The former Atlanta quarterback Michael Vick has left the federal prison to attend a hearing in Virginia. He said that prison has completely changed him. It's true ... he's more of a cat person now.

Thornburg Mortgage, long thought of as good lender for “make sense” deals, announced that a consortium of investments banks (JPMorgan Chase, Citi, CSFB, etc.) have agreed to grant the Company additional forbearance from demanding payment on deficiency claims under their various financing agreements through April 30, 2009. Basically that means that assets will be sold off to reduce their debt. “As a result of the expected and realized deficiency claims, the Company has also agreed to cooperate with the Counterparties to transfer the Company’s mortgage servicing rights, which were granted to the Counterparties as security for the Company’s obligations to the Counterparties under their respective financing agreements.” There goes their servicing, and as a result “the Company expects to file for Chapter 11 bankruptcy protection. Once these sales or liquidations are completed, the Company will discontinue operations.”

Speaking of mortgage companies filing for bankruptcy, let’s turn on the “way-back machine” and dredge up New Century. Based in Irvine, California, New Century disclosed accounting errors two years ago and its stock promptly plunged 90%. It then went bankrupt. Now we have a new lawsuit to follow: The trustee for New Century sued accounting giant KPMG Wednesday, blaming it for its demise and accusing KPMG of failing its public watchdog role by helping the subprime mortgage lender make misstatements about its finances and by filing "grossly negligent audits."

There are many differences between the residential and multifamily which impact the rates/terms and underwriting of the deal. First, apartments often have a prepayment penalty, often quoted as a "yield maintenance" PPP. Although there are exceptions, multifamily loans are often "full recourse": unlike residential loans which allow borrowers to "walk" on the property (California), multifamily loans often require full recourse on the personal guarantors. So if the borrower defaults, "judicial foreclosure" may occur on the borrower’s personal assets. Most multifamily deals require a 35% - 50% down payment, which actually helps rates since the lender/investor has much greater security. The lender chooses the appraiser, which also adds to their comfort level, but also means that the borrower is paying $1,800 - $3,500 prior to even qualifying for the loan, and even after that the lender has his ability to change terms, rates, etc. up until final approval. To the best of my knowledge there is no RESPA on these deals.

As mortgage banks try to offer better pricing for their agents and brokers, one solution is to move from a best-efforts platform to a mandatory platform. Of course, there are inherent risks in doing so, but it is something to be considered. Risk management (i.e., hedging) companies offer information on the topic. For example, Compass Analytics is offering a webinar set for April14th, 2009 at 12PM PST.  The topic of discussion is helping mortgage originators migrate away from best efforts flow into mandatory whole-loan commitments. “The how and the why, and the benefits to best efforts sellers.”  If you’re interested contact Chris Kennedy at ckennedy@compass-analytics.com.

MGIC re-evaluated their Contract Underwriting Services, and is modifying their program. “Effective June 1, 2009 MGIC will no longer accept uninsured business in our Underwriting Service Centers. Our Underwriting Service Centers will be available to underwrite your Contract-with-MI and MI-only loans. MGIC’s Contract Underwriting Services for uninsured business will only be available with on-site underwriting at a per-day pricing fee.”

Yesterday, although they didn’t move the market much, we had Pending Sales of Existing Homes (+2.1% in February, Pending re-sales were +14.5% in the Midwest, +10.6% in the Northeast, +4.4% in the South, but the West registered a 13.5% drop), ISM Manufacturing (down for the 14th month in a row), and the Fed in buying about $6 billion of Treasury debt. (I still grapple with the question, “Aren’t the Fed and the Treasury two pieces of the same US Government pie?) This morning we’ve already seen Jobless Claims, which shot up to their highest level in 26 years last week: +12k to 669k. The four-week moving average for new claims rose 6,500 to 656,750, the highest since autumn of 1982 (when Reagan beat Carter).

Some attention today may be on stocks, which seem to be on the upswing. Yesterday the S&P rallied nicely, and overnight stocks in Hong Kong were up 8%. We also have the Non-farm Payroll data coming out bright and early tomorrow morning. Technically speaking the bond market is relatively neutral, which means that rates and prices could go up or down without too much difficulty. Mortgage prices are, once again, about unchanged, and the 10-yr is at 2.69%.

What do ex-presidential candidates do? In John McCain’s case, the Arizona senator John McCain is trying to clear the name of fighter Jack Johnson, who was convicted in 1913 of violating the Mann Act which made it illegal to transport a woman across state lines for immoral purposes. Johnson was the first black heavyweight champion, and was sent to prison because of his friendship with a white woman. The woman, Lucille Cameron, would later become Johnson's wife.

At a cocktail party, one woman said to another, “Aren't you wearing your wedding ring on the wrong finger?”
“Yes, I am. I married the wrong man.”

Just think, if it weren't for marriage, men would go through life thinking they had no faults at all.

When a woman steals your husband, there is no better revenge than to let her keep him.

A young son asked, “Dad, is it true that in some parts of Africa a man doesn't know his wife until he marries her?”
Dad replied, “That happens in every country, son.”

If you want your spouse to listen and pay strict attention to every word you say, talk in your sleep.  
 

Rob

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