Wow... Quite a Friday! What, by all rights, could have been an uneventful "fade-to-sideways" into the weekend (and holiday-shortened week ahead) turned out to be the most action-packed day of the week. This might not have been the case were it not for the unexpected headlines that prompted the biggest swings of the day. After markets digested the morning data with bonds/MBS trading a bit stronger on European concerns, a pervasive and substantial flight-to-safety washed over all sectors as Hamas launched rockets into Jerusalem. That took stocks and bond yields sharply lower but the move was completely reversed when congressional leaders emerged from closed-door meetings with the President and had generally positive, hopeful things to say regarding the Fiscal Cliff. As markets corrected, MBS were able to hold their ground quite well against the unwinding of the risk-off trade which actually ended up depositing equities markets at the highs of the day. S&Ps had TWO 15 point swings today and TWO SEPARATE 10 point swings! Despite that, MBS stayed green and are now coasting out 6 ticks higher at 105-02.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
Pricing as of 4:05 PM EST
Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
Reprice Risk Waiting In The Parking Lot?
Here's one of those "more of a heads up than an out-and-out reprice alert" alerts. Granted it was spiky and brief, but Fannie 3.0s did hit 105-08 earlier today and now just hit 105-00 (though they've bounced a tick or three higher since then). That's a quarter of a point of movement off the highs and something that would cause some concern on a normal day of movement.
Of course, this isn't a normal day of movement, and even at 105-03, Fannie 3.0s are still up 7 ticks on the day. It looks like bond markets are bouncing and holding their ground here, but just something to be aware of if you're on any sort of "to lock or not to lock" fence heading into the weekend. Depending on the lender (and there are only a few who do this) the "pipeline control reprice" is probably the bigger consideration.
NY AG To Wells Fargo: Reverse Policy That Denies Foreclosure Relief In The Wake Of Hurricane Sandy
NEW YORK - Attorney General Eric T Schneiderman today warned Wells Fargo to reverse a new policy that temporarily suspends review of mortgage relief applications from New York homeowners, many of whom are still struggling to recover in the aftermath of Hurricane Sandy. In a letter to Wells Fargo, Attorney General Schneiderman warned the bank that its directive to suspend “all home preservation reviews and decisions” across the Northeast “in order to await further instructions from FEMA” likely violates the terms of the National Mortgage Settlement. That historic agreement, reached in March between 49 State Attorneys General, the Department of Justice, and the nation’s five largest mortgage servicing companies including Wells Fargo, mandates lender compliance with a number of servicing reforms, including swift review and response timelines for borrowers seeking mortgage modifications and other forms of relief.
Attorney General Schneiderman informed Wells Fargo that his office will not allow the bank to use the devastation inflicted by Sandy to evade their obligations under the settlement. The Attorney General’s letter to the Chairman, President and CEO of Wells Fargo today demands the bank immediately rescind this policy and comply with its obligations without interruption.
“Wells Fargo is not excused from any of its obligations under the National Mortgage Settlement or under New York law as a result of Hurricane Sandy,” wrote Attorney General Schneiderman. “My office will aggressively pursue any loan servicing company that uses this tragic event as an excuse to violate loss mitigation decision timelines.”
Huge, Volatile Swings in Equities, Bond Markets Follow Reluctantly
Equities markets have been tanking from the get-go this morning as reasons abound to move in a "risk-off" direction. But "forced selling" is perhaps the biggest driver at the moment, and this looks all the more likely considering the huge bounce back that's unfolded over the past 5 minutes.
Forget the morning data. It's not having an impact at the moment. The Euro tanked along with equities most severely heading into the 10am hour. It took Treasuries and MBS a while to react , but forced buying there complimented the forced selling in stocks. European concerns are a factor, as are the escalating geopolitical tensions in the Mid-East.
All of the above carried Treasuries to their lowest yields in over a month and MBS prices to their best levels of the week, as high as 105-08 on Fannie 3.0s. We've since fallen back to 105-03, which is still 7 ticks higher on the day. Several lenders repriced for the better on the positivity. More may follow if we hold these gains.
Stocks are whipsawing like nobody's business, ostensibly in response or anticipation of headlines out of Washington after the President met with Congressional leaders on the Fiscal Cliff. We have no new news on that front, yet, but will update you when it hits. For now, S&P futures are off their 1340 lows, all the way up to 1352 in a few short minutes.
Volatility reigns supreme for stocks and bond markets are doing their best to make smaller iterations of those swings.
Live Chat Featured Comments
Ira Selwin : "page 55 - here http://portal.hud.gov/hudportal/documents/huddoc?id=F12MMIFundRepCong111612.pdf"
Bryce Schetselaar : "ouch"
Ira Selwin : "FHA has been cancelling required mortgage insurance premiums (MIPs) on loans for which the outstanding principal balance reaches less than 78% of the original principal balance ...beginning with new loans endorsed after the policy change becomes effective later in FY 2013, FHA will once again collect premiums on FHA loans for the entire period during which they are insured."
Rob Clark : "15 year only"
Rob Clark : "REPRICE: 12:42 PM - Provident Funding Worse"
Victor Burek : "REPRICE: 12:31 PM - Nexbank Better"
SMTM : "I dont disagree, however, we all know it won't happen. I also agree private money needs to fill the void, if the govt lets them."
