Marc's Mortgage Matter's

Cashtration (n): The act of buying a house, which renders the subject financially impotent for an indefinite period of time.

Wanna buy a bank? Now is a good time to give that someone special a little something special - like a failed bank. Seven U.S. banks were taken over on Friday, and the FDIC could not find buyers for three of them. It brings the total to 140 for the year, the most since '92. Heck, even ex-IndyMac (now OneWest Bank) picked up the assets and 39 branches of First Federal Bank after it was closed Friday. OneWest was formed by a group of private equity and hedge fund investors to take over IndyMac's assets earlier this year. Added to the list of banks this year who have experienced deteriorating loan portfolios and related liquidity and capital issues are Imperial Capital Bank of La Jolla CA, Peoples First Community Bank of Panama City FL, New South Federal Savings Bank of Irondale AL, Independent Bankers' Bank of Springfield IL, RockBridge Commercial Bank of Atlanta GA, and Citizens State Bank in New Baltimore MI. City National Bank bought assets of Imperial Capital, Beal Bank bought the assets of New South, and Hancock Bank bought the assets of Peoples First Community Bank. The other three: zip.

Modifications aren’t going so well. Why not? Well, getting to the essence of things, from someone in the trenches, most people do not qualify income-wise on paper. Self-employed borrowers write off a lot on taxes, and many wonder if the government should help a tax cheater. Others experience the loss of spouse’s income (divorce, death, joining the circus, etc.), loss of job, overtime hours, or second job. Folks dealing with borrowers in this sector report that most borrowers are angry with their servicer because they cannot pay their mortgage, and that this “feud” prevents an open dialogue especially when there is huge amount of paperwork to be filled out.

Lastly, sometimes servicers do not have rights to the loans when the MBS (mortgage backed securities) holders own the rights – often the servicer is just the administrator of the pools. So if you are like many of us looking to modify your loan, it may be many months if it happens at all.

Mortgage rates rose again this week, the third consecutive such move. After a November dip, rates have again returned to late-October levels.

It's important not to make too much of the flare in rates. Holidays are now in full swing, markets are thinly populated and traded, and exaggerations in market moves are common. Some of the rise in yields this week appeared to be money shuffling from bonds and into equities to take advantage of any "Santa Claus" rally in stocks. It's also important to remember that the ranks of potential homebuyers and refinancers are generally reduced by the demands of the holiday season, so relatively few borrowers are affected by the minor rise in rates.

If you are in midst of a mortgage loan, and have not locked in a rate yet, I suggest that you forget about rate movements and enjoy the holiday. Some of the rise over the past couple of weeks is likely to be washed away when more pronounced activity returns to the markets in a couple week's time. Until then, we could see slightly higher or lower rates next week, all still well within the context of recent ranges.

We'd like to wish all our clients, visitors and friends Happy Holidays.

A woman was at her hairdresser's getting her hair styled for a trip to Rome with her husband. She mentioned the trip to the hairdresser, who responded:

"Rome? Why would anyone want to go there? It's crowded and dirty. You're crazy to go to Rome. So, how are you getting there?"

"We're taking United," was the reply. "We got a great rate!"

"United?" exclaimed the hairdresser. "That's a terrible airline. Their planes are old, their flight attendants are ugly, and they're always late. So, where are you staying in Rome?"

"We'll be at this exclusive little place over on Rome's Tiber River called Teste."

"Don't go any further. I know that place. Everybody thinks it’s gonna be something special and exclusive, but it's really a dump."

"We're going to go to see the Vatican and maybe get to see the Pope."

"That's rich," laughed the hairdresser. “You and a million other people trying to see him. He'll look the size of an ant. Boy, good luck on this lousy trip of yours. You're going to need it."

A month later, the woman again came in for a hairdo. The hairdresser asked her about her trip to Rome.

"It was wonderful," explained the woman, "not only were we on time in one of United's brand new planes, but it was overbooked, and they bumped us up to first class. The food and wine were wonderful, and I had a handsome 28-year-old steward who waited on me hand and foot. And the hotel was great! They'd just finished a $5 million remodeling job, and now it's a jewel, the finest hotel in the city. They, too, were overbooked, so they apologized and gave us their owner's suite at no extra charge!"

"Well," muttered the hairdresser, "that's all well and good, but I know you didn't get to see the Pope."

"Actually, we were quite lucky, because as we toured the Vatican, a Swiss Guard tapped me on the shoulder, and explained that the Pope likes to meet some of the visitors, and if I'd be so kind as to step into his private room and wait, the Pope would personally greet me.

"Sure enough, five minutes later, the Pope walked through the door and shook my hand! I knelt down and he spoke a few words to me."

"Oh really! What'd he say?"

He said: "So, Who screwed up your hair?"