The Wall Street Journal reports that, due to the federal tax credit to buy high-mileage cars, the Federal government is now paying Americans to buy golf carts. As it turns out, the IRS has ruled that golf carts qualify for the electric-car credit as long as they are also road worthy. The federal credit “provides from $4,200 to $5,500 for the purchase of an electric vehicle, and when it is combined with similar incentive plans in many states the tax credits can pay for nearly the entire cost of a golf cart”. At a list price of $8-10,000, and a top speed of 15 to 25 miles per hour. "The Golf Cart Man" is offering a deal where “you can buy the cart for $8,000, get a $5,300 tax credit off your 2009 income tax, lease it back for $100 a month for 27 months, at which point Golf Cart Man will buy back the cart for $2,000. ‘This means you own a free golf cart or made $2,000 cash doing absolutely nothing.’”

Wells Fargo can afford to buy a few golf carts – but let’s hope that they don’t until they pay that loan back to the Federal government. Wells reported a 3^rd straight quarter of record earnings - net income of $3.2 billion, almost double 2008, $9.5 billion year to date, up 75 percent from last year. This includes net interest margin of 4.36% - so it helps paying nothing on checking accounts and earning 5.5% on mortgages! As a sign of the times, Wells pumped up their credit reserves by $1.0 billion, hitting $24.5 billion and about 3% of total loans and 118 percent of nonaccrual loans on their books.

Jefferies reported a record 3^rd quarter, with record net revenues of $700 million, up 155% from the prior year, and record net income of $86 million, versus a loss of $31 million in the prior year. USB Bancorp's 3^rd quarter profit was up almost 5% due to net interest income and fee revenue growth. They made about $600 million, which included $415 million of provision for credit losses, $76 million of net securities losses and a $39 million gain related to the company's investment in Visa Inc. And Morgan Stanley reported net revenues of $8.7 billion and a net income of $757 million.

The U.S. government accused Lend America, based in NY, of committing fraud and asked a federal judge to shut down its government-backed loan operations. Supposedly Lend America falsely certified to HUD that borrowers who received over $14 million in loans met HUD's lending requirements when the defendants knew they did not. The Federal Housing Administration, a division of HUD, said it is seeking to shut down Lend America's government-backed loan operations.

Fannie Mae brought out the details of their “retirement” of the HomeSaver Forbearance plan (introduced 6 months ago and gone by the end of this month) and their conversion to the Payment Reduction Plan (PRP). Fannie’s goal for the PRP is to “allow for additional time to identify a permanent foreclosure prevention solution for a borrower who has encountered a financial hardship while having the borrower maintain a payment stream.” The borrower will be given “temporary payment relief while the servicer and the borrower work together to find the appropriate permanent foreclosure prevention solution. Under a PRP, the servicer can reduce a borrower’s monthly principal and interest (P&I) payment by up to 30 percent for up to six months.” Under the terms of the old plan, up to 50% of the borrower’s contractual monthly mortgage payment (principal, interest, taxes, insurance, and other escrow (PITIA)) was reduced for up to six months while a permanent solution is explored. Unlike the old program, however, the PRP includes non-owner occupied properties (investment properties and second homes).

Was your lock desk slow last week? The MBAA index of loan applications fell 14% last week – maybe everyone was at the conference in San Diego? Refinancing decreased 17% and the purchase gauge fell over 7%.

The good news is that according to the median estimates, the FOMC will keep the target rate for overnight funds unchanged for another year. And yesterday, after the initial movement, rates didn’t do much and actually stayed in a pretty tight range. Here this morning things are slightly worse, in spite of stocks around the world being down, and no US economic news. The Treasury’s 10-yr is at 3.39% and mortgages look weaker as well with current coupon 30-yr MBS’s are down (worse) about .250 in price. Later this morning, however, the Federal Reserve will release their Beige Book which details economic conditions in all the US regions. As I’ve said, all one has to do is drive down Main Street in any town and count the “For Rent” signs…

A husband and wife are on the 9th green when suddenly she collapses from a heart attack! 
"Help me dear," she groans to her husband.
The husband calls 911 on his cell phone, talks for a few minutes, picks up his putter and lines up his putt.
His wife raises her head off the green and stares at him. "I'm dying here and you're putting?"
"Don't worry dear," says the husband calmly, "they found a doctor on the second hole and he's coming to help you.”
"Well, how long will it take for him to get here?" she asks feebly.
"No time at all," says her husband. "Everybody's already agreed to let him play through."

Rob

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