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President Bush has dropped his threat to veto the housing rescue bill. His threatened veto was based mostly on $4 Billion to be given to states to enable them to buy and rehabilitate foreclosed properties. Questions were raised by Senator Jim DeMint, R-S.C., after learning that one of the bills architects, Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., received a mortgage deal through a VIP program at Countrywide. Unsure how much Countrywide and other retail mortgage lenders stand to profit from that $4 Billion, DeMint and Sen. Jim Bunning, R-Ky., attempted to send the bill back to committee but were defeated, 70-11. Other attempts to send back the bill to be rewritten were similarly defeated. This bill which offers some relief to homeowners on the brink of foreclosing, have broad bipartisan support in this election year, indicating there may be enough votes to override a veto. Eager to avoid a protracted veto fight, President Bush dropped his threat, indicating that restoring confidence and stability to the financial markets was a goal that was better tended to sooner than later.

A price has been put on the potential Fannie and Freddie bailout. The price tag could be as much as $25 billion. It is not a fait accompli, however. Peter R. Orszag, Director of the nonpartisan Congressional Budget Office put the odds at better than half that Fannie and Freddie will not use need any cash. Critics of the bailout maintain that homeowners should be the first to benefit from any taxpayer help. But if it is approved by congress, restoring confidence to investors in the U.S. and internationally is the bailout’s aim.  We will continue to closely watch the developments at Fannie and Freddie along with our mortgage broker and mortgage banker clients.

“Home prices in 20 major U.S. cities have dropped a record 15.3% in the past year. We are back to where we were in 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s.” Yesterday’s Wall Street Journal article started a firestorm of opinion and thoughts amongst my friends and colleagues and I wanted to share it with you. While home prices are at their lowest in the last five years, market saturation is at its highest; no one is buying or selling homes.

This post was inspired by a great article written by Sean Hannon this week. In his article, which is focused on understanding investment results, he used this simple chart to illustrate the possible results of an investment (I have reproduced this chart with my own color-coding):

Sean’s point is that you should only feel truly successful about when you have a good outcome that is produced by a good process. If you invest in a stock on a whim and it happens to produce a great return, you should not consider yourself a great investor-you should think of yourself as a lucky gambler. Similarly, if you are using a proven system that works, and you get a bad outcome sometimes, you shouldn’t feel too bad. Over time the right process will produce good outcomes more often then the bad process.

The mortgage industry will get better.  In fact, almost everyone agrees that the mortgage industry will improve.  We have heard our President and economists claim our country’s financial health is stable but isn’t that kind of like saying “It can’t get any worse”.   Surely it can’t get worse, could it?  Are we somehow missing the signs of economic improvement?  Are we deaf and blind to the signals and signs of a recovering mortgage industry?