Mortgage News - Cathy & Fred Dietrich

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Mortgage News Daily
Lowest Prices Since 10am. Potential Reprices For The Worse	3/19/2010 2:18 PM
Posted To: MBS Commentary After encountering support just over 100-26, MBS 4.5's rose to 100-29 alleviating some previous risk of a reprice for the worse. But moments ago, losses superseded those previous lows by about a quarter of a tick, bringing MBS back into a range that could elicit reprices for the worse. With the 10yr yield seeming to form a double top at 3.70, it's still possible that many lenders will not reprice for the worse given the already discussed factors of it being late in the day on a Friday, but more so than last post, the risks have increased for reprices to be more than merely isolated incidents. Act accordingly, but know that if next week's bond auctions are strong, we could be right back in the mix....(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
MND WEEKLY: Recapping The Week That Was in Housing	3/19/2010 1:34 PM
Posted To: MND NewsWire I have done this once before and got great feedback. Let me know if you found this recap useful. The Federal Open Market Committee (FOMC) met for a one day meeting on Tuesday. The FOMC is the branch of the Federal Reserve that dictates domestic monetary policy. The FOMC statement held no surprises, only a few alterations were made to the text of the release. The Board reiterated that economic conditions warranted exceptionally low rates for an "extended period". There were two changes made that relate to housing. First, the Fed inserted a few words that imply there is good reason to be concerned about the health of housing, stating: " Housing starts have been flat at depressed levels ". Secondly, the verbiage referring to the MBS Purchase Program, which is scheduled to run...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Mortgage Rates End Busy Week Above Lowest Levels of Year	3/19/2010 1:24 PM
Posted To: Mortgage Rate Watch Mortgage rates backed up a few basis points yesterday after the Treasury announced the terms of next week’s auction supply. This announcement overshadowed several economic data releases that came in close to expectations. All lenders did reprice for the worse by the end of the day, this increased consumer borrowing costs anywhere from an 0.125 to a 0.25 in discount points. The best par 30 year fixed mortgage rate did hold in the 4.75% to 5.00% range after reprices though. After yesterday’s busy economic data calendar, the schedule was empty today. Reports from fellow mortgage professionals indicate lender rate sheets to be worse today. The par 30 year conventional rate mortgage has risen to the 4.875% to 5.125% range for well quailed consumers. There are still a few lenders offering...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Bonds Retreat Into The Close. Any Risk Of Reprices?	3/19/2010 1:01 PM
Posted To: MBS Commentary 4.5's now down 3 ticks on the day at 100-27 10yr Note Yield up to 3.69 from intraday range around 3.66. No confirmation from stocks as major indexes all still in the red On of those minor sell-off's that might NOT lead to a reprice for the worse (yet) Even though it's disconcerting that the current downtrend in prices is leading us back toward the worst levels of the day, there are a few considerations that make this situation not so black-and-white. First of all, it's obviously Friday afternoon, and obviously after the technical bond market close at 3pm. The market doesn't really close at 3pm of course, but some feel it might as well. 3pm is when day over day levels are marked for comparison against each other. Volume and liquidity tend to die down between 3 and 5 unless...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Fannie Mae Clarifies Timing of Delinquency Buyouts. How Does this Affect Rates?	3/19/2010 11:37 AM
Posted To: MBS Commentary Ugly AM got prettier as 4.5's made it back to unchanged at 100-31 10yr yields actually down a bp to 3.66 (were as high as 3.7 this AM) Potentially unseen lift from Fannie delinquency buyout release If trying to recover lost YSP from this AM, still safe to wait it out. Things looked pretty bad this AM as bonds opened much worse than even an extension of yesterday's weakness would suggest. Lockers rejoiced. Floaters readied their cyanide pills. But in the previous commentary, AQ discussed a chain of events starting with a stronger dollar that has resulted in MBS getting back to unchanged on the day after commodities led stocks lower. And though there is a bit of movement, we're now approaching that "out of the woods" time of day where prices will either level off as volatility...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Rates Recover as Dollar Rally Weakens Commodity Stocks	3/19/2010 9:48 AM
