Hathaway Duke

We’ll file this in the un-substantiated rumor bin for now, but Wensmann Homes has apparently ceased operations as of last Friday, a tipster reports. We’ve managed to confirm the Star-tribune is working on a story, so there’s definitely some sort of fire beneath the smoke. What’s unclear as we write this is whether Wensmann has indeed shuttered, or filed bankruptcy, or in some other version of operational life support, or they’ve simply hit a rough patch and will continue operations in some form. Wensmann homes, founded in 1968, was the 12 largest builder (by revenue) in the Twin Cities as recently as 2005. Anyone with specific knowledge of the situation, drop us a line: alex [a] alexstenback.com

Last Week:Mortgage rates improved by .25% or so last week as negative economic news weighed down stocks and bouyed the bond markets. The biggest data point of the week was the employment report, which showed the economy shed 240K jobs in October. With a 6.5% unemployment rate (a 14 year high) and nearly 1.2 Million jobs lost year to date, the unemployment rate will almost certainly cross 7% within the next quarter or so This Week:The economic calendar this week is sparse. Friday’s retail sales report will give us the latest reading on the state of the consumer, who appears to be in headlong retreat, so we could see a very weak number here. Outside the economic calendar, markets will focus on developments in what we’ll call the political/financial space. The possible selection/announcement of a Treasury Secretary, the fate of the auto industry and a possible bailout, the state of the ever evolving bailouts/rescues/stimulus plans, and the potential for further yet unknown carnage in the financial sector as writedowns continue apace all over the globe, to name just a few. As tempting as it is to interject some sort of guidance on rate direction this week, we’ll refrain. Markets remain all too volatile and disclocated. Not sure whether to float or lock your rate? Flip a coin.——–Watching Mortgage Rates? Get live updates on intra-day changes to the mortgage market, and other factors that impact rates via the Web, IM, or your phone by subscribing to our Twitter feed.

Curb Appeal Enthusiasm is a weekly feature where we scour the open house listings for the upcoming weekend and pick out a few based on our own subjective (and some say suspect) tastes. Got an open you think should be included? Have a comment on one of the picks? Drop us a line at alex [a] alexstenback.com or hit the comments link at the bottom of this post. ——– 2800 Inglewood Ave. S. | St Louis Park$649.9K | Sun 1-3 | SkySotheby’sLove the brickery and slate roof combo. Awesome interior details.4362 Brook Ave. S. | St Louis Park$550k | Sun 1-3 | Trish Jordan ~ EdinaSharp 1928 Tudor proves SLP is more than just cracker boxes.3924 44th Street W | Edina $499.9K | Sun 2.30-4.30 | Wiessner ~ EdinaMorningside two story in a great spot here. Very nice.2000 Forest Drive | Richfield$399.9K | Sun 1-4 | Jane Hendrickson~CounselorLike the rambling, cottage-ey feel of this. Plus, it has a bidet.4908 Portland Avenue S.| Minneapolis$249.9K | Sat/Sun 12-2 | Schelly Braden~BurnetThe ivy always sucks us in on these. Great lines and potential.

