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Source of Title Blog : Economic Indicators

Unemployment in the Third Depression Era
by Robert Franco | 2010/06/30

The end of May, federal unemployment benefits began to expire leaving 1.2 million jobless Americans cut off.  The House passed a bill providing a six-month extension, but the Senate has not been able to pass such legislation... despite three attempts.  All of the Senate Republicans have blocked the effort. 

This will certainly worsen our already troubled economy as well as pile on to our crippled housing market.  One economist has noted that we may be setting the stage for a Third Depression.  While our Congressman are busy playing politics, Americans are suffering... and it is going to get worse.

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Categories: Economic Indicators, Legislation

Source of Title Blog :: 10 comments ::

Are We Starting To Recover Yet?
by Robert Franco | 2009/11/06

We seem to be getting mixed signals from the media about the economy and the housing and mortgage markets. I do not doubt those who say this is the worst economy since the Great Depression.  In response the Government bailed out banks, insurance companies, Fannie Mae and Freddie Mac, and even GM and Chrysler.  But has the billions of dollars in taxpayer money really helped?  Let's take a look...

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Categories: Banking & Finance, Economic Indicators, Foreclosures, Mortgage Industry

Source of Title Blog :: 3 comments ::

Washington's New COP: Elizabeth Warren
by Robert Franco | 2008/12/16

Have you been wondering what the Treasury Department has been doing with the first $350 billion of the biggest government bailout in the world?  It has been less than three months and the Treasury only has about $15 billion left in the Troubled Asset Relief Program ("TARP").  And, $14 billion of that could find its way to the U.S. automakers soon.  Most likely, they will be asking Congress to release the other half of the TARP funds.

Now its time to ask what the funds are being used for and who is benefiting?  Despite the hundreds of billions of dollars injected into the nations largest lenders, they still aren't lending money. Before Congress authorizes the Treasury to spend another $350 billion, someone needs to start asking the tough questions.  To get a handle on the situation, Congress created the Congressional Oversight Panel ("COP") and it has issued its first report.

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Categories: Economic Indicators, Foreclosures, Legislation, Mortgage Industry

Source of Title Blog :: 3 comments ::

Against All Conventional Wisdom
by Robert Franco | 2008/12/11

An article in Barron's is predicting that title insurance business could be up by as much as 50% in 2009, mainly due to falling interest rates.  That would certainly be very good news for all of us.  However, I am skeptical of the prognostication.  I do not think that falling mortgage rates will do much for our industry, and I do not expect things to get much better until the end of next year.  Maybe I'm a glass-half-empty kind of guy, but, I'd rather not get my hopes up and be pleasantly surprised if I am wrong.  Now let me explain why I think Barron's got this one wrong.

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Categories: Economic Indicators, Mortgage Industry

Source of Title Blog :: 3 comments ::

Homeowners Hanging Upside-down
by Robert Franco | 2008/03/03

I heard this on CNN over the weekend: "More than 30 percent of U.S. homeowners who bought in the last two years owe more on their mortgage than their house is currently worth." I found that figure staggering, so I did a little research. Here are some statistics that I found.

On average, homeowners had 56.3 percent equity in their homes in 2005, according to Demos, a public-interest research group. In 2007, that dropped to 50.4 percent. In 1973, equity averaged 68.3 percent; in the 1950s, it was upwards of 80 percent.

Why? Good question! For starters, homeowners are starting off further behind than they have in the past. It was once considered standard practice to put 20 percent when buying a home. Now, however, many opt for 100 percent financing. Starting with ZERO equity is a sure way to end with less equity than generations before us. And, when home prices drop it makes it pretty darn easy to wind up upside-down.

But, starting out that way isn't the only way to tumble over - Americans are tapping their home equity like a beer keg at a Delta Tau Chi frat party. (Useless Trivia: Delta Tau Chi was the full name of the fictional Delta House fraternity from Animal House.)

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Categories: Economic Indicators, Foreclosures, Mortgage Industry

Source of Title Blog :: 2 comments ::

The First Time Since The Great Depression
by Robert Franco | 2008/01/25

Those of us in the title industry certainly know that things have been slow. Well know we now just how bad things are. According to an article on Bloomberg.com, U.S. Economy: Existing Home Sales Fall, Prices Drop, 2007 provided us with "the biggest annual slump in 25 years and the first decline in prices since the Great Depression."

Purchases fell 2.2 percent to an annual rate of 4.89 million, the National Association of Realtors said [on January 24] in Washington. For all of last year, sales of single-family homes declined 13 percent and prices dropped 1.8 percent, the first decrease since records began in 1968 and probably the first since the 1930s, the group said.

Investors are speculating that the Fed will cut interest rates again next week in an effort to prevent the down turn from exacerbating weakness in the broader economy. But, lower interest rates may not spur homebuying as many would suspect.

"Would-be homeowners are not going to jump into the market to buy new homes no matter how much prices have dropped until they get a solid feeling that prices have bottomed," said Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.

Not to mention that with the economy at serious risk of falling into a recession many potential homebuyers may wait to see how secure their financial future is before making a major purchase. Several top economists believe that the chances of a recession are better than 50 percent.

