Mortgage News Daily

Mortgage Industry Leads Accountability and Transparency Reform

Frank Ceizyk — Fri, 20 Nov 2009 22:12:00 GMT

Transparency is the new buzz word in the financial world, especially in the mortgage industry. W hile government officials and financial pundits pay "TRANSPARENCY" plenty of lip service, those of us working on the front lines of origination live with it on a daily basis. I would go as far to say, from a point of sale perspective, MORTGAGE ORIGINATORS HAVE QUICKLY BECOME THE MOST ACCOUNTABLE MEMBERS OF THE FINANCIAL SERVICES INDUSTRY. Imagine the potential protection consumers might benefit from if all commission based financial services professionals were forced to follow in our crystalline footsteps, conducting every aspect of their businesses in the spirit of undisguised disclosure, in an environment of extreme accountability. Perhaps it would seem fit to start with car sales? Suppose...(read more)

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MBS CLOSE: Extremely Flat, Range-Bound Week

Matthew Graham — Fri, 20 Nov 2009 22:01:00 GMT

Posted To: MBS Commentary

Despite the 4 tick improvement on the day that leaves MBS just about as close to all time highs as we could ask for, the lack of excitement this week is a bit of a let down. Sure, there was plenty of chopatility earlier in the week in MBS, but not only was it mostly confined to the range, prices actually ended exactly where they started on Monday! At least the boring and range-bound nature of the week made for plenty of predictability as the only real technical levels worthy of mention played important roles throughout the week. 101-21 became eerily supportive as the week progressed. and 101-27 mentioned as a pivot point on Monday and Tuesday maintained it's technical significance as resistance by week's end. In tsy's, the story was clearly about 3.31 and 3.38. (3.31 is an intraday...(read more)

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MBS AFTERNOON: Grinding to the Right

Adam Quinones — Fri, 20 Nov 2009 21:28:00 GMT

Posted To: MBS Commentary

Its 430 on a Friday afternoon. The market is resting after a week's worth of grinding to the right. (Note sarcasm.) It was exciting when the week began...but it sure did fizzle out into the close. Everything we watch turned a profit this week. We hope you followed the crowd and booked a few extra bps yourself. Gobble Gobble. I can smell the mashed potatoes.... Enjoy the weekend PS. Smash someone up Tucker. go 44...(read more)

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MBS LUNCH: Uneventfully Coasting Into The Weekend

Matthew Graham — Fri, 20 Nov 2009 19:15:00 GMT

Posted To: MBS Commentary

With absolutely no exaggeration, all but one, maybe two of the times I've looked at my screens before writing this week MBS have been between -2 and +2 ticks on the day while changes in tsy's have been more pronounced. Same story today, at least on a price level, as 4.5's are up 2 ticks to 101-23 whereas 10's are down 6 ticks, bringing the yield up to 3.362. Neither of those levels are especially interesting as they both lie above levels that have supported 99% of the trade this week. For MBS, the level is obviously 101-21, which has received more than its fair share of mention this week, and likely needs no further introduction. And though we haven't seen much of it this week, the 3.38 lvl in tsys is equally significant. It just draws more of it's credibility from weeks...(read more)

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MBS MORNING: Reminder of Rates Reality

Adam Quinones — Fri, 20 Nov 2009 16:23:00 GMT

Posted To: MBS Commentary

Much of our analysis this week has focused on the technical dynamics of range limits and the interconnected relationship between the market's perception of fundamentals and trader's ongoing short term profit churning positional tactics. While some of the explanatory logic we have provided was mere exploratory reasoning based on the speculative maneuvering and strategery (been waiting to use that one) of performance driven traders, we have continued to rely upon the same concepts and indicators that have driven price action for the majority of 2009: the Federal Reserve's consistent presence in the agency MBS market and the bond market's ongoing independence and outperformance. An unwavering reliance on these themes has served as a stable foundation with which we build our directional...(read more)

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Mortgage Rates Bottom Out. Lock'em If You Got'em

