January 16 2006

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For the week of Jan 16, 2006 --- Vol. 4, Issue 3

Last Week in Review

LET’S GET READY TO RUMBLE!!! Just imagine…lights flashing, colored outfits, the pits full of fans yelling and cheering on their favorites... Yes, it’s just another day in the US financial world, where Traders in multi-colored jackets act and react in response to all the hot action of the day. This week saw some volatility, but Bond prices and home loan rates ended the week right where they started. Bond Traders cheered as Friday’s Treasury auction showed continued strong foreign participation, relieving any concerns of a declining appetite…and the Producer Price Index (PPI) report showed that inflation appears to be contained. For all of 2005, the PPI grew by 5.4% - the largest increase since 1990 – but was likely due to high energy costs experienced throughout the year. The Core PPI, which excludes volatile food and energy costs rose by just 1.7% during 2005. WISH YOU HAD SOME EXTRA PUNCH IN YOUR CREDIT SCORE…AND ENJOY BIG SAVINGS WITH YOUR HIGH CREDIT RATING? IT’S TIME FOR A SMACK-DOWN. LEARN HOW TO INCREASE YOUR CREDIT SCORE 100 POINTS IN THE NEXT 45 DAYS…READ THIS WEEK’S MORTGAGE MARKET VIEW.

Forecast for the Week

This will be an exciting week, with big grudge matches to watch on both Stocks and Bonds. Stocks are battling the psychologically tough ceiling of 11,000…a level it hasn't traded above consistently...ever. And Mortgage Bonds have their own Achilles heel to tend with...the 100-day Moving Average. Even though prices finished the week above this barrier, Bond prices haven't consistently traded above this important level for well over a year. This holiday shortened trading week does bring a couple of important economic releases and the CPI Report will lead the way with its read on inflation at the consumer level. The PPI was reported this past week showing that inflation at the wholesale level remains well in check, so we shouldn't see a big surprise either way from the CPI report. So let the battles begin! Since stocks and bonds also compete for the same investment dollar, if stocks break out above 11k, bond prices and home loan rates could lose some ground. But if stocks are unable to break above this tough psychological ceiling at 11k, mortgage bonds may defeat the 100-day Moving Average, continue to climb in the Upward Trading Channel as defined in the chart below, resulting in home loan rates improving. Chart: Fannie Mae 6.0% Mortgage Bond (Friday Jan 13, 2006)

The Mortgage Market View...

HOW TO RAISE YOUR CREDIT SCORE 100 POINTS IN 45 DAYS Edward Jamison, Esq. Sound too good to be true? Not as much as you’d think. Try out these five simple steps to improving your own credit score…you could see dramatic results! 1. PAY YOUR PAST DUE ACCOUNTS. Yes, this sounds obvious, but understand that credit scoring software severely penalizes you for having accounts with a past due balance. Making sure all of your accounts are current, and paying the amount that shows as being past due on the credit report can increase your credit score by a significant amount. 2. TRY TO “GET RID” OF YOUR LATE PAYMENTS. Contact all creditors that have reported late payments on your credit and request a good faith adjustment that actually removes the record of late payments reported on your account. Be persistent, if they refuse to remove the late payments at first, remind them that you have been a good customer that would deeply appreciate their help. Call several times if you need to and ask for supervisors…persistence and politeness pay off in this scenario. 3. REQUEST TO HAVE YOUR CREDIT LIMITS INCREASED. Contrary to popular belief, having low credit limits on a credit card can actually hurt your credit score. Having low available credit limits affects your “actual debt to available credit ratio”. For example, if you owe a total card debt of $10,000 and your total credit available is $20,000, you are only using 50% of your total credit available. But if you have card debt of $10,000 and your total credit available is $15,000, you change your ratio to 66% of your available credit being used. The lower the percentage of debt to available credit the better, as it shows you are able to handle having credit available without running it up to the max. 4. BECOME AN “AUTHORIZED USER”. If you have a short and limited credit history, you can ask someone to add you to their credit card account as a joint account holder or an authorized user. When added, the primary account holder’s credit card will appear on your credit report. Credit scoring software will treat the added account as though it is your account and you will benefit from the low balance and the long payment history for that account. It is important to remember that being an authorized user is helpful for your credit score only if (1) the person is carrying debt below 10% of the credit limit on that card and (2) has had good payment history on the card for seven years or longer…and the longer the history, the better. Being an authorized user is potentially detrimental to your credit score if the person giving you the card either maxes out the credit or pays late, since this would report on your credit report too. 5. DO NOT CLOSE YOUR OLD CREDIT CARDS, KEEP THEM ACTIVE. 15% of your credit score is determined by the age of the credit file. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you’ve had credit…as well as increase your “debt to available credit ratio” as discussed in point 3. Use the old card at least once every six months to avoid the account rating to change to “Inactive”. Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down. An inactive account is ignored by Fair Isaac’s credit scoring software, so you will not get the benefit of the positive payment history and low balance that card may have had in the past. If you’d like more information on credit, you can call the trusted mortgage professional who sent you this newsletter. And to receive even more tips on how to increase your credit score…and get a free copy of Jamison’s system titled “How to Completely Erase the Effects of Identity Theft from Your Credit Report in 10 Days”…just hit this link: CREDIT SAVVY Edward Jamison is the founder of Jamison Law Group, P.C., and is an attorney who specializes in consumer credit and identity theft and numerous software products tailored to the mortgage industry. Jamison is a nationally recognized expert on credit scoring.

The Week's Economic Indicator Calendar

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise. Economic Calendar for the Week of January 16 – January 20 Date ET Economic Report For Estimate Actual Prior Impact

The material contained in this newsletter has been prepared by an independent third-party provider. The content is provided for use by real estate, financial services and other professionals only and is not intended for consumer distribution. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is not without errors.

As your trusted advisor, I am sending you the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.