Bear Stearns on their earnings conference call said that the credit market is the worst they have seen in 22 years.

>>Bear Stearns on their earnings conference call said that the credit market is the worst they have seen in 22 years.
That’s their bed, and they can sleep in it.

>>Funny Cramer was just on CNBC sincerely and passionately screaming that the Fed has no idea how bad the credit market is right now. He says Ben needs to do something, anything, call someone but do something.
I am asking the Court for mercy because I am an orphan, even if I have been convicted of killing my parents.

this is from CNBC this am:
 
For those with good credit scores of 700 or above, mortgage rates have actually eased lately because of the decline in the 10-year Treasury yield, the traditional benchmark for many mortgage rates. But for everyone else, banks are no longer using the 10-year Treasury as a guide but raising rates on their own.
The reason: investors are more reluctant to buy mortgage-backed securities because of the rising default rate, so banks are forced to offer higher rates to sell the mortgages they originate. This so-called "risk premium" is being passed on to consumers with less-than-stellar credit histories.
"If lenders can’t sell loans they have, there is no choice but to offer mortgages at a higher rate to homeowners," Cohn says. "It has nothing to do with bond market yields right now".
As an example, Cohn says that even someone with a high credit score could pay as much as 8.25% for a jumbo 30-year loan. That’s well above the conventional 30-year fixed mortgage rate, which currently average 6.26%, according to Bankrate.com.
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          Mortgage Rates Rising
       
     
 

 
     
        Bank
        Rate
     
     
        Wells Fargo
        8%
     
     
        Countrywide
        7.39%
     
     
        Bank of America
        7.94%
     
     
        BB&T
        6.88%
     
 

 
A broker originated jumbo loan through Wells Fargo is carrying at interest rate of 8%, up from 6.875% last week.  Prime jumbo loans accounted for about 12% of the mortgages granted last year, according to Inside Mortgage Finance.
"The mortgage market is like a diving board," according to Greg McBride, senior financial analyst at Bankrate.com. Those with the lowest credit scores are farther out on the board because they’re the riskiest borrowers, and so they pay the highest rates.

I love it when Cramer gets emotional.  He is like no other in terms of sheer financial entertainment.
However, yes, the credit market seems to be in a "slight" mess.  Germany had to bail out a hedge fund this week.  My question is how much is Asia exposed to all this?
It’s incredible how much wealth is being wiped out right now.  The 2 largest asset classes (residential real estate & equities) of the average Joe are being wiped out simultaneously in the last 2 weeks.
Does anyone have any links to Cramer from today?  I would very much like to see him all whacked out. 
...Oh, I found one!
http://www.cnbc.com/id/15840232?video=452808336&play=1
  Man, he looks like he’s going to break down.  I almost want to crawl under my rented house.  And that lady has no idea what is going on.  She’s thinking what are you talking about Cramer, this isn’t on my script.
You may want to step away from the video at 2:30.  He may just reach right out and try to strangle you.

USD aiming for 80 again, troublesome USD/JPY movement too:

OMG!!!!!!!!!!
You have to watch the Cramer video!  He goes off!
He calls Bernake an "academic" which is exactly what he is.  He will follow his text book & formulas.  If the indicators show inflation, then he’ll raise rates and that’s that!  If 7 million homedeptors lose their homes, then that’s their problem.  Open up and swallow the medicine!
That has been BB’s record so far.  Hopefully he has the backbone to stick to his guns.

I just watched the video and have been watching Cramer for quite sometime and that is the most animated I have ever seen the guy.  Infact, I had to go get a beer just to calm myself down!!!

awgee - Countrywide had $130 billion in loan production last quarter or about $43 billion a month. They had a total of $171.5 billion in short-term liquidity sources at the end of the year. At the time they had almost $50 billion in commercial paper which is much cheaper than using a warehouse line and it isn’t subject to margin calls like a warehouse line is. Also consider that the conforming loan market is currently ok and they do a lot of conforming loans which they can sell to free up some liquidity. I just checked their wholesale rates or what a broker would get and they have priced in some additional risk. However it is not nearly as bad as some lenders. 30 year fixed jumbo could be at 6.875% with a cost of .75% and 7.25% no cost if your broker isn’t sleazy. The I/O ARMs are bit higher though especially on the 3 year but the 5 year is priced the same as the 30 year fixed.
EvaL - I  your sarcasm!
As for the Cramer video I have been watching him ever since it was Kudlow & Cramer. 99.9% of the time it is just an act and I think this time .01% is real. You can tell by Erin Burnett’s reaction that even she was uncomfortable and she interviews him daily but this is the first time she has lost her composure.

