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  • Thu, Dec 4 2008
  • 5:02 PM » Mortgage Refinancings Soar
    Published Thu, Dec 04 2008 5:02 PM by The Big Picture
    via Merrill Lynch’s Rich Bernstein adds: “The weekly percent change of the Mortgage Bankers Association Index of Applications was the greatest since at least 1990. However, a report last night on National Public Radio might lend some insight behind the numbers. The report suggested that mortgage applications, especially for refinancing, were rising. However, the report noted that the gap between applications and approvals was widening because home values have fallen. Situations in which applicants had extremely high credit scores and were up-to-date on mortgage payments were being denied refinancing without going through the full home appraisal process… If this NPR report is accurate, then it suggests that the stock market has greatly over-reacted to today’s mortgage data. Rather than showing a consumer sector that is ready, willing, and able to purchase a home, it might reflect a consumer sector that is increasingly strapped for cash flow and making multiple applications in hope of being accepted for refinancing. > Source: TARA SIEGEL BERNARD NYT, December 3, 2008 http://www.nytimes.com/2008/12/04/business/04refi.html
    Click Here to Read the Full Article

    Source: The Big Picture
  • 5:02 PM » Frank: More rules on mortgage securitization, CEO pay
    Published Thu, Dec 04 2008 5:02 PM by Market Watch
    A key lawmaker outlines a broad agenda to hike regulations on securitized mortgage products, hedge funds and beef up controls on executive compensation.
  • 5:02 PM » Did Someone Leak Treasury 4.5% Mortgage 'Plan'?
    Published Thu, Dec 04 2008 5:02 PM by CNBC
    Posted By: It’s truly amazing to me that a lobbyist who really needs something from the government would leak just the possibility of that something to the media, when that leakage would only harm their industry. Of course, I’m talking about the Treasury proposal/possibility/plan to buy mortgage debt at a rate that would allow lenders to offer buyers a 4.5 percent interest rate on the 30-year fixed. Topics: | | Sectors: | MEDIA:
  • 4:00 PM » Bernanke on Housing, Mortgage Markets, and Foreclosures
    Published Thu, Dec 04 2008 4:00 PM by Calculated Risk Blog
    From Fed Chairman Ben Bernanke: Home sales and single-family housing starts held unusually steady through the 2001 recession and then rose dramatically over the subsequent four years. National indexes of home prices accelerated significantly over that period, with prices in some metropolitan areas more than doubling over the first half of the decade. One unfortunate consequence of the rapid increases in house prices was that providers of mortgage credit came to view their loans as well-secured by the rising values of their collateral and thus paid less attention to borrowers' ability to repay. However, no real or financial asset can provide an above-normal market return indefinitely, and houses are no exception. When home-price appreciation began to slow in many areas, the consequences of weak underwriting, such as little or no documentation and low required down payments, became apparent. Delinquency rates for subprime mortgages--especially those with adjustable interest rates--began to climb steeply around the middle of 2006. When house prices were rising, higher-risk borrowers who were struggling to make their payments could refinance into more-affordable mortgages. But refinancing became increasingly difficult as many of these households found that they had accumulated little, if any, housing equity. Moreover, lenders tightened standards on higher-risk mortgages as secondary markets for those loans ceased to function. ... As house prices have declined, many borrowers now find themselves "under water" on their mortgages--perhaps as many as 15 to 20 percent by some estimates. In addition, as the economy has slowed and unemployment has risen, more households are finding it difficult to make their mortgage payments. About 4-1/2 percent of all first-lien mortgages are now more than 90 days past due or in foreclosure, and one in ten near-prime mortgages in alt-A pools and more than one in five subprime mortgages are seriously delinquent. Lenders appear to...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:00 PM » How to Buy and Sell Real Estate with ETFs
    Published Thu, Dec 04 2008 4:00 PM by www.moneyandmarkets.com
    Ron Rowland is president of Capital Cities Asset Management, and an expert on mutual funds, ETFs, and sector rotation strategies. As the co-editor of Weiss Research's International ETF Trader service, he has been helping subscribers increase their wealth with exchange-traded funds. And starting today, I've asked him to share some ...
    Click Here to Read the Full Article

    Source: www.moneyandmarkets.com
  • 3:13 PM » Quietly, these programs ease credit crunch
    Published Thu, Dec 04 2008 3:13 PM by CNN
    Treasury's $700 billion bailout has gotten most of the nation's attention, but some of the government's lesser-known programs are doing their part to help ease credit as well.
