The Obama administration’s effort to modify mortgages is heading into in a bid to make sure that borrowers who have received trial loan modifications can have that workout made “permanent.” So far, most criticism on the Home Affordable Mortgage Program, i.e., HAMP, has centered on why so few borrowers with trial modifications are converting into permanent modifications. The common refrain from loan servicers is that they haven’t been able to get paperwork from borrowers to help finalize the loan modification — important because servicers get paid for each mod, and need to prove that borrowers actually face hardship. But at ForeclosureRadar’s , Sean O’Toole raises a different, potentially more problematic issue: “Permanent” loan modifications last for only five years. He posits that reason for the low uptake of the loan modification program: Maybe borrowers have figured out that this program is really only another exotic mortgage like one they fell prey to when they bought or refinanced the house that resulted in their current predicament. HAMP and the administration’s newly announced campaign isn’t digging borrowers out of a hole. It’s only digging them a new one, and delaying the inevitable. To be sure, the five-year period tries to give borrowers a lifeline—a chance to get their life back on track. In five years, the thinking behind the plan goes, more borrowers may be financially whole again, able to make their mortgage payments, or, if housing prices have stabilized, some may be able to refinance or sell their homes. But what about those borrowers who have loans modified who aren’t ever going to be able to afford their higher payments, which is what they’ll have to pay after the five-year modification expires? Are loan mods just creating a new batch of loan resets and delaying the inevitable foreclosure for borrowers who bought too much home, or who were sold a loan that they didn’t understand and couldn’t afford? Mr. O’Toole is blunt in his criticism: The new hole...

I'm not sure what half of a nanosecond is, but that's about how long it took after the positive jobs announcement this morning, for folks to start ruminating about the Fed raising interest rates; in turn, one more half of a nanosecond later, and someone asked me what all that would mean for mortgage rates.

Written By: Stacey Sprain, Certified Ambassador Loan Processor (CALP) As they do about this same time each year, HUD has announced FHA mortgage limits for 2010 with . First, we all know by now that the conforming loan limit will remain at $417000. That in itself means little change for maximum mortgage limits. However, HUD allows any interested party to submit a request for a higher county limit to the Homeownership Center that serves jurisdiction over the area in question if one is under the opinion that the mortgage limit set forth doesn’t serve the area’s true market. The request must be accompanied by reliable housing price data provided by a local taxing authority, title company, or real estate data company. Specific details on the data requirements can be found within . Upon receipt of the request, the HOC will review the request for compliance within Departmental requirements, will verify the housing sales data and if revise the limit if it is deemed appropriate. In most cases, maximum mortgage limits are determined by county. But there are also mortgage limits assigned to metropolitan statistical areas (MSA) and micropolitan areas. A metropolitan area has at least one urban area with a population of 50,000 or greater and an urban core that exerts economic influence on the surrounding territory as measured by commuting patterns. A micropolitan area contains a small urban center population between 10,000 and 49,999 where commuting patterns are also taken into account to determine overall economic influence. Micropolitan areas can be populated regions without large cores but metropolitan areas generally consist of large cores and may or may not be surrounded by additional population. Metropolitan statistical areas (MSA) and micropolitan areas often overlap into more than one county. The mortgage limits in these areas are set based on the county with the highest median price within the metropolitan or micropolitan area. The FHA maximum mortgage limits for 2010 consist...

In August, when it was reported that the July unemployment rate dipped slightly to 9.4% from 9.5% in June, I pointed out that the dip in unemployment was just monthly noise: FAQ: How can the unemployment rate fall if the economy is losing net jobs, especially since the population is growing? This data comes from two separate surveys. The unemployment Rate comes from the Current Population Survey (CPS: commonly called the household survey ), a monthly survey of about 60,000 households. The jobs number comes from Current Employment Statistics (CES: payroll survey ), a sample of approximately 400,000 business establishments nationwide. These are very different surveys: the CPS gives the total number of employed (and unemployed including the alternative measures), and the CES gives the total number of positions (excluding some categories like the self-employed, and a person working two jobs counts as two positions). ... [T]he jobs and unemployment rate come from two different surveys and are different measurements (one for positions, the other for people). Some months the numbers may not seem to make sense (lost jobs and falling unemployment rate), but over time the numbers will work out . Here are a couple of scatter graphs to illustrate this point ... The first graph shows the monthly change in net jobs (on the x-axis) as a percentage of the payroll employment, and the change in the unemployment rate on the y-axis. The data is for the last 40 years: 1969 through July 2009. Click on graph for large image. Although these surveys are different measures of employment - there is still a correlation - in general, the more payroll jobs added (further right on the x-axis), the more the unemployment rate declines (y-axis). And generally the more jobs lost, the more the unemployment rate increases. But the graph sure is noisy on a monthly basis. Look at the two red triangles - those are the data points for the last two months. Notice that the increase in the October unemployment...

Here are a few more graphs based on the employment report ... Seasonal Retail Hiring Retailers are hiring seasonal workers at slightly above the pace of last year ... Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year. This really shows the collapse in retail hiring in 2008. Retailers only hired 54.2 thousand workers (NSA) net in October. This is essentially the same as in 2008 (59.1 thousand NSA). However retailers hired 321.3 thousand workers in November (NSA), an increase from the 233.7 thousand last year. This suggests retailers are a little more optimistic than last year. Employment-Population Ratio Click on graph for larger image in new window. This graph shows the employment-population ratio; this is the ratio of employed Americans to the adult population. Note : the graph doesn't start at zero to better show the change. The general upward trend from the early '60s was mostly due to women entering the workforce. This measure was flat at 58.5% in November; this is the lowest level since the early '80s. The Labor Force Participation Rate fell to 65.0% (the percentage of the working age population in the labor force). This is the lowest since the mid-80s. When the job market starts to recover, many of these people will reenter the workforce and look for employment - and that will keep the unemployment rate elevated for some time. Part Time for Economic Reasons From the BLS : The number of people working part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in November at 9.2 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) declined slightly...

From Bloomberg: Bank of America Corp., which plans to repay $45 billion of U.S. government bailout money, raised $19.3 billion in a sale of securities at $15 apiece, a 4.8 percent discount to its common stock. This means BofA should repay the $45 Billion in TARP money tomorrow or early next week. I expect other banks - possibly Wells Fargo and Citigroup - to raise capital too. (ht jb)

submits: Where Does Too Big to Fail (TBTF) End? A long time ago I gave up the ghost (not Gawainsghost!) on any discussion of moral hazard and all the ramifications, seen and unseen, of overextended government actions. Luckily a bizarre circumstance has surfaced that brings those idea back to the front burner and perhaps now will get another look. You all know the story; there are quite a few firms of various sorts that are too large and too interconnected to be allowed to fail or the entire Milky Way Galaxy will suddenly fall apart. Due to this cataclysmic possibility governments the world over have stepped up to make open ended commitments to these kinds of firms regardless of how badly they performed. Not exactly a good bedtime story.