The new President of the Federal Reserve of Boston called on banks to support subprime lending as mortgage rates reset to higher levels following the binge of the first part of this decade. Selections from Market Watch:

Banks must step up and provide loans during times of financial market distress and also help homeowners who find themselves behind in their payments of unfavorable mortgages, said Eric Rosengren, the new president of the Boston Federal Reserve Bank.

Rosengren said the recent market turmoil was not a wholesale reassessment of risk by investors.

Instead, the central issue was a lack of liquidity, as relatively low-risk financial assets traded between large financial institutions experienced the most difficulty.

Bank balance sheets expanded in August and September as securitization of subprime mortgages and other asset-backed commercial paper declined.

Rosengren said that “conservatively underwritten securitizations and asset-backed commercial paper will find acceptance by investors” but said this will take some time.

We certainly have worked ourselves in to a pickle here haven’t we? Let’s take a quick look at the problem. The loans that are resetting now (and in to ‘08 & ‘09) were written during 2005 (and in to ‘06/’07) which has been determined is the worst performing of the loan vintages during the subprime boom. In fact, now-defunct lenders such as New Century and Fremont drove the loosening of underwriting guidelines to the extent necessary to keep production (and profit) levels at unsustainable levels.

As just one example of the reckless underwriting guidelines at these banks to sustain this volume Fremont used to take 3 letters of reference for self-employed borrowers in lieu of any additional documentation for their income derived from the business. This was a stated income loan that didn’t require the borrower to provide anything other than 3 letters of reference! No business license, business tax returns, CPA letters, nothing.

I am not singling out Fremont, all subprime banks had these ridiculous lending standards. It’s these loans that are resetting higher that Rosengren wants rescued. The problem, of course, is that “conservative” underwriting guidelines do not include help for these people. A person who is self-employed who can’t even produce bank statements showing enough income to support a home loan is not going to get financing at this point in the game. And it’s not up to the banks to decide that either.

In the world we live in banks are often nothing more than big brokers, securitizing and selling loans off to end investors. If investors decide that they don’t want to buy self-employed stated income loans from people that have 550 FICO scores the loans aren’t getting done. Trust me, I am sure that if end investors suddenly say we’ll buy this stuff, banks would oblige in a heart beat; but they aren’t and so banks are in no position to offer those types of programs that they simply cannot sell.

Rosengren argues that credit isn’t the issue, that liquidity is. The simple fact is that the two are inexorably linked; they can’t be unwound easily from one another.

Further, banks have little room to take additional files on their balance sheets. Balance sheets have swelled unexpectedly from loan pools that haven’t found favorable bids in the secondary markets. In addition, banks rarely keep a ton of cash on hand to portfolio a large amount of loans. For the most part, the banking system is not setup that way in its current configuration.

Banks can’t be expected to make loans they can’t sell; and investors can’t be made to buy assets that don’t have a return commensurate the risk associated with the asset. No matter the Fed “hope” this situation will not change unless a major stimulus comes along to shift the existing paradigm. The Fed can’t do it alone, but the government/Fed/OFHEO/GSEs could do that through several means, including backing certain assets (a la FDIC), opening up Fannie and Freddie loan limits and portfolio caps, easing underwriting and loan limit guidance in FHA, etc. Is that a good idea? I don’t think so. What do you think?

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I get a lot of resumes. People who read Blown Mortgage send me their resume and inquire about employment at my company. I’m always flattered when someone sends me their resume; it means they have an interest in my organization and, in a roundabout way, me personally. But, of course, my company is not hiring. We’re not immune to the effects of the market slow down. We went through layoffs and downsizing back in May, and I blogged about the agony in which I had to let friends and relatives go.

