Goldman Predicts Recession, Senate To Vote Revised Bailout Bill, LIBOR Skyrocketing
John Courson, who ran Central Pacific Mortgage before they failed early last year, and who was appointed the chief operating officer for the Mortgage Bankers Association of America (and is set to become the association’s president in January), is facing a fraud and embezzlement lawsuit by former branch managers. The MBAA, of course, is now leading the industry’s effort to lobby Congress for the $700 billion Wall Street bailout, and this is the last thing that we need. The association represents 2,400 companies and 370,000 people from mortgage companies, brokers, banks, thrifts and insurance companies.
September brackets
For anyone who enjoys the college basketballs pools in March, or even if you don’t, check this out.
FHA HOPE news
Is there hope for the FHA HOPE program? Many were anxiously waiting for today for this program to kick-start their business… perhaps that is misplaced. The lenders and servicers have to agree to participate.
Lock volumes decline
Did locks slow for you last week? Join the crowd: the Mortgage Bankers Association’s index of applications dropped 23% from the prior week. The group’s purchase index fell 11% and its refinancing gauge slumped 35%, the most in six months. Purchase applications are at the lowest level since February 2002. The share of applicants seeking to refinance loans decreased to 44% of the total applications from 51.6% the previous week.
Current market & legislation
Treasury and mortgage prices are doing a little better today (10-yr 3.75%) on the bet that the $700 billion bank rescue plan won’t stop a recession. Congressional negotiators have agreed to supplement the rescue package with provisions they believe will attract sufficient House and Senate votes for passage, and the Senate may vote on it (the Emergency Economic Stabilization Act of 2008, which now includes raising the FDIC limit from $100k to $250k) tonight. The Senate’s strong support may provide the momentum for House passage, perhaps as early as tomorrow. Later this morning we’ll see the September ISM manufacturing index, expected to fall 0.4 points, not that mere scheduled economic releases seem to move the market much compared to other news.
Are we in a recession? If we’re not, I don’t know what one is. Goldman Sachs’ official forecasts sees the unemployment rate rising from 4½% in early 2007 to 7% in late 2009, and believe it would be slightly worse than the 1990 and 2001 recessions but significantly less bad than the 1973 and 1981 slumps. Economists said it now appears the economy shrank in the third quarter as consumers cut spending for the first time since 1991. A further contraction is likely in the next two quarters, some economists predicted, which would make the recession the longest since 1981-82.
LIBOR has been making the news recently. It seems that the cost of borrowing for one month in Euros and dollars has skyrocketed on speculation more financial institutions will have to be rescued. The London interbank offered rate that banks charge each other for such loans in Euros climbed to an all-time high of 5.07%, while the equivalent dollar rate surged to the highest level since January. Overnight dollar loans slid from yesterday’s record of 6.88% after funding constraints tied to the end of the third quarter passed. The Libor-OIS spread, a gauge of cash scarcity, held near a record.
Chase Correspondent Lending is implementing a revised relock and extension price adjustment structure, including the following: Aligning price adjustments to apply the same fees for all agency, non-agency, and government products, and eliminating the requirements for a manual fax registration for extensions and relocks.
Humor
4 old mischievous Grandmas were sitting at a table in a nursing home. About then an old Grandpa walked in.
One of the old Grandma’s yelled out saying, “We bet we can tell exactly how old you are.”
The old man said, “There ain’t no way you can guess it, you old fools.”
One of the old Grandmas said, “Sure we can! Just drop your pants & under shorts & we can tell your exact age.”
Embarrassed just a little, but anxious to prove they couldn’t do it, he dropped his drawers.
The Grandmas asked him to first turn around a couple of times & to jump up & down several times. Then they all piped up & said, “You’re 87 years old!”
Standing with his pants down around his ankles, the old gent asked, “How in the world did you guess?
Slapping their knees & grinning from ear to ear, all 4 old ladies happily yelled in unison, “We were at your birthday party yesterday!”