According to a recent survey by the National Association of Realtors (NAR), the typical U.S. homebuyer spent less and borrowed less in 2011. NAR's annual Profile of Home Buyers and Sellers, which due to methodology tends to under-represent investors versus owner-occupied properties, reported that "first time buyers, who made up 37% of the market, down from an historic 40% share, had a median age of 31 and income of $62,400, up from $59,900 in the 2010 study.  This buyer typically bought a 1,570 square foot home for $155,000, taking on a median monthly mortgage principal and interest payment of $794. The typical repeat buyer was 53 years old, earned $96,600 (up from $87,000 reported last year) and purchased a 2,100 square foot home for $219,500 with a median payment of $1,006." Most purchased a SFR (77%), 9% a condo, 8% a town or row house and 6% some other kind of housing. The median down payment for all buyers was 11%, however for first-time buyers it was 5% and for repeat buyers 15%.  In both cases the median was a full percentage point higher than in 2010. Fifty-four percent of first-time buyers financed with a low-down payment FHA mortgage, and 6% used the VA loan program which requires no down payment."

S&P, who brought us the downgrade of the United States earlier this year (which certainly didn't move Treasury rates any higher) but who, along with the other major rating agencies at that time somehow miss-rated billions of dollars of mortgage debt, has now downgraded several banks around the world. These include the six largest U.S. banks: And folks wonder why banks are holding on to capital, and continue high documentation and strict residential mortgage underwriting guidelines?

Speaking of bank problems, under the category of "Why should BofA be all alone in dealing with problems created by previous acquisitions?" the National Credit Union Administration is suing Wells Fargo over $200 million in soured MBS's. NCUA reached a settlement over soured mortgage investments earlier this month, but it alleges that Wachovia's two capital markets businesses sold faulty mortgage-backed securities to U.S. Central Federal Credit Union and Western Corporate Federal Credit Union, both of which were liquidated in 2009.

In a comment about life in the secondary markets, an exec from the West Coast wrote, ""Rob, what am I supposed to do with my loans? Does Wells Fargo have any competition? Citi, Chase, and GMAC all have one foot on a banana peel and my staff in Secondary is always waiting for another shoe to drop. SunTrust, Flagstar, US Bank, Franklin American, PHH, BB&T, Affiliated, and so on wouldn't know an AOT or a bulk mandatory if it came up and slapped them on the "rump" and called them Shirley. It costs a large amount of capital to sell loans to Fannie or Freddie. This is my nightmare scenario - wake me up when it is over." (Hey, not my quote!)

Well, as it turns out, lots of originators out there have applications in with Fannie & Freddie, both of whom are busy dealing with HARP questions. And of course it is necessary for borrowers, and/or their LO's, to figure out if Freddie or Fannie actually own or guarantee their mortgage if they have any hope for HARP. The sites & phone numbers are, for Fannie, or 800-372-6643, and for Freddie, or 800-373-3343. And remember that not only do primary residences qualify, but also investment properties and second homes do as well.

Turning to another government agency, "they" say a series of rule revisions by the FHA has caused thousands of condo projects to become ineligible for FHA mortgages. This, in turn, has abruptly shut off loan money for would-be condo buyers and refinancers, forcing them to pursue conventional bank loans requiring much higher down payments (20% versus 3.5%):

Regarding the news out of Washington, I received this note from Idaho: "Replacing Barney Frank with Maxine Waters? Be careful what you wish for! Maxine has shown little or no empathy for banks or financial institutions, and, in fact, according to people I know who have met her, is openly disdainful of 'bankers.' And Barney is not to blame for everything that happened:"

The MBA offers all kinds of classes for originators, whether it is increasing one's production or using social media. There usually is a cost, less for members of the MBA than for non-members, but heck, if it helps an LO close an extra loan it's more than worth it. Start at:

Turning to lender/investor news, HSOA spread the word to brokers that "USDA Purchase transactions may close; refinances remain on hold...While the appropriations budget was passed on 11/18 and signed by the president for FY 2012, the next step is for the Budget office to allocate the program funds to the USDA. This usually takes a few weeks. In the interim, USDA has unused funding authorizations available for purchase transactions, but not for refinances."

