Steve Papapietro's Mortgage Bulletin

For the Week of Sept 28th, 2009

LAST WEEK IN REVIEW

"BE WILLING TO MAKE DECISIONS." General George Patton. And that's exactly what the Fed did last week at their regularly scheduled Federal Open Market Committee meeting. But just what did they decide...and what do their decisions mean for home loan rates?

The Fed said they are going to ration out the remaining commitment of Mortgage Backed Security purchases through the first quarter of 2010. There will be no additional buying, but instead, a longer weaning off of the program. There was some speculation about the Fed increasing the amount of buying above the $1.25T committed to, and last week's statement is the Fed's nice way of saying "no." They will not be buying more in quantity, but what they will do is attempt to provide a smoother transition to normal market conditions.

It is a given that once the Fed ceases its purchases, that interest rates will climb significantly higher...most likely back above the 6% area. So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to gradually rise.This means that waiting to purchase or refinance will very likely mean a higher interest rate.

Their decision also means that the Fed's remaining purchases will all be lower in quantity, as the remaining allotment for purchases will be spread over a longer period of time - and additionally, will not necessarily be spread out as evenly as their past purchases - which could lead to more volatility for rates in the near term.

In other news, Existing Home Sales and New Home Sales were reported slightly less than expected, but both reports continue to show signs of an improving housing market. The inventory of unsold existing homes fell to its lowest inventory level since April 2007, while the inventory of unsold new homes dropped to its lowest level since January 2007. While some of the decline in new home inventory may be due to builders constructing fewer homes - these reports indicate that the housing market is indeed showing signs of life.

Remember, with home loan rates still low - but slated to increase with the Fed's recent decision - as well as a juicy tax credit for First Time Home Buyers that is going to expire on November 30th, it makes sense to get off the fence if you've been considering a purchase or refinance. Or do you have a family member, neighbor, friend or coworker who might benefit from getting some good home loan advice? I'm always glad to get your referrals, so simply let me know who I might be able to help.

Also in the news, Durable Goods Orders for August unexpectedly fell 2.4% for the largest decline since January. The weaker than expected economic data helped fuel a rally in the Bond market and a late week improvement in home loan rates...while on the other hand, Stocks struggled, particularly with the increasing concerns of Iran's construction of nuclear sites. This kind of geopolitical unrest is troubling on many fronts, and if the situation continues to escalate, it could have a big impact on both the Stock and Bond markets.

FORECAST FOR THE WEEK

There are several important economic reports in store for this week, the biggest likely being Friday's Jobs Report for September. The Jobs Report for August showed a troublesome 216,000 jobs lost for the month, with prior months revised to show an additional 50,000 jobs lost. In addition, the last report showed that the Unemployment Rate for August jumped to the highest level in 26 years, at 9.7% from July's 9.4%. This is more than double the rate of unemployment from just two years ago and significantly higher than the 5.9% average during the past 40 years. The Unemployment Rate portion of the Jobs Report is often seen as more reliable than the job loss numbers since it is an actual survey, where about 60,000 households are contacted - so this is a particularly important element of the report, as we watch to see signs of an improving economy.

Also this week, we have a read on Consumer Confidence coming on Tuesday, while Thursday brings the Fed's favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) Index, found within the Personal Income Report. Thursday will also bring another weekly Initial Jobless Claims Report, just ahead of the Labor Department's big Jobs Report coming on Friday.

It will most certainly be a full week of news, particularly as the aforementioned tension in the Middle East continues to simmer. There is a meeting scheduled for this Thursday with representatives from six nations to discuss this situation further.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds were able to mount a late-week rally through a key "ceiling of resistance", and this move higher for Bonds caused home loan rates to improve. I'll be watching closely to see if Bonds can hold their ground, and continue in this improving direction in the week ahead.

