I wouldn’t either, and given today’s GDP numbers, neither would many others. GDP, which measures the value of all goods and services produced within U.S. borders, showed that (surprise!) the U.S. economy barely grew during 2008. Previous figures were revised downward to be about a third the rate previously thought, mostly because attributed to plunging home values undermining consumer spending. For all of 2008 GDP was +.4% instead of +1.1% as previously reported. More germane to mortgage banking, spending on residential construction was down almost 23% in 2008. And consumer spending, which makes up about 65% of GDP, was down .2% for the year.

In the 2^nd quarter of 2009, the number was actually a little better than expected, falling at a 1% annual rate. (In the first quarter GDP was -6.4%.) Still, with the contraction in the second quarter, U.S. GDP has fallen for four straight quarters for the first time since government records started in 1947. Residential investment dropped at a 29.3 percent rate in the April-June period after plummeting by 38.2 percent in the first quarter.

Lastly for economic news on this summer Friday, and the last business day of July, the U.S. Employment Cost Index rose by a bigger-than-expected 0.4 percent in the second quarter. For the last 12 months, the ECI was +1.8%, the lowest on record going back 27 years. On the good news side, yesterday’s $28 billion 7-yr auction went better than expected, and we saw some nice price improvements in Treasury securities and in mortgages. And the government announced that they had purchased over $20 billion in MBS’s last week, bringing their total for the year to about $702 billion. It can’t hurt, right? After the GDP data the 10-yr yield is down to 3.56% and mortgage security prices are better by more than .250.

Monday GMAC Bank will roll out their HomePath Conforming Fixed and ARM program. GMAC states that no appraisal will be required, it is available for Primary, 2nd/Vac and Investment properties, available for Conforming High Balance on the 30 Yr Fixed and 5/1 LIBOR ARM, and the down payment can be as low as 3%. “If the loan qualifies as a Flexible Mortgage (primary only), borrower may use flexible source of funds for the down payment, including gifts and grants.”

What is a "short pay-off"? In this situation, a lender will forgive a portion of the principal balance owing on the mortgage, which has been paid as agreed, if the borrower refinances the loan with a different lender. (Is this like giving your buddy $20 to take the girl you're trying to break up with on a date?) It is not the same as a "short sale" where usually the borrower is behind and/or is having financial difficulties. US Bank's Consumer Finance Division will accept short payoff transactions, as long as the reason for the short payoff is part of the new lender's program offering. And in addition, US Bank has a list of documents and agreements needed. Speaking of US Bank, their wholesale division reminded clients that they do not accept Property Inspection Waivers (PIWs) issued by DU.

In what some view as a “hobby company” for ex-Countrywide executives, PennyMac Mortgage Investment Trust went public yesterday, backed by BlackRock and Highfields. Critics are quick to point out that not only did they cut the size of their IPO by 20%, but after raising $335 million in cash their stock fell from $20 per share to $19.10. PennyMac’s earnings will come from buying mortgages from failed banks and redoing the terms.  Although once again critics claim that they originated the mortgages in the first place, and are now trying to profit from them again, someone has to do it, right? More than 1.5 million properties received a default notice or were seized in the U.S. during the first six months of 2009.

[Warning: R-rated.]
A guy fell asleep on the beach in Florida for several hours and got horrible sunburn, specifically to his upper legs. He went to the hospital, and was promptly admitted after being diagnosed with second-degree burns.
With his skin already starting to blister, and the severe pain he was in, the doctor prescribed continuous intravenous feeding with saline, electrolytes, a sedative, and a Viagra pill every four hours.

The nurse, who was rather astounded, asked, “What good will Viagra do for him, doctor?”
 The doctor replied, “It won't do anything for his condition, but it'll keep the sheets off his legs.”

Rob

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