NEWS RELEASE

For Immediate Release
July 21, 2010

Media Contact
Dana Smith, 720-413-8979
dana.smith@q.com

Universal Lending adds local mortgage leader as
Vice President and Regional Sales Manager

DENVER - Universal Lending Corporation, one of Colorado's largest mortgage banks, has hired Thomas Donnegan as its new Vice President and Regional Sales Manager. With more than 20 years of mortgage lending experience, Donnegan will manage and grow the company's retail lending sales force.

"Tom's experience as a strategic leader in the mortgage lending business will be a tremendous asset for us as we work to grow our retail branch network and increase our marketshare," said Pete Lansing, president.

Donnegan will oversee Universal Lending's growth plan, which involves recruiting additional loan officers, hiring successful branch managers and identifying strategic acquisition partners.

Prior to joining Universal Lending, Donnegan was the Area Sales Manager for Union National Mortgage. He has also led mortgage teams at First Community Mortgage, Countrywide Home Loans and Wells Fargo - Colorado Mortgage Alliance.

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Denver-based Universal Lending Corporation, one of Colorado's largest mortgage banks, has been helping families from every walk of life achieve home ownership for more than 30 years.  Universal Lending Corporation currently operates branches in Central Denver, Westminster, Pueblo, Fort Collins, Colorado Springs, Texas and Montana.

NEWS RELEASE

For Immediate Release
Aug. 5, 2009

Media Contact
Dana Smith, 720-413-8979
dana.smith@q.com

Universal Lending Opens Lakewood Office
Well-known Jefferson County Mortgage Expert to lead ULC team

DENVER - Universal Lending Corporation, one of Colorado's largest mortgage banks, opened a Lakewood branch in order to better serve the community in Jefferson County.  With 30 years of experience serving families and individuals in metro Denver, Universal Lending will bring its special brand of knowledge, experience and professionalism to the doorstep of Jefferson County residents.

"While other mortgage companies have come and gone over the years, Universal Lending continues to thrive and serve the community because we are committed to helping families achieve home ownership over the long term," said Pete Lansing, Universal Lending president.

Universal Lending has one of the highest rates of repeat customers in the mortgage business and offers many loan choices, including FHA,VA and a variety of conventional loans.

Lansing hired well-regarded Jefferson County mortgage expert Susan Gumm to serve as the new Branch Manager.  Gumm has 35 years of experience in mortgage banking and has been a top producer in the business for several firms.  In addition to originating mortgages, Gumm worked as a construction lender, and she also owned and managed a residential mortgage brokerage firm and closing company.

She is also extremely active in the Jefferson County community and in dealing with issues relating to real estate finance.  In addition to her involvement in the Colorado Mortgage Lenders Association and the Colorado Association of Realtors, Gumm has been a board member of the Colorado State Housing Board, a Commissioner with the Clear Creek County Planning Commission and recent graduate of Leadership Jefferson County.

"I'm thrilled to be a part of the Universal Lending family because I believe so strongly in their way of doing business – working closely with families to get to know them, educating them about the process and helping them make informed decisions that will set them on the path to home ownership and financial stability," Gumm said.

"Susan is an expert in working with first-time homebuyers and self-employed borrowers," Lansing said.  "She takes pride in the long- term relationships she builds with her clients, and that's why she's a great fit for our team."

Gumm has developed a team of the best loan officers in Jefferson County and continues to look for experienced, customer-focused loan officers to grow the business.  Her current team includes:

•    Kelli Strott comes to Universal Lending with more than 11 years of experience in mortgage banking and a strong commitment to helping people.  She has held many positions, including closer, processor, loan officer assistant and loan originator.

•     Michelle Oddo has more than 15 years of experience as a mortgage lending professional.  She strives to educate her clients on the best loan option available to them, building trust that results in long-term relationships with her clients.  She gives back to the community as a member of the Kiwanis and the West Chamber of Commerce.

•    Heather Dirchl has 9 years of mortgage banking experience and 12 years of experience in the construction industry.  She believes in good old fashioned hard work and strives to earn her clients' trust and repeat business.  She is involved in the Jefferson County Association of Realtors and the West Chamber of Commerce.

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Denver-based Universal Lending Corporation, one of Colorado's largest mortgage banks, has been helping families from every walk of life achieve home ownership for nearly 30 years.  Universal Lending Corporation currently operates branches in Central Denver, Westminster, Lakewood, Pueblo, Fort Collins, Colorado Springs, Texas and Montana.

