Friday, March 23, 2012

IRS Warns of New Tax Scam and Weekly Update


In This Issue


Last Week in Review: Several housing-related reports were released last week,
 but did they show an improvement in the housing market?
Forecast for the Week: A busy week is ahead, with news on the state of the
 economy, inflation, consumer confidence and more.
View: The IRS is warning people about a new tax scam. Be sure to share the 
below information with your colleagues, clients, and friends.
Last Week in Review


The song remains the same. The title of that Led Zeppelin song is a great 
description for some of the things we're seeing lately in the Bond market. 
Read on for details, and what they mean for home loan rates.
First, several housing
-related reports were 
released last week -
 and they show that
 the housing market
 continues to remain
 weak. Both Housing 
Starts and Building 
Permits came in 
meeting expectations.
 Existing Home Sales fell 0.9% in February to 4.59 million units (though that
 was nearly inline with expectations), while New Home Sales fell 1.6%
 in February, which was below expectations. 

Perhaps the biggest takeaway from these reports is that they could cause
 the Fed to do another round of Bond buying (Quantitative Easing or 
QE3) under the guise of helping housing. The housing market remains 
fragile, and it can't absorb an uptick in rates just yet. It will be important to see
 if there are any rumors of QE3 in the coming days and weeks. Rest 
assured that the Fed has noticed the uptick in home loan rates and 
subsequent fall off in loan origination activity. This could certainly lead to another
 round of Bond buying, and as home loan rates are tied to Mortgage Bonds, 
as Bonds improve so will home loan rates. 

Another thing that could help Bonds and home loan rates is renewed emphasis
 on safe haven trading. While global economic news has taken on a bit 
of a brighter tone lately, causing investors to move some of their money 
out of the safety of our Bonds, it's important to keep in mind that the debt 
crisis in Europe is far from over. Just last week, it was reported that Portugal's
 economy is set to contract by 3.3%, and it seems that it will be nearly 
impossible for Portugal to meet the tighter fiscal union rules and annual
 budget deficit targets. Also, Europe's Services and Manufacturing
 numbers contracted more than forecast...confirming that the region is moving
 into a recession. 

It is important to note that while Stocks saw some declines last week, Bonds 
were unable to build any positive momentum. This is eye-opening and
 doesn't bode well for further price appreciation in Bonds. Whether the
 potential for QE3 or future safe haven trading helps Bonds and home loan
 rates in the future remains to be seen. 

The bottom line is that home loan rates still remain near historic lows
 and now continues to be a great time to purchase or refinance a 
home. Let me know if I can answer any questions at all for you or your clients.
Forecast for the Week


Chart: Fannie Mae 3.5% Mortgage Bond (Friday Mar 23, 2012)
Japanese Candlestick ChartAfter last week's quiet economic release calendar, this week's calendar heats up.
  • Pending Home Sales will be delivered on Monday and comes after last week's so-so reports on the housing sector.
  • Consumer Confidence and Consumer Sentiment will be released on Tuesday and Friday, respectively. The data will be closely watched to gauge how the consumer is holding up as economic news has been on the positive side.
  • Wednesday brings the Durable Goods Report, which measures big ticket items that last for an extended time.
  • Initial Weekly Jobless Claims will be released on Thursday. Jobless claims fell to the lowest level since February of 2008 last week as the sector continues to breathe life into the economy.
  • Also on Thursday, the final read for Gross Domestic Product for the 4th quarter of 2011 will be released. In order for the U.S. economy to strengthen, we will have to see sustained growth in the form of the GDP.
  • Friday brings a bunch of reports, including Personal Income and Spending, as well as the Chicago Manufacturing Report.
  • We'll also see the Core Personal Consumption Expenditures on Friday. This report provides insight into where inflation is at, so the data will be key to the Bond markets. As we know, higher inflation pushes Bond prices lower due to purchasing power loss that is associated with rising consumer prices. And, lower Bond prices can be bad news for home loan rates.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving - and when they are moving lower, home loan rates are getting worse. 

