Money Market Recap and Forecast

MMRecap for November 24th Last week we had a marathon of 17 economic reports released. Monday kicked off with November’s New York Empire State Manufacturing index. The index rose to 10.2. Not bad, considering that the previous report came in at 6.2. Twin reports, industrial production and capacity utilization, both disappointed. Production fell 0.1% from the +0.8% from the prior report, while capacity utilization edged down to 78.9% from 79.2. When the markets closed, results were mixed, with no big winners or losers. The yield on the 10-year note rose 2 basis points to close at 2.34%. On Tuesday the producer price index came out, and we actually saw some movement in October. It rose 0.2% from -0.1% in September. The PPI core, which eliminates food and energy prices, also moved up to 0.4% from 0.0%. The final report came from the NAHB; its index jumped to 58 from 54 in October. That was good news. Wednesday was a relatively calm day, as only two reports were published -- building permits and housing starts for October. Housing starts fell to an annual rate of 1009K, likely weather-related. This was down from the 1038K starts in September. Building permits had a more impressive result, as they jumped to an annual rate of 1080K -- an increase of 49,000 units from September. There were no expectations regarding Wednesday’s FOMC meeting, but it sounded like it might have gotten a little dicey. The whole idea behind QE2 was to lower interest rates as well as lowering the percentage of unemployed. Low interest rates did perk up the economy, but the unemployment rate has a ways to go, and some FOMC members seem to feel the cut off was premature. Either way, the Fed will make rate hikes in the future -- likely beginning in 2015. Thursday featured seven reports, all close to predictions. First-time jobless claims for the week ended Nov.15 led off at 291K, 2,000 fewer claims than the previous week. Continuing claims fell by 73K to come in at 2330K for the week ended November 8. Consumer price indices for October followed. The bare-bones CPI dipped to 0% from 0.1% in September. Meanwhile, the core CPI, which eliminates food and gas prices, edged up 0.2% from 0.1% the previous month. Still no inflation worries here! The next report showed existing home sales jumping to a higher-than-expected annual rate of 5.26M units in October; that’s 80,000 homes sold. If the Philly Fed Index was like any other report, it would have set the markets on fire. It is an important report concerning manufacturing in the eastern seaboard area, but it’s not in the same class as Chicago, for instance. However, in November the index rose to 40.8 from 20.7. This is a very notable increase which shows that manufacturers are humming along. This is a good sign for the economy. The final report for the week was leading economic indicators for October. It rose to 0.9% from 0.7%, but it has zero impact on the market. There were no economic reports issued Friday, but there was news that sent stocks to record highs, again. The feared recession in Japan is now a reality, but a surprise rate cut by China’s central bank, the first in more than two years, sent the European markets up; the U.S. markets followed. Despite the short Thanksgiving week, there are several reports being released. No reports come out today, and tomorrow we have just a few, starting with the second estimate of the Q3 GDP. The markets expect that report to come in at 3.3%, while the briefing forecasters are thinking more along the line of 3.0%. This compares with the 3.5% reported from the prior report issue. Next in line is the Case-Shiller 20 city index for September. The prognosticators are expecting a slight downturn in this number to anywhere between 4.2% and 4.6% compared with the 5.6% that was reported previously. We also get the consumer confidence report, which is looking good right now. The report is expected to show our confidence level rising to 96.0 in November, up from 94.5 from October. Wednesday we’ll get some reports that normally come out on Thursday, in addition to Wednesday’s reports. We’ll start the day with the initial and the continuing jobless claims reports. Initial claims are expected to go down, a result of temporary employment during the holiday shopping season. It is anticipated that initial claims will be at 285K for the week ended November 22, down from the 291K the week before. Continuing claims may go up to 2350K for the week ended on November 15, compared to the 2330K the week prior. The durable orders report for October is next. A 0.7% decrease is expected. This follows a 1.3% decrease in September, so it’s a little bit better. The durable goods ex-transportation report follows and is expected to show an increase to 0.3%, which is better than the -0.2% decrease from the previous report. The personal income report for October looks like we might be making a little more money. The forecasters are predicting this number to rise between 0.4% and 0.5%, compared to 0.2% from the prior statement. Personal spending is also predicted to be on the upswing, showing that we might be spending as much as 3% more in October. The Chicago PMI report comes out next and covers November. This report might be a little less than the previous report, coming in around 65.0 compared with the 66.2. Continuing on Wednesday, the final University of Michigan sentiment report for November is released. Only minor changes are expected, as the report might come in at 90.5 versus the 89.4 on the previous report. The next announcement is on new home sales for October. There’s a huge discrepancy in predictions from the “experts.” The markets are anticipating an increase to 469K over the 467K from September, while the briefing forecasters are predicting a major decrease to 450K new homes sold. It’ll be interesting to see the actual result here. Pending home sales also demonstrate another discrepancy between forecasters. The markets would like to see pending home sales up by 0.8% while the briefing guys are thinking more like 0.5%. Still, these numbers are an improvement from the 0.3% last reported. We want to wish all of you a Happy Thanksgiving. Be safe!

