“My Mom said she learned how to swim when someone took her out in the lake and threw her off the boat. I said, ‘Mom, they weren’t trying to teach you how to swim.'”
Rates dropped and mortgage prices improved yesterday after it was announced that US Home Prices Fell by 3.2% (sales dropped and mortgage lenders made it tougher to get a loan), the Conference Board’s Consumer Confidence level dropped from 112 to 105 in August, and the release of the FOMC minutes showed that the Fed was concerned about credit issues. Although A-paper mortgage prices did not keep up with the improvement in Treasury securities, they still improved a little. Speaking of Treasury securities, they will be selling $18 billion of 2-yr’s today and have a 5-yr auction tomorrow.
Given the current inventory of homes, there is almost (on average) a 10 month nationwide supply of homes on the market at the current sales pace. (A supply of about six months generally indicates a balanced market.) On the lending side, most analysts believe that the mortgage lending business will never be the same and that home buyers will likely never see credit quality “overlooked”. Those lenders that survive, from small brokers to the largest accumulators, will be restructured and succeed. By some estimates 60% of small mortgage brokers that existed in 2006 will vanish. Wholesalers will severely tighten requirements for approval of mortgage brokers, and most surviving brokers will have to increase their financial worth.
Indymac, the second- biggest U.S. independent home lender, is hiring as many as 850 former employees of bankrupt American Home Mortgage in a push to loan more through retail operations. It hired 600 workers and is in discussions with 250 more. Indymac said it will also assume the leases on more than 90 offices where the employees worked, in spite of Indy eliminating 400 back-office processing jobs last month.
LandAmerica Financial Group (Richmond, Virginia) said it was cutting 1,100 title insuring jobs.
CIT closed their Home Lending Division yesterday, although they said that “We are honoring the current pipeline, these are loans that have been uploaded as of August 27, 2007. These loans must be funded by the approval expiration date or in the next 30 days whichever comes first.”
Homecomings Financial, a GMAC company, “temporarily” suspended its whole loan purchase and table-funding programs effective end of day August 24, 2007. All new loan submissions and loans currently in the pipeline are subject to current program guidelines and pricing.
In an interesting move, CSFB fixed their ARM margins. “Please note that the option to Buy Up or Buy Down the margin no longer exists. Margins on Alt-A ARM products are currently fixed at 2.250. The “Margin Option” field on the website still allows the user to select “Use Max” or “Use Provided”, however the max margin will be fixed at 2.250 and any value other than 2.250 will fail.”
Tired of constantly being broke and stuck in an unhappy marriage, a young husband decided to solve both problems by taking out a large insurance policy on his wife, with himself as the beneficiary, and arranging to have her killed. A ‘friend of a friend’ put him in touch with an underworld figure who went by the name of “Artie”. Artie explained to the husband that his going price for snuffing out a spouse was $5,000. The husband said he was willing to pay that amount, but that he wouldn’t have any cash on hand until he could collect his wife’s insurance money. Artie insisted on being paid something up front. The man opened his wallet, displaying the single dollar bill that rested inside. Artie sighed, rolled his eyes, and reluctantly agreed to accept the dollar as down payment for the dirty deed.
A few days later, Artie followed the man’s wife to the local Super Wal-Mart store. There, he surprised her and proceeded to strangle her with his gloved hands. Unfortunately the manager of the produce department stumbled unexpectedly onto the scene. Unwilling to leave any witnesses behind, Artie had no choice but to strangle the produce manager as well.
Unknown to Artie, the entire proceedings were captured by hidden cameras and observed by the store’s security guard, who immediately called the police and Artie was arrested. Artie revealed the sordid plan, including his financial arrangements with the hapless husband. The next day in the newspaper, the headline declared…
“ARTIE CHOKES TWO FOR A DOLLAR AT WAL MART”
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