Mortgage Minute with Jeff Fink: March 2009

Tuesday, March 31, 2009

Monday, March 30, 2009

Thursday, March 26, 2009

Mortgage Market Minute: MBS spreads are tighter this morning, as traders watch for the results of the 1pm Treasury auction ($24B in 7-year notes). The FNMA 4.5% is up +.125 to 101.81, the 5.0% up +.03 to 102.78, and the 5.5% is up +.09 to 103.53. The 10-year is flat at 99-20/32, the yield 2.79%. Stocks are up in choppy trading, but are continuing their impressive run. Predictably, relatively low yields on Treasuries are finally encouraging investors to look to the stock market. The earnings yield on stocks, which stands at about 5.6% (measured as the reciprocal of a stock's price-to-earnings ratio), serves as a good guide to stocks' relative attractiveness to bonds – and 5.6% looks great compared to the 2.8% that the benchmark 10-year bond is yielding, even risk-adjusted. On the flip side, low Treasury yields could actually damage the U.S. stock market, since all U.S. assets look weak in the eyes of foreign investors, leading to a decline in the dollar and corporate profits. Either way, all this debt hitting the market looks dangerous. What to do? Lock these great mortgage rates now, people!Oops I did it again! Geithner at the center of another tempest.The U.S. Dollar went into a tailspin on Wednesday when “Turbo Tax” Tim Geithner reportedly said before the Council on Foreign Relations that he was “open” to rethinking the U.S.-dollar-based global reserve currency system. Geithner was responding to Zhou Xiaochuan, the governor of the People's Bank of China, who wrote an essay last week suggesting a shift to a basket of major currencies instead of the U.S. dollar. The shocking comment sent waves through the financial system, and caused the U.S. Dollar to fall more than 1% on key exchanges. Later the dollar recovered when Geithner’s somewhat ambiguous comments were clarified to state that he believed any suggestion from Zhou “deserves consideration.” In the essay, which Geithner admitted to not even having read, Zhou said it might make sense to use the IMF's special drawing rights (SDR), which include the dollar, euro, pound sterling and yen. China holds more U.S. Treasury bonds than any other country, and traders are concerned that mountains of U.S. debt will damage the Dollar. Geithner’s comments contradicted those of President Obama who said on Tuesday that the dollar is “extraordinarily strong” and there is no need for a global currency. "It was clumsy and mishandled," said David Watt, senior currency strategist at RBC Capital Markets. "The initial interpretation was not necessarily correct but on the other hand, Geithner's comment was wholly poorly advised. He should be able to see a minefield and avoid it." Further, Watt said the Treasury Secretary, who is responsible for the dollar, should never have admitted to not reading a widely-discussed essay.
Fourth quarter GDP off -6.3%.The Commerce Department said today that the U.S. GDP contracted at a -6.3% annual rate in the fourth quarter of 2008, the weakest since 1982. Profits dropped -16.5% percent from the prior quarter, the most since 1953. The data matches up with the very high rate of first time jobless claims seen throughout the period. “It’s a pretty dismal result,” said Michael Gregory, a senior economist at BMO Capital Markets in Toronto. “Given the slight improvement we’re seeing in some of the recent indicators, I suspect the first quarter will be a little better than the fourth.” The drop in GDP was larger than the -6.2% percent decline estimated by the Commerce Department last month. The consumer spending component, which accounts for about 70 percent of the economy, fell at a -4.3% pace last quarter, marking the first back-to-back decreases in excess of 3% since record-keeping began in 1947. The final third-quarter GDP figure was also released, showing that the U.S. economy shrank at a -0.5% annual rate from July through September. This means that throughout all of 2008, the economy grew just +1.1%, as exports and Bush-administration tax rebates in the first six months helped offset the slump in consumer spending that followed. Jobless claims surpass 600,000 mark for eighth straight week.The Labor Department reported that initial claims for jobless benefits last week rose +8,000 to 652,000, surpassing the 600,000 level for an eighth straight week. Total benefit rolls jumped by +122,000 in the week ended March 14, jumping from 5.44 million the previous week to 5.56 million this week, as job cuts spread from manufacturers and construction companies to services such as government agencies and health-care providers. “We’ve still got big job losses happening but we don’t think it’s accelerating,” said Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “These continuing claims are rising to record highs because people, once they file claims, are unable to find another job.” The unemployment rate stood at 8.1% in February, and economists think it may rise to as high as 9.4% percent by the end of the year.On today’s date: March 26…1872: A 7.8 earthquake shakes Owens Valley, California 1942: First 700 Jews from Polish Lvov-district reach concentration camp Belzec1945: Generals Eisenhower, Bradley, and Patton attack at Remagen on the Rhine1953: Dr. Jonas Salk announces vaccine to prevent polio1970: Golden Gate Park Conservatory made city landmark1979: Camp David peace treaty between Israel and Egypt1982: Ground-breaking in Washington, D.C. for Vietnam Veterans Memorial
The last word:“Character, in the long run, is the decisive factor in the life of an individual and of nations alike.” --Theodore Roosevelt