  • 1:54 PM » Signs of Recovery, Signs of Stupidity
    Published Thu, Dec 04 2008 1:54 PM by feeds.feedburner.com
    On Monday, all of the financial world turned its ears to announcement that the United States is indeed in a recession, confirmed by the National Bureau of Economic Research. Of course, most of us who have followed the state of the economy already knew this, and are likely shaking their fists at the powers that be and the Kool-Aid drinkers, collectively crying “Told you so!” The recession, as many of you are already aware of, began as a result of declining home values, and many analysts have stated that the economy will continue to deflate until the housing markets show signs of recovery. There have already been some positive news bubbling up in the housing market. Mortgage applications increased by a record amount last week, spurred by the Federal Reserve’s announcement that it would purchase mortgage-backed securities, and would be open to making further cuts in prime interest rates. Additionally, sales in some of the country’s most depressed regions have been recovering, including These regions happen to be the wealthiest of wealthy, so as always in real estate, location is everything. Last month in California’s Orange County region (where yours truly spent some of his college years, yes that OC) sales rose 66% year-over-year. That figure is an astonishing jump, something that should have the market cheering. Now, the Treasury is mulling a plan that will push with some help from Fannie and Freddie, after last week announcing that they would be purchasing mortgage-backed securities in an effort to restore liquidity. It’s hard not to be suspicious of plans to artificially inflate a sagging market, especially when it is beginning to show signs of recovery on its own. Artificially low interest rates are what contributed to the boom and bust in the first place. Touting them as a solution seems astoundingly short-sighted, especially when our n, via lines of credit that banks will be reducing or eliminating in order to shore up their balance sheets. Analysts are saying that...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 1:54 PM » Who REALLY Can Benefit From Lower Mortgage Rates?
    Published Thu, Dec 04 2008 1:54 PM by mrmortgage.ml-implode.com
    **NOTE - Mortgage loan officers , we want to hear from you in the comments section. How does this summary compare with what you are seeing in your battle zone? Who can benefit from lower rates? The answer is ‘a small fraction as in the past’. I am already seeing analysts reports come out saying things like ‘if rates drop to 5.25% then 6 million people will be eligible to refi’ and ‘this will save the purchase market and builders’. This in not correct and I will explain why in detail in this post. First, I am glad to see mortgage rates dropping but it would have been nice to see them drop naturally vs artificially as a result of ‘announcements’ and ‘leaks’ from government agencies. I have always said there are only two ways to quickly stabilize housing prices - a) bring back all of the exotic loans lost in 2007 b) gave everyone 300% raises. These are obviously not going to happen but illustrate how much of a jam the housing market is in. The only way to ‘fix’ the housing market with the financing available today is for home prices to drop and for the default crisis to end. Both have to happen fast and at the same time. All of this government interference to date has caused nothing but confusion and negative sentiment towards the sector. Home prices have still collapsed and show no signs of bottoming any time soon. Home prices will get back to their historic relationships with rents and incomes eventually and interventions like this only prolong the pain . The government is trying to control interest rates through talk and selective purchases of mortgage securities that have not kept pace with US Treasuries by any stretch. Real interest rates have been falling yet mortgage rates staying elevated - spreads widening. Last week it was announced that the Fed would buy $100 billion in debt and $500 billion in actual Agency mortgage backed securities. Of course the market assumed this would be done all at once within 24-hours but as we learn more it is a several quarter plan...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 1:54 PM » Treasury thinks about maybe spreading TARP to foreclosures
    Published Thu, Dec 04 2008 1:54 PM by feeds.feedburner.com
    A guest post from , veteran business journalist and author of the blog , a satirical look at marketing and business. Latest news has it that the Treasury Dept. is thinking really hard about maybe using some of the $700 billion from the Troubled Assets Relief Program (TARP)to do something about home foreclosures. Neel Kashkari, who has to administer the Troubled Assets Relief Program, told Senators, “We continue to aggressively examine strategies to mitigate foreclosures and maximize loan modifications.” It is well worth noting that Kashkari offered no actual details as to what this might mean. This doesn’t seem to indicate any change in Henry Paulson’s willingness to consider an FDIC plan to help homeowners. “” Paulson has said that use of TARP money for this would be a misuse of the funds. This is odd given his willingness to spend the money on just about anything except homeowners. On the bright side: He’s only got 47 more days on the job. Fortunately FDIC chair Sheila Bair is in her post through 2011. She does seem to be the only major player in all this concerned with only helping homeowners. And she wants to know how we will get out of all this, too. On Tuesday Bair said that if the government doesn’t devise a way out of its massive financial rescue plan it runs the risk of becoming a crutch for banks and other institutions over the long term. Bair certainly does seem to be leaning towards some sort of plan built around the model. What’s that, you ask? (Nepotism alert: author of the above is Nick von Hoffman, my father.) The BND is a non-profit with very limited services and is not FDIC insured, so it isn’t really a competitor to the commercial banks. It is worth noting that the BND has never in 90 years lost money. In the spirit of bipartisanship — and common sense — why didn’t Bair get a Cabinet post?
