A brief history of Veteran's Day straight from the Department of Veteran's Affairs...

Veteran's Day, an act approved May 13, 1938, made the 11th of November in each year a legal holiday—a day to be dedicated to the cause of world peace and to be thereafter celebrated and known as "Armistice Day." Armistice Day was primarily a day set aside to honor veterans of World War I, but in 1954, after World War II had required the greatest mobilization of soldiers, sailors, Marines and airmen in the Nation’s history; after American forces had fought aggression in Korea, the 83rd Congress, at the urging of the veterans service organizations, amended the Act of 1938 by striking out the word "Armistice" and inserting in its place the word "Veterans." With the approval of this legislation (Public Law 380) on June 1, 1954, November 11th became a day to honor American veterans of all wars.o

The government is closed, but many businesses are open. Public schools are closed, but not many private ones. The markets are closed, but plenty of mortgage companies are underwriting loans - funders spend the day cleaning their desks and preparing for tomorrow. Overall it's a noble holiday.

With all sorts of production statistics around, yesterday I asked, "If a company like Flagstar funds a loan in its name, and then sells the loan to Chase, who receives credit for the loan?  If both receive credit, are we over-counting loan production?" The answers I received are troubling, I guess...

"Rob, the numbers are double counted. I confirmed this with the executive editor of one of the two major publications that keep track of this data." "Companies like Quicken who sell nearly 100% of its production - where is it counted? It's been explained to me that Quicken, Flagstar, etc. gets credit in the paper for new loan production - but in the end it's the GSEs, Wells, Chase, Citi, BofA etc. that holds the gold."

Lastly, "The mortgage press has butchered these numbers for years.  We refuse to participate in their surveys anymore because they do exactly what you infer.  The double and triple counting that goes on in the numbers is a joke.  An honest way to look at total originations would be to break them down by retail originations, originated by the entity only - not purchased or brokered. If the press wants to provide subsets after that, then fine, they can show correspondent or wholesale - but those are already reflected in the retail numbers above because someone originated them and either sold them to a correspondent or brokered them to a wholesaler."

Lots of folks seem to want to comment on topics like HVCC and broker compensation. Here is one way. NAMB is pushing out a "Petition to Stop the Federal Reserve Board Originator Compensation Rules". Go HERE

"All the way with the USDA!" Wholesalers are rolling out funding for the Single Family Housing Guaranteed Loan Program (USDA), now available for fiscal year 2011. The Rural Housing Service (RHS) program provides very-low, low and moderate-income rural residents with affordable housing finance options with little or no down payment. Generally borrowers may obtain a loan to purchase or do a R&T refi on an owner-occupied home that is located in a designated rural area - one that usually has a population of 10,000 or less although a community with a population of 20,000 or less can be considered "rural" if it is located outside a metropolitan statistical area (MSA). The USDA has since announced additional changes to the guarantee fee structure. Credit overlays include the guarantee fee for purchase transactions is 3.50% (increased from 2.00%), the guarantee fee for refinance transactions is 1.00% (increased from 0.50%), the minimum credit score is 620 for all borrowers, non-traditional credit is no longer allowed, and the appraisal validity period is 120 days (reduced from 180 days).

GMAC Bank alerted its correspondent clients that it is adjusting its CLTV & subordinate financing requirements given the recent FHA changes. "FHA Mortgagee Letter 2010-36 regarding the elimination of the requirement that the sum of the FHA-insured first mortgage and any non-FHA second mortgage (lien) amount, not exceed the applicable FHA statutory county loan limits for purchase and refinance transactions. Program-specific CLTV limits still apply." GMAC clients are best advised to view the actual GMAC-specific guidelines.

Uh oh. Most folks have heard of Moody's, S&P, and Fitch for bond and security ratings. But Dagong? China's Dagong Global Credit Rating group reduced its credit rating for U.S. debt from AA to A+ citing the Fed's monetary easing program. Germany, Brazil and France are also upset about the Fed's QEII program to buy $600 billion in government securities - in their view it hurts the global economy. What folks don't know is the SEC has totalled revoked their status as an official credit rating provider.

Yesterday's market was best defined as a roller coaster. Originators saw it with some investors worsening rates, and then improving prices later in the day. Jobless Claims decreased by 24k, suggesting that the labor market continues to move in the right direction, and we learned that import and export prices were about as expected as the trade deficit narrowed slightly (due to the dropping dollar pushing exports). Our debt was downgraded in China, and the 30-yr auction was messy, but eventually the official yield was set at 4.32% with the smallest bid-to-cover ratio (a measure of demand) in a year. The yield on the 10-yr hit 2.78%, then suddenly... the Fed announced its purchase program details and suddenly prices started to improve and rates dropped. 10s closed at 2.648% and current coupon MBS went out in the green.  SEE CHARTS

The Fed said it will buy $105 billion in Treasury securities tomorrow through early December. This is the first round of the Fed's $600 billion in purchases, aimed at pushing down long-term borrowing costs for consumers and businesses to jumpstart the economy. Despite the global criticism, buyers returned to the bond market, and by the end of the day the 10-yr was back down to 2.66%, almost a .5 price improvement. The seven-year note, a better proxy for mortgages, was 10/32 higher. READ MORE

MBS prices, not necessarily reflected on rate sheets, ended the day better between .125-.250 on $2.5 billion of sales. Remember that the bond market is closed today. For anyone looking at rate sheets, know that investors taking locks either sold the projected locks yesterday, and will price accordingly, or are pricing to take very few locks - they can't be hedged in the MBS market.

You can retire Down East in Maine where... 

1. You own more than four pair of gloves
2. In March your vehicle is 43% mud.
3. You got a set of new snow tires for Valentine's Day.
4. More than 1/2 the meat in your freezer is moose.
5. The universal driving directions are "you can't get theyah from heah!"