Marc's Mortgage Matter's

The other day my boss commented that, "If every employee contributed half of their life savings to our firm, we'd be on the road to profitability!" I knew things were getting tough when they replaced "Bring Your Child to Work Day" with "Bring Your Child to do Work Day". On the other hand, the margarita machine in the executive lunchroom still seems to be working just fine, regardless of the unemployment statistics.

The business world is still talking about the unemployment data, which showed that the number of people claiming unemployment benefits was much larger than expected. How can we have an economic recovery if unemployment is so high? Well, remember that job growth tends to trail in a recovery but here in the US, as we continue to move away from manufacturing, economists believe that technology and manufacturing are either eliminating jobs or moving them elsewhere. The steps that the Fed has focused on relate much more to limit banking problems, which at this point they have done, and stabilize or grow GDP, which also appears to have been done, rather than on directly lowering unemployment.

Countrywide: the gift that keeps on giving. The latest story involves the discovery that they, or someone, destroyed recorded phone conversations with their VIP program prompting new congressional calls for more information about the program. On top of that, a story from Bloomberg (do they have restaurant critics?) states that Bank of America employee can now enjoy a $180 Krug champagne-paired tasting menu in the company “cafeteria” at the base of its new $1 billion Manhattan skyscraper. This group may not include Ken Lewis, who after almost 9 years of running the company is resigning at the end of the year. Bank of America has tripled in size during that time, helped by the questionable acquisitions of Merrill Lynch and Countrywide.

The FDIC continues to close banks. Three days ago three smaller banks were closed, in Minnesota, Colorado, and Michigan, which brought us to 98 for the year. Jennings State Bank was taken over by The Central Bank in MN, Warren Bank re-opened us Huntington Bancshares, and Southern Colorado National Bank came under the control of Legacy Bank. The prior week the FDIC shut down Georgian Bank, one of the largest banks based in Atlanta. With both assets and liabilities of $2 billion, the estimated cost to the FDIC is almost $900 million which is 45% of assets and the most expensive (percentage-wise) among the 10 largest failures this year.

Does October continue to live up to its reputation as a wicked month for stocks? To the degree that it does, mortgage rates should benefit. Spring lows ignited a fair bit of refi activity, but building lasting refi waves requires low (if not continually declining) interest rates for a period of weeks, even months. We'll continue to have low rates, but significant declines are unlikely. If you're considering refinancing, don't hesitate too long or a fickle October market may catch you napping.

Two women were out for a Saturday stroll. One had a Doberman and the other, a Chihuahua. As they walked down the street, the one with the Doberman said to her friend, "Let's go over to that bar for a drink."
The lady with the Chihuahua said, "We can't go in there. We've got the dogs with us."
The one with the Doberman said, "Just watch, and do as I do."
They walked over to the bar and the one with the Doberman put on a pair of dark glasses and started to walk in. The bouncer at the door said, "Sorry, lady, no pets allowed."
The woman with the Doberman said, "You don't understand. This is my seeing-eye dog."
The bouncer said, "A Doberman?" The woman said, "Yes, they're using them now. They're very good."
The bouncer said, "OK, come on in."
The lady with the Chihuahua thought that convincing him that a Chihuahua was a seeing-eye dog, may be a bit more difficult, but thought, "What the heck," so she put on her dark glasses and started to walk in.
Once again the bouncer said, "Sorry, lady, no pets allowed."
The woman said, "You don't understand. This is my seeing-eye dog."
The bouncer said, "A Chihuahua?"
The woman said indignantly, "A Chihuahua? You've got to be kidding me, they gave me a Chihuahua???!