"A clever person solves a problem. A wise person avoids it." But at this
point,
most believe that it is too late to avoid the problems in the mortgage
industry.
No one seems to believe that much will happen with Freddie and Fannie ahead
of
next year's election, which easily leads to a debate about the benefits of a
government
that seems more concerned about elections far in the future than in dealing
with
tough issues. That aside, here is the latest: Agencies
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107627796484&s=8721&e=001Co3ASA
LbWZ8m-_Gxgvely0K1iu8hqugq9YhEd4jcNsgOLeliDdTZh36q2HGHwVd-Q4sUVjm5wVNi48O3mQ
k9cHm9Wjw9owMZ39TmSGor7_Zaqm9PYLT0eUI7Coe3ny4_ejYq1pJGFtYT0_sA8I5Ec3SYN4lg5W
kbytYRgXFf_1aOdEfI7FM-Fq7U7WU9db_JENdVt3jHeSs=].
"Here's something that really helps the value of mortgage servicing," he
said sarcastically.
"Let's not pay our mortgage and save our money, let the house go into
foreclosure,
and then buy it back on the courthouse steps for
pennies on the dollar
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107627796484&s=8721&e=001Co3ASA
LbWZ9DoK3tGHhRR8l03lDUuXhCg_9gZOtzgYi8focTq2fZthOnuUu_XRn62lmLo8n0x3WX1fMs0k
-6sPL4-YM0NghDL3eCzZjVmzyMu963Xggxd3Er2-nSPQikY_V1IJMm3BSXkV0mIy9a9j6lt0uvwi
q5bUVfSwpV0LZAzeWFQmqaEkiKqL9RQseAK-pGzwXKEHQQMh_tsW0z2w9FRfdAcIssnZhQICvu31
w=]."
"A few months ago, real-estate companies that invest in mortgage securities
were
one of the hottest sectors among companies planning initial public
offerings of
stock. Now, however, they are among the least likely to go public anytime
soon."
So began a story in the Wall Street Journal about REIT's, which must pay out
90%
of their taxable income as dividends. "If the remaining five pending
mortgage REITs
eventually go public, then the entire pool of publicly traded mortgage REITs
will
grow to 28 from the 23 that the National Association of Real Estate
Investment Trusts
had on record through August." The SEC recently launched a review that could
determine
whether mortgage REITs should continue to be unregulated companies or
whether they
should be subjected, like mutual funds, to the Investment Act of 1940.
"But now, the SEC appears to be making a distinction between REITs that
manage and
operate real estate versus REITs that invest in real-estate securities. If
the SEC
determines that mortgage REITs shouldn't qualify for exemption, the
companies will
lose the ability to use hefty amounts of leverage, or borrowed capital, to
boost
returns and provide high dividends." (There is more analysis at REIT's
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107627796484&s=8721&e=001Co3ASA
LbWZ9_xGZpWMOGYYt8f5_ia_KezDy_FqUwVECUxX7xwkBMnrG_Ys_2VdBxJ4jzKT8dGBc5NruMBw
32QtkL29KegfQKy1x9DyC_Y-2YW4gEzo3yjA==].)
President Obama's proposed $447B job-creation plan would reduce the tax
break for
municipal bond interest to 28% from 35% (for couples earning more than $250k
per
year), potentially reducing demand for state and local government
securities. I
have seen nothing with regard to the mortgage interest deduction, but if
muni bond
interest is not sacred...
Tomorrow is a HUD deadline. A while back HUD has reopened the application
intake
for the Emergency Homeowners' Loan Program (EHLP), a program that provides
mortgage
payment assistance to eligible homeowners experiencing a drop in income of
at least
15 percent, directly resulting from involuntary unemployment or
underemployment
due to the economy and/or a medical condition. The deadline to apply is
tomorrow:
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107627796484&s=8721&e=001Co3ASA
LbWZ_gcjhS6BBhJax3FWRoukxeik5YQkwnhKeMY5754ogBBBeYvMtb6oTunh24ja4ecpPktMJklH
jiRznRF7pUPuFF6A5bVVNGP5A=].
HUD has been busy, releasing a number of Mortgagee Letters. A recent one,
for example,
is to "identify circumstances under which mortgagors must successfully
complete
a trial payment plan prior to the mortgagee executing a loan modification or
partial
claim action under the FHA's Loss Mitigation Program." See them all at: HUD
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107627796484&s=8721&e=001Co3ASA
LbWZ-vS8UCFCf_Nult9GQN6PIDAJkT7wfxxHszjRmkNp1cDjFwFz7fxjhpriEshGK-WksRl5V_M0
l9eZHguZadbzUqna3e8gO2Fiq47YhcNh0N2c7nUFj7Cn9IiUqb4Yeec5c-6QRQqkVUEtp13roI1-
bhCzlYBPnxjjI=].