Victor Burek — Fri, 20 Nov 2009 15:31:00 GMT

Posted To: Mortgage Rate Watch

While benchmark interest rates continue to chop around in a contained range, mortgage-backed securities have moved sideways, failing to make much progress in either direction. Although we have experience a few moments of added volatility, tight trading ranges have kept and generally "topped out" MBS prices have kept mortgage rates stable all week, near six month lows. There are no scheduled data releases today. Reports from fellow mortgage professionals indicate mortgage rates to be unchanged from yesterday. The par 30 year conventional rate mortgage continues to hold in the 4.625% to 4.875% range for well qualified consumers. To secure a par interest rate you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated...(read more)

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Jumbo Loan Market; Short Sale Responses; Updates: Chase, SunTrust, GMAC; DR Horton Loses $223 Million

Rob Chrisman — Fri, 20 Nov 2009 14:55:00 GMT

Posted To: Pipeline Press

One top ex-secondary guy wrote to me and said, "Things I sort of miss hearing in mortgage banking: "What are rates gonna do tomorrow?" "Why is IndyMac a point better than we are?" Anything associated with "Did you hear what they said on CNBC this morning.......?" "How come I'm losing money on the hedge?" And "See that rep over there? We ended up naked in a hot tub at a conference back in '94." I tell you, sometimes this commentary writes itself. Right now, companies all over the US are talking about next Friday: Black Friday! Either companies are closed, and the employees have the day off to go spur the economy, or companies are open. Those that are open may have low seniority people at the desks, or people who don't care about...(read more)

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MBS OPEN: Choppy Benchmark Prices. Sideways MBS Movement

Adam Quinones — Fri, 20 Nov 2009 14:30:00 GMT

Posted To: MBS Commentary

Got this email update from eFannieMae last night.... Fannie Mae lanza nuevo HomePath.com en español, con el propósito de ayudar a más hispanos a adquirir su vivienda. Herramientas interactivas e información diseñada para guiar a los potenciales propietarios a través del proceso de adquisición de una vivienda y prevenir una ejecución hipotecaria Fannie Mae Launches New HomePath.com in Spanish Aimed at Helping More Hispanics Buy Homes. Interactive Tools and Information Designed to Guide Potential Homeowners Through Homebuying Process and Prevent Foreclosure I wonder how many homes went/will go into foreclosure because the borrower wasn't a citizen... Banco Popular anyone? Recap of Yesterday Jobless Claims: 505k vs. 505k expected. Unchanged...(read more)

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The Day Ahead: Empty Econ Calendar. Stocks Set to Slide at Open

Patrick McGee — Fri, 20 Nov 2009 13:10:34 GMT

Posted To: MND NewsWire

In line with weak global markets, US equities are looking to open lower this morning. Two hours before the bell sounds S&P 500 futures are down 8.2 points at 1,086 and the Dow is off 68 points to 10,259. Following the trend, commodity prices are also weaker. WTI Crude oil is trading 52 cents lower at $77.53 per barrel and Spot Gold is down $4.95 to $1139.65. “Risk is still off this morning, with equity markets weighed down by a disappointing earnings report from Dell,” noted Robert Kavcic from BMO Capital Markets. The computer maker yesterday reported net income of $337 million in the third quarter, or 17 cents per share, well below Q308 income of $727 million, or 37 cents per share. Key Events? Some days are slow and this is one of them. No economic data from the US is scheduled...(read more)

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MBS CLOSE: Range Holding Makes For Boring Day

Matthew Graham — Thu, 19 Nov 2009 22:00:00 GMT

Posted To: MBS Commentary

Earlier in the day we discussed movement in MBS prices that brought 4.5's to their lowest levels of the session, but we mentioned some support for MBS as well as some support for tsy yields that had been weakening at the same time. By closing time, those ranges identified much earlier in the day held up, carrying us into tomorrow, a data-free options expirations Friday with little to no suggestion for directionality. Turns out that 101-21 was a pretty solid area for 4.5 support. And in 10's, despite a couple exploratory movements toward 3.36, 10's finished in better territory vs. their support. Volume was evenly distributed and nothing to write home about as we were mostly on par with yesterday's levels. To reiterate the sense of uncertainty going into tomorrow, today did nothing...(read more)