But that experience, and the continuing influx of resumes gave me pause. There are too many good people out there; those that worked hard, did their job well, who are now looking at a complete shift in career. The jobs are just not in the mortgage industry any more. Whether you have 6 months or 6 years of experience there is little in the way of gainful employment. Save for the booming loss mitigation/REO/servicing side (which is an important option to consider, btw) there isn’t much out there; and certainly not enough to pick up everyone. With that in mind I have come up with a new service for Blown Mortgage readers who happen to be in the mortgage industry.

What’s the idea?

Blown Mortgage Resume Review

In order to help those that have lost their job due to a layoff or company closure, I am offering a full resume review to help those out of a job find employment in other sectors of the job market. I will do this completely free of charge.

Where do I send my resume?

Send it to resumes@blownmortgage.com. You can send it as a word document or inline in the email. I can’t do anything with JPG, PDF or any other funky file format; and I probably won’t have time to respond and ask you to send it in a format I can work with, so please try to help me help you.

Be sure to include the following information:

• Are you planning on looking for another mortgage job?
• Are you planning on a new field? If it’s a new field be sure to specify what job position(s) you are exploring and/or what field(s); it will help tremendously with my review.

Why should I send you my resume?

You should send me your resume for a handful of reasons:

1. My family has been in the job placement industry for nearly 40 years; I was the black sheep who didn’t take on the mantle. I had the opportunity to live side-by-side with people who make their living putting people in jobs for the majority of my formative years; as well as hands on experience via internships for my mom’s company. Learning from my mom and grandparents has given me a keen sense of what people are looking for when reviewing a resume and what are red flags to HR folks.

2. As chief operating officer of my company I was responsible for the hiring of administrative, operations and hourly staff. I also was heavily involved in sales team hiring. I have reviewed thousands of resumes. I have seen some terrible ones and some great ones (mostly terrible). I will provide you with some insight from what I would think of your resume if it landed on my desk.

3. I came from outside of the mortgage industry. I was in marketing and advertising. Before that my background was in technology. I have a wide understanding of the business world that exists outside the mortgage and lending universe. The mortgage resumes I saw show a lack or care, attention to detail or any type of substance whatsoever. This got people by in the mortgage boom as companies scrambled to fill seats and ops positions. In today’s competitive job market outside of our world those resumes will land in the recycle pile - quickly. I can give you the critical eye of an outsider’s perspective on your resume.

4. I’ve taken many classes in hiring and interviewing and know what people are looking for and what questions they’ll be asking; this insider knowledge can benefit you and help you be more prepared.

What’s the catch?

There are two catches. Come on, this is the mortgage industry, there’s always fine print!

1. I get to use the recommendations I give to you to other people, and I reserve the right to publish or post those ideas on the blog (removing personal data, and specifics of course).
2. If you like my suggestions you send me a PayPal donation of $5-$10 for my time. If you don’t like them, you don’t pay - simple as that.

Anything else?

Yes. Patience is a virtue. I only have so many hours in the day; and while I’d love to spend my life on this blog, I need to make real money, and so my job will interfere with the amount of time I am able to commit to this project.

Further, I reserve the right to cease this project at any time, with or with out notice. Please also note that I am not a registered or certified HR consultant; I am merely a person who has pored over resumes and learned a great deal about hiring candidates from my environment. If that isn’t enough for you, fair enough, but that’s what I’m offering.

Consider it a small token of appreciation for the people who read Blown Mortgage every day who are out of work or are trying to hedge against the specter of future unemployment. We try to give out a lot of consumer advice here; and this is our way of giving back to the industry.

What’s Else Can You Expect?

I will be doing a series of posts on best-practice ways to go about finding a job outside the industry; focusing on some tried and true methods for job searchers to find a job that meets their requirements and hopes for the future. Those will start later this week.

I am also considering adding a job board, but see my opening reservations about the limited jobs in our field at the moment.

Thoughts? Feedback?

I’d love to hear your thoughts on the idea, even if you think it is a terrible one. It’s just one guy trying to help some people out, so if it flops it’s fine by me - I just wanted to put the offer out there.

