Any of our agents who locked in borrowers prior to the last few days is feeling pretty good. Especially with the 10-yr hitting 3.95% this morning, and mortgage prices worse by another .250. Haven’t you heard? We’re done with the worst of it, the economy is going to pick up speed and great times are ahead! Can we really forget that foreclosure filings for April rose 65% on a year-to-year basis and 4% from March? According to RealtyTrac, there were foreclosure filings on 243,353 properties last month. Nevada had the nation's highest state rate last month. The highest total foreclosure-filing belongs to California, with 64,683 properties, followed by Florida, Ohio, Arizona and Texas. Merced, Calif., led tracked metropolitan areas in filing rates, trailed by Stockton, Modesto and Riverside-San Bernardino, Calif.; and Cape Coral-Fort Myers, Florida.

This morning we had April’s Consumer Price Index. Expected +.3%, prices only rose 0.2%. Core prices, which exclude volatile food and energy, were up just 0.1%, half the increase analysts had forecast, but energy prices are up 15.9% percent from the same time a year ago. (Later we have the Atlanta and Boston Fed presidents speaking.) Yesterday’s data was really a double-whammy of higher growth and higher inflation, and that's pushing yields up and leading to a flattening of the curve. Oil reached $126.98 a barrel, a record high. There is a 92% chance the Fed will hold its target lending rate at 2% into the summer, and traders also see a 43% chance the central bank will increase overnight funds to 2.25% by year-end.

First Horizon National Corp. is reportedly considering the sale or elimination of its mortgage business that could happen in the next three to four months, according to a report from Morgan Keegan & Co. Monday. First Horizon's mortgage business employs more than 3,600 people in 250 locations, and the reduction would impact 230 branches and 2,200 employees. The company has about $4 billion in mortgage loans on the books. Check out http://memphis.bizjournals.com/memphis/stories/2008/05/12/daily6.html?ana=yfcpc

Last week the House passed legislation that aims to refinance troubled mortgages and increase demand among first-time homebuyers. The President has threatened a veto, and the position of the Senate is unclear. http://www.house.gov/apps/list/press/financialsvcs_dem/press050808.shtml But, regardless, at some point federal intervention still appears likely. The policy differences aren’t as large as rhetoric implies, and enactment of some type of legislation could slightly help the decline in home prices by reducing the number of foreclosures and increasing demand among first-time homebuyers – at a cost to taxpayers.

There is no agreement on the bill yet as several Republicans view the plans as a bailout for lenders, speculators and irresponsible homeowners. The program involves giving struggling homeowners a new mortgage backed by the FHA. The Democrats believe that it would cost much less compared to the potential government exposure with the Fed’s guarantee in the Bear Stearns case, and as mentioned above the president may veto it. On top of Congressional differences, lies the threat of a White House veto of the bill, asking the question, “Why should the taxpayer, through the program, provide a guarantee of principal if lenders agree to reduce the principal of a borrower’s current mortgage?” This is a volunteer program by which a mortgage company would be required to write-down the value of a delinquent loan by 15% of the home’s current appraised value for borrowers who are 60 days late on their mortgage payments. The bill specifically excludes investors and those that lied about their income on the loan application. The bill also proposes an overhaul of Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks as well as bringing the FHA into the 21st century. Stay tuned as the saga unfolds.

• Last year I received several questions about finding investors for loans in Mexico. For some unexplained reason those questions have gone away, but for anyone interested in where mortgage lending stands in Mexico, check out http://www.mexidata.info/id1826.html
• HSBC announced what they expect for appraisals in soft markets. “In addition to standard appraisal policies, the appraiser will be required to provide the following where a property has been identified as being in a soft or stressed market or the LP findings include an Excessive Value Feature statement. Items include three (3) sales closed within the last six (6) months, one (1), preferably two (2) comparable pending sales validating the market is at least stable, and the appraiser must detail neighborhood marketing data for any changes from the most recent quarter for which data is available.
• Both Chase and Flagstar announced “significant improvements” to Agency Jumbo pricing. Chase, however, went on to announce the elimination or additional requirements for loans with LTV's >80% in declining markets as a result of continued mortgage insurance industry changes, and the elimination of their Flex97 and Alt97 programs.
• The Mortgage Bankers Association said that mortgage application volume rose 2.9% percent last week. Refinance volume increased 6.5% during the week, while purchase volume fell 0.7 percent, and refinance volume accounted for 48.7% percent of total mortgage applications.

Why I Fired My Secretary...

Last week was my birthday and I didn't feel very much like waking up that morning. I went downstairs for breakfast hoping my wife would be pleasant and say, "Happy Birthday!" and possibly have a present for me. As it turned out, she barely said good morning, let alone "Happy Birthday."
I thought... well, that's marriage for you, but the kids will remember. My kids came to breakfast and didn't say a word. So when I left for the office I was feeling pretty low and somewhat disappointed. As I walked into my office my secretary Donna said, "Good Morning, Boss, Happy Birthday!" It felt a little better that at least someone had remembered.

I worked until one o'clock and then Donna knocked on my door and said, "You know, it's such a beautiful day outside, and it's your birthday, let's go out to lunch, just you and me."
I said, "Thanks Donna, that's the greatest thing I've heard all day. We went to lunch, but we didn't go where we normally would go. We dined instead at a little place with a private table. We had two martinis each and I enjoyed the meal tremendously.
On the way back to the office, Donna said, "You know, it's such a beautiful day. We don't need to go back to the office, do we?"
I responded, "I guess not. What do you have in mind?"
She said, "Let's go to my apartment."
After arriving at her apartment Donna turned to me and said, "Boss, if you don't mind, I'm going to step into the bedroom for a moment. I'll be right back."
"Ok." I nervously replied. She went into the bedroom and after a couple of minutes she came out carrying a huge birthday cake...followed by my wife, kids, and dozens of my friends and co-workers; all singing "Happy Birthday."
And I just sat there...

On the couch...

Naked.

Rob