“Most of the stuff people worry about ain't never gonna happen anyway.” But in this case, I bet a change will be made. Everyone knows the drill: small originators sell loans to mid-tier investors such as AmTrust or Franklin American, who in turn sell their loans to companies like Wells, Chase, Bank of America, or maybe the agencies. (In fact, National Mortgage News reports that in the 2nd quarter 44% of all mortgages passed through BofA and Wells!) And the large investors often sell their loans directly to Freddie or Fannie. Smaller companies often believe that "if I could only sell directly to Fannie or Freddie, I can boost my profits by eliminating the fabled middleman!" Sometimes this is true, sometimes not. Fannie’s current minimum net worth to sell to them is currently at $1.65 million (which goes to $2.5 million in a few months), and Freddie’s is, uh, $250,000. Understandably Freddie Mac reportedly is close to raising its net-worth requirement for mortgage banks to become official Freddie Mac seller/servicers. No one should be surprised if they match Fannie – in the “old days” they were the same.

On the “very good news” front, Reuters reports that mortgage-backed security issuance here in the US jumped about 90% in the third quarter “as investors' appetite for risky instruments gained amid signs of stabilization in the housing market.” The third quarter of this year saw almost $75 billion, versus $39 billion in the same period for 2008. Barclays Capital was the top underwriter, Credit Suisse was #2, and JPMorgan was #3.

Tomorrow we will have some important data. Estimates for Nonfarm Payroll are ranging around a loss of 175-200k. Lately the news about the economy has indicated that not everything is rosy. Yesterday, after the GDP number, the Chicago Purchasing Manager’s survey unexpectedly dropped to 46.1 in September instead of increasing, and reminding us that any number below 50 indicates a contraction. And a slow economy typically suggests lower rates, and in fact the market is giving only a 2% chance to the Fed raising overnight rates by the end of the year. (Overnight rates don’t determine mortgage rates, but they do grab the headlines.)

But returning to today, we’ve already seen the weekly Jobless Claims numbers, along with Personal Income and Consumption (which seem to be called “Outlays” these days). At 7AM we have the Construction Spending numbers, ISM Manufacturing Index, and Pending Home Sales. Spending/Consumption/Outlays, whatever, was up 1.3% in August, the 4th month in a row and its fastest pace in nearly 8 years, and Personal Income was +.2%. So the good news for the economy is that folks are spending, but the bad news is that the savings rate declined for the third straight month. But Jobless Claims were up to 551,000 from 534,000 the prior week. The four-week moving average of new claims fell to 548,000, the lowest since January. Overall the numbers have pushed rates lower: the 10-yr is down to 3.28% and mortgage prices are better by .125-.250.

Don’t forget! Starting today, HUD has mandated that all FHA-approved lenders must use state-certified appraisers for FHA-insured mortgages!

Today at 3PM EST, as they have for the last several months in a move toward transparency, the Fed will announce their MBS purchases for the last week. Of course, last week at the conclusion of the FOMC meeting they announced an eventual slowing down of the pace of buying $1.25 trillion of agency product. The weekly average has been $23-25 billion, and no one expects it to drop off a cliff, and anything above $20 billion should be “ok”. Origination is roughly $3-4 billion a day, so not only is the Fed, in effect, buying all new loans but also older ones as well.

Countrywide:  the gift that keeps on giving. The latest story involves the discovery that they, or someone, destroyed recorded phone conversations with their VIP program prompting new congressional calls for more information about the program. On top of that, a story from Bloomberg (do they have restaurant critics?) states that Bank of America employee can now enjoy a $180 Krug champagne-paired tasting menu in the company “cafeteria” at the base of its new $1 billion Manhattan skyscraper. This group may not include Ken Lewis, who after almost 9 years of running the company is resigning at the end of the year. Bank of America has tripled in size during that time, helped by the questionable acquisitions of Merrill Lynch and Countrywide.

If you have a banker friend coming up who has a birthday, here’s a gift idea: every banking and mortgage statistic that they could possible want: http://www.occ.treas.gov/ftp/release/2009-118a.pdf

As my wife and I were approaching our birthdays, respectively, we scheduled our annual medical examination together so we could travel together.

After my examination, the doctor said, 'You appear to be in good health. Do you have any medical concerns that you would like to discuss with me?”

“In fact, I do,” I said. “After I make love with my wife the first time, I am usually hot and sweaty.  And then, after I make love with my wife the second time, I am usually cold and chilly.”

“This is very interesting,” replied the doctor. “Let me do some research and get back to you.”

After examining his wife, the doctor said, “Everything appears to be fine. Do you have any medical concerns that you would like to discuss with me?”

She replied that she had no questions or concerns.

The doctor then asked, “Your husband had an unusual concern. He claims that he is usually hot and sweaty after having sex the first time with you and cold and chilly after the second time, do you know why?”

“Oh, that old geezer!” she replied. “That's because, the first time is usually in July and the second time is usually in December.”