NEWS RELEASE
For Immediate Release
July 23, 2009

Media Contact
Lara Therrien, 720-323-9444
laratherrien@comcast.net

New real estate blog launched with support from Universal Lending and Land Title
Edited by former Rocky reporter John Rebchook with contributions from Oliver Frascona, Inside Real Estate News aims to be top source on the real estate industry

DENVER -- Former Rocky Mountain News reporter John Rebchook and Denver’s premier real estate lawyer Oliver Frascona have teamed up to create Inside Real Estate News, a new blog that aims to become the premier source of news on the metro Denver real estate industry.

Sponsored by the Universal Lending Corporation, one of the leading mortgage banks in Colorado, and Land Title Guarantee Company, Inside Real Estate News will provide news and commentary on real estate businesses and trends throughout metro Denver.

The blog will contain in-depth news on such issues as foreclosures subsiding in Denver, and it will give readers a quick look at interesting items like the praise Denver received in Newsweek for its green efforts. The blog will also contain features on some of Denver’s leading experts in the real estate industry, like this week’s interview with top broker Dee Chirafisi.

“For years I looked forward to reading John’s stories in the Rocky Mountain News, and I’ve just really missed his reports these last few months,” said Pete Lansing, Universal Lending’s president who also sits on the Board of Directors for the Colorado Mortgage Lenders Association. “With John and Oliver teaming up to provide the best and most insightful news and analysis on the industry, I know this blog quickly will become a favorite of everyone in the business. I’m really excited about the opportunity for Universal Lending to bring meaningful and useful news to the whole industry.”

Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years.

Frascona is a shareholder in Frascona, Joiner, Goodman and Greenstein, P.C., a Colorado law firm. Frascona is the leading continuing education instructor for Realtors © throughout the Denver region. His practice areas include real estate, brokerage law, contracts, finance, land use, leasing, real estate title, business law, association law and litigation.

“John Rebchook is the consummate real estate journalist and he brings decades of knowledge and experience to his new role as editor and writer of InsideRealEstateNews.com. Combining John’s expertise with that of Oliver Frascona will make InsideRealEstateNews.com an exciting and effective new way to reach the Front Range real estate industry with in-depth commentary. John and Oliver can provide important information about residential real estate on a more frequent basis so that the business community and consumer can make informed decisions and stay current on industry information. We look forward to the launch of InsideRealEstateNews.com and believe it has the potential to become the leader in the Front Range in residential real estate industry news reporting,” said President John E. Freyer, Land Title Guarantee Company (www.ltgc.com).

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About Universal Lending Corporation
Denver-based Universal Lending Corporation, one of Colorado’s largest mortgage banks, has been helping families from every walk of life achieve home ownership for nearly 30 years. Universal Lending Corporation currently operates branches in Central Denver, Westminster, Lakewood, Pueblo, Fort Collins, Colorado Springs, Texas and Montana.

About Land Title Guarantee Company
Land Title Guarantee Company, founded in 1967 in Denver, CO by Colorado Business Hall of Fame inductee William Vollbracht, is a locally owned title insurance agency that provides title, closing and escrow services through 40 Colorado offices. Land Title Guarantee Company is one of Colorado’s largest private companies with 500 employees. Old Republic National Title Insurance Company has been Land Title's primary underwriter and has an "A+" rating for claims paying ability by Standard & Poor's. Land Title has its own underwriting company, Land Title Insurance Corporation, which has received an "A" rating from Demotech for its financial stability. Land Title is a policy-issuing agent for Chicago Title Insurance Company, and Land Title underwrites most of its metro Denver commercial transactions through Chicago Title. Land Title also writes commercial title insurance policies with The Talon Group as an underwriter. For more information, go to www.ltgc.com or call (303) 321-1880.

Housing Recovery Depends on a Big Peak to Trough Drop

Economic Notes for Friday, June 12th, 2009

Interest rates stabilized at the conclusion of $65 billion in new Treasury borrowing this week, mostly by sales of long-term bonds.

"Stability" is a relative term: all long-term rates have risen roughly one percent in just six weeks, and a further run-up will undercut any economic recovery. The question is whether current prospects for recovery justify this rate-surge, or is this surge already unsustainable? If the latter, what's the chance for a reversal, especially in mortgages?

