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A guy bets all football season with a bookie. In January he’s lost a total of $50,000. He decides he’s going to make it all back and proceeds to bet every bowl game all of the Sunday NFL games. He makes bets on 20 games… lo and behold he loses every game! That Monday his bookie calls and tells him the bad news. The bookie says, “Maybe you should bet on hockey!”

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The guy responds, “Hockey? What the heck do I know about hockey?”

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Speaking of losing lots of money and not knowing the subject matter, UBS will write down subprime mortgage investments by $10 billion, the biggest such loss by a European bank, and replenish $11.5 billion of capital by selling stakes to investors in Singapore and the Middle East . Not only did UBS eliminate their fourth-quarter profit, but said that it may post a full-year loss. For anyone keeping track, we’ve had about $76 billion of losses and markdowns at securities firms and banks this year.

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Company news:

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Because certain local real estate markets continue to fluctuate, in mid-December Wells Fargo is implementing an “At Risk Markets LTV / CLTV” overlay on all Non-conforming and Conforming product. Using Enhanced Appraisal Services, one overlay applies to Conforming loans, regardless of DU/LP approvals, and it uses a LTV/ CLTV adjustment approach, and the other applies to Non-conforming loans, regardless of Direct Express approvals, and it uses a LTV/CLTV cap approach. Determining if the market is “Distressed”, “Severely Distressed”, or “Soft”, for Non-conforming loans the borrower/market selected stated transactions are either curtailed or no longer allowed in some markets.  Note that this does not apply to risk based documentation reduction waivers (Minimum Documentation) provided by Direct Express. For example, Wells named both Contra Costa and Alameda counties here in Northern California as ”Distressed” (not just “Soft”) markets, so they will no longer purchase stated loans and the maximum will be  80% LTV/CLTV.

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Chase is updating Home Equity credit policies in mid-December that will impact several programs for all transactions. Policy changes will include the following: Loan amounts will be capped at $350,000 when CLTV is greater than 80% or FICO is less than 700, and loan amounts will be capped at $500,000 when CLTV is 80% or less and FICO is 700 or greater.