PHH came out with a first round of HARP updates. It is fairly extensive, but some changes roll into place tomorrow. Both the FNMA DU REFI PLUS program and FHLMC RELIEF REFI programs have been extended until December 31, 2013.  It "expanded the list of acceptable borrower benefits to include a reduction to the monthly P&I payment liabilities - The overlay for the maximum number of mortgage delinquencies has been removed for new registrations. LP will assess mortgage payment history to determine eligibility for the FHLMC Relief Refinance..."

"Systems will not be updated to support the use of the mortgage proceeds guidelines until a future release. In the interim, loans will need to be manually conditioned to reflect the correct terms based on the LTV."

Where do the experts think home values are heading? "Nobody should be surprised by further home value losses in the remaining balance of this year and into next year," said Zillow Chief Economist Stan Humphries. "Despite record high affordability of real estate, the psychology of home buyers is still being weighted down by economic uncertainty, keeping them on the fence when it comes to buying homes. Moreover, we do expect foreclosure liquidation rates to increase in the coming months as banks try to unload their backlog of foreclosures accumulated in the post robo-signing period. This will also put downward pressure on home values. The good news is that we expect these remaining home value losses to be relatively minor in comparison to the declines from the market peak to current levels."

This was supported by, or was said to support, the S&P/Case-Shiller index of property values that came out yesterday showing that values in 20 cities dropped 3.6% in September from the same month in 2010 after decreasing 3.8% in the year ended August. On the flip side, the FHFA's House Price Index increased 0.2% in Q3 from Q2; year over year prices were off 3.7%. For the month of September, however, prices increased 0.9% from August from a downwardly revised -0.2% that was previously reported at -0.1%. Consumer Confidence jumped to "56" from a revised 40.9 reading in October, the biggest monthly gain in eight years as people grew more upbeat about employment and income prospects. And headlines blared, "Treasuries Fall on Speculation ECB, IMF Will Move to Support Italian Debt" which pushed the 10-year T-note yield higher for a third straight day - it closed at 1.99% Tuesday. But MBS prices closed higher (improved) on the strong demand.

Today we have already had a large amount of news, scheduled and unscheduled. The MBA reported that last week's applications dropped for the third week in a row. Apps dropped nearly 12% - but don't forget that it was a holiday week. Refinancing applications dropped 15%, the biggest decrease in more than a month per the MBA, and purchases were down about 1%. And the refinance share of total mortgage activity eased to about 74%, down from 76% the prior week.

The final Q3 reading for Productivity and Unit Labor Costs was reported (+2.3% and -2.5% respectively) and the ADP private employment numbers came in much stronger than expected, +206k with job gains across most sectors. Today we also have the Chicago PMI (Nov), which is projected unchanged at 58.4, the Pending Home Sales Index (Oct), and the Fed release of its Beige Book with economic anecdotes from the 12 Districts in preparation for the December 13 FOMC meeting. But what is really pushing the markets today is the news that the Fed and world banks announcing measures to boost liquidity in order to "ease" situation in Europe. The 10-yr is up to 2.07% and MBS prices are worse by roughly .250.  - MBS Prices

Who was the first person to look at a cow and say, 'I think I'll squeeze these dangly things and drink whatever comes out'?
If Jimmy cracks corn and no one cares, why is there a song about him?
Why does your OB-GYN leave the room while you get undressed as if they are not going to look up there anyway?
If quizzes are quizzical, what are tests?
If corn oil is made from corn, and vegetable oil is made from vegetables, then what is baby oil made from?
Do illiterate people get the full effect of Alphabet Soup?
Does pushing the elevator button more than once make it arrive faster?
Why doesn't glue stick to the inside of the bottle?
Do you ever wonder why you gave me your email address?

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at . The current blog reminds everyone about how government intervention in the housing market is nothing new. If we forget history, we are doomed to repeat it, and it is important to know the last 15 years of the history of the agencies. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.