By Appointment: 7150 E Camelback Rd., Ste 444 Scottsdale, AZ 85251 taum@marketlinemortgage.com www.marketlinemortgage.com P: 480-967-8286 C: 480-797-4898 TF: 877-967-8286 F: 866-699-1939 BK#0911893 NMLS#1842 #3950 OR LO#51267

Realtors' Lender of Choice!

Copyright 2008 The Daily Communicator

MMRecap for November 3rd Last Monday was a relatively quiet day, with only September pending home sales released. They rose 0.3%, which was better than the previous -1.0% decline; it was, however, far short of expectations, which ranged from 0.5% to 1.0%. Although the Dow gained 12.53 points, that was about as good as it got. The Nasdaq closed up 2.22 points, and the S&P 500 fell 2.95 points. The 10-year Treasury slid to 2.27%. Tuesday gave us the report on durable goods; it came in far better than the previous report of -18.3%. This report showed durable goods down only by -1.3%, a disappointing number when compared to the hopes of the forecasters that durable goods sales would improve by 0.5% or 0.6%. Orders for durable goods ex-transportation fell -0.2% on this report, far lower than the 0.7% from the prior report. Case-Shiller reported that home sale prices rose 5.6% for the month of August. This was slightly down from the 6.7% rise in prices from July. We also had the consumer confidence report for October that came out Tuesday. Good news here! The report showed an increase in consumer confidence with a score of 94.5. This was a nice jump from 89.0. All this good news had a positive effect on the markets as the Dow rose 187.81 points, or 1.12%, the Nasdaq gained 78.36 points, or 1.75%, and the S&P 500 closed up 23.42 points, or 1.19%. The 10-year yield rose 3 basis points to finish the day at 2.30%. Wednesday morning the Fed announced that QE3 was finished, done, over with! That was the only report that counted, and the markets reacted a bit, but nothing drastic. When the markets closed, the Dow was down 31.44 points, the Nasdaq closed at -15.07 points and the S&P 500 slipped slightly, closing at -2.75 points. The 10-year yield rose 4 basis points to end the day at 2.34%. On Thursday we had the usual reports on initial and continuing jobless figures, as well as the GDP report. Initial jobless claims came in at 287K -- 3000 more new claims than the week before. Continuing claims, those receiving unemployment benefits for a second or more weeks, also went up, and the results for the week ended October 18 came in at 2384K, compared with 2355K the prior report. The GDP report for Q3 was disappointing as the economy only grew 3.5%. This was better than had been forecasted but down from the 4.6% from the previous quarter. This news didn’t seem to affect the markets much, as all of the indices were up for the day. When the bell rang on Thursday, the Dow was up 221.11 points, or 1.30%, the Nasdaq rose 16.91 points, or 0.37% and the S&P 500 went up 12.35 points, or 0.62%. The 10-year yield dropped 2 basis points to close at 2.32%. Friday was a busy day in spite of it being Halloween. Lots of reports came out to end the month. The first report was on personal income for the month of September. Although it was up by 0.2%, that was less than the expected amount of 0.3%. Not a big deal. On the other hand, personal spending took a dip to -0.2%, after a +0.5% increase in August. So apparently the people who went out and spent some of their income in August took a breather in September. No surprise on the PCE report, which came in as expected for September and remained at 0.1%. The employment cost index for Q3 held at 0.7%. This has been constant for the last two quarters. The Chicago PMI had good news and reported an increase to 66.2 for October. This is up from the 60.5 reported for September. Finally, the month ended with the Michigan sentiment report for October. More good news, as the report inched up to 86.9 from 86.4. Though not earth-shaking, an increase in confidence is always a welcomed sign. The markets were happy last Friday, and all of the indices ended up. The Dow closed up 195.10 points, or 1.13%. Nasdaq closed up 64.60 points, or 1.41%, and the S&P 500 closed up 23.40 points, or 1.17%. The 10-year yield rose 3 basis points to close the week at 2.35%. According to the MBA, mortgage applications for the week ended October 24th decreased by 6.6% on a seasonally adjusted basis from the previous week. Refinance applications also decreased by 7% from the prior week. The refinance share of mortgage activity remained unchanged at 65% of total loan applications. The average contract for a conforming 30-year fixed rate mortgage increased to 4.13% from 4.10%. Although Halloween is over, we have another scary week coming up, as there are 16 reports scheduled. Some of these reports are market movers, some aren’t. Today’s first report is the ISM index, a look at manufacturing in the U.S. during October. It had previously dipped to 55.7 from 56.6. That will be followed by the report on construction spending in September, which already made a good recovery from August, rising 0.7% vs. 0.8% the previous month. On Tuesday we get a peek at the trade balance, which had been edging down in an effort to reduce the $40.1B deficit. It was slowing a bit, but the last couple of months it has returned to its evil ways, and that is expected to continue. The next report is factory orders for September which are predicted to drop -0.5%; but that’s a lot better than the August report of -10.1%. Because the employment numbers come in on Thursday, the ADP employment change report for October will be released Wednesday, along with the October ISM index on the service sector. This is a far less important report than the manufacturing ISM. Neither one of these reports generally affect the markets much. On Thursday we have the initial and the continuing jobless claims reports. Thursday’s final report will be on Q3 productivity and unit labor costs. Last month the productivity level came in at 2.3%. The analysts are predicting this report to show only about 1.5%. The unit labor cost is expected to go up to 0.9% from the previous -0.1%. Friday is the biggie, with the unemployment report for October to be released. Unemployment dropped below 6.0% (actually it came in at 5.9%) in September for the first time since July, 2008. It is expected to stay about the same. Next up is the nonfarm payrolls report, and the analysts are divided about their predictions. Some believe the figure will come in at about 235K, while the other group is betting on 275K. The previous report indicated 248K jobs in the nonfarm payrolls. That wraps it up for this week.