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 11:47 AM » Mortgages: Mortgage rates plummet after Fed action
    Published Thu, Dec 04 2008 11:47 AM by Market Watch
    Mortgage rates for fixed-rate loans plummeted this week, after the Federal Reserve's actions to increase liquidity in the mortgage market, Freddie Mac's chief economist says.
  • 9:30 AM » Bank of England Slashes Rates 100 Basis Points
    Published Thu, Dec 04 2008 9:30 AM by The Big Picture
    The Bank of England cut its benchmark rate by one percentage point to 2% — a level not seen since 1951. The Bank of England on Thursday slashed its key lending rate by a full percentage point to 2%, the latest in a series of steps taken by policy makers seeking to minimize the depth and length of a potentially long-lasting recession. The move by the nine-member Monetary Policy Committee follows a decision last month to cut the key lending rate by an unexpectedly large 1.5 percentage points to 3%. But recent economic confidence data offered no sign that the November move helped buoy activity or sentiment across the manufacturing or services sectors, economists noted. And other data and events have only served to deepen the gloom surrounding the outlook for the British economy. The ECB makes their announcement at 7:45am. A half point cut from 3.25% is widely expected. > Sources: William L. Watts, MarketWatch 7:03 a.m. EST Dec. 4, 2008 http://tinyurl.com/5t33ql Jennifer Ryan Bloomberg, Dec. 4 2008 http://www.bloomberg.com/apps/news?pid=20601087&sid=aVX9WZ1IqEKU&
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:29 AM » Is Real Estate Investing Our Best Shot at Wealth?
    Published Thu, Dec 04 2008 9:29 AM by Seeking Alpha
    submits: By Eric Ames Real estate has been a tremendous wealth builder over the years, but now that we are seeing record price falls is it still the best path to wealth? 91 percent of homeowners surveyed by real-estate-services firm Realogy Corp. thought that owning a home was the best long-term investment they could make, according to the . Looking at those numbers, it seems as though people still think that real estate investment is a good road to wealth, but what about the experts?
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:28 AM » Making Credit Rating Agencies Credible
    Published Thu, Dec 04 2008 9:28 AM by feeds.feedburner.com
    The is getting tough on credit rating agencies. A series of measures announced on Wednesday, December 3, would impose additional requirements on the credit reporting agencies in an effort to increase transparency and accountability. Consumers, investors and lenders may even end up getting more meaningful ratings. These comprehensive rules touch every aspect of the credit rating process - from conflicts of interest, to publication of ratings methodologies to disclosure of ratings track records,” explains . The proposed rules are the result of an of the three major credit ratings agencies recently concluded by the SEC. The examination, which lasted 10 months, revealed significant weaknesses in ratings practices. “One of the significant weaknesses in the credit rating process has been that while the credit rating agencies often relied on other to verify the quality of assets underlying structured products - and thus their ratings were vulnerable to reliance on incorrect information - there was frequently inadequate explanation of the limitations of the ratings of these products,” Chairman Cox said. “Just as significantly, conflicts of interest ingrained into the business models of credit rating agencies were amplified as structured products were specifically designed to achieve high ratings for certain tranches and as credit rating agencies sought to gain business and market share by assisting in this process.” This is the second set of reforms proposed by the SEC since June 2007 when Congress granted the Commision the authority to Register and oversee credit rating agencies. The Credit Rating Reform Act ended nearly a century of self-policing by the credit rating agencies who act as financial gatekeepers determining who can borrow funds and at what cost (interest rate). Some would also say that credit ratings have become a means of assessing a person’s or an organization’s trustworthiness and moral character. Credit scoring cannot help but provide a moral context for making...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:27 AM » Wondering how much of your money will go towards “fixing” the problem?
    Published Thu, Dec 04 2008 9:27 AM by feeds.feedburner.com
    A great graph by EconomPicData shows just how much of the cash dolled out by Hank Paulson will actually remain in the system. The bottom line? From the $125 billion handed out to-date to the largest 9 banking institutions a mere $17 billion will go towards recapitalizing the system. The rest? Yup - bonuses and compensation. My head just exploded. From via : It turns out that the nine banks about to be getting a total equity capital injection of $125 billion, courtesy of Phase I of The Bailout Plan, had reserved $108 billion during the first nine months of 2008 in order to pay for compensation and bonuses.
