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Showing posts with label Ephemera. Show all posts
Showing posts with label Ephemera. Show all posts

Saturday, July 12, 2008

On Maes and Macs

by Tanta on 7/12/2008 03:49:00 PM

My somewhat tenuous attention was captured this morning by this little parenthetical in the NYT story on the IndyMac failure:

The bank, once part of the Countrywide Financial Corporation, is the first major bank to shut its doors since the mortgage crisis erupted more than a year ago. (IndyMac is not related to Fannie Mae and Freddie Mac, the big mortgage finance companies that alarmed the stock market this week.)
Are we worried that the public will think all Maes and Macs are the same? And whose reputation would be more endangered by this, IndyMac's or Freddie Mac's?

The ironies of history. Trivia buffs will know that once upon a time there were three "agencies": the Government National Mortgage Association, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. It didn't take all that long for market participants to start coming up with pronunciations for the abbreviations GNMA (Ginnie Mae), FNMA (Fannie Mae), and FHLMC (Freddie Mac, which makes no sense whatsoever except that nobody liked "Filly Mac." I once overheard an old hand in the loan delivery department helpfully explaining to a new recruit how to remember the difference between Mornet (FNMA) and Midanet (FHLMC), the GSEs' pool delivery software systems. "It's easy to remember," she said. "Midanet has a 'd' in it, just like 'FHLMC.'"). Old farts whose favorite childhood treat was a box of Pixies will remember the old-time candy company Fannie May, whose name is said to have inspired the whole thing, probably in the throes of a major sugar rush.

Anyway, the players long ago accepted the nicknames to the extent of actually legally changing their names to Ginnie Mae, Fannie Mae, and Freddie Mac, which was great for those of us who had to type Assignments of Mortgage. At some point the student loan corporation climbed on board and we got Sallie Mae, plus the agricultural loan guarantor known as Farmer Mac. By the mid-80s, if you were a government agency or GSE involved in the secondary loan market, you were almost always a Mae or a Mac of some kind. The Federal Home Loan Bank Board never did accept "Freddie Bob," which some of us thought was unsporting but there it is.

This started a fashion for private companies to put a Mae or Mac in their names, signifying that they were major players in the secondary loan market, too. Independence Mortgage Corporation named itself IndyMac. There was Ginger Mae for dicey home equity loans in the great subprime boom of the 90s. ResMae just declared bankruptcy last year, but Charlie Mac (which pools credit union loans) is still functioning as far as I know.

I don't think any private loan buyer has named itself Mac or Mae since 1998 or thereabouts; in this last boom the new entrants, mostly REITs, gave themselves sparkling fresh names like New Century and Luminent and Novastar as if to maintain a light-year's distance from the old gold standard of the Maes and Macs.

And just when it might have been useful to shed the boom-era designer names and huddle up to a solid, staid, boring old Mae or Mac again, we've got the media worried that we won't be able to keep our failing Macs straight.

Tuesday, July 08, 2008

Déjà vu

by Tanta on 7/08/2008 07:44:00 PM

July 8, 2008, via Housing Wire:

According to a press statement released late Tuesday, Northbrook, Ill.-based Prospect Mortgage has signed an agreement to acquire more than 60 branch offices nationwide and 750 of Indymac’s retail employees, including loan officers. Terms of the deal were not disclosed.

The employees will become Prospect mortgage employees, with the branches being renamed, the company said; it’s unclear if the company intends to cut staff in the wake of the planned acquisition.

Both John Johnston and Ron Bergum will remain in their leadership roles with the retail branch group and report to Mark Filler, CEO of Prospect Mortgage; both Johnston and Bergum were senior retail banking executives at now-bankrupt American Home Mortgage Co. before joining Indymac.
August 29, 2007 via Bloomberg:
One mortgage lender announced that it was hiring yesterday as it tried to take advantage of the turmoil in the market, while another said it was cutting jobs.

IndyMac Bancorp said it had hired more than 600 former employees of the American Home Mortgage Investment Corporation and might hire 250 more.

IndyMac will also assume the leases on more than 90 offices where the employees worked.

Last month, IndyMac eliminated 400 back-office processing jobs, about 4 percent of the work force.

