"Eleven indicted Somali pirates dropped a bombshell in a U.S. court early this morning, revealing that their entire piracy operation is a subsidiary of Goldman Sachs. The pirates explained that the pirates forcibly attacked ships that Goldman had already shorted, and had merged their operations with Goldman in late 2008 to take advantage of the more relaxed regulations governing bankers as opposed to pirates, 'plus to get our share of the bailout money.' In the aftermath of the shocking revelations, government prosecutors were scrambling to see if they still had a case against the Somali pirates, who would now be treated as bankers in the eyes of the law."

Seriously....HERE is the story

Yesterday was quite the day for the financial markets. For an appetizer, we started with S&P cutting Greek debt to junk and downgrading Portugal too. For the salad course, US home prices slipped in February, but Consumer Confidence rose. For the main course, Goldman Sachs representatives sat in front of the Senate and fended off accusations of exploitation while the stock market went into the tank (on fears of strong reform and Greece). And then, for dessert, the $44 billion 2-yr note auction was "mediocre" - but by then it didn't matter.

All of this caused our fixed income securities, which include mortgages of course, to rally and yields to drop. 7-yr notes were up by over a point; 30-yr bonds over a point and a half. Why buy Greek debt when you can buy clean Fannie or Freddie-backed securities? Investors are worried that political pressures could block a multi-billion euro bailout of Greece. The rally caused many mortgage companies to buy back mortgage securities that were being used as hedges, and lock desks everywhere to hope that any locks taken in the last week or two will stick. The 2-year auction was adequate at best, but that didn't matter given what was going on in stocks and sovereign debt. The 10-year rallied to 3.68% (the lowest yield close in a month) but still within the 3.56-3.99% range it's been in since mid-December.

Goldman Sachs executives tried to fend off accusations they inflated the housing bubble, sold clients bad deals and made billions off the market's collapse, in a high stakes Senate hearing. Facing tough questions from a panel of Senators, the current and former employees said Goldman was managing risk on individual positions rather than making a broad bet against the future of the housing market. READ MORE

Standard & Poor's (S&P) released its S&P/Case-Shiller Home Price Index for February, and the annual rates of decline of the 10-city and 20-city composites improved in February compared to January 2010 but prices are still 30% below the July 2006 peak. In fact, for the first time since December 2006 the annual rates of change for the two composites were positive, and increased .6% from February of 2009. Analysts pointed out that where prices are still falling, the lower tier is still underperforming (i.e., the higher tier is outperforming) because credit problems still dominate.  But when the recovery kicks in, lack of readily available financing for jumbo mortgages is compressing any potential appreciation in higher-priced homes.

From Chase:

Yesterday, the U.S. House of Representatives passed the Rural Housing Preservation and Stabilization Act of 2010 (H.R. 5017).  Through this legislation, the guarantee fee in the USDA Guaranteed Rural Housing (GRH) Program may be raised to offset any need for Congressional appropriations.  Additionally, H.R. 5017 would authorize USDA Rural Development to guarantee up to $30 billion in loans in Fiscal Year 2010.  This would represent an additional $18 billion in loan making authority for the remainder of this fiscal year. Before these changes can be implemented, similar legislative action will need to occur in the U.S. Senate.

Are you more confident than you were a month ago? The Conference Board's Consumer Confidence shot up to a level of 57.9 in April, up from 52.3 (revised from 52.5), and moving to a new cyclical high. The level was pegged at "100" in 1985, and is a survey of 5,000 households.

Yesterday I mentioned some pull-through information. As it turns out, Stratmor Group, an industry consultant, noted that with the exception of 2008, the average Retail channel pull-through has been about 64% while the Broker Wholesale Channel has averaged 68% from 2003 through 2009. Pull-Through declined materially in 2008, with Retail at 51% and Broker at 57%. In other words, Stratmor's information showed that broker channel has consistently reported better pull-through than retail.

CitiMortgage's wholesale group, following HUD's final rule regarding broker approval to participate in the FHA insured loan program, reminded clients that the rule will eliminate FHA's
requirement that brokers obtain a separate approval from FHA to perform mortgage broker services on FHA insured loans. "Brokers that are currently approved and recertified by FHA for 2010 will retain that approval until December 31, 2010. CitiMortgage will continue to accept FHA registrations from these brokers. CitiMortgage is not currently accepting FHA registrations from brokers that are not approved and recertified by FHA for 2010."