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The Carnival of Real Estate was hosted by the vFlyer Blog and Blown Mortgage was representing again. The entry selected was the “5 Things to do Right Now if Your ARM is Going to Reset Soon” post. I admit, not my most elegant title selection; but the content is worthwhile for homeowners in adjustable rate mortgages that are set to adjust soon. View the rest of the winners at the vFlyer blog.

Here is a snip of the winning post, if you’re hedging on clicking the link.

I’ve put together this list of 5 things to do right now if you are in an adjustable rate mortgage so that you can better manage what needs to happen before your rate changes. I recommend starting this process at least 75 days from your adjustment date; however, if you have credit issues I recommend starting right away - regardless of your reset date.

1. Determine your rate adjustment date.
2. Determine what your new interest rate and monthly mortgage payment will be.
3. Determine your credit score.
4. Determine your home value.
5. Pull together your income, asset and credit information.

Thanks again to everyone that reads Blown Mortgage and your honest and thoughtful participation in this community.  It is always humbling (save for post titles).  — Morgan

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Filed under: Earnings reports, Consumer experience, Google (GOOG), Cisco Systems (CSCO), General Electric (GE), Coca-Cola (KO), Market matters, Citigroup Inc. (C), Tiffany and Co (TIF), Costco Wholesale (COST), Economic data, Presidential elections, Delta Air Lines (DAL)

More than ever, Wall Street cares about you. Not you personally but average folks who don’t have multi-billion dollar bonuses, pay obscene rents to live in a refrigerator-box sized apartments or have to write essays to get their children admitted to nursery schools that are more selective than some universities.

Believe it or not, you with your 2.5 kids, house in the suburbs and job with your annoying boss are very much on the minds on Wall Street heading into the third quarter. Your pessimism about the economy perplexes pundits and politicians who continually argue that the economy is strong. A recent ABC News/Washington Post poll showed that 35% of Americans rate the economy as excellent or good.

So who’s right, Wall Street or Main Street?

So far, it depends on the neighborhood where the consumer lives. Costco Wholesale Corp. (NASDAQ: COST), whose customers tend to be well-heeled, today reported fiscal fourth quarter results that while not great, beat Wall Street’s expectations. Meanwhile, Petsmart Inc. (NASDAQ: PETM) shares are tanking after the pet supply retailer cut its third quarter and 2007 profit forecast, citing weak consumer spending. So, consumers are confident enough to buy huge bags of pet food but worried about buying regular sized bags of Alpo.

Maybe the rich are happier than everyone else is because of the shrinks that some banks are offering to their very wealthy clients. Tiffany & Co. (NYSE: TIF) Chief Executive Michael Kowalski told CNBC that the luxury retailer expects a “strong” holiday season. Meanwhile, September same-store sales are forecast to have their SLOWEST growth rate in five months, according to Bloomberg News.

Tomorrow, we’ll see if consumers are drowning their sorrows in caffeinated beverages. PepsiCo Inc. (NYSE: PEP), which now is facing a consumer revolt over bottled water, is expected to report a 10.7% gain in sales this quarter. Earnings are expected to rise to 96 cents compared with 88 cents a year earlier, according to Thomson Financial. Analysts expect Coca-Cola Co. (NYSE: KO), which reports Oct. 17, to have profit of 68 cents compared with 62 cents a year earlier on revenue of $7.3 billion.

Consumers will be back in focus when results are reported in the coming weeks for companies ranging from Citigroup Inc. (NYSE: C) to Mattel Inc. (NYSE: MAT) to General Electric Co. (NYSE: GE) to Google Inc. (NASDAQ: GOOG) to Delta Air Lines Inc. (NYSE: DAL) and to Domino’s Pizza Inc. (NYSE: DPZ). Not only will Wall Street be paying attention, but so will the presidential candidates who will be discussing the economy ad nauseum as the primary season looms.

