Counterfeit money arrests are at a five year high.
Apparently there is one group in particular that is printing all kinds of
worthless money: the U.S. Treasury. Seriously, Wells Fargo is paying the
Federal Government (and therefore us, the taxpayers, right?) a total quarterly
dividend of $371.5 million based on the U.S. Treasury owning 25,000 shares
of Fixed Rate Cumulative Perpetual Preferred Stock ($14,861 per share). Wells
Fargo went on to say, “Since credit began contracting 18 months ago,
Wells Fargo has made almost half a trillion dollars in new loan commitments and
mortgage originations…last quarter alone, Wells made $22 billion in
loan commitments and $50 billion in mortgage originations. That's more than
$70 billion or almost three times the amount of the U.S. Treasury's investment
in Wells Fargo.” Citi`s new U.S. lending totaled $75.0 billion in the
4th quarter, which is spelled out in a report they issued this
morning detailing the deployment of the $45 billion of capital the U.S.
Treasury invested in them as part of TARP.
Let’s say that you are an investor, and still buying
loans from brokers. You want to scale back this broker business, however,
but don’t want a nasty public relations mess on your hands? Why not just
slowly raise credit requirements, increase underwriting guidelines, make having
an appraisal done more difficult, and slow down/eliminate new approvals,
therefore skipping that whole nasty announcement thing. One Maryland broker sent me
an e-mail saying, “I sent my broker package in to SunTrust last week and
they are no longer accepting new brokers…or at least for now. I was told
they are going through current ones and weeding out the dead weight.”
Suddenly brokers are learning a new word(s): “pull through”, or
“pullthrough”. However it is spelled, many point to poor TPO
pull through as one of the primary reasons that hedge costs have gone up, the
spread between best efforts and mandatory is approaching 2 points, and large
investors have bailed on their wholesale channel.
Are mortgage brokers being “marginalized”? You
bet they are. http://www.nytimes.com/2009/02/01/realestate/01mort.html
The Fed is continuing to buy pools of mortgages. But are the
loans new, or older stuff that banks have had on the books. The Fed
definitely has the authority to purchase seasoned pools, but so far, based on
their statements, their focus has been on new production (“TBA”
– to be announced – pools). However, when you seen the Fed in
buying 6% or higher coupons, the logical conclusion is that they are buying
older loans.
In this case, banks may
“deleverage assets”, and sell older loans to Wall Street firms
or the Fed in order to make new loans. Besides, these pools of seasoned loans
may represent a good value, IF the loans are paying and stay on their books.
Is something broken out there? Uh, you tell me. During
the month of January, the 10-yr Treasury yield went from 2.46% up to 2.87%. The
Fannie 5% security, which generally includes mortgages from 5.25% to 5.625%,
was roughly unchanged. But investor’s whole loan, best efforts, prices
worsened by .5%. So, approximately, best efforts whole loan pricing
followed the 10-yr higher, whereas the Fed’s buying helped
mortgage-backed securities.
GMAC Bank Correspondents should note that
their Freddie Mac Alternative Product has been discontinued.
Looking for some training on FHA loans in California? The
California Mortgage Bankers Association (CMBA) and CampusMBA, the
education department of the Mortgage Bankers Association (MBA), are teaming up
to bring you essential FHA education. As more loans are originated through the
program, it is important that lenders understand these loans and lend
responsibly. Check out http://www.cmba.com/new/brochures/California_FHACentralFlyer.pdf
We had a nice little Treasury rally yesterday, and although
mortgage prices didn’t keep up, it was a good thing – especially in
the face of the supply that will soon hit the market and the unemployment data
coming out Friday. There isn’t much news today, which is good because Denny's
announced, during the 3rd quarter of the Super Bowl, that it will
give away a free Grand Slam breakfast to any customer visiting its restaurants
today between 6AM and 2PM. The only
news today is Pending Home Sales for December. Tomorrow we have the “ADP
Employment Change” always of questionable worth compared to the actual
government job statistics, along with the ISM Services number. Thursday is,
yes, you guess it, weekly Jobless Claims, along with some productivity, labor
cost, and factory order figures. On Friday we have the Unemployment Data (the
workweek and hourly earnings are expected unchanged, but Nonfarm Payrolls are
expected to drop about 525,000 and the unemployment rate go from 7.2% to 7.5%).
The 10-yr is up to 2.77%, and mortgage prices are a shade worse than
yesterday afternoon.
I asked my wife, "Where do you want to go for our
anniversary?”
It warmed my heart to see her face melt in sweet appreciation.
"Somewhere I haven't been in a long time!" she said.
So I suggested, "How about the kitchen?"
And that's when the fight started....
Rob
