Refinancing Continues to Drive Application Volume

The
Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey
reported that mortgage applications as measured by its Market Composite Index
were down 2.9 percent on a seasonally adjusted basis during the week ended
January 27 but increased 9.0 percent from the previous week on an unadjusted
basis.

The
seasonally adjusted Purchase Index was down 1.7 percent while it increased 17.1
percent on an unadjusted basis from the week ended January 20 and was 4.3
percent lower than during the same week in 2011.  The Refinance Index decreased 3.6 percent
from the previous week.

All
of the four week moving averages were higher for the week.  The seasonally adjusted Market Index rose
4.11 percent, the seasonally adjusted Purchase Index was up 2.48 percent and
the Refinance Index increased 4.22 percent.

Applications for
refinancing represented 80.0 percent of all applications, down from 81.3
percent the previous week.  Applications
for adjustable-rate mortgages (ARMs) had a 5.6 percent market share compared to
5.3 percent a week earlier.

Refinancing
applications in December increased in every U.S. state according to MBA and,
despite multiple holidays only 12 states had fewer purchase applications than
in November.  In Connecticut refinancing
applications increased 80.1 percent from November and Maine saw a 30.8 percent
increase in applications for home purchase mortgages.

Purchase Index vs 30 Yr Fixed

Click Here to View the Purchase Applications Chart

Refinance Index vs 30 Yr Fixed

Click Here to View the Refinance Applications Chart

Rates fell for all
fixed rate mortgages (FRM) compared to the previous week.  The average contract interest rate for
30-year conforming FRM (balances under $417,500) decreased to 4.09 percent with
0.41 point from 4.11 with 0.47 point. Rates for jumbo mortgages (those with
balances over $417,500) decreased from 4.39 percent to 4.33 percent while
points increased from 0.40 to 0.41.  This
is the lowest rate for the 30-year jumbo mortgages since MBA started tracking
them one year ago. 

FHA backed 30-year
FRM rates decreased one basis point to 3.96 percent with points increasing to
0.61 from 0.57.  Rates for the 15-year
FRM were down from 3.40 percent with 0.40 point to 3.36 percent with 0.41
point.  The effective rate of all of the
mortgage products listed above also decreased.

The sole rate increase was for the 5/1 ARM which increased on average to 2.94 percent with 0.39 point
from 2.91 percent with 0.41 point.  The
effective rate also increased. 

Follow what drives changes in mortgage rate each day with Mortgage Rate Watch from MND.

All rates quoted
are for 80 percent loan to value loans and points include the origination fee.

Michael
Fratantoni, MBA’s Vice President of Research and Economics said of the week’s
results, “The Federal Reserve surprised the market last week by indicating
that short-term rates were likely to stay at their current low-levels until the
end of 2014.  Longer-term treasury rates dropped in response, and mortgage
rates for the week were down slightly as a result.  Although total application volume dropped on
an adjusted basis relative to last week, refinance volume remains high, with
survey participants reporting that the expanded Home Affordable Refinance
Program (HARP) contributed to roughly 10 percent of their refinance
activity.”

MBA’s weekly
survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted since 1990.  Respondents include
mortgage bankers, commercial banks and thrifts.  Base period and value for
all indexes is March 16, 1990=100.

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AG Holder Announces Structure of MBS Fraud Unit

The formation of the Residential
Mortgage-Backed Securities Working Group
tasked with investigating mortgage
fraud is now official.  The new office,
which will be part of the Administrations Financial Fraud Enforcement Task
Force (FFETF) was first announced by President Obama in his State of the Union
speech on Tuesday.

At a press conference this morning (video below), Attorney General Eric Holder along with
Housing and Urban Development (HUD) Secretary Shaun Donovan, Securities and
Exchange Commission (SEC) Director of Enforcement Robert Khuzami and New York
Attorney General Eric T. Schneiderman, Holder outlined the mechanics of the working
group which will bring together the Department of Justice (DOJ), several state
attorneys general and other federal entities to investigate those responsible
for misconduct contributing to the financial crisis through the pooling and
sale of residential mortgage-backed securities. 
The group will consist of at least 55 DOJ attorneys, analysts, agents,
and investigators from around the country including the 15 civil and criminal
attorneys and 10 FBI agents already employed in the FFETF unit.  This team will join existing state and federal
resources investigating similar misconduct under those authorities.

Holder said that the goal of the group will be to hold accountable any
institutions that violated the law; to compensate victims and help provide
relief for homeowners struggling from the collapse of the housing market,
caused in part by this wrongdoing and to help turn the page “on this
destructive period in our nation’s history.”

Holder confirmed the principal staff that we identified here earlier this
week:  Schneiderman will chair the group
with co-chairs Khuzami, Lanny Breuer, Assistant Attorney General, Criminal Division,
DOJ; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant
Attorney General, Civil Division, DOJ. 
Schneiderman will lead the effort from the state level and will be
joined by other state attorneys general.