Posted To: MBS Commentary Rates are staging a lackluster comeback as commodities stocks battle a strong dollar. Adding some weakness is a continued lack of liquidity in the markets. Plus health care debate rages on....much uncertainty lies ahead. The dollar is rallying and energy shares are weighing down stocks. The S&P is -0.52% at 1159, but finding stable ground at 1160 support. Here is the S&P loserboard....Georgetown should be #1 on this list, but they were omitted because they are a college basketball team, not a stock. Still, I think we can make an exception. ....and 10s are feeling some bargain buying stock lever love. Back in the 24-hour sideways trend channel after a brief bump in yields. The FN 4.5 is now flat on the day at 100-31. This is a 9 tick improvement from the intraday low price print of 100...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Underwriter Compensation and Production; Mortgage Insurance Update; Fannie Mae Buyout Details	3/19/2010 8:00 AM
Posted To: Pipeline Press Yesterday I overheard a snippet of a conversation between a father and his son, with the father trying to prove a point. "Son, how old are you?" His son replied, "Eight". The father said, "When I was your age, I was nine." Who were, and probably still are, the largest mortgage lenders/investors in 2009? There were no real surprises. HERE are the rankings Yesterday I mentioned underwriter compensation and production , and perhaps was somewhat misunderstood. First, let me go on record that I have nothing against underwriters, and in fact believe that as a group they are often under-appreciated, under-paid, over-pressured, and usually taken for granted. I received a few comments that I will certainly pass along. "I have been underwriting FHA loans for over 15...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Rates Higher as Trading Session Gets Off to Slow Start	3/19/2010 6:33 AM
Posted To: MBS Commentary Good Morning. How in the world does Georgetown lose in round 1?!?!?!? They aren't the only ones heading back to class early though. 13 seed Murray State beat 4 seed Vandy. Marquette, who was a five seed, couldn't get passed no.11 Washington. Notre Dame, the six seed lost to Old Dominion. Meanwhile, Nova just barely pulled out a nail biter against Robert Morris and New Mexico, who had their second lowest point total on the season, found a way to squeak one out against 14 seed Montana. Bracketology gets interesting from here...especially with the Hoyas down and out. Did you call any of these upsets? What shocker did you forecast for day 2? The econ calendar is quiet today, making secretive tourney watching that much easier...COUGH COUGH HERE IS THE LINK COUGH COUGH Both benchmark 10s...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
The Day Ahead: Light Calendar Puts Market Focus on Politics	3/19/2010 6:27 AM
Posted To: MND NewsWire Stocks are in mixed after yesterday’s mixed session. A lack of significant data on today’s schedule implies trading could be light, but headlines should be active as former Federal Reserve chief Alan Greenspan prepares to deliver a 48-page paper entitled "The Crisis" to the Brookings Institution in Washington. According to the Financial Times, Greenspan will take issue with claims that the Fed’s interest rate slashing early in the decade caused the US housing bubble. While he will concede "that regulators underestimated the scale of the asset price bubble . . . he attributes the failing, among others, to overseas regulators, the US credit rating agencies, financial houses and mainstream economics," the FT reported. One hour before the opening bell, Dow...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Winning Streak Snaps As MBS Close At The Lows	3/18/2010 3:09 PM
Posted To: MBS Commentary Going out at lows of the day with 4.5's down 3 ticks to 101-00 10yr Tsy at high yield of day just under 3.68 Moderate gains in Dow and Nasdaq, S&P unchanged Big raft of data + Treasury Supply was just a bit too bearish for bonds today Still... Not a huge affair in terms of volume. MBS about half of normal. Kind of a medium term chart tonight but a lot going on with MBS trends, so the discussion will be almost exclusively on the top section of the following chart: Many many colors in the MBS chart, eh? Here's what they are: WHITE LINE: can either be thought of as one of two things: pretty dang close to 101-00 or an inflection point over the past two weeks. Both are accurate. It's moderately supportive vs. the pessimism that the next two sets of lines seem to suggest YELLOW LINES...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
