Fannie Mae’s and Freddie Mac’s foreclosure prevention activity increased in the third quarter of 2011 and total nearly 2 million foreclosure prevention actions since the beginning of conservatorship in 2008. During this period, the Enterprises completed one million loan modifications, helping borrowers stay in their homes.

According to the Federal Housing Finance Agency’s third quarter 2011 Foreclosure Prevention & Refinance Report, the increase in completed foreclosure prevention activity in the third quarter was driven primarily by loan modifications and repayment plans. Two-thirds of all borrowers who received loan modifications in the third quarter had their monthly payments reduced by over 20 percent. Additionally, the Enterprises' cumulative refinancings through the Home Affordable Refinance Program (HARP) increased 11 percent during the third quarter to nearly 928,600 loans.

It's possibly slightly too soon to assume that lenders would reprice for the worse on current bond market weakness (especially considering not many of them repriced for the better earlier), but if you were waiting it out to potentially lock ahead of the Euro Summit on Friday, this is the first good opportunity so far this week.

MBS are holding up well so far, still up 2 ticks on the day at 102-04. 10yr yields are at their highest levels of the day at 2.0927 and stocks surged to their highs as well: 1263 in S&P's. All the bother ostensibly surrounds another FT article on "eleventh-hour negotiations" to not only increase support for the IMF but also leave in place a 440 bln euro bail-out fund set to expire in mid 2012 which would run concurrently with the new 500 bln euro rescue fund that begins at that time.

We're watching 102-03 in Fannie 3.5's. If prices are falling from there, risks are increasing of negative impact to rate sheets.

On of the "early crowd" lenders just repriced for the better as MBS have slowly but surely trickled uphill to their highs of the day at 102-06 (FN 3.5's). This puts MBS up 4 ticks day-over-day vs 10yr yields being slightly higher vs both 3pm and 5pm marks. On the day however, 10's have been gaining, but not quite as directionally as MBS. Stocks are near their lows, but overall, things are fairly flat.

MBS appreciate that lack of volatility, and the appreciation is reflected in price gains and perhaps soon, additional lenders' willingness to reprice. It's still a bit early to flat-out EXPECT positive reprices from most lenders, but neither would we fear a reprice for the worse at the moment.