Schneiderman said, “In coordination with our federal partners, our office
will continue its steadfast commitment to holding those responsible for the
mortgage crisis accountable, providing meaningful relief for homeowners
commensurate with the scale of the misconduct, and getting our economy moving
again.  The American people deserve a thorough investigation into the
global financial meltdown to ensure nothing like it ever happens again, and
today’s announcement is a major step in the right direction.”

The new office has been the target of criticism from Wall Street since the
President’s announcement such as that from JP Morgan Chase CEO Jamie Dimon who said
the working group would “derail” the proposed settlement between the states and
major banks, and Jaret Seiberg,
Senior Vice President of the Washington Research Group who told CNBC that the
sole purpose of the group is to bring criminal charges against bankers.

Press Conference Video

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Foreclosures made up 20% of home sales in 3Q

Sales of homes in foreclosure comprised 20% of all U.S. residential sales during the third quarter, according to RealtyTrac.

Applications Fall 5% during Holiday Shortened Week

Mortgage applications were down during
the week ended January 20 according to the Weekly Mortgage Applications Survey
conducted by the Mortgage Bankers Association (MBA).  The Market Composite Index, a measure of
application volume fell 5 percent on a basis that was adjusted seasonally and
to account for the week shortened by the Martin Luther King holiday.  On a non-seasonally adjusted basis the
Composite fell 13.8 percent from the previous week which ended January 13.

The
seasonally adjusted Purchase Index was down 5.4 percent and the unadjusted
Purchase Index 9.7 percent.  The latter
was 6.5 percent lower than during the same week in 2011.  The index measuring applications for
refinancing was down 5.2 percent. 

The
four week moving averages for all indices remained positive.  The Composite Index was up 4.12 percent, the
Refinance Index increased 4.85 percent and the seasonally adjusted Purchase Index
rose 0.47 percent.

Refinancing
continued to represent the majority of mortgage activity, falling slightly from
82.2 percent of all applications the previous week to 81.3 percent.  Applications for adjustable rate mortgages
were at a 5.3 percent level compared to 5.6 percent a week earlier. 

Looking
back at the month of December, MBA found that refinancing borrowers applied for
30-year fixed-rate mortgages (FRM) in 56.6 percent of cases and 24.3 percent of
applications were for a 15-year FRM.   ARMs represented 5.3 percent of applications in
December.  The
share of refinance applications for “other” fixed-rate mortgages with
amortization schedules other than a 15 or a 30-year term was 13.8 percent of
all refinance applications.

Purchase Index vs 30 Yr Fixed

Click Here to View the Purchase Applications Chart

Refinance Index vs 30 Yr Fixed

Click Here to View the Refinance Applications Chart

The average contract interest rate for 30-year FRMs with
conforming loan balances of $417,500 or less increased to 4.11 percent from
4.06 percent with points down one basis point to 0.47 point.  The effective rate increased from the
previous week.  The rate for jumbo
30-year FRM with balances over $417,500 decreased from 4.40 percent with 0.37
point to 4.39 percent with 0.40 point. 
The effective rate also decreased. 
The rate for FHA-backed 30-year FRM rose to 3.97 percent from 3.91
percent while points were down from 0.59 to 0.57 point.  The effective rate increased.

The
average rate for 15-year FRM increased to 3.40 percent from 3.33
percent, with points increasing to 0.40
from 0.39 and the effective rate increased as well. The rate for the 5/1 hybrid ARM was
up one basis point to 2.91 percent with points decreasing to 0.41l from
0.45.  The effective rate increased.

All
rates quoted are for 80 percent loan-to-value mortgages and points include the
application fee.

 The
MBA survey covers over 75 percent of all U.S. retail residential mortgage
applications, and has been conducted weekly since 1990.  Respondents
include mortgage bankers, commercial banks and thrifts.  Base period and
value for all indexes is March 16, 1990=100.

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Zell’s Archstone Purchase Blocked, Officially

Bloomberg News
Sam Zell, chairman of Equity Residential

Equity Residential’s purchase of a stake in competitor Archstone has been blocked by the estate of Lehman Brothers Holdings Inc., as Lehman has exercised an option to match the company’s $1.33 billion bid, Equity Residential said in a securities filing today.

But this latest step in the complex fight over apartment-company Archstone doesn’t put Equity Residential out of the picture. The Chicago company, whose chairman is investor Sam Zell, has another bite at the apple: It has an option to buy another 26.5% stake for at least the same price. It has 30 days to make a deal, at which point Lehman would, once again, have the right to match that offer.

Lehman’s purchase – which is half of the position in Archstone owned by Bank of America Corp. and Barclays PLC – ups its stake in Archstone to 73.5%. The failed investment bank’s advisers are expecting Equity Residential to put in an offer for the final 26.5% stake, and are preparing to block that too, according to people familiar with the matter.

Of course, it’s unclear what price Equity Residential would bid, and in theory it could be high enough that Lehman wouldn’t match it. Equity Residential is entitled to a breakup fee of up to $80 million if Lehman blocks its second purchase.