Monday, March 23, 2009

News for March 22nd 2009

Mortgage Market Minute: At mid-day the MBS market is flat-ish with the FNMA 4.5% is flat at 102.03, the 5.0% is up a tick at 103.00, and the 5.5% is up a tick at 103.56. Stocks are up hugely on the great Existing Home Sales data (although it was driven by foreclosure sales, which must mean we’ll take any good news there is, even if it is “bad” good news). Treasuries are flat, with the 10-year at 100-31/32, the yield at 2.63%. Tuesday we get a 2-Yr US Treasury Note Auction. Wednesday we get Durable Goods (expect -2.0% vs -5.2% in February), New Home Sales (expect 315,000 after last months record low 309,000) and a 5-Yr US Treasury Note Auction. Thursday we get the GDP figure for Q1 (expect -6.6% after last quarter’s -6.2%) and Jobless Claims (expect 650K versus last week’s 646K). Friday we get Personal Income and Outlays (expect income -0.2% after last month’s +0.4%, and consumer spending +0.3% after last month’s +0.6%), Personal Consumption Expenditure report (expect +0.2%, last month +0.1%), and Consumer Sentiment (expect 56.7 after last month’s 56.6).Existing home sales up strongly.The National Association of Realtors reported this morning that existing home sales grew +5.1% from 4.49 million in January to 4.72 million in February, versus an expected -0.9% decline, and following January’s -5.3% decline. Sales of single-family homes rose +4.4% (versus -4.7% in January), while sales of condos and other multiple-family units climbed +11.4% (versus -10.2% in January). The average price of a single-family home in February was $209,600, slumping -15.5% versus a year ago, the second-biggest drop on record, with distressed properties accounting for 45% of all sales. “The decline in home prices and presence of deeply discounted foreclosures has increased affordability and enticed bargain hunters,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “However, rising unemployment, depressed confidence and expectations of home-price depreciation serve as powerful offsets.”
Administration unveils details of $1T plan to buy up toxic bank assets.The administration today revealed details of its long-awaited plan to purchase toxic bank assets in order to revive a stalled lending system. The plan will target up to $1 trillion in purchases of illiquid real-estate assets, using $75 billion to $100 billion of the Treasury’s remaining bank-rescue funds. The Public-Private Investment Program will also rely on Federal Reserve financing and FDIC debt guarantees, the Treasury said in a statement in Washington. The program depends on private investors stepping up, officials still have to pick private asset managers, and banks have yet to commit to selling their illiquid investments. That means it could take weeks to determine the plan’s effectiveness. “The big question is what is the incentive for the banks to sell?” said Dino Kos, managing director at Portales Partners LLC in New York and former executive vice president at the New York Fed. “What is the incentive for a hedge fund to pay a price close to where the banks have it marked at?” Half of the Treasury’s funds will go to a FDIC-run “Legacy Loans Program” that will be overseen by the FDIC with the FDIC guaranteeing financing for the investors, and auctioning the pools of loans. The second half of the Treasury’s contribution will go to the “Legacy Securities Program,” which will attempt to generate prices for securities backed by mortgages that are no longer traded because investors have little confidence about the underlying value of the home loans. The announcement provides details on an initial strategy laid out by Geithner last month, which caused a slump in stocks because it lacked an explanation of how the effort would work. The S&P 500 index is still down about 10% since Geithner’s Feb. 10 outline.Commercial real estate – the next shoe is dropping.Banks must now weather increasing loan delinquencies from owners of skyscrapers and shopping malls, as businesses close and employees are laid off. The country’s 10 biggest banks have $327.6 billion in commercial mortgages, where a projected tripling in the default rate would result in losses of about 7% percent of total unpaid balances, according to estimates from analysts at research firm Reis Inc. Commercial property prices are down almost 20% in the past year, and there is “significant stress” in the market, according to William Schwartz, a credit analyst at DBRS Inc. in New York. Bank of Hawaii Corp., City National Corp., Comerica Inc. and Sovereign Bancorp Inc. were among the companies put on Moody’s list of lenders with a “negative outlook” on March 12, partly because of their “risk concentrations” in the commercial market. Wells Fargo & Co. and Bank of America Corp. account for about half of commercial mortgages owned by the 10 largest banks, company reports show.