Chart: Fannie Mae 4.5%% Mortgage Bond (Friday Sep 25, 2009)

MORTGAGE MARKET VIEW

Financial Benefits of Home Ownership

There are a number of personal and emotional reasons to buy a home. But there are also some strong financial reasons to make the investment. In addition to exceptional home affordability and near historic interest rates, here are some important financial benefits of owning a home:

Increased Net Worth: Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

A Big Tax Deduction: One of the largest tax deductions available is the amount of interest paid on a mortgage. In fact, a $150,000 home at a 5.50% interest rate can add up to approximately $8,000 in first year's interest. This amounts to a significant savings - effectively reducing the amount of a homeowner's monthly loan payment.

Long-Term Appreciation: Over the last few years, home prices have corrected and become more affordable. While that's good news for potential buyers, it has overshadowed the long-term appreciation of a home's value. The reality is, despite market ups and downs, real estate historically appreciates around 6% per year. Even if you calculate a modest appreciation of 3%, a home purchased today for $150,000 should grow in value to $364,000 over 30 years.

$8,000 Tax Credit: Don't forget, the government is offering an $8,000 tax credit for first-time homebuyers - or for folks that haven't owned a home during the past three years. However, the program is scheduled to end soon. In fact, the Internal Revenue Service recently reminded potential buyers that they must complete their first-time home purchases before December 1, 2009 to qualify for the special credit, which means the last day to close on a home and qualify for the credit is November 30, 2009.

If you're considering purchasing a home or refinancing, this is an ideal time. Call or email me today to discuss your specific situation and how you can benefit from today's market.

This 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 September 28 - October 02

Date ET Economic Report For Estimate Actual Prior Impact Tue. September 29 10:00 Consumer Confidence Sept 57.0 54.1 Moderate Wed. September 30 08:15 ADP National Employment Report Sept -200K -298K HIGH Wed. September 30 08:30 Gross Domestic Product (GDP) Q2 -1.2% -1.0% Moderate Wed. September 30 09:45 Chicago PMI Sept 52.0 50.0 HIGH Wed. September 30 10:30 Crude Inventories 9/25 NA NA Moderate Thu. October 01 10:00 ISM Index Sept 54.0 52.9 HIGH Thu. October 01 08:30 Jobless Claims (Initial) 9/26 NA 530K Moderate Thu. October 01 08:30 Personal Consumption Expenditures and Core PCE YOY NA 1.4% HIGH Thu. October 01 08:30 Personal Consumption Expenditures and Core PCE Aug NA 0.1% HIGH Thu. October 01 08:30 Personal Spending Aug 1.1% 0.2% Moderate Thu. October 01 08:30 Personal Income Aug 0.1% 0.0% Moderate Thu. October 01 10:00 Pending Home Sales Aug NA 12.9% Moderate Fri. October 02 08:30 Average Work Week Sept 33.1 33.1 HIGH Fri. October 02 08:30 Hourly Earnings Sept 0.2% 0.3% HIGH Fri. October 02 08:30 Non-farm Payrolls Sept -188K -216K HIGH Fri. October 02 08:30 Unemployment Rate Sept 9.8% 9.7% HIGH

C.A.R Market Matters, November 6

Thursday November 06, 2008

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS

C.A.R's Mortgage Update

This week C.A.R is introducing an occasional new feature in Market Matters entitled Mortgage Update. Mortgage Update will update REALTORS and consumers on recent news about the mortgage market. 

This issue of Mortgage Update contains news and updates on the "Hope for Homeowners" program, and foreclosure assistance programs for borrowers with mortgages issued through Indymac, JP Morgan Chase and Co, and Countrywide.

MAKING SENSE OF THE STORY FOR CONSUMERS

Early projections indicate that only 20,000 troubled homeowners will apply for the "Hope for Homeowners" program, a considerable reduction from the previously estimated 400,000 homeowners who were expected to apply. The $300 billion program was launched Oct. 1 and is designed to help troubled homeowners rewrite a "risky" mortgage loan into a 30-yr, fixed-rate loan with a lower interest rate. During the first two weeks of the program, the Federal Housing Administration, which oversees Hope for Homeowners, reported receiving only 42 applications. Some housing experts believe the low application rate is due to the program being voluntary for lenders and provisions requiring homeowners to agree to an equity share with the government. 

