•  Banks to Make Record $38bn From Overdraft Fees
US banks stand to collect a record $38.5bn in fees for customer overdrafts this year, with the bulk of the revenue coming from the most financially stretched consumers amid the deepest recession since the 1930s, according to research the Financial Times reported.

Here's how they are gettin' ya: Data show that due to the crisis many banks lift charges on overdrafts and credit cards in order to boost profits.  A survey by the Consumer Federation of America found that five of the ten largest banks have raised their overdraft fees in some way in the last year.

•  Social Mood Shift: With the Prolonged Slowdown the criminalization of poverty has actually been intensifying.
“A new study from the National Law Center on Homelessness and Poverty, which found that the number of ordinances against the publicly poor has been rising since 2006, along with ticketing and arrests for more “neutral” infractions like jaywalking, littering or carrying an open container of alcohol.”   Is It Now a Crime to Be Poor?  New York Times

•  Fear of Next Credit Freeze Revealed in Treasurers Hoarding Cash
“Two years after credit markets seized up and caused the worst financial crisis since the Great Depression, companies are hoarding the most cash in at least a decade.” Bloomberg.com

•  Fed Focusing on Real-Estate Recession as Bernanke Convenes FOMC
“Property values have fallen 35 percent since October 2007, according to Moody’s Investors Service.  That’s making it tough for owners to refinance almost $165 billion of mortgages for skyscrapers, shopping malls and hotels this year”  Bloomberg.com

•  Last week, Mortgage Guaranty Insurance Corp. - the nation's largest MI company in terms of policies-in-force - posted a $340 million loss in the second quarter, warning that it may not meet minimum capital standards that would allow it to continue writing new policies.

•  Lenders Continue to Keep Payrolls Lean
Mortgage companies trimmed their payrolls of 500 full-time employees in June and continue to hold back on hiring despite stabilizing home sales and high demand for refinancings.

•  Fannie Purchases 16,000 HARP Loans in July
The Obama administration's Home Affordable Refinance Program jumped into second gear in July as Fannie Mae purchased 16,000 HARP refinancings in a single month.

•  Survey Finds Consumers Seeing Housing Market Better
There are signs the housing markets are returning to a more normal state, according to a survey conducted for Relocation.com.

I hope this finds you well and your accomplishments great.

•  The headline screams that new home sales jump nearly 10% in July.

•  Buried in the text of MarketWatch article is this caveat:

"Government statisticians have low confidence in the monthly report, which is subject to large revisions and large sampling and other statistical errors.  In most months, the government isn't sure whether sales rose or fell.  The standard error in July, for instance, was plus or minus 13.4%."

Read the full government report.

•  The prices of single-family homes in 20 major cities rose a seasonally adjusted 1.4% in June, the second increase in a row after falling every month for three years, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.  BUT, FHFA reports prices falling 0.7% across the nation from the first quarter to Q2.

•  Ben Bernanke has been renominated to head the privately owned Federal Reserve.FHAF  The intriguing Erin Burnett of CNBC notes that while President Obama had a flag pin on his lapel the newly nominated Bernanke did not.  Significant?

Larry Summers, an uncompromising advocate of deregulation and liberalization, blamed the Asian crisis, in part, on "crony capitalism."  Increasingly, government actions to rescue and re-regulate the financial system display many of the characteristics of the policies that Summers once criticized.

The phrase "military industrial complex" described the complex inter-relationships and influences that shaped America in the postwar era.  The "finance government complex" (dubbed "Government Sachs" by its critics, perhaps because of the ubiquity of Goldman Sachs (GS) execs in high places) replaced the original arrangement in the late twentieth century, and may well prove to be the undoing of American economic dominance.
                                         Satyajit Das   Minyanville.com

•  Debt Repudiation:  Fewer Are Catching Up on Lapsed Mortgages
"Homeowners who fall behind on their mortgage payments have become much less likely to catch up again, a new study shows," the Wall Street Journal reports.  Indeed, this is the next and final stage of the debt crisis: debt repudiation.

•  FHA Won't Implement HVCC
The Federal Housing Administration has no plans to implement the Home Valuation Code of Conduct, Commissioner David Stevens told a delegation from the National Association of Mortgage Brokers.

•  Fitch: Delinquency Cure Rates Could Be Problematic
The increasing number of borrowers "underwater" on their U.S. prime credit mortgages appears to be behind a decrease in private-label securitized loans' delinquency cure rates, according to Fitch Ratings.

•  July Existing Home Sales Up 6.5%
Single-family existing home sales jumped 6.5% in July from the previous month as "demand for foreclosed and lower-priced homes spiked," according to the National Association of Realtors.

There's an old trading belief that highs are formed on good news and lows are created on bad news.  Uh, oh.

If you read nothing else today, please take a look at this column.  If you don't read it now, file it , bookmark it, something...  It's that important:  Dismantle Bernanke's 'Happy Conspiracy' ... now!

•  “Warning: Behavioral economics means one thing to Wall Street and Washington and something quite different to Main Street.  It depends on whether you're the nudger or nudgee, the manipulator or the manipulated, the guys making lots of money or the folks being scammed.”

Paul Farrell goes on to say, “Mainstream America feels a mysterious angst, like (Mel) Gibson in "Conspiracy Theory."  A disruptive anger is filling America, a rebellion against being manipulated, recently captured by Frank Rich, the New York Times columnist:

"This mood isn't just about the banks, Public Enemy No. 1.  What the Great Recession has crystallized is a larger syndrome that Obama tapped into during the campaign.  It's the sinking sensation that the American game is rigged -- that, as the president typically put it a month after his inauguration, the system is in hock to 'the interests of powerful lobbyists or the wealthiest few' who have run Washington far too long.'"

