MBA’s Secondary Marketing Committee; Primer on Inverse Floaters; Lender Updates

I have
heard that there are some places on the outskirts of Detroit that are becoming
farms. That is pretty weird. But even weirder are some of these places around
the world. (The photos are pretty haunting, even of Centralia, Pennsylvania.)

Remember that ordinance, in place in Chicago since mid-November and then Las
Vegas, that requires mortgage holders to pay
a one-time fee of $500 to register a vacant building
with the city’s
building department 30 days after it becomes vacant or 60 days after the
mortgage goes into default, whichever is later? Questions about the legality
and the “How do I know if it is vacant?” questions, Fannie & the
servicers are quietly protesting it.

Old CEO’s
don’t die, they just join other boards. Former Morgan Stanley Chief Executive
John Mack has joined the board of LendingClub
as the “peer-to-peer lending startup” works to attract more investor money and
expand its consumer loan offerings.

Here’s
something that might appeal to some folks: the MBA’s Secondary Marketing Committee. It, along with the other MBA
committees, is a good way to have your voice heard. The Committee reports up to
the Residential Board of Governors within the MBA, and its goal is to foster
safe, sound, and prudent practices within our industry. “The Secondary
& Capital Markets Committee monitors secondary market activity and issues
and serves as an information resource and a policy formation advisory group for
MBA. Issues of interest to the committee range from securities disclosure and
GSE mission boundaries to development of more competition in the secondary
market through the FHLB programs or revitalization of FHA and Ginnie Mae.”
Members, who cannot work for the agencies, need to be either MBA members, or
work for member firms. For more information about the group, or about joining,
visit this link.

(Now, if only the MBA can revisit its membership dues, which, as I have heard
from more than one party, seem to penalize companies that are expanding.)

Perhaps one of the discussion topics for the MBA’s committee will be Ally, which is shutting down its Broker
Dealer desk. And talk on the street is that Ally is requiring all its customers
to pair off trades this week. Folks
say this is unprecedented – even Lehman wound it down over a 3 month period to
allow normal settlements. (And I remember when Drexel Burnham went under, the MBS
trading process we had to go through.) The Ally issue is not a crisis, but it
is a pain in the rump for hedging companies and secondary staffs with positions.

While we’re
talking about mortgage-backed securities, about 90% of mortgage originations
are backed by the agencies. Good time for a quick lesson on one component of
MBS’s: inverse floaters. F&F create a security (MBS) backed by mortgages it
guarantees which are often divided into two parts. The larger portion, backed
by principal, is viewed as a fairly low risk, paid a low return and traditionally
has been sold to investors. The smaller portion, backed by interest
payments on the mortgages, was riskier, and paid a higher return determined by
the interest rates on the underlying loans.  This portion, called an “inverse
floater,” is retained by Freddie Mac. But remember several months ago when
Freddie was accused of betting on declining values?

In 2010 and 2011 Freddie Mac’s purchase (retention) of these inverse floaters
rose dramatically, from a total of 12 purchased in 2008 and 2009 to 29. 
Most of the mortgages backing these floaters had interest rates of 6.5-7%. In
structuring these transactions, Freddie Mac sells off most of the value of the
MBS but does not reduce its risk because it still guarantees the underlying
mortgages and must pay the entire value in the case of default.  The
floaters, stripped of the real value of the underlying principal, are also now
harder and possibly more expensive to sell, and as Freddie is paid the
difference between the interest rates on the loans and the current interest
rate, if rates rise, the value of the floaters falls.

While Freddie, under its agreement with the Treasury Department, has reduced
the size of its portfolio by 6 percent between 2010 and 2011, “that $43
billion drop in the portfolio overstates the risk reduction because the company
retained risk through the inverse floaters.” Since the real value of the
floater is the high rate of interest being paid by the mortgagee, if large
numbers pay off their loans, the floater loses value. So did Freddie deter
prospective refinancers by tightening its underwriting guidelines and raising fees,
or was it only market influences?