Full Story

Less than half of homeowners with mortgage loans through IndyMac have responded to offers from the Federal Deposit Insurance Corporation (FDIC) to lower loan payments and interest rates. The FDIC, which is running IndyMac, mailed 35,000 letters offering homeowners an opportunity to rework the terms of their mortgages. The goal is to reduce the monthly payment on a loan, including taxes and insurance, to no more than 38% of the borrower's pretax income. The FDIC is prepared to implement the following: reduce the interest rate to as low as 3%; extend a loan's terms to 40 years; and waive interest on a portion of the mortgage balance.

Full Story

JPMorgan Chase % Co has reported that it is instituting a 90-day foreclosure freeze while it searches for ways to make payments easier for consumers. The program may enable up to 400,000 borrowers to reduce their interest rates or principal amounts. The bank will also open 24 mortgage counseling centers in areas with the highest delinquency rates. JPMorgan also is planning to hire 300 loan counselors to work with delinquent borrowers and employ approximately 150 additional staffers to review each mortgage prior to sending it through the foreclosure process. The program offer is extended to borrowers who have loans through Washington Mutual Inc., and clients of EMC, a mortgage unit of Bear Sterns Companies. Both companies were acquired by JPMorgan in recent buyouts and takeovers.

Full Story

Bank of America, which acquired Countrywide in July, said that nearly 400,000 troubled homeowners who have subprime mortgages and option adjustable-rate loans through Countrywide may be eligible for loan modifications. To be eligible for the Bank of America plan, homeowners must occupy the home as their primary residence, the mortgage must be seriously delinquent---or likely to become so; and the loan must have been serviced by Countrywide and originated prior to December 31, 2007. Bank of America will help borrowers by restructuring first-year payments of principal, interest, taxes and insurance to no more than 34% of the borrower's income; halting foreclosure sales against borrowers who are likely to qualify for a loan modification; and waiving restructuring fees and prepayment penalties. 

Full Story

 Chicago Tribune

Finding an area with appreciation potential

Some real estate experts believe that home buyers who purchase a house during the current market will gain equity if they stay in the house for at least five years and purchase in a desirable neighborhood.

MAKING SENSE OF THE STORY FOR CONSUMERS

Neighborhoods with strong employment bases, such as hospitals, universities, and government, tend to be recession-proof. People desire to live near their jobs, so housing that is in close proximity to these types of industries are generally higher in demand than those in other areas.

High gas prices and roadway congestion have led many people to see "walkable" communities--nieghborhoods that offer both daily needs such as grocery stores and coffee shops to more speciality items like hair salons, all within walking distance. Walkable communities also provide public transportation, which is becoming more desirable to many home buyers and is increasing demand for housing in these areas.  One web site, walkscore.com, calculates teh walkability of a community by locating stores, restaurants, schools, parks, and other attractions that are within walking distance. The scores are based on a 100-point scale with 100 points being a walker's paradise.

Home buyers who seek a new or nearly-new home should search in areas where the homebuilder is known for honoring warranties and building high-quality homes that are structurally sound. Homes in these areas are more likely to weather well and gain value in the future than homes in areas where the home builder is unknown.

Homes in neighborhoods with sales momentum generally appreciate at a faster pace than areas where sales are flat. Some real estate industry consultants advise clients to pay close attention to the "list to sale" numbers, which reflect the difference between the asking price and the final closing price. Usually if the gap in list-to-sale numbers is narrow, then the real estate market in that area is improving.

Full Story

CNN MONEY

7.5 million homeowners "underwater" 

Approximately 7.5 million U.S homeowners owe more on their mortgages than their homes are currently worth, and an additional 2.1 million Americans own homes valued at only 5% more than their loan.