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Filed under: Deals, Google (GOOG), AT and T (T), Technology

AT&T, Inc. (NYSE: T) will buy about $2.5 billion in wireless airwaves from the privately held Aloha Partners, according to the nation’s largest wireless carrier. The additional airwaves will give AT&T 72 of the top 100 markets for wireless service in the 700 Megahertz radio spectrum, with a potential of serving 196 million customers in 281 markets.

This is probably an effort to head off pressure from Google, Inc. (NASDAQ: GOOG), which has expressed pretty strong interest in the same radio spectrum as part of its plan to create a new way of providing wireless services to customers. The idea is to allow customers to buy any device designed for that radio spectrum and use it on any carrier that wishes to provide service. Right now, U.S. wireless carriers have a death grip on the wireless handset market and frequently lock customers into their own networks, shoddy phones and all.

Aloha was planning on rolling out a mobile television service using those airwaves and was in testing in the Las Vegas area, but apparently the AT&T offer was too tasty. What is unknown now is if AT&T will participate in the upcoming 700 Megahertz airwave auction that Google wants to dominate (if certain conditions are met).

Did AT&T just do an end-run around Google? In a sense, yes. But there is more at stake here, and Google’s war chest of cash is in prime position to challenge any and all established telecom companies as it tries to re-invent the rules of how communication happens.

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Filed under: Products and services, Google (GOOG), Marketing and advertising, Technology

Back in the 1980s and 1990s, Microsoft (NASDAQ: MSFT) had always known its key focus: do whatever is possible to leverage the operating system.

Well, something similar is happening to Google (NASDAQ: GOOG). The company realizes that when it needs results, it should focus on its advertising machine.

So it’s no surprise that the company is adding YouTube videos to the Google AdSense network. There will be both banner and text ads. What’s more, it should be an additional source of income for Google’s many Web publishers.

Actually, I tried out the system - and it is pretty easy to use (what Google service isn’t?) You can see an example at the top left of this post.

What’s more, I talked to Chase Norlin about it. He is the CEO and founder of Pixsy (a video search engine). According to him:

“Google acquired YouTube not necessarily for their huge destination site audience, but because they now have the ultimate media aggregation tool for consumer, semipro, and professional content providers. Once the licensing issues are sorted out, Google will have a solid weapon in the content distribution market via AdSense. The challenge, of course, will be to equal or exceed the existing monetization capabilities of the AdSense network.”

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Filed under: Google (GOOG), Apple Inc (AAPL), Cisco Systems (CSCO), Dell (DELL), Time Warner (TWX), Amazon.com (AMZN), Intel (INTC), Motorola (MOT), Market matters, JPMorgan Chase (JPM), Advanced Micro Dev (AMD), Comcast Cl’A’ (CMCSA), Research in Motion (RIMM), QUALCOMM Inc (QCOM), Texas Instruments (TXN), Deere and Co (DE), Stocks to Buy, Garmin Ltd (GRMN), Cramer on BloggingStocks

TheStreet.com’s Jim Cramer is amazed by some stocks that just won’t quit and looks at the practicalities of getting into these winners.

Starting to get startling disparities between the haves and the have-nots.

Can we have a day where Syngenta (NYSE: SYT) (Cramer’s Take) and Monsanto (NYSE: MON) (Cramer’s Take) don’t go up, let alone Deere (NYSE: DE) (Cramer’s Take) and Bunge (NYSE: BG) (Cramer’s Take)?

Can we have a breather in which Fluor (NYSE: FLR) (Cramer’s Take) and Shaw Group (NYSE: SGR) (Cramer’s Take) don’t run higher, or Foster Wheeler (NASDAQ: FWLT) (Cramer’s Take) and McDermott (NYSE: MDR) (Cramer’s Take)?

And can we have a two-day period when a Masco (NYSE: MAS) (Cramer’s Take) or a JPMorgan (NYSE: JPM) (Cramer’s Take) can go higher?