By Appointment: 7150 E Camelback Rd., Ste 444 Scottsdale, AZ 85251 taum@marketlinemortgage.com www.marketlinemortgage.com P: 480-967-8286 C: 480-797-4898 TF: 877-967-8286 F: 866-699-1939 BK#0911893 NMLS#1842 #3950 OR LO#51267

Realtors' Lender of Choice!

Copyright 2008 The Daily Communicator

Real Estate Regrets: 80 Percent of Homebuyers Want a Do-Over

Every house-hunter has a wish list, and every homeowner probably has a “wish I researched” list. In fact, 80 percent of homebuyers have at least one major regret about their new home, according to a recent HSH.com survey of 2,000 U.S. adults at least 25 years old. Only 20 percent of respondents said they had no regrets about their home.

Among the most common regrets: Nearly 16 percent said their home was too small. More than 9 percent said their home didn't have enough storage or closet space. Smaller percentages weren't happy with their neighbors or school system or felt their home had too few bathrooms, a too-small yard, not enough natural light or too-high maintenance costs. Fewer than 3 percent said their home was too big.

Most people know they'll have to give up something they want, says Bunni Longwell, a Realtor at Keller Williams Realty St Pete in St. Petersburg, Florida. "Everybody's wish list is 'I want a pool, I want 2,500 square feet, I want to be on the waterfront and I want to pay $100,000.' If we can't find all those things, what would you sacrifice?" Longwell says.

The few buyers who seemed to get everything they wanted apparently were willing and able to pay more to achieve that goal. Rather than sacrifice any major item on their list, they're willing "to come up on their price if 98 percent of their wish list is covered," Longwell says.

Future needs

Buyers' regrets don't always surface right away, adds Jake Russell, a Realtor with Keller Williams Realty in Waco, Texas. Only later do buyers figure out their once-adequate home is too large or too small for their family, which might include an aging parent moving in or an adult child moving out. "People don't think about what they'll need three or five years down the road," Russell says. Other issues come up, too. "People don't buy a master bath with enough amenities or a kitchen with enough storage. Those are the type of thing that, until you live in a home, you don't realize," Russell says.

Daily regrets

For some buyers, regrets are just a minor annoyance. For others, however, they're a significant irritation. Nearly 36 percent of survey respondents who expressed regrets said they thought about their disappointment only occasionally. But more than 37 percent thought about their regret frequently, and almost 22 percent thought about it every day.

