What We're Hearing

If anyone still thinks the Federal Reserve will stop buying GSE-backed MBS at the end of March they can look at today's new unemployment release from the Department of Labor and rethink their prediction. (U.S. employers unexpectedly cut 85,000 jobs in December.) All week, we heard media reports quoting analysts who were hoping for a December "surprise." But when the number came out this morning all the optimism that had been built up, popped. With the jobs picture still ugly, it's highly likely the Fed will want to keep mortgage rates low and one way to do that is to keep buying GSE MBS. Economist Mark Zandi was quoted as saying he thinks the unemployment rate will still be at 10% come election day -- which will be bad news for the party in power. At National Mortgage News we spend a lot of time looking at employment reports and related news because we know that employment is a key determinant of where delinquencies and new loan applications are headed. Meanwhile, we understand there was a little pow-wow at the FDIC this past week. The agency predicted that 250 to 300 banks will fail this year. That's probably no surprise, though...