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Running Long Distance and thoughts on Mortgage Land

January 9, 2015

As anyone who follows this knows I am a long distance athlete, primarily a runner, hiker, but throw some triathlon in too for variety.  What this means to me is that I have mentally prepared myself to have my version of yoga/therapy/meditation be the time spent pounding the pavement swimming laps or enjoying nature.  I often times find it hard to get up the motivation to go out and every time I go out it seems like the first time I have run in my adult life, but despite these I still use activity for these sources of painful joy in life.

For Christmas I received a copy of a book by the comic, The Oatmeal, entitled The Terrible and Wonderful Reasons I run Long Distance.  The author brings a wonderful perspective to the sport of long distance running and I was reading through tears of laughter the whole time.

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My favorite quote from this book is really sums up my position on endurance sports, “Running is a form of practiced stoicism.  It means teaching your brain and body to be biomechanically comfortable in a state of disrepair”.  I plan on practicing this effort this weekend so will likely post on the results of my first “bandit” marathon next week.  I will also likely try and do some more barefoot running this year and break out my vibrams for some trail running. Since everyone already makes fun of them I poked around and found another comic I really enjoy, XKCD, take on toe shoes…

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During my workouts this week I have been mulling over the news and where I think we will come out economically this year.  Being in mortgage we are always advised to “pray for low rates” but having spent many years in distressed/default, specifically embroiled in subprime, I am hoping this year for a return of private money to the mortgage marketplace.  The subprime link above is to a slide presentation to explains the last mortgage crisis in a humorous and simple way that I believe was written by a professor that I took a secondary market course from years ago, thanks Jay still using it.

With quantitative easing coming to an end we will thankfully see the treasury balance sheet stop expanding with hundreds billions of dollars of mortgage loans and while this may be painful for the sector to absorb at first I am hoping that it combined with a rising of rates will encourage private money to come back into the market, this will likely start with subprime which I am in favor of since it is an underserved portion of the mortgage market and when written well can serve all parties from the consumer to the bank to the tax man.

With Ocwen announcing their exit from GSE servicing, the non-bank servicers will likely all snap up the best portions of the MSR product that Ocwen sells, allowing them the liquidity they need to payoff the various fines and regulatory fees they have incurred.  This move will either position them to be the best low cost third party servicer in the country or precede their ultimate fall from grace, I hope for the former but predict the later.  As for the rest of the non-banks I hope they can find the correct balance of GSE and private since that brings balance to the market.

For lending, I am guessing the 10 yr stays low but refinance remains the ghost of the QE past and worry a bit that the game of chicken being played with petroleum production could have pretty adverse effects on housing production.  While that seems a little counter intuitive, cheap oil will drive an economy only so far and at some point the Federal reserve will have to take the punch bowl away from the party.  So in short at the end of 2015 I am thinking, slight rate uptick on the 30 yr rate, call it average of 4.5%, inflation will remain low, say 1.6% which I think would be up from 2014’s 1.3, and only in Q3 and Q4 will we see any private money come back to mortgage.

 

Enough insomnia time for last run before the marathon out east this Sunday.

 

 

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One Comment
  1. Jonathan Prater permalink

    Great article and I like the fact that you pinned down specific projection #’s. This is the first of your posts that I’ve read. Keep them coming. Good luck in your athletic endeavors; I like your style sticking with those toe shoes.

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