$1,400,000,000

That’s how much of a hit Wells Fargo just took on their home equity loans. That’s a lot of money, but the most important thing it shows is that the problem is wide spread.

Check out “here” for the details…..

Some interesting commentary….

If you want to read some honest and thought provoking (at least for me) commentary on the role that mortgage lenders and consumers can and should play in the mortgage world, check out www.blownmortgage.com.

Specifically, click here to read about one loan officer’s frustration with consumers who don’t look at the whole picture and take out a “stupid” loan rather than one that is really good for them. I could tell you many similar stories…..

I’m more convinced than ever that honesty, integrity, and the ability to put your clients needs first is what it takes to succeed, and if you can’t succeed with honest, integrity and putting the clients needs first, then the business isn’t worth doing.

National Home Sales

Were just plain ugly numbers. Previous months were revised downward and this month wasn’t good either. These are national numbers and show the effects of the tightening of the credit guidelines is weeding out prospective buyers who probably shouldn’t be there. For more on the home sales (if you want to get into the numbers of them), check out www.calculatedrisk.blogspot.com

Housing prices

Does anyone know where I could find statistics on whether house prices in our area are actually dropping or if it’s more of a matter of lower price houses selling more than higher price houses? Let me explain….

If you have a house for $100,000 and one for $150,000 sell, you have an average price of $125,000. If you have a house for $80,000 and one for $150,000 sell, your average price is $115,000. Did home prices really drop by $10,000? Or is it just that more lower price homes are moving……

What do you think?

Time to get caught up on the news…..

Sorry for the delay in posting anything about the mortgage world. I’ve been swamped at work (a good problem) and also caught my annual case of November bronchitis so energy levels haven’t been as high as they should……

So, here goes the week…….

17 Reasons America Needs a Recession?

A thought provoking article. What do you think?

Fannie and Freddie

When I read an article about Fannie and Freddie needing to raise serious amounts of capital, it makes me realize that life is never boring and we truly are in a new world as far as the mortgage industry is concerned.

Check it out here and let me know what you think……

Mortgage Insurance Changes

Here’s a link to a story about how the rules are changing on mortgage insurance. They are not giving it to people with really low credit scores and increasing the cost for people with “low” credit scores.

Another example of how things are changing and how it’s important to keep up on what’s happening in the mortgage world.

More changes are coming….

Chris at www.blownmortgage.com has a good post about the impending changes in the mortgage business that are coming down the pipeline. While none of us know exactly how it’s going to play out (or how far it’s going to play out), his scenario makes a lot of sense to me. Read it here and then let me know what you think……

Freddie is in trouble – and that doesn’t bode well for anyone….

My original plan for the week #4 of the 7 week “New Reality” series of e-mails was to provide an overview of the 100% financing programs that we have and refute the idea out there that the options for people who want to buy a house with 0% down are gone. But something happened on Tuesday that changed those plans.

I’ve said a number of times throughout the last few months that as long as Fannie Mae and Freddie Mac remain “okay,” the main portion of the mortgage market will be fine. So far, the 15 and 30 year fixed rate market, under $417,000, has remained very stable. Well, on Tuesday, that changed. Freddie Mac, the second largest “quasi governmental” investment company, and a major buyer of conventional mortgages announced earnings reports today that were significantly worse than dismal. It was really the first time that we have a good insight into the fact that this is not “just a subprime” problem, it’s not “just an Alt A” problem, it’s not “just a Wall St.” problem, but it’s a pervasive problem and one that is impacting all areas of credit. This is a big issue for the entire country. Sorry to be so cheerful about it, but it’s not pretty.

Here are some “excerpts” of an article from Bloomberg about it:

Freddie Mac fell 29 percent, the biggest decline since it went public in 1988, as the second- largest U.S. mortgage-finance company posted a record loss, warning of a possible dividend cut and the need to raise capital.

The net loss was $2.02 billion, or $3.29 a share, three times what some analysts estimated.

“It’s as bad as it possibly could be,” said Howard Shapiro, an analyst at Fox-Pitt Kelton in New York.

Freddie Mac and the larger Washington-based Fannie Mae, created by Congress to foster American home ownership, have lost $41 billion in market value this year as mortgage defaults and foreclosures rose to record levels. The companies, which own or guarantee 40 percent of the $11.5 trillion U.S. home loan market, will have less money available for new mortgages.

“There is nothing we see right now to be more optimistic,” Chief Financial Officer Anthony Piszel said in an interview. He told analysts on a conference call that the fourth quarter “is not going to be pretty.”

Read the entire article at http://www.bloomberg.com/apps/news?pid=20601087&sid=aDknsLShiOxE&refer=home

So now what? Well, let’s put it this way, I don’t have a clue. (How’s that for clarity?) I think that communication on what’s working, what’s not and what’s happening is going to be even more important than ever. I’m working on some ideas that will expand on the importance of being smart, being educated and keeping informed. I hope to have it on your e-mail by the first part of next week.

I really wish that I could have “kicked off” the start of a Thanksgiving weekend with some good news, but there isn’t any. I think there’s a very very solid chance that three months from now, we’re going to look at this week as the start of a big problem similar to what happened in August, but unfortunately probably worse. I wish I could tell you better news, but I know it’s important to be informed.

I’ll continue to keep you informed, let me know if I can be of help.

And have a Happy Thanksgiving anyway!

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