The mortgage business just finished a conference in Boston . Besides the numerous comments about it being a “job fair”, this comment from an attendee was particularly interesting:
“The unfortunate part of the conference was that those who were out of work were actually the most cheerful, as if some weight had been lifted. Those who were working were so concerned about what faces us every day - declining volumes, repurchase issues and declining values – that it wasn’t enjoyable.”
· The latest FDIC data shows BofA controls an 8.9% market share of deposits, followed by JP Morgan Chase at 7.0% and Wachovia at 5.9%. (BofA could still acquire a bank with up to $75B in deposits and still be under the 10% cap.) Speaking of BofA, their earnings today were far below expectations, much attributed to non-performing loans.
· Mortgage applications last week were up slightly, given the Columbus Day holiday.
· Washington Mutual Inc.'s third-quarter profit shrank 72%. WAMU reserved $967 million in the third quarter to prepare for borrowers defaulting on their debt. The bank also had a write-down of $147 million after transferring to its investment portfolio $17 billion in home and other real estate loans that it had originally intending to sell.
· Wachovia plans an aggressive expansion in California – aiming for a fivefold increase in the number of branches in the state over the next several years. Based in Charlotte , N.C. , most think of them as the company that bought World Savings.
The bank is in the process of changing the signs on the former World Savings branches to Wachovia, at which point they will have 149 branches in the state. Wachovia was a regional bank until 2001, when it merged with First Union, and now operates in 21 states. The bank's latest acquisition is the $6.8 billion takeover of brokerage firm AG Edwards.
Rates are continuing to drop, and prices improve, as a) BofA announced their earnings, b) weekly Jobless Claims were +28k to 337k, c) housing market indicators continue to show sustained weakness, and d) the chance of a Fed Funds cut on the 31st have increased to 75%. Is the labor market starting to slide? Later this morning we have September’s Leading Economic Indicators index is expected to show a slight gain of 0.3%, while the Philly Fed will likely decline 3.9 points to a reading of 7.0.
Where is the economy heading? And just what is "FHASecure"? What a great question. Last week Retail Sales was surprisingly strong, up 0.6%, but the University of Michigan Consumer Confidence Index Fell to 82 - the lowest since August 2006 as the outlook for housing worsened. The Producer Price Index was stronger than expected, indicating inflation is still a concern, yet house prices continue to slide in many areas.
Unemployment is low, and many companies are looking for workers (I can’t walk by a Starbucks without thinking about turning in an application!), yet foreclosure rates are climbing because borrowers can’t afford their payments.
Tomorrow we get another clue with the Consumer Price Index, but given that unleaded gas is once again above $3/gallon has led me to tell the kids that Christmas will be slim this year… It hasn’t helped, and this could point to lower rates eventually, that there has been positive overall job growth but all of that growth attributable to three employment categories: education and health services, food service and drinking places, and government (Federal, State, and Local).
Continuing on, mortgage prices have improved a little this morning (and the 10-yr is at 4.66%) but were slightly worse yesterday after a report showed manufacturing in New York reached the highest level in three years (aren’t we a service economy?).
The factory report adds to expectations that the Fed will stay on hold. We also saw an $80 billion plan over the weekend to revive the credit markets: Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. agreed to start a fund to help revive the asset-backed commercial paper market.
The high-stakes plan to rescue banks from losses on mortgage securities amounts to a big bet that this group can persuade investors to pour more money into the credit market. Companies depend on commercial paper to finance day-to-day expenses like payroll and rent, although we’re already seeing the jumbo market improve slightly.
Pessimists thought that the “super-SIV story is a bit much for the market to handle...we have some risk that needs to find a home; none of the existing firms want that risk...so we will create a new ‘firm’ to become the buyer of last resort, capitalized from the firms that created the products, but don't want them at current prices.”
Are they trying to create a buyer out of thin air?
Ginnie Mae announced last night that starting December 1, 2007, all FHASecure loans will fall into the GNMA II program but they will be pooled separately as “specifieds” and will not be TBA deliverable. But what is an “FHASecure” loan?
President Bush, on August 31st, announced that HUD's Federal Housing Administration (FHA) will help families avoid foreclosure by enhancing its refinancing program. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.
In addition, FHA will implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay - i.e., riskier borrowers pay more. The press release can be found at http://www.fha.gov/press/2007-08-31release.cfm The FHASecure program was conceived as a way for borrowers that are having trouble making their post-ARM reset payments to refinance into a fixed-rate FHA loan.
You can also visit http://www.fha.gov/about/fhasfact.cfm. Eligible homeowners must have a non-FHA insured ARM that has reset, sufficient income to make the mortgage payment, and a history of on-time mortgage payments before the loan reset.
Thought for the Day: “The ultimate responsibility of a leader is to facilitate other people’s development, as well as his own.”