On today’s date: March 23…1912: Dixie Cup invented 1922: 1st airplane lands at the U.S. Capitol in Washington, D.C.1934: U.S. Congress accepts Philippines independence in 19451943: German counter attack on U.S. lines in Tunisia 1972: Evil Knievel breaks 93 bones after successfully clearing 35 cars2001: Russian Mir space station is crashed into the Pacific during a controlled re-entry

RATES & INFO FOR MARCH 22nd 2009

Friday, March 20, 2009

News for March 20th 2009

Mortgage Rates and Warehouse Lending: The Shoe is Dropping
Posted By: Diana Olick
Topics:Barack Obama Timothy Geithner Interest Rates Housing Real Estate
Sectors:Financial Services Construction and Materials
Companies:Fannie Mae Freddie Mac
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As you might expect, the announcement that the Federal Reserve would buy $750 billiion more of Fannie and Freddie mortgage backed securities sent mortgage rates lower immediately.
Zillow Mortgage Marketplace reports that overnight rates fell well over a quarter percentage point. But there is a big barrier standing in the way of even bigger rate drops, and that is warehouse lending. Ok, what is that?
While you hear so much about the big banks like Bank of America and JP Morgan working to offer more loans, the fact is that 40 percent of the residential mortgage market is made up of non-depository lenders. These are mortgage lenders that aren't traditional banks. They tend to be more local, like First Savings of Virginia.
Anyway, these lenders rely on warehouse lending to get the cash they use to give you a loan. Warehouse lenders are large banks or commercial banks.
Here's the problem, explained by Glen Corso of the Warehouse Lending Project.
Over the past several years we've had a reduction of about 90% in the amount of warehouse credit that's available, so that reduction in warehouse credit is coming at the same time that there's a big surge in application volume, and these nondepository lenders are struggling to make the loans that people are seeking from them in order to refinance their mortgages.
Fed's Move: What It Means For Investors and Markets
Last week a big warehouse lender, PNC'S National City, said it would get out of the warehouse lending business, so did Guaranty Bank, the nation's third largest lender. Remember, these banks need the cash to make the loans before they ever sell them to Fannie and Freddie.
"Until you address this issue there's going to be a big gap between the Fed and driving rates down in the capital markets for mortgages and what the borrower on the street sees as the mortgage rate that comes to them," says Corso. It really flies in the face of everything the Obama administration is trying to to stabilize the housing market.
And just to put it in perspective, warehouse lenders make up 40 percent of the mortgage market, but they make up 55 percent of the FHA market, which is the only game in town for lower income borrowers with greater risk. FHA used to make up 3 percent of all loans, but now, with the death of the subprime lending industry, it makes up about 1/3 of all new loans.
If non-depository lenders can't make loans, then the rest of the industry has to eat up 40% more -- and given the surge in refi applications, thanks to the new low rates, they are struggling to handle it all. Plus, if the big banks get all the business, then what is their incentive to keep rates low? I posed that question to Barbara Desoer over at Bank of America Mortgage.
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“The benefits of the government actions to date have led to this favorable rate environment, and consumers are benefiting from those actions ... we anticipate further rate improvements as we and other lenders are positioned to drive aggressive pricing strategies to gain share and generate profitable revenue growth.”
Okay, fair enough. But the Mortgage Bankers Association sent me a letter that they sent to Treasury Secretary Geithner a few weeks back, asking for a short-term federal guarantee of warehouse lines that are collateralized by Fannie and Freddie and FHA. "This assistance is urgently needed to maintain the mortgage funding structure borrowers depend upon, especially borrowers who rely on independent, non-depository lenders."
I'm told a few lenders did get a meeting with Treasury senior staff as well as FHFA Director James Lockhart, but so far no movement. Oh, and Colonial BancGroup of Alabama, the nation's largest warehouse lender as of Dec. 31, 2008 requested funds from the TARP. Stay tuned.

