Chatter continues about Goldman Sachs executives appearing before the Senate a few days ago. There was one embarrassing moment: when the CEO of Goldman Sachs was going through security, he was asked to empty his pockets and five Republican senators fell out.
Yesterday both the bond and stock markets rebounded from moves on Tuesday. Bond prices fell, and rates slid up; the 10-yr yield, which had gone back into the 3.60% range due to the concerns over Greece, moved back into the 3.70's. Mortgage prices were worse by about .250, but fortunately "tightened" versus Treasuries so the sell-off was not as bad. (Traders reported heavy selling by originators, so locks must be picking up.) The Federal Reserve said interest rates would remain low for an extended period and pointed to signs of strength in the economy. (Are there any questions on this? I hope not - the Fed has said the same thing in the past several announcements.)
Are mortgage originators rooting for a strengthening economy or lower rates? Pick one, since the two usually don't go "hand in hand".
The Federal Reserve sounded cautiously more upbeat on the U.S. economic recovery and jobs as it renewed its promise to keep interest rates low for an "extended period." Consumer and business spending were picking up steam, and inflation is subdued. "Economic activity has continued to strengthen and ... the labor market is beginning to improve," the central bank said. They pointed out as well, however, that housing starts are still depressed and bank lending continues to contract. There was nothing mentioned about asset sales (read: $1.25 trillion of MBS' earning the Fed about 5.25% on its money). Analysts point to gains in output being linked to productivity improvements and limited job increases, the fabled "jobless recovery". READ MORE IF NEEDED
The debt crisis, which began in Greece, might affect economies across Europe and beyond. Heck, here in the US our economy is trying to do better, and if a large trading partner such as Europe slows down, it will certainly impact our economy. There are no good solutions here, only very difficult ones. In order to get financing, Greece must willingly put itself into a multi-year depression - try explaining that to any resident. Greece's economy is mostly based on tourism, and borrowing more money, when it cannot afford to pay back what it already has, will not solve the problem. Riots and going on strike don't really help, and banning short selling on its stock market for the next two months will be interesting. Money is quickly leaving Greek banks, which makes sense, as how can a bankrupt Greek government guarantee Greek bank deposits? Portugal, Spain, Ireland, etc. are watching closely.
Statistics continue to point to slower FHA and VA volumes. The volume of Ginnie mortgage-backed securities is down 46% since December. Issuance of Ginnie Mae mortgage-backed securities fell 24% to $22.8 billion in March ($22 billion SFH, $800 million of multi-family), the third month in a row of declines. Issuance of MBS backed by FHA-insured reverse mortgages totaled $751 million, down from $1.45 billion in February.
Fannie Mae announced that it has extended its seller assistance incentive on all of its real estate owned (REO) HomePath properties. This amounts to buyers receiving 3.5% of the final sales price to be used toward closing-cost assistance or their choice of selected appliances. The offer is available to any owner-occupant who closes on the purchase of a property listed on the HomePath Web site by June 30th. HomePath properties may also be eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers prospective buyers an opportunity to purchase properties with as little as 3% down. HERE is the full story.
When you bring a gal flowers, the results are usually positive - but eventually it wears off. All of the federal housing stimulus effects are significant in the scenario simulations. The fixed effect indicates that the home prices are increased by federal stimulus all else held equal, and the trend effect indicates that the positive influence has declined over time. The scenario with federal stimulus in the form of the tax credit expiring in April 2010 (as it is expected to do), shows a forecasted year-over-year decline of 4.2 percent in February 2011. If, alternatively, the tax credit is again extended (continuing federal stimulus of the housing market), the one-year forecast shows a fairly strong positive increase in the HPI of 4.1 percent. In other words, the federal housing stimulus has had a meaningful effect on home sales and prices, but that effect has exhibited diminishing returns as the time since implementation has progressed. HERE is the white paper.
Bank of America correspondents were reminded that with the RESPA rule, the VA is requiring "an Origination Statement or a breakout of the origination fees on the HUD -1, eliminating the Interest Rate and Discount Disclosure, and clarifying fees that can be charged to the veteran/borrower. This impacts all VA loans. The lender may charge the veteran an origination fee of up to 1% of the loan amount, plus reasonable discount points, as well as reasonable and customary amounts for certain itemized fees. If a 1% origination fee is not charged, the lender may assess other fees as long as the aggregate amount does not exceed 1% of the loan amount." This begins for BofA on May 1.
Chase apparently likes California enough to announce plans to add 90 bank branches this year in that state (35 in Nor Cal, 40-something in So Cal). With this comes 1,200 jobs being added to the 10,000 Chase employees already in the state and brings Chase's branch level to more than 800, plus 16 Homeownership Centers for loan counseling.
Secondary marketing folks are occasionally asked about the difference between the mortgage rate a borrower pays and the coupon yield on a Mortgage Backed Security (MBS) that an investor receives. If a borrower pays 5.25% on their loan, the investor will only receive either 4.5% or 5.00% of that, depending on whether or not the issuer buys up or buys down the guarantee fee. The reduction to 4.50 or 5.0%, which is the pass-through rate, is because the mortgage loan servicer takes a small piece of the monthly payment (in yield) for servicing the loan, and for guaranteeing the timely payment. And if the loan is put into a security, the security issuer will be compensated for underwriting, securitizing and selling this paper.
A famous Viking explorer returned home from a voyage and found his name missing from the town register. His wife insisted on complaining to the local civic official who apologized profusely saying, "I must have taken Leif off my census." (Yes, I know, keep my day job.)
The census workers that continue to be hired by the US Government has ramifications for Initial Jobless Claims, out every Thursday, and the unemployment data that is usually released on the first Friday of the month. READ MORE. Today we had Initial Claims which came in at 448,000, a drop of 11,000 from a revised 459,000. The 4-week moving average was up by 1,500 to 462,500. We also have the final leg of this week's auctions with $32 billion in 7-year notes, and some testimony from Treasury Secretary Geithner on the 2011 budget. With all of that the 10-yr yield is at 3.77% and mortgage prices are roughly unchanged.
Two women were sitting next to each other at a bar. After a while one looks at the other and says, "I can't help but think, from listening to you, that you're from Ireland."
The other woman responds proudly, "Yes, I sure am!"
The first one says, "So am I! And where about in Ireland are ya from?"
The other woman answers, "I'm from St. John's, I am."The first one responds, "So, am I!! And what street did you live on?"
The other woman says, "A lovely little area, it was in the west end. I lived on Warbury Street in the old central part of town."
The first one says, "Faith and it's a small world. So did I! So did I! And what school did ya go to?"
The other woman answers, "Well now, I went to Holy Heart of Mary, of course."
The first one gets really excited and says, "And so did I. Tell me, what year did you graduate?"
The other woman answers, "Well, now, let's see. I graduated in 1979."
The first woman exclaims, "The Good Lord must be smiling down upon us! I can hardly believe our good luck at winding up in the same pub tonight. Can you believe it; I graduated from Holy Heart of Mary in 1979 me self."
About this time, Michael walks into the bar, sits down and orders a beer.
Brian, the bartender, walks over to Michael, shaking his head and mutters, "It's going to be a long night tonight."
Michael asks, "Why do you say that, Brian?"
Brian answers, "The Murphy twins are drunk again."