In the days ahead, will the private Mortgage-Backed Securities (MBS) market cease to exist? Will loan modifications wind up destroying the long-standing playing field between lenders and second lien holders? Will the Fed ever be able to exit the mortgage market?

These questions have all come to mind because of unintended consequences brought on by the Making Home Affordable Modifications program. The program that was structured to assist failing homeowners has managed to create a host of uncertainties in its wake. A recent editorial in the Wall Street Journal wonders if the MBS market will be next.

Read the rest of this entry »

Realtors and mortgage brokers are clamoring to get the $8,000 first-time homebuyer tax credit extended. Certain market observers fear that as soon as the tax credit expires, home sales will retract to the lower levels observed prior to the tax credit’s introduction (see our story on how Cash for Clunkers created a false sense of demand).

However, the recent surge in mortgage applications which coincided directly with last week’s drop in mortgage rates suggests that, one, it takes far more than just a tax credit to get borrowers interested in housing, and two, borrowers have and will continue to react to lower mortgage rates more strongly than any other homebuying incentive.

Read the rest of this entry »