Ring ring.
“Hello?”
“Hey Warren,
this is Ben over at the Fed. You know how you already own 10% of Wells Fargo?
Well, I have a little favor to ask…”
Warren Buffett's Berkshire Hathaway will
invest $5 billion in Goldman Sachs, and shares of Goldman rose 6.5%
following the announcement yesterday. Berkshire
will buy $5 billion of perpetual preferred stock that carries a 10 percent
dividend. It also will receive warrants to buy $5 billion of common stock, or
43.5 million shares, at $115 per share, within five years, which could give it
a roughly 9% stake in Goldman. Shares of Goldman had fallen 50 percent
from their level at Halloween. Well, given that Henry Paulson supposedly owns 4.6 million shares of GS already,
maybe Paulson, who is in charge of the bailout for the mess that took place
during his tenure at GS, placed the call…
Mortgage pricing staged a nice comeback yesterday after Fed
Chairman Ben Bernanke’s testimony in front of Congress. He stated that
the government should buy the distressed assets at hold-to-maturity value
rather than at market determined fire-sale prices, which, as everyone in the
mortgage business knows, have driven prices down. Bernanke and Secretary Henry
Paulson explained the $700 billion bailout plan in front of the Senate Banking
Committee yesterday, and today brings round two on Capitol Hill for Bernanke as
he testifies before the Congressional Joint Economic Committee at 10AM EST and
then before the House at 2:30PM EST. Paulson will join him in the
afternoon session to discuss the proposal.
Did locks slow for you last week? After being +33% the week
before, MBA mortgage applications declined -10.6% for the week ending Sept.
19th. Refinancing was -11.2%, while purchases decreased -10%.
Today we have Existing Homes Sales for August, expected -1.6%. On
Thursday we see August New Home Sales with expectations for a decline of 1.0%.
In addition, we have 2-yr (today) and 5-yr (tomorrow) note supply to absorb,
which may add pressure to mortgage prices. The biggest news of the week will be
the early details of the plan for the purchase of distressed mortgage loans
that the government comes up with. 10-yr currently 3.80%, mortgages about
unchanged.
Federal investigators have opened preliminary probes into the
financial troubles of four companies that are at the center of the current
financial turmoil: did fraud helped cause some of the troubles at Fannie Mae,
Freddie Mac, Lehman Brothers Holdings Inc. and American International Group
Inc.?
FHA has just released Mortgagee Letter 08-25 which
contains guidelines for using rental income from a current property to be
retained by the borrower when purchasing a new residence. Until they can
further evaluate the situation they are no longer allowing rental income to be
used on a departure property when qualifying the borrower for a new loan unless
the borrower meets one of the two exceptions to the rule listed below.
GMAC is planning on selling their Home
Services division to Brookfield Asset Management, a Canadian real estate
conglomerate known as Brookfield Residential Property Services. Apparently the
name “Pacific Union” will be retained.
An old country preacher had a teenage son, and it was
getting time the boy should give some thought to choosing a profession. Like
many young men his age, the boy didn’t really know what he wanted to do,
and he didn't seem too concerned about it. One day, while the boy was away at
school, his father decided to try an experiment. He went into the boy’s
room and placed on his study table four objects.
1. A Bible.
2. A silver dollar.
3. A bottle of whiskey.
4. And a Playboy magazine.
"I'll just hide behind the door," the old preacher
said to himself. "When he comes home from school today, I'll see which
object he picks up. If it's the Bible, he's going to be a preacher like
me, and what a blessing that would be! If he picks up the dollar, he's going to
be a business man, and that would be okay, too. But if he picks up the bottle,
he's going to be a no-good drunken bum, and Lord, what a shame that would be.
And worst of all if he picks up that magazine he’s
going to be a skirt-chasing womanizer."
The old man waited anxiously, and soon heard his son’s
foot-steps as he entered the house whistling and headed for his room. The boy
tossed his books on the bed, and as he turned to leave the room he spotted the
objects on the table. With curiosity in his eye, he walked over to inspect
them.
Finally, he picked up the Bible and placed it under his arm.
He picked up the silver dollar and dropped into his pocket.
He uncorked the bottle and took a big drink, while he
admired this month's centerfold.
“Lord have mercy," the old preacher disgustedly
whispered. "He's gonna run for Congress
Rob
