Sometimes I think that computers are great, other times not. Over the weekend I went to Costco, where they always pass your card over the reader prior to ringing up your purchases. By the time I was through the line, and about ready to buy my Dad his obligatory lunch hot dog and soda, a customer service rep with a clipboard approached me. He said, “Excuse me sir, I see that you’ve been a member for about a year, and that you’ve spent $---- at Costco during that time. Do you know that if you’d signed up for the Executive Membership, you would qualify for a rebate of $---?” Obviously they, and other stores if you use a membership number or credit card, can track every purchase you make. I almost expected the Costco guy to say, “And I notice that you’ve bought the 24-pack of donuts the last 3 times… did you see our special on exercise equipment on aisle 8?”

Those folks at the FDIC are clever: they don’t call bad loans “troubled assets” or “toxic waste”. Instead, they are moving ahead with their “legacy loan” program, which is part of the Financial Stability Plan. The Treasury Department has released the details of its public-private investment plan to remove bad assets from banks' balance sheets. It is hoped that $1 trillion can be sold using advantageous financing provided by the FDIC and the Federal Reserve, including acquisitions of mortgages and mortgage-backed securities. Sales of legacy loans will free up obstacles to lending, while sales of legacy securities will unclog the secondary markets, according to the Treasury.

Ever heard of Metro Dream Homes? I hadn’t, until now – and it is rare when I pass up a chance to lose money. Federal authorities say the company, based in Washington DC, bilked $70 million from home owners by promising to pay off their mortgages. ”Metro Dream Homes was founded by Andrew Hamilton Williams Jr., who used some of the $50,000 minimum payments provided by home owners to cover the losses of an automated-teller-machine scheme he was ordered to shut down in 2001, according to the indictment unsealed Monday. Investors in Metro Dream Homes who forked over the $50,000 were told the company would pay off their mortgages…but the cash was used to pay off the mortgages of the original investors and cover other losses.” Some of the original investors, whose mortgages were actually being paid by later investors, would tout the program’s success during the seminars. Investors were encouraged to invest $150,000 or more through incentives offering cash rewards and positions on Metro Dream Homes’ board of directors. Read all about it: http://www.washingtonexaminer.com/local/DC-based-company-took-investors-for-70M-in-mortgage-scheme-prosecutors-say-43775962.html

Mortgage rates improved a little yesterday and again so far this morning, although there is very little volatility. The market is working under the impression that the Fed will do whatever is required to keep 30-yr mortgages below 5%, which is very comforting for those of us who have not refinanced yet. Currently 4% securities, into which lenders would put 4.5% mortgages, are priced near 101, and when you add some servicing value onto that one can easily see a premium above 102.00 – but originators are still not passing much of the premium along to borrowers or brokers. What about Fannie 3.5’s, which would include 4% loans? They improved in price yesterday by 1.5 in price!

Today the focus is on the stock market (which is being hit by the swine flu), news that Citi and Bank of America will probably need to raise additional capital, and the $35 billion 5-yr auction. We also have Consumer Confidence, and the Case Shiller housing price index. The index of 20 metropolitan areas showed that prices of U.S. single-family homes fell almost 19% in February from a year earlier but the rapid pace of decline slowed – near the bottom? Currently the 10-yr is back down to 2.80% and mortgage prices are better by another .125 in the securities markets. Let’s hope some of that gets passed along to borrowers!

Things have been pretty quiet in the mortgage news front. Yesterday Wells Fargo wholesale made some MI changes, effective immediately. For loans requiring MI: Minimum Loan Score 720, Maximum LTV for Cash-out Refinance 80%, Maximum LTV for Condos and Attached Housing 85%, Maximum LTV for Second Homes 80%, Maximum LTV for 2-unit 80%, Maximum LTV for Condo/attached housing 90%, and Maximum debt-to-income (DTI) 41%. But while we’re on Wells’ wholesale group, their $729,750 loan limits were made available yesterday.

One year, a husband decided to buy his mother-in-law a cemetery plot as a Christmas gift.

The next year, he didn't buy her a gift.
When she asked him why, he replied, "Well, you still haven't used the gift I bought you last year!" 

And that's when the fight started.

Rob

(For archived commentaries, check www.robchrisman.com, or to subscribe write to rchrisman@robchrisman.com)