10 Days Left in Fed's MBS Purchase Program. What is Potential for Extension?	3/18/2010 3:03 PM
Posted To: MND NewsWire The Federal Reserve reported on their weekly purchases of agency mortgage-backed securities (MBS). In the week ending March 17, 2010, the Federal Reserve purchased a gross total of $10.6 billion agency MBS. In that week the Fed sold $601 million mortgage-backeds (supported the roll), for a net total of $10.0 billion agency MBS purchases. This amount is unchanged from the previous three reporting periods. The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Lenders Reprice for the Worse. Mortgage Rates Move Higher	3/18/2010 2:40 PM
Posted To: Mortgage Rate Watch Mortgage rates moved a few basis points lower yesterday after producer price data indicated inflation is still not a market moving concern. This data came out early in the morning which allowed lenders to improve rate sheet pricing right out of the gates. After that, mortgage backed securities prices moved sideways for most of the day before closing slightly above the price which they opened. Most lenders left rate sheets unchanged on the day, at very aggressive levels. The economic calendar was packed today. First out was consumer level inflation data, the CPI. The Bureau of Labor Statistics released the Consumer Price Index at 8:30 this morning. This index measures the price change of a fixed basket of goods and services purchased by consumers, also known as inflation, the enemy of interest...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
MBS Finding Support at 101-00	3/18/2010 1:27 PM
Posted To: MBS Commentary 4.5's down 2 ticks on the day at 101-01 10yr tsy down 8 ticks, bringing yield up to 3.67 S&P down a point, Dow up just over 30 points. Current levels in bonds are at or slightly better than well tested support on the day With no data, and quadruple witching, tomorrow is uncertain. After moving weaker all day in trend channels, MBS and treasuries look to be finding some support at recent lows. Whether that's merely a stop to today's bleeding or a broader consolidation that will reverse course tomorrow remains unknown. What is known is that reprices for the worse have already happened and in some cases may still happen, but the market-based motivations for them are fading for the moment. If you didn't lock last night and find yourself floating right now, tomorrow is too uncertain...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Shortening the Short Sale Timeline: Broker Price Opinions	3/18/2010 11:52 AM
Posted To: Voice of Housing Short sales have been hampered by cycle times that can easily last months. One of the critical steps to improving adoption of this loss mitigation tool is to standardize and shorten the time from initial offer to investor acceptance. Using BPOs (Broker Price Opinions) to benchmark and vet purchase offers is a critical step that can save weeks or more from the process. Rather than a buyer submitting an offer and not knowing whether it was accepted or rejected for one or two weeks, they could have a response in just a few days . Anyone who has used or seen the evolution of BPO services over the past six to 12 months understands the comprehensive and statistical data and methodologies that are used to derive a value opinion. This month, appraiser groups told Treasury Secretary Geithner that real...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Rumors Keep Markets from Making Another Move. Rates Maintain Weakness. Reprices Possible	3/18/2010 10:43 AM
Posted To: MBS Commentary There is a fair amount of chatter in the marketplace that the Fed is planning on hiking the discount rate again. Remember the Fed bumped the discount rate on February 18, from 0.50% to 0.75%...which caused a lot of commotion in the marketplace in the day's following the announcement. If the Fed does indeed order the N.Y. desk to make this policy adjustment, it doesn't mean much fundamentally because the banking system is still super liquid/flush with excess reserves. We discussed the economics of the discount rate hike in THIS BLOG POST . Re-reading it will give you an edge when clients come calling, nervously interrogating you about how this move will affect their rate. The rumor is affecting the general sentiment of the marketplace though.... Even though the IMF is said to be standing...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Discussing the Attributes of Successful Mortgage Operation Leadership	3/18/2010 10:06 AM