Jeff Fink

LA Mortgage Inc.
15300 Ventura Bl. #101
Sherman Oaks,CA 91405
818-723 1638

Rates and info for March 20th 2009

Thursday, March 19, 2009

Low rates are they here to stay

Here's what you need to know about the Fed's surprise attack on the housing crisis.
And you thought 5 percent was a good rate? After already bringing mortgage rates down near 50-year lows, Fed Chief Ben Bernanke unleashed a surprise attack on the housing slump Wednesday by announcing aggressive steps that should make home loans even more attractive. Lower rates, of course, can help push timid buyers off the sidelines so they can mop up the excess inventory that's been driving down home prices. "This is a huge step forward," Ian Shepherdson of High Frequency Economics, wrote in a report shortly after the announcement.
Here's what you need to know about the development:
1. What is the Fed doing? With the federal funds target rate--which is the Fed's conventional monetary policy weapon--already down to as low as zero percent, Bernanke has been forced to get more creative in his efforts to resolve the economic mess. To that end, the Fed announced two key steps Wednesday that should drive mortgage rates lower.
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2. Fannie Mae and Freddie Mac assets: The Fed unveiled plans to buy up to an additional $750 billion of mortgage-backed securities backed by government-controlled entities such as Fannie Mae and Freddie Mac, on top of the $500 billion it already committed to purchasing. At the same time, the agency said it would as much as double--to up to $200 billion--its purchase of Fannie and Freddie debt. The moves will help to reduce Fannie and Freddie's financing costs, which should enable them to pass savings on to consumers in the form of lower interest rates. Today's announcement represents a significant expansion of the initial initiative announced last fall, which drove mortgage rates from 6.2 percent in mid-November to 5.2 percent in the week ending March 13, according to HSH.com.
3. Long term Treasury bonds: Meanwhile, the Fed said it would buy up to $300 billion in long-term Treasury bonds over the next six months. The announcement has already helped push yields on 10-year Treasury notes--which play a key role in mortgage rates--down sharply. This could also help lower mortgage rates.
4. How low will mortgage rates go? Nigel Gault, chief U.S. economist for IHS Global Insight, says 30-year fixed mortgage rates could drop to as low as 4.5 percent. But Keith Gumbinger of HSH.com, expects a more modest decline of between a quarter and a half of a percentage point from current levels. "I don't think we are going to have a plummet, but I do think it helps to support some downward pressure on rates," Gumbinger says.
5. So what does this mean for the housing market as a whole? Before today's developments, lower mortgage rates have benefited those looking to refinance more so than home buyers, said Guy Cecala, the publisher of Inside Mortgage Finance, in an interview that took place before the announcement. Cecala said that in the fourth quarter of 2008, 51 percent of mortgage originations were for loan refinancing, while 49 percent went toward home purchases. And although it hasn't closed yet, "there is no question [the refinancing share of mortgage originations] is going to be up near 60 percent for the first quarter," Cecala said.
Today's Fed move should further boost refinancing activity. "It's a huge positive for refinancing, because it means that everyone who hasn't done it is going to come in and do it," Gault says. But its impact on the housing market will be less profound, says Richard Moody of Mission Residential. It will help "very little," he says. That's because "the overriding factor [in the housing slump] is the labor market, and consumer confidence," he says. Even with lower mortgage rates, housing won't rebound without improvement on these fronts--and Moody doesn't expect that to occur anytime soon. "You can't make the argument that mortgage rates have been the impediment to home sales over the past several months," he says.
6. How can I qualify for these low rates? As banks jack up their lending standards in the face of higher delinquencies, not all borrowers will be able to get their hands on today's lowest cost of financing. To do so, most home buyers will need to have a FICO score of roughly 720 or higher, a down payment of at least 3.5 percent--although it could be significantly higher in certain markets--and documented income verification. To refinance, borrowers will need to meet similar credit score and income documentation requirements and have minimum of 10 percent equity in their homes, Moody says.
7. What does that mean for me? Should I refinance now or hold off for a better rate? With rates poised to drop to even more attractive levels, fixed rate borrowers that meet the credit requirements should certainly consider refinancing now. (Refinancing, however, only make sense for borrowers who can obtain a large enough break in their interest rate to compensate for the fees associated with the process.) But since rates are expected to remain attractive for some time, there's no pressure to refinance immediately. Still, Moody points out that with home prices on the decline, borrowers who wait too long to refinance could find that they no longer have enough equity in their home to qualify. So you may be better off getting the process started sooner rather than later.
Likewise, homeowners with adjustable rate loans--who have likely seen their interest rate fall recently--should not feel compelled to act this very second. "There is not a gun to your head," Gumbinger says. However, borrowers with these products should keep close tabs on the market and look for an opportunity--perhaps now, perhaps in the coming months--to get into a more conservative, fixed-rate mortgage while rates remain low. "Do yourself a favor and prevent future disaster," Gumbinger says.