This year’s surge in missed loan payments reduced the profitability of home lending, forcing more than 100 mortgage companies to close, declare bankruptcy or put themselves up for sale. IndyMac joins Countrywide Financial and Merrill Lynch’s First Franklin unit in trying to benefit from the shake-out by hiring displaced workers.
Hope Prospect Mortgage's business cards are handled on a print-on-demand basis. I'm not sure I'd stock up.

Saturday, May 03, 2008

Microsoft Walks Away

by Calculated Risk on 5/03/2008 09:22:00 PM

Off-topic (but probably of interest): From the WSJ Microsoft Withdraws Yahoo Offer After Sweetened Bid Is Rejected

Microsoft Corp. said it abandoned its offer for Yahoo Inc., as the two companies failed to bridge a gap between them on price.
Here is the Ballmer letter to Yahoo.

Friday, December 14, 2007

As Opposed to the RepoChopper

by Tanta on 12/14/2007 09:50:00 AM

In case you were paying attention to big news yesterday (yeah, we're lookin' at you, Citi) and missed the RepoBus, don't miss the RepoBus. Tragedy as farce. It always gets there in the end.

I forgot who sent me the link to that article yesterday. So I'll just hat tip everybody, the innocent as well as the guilty. It ought to be a fun day.

Wednesday, November 07, 2007

MMI: Smells Like Accounting Spirit

by Tanta on 11/07/2007 08:21:00 AM

An Associated Press reporter has apparently been living in a cave for a few months:

NEW YORK - The malaise in the mortgage market is starting to spread to credit card and auto loans in what one analyst has dubbed consumer credit "contagion." It's an ominous warning signal for the economy.
"One analyst"? "Contagion" in quotes? I checked the byline; this seems to have been published this morning.
No one is calling this problem the next debt-related land mine yet, but it is important to watch what happens, especially as the holiday shopping season gets under way.
OK. Let me rectify this inexplicable failure of cliche:

This problem is the next debt-related land mine. You read it here first, kids.

We also savor the perfume of the new trend, odiferous metaphoricity:
"Firms that are now adding to the portfolio might have had a few whiffs of trouble brewing earlier this year and dragged their feet in adding to reserves because they were hoping that interest rate cuts might bail them out and give borrowers breathing room," said Jack Ciesielski, who writes the industry newsletter, The Analyst's Accounting Observer.

"Now, the odor is getting stronger, and it looks like adding reserves is the only course of action they can follow without presenting misleading financials," Ciesielski said.

Friday, November 02, 2007

MMI: Elevated Threat

by Tanta on 11/02/2007 09:44:00 AM

It has been a while since we measured distress level in the credit markets by a shallow survey of goofiness in the news. Since we have already noted solemnly the important news of the day--jobs report didn't smell bad--let us descend to news of the weird:

Mark to model? How about mark to flea market? "Prepare for the credit drama sequel" by stocking up on beaver pelts and glass beads.

Put on your blast goggles before you read this blinding flash of obvious: "Jump in foreclosure could hurt prices." Also, "contagion" is back.

But not to worry, it's not that contagious:

The soaring price of oil has yet to have a crippling effect on the economy, and inflation and unemployment figures remain in check, suggesting the economy is relatively healthy, despite the disastrous effects of the subprime collapse in the housing and lending arenas.

Bad bets on subprime mortgages have placed the financial sector in its current quagmire, not a lack of liquidity, and in the midst of sorting out the fallout from those decisions; it does not appear that Fed rate cuts are having the desired effect of propping up the flagging industry.
I don't know; what that means either, but fallout from the quagmire of the bad bets doesn't sound good.

Monday, October 29, 2007

MMI: Maternal Merrill Comes to Me

by Tanta on 10/29/2007 09:24:00 AM

Remember all those witty ursine puns in July when the news was all Bear Stearns all the time? Sure you do.

Since it's likely to be all Merrill all day for the foreseeable future, we're going to have to have a talk with the headline writers at Bloomberg.

"O'Neal Ouster Makes Mess of Maternal Merrill Lynch."

"Maternal Merrill"? Is this the New Formality, or did someone's online translator have a bit of difficulty with "Mother Merrill"?

Let it be . . .

