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I don't know what was stranger on The Today Show this morning:

• Meredith Vieira's back-to-back interviews with Jim Kramer and J.K. Rowling
• Jim Kramer looking like a fish out of water in front of a camera
• Watching Lester Holt and Matt Lauer (1) share the anchor desk and, (2) actually seem to care about the Lindsay Lohan story

If you watched this morning, you know what I am talking about. 

You also know that Mad Dog Kramer spent some time discussing yesterday's stock market losses.  The papers are doing the same today so, like we always do, let's talk about this in plain English.

Here's what you need to know:

• The markets lost 300+ points yesterday
• A 300-point loss is not a big deal in percentage terms -- it's just 2.3% of the overall average
• On a points basis, a 300-point loss this doesn't even crack the Top 10 of daily losses

So, historically, yesterday is just another day of trading in the markets.  But, what may make it different going forward is that yesterday losses it sourced from worries in the credit markets.  This includes mortgage lending, of course.

The more that investors worry about weakness in bonds (which are a major part of lending), the fewer buyers there will be for bonds.  Fewer buyers means that the the prices of bonds will drop.

Lower bond prices creates higher interest rates on bonds and that pushed mortgage rates higher.

For now, keep your radar up.  If you are invested in stocks, don't react too swiftly to the headlines.  Many passive investors lose money when trying to time the market's ups-and-downs.  If you're nervous about your exposure to stock market fluctuations, speak with your wealth planning professional for advice.

The Dow's worst day ever remains Black Monday on which the market lost 22.61%.  Since that date, however, the Dow Jones Industrial Average has added more than 12,000 points.  Investors that stayed the course endured temporary pain, but emerged as winners.

From the CBS News Video Web site, an interesting story for anyone who's recently applied for mortgage credit.

The three major credit bureaus -- Experian, Equifax, and TransUnion -- sell the contact information of new mortgage loan applicants to other mortgage lenders that want to compete for the same business.

It works like this:

• You call your loan officer for a rate quote
• Your loan officer submits a credit report to the credit bureaus
• The credit bureaus recognize that you are applying for a mortgage loan
• The credit bureaus sell your financial information to other loan officers around the country
• The other loan officers call you at your home with new offers for credit

Called "trigger leads", this system of lead marketing identifies a person making a lending decision right now. It's no wonder that lenders are salivating over them.  One marketer of trigger leads calls them "the best leads in the business". 

Trigger lead critics cite privacy concerns as a major problem but supporters of the system say that the risk is offset by giving consumers more choices in lending and, therefore, better prices.

As the family in the CBS video learned, however, it's difficult to get the phone to stop ringing once it starts.  Some of the calls bordered on harassment.  It makes me embarrassed for my industry, actually.

Consumers can stop the calls before they start, if they choose. 

There is a very low-tech, opt-out Web site called http://www.optoutprescreen.com that is sponsored by the three major credit bureaus.  On the site, you can opt yourself out from credit offerings for five years, or submit a form by mail to opt out forever.

Watch the video and then go protect yourself (if you're so inclined).

(Image courtesy: CBS News Video)

In his weekly syndicated column, Kenneth Harney pulled back the curtain on a nasty piece of IRS tax code that can penalize homeowners with foreclosures and short sales.

For those that don't know, a short sale is when a lender accepts a payoff amount that is less than the amount owed on a home. 

Author's note: If you're new to short sales, consider this to be a seminal moment. It's the first of many times you'll hear the term "short sale" bandied about over the next 12-18 months.  You heard it here first, folks.

Here's an example of a short sale. 

• You owe $400,000 on your home
• You are missing mortgage payments and are 90 days late to the lender
• You have no assets or reserves in the bank
• Your home sells for $380,000
• After paying commissions and taxes, you have $365,000
• The lenders realizes that you can't pay them back for everything you owe
• The lender agrees to accept less than the amount owed because something is better than nothing

So, it appears that the homeowner is getting away scot-free on the $35,000 shortfall to the lender. 

Quite the contrary.

According to IRS tax code, when a creditor agrees to cancel a personal debt of $600 or more, it is required to submit a 1099-C, Cancellation of Debt form to the IRS.  And, when the IRS receives this form, it treats the canceled debt as income.

So, when the lender agrees to "forgive" the $35,000 in the short sale example above, it is required to report that write-off to the IRS.  The IRS, in turn, treats the write-off as income for the homeowner.

Assuming the 28% tax bracket, the homeowner added $9,800 ($35,000 * 0.28) of additional tax liability come April 15 -- even he never physically held the cash, or was paid the cash at all.

But the tax code related to Form 1099-C may not last forever.  Several lawmakers on Capitol Hill are trying to modify the tax code related to cancellation of debt. 

The Mortgage Cancellation Tax Relief Act of 2007 would amend the tax code to forgive debt cancellations on primary residences and is currently before the House Ways and Means Committee, the primary tax legislation body of Congress.

Big day today.  Alan Greenspan's 18-year run as Fed Chief ends and Ben Bernanke should become the new leader (if the Senate votes him in).

Think Bernanke had a rough night's sleep?  He went to bed as a former Ivy League professor and is waking up as the eminent leader of the world's largest economy's banking system.  Wow.

First things first -- most of the news today will focus on every except the increase in the Fed Funds Rate.  That will be almost an after-thought. 

So, let me remind you.  The Fed Funds Rate is the interest rate at which banks borrow from the government's banking system.  It's considered to be short-term money.  If the Fed Funds Rate increases, the banks usually pass on that cost to you for your short-term money, too.

What is "short-term money"?  Think Home Equity Lines of Credit and credit cards, most notably.

So, if the Fed Funds Rate increases, so does your cost of borrowing on your HELOC and on your credit cards.  While you weren't paying attention, that rate of borrowing has increased dramatically.  Less than two years ago, Prime Rate was 4.00%.  Today, it's expected to increase to 7.50%.