AJ's ECONOMIC BUZZ           March 19^th, 2007

Alan "AJ" Nisen    My goal is to build lifetime relationships with every client!
Bank of America Mortgage
Direct:   1.925.963.5836
Work:    1.925.688.3820
Fax:        1.925.688.3829
aj.nisen@bankofamerica.com
www.nowville.com/aj.nisen

Last Week's Economic Retrospective.
Last week I talked about the "sub prime meltdown" and about how the sub prime loan market is experiencing heavy default rates and foreclosure. There is a potential consequence on the US economy from the sub prime market debacle. In the short term, home loan rates are benefiting as the stock market is taking a beating. This situation causes money to flow from stocks into Bonds and Mortgage Backed Securities resulting in better home loan rates. But the long term picture may spell higher interest rates for all. Lenders may have to absorb the cost of the foreclosed loans, combined with the cost of increased compliance and accountability standards. Expect continued volatility in the market place as media's negative forecasting a financial economic disaster continues even though sub prime mortgages only represent a small part of the mortgage market.

With other news, Retail Sales came in a bit weaker than anticipated last week, but a cold February across most of the US wasn't exactly the best month for shopping. The Producer Price Index (which measures wholesale inflation) and the Consumer Price Index (which measures retail inflation) both came in a bit higher than expected, indicating that inflation has been persistent in our economy.

If you've ever thought it's too expensive to work with a real professional, think about the cost if you work with an amateur. The price paid is clear and it will be a very painful one for some.  Because of the sub prime crisis, credit and lending standards are tightening across the board, so it's a great time to get a mortgage check up, both you personally, as well as your clients, friends, family members and coworkers, even if they are not immediately in need of any home loan financing.

This Week's Economic Forecast.
This week we start with the release Housing Starts and Building Permits on Tuesday and end with Existing Home Sales on Friday. But the financial highlight of the week will be the Fed Meeting and resulting Policy Statement. There have been rumors of a Fed Funds Rate cut to help the housing market or to smooth out the sub prime home loan problem, but don't expect it. The Fed's main charge is to control inflation. The Fed's will only consider cutting rates if the core rate of inflation, as measured by the Personal Consumption Expenditure (PCE) Index, falls below 2% for a few consecutive months. The latest Core PCE was 2.3%, so don't look for Home Equity Lines of Credit or other adjustable home loan rates that are tied to the Fed's movements to be dropping anytime soon.

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Best Regards

AJ Nisen

Alan "AJ" Nisen, MBA, Notary
Lafayette Chamber of Commerce Board
Orinda Chamber of Commerce Board
Alamo Merchants Professional Association Board
Danville Chamber of Commerce
Lafayette Rotary

Thank you for your interest in starting a mortgage a conversation with me.  Remember, Bank of America has Industry leading low rates and is a full service bank. Bring me any mortgage offer to compete with to see what we can do for you.  I look forward to serving you in the future!