The mother asks the son what he wants to be for
Halloween. “I want to be real scary. I want to be Freddie”.
The mom replies, “Freddie Krueger? From ‘Nightmare
on Elm Street’?”
“No”, the boy replies, “Freddie Mac, from
‘Nightmare on Main Street’.’”
Although nationwide apps seems to be doing ok (see graph
below), many lenders are “staring at an abyss” after the
end-of-the-month fundings today. A combination of reasons have many
borrowers sitting on the sidelines: mortgage rates have not crept down,
they’ve lost their down payment money in the stock market, they believe
property values are going to fall further, and “they just want to wait”.
Until when? After the election? After the holidays? After the 2nd quarter of
2009? Inquiring agents would like to know, since unless volumes pick up, look
for continued mortgage-related job cuts.
How are jumbo/conforming spreads doing? Anyone following
rate sheets has noticed that there has not been much change recently. Check out
http://www.banx.com/
- there is a “view chart” feature near the top/center box which helps
illustrate the spreads. The news is not good.
The Veterans Administration (VA) announced several changes
including the reinstatement of the VA adjustable rate mortgages (ARMs).
Some investors, such as Wells’ wholesale, will accept transactions with the
3/1 and 5/1 VA treasury ARM products.
Flagstar reported a 2008 third quarter net
loss of $62.1 million, compared to their loss in the third quarter of 2007 of
$32.1 million. So far in 2008 Flagstar has a net loss of $56.9 million compared
to a net loss of $9.2 million for the same period in 2007. Mark Hammond, CEO,
said, “Although we continue to have positive margins in our core
operations - net interest margin, gain on loan sales and income from our
servicing portfolio, those margins were more than offset by several significant
credit and asset disposition charges.”
(Compare that to the oil companies who recently reported
profits. Exxon Mobil beat its own U.S. record for quarterly profits
yesterday, reporting $14.83 billion in net income. Royal Dutch Shell posted
$8.45 billion in higher earnings, beating analysts' estimates, and Conoco
Phillips, the third-largest U.S.
oil company, said last week that its third-quarter profit was $5.19 billion.)
Barclays, Britain's
second-biggest bank, will raise $11.8 billion from a group that includes
investors in Abu Dhabi and Qatar. By doing
this Barclays steers clear of a U.K.
government bailout plan that calls for overhauling management boards, capping
executive salaries and banning dividend payouts.
The stock market is finishing a bad month: for October the
S&P 500 is down 15%! Fortunately for us, we’re seeing a bit of an
improvement this morning in rates. 30-yr mortgage-backed securities are
currently up by .375 to .5 in price, and in unrelated news the 10-yr’s
yield is down to 3.85%. Later this morning we’ll see the PCE
Deflator, Employment Cost Index, Chicago Purchasing Manager’s survey, and
the University of
Michigan consumer survey.
The ECI tracks employer costs for salaries and benefits, which, when people pay
attention to scheduled economic news, is important since rising costs raises
wage inflation concerns and may hurt bond prices. It is expected to show an
increase in costs of 0.7%. September’s Personal Income and Outlays
report, already out, was +.2% and -.2% respectively, and was expected to show
an increase of 0.1% in income and decline in outlays of 0.2%.
Where are mortgage applications currently versus the last few years? Not as bad
as you’d think – see the graph below from MBAA data. Applications were
relatively steady during 2007, but volatility has picked up this year with
rates jumping around.
The state of Arizona
listened to the Wise Old Indian.
When told the reason for daylight saving time the old Indian said, 'Only a
white man would believe that you could cut a foot off the top of a blanket and
sew it to the bottom of a blanket and have a longer blanket.” Don’t
forget to change your clocks this weekend!
