I am the first to admit that if I had to make a living as a day trader, I would be bankrupt within a month. Yesterday was a perfect example. Bank stress test results have been leaked out, showing, for example, that Citi, Bank of America, and Wells Fargo will all require additional capital. (My daughter found a copy of the government report posted on the cafeteria bulletin board – that’s how bad the leak is.) So I would have thought that those stocks would have fallen, and traded accordingly - selling. So what happened? Yesterday, in one day, Cit and BofA stocks were up 17%, and Wells was up 16%!

Most analysts feel that if Treasury rates drop, mortgage security prices will not keep up. And, of course, the direction of US government debt will be greatly influenced by tomorrow’s Unemployment data (Nonfarm Payroll is expected to be -600k). On the other hand, no one expects the government to let mortgage rates rise, prices fall, too much at this point in time. And stocks just keep rolling along. Not only did we see another rally yesterday, but it continued overnight in Asia. Unfortunately this has removed the “flight to quality” bid for bonds, and prices have dropped/rates moved higher due to this and due to the supply of debt being auctioned off.

We have $14 billion 30-yr bond auction today. We have already had Jobless Claims this morning, which unexpectedly fell by 34,000 last week. And the four-week average of new claims declined for a fourth straight week. In addition, U.S. productivity grew at a slightly higher-than-expected 0.8 percent annual rate in the first quarter but the number of hours worked fell faster than output as firms cut back sharply on employment to protect profits. After the news, the 10-yr yield is up to 3.26%, and 5-yr Treasury & mortgage prices are worse between .125-250.

Flagstar’s in the club! Effective yesterday, “customers may register loans up to the new maximum loan limits permitted by ARRA on the Fannie Mae High Balance Program.  LTV limits and credit score requirements are broken down between loans from $417,001-$625,500 and $625,501 and greater; fixed rate and adjustable rate; fully amortizing and interest-only.” “Effective May 16, 2009 Flagstar Bank is pleased to announce that customers may register loans up to the new maximum loan limits allowed by ARRA on the Freddie Mac Super Conforming Program (Doc. #5347).  LTV limits and credit score requirements are broken down between loans from $417,001-$625,500 and $625,501 and greater and fully amortizing and interest-only.” Loan limit tables can be located at http://www.fhfa.gov/Default.aspx?Page=185.

Rumors are swirling that Bank of America Home Loans may soon announce, but these are purely rumors and it is unknown whether they will be for all business channels or just one or two of them.

I have a little more clarification on the HVCC & FHA question. First, please remember that policies often vary with the same company, especially leading investors, depending on if the loan is originated through retail, wholesale, or correspondent channels. And the commentary is not meant to be and end-all underwriting source – one should check with their sales person about specifics!

“Flagstar is not implementing HVCC appraisals on FHA loans yet. That is not to say Flagstar won't if the market moves in that direction, but not yet – it is only Fannie/Freddie at this time. To repeat, Flagstar only required HVCC appraisal's and ordered through the website as of May 1st for conventional loans only.”

Realtors now have their own credit union. And the web-based organization originates mortgages. REALTORS FCU serves the 1.2 million members of the National Association of Realtors (NAR), their families and staff. It will offer residential mortgages, along with lines of credit, consumer loans, and checking and savings accounts. The Web site for the credit union is www.realtorsfcu.org

A golfer is in a competitive match with a friend, who is ahead by a couple of strokes. “Boy, I'd give anything to sink this putt," the golfer mumbles to himself.

Just then, a stranger walks up beside him and whispers, "Would you be willing to give up one-fourth of your sex life?"

Thinking the man is crazy and his answer will be meaningless, the golfer also feels that maybe this is a good omen so he says, "Sure," and sinks the putt.

Two holes later, he mumbles to himself again, "Gee, I sure would like to get an eagle on this one."

The same stranger is at his side again and whispers, “Would it be worth giving up another fourth of your sex life?"

Shrugging, the golfer replies, "Okay." And he makes an eagle.

On the final hole, the golfer needs another eagle to win. Without waiting for him to say anything, the stranger quickly moves to his side and says, "Would winning this match be worth giving up the rest of your sex life?"

"Definitely," the golfer replies, and he makes the eagle.

As the golfer is walking to the club house, the stranger walks alongside him and says, "I haven't really been fair with you because you don't know who I am. I'm the devil, and from this day forward you will have no sex life."

“Nice to meet you," the golfer replies, "I'm Father O'Malley."

Rob

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