Today’s Wall Street Journal has an update on the forthcoming loan modification program from the Treasury and FDIC that we mentioned last week. It appears they are getting closer: And the Treasury, the Federal Deposit Insurance Corp. and other government agencies are said to be close to announcing a government program to address residential foreclosures at the root of the crisis. Semi-related and also worth noting is that with the election over, a resurgent democrat congress will likely redouble it’s pursuit of a 90 Day Moratorium on Foreclosures. The general idea behind a moratorium is that it will (forcibly, we note) inspire servicers to consider modifications rather than foreclosures, thereby keeping people in homes. American Banker notes that some servicers are terrified of this: “A foreclosure moratorium would make a correction take much longer and have unintended consequences on servicers who already have liquidity constraints,” said Dennis Stowe,a buyer and servicer of distressed mortgages.” The likelihood some sort of moratorium will pass as early as January has inspired at least one big bank, Chase, to institute it’s own 90 day moratorium, presumably to get ahead of the coming legislative storm, and focus on modifications. To supporters, a moratorium sounds great, albeit in a populist, “lets stick up for the little guy sort of way.” But in practice, these types of sweeping “solutions” can be riddled with problems. And you can bet your sisters kitty that there will be consequences neither desirable nor intended from any moratorium. Higher rates, higher down payments, higher mortgage insurance rates, a prolonged housing correction, and the possibility that we’ll have to shovel more taxpayer dollars into the ailing banking system are the first few that spring to mind. There are more. On the other hand we’ve already seen much the preceeding list happen, so I guess the questions worth asking are: How much worse could a moratorium make things, and whether servicer objections are as much about keeping congress out of their knickers as they are about preventing distress to future borrowers. One thing is clear, and worth keeping in mind when the details of these efforts are put forth: Any attempt to prop up housing values will not work, and the shortest distance between where we are now and a healthy housing market is to let the correction happen, and get it over with as quickly as possible. We don’t see how a moratorium helps in that regard. Our guess is that the number of additional modifications that happen as a result of a moratorium will be small, at least if the industry and FDIC’s modification track record thus far are an indication of how this will go. For most, the best this will do is forestall the inevitable. We’ll be sure to update you when there’s an official announcement.

Local Thousands of Foreclosure Scams Yield Few Charges [MPR]Amazing, but not surprising. Local authorities having a hard time working through the backlog of mortgage/foreclosure related complaints Foreclosures May Become Roofs for Needy [Strib]Dakota county joins the growing list of twin cities municpalities that plan to use Federal Dollars to buy foreclosed homes and return them to the community as affordable housing. High End Homes Feel Pinch, too [Strib]Though the impacts of foreclosures are less severe, and high end owners are able to weather economic downturns better than most, they are taking some serious haircuts in this housing market. Elsewhere and Otherwise Underwater Need not Mean Foreclosure [WSJ]Wall Street Journal points out the obvious fact that just because someone is underwater on a house, does not mean they will lose it. Only those that are underwater AND cannot afford the home are truly at risk. The majority will keep their homes. Sorry Obama, Wall Street Doesn’t Care [Kedrosky]President-elect Obama will find that the financial crisis and recessionary economy will severely curtail his options in shaping economic policy: “All he can do is try to survive in the face of massive deficits, a teetering economy and a looming social security nightmare.” Obama Has Chance to Make Quick Mark on Fed [Realtime Economics]Courtesy of the financial crisis, the Fed has much more power and influence. Bernanke’s term expires in less than a year, and there are currently two vacancies on the Fed’s board, with two more to follow within a year of inauguration.

Last Week:Mortgage rates moved in the wrong direction last week, and ticked up by .125% -.25% in the aftermath of the Fed rate cut. Though the mortgage bond market (from which mortgage rates are derived) would normally benefit from a series of negative reports on the economy like we had last week, the coordinated global rate cutting and mild post-Fed rally in stocks kept a lid on any potential improvement in rate. This Week:The biggest event on the economic calendar is the October employment report, which prints on Friday at 8.30 AM, and will give further insight into how bad the national employment picture is. Our economy has shed something like 750,000 jobs in 2008, and Friday’s report holds the possibility that the US has crossed over the psychologically important threshold of 1 Million jobs lost. As we write this, the ISM index, measure of manufacturing sector health, has published at 38.9 (above 50 is expanding, below 50 is contracting) which is a deeply recessionary number and the worst such reading since 1982. Conventional wisdom tells us that what is bad for the economy is usually good for mortgage rates, though (as we have noted in this space before) that correlation has broken down of late for reasons too numerous and foggy to break down here. Suffice to say that as long as the financial markets remain in a state of flux, “normal” behavior in the bond markets will be hard to find, and rates may ping about unpredictably.This Week’s Economic Calendar [Barron’s] —-Watching Mortgage Rates? Get live updates on intra-day changes to the mortgage market, and other factors that impact rates via the Web, IM, or your phone by subscribing to our Twitter feed.

