There are some clever folks out there, regardless of political orientation: http://www.youtube.com/watch?v=wzyT9-9lUyE

If you’re wondering about your income or even your job, or you don’t want to run up your credit card, you’ll cut back on your spending. If you cut back on your spending, you’ll cut back on imports, and domestic goods. And if you, and millions of other Americans, cut back on buying imports, whether it’s Porches or whoopee cushions, foreign economies will be negatively impacted, right? Thus we see the unraveling of foreign stock markets, along with stock markets here. Simple, huh?

Ace Funding, out of Indianapolis, shut its doors, which includes not only the mortgage company but also Archer Land Title and Ace Imaging. They were not a presence on the East or West coast, but still had offices in 15 states and several hundred employees.

How popular are Interest Only loans? As it turns out, not very, and interest is waning. As an indicator, CitiMortgage proclaimed that they will be eliminating the Non-Agency LIBOR full amortization and interest only ARM offerings (“Non-Agency ARMs”) effective November 7, 2008, but will retain the Non-Agency Fixed Rate and Non-Agency Fixed Rate Interest Only in their product set. Fannie announced a series of clarifications to IO loans. For example, “Jumbo-conforming IO loans are no longer eligible for manual underwriting and must be submitted to DU. Because DU was updated in August to accommodate the underwriting of Jumbo-Conforming Mortgage eligibility guidelines, there is no additional impact. Note that Jumbo-Conforming Mortgages, which were implemented under the temporary increase in our conforming loan limits, must be closed on or before December 31, 2008.”

There seem to be two schools of thought, one believing that further restricting the choices that borrowers have is detrimental, the other side saying that the risk on these does not justify continuing to offer the product. One investor stated, “Basically, we have not heard that this product is going away, but the feeling is that as credit requirements continue to tighten up on IOs, the product will start going away ‘naturally’.” Another investor said, “Ops may be discontinuing the non-agency jumbo ARMs (full am and I/O), but leave other IO products alone [see above].”  Others have restricted certain sectors on the IO line up. For example, Chase restricted “Non-Agency Interest Only” in Florida. (“The following restrictions apply to Non-Agency Interest Only loans with properties located in the State of Florida: Condominium property types are no loner permitted. 2-unit properties are no longer permitted.”) And still other investors seem to have priced themselves out of the IO market entirely.

The Fed begins their meeting today, with the announcement on rates expected tomorrow (Wed) at 11:15AM PST. As was mentioned yesterday, a rate drop between .5 to 1 full percent is expected. But will that really help mortgages? In the mean time, stocks markets around the world bounced off of lows, and although ours is at a 5 ½ year low, this news is not expected to help rates. The 10-yr is chopping around 3.80%, and mortgage prices appear to be off about .125-.250 to begin the day.

Following the problems in the financial sector in the U.S., uncertainty has now hit Japan.

In the last 7 days, Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank announced plans to cut some of its branches. Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song, while today shares in Kamikaze Bank were suspended after they nose-dived. In the meantime, Samurai Bank is soldiering on following sharp cutbacks, Ninja Bank is reported to have taken a surprise hit, but they remain in the black. Furthermore, 500 staff at Karate Bank got the chop and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal. Oh yes, and the Karma Sutra Bank is, well, never mind…