The HARP 2.0 initiative aimed at helping agency homeowners to refinance. Then came HAMP 2.0 (this past Friday), aimed at helping to encourage more modifications. Yesterday Obama unveiled a separate refinancing program (discussed below) targeted at non-agency homeowners (making refinancing easier for mortgages not backed by Fannie or Freddie). Finally, in the coming days/weeks we could get a final foreclosure settlement as well as a plan to sell foreclosed homes in bulk.  In aggregate, all these policy moves could help at the margin but most believe they fall short of some grand Fannie/Freddie automatic refinance plan for which some investors had hoped. Maybe we're done with government initiatives for the year? Perhaps not - don't forget chatter out there about the foreclosed properties sitting on the agency's balance sheets, and large scale plans of selling them to investors. And we have some type of possible settlement between the state's AG's and large servicers...

Regarding President Obama's election year housing plan, which is probably going to require Congressional approval, and is therefore highly unlikely...there are fact sheets ranging from 7-10 pages. It certainly gave investors something to talk about yesterday, even if it will take many months, if at all, to roll out. There is too much to reproduce here, check out the original: http://www.whitehouse.gov/the-press-office/2012/02/01/fact-sheet-president-obama-s-plan-help-responsible-homeowners-and-heal-h. Most believe that this plan will not pass through Congress, given the level of political polarization. And it is difficult to understand why the Administration thinks it can get this proposal through Congress when it cannot get the parts that do not need Congressional approval through the GSE’s and FHFA (a federal agency). If rising pressure on the GSEs does lead to them to adopt the agency components of this plan, there will be an enormous effect on agency MBS.

One statement noted, "... believe these steps are within the existing authority of the FHFA. However, to date, the GSEs have not acted, so the Administration is calling on Congress..." Most of the proposals for the plan do not need Congressional approval but the Administration is implying that the main reason to send these proposals to Congress is that the Administration cannot get the GSEs (and presumably FHFA) to do what needs to be done "in the taxpayer's interest..." Consequently, this public proposal seems to be a way to put pressure on the GSEs and FHFA to do what the Administration wants. I guess this is how modern government functions…

So please dig into the fact sheet noted above – that is what the market knows. Originators should probably not become too enamored or bogged down in the plan, as it will take, if it happens at all, several months to sort out, digest, and implement. And who knows which agencies or investors will still be around to originate or buy those loans, which leads me to…

"Dear Broker Mortgage Lending Clients: Over the last four years, the Broker Lending community has shown great resilience during continued consolidation of this market segment.  We appreciate your partnership, your willingness and your ability to adapt to the ever-changing regulatory environment. After careful consideration, Citibank has decided to transition away from our Broker lending business and sharpen our focus on a customer-centric channel strategy...In an effort to effectively manage the Broker Mortgage Channel pipeline for you and your customers, we will manage the transition as follows: We will no longer accept new registrations from our Broker Mortgage Channel clients after the close of business on Wednesday, February 8, at 11:59 pm CST. All locked pipelines must be funded and closed by April 30."

And with that, Citi exits the wholesale business. Although Citi had scaled back from its broker channel some time ago, and tended to be more focused on certain geographic areas than others, it is yet another piece of bad news. Brokers have to be thinking about the old saying, "Death by a thousand cuts." Of the major, top 4 or 5 investors who had wholesale divisions a few years ago, or bought loans from correspondents who dealt with brokers, who is left? Uh, Wells Fargo. BofA is gone, Citi is now gone, GMAC/Ally has scaled back, Chase won't buy TPO business. SunTrust is going through a massive retooling. That being said, there are plenty of investors and lenders willing to step into this arena, and already have. I am not going to make a list of them here, but brokers do have many homes for their loans.

(Ally’s results came out this morning. The bank suffered a loss of $250 million for the 4^th quarter, and the mortgage Origination and Servicing segment reported a fourth quarter 2011 pre-tax loss from continuing operations of $237 million. “The fourth quarter 2011 pre-tax loss from continuing operations included $125 million of pre-tax income from originations, an $81 million pre-tax loss from servicing and a $270 million charge recorded during the quarter for penalties expected to be imposed by certain regulators and other governmental agencies in connection with foreclosure-related matters.  In addition to the foreclosure-related charge, fourth quarter 2011 Origination and Servicing results declined on a year-over-year basis due to a lower net gain on the sale of mortgage loans, lower net financing revenue due to a decline in production and higher noninterest expense.” Refinancing was 80% of volume.)

There is discussion about, “will the U.S. become a nation of renters?” A decent chunk of private equity is certainly moving that way, buying up inventory to rent out: http://www.bloomberg.com/news/2012-01-31/foreclosures-draw-private-equity-as-u-s-selling-200-000-homes-mortgages.html.