MAKING SENSE OF THE STORY FOR CONSUMERS

According to some estimates as many as 12 million borrowers may have negative equity in their home, meaning that they owe more on their mortgage loans than their homes are currently worth. However, according to statistics gathered by C.A.R over the last 40 years, homeowners who purchase a house and keep it for at least five years have an average annual rate of return at nearly 12%. 

Although California's inventory of homes with high negative equity is higher compared with other states, lower home prices have increased affordability, making it easier for first-time home buyers to enter the market and other buyers to move up to larger houses or more desirable neighborhoods.

Borrowers who are facing foreclosure should work with their lender and apply for a loan modification program. Many financial institution are offering homeowners the opportunity to rewrite an adjustable-rate mortgage into one that is fixed for 30 years. Some banks are also offering existing customers zero interest for a short period of time and lowering the principle balance on the loan to make payments more affordable.

Full Story

Washington Post

Meltdown 101: How we'll know we're in a recession

Recent economic reports and many news stories have led some Americans to believe the country is in a recession. Although unemployment is high and incomes have failed to keep pace with inflation, the country is not yet in a recession, which must be declared by the National Bureau of Economic Research (NBER)

MAKING SENSE OF THE STORY FOR CONSUMERS

The National Bureau of Economic Research (NBER) is the entity that officially declares the country is in a recession. Founded in 1920, NBER consists of more than 1,000 university professors and researchers who study the economy. The Business Cycle Dating Committee within the NBER makes the call on recessions. Often times NBER doesn't declare a recession until after it's over.

Contrary to popular belief, a recession is not defined as two consecutive quarters of negative gross domestic product growth. NBER defines a recession as a significant decline in an economic activity spread across the economy, lasting more than a few months. This is usually based on reports such as the gross domestic product--a measure of the value of all goods and services produced within the United States; real income, employment, industrial protection, and wholesale and retail trade.

A recession's start and end dates are based on the high and low points within the nation's "business cycle" --periods of economic growth and contraction. A recession begins when the economy peaks at the top of an expansion period. It continues as the economy contracts until it hits the "trough", the lowest point on the downward cycle. After that, the economy begins to recover. The "peak" date is the beginning of the recession and the "trough" date is its end. The last official recession began in March 2001 and lasted eight months before ending in November 2001.

Full Story

LA Times

'Green' improvements can add to a home's appeal

Many home buyers are seeking "green" homes to offset their carbon footprints and pocketbooks. Although most green homes are new houses, owners of existing homes for sale can make "green adjustments" to be more competitive in the market.

MAKING SENSE OF THE STORY FOR CONSUMERS

C.A.R recently launched a new Green website--"At Home with Green", which provides information to consumers and REALTORS about how to find and sell green homes; how to make green home improvements; and other tactics for greening their homes, offices, and lives. To visit, "At Home with Green" CLICK HERE

Consumers can work with their local utility company to conduct an energy audit to determine how green a home is and to get pointers on how to further green the home. Although the changes could be costly and the homeowner likely will not recoup all the money spent making the green upgrades, the home could sell faster with the improvements. Some home buyers may make an offer on the home as is, but might request a credit towards making the green improvements. Often times the credit will be nearly twice the amount that it would have cost had the homeowner made the improvements prior to listing the home.

Homeowners can make green improvements in their homes by making simple changes, such as replacing regular light bulbs with compact fluorescent bulbs (CFLS) which use only one-fifth the energy of regular bulbs and last almost 12 times longer, or more substantial improvements like replacing appliances with ENERGY STAR-rated ones, which can use as little as one-quarter the energy of older models.

Full Story

In Other News...

CNBC

What Does 'Good' Credit Really Mean?

Wall Street Journal

The Stampede of White Elephants

Mercury News

Freddie Mac says fewer homeowners are borrowing from equity

Washington Post

A crackdown on credit fixes

LA Times

Banks, consumer advocates urge U.S to allow credit card debt forgiveness

Talking Points

Here's what to tell consumers

The U.S Dept. of Housing and Urban Development (HUD) offers an online guide to preventing foreclosure. The guide provides consumers with information such as how to contact a housing counselor; when and how to talk to their lender, how to find foreclosure resources, tips on avoiding foreclosure and foreclosure scams, as well as information for consumers who cannot keep their home. The guide to preventing foreclosure can be accessed here. 

