If you look at the most recent U.S. jobs and manufacturing data summarized below as well as better retail earnings this morning (WSJ, IBD), it’s a picture of modest improvement. Normally this would mean higher rates as investors shift out of safe bets into riskier assets. But the overhang of the Eurozone debt crisis proves to be too much.

It doesn’t help that Bernanke implied the U.S. could be Greece in his testimony this morning. Read the link for why it’s really not, but that doesn’t matter on short-term sentiment. The bond rally continues on this, and of course the week’s hot Eurozone topic: Greece, which is still trying to get private investors to agree on a debt deal.

The deal calls for Greek bond investors to exchange outstanding bonds for new ones with coupons as low as 3.6-3.75%, and take losses of about 70% in the process. If most private investors don’t agree, it could trigger credit default swaps (CDS) on these securities, leading a European bank liquidity issue, which is really a global issue.

That plus the fact that the deal may not save Greece is why investors are seeking refuge in MBS and Treasuries (which are yielding 1.84 right now, also staggeringly low).

And now for the stat/chart rundown…

Jobless Claims
-367,000 for week ended January 28, seasonally adjusted
-Down 12,000 from previous week’s revised 379,000 (was 377k)
-4-week moving average was 375,750, down 2,000
-The 4-week average translates into 1,637,000 Jobless Claims/month
-While this week’s data is modestly better, this is not an indication of a healthy jobs market. It is healthier that it was but still not well. Tomorrow’s BLS Employment Situation Report will give another look.

Challenger Job-Cut Report
-Announced layoffs for January were 53,486 up from previous month’s 41,785

ISM Manufacturing Index (January 2012)
-ISM Manufacturing Index 54.1. Previous was 53.9.
-50 is dividing line between expansion and contraction
-This is the 30th straight month of (albeit modest) expansion
-The data are consistent. The wholesale part of the economy seems unaware that consumer spending had flattened. Either Consumer Spending will increase or manufacturing will decrease. The last GDP report showed significant growth in inventories.

The point is that this is perilous for 1Q2012 GDP. If Consumer Spending is flat and Government Spending is down and the Investment part of GDPis down because inventories are too large then GDP will be flat or even negative.

Here’s a summary of all ISM Manufacturing trends:

Worker Productivity and Costs (4thQ2011)
-Nonfarm productivity – Quarter/Quarter change +0.7%
-Unit labor costs – Quarter/Quarter change (seasonally adjusted, annualized) – +1.2%
-Productivity growth slowed (it was +2.3% in the previous Q/Q comparison) while compensation rose 1.9% after falling 0.3% in 3rdQ2011.

ADP January 2010 Jobs Report
-ADP showed +170,000 new private jobs
-Previous was +325,000, Consensus was +172,000
-These are private sector jobs only: +170,000 private jobs is not an indication of economic growth and just barely keeps pace with population growth.

Mortgage Applications Week Ended January 27
-Purchase Index, Week/Week -1.7%
-Refinance Index, Week/Week -3.6%
-Composite Index, Week/Week -2.9%

- Purchase Index, 4-week Moving Average +4.11%
- Refinance Index, 4-week Moving Average +4.22%
- Composite Index, 4-week Moving Average -2.9%

-Full mortgage app report.

Construction Spending (December 2011)
-Construction Spending, Month/Month +1.5%
-Construction Spending, Year/Year +4.3%
-New single-family construction was 1.5%

by Julian Hebron & Dick Lepre

The Bay Area housing market is very busy from where I sit. I’ve been pre-approving lots more buyers in the past two months than is typical for this time of year. It’s quite surprising and encouraging.

I’ve been so fult tilt on 2012 that one cool achievement from December got lost in the shuffle: I made National Mortgage Professional magazine’s “40 Most Influential Mortgage Pros Under 40″ list.

Took pictures of magazine and my excerpt above and below, so please excuse my bad photography. And for those who bristle at self-promotion, I’ll share two thoughts:

First, I usually bristle too but check out number 9 on this list. Cramer is absolutely right: “you have to promote yourself. Nobody else is going to do it for you.”

Second, if its any consolation, I’m also a firm believer in number 10 on that same list. It talks about how you have to be real—to bleed—if you expect people to be interested or take you seriously as a writer. Because people who never make mistakes, always have the markets right, and always have something good to say about themselves are often revealed to be full of crap, boring, or both. The last thing I want to be is That Guy.

