While congressional leaders and the Bush administration work preparing a massive bailout of the US Financial system including a plan to allow banks to sell bad loans to a Resolution Trust like company, mortgage rates have dropped in Sacramento. The decline from 5.93 percent for a 30-year fixed to 5.78 percent for the week ending September 18 marks a seven month low.
As bank stocks are going up and their senior executives are anxiously waiting to sell their mistakes, I mean bad loans to the government. Some of these same bankers have instituted a policy of denying short sale applications that do not include the seller/borrower signing a note for some portion of the short sale. Based on our extensive experience with short sales this would, in the past, have created a situation where the seller will refuse to sign the note and the bank would take a larger loss. With the ability to pass these loans to the government it means lenders may be taking much harder line with short sales and increasing the burden on taxpayers.
Where else in the world can you make a mess and get rewarded for it?
I have a suggestion for candidate "change" and candidate "reform." When one of you gets to Washington, let's have a policy that says if a mid-level IRS agent can't understand what a company is doing or how a particular derivative is an asset it should be illegal. Another reform or change should be if a company gets big enough that their failure will impact the economy it should be fined and immediately broken into smaller companies.
At least it is Friday, rates are low, and buyers are out looking at homes.
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