In the
end, the story died down, and it was generally viewed as unlikely that Freddie
purposely tried to dampen refinancing. The FHFA knew about the inverse floater
trades, as I recall, but it was unknown whether the FHFA knew about them as Freddie
was conducting them or whether the FHFA had explicitly approved them. The FHFA
statement said that Freddie Mac has historically used CMOs as a tool to manage
its retained portfolio and to address issues associated with security performance,
and that for several reasons Freddie’s retention of inverse floaters ended in
2011 and only $5 billion is held in the company’s $650 billion retained
portfolio.  And supposedly none of this impacted HARP turning into HARP
2.0.

How
about some investor/lender updates from the last few weeks? 
As always, it is best to read the
actual investor bulletins – information provided here is meant to show
trends rather than timely detailed specifics.

Flagstar issued a memo regarding which loans
must close in Flagstar’s name and which FHA loans may close in the originating
lenders name. Beginning with loans locked last Friday, the three Expanded
Approval Risk Class price adjustments for applicable Flagstar serviced HARP
programs will be consolidated into one price adjustment (-.250).

GMAC spread the word to clients that transferred, modified or
replacement certificates will be permitted and utilize the MI coverage
requirements on the original loan as messaged by DU. Standard coverage
requirements by LTV do not apply. Coverage may be waived if permitted by DU.

SunTrust Mortgage updated the FHA product description
to include the new annual and upfront mortgage insurance premiums (UFMIP).
Additionally it removed references to the FHA MIA program because HUD suspended
that program.

U.S. Bank Wholesale reminded brokers of its “First Time
Home Buyers Program”: borrowers can borrow up to 80% of the purchase price, the
remaining 20% of the purchase price can be gift funds from family, customer
reserves, or borrowed against other assets, seller concessions up to 3% allowed,
and maximum loan sizes up to $1,000,000. (Quite a first time home buyer
amount!)

I don’t know which large national bank agreed to pay, or if the fees they
agreed to pay were previously paid to the Appraisal
Loft
group, as noted below. But Joan Kirby with United States Appraisals wrote, “Lender accepts responsibility for
unpaid appraisal fees. Last week precedence was set as a large national bank
agreed to pay significant unpaid appraisal fees resulting from the failure of
an appraisal management company, Appraiser Loft. Estimates are the AMC left
over $3,000,000 in unpaid appraisal fees across multiple lenders. The
Interagency Appraisal and Valuation Guidelines further support this position by
placing full responsibility of 3rd party vendors, including AMC’s, solely with
the lender. What should lenders do to avoid a similar situation? United States
Appraisals pays appraisers every two weeks and provides a monthly
reconciliation report that details the actual fee paid, date paid, and ACH
transaction detail. Full financial disclosure should be provided by an AMC on a
consistent schedule.”

In her marketing
piece Ms. Kirby continues, “How can lenders ensure appraisers are paid
customary & reasonable fees? Local appraisers actively engaged in appraisal
production are the most accurate source of information. Prior to accepting a
specific assignment, an appraiser should certify:  ‘By accepting and
completing this assignment, the appraiser agrees that the compensation offered
was established by the appraiser based upon market competitive rates for
similar assignments within the subject property’s local market, and therefore,
constitutes a reasonable and customary fee under presumption one of the Interim
Final Rules.’ What is the cost of C&R violations under the Dodd Frank? A
civil penalty of not more than $10,000 per day and $20,000 for each subsequent
violation.” (Joan Kirby can be reached at joank@UnitedStatesAppraisals.com.)

West Coast
wholesaler Pinnacle Capital’s underwriting
guidelines on conforming loans have been modified, with changes regarding
Property Fieldwork Waiver eligibility, the waiting period calculation for short
sales, separated borrowers without legal separation agreements, and insurance
requirements for attached PUDs.  Enhanced DU Refi Plus products now
feature an LTV cap of 125% with unlimited CLTV.  The condo matrix has been
modified to include the DU Refi Plus updates, Combined Conventional and FHA
HO-6 requirements and clarification on coverage amounts.

Some LO’s
around the nation thank the U.S. Government every day for buying MBS’s, and for
good reason: the NY Fed is buying about
$1.4 billion per day, soaking up about 70% of what originators are issuing
.
One can argue the merits of this strategy, but there is no doubt that it is
keeping agency mortgage rates low. And when this is added on to the typical
demand by money managers, REIT’s, insurance companies, and so on, the demand
for mortgages is pretty darned good.

