China's Large Trade Deficit causes European Stocks to Fall

China recently had their biggest trade deficit in 12 years. This sparked concerns from miners and oil firms that commodity prices would drop and there'd be slower demand in China, which is the world's second largest economy. The country did indeed report a $31.48 billion deficit for February after they had a $27.28 billion surplus in January. This signals an economic slowdown in China which could potentially lead to a global slowdown.

In London, miners and energy firms also took a hit in the stock market this week. Banks were also down due to continued focus on the developments in Greece's debt restructuring. Immediately after Greece's success with its debt restructuring, new Greek government bonds that were issued surged to the highest levels in the eurozone. This indicates that many are skeptical about Greece's ability to reach a sustainable debt level. Nonetheless, it is expected that the finance minsters will agree to Greece's second bailout later today.

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FHA Cuts Prices on Streamline Refinancing

The FHA has recently announced price cuts for their Streamline Refinance Program that could benefit anyone with a mortgage insured by the FHA. As of June 11, 2012, the FHA will lower its Upfront Mortgage Insurance Premium (UFMIP) to .01% and it will also reduce its annual premium to .55% for qualified borrowers. In order to qualify, a borrower must be current on their existing mortgage that was endorsed on or before May 31, 2009. This accounts for nearly 3.4 million households. These households pay more than a 5% annual interest rate. If they were to refinance, they could potentially save as much as $3,000 a year. By helping homeowners to reduce their monthly costs, the FHA hopes to help people stay in their homes.

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ISDA: Greece Escapes Default For Now

The International Swaps & Derivatives Association (ISDA) has met in the last hour to decide whether or not Greece will default on their debt. Greece has used what is known as "collective action clauses" (CACs) in order to force investors and private creditors to take a loss. Their debt restructuring has caused payouts on $3 billion of default insurance. Using these CACs makes the restructuring considered a "credit event". This credit event indicates that a maximum of $3.16 billion of net outstanding Greek credit default swap contracts can be paid out.

Greece averted the immediate threat of an uncontrolled default, winning strong acceptance from its private creditors for a bond swap deal which will eat into its mountainous public debt and clear the way for a new bailout.

The Greek finance ministry said creditors had tendered 85.8 percent of the 177 billion euros in bonds regulated by Greek law. This would reach 95.7 percent of all privately-held Greek debt with the use of "collective action clauses" to enforce the deal on creditors who refused to take part voluntarily.

Despite the success, the deal may at best buy time for a country facing its biggest economic crisis since World War Two. The event means Greece is now set to repay debt due soon and has a second chance to rebuild its shattered economy, while the eurozone has dodged default chaos that could have destabilized global financial markets. A full-blown default would be catastrophic for Greece, and could cost the eurozone up to one trillion euros according to one estimation while sending shockwaves through global markets.

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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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Getting Familiar with the 203(k) Loan

The FHA has a loan program that does a really great thing for homebuyers. It allows them to actually purchase the home that they want. Many homes on the market right now are not selling well because they drastically need repairs and updates. People who are house shopping want to find something affordable, but with great new features rather than old dated, worn down features. Nobody wants to find the seemingly-perfect-on-the-outside house, and then walk into a kitchen straight out of the 70s.

To help with this, the FHA's 203(k) loan program allows homeowners to choose the house, choose the neighborhood, and choose their own upgrades. They are given the ability to pick out the new carpet, paint, cabinets and appliances that would go into the house. This helps to make the properties much more marketable and it helps to make sales happen faster. Usually, a homebuyer cannot afford to remodel or make improvements to the home right away, which often turns them away from buying it altogether. But thanks to this loan program, it is possible to buy the home of your dreams.

The 203(k) loan program is basically a renovation loan. It was designed specifically to help borrowers purchase, repair, remodel and renovate the home at the same time with a single loan. It offers favorable loan terms, higher loan limits and flexible downpayment options to make it more affordable for more people.

The popular 203(k) Streamlined Loan allows for the purchase or refinancing of a home, and it also covers the remodeling costs up to $35,000. Once the purchase is made and the transaction is closed, the renovation funds are held in escrow. They are then releasted through a draw process to pay for the remodeling, but all work has to be pre-determined for the loan, and completed by approved contractors.

The FHA hopes that this loan program will help to stimulate the economy and get properties moving. If you are interested in working with this program, give us a call and we would love to help you find and update that perfect home! 1-888-883-5252.

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Fannie Mae Requests More Bailout Money

We have discussed Fannie Mae several times. You know that it is a GSE that is under the conservatorship of the FHFA. You know that it is constantly in the news for various reasons. Today, Fannie Mae is in the news because it has requested a large sum of money. Reportedly, Fannie has lost $2.4 billion during the fourth quarter of 2011. Its revenue is sitting at $4.5 billion. Because of its deficit, Fannie Mae is seeking aid from the government in the form of $4.6 billion.

We also reported that there are many efforts underway regarding shutting down Fannie Mae and Freddie Mac. The government no longer wants to support them, but rather have them be a more privately-owned enterprise. As of now, taxpayers have spent $150 billion trying to maintain the GSEs. A new estimate is saying that figure could be upwards of $260 billion by the end of 2014 just to keep the companies afloat. You can see why the government wants to bail on them: Fannie alone is proving to be one of the most expensive single-company bailouts in history. So far Fannie has taken a whopping $116 billion from the U.S. Department of Treasury.

Fannie isn't the only one, though. Freddie Mac has requested its fair share of bailout money. In November, a request was made for $6 billion in financial assistance after it reportedly lost that much during the third quarter of 2011.

What do you think is the best solution? Is the government doing the right thing by bailing them out so often despite it coming straight from the taxpayers' pocket? Should the government just tell them to take their losses?  Leave your thoughts below!

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