Points of Interest ©

 
•  The US government is expected to take control of Fannie and Freddie as soon as this weekend in a move designed to protect them from failure.

•  The move would come on the heels of a report that a record 4 plus million American homeowners were late in their payments or already in default.

•  Led by Treasury, Feds ready rescue plan.  Hank Paulsen's Treasury Department is creating a legislative proposal to buy illiquid mortgage assets from ailing financial institutions a la RTC.  In a separate move it will seek to boost its purchase of mortgage backed securities (MBS) to provide instant liquidity.

•  RTC concept is said to have been floating around Treasury since January.

•  Stock market rallies with the news.  News of the preemptive elimination of "short selling" of a specific list of financial stocks creates buying panic.  GE, on reports of being added to list is up more than 10% at one point.

•  Bond prices sink and yields are UP!  Yields on 10 year bonds have gone from around 3.40 to over 3.70%.

•  Fannie Mae is hiking the net worth requirement for approved seller/servicers.  How ironic is that?

•  SIPC to liquidate Lehman Brothers.  Lehman filed bankruptcy on Monday.

•  According to AARP, over 25% of mortgage delinquencies and foreclosures involve seniors.  Older homeowners with subprime mortgages are 17 times more likely to end up in foreclosure than their peers with prime mortgages.

•  The National Association of Hispanic Real Estate Professionals and Freddie Mac are co-sponsoring a new housing-crisis survival guide titled "The American Nightmare: Strategies For Preventing, Surviving and Overcoming Foreclosure."

•  Who will be the first to wed in this new climate: WaMu, Citibank, Wachovia or Morgan Stanley?

•   Deutsche Bank chief economist, says housing prices key to banking recovery.

•  American taxpayers now own an insurer, as Fed issues a $85 billion line of credit to AIG.

•  House Panel has OK'd new bill that would allow nonprofit housing groups to continue to arrange downpayment assistance on FHA loans and let HUD have some latitude in pricing mortgage insurance premiums based on the additional risk.

•  Appreciate the little things once taken for granted.

•  Understand the difference between having fun and being happy.

•  Realize time is a precious commodity.

•  Today's a day of reflection, remembrance and personal introspection.

•  Take a moment to appreciate what we do have.

•  On Sunday morning, the new GSE regulatory agency, the Federal Housing Finance Agency (FHFA) in conjunction with the Treasury Department placed congressionally chartered mortgage giants Fannie Mae and Freddie Mac into separate conservatorships, as the government committed as much as $100 billion to each while removing their CEOs and laying the groundwork for a radical and historic restructuring of the entire U.S. mortgage market.

•  The New York Times reports:

Robert Shiller, one of the names on the Standard and Poor's/Case-Shiller U.S Home Price Index made a few statements recently:

•  Home prices declines are already approaching the 30% plunge which happened in the 1930's during the Great Depression.  Prices are down around 18% he said, but noted that adjusted for inflation they are down 24%.

•  There are about 10 million homeowners whose mortgage debt is greater than the value of their home.

A possible positive takeaway is that we are at or near a bottom.  Schiller does suggest that any recovery will not be "V-shaped".  The Standard and Poor's/Case-Shiller index uses a 10 or 20 city composite and only tracks homes with two or more recorded sales at fair market value.  It does not include condos and co-ops and also excludes new homes.  It must be noted that Mr. Shiller is promoting his new book The Subprime Solution.

•  Integrity Bank is the nations 10 bank failure this year.  It had 60% of its assets tied up in construction and development loans.  Of those, more than 50% were seriously delinquent when Georgia regulators closed the $11 billion bank.

•  Can you recall a more serene August weather pattern than we had last month?  It was delightful.  Does that mean we are in for a nasty winter?

•   The Institute for Supply Management, or ISM said the group's inflation index hit a six month low.

•  Fitch, a ratings watchdog, sees Option ARM problems mushrooming next year.  Last week Wachovia was blasted by an analyst for the same reason saying the bank is treating its portfolio like a "distressed asset" and will be taking more hits on the loans.

•  Mortgage Insurance issuance in dollar volume hit new yearly lows in July.

•  MetFund has followed the green company concept since its inception.  The company switched to an all digital storage routine with a secure Linux server at the end of 2002 long before it was "cool".  Let us know what you are doing in your business to save energy and reduce waste.

•  This past weekend the Washington Post ran an article on the "New Lending Standards".  Many of these new standards were changing more than a year ago as we had previously noted in this article from June, 2007.