Cramer is such a certifiable goofball.  I love watching him though, just for the sheer entertainment value.  Two weeks ago he was telling us to buy WAMU at $42, now WAMU is under $34 and he’s having an on-air aneurism.

I’ve been digesting this hike.  The more I think about it, the more I don’t see the giant jump for buyers, but instead see the basic elimination of Mortgage Brokers.  Buyers will either get saddled with a 8% through a broker, or have to bird dog through multiple banks themselves to find which is offering the same loan at 7.25% instead of 7+3/8ths or 7.5%.
Am I basically seeing that correctly?  Rates went up 1/4 to 3/8th point for direct but hammered nearly1.5% for a broker done deal?
How many in OC is that going to put out of work?

NSR,
This problem goes way beyond pricing.
We are talking about the potential of losing all but full doc / great credit loans.
 
 

NSR - It depends on who they broker to. If they are limited to lenders who have jumped rates up then yes they are done. The bigger more legit brokers will still have sources to compete with the banks directly. Most of the banks will keep their rates down on the direct level for customer service even if they are at risk to lose money. But if this lasts long enough they will have to adjust accordingly. Some banks like Union Bank or Teachers Credit Union will still be able to keep rates down since they don’t sell the loans.

irvine123 - The lenders do not get their funds from the Fed, even indirectly, and if the Fed lowers rates, it may have little to no effect on mortgage interest rates.  Mortgage lending is dependent upon the credit default swap market for hedging and the spreads in that market are widening.  If most of the credit default swap market is getting it’s underlying from the yen carry trade, which in my opinion it is, credit will continue to tighten as long as the yen strenghtens.  When the yen carry unwinds, not if, the mortgage market in this country will dissappear.  Heck, it is doing a good job of running away even now.

lendingmaestro - Thanks, yesterday I increased my short position and long put position.

Janet, full doc isn’t a problem as long as self-employed can still use the tax return for income verification.  No-doc killed itself.  I don’t see that as a credit problem, however I do see it as a housing market probelm.  People will need to show they have $250K+ incomes to carry the DTI on a home in Irvine. 
Basically, they’re going back to basics, good credit, down payment, proof of income and assets.  That’s not bad, that’s sound lending practices.
The fact that OC housing is so distorted that sound lending practices makes it only possible for about 10% of the population to buy a "median" home is the problem.  It’s the problem the blog has been pointing out for a long time.  Although today, I think people are starting to see that they’re sitting top of the new thrill ride at the amusement park.

Reality,
   I’m going to guess its going to put ALOT of people out of work. 
Marty,
    If WAMU can get down to 30, I think i may push a few dollars that direction.  Good luck
 
-bix <—- thrillride Weeeeee…...  (*thinking*) glad I saved a few for the crash….
 

awgee—the mortgage market in this country will never disappear.  not even if the yen carry trade goes away, terrorists launch a nuclear attack and global warming causes the polar ice caps to melt away.

usually i pay no mind to Kramer but he has some interesting points in the first 4 pages of this commentary.
i am less sanguine than his prediction on the 5th page but essentially a distillation of his rant
http://www.thestreet.com/s/the-lie-that-will-kill-hedge-funds/markets/activetraderupdate/10372191.html?puc=_tscana

biscuit, they’re already on the bus for out of work.  That train left the station 18 months ago when the sales volume dried up.  That’s why propping up housing prices doesn’t fix the mess, sales volume is needed to keep that segment of the economy rolling and those people employed.  The addtional 5% or so of consumer spending needs appreciation, not normal appreciation but double digit appreciation so they can supplement their spending with equity.
 

Reality,
   Yep, i’ve been thinking about this problem for quite a long time (about 2003 when It started to be a major hobby of mine).
-bix

Strange that so many love to diss mortgage brokers -  and then reveal their ignorance of the mortgage market in the very next sentence.   A good broker (not all) will pay for himself in value-added.  Also, banks don’t necessarily offer better pricing to their retail customers than those obtainable through brokers.  They love for you to think that though.

I just received an email from our ceo, who is friends with Angelo Mozilo…..Credit Suisse has stopped funding all option arms (neg am loans).  Credit Suisse is a major investor of countrywide

"Strange that so many love to diss mortgage brokers ..."  Probably due to their poor reputations.
"and then reveal their ignorance of the mortgage market in the very next sentence." - A benefit of this forum is people can get a better understanding of what they do from those who know.  MasterofDamoney’s post is a good example of that.
 

Option ARM. I can’t believe they came up with that. I bet you alot of borrowers were not informed of the bad side to that type of loan product.

Major,
I agree. That’s what I like about this forum. For many a times, I would ask the most basic questions. And usually, I would get very informative responses without being talk down to. I have learn alot and thanks.