No one ever says, "It's only a game!" when their team is winning. Who were the top ARM producers in the first 9 months of 2007? The top 5, in order, were Countrywide, Chase, Wells, WAMU, and Citi. What about Interest Only or Option ARM leaders? Countrywide, Wells, WAMU, Indy, and Wachovia.

For anyone thinking of disposing any electronics this year, Christina Perez (Walnut Creek) sent in an interesting site and said, “I thought this Free E-waste notification might be useful, especially after Christmas when people will be replacing electronics. http://www.noewaste.com/calendar/index.php

This morning the world’s political scene was hit with the assassination of Pakistan’s opposition leader, former Prime Minister Benazir Bhutto. One often sees a flight to quality after an event like this, and in a “thinly-traded” market like this we are indeed seeing one: it is helping the dollar and rates somewhat. In addition to that tragic news, here in the U.S. we had Durable Goods, up only .1% versus an expected +1.5%, and Jobless Claims +1k to 349k (the 4-week moving average was -1k to 342k). After this collection of news we find the 10-yr yield down to 4.18% and mortgage prices better by .250 in price. The markets will closely watch Dec US consumer confidence index, which is expected to drop to 86.5 from a 2-year low of 87.3 in November.

Why are some bearish analysts thinking that the housing & mortgage market get worse before it gets better? They point to the statistic that more than one out of every four homes sold in 2005 and 2006 were sold to speculators and now house prices are at or below 2005 levels. This means that many non-owners have no equity in their property (and then some considering transaction costs). Much of this demand is gone, and may not return for many years, and less demand equal lower prices - simple as that. The analysts believe that developers overbuilt the national housing stock by a very large amount in part to meet this speculator demand, perhaps in the area of two to three million excess units which could translate to a minimum of 3 years before population gains naturally work it off.

The Mortgage Bankers Association’s (MBA) recently released the National Delinquency Survey for the third quarter of 2007. Unfortunately it showed credit deterioration across all mortgage products, most notably for adjustable rate mortgages (ARMs). The national delinquency rate for all loans was 5.59% (up 20% y-o-y) and 9.59% for ARMs (up 48% y-o-y). The deterioration was sharpest in CA, FL, AZ, and NV. On an incremental basis, residential mortgage credit deterioration is highest in states with more investor (i.e. non-owner occupied) properties. Another area of concern is the mid-western rust belt states (MI, OH and IN) where delinquencies are relatively stable, but remain at elevated levels.

The Securities and Exchange Commission reportedly is investigating how Washington Mutual Inc., the nation's largest savings and loan, handled mortgages that were possibly based on inflated home appraisals. "We are voluntarily and fully cooperating with the SEC's inquiry as well as the [Office of Thrift Supervision]" - the company's federal regulator - "and look forward to bringing the facts to both the regulators and public," according to a company statement published Friday by The Wall Street Journal. Shares of Seattle-based Washington Mutual fell 3.3% on Friday, and have fallen 60% since mid-September. "After spending a month and a half investigating these allegations, we can say with confidence that there has been no systematic effort by WaMu to inflate home appraisals," the company statement said. "We take these allegations very seriously." The company's chief legal officer, Fay L. Chapman, earlier this month said she was retiring.

A young Scottish lad and lass were sitting on a low stone wall, holding hands, gazing out over the loch.  For several minutes they sat silently, then finally the girl looked at the boy and said, "A penny for your thoughts, Angus."

"Well, uh, I was thinkin'...perhaps it's aboot time for a wee kiss."

The girl blushed, then leaned over and kissed him lightly on the cheek. Then he blushed. The two turned once again to gaze out over the loch.  Minutes passed, and then the girl spoke again. "Another penny for your thoughts, Angus."

"Well, uh I was thinkin'...perhaps its noo aboot time for a wee cuddle."

The girl blushed, then leaned over and cuddled him for a few seconds. Then he blushed. Then the two turned once again to gaze out over the loch. After a while, she again said, "Another penny for your thoughts, Angus."

"Well, uh I was thinkin'...perhaps its aboot time you let me pewt ma hand on yer leg." The girl blushed, then took his hand and put it on her knee. Then he blushed. Then the two turned once again to gaze out over the loch before the girl spoke again.  "Another penny for your thoughts, Angus."

The young man glanced down with a furled brow. "Well, noo," he said, "My thoughts are a wee bit more serious this time."

"Really?" said the girl in a whisper, filled with anticipation.

"Aye," said the lad, nodding.  The girl looked away in shyness, began to blush, and bit her lip in anticipation of the ultimate request.

And he said, "Din'na ye think it's aboot time ye paid me the first three pennies?"