Buyers can avoid some regrets by spending more time inside for-sale homes, says Ken Pozek, a Realtor with Keller Williams Realty in Northville, Michigan. "You can only see so much online. You have to touch it and feel it," he says.

Research matters

Buyers' regrets typically weren't directly due to inadequate research. Yet in some cases, more research might have helped. More than 60 percent of survey respondents said they researched local schools, property taxes, commuting distances, home insurance costs or characteristics of neighborhoods or neighbors. But large proportions admitted they'd overlooked factors they later wished they'd reviewed more carefully, though 10-14 percent said one or more issues wasn't relevant to their situation.

The HSH.com survey found:

25 percent of homebuyers wished they had researched their new neighborhood or neighbors.

22 percent wished they'd researched homeowner insurance costs.

More than 20 percent wished they'd researched property taxes.

14 percent wished they'd researched local schools.

Resale regrets

Almost 47 percent of survey respondents said they'd researched sex offender registries. But another 30 percent said they didn't research that information and later wished they had.

While that information might not seem immediately relevant -- 23 percent of the buyers said it didn't apply to them -- it can become be important later on.

"It's a terrible thing for a child predator to be in your neighborhood," Russell says. "If you have kids, it's beyond terrible. Some people are at a time in their life when it's bad, but (they decide to purchase the home anyway). When they want to sell, everyone who wants to buy has kids, so it's no deal."

Local factors

Homeowners also manage to overlook research related to specific local concerns. Longwell cites flood insurance as an example. "In Florida, we have homeowner insurance and flood insurance," she explains. "That's completely off the radar when buyers look at areas. They've done research. They know where they want to live. Then the Realtor tells them they have to add $150 a month for flood insurance, and they say they never thought of that."

By: Marcie Geffner, www.hsh.com

Housing More Affordable Than Ever - Bidding Wars Again

The National Association of Realtors says housing is more affordable than ever.  Its measure of housing affordability reached an all-time high last quarter, as prices, mortgage rates and family incomes converged.


At the same time, bidding wars are becoming more common in Phoenix, and driving up prices.


The real estate agent's trade group says the only thing missing from the equation is a return to normal lending standards.
NAR bases its index on median housing prices, median family incomes and average mortgage interest rates and says with a median income of just under $61,000, a buyer could afford a home costing $325,000 in the first quarter, more than double the national median existing single-family home price of $158,000.
The median mortgage payment for a median priced home would take just 13.5 percent of gross income.

NAR predicts home prices and mortgage rates will rise this year, but it says housing affordability will remain favorable, with its housing affordability index likely to hit an annual record in 2012.
Jeff Clabaugh covers general assignment and provides business coverage for WTOP.

Refinance Faster, Lower Rates using Small Lenders (Like Marketline Mortgage!)

Large Banks Clogged!

70 Days on Average for Refinancing vs. Local Small Lenders Averaging 21 - 30 Days

When Craig Foyer called Bank of America Corp. BAC -1.95% in March to ask about refinancing the mortgage on his Oconomowoc, Wis., home, a saleswoman told him the company was "swamped with business" and that it would call him back in 60 to 90 days, he says.

"That doesn't do much for someone interested in the market right now," said Mr. Foyer, 46 years old, who works in software development.

Clogged mortgage pipelines have created headaches for hundreds of thousands of Americans trying to take advantage of low mortgage rates, which averaged 4.05% for the week ending April 27, according to the Mortgage Bankers Association.

Those rates have helped thousands of Americans free up cash or retire debt. On average, borrowers that refinanced during the first quarter of 2012 reduced their first-year interest payments by $2,900, according to mortgage-finance giant Freddie Mac. Overall, refinancing over the past three years has unlocked savings worth $46 billion in their first year, according to Moody's Analytics.

Clogged mortgage pipelines have created headaches for hundreds of thousands of Americans trying to take advantage of low mortgage rates, Ruth Simon reports on Markets Hub. (Photo: Joe Raedle/Getty Images)

But considering how far mortgage rates have dropped, the refinancing burst has been lackluster by historical standards. A surge in demand has come at a time when fewer banks control a larger share of the mortgage market than they did before the financial crisis. Banks also are being more careful about whom they lend money to and how they process loans. It now takes the nation's biggest mortgage lenders an average of more than 70 days to complete a refinance, according to Accenture Credit Services, up from 45 days a year ago.

There is another factor. Amid reduced competition, some large lenders have boosted their rates in a bid to hold down volumes while bolstering profits. That limits the savings for many applicants.