Why Should Anyone Buy a Home in This Market?

Owning a home can get complicated. Your home is often your biggest investment, a tax shelter, and that first giant step into adulthood. The most important and most overlooked aspect of home ownership is emotional--homes are the centerpieces of lives and families. Your home is your castle, a place to be with family, friends, and pets. It's where you make your mark on your internal world, not your mark on the outside world. 

The values of home ownership aren't debatable--but in today's market, it's more important than ever to reflect on the pros and cons before making the big decision. Should anyone buy a home in this market? Is the economy too unpredictable? Should you wait? 

These issues are plaguing many families right now, and there is no simple answer. 

I've put together a list of essential questions to help you discover if now is a good time for you to buy. First there are the simple mathematical questions, and then there are the more existential ones:

1. Can you afford to put 20% down and carry a 30yr mortgage, or put 10% down, carry a 30yr mortgage, and pay PMI (private mortgage insurance), or put 5% down and get an expensive FHA loan? There are some shorter fixed periods than the 30yr fixed which may be good in some circumstances, but I am going to take the conservative route and ask you if you can afford payments on a 30yr fixed loan. Can you weather the economy's ups and downs? If no, then you should not try to buy now. If yes, move on to the next question. If you do not know, search out a good lender and talk with them. DON'T use internet calculations. They won't provide a dependable answer.

2. Are you planning on staying in this home for at least 5 years and maybe longer? If you have to move can you afford to to keep your home as a rental? If you don't know, don't buy. At this moment in the Silicon Valley I can't think of any homes worth less than they were 10 years ago. Most are still worth more than they were 5 years ago. If you can't commit to at least 5 years stop here. If not, move on to the next question. 

3. Do you have a very specific goal in mind that can be achieved in a specific location? For example, are you trying to buy a home in Palo Alto so your children can attend schools there? Has the soft market enabled you to do that? If so, then this is a great time to buy. If you do not buy soon prices or interest rates could conceivably go higher and lock you out. It's also possible that prices could go lower, but are you willing and able to take that gamble with your children's education? If you are willing and able, then wait, and you might get a better deal.

4. Are you easily pleased, or specific about what you want and need in a home? If you are flexible regarding what you want in a home, and are more interested in getting the best prices, then there is no reason to rush into buying if you think prices will drop or inventory will skyrocket. However, if you are very picky or have specific needs that aren't found in many homes, when you find what you want, BUY IT. For example, if you're sound sensitive and find an affordable home where noise is not an issue in an area that has few quiet places to live, then you are a good candidate for buying now. Are you looking for a one story town home that has central air, a nice patio, and an attached garage? Trust me, these are not a dime a dozen. If you find what you want, buy it! 

5. Do you want a new home in an area where there is not a lot of room to build? Right now there is a large inventory of new homes. If you live in a city where there is little room to expand this is probably a great time to buy a new home. Builders are very generous with their upgrades and a few years from now there may not be as many developments to choose from in centrally located areas. There are a number of new developments in San Mateo and Santa Clara counties right now, but there is not a lot of empty land. There may not be as much new inventory in coming years.

We're still left with the question: Why should anyone buy in this market? Clearly, the answer isn't simple, although hopefully my guide brought you closer to understanding your options. With some soul-searching and advice from a trusted Realtor and Lender, the answer will get clearer for you. Good luck! 

The Call Heard Round the World

An article by Jeffrey Cane on Portfolio.com pins the birthdate of the credit crunch on last August 9th, when a call from a French bank pulled the rug out from under the U.S market. According the Cane, the credit market's issues had already begun last February, after the disintegration of the subprime mortgage market. The gravity of those issues wasn't revealed until French bank BNP Paribas stopped investors from withdrawing money from funds, claiming the market was too unstable for them to determine their holdings.

