On Feb 2nd, I wrote:

One scary development today—- Connecticut Sen. Chris Dodd, head of the BANKING Committee, says he’ll refinance two mortgages that he received through a VIP program from Countrywide Financial Corp. Seems he got a couple ”sweetheart” deals from Countrywide in 2003. Since he refused to say he got any special deals back in 2008–he is now changing his tune.

IF HE IS REFINANCING NOW —- Does that mean that rates will GO UP from here—-after all he is head of the Banking committee. What do you think?

Well, it has been almost 2 months now and even though the Federal Government has been buying about $20 billion in mortgage back securities, 30 yr fixed rates are still at 5% and have not moved. They will buy Mortgage backed securities until June, but I think the best to hope for is– no movement in rates.  Even the $8000 tax credit for first time homebuyers has not put a dent in the market. INVESTORS still do not trust Mortgage Backed securities, even though credit score requirements have been tightned.

So it looks as though Obama wanted 30 year rates in the 4.5% range, there is nothing that will happen to get them there.  The most popular program out there–I call it a SCAM on Taxpayers—is the FHA STREAMLINE REFI. You are able to refinance your current FHA loan with NO income verification, NO Appraisal, etc. I think the taxpayer will be stuck with billions when more people default on these loans as unemployment continues to climb. I think Too much money in the Stimulus went to everything but JOB CREATION. Only 17% went to infrastructure projects and most was strung out to 2010 and beyond.

I see mortgage rates headed UP after June, unless the administration does something to put confidence in the mortgage market. If the Obama administration does not spend Billions to buy Mortgage backed securities after June, rates will skyrocket. I hope I am wrong.