Up until recently I lay awake at night, wondering if I got cheated when I had to make my standard mortgage payment in February, since it only has 28 days. A California appellate court has rejected a class action lawsuit by Julie and Kenneth Puentes claiming Wells Fargo unfairly treated customers in its calculation of monthly interest rates for February (the shortest month of the year) as “unfair” and entitling plaintiffs to “overpayments.” The plaintiffs had argued that because the industry’s calculation of a month represented 30.4 days—and because February has only 28 days—that the calculation unfairly charged them for February and they were entitled to a refund of their “overpayment,” plus damages. The attorney said that “The Puenteses conveniently ignored the fact that longer months like August or October were also treated as 1/12th of a year, a bonus to consumers.” Had the plaintiffs succeeded, it could have undermined not only how mortgage companies calculate interest rates, but also the uniformity of the secondary market as a whole. And folks wonder why there are so many attorneys out there.

The FHA, who lost $4.6 billion last year, may be losing their ability to accept down-payment assistance program money. Nearly 79,000 people last year took advantage of them, where nonprofit groups provide buyers with money for down payments and home sellers then reimburse the organizations and pay an administrative fee. The FHA said seller-funded down payments present the single biggest challenge to its solvency. Borrowers who take part in these arrangements go to foreclosure at nearly three times the rate of borrowers who put their own money down, according to the agency. The Senate version of the housing bill would have banned them but the House version would not. At this point a compromise bill has backed the Senate's version on this, which also is supported by the Bush administration.

Got an Alt-A loan, maybe a jumbo? Well, cross Wachovia wholesale off of your list. “Wachovia Mortgage has evaluated its business model and decided to reposition its mortgage business. Going forward, we will primarily focus on customers who have relationships with the bank, and who are located in geographies where Wachovia branches are located. As a result of our new strategic focus, Wachovia Mortgage has decided to discontinue lending through third-party, or wholesale, mortgage brokers. This decision will be effective July 25, 2008, which will be the last date on which Wachovia Mortgage will accept loan applications from brokers.” One wholesale employee told me, “Ah yes, I still remember seeing the HR videos over the last year saying ‘welcome aboard we're so glad we bought you’. Now it's ‘off with you, you drank our Kool-Aid and none of the World Savings upper management have a say in whether we keep you or not’. Most of them are waiting by the phone in hopes of a severance package anyway.”

Speaking of Wachovia, they posted an $8.86 billion second-quarter loss, slashed its dividend and announced 6,350 job cuts. All before breakfast! Needless to say, its shares are down over 10% before the market opens. Results included a $6.1 billion write-down of goodwill, and reflected a $4.2 billion increase in reserves for bad loans. Wachovia slashed its quarterly dividend 87% to 5 cents per share from 37.5 cents, and has now lowered it 92% this year. Where the heck am I going to place my Alt-A jumbo borrower? It seems that the alternatives are either incredibly strict, or “the service is so bad that you could do a tour of Europe before your loan closes.”

SunTrust said second-quarter earnings dropped 21%. However, its stock price, which is down almost 50% this year, rose after they said they won't sell new shares or cut the dividend! SunTrust said nonperforming loans were 2.2% of the total as of June 30, up from 1.7 percent on March 31. The rise was due mainly to late payments on mortgage and construction loans as the housing market and economy weakened, the company said.

At least rates stopped going up yesterday, and we saw some intra-day improvements, although this morning we’re back up 4.08% and mortgages are worse by .125. Leading Indicators Index in U.S. Fell 0.1% in June after a revised 0.2 percent drop in May. The index points to the direction of the economy over the next three to six months. Besides the earnings announcements (WaMu is later today), we still have July’s Richmond Fed Manufacturing Index, expected to show a small upward rebound of +3 points to -9, coming off of a 5-yr low June level of -12.  Also today our Treasury will auction $6 billion in 20-yr TIPS. (The full schedule is below, in Eastern times.)

Today:

10:00a.m. Jul Richmond Fed Manufacturing Index: Previous: -12; 5:00p.m. ABC/Wash Post Consumer Conf For Jul 20:

Wednesday, July 23, 2008 – no announcements.

Thursday, July 24, 2008

8:30a.m. Initial Jobless Claims; 10:00a.m. Jun Existing Home Sales: Previous: +2.0%; 10:00a.m. DJ-BTMU Business Barometer For Jul 5.

Friday, July 25, 2008

8:30a.m. Jun Durable Goods: Previous: Unch; 10:00a.m. Jun New Home Sales: Previous: -2.5%; 9:55a.m. End-Jul Reuters/U Mich Sentiment Index:

Thought you might like to know:

-No piece of paper can be folded in half more than seven times.

-You burn more calories sleeping than you do watching television.

-Apples, not caffeine, are more efficient at waking you up in the morning.

-Oak trees do not produce acorns until they are fifty years of age or older.

-The first product to have a bar code was Wrigley's gum.

-The King of Hearts is the only king without a moustache.

-American Airlines saved $40,000 in1987 by eliminating one olive from each salad served in first-class.

Rob