Housing bubble mortgage issues

Posted To: The Garrett Watts Report We are often asked whether or not a mortgage banker should be actively managing interest rate risk via mandatory commitment loan sales. We recently provided information from a prominent hedging consultant firm regarding the pricing spread between best efforts pricing and mandatory pricing. As was noted, the wide spread between mandatory one-off's and best effort pricing that was observed in early 2009 has since narrowed considerably. HERE is the data. HERE is more perspective on WHY. Many owner/operators see the large spread in commitment prices as an easy method to add 30-50 basis points in gain on sale to the bottom line. We agree, mandatory commitments offer the opportunity to increase profits and even lower rates, but we must point out the risks associated with mandatory committing...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: Pipeline Press Bernie Madoff's daughter-in-law, Stephanie Madoff, is changing her name. She says the Madoff name is tainted with scandal and she wants a name with less negative connotation. She will now be known as Stephanie bin Laden. But an underwriter is an underwriter, regardless of name. Lately I have been hearing from producers, some of whom are upset about the current lending environment, some not. But for a slightly different view of things, here is what one very experienced and knowledgeable underwriter wrote to me : "It used to be that we could 'underwrite' a loan and use common sense to navigate individual circumstances and actually make a decision that a loan was a good credit risk. Then DU and LP came along and gave us the laundry list that had to be followed. We were still able...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWire The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 26, 2010. The survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, such a trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt. From the release : The Market Composite Index, a measure...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWire Delinquencies among loans guaranteed by Freddie Mac continued to rise in January according to the Monthly Volume Summary issued last week. At the same time, the Enterprise's investment portfolio continued to contract. Loans over 90 days delinquent increased to 4.03 percent of all loans during January compared to 3.87 percent in December. The delinquency rate in January 2009 was 1.98 percent. The non-credit enhanced portion of the portfolio had a January delinquency rate of 3.13 percent compared to 3.0 percent in December while the credit-enhanced portion had a rate of 8.52 percent compared to 8.17 percent. The percentage of delinquencies in the multi-family portfolio was unchanged at 0.15 percent. Loans more than 120 days delinquent represented 2.59 percent of Freddie Mac's total fixed...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: The Garrett Watts Report I spoke Monday at a sales and production event put on by one of our retail mortgage banker clients. My client has recently partnered with a strong regional bank and implemented additional technology and business infrastructure to support its growth plans for the next 2-3 years. The audience was a group loan officers and branch managers, and the theme was to outline the company’s vision, strategies and action plans to help management execute on the growth plan. The CEO and his management team have spent the last year studying loan officer needs and the results of the recent events impacting the industry. Armed with this information, they developed a strategy to build a profitable loan officer centric mortgage bank. You see, the CEO is a past loan originator and believes a sustainable profitable...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWire Homeowners who hope to refinance existing mortgages that are "underwater" just got a reprieve that will allow them another year to do so. The Federal Home Financing Agency announced Monday that its Home Affordable Refinance Program (HARP), which was originally set to expire on June 30, 2010, will be extended to June 30, 2011. HARP, part of the Making Home Affordable Program, is designed to expand access to refinancing for otherwise qualified borrowers who cannot move into more affordable mortgages because of a lack of equity in their homes. Unlike other homeownership assistance programs, HARP guidelines are designed for borrowers who are current on their mortgages. The program was originally designed to help homeowners with a loan-to-value (LTV) ratio up to 105 percent including those...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: MND NewsWire Freddie Mac is taking another step in the direction of historically responsible lending habits. The Enterprise today announced it would no longer offer interest only loans as of Sept. 2010. Lenders will undoubtedly enforce this guideline change well in advance of the deadline. HERE is the release: McLean, VA – Freddie Mac (NYSE: FRE) announced today that on or about September 1, 2010, the company will cease purchasing and securitizing interest only mortgages, including Freddie Mac Initial Interest fixed-rate and adjustable-rate mortgages. Additional information will be provided to Freddie Mac Seller/Servicers in an upcoming Single-Family Seller/Servicer Guide bulletin. Interest only mortgages, including Freddie Mac Initial Interest mortgages, provide for interest-only payments for a specified...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: Mortgage Rate Watch Mortgage rates didn't make much progress in either direction yesterday despite some bond market friendly economic data and a successful Treasury note auction. Mortgage backed securities traded in a tight range which prevented most lenders from passing along improved mortgage rates. The economic calendar started this morning with weekly Jobless Claims. This report provides three measures of the labor market: Initial Jobless Claims : totals the number of Americans who filed for first time unemployment benefits Continued Claims : totals the number of Americans who continue to file for benefits due to an inability to find a new job Extended Benefits : totals the number of Americans who have exhausted their traditional benefits and are now receiving emergency benefits While an increase in jobless...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: MBS Commentary Ok, so it's never a good time to ignore the MBS market, but the real question wouldn't fit into the title. Even then, it's a rhetorical question anyway, the purpose of which, to suggest that we merely ignore past ranges of MBS as indicative of how high or low they are in the current range. I'm not sure if that's entirely clear, but I'll keep trying... MBS closed up at ticks at 100-31. That's far enough away from the highest prices so far this year to hope for just a bit more upside if you thought the current rally might continue. And of course, there's always a chance for upside or downside. But if you were to be informing your opinion in some way with the thought that MBS are not near the top of their range and thus have "room to run," it is indeed...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.

Posted To: Pipeline Press A copy of the first issue of Superman comics was sold for one million dollars. The copy originally sold for ten cents in 1938. Someone said that if that same dime had been invested in General Motors stock in 1938, it would be worth at least a quarter. What are brokers and reps saying out there? "It seems the faucet turned off mid January. My brokers have very little and it seems every community bank is terrified of Friday's and the FDIC." "I'm still pretending to be a Mortgage Broker in this wonderful economic climate, all I seem to be doing is paying for licenses, taking exams and foolishly marketing my services." "Things are good here - people are getting back out looking and people are listing - just what we need!" "Dealing with the current GFE...( read more ) Forward this article via email:   Send a copy of this story to someone you know that may want to read it.