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Latest Industry News

Treasury Auctions Done. Bonds Cautiously Resilient as Stocks Repeat History »

Posted To: MBS Commentary

Treasury just sold $29 billion 7s to a group of uninterested buyers... Auction demand as measured by the bid to cover ratio was below average. 2.78 bids were submitted for every 1 accepted by Treasury. Compare that to the ten auction average of 2.81 and the five auction average of 2.86. 25.6% of the issue was awarded at the high yield of 2.394%. This was 2.1bps above the 1pm "when issued" bid, a sign that buyers were looking to pay a little less than they did. Primary dealers took down a much greater award than usual, which explains why the high yield tailed. 48.8% of the issue and 25.1% of what they bid on. Both metrics are above average. This is not indicative of strong buyside demand. Directs were awarded 8.9% of the competitive bid. That makes them 0 for 3 this week. Indirects...(read more)

Fannie Mae Preps Investors for Reform. Book of Business Reflects Tight Credit Conditions »

Posted To: MND NewsWire

In the wake of the passage of Wall Street Reform, which many opponents have criticized Capitol Hill for failing to deal with the future of Fannie Mae and Freddie Mac, the Obama Administration is beginning to present the broad outlines of how the future of the GSEs will be determined. In a letter released Tuesday , David H. Stevens, acting commisioner of the FHA, said that the question of reforming the GSEs is "not if, but when." The Obama administration, he said, has made it clear from the beginning that the current structure of the government's role in the housing finance market is unsustainable and unacceptable, but winding down Freddie and Fannie abruptly would destabilize an already fragile housing industry and put the loans already on the books of these institutions at even...(read more)

Are HECM Regulators Acting Unethically Toward the Reverse Mortgage Program? »

Posted To: Community Commentary

I recently spoke on two interesting panels at the American Conference Institute’s two day symposium on Reverse Mortgages. The conference was held at the famed Helmsley Park Lane Hotel in the heart of Manhattan. The conference attracted a virtual who’s who in the mortgage and reverse mortgage industry. The speakers and the attendees formed an eclectic group which ranged from major law firms, title companies, quality control experts, compliance examiners, HECM counseling experts and state and federal regulators and various enforcement agencies. There was a genuine desire to understand the program so that enacted policy could be effective. On the first day of speaking, I was joined by Dave Adkins, OTS, Matthew Yoon, Esq. and Arthur Axelson, Esq. I pointed out that HERA could prevent...(read more)

Final Ruling Issued on SAFE Act; Underwriting Guideline Overlays, Adverse Market Fees and Steep LLPAs; CMBS Sales; California State of Emergency; »

Posted To: Pipeline Press

On a non-mortgage note, my son asked me, "At what age is it ok to tell a highway that it is adopted? At some point the highway will realize that it doesn't look like the Kiwanis's Club." I would have told him to "keep his day job", except he doesn't have one as he prepares for college. Lots of folks don't have jobs, as re-emphasized by this morning's Initial Jobless Claims number. One industry veteran told me, "The weekly number is just catnip for those who think the economy is limping along," and this morning's numbers came in down 11,000 to 457,000, but continuing claims climbed. Employment is still a huge issue for the economy, but the unemployment situation is certainly helping to keep rates low. We are not done with implementing the...(read more)

Vacancy Rate Near Historic High. America Has a "Home Problem" »

Posted To: MND NewsWire

As we have pointed out over the last few weeks , America has a homelessness problem; over a million individuals and families are temporarily or chronically homeless. While the statistics don't fully address this aspect, there is at least anecdotal indication that some of these people are in shelters or on the street because their own home or one they were renting was foreclosed. There is also purely anecdotal information that a lot more homeowners are hanging on by their fingernails; savings and unemployment exhausted, legal remedies gone, as lenders churn through a backlog of pending foreclosures and subsequent evictions. In other words, the problem could well get worse. It is also clear that the country is deep into what we are going to abuse poetic license to call a "home problem...(read more)

The Day Ahead: Moody's Questions U.S. Credit Rating. Bonds Shrug Off News »

Posted To: MBS Commentary

Equity futures are trading higher this morning despite word from Moody’s that it would have to question America’s triple-A credit rating unless it provides a credible plan to tackle its growing deficit. Steve Hess , a top sovereign debt analyst at Moody’s, said the U.S. appears to have “no plan” to reduce the deficit. “Can the United States do it is the big question right now and we are not sure either way,” he told Dow Jones Newswires. “We will wait and see what happens in the next couple of years on this front.” Meanwhile, economic confidence in Europe rose for a second straight month to its highest level in more than two years. The July index rose 1.3 points to 101.3. Economists at BMO said the populace may be “heartened by the...(read more)

Can Mortgage Rates Go Any Lower? »

Posted To: Mortgage Rate Watch

Well, here we are on "hump day" and mortgage rates are still detached from the price fluctuations of the secondary mortgage market. Instead, the ups and downs of consumer borrowing costs continue to be driven primarily by the capacity constraints of major lenders, the market makers for mortgage rates. One misconception is record low mortgage rates have drawn out a hoard of "fence sitting" borrowers who are bustling with excitement to refinance. Yes, media coverage of record low mortgage rates has attracted attention from some homeowners, but the crowds just don't compare to the mini-frenzy we witnessed in early 2009. This tells us the capacity constraints of major lenders are not totally due to an increase in loan applications. With the larger lenders allocating newly...(read more)

Is There Life After the Mortgage Business? »

Posted To: The Garrett Watts Report

We all know the mortgage business can be extremely profitable at times. We also know it can be disastrous at other times. Regulators and law makers have created an environment that makes us feel like a pin ball, bouncing aimlessly from one bumper to another Regardless of all these issues, most mortgage lending professionals stay in the business too long and never retire. I recently had the opportunity to talk to an “old timer”. He is in his mid-70s and still looking for an opportunity to manage/operate a company again. While his previous companies were well run and profitable, I was perplexed as to why he wished to do it all over again at the age of 75, especially in this environment. I had the opportunity to chat with a younger mortgage banker who had already sold a company, made...(read more)

FHA Ready to Reduce Seller Concessions. HUD Invites Industry Comment Before Implementation »

Posted To: MND NewsWire

HUD is preparing to implement a few new policies that will no doubt affect your pipeline/loan application process. Last week, HUD and the FHA invited public comment on three of those policy changes, which are part of FHA's strategy to "strengthen their capital reserves". The proposed changes which are either tweaks to other recent revisions or have been telegraphed by FHA and HUD in earlier Congressional testimony, notices to lenders, or press releases will: Update the combination of credit and down payment requirements for new borrowers Reduce allowable seller concessions from six to three percent. Tighten underwriting standards for manually underwritten loans FHA has been scrambling to strengthen its financial situation since an audit late in 2009 showed that the capital ratio...(read more)

Beige Book: Mixed Reads on Economy. Housing Market Definitely "Sluggish" »

Posted To: MND NewsWire

The Federal Reserve has released the Beige Book The Beige Book is a compilation of anecdotal information and data on current economic conditions across the country. The findings are NOT THE VIEWS OF FEDERAL RESERVE OFFICIALS ...instead, each Federal Reserve bank interviews key business contacts, economists, market experts, and other sources in their specific district. This report is published eight times a year. They call it the Beige Book because its Beige . This edition was prepared at the Federal Reserve Bank of St.Louis and is based on information collected on or before July 19, 2010. Below is a summary of the findings and a few excerpts on bank lending and housing. I called attention to some of the more important observations. Economic activity has continued to increase, on balance, since...(read more)