3,800 Indymac folks are now, or will soon be, looking for jobs. “…effective July 7, 2008, that we will no longer accept any new loan submissions or rate locks in our retail and wholesale forward mortgage lending channels, except for our servicing retention channel. We plan to honor all of our existing rate-locked loans and will continue to fund these loans in the coming weeks. While the managers and employees in these units have worked incredibly hard, these units are not currently profitable due to the continuing erosion of the housing and mortgage markets… we will refocus our lending efforts on supporting and building within regulatory constraints Financial Freedom, our reverse mortgage unit (FHA production only), and on continuing the retention activities associated with our servicing portfolio. Unfortunately, the above actions will necessitate the reduction in our present workforce from approximately 7,200 to roughly 3,400 or so over the next couple of months, which should reduce our operating expenses by roughly 60%. We will retain about 1,100 employees in loan servicing in Kalamazoo and Austin; 350 in our servicing retention group in Irvine and Kansas City; 800 at Financial Freedom, primarily in Irvine, Sacramento, and Atlanta; 400 in our Southern California retail and web bank; 500 in portfolio management and administration, largely in Pasadena; and 250 in discontinued businesses.”

Yesterday shares of Fannie Mae and Freddie Mac both plummeted after an analyst with Lehman Brothers wrote in a report that the two companies may need to raise billions of dollars if accounting rules (FAS 140) are changed. Most experts feel that they will not have to come up with the $75 billion, but the analyst’s report did its damage. Shares of Fannie Mae fell more than 16% to $15.74, and hit an intra-day low. Freddie Mac plunged nearly 18% to $11.91. It also hit a new 52-week low of $10.28 a share before recovering slightly at the end of the day.

If there is any good news in this, it would be that the news has caused a slight flight to quality bid in Treasury securities. The 10-yr yield is down to 3.92%. But mortgage prices have lagged, and this morning they are only better than yesterday afternoon by .125. There is no economic news of great importance.

Both Wells Fargo correspondent and wholesale channels announced that beginning next week, neither will buy Freddie Mac’s Alt 97 program and that mortgage insurance from Triad will not be acceptable after the end of July.

Thornburg published their 2008 Sellers' Guide which has a number of program and underwriting revisions that are reflective of the current financial climate. All loans that have been locked or registered prior to July 14, 2008 will be underwritten using 2007 guidelines. Their exceptions process remains unchanged. At this point, however, they are still pretty much on the sidelines for locks and decent pricing. Late July/August…

Here in California, SB1137, which is designed to reform the foreclosure process in California for the benefit of homeowners trying to retain their homes, has passed the Assembly. It requires lenders and servicers to contact borrowers (or engage in a prescribed process to do so) to schedule telephone or in-person meetings on restructuring options before beginning the foreclosure process; requires a 60-day notice to be given to tenants of buildings facing foreclosure before they can be removed from a rental housing unit; and allows fines of up to $1,000 a day for owners of foreclosed properties that fail to adequately maintain them. The legislation will take effect immediately if signed by Gov. Schwarzenegger, although the provision requiring servicers to contact borrowers before starting the foreclosure process will have a 60-day implementation period before it goes into effect.

I recently picked a new primary care doctor. After two visits and exhaustive lab tests, he said I was doing 'fairly well' for my age. A little concerned about that comment, I couldn't resist asking him, “Do you think I'll live to be 80?”

He asked, “Do you smoke tobacco, or drink beer or wine?”

“Oh no,” I replied. “I'm not doing drugs, either!”

Then he asked, “Do you eat rib-eye steaks and barbecued ribs?”

I said, “No, my former doctor said that all red meat is very unhealthy!'”

“Do you spend a lot of time in the sun, like playing golf, sailing, hiking, or bicycling?”

“No, I don't,” I said.

He asked, “Do you gamble, drive fast cars, or have a lot of s_x?”

“No,” I said.

He looked at me and said, “Then, why do you even give a darn?!”

Rob