Author bio section

I am the author of this blog and also a top-producing Loan Officer and CEO of InstaMortgage Inc, the fastest-growing mortgage company in America. All the advice is based on my experience of helping thousands of homebuyers and homeowners. We are a mortgage company and will help you with all your mortgage needs. Unlike lead generation websites, we do not sell your information to multiple lenders or third-party companies.

CNN Money reported that China’s $200 billion sovereign wealth fund, which suffered big paper losses on stakes in Morgan Stanley and Blackstone, is set to invest up to $2 billion in U.S. mortgages as it eyes a property market recovery.

Under the Public-Private Investment Plan (PPIP) launched earlier this year, the U.S. government plans to seed a number of public-private investment funds that would combine taxpayer money with private capital to buy as much as $40 billion in toxic securities from banks.

Compared with TALF, the new and smaller PPIP program focuses on safer toxic securities, which must have triple-A ratings from at least two agencies, and are debts guaranteed by the Federal Deposit Insurance Corporation (FDIC), sources explained.

So, recent talk that China will begin to retreat as the largest holder of US debt in the world are premature and not likely. So the news that China is sniffing around the US Mortgage Backed Securities (MBS) markets is encouraging. The minor amount of mortgages it is said to be planning to purchase is a start and adds to the view that the US housing sector is about to recover. More importantly however, the quality of currently originated mortgages is by the best we have had in years, and their rates are better than treasuries as well as being essentially guaranteed by the government. We wonder why other investors have been slow to recognize the value in MBSs. Property appraisals low, credit underwriting very conservative, the yield about 170 BPs higher than 10 yr treasuries; should be an attractive investment.

Compared to $1.25 trillion of MBS that the Fed has agreed to buy this year, $2 billion is a miniscule amount and may not impact mortgage rates. However, if we continue to see more investors (domestic & foreign) interest in the MBS market, it may help keep the interest rate low even after Fed stops buying Mortgage Backed Securities after Dec 31, 2009.

Related Posts

  • 89
    The week that was Oct existing and new home sales were much better than economists thought, the manufacturing sector better than thought, and auto sales stronger. The Nov employment report on Friday really shook things up; job losses only 11K with the unemployment rate lower, to 10.0% frm 10.2% in…
    Tags: interest, rates, sales, better, losses, rate, yr, will, markets, mortgage
  • 85
    The week that was: The minutes from the 11/4 FOMC meeting were released. Fed's minutes reiterated the Fed isn't anywhere close to increasing interest rates. Fed governors and regional bank presidents predicted the jobless rate will range from 9.3% to 9.7% in next year fourth quarter. Oct personal income increased…
    Tags: fed, will, mortgage, interest, rate, sales, market, year, earlier, rates
  • 79
    The week that was: The statement from the last FOMC meeting wasnt much of a change. The fed stuck to keeping the rates low for "extended period". But how "extended" is "extended" - now that's anybody's guess! Freddie Mac's weekly Primary Mortgage Market Survey reported 30-year fixed-rate mortgage (FRM) averaged…
    Tags: year, mortgage, market, will, rates, fed, pending, sales, santa, clara
  • 78
    The week that was A little better in the rate markets; the 10 yr note yield fell 12 BPs and mortgages down about 8 BPs. Choppy trade once again characterized the action last week. Treasury had little trouble selling $109B of notes while new home sales increased 9.6 % in…
    Tags: year, mortgage, market, markets, losses, rates, pending, sales, santa, clara
  • 77
    The week that was: Existing-home sales bounced back strongly in September with first-time buyers driving much of the activity, marking five gains in the past six months, according to the National Association of Realtors┬«. Existing-home sales including single-family, townhomes, condominiums and co-ops jumped 9.4 percent to a seasonally adjusted annual…
    Tags: yr, sales, markets, mortgage, rates, rate, pending, santa, clara, county