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:26 AM » Paulson Still Doesn’t Understand Housing’s Problems
    Published Thu, Dec 04 2008 9:26 AM by The Big Picture
    Treasury Secretary Hank Paulson once again reveals his appalling misunderstanding of the Housing market and its problems today when he floated his latest idea to “Stem Home-Price Declines.” There are two problems with Housing: Ultra low rates and an abdication of lending standards put 3 - 4 million people in homes they could not afford. The real costs of home ownership have been forcing many of these people to move back into more affordable quarters (i.e., rentals). By just about every measure, home prices remain significantly elevated over historic metrics.And given the chain of sales that accompanies any existing home sale — the starter home/move up home/bigger house/even nice home/downsize retiree — anything that keeps home prices out of reach of the starter and move up buyers damages the entire chain fo purchasers. Excerpt: “The Treasury Department is considering a plan to revitalize the U.S. housing market by reducing mortgage rates for new loans, according to people familiar with the matter. The plan, which is in the development stages, would use mortgage giants Fannie Mae and Freddie Mac to bring loan rates down as low as 4.5%, a full percentage point lower than the prevailing rates for 30-year fixed mortgages. Government officials are under pressure to stem foreclosures, which underpin much of the current financial crisis. Treasury has struggled for months to come up with a plan that would ease the market without appearing to bail out homeowners and lenders. Under the plan, Treasury would buy securities underpinning loans guaranteed by the two mortgage giants, which are temporarily under the control of the government, as well as those guaranteed by the Federal Housing Administration. Fannie and Freddie guarantee a large proportion of all new home loans made in the U.S. Bad idea, Hank. > Sources : Rates Could Be as Low as 4.5% for Newly Issued Loans DEBORAH SOLOMON and DAMIAN PALETTA WSJ, December 3 2008 http://online.wsj.com/article/SB122833771718976731.html...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:25 AM » Capital One offers $520B for Chevy Chase Bank
    Published Thu, Dec 04 2008 9:25 AM by CNN
    Read full story for latest details.
  • 9:25 AM » The Solvent: Housing's Best Hope
    Published Thu, Dec 04 2008 9:25 AM by www.portfolio.com
    If the U.S. Treasury manages to follow through on its plan to push mortgage rates down—as much as a full percentage point—on new home purchases, it would represent a bold move for Hank Paulson’s D.C. bailout boys: They’d actually be helping the solvent. The Wall Street Journal Wednesday afternoon that “the plan, which is in the development stages, would use mortgage giants Fannie Mae and Freddie Mac to bring loan rates down as low as 4.5 percent, a full percentage point lower than the prevailing rates for 30-year fixed mortgages.” The Treasury would buy securities underpinning loans guaranteed by the two mortgage giants as well as those guaranteed by the Federal Housing Administration. While America has grown accustomed to seeing deadbeats from Wall Street and the of Detroit standing in Capitol Hill’s breadline, it’s refreshing that the Treasury’s housing plan targets people who have been prudent and have enough cash for a real down payment with ostensibly enough left over to actually pay their mortgages. As long as the mortgage and banking industries don’t backslide into their free-lending ways, giving buying power to average Americans—as long as they’re not flipping Florida condos—can’t be too bad of a move. There is some , obviously, that Americans so deeply fear losing their jobs, their credit cards, and their 401k balances that lower rates won’t spur any real estate bargain-hunting . Still, as a fine editorial in Wednesday’s Journal , there’s just as much risk in the F.D.I.C.’s proposal to modify existing mortgages and give homeowners a second chance to default. That may cost the Feds $24 billion to start. Not a great proposition. Stabilizing the housing market holds one of the keys to a real recovery in that it helps the flow of capital in the macro-economy while providing a psychological boost to Main Street. Much of the consumer spending boom of the late 1990s was rooted not only in cheap credit but in the confidence Americans had that their homes had value that...
    Click Here to Read the Full Article

    Source: www.portfolio.com
  • 9:25 AM » Lawyers Sought for Foreclosure Prevention
    Published Thu, Dec 04 2008 9:25 AM by Washington Post
    When Maryland's chief judge asked the state's lawyers to come to the aid of homeowners facing foreclosure this summer, hundreds of attorneys across the state stepped forward, agreeing to provide free legal assistance.
