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Jul. 10, 2009: Little in the way of news, rates somewhat quiet; the mortgage industry simplified
Rob Chrisman
Women
and cats will
do as they please, and men and dogs should relax and get used to the
idea. Many
believe that Fannie and Freddie will do as they please, and everyone
else had
better relax and get used to the idea. What did I learn at the Western
Secondary conference here in San Francisco? Well, F&F set the
guidelines,
but besides them there are five primary investors, in alphabetical
order: Bank
of America, Chase, CitiMortgage, GMAC, and Wells Fargo. (GNMA, of
course, doesn’t
buy loans, but insures them – see note below.) And, aside from a few
exceptions, other lenders ranging from Taylor Bean, Flagstar, AmTrust,
Franklin
American, etc., down to small brokers, sell to them or directly to
Freddie
& Fannie, using the Fannie/Freddie guidelines. That about sums it
up!
In
an effort to save
some trees, and maybe make some money, next week Flagstar “for all
eligible
refinance loans that close…will begin charging a $50 Paper Handling Fee
to help
offset some of the cost associated to traditional closings.”
According
to the
MBAA, the government-insured (FHA and VA loans) share of mortgage
applications
was nearly 36% last month, the highest level since November 1990, and
accounted for almost 40% of purchase applications. Could it be because
these
loans require a lower down payment? Of course - and it is easy to see
why many are hoping that they aren't the next subprime nightmare: http://www.mbaa.org/NewsandMedia/PressCenter/69541.htm
The
Fed purchased
$17.05bn net in agency MBS over the past week, bringing its total net
purchase
to $638.6bn. "What happens when they run out of money?" my 86-year
old Dad asked me yesterday. (He grew up during the Depression, and
visits his
savings in the safe deposit box every few weeks.) I replied, "Dad, you
obviously don't know anything about high level finance. They'll just
print
more!"
This,
no doubt
accounted for the strong performance recently of mortgage securities,
relative
to Treasury prices. Wall Street traders say that buyers from Asia,
money
managers, and the Fed have all been in buying MBS’s – even the higher
coupon
mortgage product. And yesterday was another light news day, with
initial Jobless
Claims being much lower than expected at 565K, but continuing Jobless
Claims were
much higher than expected at 683K. The 30-yr auction of $11 billion was
pretty
good (4.30% yield, 50.2% indirect bids), for lack of a better term, but
the market
is glad to have the auctions behind it. Ahead of the open the stock
market
appears to be heading for negative territory. We will have some trade
data this
morning, but for now the yield on the 10-yr is 3.34% and mortgages are
roughly
unchanged – again. It has been a quiet week.
A lonely widow, age 70, decided that it was time to get married again.
She put
an ad in the local paper that read:
HUSBAND WANTED:
MUST BE IN MY AGE GROUP (70's),
MUST NOT BEAT ME, MUST NOT RUN AROUND ON ME?
MUST STILL BE GOOD IN BED!!!!!
ALL APPLICANTS PLEASE APPLY IN PERSON.
On the second day, she heard the doorbell. Much to her dismay, she
opened the
door to see a grey-haired gentleman sitting in a wheelchair. He had no
arms or
legs.
The
old woman said,
'You're not really asking me to consider you, are you? Just look at
you...you
have no legs!”
The old man smiled, “Therefore, I cannot run around on you!”
She snorted. “You don't have any arms either!”
Again, the old man smiled, “Therefore, I can never beat you!”
She raised an eyebrow and asked intently, “Are you still good in bed?”
The old man leaned back, beamed a big smile and said, “Rang the
doorbell didn't
I?”
Rob
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