We’re now in that lull period leading up to Thanksgiving. Many feel it is a good time to pull pranks on cubicle dwellers.

Geez, it seemed like every other e-mail yesterday was a mid-day rate change. The 10-yr slowly worsened, mortgage prices took it on the chin. The general feeling (for the day) among traders and investors was that the evident strength in the economic numbers, along with the criticism of QEII (take your pick: too strong and will cause inflation, or too weak and worthless), is making the market nervous. Ten- and 30-year U.S. Treasury prices each fell a point as traders unwound positions taken in advance of the Federal Reserve’s QE2. 10-yr notes dropped almost 1.5 points in price for a yield of 2.95%. 7-yr notes, more of a proxy for mortgage prices, were worse by 1.125. We’re seeing a small bounce today - see ending paragraphs.

Yesterday I mentioned well capitalized mortgage companies buying banks. A grizzled industry vet wrote, saying "Buying a bank is a good idea but it is nearly impossible to do if you are not a bank.  I have worked with very well capitalized clients for over a year only to find out that the OTS and OCC will not approve the deals if the business plan is to operate the bank to feed the needs of the mortgage company.  Once you own a bank you can bid on other banks that are closed each week, but without being in the pre-approved category you have no idea who is for sale. People with money who want to buy banks are not allowed to play because they don’t own a bank."

Regarding the loan originator compensation issue, a compliance person wrote in saying, “It seems like all the small guys are waiting for the big guys to weigh in, and the big guys don’t quite know what to do. So we wait.” A broker wrote, “I have gone to three compensation meetings. I love how they try to say the brokers have an advantage. Frankly, no one has an advantage and only the consumer loses. This is sheer stupidity by government employees with little understanding of the inner workings of the industry. Earlier this year we were told that YSP was gone (under the new 2010 GFE), yet the comp rules and discussions continually reference the YSP. Give us some direction then leave us alone!”

The folks at HUD were busy yesterday sending out two Mortgagee Letters. One dealt with users completing a screen in FHA Connection entitled ‘HECM Referral List Update’ and the other discussed the PowerSaver pilot program. But hey, don’t take my word for it – go  here.

A ways back, as my grandfather would say, Flagstar Bancorp announced the sale of a good-sized chunk of non-performing loans. Yesterday it announced that the sale had closed, and that the $474 million of non-insured non-performing residential first mortgage loans have a new home.

Credit-Based Asset Servicing and Securitization, known by industry vets as C-BASS, filed for Chapter 11 bankruptcy. In the past, C-BASS purchased and serviced subprime and Alt-A mortgage loans. The company is owned through a joint-venture of mortgage insurers MGIC and Radian, and back in 2007 sold Litton Loan Servicing to Goldman Sachs.

more news on Wells Fargo, BB&T, US Bank, ING, Impac, Freedom Mortgage, GMAC, Chase, Flagstar, PHH, Icon Residential, Freddie Mac, markets, and Joke of the Day – click here.