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Do you expect the home buyer tax credit extension to contribute to a noticeable pick up in loan production?

Created By: Adam Quinones
  • Yes, I anticipate an increase in activity (25.7%)
  • Only a modest upturn in production (44.9%)
  • Nope. 2009 demand stole from 2010 demand (29.4%)

Federal Reserve MBS Purchase Program





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MBS OPEN: Testing Range Resistance
by Adam Quinones
Posted
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Recap of Yesterday

  • $40bn 5yr TSY auction  stops out at 2.47% high yield. 3bps tail of 1pm "When Issued" yield. 2.4 Bid to Cover
  • FOMC says “Economic activity has picked up following its severe downturn”, keeps short-term interest rates at exceptionally low levels “for an extended period",  “inflation will remain subdued for some time.”, concerns for “ongoing job losses, sluggish income growth, lower housing wealth, and tight credit.”
  • Fed MBS purchase program to be extended until end of Q1 2010
  • After making new 2009 high, following the FOMC statement the dollar rallied and stocks sold off. S&P closes at 1060, lower than previous day
  • THE RANGE HOLDS!!!
  • 10yr note hits intraday high of 3.51% before rallying down to 3.40% after the FOMC statement.
  • FN 4.5 hits intraday low of 100-02+ before FOMC statement. After statement FN 4.5 rallies up to 100-25. Ends day +0-03 at 100-21.
  • MBS unable to keep up with TSY rally, "rate sheet influential" yield spreads wider as TSYs outperform
  • Mortgage banker supply in $2bn range
  • MBS Current Coupon ends day at 4.378%
  • Lenders repriced for worse and for better
  • At days end rate sheets were mostly unchanged...stuck in a range near four month lows

So Far this Morning

  • SHANGHAI +0.38%, HANG SENG -2.52%, NIKKEI +1.67%, CAC -0.15%, DAX -0.1%, FTSE -0.14%,
  • 530,000 New Jobless Claims vs. consensus 550,000 and prior 551,000
  • 553,500 4-week moving average of New Jobless Claims
  • 6.138 million Continuing Claims vs. consensus 6.19 million and prior 6.261 million
  • Stock and TSY futures mostly sideways overnight...stock futures higher, TSY futures lower after Jobless Claims data

The FN 4.5 is currently +0-02 at 100-23 yielding 4.374%....

The 10yr is testing range resistance at 3.40%...

Yield Curve

2s/5s: 2bps steeper at 144bps

2s/10s: 1bps flatter at 245bps

5s/10s: 4bps flatter at 101bps

5s/30s: 4bps flater at 179bps

10s/30s: unchanged at 78bps

The dollar index is slightly stronger at 76.15. The EUR/USD is 1.4786. 

Oil prices are $0.42 cheaper. Gold is more expensive at $1,014

MND The Day Ahead

10:00--- Existing Home Sales (consensus +2.1% vs. prior +7.2%) Annual pace consensus 5.35 million vs.prior 5.24 million

10:00--- House Financial Servicers holds hearing on Systematic Risk and Resolution

13:00--- $29 billion 7 yr note auction

14:30---Senate Banking Subcommittee hearing on "Securitization of Assets: Problems and Solutions

