Recently Morgan Stanley, Merrill Lynch and Goldman Sachs were in the news for stating that they had reserved $20 Billion to pay themselves their bonuses. This came after the government announced its bailout. http://www.bloomberg.com/apps/news?pid=20601087&sid=aRDImphnW84Y&refer=home

So we know part of the bailout is being used to protect Wall Street bonuses. Does that help the economy? Is that fair? Should that make us furious? Why is it that the same institutions and same people who profitted handsomely from creating this mess are getting bonuses?

Well how should the money be used?

As Einstein would say the best solutions are the simplest. We have also been down this road before. Let's review the fundamental reason why we are in this mess.

Housing.

This past week ending October 18th, saw a slight increase in Mortgage Interest rates. Why the increase and what is our forecast for the weeks ahead.

1) There has been an increase in 30 year conforming rate to 6.125% with zero points.
2) The underlying 30 year and 10 year notes both rose this past week.
3) At the end of the week the concerted government action led to freeing of capital across borders

We believe that the Federal Reserve will reduce the Fed Funds rate at their next meeting and that the further introduction of new money into the system (through TARP and other programs globally) will lead to a decrease in rates. When the fiscal stimulus effect of these actions take hold banks will be increasingly under pressure to loan the money at lower rates.

In the midst of all the bad, I mean really bad news, this past week, their was some good news for homeowners in the high priced areas of the country. OFHEO, the government agency responsible for oversight of Fannie and Freddie Mac have raised the limit of loans that these agencies can securitize.

To find out if your county is affected please visit OFHEO's website: http://www.ofheo.gov/newsroom.aspx?ID=418&q1=0&q2=0 which has a PDF of those counties that are affected: http://www.ofheo.gov/media/hpi/AREA_LIST.pdf

Good news, right???

Maybe.

There are several important limitations which reduce the availability/usefulness of these loans.

About a week after I contacted Quicken by submitting their form from the icon located to the right on Best Pick Home Loans, I received a phone call from their representative. The representative came on very strong. He spent a good five minutes telling me that he is glad to be working for a Company that is reputable. He mentioned the affiliation with Quicken and Quickbooks as a source of pride within his Company. He told me that he doesn't make commissions on the loans. He also told me that they are the largest online lender. He also emphasized more than few times how Quicken Loans is a DIRECT LENDER. They are not a broker and therefore they can eliminate middlemen and avoid multiple fees.

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Okay so despite all my research and knowledge about loans that I had gained, I still was wondering if I made the right choice to lock in a 15 year fixed loan at 6.25% today August 30, 2007 with $1733 in closing costs (all in including $33 for buy down). The loan amount was for $100,000.

After agreeing to lock down the rate, I received in the mail a Express Mail envelope from Citibank which offered to beat any offer or pay us $100. It was perfect timing and they somehow must have known that we were shopping for loans - I give them kudos for anticipating such a move and sending out the letter when they did.