Mark Twain said, “If you don’t read the newspaper you are uninformed, if you do read the newspaper you are misinformed.” If one read the newspaper lately, you’d have seen that it’s getting pretty crazy; we’re bailing out Wall Street, we’re bailing out banks, we’re bailing out car companies…In fact, there was a special box on your tax form this year you could check if you want a portion of your taxes to actually go to running the government.
Chrysler Files Chapter 11
Yesterday Chrysler filed for Chapter 11 bankruptcy after talks with a small group of creditors fell apart. Analysts believe that this will give the company time to finish writing the partnership with the Italian car maker Fiat. The government, which is in effect you and me, has already poured $4 billion in loans into Chrysler and would provide up to $8 billion more to carry the company through bankruptcy. Our tax money at work.
Guaranty Bank Folds
Speaking of biting the dust, here is another one. GB Mortgage is gone. As a reminder, “GB Mortgage is a wholly owned subsidiary of Guaranty Bank, FSB of Milwaukee, Wisconsin. GB Mortgage works (now “worked”) with an extensive network of third party originators who provide consumer direct mortgage lending services. We continue to experience strong growth and currently serve more than 5,000 independent mortgage brokers and bankers in 47 states. Our parent company, Guaranty Bank, is a fourth generation, family owned company. Founded in 1923 during the Great Depression by Joseph Saffro, its one small office in downtown Milwaukee, Wisconsin offered only mortgages and savings accounts. It survived the lean years of the twenties and began growing in the 1930s.”
Contrary to popular rumors, I have not seen or heard of Las Vegas odds makers betting on how successful HVCC will be. So we may as well take it seriously. A cottage industry has sprung up around it. One, named ServiceLink, includes an appraisal management company, appraisal panel management, and warranted valuations. Look for more companies to start offering help for originators in dealing with the HVCC.
Bankruptcy Judges Can’t Modify Mortgages, For Now
The “Cramdown” legislation, which would have allowed bankruptcy judges to modify mortgages, failed to pass the Senate yesterday. Despite the administration’s attempts to negotiate with Bank of America, J.P. Morgan Chase and Wells Fargo for weeks in order to get their support, but the financial services industry refused to support it. Supporters argued that the measure would have kept 1.7 million borrowers in their homes, and would have allowed bankruptcy judges to lower the interest rate or principal balance on troubled mortgages.
Top 10 Mortgage Companies 1Q2009
Who were the top 10 loan producers (all channels) during the first quarter of 2009? It is probably little surprise that the top 5 were, in order, Wells Fargo with $103 billion, BofA with $90 billion, Chase with $39 billion, Citi with $24 billion, and the SunTrust with $13 billion. These were followed by US Bank, Provident, Metlife, Flagstar, and Res Cap. (Wells did twice as much volume as the #6-10 combined, according to the Inside Mortgage Finance numbers.)
Yesterday the market learned that the Chicago Purchasers’ April Index Increased to 40.1, the highest level since September, from 31.4 the prior month. (Anything below 50 is a contraction.) Is the recession beginning to ease? Especially if one looks at consumer confidence and home sales, for what they’re worth, maybe. And if we come out of recession, does that lead to higher rates? Perhaps, and currently the market seems to believe so although it is difficult to figure out if the higher rates are due to supply by the Treasury or by the economy improving. (The US sold $101 billion this week, and is slated to do another $71 billion next week.) Treasury prices fell, and rates increased, for a 3rd straight day yesterday (and we could be there again today) and April may have the largest price drop since January. The yield on the 10-yr hasn’t been this high since around Thanksgiving. Stocks, however, seem to have had their biggest monthly gain in 9 years! The only news out this morning is the University of Michigan survey, Factory Orders, and the ISM survey – all later in the morning – and rates are continuing to move higher. Mortgage prices are worse by another .125, and the 10-yr is up to 3.17%.
Mick met Paddy in the street and said, “Paddy, will you draw your bedroom curtains before making love to your wife in future?”
“Bejaysus why?” Paddy asked.
“Because,” said Mick, “the whole street was laughing when they saw you making love yesterday.”
Paddy said, “Well, the laugh’s on them…I wasn’t even home yesterday.”