OTS: Re-Defaults Above 50%, New MBS Rules, National Highway Factoid
Jay Leno said, “Barack Obama says one of his top priorities once he becomes president is closing down Guantanamo Bay. To make sure it closes, he’s going to turn it into a bank.”
Factoid About National Highway System
Years ago I’d heard a rumor that, for Interstate Highways built in the 1950’s, every five miles had to have one mile of straight highway? Why? For the emergency landing of military jets. As it turns out, this is untrue. According to the Federal Highway Administration’s Office of Infrastructure, “No law, regulation, policy, or sliver of red tape requires that one out of five miles of the Interstate Highway System must be straight.” (Besides, there are more overpasses and interchanges than there are miles in the system so even if there were straight miles, planes attempting to land would quickly encounter a overpass on their runway.)
Salary Research
If I had co-workers, I’d want to know what they made every month. Or, as an underwriter, back in the Paleozoic era when “stated loans roamed the earth”, I’d like the ability to check pay rates. Three seemingly popular sites are Glass Door, PayScale, and Salary.com.
OTS: Re-Defaults Above 50%
According to a study done by the Office of Thrift Supervision, more than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again. Perhaps this is of little surprise to loan agents & brokers. “The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures”, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency. Many experts claim the bulk of loan modifications don’t actually provide much financial relief for borrowers. http://money.cnn.com/2008/12/08/real_estate/meltdown.ap/index.htm?postversion=2008120814
Daily Humor
Thank you Richard L:
Two guys are speeding through Texas when a state trooper pulls them over. The trooper walks up to the drivers side of the car, gets out his billy-club and smacks the driver across the face. Stunned, the driver asks, “Why did you do that??”
The trooper responds, “You’re in Texas now son, you have that license out and ready around here!”
“I apologize sir, I’m not from around here.”
The trooper then walks to the passenger side of the car, and taps on the window. The passenger rolls down his window and the trooper takes out his club and smacks the passenger across the face.
“What was that for??” asked the passenger.
“I know your kind,” says the trooper, “About two miles down the road you would have looked at your buddy and said ‘I wish that trooper would have tried that —- with me!”
Market Update
The markets are relatively quiet with little economic news out, with the 10-yr at 2.72% and mortgage prices about .250 better than yesterday afternoon. Some expect interest rates creep up a little, since the treasury market is very overbought and mortgages will track the retracement. The FOMC meets early next week, and most expect them to lower overnight rates although the impact on mortgage rates will be minimal. We do have a $28 billion 3-year auction tomorrow to get through, along with Pending Home Sales later this morning. So the focus is on the stock markets, where another nice rally took place yesterday
New MBS Rules
Students of mortgage originations know that SIFMA has said “no more than 10% high balance loans can go into TBA-eligible pools.” (TBA’s, to-be-announced, are basically FNMA/FHLMC mortgage securities.) So how does an investor such as Fannie Mae, Chase, or Wells put a cap on originations? Through price, of course. Several investors, such as Countrywide and Chase, have High Balance price hits, thought to range from 1-2 points for this product. They will probably keep this in place until they see the mix of products, regular versus high balance, which they are receiving from their originators. Not exactly scientific, and certainly confusing for smaller companies that sell loans to them, but understandable.