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I've met Paul Knag a couple of times last year and respect his opinion about Home Loans, mortgage loans, the housing market - a market I occasionally write about even though I don't own a home (and never have - I've rented my entire life). 

I have worked on architectual house plans sites and from that perspective, learnt a lot bout the housing market - because I needed to understand why someone would buy an architectural house plan and hire builders or DIY, or a combination of both.

But Paul Knag, a real insider to the home mortgage industry has called it  - said the truth - said something that is probably not being fully reported in Mainstream Media yet in 10 Ways the Credit Crunch will Change Mortgage Lead Generation:

"..Overnight, the residential mortgage industry is in a real crisis, the first days of what may be an extended and painful credit crunch. American Home Mortgage, my employer of 10 years, collapsed with incredible speed last week, when the entire secondary market for our products evaporated. BlownMortgage has a good summary of all that happened on Friday.

An entertaining highlight from the day was Jim Cramer freaking out on air, announcing "Armageddon" and railing against Fed Chair Ben Bernanke and " We won't rescue the markets" Fed President Bill Poole, pleading with them to drop the Fed funds rate at the FOMC meeting next week.

The gist of it:

- Rates are shooting up: Despite the fact that Treasury bonds are down and may continue to drop, residential mortgage rates will not. Generally speaking, the spread between mortgage rates and Treasury bonds has increased markedly because mortgages are now seen as riskier and have been repriced to reflect that increased risk.

- Products are being eliminated, guidelines are being modified daily by lenders, with wholesale and correspondent channels sometimes getting whacked harder than retail.

- The non-bank mortgage lender who relies on warehouse lines of credit to fund its loans, and a secondary market to purchase them, may no longer be a stable business model, suggests investment bank Keefe, Bruyette & Woods.

I didn't find anything in the New York Times that says the Mortgage Credit Crunch arrived - unless it's in Times Select but I did find several stories on Google News once I put in "mortgage credit crunch".  Surprising that no major story was in the Times though..... no one wants to come out and say it, I suspect:

http://www.canada.com/nationalpost/financialpost/story.html?id=46201a41-a28f-498e-856c-b1f9e8abbfb5&k=76564   We have to go to Canada to find out about "our" banking crisis.

"..WASHINGTON -- U.S. Federal Reserve officials meeting on Tuesday will grapple with how turmoil in financial markets and tighter credit may damage the economy, and could hint at some concern growth could falter.

The Fed is widely expected to hold overnight interest rates steady at 5.25%, where they have been for more than a year. The policy-setting Federal Open Market Committee is expected to release a statement outlining its views on the economy at around 2:15 p.m. on Tuesday."

Stock markets face more credit-crunch volatility

"...NEW YORK (MarketWatch) -- U.S. stocks will fall next week, continuing a broad sell-off seen on Friday, as investors stay on high-alert for more bad news linked to dodgy home loans, credit woes, and their potential impact on the broad economy, analysts said. See full story.

Mortgage borrowers in turmoil as lenders cut off riskier loans."

Credit Crunch, the movies' latest drama - The ramifications of the home mortage loan collaspe will be felt far wider sphere:

".... (the loans) allowed Hollywood studios such as Sony Pictures Entertainment, Warner Bros, Paramount, Universal and 20th Century Fox to spread the risk attached to costly projects.

However, the recent collapse of the subprime mortgage sector has caused a spike in the cost of debt.

The knock-on effect has hit several highly-leveraged takeover deals and is heading Hollywood's way.

Lionsgate Entertainment, which produced the Saw franchise, became the latest studio to complete a financing deal last week when it struck a $400m agreement with the investment arm of the Québec government. "

Meaning all those "leveraged buyouts" are probably going to collapse or have to be renegotiated which will cause those markets to stagnate, somewhat - thereby causing a downward spiral that will be difficult to recover out of.

Tightening belts to beat off the 'credit crunch'  - again, you have to go outside the United States to hear what others are saying because our homegrown media does not want to really say what's obvious:

"..TUMBLING stock markets, business takeovers cancelled, sub-prime mortgage lenders going to the wall: welcome to the "global credit crunch" of 2007. In recent days, problems at a large US mortgage lender sent Wall Street plunging. Elsewhere, losses at two funds owned by the Australian bank Macquarie hit Asian markets, while a German government"

Did you hear that "Global Credit Crunch" ..that's what we just entered on Friday.

Thanks to Paul Knag for having the courage to share his story in 10 Ways the Credit Crunch will Change Mortgage Lead Generation.