Now is an interesting time to be associated with the mortgage business. (I guess some would suggest that any time is an interesting time.) From my limited perspective, well-grounded companies are "going gangbusters", expanding and increasing their efficiency, whereas some companies are wondering "What's going on - if I have agents working for me who can't originate loans at 4%, what are they going to do when rates go to 5%?" Some companies are scrambling for experienced personnel, and talented folks are still looking for work.

If anyone is looking, or if anyone knows of anyone looking, for a sales manager position in Northern California with a (good-sized) and fast growing mortgage bank, they should look into an opportunity in the South Bay Area. Opes Advisors, a privately held regional financial services firm, is looking for a sales manager for their Los Gatos branch. Opes would like the candidate to have "a minimum of seven years of experience in mortgage lending with demonstrated success as a sales leader in the Bay Area.  (The company, recognized in the media as a great place to work, is pretty interesting, in that it combines the mortgage operation with wealth management, looking at their entire asset and liability picture.) If you're interested in hearing more, shoot an e-mail to Quincy Wolfensperger at

In Southern California, Mountain West Financial (Redlands) is looking for VP of Capital Markets.  The person will run pricing, pipeline management, mandatory loan sales through various channels, product selection & development, and company risk management for servicing retained loans. It's an upper level management position, and experience, education, and a solid knowledge of secondary marketing & capital markets are all "a must". If you know of anyone, contact Mike Douglas at

Freddie Mac reported a $2.5 billion third-quarter loss, and is asking taxpayers for an additional $100 million in part to cover the cost of $1.6 billion in interest payments made to the federal government. Its loss was less than in recent quarters, a possible indication that mortgage delinquencies are slowing - but it, and the industry, is still grappling with delays in the foreclosure process which, combined with a slow housing market, will only cost more mo' money. HERE IS THE EARNINGS RELEASE

HERE is the outlook on Freddie and Fannie's earnings. It should surprise nobody that the FHFA expects continued losses at the GSEs.

PennyMac Mortgage Investment Trust reported net income for the third quarter of $7.7 million. Last quarter PennyMac invested $125 million in distressed mortgage assets, comprised of $73 million in nonperforming residential mortgage whole loans and $52 million in MBS's using cash from existing investments and debt from security repurchase agreements on the Company's mortgage-backed securities. Per its press release, "at the end of the quarter, the Company's portfolios of residential mortgage whole loans and mortgage-backed securities were valued at $245 million and $137 million, respectively. After the end of the third quarter, the Company entered into a transaction to purchase nonperforming whole loans valued at $222 million. That transaction is scheduled to close in the middle of December."

PHH (#7 in mortgage volume in the first half of 2010) lost $2 million in the 3rd quarter, down from a loss of $80 million a year ago. Mortgage closings increased, which helped revenue for the quarter increase to $572 million from $507 million last year. The mortgage-production segment of PHH had income of $161 million, while the servicing segment lost $194 million for a combined loss in the mortgage-services unit of $34 million. Mortgage closings were $12.7 billion for the quarter, up 26% over second quarter 2010 and 41% versus the period a year ago.

Bank of America and PNC Financial Services are reported to soon be reducing their investment in BlackRock by selling 42 million shares of its stock. BlackRock's stock price is down almost 30% this year (including 4% yesterday), but the sale should bring in billions of dollars for BofA and PNC which will help them with cash needs and in focusing on core businesses.

Ally Financial came out with its 3rd quarter results showing the 3rd consecutive quarter of profitability. The company made $269 million of net income, and core pre-tax income of $636 million, compared to a net loss of $767 million for the third quarter of 2009. Ally's position in the auto finance industry helped.

Speaking of Ally/GMAC/RFC or whatever name they go by nowadays, GMAC Bank's correspondent clients learned that some of its FICO adjustments changed on Government products. "FHA FICO >=640 and <660 is changing from -.500 to -1.000. VA FICO >=640 and <660 is changing from -.875 to -1.375."

Occasionally I am asked, "When the US Treasury sells bills, notes, and bonds, does the money go toward increasing the deficit, or toward paying off old debt?" The answer is both. For example, yesterday came news that the Treasury Department plans to sell $72 billion in its quarterly sales of long-term debt next week, as lower projected budget deficits have allowed the government to reduce borrowing. It will auction off $32 billion in 3-yr notes on Nov. 8, $24 billion in 10-year notes Nov. 9 and $16 billion in 30-year bonds Nov. 10. (Thursday is a holiday, thus the shift.) The whole thing will raise $58.2 billion in new cash, with the rest of the proceeds going to pay off maturing debt. HERE is the refunding statement

Lately the Treasury has been scaling back auction sizes, after expanding debt sales to finance annual budget deficits exceeding $1 trillion for the past two years. Most estimates point to a Federal deficit north of $1.2 trillion in fiscal 2011, $1 trillion in 2012, and $900 billion in 2013.  HERE is the TBAC's report which discusses Treasury's funding needs.

Which leads into yesterday's interest rate-moving announcement that the Federal Reserve will, in effect, print money to buy an extra $600 billion of Treasury bonds by next June. Their hope is that the move will make it cheaper for us to borrow money, take out mortgages or refinance our houses, and for businesses to borrow funds in order to expand. Higher inflation and lower unemployment is the goal. The financial markets had been talking about, and had priced in, the Fed's move for weeks, and stock indexes didn't move much after the announcement. "The pace of recovery in output and employment continues to be slow," the Federal Open Market Committee statement said. It will help by raising asset prices, like stocks, which might make some folks feel better and go out and spend. READ MORE

The market reaction was mixed, with stocks rallying, the dollar going down, longer-term yields going up, and mortgages improving. MBS pay-downs will continue to be reinvested into Treasuries: the NY Fed Desk estimates pay-downs of $250 to $300 billion over this same time period, or $35bln per month area. Taken together, this equates to around $110 billion per month in Treasury purchases. The average duration of the purchases will only be between 5 to 6 years, so the backend of the Treasury yield curve (30-yr bonds) sold off. But remember that mortgages don't trade off of 30-yr bond prices - their expected duration is more like 5-10 years, so MBS prices improved .125-.250 with about $2.1 billion being sold by originators. READ MORE ABOUT THE MORTGAGE RATE REACTION

So we're done with the elections and with the FOMC verdict. Mortgage investors still have some prepayment news later today, and tomorrow's unemployment data. Prepayments on FNMA 30-year MBS are expected to increase nearly 4% on average on 4-7% securities, but Ginnie Mae securities (with FHA & VA loans) are expected to be flat. (This is important for investors to know, given that they are counting on certain cash flows for certain periods of time.)

You can retire to Minnesota where...

  1. You only have four spices: salt, pepper, ketchup, and Tabasco.  
  2. Halloween costumes fit over parkas.  
  3. You have more than one recipe for casserole.  
  4. Sexy lingerie is anything flannel with less than eight buttons.  
  5. The four seasons are: winter, still winter, almost winter, and construction.