Rates and news for March 19th 2009

Wednesday, March 18, 2009

RATES & INFO FOR MARCH 18th 2009

Wednesday, March 11, 2009

News for March 11th 2009

Mortgage Market Minute: MBS have opened slightly stronger with the FNMA 4.5% flat at 100.66, the 5.0% up +.06 to 102.00 and the 5.5% up +.09 to 102.72. Treasuries have sunk on strong supply, with the 10-year down -2/32 to 97-24/32, with the yield at 3.01%, up +0.01%. We saw some asset reallocation yesterday with stocks setting a record gain, the best day of the year, and that may continue today as the market for equities continues to post gains this morning. Yesterday’s record-setting auction of $34B in 3-year notes saw healthy demand, according to the Treasury Department. Today we get a $18B auction of 10-year notes, and Thursday we’ll see a sale of $11B in 30-year notes. Bondholders may also be responding to the Bernanke's remarks that he is more concerned about inflation than deflation, despite fears from economists about deflation driven by poor global demand and massive job losses. Perhaps that has something to do with the government’s plans to issue $4T in new debt over the next two years to pay for stimulus and bailout packages. Weekly mortgage apps increase, rates down nearly 20bps.Weekly mortgage applications rose by +11.3% in the week ending March 6, compared to the previous week’s -12.6% decline, according to the Mortgage Bankers' Association (MBA) today. The fixed-rate mortgages applications rose by +11.3%, after a decline of -12.9% in the previous week. ARM applications increased by +14.4% compared to an increase of +2.7% in the prior week. The average loan size was $220,400, compared to previous week's $222,500. The average interest rate on a 30-year fixed fell from 5.14% to 4.96%.Stocks jump on welcome profit news from Citi.Pacific Investment Management Co. (Pimco) which runs the world’s biggest bond fund, warned that inflation will take the stage in the near future. Pimco joined investors Warren Buffett and Marc Faber in its recent comments on the topic, which is a warning bell for Treasury investors. Pimco said that the government’s spending efforts will increase costs for goods and services as soon as 2010, Pimco said in a report today on its Web site. Delays in commodity production will force prices higher in the next phase of economic activity, as global growth begins to resume. Pimco is among a growing list of investors who are warning that programs to counter the U.S. slump will increase consumer prices as the economy starts to revive. Investor Jim Rogers, author of the books “Hot Commodities” and “Adventure Capitalist,” said this week U.S. policies will hurt conventional Treasuries, those that don’t offer inflation protection. Mortgage-backed securities prices tend to follow those of Treasuries, and mortgage rates move inversely with MBS prices. On today’s date: March 11…1918: Save the Redwoods League founded1974: Mount Etna in Sicily erupted1982: Menachem Begin and Anwar Sadat sign peace treaty in Washington D.C.1997: Ashes of Star Trek creator, Gene Roddenberry are launched into space1997: Beatle McCartney knighted Sir Paul by Queen

Tuesday, March 10, 2009

Rates for March 10th 2009

Monday, March 9, 2009

RATES & INFO FOR MARCH 9th 2009

LA MORTGAGE INC. a Rodeo Realty company
15300 Ventura Bl. #101 Sherman Oaks, CA 91403
Jeffrey Fink Email: jefffink@lamortg.com
Mobile: 818-723-1638 Office: 818-986-7300 ext 120 Fax: 818-986-1066
CONFORMING, JUMBO,BRIDGE AND REHAB LOANS

