Franklin Financial Group Blog

Identity Theft has become the number one white-collar crime in America. The statistics are staggering! According to the Federal Trade Commission, one out of every five Americans will be a victim this year. That’s up from one in seven just a year ago. At the rate this crime is growing, it’s virtually not a question of “if” you’ll become a victim; it’s a question of “when.” And yet most people have maintained the attitude that “it will never happen to them.”

Consider the following statistics:

• 1 in 5 people will have their identity stolen this year.
• Every 9 seconds another identity is compromised.
• The FTC estimates that as many as 10 million Americans have their identity compromised every year.
• Since January of 2005, over 220 million records containing sensitive information have been lost or stolen from databases across the country.
• If this crime continues to grow at its current rate, virtually every American will become a victim.

Information about us is gathered and spread around from the day we are born. Computers and the Internet have only increased the amount of personal information about us that reside in far-flung databases. They make it quick and easy to spread our information globally. What happens to our information remains very much unregulated.

In spite of the epidemic proportion of this crime, it remains mostly misunderstood. There are 5 types of identity theft which are Financial, Social Security, Medical, Driver's License and Character/Criminal. Any one of these can be financially devastating. Most people are only familiar with credit ID Theft, when in fact, 70% of all ID Theft is non-credit related. The FTC has concluded that a large portion of the information is stolen from the workplace. In order to slow down these occurrences, old laws have been revised, and new ones created, that require businesses to be responsible for non-public information in their possession.

Whether you are a business or you simply wish to protect yourself, having some form of Identity Theft Protection that includes a Restoration Service is essential. It only takes a few minutes for criminals to steal your good name.

*Information included in this message was obtained from Majestic Security, LLC, a provider of identity theft protection and restoration services. For additional information please visit their website at www.majesticsecurityidsafe.com

As of Wednesday, January 31st 2008, the Fed has reduced rates twice in 30 days.  The total reduction has been 1.25%.  After the first 0.75% rate reduction my phones started to light up. After this second 0.50% reduction, my phones started to blow up!  The single most predominant question was where are mortgage rates. Many people are under the misconception that rates should have dropped by 1.25% as well.  While that would be wonderful for mortgage professionals nationwide, this has not been the case. Often you will actually see mortgage rates rise when the Federal Funds Rate drops.

Let me first explain what the Federal Funds Rate is. The Federal Funds Rate is the interest rate which a depository institution lends funds to another depository institution, or simply the interest rate on overnight loans between banks. This information was obtained from http://www.econmodel.com/classic/terms/fedfunds.htm. The Federal Reserve mandates that banks must keep a certain amount of cash, or reserve balance, on deposit at their local Federal Reserve branch office at all times.

An example of how the Federal Funds Rate works is that when the Federal Funds Rate is decreased banks lend more money, businesses expand, home loans are cheaper, the housing market improves, and homeowners take out home equity loans. These loans are often used to pay for things such as home improvements and new cars, stimulating the overall economy. This information was obtained from http://useconomy.about.com/od/monetarypolicy/a/fed_funds_rate.htm.

So the question many people have is why haven't mortgage rates dropped to match the reduction in the Federal Funds Rate?  The answer is that the two are NOT directly related to one another. The Federal Funds Rate applies to short-term rates, while mortgage rates are tied to long-term rates. These long-term rates are often influenced by much emotion such as greed or fear. If investors believe a reduction in the Federal Funds Rate is certainly going to boost the economy, then you might see the Stock Market (riskier investments) experience a rise as money is moved from the Bonds and/or Mortgage Backed Securities (more conservative investments) into the Stock Market.  This is also often true when inflation becomes a concern. Conversely, if news hits Wall Street creating feelings that the economy may not be suffering or may suffer in the near future, or that inflation is not as much of a concern as may have been thought, then you often see money transferred from the Stock Market back into Bonds and/or Mortgage Backed Securities. When money flows out of Bonds and Mortgage Backed Securities the price of mortgages (rates) will rise. The opposite is true that when money flows into Bonds and Mortgage Backed Securities the price of mortgages (rates) will fall.

Hopefully this clarifies some of the questions that are out there about how mortgage rates are influenced by the Fed's moves as of late. There is no way to guarantee what rates are going to do. If the recent moves do what they were intended to, and the economy starts to experience growth, you should not be surprised to see mortgage rates rise. 

In conclusion, mortgage rates are currently FANTASTIC!  There is a lot of inventory with regards to homes that are on the market to be sold. Buyers can not only obtain tremendous financing rates, but also may be able to purchase the property at an amazing value. If you already own a home, now may be the perfect time to look into refinancing in order to take advantage of these great rates.