Thursday, October 11, 2007

Countrywide Wrist Band: $152.50 on EBay

by Calculated Risk on 10/11/2007 10:31:00 PM

On EBay: Countrywide "PROTECT OUR HOUSE" Wrist Band (hat tip wall street pharmacist)

Countrywide Wrist BandClick on photo for larger image.

The band says "Countrywide" and "Protect Our House".

Yes, it also says "Made in China".

Here is the text:

Employee Wrist Band
This wrist band was recently given out to all employees of Countrywide who signed a pledge to "tell the company's story" during the tough times that the mortgage industry is currently going through. There has been an overwhelming request online for these wristbands by collectors, as well as members of the mortgage industry OUTSIDE of Countrywide.

Some people believe that I am risking my job by selling this on Ebay. My thoughts are that I show my support to the company by working hard every day. I am happy with my job, I wish the best for my fellow employees who have lost their jobs, and I ask that you bid like crazy, just in case I need it!!! :)

Experts like blaming Countrywide for the current condition of the Mortgage industry, but that is just because we are the largest, who else are you going to blame? Once the dust settles and Countrywide regains the image that existed prior to this mess, this wrist band will be a collectible!

This wrist band is new!
The current bid is $152.50.

Friday, October 05, 2007

Excellent Hedge, There, But Your Tie is Ugly

by Tanta on 10/05/2007 08:45:00 AM

Because we really needed to know that 47% of you think a professional opinion about cycling vs. jogging or miniblinds vs. drapes or mary janes vs. t-straps is of more value to you than a professional opinion about stocks vs. bonds.

According to the Securities Industry and Financial Markets Association:

Washington, D.C., October 3, 2007 – A majority of adults (53%) would choose to receive financial advice over that of a personal trainer, interior designer or fashion consultant if given the opportunity, according to the findings of a recent survey conducted on behalf of the Securities Industry and Financial Markets Association (SIFMA).
Should you for some reason really care, the question was "If you could have a free consultation session with an expert, which would you choose?" The responses were:

Financial Advisor: 53%
Personal Trainer: 23%
Interior Designer: 9%
Fashion/Style Consultant: 6%
Don't Know: 8%

We have certainly managed successfully to redefine the term "expert." I for one see great opportunities for financial advisors who also offer personal training services. If you could discuss portfolio allocation while teaching yoga--good morning, CR!--you could make a fortune. (I, whose interior design has been described as "presence of the usual items of furniture" and whose fashion has been described as "clothed and shod" and whose major form of aerobic exercise is typing, am angling for the "don't know" crowd.)

Wednesday, October 03, 2007

Tanta for Mortgage Czar!

by Calculated Risk on 10/03/2007 08:45:00 PM

From Reuters: Congress calls for "mortgage czar"

Lawmakers called on Wednesday for a 'mortgage czar' to help cope with an expected wave of foreclosures from the U.S. housing slump but Alan Greenspan said the credit crunch was past the worst.

"We are beginning to see the frenzy calm down," the former chairman of the Federal Reserve told a conference in Lisbon. "Unless we get secondary effects the worst is over."
Whoa! Hold it right there. Whenever Greenspan says the 'worst is over', watch out! Here is a quote from October 9, 2006 (almost exactly one year ago) via Bloomberg: Greenspan Says `Worst' May Be Past in U.S. Housing
Former Federal Reserve Chairman Alan Greenspan said the ``worst may well be over'' for the U.S. housing industry that's suffering its worst downturn in more than a decade.
Tanta for Mortgage Czar!

Tuesday, October 02, 2007

New Game

by Tanta on 10/02/2007 12:17:00 PM

Because everything has gotten so boring and predictable.

Here's the quote. Your job is to identify the speaker (without Google):

``The Wall Street firms were under real pressure to supply asset-backed securities, and the Wall Street firms were pressing the lenders to give them more raw material,'' [mystery speaker] said today. ``Credit standards just went straight down, and applications for subprime mortgages soared. The consequences of that are evident.''
I'll give you a hint: it wasn't me, and it wasn't CR.

