume

Recently seen bumper sticker: “Honk if you are paying my mortgage”.

Tax On Small Business
Most mortgage companies in the United States would be counted under the “small business” category. (500 employees or less.) Sure, billions of dollars of closings might pass through their doors, but in terms of revenue, expenses, and employees, they would be considered small businesses. The current budget plan proposes that only a few small businesses would see a tax increase. Would increased taxes hurt small companies who are the “engine of economic growth”? Republicans have accused Obama of trying to raise taxes on small-business owners since he proposed a tax increase on the wealthiest Americans during the campaign. Not true, Obama replies. Only a few of the most successful small-business owners would pay more, he says. Both the House and Senate budget outlines that have recently been worked on assume Obama’s tax increase will pass. It is true that relatively few small-business owners would face tax increases. But those businesses, which are the ones that make the most money, are the most likely to employ 20 or more workers, according to data from the National Federation of Independent Business.

Mortgage Rates At TARP Banks
What is your bank doing with its TARP money? Up in Washington State, Sterling Savings Bank ($303 million in TARP) and Banner Bank (($124 million in TARP money) are offering mortgages at interest rates at 3.875%. Most borrowers must have a 20 percent down payment. Sterling is working with Golf Savings Bank, its mortgage lending subsidiary.

Second Mortgage Update
Do you have a second mortgage? Made a 2nd mortgage? Know someone who knows how to spell “2nd mortgage”? Check this out.

Private MBS Volume
Up until recently, mortgage bankers would sell about $1-2 billion a day in mortgage securities. Now, with all of the refinancing going on, the average selling of mortgages about $4-5 billion per day. Well, fortunately the Fed is there for us, buying roughly $6.5 billion per day. Certainly mortgage rates have been helped by this, given the normal daily fluctuations due to the general interest rate markets. For example, this week we have little in the way of economic news, but supply hitting the market. Today we have several billion of 10-yr TIPS to be sold, tomorrow the Treasury is selling $34 billion of 3-yr Notes, and on Thursday is another 10-yr Note auction. With no economic news, the 10-yr is wallowing around 2.90% and mortgage prices are a shade better than Monday afternoon.

Daily Humor
The teacher gave her fifth grade class an assignment: Get their parents to tell them a story with a moral at the end of it.
The next day, the kids came back and, one by one, began to tell their stories. There were all the regular types of stuff: spilled milk and pennies saved. But then the teacher realized, much to her dismay, that only Ernie was left.
“Ernie, do you have a story to share?”

“Yes ma’am. My daddy told a story about my Aunt Karen. She was a pilot in Desert Storm, and her plane got hit. She had to bail out over enemy territory, and all she had was a flask of whiskey, a pistol, and a survival knife. She drank the whiskey on the way down so the bottle wouldn’t break, and then her parachute landed her right in the middle of 20 Iraqi troops. She shot 15 of them with the pistol, until she ran out of bullets, killed four more with the knife, till the blade broke. And then she killed the last Iraqi with her bare hands.”
“Good Heavens,” said the horrified teacher. “What kind of moral did your daddy tell you from this horrible story?”
“Stay the f… away from Aunt Karen when she’s been drinking!”