And there is quite a bit of FHA training around the nation. Today in
Portland, OR
(FHA Loss Mitigation Program Training and HUD Housing Counseling), the 20th
in Fort
Worth ("A Day with the FHA & the FHA Appraisal"), the 21st in Birmingham
(HUD Loss
Mitigation Program Training) and so on. Page down through the sessions at
Training
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107627796484&s=8721&e=001Co3ASA
LbWZ8fODH-d4XxxC5-8_mD76FSsxeZQahoSiRUAD1g-l6kfC_t_K_7Bn9-pcthjX16CIZ7JJZQ1T
219t-RkhUpsVRJyk3SjJt8qAsWELocl1JeN1yAgRtmBpXuWGSllNPXGLBgReBS59p6r9nAVMwHfq
fjtHBrdslxwKKFlig5ULzZ6w==].
AllRegs and The Prieston Group announced a "joint relationship to offer risk
assessment
resources to the mortgage industry. Together the two companies will build on
existing
tools, processes and resources to provide real-time corporate level risk
assessment
tools and benchmarks. Both organizations have agreed to a multi-year
commitment.
Research and development, technology infrastructure, product development
and various
other capital resources will be invested by both organizations to create a
new suite
of risk assessment resources and benchmarks." To learn more about AllRegs,
visit
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107627796484&s=8721&e=001Co3ASA
LbWZ_nwEKVufGpZcPaM-HZT_fI-Ud9lamojS83gpLIrqdtQ_YSu0o8wuoMoVRb-rBgASaJMwJ8y4
5GttGdqoxL7lSYPogRqtw4qsevtSNm6vMKZNOVrjN4thj9]
or for more information about The Prieston Group, visit
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107627796484&s=8721&e=001Co3ASA
LbWZ__LFw6oRTPapOkw5URM_mgf0ymiK10gejO-bZ7kJM45f8vJtio8WsOASk9RTAidSFtVLfsPk
cWZ5Q5PfpXrFHCbBf2lDeGwuYpEY4ZwHblhA==].
The Wall Street Journal had quite an opinion piece on the recent Bank of
America
job cuts. "What is the cost of overregulation? Bank of America appears to
have
provided part of the answer by announcing...it will cut 30,000 jobs between
now
and 2014. CEO Brian Moynihan said the bank's plan is to slash $5 billion in
annual
expenses from its consumer businesses. Mr. Moynihan didn't say this, but we
will:
These layoffs are part of the bill for the last two years of Washington's
financial
rule-writing. After loose monetary policy had combined with insane housing
policy
to create a financial crisis, the Democrats who ran Washington in 2009 and
2010
enacted myriad new rules that had nothing to do with easy money or housing.
Take
the amendment that Illinois Democrat and Senator Dick Durbin (with the help
of
17 Senate Republicans) attached to last year's Dodd-Frank financial law. Mr.
Durbin's
amendment instructed the Federal Reserve to limit the amount of "swipe fees"
that
banks can charge merchants when customers use debit cards. How exactly does
forcing
banks to charge Wal-Mart less money for operating an electronic payment
system prevent
the next financial crisis? Readers may wait a long time for a satisfactory
answer,
but the cost of this Dodd-Frank directive is straightforward."
The WSJ opinion piece goes on. "Restricting bank profits on a particular
product
may have obvious populist appeal, but politicians shouldn't be surprised if
banks
decide that such consumer credit operations aren't good businesses and can
function
with fewer employees. Add in the various federal programs aimed at
extracting penalties
for this or that mortgage-foreclosure error and it's understandable that a
bank
would have trouble forecasting growth to justify its current work force. To
be sure,
Bank of America is also suffering from its own mistake in deciding to buy
Countrywide
Financial in 2008. As for the financial industry generally, it had become
distended
and needed to shrink after the bubble years of easy money. But given the
real-world
results for bank employees, politicians should not be allowed to pretend
that there
are no consequences when they deliberately reduce the profitability of
employers.
Mr. Obama proposed last week to spend some $450 billion more in outlays or
tax credits
to create more jobs, but it would have cost a lot less to save these
30,000."
Even with the impending expiration of the temporary conventional maximum
loan amounts
(although many are convinced that an extension will be pulled out of the
hat), some
companies are rolling out marketing focused on it. Kinecta Credit Union, for
example,
in its Portfolio Lending program, "options and flexibility to meet the needs
of
your borrower with loan amounts up to $2,000,000! (and higher by exception),
Max
LTV/CLTV up to 80%, ARMs up to 40-year term (3/1, 5/1 only), Primary
residence,
2nd Home, Cash-Out Refi available..." (Kinecta also rolled out an Asset
Utilization
program in late August that is available in conjunction with a Kinecta 5/1,
7/1
or 10/1 fully amortizing jumbo ARM loan. Asset Utilization allows applicants
with
significant liquid assets to use those assets as income for qualifying
purposes.