They are sitting around a table right now wondering how they got millions of American borrowers to take a mortgage that from the beginning was predicted to “blow up” in about 18 months.  The option ARM, from not only the likes of Washington Mutual (consumed by JP Morgan Chase) and World Savings (a subsidiary of Golden West Financial Corp. originally taken over by Wachovia only to be “rescued” by Wells Fargo) with its index where it was in 2007 would reamortize in less than 18 months.  The new payment was far greater than that inviting, albeit artificial, initial low minimum payment.

Borrowers actually believed that they could borrower $500,000 and make a payment based on a 1% rate for thirty years.  $500,000 for $1,608.20 per month for 30 years?  Not likely.  None of our customers, but the blogs are full of other's horror stories.

Why?  Very simple: "Evidence is accumulating that the human brain systematically misjudges certain kinds of risks," writes New York Times columnist Nicholas Kristof.  Further, “threats get our attention when they are imminent, while our brain circuitry is often cavalier about the future.”  (emphasis is mine).

We're wired to respond to crises, while pushing off the real big problems such a what happens when our artificially low, minimum mortgage payment eventually goes up.

•  TBW Halts Online Payments and Deductions
Taylor, Bean & Whitaker said it is no longer able to offer online payments capabilities nor can it do automated payment deductions for those consumers whose loans it still services.

•  Borrowers 60 Days+ Past Due Hit High of 5.81%
Mortgage loan delinquency, borrowers 60 or more days past due, increased for the tenth straight quarter, hitting an all-time national average high of 5.81% for the second quarter of 2009, according to the latest data from TransUnion.com.

•  Florida Man Sentenced for Commercial Mortgage Fraud
After being found guilty of fraud and money laundering charges in connection to participating in a commercial mortgage fraud scheme, Larry P. Nardelli of Tampa, Fla., has been sentenced to 48 months in federal prison and ordered to pay $26.3 million in restitution.

•  Mortgage Broker Contraction May Be Greater than Thought
Contraction in the mortgage broker arena may be even greater than most realize, if statistics presented in Savannah at the American Association of Residential Mortgage Regulators' annual conference are on target.

•  In our last article we discussed how the credit bureaus had co-opted the FCRA replacing joint use with reissue and secondary issue thus creating more fees.  In some cases the fee would increase more than 100% over the cost of the report itself.

Today, we will review the other, additional hidden costs of the credit bureaus' move.

To produce the best terms (rate and cost) for you, the consumer, we take your credit package to a number of lenders.  But here is the hidden cost: because too often consumers look at the up front costs instead of the total cost over some fixed time frame many originators skip the part about finding the best terms.  And worse, this practice by credit bureaus with the support of major financial institutions has forced many originators from the business creating a less competitive landscape from which consumers can choose.

Less competition gives the money center banks pricing power, and therfore you pay higher rates and costs.

The big three credit bureaus have monopoly power in the mortgage credit industry and have created a huge new revenue stream and have reduced their competition.  This is not a consumer friendly event and has been accomplished to this point in the face of court rulings and federal agencies recognition of “joint use”.

The next time you hear someone speak of competition and free markets let's hope they are not from the credit bureau industry: that would be hypocrisy.

•  Feds: Second Lien Should Not Impact Loan Mod Decision
Federal regulators are advising banks that their ownership of a second lien should not influence their decision to modify the first mortgage that they are servicing for other investors.

•  Freddie Mac Survey Sees Rates Decline
The 30-year fixed-rate mortgage averaged 5.22% with an average of 0.6 points for the week ending Aug. 6, according to the Freddie Mac Primary Mortgage Market Survey.

In the spring of 2007, we noticed unusual charges starting to appear on our credit report invoices.  And it was driving the cost of credit reports to our customers higher.

What we found was that the three national credit bureaus – Experian, TransUnion, and Equifax – had unilaterally reinterpreted federal law and issued policies that force a majority of mortgage originators to pay multiple times for the same credit report during the mortgage transaction.

The new policy created the terms “reissue” and “secondary use” of a consumer's credit report replacing the Fair Credit Reporting Act's (FCRA) term, “joint use”.  The term “joint use” is recognized by the Federal Trade Commission (FTC), the Federal Reserve Board, and the Office of the Comptroller of the Currency.  Joint use allowed the report to be used among multiple lenders in seeking the best price and terms for the borrowing consumer.

The FCRA changed, not by congressional action but by the unilateral action of the three major credit bureaus.  They have a monopolistic grip on the mortgage credit reporting due to the required merged credit reporting requirements of Fannie Mae, Freddie Mac and the US Department of Housing (HUD).

The consumer pays the greatest cost as they face multiple issues from the reissue/secondary use policy.

The first and least prohibitive cost is that of the credit report itself.  The cost is now multiplied by the number of lenders reviewing the same information.  In the past, once a mortgage originator purchased a credit report, the price remained constant no matter how many potential lenders reviewed the information in the search for the best terms for the consumer.  Now, if less than a half dozen lenders reviewed the same information it could cause the cost of the original report to expand by more than 100%.

In 2003, when the FCRA required a free credit report for each consumer annually, the bureaus assessed a recovery fee of $0.11 per credit report.  We don't believe that justifies increases of 100% or more.  That, our dear readers, is outright gouging.

This is just one significant anticompetitive feature of today's mortgage market.

(Come back for the other, more excessive costs of the policy).