Aug. 27, 2007: With Labor Day in our sight with the 10-yr at 4.61% and some humor

One originator wrote to me and said, “Everyone asks me why I am gaining weight and I tell them that I bring a bag of marshmallows into work every day and roast them at the bonfire of the mortgage companies.” Another wrote, “I thought I would share something with you that truly reflects how difficult loans are in this market.  A short while ago we got an approval on a loan that has been to three lenders over 4 weeks.  It had an approval reneged the night before closing as well. I received the following message from the LO when the approval came in…’Hallelujah, praise Jesus!’ Now, that is just how high up the underwriting chain of command we had to go!”

CitiMortgage is rumored to be making positive changes to their DU SISA product to include LP, along with expanding their I/O offerings.

HSBC announced that “due to current market conditions, effective immediately, HSBC  is implementing the following changes to our Alt A Fixed Rate and Fixed Term ARMs: Effective immediately, any registrations not locked (floating) where HSBC has not received a loan package will no longer be accepted, loans registered and locked will be honored to the lock expiration date but lock extensions will not be granted, and all loan packages must be received no less than 10 business days prior to the lock expiration date.

Bank of America continues to “evaluate market conditions to determine necessary changes and improvements to help our products fit an ever-changing environment. As a result, they will be making changes to their “Expanded Criteria Products” – all Expanded Criteria products will be suspended until further notice.  Expanded Criteria products include, but are not limited to, Stated Income/Stated Asset, Stated Income/Verified Asset, No Income/No Asset, No Ratio and 80/20. All Expanded Criteria pipeline applications must be locked by end of day Friday, August 24th.”

What is happening with the Fed and interest rates? What happens if rates are cut and the desired effect doesn’t happen? Will they cut again? And again? And yet again – like Japan a few years ago? The recent cut boosted everybody’s morale and helped stabilize the mortgage and housing markets, along with the stock market. But there’s no guarantee it’ll solve the liquidity problems, help subprime borrowers keep their homes or make the economic world better for everybody. Many believe that Federal Reserve policy makers’ uncertainty over the credit crunch’s toll on U.S. growth is making them increasingly unlikely to cut interest rates before their Sept. 18 meeting. Fed officials are gathering anecdotes from the dozen district banks to assess economic conditions, since policy makers expect to learn little from government reports on the economy before the collapse in securities backed by subprime mortgages. (If you study the Japanese economy during the 90’s you will see that they dropped their rates to 0% to try to stimulate the economy, but it didn’t work, mostly because there had to be an incentive for taking on the risk of assets in that environment at that time.

Four married guys go fishing. After an hour, the first guy says, “You have no idea what I had to do to be able to come out fishing this weekend.  I had to promise my wife that I will paint every room in the house next weekend.”

The second guy says: “That is nothing, I had to promise my wife that I will build her a new deck for the new pool.”

The third guy says: “Man, you both have it easy!  I had to promise my wife that I would remodel the kitchen for her.”

They continue to fish when they realize that the fourth guy has not said a word. So they asked him.  “You haven’t said anything about what you had to do to be able to come fishing this weekend.  What’s the deal?”

The fourth guy said: “I just set my alarm for 5:30 am.  When it went off , I shut off the alarm, gave the wife a nudge and said, “Fishing or s*#” and she said, “Wear sun-block.”

Week of August 27 – August 31