Victor Burek : "but lender of last resort means they are always gonna get the highest risk loans with highest default rates..they need to be able to keep some of the good loans as well"
John Paunan : "My thoughts as well...FHA isn't supposed to be a big player with a heavy market share...supposed to be the lender of last resort."
Victor Burek : "i agree Dan..all other insurance is priced that way"
Dan Clifton : "Michael, i am a licensed lender but run as a broker. No Warehouse line, small shop with me and 3 LO's"
Dan Clifton : "SMTM, i dont agree. FHA should come up with a sliding scale for MI based on score and DTI to balance their risk portfolio and be competitive with higher quality borrowers. but we all knwo that wont happen"
Michael Gannon : "if so that would explain it I guess, but for bankers conv and FHA are not even close. "
Michael Gannon : "not sure how that is possible Dan"
Dan Clifton : "i dont even have that much spread on FHA vs conventuional. I can do coventional 97% vs FHA 96.5% for only 0.25% more in rate with the same premium"
SMTM : "The only way to fix it is to bankrupt it."
Dan Clifton : "FHA is elimnating solid borrowers from their program. very shortsighted"
Ted Rood : "Well stated, Dan. FHA will be adversely selected."
Dan Clifton : "FHA is pricing good home buyers out of their product and they are going to have a endless cycle of this. A good borrower (680+ score and good DTI) will go conventional 97%, the MI is only 1.15% and No upfront MI. Only the lower quality borrwers will have to go FHA because their score and DTI wont qualify for conventional 97%. Lower Quality FHA borrowers = higher level of defaul = never ening cycle of raising FHA premiums to offset defaults"
Matthew Graham : "RTRS - HOUSING OFFICIALS SAY FHA TO HIKE MORTGAGE PREMIUM BY 10 BASIS POINTS, INCREASING LOAN COSTS FOR AVERAGE BORROWER BY ABOUT $13/MONTH "
Matthew Graham : "RTRS- OFFICIALS SAY FHA TO HIKE PREMIUMS, EXPAND SALES OF DEFAULTED MORTGAGES AND USE OF SHORT SALES, AND IMPROVE LOSS MITIGATION EFFORTS "
Matthew Graham : "RTRS- HOUSING OFFICIALS SAY FHA TO ASK CONGRESS FOR ADDITIONAL LEGISLATIVE AUTHORITIES TO PROTECT MORTGAGE INSURANCE FUND "
Matthew Graham : "RTRS - U.S. HOUSING OFFICIALS UNVEIL STEPS TO BUILD UP FHA FINANCES THEY SAY WILL RETURN FHA'S CAPITAL TO POSITIVE POSITION WITHIN THE YEAR "
John Paunan : ""May you live in interesting times"...anyone else feel cursed?"
Eric Franson : "So that's what a cliff looks like!"
Matthew Graham : "yep, thanks Fiscal Cliff headlines and stock rally"
Paul Carlin : "FNMA 3.00 took a dive, ????"
Eric Franson : "REPRICE: 12:03 PM - Wells Fargo Better"
Matthew Graham : "Euro/equities tanking at 10am looks best attributable to Hamas rocket attack on Jerusalem. "
Matthew Graham : "equities bounce seems clearly linked to the fiscal cliff headlines. TSY rally is a bit more enigmatic, but lines up best with Spain "bad bank" announcement. General flight-to-quality undertones into the European equities close as well."
Matthew Graham : "RTRS-MCCONNELL - NEED REFORMS TO ENTITLEMENT PROGRAMS, PREPARED TO PUT REVENUE ON TABLE AS LONG AS "YOU FIX THE REAL PROBLEM""
Matthew Graham : "RTRS-PELOSI - SHOULD HAVE A GOAL IN TERMS OF HOW MUCH DEFICIT REDUCTION, SHOULD HAVE DEADLINE BEFORE CHRISTMAS"
Matthew Graham : "RTRS-REID - WILLING TO WORK THROUGH THANKSGIVING RECESS TO GET SOMETHING DONE ON FISCAL CLIFF"
Matthew Graham : "RTRS-BOEHNER SAYS PUT REVENUE ON TABLE, MUST BE ACCOMPANIED BY SIGNIFICANT SPENDING CUTS"
Dan Clifton : "US bank rates arent that great, and besides they deactivated me due to lack of volume so they are not an poption for me"
Matthew Graham : "RTRS-BOEHNER SAYS MEETING WITH PRESIDENT WAS CONSTRUCTIVE, OUTLINED A FRAMEWORK FOR TAXES, SPENDING"
Victor Burek : "congressional leaders seem to be coming together"
Michael Tadros : "REPRICE: 11:37 AM - Provident Funding Better"
Jay Waters : "REPRICE: 11:37 AM - Franklin American Better"
Matthew Graham : "RTRS- SPAIN WILL START TALKS WITH FIVE INVESTMENT BANKS ON MONDAY TO LOOK FOR INVESTORS IN BAD BANK - ECONOMY MINISTRY SOURCE "
Matthew Graham : "RTRS - SPAIN'S BAD BANK GENERATING A LOT OF INTEREST FROM INTERNATIONAL INVESTORS - ECONOMY MINISTRY SOURCE "
Victor Burek : "for the first time, Plaza is showing conventional 30yr rates below 3.25 on rate sheet"