Conforming Limits: $100,000 to $417,000 March 9, 2009
Rates
5.25% 30-Year Fixed

HIGH CONFORMING

Conforming: $417,001-$625,500
Rate: 5.625% 30 Year Fixed
Rate
JUMBO LOANS

LOAN AMOUNTS $625,501-$10,000,000
5 Year Fixed 5.75 %
10 Year Fixed 6.25%
Interest only available

FHA LOANS LOAN AMOUNTS TO 96.5% LOAN TO VALUE30

30 Year Fixed $100,000-$ 362,000 5.0 %

$ 362,500 -625,500 5.5%

Rates are based on a 1- 1.5 point origination and are subject to fico scores, loan to values and dwelling type and occupant status rates can change without notice. Rates are constantly changing so call me for updates

There are a lot of changes taking place every day and clients have a lot of questions so please do not hesitate to have your clients call me.

Remember that LA Mortgage is a mortgage broker and we do refinancing as well as purchase money loans.

Stable Market Changes:
LTVs > 90%: Eliminated. New maximum LTV is 90%
LTVs > 80%:
Minimum Credit Score: Increased from 620 to 700
Max DTI: Maximum DTI of 41%, regardless of AUS decision
Tradelines: Minimum 3 tradelines required
Payment History: Minimum payment history 0 x 30 x 12 required
Reserves: Minimum 2 months reserves required, regardless of AUS decision
Pay off of Subordinate Liens: Will now be considered cash-out and will not be allowed for LTVs > 80%
Second Home: Maximum LTV lowered from 90% to 80%
Cash-Out: Maximum LTV lowered from 85% to 80%
Non-Conforming: Maximum LTV lowered from 90% to 80%
Soft Markets Changes:
LTVs > 80%:
Min Credit Score: Increased from 680 to 720
Condos: Maximum LTV lowered from 95% to 85%
Interest-Only: Maximum LTV lowered from 90% to 80%

Thursday, March 5, 2009

RATES & INFO FOR March 5th 2009

Mortgage rescue plan 2009

guidelines for the up to 9 million struggling homeowners who could be helped run 17 pages, and some details for lenders are still being worked out. But the programs are now in place.
Figuring out whether you can use them is not all that easy. So to help threatened homeowners figure out if there's a deal here for them, the Daily News breaks it down.
The two rescue plans are:
The Home Affordable Refinance program, aimed at up to 5 million people who can't refinance at lower rates because their home values have been hammered in the downturn.
The Home Affordable Modification Program, a more complicated effort aimed at up to 4 million people facing hard times who are in danger of slipping into foreclosure.
Here's how they work:
Eligibility for either program
The owner must live in the home.
The loan can't be in default already.
It must be held or secured by Fannie Mae or Freddie Mac.
To find out if one of those mortgage giants has your loan, call the company that services your loan or Fannie Mae or Freddie Mac (see box inset for contact information.)
The next step
If you have a government-backed loan, you need to figure out if either program works for you, and then call your lender and tell them you want to take advantage of Uncle Sam's help.
The refinancing program
There are nearly 200,000 homes in New York state that may fit in this category.
To refinance, the value of a home has to have slipped below the 20% equity required by standard home loans - but not so far that it is deep "underwater."
For instance, if you bought a $400,000 home with a traditional 20% downpayment and took out a $320,000 mortgage, you could refinance with federal help if your home is now valued at under $400,000. In that case, the loan would be worth more than 80% of the home's value.
But, you're blocked out of the program if the house's value has fallen so low that the mortgage is worth 105% or more of the home itself. In this example, with a $320,000 mortgage, that would be a home value that has dropped to $304,000 or lower. So if the market value of your home is between 80% and 105% of your mortgage, you can qualify.
After that, you have to prove to your lender that you can still afford the new mortgage.
The loan modification program
If your home is deep underwater, or you're in danger of foreclosure and you have fallen on hard times, this is the program for you. Its basic requirements:
The unpaid balance on the first mortgage must be under $729,750 for single-family units. Limits are higher for two- to four-family homes.
The loan must be originated before this year.
The borrowers' housing costs must exceed 31% of their income.
Borrowers must have suffered a "significant" change in income or expenses, such as losing a job, falling ill or seeing their mortgage interest rate skyrocket.
The goal is to get housing costs down to 31% of income. If someone qualifies, the feds sweeten the deal by paying down up to $5,000 in principal over five years to encourage the borrower to meet their payments.
Other conditions
If a borrower's entire debt exceeds 55% of income, they must get housing counseling.
If a lender can do better selling the home at foreclosure, the borrower may be shut out.
Borrowers may have to pay various fees.
Plans for second mortgages are not yet resolved