Kinecta has developed an income calculation worksheet that must be used to
determine
the qualifying income. It is best to contact the company for specifics.)
Provident Funding reminded brokers that "Super Conforming loans exceeding
the 'permanent'
loan limits for 2011 (up to $625,500) will not be allowed to lock with a
lock period
expiring after September 30, 2011, and thus the last day for a 12-day lock
is 9/18/2011;
impacted loans unable to fund before the lock expiration will need to be
restructured
as lock extensions beyond September 30, 2011 will not be granted."
Stearns Lending reminded brokers that, "To ensure your loans fund prior to
the expiration
date, please note the following cutoff dates: Lock cutoff date is September
16th,
Docs must be drawn by September 20th, Notes must be dated on or before
September
29th, Loans must fund by September 29th."
Bank of Internet has had an Asset Depletion program for quite some time "to
offset
ratio guidelines for borrowers with significant assets. With BofI's asset
depletion
program your borrowers may use their liquid assets as return for income to
assist
in meeting full doc DTI requirements." It also offers Jumbo ARM's up to
$5,000,000.
Staying in the wholesale channel, ING reminded brokers that it has no hit
for FICO,
LTV, no escrow, and not hit for loan amounts up to $1.5 million.
Turning to the current markets, yesterday's 10-yr T-note auction was "a bit
sloppy"
with a below-average bid-to-cover; the yield was 2.00%. 10-yr Notes ended
the day
worse in price by over .5, and MBS prices were worse by roughly .250. (Today
we
will have a $13 billion 30-yr auction.)
We've already had last week's mortgage application data from the MBA (+6.3%,
refi's
+6%, purchases +7%, refi's at about 77% of total applications), Retail Sales
(unchanged,
weaker than expected), and the Producer Price Index (also unchanged). More
importantly
Moody's downgraded two French banks, and although it was widely expected it
is certainly
a sign of the times. The finance community is waiting to hear Moody's
verdict on
Italy. In the early going stocks appeared to be heading higher, but
interest rates
are slightly higher with the 10-yr at 2.01% and MBS prices worse by about
.125.
At closing time, a drunken guy took a new girl home from the bar. In his
bedroom
she saw a huge brass gong and a mallet, and asked, "What's up with the
gong?"
He replied, "It's not a gong - it's a talking clock."
She squinted at it and tipsily asked, "How's it work?" The drunk took the
mallet
and whacked the gong. A voice from the other side of the wall screamed, "You
jerk
- it's two in the morning!"
If you're interested, visit my twice-a-month blog at the STRATMOR Group web
site
located at www.stratmorgroup.com
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106435366068&s=4179&e=001SVt-lj
bp53436QjxD9vbwURtIPPjV05jEcEKyBN3SjS2forXe0C_foO8RjEV-Uye0N7Z_Sh1il0SRXPx6P
jQauayNXQjni-Hc9Sseu-hhZcR1ujeZyAEpw==]
. The current blog takes a look at the recent news concerning REIT's, and
the possible
tax implications. If you have both the time and inclination, make a comment
on what
I have written, or on other comments so that folks can learn what's going on
out
there from the other readers.
Rob
(Check out
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=ea9f7rhab.0.epg7qedab.zy6u9cdab.8
721&ts=S0672&p=http%3A%2F%2Fwww.mortgagenewsdaily.com%2Fchannels%2Fpipelinep
ress%2Fdefault.aspx]
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=ea9f7rhab.0.v7uif6dab.zy6u9cdab.8
721&ts=S0672&p=http%3A%2F%2Fwww.thebasispoint.com%2Fcategory%2Fdaily-basis].
For archived commentaries, go to www.robchrisman.com
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=ea9f7rhab.0.fpg7qedab.zy6u9cdab.8
721&ts=S0672&p=http%3A%2F%2Fwww.robchrisman.com%2F].
Copyright 2011 Rob Chrisman. All rights reserved. Occasional paid notices
do appear.
This report or any portion hereof may not be reprinted, sold or
redistributed without
the written consent of Rob Chrisman.)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
~~~~
Join My Mailing List
[http://visitor.r20.constantcontact.com/email.jsp?m=1102827910937]
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
~~~~
Forward email
Instant removal with SafeUnsubscribe(TM)
TmggCt&t=001mbGEfmc9utg_O9kXoSAmbQ%3D%3D&llr=zy6u9cdab
Privacy Policy:
Online Marketing by
Constant Contact(R)
Chrisman Inc. | 326 Mission Ave. | San Rafael | CA | 94901
14/2011
No comments:
Post a Comment