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Categories: Economic Indicators

Source of Title Blog :: 7 comments ::

by Robert Franco | 2007/11/08

Did anyone notice that the national debt was broke the $9 TRILLION level on Tuesday? We went from George Washington to Ronald Reagan before the national debt exceeded $1 trillion; that is about 200 years. Yet it only took us about 20 years to go another $8 TRILLION in debt!

So, I have another theory about why interest rates have been kept so low for the past dozen years or so. If you were servicing the kind of debt Uncle Sam has amassed, wouldn't you want the lowest interest rate possible?? It would seem that our government has fallen to the same kind of spending as the general public - they don't spend what they have, they spend what they can afford to borrow!

Just like John Q. Public who buys a bigger house than he can afford because lower interest rates allows him to borrower more money, our government has been able to get away with record spending because money was cheap! Sooner or later we are going to have to pay for that mistake. Already, due to lower interest rates, the value of the dollar has fallen. When measured against the British pound, the dollar is at a 26-year low ($2.10). A shrinking dollar means that imported goods cost us more.

Typically, to fight this effect, the Federal Reserve would raise interest rates. However, that would like slow spending and dampen an already weak economy. With home prices expected to decrease and oil prices expected to increase - what is the Fed to do? It is likely that it will do nothing.

According to an article on MSNBC:
Mr Bernanke is expected to reaffirm the Fed view that the risks are now roughly balanced, implying that rates are no more likely to go down than to go up. However, he will likely also emphasise that the Fed will remain flexible in the face of economic uncertainty. The bank's new policy stance is neutral but it will respond in an activist manner to incoming data.

With all of the uncertainty, turbulent times are ahead. The struggling housing market will not see much help from the Federal Reserve. This nation, much like its citizens, needs to adopt better spending habits. Uncle Sam is setting a poor example for us all.

Robert A. Franco

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Categories: Economic Indicators

Source of Title Blog :: 4 comments ::

Osama The Mortgage Broker
by Robert Franco | 2007/08/27

According to a survey by the National Association of Business Economists, the biggest threat to the economy is no longer terrorism and the Middle East - its the threat of subrpime mortgage defaults and "excessive indebtedness." Obviously, the lending crisis has had quite an effect on Wall Street already. But, the real problems may be just beginning as the supply of cheap money dries up and so many debt ladened Americans find themselves unable to continue their borrow and spend habits.

According to an article in the Financial Post, Debt Crisis Tops Terrorism as Threat to U.S. Growth:

The meltdown in the US$2-trillion subprime mortgage has led to the bankruptcy of dozens of mortgage firms and is threatening to spill over into the broader economy as more and more homeowners face foreclosure.

The U.S. Center for Responsible Lending recently estimated that 2.2 million subprime home loans made in recent years have -- or soon will -- end in foreclosure.

Who is going to buy all of those foreclosed properties? The housing market is already fairly stagnant and adding more homes that will likely be sold below fair market value will inevitably lead to a further decline of home prices. That will mean less equity to borrow against and put more pressure on a struggling economy.

The article goes on to indicate that this may just be a temporary bump in the road:

However, Mr. Tannenbaum [president of NABE and chief economist at La Salle Bank/ABN-AMRO] said he expects the crisis will soon pass, largely because of the strength of the broader economy, the world's largest.

"These concerns appear to be somewhat transitory as the five-year outlook for housing remains positive," he said.

I'm not so sure I agree. Once the effect of the 2.2 million foreclosures, and the realization that the American debtor is already carrying an excessive debt-load sinks in, the five-year outlook will likely be adjusted. But, regardless, we are in for a bumpy ride the next few years.

Robert A. Franco

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Categories: Economic Indicators, Mortgage Industry, Subprime Lending

Source of Title Blog :: 3 comments ::

Blame It On The Weather
by Robert Franco | 2007/04/26

I guess I would be remiss in my duties if I didn't address the dismal figures in the housing market that hit the news yesterday. Even David Lereah, chief economist at the National Association of Realtors, couldn't put a positive spin on it - and that is his main job. Though you have to give him some credit for softening the blow. Existing home sales fell 8.4 percent, the steepest decline since January 1989. Lereah blamed it on the weather.

Unusually bad winter weather in February curtailed home shopping, slowing sales that closed in March, which may have been dampened further by a decrease in subprime lending volume, according the the National Association of Realtors.


David Lereah, NAR's chief economist, expected the drop. "For the last couple month we've been expecting a weather 'hit' on home sales finalized in March, but looking at overall activity in the first quarter we see that existing home sales averaged 6.41 million - a figure that is moderately higher than the sales pace during the second half of 2006."


"It's too early to measure a significant impact from tighter lending standards, which should moderately dampen activity, but we're still looking for existing-home sales to gradually improve during the last half of 2007," Lereah said.

Other economists were reporting that consumer confidence may be to blame as rising gas prices undermined how Americans feel about the prospects for economic growth. Granted, I'm not an economist and I don't spend my days watching the economic indicators formulating detailed analysis to postulate that bad weather or high gas prices are to blame for our housing woes. However, I do have a theory that is at least as valid as "let's blame it on the weather." Has anyone considered that nobody has any money?

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Categories: Economic Indicators

Source of Title Blog :: 2 comments ::

Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco



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