Wanna Read the Perfect Auction Listing?

I didn't write this, and I'm going to have to wait until later to say something about it.

Meantime, give it a read. It's brilliant.

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=130144061675&ru=http

A Post Actually About Mortgages

Thought I'd post on this briefly - the Fed cut rates by .5% today, meaning that the Prime rate will be at 7.75% instead of the 8.25% it has been at. The stock market is reacting with joy and that's taking money out of the bond market, which is supposed to make mortgage interest rates rise.

But.

We just got a novel reprice from one of our lenders. Even though the bond market is moving the wrong way, the reprice was for the better. This confirms something we have long suspected, that mortgage rates are artificially high due to lack of liquidity in the secondary market, not because the bond prices justify it.

Additionally, yesterday IndyMac, one of the nation's largest lenders, added new programs and brought back stated-income programs that were on suspension. That's the first tangible sign that the mortgage pendulum is beginning to swing back a wee bit.

No way around it, though - the financial markets are FUBAR. We've no idea what's coming next. But it does appear that this crash might not be as horrible as CNN, et al. have been suggesting.

Why You Should Read Your Kids' Books

When I was a senior in high school at jolly West Springfield High in Springfield, VA, I had a really good teacher. Her name was Kathryn Russell and she taught AP English.

I don't really know much about her as a person outside of class. She was probably about 55 years old - it's so hard to tell these things when you're a teenager; everyone that's not your age is your parents' age - and she had been teaching for some years. She lived close (most teachers do), but not in the richer part of town. I never saw her out of class.

Of all the teachers I have ever had in the public school system, she was the one that had the greatest impact on my life. [an aside: the school-based person that had the biggest impact on my life has to be Linda Rezek, but she was my Choir Director and a companion for three classes every year for four years. I never really thought of her as a teacher. She was one, but she seemed more like a trusted advisor than a teacher. I just realized this.] Mrs. Russell had a love of English and language and led us through it in a class that to this day is still the hardest English class I ever took. It was far, far harder, for instance, than the Honors Freshman English class I had at BYU, which, thanks to Mrs. Russell, I hardly even needed to attend to get an A.

The lynchpin of Mrs. Russell's class was the timed essay. We were assigned the standard "classics" to read in that class, like Lord of the Flies and Heart of Darkness (two books I profoundly disliked), but instead of just writing a paper on them at the end (which, however, we also did), we had to write a 30-minute timed essay 3 times a week on the chapters we were supposed to be reading at that point. These were grueling papers to write, establishing and defending a premise over about 15 pages a week, but by the end of the class, we could do them backward in Hebrew if necessary. Mrs. Russell told us that if we mastered this skill, not only would we be able to pass the AP English exam with ease, but we would find that most other exams got easier, too, since they depended heavily on argumentation and speed of analysis and defense in essay presentation. Spot on. I received many an A in college on exams that I had studied woefully inadequately for because I knew how to present what I did know in a compelling fashion.

She also gave me Cs. Not always, and not regularly, but occasionally and usually in critical spots. Then, as now, I had one or two things going on in my life. I had two hours every day of after-school choir practice, basketball and church work to do, a large paper route (meaning that I got up at 4am every day), in December a Christmas concert out of school every day, and from January to May every year I had 3 more hours of after-school play practice for the school musical. I tended to slack off in my school work occasionally. Mrs. Russell never let me get by with it.

Look, I can write. My stories won prizes once upon a time and my essays get published when I send them somewhere for the purpose. I always had a facility with combining words and presenting them on paper. My English papers were pretty good even when I didn't spend half my life on them. Mrs. Russell could have given me an A with perfect justification on most of the stuff I wrote, but instead of judging it against the capacity of other people, she gave me what my effort deserved. At first contact, I thought this monstrously unfair. Fairly shortly, though, I could see that she thought I was really good, and that if I learned to apply myself, I could be excellent. She demanded that excellence. I haven't lived up to it always, but I haven't forgotten. And sometimes I write something that I think she'd have really liked.

This morning I re-read Frindle by Andrew Clements, and marveled again at what a first-rate story that is. It's the best of Clements's work, I think - in this one the story is perfectly natural, and doesn't feel forced, as if the author once caught lightning in a bottle and is hoping to make it strike twice. Frindle is, quite simply, the best tween book I've read, and we have a lot of tweens in this house, and I've read a bunch. It's a great story no matter your age. It has all the classic elements, the plucky hero, the evil villain (who reminds me powerfully of Mrs. Russell, hence this post), and a great twist at the end. Mrs. Russell was a Lorelei Granger. She made all of us want to be better, even if we didn't know that's what was happening under the teenage carping.

I never found out what happened to her. I've wanted for a long time to find her and tell her how much her class meant to me, how much of my life (right down to this very blog post) has been influenced by the things I learned there. I heard that she had breast cancer about ten years ago, but the outcome of that I didn't know. Hang on...Google, however, knows all, and it found her as recently as last year teaching at George Mason University.

And hey, there's a phone number...

The Best Laid Plans of Mice and Men

I meant to post on Monday, but I couldn't sleep the night before and spent a couple of hours on the stairs in my house praying and trying to be grateful that I have it better than most, however it feels like sometimes I could lose it in heartbeat.