The Fed’s
Beige Book, literally beige, showed concerns from many sectors of the economy
about increased energy prices which would seem to make the case for keeping it
in reserve if the economy has a setback, and economists inferred that any
chatter about QE3 should be saved for a dramatic adverse change in the economy.
By the end of the day MBS prices ended lower by over 1/4 point on 30-year 3.0%
coupons (3.25-3.625% mortgages), and the new 10-year note closed at 2.03%.

Overnight
there was little of consequence, and U.S. Treasury debt hovered around the NY closing
levels for most of the London session. This morning we learned here in the
States that the Trade Deficit shrank. The Producer Price Index was unchanged,
much lower than expected, but the core rate was higher than expected at +.3%. And
lastly Jobless Claims are up to 380,000, up 23k from a revised 357k the prior
week. We still have a $13 billion 30-yr bond auction to get through at 1PM PST,
but in the early going the 10-yr is
nearly unchanged at 2.02% and MBS prices are about where they were at the end
of Wednesday
.

Paradoxical “Quote of The Day” from Ben Stein, sure to, unfortunately, garner
me plenty of e-mails: “Fathom the hypocrisy of a government that requires
every citizen to prove they are insured… but not everyone must prove they are
a citizen.”

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HARP Input from LO’s and Investors; Comment on the CFPB’s RESPA & TILA Proposals

Things are
decent in the mortgage insurance biz:
MI companies wrote $5.4 billion in new pools of risk in February. Mortgage
Insurance Companies of America (MICA) includes numbers from its members like Genworth,
MGIC, and Radian, but not from companies such as UG or Essent – two big “up ‘n
comers.”

And some
mortgage companies are continuing to expand as their business grows. I have
been retained by a San Francisco Bay
Area-based wholesale lender
that is looking for underwriters, funders, and
Broker Service Representatives (processors) for its San Francisco and East Bay
branches.  The company offers A-Paper Agency and jumbo loans and has a
reputation of exceptional service and leading edge technology. The company
lends in 3 states, has plans to expand into 15 more, and is projecting to fund
approximately $3 billion in 2012 (versus $1.5 billion in 2011. They also expect
to reach $2 billion in servicing this year. If you’re interested or know
someone who is, resumes should be sent to me at rchrisman@robchrisman.com.

And in another part of the country, Franklin
American Mortgage Company
is currently searching for a Regional Sales Manager
for its Wholesale Division.  As most know, FAMC is one of the top 5
non-bank lenders in the U.S. The candidate would be responsible for the
recruiting, hiring and development of AE’s in OH, MI, IN, NC, DE, VA, WV, and the
Washington, D.C. area. Additionally, FAMC
is looking to hire AE’s in its Western Region (Houston, Chicago, St. Louis,
Los Angeles and WI) and it’s Eastern
Region (GA, OH, VA, NC, FL, MS, and MI). The company has four wholesale
sites around the nation, is FHA Direct Endorsed, VA Automatic, a LAPP authority
and a Fannie Mae, Freddie Mac and Ginnie Mae Approved seller/servicer. 
Please submit resumes to Deepa Holland at dholland@franklinamerican.com.

Warehouse
banks provide the life-blood for non-depository lenders. Noting the recent
issues that some lenders are having with ewarehouse,
Jack Nunnery with Texas Capital Bank
writes, “Warehouse banks perform considerable due diligence on their
mortgage banking partners.  I believe it is prudent the mortgage banker
perform due diligence on the warehouse bank.  Whether or not the warehouse
bank is a new name in the space or an existing warehouse bank, I recommend the
mortgage banker go on site at the warehouse lender’s operation center and make
sure the counterparty is an acceptable ‘fit’.  The warehouse bank is a
critical component in any mortgage bank’s strategic vision.  Why not
kick the tires?”

A few readers wrote in to say that they
had reported ewarehouse to the FBI
, and to remind others to do the same. In
addition, those harmed should provide all the sales people’s names, addresses,
phone numbers, etc. and any known persons to GSA and HUD so that they appear on
LDP and GSA lists and are banned from government activity. And David Akre with
Whole Loan Capital reminds us that not only are there plenty of legitimate
warehouse banks looking for business but there is also a group on Linkedin for
warehouse lending.

