What do Bank USA, National Association of Phoenix; California National Bank of Los Angeles; San Diego National Bank; Pacific National Bank of San Francisco; Park National Bank of Chicago; Community Bank of Lemont, Illinois; North Houston Bank; Madisonville State Bank of Madisonville, Texas; and Citizens National Bank, of Teague, Texas have in common?

Their deposits and assets all became part of US Bancorp after being shut down by the FDIC on Friday. The FDIC and taxpayers (in a roundabout way) are out $2.5 billion. USB, who has not been immune to their stock sliding almost 20% in the last year, has repaid almost $7 billion in TARP money. Friday they added 153 branches with combined assets of $19.4 billion and deposits of $15.4 billion.

And what do Eddie Bauer Holdings and Dunkin' Donuts have in common? They, along with literally one million other businesses, have both received loans from commercial lender CIT Group. CIT filed for Chapter 11 bankruptcy protection, which analysts say will help bondholders and customers but not stockholders and taxpayers. Apparently we've put about $2.33 billion of our money into CIT, which is now the largest firm to go bankrupt after getting a federal bailout. None of CIT's operating subsidiaries, including Utah-based CIT Bank, were included in the filing, CIT said in a statement.

The US government ended its program of buying Treasury securities on Thursday after hitting the $300 billion mark. In a similar vein, the Bank of Japan will stop buying corporate debt by the end of the year, as there seems to be no further need to prop up those markets. The mortgage-backed market, however, is still reaping the benefits of the US government purchasing those bonds, with several more months to go. Keep in mind that at some point it will end, and the markets know this. Occasionally rates will shoot up for a day, and someone will blame "the eventual ending of the mortgage purchase program". This makes little sense, as it is well known by investors - but there is hope for an extension if the Fed doesn't see secondary market interest.

Although we won't have the numbers for a few days, locks desks picked up their activity late last week. Of course this resulted in some selling pressure on mortgages, although the Fed has been in buying and a few dealers report some bank buying of mortgage-backed securities. It seems like supply is running between $2-5 billion a day, and Fed buying has about matched it.

At the end of last week most eyes were on the stock market, which, on Thursday, had its largest increase in three months, but then had its largest decrease in four months on Friday. The Chicago Purchasing Manager's survey hit a 13 month high and beat expectations, but the University of Michigan Consumer Sentiment survey dropped from 73.5 to 70.6.

We have yet another full slate of economic news this week. We begin slowly with "second tier" numbers like Construction Spending and the ISM Index today and Factory Orders tomorrow. Thursday we have the ISM services number, along with the Employment Cost Index and Jobless Claims. The biggest economic event this week will either be the Fed meeting on Wednesday or the unemployment data on Friday.  So although overnight rates, which don't directly impact mortgage rates, should stay put, the Fed may indicate future changes in monetary policy. Nonfarm Payroll is expected to drop 165K jobs for October. In addition, the ISM Manufacturing index and Pending Home Sales will come out today. ISM Services will be released on Wednesday. Productivity, Construction Spending, and Factory Orders will round out the busy schedule. The Treasury will announce the size of upcoming auctions on Wednesday as well. Ahead of all that the 10-yr is at 3.41% and mortgages are worse by about .125.

A story came out saying that "The National Association of Realtors thanked Congress for speedy action in passing a congressional resolution...that would extend the current higher Fannie Mae, Freddie Mac and FHA loan limits through 2010. The present loan limits would expire at the end of 2009 and revert to previous lower limits." The resolution is not a law - it would extend the present conventional loan limits for Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. This legislation was approved by both the House and Senate late last week that extends the higher loan limits currently in place for agency mortgages. The higher loan limit measure was attached to a budget and appropriations bill that was approved by the House with a vote of 247-178 and passed by the Senate just hours later, 72-28.

Although there is widespread support in Congress for extending the life of a home-buyer tax credit scheduled to expire at the end of this month, there is nothing to report. Hopefully the entire industry doesn't hinge on the result, but an extension is expected soon. Congress still hasn't finished work on the legislation. As many who have survived because of it know, the credit amount is 10% of a home's purchase price, with a maximum of $8,000 for a single taxpayer and a married couple filing a joint return. Eligible taxpayers will get the credit even if they don't owe any tax, or if the credit is more than the tax they owe for 2008 or 2009.

I had not heard of "Financial Mortgage USA Inc." until the U.S. Department of Housing and Urban Development took action against this reverse mortgage lender in Hawaii. "HUD's Mortgagee Review Board wants to permanently withdraw the HUD/Federal Housing Administration approval of Financial Mortgage USA Inc." after the company failed to implement an FHA-required quality control plan and separate its lending operations from those of its affiliated insurance company. But now, supposedly, their phones don't work...

On Friday I mentioned some changes that "US Bank" was making in their "declining markets" LTV's and states. I was reminded that US Bank has two different divisions, and that US Bank Home Mortgage made the changes. U.S. Bank Consumer Finance, Mortgage Wholesale Division, handles mostly portfolio product, as opposed to USBHM which is focused on conforming/agency product. USB's Consumer Finance group has the states divided into three tiers, with Tier One has a 75% cap on LTV (CA, NV, AZ, FL, UT, OR, WV, DC, and HI), Tier Two has a 80% cap on LTV for 2nd position, 85% cap on everything else, except first position refinance can still go to 90% (ID, IL, MI, NJ, NM, RI, and WA), and then "Non Tier" states have an 85% cap on LTV (all lien positions) except first position refinance can still go to 90% LTV. I apologize for any confusion.

GMAC came out with some FHA & VA news late last week. "Regardless of AUS decision, the minimum FICO is 640 for purchases and refinances and IRRRL's" along with credit qualifying streamline refinances. The following are no longer eligible:

  • Non credit qualifying streamline refinances including transactions with or without an appraisal
  • Manufactured homes
  • Non-traditional credit - is defined as a credit history having no established traditional credit trade lines or minimal established traditional trade lines that are not sufficient to generate a FICO score.
  • All loans with a credit score must meet the minimum score of 640."

November 3rd is the date these updates take effect.

A guy walks into a bar with a dog. The bartender says, "We don't allow dogs in here."

The guy replies, "Wait a minute. This is a talking dog. If I can get him to answer a question, can I get a free drink?"

The bartender thinks for a minute and says, "Well, ok. Go ahead."

"Okay, Rex," the guys says to the dog, "what's on the top of a house?"

"Roof!" the dog replies.

"Oh, come on..." the bartender responds. "All dogs go 'roof'."

"No, wait," the guy says. He asks the dog "what does sandpaper feel like?"

"Rough!" the dog answers.

The bartender gives a condescending blank stare. He is losing his patience.

"No, hang on," the guy says. "This one will amaze you."

He turns and asks the dog, "Who, in your opinion, was the greatest baseball player of all time?"

"Ruth!" goes the dog.

With that the bartender, having seen enough, boots them out of his bar and onto the street.

And the dog turns to the guy and says, "Maybe I shoulda said DiMaggio?"