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Fed MBS Purchases Focus on New Loan Production

Adam Quinones — Thu, 19 Nov 2009 21:34:00 GMT

Posted To: MND NewsWire

The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the five trading days between November 12 and November 18, the Federal Reserve purchased a total of $17.23 billion agency MBS. In those five days the Federal Reserve sold $1.23 billion agency MBS (dollar rolls) bringing net purchases to a total of $16.00 billion, $2.5 more than the previous, holiday shortened week. The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and...(read more)

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MBA Reports Record Delinquency Rates. Will Get Worse Before Improving

Jann Swanson — Thu, 19 Nov 2009 21:06:00 GMT

Posted To: MND NewsWire

Mortgage loan delinquencies continued to rise in the third quarter according to information released on Thursday by the Mortgage Bankers Association (MBA). Loans on one-to-four unit family homes that were delinquent, but not yet in foreclosure, reached 9.64 percent of all loans during the third quarter. This is an increase of 40 basis points over the second quarter of 2009, breaking the all time record set at that time . The rate is 265 basis points higher than the 6.99 percent delinquency rate reported one year ago. 3.57 percent of all loans were 30 days past due compared to 3.68 percent last quarter and 3.39 percent one year ago. 1.67 percent of all loans were 60 days delinquent compared to 1.68 percent and 1.40 percent on year ago Seriously delinquent loans - those over 90 days or in foreclosure...(read more)

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MBS AFTERNOON: Flat on the Day With Room to Move Lower

Adam Quinones — Thu, 19 Nov 2009 20:29:00 GMT

Posted To: MBS Commentary

Heading into the close, the FN 4.0 is trading +0-02 at 99-09 yielding 4.078% and the FN 4.5 is +0-02 at 101-24 yielding 4.286%. The secondary market current coupon (CC) is 4.13%. The CC is +78/10yr TSY and +67/10yr swap. As you can see in the chart below, after prices fell early in the week, "rate sheet influential" MBS prices haven't made much progress in either direction with most of the price action occurring between 101-26 and 101-20. This should continue into today's close. Again...lock!...(read more)

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MBS ALERT: Lows Of The Day, But Still Within The Range

Matthew Graham — Thu, 19 Nov 2009 18:45:00 GMT

Posted To: MBS Commentary

This is one of those obligatory alerts where price action in context doesn't justify an alert, but MBS prices have touched their lows of the day. In addition tsy's have broken out of their trend of improvement on the day with the 10yr backing up 3.35. Will there be reprices? Tough to say, considering the nice, flat resistance going back to yesterday at 11am. That coincides with some internal support at just over 3.35 in tsys. So personally, I wouldn't be rushing to lock anything that wasn't locked already. However, given the lock bias of the hedge ratio, that might constitute a different swath of your pipeline... If you can risk it, roll with it and wait to see if 3.35 tsy's break or 101-21 MBS breaks. Some lenders will reprice for the worse, but many will not (not unless...(read more)

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House Amendment Poses Threat to Lending Liquidity

Joe Murin — Thu, 19 Nov 2009 18:10:00 GMT

Posted To: Voice of Housing

On the same day that Treasury Secretary Tim Geithner was in downtown Washington calling on banks to boost lending , up on Capitol Hill the House Financial Services Committee passed an amendment to that would do just the opposite. At an Obama administration summit on strengthening credit flows to small businesses, Geithner said “We need banks to be working with us, not against recovery." At the very same time on Wednesday, an amendment from Reps. Brad Miller and Dennis Moore would allow the FDIC to impose a 20 percent haircut on all secured creditors, including the 12 Home Loan banks, when resolving systemically important institutions that fail. The amendment, said to be pushed by FDIC chair Sheila Bair, is aimed at ending the Home Loan banks' priority status in the event of a...(read more)

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Freddie Mac: Record Low 15 Year Fixed Rate Mortgage