Posted To: The Garrett Watts Report My partners and I have visited many mortgage companies over the past year. We perform our FOCIS audit for warehouse lenders looking to identify hidden risks and potential “tapebombs” that may result in unexpected losses. We also perform FOCIS-plus studies for management and boards of mortgage companies who are looking for ways to increase revenues, control cost and better manage risk. Both studies require us to interview the senior management team and other middle management to uncover business practices and leadership styles. One of our key findings is how the leadership and behavior of the CEO influences a company’s management style and corporate culture. Whether it is good or bad leadership, the CEO’s style influences management from the senior level to the leads...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
ALERT: Treasury Supply Announced. Benchmark Rates Rise. MBS Prices Fall Fast	3/18/2010 9:00 AM
Posted To: MBS Commentary Treasury has announced the terms of next week's government fundraiser. As expected, supply sizes were all unchanged from the previous auctions. A total of $118 billion in TSY notes will be sold. Here is the schedule: Tuesday: $44 billion 2 year notes Wednesday: $42 billion 5 year notes Thursday: $32 billion 7 year notes Settlement is March 31 Because the majority of debt supply is concentrated in the front end of the yield curve, traders have been selling the curve---aka trading the "flattener". The yield curve can flatten one of two ways: Bear or Bull A bull flattener is when yields in the long end of the curve are falling faster than yields in the front end of the yield curve. For instance if 10yr TSY note yields are falling faster than 2yr TSY notes, then the spread between...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Fannie Mae Cuts Home Sales Forecast. Reduces Origination Outlook Again	3/18/2010 8:55 AM
Posted To: MND NewsWire While investment in residential real estate still looks relatively strong for 2010 compared to 2009, the results in the first quarter have been less robust than expected according to Fannie Mae's Economics and Mortgage Market Analysis for March. The research piece opens with the following statement: "Severe weather was disruptive to economic activity during the first two months of the year. If economic fundamentals have not deteriorated , the weather impact will likely fully reverse at some point, and we expect most economic indicators affected adversely by the weather to rebound in the months ahead " But the monthly report was quick to call attention to those economic fundamentals, pointing toward a much more anemic response to the extension of the housing tax credit than expected...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
The Cost of Labor in the Mortgage Market; FHA Origination Down 10% in January; Wells to Modify 2nd Liens; Condo Questions	3/18/2010 8:20 AM
Posted To: Pipeline Press Whether it is a house, a bushel of wheat, or a share of stock---when a buyer and seller come together an item trades hands. A lower price will always benefit the buyer. Is that the case in the labor market, where buyers (employers) and sellers (employees) come together? Not necessarily, since the employee, given a low wage, will likely be less motivated to perform services. What will typically happen is employers will pay more than the base wage for a given task, and employees will often work for less than the maximum that employers will pay. Therefore the labor market is not quite like other markets. I mention this because the cost of labor in the mortgage business , whether it is for underwriters or loan agents, has always been a huge piece of the overhead pie for company owners. I have heard...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.
Consumer Level Inflation Tame in February. Emergency Jobless Benefits Hit Record High	3/18/2010 6:42 AM
Posted To: MBS Commentary Good Morning. Inflation data has hit screens. The Consumer Price Index was UNCHANGED in February (+0.0018)...this is cooler than consensus forecasts which called for a 0.1% gain. The CORE CPI print, which strips out food and energy, rose 0.1% in February---on the screws. Year over year, the consumer price index is up 2.1%, slightly below economist expectations for a read of +2.3%. Ex-food and energy, consumer price levels were up 1.3% YoY. GASOLINE was a big contributor to weakness...don't expect that category to be so helpful next month---gas prices have been on the rise lately. Housing prices were all unchanged. Overall, another round of tame inflation data. Jobless Claims data was also released. New claims fell by 5,000 to 457,000 in the week ending March 13. This is slightly worse than...(read more) Forward this article via email: Send a copy of this story to someone you know that may want to read it.