The Crisis of Credit – A Short, Humorous Video

I had stumbled upon this great little video a while back, and have been sharing it with many of my students, particularly those new to real estate and the secondary markets.  It provides a very entertaining, yet fairly factual account of the events that led to the collapse of the financial markets toward the end of 2008.  It was created by Jonathan Jarvis, a design student out of Pasadena, as part of his graduate thesis.  Perhaps a tad simplistic, but still conveys many key points.  I particularly get a kick out of the “subprime family” caricatures.  I hope you’ll enjoy it as much as I do.

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Fed MBS Purchase Program 92% Complete – Higher Rates Ahead?

The Federal Reserve Bank of Atlanta reported as of Jan. 13 that it had completed $1.14 trillion, or 91%, of its planned $1.25 trillion MBS purchases. Per a separate update from the Federal Reserve Bank of New York  another $12 billion was purchased last week, bringing the total to $1.15 trillion, or 92% of the total commitment.  As planned, the program is set to reach its goal by the end of Q1. 

So what’s the big deal?  Well, the wind-down of this plan will show us just how effective the Obama Administration and Fed was at creating stability in the housing market.  Unless we see continued commitment towards MBS purchases after this date (doubtful though not impossible) my prediction is that mortgage rates will rise nearly half a point and, together with expiration of the Homebuyer Tax Credit, will lead to further deterioration in the housing market.

Here are the links to the Fed data: 

http://www.frbatlanta.org/documents/research/highlights/finhighlights/FH_012010.pdf 

http://www.newyorkfed.org/markets/mbs/

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