The Mortgage Reports Blog

The Mortgage Market Brain Dump (August 11, 2008 Edition)

Like a fine movie with endless details, mortgage markets were dense last week and in need of a second (and third) look.  Here's that extra look, in Brain Dump format.

Follow me: Come to Twitter and get my mortgage market updates, wriitten several times daily.  If you followed me, you'd know that rates jumped 0.125% this morning.

Pending Home Sales are up: The number of homes under contract increased in June. Some call it hope for housing but that's premature.  These are contracts, not closings.  To make the data count for something, the buyers have to be approved and that's getting tougher week by week.

Credit card holders (and their FICO scores) get pinched: File this story under "unintended consequences".  As credit card companies cut their borrower's credit lines, consumers get harmed.

The Godfather, Part II was a rarity: Not every sequel can be as good as the original.  That's why I'm not even trying.

Freddie Mac adds new mortgage fees: Like its cousin Fannie Mae, Freddie Mac upped its "adverse market delivery fee" to 0.500 percent Friday, and changed its risk-based pricing, too.  Freddie's fee update also includes heavy adjustments for investment units.

Beware rising CD yields: In a clear case of moral hazard, CD yields are inching up despite a general feeling that inflation is subsiding.  That's abnormal and may be proof that banks are shoring up their reserves at the expense of taxpayers the FDIC. 

Oh, and the CD Yield Trick is nothing new: Remember this story about Countrywide from a year ago? 

Bad news for homeowners with construction loans: Construction loans from when home values were rising are tough to pay off after home values have fallen.  No wonder local banks are left holding the paper. 

Mortgage brokers are the department stores of home finance: When Wachovia shut down its retail mortgage offices in 19 states, it reminded us that getting mortgages from a branch bank is like shopping at specialty stores -- it's one brand and limited products.  Brokers, by contrast, are like department stores -- all the brands and all the products.

Only Miss Cleo can predict the future:  Economists are much better at interpreting the past than predicting the future.  And they change their minds a lot.

Alt-A loans are going the way of sub-prime: Now that Fannie Mae is swearing off Alt-A mortgages, homeowners with large tax write-offs or oversize home loans will find that buying or remortgaging a home is considerably more expensive.  Alt-A home loans are expected to disappear prior to 2009.

Yes, even you will find it harder to get a loan:  It doesn't matter if you have impeccable credit, stand-out income and rock-solid assets.  The rules of lending have changed and you're going to have to make a larger downpayment than you expected.

July 15 is a milestone date: It's the last calendar date on which gas prices went higher.  Every day since July 15 -- all 27 of them -- gas prices have fallen.  This is good for mortgage rates and the economy.

This just in: Oil prices move higher on Russia's invasion of Georgia (UPDATE @1:45 PM ET : ... but then retreat.)

The Fed Funds Rate may remain on pause for a while: The Federal Reserve lowered the Fed Funds Rate to 2.000 to stimulate the economy.  It didn't expect gas prices to skyrocket, however, sparking inflation.  With gas prices falling, the Fed can afford to sit back on its heels a while longer.  This is good news for people with home equity credit lines.

Adjusted The Barenaked Ladies For Inflation -- If I Had $1,000,000,000: There's a lot of common-sense mortgages to be made in this market and nobody's invented a Prosper for home loans.  If you've got money and want to meet my clients, send me an email.

Foreign nationals should speed up the process: If you're a non-U.S. citizen and you're thinking of buying a home in the states, consider getting under contract as soon as possible.  It's better to leverage a weak dollar than a strong one.

Gold Medal commercials: The Olympics is every bit the commercial lovefest that the Super Bowl is, but with 100 times more class.

Beauty is in the eye of the beholder: One of the best parts of FHA is that underwriting is highly subjective.  When one underwriter says no, another underwriter says yes.  This is one more reason why FHA's portfolio should deteriorate in the coming years.

CNN Top 10 Alert spam: 8 million spam sent per hour.  I'm getting half of them.

(Images courtesy: Wall Street Journal Online, Associated Press, Wikipedia)

The Mortgage Market Brain Dump

There's a scene in Awakenings when Dr. Sayer theorizes about Leonard's condition.  He wonders if the trance-like paralysis is the result of an extreme tremor:

If compulsions in the patient were somehow accelerated --- the hands, the shaking, the tics, the head bobbing, the quickening speech -- might they not cave in on themselves and, in effect, turn the person into stone?

And that's my blog post lead-in.

Over the past two weeks, I have had so much to say that I can't seem to say anything at all.  It's like a sink clogged with hair and I just need to push everything through with a pipe-clearning snake.  So, the plan is to just barf all over this Web page and dirty it with everything I've mentally eaten lately.

There's a lot of bullet points to read, a lot of links to follow, and if you're not careful, you might learn something before it's done.

Okay... I think I'm gonna hurl.