For upcoming
events, all NAMB members are invited
to join NAMB President, Don Frommeyer, for an hour-long conversation with the
Director of the CFPB, Mr. Richard Cordray. “This webinar is limited to the
first 1,000 registrants” and it is your opportunity to ask the CFPB Director
specific questions which relate to our profession.

And out in
California, the CMBA’s 3rd Annual Sales
& Marketing Conference
is taking place next week near San Francisco. It
is only $40 and this year is “focusing on retail, wholesale, correspondent
lending, and industry information that will prepare you for tomorrow’s mortgage
market!” More here

How about some HARP 2.0 chatter from
the origination trenches
?
An LO from North Carolina wrote, “I have been taking applications and
declining lots of Harp 2.0 loans. Yes, declining. I have taken a dozen of these
loan applications and here is what I have found. If your loan is owned by
Fannie Mae you are in good shape. If your loan is owned by Freddie, you have a
higher chance of your loan being declined for all the reasons Obama tried to
remove in his HARP 2.0 announcement. Here is a sample what Freddie is
declining: credit card balances exceeding 50% of the credit limit, LTV’s over
125%, debt ratios over 45%. These are things that are Freddie-specific in LP.
This has been a surprise and most originators did not expect this to be the
case. Fannie, on the other hand, in my experience, has been approving loans
regardless of LTV, DTI ratios are being approved over 60%, and there are no
credit card balance criteria.  I would speculate that Freddie will have
pressure in the future to have more relaxed underwriting, but as of right now,
it is not really helping the homeowner.”

A mortgage company owner wrote, “I am not a big fan of the program, and am
seeing LO’s salivating for this new “race
to the bottom
“. As REFI shops compete I can already hear, “We
will go to 350% LTV!  My thoughts are: 1) we are not going to do any of
these that we sell to an aggregator. 2) We will only sell direct to FNMA. 3) We
will not do any that exceed an LTV of 120%. This last point is not going to
make me very popular with the LO’s but going broke is not going to make me very
popular with my wife and kids. The fact is that that we are still seeing a lot
of fraud out there – I think more than we have in our 25 years. I am not going
to let HARP 2.0 become a vehicle which easily allows someone else’s monkey to
jump from their back to mine.”

The implications of the HARP’s continue. Paul Jacob (Banc of Manhattan) observes that, “We’ve seen a tremendous pickup
in originator selling of MHA-HARP related pools in the past week. 
Issuance of the highest LTVs exploded in March, running at three times the
average pace of the past year.  We also saw very big increases in selling
of TBA-eligible tiers earlier this week (100% Refi 80-90 LTV, 90-95, etc.).
MHA/HARP supply can only come from one place: refi’s on May 2009 and earlier
Fannie and Freddie originations.  We believe the supply explosion in HARP
pools raises the possibility of faster-than-expected CPR prints on seasoned
high coupons in the upcoming prepayment report.  If so, we’re likely to
see high coupon MBS prices come under pressure in the coming weeks.” In other
words, investors are indeed tuned in to the fact that older Fannie &
Freddie loans could indeed be paying off early, regardless of LTV.

Honestly,
I lose track of what the CFPB is
involved in, versus what they’re not involved in yet. The CFPB threw its weight
into the courtroom recently by filing a friend-of-the-court brief in the U.S.
Court of Appeals for the tenth circuit. The issue is whether homeowners can cancel their loans within a three-year period
stipulated under the Truth-in-Lending Act, and whether a plaintiff need sue
within the same timeframe before the right of rescission expires
. The case
in Denver involves a borrower who sued for an injunction against servicer HSBC
in 2009 when an earlier notice of rescission went unnoticed. The CFPB is
arguing that the borrower had met the minimum standards for rescission by
filing it and that she required adequate disclosure forms from her servicer
before it moved forward with foreclosure for her property. The CFPB also
charged that earlier courts have “erroneously” thrown out rescission lawsuits
on the presumption that a homeowner needs to file notice of rescission within
three years. The CFPB said that it plans to invoke the same legal authority by
filing amicus briefs in appellate cases from three other circuits. “We are
committed to making sure that borrowers can exercise their rights to the full
extent allowed under this law,” CFPB Director Richard Cordray said in a
statement. “The consumer’s right to cancel gives lenders a powerful incentive
to provide the disclosures that consumers need to make good financial choices.”

