It is well documented, somewhere, that rocker George Thoroughgood was a loan agent. In fact, he wrote a song about finding the best rates for his borrowers:

Now, every morning, just before breakfast, I don't want no coffee or tea.

Just me and my good buddy Weiser. That's all I ever need.

Cause I lock a loan, yeah, with nobody else.

I lock a loan, yeah, with nobody else.

Yeah, you know when I lock a loan, I prefer to be by myself.

Now, the other night I lay sleeping. And I woke from a terrible dream.

So I called up my pal, Jack Daniels, and his partner Jimmy Beam.

And we locked loans, yeah, with nobody else.

We locked loans, yeah, with nobody else.

Yeah, you know when I lock a loan, I prefer to be by myself.

Lenders had a good January, will end up with great February’s, and solid March’s. After that, it is anyone’s guess as pipelines clear up, loans are purchased, and rates perhaps inch downward. Will these volumes continue if rates stay the same? Are underwriting guidelines going to loosen up? “What do you think?” he said sarcastically. As of yet, aside from a couple random things from Fannie (like increasing the number of properties a borrower can own) personally I have seen no sign of anyone loosening up any guidelines. Investors will take their cue from Freddie and Fannie, and, like I said, I have seen no signs that would point to different guidelines, especially since credit risk is one of the key issues bringing the housing market to where it is. And the government is better in dealing with rates then in setting guidelines.

Last week the Fed bought $25 billion in agency mortgage-backed securities – the most since the program began. Almost 50% of the securities were Fannie 4.5’s, which generally include mortgage rates from 4.75-5.125%.

Citigroup, who just announced $10 billion in write-downs in the 4th quarter, and parent of CitiMortgage, will offer to convert as much as $27.5 billion in preferred stock, not held by the federal government to common stock, with the U.S. agreeing to match up to $25 billion of the conversions in the latest effort to keep them afloat. If this happens, common shareholders would see their holdings diluted by nearly 75%, with the government becoming the largest holder at 36%. The goal of this is to increase their tangible common equity, in spite of last year’s net loss of $27.7 billion. The agreement marks the third time in the last 6 months that our government has come to Citigroup's rescue: twice late last year the government pumped a total of $45 billion into the company, and also agreed to protect Citigroup against most losses on $301 billion of assets. That gave the U.S. a 7.8% stake in the company. And the government has pressured Citi to break itself up, although rumors that Herb and Marion Sandler are interested in buying CitiMortgage are unfounded!

FHA treats short sales, deeds in lieu, etc all the same as foreclosures when it comes to guides and they require 3 years before a borrower can qualify for a loan. Fannie has the new short sale guideline that requires 2 years before a borrower can qualify and 5-7 years for foreclosures. Speaking of FHA, remember that Mortgagee Letter 2009-07 establishes the new FHA loan limits set forth by the American Recovery & Reinvestment Act of 2009. Things to note: new loan limits are for FHA loans that receive approval in calendar year 2009, not farther out; changes apply to the 203b (basic loan), 203h (disaster victims), & 203k (rehab loan); the national FHA floor limit remains at 271,050; the FHA ceiling for high value areas is 729,750; lastly the national reverse mortgage limit increases from 417,000 to 625,500. For the limit in your area, check https://entp.hud.gov/idapp/html/hicostlook.cfm

This morning the US GDP number (the sum of all goods and services produced by the economy) was expected to be -5.4%. It actually fell at an annual rate of 6.2% in the 4th quarter, the deepest slide since the first quarter of 1982. It should be no surprise that consumer spending, which accounts for more than two-thirds of domestic economic activity, dropped at a 4.3 percent rate, the biggest fall since the second quarter of 1980.  This, combined with stocks being hit by the Citi news, has brought the 10-yr yield back down to 2.93% and mortgage prices better by roughly .125. Later on we’ll see the Chicago Purchasing Manager’s Survey for February, expected to slide further after January’s decline, and the University of Michigan’s Consumer Confidence Survey – as if that is going to be positive and move the market.

An elderly gentleman had serious hearing problems for a number of years.

He went to the doctor and the doctor was able to have him fitted for a set of microscopic hearing aids that allowed him to hear 100% perfectly.

He went back in a month and the doctor said, “Your hearing is perfect. Your family must be really pleased that you can hear again.”
The gentleman replied, “Oh, I haven't told my family yet. I just sit around and listen to the conversations. I've changed my will three times!”