Seen on a bumper sticker: “CHANGE....... it's all we're gonna have left!”

In the old days, I used to have what we called a “stock portfolio”, and I also used to think that I was pretty smart since it went up year after year. Now the DOW is back to 1997 levels, and is down 22% in just the last two months! It doesn’t take a math professor to tell you that if a stock looses 50% of its value, going from $100 per share down to $50 per share, in order to go from $50 per share back to $100 it has to go up 100%, or double. And many analysts just don’t see the stock market doing that any time soon in this environment. Of course, if a stock pays a dividend, the yield has doubled – if the company continues to pay it.

Yesterday the improvement in rates was directly attributed to the falling stock market. The DOW dropping 300 points when it is in the 7,000 area is not the same percentage hit as when it drops 300 in the 14,000 area. Treasuries saw the ol’ “flight to quality bid” as the economic news was pretty dismal, including the losses from tax-payer owned AIG and Construction Spending falling over 3%. Today’s rates are a little worse, with the 10-yr back to 2.95%, but mortgages are roughly unchanged from Monday afternoon.

Today there is no substantive scheduled news, although many are waiting for tomorrow’s clarification of the Homeowner Affordability and Stability plan. Business Week did a fine story on Vallejo’s woes: http://www.businessweek.com/magazine/content/09_10/b4122052964412.htm

Citigroup is doing what it can to help newly unemployed homeowners to temporarily reduce payments on their mortgages. Citi will lower payments for three months to an average of $500 per month for certain borrowers who lost their jobs and are at least 60 days delinquent, and after that it will work on a case-by-case with borrowers who are still unemployed after that time. As one would expect, the program is limited to people who have mortgages that are owned and serviced by CitiMortgage, which does not include the 4.3 million mortgages that Citigroup services but does not own. Qualified borrowers must live in their homes and the loans must be $417,500 or less.

Chase Correspondent is increasing their fees. They announced that, “For all loans locked, relocked, or extended on or after March 16, 2009, the administrative fee will increase from $110 to $175.” Fee income is one of the leading line items for many mortgage banks, so why not make hay while the sun shines and try to cover the additional overhead added in processing this glut of loans? Small to mid-sized lenders will in turn either increase the fees to their borrowers or eat the difference.

A pirate walks into a bar with a steering wheel sticking out the front of his pants.

The bartender says, “Hey, you know you have a steering wheel stuck in your pants?”

The pirate looks down and says, “AAARRGGHH, it’s driving me nuts.”