    Click Here to Read the Full Article

    Source: Washington Post
  • Wed, Dec 3 2008
  • 6:40 PM » BofA CEO: No "short-term rays of sunshine"
    Published Wed, Dec 03 2008 6:40 PM by Calculated Risk Blog
    From the Charlotte Business Journal: Ken Lewis, CEO at BofA ... said he was hopeful conditions would improve in the second half of next year. He sees no bright spots for the economy before then. “Times are really tough, and we don’t see any short-term rays of sunshine,” he told the more than 600 attendees at the Westin Charlotte hotel. When the panel was asked for advice on how to get through the next six months, Lewis recommended a conservative strategy of hoarding cash and capital and waiting for the storm to pass. “Think of getting through this as the primary objective,” he said. Hoarding cash doesn't sound like lending ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 6:24 PM » Large Inventories of Foreclosed Homes Leading to Bulk Sales
    Published Wed, Dec 03 2008 6:24 PM by www.thetruthaboutmortgage.com
    As the number of foreclosed homes continues to rise, some of the banks and investors that own them are beginning to fiddle with bulk sales in an effort to clear their inventories more quickly, the WSJ reported. Per the article, banks and investors owned 871,000 foreclosed homes as of November 1, up from 414,000 a year [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 6:24 PM » WSJ: Treasury Considers Plan to Lower Mortage Rates to 4.5%
    Published Wed, Dec 03 2008 6:24 PM by Calculated Risk Blog
    From the WSJ: The Treasury Department is considering a plan to revitalize the U.S. housing market by reducing mortgage rates for new home loans ... The plan, which is in the development stages, would use mortgage giants Fannie Mae and Freddie Mac to bring loan rates down as low as 4.5%, a full percentage point lower than the prevailing rates for 30-year fixed mortgages. ... Under the plan, Treasury would buy securities underpinning loans guaranteed by the two mortgage giants... Oh my ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:47 PM » Loan Modification Programs of Limited Benefit to RMBS
    Published Wed, Dec 03 2008 3:47 PM by Seeking Alpha
    submits: Loan modification programs may have a modest positive ratings impact on prime Residential Mortgage-backed Securities, but subprime, Alt-A and Option-ARM RMBS are unlikely to see any significant improvement, according to Standard & Poor’s. Furthermore, loan modifications could encourage more delinquencies, negating any potential benefits. Standard & Poor’s Ratings Services recently conducted a study examining the potential impact of loan modifications on U.S. RMBS. The study examined four 2006-vintage transactions from each product sector that displayed average collateral characteristics and four that displayed adverse performance, subjecting them to a broad range of test scenarios.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 2:59 PM » Fed Beige Book says economic activity weakened
    Published Wed, Dec 03 2008 2:59 PM by Reuters
    WASHINGTON (Reuters) - Economic activity has weakened across the United States since early October, while price pressures have eased with declines in retail and energy prices, the Federal Reserve said on Wednesday.
  • 2:44 PM » Mr Mortgage: Actual IndyMac (Exotic) Loan Modification
    Published Wed, Dec 03 2008 2:44 PM by mrmortgage.ml-implode.com
    Sheila Bair’s underwriting makes Angelo Mozillo’s look tight. The IndyMac loan modification shown here has redefined ‘exotic’ and ‘leverage’ with respect to mortgages. I am going to name it the 5-year hybrid, 30-year term, 8-year graduated payment, 176% combined loan-to-value, mega-balloon, super bendover ARM (document below). And you thought Pay Option ARMs were exotic! If they would have had these loans out during the bubble years the housing bubble could have grown twice as large. This borrower is not as bad off as many in the bubble states - they are only 44% or $370k underwater in their home. Their present first mortgage is only slightly higher than the value of $475k. But when you add in the $345k second mortgage that the IndyMac modification lets stay in place, they are $370k upside down. This modification makes the borrower a renter and debt-prisoner for life. This is not a financial solution for the borrower, rather a structure that lures the borrower into a terrible financial decision because it is cheaper to stay than walk away and rent. All of these new proactive loan modification plans by the law makers, regulators and bank are designed to do just this. A ’solution’ where the borrower still owes $840k on a $475k home and will never be able to refi or sell, should send them running. While some will take this offer, I am hopeful that the typical home owner is not this ignorant. That is a lot of debt to carry around for life. On the other hand when you have nothing to lose and your only alternative will be foreclosure 6 months down the road, you may just accept the offer not considering the legal ramifications. I am sure this is also what the banks hope. One thing is for sure - having millions of zombie homeowners unable to refi or sell their property awaiting the day a life circumstance forces their default and foreclosure is not the clearing process needed for an ultimate bottom in housing. Modifications such as this stretch the problem out several years...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 2:44 PM » Thornburg Mortgage to Lose NYSE Listing
    Published Wed, Dec 03 2008 2:44 PM by www.thetruthaboutmortgage.com
    Despite a 1-10 reverse stock split, struggling mortgage lender Thornburg Mortgage will see its shares delisted from the NYSE this Friday. The company announced today that its stock price fell below the minimum 30-day average closing price of $1.00 per share back in May, and subsequently failed to cure the non-compliance within the required six month [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 11:51 AM » Paulson debates next $350 billion in bailout: report
    Published Wed, Dec 03 2008 11:51 AM by Reuters
    NEW YORK (Reuters) - Treasury secretary Henry Paulson is debating whether to ask Congress for the next $350 billion in the $700 billion U.S. bailout, the Wall Street Journal reported on its website on Tuesday.
