Do illiterate people get the full effect of Alphabet Soup? 

Did you ever notice that when you blow in a dog's face, he gets mad at you, but when you take him on a car ride, he sticks his head out the window?

As the credit crunch shakes up the mortgage market, one group that's suffering some severe collateral damage doesn't own a home at all: renters. According to the Center for Public Housing, 25% renters are paying more than half their income on rent — the highest level in at least two decades. That's up from 20% in 1997, and is expected to worsen.  Rents are projected to rise about 4% this year and next. In part, that's because of a shortfall in apartment construction. At the same time, more renters are renewing their leases because they can't qualify for a mortgage. And rising foreclosures are turning some homeowners back into tenants.

What were the top 3 headlines in the National Mortgage News yesterday? “Lehman Re-jigs Mortgage Biz, Cuts 850 Jobs”, “Countrywide Cuts 900 Jobs”, and “New Foreclosures Reach Record Level”. Could someone let me know when this nightmare is over?

National City Corp., Ohio's largest bank, said that it too would sever 800 employees and take a $200 million pretax charge in the third-quarter because of losses in its mortgage business.

Lehman Brothers, the biggest underwriter of U.S. bonds backed by home loans, said it will cut 850 more jobs (mostly in Aurora) because of reductions in the size of its mortgage operations in the U.S. and overseas. Lehman's Korean mortgage unit (Korea?) will be shut down, while lending in the U.S. and U.K. will be re-scaled. (Last month, Lehman announced the closure of BNC, resulting in 1,200 job losses.)  Aurora closed Gaithersburg and Dallas offices completely and are changing their name to Lehman Mtg. Capital.

How about the economy? We had a shock of a Non-Farm Payroll number this morning. Expected to be up 110K, Non-Farm Payroll was actually down 4k, and June & July numbers were revised down a total of 81k! This is the worst jobs report in four years, and virtually guarantees a Fed Funds cut on September 18th. And it doesn’t even include the mortgage job cuts for August! The Unemployment Rate was unchanged at 4.6%, and Hourly Earnings were +.3%. On the news the yield on the 10-yr dropped from 4.48% down to 4.44%, the yield on the 2-yr dropped below 4.0%. 30-yr A-paper mortgage prices have improved by roughly .375.