Hope you had a lovely Thanksgiving. Here is just a little more Thanksgiving cheer. It’s a special stock trading pattern.

Happy Friday!

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Wishing you a Happy Thanksgiving!

I am grateful to my readers, and am glad that I get to do something I love everyday.

May you find many things to be thankful for at this time.

Mortgage rates could be headed lower, thanks to moves made by the Federal Reserve. Yesterday, when the Fed and Treasury announced that consumer financing would be encouraged, the agencies also made moves to help lower mortgage rates.

In an effort to get liquidity going and overcome mortgage lender hesitation, the government announced it would be taking some of the obligations from Fannie Mae, Freddie Mac and Ginnie Mae. This should help lower the spread between Treasury yields and mortgage rates, and — hopefully — bring mortgage rates down.

Of course, the cost will be another cool $800 billion, and some may think the price tag for such "rescue" is too high.

For quite some time, the Federal Reserve, through its TARP facility, has been offering special loans to business and financials looking for liquidity. This, however, has not done much in terms of loosening credit and encouraging consumers to spend. So the Fed has expanded the TARP program to include consumer loans.

That’s right.

Now TARP is offering special financing for those who want to purchases securities backed by consumer debt:

* Credit cards
* Auto loans
* Student loans

The idea is that once things loosen up on that end, consumers will be able to borrow more money, and then they’ll be able to spend more money thanks to that debt.

Is it just me, or did all this focus on getting consumers in debt get us here in the first place?

Poor Lehman Brothers. The company will be forever known as the company that was allowed to fail — while all around it, companies are being saved. Lehman might not have been "too big to let fail," but just about everything since has been put into that category. Including Citi.

Over the weekend the government announced a Citi bailout. (Stock markets around the world are doing a victory dance this morning.) This isn’t really part of the $700 billion bailout deal. And, really, when you think about it, the $700 billion package wasn’t actually necessary. The government will just be handing out random amounts of money, no matter what, from wherever the people in charge want.

Anyway, here are some of the details of the Citi bailout:

* Infusion of capital for Citi.
* Government guarantees about $300 billion in troubled assets.
* Government will limit executive compensation.
* Citi has to reduce its dividend payout.

Things are getting a little crazy up in here. The next question is this: Which bank will *need* a bailout next?

I have fond memories of Carmina Burana, Carl Orff’s setting of poems and songs from the Burana Codex. I played the clarinet in the school band and I practiced like crazy so that my instrument would not be the one that squeaked during O Fortuna.

And, considering the financial mess our country is in, O Fortuna seems appropriate. But these lyrics are different — so it’s not quite a lament of dispair.

Happy Friday!

Right now, it’s a little tough to get a loan from a traditional lender. Even credit card companies are tightening their lending standards and considering interest rate hikes. If you have a credit score below 700, the terms you are offered by banks and other lenders just aren’t that great anymore.

And that’s peer-to-peer (P2P) lending is becoming more popular.

P2P lending

Like seller financing, which is gaining traction in the real estate market, peer-to-peer lending is when ordinary people lend money to others. It is possible for someone with less than perfect credit to get better terms (and even get approved) when they might not with traditional lenders. The ordinary people lenders can choose which people they want to lend money to. And they don’t have to lend the full amount. It is possible to lend a smaller amount, and get your portion of the interest.

It’s an interesting concept, but still risky for the lender. But the borrower has the potential to benefit quite a bit.

Bankruptcy reform bills in the past have sought to include mortgage write downs (or "cram downs" as mortgage lenders to call them) on primary residences. For second homes, it is possible for a bankruptcy judge to modify the principal so that the buyer can make payments, but primary residences remain outside this purview.

The most recent incarnation of mortgage write downs in bankruptcy is coming from Senator Dick Durbin, D-Ill. Here is what National Mortgage News reports about the provisions for mortgage write downs:

Like the original bill, the new bill allows bankruptcy judges to modify
mortgages on primary residences. The mortgage industry strongly opposes
such bankruptcy "cram downs." Sen. Durbin called the bill a "marker for
future action" that he wants to pass next year.

What do you think of mortgage principal cram downs?

Sometimes we like to think that these are the worst times, and that only in the 20th and 21st centuries have we seen bailouts. However, bailouts have a long history in the United States, starting in 1792, when debt from the Revolutionary War threatened to take down the original 13.

But the biggest bailouts are, in fact from this century and the last. And four of the six biggest, reports Investopedia, are, in fact, from this past year:

1. $700 billion bank bailout. (Although everyone wants a piece of the action.)
2. The Great Depression.
3. Savings and loan bailout in 1989.
4. Bear Stearns.
5. AIG.
6. Fannie and Freddie.

I wonder if we’ll be adding the auto industry to the list.

image credit: Steve Jurvetson

One of the things we don’t often think about when foreclosed properties are mentioned is that, in some cases, there are innocent tenants who have no idea what is happening. This is becoming one of the latest trends in the housing market crisis.

The problem is that even though tenants do not own their dwellings, someone else does. And even if a renter is paying his or her rent faithfully, there’s not a lot he or she can do if the actual owner of the home has not been meeting his or her obligations. This is starting to cause a problem as officials show up to evict unsuspecting renters, many of whom have no idea of what is coming. Additionally, reports RealEstateProArticles.com, some renters are in danger of losing their security deposits:

Many of these renters have paid security deposits to landlords who have
no more funds to return these deposits to them. They also have to
scamper to look for new housing as they are given only a short time to
remain in foreclosed properties.

Help is on the way, however. Tenants in foreclosed properties are starting to get help from local and state authorities, who are willing to give renters adequate time to find new housing arrangements before being evicted.