15:00---Federal Reserve reports on weekly MBS purchases


MBS, TSY, LIBOR QUOTES

Data provided by Thomson Reuters
Secondary Marketing Managers and Capital Markets Desks, if you are interested in subscribing to the same fixed income and mortgage market data we use:CLICK HERE.
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David Haines  |  Contact or Connect with this Member
on
US Home sales fell 2.7% in August. Not a surprise really. Rates go up and people lose interest in buying.
Edgar  |  Contact or Connect with this Member
on
I guess the free 8k can only prop up the housing market so long. Will washington use this as ammo to extend the 8k credit, ammo to increase it to 15k or is it ammo to say: see it doesn't work, stop waisting money.
Adam Quinones  |  Contact or Connect with this Member
on
hi susan johnson....edgar hows your month looking?
Edgar  |  Contact or Connect with this Member
on
August was slow, September even slower. Call in's, web traffic, referrals......have all come to halt. What gives people? From the few I know left in the industry (personally) it seems across the board. And Mr. or Mrs. I am doing 40 loans this month....save it for someone who believes you. I have heard from several bank reps that have said: without FHA loans for the last few months, they would not have made a penny. But the FHA loans are not as numerous as earlier in the year so they're hurting big time. Who is ready for Jan 1 and no ysp? I wonder is at some point prior LOs are going to speak out. I get the feeling most LOs have no idea and wont until that Jan 2 rate sheet shows par/cost pricing. I need to find a broker with a bank line asap.
Raymond J Ruddy III  |  Contact or Connect with this Member
on
my apps really slowed down as well. locked 2 yesterday though.
Bobby Downey  |  Contact or Connect with this Member
on
AQ historically what do existing home sales do in August? I haven't looked into it but I can only imagine with summerwidning down, last ditch vacations, and school starting back up that they would dip. New home sales should see a strong push from now through November. Already big incentives being offered in my market from builders trying to finish their fiscal year strong or eliminate exisiting inventory before new year starts.....Pushing USDA here and seeing that help my purchase numbers. 100% Financing is not too hard to sell..........liking the green though and still have a few waiting for that magic number 4.5% that I would like to get so rally strong my little MBS friends.....
akaagassi  |  Contact or Connect with this Member
on
phone calls this week have pretty much been grinded to a halt here too...prior to that was relatively busy...phone calls down therefore app count is down...
Mike Valenti  |  Contact or Connect with this Member
on
Brokers losing YSP is not a definite right Edgar? Haven't they been talking about that for 10 yrs. now?
Michael Cromwell  |  Contact or Connect with this Member
on
Good points Edgar. September has been a pretty good month, for closings. I have 2 closings on Monday to finish the month. The problem is that these were all apps from August. September origination has been SLOW. I've been running 99% purchases all year, & do not have any PM apps this month. 4/5 calls from people who just want to try and sneak into the $8K(they probably couldn't get credit for a can of Coke). 4 Refi apps & all will be extremely tough due to LTV issues. The value on 2 of the deals looks workable, given my research, but it's a tough call to make "rolling the dice" on an HVCC compliant appraisal. Gambling $400-500 of my clients' hard earned money is frightening. This system needs to be reworked.
Garth Cook  |  Contact or Connect with this Member
on
It is slower. The only thing propping me up are 203ks. Pain in you know what, but when the word gets out that you do them, the referrals keep the phone ringing. A great product with many of the forclusures needing work. Nothing better than a 3.5% down construction loan. It gives you a competitive advantage because noone wants to do them. Edgar try a reputable net branch. Due your due dillengence. Now adays we need to find a way to keep more of the pie to make it.
Rodney  |  Contact or Connect with this Member
on
Mike & All: One proposal that is embedded, which is written in an ambiguous way, R-1366 would essentially wipeout the current compensation structure to loan officers… retail, correspondent, and broker. The FRB proposal would require mortgage lenders to pay originators – again, retail, correspondent, and brokers - a flat fee, which would be stated and disclosed upfront, and would not increase based on changes in the interest rate or other loan terms. This all sounds fair, but make no mistake, the target is on YSP, SRP, and compensation paid to all mortgage originators This Federal Reserve proposal will ELIMINATE the ability of loan officers to earn a "Yield Spread Premium" on Mortgage originations. This proposal is in the comment period until December 24th and could become effective as early as mid 2010. To date, there are only 300 comments on the Federal Reserve comment board. I do not understand with over 200K Loan originators and employees who stand to suffer possible job loss over this Proposal, that so few seem to comment. the link is: http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm ) Submit comments on the Regulation Z - Truth in Lending - Closed-end Mortgages [R-1366 ] If you wish to read the proposal, the link is: http://edocket.access.gpo.gov/2009/pdf/E9-18119.pdf (starts on page 102)
Garth Cook  |  Contact or Connect with this Member
on
I think that this YSP thing will make it harder for consumers to get a loan. Origination staff will be small because you do not want to pay someone to sit around. It will become an order taker business. Or, on the other hand maybe originators will be paid the same with no ability to negotiate rates. Here is the rate, take it or leave it. Will that mean less competition and higher prices??
Raymond J Ruddy III  |  Contact or Connect with this Member
on
I think that brokers in general have lost market share since 2003. I expect the banking lobby is behind it. Looks like the YSP issue is another attack on brokers. I already disclose YSP and have been doing so for years.
Garth Cook  |  Contact or Connect with this Member
on
Housing DATA - I think we have another two or three years to go before we see real improvement. There is about a one year of overhang that is off the market. I for one have an extra house that I do not want. Took it off the market and rented it becuse I was tired of paying a note in this market. I know at some point in time it will go back on. There is a lot of this out there.
Frank Ceizyk  |  Contact or Connect with this Member
on
not doing 40 a month but august and sept have picked up substantially--think niche guys--this website gives you added edge--predictive rate--knowledge the other warm body app takers don't have. use it to carve out a niche as a mortgage expert with financial planners, real estate attorneys, real estate investors, retirement investing groups, and realtors looking to give their clients every edge they can get...value added knowledge--i "surprised" two purchase deals with float downs prior to closing--guess how many calls i'm getting from those agents--this website offers tons of information to help you beat the system no matter how rigged it seems against you...just listen, learn and apply it to your business model...think outside the box...adam and matt have provided a whole new box for us us to use....!!!
Mike Valenti  |  Contact or Connect with this Member
on
It has been picking up around here. 8 closings last month and 9 this month. A lot of purchase apps in the last 2 weeks.
IllyWilly  |  Contact or Connect with this Member
on
In regards to the YSP, if you have not seen this email. Please pass along: Don't wait until Jan 2 The Federal Reserve Board has issued a PROPOSAL on a rule that would require mortgage lenders to pay originators a flat fee, which would be stated upfront and would not increase based on changes in the interest rate or other loan terms. The mortgage industry has until December 24 to comment on the change to the Truth in Lending Act rule, which is described as an attempt to regulate how yield-spread premiums are set. If you would like to comment on the proposed rule go to: www.regulations.gov Where is says 'enter keyword or ID', enter the proposed rule, FRS-2009-0240-0001 You can click on the title 'Truth In Lending' (Page 10 Section E) to read the proposed rule and under the actions column, click on 'submit a comment' to comment on the rule. By law, the Fed is required to review all public comments.
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