CitiMortgage's correspondent group issued an extensive collection of changes and adjustments. To start with, for DU Refi Plus loans an existing borrower may be removed provided the remaining borrower(s) provide evidence that they have been making the payments on the existing mortgage from their own funds for the most recent 12 months prior to the origination of the new mortgage. (If the borrower is being removed due to death, the 12-month payment history is not required.) "Fannie Mae Special Approval" designation is being added by Citi as an eligible condo project type. Mortgages secured by units in projects with this designation must be purchased 30 days prior to the expiration date of the project's designation, and be sure to include the form. Citi has increased the allowed time span between closing and loan purchase from 60 days to 75 days. If more than 75 days, the seller must provide a new appraisal or an appraisal update (if there is a decline in the property's value, the loan is ineligible for sale to CMI).

Citi goes on to address several other topics. Self-employed borrowers' proof of the business (3^rd party verification, phone listing, etc.), borrowers being the ones to decide which debts to pay off (not the lender), rent schedules and operating income statements for investment properties, written VOD's being used to verify deposits,  wage earner borrower VOE's and their time frames, FHA loan cash out refi's, documentation requirements for construction-to-perm loans, a declining market update, a reminder that Fannie Mae will require the submission of electronic appraisal reports and their addenda in an acceptable XML format for all loans requiring an appraisal report, client administration billing, VA RESPA origination fee procedure, hazard insurance, tax return requirements for this time of year, etc., etc., etc.

ING reminded its clients of its "Chain of Title" requirements. For purchases, ING requires a 24 month chain. For refinances, 24 months is required if the current mortgage has been seasoned for less than 12 months, but a title chain is not required if the current mortgage has been seasoned for more than 12 months.

Wells Fargo's wholesale group told its broker clients that the Freddie Mac Relief Refinance Mortgage loans that have qualified using Home Value Explorer (HVE), in lieu of a full appraisal, must close prior to the expiration of the HVE findings. Wells also released a timeline for funding FHA Streamline Refinance Loans by May 26. For example, a complete credit package must be received by May 7, conditions must be received by May 14, etc. "There will be no rushes on loan revision requests - and all loan revision requests are subject to a 24-hour turn time. Loan amount adjustments of $100 or less will not be made."

A few weeks ago I mentioned the marketing book, "ROAR! Get Heard in the Sales and Marketing Jungle." It turns out that it became a best seller!!!  Obviously the author (Kevin Daum) thanks all the buyers of the book, and it became the #1 best selling sales and marketing book on Amazon and thousands of sales folks are boosting their numbers using it. He is sure to make his tattooed goal.  No wonder, it's a fun read and teaches how to identify and close the different types of buyers. The first print run with the special chapter and webinar is almost gone so you might want to pick up a copy soon.  Pick it up today at Barnes & Noble or you can order the book here http://www.bit.ly/rcroar  and check out Kevin's latest video.  It's short and funny (like Kevin).

Today the MBAA's applications for last week showed apps falling. The overall index decreased 2.9% in the week ended April 23, with the refinance measure dropping almost 9% but purchases rising 7.4% to the highest level since October (the month before the tax credit was initially due to lapse).

Later today we have a 5-yr auction, and the Fed announcement. To sum it up, don't look for any rate change in overnight rates. Instead, if it is a slow day, the bond market will pick apart the announcement for word changes. Whether it is Greece, Spain, Portugal, Abu Dhabi, Las Vegas, the commercial property market in general, foreclosures here in the US, there are a lot of problems out there, and the Fed pushing rates higher is very unlikely. The yield on the 10-yr is back up to 3.73% and mortgage prices are worse by about .125.

Two guys are sitting in a bar, with one looking very glum.

Joe asks, "What's the matter?"

The glum guy replies, "My wife walked out three days ago. Never came back. Said she was only going out for a carton of milk."

Joe says, "That's not good. How are you coping?"

The glum fellow cheers up and says, "Surprisingly OK. It's amazing how fast you get used to black coffee!"