Just kidding about the NINA - sorry. It sure has a catchy
ring, and harkens back to “the good old days”. Most folks still in
the business feel that many of the “bad apples” have left the
industry, whether they are companies or individuals. (Unfortunately, of course,
many “good apples” are no longer in the mortgage industry either.)
And agents will admit that the products are more sensible now. “I
couldn’t believe that investors were buying that stuff” is a common
refrain that I have heard, along with “That product was way too
aggressive”. But I bet that if an investor actually re-introduced
something out like that, every agent, and their brother, would jump at it
again.
I have my life savings over at Frank’s Thrift and
Loan. How do I know that Frank’s isn’t on the FDIC Watch List for
threatened savings institutions? I don’t. (Granted, my $1,239.08 balance
doesn’t come anywhere near the $100k FDIC insured amount.) The closest
one can get is http://www.fdic.gov/bank/individual/bank/index.html
Wells Fargo’s stock skyrocketed yesterday, up over 30%
in one day, after their earnings announcement. Will JPMorgan
Chase’s do the same? Their earnings plunged in the second quarter, which
include $1.1 billion in write-downs, but were still better than expected! Chase
reported net income of $2 billion in the second quarter, a 53% drop from
$4.2 billion in the second quarter of 2007, but without the $540 million net
loss stemming from the acquisition of Bear Stearns in May, net income would
have been $2.5 billion.
In underwriting news, Downey
now longer allows more than 5 financed properties and DTI can't exceed 40%.
The economic news yesterday and today points to a stronger
economy. The Labor Department said that Jobless Claims rose by a
less-than-expected 18,000 last week to 366,000. The four-week average of new
jobless claims, which decreases the volatility somewhat, fell to 376,500 from
381,000 the week before, the second consecutive weekly drop. Are things
improving in the jobs sector? Are the unemployed merely taking lower paying
jobs just to have one? It was the 12th straight week that these continued
claims were above 3 million, a sign the slow U.S. economy has made it harder for
workers to find jobs. We also had Housing Starts increase 9.1%, partially
blamed on a New York
housing law about to take effect, but nonetheless the Commerce Department said
housing starts set an annual pace of 1.066 million units in June, the highest
since February. Building permits climbed to 1.091 million, higher than the
960,000 expected. We still have the Philadelphia Fed index ahead of us.
Yesterday we got hit with a rallying stock market, a high Industrial Production
number, a high Capacity Utilization number, and a CPI that came in at a lofty
5%. Suddenly the 10-yr is back up to 3.97% and mortgage prices are worse by
another .75 in price versus yesterday, 1 point worse than Tuesday afternoon!
Fed Chairman Bernanke wrapped up his testimony yesterday,
saying that there are “significant downside risks to the outlook for
growth,'' and “upside risks to the inflation outlook have
intensified.” He said that stabilizing financial markets remains “a
top priority” – a good thing! Did the news cause anyone to re-think
their opinion about GDP, or the odds of a Fed overnight rate hike? Yes:
Barclays revised their GDP growth and federal funds rate outlook, increasing
their 2nd quarter estimate, but lowering it for the 2nd
half of 2008. In addition, they are pushing back their guess of the first Fed
rate hike to March 2009. The market believes that the odds are 93% that the
Fed Funds rate will remain at 2% in August.
After retiring, I went to the Social Security office to
apply for Social Security. The woman behind the counter asked me for my
driver's license to verify my age. I looked in my pockets and realized I had
left my wallet at home. I told the woman that I was very sorry, but I would have
to go home and come back later.
The woman said, “Unbutton your shirt.” So I
opened my shirt revealing my curly silver hair.
She said, “That silver hair on your chest is proof
enough for me,” and she processed my Social Security application.
When I got home, I excitedly told my wife about my
experience at the Social Security office.
She said, “You should have dropped your pants. You
might have gotten disability, too.”
And then the fight started...
Rob