In today's epic divergence in economic outlook, you found what you wanted in new data. May retail sales rose .5% -- some say presaging positive GDP, others weak-as-ever, flat after extracting a spike in gasoline prices. New claims for unemployment insurance fell close to 600,000 last week, down from the 668,000 peak in early April but almost triple anything resembling job growth.

The damage to long-term rates was entirely pushed by Treasurys -- for whatever reasons (broken markets, inflation-dollar-commodity-oil fear), more borrowing than the market could absorb. At the current deficit pace, the Treasury must repeat this week's damage-doing borrowing, $65 billion every 12 days, most of it piling up in short-term debt that must be rolled. And rolled, and rolled, and rolled...

The Fed's effort to control mortgage rates has succeeded beautifully, in the sense of restoring a proper spread between mortgages and Treasurys. Historically, a retail mortgage rate should be about 1.70% above the 10-year T-note; all through 2008 the spread ran 2.50% to 3.00%+. Today's spread is about 1.80%.

There are $10 trillion in US 1st mortgages outstanding, $5.5 trillion of those Ginnie-Fannie-Freddie "Agency" MBS, which the Fed began to buy on January 5. The market for the other $4.5 trillion is dead as a hammer, and there has been no net growth in total 1st mortgages since summer 2007. Of that Agency $5.5 trillion, Fannie and Freddie own $1.5 trillion -- portfolios embalmed, replacing loans as they are refied, foreclosed, or prepaid by sale, zero-growth. Of the remaining $4 trillion, by the end of this year the Fed will have bought $1.2 trillion. Thus spread has been restored in a market with essentially no private buyers (for that matter, few buyers for any IOUs).

Those so convinced of recovery might consider: to maintain any functioning mortgage market, the Fed has had to buy 12% of all outstanding loans, a portfolio that took Fannie and Freddie 75 years to accumulate. Only the Treasury yield-surge could push mortgages to a marginally affordable 5.75% -- certainly not borrowing demand.

Angry voice in back of room: "Hell man, that's only a half-percent above the fifty-year low in 2003!" True. However, housing recovery depends on a big peak-to-trough drop, and all recession-recoveries have required a housing recovery (and autos... heh-heh). In the recovery from the 1973-74 recession, mortgages fell from 10% peak back to 8.5% (the decline greatly magnified by rising inflation); 1979-82, from 18% to 10%; 1991-93, from 9.50% to 6.75%; and from 2000-03, 8.50% to 5.25%.

This time, from 6.50% 2004-08 to 5.75% ain't gonna cut it, especially with the most severe tightening of credit standards ever seen.

Mortgage rates will not come down unless Treasury yields do, and they are beyond Fed control. It is possible that the economy has entered a normal, cyclical recovery that will create loan demand at these and higher rates, but that is the least likely scenario. As is the inflation-dollar-commodity-oil camp, itself dependent on substantial recovery.

In scenario two, if this interlude reveals itself as a false recovery in the next 30-90 days, most likely to us, the severity of anxiety will set the boundary of rate decline. Fear would take us back to the fours, merely soggy-bottom perhaps to 5.00%.

Scenario three is the truly confounding one. Greenspan's Conundrum was the 2004 refusal of long rates to rise with a tightening Fed. Now we may be entering Bernanke's Conundrum, long rates rising despite all-time Fed ease, pushed by excessive Treasury borrowing. The only remedy: cut Federal spending. Now, in mid-recession.

The Cyclical Turn is an Illusion of Temporary Stability

The economic optimists are still in charge of markets, rates and stocks still rising. However, the divergence is widening between them and those worried about credit and latent weakness. It may take a month or two to figure whose stubbornness has merit.

Markets first, then new economic data.

The 10-year T-note has jumped to 3.85% this morning, the highest since last fall, and even 2-year Treasurys rose in yield today in belief that a Fed rate-hike has come closer. Mortgages have gone right along to 5.625% with lowest fees, the highest since the Fed announced its intentions to buy at Thanksgiving. A 1.00% rate-rise in two weeks has stopped refinance activity altogether, and purchase markets also suffer.

Stocks have now recovered all 2009 losses, and the Dow's press up on 9,000 has retraced one-third of its overall collapse. A mechanical pattern typical of all major moves either up or down, these retracements also typically have little predictive value. Worriers are convinced that this move is an all-time "dead-cat bounce."