Jann Swanson — Thu, 19 Nov 2009 18:00:00 GMT

Posted To: MND NewsWire

The interest rate on 15-year fixed-rate mortgages (FRM) set another record low this week, according to information released this morning by Freddie Mac. The Primary Mortgage Market Survey for the week ended November 19 showed rates down across the board, with the 15 year FRM averaging 4.32 percent, the lowest rate since Freddie Mac began tracking the mortgage in 1991. Last week the 15-year averaged 4.36 percent. Fees and points were unchanged at 0.6 point. The 30-year FRM averaged 4.83 percent with 0.7 point, down from the average of 4.91 percent also with 0.7 point a week earlier. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.25 percent, a decrease of 4 basis points. Fees and points were unchanged at 0.6 point. One-year Treasury-indexed ARMs had an average rate...(read more)

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HVCC Petition Submitted; Mortgage Rates Hit Floor

Victor Burek — Thu, 19 Nov 2009 17:32:17 GMT

Posted To: Mortgage Rate Watch

Trading action in the rates market yesterday was similiar to the previous session: early morning weakness, followed by a move higher in the lunch hour, which was then lost heading into the close. News and events were fairly positive for the fixed income sector which helped spark the move higher in price, however profit takers were quick to step in and temper gains. Sounds like a lot of back and forth with no real progress in either direction right? EXACTLY! This choppy price action illustrates a market that is "range trading", which is what we have been discussing since early summer. This morning the Department of Labor released the weekly unemployment claims report, aka jobless claims. This data totals the number of Americans who filed for first time unemployment benefits in the...(read more)

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MBS MORNING: Bonds Rally Leading Indicators, Geithner, and Supply

Matthew Graham — Thu, 19 Nov 2009 16:32:00 GMT

Posted To: MBS Commentary

Thursday's tend to be data-rich and today is no exception. After the "with us as always" jobless claims at 830, a concentrated dose of data and headlines hit at 10am. In the ongoing court case of Reality v. Stable Economic Recovery , Philly Fed survey served as chief counsel for the defense, topping expectations of 12.0 with a 16.7 reading. That was up from 11.5 reading in the prior month but did little to help already plummeting stocks. Philly Fed results did, however, give pause the the rally in bonds, but after a minor retracement, the LEI reading combined with the soothing words from Timayyy to bring bonds back to their strongest points of the past 2 days. Leading indicators printed down a tenth from from the .4, and the 0.3 actual was significantly lower than the previous...(read more)

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Short Sale Basics; Global Mortgage Standards; FHA Streamlines; Lots of Investor News

Rob Chrisman — Thu, 19 Nov 2009 15:13:41 GMT

Posted To: Pipeline Press

When I talk to realtors in many parts of the nation, they admit that foreclosures and short sales continue to be a key part of the housing activity in their area. Many analysts feel that the pace of short sales is likely to increase, especially given market conditions and the opinion that short sales are an alternative to foreclosure that can benefit the borrower and the lender. The lender sees potentially lower losses on the loan, and the borrower avoids the stigma of having a foreclosure on their credit history. The government continues to use various tools, such as modifications or foreclosure moratoria (moratoriums?) to prevent more loans from entering the REO market. The short sale option is mostly offered to borrowers who are ineligible for or have failed to succeed in loan modifications...(read more)

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MBS OPEN: Range Still Containing Price Action

Adam Quinones — Thu, 19 Nov 2009 14:29:00 GMT

Posted To: MBS Commentary

Recap of Yesterday... Housing Starts fell 10.6% in October to lowest level in six months. Led by a 6.8% decline in construction of single-family dwellings and 34.6% drop in multi-family starts. Building Permits, the more important, forward looking housing market indicator, fell by 0.2%. Not too bad considering the tax credit extension was still in limbo. HERE is commentary on the data Consumer Price Index (CPI): consumer level inflation rose 0.3% in October vs. +0.2% in September. Slightly above the market's expectations. When stripping out food and energy prices, core consumer prices were 0.2% higher in October, the same increase was seen in September. Year over year, core prices are up 1.7%. Fed President Bullard, who is not currently an FOMC voter but will be next year, caused a little...(read more)

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The Day Ahead: Dollar Firms, Equities Retreat Before Jobless Claims, LEI, Philly Fed

