The three big domestic automakers are now saying they are working jointly on a new hybrid car. It runs on a combination of state and federal bailout money. Today marks the major automakers' deadline to submit restructuring plans as part of its $25 billion bailout package. (Conan O’Brien quipped, “A new study found that the Ford Motor Company makes the cars with the highest safety rating of all cars.

Apparently, Ford cars are so safe because they never leave the dealer's lot.”)

The ISM index, which attempts to measure production, new orders, employment, and inventories by polling supply managers, hit a 28 year low. (The index of prices paid dropped to 25.5, the lowest level in six decades, from 37!) The other news from Monday, besides the stock market’s plunge (is that news anymore?) was that Construction Spending was -1.2% in October, about as expected. Versus 2007, construction spending is down almost 24%. There is no economic news this morning, but looking ahead to the next Fed meeting in two weeks, the market is now suggesting that there is a 74% chance that the Fed will cut overnight rates 50 basis points to 0.5%. Although there is no direct correlation between overnight Fed Funds and 30-yr mortgage rates, it is nice to hear. We start the day with mortgage prices that are slightly worse than yesterday afternoon’s (by about .125-.250)

The Mortgage Network, Inc. (MNET), a nationwide lender and the largest independent mortgage company headquartered in New England that has been in business for 20 years, will cease Wholesale and Correspondent origination operations effective immediately. They told their brokers that, “Mortgage Network will continue to process any loans that are currently in the pipeline as of December 1, 2008. Loans in a floating status must be locked by Wednesday, December 3, 2008. All loans in pipeline must close and fund no later than Wednesday, December 31, 2008.

Also ahead of Christmas, AmTrust Bank, based in Cleveland, said it has begun laying off workers as part of a cost-cutting effort. According to the article, the bank employs 2,700, with 1,800 of them in Ohio. Are inexpensive houses in that area about to become even cheaper? http://blog.cleveland.com/business/2008/12/amtrust_begins_laying_off_work.html

So right now the yield on the 10-yr Treasury is at 2.75% (graph below). Let’s remember what this is for a moment. The median income here in the US is roughly $50k/year. Of course, people have expenses, and taxes, and so let’s say that someone could save $25,000 per year. That means if you worked all your life to save up $1 million, and wanted to invest it in a safe instrument you could buy a 10-yr T-Note and earn less than $30k per year on it. $27,500. But of course the counter-argument goes, as one savvy loan agent asked me yesterday, “Who the heck would invest in the stock market right now?”

There was a decent article in the Wall Street Journal yesterday about self-employed borrowers. “The changes are increasingly frustrating a group of borrowers whom banks once coveted: affluent self-employed professionals such as doctors, lawyers, accountants and small-business owners. The chief problem for self-employed people is that they don't have W-2 forms from an employer to document their full wages. For proof of income, they must rely solely on their income-tax returns. But income for the self-employed is often understated for tax purposes, in part because they tend to take large business-related deductions. Self-employed borrowers who don't take any big deductions won't likely face the same difficulty getting a loan. "When you're self-employed, the write-offs that you use help at tax time -- but that means when you apply for a loan, your income won't reflect your cash flow," says Richard Redmond, a mortgage broker in Larkspur, Calif. Lenders are also cautious because non-salaried workers can see greater volatility in their annual income.”

A motorist was unknowingly caught in an automated speed trap that measured his speed using radar and photographed his car.

He later received in the mail a ticket for $40 and a photo of his car. Instead of payment, he sent the police department a photograph of $40.
Several days later, he received a letter from the police that contained another picture, this time of handcuffs.

He immediately mailed in his $40.