Optimists think oil touching $70/bbl confirms their position, but that market carries a sulfuric whiff of speculative fiddling. There is no increase in global demand, and the world is awash in supply overshoot -- it won't last for more than a few years, but is deep and broad. Not even speculation can move natural gas, trading under $4.00 today. Industrial commodities have retraced like the stock market, but the whole agricultural sector is flat-on-bottom -- one old friend says that Memorial Day retail sales of beef were the worst ever measured. National health kick, or budget beans?

The first week of each month brings the most important data. Today's rise in rates and stocks immediately followed news that payrolls contracted by "only" 345,000 jobs in May, down a quarter-million from the 1st quarter monthly average. However, unemployment jumped another .5% to 9.4%, new claims for unemployment insurance are steady at 625,000 weekly, and only continuing claims flattened. Possibly some people are going back to work, but only at lesser pay. The overall job picture is awful.

The twin ISM reports by inventory managers excited the optimists. Manufacturing rose from 40.1 to 42.8, technically close to recession-end level (actual growth lies at 50.0), but the juice was in the components: new orders to 51.1, and prices-paid from 32.0 to 43.5 produced a delighted "Eek!!" from inflationists. Wednesday's service-sector survey (70%+ of the economy) was tepid, to 44.0 from 43.7, and optimists ignored employment components in both surveys still mired in the 30s.

The optimists, centered in the stock market and joined by the inflation-fearful, see a normal, cyclical recovery building, in which jobs are the last to recover and inflation follows. It may be on the weak side, but there will be no more Bears, Lehmans, AIGs, Chryslers, or GMs. With all the big dominoes down, there is no reason to buy Treasurys for safety at no-earn yields. Housing can fend for itself -- those silly people deserve this lesson, after all. Even Bernanke says, "...Housing has shown some signs of bottoming."

The worried, mostly credit people joined by non-stock-market economists, see an extremely atypical situation: a balance-sheet recession still deteriorating. Asset values have fallen or collapsed versus debt outstanding, leaving households and banks with negative equity and little access to credit. Without credit, there is no way to stop the asset-liquidation spiral. The cyclical turn is an illusion, merely temporary stability among big institutions while Main Street continues to erode.

The worst illusion: the rise in Treasury yields is mistaken by optimists for a sign of health, when in reality excessive Federal borrowing cannot be absorbed by a still-shrinking and decapitalized financial world. Last week, Fed Vice-Chair Donald Kohn gave a careful warning about deficit-spending benefits at risk to higher long-term rates.

This week, Perfesser Bernanke: "A relapse in the financial sector could cause the incipient recovery to stall." A new shut-off in mortgage credit looks like a relapse to us.

Mortgage News Week in Review - June 6th

Investors have been concerned for quite a while about the coming supply of new debt needed to pay for all the government stimulus programs. On top of that, the economic outlook has been improving sooner than expected. The combination of these two potentially inflationary developments pushed mortgage rates higher during the week.

The economic surprise this week came from the Employment report. Although the economy lost -345K jobs in May, it was far fewer than the consensus estimate for a loss of -525K jobs. The Unemployment Rate jumped to 9.4% from 8.9% in April. A surge in people entering the labor force was responsible for the unexpected increase in the Unemployment Rate. The labor market is typically one of the last areas to show improvement during an economic rebound, so signs of a turnaround are particularly significant.

Fed Chief Bernanke supported the notion that the recession would end this year. In testimony before Congress this week, Bernanke stated that he still expects the economy to move higher later this year, although it may take a while for growth to return to average levels. He looked ahead to measures needed once the economic crisis has passed, such as containing the budget deficit and reducing government control of markets. At this point, most investors believe that the Fed is not inclined to expand the mortgage-backed security (MBS) purchase program beyond its current level of $1.25 trillion, unless economic growth falls short of the Fed's outlook.

More evidence that the economy may be rebounding came from this week's housing data. April Pending Home Sales rose for the third consecutive month, increasing 7% from March. Pending Home Sales are a leading indicator, meaning that future New and Existing Home Sales reports may show increases.

Next week, the most significant economic data will be the Retail Sales report on Thursday. Retail Sales account for about 70% of economic activity. In addition, the Trade Balance and the Fed's Beige Book will be released on Wednesday. Import Prices and Consumer Sentiment will come out on Friday. There will be large Treasury auctions on Tuesday, Wednesday, and Thursday as well.

