When investors are scared about inflation, or lack of inflation, political turmoil, increasing debt, etc., they buy gold, and the price goes up. And when things calm down, usually the demand decreases and the price goes down.

Back in 1980 the price hit $850 per ounce - holy smokes - but that pales in comparison to gold now, which is sitting around $1,390 per ounce. In the "old days" you actually had to have cash to buy gold, or you could buy stock in gold mining companies as a proxy - but that added another layer of volatility and risk. Since 2004, however, one can buy gold through exchange-traded funds (ETF's). Historically gold has gone up 2% per year (versus 8% for stocks) although since 2001 the price of gold in US dollars has more than quadrupled. And historically investors have used gold as more of an insurance hedge than a way to become rich - but as speculators have piled into the market potential volatility has become more of an issue in the last few years. With speculators comes volatility. That being said, gold is the one currency that a central bank can't print - nor does its value depend on national politics. And many think that the world may be heading back to the gold standard.

You may need some gold after Christmas if you want to ski at Vail and Beaver Creek: they will charge $108 for a single-day, walk-up lift ticket during the week after Christmas, passing the much anticipated $100 mark for the first time in resort-industry history. That's a lot to start at 9, end at 3, and take an hour to eat a $9 bowl of Denison's chili at lunch.

If you're not doing anything tomorrow (Wed), at 2PM EST, there will be an FHA conference call to discuss extensions. What extensions? 

2010 marked an effort to manage the FHA risk, and to strengthen its lender approval criteria & make FHA-approved lenders responsible for the oversight of mortgage brokers. "After reviewing your comments regarding transitioning to compliance with the new changes, we are extending certain effective dates in order to give our lending partners more time to transition to their new business models." HUD has announced a temporary extension of the deadline for obtaining unconditional DE approval to July 1. "We are extending the deadline for obtaining unconditional direct endorsement (DE) approval for those DE-eligible entities that wish to participate as a Principal in Principal-Authorized Agent originations.  A Principal-Authorized Agent origination is a type of FHA origination by two FHA-approved mortgagees (neither of which is a loan correspondent). The Principal-Authorized Agent relationship is used when the two FHA-approved lenders originate a loan together and both need access to the loan file in FHA Connection.  In a Principal-Authorized Agent origination, the Principal must originate the loan, and the Authorized Agent must underwrite the loan."

The attendee call-in number is 800-675-2535.  Call in code is: 2662519.

So the Final Rule that changed Principal-Authorized Agent relationship originations to require that both lenders (Principal and Authorized Agent) possess unconditional direct endorsement approval has been moved from 1/1 to 7/1.  HUD believes that this extension "will allow sufficient time for most non-DE mortgagees to obtain unconditional DE approval to become Principal mortgagees in Principal-Authorized Agent originations of Title II single family loans."

HUD also announced a "Temporary and Narrow Extension of FHA-Approval for Loan Correspondents - Extended to March 31, 2011, with conditions: The final rule provides that FHA-approved Loan Correspondents may close FHA-insured mortgages in their names until December 31, 2010.  However, we have been advised that a significant number of Loan Correspondents have mortgage loans that have been assigned FHA case numbers but are unlikely to close by December 31, 2010.  A majority of these cases are due to uncertainty in the timing of the mortgage lending process which may be outside the control of the lender. Since FHA will no longer be approving Loan Correspondents after December 31, 2010, they will be statutorily prohibited from closing FHA-insured mortgage loans in their own names.  If we do not extend that deadline, the inability of currently approved Loan Correspondents to close mortgage loans in their names will likely disrupt the loan processes of a significant number of lenders. Because of this, we are also granting a temporary extension of FHA-approval for currently approved Loan Correspondents with pipeline loans that meet certain criteria for the narrow purpose of allowing these loans to close in the Loan Correspondents' names. This extension will only apply to loans in which a case number has been assigned and the loan has been approved by a DE underwriter as of December 31, 2010.  The extension will expire March 31, 2011."

For more details on the waivers, go to http://www.hud.gov/offices/hsg/sfh/waivers122010.pdf

I expressed some surprise yesterday at BofA's reminder to clients that addresses on various loan documents must match. I received a few comments. "I was in Ops at BAC's ____Center.  You wouldn't believe how sloppy some mortgage bankers are.  Delivering loans at 95% without MI; forgetting to escrow for taxes and insurance on LTVs > 80%; delivering a loan with an 80% DTI and NO AUS; the list goes on and on.  It's amazing that "mortgage bankers' have to be reminded of something that should be completely a given. Clients would become upset when they had to get a Note re-signed, or a DOT re-recorded b/c they didn't have matching addresses."

"Regarding BofA wanting all addresses to match - as much as it sounds silly and you wouldn't think it would work any other way, the problem arises when the 'known as' or postal address doesn't match the legal description of the property. Here in suburban NY, this is very common as the real "towns" are large and made up of many hamlets or villages. Thus, it's actually appropriate for the contract, appraisal, application/AUS and everything but the deed to use the known address. I'd love to put that decision maker on the phone with the attorney, the appraiser, the Realtor, etc., and have them explain why all the addresses should be changed and then have to explain to the servicing department clerk why they need to change the address back once the loan is closed so that the monthly mortgage statements actually arrive where they're supposed to..."

"POA" is a common abbreviation for "Pay Option ARM". Wells Fargo agreed to modify more than $2 billion of risky POS, uh, I mean POA loans (the "a" is next to the "s" on the keyboard) from World Savings and Wachovia. Wells agreed to provide loan modifications worth more than $2 billion to California homeowners who have "pick-a-pay" loans, and also agreed to pay $32 million to borrowers whose homes were lost in foreclosure. It seems like it can afford it: Wells recently passed JPMorgan Chase & Co. to become the largest U.S. bank by stock-market value. The other day Wells Fargo's market capitalization rose to $157.6 billion versus JPMorgan's $156.4 billion. (But Wells Fargo is ranked fourth by assets and deposits, while JPMorgan is second behind Bank of America - Citigroup is third.) The biggest shareholder in Wells Fargo is Warren Buffett's Berkshire Hathaway with a 6.4% stake.

PennyMac, led by former Countrywide executives, announced plans to underwrite its first new jumbo residential loan as early as next month. PennyMac has made more of a name for itself buying distressed loans, which critics claim were Countrywide's to begin with. Regardless, the news is good for lenders "in the jumbo space" as there have also been recent reports that BlackRock and Redwood Trust have similar projects in the hopper. And last week PennyMac Mortgage Investment Trust last week entered into a $125 million repurchase agreement with Citibank.

The two holiday weeks began yesterday with MBS prices ending the day roughly unchanged from Friday afternoon's levels, and the 10-yr ending at 3.35%. As one would expect, MBS volume was less than the average over the last month. And really, the market didn't move much yesterday, nor were there really any market moving events, so I am not going to make anything up just for the sake of jabbering on. This morning we find the 10-yr yield down to 3.32% and MBS prices better by .125 or so.

The telephone rings at night.

Husband:  "If it's for me then say that I am not at home."

Wife answers:   "He is at home."

Husband:  "What the heck?!"

Wife: ''It was for me!!"