Agents enjoy talking about the great the loans are that are being originated now, and “Why wouldn’t investors want to buy them?” On the flip side, this is just what mortgage investors don’t want to see: headline stories about how mortgage fraud is still going strong. http://money.cnn.com/2008/08/25/real_estate/soaring_mortgage_fraud/?postversion=2008082606

Here is more information on down payment assistance programs. Although the Housing Act is bringing most of them to and end, there are questions about the timing. Readers report, “The only exception I've seen on DPA loans is Freedom. All DPA loans must be in a final-approved status in DO with no changes made after September 30, but they will allow them to fund through October 30.” Another wrote, “Wells still hasn't come out with anything but Chase and GMAC have also stopped accepting them...” And lastly, “CW announced that ‘If the AUS approval and/or loan documents have different dates, all must be must be dated prior to October 1, 2008. Any loan, credit approved prior to October 1, 2008 that needs to be redecisioned either via AUS or manually by the DE on or after October 1, 2008, can no longer utilize a seller/interested party-funded DAP.’”

Wells Fargo Funding (correspondent and wholesale) made changes to several guidelines, including their requirements for when a primary residence is being retained by the borrower (for conforming, non-conforming, and Wells Fargo High Balance Conforming Loan Program loans), changes to their REO financing (allowing 2-unit and buy-down loans), and sent out a new HOA certification form.

Franklin American, starting in September, stated that except for FHA Non Credit Qualifying Streamline Refinances and VA IRRRLs, loans must include an IRS Form 4506T executed by each borrower at the time of closing, regardless of DU or LP findings, documentation type, income type, or origination source. And any loan submitted to FAMC for prior-approval underwriting must include a completed and signed Form 4506T. An updated Form 4506T must be executed by the borrower(s) again at the time of closing.

Just when you thought it couldn’t get any worse, Reuters is reporting that “Opium production dropped in Afghanistan this year for the first time since 2001, the United Nations said on Tuesday, but that may have more to do with the weather than international efforts to cut the drug crop. Afghanistan broke all records and produced 93 percent of the world's opium in 2007. This year, 157,000 hectares grew opium poppy, compared with 193,000 hectares in 2007, a 19 percent decrease, the U.N. Office on Drugs and Crime (UNODC) said.”

At least rates are low, right? U.S. Note yields are the lowest they’ve been in three months. Unfortunately for us who don’t make a market in Treasury securities, but are more concerned about mortgage rates, derivative security yields are showing that banks are becoming more hesitant to lend. U.S. economic activity decreased in July, according to the Federal Reserve Bank of Chicago, and the numbers being bandied about are scary: losses and write-downs on securities related to subprime home loans now exceed $500 billion at financial institutions worldwide (according to data compiled by Bloomberg).

Sometimes I feel like a snail under a salt shaker. The data from the Standard & Poor's/Case Shiller national home price index suggested the housing slump is far from over: national U.S. home prices fell a record 15.4% in the second quarter compared with last year, according to the report this morning. The loss was even larger than the record 14.2% drop posted in the first three months of 2008. Both the Case-Shiller 10-city and 20-city indexes also posted record year over year losses in the second quarter, down 17% and 15.9% respectively. Sales of newly constructed U.S. single-family homes in July were lower than economists expected - expected to remain unchanged at the 530,000 annual pace first reported for June the actual sales pace in July of 515,000 climbed from the revised June level of 503,000. We still have August’s Consumer Confidence this morning, expected to rise +1.1 to 53.0, and July New Home Sales, forecast at 525K from the previous 530K.  The Fed will also release minutes of their Aug 5^th FOMC meeting. The 10-yr is perched at 3.81% and mortgage prices are roughly unchanged.

A fellow walks into a bar, notices a very large jar on the counter, and sees that it's filled to the brim with $10 bills.  He guesses there must be more than ten thousand dollars in it. He approaches the bartender and asks, 'What's with the money in the jar?'

'Well......you pay $10 and if you pass three tests, you get all the money and the keys to a brand new Lexus.'

The man certainly isn't going to pass this up.  And so he asks, 'What are the three tests?'

'You must pay first......Those are the rules,' says the bartender.

So, after thinking it over a while, the man gives the bartender the $10 and the bartender drops it into the jar.

'Okay,' the bartender says, 'Here's what you need to do: First - You have to drink a whole quart of tequila in a minute or less, and you can't make a face while doing it. Second - There's a pit bull chained in the back with a bad tooth. You have to remove that tooth with your bare hands. Third - There's a 90-year old lady upstairs who has never made love to. You have to take care of that problem!'

The man is stunned. 'I know I paid my $10, but I'm not an idiot!

I won't do it!  You'd have to be nuts to drink a quart of tequila, and then do all those other things...'

'Your call,' says the bartender.....'But, your money stays where it is.'

As time goes on, and the man has many more drinks, he finally says, 'Where's the darn tequila?'

He grabs the bottle with both hands and drinks it as fast as he can. Tears stream down both cheeks... but he doesn't make a face, and he did it in 58 seconds!

Next, he staggers out the back door, where he sees the pit bull chained to a pole.  Soon the people inside the bar hear growling, biting, and screaming sounds... then nothing but silence! Just when they think that the man surely must be dead, he staggers back into the bar, with his shirt ripped open and there are scratches and he's bleeding all over his body.

He says, 'Now where's that old woman with the bad tooth?'

Rob