Market Color: Another mixed economic message today with the jobless claims report higher than expected while the trade balance improved with the weaker dollar allowing for more exports thus reducing the trade deficit. Yield curve as determined by the differences between the various maturities from 1 month to 30 year shows the widest gap in 17 years between the two year and 30 year maturity. With this kind of rate difference attracting bidders for our debt will be easier with the massive debt auctions necessary to finance the debt the treasury and FED is piling up. If you care to know how to read what a particular yield curve means, the attachment can answer some of those questions. Right now, the futures market is pricing in an 81% chance that the Fed keeps rates somewhere between 0% and .25% through March 16th, 2010. Currently, the Ten Year yield is at 3.45% (3.40% yesterday).
Market News: Ongoing fight continues to obtain votes for imposing further regulations on our industry. With the House of Representatives taking up a broad plan to place new constraints on businesses and financial institutions, some Democrats are threatening to withhold support due to concerns over the impact on those entities. Liberal lawmakers are particularly unwilling to make concessions to banks on account of their role in the economic crisis. Opposition also has come from the Congressional Black Caucus, which charge that so little of the plan addresses economic troubles in the nation’s minority communities. Consequently, provisions have been added to steer $4 billion from the bank rescue fund to buy and repair abandoned and foreclosed houses and to provide low-interest loans to unemployed homeowners.
Another version of the blame game is occurring as it pertains to the loan modification process. A Dec. 9 report from a watchdog panel indicates that the Obama administration’s mortgage relief plan resulted in just 10,000 permanent modifications, and only $2.3 million of the $75 billion earmarked for the program has been used. The report says the initiative “appears capable of preventing only a fraction of foreclosures,” and critics attribute the low numbers to the fact that lender participation is voluntary. However, the lending community blames homeowners for failing to meet requirements, with the report showing that just 33 percent of borrowers have submitted the required paperwork.
GEM corporate will be watching this issue and send out guidance, but HUD is supposedly planning to remove the 1 percent cap on origination fees for FHA mortgages in the coming weeks. As we already know the revisions for the Real Estate Settlement Procedures Act rule will standardize the good-faith estimate of mortgage terms and closing costs, and it believes that giving consumers the opportunity to compare lenders’ fees and shop around for the best price will prevent fees from rising too much. HUD signaled last year it might lift the cap when it overhauls regulation for upfront disclosures but said it would reserve the right to reinstate or add limits on fees charged to borrowers.
Ok, I know it is getting colder unless you are Mary Joe Sato’s branch in Hawaii, but if your mind begins to wonder and thinking about taking a vacation, the following slide show either will make you sick or make you to decide to move to another country. And while we as Americans tend to work more than other countries, believe it or not, there are countries that have less time off on par than the US. One of those countries is not to far away. The pictures are a postcard for sure for each respective country.
Product News: Bank of America sent out a reminder that DU Version 8.0 will not issue Expanded Approval Level II and III recommendations. Any Expanded Approval decision (I, II or III) using DU Version 7.1 must be locked by tomorrow, but loans that receive an EA-I recommendation will continue to be eligible for purchase with the exception of Agency High Balance, DU Refi Plus, Interest-only loans, 6-month ARMs and 5/1 ARMs with 5-2-5 caps. In addition, 5-year and 7-year balloon programs will no longer be offered – lock them by tomorrow. In fact, BofA has set forth 2/26 as the last day that they will purchase loans with credit scores less than 620, loans underwritten under previous two-unit owner-occupied interest-only LTV guidelines, etc. – any loans with DU 7.1 characteristics.
Filed under: Rick Roper |
Freedom Mortgage Funding Blog 
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