  • 11:35 AM » Paulson May Ask for the Remaining $350 Billion TARP Allotment
    Published Wed, Dec 03 2008 11:35 AM by Google News
    You have to hand it to Paulson. The man is brazen. Now, admittedly, he has not asked Congress for the second half of the $700 bailout funds; the Wall Street Journal says merely that he is considering making a request. Now let us consider; 1. Paulson got the bill passed (remember the timing: it was signed into law October 3) by threatening Congressional leaders that if he didn't have the funding, the result would be financial armageddon. October delivered that anyhow. 2. Paulson first was going to buy troubled assets, and when that turned out not to be such a hot idea (observers saw it as a back door bank recapitalization, with the added advantage of creating phony inflated valuations for crappy paper, useful for those who did not avail themselves directly of the program), he switched gears and started recapitlizing banks directly and inefficiently, putting $125 billion into nine large banks, some of whom profess they didn't need it (and that was a feature, not a bug, with Paulson saying up front that he didn't want to stigmatize banks by singling out the bad ones). Oh, and virtually no strings attached, this was supposed to be user friendly 3. Paulson then renounces the TARP version 1.0 "buy crappy assets" program. Crappy MBS go into a tailspin, necessitating creation of new Treasury/Fed programs to help shore up agency mortgages and asset backed securities, and rescue of Citi. 4. New head of oversight panel, Elizabeth Warren, is that the Treasury is failing about and lacks a strategy. Put more simply, what pray tell do we have to show for the $350 billion spent so far? Why would you trust this man with another penny, particularly when the terms of the bill put him above the law (although some readers contend that language is unconstitutional). Plus there is no pending emergency to warrant releasing the funds. But with that lousy fact set, Paulson still has the gall to be noodling making a appeal to Congress for more dough. But then again, those...
  • 11:34 AM » How the Fed gets its money
    Published Wed, Dec 03 2008 11:34 AM by themessthatgreenspanmade.blogspot.com
    Axel Merk how the Federal Reserve can effortlessly increase its balance sheet by more than a trillion dollars, whereas, rescue money flowing from the Treasury is a much more labor-intensive process, one that is also politically charged as we all learned a couple months ago when the $700 billion rescue package was presented to Congress. How does the Fed get its money? It doesn't need to borrow it; it merely creates an entry into its balance sheet. All the Fed requires to "print" money is a keyboard connected to a computer. The difference between the Fed and the Treasury issuing money is that the Treasury needs to get permission from Congress before selling bonds. In this context, it shall be mentioned that physical cash (coins, bank notes) are entered as liabilities on the Fed's balance sheets; they are rather unique liabilities, however, as you can never redeem your cash: if you went to a bank, the best you can hope for in return for your dollar bill is a piece of paper that states that the bank owes you one dollar. While it is possible for central banks to remove cash in circulation, they are not obliged to do so. Until recently, the Fed would only temporarily park non-government securities on its balance sheet: a bank would typically receive a temporary, often overnight, loan for depositing top rated securities with the Fed; these "swap agreements" were traditionally intended for very short-term loans, but the crisis has led the Fed and other central banks around the world to engage in 60, 90 day or even longer agreements. Since late September, the idea of swap agreements has been supplemented by outright purchases. When the Fed issues cash for debt securities it acquires, we talk about "monetizing the debt". The entire article is worth a look.
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 11:34 AM » Notable Citi, Wells and BofA Tidbits
    Published Wed, Dec 03 2008 11:34 AM by mrmortgage.ml-implode.com
    Like many of you I have 10s of thousands of saved press releases from the past couple of year I like to read back through occasionally. Beginning today I am going to start posting some of the stories that seem important to me but have been blown over by the mainstream. For a story to qualify, the content must evoke a feeling of overwhelming sickness or blind rage in me. Both below qualify. Click the links to each story to read the full story. -Best Mr Mortgage - Bloomberg, by Jonathan Weil Citigroup has “very strong capital,” the bank kept saying. Its capital was so strong that the New York-based lender yesterday was ironing out yet another federal bailout. One lesson here is: There’s something very wrong with the way Citigroup and the government measure capital. To see why, let’s dig into just one portion of Citigroup’s capital that has been soaring in value this year. It’s called deferred-tax assets, or DTAs, which now make up a big part of Citigroup’s book value and regulatory capital. You won’t see anything about these assets’ values in Citigroup’s third-quarter report to shareholders. The bank buried them on its balance sheet in a line called “other,” and it discloses them in its financial-statement footnotes only once a year. You can piece together how much the values had grown, though, from Citigroup’s with the Federal Reserve Board. typically consist of tax-deductible losses carried forward from prior periods, which companies can use to offset future tax bills. Under generally accepted principles, such are valuable only to companies that are profitable and paying income taxes. To the extent a company doesn’t expect to use these assets, it’s supposed to record an offsetting valuation allowance to reduce their value. DTAs also can take the form of , which let companies claim refunds of past taxes paid. As of Sept. 30, Citigroup’s net DTAs were about $28.5 billion, after subtracting deferred-tax liabilities. That represented 29 percent of the bank’s common shareholder...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 11:34 AM » Goldman mulls online bank, open to deals: source
    Published Wed, Dec 03 2008 11:34 AM by Reuters
    NEW YORK (Reuters) - Goldman Sachs Group Inc is considering launching an Internet bank and has not ruled out acquiring consumer banks, people familiar with the situation said.