To go one step further - a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning. 

As you can see in the chart below, Bonds have been on a "Down Escalator" trend of late...and this trend is not friendly to home loan rates. I'll be watching closely to see if Bonds can "step off" this escalator and change course.
The Mortgage Market Guide View...



IRS Warns of New Tax Scam 

Senior citizens are the target of a phony refund scheme.
By Cameron Huddleston, Kiplinger.com

The IRS is warning taxpayers to watch out for people promoting a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit. This credit is available to taxpayers who have qualified college expenses, but promoters of the new scheme claim they can get a refund based on the credit even for people who aren't enrolled in or paying for college. 

Scam artists are targeting senior citizens, members of church congregations and people who have little or no income and normally aren't required to file a return, according to the IRS. Promoters of the scam often charge exorbitant upfront fees to file claims for nonexistent refunds. 

The IRS already has stopped thousands of these fraudulent claims and is investigating the source of them. However, the IRS warns taxpayers to be aware of the following to avoid becoming a victim: 

-Homemade flyers and brochures implying tax credits are available without proof of eligibility.
-Offers of free money with no documentation required.
-Promises of refunds for "Low Income - No Documents Tax Returns."
-Unfamiliar for-profit tax services selling refund and credit schemes to the membership of local churches.
-Claims for the expired Economic Recovery Credit Program or for economic stimulus payments.
-Unsolicited offers to prepare a return and split the refund.
-Internet solicitations that direct individuals to toll-free numbers and then solicit Social Security numbers. 

For more advice on how to avoid becoming a victim, see 5 Ways to Guard Against Tax Fraud

Reprinted with permission. All Contents ©2012 The Kiplinger Washington Editors. Kiplinger.com

Economic Calendar for the Week of March 26 - March 30
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. March 26
10:00
Pending Home Sales
Feb
NA

2.0%
Moderate
Tue. March 27
10:00
Consumer Confidence
Mar
NA

-4.0%
Moderate
Wed. March 28
08:30
Durable Goods Orders
Feb
NA

-3/7%
Moderate
Thu. March 29
08:30
Jobless Claims (Initial)
3/24
NA

NA
Moderate
Thu. March 29
08:30
Gross Domestic Product (GDP)
Q4
NA

3.0%
Moderate
Thu. March 29
08:30
GDP Chain Deflator
Q4
NA

0.9%
HIGH
Fri. March 30
09:45
Chicago PMI
Mar
NA

64.0
HIGH
Fri. March 30
08:30
Personal Consumption Expenditures and Core PCE
YOY
NA

1.9%
HIGH
Fri. March 30
08:30
Personal Consumption Expenditures and Core PCE
Feb
NA

0.2%
HIGH
Fri. March 30
08:30
Personal Spending
Feb
NA

0.2%
Moderate
Fri. March 30
08:30
Personal Income
Feb
NA

0.3%
Moderate
Fri. March 30
10:00
Consumer Sentiment Index (UoM)
Mar
74.3

74.3
Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Equal Housing Lender          

Monday, March 19, 2012

Weekly Update!


In This Issue


Last Week in Review: It was a tough week for Bonds and home loan rates. Find out
 why.
Forecast for the Week: Housing data dominates the headlines, with news on
 Existing and New Home Sales, Housing Starts, and Building Permits.
View: If you ever need to rent a car for business or pleasure, you’ll definitely want
 to check out the money-saving tips below.
Last Week in Review


Don't fight the Fed. The markets certainly felt the truth of that sentiment last week,
after the Fed released its Policy Statement from their regularly scheduled meeting 
of the Federal Open Market Committee. Read on to learn how this and all the
 news of the week impacted Bonds and home loan rates. 

