Mortgage Info for Homes and Small Business Financing

“Riddle Me This, Batman”

Our Economy & the Markets

As reported by the Federal Reserve Bank of St Louis, disposable personal income (DPI) has been reported to have grown 1.46% from January 1, 2007 to May 1.  That is approximately a 3.5% annual rate of growth in the measure of the total amount of income an individual makes after direct taxes.

At the same time, the Department of Housing and Urban Development (HUD) has recently adjusted downward many of the Area Median Incomes Fannie Mae uses for determining eligibility for many of its housing finance programs, most notably its MyCommunityMortgage (MCM) program.

One government entity (HUD) reports incomes down and another non-government (or at best quasi-government) entity reports incomes up.

What’s going on here?

Well, there could be a couple of things. Reporting anything of this magnitude is not an exact science.  A lot of it is based on modeling.  And models of reality are infected with presuppositions of the modeler.  Sir Arthur Conan Doyle famously quipped, “Insensibly one begins to twist facts to suit theories, instead of theories to suit facts”.

And maybe it’s something else. Maybe incomes in certain parts of the country have gone up so much that it counteracts the areas that have lost income and overall allows the Federal Reserve to report increased DPIs.  That may explain why certain area’s median incomes are down this year according to HUD.

I have yet to see this mentioned in the mainstream press.  But we will keep looking, hoping to make some sense of this.

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