That’s why my I’m glad they wrote my 40 Under 40 profile as they did (typos aside), because it’s no bullshit: my primary goal in blogging isn’t to get business—I’m fortunate enough to have steady business through more traditional channels—it’s to be a voice from the housing trenches. A credible, un-boring voice.

I’m not there yet, and it’s mostly because I don’t bleed enough when I write. But I’m working on it.

The main thing I’ve learned since launching The Basis Point publicly two years ago (details) is that it’s incredibly hard for mortgage lenders to blog.

I’d argue it’s harder for mortgage pros than other financial pros like investment advisors because we’re so transaction oriented. We have all the same client relationship and prospecting responsibilities, but then we’re running transactions on top of everything else. And transactions that involve such personal involvement from clients can eat up whole days/nights in a blink.

But that’s why I’ve always remained focused on blogging, and built a lending team that enables me to write regularly. So it may inspire others in my shoes to do the same. Or at least live through some of the stories when I’m bleeding in the good-writer sense of the word.

If I’ve started to become “influential” in the eyes of others, great. But it’s not about influence, it’s about inspiration. A fine line I know, but an important one that divides the self-promoters from the real professionals.

___
And also…
If you’re in lending, you should be reading National Mortgage Pro: Website | Facebook | Twitter

A memo written by BofA home loans sales executive Matt Vernon notes that:

While we regret the inconvenience this will cause to some of our customers in the short term, we are making the responsible choice that is in the best interest of our long-term capabilities to provide a predictable customer experience.

The memo was provided to National Mortgage News by a confidential source.

In spite of arguments that this is some of the cleanest product ever to be originated, and profit margins being solid for many in the business, BofA seems to be backing off a bit. They produced just over $22 billion in mortgages during 4Q2011, a 75% decline from 4Q2010.
___
Source:
Another Mortgage Shoe Drops At BofA – National Mortgage News
___
Related:
Mortgage Banker View: BofA Cuts Off Mortgage Bankers

Today they announced they haven’t found a buyer and are ceasing forward mortgage operations. Here’s the meat of the press release:

NEW YORK–(BUSINESS WIRE)–Jan. 10, 2012– MetLife, Inc. (NYSE: MET) announced today that it is exiting the business of originating forward residential mortgages. MetLife Home Loans, the residential mortgage division of MetLife Bank, N.A., will no longer accept new loan applications for forward mortgages. MetLife Home Loans continues to originate reverse mortgages.

MetLife Home Loans will continue to service its current mortgage customers. In addition, MetLife Home Loans will honor all contractual commitments for loans in process and expects the majority of loans to close in 90 days.

MetLife expects $90 to $110 million, after tax, in costs related to exiting the business to be incurred over the next year, with no expected impact on the company’s operating earnings.

On December 27, 2011, MetLife announced that GE Capital Financial Inc. had agreed to acquire most of MetLife Bank’s depository business, including certificates of deposit and money market accounts.

MetLife’s entire retail banking business, including mortgages, represented under two percent of MetLife’s 2011 operating earnings as of September 30.

Also, they sent a memo to all the mortgage broker firms who originate and send loans to MetLife (via their wholesale mortgage division, also being shut down), saying that today is the last day to submit loans.

If you’re a consumer working with a MetLife agent, ask them to brief you on your timing. If you’re working with a mortgage broker right now, ask them if they’re placing your loan with MetLife, and what impact this may have.

My hat’s off to MetLife loan agents who didn’t have a choice in this matter.

Here’s my advice to MetLife agents and more details on this big news that I wrote when it was first announced.

His letter is below, and I’m surely not the only consumer-facing finance pro to parse that letter like it’s an FOMC statement.

My initial take: he’s got an incredibly political job. He does a nice job of personalizing his goal with a specific consumer loan-modification-gone-bad anecdote. Old political speech technique, but still: well executed.

But it’s curious that he chose loan modifications. This is an area of finance that has only risen to prominence with the housing bust. There were never any rules written on disclosures, fees, etc. for loan mods because Notes and Deeds of Trust spelled out terms clearly.

The result: negotiating a loan mod is like the wild West. No bank evaluates it the same because it’s a case-by-case decision. Clouding it more is the fact that everyone from former loan agents to former escrow officers to attorneys stepped in to capture loan mod business, and there’s no two loan mod fee models that look exactly alike.