  • Tue, Dec 2 2008
  • 10:48 PM » Bill Gross Says Stocks May Not Be So Cheap
    Published Tue, Dec 02 2008 10:48 PM by Google News
    One of the arguments made by bottom-fishers is that not only are stocks "oversold" (a technical notion that reflects recent trading activity, such as trading volumes, price in relationship to various moving day averages) but are also cheap based on fundamental notions of value. We have been somewhat leery of any long-term valuation notions given the fact that the US economy has gone through 20 years of growing leverage, with a steepening of debt levels in the mid 1990s, and a further ratchet up starting in 2004. The post 1996 period (starting the time Greenspan made, and then retreated from his famous "irrational exuberance" comment) shows a marked deviation from previous valuation norms (and that further suggests that removal or adjustment of the bubble era would have a big impact on norms as well). Click to enlarge: Gross focuses on the role of leverage versus deleveraging, as well as government intervention, in the prospects for stocks. He concludes that those two factors mean that stocks might not be so cheap after all. Note he first looks at measures like the famed Q ratio, which suggests stocks are a bargain, and then P/E ratios, which are only a tad below their mean for the last 100 years. Key excerpts from his (boldface his): We will not go back to what we have known and gotten used to. It’s like comparing Newton and Einstein: both were right but their rules governed entirely different domains. We are now morphing towards a world where the government fist is being substituted for the invisible hand, where regulation trumps Wild West capitalism, and where corporate profits are no longer a function of leverage, cheap financing and the rather mindless ability to make a deal with other people’s money. .... Corporate profits have been positively affected for at least the past several decades by several trends that appear to be reversing. Leverage and gearing ratios – the ability of companies to make money by making paper – are coming down, not...
  • 10:47 PM » Manhattan: Office Space for Lease Doubles
    Published Tue, Dec 02 2008 10:47 PM by Calculated Risk Blog
    From the NY Times: Almost 16 million square feet is currently listed as available in large blocks in 68 office buildings in Manhattan, according to Colliers ABR, a commercial brokerage firm. That is nearly double the space available a year ago, both in terms of the number of large office blocks — which in New York usually means 100,000 square feet or more — and in terms of total square feet. And just like in the previous downturn, sublease space is flooding the market: By far the biggest increase in availability has been in the sublease market. Currently, at least 16 large office blocks are being marketed for sublease in Manhattan, up from just 3 listed at this time last year, according to Colliers ABR. And rents are down sharply: Mr. Colacino [president of Studley, a real estate brokerage firm] estimates that the actual rents on deals signed in the last three months are down by as much as 20 to 30 percent from the going rents at the end of the summer ... There is much more in the article, and it sounds like the situation will get worse next year.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:46 PM » Commercial Foreclosure Tsunami on the Way
    Published Tue, Dec 02 2008 10:46 PM by loanworkout.org
    Looks like the commercial mortgage arena will have a rough year in 2008. It is only the next logical foreclosure wave to hit the US and this tsunami may be the mother of all waves that drowns what’s left of our economy. Reuters - Commercial property loans originated in 2005 to 2007 that increasingly carried [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 10:46 PM » Former Treasury Undersecretary Proposes 100 Year Treasuries
    Published Tue, Dec 02 2008 10:46 PM by feeds.feedburner.com
    Those not thrilled with the prospect of getting 3% for 30 years on the long bond can now entertain the possibility of getting 3% for 100 years. Peter Fisher Says . BlackRock Inc.’s Peter Fisher said the U.S. Treasury should consider selling 100-year bonds to ease the federal government’s borrowing costs as it faces a budget deficit expected to top $1 trillion. “If you issued a 100-year bond and had principal and interest pay down smoothly over the last 50 years, you create a great borrowing device for the Treasury that would let us move this hump of borrowing over the generational retirement that’s coming up,” Fisher, managing director and co-head of fixed income at BlackRock in New York, said in a Bloomberg Radio interview. “There are a lot of investors, pension funds, endowments, who would love to get a long-term annuity like that,” Fisher said. “They love to get an interest-only stripped off the 30- year, and they’d love to get something even longer. I think there would be a lot of demand from investors for that.” Artificial Demand Fisher is badly mistaken. The only demand for 100 year treasuries would be from Bernanke attempting to hammer interest rates lower in