On that note, this old news seems very related: October 31 – Bloomberg (Jody Shenn): “Fannie Mae, the government-chartered company that finances one-sixth of U.S. apartment-building debt, this month loosened its review process for multifamily-property loans it will buy, allowing lenders to act faster in a potentially weaker market. The first ‘significant’ changes to the Delegated Underwriting and Servicing program in 20 years will enable lenders to make more loans that Fannie Mae will buy without first looking at their details, said Michele Evans, vice president of multifamily corporate affairs at [Fannie]…”

October 30 – Bloomberg (James Tyson and Jody Shenn): “Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression. Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6%. The government-sponsored companies were able to make loans at about 4.9%, saving the private banks about $1 billion in annual interest. To meet the sudden demand, the institutions sold $143 billion of short-term debt in August and September…”

Oh yes, and 5 million adjustable-rate US mortgages (ARM’S) are slated to reset in the next 18-months. More than two million of these ARM’s are sub-prime and as many as 600,000 sub-prime borrowers could lose their homes..

Anyone watching Treasury yields fall?

Heck of a job Brownie….this feels a lot like FEMA policy before during and after Katrina.

Is this what a liquidity trap looks like as the jaws snap shut?