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Jumbo Mortgage Loan Squeeze: Will it Affect Home Prices?

From Mish’s Global Economic Trend Analysis

Starting October 1, the maximum loan amount from Fannie Mae and Freddie Mac will drop from $ 729,750 to $ 625,500.

The correct amount is zero because government should not be in the mortgage business at all. However, this is a small step in the right direction and it will increase costs of mortgages that exceed the maximum.

Reuters reports Home buyers try to beat “jumbo” loans squeeze

It was only in recent years that the loan limits went so high. Mortgages that are too big to be sold to Fannie and Freddie are termed jumbo loans and are backed privately. Until 2008, all home loans over $ 418,000 were considered jumbo loans. In that year, a stimulus-focused Congress twice raised the limit on loans the government would back in high cost areas, first to $ 625,500 permanently, and then to $ 729,750, temporarily.

Since then, Fannie and Freddie have backed an increasing share of that market. In 2010, so-called “jumbo conforming” loans, those over $ 417,000 and government-backed, made up 6.73 percent of loan originations, according to CoreLogic.

That top temporary limit was extended twice, but is expected to expire at the end of September.

Private lenders are preparing to step in, according to Guy Cecala of Inside Mortgage Finance, a research firm. In the last quarter of 2010, private lenders originated more loans over $ 417,000 (the traditional jumbo market) than did government agencies, he said.

Investors like…

Phil Davis Discusses Options and Today’s Markets

From zero hedge – on a long enough timeline, the survival rate for everyone drops to zero

John Nyaradi of Wall Street Sector Selector interviewed Phil last week and here’s a transcript of their exciting interview covering the economy, the financial markets, QE2 and POMO, hyperinflation, the fed’s trickle down approach to producing the inflation it wants to alleviate debt, and investing in this grossly manipulated environment. – Ilene 

Expert options trader Phil Davis shares his options trading secrets and views on today’s economy.

John Nyaradi: Philip R. Davis is an options trading expert and founder of Phil’s Stock World, a stock and options trading site that teaches the art of options trading to newcomers and advanced trading strategies for expert traders. His articles and references have appeared in the Wall Street Journal, Google Finance, Business Week, CNN Money.com, Trader Planet, and iStockAnalyst.

Phil, welcome to Wall Street Sector Selector.

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Jobs Bill? The Government Passed a Jobs Bill Years Ago … Just Not for US

From zero hedge – on a long enough timeline, the survival rate for everyone drops to zero

A lot of proud American citizens the serfs have complained that the government hasn’t passed a meaningful jobs bill.

Sure, unemployment is brutal for most Americans … and the government is doing everything wrong in terms of reducing unemployment.

But that’s a small price to pay … corporate profits are soaring thanks to record unemployment.

But
more importantly, the truth is that government LONG AGO passed a full
employment act … but it only applies if you are a big cheese at a too
big to fail bank (see this and this), a giant energy producer (here and here) or a big defense contractor (see this and this).

So stop whining, we’ve already got a jobs bill … it’s just not for you and me. It’s only for the people who count.

And
for the crybabies who think that President Obama is not representing
the wishes of his constituency, the people who put him into office … you’re wrong.

The “Education Bubble”; Student Loan Debt Passes Credit Card Debt, Expected to Hit $1 Trillion

From Mish’s Global Economic Trend Analysis

Peter Thiel, co-founder of PayPal says We’re in a Bubble and It’s Not the Internet. It’s Higher Education.

“A true bubble is when something is overvalued and intensely believed,” he says. “Education may be the only thing people still believe in in the United States. To question education is really dangerous. It is the absolute taboo. It’s like telling the world there’s no Santa Claus.”

Like the housing bubble, the education bubble is about security and insurance against the future. Both whisper a seductive promise into the ears of worried Americans: Do this and you will be safe. The excesses of both were always excused by a core national belief that no matter what happens in the world, these were the best investments you could make. Housing prices would always go up, and you will always make more money if you are college educated.

Making matters worse was a 2005 President George W. Bush decree that student loan debt is the one thing you can’t wriggle away from by declaring personal bankruptcy, says Thiel. “It’s actually worse than a bad mortgage,” he says. “You have to get rid of the future you wanted to pay off all the debt from the fancy school that was supposed to give you that future.”

Thiel’s solution to opening the minds of those who can’t easily go to Harvard? Poke a small but solid hole in this Ivy League bubble by convincing some of…

The Market Ticker – Here It Comes Again (Jobless Claims)

From The Market Ticker

So much for "higher commodity prices won’t do anything."

In the week ending April 16, the advance figure for seasonally adjusted initial claims was 403,000, a decrease of 13,000 from the previous week’s revised figure of 416,000. The 4-week moving average was 399,000, an increase of 2,250 from the previous week’s revised average of 396,750.