Last week's Fed Statement was not a glowing endorsement of the 
economy, but they did admit that things are improving in most areas 
except housing, which remains "depressed." While improvement in our economy
 is good, should this trend continue home loan rates could edge higher. Why? 
Because Stocks often benefit in strong economic times at the expense of Bonds 
 (including Mortgage Bonds, which home loan rates are based on). 

The Fed did acknowledge that inflation could increase in the near-term due
 to higher energy prices - and higher inflation is never good news for Bonds 
as inflation hurts the return of a fixed investment. And we did see a hint of this 
last week as the Consumer Price Index rose a bit in February (though the 
wholesale-measuring Producer Price Index was tame). If hints of inflation pick 
up in the weeks or months ahead, this could hurt Bonds and home loan rates.

But there was more salt in the wound from the Fed's Statement for Bonds and 
home loan rates. Not only did the Fed fail to mention anything about another
 round of Bond buying (called Quantitative Easing or QE3), but there was word 
that out of 19 banks, all but four passed an important stress test. While that's
 good news for the financial system and the economy, it did help Stocks at the 
expense of Bonds. 

Another important point to note: Things have been quiet in Europe and this 
has lifted the safe haven trade, thereby further applying selling pressure 
on Bonds. That's not to say that Bonds and home loan rates won't be seen 
as a safe haven for trading in the future, as the uncertainty in Europe is far
 from over. In addition, the issues with Israel and Iran aren't going to just disappear,
 and those issues may lead investors back into the safety of Bonds in the near future.

The bottom line is that even though Bonds and home loan rates worsened 
last week, rates still remain near historic lows and now continues to be 
a great time to purchase or refinance a home. Let me know if I can answer 
any questions at all for you or your clients.
Forecast for the Week


Chart: Fannie Mae 3.5% Mortgage Bond (Friday Mar 16, 2012)
Japanese Candlestick ChartThe economic release calendar is light this week, and housing data dominates the headlines.
  • Housing Starts will be delivered on Tuesday along with its cousin Building Permits.
  • On Wednesday, Existing Home Sales will be delivered, followed by New Home Sales on Friday.
  • Initial Weekly Jobless Claims will be released on Thursday. Jobless claims continue to hover near the 350,000 level as the labor sector rebounds.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.
When you see these Bond prices moving higher, it means home loan rates are improving - and when they are moving lower, home loan rates are getting worse.
To go one step further - a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Bonds and home loan rates worsened due to the upbeat Fed Statement and the improvement in Stocks. I'll be watching the markets closely this week to see what happens.
The Mortgage Market Guide View...



How to Avoid Unnecessary Rental Car Fees
You could end up doubling the daily rate unless you just say no at the counter.

By Jessica L. Anderson, Kiplinger.com

Renting a car is a little like buying a car: Before you can drive the vehicle off the lot, you have to withstand a hard sell for a slew of options. And in their zeal to nick your wallet, rental companies are getting creative.
For example, you'll almost certainly get the pitch for prepaid gas. Presented as a convenience, it's a big moneymaker because you are likely to pay for fuel you never use. Thrifty, for one, makes it a tough option to turn down. When you fill up the car yourself, the company requires that you provide a receipt proving that the gas station was within ten miles of the rental car lot. If not, Thrifty hits you with a fueling charge.

If you prepay for a rental from Avis and change your mind, make sure you cancel at least 24 hours in advance; if you don't, you'll get your money back - minus a $50 "no show" fee. A few rental car companies even charge a fee of $15 if you return your car a day early. 

Be aware of charges for add-ons, too. A portable GPS unit typically costs $13 a day, and satellite radio can trigger a $5 daily fee. An "electronic toll transponder" carries a daily or weekly fee - $3 a day is typical - in addition to the tolls. Need a car seat for your kid? That's another $11 a day. 

If you're charged a fee that wasn't disclosed when you signed for the car or made an online reservation, fight it. Jeremy Acevedo, a research analyst at Edmunds.com and former Enterprise employee, says the squeaky wheel often gets the grease. Always pay with a credit card so you can dispute a charge if necessary. (If you use a debit card, a hold of $100 or more, plus the cost of the rental car, is often put on your account until the car is returned.) 