In a statement, the bank said--

"The complete evaporation of liquidity in certain market segments of the U.S securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating."

This call sparked a landslide of rumors about problems at other banks and with hedge funds. People began to get worried, and the stock market illustrated their fear. This lack of confidence in the market caused banks to distrust other banks and investors to rely only in the safe zone. Getting a loan got a lot harder.

The aftermath of the credit crunch has been huge. Bear Sterns and Countrywide are gone, and the future of Wall Street is hazy. The re-vamping of Fannie Mae and Freddie Mac is just the start of a necessary total over-haul of this country's financial system. 

Cane ends his article with a mention of how much financial pain the new President (Obama!) will have to deal with. President Bush has been downplaying the problem all along--constantly repeating that the economy is fundamentally strong, etc. That is, until the problem became too big to ignore. So how much of this is his fault?

Frequently Asked Questions--Mortgage, Mortgage, Mortgage

WHY DOES THIS BLOG SPEND SO MUCH TIME ON MORTGAGE ISSUES?

This is a very easy question to answer. In 2005-2006 the only requirement for getting a mortgage was having a pulse (although there was probably some mortgage fraud going on that allowed dead people to acquire mortgages as well). The crash in the credit market has made getting a loan very difficult, if not downright impossible for many. The desire to own a home hasn't changed, but the ability to do so has changed radically. I am often asked when will the housing market recover. My best guess is that when the credit loosens the market will improve.

Steve Papapietro's Weekly Mortgage Bulletin:Bonds Take a Nose Dive

LAST WEEK IN REVIEW

"IT'S A BEAUTIFUL THING, DIVING INTO THE COOL CRISP WATER." Olympic Gold Medalist Dawn Fraser. Driving may be a beautiful sport at the Olympics, but it's not a beautiful thing to watch in the Bond market. And that's exactly what happened last week, as Bonds drove to their worst levels so far this year. 

So what caused this big belly flop to occur? Once again, inflation was the big culprit. While Bonds and home loan rates did begin the week in rally mode after the Federal Reserve announced that it authorized Fannie Mae and Freddie Mac to borrow directly from the Central Bank if they need additional capital, this confidence boost in the markets was short lived on the heels of important inflation reports. 

On Tuesday, the Producer Price Index (PPI) report, which measures prices of goods at the wholesale level, revealed that the year-over-year PPI soared in June, marking the highest year-over-year rate since 1981. Also on Tuesday, the Retail Sales report, which measures the total receipts of retail stores, showed that retail sales increased much less than the forecast. This may mean that the boost in sales received from the tax rebates may already be fading as consumers are focusing on paying for essentials... something that Wednesday's news seemed to confirm. 

What was Wednesday's news? The important Consumer Price Index (CPI) report, which measures prices paid by consumers like us. It showed prices overall are up 5% from a year ago, the biggest year-over-year rise since 1991. This probably comes as no surprise as you look at your own monthly expenses, particularly the amount you're likely spending these days on groceries and at the gas pump.

Bond prices and home loan rates continued to worsen through the week as no other news or reports could help them shift course. With inflation and tough overhead technical resistance proving to be strong competitors against any improvement, home loan rates generally ended the week around .375% worse than where they began. 

THE ART OF CREATING SAFE BUT EASY-TO-REMEMBER PASSWORDS FOR ALL OF OUR ACCOUNTS COULD BE LIKENED TO AN OLYMPIC SPORT! CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW TO LEARN SOME GREAT PASSWORD-CREATION TIPS THAT COULD HELP EARN YOU A PERFECT 10. 

FORECAST FOR THE WEEK

Inflation was the big newsmaker last week, and the news this coming week will be focused on the housing market, as both New and Existing Home Sales Reports will be released. It won't be much of a surprise to see some continued sluggishness in the nation's overall housing market. 