So I didn't post.

I meant to post on 9/11 on the tragic and still almost unbelievable loss of that day. The year after I participated in the "Rolling Requiem", an hour-by hour tribute to the dead through the singing of Mozart's Requiem mass beginning at 8:17am in every time zone. I've not forgotten that day; nor, I suspect, have any of you.

But I didn't post.

I meant to post on Wednesday the 12th, a day where I passed a test that a few years ago I failed. I hadn't thought I'd come that far. I also learned several very important things that I want to share, but I didn't have time when I got home at close to midnight.

And here we are on Thursday and hey! I have time!

The markets are fairly settled. There's the distinct possibility of a Fed rate cut of as much as .5% next week, which would be a very aggressive move. It would ease the pressure on those that need to refinance out of adjustable rate mortgages (Fed moves directly affect ARMs), and that could help ease the fears in the secondary mortgage markets. Frankly, I can't tease out how the Fed affects the entire world economy, so I tend to pull for those moves that make it easier for me and my clients to get loans done. That usually means rate cuts. Forgive the bias. But I do think that is what the Fed should do.

In an effort to expand our product range and provide more services to our clients we have developed a couple of new programs that are related to, but are not, mortgage loans. One is a huge undertaking that I'll have a whole post about relatively soon, and the other is potentially the most useful mortgage add-on that I've ever seen. More about those later.

Get a Job, Da da da da, da-da-da-da-da

No, not me.

The federal jobs report came out this morning, and it was baaaaaad. That's gooooood. For us, anyway.

I posted on this before, about how the employment picture has a great deal to do with bonds, because high employment is supposed to mean high inflation (how people can still be sold on this idea when we've had record low unemployment for years now and inflation has never crested 5%, I don't know, and you would have thought that the Carter years of 10% unemployment and 18% inflation would have killed that off, too, but whatever), and high inflation is bad for bonds, and what is bad for bonds is bad for interest rates, so bad employment numbers is good for bonds and therefore good for interest rates, not that we really want people to be out of work, but we're thinking primarily about ourselves here.

That was all one sentence.

I expect, given the huge move in bonds this morning, that we'll be back to 6 - 6.125% on the 30-year fixed by Monday. Maybe not; lenders have a habit of not being willing to move down nearly as fast as they move up, but the market move certainly isn't going to hurt anything. It is now virtually certain that the Fed will cut rates at its next meeting, and that is good for the economy as a whole, I believe.

Good news has been a long time coming in this part of the market, and it's all the more welcome now that it has.

A Light Has Gone Out of the World

Luciano Pavarotti died last night of pancreatic cancer. He was 71. He died in Modena at his house, with his wife and family around him, which is how every man should die. Especially this one.

All have gifts. Every man is given a gift. Some men are given gifts so enormous that they cannot be hidden, and Pavarotti had such a gift. He was the man that gave Giacomo Puccini's music the perfect incarnation, that made it alive. Whether you like opera or not, what Pavarotti did to the music he sang is simply magical.

If you don't believe me, I invite you to listen to his supernal recording of Puccini's Nessun Dorma from the opera Turandot. That is the sound that you hear when you and your true love embrace for the first time. I once put it on my mp3 player when I went out running, and I literally had to stop when it came on, because I was weeping. It's very hard to run when you're weeping. No other piece of music has ever made me feel like that.

Don't miss out. Pavarotti was the greatest tenor that ever sang Puccini. Get a recording, a candlelit room, and some quiet surroundings. You'll thank me.

And the Verdict Is....

that the sky is not, in fact, falling. It turns out that the actual damage in the subprime market is being done by loans made only from 2004-2006, and that there are only a small percentage of those loans that are going bad, and that the total percentage of foreclosures in the subprime market is actually smaller than it was in 2000-2001 during the stock market crash.

The Fed, for its part, is not going to sit on its hands, and everyone expects a quarter-point cut at the Fed meeting later this month. That's probably not enough, but remember, it's not the effect of the move that will matter, but the effect of the interpretation of the move to mean that the Fed will not sit idly by and watch this be the worst Christmas season in the history of money.

This, in turn, has calmed things down across the markets and though many subprime lenders are still contracting on their programs, there's no serious degradation of the market any more, and liquidity is starting to come back into the secondary market.

Locally, even more hopeful, there's some sign of buying pressure in the $350-400k market in the Utah area, a price point that has been absolutely dead over the last six months. No, that doesn't mean a return to the blaze of glory of 2005-2006, but it may mean a return to a normal market sooner rather than later. Think March, instead of 2009.

Meanwhile, it also appears that those who have good credit and a real job are realizing that there are still good deals to be had at good rates out there. The competition for properties is much less, with those lacking hard cash ceding the field to those that have it. There are a fair number of those people, and the 30-year loans are still in the low-mid 6% range, and that makes for some good buying opportunities.

Bottom line - things are bad, on a relative scale, but not disastrous. There are beginnings of a return to normalcy, and the potential of the return to a normal market early next year. Things could be much worse.