What does the future hold for combined
RESPA and TILA regulation?
 Things are still very much up in the air,
but the CFPB gave investors their first indication in late February when it
announced that it was forming a panel to get feedback from small business
mortgage and settlement companies regarding the new combined RESPA and TILA
disclosure forms and released a list of proposals currently under
consideration. Lenders will be most interested in the fact that the CFPB is
considering adding fees to the zero tolerance category, where there’s already
risk in that lenders are accountable for any fees that may exceed the GFE and HUD-1
Settlement Statement.  The fees would be charged by the lender’s
affiliated service providers, which means that lenders would have to be
diligent with disclosing them on the estimate disclosure.  If the fees
charged by an affiliated title insurance company, for example, turned out to be
higher than indicated on the estimate disclosure, the lender would be
responsible for customer refunds as well. 

One of the big questions here is whether or not the CFPB actually has the legal
authority to impose tolerance restrictions on lenders. The changes could affect
a number of other areas, including the definition of “application,” which would
expand the circumstances under which disclosures would be necessary; the
language used in pre-application summaries of loan terms and settlement fees;
average cost pricing; and electronic recordkeeping.  Everything is still
in the discussion stage, so for those interested putting in their two cents,
the CFPB will be accepting public comment until July 2012: http://www.consumerfinance.gov/notice-and-comment/.

All of
this is much more interesting than our interest rates. The U.S. 10-yr closed at
2.22%, still good but we saw some investor rate changes Monday. Pretty much the
only news was the ISM Manufacturing Index which came in pretty much as
expected, but traders reported that they were seeing a lack of buyers, causing
prices to drop and rates to nudge higher. Part of this might be caused by
nervousness about the employment data coming out on Friday which is also an
early close due to Good Friday. But in
the early going rates are right back down, with the 10-yr at 2.16% and MBS
prices better by .125-.250
.

SOUTHERN KNOWLEDGE (Part 1 of 2)
A possum is a flat animal that sleeps in the middle of the road.
There are 5,000 types of snakes and 4,998 of them live in the South.
There are 10,000 types of spiders. All 10,000 of them live in the South, plus a
couple no one’s seen before.
If it grows, it’ll stick ya. If it crawls, it’ll bite cha.
Onced and Twiced are words.
It is not a shopping cart, it is a buggy!
“Jawl-P?” means “Did y’all go to the bathroom?”
People actually grow, eat, and like okra.
Fixinto is one word. It means I’m fixing to do that.
There is no such thing as lunch. There is only dinner and then there is supper.
Iced tea is appropriate for all meals and you start drinking it when you’re
two. We do like a little tea with our sugar. It is referred to as the Wine of
the South.

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Aurora Bales and Sails; Wells Fargo Expands Globally

n the interesting
side, per the FDIC, there were no new banks created in the US in 2011, making
it the first year since at least 1984 that the country has gone without the
establishment of a single start-up lender. The Financial Times reports that none
of the three new banking charters reported by the US FDIC for 2011 were de
novos. That is compared with three de novo banks reported in 2010. (A de novo
bank is a freshly chartered bank that has not been created through the takeover
of an existing institution.)

On the
minus side of things, “Valued Customers, Aurora Bank has made the decision to close its Residential Lending unit
which includes its Correspondent Lending business. Aurora Bank continues to
service its current mortgage customers. We are no longer accepting new loan
registrations or locks.  We are committed to processing locked
applications in the pipeline through to final disposition. Please note that
lock extensions will not be granted.  We will continue to be staffed to
support your needs and ensure a seamless experience for you and your
customers.” (“Seamless”? Words are interesting things…)

On the
plus side, there are expanding companies. Houston’s
First Continental Mortgage Company is looking to aggressively grow their retail
origination channel by adding seasoned retail originators, branches and
company acquisitions. The company has a strong builder presence across the
Southeast, Southwest and the state of Texas and is targeting retail expansion
across this lending footprint. Founded in 2002, it funded approximately $1
billion in 2011 and has Fannie Mae Seller/Servicer and Ginnie Mae issuer
approvals. FCM is financially strong, has significant liquidity and
consistently profitable. Visit www.fcmchou.com for more information and contact Paul
Peters, CMB at ppeters@fcmchou.com to discuss opportunities.

