Q: What's the problem with Barack Obama jokes?
A: His supporters don't think they're funny and other people don't think they're jokes.

There is no shortage of critics, or jokes, when you’re president. Most recently, Obama’s mortgage plan for Fannie & Freddie is being faulted since Fannie and Freddie’s charters prohibit the acquisition of new loans with an LTV of more than 80 percent unless mortgage insurance or some other credit backing is used.  Regulators will supposedly work around that requirement by treating the refinancing as a “modification for charter purposes,” not as new loans. But MI companies are miffed, since there is some question about their role in the program. The plan is limited to loans within the conforming limits that are eligible for backing from Fannie Mae and Freddie Mac, and to borrowers that have a loan-to-value of 80% to 105% on their first mortgage.

If you’re a broker, doesn’t this appraisal issue sound familiar, as one wrote, “We are required to use it by Wells Fargo.  We have a r/t refinance in process.  The appraisal was ordered through RES Direct.  While in underwriting the underwriter required an additional comp.  We provided that.  Then,  right before clear to close was given it was changed to cash out by Wells because the borrowers switched from a variable rate program on their purchase money second to a fixed rate even though a no cash back resulted and a perfect paper trail existed.  Ok, I should have known or expected that.  Now, as a cash out they require a "Collateral Consultation Review" of the appraisal we ordered through RESDir.  Of course, RESDir will do that too. They instruct me to order it at a cost of $265 on my credit card.  Now-it has also been in underwriting since January 30.  They told me I will have to reprice to cover these expenses (.625 for cash out, $265 for CCR, and, my 45 day lock expires Monday.) We need to extend but don't know how long the CCR will take, don't know how long it will take for a clear to close after that then pray for docs.  I did this loan for 0.895, subtract the cash out and it is .270, subtract the CCR, lock extensions and we are close to zero.  And, I am fully expecting RESDir to have an adverse action on their appraisal and find the loan declined.” Man-oh-man.

Are you confident? Me neither. Yesterday it was reported that Consumer Confidence fell to its lowest level since 1967, which is when the survey began. We did see a little price improvement yesterday due to Ben Bernanke’s remarks, along with a decent 2-yr auction, but then prices sank somewhat. Bernanke conjectured that the recession could last into 2010, along with assuring the market that the government does not desire to nationalize the big banks, most notably Citi and BofA. The Treasury Department sold $40 billion in two-year notes at a yield of .961% ($32 billion in 5-year notes today and $22 billion in 7-year notes tomorrow) As everyone in mortgage banking knows, the Fed is focusing on purchases of agency debt and mortgage-backed securities as well as extending loans to the private sector to jump-start business and consumer lending – some dealers report that they are the ONLY buyer. 

The MBA mortgage applications index for last week showed a 15.1% drop in applications, with refis down 19.1% and purchases -2.6%, giving Lock Desks everywhere a little time to focus on extensions and changes.  Later this morning we’ll have Existing Homes Sales which is expected to be up (yes, spelled u-p) slightly, adding to December’s +6.5%, although analysts believe that this is due to bargain hunting in the home market and that we still have several months of inventory. With this going on, the 10-yr seems content at 2.81% and mortgages are “unchanged-to-slightly-better” than yesterday afternoon.

CitiMortgage sent out a notice regarding “Approved Contract Underwriting Vendors”, noting that for correspondents “the Contract Underwriting agreements between CitiMortgage, RMIC and Genworth Mortgage Insurance companies have been terminated” although existing commitments will continue to be honored. Loans intended by a Correspondent for contract underwriting must be underwritten by PMI, MGIC, or UGIC. That being said, vendors for mortgage insurance on loans destined for Citi include PMI, UGIC, MGIC, Radian, RMIC, and Genworth, although PMI will no longer provide mortgage insurance for loans that are not in the name of the Correspondent.

Citi also came out with FHA loan limits, stating that “FHA will permit loans originated under the 2008 loan limits to be refinanced at mortgage amounts that exceed the current 2009 (and future) geographic loan limits. For streamlines with appraisals or full refinances, the mortgage amount may exceed the current geographic limit provided that the new loan amount (without MIP) does not exceed the prior case loan amount; and the new appraised value supports the loan amount and the LTV is not greater than 97.75%. In addition, they reminded us that “CitiMortgage now requires all FHA/VA loans to have minimum credit score requirements of 620 (for loans ˜ $417,000) and 660 (for loans > $417,000). For No-Credit Qualifying Programs such as FHA Streamline Refinance and VA IRRRL, a tri-merged credit report must be obtained to verify the minimum score requirements but these programs should not be processed through Total Scorecard or pmiAURA. No further evaluation of the credit report is necessary beyond current policy requirements.”

A REDNECK LOVE POEM

SUSIE LEE DONE FELL IN LOVE,

SHE PLANNED TO MARRY JOE.

SHE WAS SO HAPPY 'BOUT IT ALL,

SHE TOLD HER PAPPY SO.

PAPPY TOLD HER, SUSIE GAL,

YOU'LL HAVE TO FIND ANOTHER.

I'D JUST AS SOON YO' MA DON'T KNOW,

BUT JOE IS YO' HALF BROTHER.

SO SUSIE PUT ASIDE HER JOE

AND PLANNED TO MARRY WILL.

BUT AFTER TELLING PAPPY THIS,

HE SAID, 'THERE'S TROUBLE STILL.'

YOU CAN'T MARRY WILL, MY GAL,

AND PLEASE DON'T TELL YO' MOTHER.

BUT WILL AND JOE, AND SEVERAL MO'

I KNOW IS YO' HALF BROTHER.

BUT MAMA KNEW AND SAID, MY CHILD,

JUST DO WHAT MAKES YO' HAPPY.

MARRY WILL OR MARRY JOE;

YOU AIN'T NO KIN TO PAPPY.

Rob