In March, Mark Morrison says he was offered a 4.63% rate by his mortgage company, Ally Financial Inc., when he asked about refinancing. That would have resulted in monthly savings of just $87, before figuring in $1,500 in upfront fees. Rates that week were being quoted at 4.13% in the local newspaper, and the Waukesha, Wis., resident says he "got the runaround" when he asked why his mortgage company couldn't offer him a more competitive rate. An Ally spokeswoman declined to comment.

After shopping around, Mr. Morrison locked in that lower rate with a smaller lender. Accunet Mortgage in Butler, Wis., also offered to pay closing costs, providing Mr. Morrison a monthly savings of $167. He closed on the loan last month after a wait of about three weeks. "It really is a rat's maze for the consumer," says Brian Wickert, Accunet's president. The bigger banks, he says, "have enough people saying 'yes' to those offers that they're taking super-high profit margins."

Bank of America mortgage services representatives help register people looking for help with their mortgages during the Help for Homeowners Community Event in Miami in February.

While it is taking lenders of all sizes longer to process loans today, some smaller, more nimble mortgage lenders are turning around loans more quickly because they quickly staffed up or never cut back.

The housing bust wiped away $7 trillion in household equity, leaving many homeowners with too much debt to qualify for new loans. But the mortgage sector's limitations are further undermining the Federal Reserve's effort to boost the economy by holding short-term interest rates near zero.

Normally during a downturn, refinancing activity "really gets the economy going, and it isn't happening right now," says Alan Boyce, a bond-market veteran who runs Absalon, a company backed by billionaire financier George Soros that is pushing to change how U.S. mortgages are financed.

While refinancings from the drop in interest rates since 2009 have produced $46 billion in savings, Mr. Boyce estimated last year that in a normal market, refinancing could have generated an additional $67 billion in annual savings.

Part of the reason is that lenders are being more cautious in the wake of the financial crisis. The two government-controlled mortgage companies, Fannie Mae and Freddie Mac, have added new requirements designed to improve loan quality for all mortgages. Appraisal packages, for instance, must now include a photograph of bathroom toilets as proof the house actually has a bathroom.

Demand for refinancing also has surged in recent months amid a push by the Obama administration to make it easier for homeowners with loans backed by Fannie Mae and Freddie Mac to refinance, even if they don't have any equity in their homes or strong credit. That initiative, called the Home Affordable Refinance Program, has accounted for as much as one-third of refinance applications in recent weeks, according to the Mortgage Bankers Association.

“The housing bust wiped away $7 trillion in household equity, leaving many homeowners with too much debt to qualify for new loans. But the difficulties in refinancing are further undermining the Fed's effort to boost the economy.”

President Barack Obama is set to renew a legislative push to enable refinancing for underwater borrowers, or those who owe more than their homes are worth, whose loans aren't backed by Fannie and Freddie during a visit to Reno, Nev., on Friday, according to a White House official.

In the past, mortgage companies relied on independent mortgage brokers to help pick up some of the added demand when refinancing spiked. But mortgage brokers now account for less than 10% of originations, down from roughly 31% in 2005, according to Inside Mortgage Finance. The shakeout helped rid the industry of brokers who were making questionable loans, resulting in sounder lending. But it also means there are fewer places for borrowers to turn to find the lowest rates.

"You have more loans going through a pipeline that is too small," says Terry Moore, global managing director of Accenture Credit Services, which provides consulting and mortgage-processing services to banks.

The nation's four largest banks now account for 55% of all loan originations, up from 38% in 2004.

Wells Fargo WFC +0.36%& Co., the nation's largest mortgage lender; third-ranked Citigroup C -4.24%Inc.; and fourth-ranked Bank of America now routinely advise borrowers to expect refinances to take as long as 90 days. Wells Fargo and Citigroup say they are generally picking up the extra cost of locking in the rate for the longer-than-normal period so that customers are protected if rates rise. Wells Fargo says it has also added staff in response to higher loan volumes.

J.P. Morgan Chase JPM -9.28%& Co., the country's second-largest mortgage lender, says it is telling borrowers to generally expect their refinances to close within 45 to 60 days. The bank says it hired more than 1,100 new employees to handle mortgage originations in late 2011 and continues to hire loan officers, underwriters and processors.

Citigroup has been adding staff and streamlining its processes in an effort to cut its average refinance time from 77 days to less than 50 days, says CitiMortgage chief executive Sanjiv Das.