Can we have more than a short-squeeze streak by a retailer?

Or even in tech, there are Google (NASDAQ: GOOG) (Cramer’s Take) and Research In Motion (NASDAQ: RIMM) (Cramer’s Take) and Garmin (NASDAQ: GRMN) (Cramer’s Take) — back from the Navteq (NYSE: NVT) (Cramer’s Take) — declared dead — Apple (NASDAQ: AAPL) (Cramer’s Take) and Amazon (NASDAQ: AMZN) (Cramer’s Take).

And then there are companies like AMD (NYSE: AMD) (Cramer’s Take) and Intel (NASDAQ: INTC) (Cramer’s Take) and Dell (NASDAQ: DELL) (Cramer’s Take) and Texas Instruments (NYSE: TXN) (Cramer’s Take) that are being left in the dust.

To come in and buy the winners feels a lot like coming and buying Qualcomm (NASDAQ: QCOM) (Cramer’s Take) or Cisco (NASDAQ: CSCO) (Cramer’s Take) at the end of 1999. There has not been a serious correction to Monsanto in ages and ages. Foster Wheeler and Shaw just seem to have no gravity restraining them. But Motorola (NYSE: MOT) (Cramer’s Take) and Time Warner (NYSE: TWX) (Cramer’s Take) and Comcast (NASDAQ: CMCSA) (Cramer’s Take) just are dead in the water.

I don’t know what to say about this disparity. I tend to want to buy stocks like the oils because at least they have an occasional selloff that lets you in. I find buying agriculture daunting at this point.

But these trends are some of these mutual funds’ endless friends, and they don’t let up. What has happened in the past when you get these runs is that right around November, we get people who want to ring the register, and that presents the next opportunity. Other than that, I think the only remotely safe thing to do is buy deeper calls out until January and trade common against them, hoping for a decline.

Or you can find the anomalies. Or wait for them: Some health care stock may get dinged momentarily or some defense stocks could come under some pressure because of political fears.

Otherwise, gains are really very hard to come by.

Maybe it’s nuts, but I don’t find the disparity bearish. There are sectors that are out and sectors that are in. That’s always been the case. Live with it, or underperform as always.

RELATED LINKS:

• The Top Dividend Stocks of the Week
• 3 Stocks I Saw on TV, Oct. 10

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in any of the stocks mentioned in this post.

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Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Google (GOOG), Apple Inc (AAPL), eBay (EBAY), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Walt Disney (DIS), ConAgra Foods (CAG), Oracle Corp (ORCL)

More profit warnings:

• International Paper Co. (NYSE: IP) shares are down over 2.5% in premarket trading after yesterday it lowered its third-quarter land-sales earnings outlook due to lower-than-expected land sales during the quarter.
• PetSmart Inc. (NASDAQ: PETM) this morning trimmed its sales and profit forecast for the rest of the year due to weak consumer spending and warmer-than-usual weather. PetSmart now expects 17 cents to 20 cents per share for the third quarter, from a previous forecast of 21 cents to 23 cents earnings per share.

ConAgra Foods Inc. (NYSE: CAG) “voluntarily stopped production at the Missouri plant that makes its Banquet pot pies after health officials said the pies may be linked to 139 cases of salmonella in 30 states, including Wisconsin.”

Oracle (NASDAQ: ORCL) yesterday announced it has agreed to acquire LogicalApps, a provider of automated Governance, Risk and Compliance (GRC) controls management solutions.

While many schools ban and confiscate Apple Inc.’s (NASDAQ: AAPL) iPods, some found a good use for them, The New York Times Reports — to help bilingual kids with some difficulty understanding English. As for the iPhone, Piper Jaffray conducted a survey and found that 3% of teens already own an iPhone.

Walt-Disney (NYSE: DIS) company has kicked off the holiday shopping season with its 10 most wanted gifts list.