Curb Appeal Enthusiasm is a weekly feature where we scour the open house listings for the upcoming weekend and pick out a few based on our own subjective (and some say suspect) tastes. Got an open you think should be included? Have a comment on one of the picks? Drop us a line at alex [a] alexstenback.com or hit the comments link at the bottom of this post.——– 4809 Knox Avenue S. | Mpls$849.9K | Sun 1-4 | Karen London~Edina RealtyEverything about this place just works. Great look from the curb, superb interior. 2228 Sheridan Avenue S. | Mpls$629.9K | Sat 2-4 | Jim Grandbois~SkySotheby’sA classic look with all sorts of possibilities in Kenwood.5007 Harriet Avenue S. | Mpls$599.9K | Sun 1-3 | Lesley Novich~BurnetOld school Tangletown elegance here. Again with the vines, which we dig on.4905 16th Avenue S. | Mpls$350K | Sat/Sun 1-4/2.30-4.30 | Todd Kratochvil~EdinaThis Minnehaha Tudor is great all around, but landscaping closes the deal.2414 65 1/2 St. | Richfield$264.9K | Sun 1-3 | Tod Teeple/Larry LaVercome~Re/MaxVery cool 50’s rambler with all the retro details intact.4315 Russel Avenue N. | Mpls$199,900 | Sun 2.30-4 | Commers/Bilski~EdinaDead center brick fireplace gives this a nice look.

Though details are precious few, the Wall Street Journal, and others report on a soon to be announced FDIC/Treasury initiative to aid some 3 Million homeowners in danger of losing their homes. From the WSJ: Estimated to cost between $40 billion and $50 billion, the plan would have the government agree to share a portion of any losses on a modified mortgage offered by lenders. Funding for the plan could potentially come out of the $700 billion financial-rescue program authorized by Congress earlier this month. The plan, which was previewed during Congressional testimony last week, would represent one of the most aggressive and sweeping moves to address the nation’s foreclosure mess, among the last elements of the crisis yet to be addressed by concerted government intervention. Though we don’t have near enough detail to make any judgment on this program, from a philosphical standpoint, if we’re in the bailing out business (which we clearly are) some of this assistance has to find its way to the homeowner level. So, yeah, it’s a good thing. But if history is any sort of guide, I think we’ll find the efforts help far fewer than the 3 Million homeowners put forth by the FDIC

At 2:15 ET today the Fed will release a policy statement and rate decision, so this is your obligatory “The Fed does not set mortgage rates” post. You’ll find the policy statement itself at this url, so feel free to join us in hitting refresh every few seconds until the policy statement appears. Most Fed watchers expect the Fed to slash the Federal Funds rate by .5%, though there is the chance that the Fed goes further and cuts by .75% or 1.0%. Predicting the impact of a cut on markets or mortgage rates is a dicey business - nobody really knows what direction they’ll move, or if they’ll move much at all in the wake of a Fed cut - It is a mental coin flip, at least in the short run. This is true even in normal times, and doubly so today with all of the chaos and volatility in the financial markets. But whether mortgage rates rise or fall after the Fed’s accouncement today, a question worth asking is this: What impact will a cut to the Federal Funds rate have on the economy, really? Will it turn around the housing market? Will it prompt employers to ramp up production, add jobs, etc.? Will worried consumers start consuming again, en masse? We think not. Mortgage rates are already low. The job market is weakening. A besieged real estate and stock market is creating a negative wealth effect. Demand for all forms of debt is cratering. Against that backdrop, it is hard to conceive a .50% cut to the Federal funds rate will change much of anything - the impact is just too far removed from main street. Economists call this “pushing on a string”: You can influence any point along it, but the influence diminishes the further you get from the point of action. So if (despite the best efforts of Bernanke and the Fed) the economy does continue to slow, and inflation continues to moderate (a big IF, given all of the debt being issued) we may see mortgage rates decline. Or, you could just flip a coin.

A great graphic from the folks over at Econompic Data that illustrates just how little correlation there is between the Federal Funds Rate and Mortgage Rates. Sometimes, a little eye candy will make the same point it takes us a few hundred words to get across. The Fed cut rates by .5% to 1%. This is the lowest level for the Federal Funds Rate since 2003, and there may be more cuts to come, in case you did not catch the news.