Monday, October 01, 2007

More MMBS: What is "Profit"?

by Tanta on 10/01/2007 10:08:00 AM

From the NYT, "The Foreclosure Pickings Are Plentiful but Not Easy," comes this classic quote from an "investor" in foreclosed properties:

“I’ve been good on picking up properties, but I haven’t been good on an exit strategy,” said Mr. Vela, who paid cash. “I’ve had to hold them longer than I originally liked. That’s O.K. That’s part of the game. It’s affected my holding times but not my profit.”
I apparently understand "profit" as little as I understand "loss." No wonder I'm just a blogger.

MMBS: At a Loss

by Tanta on 10/01/2007 09:52:00 AM

I thought we'd take a moment for philosophical reflection on this bright sunny Monday morning. What is "a loss"? If an accountant bangs her head against the desk in a deserted office, does anyone hear the sound?

Our text today is "Owners face selling at a loss now that the housing bubble has burst." The owners in question are currently marketing their home for $868,000, even though--alas!--it was valued by a real estate broker 18 months ago at $930,000. Another distressing story of borrowers upside down on their mortgage, forced into the horrors of the short sale? Well, not quite.

The Bellomos' house is sited on the edge of the wetlands. The large picture window on the second story overlooks acres of wetlands filled with egrets and other wildlife. Barker said his firm has put a value of $40,000 to $50,000 on the view but said he couldn't value the home because he's unfamiliar with it.

When the Bellomos bought their house on Wetlands Edge Drive in 2002, the market was so hot that they took time off from work to drive up from the Peninsula on a Friday morning. They nabbed one of the last houses in the development with a view of the wetlands. They paid $424,000. Because they had no children, the Bellomos bought the 3,300 square-foot, four-bedroom, 41/2-bath home for themselves, their cats Felicia and Felix, and for the many family members who visit often.

From the outside, the home is similar to many on the block: a large, nondescript house on a smallish lot. But inside, the house is large and stately. The Bellomos put considerable work and money into making it that way. They upgraded cabinets and added granite in the kitchen, placed an inlay in the foyer's hardwood floor and added marble and granite slabs in the bathrooms.

Saverio Bellomo got his dream library-study with built-in cabinets and the couple added expensive Venetian plaster to many of the walls in the house. The same high-end cabinets and granite countertops used in the kitchen were installed in the laundry room. Every closet got a built-in closet organizer. New built-up baseboard and crown moulding was installed throughout the house.

The trouble is, upgrades for one family are renovations waiting to happen for another family, Barker said. For instance, the Napa Valley school district is a huge draw for many home buyers in American Canyon. But the Bellomos have converted two rooms to an office and a library, respectively - with built-in cabinets. For many potential buyers these would be kids' bedrooms.

The Bellomos declined to say how much they paid to make the renovations but admitted that even if the house fetches full price they won't break even.
These people put more than $444,000 in luxury "improvements" into the home over five years? That's some serious granite.

Fortunately, the Bellomos are taking this well:
They braced themselves for the financial loss. But they are also looking at it positively. "We're trying to be Zen about it," Robinson Bellomo said. "This is the market we have here. Hopefully, the market in Albuquerque will be the same and the real estate gods will be good to us, too. In the meantime, the home buyer is going to get an incredible value."
You crazy Californians.

Sunday, September 23, 2007

Want To Buy A Second Home?

by Tanta on 9/23/2007 10:50:00 AM

The Washington Post has some excellent advice for you, if you do. My favorite part was making sure you found a job thirty years ago that paid a lifetime pension with health coverage, and you stuck to it like glue. Otherwise, you'll want to look into the strategy of borrowing as much as possible (up to the conforming limit) at 6.50% because after taxes (retiree taxes, no less) you can surely end up ahead by investing your savings elsewhere. And if you're trying to maximize your mortgage interest deduction, why wait for RE prices to come down a bit more?

So a couple of folks with $600,000 in savings and a $20,000 balance on their HELOC (on the "paid off" home) allowed their names to appear in the newspaper. I'd guess by noon they'll have 47 mortgage brokers lined up in the driveway . . .

Tuesday, September 18, 2007

The Hanging Out Revolution

by Tanta on 9/18/2007 12:13:00 PM

We take a brief break from the failure to air the financial sector dirty laundry in order to report on one of my favorite bits of Total Insanity. Thanks, Yves, for the link. The WSJ reporteth:

BEND, Ore. -- It was a sunny, 70-degree day here in Awbrey Butte, an exclusive neighborhood of big, modern houses surrounded by native pines.