Markets Demand Fiscal Discipline

Economic Notes for Monday, June 1st, 2009

The explosion in long-term interest rates is abating, but the warning from markets remains stark and bleak.

In one week the 10-year T-note blew from the 3.20s to 3.70s, now 3.50% but far from the 2.50-3.00% range Thanksgiving-April. An origination fee bought a 4-something mortgage until Wednesday, then 5.25% at the top, back toward 5.00% now.

Optimists and worrywarts found what they wished in economic data. Conference Board consumer confidence rose from the 25.3 pit in February to 54.9 in May; however, a normal-growth economy has a 100-125 confidence reading. Orders for durable goods jumped 1.9% in April, but only offset the downward revision for March. New unemployment claims held 623,000 -- off the 663,000 peak in early April, but no good.

Sales of existing and new homes stayed flat in April, at record lows. "A" quality loan delinquencies rose to 8.9%; all indicators for foreclosures are rising; modification programs are still small-number, and of those, re-defaults run 25%-60%. Low-priced homes in every market get auction-style attention; however, foreclosures at 50% of resales tells you everything you need to know about the non-foreclosure fraction. Unstable, not bottom, not bottoming. Higher rates make bottom impossible. Even before this week's rate-wreck there was still no up-tick in purchase-loan applications.

There are four reasons for the bust in long-term Treasurys:

1. In this ultimate Keynesian spasm, too many Treasurys are coming to market. Not so much the $2 trillion this year, or even the $1.5 trillion next year, but the flat refusal by the Obamanauts to adopt fiscal discipline in the out-years. On current "plan" our debt will soar from 45% of GDP to 75% in 2013, still ramping open-ended.

2. Everyone knows that inflation is a sure thing. The odds are 10:1 against, but there's nothing like last-war certainty. Breaking that fear will take time. The Fed could get us to Weimar or Zimbabwe by printing currency and dropping it in stacks on street corners, but in utterly broken credit conditions invented money is struggling slowly from the Fed to the corner, evaporating on the way.

3. The Green Shooters are equally certain that economic bottom has passed, and recovery has arrived. These people will change their minds sooner than inflationators.

4. The Fed at "0%-.25%" cost of money should anchor long Treasurys. Borrow at no cost, lever 8:1, a 2.50% 10-year pays a fantastic return, enough to offset damage in future reckoning. However, all of the bank-repair efforts have descended to black comedy: pretense, gaming, and deferral. The financial system is still loaded with bad assets and short capital -- no loans, no leverage of Treasurys, MBS, or anything else.

One quick corrective: mortgage demand collapsed on Wednesday. 70% of applications had been for refinance, and above 5.00% demand is zero. Another possible nearby corrective: a load of Agent Orange economic data next week.

The nightmare corrective: historians will study this Keynesian Limit the same way we have studied FDR's balanced-budget error in '36. If government over-borrows in a super-Keynesian attempt to stimulate aggregate demand, and long-term rates rise, at what point will higher rates choke off the benefit of stimulus? Answer: Wednesday.

The 1936 national debt had all the magnitude of an accounting error. The flinch from borrowing then was hair-shirt ignorance. When debt ran to 140% of GDP in WWII, it was soaked up by a nation on rationing, War Bond rallies, and nothing to buy on Iwo.

From California to oblivious Obamanauts, markets demand fiscal discipline. Until it is adopted, the high-wire hazard from spending cuts notwithstanding, each new auction of Treasury paper will be Russian Roulette.

The good news: spending limits might work, and well. "Aggregate demand" was the problem in the '30s, but not now. This is a balance-sheet catastrophe, debts in excess of assets. Solve the financial problem by modest borrowing, capital forbearance and guarantees, get credit going, and we can crawl out of this.

We Can Grow Our Way Out of Debt Trouble

Economic Notes for Tuesday, May 26th, 2009

This week marked the first of several collisions ahead between markets and US plans to borrow. Treasury yields have soared, but mortgages are holding in the fours.

New data failed to reinforce either the Green Shooters or the Agent Orangers, as prior historical guides are unreliable in a brand-new predicament.

