Happy New Year! After a bruising 2008 I think we can all agree that it’s great to have last year behind us. The market opened the year on January 2nd with upward movement for all major indexes, a good sign. Some financial analysts believe that market performance on the opening day of the year signals a trend for the entire year. While I’d like to be optimistic, this week’s market has been down each day so far… so I’m not breaking open the champagne just yet. This said, it won’t surprise me if the economy begins to turn around mid 2009.

Congress went back into session this week and is already working on a huge stimulus bill that is destined for Obama’s desk right after he takes office on January 20th. In fact, both he and the Bush administration have asked for the remaining funds from the last stimulus package (TARP passed in the fall of 2008) to be released now. Everyone seems to agree that the economy needs all the help it can get now. Hopefully the money will be well spent!

TARP funds that have already been distributed to major banks are having a little effect on the credit freeze that continues to plague home and business owners. One effect we’re seeing is that conforming mortgage rates have gone down to the low 5% range for 30 year fixed rate loans, while “agency jumbo” loans ($417,001 to $625,500) still have higher rates. But this may change more dramatically also because I’ve recently seen reports that indicate the federal government is applying pressure to these financial institutions to use the funds to modify existing mortgages and to refinance existing loans into lower rates.

Loan modifications are becoming a hot topic. Unfortunately, lenders still seem stalled when it comes to actually modifying troubled mortgages. FDIC programs for banks they’ve taken over (like Indy Mac) are not offering permanent
rate reductions. Non-profit and government modifications still don’t seem to be getting loans modified in ways that offer permanent, sustainable alterations to loan terms. The law firm I’ve been referring clients to for loan modifications
seems to be having excellent success in getting loans modified… and doesn’t charge huge up front fees. So there are some modification companies that are fine to work with. Just be careful and ask lots of questions. As 2009 opens I remain hopeful that this year will be a good one!