To Susan Taylor, it was a perfect time to hang her laundry out to dry. The 55-year-old mother and part-time nurse strung a clothesline to a tree in her backyard, pinned up some freshly washed flannel sheets -- and, with that, became a renegade.

The regulations of the subdivision in which Ms. Taylor lives effectively prohibit outdoor clotheslines. In a move that has torn apart this otherwise tranquil community, the development's managers have threatened legal action. To the developer and many residents, clotheslines evoke the urban blight they sought to avoid by settling in the Oregon mountains.

"This bombards the senses," interior designer Joan Grundeman says of her neighbor's clothesline. "It can't possibly increase property values and make people think this is a nice neighborhood." . . .

Brooks Resources repeated its threat of legal action, and then advised Ms. Taylor to "develop a plan to screen your outdoor laundry and submit the plan to the ARC for review." It also suggested the possibility of formal proceedings to get the rules amended, which would require 51% of homeowners' support in writing.

The following month, Ms. Taylor constructed a fabric screen to conceal her clothesline. The committee, which included Brooks Resources Chairman Michael P. Hollern, gave it a thumbs down. "It doesn't blend with the home or the native surroundings," says Ms. Haworth.

Mr. Hollern says, "Personally, I think people probably ought to screen their laundry from other people's view. If you feel differently, you should probably be living somewhere else."

Many neighbors agree. When Ms. Grundeman first noticed the Taylor clothesline, she assumed it was temporary. "My first thought was, 'Oh gosh, her dryer must have broken,' " says the interior designer.
In the 70s, we burnt our bras to teach you pigs a lesson. Thirty years later, we're hanging them out right in front of you! It's Laundry Liberation Front in the burbs. Out of the way, Stepford Wives! And take your "property values" with you when you go!

Roll Us Over, LEH Us Down

by Tanta on 9/18/2007 08:18:00 AM

Daytraders and global stuffees bail out real estate specuvestors! Or something. (Hat tip Turbo, who observes that the TEOTWAWKI has been postponed another quarter):

Sept. 18 (Bloomberg) -- Lehman Brothers Holdings Inc., the largest U.S. underwriter of mortgage-backed bonds, said profit fell less than expected as fees from equities trading and investment banking offset some losses from subprime home loans.

Net income fell 3 percent to $887 million, or $1.54 a share, in the third quarter from $916 million, or $1.57, a year earlier, the New York-based company said today in a statement. The average estimate of 16 analysts surveyed by Bloomberg was $1.48 a share.

Chief Executive Officer Richard Fuld's efforts to reduce the reliance on fixed income by expanding stock trading and merger advice solidified earnings as contagion in the credit markets spread, led by defaults among home-loan borrowers with poor credit histories. Lehman is cutting about 2,000 mortgage-related jobs. Revenue from equities jumped 64 percent to $1.37 billion.

Monday, September 17, 2007

MMI: Looks Like a Flotation Device is in Order Here

by Tanta on 9/17/2007 10:11:00 AM

Today we reflect on the age-old question: if a business reporter is not contributing to the success of the tribe, can we put it on an ice floe and let it float out to sea?

IF you’re considering wading into the housing market as a buyer, seller or borrower, be prepared for choppy water and even an occasional rogue wave. Summer may be just about over, but hurricane season, at least in housing, continues.
Don't worry, this article has some good solid consumer advice for you waders:
What are your options if you’re worried about rising rates?

Risk-tolerant home buyers still might consider an ARM. The initial rates on these loans are often, but not always, lower than those for fixed-rate ones. On Friday the national average rate on a one-year ARM was 6.35 percent, according to HSH Associates, about the same as the rate for a 30-year conforming mortgage. Lenders also offer ARM’s with initial fixed-rate periods of one, five, seven and even 10 years.

Be aware that borrowing via an ARM means, in essence, betting either that interest rates will be steady or fall once your loan begins to adjust, or that you’ll be able to refinance.

That risk makes sense for people who are sure they will move before the adjustments begin. “If you don’t need that 30-year protection, there’s no point in paying for it,” said David C. Schneider, president of the home loans group at Washington Mutual in Seattle. “And you need to understand that you do pay for it.” Over the life of a loan, a higher interest rate can translate into tens of thousands of dollars in additional payments.

