With Edwards dropping out of the race, and Giuliani expected to do so today, will that mean more rate locks? No, but what were locks like last week? “The best week I’ve ever had!” “I took 15 apps in one day!” “I suddenly have 40 locks in my pipeline!” “I was too busy to schedule a spa treatment!” The MBA Mortgage Application Index data bore that out, rising 7.5% last week with the Purchase Index -17.7% and the Refi Index +22.1%, in spite of the refi boom lasting four hours on Wednesday.

The Fed announces their decision at 11:15AM PST, 2:15PM EST. How’d that last Fed cut treat you? When the Fed cuts rates, aren’t rates supposed to go down? And what about the stock market? It is not the job of the Fed to support the stock or bond markets. It is the job of the Fed to provide price stability (control inflation) and help maintain moderate growth. But losses and write-downs are much larger than imagined, impacting the US and world economies, the banking system, bond insurers, and municipal economies, which could be the real reason the Fed lowered rates last week and possibly today. The Fed does not want to be thought of as “behind the curve”. Lehman looks for the FOMC to cut rates by 25 basis points, many others are thinking 50 bp (down to 3.00%), with a good possibility of additional cuts.

So what about Congress’s stimulus package? The House approved HR 5140 yesterday, 385-35. It would send one-time rebates to 111 million families, provide tax breaks to businesses, and ease mortgage loan limits. (The “tax breaks to businesses” is already coming under fire: what good will come of helping a company pay for machines to produce something that consumers can’t buy because they’re spending their money on fuel and food and their home equity is tapped out?) Section 201 of the bill temporarily increases the conforming loan limit until December 31, 2008 to as high as $729,750 in high cost housing markets. The bill also includes a FHA loan limit increase from $362,790 to the same $729,750. The bill now must be approved by the Senate, with every attempt being made to meet the imposed Feb 15 deadline. There is some concern being expressed in the Senate about the increase in the conforming loan limit without a comprehensive set of new authority for OFHEO. If all goes as planned and the President approves the bill on 2/15, some believe that originators would be able to start making loans almost immediately after bill is signed into law.

Before agents put away the Mickey’s Big Mouth and break out the Dom Perignon, keep in mind that borrowers still have to qualify. (Darn!) Fannie & Freddie are primarily full doc programs. And without stated income for wage earners, it’s tough to qualify for a $700,000 loan. Not that one should ever call them a “Liar’s Loan”, but in previous years it is estimated that 70% of jumbo loans were “stated income” for a reason: perhaps the borrower didn’t qualify. And refinancing will still have trouble due to values dropping in jumbo areas by such a large amount. The good news is that for those purchase money loans for people that actually make the money and have the down payment, the new loan limits will be very welcome.

Ahead of the Fed decision rates & prices are relatively stable. The 10-yr is currently at 3.68% and 30-yr conventional prices are roughly unchanged from yesterday afternoon. Gross domestic product, which measures total goods and services output, was up at only a.6% annual rate in the fourth quarter and for the full year advanced only 2.2%, the slowest growth in annual GDP since 1.6 percent in 2002.

ING announced that effective today, the Max LTV and CLTV for all STATED INCOME loans will be 75%.

UBS announced that the company was writing off $14 billion of credit losses.

One day a florist goes to a barber for a haircut.
After the cut he asked about his bill and the barber replies, “I cannot accept money from you. I’m doing community service this week.”
The florist was pleased and left the shop.
When the barber goes to open his shop the next morning there is a ‘thank you’ card and a dozen roses waiting for him at his door.
Later, a cop comes in for a haircut, and when he tries to pay his bill, the barber again replies, “I cannot accept money from you. I’m doing community service this week.”
The cop is happy and leaves the shop.
The next morning when the barber goes to open up there is a ‘thank you’ card and a dozen donuts waiting for him at his door.
Later that day, a college professor comes in for a haircut, and when he tries to pay his bill, the barber again replies, “I cannot accept money from you I’m doing community service this week.”
The professor is very happy and leaves the shop.
The next morning when the barber opens his shop, there is a ‘thank you’ card and a dozen different books, such as “How to Improve Your Business” and “Becoming More Successful.”
Then, a mortgage broker comes in for a haircut, and when he goes to pay his bill the barber again replies, “I cannot accept money from you. I’m doing community service this week.”
The mortgage broker is very happy and leaves the shop.
The next morning when the barber goes to open up, there are a dozen mortgage brokers lined up waiting for a free haircut.

Rob