What is the state of mortgages, and mortgage banking? Let’s hope this comment, from a buddy in the business, doesn’t sum it up for everyone! “Mortgages are getting creamed, Moody is getting ready to downgrade MBIA and Ambac, Bernanke is worried about inflation, and I am worried about the continuity of my employment.”

The Senate has confirmed Steven Preston to be the new secretary of the Department of Housing and Urban Development as the agency steps up its efforts to help struggling homeowners and tries to finalize a RESPA proposal before year's end.

Once again, it helps that NL Inc. is a mortgage bank and not a broker, since agents originating in-house loans are not required to show the YSP. Mortgage brokers are being inundated by warning notices about HUD's new proposed rule, that it “will have a devastating effect on the mortgage broker industry. Broker YSP/Rebate will be a credit to the Borrower…Brokers only, must quote all earnings (including YSP) and there can be no change at close…The GFE is now a Good Faith binding agreement…Brokers will have to guarantee certain third party fees…Brokers will have to give the borrower a GFE without a loan application and guarantee their total origination fees and certain other fees for 10 days…, etc.” Comments are to be sent to HUD by late next week.

The Federal Reserve Board approved Bank of America's acquisition of Countrywide Financial. Bank of America agreed in January to pay $4 billion for Countrywide, although whether or not the deal closes remains the subject of rumors and speculation. This is obviously a positive step.

The big economic news today is the unemployment data, but so far it has done little to move rates (10-yr currently at 4.0%, mortgages unchanged). Yesterday, and Wednesday, both mortgages and treasuries worsened on both decent economic news and a rally in stocks. Although, as most know, it is not against the law for both stocks and bonds to improve on the same day, and just because Costco and Wal-Mart sales are improving doesn’t mean that the entire economy is better. Payrolls were pretty much as expected, -49k, but the report’s headline number (the Unemployment Rate) was much worse than expected due to a huge jump in the unemployment rate, from 5.0% to 5.5%. An increase in the labor force appears partly responsible, with more people trying to re-enter the workforce. Nonetheless, employers shed jobs for a fifth straight month in May and the unemployment rate jumped to its highest in more than 3-1/2 years. So far in 2008, job losses have totaled 324,000, according to the Labor Department. The market seems more focused on the oil market, which is putting the price of a barrel of oil up near $135 yet again.

THE WORLD'S SHORTEST FAIRYTALE ... 

Once upon a time, a guy asked a girl, "Will you marry me?"

The girl said, "NO!"

And the girl lived happily ever-after and went shopping, dancing, camping, drank martinis, always had a clean house, never had to cook, did whatever the heck she wanted, never argued, didn't get fat, traveled more, had many lovers, didn't save money, and had all the hot water to herself. She went to the theatre, never watched sports, never wore uncomfortable lacy lingerie, had high self esteem, never cried or yelled, felt and looked fabulous in sweat pants and was pleasant all the time.

The End

Rob