Overall, how is the mortgage industry doing? There are those who say, although the landscape and rules have changed, things are good. And there are others who are more worried. And there are those, such as the president of Sterling Financial in Southern California, who say, “Also, combined with the new HEPA rules and others, I have to liken the mortgage industry to a seriously ill patient being diagnosed by a multitude of doctors - none of whom are talking to each other, and some are still interns. The doctors are all prescribing medicines to fix the problem with no consideration given to how their drugs may interact with the drugs being given to the patient by the other doctors. The end result of this is usually is not good…”

As you may recall from last week, we finished off a roller-coaster of economic news with the unemployment data. Rates moved higher, and once again analysts are optimistic that we’ve seen the bottom. Prices dropped, and rates moved higher: the 10-yr hit 3.88%. This week the markets will be seeking more directional hints, especially with $75 billion of securities to auction off. There is no news of substance today or tomorrow, but on the 12^th we have the Trade Balance figures. On Thursday we’ll see Import and Export Prices, Jobless Claims, and Retail Sales. Friday we have a slew of data with the Consumer Price Index, Industrial Production and Capacity Utilization, and the University of Michigan Consumer Sentiment Survey. And with no substantive news this morning, the yield on the 10-yr Treasury note is 3.83% and mortgage prices are slightly better than Friday afternoon.

Returning to the unemployment data, it would appear that the headline-grabbing numbers were better than the details, if that makes any sense. The better-than-expected monthly job loss figures (247k vs. 325k anticipated) were largely driven by more government jobs being created/not lost and less by private sector jobs. Is this enough to get our economy out of the recession? Some would argue that “a job is a job”, but critics say “no”. And since the US has more of a service-sector economy, rather than a manufacturing economy, and service sector jobs declined even further in July, that doesn’t help the case that “we’re out of the woods”.

Who are the big lenders in 2nds across the nation? During the first half of 2009, according to National Mortgage News, Bank of America led the pack, followed by Wells Fargo, Chase, CitiMortgage, SunTrust, and then US Bank. Interestingly, US Bank's numbers were up 20% versus 2008, Wells' numbers were basically unchanged, whereas the other investors were down between 64 to 86% versus the first half of 2008 – and BofA still leads the group!

Stonewater Mortgage’s wholesale group told clients that “The HVCC process allows for the portability of appraisals and StoneWater Mortgage has created a process to accept reports that were ordered by other lenders according to the Code. In order to facilitate appraisal transfers to StoneWater, the following documents will be required at time of the transfer: Legible Appraisal, Valid/Current Appraiser’s License, Transfer letter from Lender who ordered the appraisal, HVCC Certification/Acknowledgment from Lender who ordered the appraisal, and Evidence of the Appraiser’s E & O Insurance Declaration Page (applies to FHA reports only as it will be necessary for StoneWater to approve the FHA appraiser who completed the original appraisal).

Per the Washington Post, the Obama administration is considering an overhaul of Fannie and Freddie. Soon after the news story, the administration “downplayed” any plan that would strip the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market. Similar to the RTC in the 80’s, the bad debts the firms own would be placed in new government-backed financial institutions (“bad banks”), leaving two healthy financial companies with a clean slate. Who knows what will happen, although the taxpayers have paid more than $1.5 trillion, including $85 billion in direct aid, to keep the mortgage market working through Fannie Mae and Freddie Mac so far. James Lockhart, the chief regulator of Fannie Mae and Freddie Mac, said there needs to be a "good bank, bad bank" structure in his resignation interview last week. Remember, though, that between the two of them they own and insure trillions of dollars of existing mortgages – who is going to foot the bill for future losses?

At least they aren’t, to the best of my knowledge, the subject of a criminal probe. Colonial BancGroup, however, faces a criminal probe by the U.S. Department of Justice related to accounting irregularities at its mortgage lending unit. Yes, Colonial supplies a large portion of the current warehouse needs for mortgage banks, but last week the agency that investigates misuse of U.S. banking bailout money raided Colonial's mortgage warehouse lending division in Florida, and the SEC issued subpoenas to the company seeking disclosures related to its participation in the U.S. Treasury Department's Troubled Asset Relief Program (TARP) and its accounting for loan-loss reserves. Taylor Bean has already fallen by the wayside. Colonial isn’t small potatoes: 355 branches in Florida, Alabama, Georgia, Nevada and Texas with over $25 billion in assets.

If Colonial fails, it would be the largest failure this year. But they won’t be alone: with the three from Friday, U.S. bank failures rose to 72 this year. First State Bank and Community National Bank, both based in Sarasota, Florida, and Community First Bank in Prineville, Oregon, were shut down by the FDIC. The cost is estimated to be another $185 million.

After his recent hole in one, Frankie and his buddies were hanging out and planning a 5-day golf outing.  Unfortunately, he had to tell them that he couldn't go this time because his wife wouldn't let him.
After a lot of teasing and name calling, Frank headed home totally frustrated. The following week when Frank's buddies arrived at the golf resort to play golf, they were shocked to see Frank sitting in the lobby, drinking a beer, holding his putter!
"How did you talk your missus into letting you go, Frankie?"
"I didn't have to," Frank replied. "Last I night I slumped down in my chair with a beer to drown my sorrows. Then, the wife snuck up behind me and covered my eyes and said, “Surprise!” When I peeled her hands back, she was standing there in a beautiful see through negligee and she said, “Carry me into the bedroom and tie me to the bed, and you can do whatever you want”

“SO HERE I AM!"

Rob

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