Jeff Montgomery

Montgomery Financial Services LLC

11022 Nicholas Lane

Ocean Pines, MD 21811

October 2017
Market Update
(all values as of 09.30.2020)

Stock Indices:

Dow Jones 27,781
S&P 500 3,363
Nasdaq 11,167

Bond Sector Yields:

2 Yr Treasury 0.13%
10 Yr Treasury 0.69%
10 Yr Municipal 0.84%
High Yield 5.77%

YTD Market Returns:

Dow Jones -2.65%
S&P 500 4.09%
Nasdaq 24.46%
MSCI-EAFE -8.92%
MSCI-Europe -10.53%
MSCI-Pacific -6.19%
MSCI-Emg Mkt -2.93%
US Agg Bond 6.79%
US Corp Bond 6.64%
US Gov’t Bond 8.04%

Commodity Prices:

Gold 1,892
Silver 23.37
Oil (WTI) 39.88


Dollar / Euro 1.17
Dollar / Pound 1.28
Yen / Dollar 105.60
Dollar / Canadian 0.74

Reverse Mortgage Rules Tightening – Financial Planning

U.S. Department of Housing and Urban Development (HUD) announced changes to rules affecting reverse mortgage loans. Reverse mortgages are currently back-stopped by U.S. taxpayers, which the administration believes has led to additional financial exposure.

The Department of Housing and Urban Development (HUD) has backed over 1 mil-lion home equity conversion mortgages, otherwise known as reverse mortgages, since the program began in 1990. HUD expects the program to have a negative value averaging 10 ½ billion dollars a year until 2023, placing a strain on its current re-serve fund. There are currently over 650,000 reverse mortgage loans back-stopped/insured by the Federal Housing Administration (FHA), which is part of HUD. The administration believes that the losses occurring need to be addressed in order to avoid an enormous future liability to U.S. taxpayers. The modifications will not apply to existing borrowers but only to new borrowers affecting new loans.

Reverse mortgages essentially allow seniors to take out loans against their homes in order to supplement pension and fixed income retirement assets. When the bor-rower moves or dies the proceeds from the sale of the home is then used to repay the loan. Losses from the program have been mounting since seniors are living longer and home values are not rising as originally forecasted, thus creating an enormous risk for the overall mortgage market insured by FHA.

Sources: FHA, HUD

Median Refi Loan Age Drops – Housing Market

As rates have gyrated over the past 1-3 years, mortgagees have ramped up refinancing more often.

A significant contributor to the financial crisis of 2008 was the onslaught of lower quality mortgages, or otherwise known as sub-prime loans, which were “packaged” and sold as complicated products deemed as high quality.

The dramatic drop in mortgage debt from its height in the second quarter of 2008, to its low in the 1st quarter of 2013, was a drop of over 10.5%. Data collected by the Fed since 1951 has never seen such an elimination of mortgage debt of this magnitude.

The growth of the mortgage market has been compromised ever since the financial debacle of 2008, when new lending regulations limited loans. Growth in mortgages actually didn’t start again until the second quarter of 2013.

Economists see an improving housing market as a result of an improving job environment and stronger household finances. Such dynamics lend themselves well to the overall health of the economy.

Source: Federal Reserve