Tuesday, March 3, 2009

News for March 3rd 2009

Mortgage Market Minute: The market is trading up this morning with the FNMA 4.5% at 100.54, up +.09, the 5.0% MBS is at 101.94, up +.09 as well. The 5.5% MBS is at 102.72, up +.125. It’s a light day for news, with only Pending Home Sales (down surprisingly far) and some comments from Bernanke, neither of which should move markets dramatically. Tomorrow we are supposed to get details on the Obama Administration’s Homeowner Affordability and Stabilization Plan. So far, the Administration has regularly been short on detail, long on rhetoric, so we hope that it isn’t more of the same - - so do the markets. Later in the week we get more on (un)employment, which should be the real mover. Pending home sales fall 7.7%. NAR says home affordability highest since 1970.Pending home sales slid more than expected, according to the latest report from the National Association of Realtors this morning. After showing an unexpected rebound in. December of +4.8% (adjusted downward from 6.3%), January’s numbers showed that pending home sales fell -7.7%, far more than the -3.5% decline that was expected. The Pending Home Sales Index, based on contracts signed in January, was pegged at 80.4, the lowest since the NAR started the series in 2001. Existing home sales in January fell -5.3%, versus the +1.1% increase that was expected. The data is consistent with other reports which show new home sales falling -10.2% in January versus an expected -2.1% drop. “Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales," said Lawrence Yun, NAR chief economist. The NAR's housing affordability index surged 13.6 percentage points in January to 166.8, the highest since tracking began in 1970. "We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions and from the $8,000 first-time buyer tax credit."Fed will launch TALF on March 25 to jump-start securitization market. The Federal Reserve has says it will launch the Term Asset Backed Securities Facility (TALF) on March 25, a program which will provide up to $200 billion to investors owning AAA-rated ABS backed securities in a bid to improve terms in lending to consumers and small businesses and ultimately spur up to $1 trillion in lending. The operation, which the Fed says it hopes will "catalyze the securitization market", will be made on a monthly basis, and will extend until at least December 2009, after which the program will be reconsidered. The Fed also said it anticipates that by April the TALF will also cover rental, commercial and government vehicle fleet leases, as well as ABS "backed by small ticket equipment, heavy equipment and agricultural equipment loans." The Fed is also considering expanding the facility to include a broader range of securities and plans to ask for additional authorities to support the financial system in the United States.
Bernanke says we need more steam.Federal Reserve Chairman Ben S. Bernanke said the banking system may need more than the $700 billion already approved and that policy makers may need to take other aggressive measures --- even if it pushes up the already-bloated deficit. “Without a reasonable degree of financial stability, a sustainable recovery will not occur,” the Fed chairman said today before for the Senate Budget Committee. “Although progress has been made on the financial front since last fall, more needs to be done.” The Obama administration wants congressional approval for a massive $3.55 trillion federal budget for the fiscal year beginning in October -- including standby authority for $750 billion in new aid to the financial industry – on top of the gigantic $787 billion economic stimulus package that is now law. This year, government will spend $3.94 trillion, up 32 percent from a year ago, delivering a record deficit of $1.75 trillion this year (equal to about 12% of GDP, the highest since World War II). Equity markets aren’t happy with policy makers’ decisions, as the S&P500 has fallen -22.5% year-to-date, with the S&P Financials Index off -44.2%. According to Macroeconomic Advisers LLC, the Obama stimulus package could keep the jobless rate at about 8.8% versus the 9.5% rate that would result without the package – a questionable benefit given the enormous cost of the recovery efforts.
On today’s date: March 3…1634: 1st tavern in Boston opens (Samuel Cole)1791: Congress establishes U.S. Mint1853: Transcontinental railroad survey is authorized by Congress1875: Congress authorizes 20 cent coin, lasts only 3 years1955: Elvis Presley made his 1st TV appearance1959: San Francisco Giant's rename their stadium Candlestick ParkThe last word:“I once beat up the school bully with a baseball bat. He had two broken arms. Which is what gave me the courage.” -- Emo Philips