Patrick McGee — Thu, 19 Nov 2009 13:19:17 GMT

Posted To: MND NewsWire

New 13-month peaks early in the week and now . . .hesitation. Ninety minutes before the opening bell, S&P 500 futures are off 10 points to 1,098 and Dow futures are 66 points lower at 10,338. With equities taking a dip, other assets considered risky are following suit. WTI Crude is trading 70 cents lower at $78.88 per barrel and Spot Gold is $10.87 lower at $1134.63. As President Obama warns of accumulating too much debt, he is also tapping into unused portions of the TARP funds, sending mixed messages to the market. Meanwhile, investors are concerned about the US housing market, trade relations with China, and the broad decline of the US dollar. Still, the dollar is maintaining its safe-haven status and firming against multiple currencies this morning. BMO’s Sal Guatieri notes that...(read more)

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MBS CLOSE: Bad Technical Moon On The Rise

Matthew Graham — Wed, 18 Nov 2009 23:09:00 GMT

Posted To: MBS Commentary

It hasn't received as much air time these days, but the range trade and technical price levels are still very much in play. That has to do with the slightly less paradoxical directionality these days. Markets have tended to move in the direction suggested by data to a much greater extent than the summer months that saw the release of our hit single "Day Trader's Paradise..." Mortgages started off the day significantly weaker to tsy but rallied a lot harder into the noon hour. The highs of the day coincided with the upper limit of the trend channel we've been riding all week. After bouncing shortly thereafter at 101-27, weakness ensued through the close but never managing to bring prices below this AM's lows or yesterday's lows. In fact, we're only 2 ticks off...(read more)

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MBS AFTERNOON: Testing Limits of Range

Adam Quinones — Wed, 18 Nov 2009 21:01:00 GMT

Posted To: MBS Commentary

Heeeeeeeeeading into the 5 pm marking period... The FN 4.0 is trading -0-04 at 99-09 yielding 4.084% and the FN 4.5 is bid -0-02 at 101-23 yielding 4.294%. The secondary market current coupon is 4.137%. The CC is +77/10yr TSY and +67/10yr swap. It has been a choppy day... 10s went out selling with most of the flows taking place early is the session within the 119-16 to 119-21 price range. This is where most of the trading volume was "accummulated" and "distributed". This is our 3.32 to 3.37 range. See chart below. Range intact, but we are testing it's lower limits as we head towards option expiration on Friday. Lock Bias Still On.... Anyone see the changes to THIS? Consistent with the continued evolution of the program's operation, the New York Fed will begin in...(read more)

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MBS LUNCH (alert): Major Steepening Of Yield Curve

Matthew Graham — Wed, 18 Nov 2009 18:54:00 GMT

Posted To: MBS Commentary

Rather than dismiss the trend of lower yields in tsy's as more likely to stop at 3.32, perhaps we should have focused our analysis on what yields might do on the upside! For now, however, both MBS and the 10yr movements are simple if not elegant examples of the technical levels we discussed this AM. You get resistance from the downtrend at the red circle and resistance at 101-27 at the white circle... Tsy's are worse off today... In fact, yields are approaching the unfriendly side of their trend... We watch, wait, and place bets on where the next bounce will be... I think we break upside support in 10yrs, but stay under 3.38+ support. Any takers? (just opinion, you're free to disagree) Any other bets? Oh yeah, and MBS'll probably have to follow suit to some extent meaning some...(read more)

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Mortgage Rates Hold Near Six Month Lows. Still Locking Loans

Victor Burek — Wed, 18 Nov 2009 18:29:35 GMT

Posted To: Mortgage Rate Watch

In a volatile session, mortgage rates ended yesterday's session unchanged as a small rally in benchmark Treasuries helped support the MBS market. Following weaker than expected economic data in the morning, rates rallied. However as profit taking took place later in the day, early session strength was lost and MBS prices returned to opening levels. Overall, even though prices moved about a relatively wide range, rates remained unchanged on the day. The Mortgage Bankers’ Association this morning released their weekly applications index. This data tracks the weekly change in the amount of mortgage applications at major lenders. An increasing trend is positive for the economy in two ways. First, more home purchases leads to more home construction and consumer spending as the home buyer...(read more)

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