misguided moves to get investors to take on more risk and to get banks to lend. Artificially Low Rates Affect Pension Plans And Insurance Companies Unfortunately, Bernanke's helicopter drop play of purchasing longer-term Treasury on the open market in substantial quantities to force down long term rates (and Fisher's proposal to carry the idea to even more ridiculous extremes) is bound to blow up insurance companies and pension plans while doing nothing to stimulate demand. Think of all the insurance companies that promised annuities guaranteeing 6% or more. Think of all the pension plans with assumptions of 8.5% annual returns. There's nothing like matching up those needs and assumptions with treasuries yielding 3% for 100 years. Please see and for more on Bernanke's efforts to force down...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 10:46 PM » Citigroup Predicts 2,000 Gold in 2009
    Published Tue, Dec 02 2008 10:46 PM by feeds.feedburner.com
    by David Vaughn. "The debate continues over bailing out the auto industry. What do you think? If a bailout occurs it will only be the first in a never ending line of industries seeking help. The world is now quickly changing and moving with a determined force we have not witnessed in our generation or the generation before. "
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 6:20 PM » Mortgage Applications Likely Soared Last Week - But Not Really
    Published Tue, Dec 02 2008 6:20 PM by mrmortgage.ml-implode.com
    When we get weekly Mortgage Bankers Loan Applications survey tomorrow morning it is going to show an explosion that will make everyone think the entire nation is refinancing all at once. That is what the Wall Street analysts and media have been pushing for the last week as well. This is an incorrect assumption. Below is a note I wrote to clients about IndyMac when they put out a press release saying they locked $1 billion in new loans last January. This is a very misleading press release, which I am sure was the intent. If you look at the chart, it had the effect of sending the stock price up 100% for a brief period of time. All of those who bought under the false impression that IndyMac was doing great based upon loan application counts were ultimately burned. The same rules apply today when rates surge lower in this short of a period of time. Remember folks, with respect to mortgage and housing ‘NOTHING is at it appears’ . Not even something as easy as counting up mortgage applications. The number that comes out tomorrow will be mostly wrong. Not ’somewhat’ or ’slightly’ but ‘mostly’ wrong. While lenders did get a surge of business that is new to them most is not new business. When rates come slamming down in a very short period of time like we saw last Tuesday very little new business is originated that day. My best guess is that of all the loan applications being counted last week that 85% of them were a result of a loan that was pulled from another lender for a better rate elsewhere. This is because most lenders will not ‘roll down’ borrowers interest rate locks to ‘today’s rate’ when rates drop. Because of this when rates drop through the floor in a short period of time, entire portfolios of loans that have been in process for up to a month shift from one bank to another as loan officers and borrowers do what is necessary to take advantage of ‘today’s rate’. The surge in mortgage apps last week mostly represents the past month of loans all re-locked and submitted...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 6:19 PM » FDIC head: gov't rescue plan needs 'exit strategy'
    Published Tue, Dec 02 2008 6:19 PM by Washington Post
    WASHINGTON -- The head of the FDIC said Tuesday the government needs to devise an "exit strategy" for its massive financial rescue plan to avoid artificially propping up banks and other institutions over the long term.
    Click Here to Read the Full Article

    Source: Washington Post
  • 6:18 PM » Schumer says housing `vultures' hurt NYC
    Published Tue, Dec 02 2008 6:18 PM by Washington Post
    NEW YORK -- At the height of the real estate boom, even drab, rent-controlled apartment houses in the Bronx and Harlem were suddenly fetching Park Avenue prices.
    Click Here to Read the Full Article

    Source: Washington Post
  • 6:18 PM » Freddie Mac mulls reverse stock split
    Published Tue, Dec 02 2008 6:18 PM by CNN
    Read full story for latest details.
  • 6:18 PM » FDIC's Bair: Hopeful Obama will support her mortgage plan
    Published Tue, Dec 02 2008 6:18 PM by Market Watch
    Federal Deposit Insurance Corporation chairwoman Sheila Bair says she hopes the Obama administration will support a mortgage foreclosure mitigation plan she introduced last month.
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More From MND

Mortgage Rates:
  • 30 Yr FRM 4.85%
  • |
  • 15 Yr FRM 4.30%
  • |
  • Jumbo 30 Year Fixed 4.40%
MBS Prices:
  • 30YR FNMA 4.5 103-01 (0-00)
  • |
  • 30YR FNMA 5.0 104-29 (-0-00)
  • |
  • 30YR FNMA 5.5 106-11 (0-01)
Recent Housing Data:
  • Mortgage Apps -2.60%
  • |
  • Refinance Index -3.69%
  • |
  • Purchase Index -1.98%