Bank of America says beginning in April it no longer put customers like Mr. Foyer on a wait list because it has added 500 employees to handle the latest surge in business. Delays are "vastly improving" from late last year, when a drop in rates caught much of the industry by surprise, said Matt Vernon, who heads retail sales for Bank of America Home Loans.

Mr. Foyer ultimately settled on a no-cost refinance with a local mortgage bank for a 3.5% rate on a 15-year mortgage, down from the 4.3% rate on the previous 20-year loan. Mr. Foyer estimates it will save him about $12,000 over the life of the loan. He closed on the loan in April some three weeks after he applied.

Before the mortgage crisis, the spread between the rate lenders paid investors and the rate they charged borrowers averaged around 0.5 percentage point. But that gap has nearly doubled since 2009.

At U.S. Bancorp, USB +0.94%mortgage-banking revenue more than doubled during the first quarter from the year-earlier period to $452 million in the first three months of 2012. "It is just a function of supply and demand in the current market and that gives us some pricing opportunity," said Andy Cecere, the bank's chief financial officer on a call with analysts in April.

The mortgage industry has long suffered from boom and busts, with loan processing times increasing as refinancings climb. That is being compounded today by the fallout from the mortgage bust.

Lenders have become far more cautious about making new loans because they may have to repurchase bad loans from mortgage giants Fannie and Freddie. The government-controlled firms can force banks to buy back mortgages that run afoul of underwriting rules, and they have stepped up those demands in the aftermath of the mortgage bust.

Fannie asked banks to buy back $24 billion in defaulted mortgages last year, up from $13 billion in 2010. The company didn't report data on repurchases before the crisis, when they were viewed as a minor nuisance.

Lenders have responded to buyback pressures by scrutinizing anything that could be used to justify a costly loan repurchase. CitiMortgage, for instance, now triple-checks borrower income and assets and the appraisals used to determine a property's value.

The normal gridlock can be exacerbated if the borrower is self-employed or if the appraisal comes in lower than expected. A disputed appraisal value spawned Amy Sperrazza's six-month battle before securing a 3.75% fixed rate for her Dawsonville, Ga., home in February.

"It was one thing after another," says Ms. Sperrazza, who began the refinance process last August. She and her husband both are employed and have good credit, but they spent months haggling over the appraisal, which valued the home using the sale of foreclosed properties from a different county.

By NICK TIMIRAOS And RUTH SIMON
—Robin Sidel contributed to this article.

Marketline Mortgage: Preview "Refinance Faster, Lower Rates using Small Lenders (Like Marketline Mortgage!)"

Marketline Mortgage: Preview "Refinance Faster, Lower Rates using Small Lenders (Like Marketline Mortgage!)"

Social Security Number Process Change

The Social Security Administration (SSA) is changing the way Social Security Numbers (SSNs) are issued. This change is referred to as "randomization." The SSA is developing this new method to help protect the integrity of the SSN. SSN Randomization will also extend the longevity of the nine-digit SSN nationwide.

The SSA began assigning the nine-digit SSN in 1936 for the purpose of tracking workers' earnings over the course of their lifetimes to pay benefits. Since its inception, the SSN has always been comprised of the three-digit area number, followed by the two-digit group number, and ending with the four-digit serial number. Since 1972, the SSA has issued Social Security cards centrally and the area number reflects the state, as determined by the ZIP code in the mailing address of the application.

There are approximately 420 million numbers available for assignment. However, the current SSN assignment process limits the number of SSNs that are available for issuance to individuals by each state. Changing the assignment methodology will extend the longevity of the nine digit SSN in all states. On July 3, 2007, the SSA published its intent to randomize the nine-digit SSN in the Federal Register Notice, Protecting the Integrity of Social Security Numbers [Docket No. SSA 2007-0046].

1. 
   SSN randomization will affect the SSN assignment process in the following ways:
   It will eliminate the geographical significance of the first three digits of the SSN, currently referred to as the area number, by no longer allocating the area numbers for assignment to individuals in specific states.


2. 
   It will eliminate the significance of the highest group number and, as a result, the High Group List will be frozen in time and can be used for validation of SSNs issued prior to the randomization implementation date.


3. 
   Previously unassigned area numbers will be introduced for assignment excluding area numbers 000, 666 and 900-999.

These changes to the SSN may require systems and/or business process updates to accommodate SSN randomization.If you have any questions regarding SSN randomization or its possible effects to you or your organization, please see the related Frequently Asked Questions or email your question(s) to ssn.randomization@ssa.gov