The CDW decision. Nothing is as expensive, or as confusing, as the CDW, or collision damage waiver (sometimes called the LDW, or loss damage waiver). Agents are trained to make this rental car insurance, which typically costs $20 to $30 a day, sound nonnegotiable. 

You probably don't need it. Rental car damage and liability are covered by your auto insurance policy up to the same limits as for your personal vehicle, and your credit card likely fills any gaps. Most cards, for example, will pick up your deductible and miscellaneous fees. 

But turning down the CDW isn't a slam-dunk. Some people buy it because they don't want an accident on their insurance record, should one occur. And if you don't have auto insurance because you don't own a car, you may need to suck it up. Your credit card is likely to cover collision damage to the rental car, but no credit card covers you for liability - personal injury or property damage you cause and for which you are liable. Although liability insurance up to state limits is usually included automatically in the rental cost, the protection is often minimal. To beef it up, you'll have to buy a separate add-on called supplemental liability or additional liability insurance (for about $13 a day). 

If you are in an accident and haven't purchased the CDW, the rental company may charge you towing, administrative and "loss of use" fees - the money the rental company forfeits by having a car in the shop instead of out on the road. And those fees aren't always covered by your insurance or credit card. Only a handful of states require that standard auto policies cover loss of use, and most major insurers don't cover it. Progressive does include it on standard policies, however, and State Farm sells an annual endorsement for $50 to $100. 

Among credit cards, American Express and Visa cover towing, administrative and loss-of-use fees. But only certain MasterCards (gold, platinum, World and World Elite cards) cover rental cars; that coverage includes towing and loss of use, but not administrative fees. Discover doesn't cover any rental car fees. 

Although you may be covered on paper for loss-of-use fees, you could get caught in the crossfire. Card issuers and insurers typically ask rental companies to prove loss of use by providing fleet logs showing that all other vehicles were rented out, but rental companies are often reluctant to turn over their records. It can come down to a gamble. Take the CDW, or take a chance that the stars won't align against you. Even if you are in an accident and no one else pays up for loss of use, you're likely to be charged a few hundred dollars at most.
Shop smart. To save money on your rental, shop around. Your best bet is to make a reservation as soon as you know you're going to need a vehicle and then keep checking for lower prices as your departure approaches. Acevedo says walk-ups at the airport can get a steal if unreserved vehicles are sitting on the lot. If you won't owe a cancellation fee, ask for the best rate at several rental counters. 

You can often save money at smaller companies, such as Ace Rent A Car and Midway, which may not show up on the big travel Web sites. Ace just scored J.D. Power's highest rating for overall satisfaction. (Enterprise scored the highest among the major brands; Avis and Thrifty scored the lowest.) If your goal is a low price and you're not picky about which company you rent from, try Priceline or Hotwire - they'll get you a reservation with a name brand for up to 40% off, but you won't find out which one until you're booked. Plus, you will have to prepay to get the lowest rates. 

For longer trips, consider renting at an off-airport location. The airport concession fee is typically 11% to 13% of your total rate. Do the math to see whether a cab ride into town is worth the cost. 

Reprinted with permission. All Contents ©2012 The Kiplinger Washington Editors. Kiplinger.com

Economic Calendar for the Week of March 19 - March 23
Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Tue. March 20
08:30
Housing Starts
Feb
NA

699K
Moderate
Tue. March 20
08:30
Building Permits
Feb
NA

676K
Moderate
Wed. March 21
10:00
Existing Home Sales
Feb
NA

4.57M
Moderate
Thu. March 22
08:30
Jobless Claims (Initial)
3/17
355K

351K
Moderate
Fri. March 23
10:00
New Home Sales
Feb
321K

321K
Moderate

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors.

As your mortgage professional, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated.   Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email.   You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose.

Equal Housing Lender