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Holden Lewis
Past posts from Holden Lewis's Web log about mortgages and real estate, and how they are affected by the economy.
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Video: Cost of summer camp

Untitled Document STARTING UP: Early today, mortgage rates bounced upward, roughly one-sixteenth of a percentage point. The difference might not be reflected in the par rate, but rather in points and fees. The impetus for rising rates comes from two sources: optimism on Wall Street and fast-climbing wholesale prices.

The overall Producer Price Index rose 1.1 percent in March. That's a breathtakingly high inflation number. When you ignore food and fuel prices -- just close your eyes and imagine that gasoline and veggie prices aren't going up -- core wholesale prices went up 0.2 percent. That's an improvement over February, when core wholesale prices went up 0.5 percent.

Confusing, eh? The bean-counters say wholesale prices aren't rising much, unless you count food and gasoline. The bond market seems to be splitting the difference, acknowledging that prices are rising, but opining that maybe they're not rising as fast as that overall PPI of 1.1 percent in just one month.

REO SPEEDING UP: When a lender forecloses on a house and takes possession of it, the industry term for that property is REO -- real estate owned. Housing Tracker follows trends in REOs and the results are striking. The REO index for Cape Coral, Fla., is up 971 percent in the last year, according to Housing Tracker. Los Angeles is up 607 percent and Las Vegas, up 401 percent.

Thin data probably swell some numbers. Housing Tracker says the REO index in Salt Lake City is up 1,600 percent in the last year. That sounds bad, but it looks like it merely reflects the fact that Housing Tracker has REO data from only a few lenders there. Last week, Countrywide reported 12 REOs in Salt Lake City; Citi reported 2, and IndyMac, 1. Fannie Mae and Freddie Mac reported a total of 17. There aren't numbers from Wells Fargo and Washington Mutual.

If you're doing addition in your head, you see that Housing Tracker reports 32 REOs in Salt Lake City from the lenders that are sampled. There must have been just two REOs a year ago among the sampled lenders. Getting a complete and accurate set of numbers, from all mortgage servicers, would be extremely difficult. The index should become more accurate and useful as data collection stabilizes.

RADICAL VIATICAL: A 69-year-old man in Minneapolis has come up with a novel incentive to sell his house: It comes with an insurance policy on his life.

If you buy Bob Fanning's house and he dies within 10 years, you collect on a $500,000 term life insurance policy. You don't collect if the cause of death is homicide or suicide. Essentially, you get a free house if he dies in time.

"When you get to this age," he told the Chicago Tribune, "death is something you have to start to deal with."

-- Posted: Apr. 24, 2009

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