Hoping to capitalize on the social networking craze, eBay Inc. (NASDAQ: EBAY) has launched its own version of a social networking service today, Neighborhoods, and is promising other customer-friendly features by year’s end.

Google Inc. (NASDAQ: GOOG) has bought Jaiku, an activity stream and presence sharing service that works from the Web and mobile phones.

There was much news on Sirius Satellite Radio (NASDAQ: SIRI) and XM Satellite Radio (NASDAQ: XMSR) yesterday and the shares surged after a Citigroup analyst Eileen Furukawa estimated the transaction’s likelihood of closing at greater than 60%. The merger, she said, could produce up to $7 billion in cost savings. She has upped XM’s price target to $19.50 from $15. The market, however, still gives the deal only a 24% chance of passing regulatory muster. SIRI shares closed up 3.77% and XMSR shares up 6.87%.

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Filed under: Other issues, Hewlett-Packard (HPQ), Politics

Carly Fiorina, former head of Hewlett-Packard Co. (NYSE: HPQ), will be joining the new Fox Business Channel (still in pre-launch) as a contributor. Apparently, Rupert Murdoch’s new business venture wants to take some glitz from competitor CNBC, as Fiorina has that in ample supply after gracing magazine covers for six years while at the helm of HP.

It’s not that Fiorina did not know how to run a business (far from it), but the needs of a dynamic industry finally caught up with her in 2005 when HP’s board ousted her in favor of current CEO and Chairman Mark Hurd. Hurd’s done great things in his tenure with HP so far, as his operational finesse and cost control methodology apparently has set HP back on track from quarter after quarter of missteps under Fiorina’s leadership. Many believe Fiorina’s contribution to Hurd’s current success is her lasting legacy at HP. That’s fine, as there is probably some truth to that.

Fiorina, probably the most recognized female CEO ever, was more of a showperson than a hard-nosed business executive from many accounts — something that ended up costing her a job. So when Fox News says that “Carly Fiorina is one of the foremost business leaders of our time,” I have to disagree. There are multiple examples of more efficient and successful leaders, even in the last decade. Howard Schultz, Steve Jobs and Jack Welch (to a point, heh) are just a few.

When the Fox Business Channel launches, it will most likely be about glitz and glamour. The loudmouths the network already has in place on the Fox News Channel easily make this a verifiable premonition. We’ll wait to see what substance is put forth before making further assessments. But, for someone who has a flair for the dramatic, perhaps Fox is Fiorina’s rightful place.

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Filed under: Analyst reports, Analyst upgrades and downgrades

MOST NOTEWORTHY: The ocean shippers sector, Tesoro, Siemens AG and MGI Pharma were today’s noteworthy upgrades:

• Bear Stears upgraded the ocean shippers sector to Market Weight from Market Underweight, citing higher day rates in the dry bulk market. The firm sees potential upside for dry bulk firms Eagle Bulk Shipping (NASDAQ: EGLE), Quintana Maritime Limited (NASDAQ: QMAR) and Ultrapetrol Ltd (NASDAQ: ULTR).
• Bernstein raised shares of Tesoro Corporation (NYSE: TSO) to Outperform from Market Perform and expects a rebound in West Coast refining margins.
• ING upgraded shares of Siemens AG (NYSE: SI) to Buy from Hold on valuation and the possibility the company may exit businesses.
• MGI Pharma (NASDAQ: MOGN) was upgraded at JP Morgan to Overweight from Neutral, citing expectations for a strong Q3, Aloxi re-acceleration, Dacogen growth, and Auqavan opportunity.

OTHER UPGRADES:

• UBS upgraded shares of Agnico-Eagle (NYSE: AEM) to Buy from Neutral.
• Banc of America upgraded Everest RE Group (NYSE: RE) and PartnerRe (NYSE: PRE) to Buy from Neutral.
• Calamos Asset Management (NASDAQ: CLMS) was upgraded to Neutral from Sell at Goldman Sachs.

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