Rules of the Game Changing

We all know what is happening with the economy and just how far the fox hole goes. Or do we? I am in utter amazement as to the volatility we still face even in light of the government guaranteeing everything that contains a pulse! For instance, just Monday we saw 30 year mortgage rates hit 5.375% and yet today we will see rates at 5.75%. Though the former is still a fabulous rate what is intriguing to me is the fact that nothing has changed in the MBS environment to warranty this type of swing. In all my research, studying, and speaking with people the only thing I can gather is that "flows" (meaning the flow of money from the selling and buying side) have recently switched to being one-sided. Keep in mind the $500 billion directed by the government for the sole purpose of buying Agency MBS has not even hit the market yet.

On another note advertising by companies linked to the real estate industry is down over 62%......wow what a shock! Companies are doing everything imaginable to cut costs just to stay afloat during these very tough times. How about a hand out for the little guy? This just in.....Countrywide / Bank of America is being sued.......AGAIN! It's no secret that they have been actively trying to modify as many as 400,000 loans to help borrowers stay in their homes. However, some of the "investors" in these pool of mortgages are now suing Countrywide Financial for the losses they will take on their mortgage holdings. With reduced rates, write-downs and cheaper terms investors are set to lose billions and want Countrywide Financial and in turn Bank of America to fit the bill for their lost investment.

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