Yes! Lower rates are expected ahead of us! In the meantime, NAMB has set up a national teleconference to discuss H.R. 3915 the "Mortgage Reform and Anti-Predatory Lending Act of 2007", which may fundamentally change the way brokers are paid, outlaw YSP, and legislate underwriting guidelines into law, and possibly change lender’s liability. The House of Representatives Financial Services Committee will vote next week. NAMB has scheduled two information teleconferences: Thursday, November 1st at 1:00PM EST (10:00AM PST) and the second is scheduled for tomorrow at 7:00PM EST (4:00PM PST). Thursday’s number is 1-877-238-4697, pass code: 453723, and Friday’s is 1-800-214-0745, pass code: 648439. There will be 500 lines for each of the calls so one may want to call in early to guarantee a spot.

More underwriting and pricing news:

• Wells Fargo’s price adjustment of 1.50 points on CLTV’s above 80% applies to non-conforming product, not to conforming. One loan with MI would not be applicable to the adjuster, so one solution would be to start pricing non-conforming loans with MI. (See below.)
• CitiMortgage is discontinuing Second Lien/Home Equity products through Correspondent Lending after today.
• Astoria is limiting purchase and rate/term LTV/CLTV to 80/80 on loans UNDER $500k, and to 75/75 on cash-out refi loans UNDER $500k.  Also, they have eliminated their Stated Income product entirely. These changes are only for loans under $500k – loans above that are not impacted. (This is a great example of a company analyzing their servicing defaults and identifying a problem on smaller loans with high CLTV’s as carrying a higher risk of default.)
• HSBC is making changes to: LTVs, TLTVs, HTLTVs, credit scores and underwriting requirements for Fannie Mae Stated Income Fixed Rate and ARM programs. Highlights of the changes are: owner occupied 1 & 2 unit purchase and no cash out refinance TLTVs/HTLTVs are being reduced to 90% from 95%, owner occupied 1 & 2 unit and 1 unit second home cash out refinance transaction LTVs/HTLTVs are being increased to 90%, and minimum credit scores are being increased to 700 for 2 unit and second home cash out refinance transactions.

What alternatives are available to second liens or home equity loans? Most of first mortgage programs allow for subordinate financing, but in the absence of subordinate financing many loan agents are turning to a) Monthly MI - The monthly option features a coverage term of one month, b) Split Premium Mortgage Insurance - is a borrower paid MI program in which an up-front premium component may be paid either by the borrower or an approved third party to buy down the monthly MI cost. The monthly MI premium components are paid by the borrower following standard MI requirements. Some investors do not permit the initial (up-front) premium to be financed by the borrower in the loan amount, as financed MI is not eligible, and c) Lender-Paid Mortgage Insurance - Single Premium up-front lender paid mortgage insurance is often acceptable from approved private mortgage insurance companies.

The FOMC lowered the target rate 25 basis points yesterday, saying that the pace of economic growth is likely to slow in the near term due to spillover effects from the housing recession and that they fell that the current inflation risks were balanced with the downside risks to growth. Their statement followed the morning release of the 3rd quarter GDP which showed that the economy grew at a 3.9% annualized rate in the 3^rd quarter. Renewed inflationary concerns (oil near $100 per barrel!) could make the Fed hesitate before lowering rates further. Speaking of rates, the 10-yr stands at 4.45% this morning after the release of Personal Income & Consumption (+.4 and +.3, respectively), the core PCE deflator (+2.4%, as expected), Jobless Claims (-6k to 327 with the 4-week moving average +1,750). Tomorrow’s payrolls number is expected to show an increase of 80K month over month while the unemployment rate is expected to hold steady at 4.7% and the ISM manufacturing index is expected to show some modest retraction to a level of 51.5, which still signals some level of expansion in the manufacturing sector.

I rear-ended a car this morning.  So there we are, alongside the road, and slowly the driver gets out of the car, well, I could not believe it . . . he was a dwarf!
He storms over to my car, looks up at me and says, "I AM NOT HAPPY!"
So, I look down at him and say, "Well, which one are you then?"

That’s how I got this black eye.