Leading indicators rose 1.0%, the first gain in seven months. However, Orangers note that .44% of the boost came from a suspect rocket by stocks; another .28% from the jump in long-term Treasury rates, more likely to be destructive than helpful; and .27% from consumer attitudes improving from desperate to merely miserable.

The Shooters are adaptable. Tuesday's release of new housing starts and building permits was supposed to show housing bottom, and stocks rose in anticipation. The actual numbers, down 13% and 3.3%, were the worst ever measured, but good news! Less construction must mean less supply, therefore housing bottom. Stocks rose.

The Fed's staff produces the best forecast available. State secrets until a few years ago, these forecasts are public just three weeks after each Fed meeting. The minutes of April 28-29 (www.federalreserve.org) were badly mis-read upon release this week: media and Street sources initially reported the Fed "considering" an increase in its purchases of Treasurys, and Treasury rates fell. The same crew also reported the Fed had altered its forecast to the downside.

Wrong and wrong. There was no debate on increased purchases; merely unanimous decision to wait-to-see. Then, there are two forecasts at Fed meetings: one by the twelve regional Feds, and another by the staff, historically by far the more accurate of the two. The regional banks cut their forecast, but the staff boosted its outlook: "Real GDP to edge higher in the second half... Fiscal stimulus... Bottoming of housing... Turn in the inventory cycle... Gradual recovery of financial markets."

Markets figured it out: an improving economy and no Fed support for Treasurys...? Sell. The 10-year T-note blew to 3.44% from the high-twos of fall-winter.

Mortgages are holding because the Fed is executing a $1.25 trillion buy, more than 10% of outstanding mortgages. This operation has successful impact because there has been no net increase in loans outstanding since 2007 (refis are a wash, and purchase of a foreclosure results in net decrease). Here we sit, mortgages roughly 4.75%, only 1.30% above the 10-year, the lowest spread in memory. If Treasurys continue to blow up, can mortgages stay put, the spread ever-narrower? Dunno. Never tried this before.

A steepening yield curve (long rates rising far above short) is supposed to forecast good times. Not when low rates and unprecedented Federal borrowing are required to get out of an asset-deflation spiral. Absolutely not.

Given new-cash Treasury borrowing of at least $1.8 trillion this year, the Fed may not have the power to suppress those yields. The Obama people appear oblivious to the market damage done by their failure to address "out-year" deficits. Geithner's plaintive promise today to get deficit growth back to 3% per year just made things worse. We're going to run our debt from 44% of GDP to 75% in depression-prevention, and then grow it 3% per year, when we will be lucky to have GDP growing as fast? When interest rates normalize, interest on debt so great as that will wreck the budget.

The elephant in the room since Lehman September: without blowing up rates, can we and Europe borrow as much as we must? We have borrowed and spent our way to premature prosperity for 50 years, and now must exhaust our emergency borrowing reserve. None will remain to cushion entitlement promises to aging Boomers. We cannot inflate our way out of debt because rates will rise and abort recovery. We may be aborting right now, rates rising and the Treasury crowding out lesser borrowers and capital raisers. Tax our way out? Ahhh... no.

We can grow our way out of debt trouble, but only by limiting spending. Somebody please Twitter the President before markets reach him by bullhorn.

Mortgage News Week in Review - May 22nd

While weaker than expected economic data pushed mortgage rates lower last week, concerns about the coming supply of debt needed to pay for government programs moved mortgage rates higher this week, leaving rates nearly unchanged over the past two weeks.

This week, the economic data had little impact, but mortgage rates moved higher for a variety of other reasons. The Treasury announced a huge $101 billion in auctions next week, meaning additional supply for the market to absorb. Compounding the problem, the UK was placed on the watch list on Thursday for a possible downgrade of the credit rating for its debt, due to its high level of government debt. A lower credit rating implies greater risk, pushing yields higher. Investors are now concerned that the US also may be at risk of a downgrade. Finally, there was hope that the Fed would step up its asset purchases, but the Fed held steady its level of Treasury and mortgage-backed security (MBS) buying this week, disappointing many investors.

The housing data released this week was mixed. While April Housing Starts and Building Permits fell to record lows, the weakness came from multi-family units. Construction of single-family homes actually rose 3% from March, its second consecutive monthly increase. In addition, the National Association of Home Builders (NAHB) May confidence index rose to the highest level since September 2008.

