Rates are higher again today. What’s going on? Two-year notes (akin to ARM rates) may see their biggest two-week decline since 1982, for example, and their rates have gone up nearly .75%! Traders believe that the Federal Reserve will stop cutting overnight interest rates after the meeting next week, and now two-year yields are above the Fed’s rate for the first time since 2006. Ten-year yields are now in the high 3.80’s, and the difference between two- and 10- year yields is below 1.50%, the least since January. 30-yr mortgage prices this morning are worse by another .125. So what happens to the economy if rates move higher, gasoline & food prices continue higher, and job growth slows?

One publication that I read without fail is WebCPA. This story caught my eye: IRS Withdraws Proposed Regulations on Mortgages. The Internal Revenue Service has withdrawn proposed regulations that would have treated mortgage loans as capital assets and restricted the deductibility of mortgage defaults. The Treasury Department and the IRS first published the proposed regulations on Aug. 7, 2006, seeking to clarify the circumstances in which accounts or notes receivable are “acquired … for services rendered” within the meaning of Section 1221(a)(4). The IRS’s proposed regulations would only have allowed mortgage companies to use the losses from mortgage delinquencies to offset capital gains. The withdrawal of the regulations is mainly expected to benefit large mortgage organizations such as Fannie Mae and Freddie Mac, and other holders of defaulted loans.

Downey Financial Corp. said it will reduce its quarterly dividend to 1 cent. At first they planned to cease paying a dividend entirely, but realized that many institutional investors/buyers are required to buy & own stock only from dividend-paying companies. Downey Financial was a large originator of option adjustable-rate mortgages, which allowed customers to choose from multiple options when making payments (including paying less than the amount of monthly interest owed on the loan). And as we all have heard, seen, and been told, thousands of times in the last 9 months, products like option adjustable-rate mortgages have seen rapid increases in delinquencies and defaults in recent months as the housing and mortgage markets have severely weakened.

A judge here in California upheld Nehemiah’s motion for summary judgment and invalidated the U.S. Department of Housing and Urban Development (HUD) rule to ban private down payment assistance as proposed in the “Standards for Mortgagor’s Investment in Mortgaged Property” regulation published October 1, 2007.

Therefore, the judge ruled that this rule cannot be enforced by HUD and is no longer a threat to private down payment assistance programs.

HSBC is retiring the Freddie Mac A- Fixed Rate and Fixed Term LIBOR ARM programs in the Broker and Table funding channels. HSBC is also retiring the Fannie Mae Expanded Approval Fixed Rate and Fixed Term LIBOR ARM. Lastly, HSBC announced that “When ordering FannieMae Automated Underwriting decision (DU) through Webloan, (lenders) will be required to input their credit provider name and account number in order to pull credit. Effective April 28, FreddieMac Automated Underwriting engine (LP) will run merged credit for AU response.   Therefore, when ordering FreddieMac Automated Underwriting decision (LP) through Webloan, a credit repository agreement with HSBC’s preferred credit provider, CBC Innovis, is required.   If you will be using LP in Webloan, you must start the process with CBS Innovis soonest possible.”

Genworth Mortgage Insurance will make rate changes to the following programs effective for all MI applications received on or after Monday, July 14, 2008: Borrower Paid Mortgage Insurance Change, Lender Paid Mortgage Insurance Change, Rate/Term Refinance Premium Adjustment Change, Loan Amount Premium Adjustment Change.

An Irishman moves into a tiny hamlet in County Kerry, walks into the pub and promptly orders three beers. The bartender raises his eyebrows, but serves the man three beers, which he drinks quietly at a table, alone. An hour later, the man has finished the three beers and orders three more. This happens yet again. The next evening the man again orders and drinks three beers at a time, several times.
Soon the entire town is whispering about the Man Who Orders Three Beers.
Finally, a week later, the bartender broaches the subject on behalf of the town. “I don’t mean to pry, but folks around here are wondering why you always order three beers?”
“Tis odd, isn’t it?” the man replies, “You see, I have two brothers, and one went to America, and the other to Australia. We promised each other that we would always order an extra two beers whenever we drank as a way of keeping up the family bond.”
The bartender and the whole town was pleased with this answer, he becomes a local celebrity and source of pride to the hamlet, even to the extent that out-of-towners would come to watch him drink.
Then, one day, the man comes in and orders only two beers. The bartender pours them with a heavy heart. This continues for the rest of the evening: he orders only two beers. The word flies around town.
Prayers are offered for the soul of one of the brothers. The next day, the bartender says to the man, “Folks around here, me first of all, want to offer condolences to you for the death of your brother. You know — the two beers and all…”
The man ponders this for a moment, then replies, “You’ll be happy to hear that my two brothers are alive and well. It’s just that I, meself, have decided to give up drinking for Lent.”

Rob