• According to an article in the Wall Street Journal, Option One, Countrywide and First Franklin (Merrill Lynch) will no longer offer 2/28 loans. A spokesman for Countrywide said that investors' demand for such loans is "very, very limited."
• Alliance Bancorp. ceased operations on July 13th per a message placed on their homepage, and Heritage Plaza Mortgage, a California mortgage wholesaler and retailer best known for its Alt A products, has closed.
• General Electric Co. said that it plans to sell its three-year-old U.S. subprime WMC Mortgage unit following a surge in defaults by borrowers.
• According to Moody’s, Washington Mutual's Long Beach Mortgage, GE's WMC Mortgage, New Century Financial Corp. and Fremont General Corp. made loans that backed about 60% of the $5 billion bonds that were downgraded according to Moody's chief credit officer for asset finance. Their loans accounted for about 30% of the subprime-mortgage bonds issued last year, they said.
• Speaking of WAMU, they and Ameriquest Mortgage Co., and nine other mortgage lenders have been accused of race bias in lending.  The National Association for the Advancement of Colored People (NAACP) claimed in a lawsuit that these companies charged blacks more than whites for subprime home loans.

Yesterday the bond (and mortgage markets) were quiet in spite of the PPI number and Industrial Production and Capacity Utilization being stronger than expected, although the 10-yr yield dropped down near 5%. The Consumer Price Index for June came out at 5:30AM PST and was +.2%, core +.2%, up a little over 2% year-over-year. We also had June Housing Starts and Building Permits: Starts were slightly stronger than expected, but a prior month was revised downward, and Permits were weak. Later this morning we’ll have Fed Chairman Bernanke beginning his semi-annual report to Congress on Fed policy. The result? Not much: the 10-yr yield sits at 5.05% with mortgages not moving much.

An older, white haired man walked into a jewelry store one Friday evening with a beautiful young gal at his side. He told the jeweler he was looking for a special ring for his girlfriend. The jeweler looked through his stock and brought out a $5,000 ring and showed it to him.
The old man said, "I don't think you understand, I want something very special."
At that statement, the jeweler went to his special stock and brought another ring over. "Here's a stunning ring at only $40,000", the jeweler said.
The young lady's eyes sparkled and her whole body trembled with excitement.
The old man seeing this said, "We'll take it."
The jeweler asked how payment would be made and the old man stated, by check. "I know you need to make sure my check is good, so I'll write it now and you can call the bank Monday to verify the funds and I'll pick the ring up Monday afternoon," he said.
Monday morning, a very teed-off jeweler phoned the old man. "There's no money in that account."
"I know", said the old man, "but can you imagine the weekend I had?"