As is typically the case in financial matters, it pays to shop around when seeking a mortgage. At the moment, 30-year fixed-rate loans are a better deal than many shorter-term ARM’s, Mr. Gumbinger said.
“If you don’t need that 30-year protection, there’s no point in paying for it." This quote appears in the same article that notes that, given the lack of ARM discounting at the moment, you actually get that 30-year protection for free, whether you "need" it or not, by taking the fixed rate. Plus, we've seen a few glitches lately with that business of being "sure" you will move before the reset fun starts. I notice we never addressed the question of why you would pay transaction costs and take god-awful price risk to buy a house you are "sure" you will only be in for a few years.

Dudes, it's time to update the quote-bots. The old ARM quotes are inoperative. New ARM quotes have been issued. Clear your cache. Thank you for your cooperation.

Wednesday, September 12, 2007

In a Hole? Keep Digging!

by Tanta on 9/12/2007 03:33:00 PM

Normally I see very little point in reading press releases, but this one caught my eye. Worried about lenders using those AVMs to value real estate in mortgage lending transactions? Worry no more! You can now buy a cheap piece of software to "test" the results of your cheap piece of software! It will either still be cheaper than sending an appraiser out to look for foundation cracks, which will mean no one will ever look for foundation cracks, or it will be even more expensive what with running both kinds of software, in which case, we'll pass that "savings" on to you, the consumer, and still not use professional appraisers! You have to love simple solutions to regulatory policy changes.

Is it happy hour yet?

AUSTIN, Texas, Sep 12, 2007 (BUSINESS WIRE) -- FirstClose, a service of First Lenders Data, Inc. (FLDI), an Austin, Texas-based provider of bundled mortgage settlement services, announced today that it has developed a comprehensive approach to back-testing Automated Valuation Models (AVMs), entitled ValueTest(TM).

The ValueTest(TM) program is designed to help lenders satisfy recent regulations and guidelines from Fannie Mae, Freddie Mac, the OCC, the NCUA, and other regulatory bodies that have imposed requirements or guidelines on lenders to "back test" AVMs regarding their accuracy. Utilizing a vast array of the mortgage industries top AVM companies and collateral risk assessment tools, ValueTest(TM) provides lenders with a simple, easy, and inexpensive way to satisfy regulatory requirements.

"We are excited about offering an inexpensive, yet comprehensive solution to our mortgage lending customers to help them satisfy regulatory requirements," said Tedd R. Smith, Chief Executive Officer of First Lenders Data, Inc. "Back Testing AVMs has been an ongoing concern of our customers since regulatory inception and no one seems to be able to provide a safe and inexpensive solution until now."

According to Fannie Mae's Perspective on Automated Valuation Models (AVMs), "It is critical that users of AVMs design an appropriate use and implementation strategy that considers the overall credit risk of the loan and reflects the specific strengths and weaknesses of the particular AVMs they use, particularly the property data supporting those products." The ValueTest(TM) program works well for any mortgage lender offering both first and second mortgage loans. As part of quality control checks and balances, the ValueTest(TM) program can be custom designed to fit any lenders needs and requirements.
Oh, the vendor of this wildly exciting product also sells "settlement services," meaning it has a vested interest in seeing to it that closings don't get cancelled because of those pesky "valuation" problems. Surprise! Could that be why this is so "inexpensive," or is it just some PlaySkool My First Laptop-quality version of everyone's favorite game, Regulatory Evasion? Or both?

As soon as I finish development of HorseHockeyTest™, I'm going to quit blogging and get rich. You have been warned.

Tuesday, September 04, 2007

MMI: Staying Ignorant in Five Easy Steps

by Tanta on 9/04/2007 09:16:00 AM

A consensus is emerging in some quarters that a lot of the bad borrowing decisions people appear to have made during the boom had to do with consumers being insufficiently informed. I, who have been doing internet searches on mortgage-related topics since the invention of the internet, and who have learned how to weed out the jillions of "personal finance advice" articles in my quest for actually useful information, am here to tell you that something doesn't add up.

One of these days I'm going to write a nice retrospective post on all the really spiffy advice all those advice columnists handed out to mortgage-wannahaves over the 2002-2006 period, just to see what a "well-informed consumer" might have been expected to have assumed about the world.

