We had some foreclosure news out this morning, saying that foreclosures were up. Is that news? On the Jobless Claims front, however, the number of Americans filing first- time claims for unemployment benefits rose last week by 15,000 to a larger-than-forecast 478,000. This is up from a revised 463,000 the prior week. The number of people staying on benefit rolls is hovering at the highest level in five years. You’ll be able to add 3,260 Goldman Sachs folks to that group soon. Goldman Sachs Group Inc. is cutting about 10% of its work force, or about 3,260 jobs, putting their staffing back to levels from a few years ago.

SunTrust announced a 26% decline in third-quarter profit and said it may sell a stake to the U.S. government. SunTrust said it will apply to sell $1.6 billion to $4.9 billion in preferred shares to the U.S. Treasury, joining regional lenders including KeyCorp and Regions Financial Corp. that want to participate in the $250 billion program to recapitalize banks.

Yesterday E-Loan’s parent, Banco Popular out of Puerto Rico, announced their earnings, which were a net loss of $668.5 million for the quarter ended September 30, 2008. The Corporation also announced additional actions in the restructuring of its U.S. operations. Their chairman stated that, “We are focused on the profitability of our U.S. operations and we will be taking additional steps to further reduce expenses and to close or consolidate unproductive branches." Apparently this means the winding down of E-Loan, per the friendly Implode-o-meter website, and a few other sources.

In addition to all of this wonderful news, the stock market appears that it is going to fall again today. Thus we find ourselves with much lower Treasury yields: the 2-yr is down to 1.54% and the 10-yr is down to 3.57%. And mortgages have improved, right? Nope. In spite of having a government guarantee, and in spite of being incredibly clean underwriting-wise, mortgage prices are actually worse, or at best unchanged, versus yesterday afternoon. Go figure.

Speaking of mortgage prices, many lenders watch the spread between mandatory and best effort pricing that is offered by investors like Fannie, Citi, GMAC, etc. Spreads are driven by two primary factors, hedge cost and demand for product. When volatility increases (a choppy market), the mandatory/best effort spreads tend to widen out, meaning that any lender offering mandatory pricing will look much better. When the market settles down, you should see these spreads narrow again. For example, a look at a GMAC rate sheet from yesterday and one from two weeks ago shows a narrowing of about 18 basis points in price. Investors are doing their best to encourage pull through, either by offering pricing incentives for better delivery, or penalizing lenders who have poor pull through with them, therefore lowering their own hedging costs.

A highway patrolman pulled alongside a speeding car on the freeway.

Glancing at the car, he was astounded to see that the blonde behind the wheel was knitting! 
Realizing that she was oblivious to his flashing lights and siren, the trooper cranked down his window, turned on his bullhorn and yelled, "PULL OVER!" 
"NO!" the blonde yelled back, "IT'S A SCARF!"