So it’ll be interesting to see if loan mods are a pet topic. I hope not—at least to start—because the CFPB needs to keep its eye on their current initiative of revising mortgage Good Faith Estimate disclosures.

I’ve said repeatedly the three-page GFE implemented January 2010 (after receiving OMB approval under Orszag’s rule) is a joke. For example, it combines fees into groups instead of showing each line item, and disclosure rules require it to show seller-paid fees (like transfer tax) as buyer-paid.

This afternoon, I spent 90 minutes explaining it to new clients buying a home (that I’d categorize as astute consumers), and they’re still dubious about the terms I’m presenting—which are incredibly straightforward when not displayed in this form. All because I’m forced to use a form written by people who have never originated a consumer mortgage.

So Richard, please keep your eye on the ball and finish the new GFE that the CFPB has been working on since May 2011.

Naturally, the fourth draft you recently released is less clear than the first, but it’s still worlds better than the existing form that makes people in my profession look like we’re trying to hide something.

I’ll say that again: The disclosures that mortgage loan agents have been required by Federal law to use since January 2010 make us look like we’re trying to hide fees.

Please fix this, and please let me know how I can help. I put those forms in front of clients every single day, and 80% are baffled, even the PhD’s.

You say you’re listening Richard. And as a lender whose whole life is centered around doing the right thing for my clients, I really hope you are.

And for everyone else reading this, here’s Richard’s letter to you. Click the links and go tell him your stories…

Happy New Year,

As the new Director of the Consumer Financial Protection Bureau, and as someone who has been helping to build the Bureau for about a year now, I can tell you it’s an extraordinary privilege to work on behalf of American consumers.

Consumers like you. Tell your story.
https://help.consumerfinance.gov/app/tellyourstory

In our first six months, our team at the Bureau has been answering calls and reading stories from hundreds of American consumers every week. Their stories illustrate the kinds of issues people are dealing with around the country.

These things can happen to anyone. We are not talking about some impersonal abstraction, not about somebody “else.” We are talking about each one of us. We’re talking about our mothers and fathers, our sisters and brothers, our sons and daughters. Regular people who are trying to make the right choices for themselves and their families.

We’ve heard from people like Rebecca from North Carolina. She told us she missed a mortgage payment nine months after her husband lost his job. In the two years since then, her mortgage servicer has increased her payments even though she entered a trial modification in an effort to lower her monthly payments. The servicer has charged her monthly fees for inspections and appraisals that she never asked for and she believes have never occurred, all while repeatedly threatening her with foreclosure unless she shells out more money in unexplained fees. Rebecca has frantically complied with all of these demands because she is afraid of foreclosure and so is doing whatever she can to stay in her home.

Tell us your story at https://help.consumerfinance.gov/app/tellyourstory

With the stakes so high, consumers need to be able to fully understand the costs and risks of borrowing on credit, and they need to be able to comparison shop for the best deal. Consumers deserve to have someone who will stand on their side, who will protect them against fraud, and who will ensure they are treated fairly. The new Consumer Bureau was created to make sure that these things are achieved for all Americans. The good news is that we have already gotten started.

Over time, we will judge the success of our efforts by considering whether consumers are treated more fairly and with more clarity and candor in the financial marketplace. We deeply believe that we must hear from Americans about their experiences.

Can you share your experience?
https://help.consumerfinance.gov/app/tellyourstory

Think about your own family members. Like all of us, they want to be able to use consumer credit to make their lives better, not worse. That is our goal as well. The financial marketplace can be a potent arena that helps people find and seize opportunity, not condemn them to bewildering failure. By working every day to protect consumers, we will help to fashion a more resilient economy and a stronger country. Join us; work with us; help us make it so.

Thank you,
Richard Cordray
Director
The Consumer Financial Protection Bureau

While we’re on Wells, its economic team notes the following on housing:

Most of the economic reports dealing with housing have shown a little more strength recently. New home sales rose, sales of existing homes climbed, and new home construction has also improved lately. Low mortgage rates, an improving job market, and some reported easing in mortgage underwriting standards has raised hopes that the momentum will carry over into 2012. The news has not been universally positive. The latest S&P/Case-Shiller data shows price declines accelerating in October. The 20-city index fell 0.6 percent in October and has tumbled at a 6.4 percent pace over the past three months. Home prices are down 3.4 percent over the past year. Moreover, price declines have been fairly widespread, with 16 of the 20 markets surveyed reporting price declines in October. The sharp drop in home prices over the past three months should raise some caution flags for those expecting dramatic gains in 2012. That said, 2012 will be a better year. We have slightly increased our forecast for the next two years, which marks the first time we have raised our expectations for housing in any significant way in well over a year.