Still have that "4" handle don’t we?  This ought to put a cap on the claims of "job growth"; claims numbers in the low 300,000s are consistent with that, not numbers near or above 400,000.

What’s worse is that extended benefits are now starting to run out "en-masse" across multiple states.  The reason for much of this is technical in how eligibility is computed – many have a "x% rate over the 12 or 24 month ago rate", and now that joblessness has become endemic over an extended period, those extended benefits no longer apply.

The first-week of "hopefulness" is reflected in the "big table" (which is a couple of weeks behind the headline number); don’t expect the "nice" number reported here to be sustainable.  It’s not, given the last two week’s reports.

What’s driving this?  Commodity prices.  At the margin ramps in commodities, especially gasoline, causes a huge problem for consumers and ultimately knocks many in the lower economic strata off the horse.  When you’re making $ 10/hour and it costs you an hour of work to…

Test: Do you need food storage?

From The Survival Mom

Guest post by Don Ruane

image by president raygun

Just take this simple test and you will know if you need food storage. Listed are a few things that can and have happened here and around the world.  Please read each item carefully and decide if this scenario is one you are, or should be, concerned with. Then I will ask you one question. Your answer to this question will determine if you need food storage.

1: Floods: Mass destruction in the path of the flood. Washes roads and bridges away.

2: Earthquakes: Think about Japan and the New Madrid fault line.

3: Tornado: Power grid destroyed.  It can take months for a full recovery.

4: Hurricanes: Just think of Katrina.

5: Extreme Heat: Power grid overloads and fails. Power generating plants have not been upgraded for over 35 years. Power grid also not upgraded.

6: Extreme Cold: See the possible consequences for Extreme Heat and add gas grid fails and trucks that cannot run to deliver fuel.

image by Andrew Turner

7: Money devalued: Prices skyrocket instantly, on all products and services. Read something about Germany’s inflation after WW1.  A bag full of Deutsch marks today, a wheelbarrow full needed tomorrow

8: Financial Meltdown: Currency worthless, only barter. Food is the best currency to have to barter.

9: Banks Closed: No cash and no credit.…

First Person Account From Inside The China Protests

From zero hedge – on a long enough timeline, the survival rate for everyone drops to zero

Over the past two days we reported (here and here) on the Shanghai trucker protests over high has prices and low wages, which from peaceful promptly turned violent as more people joined the clashes against police (it appears only in America do people not protest these things). Today we present a first person recount of what is really happening in China, as unfortunately nothing coming out of the world’s “fastest growing” economy can be relied upon.

The protests are very contained, as the gov is obviously powerful enough to stop it before it gets out of hand. My best friend was up in Beijing back in the beginning of March, though, and happened to be there on protest day and she said there were guards, policeman, military and they even brought a tank in! (like Tiananmen Square part II). She got out of Beijing asap as it was quite scary. I have yet to see a protest here in Shanghai, but that’s because they have military dressed up as street cleaners and such in proposed protest spots to keep things in order. There are rumors that the gov itself is organizing the protests to catch anyone who shows up (those who have, have been detained and the talk is that they are likely sentenced to death or

…

Economic Turmoil in Europe: Political Backlash and a Euro-Nordic Headache

From Mish’s Global Economic Trend Analysis

Dan Steinbock, writer for The Globalist sent an interesting story he wrote regarding the Euro Crisis: Economic Turmoil, Political Backlash in the wake of the Finnish election results and the
rise of the “True Finns”.

What follows is partial excerpt of that story, starting with a section titled “The Euro-Nordic Headache“. I am not going to do my normal blockquote so as to make what follows easier to read. Everything that follows is from Dan Steinbock.

The Euro-Nordic Headache

The [Finnish] election took place only days after Portugal became the third euro member to seek a bailout and market speculation grew over impending debt restructuring in Greece.

With their strong election performance, the True Finns could disrupt efforts to tackle the euro debt crisis because Finland, unlike other euro countries, requires approval from its parliament to participate in EU bailouts.

Even before the election, the largest opposition party, the Social Democrats, led by chairman Jutta Urpiainen, began setting conditions on support for Portugal. Following in their footprints, the conservative Finance Minister Jyrki Katainen and Prime Minister Kiviniemi called for harsher measures in the case of Portugal.

With the global financial crisis, the True Finns quadrupled their support.

…

The Market Ticker – Philly Fed: Collapse In Process

From The Market Ticker

All I can say is "oops", or perhaps

Inflation Watch:

From SurvivalBlog.com

J.D.D. flagged this: That’s pricey: 13 items that cost more, or will

Latest global food price figures.

India food inflation eases slightly. (Now down to 9.18% , annually.)

11 Prices That Will Rise Along With Your Gas.

Which Would you Steal, Cash or Groceries? (Thanks to Scott M. for the link.)