Mortgage Default Rates Drop as Economy Improves

As the economy continues to improve, consumer debt continues to decline. Because Americans now have less debt overall, consumer default rates have decreased for mortgages and automobiles alike! This means that the financial condition for consumers is getting better as the economy stabilizes.

The national default rate for mortgages fell to 1.31 percent in the month of April, which is down from 1.41 percent in March.  This data is according to S&P Dow Jones and Experian Consumer Credit. They've worked together to build a comprehensive measure of the changes in consumer credit defaults. Mortgages are doing well, but bank cards saw a small increase in default rates.

Unemployment rates are still somewhat high, but the good news regarding the decline in default rates indicates that the recession is truly behind us. Some cities have reached new post-recession lows in regard to default rates.

If you feel you are in danger of defaulting on your mortgage, seek financial help! Perhaps refinancing could save you from your situation. View the links to the right for information on a couple companies that we'd recommend!

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U.S. Job Market Staggers

The U.S. economic recovery has had a bit of a slowdown in May. According to the Labor Department's Job Report for May, only 69,000 jobs were created. This is a much lower number than experts had expected for the month. With that said, the unemployment rate has also climbed up to 8.2%, which is the first time it has increased in the past 11 months. This all comes at a time when Americans are worried about the European crisis, higher gas prices and the constant problems that the housing market faces. It is important, therefore, that the U.S. economy continues to grow, especially since Europe is declining. If the U.S. has frequent slowdowns like the one in May, it could bring about a global slowdown. It had enough of an impact on the economy for the Obama administration to comment that this jobs data was unacceptable and that Congress needs to do something to strengthen the nation. Time will tell if they take action to make a difference in the lives of Americans or not.

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Mortgage Update

The debt issue in Greece is still not completely resolved, but it is nearing the end. In the meantime, Stocks are benefiting at the expense of Mortgage Bonds which are trading at lower levels now. Greece's problems are far from over, however. This debt deal is only giving them a small boost in the now, but it will bring up new problems down the road. Germany has imposed tighter fiscal union guidelines on the country, and they also have to contend with the austerity measures that we've mentioned before.

Switching back to America, a new Jobs Report is expected soon that will detail how we're doing with our economic recovery. A recent count of Jobless Claims is at 362,000 which is higher than last week's 354,000. This puts the Unemployment Rate at 8.3% right now.

The Jobs Report will have more to say, but right now we would advise our clients to Lock before the report comes out. There could be a negative effect on Bonds, making them drop even further, depending on the report. That would in turn cause home loan rates to increase. Lock while you can!

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Claims for Unemployment Benefits Decline

According to the U.S. Labor Department, there have been fewer claims filed for unemployment benefits lately. This drops the level down to the lowest it has been in four years.  New applications for jobless benefits have declined, meaning there has been some great employment gains throughout the country.

The government will be releasing February's employment report on March 9th. While the country still has a long way to go for economic recovery, this report is expected to have favorable data that shows job growth accelerating.

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Retirement Growing Increasingly Difficult for Americans

In this rough economy, most people cannot afford to be unemployed. This is especially the case when these people have mortgages to pay. However, money woes do not discriminate against age. More and more, people are finding themselves unable to retire at the traditional age of 55. In fact, surveys have shown that just over 40% of Americans 55 and older are still working. Comparatively, this figure was below 30% in the early 1990s.

Granted, there are people in this age range that choose to work. But overall, people don't have much of a choice otherwise. The economy can take the blame for that. Fortunately, there are more jobs today that are not physically demanding as compared with past decades, so those who are forced to work are at least able to do so relatively well. Those who have held onto a job throughout the recession are reluctant to give them up quite yet.

This economy has made it increasingly difficult to save money in a retirement plan. Even those who had a significant nest egg in the past are finding that it has dwindled due to drops in the stock market. Wisely, people are holding on to every penny they can. Specifically, it is women between 55 and 64 who are now working more often to make up for child raising years when they may not have worked, and therefore did not have retirement savings during that time.

There is also the issue of health insurance. Those who worked full time for years may have had health insurance through their employer that took care of most of their medical needs. It would be very expensive for someone at retirement age to purchase private health insurance and pay on it every month, so this has also had an affect on the decision to retire. Health care coverage is very linked to employment, and many have depended on this over the years. In fact, it is almost vital for some people to continue working until they've become eligible for Medicare.

Additionally, many older homeowners have refinanced in recent years expecting to sell their home at a profit so they could downsize and not have a mortgage. However, they are now finding themselves unable to profit, which forces them to continue making monthly mortgage payments. This of course, leads to a greater need for a job despite being near or past retirement age.

