With lots of time on my hands, I decided to start a mink farm. Of course, I could never kill one of them, but letting them lose in the neighborhood – one per week - appeals to me. The first steps include acquiring knowledge of the mink, including life cycle, breeding cycles, vaccinations, and nutritional needs. I need to choose the site for a mink farm carefully, taking into account future building growth in the area, and it should have good drainage, such as slightly sloping land. A fence should enclose the mink sheds, which should have year-round boxes lined with straw or wood shavings for breeding. (Sounds like a college dorm.) The young will stay with their mothers until they are seven to eight weeks old, and mature minks reserved for breeding purposes should have their own cages. This also sounds like dorm life. Lastly, become certified through the Fur Commission USA – just like the Mortgage Bankers Association. See? Now you’ve learned something new.

Aside from Chrysler inking a deal with FIAT, and oil hitting $33 per barrel, let’s move on to something more relevant to mortgage banking –

• Regions Financial lost over $6 billion in the 4th quarter as it took a $6 billion goodwill write-down and sharply raised loan-loss provisions, although non-performing assets fell slightly amid the continuing disposal of problem assets. Regions, located in the Southeast, received $3.5 billion in November from the U.S. Treasury under the Troubled Asset Relief Program.
• GMAC will implement a 1.50% price adjustment to FHA High Balance loans.
• Banks are racing to modify million of loans by reducing interest rates or lengthening terms. J.P. Morgan Chase is expanding its program to modify mortgages to include not only mortgages the bank owns but also more than $1 trillion of loans the bank sold to investors.
• Volume is through the roof for everyone, right? Wells Fargo wholesale will now require a 45-day lock for refinances! (Interestingly, Wells is, or at least was, paying .5 extra if you do a 45 day lock instead of a 30. Perhaps the theory being that they want to keep people sending in loans, in spite of the 12 day underwriting turnaround, but even with that 45-day lock hit their wholesale rates are still relatively too good to ignore on refis.)
• While Freddie and Fannie Mae have suspended sales of foreclosed properties and aren’t locking people out of their homes, they are continuing to initiate court cases against homeowners and pursue existing cases. Freddie is also still filing eviction proceedings against renters, while Fannie says it has suspended all action against tenants living in repossessed homes.
• Why don’t the words “cram down” ever have a good connotation? Wednesday afternoon Barclays Capital hosted a conference call for investors to discuss the basics of current bankruptcy laws, developments around proposed bankruptcy cramdown legislation and the implications (both intended and unintended) of this bankruptcy reform effort. The proposed changes would enable bankruptcy judges to place the principal value of mortgages down to the value of the underlying property (a power that they do not currently have), leaving all previously secured claims as an unsecured claim that may or may not be extinguished by the judge. Barclays expects that the change could “lead to a surge in bankruptcies that raises estimates for credit card charge-offs from 10% in 2009 to 12%-14%”.
• Freddie Mac’s weekly survey showed that average mortgages rates fell below 5.0% for the first time – they came in at 4.96%. Whoever is complaining about mortgage rates should note that it was the 11th consecutive weekly decline and the lowest rate since Freddie started the survey in 1971. In a yield curve lesson, 5-yr hybrid ARM rates are 5.25%; 1-yr Treasury ARM’s averaged 4.89%, and 15-year fixed-rate mortgages edged up to 4.65% from 4.62% a week ago. Brokers know that the two fixed-rate loans required the payment of an average 0.7 point to achieve the interest rate.

How about the current economy? Late last week we saw Industrial Production fall 2.0% for December, but Consumer Sentiment improve slightly in the University of Michigan survey. Economic news releases for the week few and far between. In fact, there is little until Thursday, which at this point is already the day after tomorrow, when we have Housing Starts, Building Permits, and Jobless Claims. Probably more importantly, the Treasury announces three and six month bill, 2-yr and 5-yr note auctions. Interest rates have worsened ahead of this, with the 10-yr up to 2.46% and mortgages worse by .250-.375 in price.

President-elect Barack Obama had his first day in Washington. Obama said he got a little choked up as he left his house in Chicago for Washington D.C. It was especially painful because as soon as he left, Governor Blagojevich sold his house.

Barack Obama's mother-in-law might be moving into the White House with him. Joe Biden was right. Hostile forces will test him in the first few months.

There was a little confusion at the meeting there at the White House when President Bush was told that Obama was coming. He said “Oh, you mean we caught him?”