Today, though, I'll just content myself with this nice example of post-turmoil wisdom from MarketWatch, whose editors really ought to know better, but consumer-advice-filler-drivel is such a staple of the financial press model that it apparently will take the Second Coming to shock some folks out of it.

PALM BEACH GARDENS, Fla. (MarketWatch) -- You still may qualify for a mortgage, regardless of a shaky credit market. But you need to know the ropes because many lenders have tightened standards. So what should you do if you're buying a home today or you need to refinance? . . .

Five steps to a mortgage

Before applying for a home loan, consider taking these steps:

1. Pay down credit balances. That will make you look less risky and might help your credit score, suggests Tom Quinn, vice president of scoring for Fair Isaac Corp., Minneapolis. If you have good credit, it may be possible to raise your credit score by asking existing creditors to raise your credit limits. But ask the lender not to pull your credit report to do it. Credit-report inquiries or deteriorating credit can lower credit scores.
Is it really very helpful to tell people who think they need credit that they should reduce the amount of credit they use in order to get more credit? Bad news, folks: if you have $20,000 in credit card debt and $20,000 in your savings account and you use the money to retire the cards, you will be denied a mortgage loan because in the Brave New World the mortgage lender wants that $20,000 as a down payment. If your credit card debt is trivial, so is this advice. And for the love of God, can we stop talking about what makes you "look risky"? What, "risky" is just some subjective attribute, like "fat in horizontal stripes," that can be fixed by changing your outfit? After all this turmoil, we're still making people think that it's just a matter of appearances and easy steps. MarketWatch, for shame.

2. Get a copy of your credit report from each of the three major credit bureaus. Fix errors and get as much adverse information removed as possible. You're entitled to one free credit report annually from each credit bureau at www.annualcreditreport.com. Read six steps to correct your credit report.
I'll forgive the editors of MarketWatch when they produce empirical evidence quantifying the number of people whose difficulty getting a mortgage comes down to credit report errors. You get bonus points if you ask yourself how "fixing errors" became code, during the boom, for fraudulent "credit repair." You get double bonus points for asking how some people became able, easily and without cognitive dissonance, to tell themselves that their debt problems were "all a big mistake."

3. Check licenses of lenders you're considering. This may not be easy because state licensing requirements vary by state and lender. Banks and thrifts can be checked out at www.fdic.gov by clicking on "Institution Directory."
Do you yet know whether all depository lenders actually require state licenses? I didn't think so. Do you yet know how many imploded, bankrupt, and criminally-investigated lenders so far this year had perfectly valid licenses? I didn't think so.

4. Shop several lenders. Don't assume if you get one quote of an unusually high interest rate, all will be high. Negotiate lower rates and seek removal of unnecessary fees.
Do you know what "unusual" is? Do you know what fees are "necessary"? Please analyze and evaluate your "negotiating" strength in a credit crunch. You can use the back of this paper if you need more space. (Hint: it's called a "credit crunch" when you have no position from which to negotiate because you need a loan more than the lender needs to make one.)

5. Consider that interest rates and terms may change daily. Also, a low interest rate could mean more upfront points or added fees. Get all pricing information in writing before obtaining a written commitment for your loan. Get a commitment letter directly from the lender who's financing the mortgage, which may be different from the loan originator.
This one may be my favorite. You aren't likely to get a written price quote until your loan has been underwritten these days. That means that the written price quote is in the commitment letter. It still isn't a "rate lock" until you get a "rate lock agreement." Much, much more to the point is that a "commitment letter" commits the lender to lend at the specified terms. It does not commit the borrower to borrow. You are not obligated for diddlysquat until you sign something with "Note" at the top and "I promise to pay" somewhere in the first line. We have heard story after story about people who didn't think they could "back out" when they were confronted with closing documents that didn't look right. Helpful advice might involve explaining that issue.

I conclude that the authors of this article have never been any closer to the actual mortgage business than standing around taking up space in my lobby, eating my LifeSavers and reading my back issues of House Beautiful, before getting tired of that and going home to surf the web for stupid "consumer advice" articles from 2004 that can be rehashed into filler for today's column.

MarketWatch editors: Now do you understand why I get so "mercurial" when you do this?