Overall, people are afraid to give up their jobs despite their age, or simply cannot afford to retire in this economy.  Are you in a similar situation?

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Economic Struggle: Underwater Mortgages Hindering Job Search

Many American homeowners are finding it increasingly difficult to apply for jobs because of their housing situation. Homeowners who are strapped to the mortgage of an underwater home seem to be having difficulty leaving it. This means that job relocation rates are suffering.  The number of people who are willing to relocation during this recession is at 13.2%, but the average relocation rate since 2009 has been around 7.9%.

Despite needing jobs in this rough economy, many are forced to stay where they are and pass up far-away employment opportunities because of their mortgages and financial burdens. This in turn effects employer's long-range growth. Once they run out of local options, they will need to rely on those willing to relocate  in order to prevent their company's expansion plans from stalling, which would ultimately effect the economic growth of the country. Unfortunately at this point, most employers will not cover an employee's relocation costs and even fewer will help lessen the impact of selling an undervalue home. All of these factors add up to very little incentive for a job seeker to take a chance on moving to a new location.

It seems as though moving really is a last resort for the majority of job seekers. There are not many who are willing to take such a big loss on the sale of their home for a job position that may not last long or pay off well. Overall, people are a bit stuck. This could be one of the biggest obstacles for Americans in this economic recovery.

Hopefully the American people will take advantage of all the mortgage help that is being offered lately such as the impending bank deal that will help those facing foreclosure to restructure their loans. There's also HARP's new guidelines that are allowing homeowners to refinance at today's lower mortgage rates. And if absolutely necessary, Freddie Mac will be allowing unemployed borrowers an additional 6 months of forbearance on their mortgages.

So if you are one of the homeowners who feel stuck because of a lack of job opportunities and the impossibility of leaving your home, hold tight. The help is coming. Recovery is on the horizon. Here's to hoping that it truly will help Americans to climb back out of the holes caused by unemployment rates and underwater mortgages.

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Federal Reserve: No Rate Hikes until 2014

According to the U.S. Federal Reserve, interest rates will not be raised until at least late 2014. This is even later than investors were expecting. They are doing this in an effort to support the economy's recovery.

The Central Bank says that the unemployment rate is still elevated throughout the country, however inflation is expected to remain somewhat consistent with stable prices. If economic conditions change, the Fed could actually adjust this time frame, but it is expected that the Fed will not change its record-low rate for nearly three years. So this is good news! We should have low rates for quite a while to come.

While the unemployment rate stands at 8.5%, meaning that some 13 million Americans are still unable to find work, the Fed is optimistic about the unemployment rate for 2012. They expect the U.S economy to grow at a 2 percent annual rate this year.

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Current U.S. Unemployment Rates

Because Housing and Jobs are so closely related, it is important to watch for changing trends in the Unemployment level. The chart below displays current levels of Unemployment by state.

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New Freddie Mac Loan Forbearance Policy

As of February 1st, 2012, Freddie Mac will begin allowing unemployed borrowers an additional 6 months of forbearance on their mortgages. That's 6 months without prior approval from Freddie Mac, and an additional 6 months on top of that with prior approval.  So unemployed borrowers will now have up to 12 months to find jobs before they need to pay their loans. This direction comes straight from the Federal Housing Finance Agency (FHFA).

"These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies," said Tracy Mooney, SVP of single-family servicing and REO for Freddie Mac. "We believe this will put more families back on track to successful long-term homeownership."

  The above quote was taken from this article where you can find additional information about this new policy.

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Monthly Employment Report from the U.S. Labor Dept.

The U.S. Labor Department reported on Friday that the economy's payroll increased in December 2011. This monthly employment report showed that 200,000 jobs were created, well above the 150,000 that was expected. However, a portion of that number is most likely being attributed to seasonal hiring for the holiday shopping season. 

The Unemployment Rate fell from 8.7% in November to 8.5% in December. The rate has been falling for 4 straight months and is currently at its lowest level since February 2009. Even though the rate has been dropping, this economy still leaves 24.4 million Americans either unemployed or underemployed.  

For more information, take a look at MSNBC's article.

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Fed White Paper: "The U.S. Housing Market: Current Conditions and Policy Considerations"

The Federal Reserve wrote a report addressing the current problems in the US housing market. They say that it doesn't cover everything but it is to serve as a "framework for thinking about certain issues and tradeoffs that policymakers might consider."

It discusses the American economy, the unemployment rate, housing foreclosures and more. They may push the government-owned mortgage buyers to rent out the homes they own as a possible way to improve the housing market.

Read all about it by clicking on this link here.

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