Last week, the Secretary of the Department of Housing and Urban Development (HUD) announced that home buyers would be able to use the $8,000 first-time homebuyer tax credit for down payments on FHA loans through the use of bridge loans. HUD also posted the information on its website (HUD Mortgagee Letter 09-15). Since then, HUD has completely removed the information from its website. While no official explanation has been given, it appears that HUD and the IRS need more time to research the details of the program before moving forward.

Next week, there will be Treasury auctions on Tuesday, Wednesday, and Thursday. Existing Home Sales and New Home Sales will come out on Wednesday and Thursday, respectively. Durable Orders, an important indicator of economic activity, will be released on Thursday. The Chicago PMI national manufacturing index is scheduled for Friday, along with the first revision to first quarter Gross Domestic Product (GDP). Consumer Confidence and Consumer Sentiment will round out the economic reports. Mortgage markets will be closed on Monday for Memorial Day.

Restore Credit and Prices to Halt Foreclosure Wave

To Vee, or not to Vee... that is the question.

The optimists see the steep far side, the middle roaders see bottom nearby, and the skeptics see the economy still declining, just slower, possible multiple bottoms ahead.

A .4% drop in April retail sales was less than the 1.3% dive in March, but the weakness still surprised the optimists, who are happy today with an "only" .5% decline in April industrial production. That is the least decline since October, but "capacity in use" fell .3% to a new post-Depression low 69.1%.

The high week for new unemployment claims was April 4, 668,000 ex-workers filing, and the cycle claims-top often precedes recession bottom by a couple of months. From a late-April low at 604,000, claims popped back to 637,000 last week.

The NFIB April small-business survey climbed a hair from all-time low territory, but did so only on two "soft" sentiment indicators. The "hard" ones -- sales, compensation, capital spending, employment -- all headed lower.

Administration spinners point to improved credit markets with some truth. No large institution has collapsed this year. Survivors have been able to sell some new stock. Some spreads have narrowed. However, only the very best businesses can borrow at affordable rates; BBB-rated bonds are still 6.00% above Treasurys, normal is 1.00%.

The all-important effort to extract toxic assets from banks, recapitalize them, and get them back in the game has stalled. Tim Geithner is the new opening-skit star on Saturday Night Live, energetic and vacant while announcing new and wacky plans.

The greatest gap between credit reality and the authorities' comprehension or effectiveness (dunno which is worse) is in housing.

This morning, Minneapolis Fed Prez Stern announced that "creditworthy mortgage borrowers" would be approved, "if not at the first bank, the second or third." Fool.

We are now almost two years without affordable Jumbos, fixed-rate spreads most places 1.50% above Fannie conforming. Jumbo down payments are 20%-25%. From the '70s on, these loans were available up to 95% -- capped amounts, hyper-qualified, but available. Thus, if you aspire to a $500,000 home, no matter how strong your income, credit, and retirement savings, and have only $50,000 to put down... forget it.

Second mortgage lending in just the last 60 days has receded to 85% maximum.

The last "common sense" loans disappeared almost a year ago. 50% down, huge reserves in savings, but a quirky 1040 -- forget it. Almost every day we must explain to a startled applicant that today's system cannot make a loan that our Granddaddy would have been happy to make at his Ponca City, OK S&L in 1935. And he was tough.

The new Market Conditions Addendum to every Fannie appraisal has added a whole new layer of destruction to regional redlining. Even if value is there (if we can find recent comparable sales), we can't make loans because the number of sales is down.

With an 80% loan on with a 674 FICO (low because of $1,000 in medical collections in an insurance dispute, co-borrower 740), we must tell them Fannie's surcharge will cost them 5.50% with one point instead of 4.50%. The purchase will die.

Suicide-tight underwriting has overwhelmed all-time low rates, as shown in dead-flat applications for purchase loans, and even refis are falling off.

The Obamanauts have a new foreclosure-preventer scheme every week, but this toothpaste-back-in-tube priority has failed for two solid years. Agency 90-day delinquencies rose a half-percent from December to February, to 2.63% of 30,000,000 loans -- up from .95% one year ago.

There is no way to stop the foreclosure wave without restoring price appreciation, the only means to give hope to underwater and breakeven households. And there is no way to get markets going without mortgage credit restored to the reasonable standards of the '70s, '80s, and '90s. If the plan is for the nation to adapt to a Marie Antoinette standard for credit, the plan will fail.