Everytime there seems to be some relief we get hit with a new headline. What is tomorrows?

How Mortgage Rates Responded To The "No" Vote On The Bailout Bill

Monday afternoon, the U.S. House of Representatives defeated the $700 billion "Bailout Bill", surprising Wall Street and the world.

The Dow Jones Industrial Average responded by falling 777.68 points -- its largest one-day loss in history and, this morning, every newspaper in America is covering the story as front page news.

Lost in the coverage, however, is how the "No" vote created a terrific opportunity for home buyers and mortgage rate shoppers.

Yesterday, as money fled the tanking stock market, most of it ended up getting parked in the relative safety of government-backed bonds which includes, of course, the mortgage bonds. This rising demand for mortgage bonds caused rates to fall, improving home affordability.

To investors, stock markets represent risk and bond markets represent safety. So, when market sentiment changes, as it did yesterday, Wall Street players often shift their dollars from one forum to the other. This is why yesterday's stock sell-off was good news for mortgage rate shoppers -- the added demand for "safe" securities drove down rates.

Conforming mortgage rates were lower by about an eighth-percent Monday.

Now, today, mortgage rates are opening flat, suggesting that markets are in a Wait-and-See Mode. Wall Streets knows that the defeated bill will re-emerge later this week and, when it does, expect traders to respond accordingly.

If the new-look bill is viewed as favorable to U.S. businesses without harming taxpayers, expect stock markets to improve and mortgage rates to rise. If the bill fails to accomplish that goal, however, expect mortgage rates to improve.

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If My Lender Fails Am I Still in Debt?

Thursday, federal regulators seized mortgage lender Washington Mutual.   The Seattle-based thrift became the third "big name" lender to close its doors since July, joining IndyMac and Lehman Brothers.

In 2007, these 3 lenders represented about 10 percent of the mortgage market and their subsequent failures are confusing American homeowners.

The most prevalent question:

If my mortgage lender fails, are my payments still due?

And the answer is an unequivocal "yes". If a mortgage lender is seized, goes bankrupt, or is otherwise closed, it doesn't change the terms of the bank's mortgages whatsoever -- just maybe the mailing address.

This is because a mortgage (and its corresponding note) is a legal contract between the lender and the lendee, signed on the date of closing. It is binding and cannot be altered by either party.  The only way to "end" the contract is to pay the loan in full. 

This can happen in one of 3 ways:

1. The home is sold and the mortgage is repaid
2. The home is refinanced and the mortgage is repaid
3. The home loan is paid down to $0 balance by the homeowners

So, if a mortgage company fails, its doesn't cause the loan to be paid-off and, therefore, the mortgage contracts is still valid.  Payments are still due. 

However, because its mortgages are an asset, the failed lender will usually transfer them to a new lender's servicing department.  This means that homeowners will write the same check for the same mortgage but to a different company.

To reduce confusion around transactions like this, the government puts two safeguards in place.  First, it requires the former lender to send a 15-day advance notice of the change to the homeowner.  And second, it requires the new lender to do the same.

In situations like this, the onus is ultimately on the homeowner to open and read his mail, and make changes accordingly.  It's especially important for people who pay their bills online as opposed by paying them manually; you likely won't get notified if you're sending payments to the wrong place.

A Video Tutorial on Cleaning Your Gutters

When functioning properly, gutters can extend the life of a home. By directing water away from the physical structure, gutters protect a home's foundation, its siding, and its landscaping. 

The key to reliable gutter performance is simple -- keep them clean.  Twice annually, experts recommend a thorough gutter cleaning and the project can be a do-it-yourselfer,  if you're so inclined. 

The basic toolset is likely already on hand:

• A ladder
• A scoop
• A trash bag
• A garden hose
• Protective gear

Watch the video above for a quick tutorial, or if DIY is not your thing, reach out to me anytime. I'd be happy to refer you to a reliable professional in the neighborhood.

When Builders Slow Down, Sellers Benefit

In August, home builders broke ground on the fewest number of homes since January 1991.

It was the 16th straight month in which Housing Starts declined.

But, although the press labels these statistics indicative of a recession, home sellers nationwide quietly applaud them.

With fewer new homes coming on the market, home sellers are finding that there's less competition for buyers, helping them to command higher prices for their homes.

It's Supply and Demand in its most basic form.

But that's not all that home buyers have to worry about. The most recent Existing Home Sales report showed an increase in sales nationwide, plus a reduction in the number of single-family homes for sale.

Again, Supply and Demand. Good for sellers, bad for buyers.

However, we should keep in mind that real estate is local. What we see in national and regional trends are not as important as what's happening in your town, your neighborhood, and your street. But, if we learn one thing from the chart above, it's this: builders are rational.

If homes won't sell, builders will stop building them. And, sooner or later, the market -- and home prices -- will catch up.

(Image courtesy: The Wall Street Journal)