With the price of gold at $850/ounce (a 28-year high), and the mortgage banking business being what it is, I figured that it was time to call my 84-yr old father since he has several gold fillings in his mouth. “Dad, have you ever thought about replacing your fillings with nice ceramic ones?” Unfortunately he immediately sensed a trap, reminded me about how I had wanted to use their yard to plant corn for ethanol last year, and handed the phone to my mother. But not before he reminded me of this yield-spread-premium situation currently in the press. There are many questions yet to be settled (especially the one regarding whether or not, if the loan is kept “in-house”, the law even matters – one of the reasons our agents like using NL Inc.’s Bank is that no YSP is even disclosed to their customer). But if you’d like to read the proposed law, here it is: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname0_cong_bills&docidf:h3915ih.txt.pdf

Is Nationwide Mortgage Licensing around the corner? Check out http://www.mortgagenewsdaily.com/382007_Mortgage_Licensing_System.asp

A person can buy insurance on their car, their home, and their voice, whatever. Homeowners with a loan higher than 80% LTV often/usually have mortgage insurance. What about insuring the bond that the mortgage went into?  There are firms that sell insurance to banks and other major investors for bonds backed by mortgages and the complicated investments that hold the bonds, known as collateralized debt obligations (CDOs). The policies are designed to protect investors in case the securities default. As CDOs grew into a trillion-dollar business, bond policies (called credit default swaps) became a lucrative source of revenue for companies such as American International Group, MBIA, Ambac Financial Group, and ACA Capital – hardly household names. But a flurry of downgrades on mortgage-backed securities and CDOs has started to affect insurers' earnings. Do they have the capital required to handle losses well into the billions? Good question – and no one knows for sure yet.

• For Wells Fargo, the maximum CLTV for nonconforming conventional loans has been changed to 90% rather than the previously announced 89.99%. However, in early December Wells will change to “15-year Term For Interest-Only Payment Feature For Conforming 30-year Fixed Loans Will No Longer Be Accepted - locks for loans with the 15-year interest-only term option (180 months) will no longer be accepted for conforming 30-year fixed loans. The interest-only terms available for non-conforming 30-year fixed loans will not change.
• Fannie Mae completed a review of their portfolio and promptly announced a series of price changes that will, at some level, filter down through many investors next March. Specifically, they are ratcheting up the price hits on loans with LTV’s greater than 70% and FICO’s below 680. (Does anyone do those anymore anyway?) For example, if the FICO is below 620 and the LTV higher than 70%, there will be a two point hit. The changes do not apply to My Community, Expanded, or 15-yr terms, and it is believed that FHLMC will follow.
• California wholesaler ResMae announced that they have ceased accepting locks.
• Indymac reported a net loss of $202.7 million ($2.77 per share) for the third quarter, compared with net earnings of $86.2 million ($1.19 per share) a year earlier.

The dollar is down again after China's comments on the need for foreign exchange diversity…oil is at $98/barrel…gold is at $850 per ounce… 2-yr Treasury rates are the lowest they’ve been since 2005 and the 10-yr yield is 4.34%...GM is taking a $39 billion non-cash charge for the 3^rd quarter… and WAMU is predicting a $1.5 trillion mortgage market in 2008. Mortgage prices for 30-yr A-paper product are up (better) slightly. This morning’s only economic number was 3^rd Quarter Productivity (+4.9%) and Labor Costs were -.2%. Do these matter? Probably not, given the value of the dollar and commodities.

And finally, the last rules for the workplace:

Anyone can do any amount of work provided it isn't the work he/she is supposed to be doing.
If you are good, you will be assigned all the work. If you are really good, you will get out of it.
You are always doing something marginal when the boss drops by your desk.