Also this week will come a look at Durable Goods Orders, which is simply a measure of how many "durable" or non-disposable goods have been purchased during the previous month. Durable goods are those products which are expected to last longer than three years, such as televisions, golf clubs, furniture, office equipment, and cars. With consumables like food and energy taking such a bite out of most people's budget, it will be interesting to see the level of buying for these types of items... it wouldn't be surprising to see it at somewhat low levels. Additionally, a look at Consumer Sentiment will arrive, with a read on how positive-- or not-- consumers are feeling about their current and future economic conditions.

Remember when Bond prices move higher, home loan rates move lower... and vice versa. And this week, Bond prices took a very steep dive indeed, causing home loan rates to worsen. the chart below shows how Bonds were pushed sharply lower by the news of the week, and an inability to defeat a strong overhead ceiling of resistance at the 200-day Moving Average. If this week's news isn't Bond friendly, Bond prices could continue their dive lower, and cause home loan rates to worsen further still... but some negative economic news could pull money out of Stocks and into Bonds, give Bonds a boost higher, and help home loan rates regain some lost ground.

FOR THE CHART, CLICK HERE

WHAT'S YOUR MOTHER'S MAIDEN NAME?

Passwords are crucial to accessing your personal accounts and information. The problem is: We all have so many accounts that we worry more about remembering our passwords than we do about making sure they actually protect our data from hackers. So we end up using passwords like our mother's maiden name or child's first name. But even if you add a few numbers to the end, those types of passwords are easy to break. And that means your data isn't safe.

The tips below can help you avoid the most common password pitfalls and even implement a few new ideas that will make your passwords easy to remember... and hard to break!

Strength Training

A well-protected password is not only unique, but also hard to guess. How do you do that? It's pretty simple really. Just follow this advice:

Use a random string of characters. That means no sequential letters or numbers. None.

Make it loooong. The longer the better--even up to as many as 10 to 14 characters.

Switch things up.  Use a combination of upper and lower case letters, along with a few numbers mixed in the middle or end. 

Don't use substitutes. Using @ for a or 1 for I may look good to you, but most hackers are smart enough to break those substitutes rather quickly.

Avoid easy targets like words straight out of the dictionary or things like family names and birthdays.

Multiplication Facts

Most of us cheat when it comes to passwords. We have trouble remembering our passwords, so we come up with two or three that we can remember and use them everywhere. But you should avoid the temptation. The fact is, once a password is compromised, all of your accounts are vulnerable. There's no way around it, you need a way to create and remember multiple passwords--a different one for each account! 

Sure-Fire Technique for Memorable, Unique Passwords

For all the advice above, good passwords come down to two things: they're easy for you to remember, and they're hard to break. Implementing the tips above can make your passwords hard to break, but what about remembering them---especially if you have a unique password for every account? Here's a sure-fire tip to help!

1. Think up a phrase. Instead of a common word or family member name, think up a unique phrase that only you know. For example, you may think up something off the wall such as "I like short hair too."

2. Make it an acronym. In our example, "I like short hair too," becomes ILSHT.

3. Add complexity. Remember those substitutes you're not supposed to use with dictionary words? Well, you CAN use them with acronym. For example, "I like short hair too" can become "I like $hort hair 2" which makes:1L$h2. You can also use upper and lower letters to make it 1L$h2. The point is to be creative, but in a way that you can easily remember it. 

4. Make it unique. A password is only really unique if you use it for one account and one account only. So you can't just use 1L$h2 for every account. And, in reality it's still too short. Here's the key to the whole process: Mix in additional letters and numbers that are unique to each account. For example, if you're logging into a "gmail account" you can use the "gm" and the "@cct" (for account) to make: 1L$h2gM@cct. Then, for a Netflix account, you may use: 1L$2Nf@cct.

Of course, these are just examples. You'll want to be creative and think up your own acronym and ways to add unique characters to each account. And then keep that little secret to yourself so no one will be able to guess your account passwords. 

Follow these simple steps and you'll have passwords that are tough to break, unique to every account, and easy to remember!

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.