Last Week in Review: Historic news out of Europe, plus Stocks make history.

Forecast for the Week: The Fed meets, and Friday brings big Job news-will the numbers give the markets a scare?

View: Changes are coming to the Home Affordable Refinance Program. Find out what this means for homeowners.

Trick or treat? Last week, there was big news out of Europe, as an agreement was reached to help keep Greece from going into default. But will this deal mean a frightful time is ahead for Bonds and home loan rates? Read on for more details.

On Thursday, the world was cheering on the news that a deal in Europe was reached, with private banks and other holders of Greek debt accepting a 50% haircut on their principal investment. Once the write down takes place, Banks who are holding Greek debt will have to recapitalize themselves by year-end, and government support will be available to fill voids that private money won't fill. In addition, the Economic Financial Stability Facility (EFSF) rescue fund, which currently has $443 Billion in holdings, will be expanded and leveraged to $1 Trillion Euros or $1.4 Trillion US Dollars.

So the agreement is together…but like any effective plan, it now has to be put into action. And as this rolls out, the financial markets will be watching every step. When the sentiment is positive, like it was the day the plan was announced, Stock markets could benefit as investors would seek to take advantage of gains.

In fact, the Stock markets are set to have their biggest monthly gains on record as October comes to an end. The closely watched S&P 500 Index is up 13.5% for the largest increase since October of 1974, while the Dow Jones advance of 12% is the biggest gain since January of 1987. Optimism surrounding the European crisis, positive economic data and better than expected earnings reports have fueled the rally.

So what does all of this mean for Bonds and home loan rates? The deal that was reached in Europe is historic, and good news for the world's economies overall. However, the plan has yet to be put into action-and then it has to work. And if there are hiccups or issues along the way, Bonds and home loan rates could benefit with some renewed safe haven trading. We saw a little of that late last week, when Friday's less than stellar Italian Bond auction reminded the world that the European debt crisis is not yet entirely resolved.

The most important thing to keep in mind is that now remains a great time to purchase or refinance a home, as home loan rates are still near historic lows. Let me know if I can answer any questions at all for you or your clients.

The President's New Plan for Homeowners

You may have heard that President Obama plans to open up refinancing to more homeowners who are underwater. If you've been hearing questions about this program or are just curious about what the plan involves, here are some of the major highlights:

What's Really New?

First, it's important to realize that the president's proposal is not a new program, but a revision to the current Home Affordable Refinance Program (HARP). However there are some big changes that you can let people know if they ask you.

Refinance…No Matter How Underwater

Now homeowners can refinance no matter how underwater they are! Before homeowners could only refinance if they were 25% or less underwater, and even then many banks only let people who were 5% or less underwater refinance.

No Appraisal Necessary?

With the program's revision, it's possible that an appraisal won't have to be performed. That's great news because it can help people save time and money. But this is only the case if Fannie Mae or Freddie Mac can electronically estimate the value through their valuation models.

But Keep in Mind

These updates to HARP apply only to people whose mortgage is currently secured by Fannie Mae or Freddie Mac...and whose loan was securitized by Fannie Mae or Freddie Mac prior to May 31, 2009. So the chances are that people who have refinanced since May 2009 will not qualify to refinance under the HARP revision.

What's Next?

As of now, the revisions to HARP have been proposed by President Obama and the Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac. This directive has been given to Fannie Mae and Freddie Mac, and they now have until November 15, 2011 to give guidance and details regarding how these changes will be run.

If you or someone you know has a question about what these changes mean, call or email me anytime. I'm always happy to help.

Economic Calendar for the Week of October 31 - November 04