The Recap!

We finally have some good news to talk about! If your an avid reader of this blog you will recall that I made it known that the U.S. Government needed and wanted to help mortgage rates become "more attractive" (see blog dated 10/15/08). Well yesterday we finally saw "the hustle behind the muscle" with an unprecedented $800 billion dollar commitment to consumer borrowing costs.


They (U.S. Govt.) created the Term Asset-Backed Securities Loan Facility (officially known as TALF). This entity (not operational until February 09) will purchase $100 billion in direct debt from Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Another $500 billion will be directed to Agency TBA MBS (Mortgage Backed Securities).....that's great news for mortgage rates! The remaining $200 billion will be vested into asset backed securities involving student loans, auto loans, credit cards and SBA (Small Business Association) loans. No matter how you look at this, these moves are much needed, overdue and outright awesome for our industry! The caveat to this will be the long-term repercussions of this cash influx into the U.S. financial system? What do I mean? The U.S. Government is taking extraordinary albeit necessary risks to free up market liquidity and promote key economic growth (GDP down .5% for the third quarter). How will this never-ending tale end up? Will there be huge defaults, will we have to print money, what will the U.S. debt load look like 3 years from now, and how will we pay it off?

The answers to these questions are unknown however, the one certainty in all of this are these actions are necessary and I am very much glad to see them coming!


Those of you that do business with PMG, Inc. noticed that I not only predicted these types of moves but I also sent this information out over five and a half hours before my closest competitor. Will these gains and low rates hold? I would like to think so especially since this rally didn't even involve the $500 billion yet to come from the U.S. Government. This money has yet to hit the MBS market rather the gains we did see were from pure speculators and other financial institutions like Hedge Funds, Asian Banks and U.S. wholesale institutions. I like our chances to hold some modest to impressive gains albeit we will see some continued choppiness . That will not go away on such news but at least we had great news none the less.


On another note you may have seen that GM recently pulled a $7 million a year contract with Tiger Woods. Can I say "I told you so" (see blog post dated 11/12/08)? Professional sports, teams and franchises are having extremely difficult times in justifying the huge amounts of money they pay to advertise on this front! We will continue to see companies pull out of the sports arena because they simply cannot afford the expenses associated with today's economic environment. In turn we will continue to see large changes in sports like golf, Nascar, football, baseball and many other popular sports as the owners of these teams deal with the reality of today's environment!



Brought to you by Shawn Von Talge of Professional Mortgage Group, Inc.

Your Columbia Missouri Mortgage Broker