~ Fred Pryor
“The unfortunate part of the conference was that those who were out of work were actually the most cheerful, as if some weight had been lifted. Those who were working were so concerned about what faces us every day - declining volumes, repurchase issues and declining values – that it wasn’t enjoyable.”
· The latest FDIC data shows BofA controls an 8.9% market share of deposits, followed by JP Morgan Chase at 7.0% and Wachovia at 5.9%. (BofA could still acquire a bank with up to $75B in deposits and still be under the 10% cap.) Speaking of BofA, their earnings today were far below expectations, much attributed to non-performing loans.
· Mortgage applications last week were up slightly, given the Columbus Day holiday.
· Washington Mutual Inc.'s third-quarter profit shrank 72%. WAMU reserved $967 million in the third quarter to prepare for borrowers defaulting on their debt. The bank also had a write-down of $147 million after transferring to its investment portfolio $17 billion in home and other real estate loans that it had originally intending to sell.
· Wachovia plans an aggressive expansion in California – aiming for a fivefold increase in the number of branches in the state over the next several years. Based in Charlotte , N.C. , most think of them as the company that bought World Savings.
The bank is in the process of changing the signs on the former World Savings branches to Wachovia, at which point they will have 149 branches in the state. Wachovia was a regional bank until 2001, when it merged with First Union, and now operates in 21 states. The bank's latest acquisition is the $6.8 billion takeover of brokerage firm AG Edwards.
Rates are continuing to drop, and prices improve, as a) BofA announced their earnings, b) weekly Jobless Claims were +28k to 337k, c) housing market indicators continue to show sustained weakness, and d) the chance of a Fed Funds cut on the 31st have increased to 75%. Is the labor market starting to slide? Later this morning we have September’s Leading Economic Indicators index is expected to show a slight gain of 0.3%, while the Philly Fed will likely decline 3.9 points to a reading of 7.0.
Where is the economy heading? And just what is "FHASecure"? What a great question. Last week Retail Sales was surprisingly strong, up 0.6%, but the University of Michigan Consumer Confidence Index Fell to 82 - the lowest since August 2006 as the outlook for housing worsened. The Producer Price Index was stronger than expected, indicating inflation is still a concern, yet house prices continue to slide in many areas.
Unemployment is low, and many companies are looking for workers (I can’t walk by a Starbucks without thinking about turning in an application!), yet foreclosure rates are climbing because borrowers can’t afford their payments.
Tomorrow we get another clue with the Consumer Price Index, but given that unleaded gas is once again above $3/gallon has led me to tell the kids that Christmas will be slim this year… It hasn’t helped, and this could point to lower rates eventually, that there has been positive overall job growth but all of that growth attributable to three employment categories: education and health services, food service and drinking places, and government (Federal, State, and Local).
Continuing on, mortgage prices have improved a little this morning (and the 10-yr is at 4.66%) but were slightly worse yesterday after a report showed manufacturing in New York reached the highest level in three years (aren’t we a service economy?).
The factory report adds to expectations that the Fed will stay on hold. We also saw an $80 billion plan over the weekend to revive the credit markets: Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. agreed to start a fund to help revive the asset-backed commercial paper market.
The high-stakes plan to rescue banks from losses on mortgage securities amounts to a big bet that this group can persuade investors to pour more money into the credit market. Companies depend on commercial paper to finance day-to-day expenses like payroll and rent, although we’re already seeing the jumbo market improve slightly.
Pessimists thought that the “super-SIV story is a bit much for the market to handle...we have some risk that needs to find a home; none of the existing firms want that risk...so we will create a new ‘firm’ to become the buyer of last resort, capitalized from the firms that created the products, but don't want them at current prices.”
Are they trying to create a buyer out of thin air?
Ginnie Mae announced last night that starting December 1, 2007, all FHASecure loans will fall into the GNMA II program but they will be pooled separately as “specifieds” and will not be TBA deliverable. But what is an “FHASecure” loan?
President Bush, on August 31st, announced that HUD's Federal Housing Administration (FHA) will help families avoid foreclosure by enhancing its refinancing program. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.
In addition, FHA will implement risk-based premiums that match the borrower's credit profile with the insurance premium they pay - i.e., riskier borrowers pay more. The press release can be found at http://www.fha.gov/press/2007-08-31release.cfm The FHASecure program was conceived as a way for borrowers that are having trouble making their post-ARM reset payments to refinance into a fixed-rate FHA loan.
You can also visit http://www.fha.gov/about/fhasfact.cfm. Eligible homeowners must have a non-FHA insured ARM that has reset, sufficient income to make the mortgage payment, and a history of on-time mortgage payments before the loan reset.
Thought for the Day: “The ultimate responsibility of a leader is to facilitate other people’s development, as well as his own.”
~ Fred Pryor
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