Was it really only a 4-day workweek? For some reason it seems longer…

A college girlfriend once told me, “The more I think of you, the less I think of you.” At first I thought that was pretty clever, but then it dawned on me what she was saying… The same goes for rates. These rates, relative to where they were two weeks ago, are bad. 30-yr conforming is back into the low 5% area, “high balance” conforming is priced about .5% higher than “low balance” conforming, and on the wholesale side jumbo loans are in the mid-6% area. Suddenly any borrowers who waited to lock, especially if they incurred expenses in processing or having an appraisal done, are upset. And on the jumbo side, there is still no securitization of larger loans, with portfolio lenders holding on to the product. If housing is going to take us out of the recession, rates moving up won’t help.

There are definitely signs, however, that certain markets are turning around. Yes, prices are lower, but one broker reported, “Things are starting to pick up here in Arizona.  The outlying counties are seeing multiple bids on homes in the starter home price range ($95,000 - $150,000), and they are driving other prices up.  The move-up homes are getting more foot traffic and sales. And, of course, the luxury home builders are hopeful about the future – now, if only MBS prices would rally and behave! If rates would stay under 5% we might actually have a nice summer.”

I live in Marin County, which most is located between San Francisco and the Napa Valley. Yesterday I decided to take a look at the REO listings for Wells Fargo, since they have a large market presence here in Northern California. So I went onto their REO site: http://www.pasreo.com/pasreo/public/content.do?pageID 00576 There were only 4 listings! Perhaps they’re not listing everything they have, things are better than we think, they’ve disposed of their inventory, or we’ll soon be seeing a glut come onto the market since foreclosure moratoriums have been lifted. Most large investors have similar sites, so for example here is the one for Chase: http://mortgage.chase.com/pages/other/co_properties_landing.jsp

For anyone who likes reading about scams, here is one for you: http://willcarless.wordpress.com/2009/04/18/a-staggering-swindle/

Yesterday we learned that Home Sales in the U.S. climbed 0.3%, slightly lower than was expected, and the median price of a new home decreased to $209,700 from $246,400 in April 2008. Still, last month’s value was up from March. And, at first rates continued their march higher as bond prices dropped, but then turned around. Why did they improve, leading to a few intra-day price improvements? “Treasuries rose for the first time in five days on speculation that the highest yields since November are unsustainable given forecasts that the U.S. housing market shows few signs of recovery.” In addition to that, apparently there is some feeling that, with rates where they are, our debt has become more attractive to own. Heck, if a buyer wanted to own 10-yr Treasury debt at 3.00%, they must really like 3.60%, right? It is not quite that simple, but nonetheless rates came down a little.

GDP came out this morning, showing that the U.S. economy contracted slightly less than initially estimated in the first quarter. Another hint that the recession is moderating? Maybe - Gross Domestic Product, which measures total goods and services output within U.S. borders, dropped at a 5.7% annual rate which is less than the 6.1% estimated by the government last month. Output, however, has declined for three straight quarters for the first time since 1974-1975. We still have the Chicago Purchasing Manager’s survey due out (estimated at “42”) along with the University of Michigan survey. After the GDP number the 10-yr yield is 3.61% and mortgage prices are perhaps .5 to .75 better than yesterday afternoon.

A woman was at her hairdresser's getting her hair styled for a trip to Rome with her husband. She mentioned the trip to the hairdresser, who responded:

"Rome? Why would anyone want to go there? It's crowded and dirty. You're crazy to go to Rome. So, how are you getting there?"

"We're taking United," was the reply. "We got a great rate!"

"United?" exclaimed the hairdresser. "That's a terrible airline. Their planes are old, their flight attendants are ugly, and they're always late. So, where are you staying in Rome?"

"We'll be at this exclusive little place over on Rome's Tiber River called Teste."

"Don't go any further. I know that place. Everybody thinks it’s gonna be something special and exclusive, but it's really a dump."

"We're going to go to see the Vatican and maybe get to see the Pope."

"That's rich," laughed the hairdresser. “You and a million other people trying to see him. He'll look the size of an ant. Boy, good luck on this lousy trip of yours. You're going to need it."

A month later, the woman again came in for a hairdo. The hairdresser asked her about her trip to Rome.

"It was wonderful," explained the woman, "not only were we on time in one of United's brand new planes, but it was overbooked, and they bumped us up to first class. The food and wine were wonderful, and I had a handsome 28-year-old steward who waited on me hand and foot. And the hotel was great! They'd just finished a $5 million remodeling job, and now it's a jewel, the finest hotel in the city. They, too, were overbooked, so they apologized and gave us their owner's suite at no extra charge!"

"Well," muttered the hairdresser, "that's all well and good, but I know you didn't get to see the Pope."

"Actually, we were quite lucky, because as we toured the Vatican, a Swiss Guard tapped me on the shoulder, and explained that the Pope likes to meet some of the visitors, and if I'd be so kind as to step into his private room and wait, the Pope would personally greet me.

"Sure enough, five minutes later, the Pope walked through the door and shook my hand! I knelt down and he spoke a few words to me."

"Oh really!  What'd he say?"

He said: "So, Who screwed up your hair?"

Rob

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