But what’s good for housing isn’t always good for those in the mortgage business. Despite record low mortgage rates, 2011 has seen a surprisingly high level of cash home purchases, according to the real estate research firm Hanley Wood Market Intelligence. Analysts say tight lending standards and a search for yield by investors (NOO purchases) has driven all cash purchases of homes higher. Per the report, 38% of homes purchased in 2011 were bought with all cash, up from 34% in 2010, and double the 19% rate in 2006.

A better housing market would certainly help the housing agencies, as WSJ veteran Holman Jenkins says in his editorial called The Fannie & Freddie Hate Storm:

So where ultimately do Fannie and Freddie rank amid the confluence of ridiculous subsidies, private-sector opportunism and ungovernable global capital flows that contributed to the crisis? Who knows exactly, but the exaggerated ferocity of the debate lately is a reliable Washington hallmark of an argument fading into irrelevancy. The financial crisis isn’t over, and around the world the problem is not housing but governments whose commitments far exceed their resources.

Not because it’s good. Because it’s so, so bad.

From my quick digging around on rappin’ Dan Long, he looks to be a truly dedicated local lender in Ohio. He must know this video is cringeworthy yet he’s putting himself out there anyway. And for anyone who does so on a regular basis–whether serving retail clients, writing, marketing, etc.–you know how hard putting yourself out there can be.

Dan has balls. So I’m highlighting his video to give him some search engine love. Also I’m pasting the text he (or his team) put into YouTube below which brings some extra context.

This file is of one of our LOs / BMs in the Ohio market. He attends a regular BNI meeting in his town of New Philadelphia, Ohio, where they all have to give a 30-second advert at each get-together. Dan is a pillar of the community there, lending great weight and reputation to the title of Mortgage Banker. He is always in his office at 123 4th Street, dressed in white business shirt, tie, tie pin, suit trousers and polished shoes. He has lovely silver hair; an absolutely distinguished gentleman. But he is definitely an innovator and thinker and will always be at the front of new and different ways to get his message across. It is no wonder his branch is a success!

Import/Export Prices
-Export Prices, Month/Month +0.1%
-Export Prices, Year/Year +4.7%
-Import Prices, Month/Month +0.7%
-Import Prices, Year/Year +9.9%
-This data says more about the fact that the US dollar is still the world’s reserve currency. A lot of exports are agricultural and a lot of imports are oil making Import/Export prices volatile.

I am always the last to hear, but although it made news yesterday, the “scaling back” of Google Comparison Ads took place on 11/21.

Mortgage rate searches from Google are still available in Alabama, Alaska, California, Pennsylvania and Washington D.C.

Supposedly Google is preparing a reboot of the service (by hitting control, alt, delete perhaps?).

“It was explained to me as being a temporary transition to allow them to better focus in on a smaller market and then once they’ve proven out the enhancements that they want to make, they want to thoughtfully broaden it back to the stage where it is national again,” Bruce Backer, the president of LoanSifter, explained.

Full story on Google’s mortgage strategy from National Mortgage News below.

Google Suspends Mortgage Rate Search Ads

I don’t necessarily agree, and besides, many should be saving up for repurchase requests anyway. But the MBA reported Thursday that independent mortgage banks and subsidiaries made an average profit of $1,263 on each loan they originated in the third quarter of 2011, up from $575 per loan in the second quarter of 2011, according to the MBA Third Quarter 2011 Mortgage Bankers Performance Report.

“Higher volume helped profitability as production costs were spread over a greater number of loans,” said Marina Walsh, MBA’s AVP of Industry Analysis. “Third quarter production expenses dropped on a per-loan basis as volume rose, although expenses remained high by historical standards when compared to other quarters with similar volume. At the same time, secondary marketing income [selling loans] rose from $4,006 per loan in the second quarter of 2011 to $4,563 per loan in the third quarter of 2011. Secondary marketing gains improved as primary-secondary spreads widened in the third quarter.”

The full MBA report has lots of interesting stats in easy bullet point form. Here’s the link:

MBA: Higher Volumes & Profit From Mortgage Banks In 3Q