Umm, what did I say about there being no recession?

While the U.S. overall is avoiding recession, apparently Arizona is not. The Arizona Daily Star had some great business articles today, starting with this one on the recession:

Arizona is among five states in the nation either in recession or on the verge of it, Vest said. The others are Michigan, California, Florida and Nevada, he said. For most, the primary cause was likely a boom and bust in the housing market with heavy speculation and prolific use of risky mortgages, he said.

"Things got a little crazy here during the housing bubble," Vest said in a press conference before the event. "It was a lot of fun while it lasted. Now we're suffering from a hangover."

Next there was a great article about the Federal Reserve stepping in to toughen rules on mortgages. What struck me was the part about loans that don't escrow taxes and insurance -- that's just plain crazy!

The proposal, expected in two weeks, is emerging as the most muscular use of regulatory power at the central bank since Fed Chairman Ben Bernanke took office in early 2006.

It is expected to target certain prepayment penalties as well as loans that don't escrow taxes and insurance. The plan also targets low-documentation loans and loans that are made regardless of a borrower's ability to make payments, Fed officials have said.

Last but not least, Fannie Mae and Freddie Mac have changed their rules on mortgages, effectively freezing out sub-prime borrowers, but the new rules will also affect prime borrowers with medium-level credit records. Looks like it's going to get a lot tougher to get a mortgage the next few years:

Giant investors Fannie Mae and Freddie Mac are imposing significant increases in fees for a broad range of borrowers who have lower than 30 percent down payments and formerly were treated as "prime" credit applicants. At the same time, the two largest private mortgage insurers — MGIC Corp. and PMI Group — are raising premiums on consumers who have low down payments and FICO scores in the mid- to upper 600s.

. . .

"This is outrageous," said Steven Moore, a mortgage broker with 1st Solution Mortgage in Falls Church, Va. "On a loan of $300,000 and with a credit score of 675 — which is not a bad score — and a 75 percent loan-to-value ratio (25 percent down payment), the cost is an additional $2,250 per loan." If the same borrower wants to do a cash-out refinancing to consolidate debt, the new Fannie-Freddie fee schedule will add another $1,500 to total costs on a $300,000 mortgage, said Moore. On a $400,000 loan, he estimates the extra fees would total $5,000.