Monday, March 2, 2009

RATES & INFO FOR March 2nd 2009

News for March 2nd 2009

Mortgage Market Minute: With the stock market in the tank, Treasuries are up solidly, and to some degree MBS’s are following with the FNMA 4.5% up +.31 to 100.47, the 5.0% is up +.22 to 101.91, and the 5.5% is up +.22 to 102.69. The 10-year is up +1 to 98-23/32, the yield 2.89% down -.12%. Freddie Mac CEO calling it quits after just 6 months.Freddie Mac Chief Executive Officer David Moffett is quitting after just six months, according to a statement released by the company. In the statement, Freddie Mac said that Moffett wants to return to the financial services industry, where he worked from 1993 to 2007 as vice chairman and chief financial officer of U.S. Bancorp. Jim Vogel, a strategist at FTN Financial Capital Markets in Memphis said, "Whatever the reason Mr. Moffett has determined to leave, the abrupt departure with no replacement in hand is a negative indicator for the company.” According to Fannie and Freddie, foreclosure prevention efforts could worsen the credit profiles of their portfolios in 2009. President Obama outlined a home refinancing and foreclosure prevention plan that relies heavily on the two government sponsored entities. At the same time, the Obama administration doubled its capital commitment to the companies to $400 billion. Freddie Mac expects its regulator to ask the Treasury for $30-$35B to maintain a positive net worth after the company files its 2008 annual report with the SEC. Government ups stake in ailing AIG to nearly 78% with $30B injection. The nation’s largest insurer, AIG, announced this morning that it lost $61.7 billion in the fourth quarter (the biggest quarterly loss in U.S. history), and as anticipated over the weekend, the government once again stepped up to allow the company to draw up to $30B in exchange for preferred stock, in a move that the government says will “further strengthen AIG’s capital levels and improve its leverage.” The Treasury Department also stated that “The company continues to face significant challenges, driven by the rapid deterioration in certain financial markets in the last two months of the year. The additional resources will help stabilize the company, and in doing so help to stabilize the financial system.” The government now owns 77.9% of AIG through preferred shares, effectively nationalizing the company. AIG was trading at $0.49 per share, up $0.07 (16%), for a total market cap of merely $1.6B. The stock market on the other hand is very bearish, with heavy losses of over -2.5% and the S&P 500 trading at the lowest level since 1996.
Personal spending in January ticks up, snapping 6 months of declines.The Department of Commerce today reported that personal spending, which makes up roughly 70% of U.S. GDP, rose +0.6% in the month, following a decline of -1% in December, and marking the largest increase since May. The key driver was (….drumroll, please…..) pay increases for federal employees. Economists had been expecting a rise of 0.4%. Incomes increased by +0.4%, also posting the biggest increase since May, after December's -0.2% The report also showed core inflation moving slightly higher over the month. The Federal Reserve's preferred measure of inflation, the personal consumption & expenditures (PCE) core deflator, was higher by +0.1% in January, as expected, and follows a flat reading previously. Annual core PCE fell back to 1.6%, four-tenths below the Fed's unofficial target level of 2.0%. Boston Fed president urges speed in removing troubled assets from bank booksBoston Federal Reserve Bank President Eric Rosengren said today before the Institute of International Bankers that troubled assets should be moved off bank balance sheets as quickly as possible in order to speed the recovery “so banks can once again focus on future prospects rather than past mistakes." He went on to say, however, that governments are not good managers of such assets, and that "Removing bad assets and quickly selling them to new owners are steps that are likely to get resources allocated to their best economic use.” He said that banks may be reluctant to sell loans and securities that have been labeled as “toxic”, as this could lead to further writedowns that could threaten the solvency of a given bank. Rosengren said that for securities, where the problem is liquidity rather than credit concerns, "there should be a role for purchasing these assets and reducing the liquidity premium." Rosengren cited past crises in Japan and the United States as evidence that allowing banks to operate with insufficient capital can exacerbate problems with credit availability, as they shift their attention to short-run capital preservation. On today’s date: March 2…1933: "King Kong," premieres at Radio City Music Hall and RKO Roxy New York City1969: 1st test flight of the supersonic Concorde1972: Pioneer 10 launched for Jupiter flyby1977: 1st time Jay Leno appears on Tonight Show with host Johnny Carson1983: Final episode of M*A*S*H; 125,000,000 viewers1991: U.N. votes in favor of U.S. resolutions for cease fire with Iraq

Mortgage Minute with Jeff Fink