On the
minus side, last week Grand Bank of NJ
was rumored to have been placed under some type of written order. Written
orders do not help mortgage subsidiaries of banks – in this case ICON Residential Mortgage, so we will
see how this plays out.

On the
plus side, last month O2 Funding became
part of New Penn Financial, which is, in turn, a wholly owned subsidiary of Shellpoint
Partners (PA). New Penn is licensed in 41 states and “Its affiliation with
Shellpoint Partners will allow New Penn to continue to originate Agency loans
while expanding its products to include Non-Agency loans” – so thanks
Shellpoint. (If you want more information contact Omar Cantillo at ocantillo@newpennfinancial.com.)

On the
minus side, Friday the Georgia Department of Banking & the FDIC shut down Global
Commerce Bank – which starting today will be Metro City Bank.

On the
plus side, we’ve become accustomed to the FDIC shuttering banks on Friday
afternoons. I can’t say that every bank ever shut down was under a written
order of some type by regulators leading up to its demise, but it would
probably be a safe bet. There are, of course, varying degrees of written orders
issued by state and federal bank regulators, but one notable success story is
that of HomeStreet Bank’s recent
successful IPO
. Like many community banks, HomeStreet ran into the 2008
buzz saw as construction lending came to a grinding halt and builder defaults
overwhelmed the organization. Shortly thereafter, it was placed under a
regulatory order, which is fatal in the vast majority of such situations – but
in this case, under some new mortgage leadership, its mortgage division was so profitable (twice the average of its bank
peers, which are in turn twice as profitable as independent mortgage banks on
average) and well managed that the regulators gave the bank some time to work
out their troubled loan portfolio
. One industry vet believes that, “The
mortgage division kept the parent bank afloat until HomeStreet was able to pull
off an IPO two Fridays ago – I believe that it is the only community bank that
has been able to recapitalize via the IPO route.” (For more information and the
S-1, go to EDGAR, HomeStreet, Inc., symbol HMST, Washington State.  The
FWP is dated 2/8/12 and the entire S-1 under registration # 333-173980 and
333-179484 dated 02/14/12. The whole story is contained on the first 16
pages.)

On the
interesting side, it seems Wells Fargo
has decided to expand globally.

Also on
the interesting side is that Banc Investment Daily reports that in California “Kinecta FCU and NuVision FCU announced
their Boards had mutually decided to terminate their merger agreement that
would have created a $4.4B credit union. The amount of time required to get
regulatory approval, integrate the companies and final review were simply too onerous
and too disruptive to their members.”

And lastly,
I received this note: “I found your recent posts regarding Provident’s decision
to no longer accept low-rise condos and limit hi-rise condos to a few specific
markets interesting. In particular, I’m referring to the statements that
Provident, because it offers such low rates, is looking to lower its costs and
improve their execution in the secondary market.  In contrast, InterBank Mortgage, a direct seller who
closed over $1 billion in wholesale last month alone, continues to offer condos
to its brokers/bankers. (For information on getting approved with InterBank contact
Phil Grossfield at pgrossfield@interbankwholesale.com.)

Last week
the commentary mentioned issues with UCDP,
and I received this note: “The problem with the UCDP, supposedly, is the vendor
that FNMA and Freddie contracted with to build the technology and converting
.pdf’s to MISMO was counting on a solid revenue stream. It appears,
however, that most lenders are working with vendors that are already providing
the appraisals in a data format that can easily be piped directly to the UCDP,
obviating the necessity to convert .pdfs. The rumor is that the original vendor
has lagged in the people and technology to have the UCDP functioning as
promised – even the registration process to the portal, which was supposed to
be a 2-3 day process, is dragging on for weeks.” (Editor’s note – I have not
verified this.)

