Ali was also rumored to have the following conversation with a flight attendant on a trip where he couldn’t take a bus:
Flight Attendant: “Buckle up, Champ”.
Ali: “Superman don’t need no seatbelt”.
Flight Attendant: “Superman don’t need no airplane, either.”

Some in the fixed income markets have come to rely on the Fed as Superman. It is generally agreed that rates, especially mortgage rates, are artificially low based on their purchases which provide liquidity to the market. Yesterday the new purchase figures were released, and sure enough, the Fed purchased another $20 billion in agency mortgage backed securities over the past week, bringing its total net purchase to $925 billion and at this pace much greater than current origination volumes. And Chairman Bernanke was quoted as saying, "My colleagues at the Federal Reserve and I believe that accommodative policies will likely be warranted for an extended period."

That being said, yesterday’s $12 billion 30-yr auction did not go as well as the previous two this week. Prices of this security had moved up (rates down) recently, which sometimes is a warning sign. It doesn’t help that the Congressional Budget Office reported that our government now has a deficit of $1.4 trillion, which is the largest since 1945, and that gold prices continue to escalate. (My Dad’s mouth is worth more and more every day!) The results of the 30-year bond reopening were “sloppy”, coming in at a yield of 4.009% with a bid/cover ratio of 2.37.  The “indirect” bids were 34.5% of the auction versus a recent average of 40%.

Besides our president winning a Nobel Peace Prize, and the stock market being down slightly, the only news out this morning was the Trade Balance. The U.S. trade gap narrowed unexpectedly in August as services trade pushed exports slightly higher and imports fell by a fractionally larger amount. Unfortunately the lousy 30-yr auction has carried into today somewhat, and we find the 10-yr yield up to 3.31% and mortgage prices worse between .125-.250.

So just how much agency loan production is there? Fixed rate MBS production totaled $117 billion for September, down $24 billion from August. It worked out to about $5 billion a day, which has dropped since. 30-yr production decreased by $18 billion from August. – the typical pattern. Lenders are, of course, hopeful for yet another refi wave for another month or so if rates hold, as those that missed the great rates in April & May will have another opportunity.

Well, let me know when the investor changes stop so that I can open my eyes again! In reference to Citi’s list of unapproved originators, one person wrote, “I think originators should start a blacklist of investors who are not acceptable and will not receive any loans due to their ineligibility. The decision is final, and the list can change without notice. Woe to any investor who ends up there by mistake! And even more woe to any investor who ends up there with good reason - word tends to get around.”

Freddie Mac relayed news that the Treasury Department published a “Supplemental Directive” for the Making Home Affordable Program (MHA) which hopefully will streamline the HAMP documentation requirements and standardize the evaluation process used to determine if a borrower is eligible for a modification under HAMP. “All Freddie Mac Servicers must immediately begin following the new requirements in Supplemental Directive 09-07 when working with eligible borrowers who have Freddie Mac-owned mortgages and are 31 days or more delinquent. Additionally, Servicers are strongly encouraged, but not required, to use the new forms prior to March 1, 2010. They may be downloaded from HMPadmin.com later next week.”

Flagstar changed their pricing, adjusting their state-based tiers for FHA & VA loans starting on the 19^th. Most states had no change, but some of the larger areas (TX, CA, IL, NC, SC, etc.) will be slightly adjusted. In addition, Flagstar ratcheted down their pricing for FICO scores below 680, and improved their pricing for borrowers with FICO’s above 700.

A VP at Comerica Bank reminded me that Comerica is still doing jumbo mortgage loans for both new and existing Private Banking Clients who have at least $250,000 on deposit or have a balance on their commercial loan or commercial line of credit of at least $1 million. (Private banking clients typically make more than $250 per year and have over $1 million of assets to invest.)  Unfortunately Comerica does not allow for mortgage brokers to be paid a referral fee in escrow, and of course HUD relationships are carefully checked.

GMAC Bank’s correspondents found out that GAMC introduced the Freddie Mac Relief Refinance Mortgage - Open Access Conforming Fixed and ARM mortgage products. Any Freddie Mac approved lender is eligible, regardless of whether or not the Seller/Servicer is the servicer of record for the mortgage being refinanced; however, Freddie must be the investor on the existing mortgage. The program allows for primary & second homes (1 unit) and investment properties, LP “accept”, 1-4 units, up to 105% LTV in some cases. Clients should be prepared to have Freddie’s loan number on the existing mortgage if it is a new Relief Refi - Open Access loan. And the existing mortgage must be current, regardless of LP decision. 0 x 30 in the last 12 months or, if the mortgage is seasoned < 12 months, since the Note Date.

A couple lived near the ocean and used to walk the beach a lot.
One summer they noticed a girl who was at the beach almost every day.  She wasn't unusual, nor was the travel bag she carried, except for one thing; she would approach people who were sitting on the beach, glance around and then speak to them. 
Generally, the people would respond negatively and she would wander off.  But occasionally someone would nod and there would be a quick exchange of money and something that she carried in her bag. 
The couple assumed that she was selling drugs and debated calling the cops, but since they didn't know for sure, they decided to just continue watching her. 
After a couple of weeks the wife said, "Honey, have you ever noticed that she only goes up to people with boom boxes and other electronic devices?" 
He hadn't and said so. 
Then she said, "Tomorrow I want you to get a towel and our big radio and go lie out on the beach.  Then we can find out what she's really doing." 
Well, the plan went off without a hitch and the wife was almost hopping up & down with anticipation when she saw the girl talk to her husband and then leave. 
The man then walked up the beach and met his wife at the road. 
"Well, is she selling drugs?" she asked excitedly.
"No, she's not," he said, enjoying this probably more than he should have. 
"Well, what is it then? What does she do?" his wife fairly shrieked. 
The man grinned and said, "She's a battery salesperson." 
"Batteries?" cried the wife. 
"Yes!" he replied. 
"She Sells C Cells by the Seashore!"

Rob

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