FED EASING = o% interest rates, buying mortgage backed secutities, and buying treasury bonds
Large corporations are buying smaller corporations with either the cash on hand (since it pays next to nothing) or borrowing the money at artificially low rates. Then they take the "synergistic savings" from the merger and buy back their own stock.
This chart says it all!
I got my homeowners insurance and the premiums rose 20%. My dwelling figure (replacement cost) went up despite lower copper and lumber prices. State Farm bases everything off this number as a percent. Personal property is 75% of the dwelling for example. The Insurance Information Institute said personal property should be 50% - 70% of the dwelling.
So I called and said I have no intention of rebuilding the exact same house in the exact same location, I was able to name my own replacement cost for the dwelling!
If you are ever in this situation, you can try what I did and raise your deductible at the same time.
How? By simply paying off their mortgages. Since 2/3 of GDP is consumer spending, the savings would have gone to buy products/services. That would have kept the unemployment rate from rising.
Here is what my research shows:
The quarterly survey published by the Federal Reserve, called the Flow of Funds Report, shows the total value of all home mortgages in the U.S. was $11.2 trillion through the third quarter of 2008.
Here is what they did:
Comparing bids from several contractors will give you some leverage with the one you’d like to hire. Get three to five bids, and be clear about the products you want to use. If your preferred contractor is at the high end, say so and offer to show him the other bids. He may adjust his price.
When hiring a plumber or a tradesman for a small job, ask him to break down his price into labor and materials. About 35 percent should be materials and 65 percent labor, says Al Paxton, a construction estimator in Malibu, California. If the ratio seems wrong, say so. But be diplomatic. “If you squeeze him too hard, he might give you less than first-class workmanship and use less expensive materials,” Paxton says.
I used an Excel based mortgage spreadsheet to see how the life of my mortgage would change if I paid a little more each and every month to the principal. It amazed me! By paying just an extra fifty dollars a month, I was able to shorten the length of my loan by five years and ten months and save more than $18,000 in interest!
PMI companies ARE paying out billions of dollars to lenders, but again, the lenders must foreclose first, and then file a claim to collect 90% of their losses. This is still not enough to stem the tide.
Keep in mind that a lender might only make 2-4% of the loan amount as profit, after selling the loan. If the loan goes bad, the lender has to buy it back, while making your missed payments. Then, the lender has to go through all of the expense of foreclosing or otherwise settling your case before trying to collect from the PMI firm.
If this was on a loan-by-loan basis, it might not be so bad, but that is not how it works. A lender will package $100 million worth of loans in a single offering. They might sell that bundle for $103-104 million. If the default rate goes over a certain amount, say 3-5%, then the lender has to give back the $103-$104 million all at once.
If a lender has a 5% default rate, they are out of business, because they had to pay all of their profits out to buy back those bundles. That's without even taking into account any of the lender's expenses of marketing, salaries, and operations.