Regarding
the HUD suit against BofA over, among other things, requiring certain
information on disability income, Barbara Werth of Mortgage Training Today observes, “I just did a case study on that
for my class and the main thing that was in dispute was not that they had to
provide proof of the three years, but that B of A required the doctors to state
the nature of the disability.  They had to list the actual medical
condition and that is what caused the problem.  FNMA guidelines do require
that the 3 years be documented, but nowhere in the guidelines does it state
that the nature of the disability be disclosed or is required.  B of A had
a condition on the loan approval that the actual disability be documented.” For
thoughts write to her at Barb@MortgageTrainingToday.com.

There is always plenty of blame to go around, and on the agency’s role, or lack
thereof, S.W. from Sovereign writes,
“As many of us who work or worked for the agencies know, another
interesting note on the GSE situation is that if one looks at the book of
business the GSE’s own that was originated to their own underwriting standards,
it is still performing within expectations (I haven’t seen the actual numbers
in about 10 months, but the difference was stark at that time).  In order
to meet the affordable housing goals that Mike mentioned in your commentary
Friday, both agencies began buying private-label subprime pools of loans and
MBS that were issued by entities whose underwriting standards and guidelines
the GSE’s didn’t know, didn’t understand and couldn’t control or influence. I’m
not suggesting that the GSE’s be let entirely off of the hook, but I am saying
that the full picture that illustrates Mike’s points isn’t revealed until one
looks at the performance of the GSE-originated books vs. the performance of the
GSE-purchased books. That’s when the damage of the government Affordable
Housing Initiative mandate really reveals itself.”

Here’s a
nice write up on agency guarantee fees. By the way, for a more in-depth look
at what the future role of the agencies might be like, given the druthers of
FHFA, go to stratmorgroup.com.

There’s
nothing quite like curling up with a good book on a cold winter night. With
this in mind, the MBA has rolled out the “2010 HMDA Originations Summary DataBook” at a new, lower price
of $475 for MBA members and $995 for nonmembers. “Home Mortgage Disclosure
Act (HMDA) data are the most comprehensive source of loan origination data and
a valuable market intelligence tool. Learn how MBA’s research team can provide
you with timely and targeted HMDA data reports to help you formulate your
business strategies through better understanding of your market, enabling you
to discern business strengths, identify market share and target areas for
improvement. The 2010 HMDA Mortgage Originations Summary DataBook includes a
collection of summary origination reports such as origination totals by state,
origination totals by state and purchaser type, origination totals by
state/loan purpose/loan type and the Top 100 lenders for each state ranked by
origination volume.” Operators standing by: www.mortgagebankers.org/HMDA.

Although
the biggest economic report this week will be the employment data on Friday, we
have some other thrill-packed numbers first. ISM Services and Factory Orders
will be released today, zip on Tuesday, Wednesday holds the usual
pre-employment-Friday ADP data (on private jobs) and some productivity &
unit labor cost information, and on Thursday is Jobless Claims. The Trade
Balance is also scheduled for Friday. In
the early going, and with things pretty quiet in Europe, we have our 10-yr. at
1.98% and MBS prices roughly unchanged. – View MBS Prices

(Part 1 of 3)
Two Irishmen walk into a pet shop in Dingle, they walk over to the bird section
and Gerry says to Paddy, “Dat’s dem.”
The owner comes over and asks if he can help them.
“Yeah, we’ll take four of dem dere little budgies in dat cage up
dere,” says Gerry.
The owner puts the budgies in a cardboard box.
Paddy and Gerry pay for the birds, leave the shop, and hop into Gerry’s truck
to drive to the top of the Connor Pass.
At the Connor Pass, Gerry looks down at the 1,000 foot drop and says, “Dis
looks like a grand place.”
He takes two birds out of the box, puts one on each shoulder and jumps off the
cliff.
Paddy watches as the budgies fly off and Gerry falls all the way to the bottom,
killing himself stone dead.
Looking down at the remains of his best pal, Paddy shakes his head and says,
“Sod dat. Dis budgie jumping is too sod’n dangerous for me!”

…(read more)

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