Another Mortgage Closure, Housing Starts Dismal

GM wants $17 billion more. One trader from Cantor Fitz mentioned that, “GM seems like a pension plan that occasionally makes a car somebody occasionally buys.”

Citi Loan Changes
First things first. Yesterday I mentioned that “CitiMortgage now requires the following minimum FICO scores on all FHA and VA loans, including FHA Streamline and VA IRRRL. For loans ≤ $417,000, it is 620, above $417 borrowers need a 660.” Please note that this was for Citi’s wholesale and correspondent business channels only, not for their retail banking side.

EquiFirst Closes
EquiFirst, a 20-year veteran retailer and wholesaler headquartered in Charlotte and owned by Barclays, yesterday announced, “Effective immediately, EquiFirst Corporation is ceasing its lending operations and will no longer accept mortgage loan applications for any type of mortgage loan product. EquiFirst will continue to process any completed mortgage loan application upon completion of underwriting and processing.” Their website said, “Barclays Capital Real Estate Holdings Inc., a subsidiary of Barclays Bank, PLC, acquired EquiFirst in 2007, providing us with the stability to grow and change with the mortgage industry. As a result, our commitment to our brokers has never been stronger. No matter how big or small, we promise to handle your loans with the urgency, service and expertise they deserve. We know you have a choice of where to take your business, and we appreciate you choosing EquiFirst.”

Stock Market, Economic Stats
For the markets, yesterday was another day of “stocks down, bond prices up” although as we know that is not always the case. It depends on the reasons, but with every country’s economy doing poorly, they can’t support higher rates. Along with Japan’s dismal data, manufacturing in the New York area contracted at the fastest pace on record, spurring concern the government’s stimulus package won’t be enough to curb the recession, which some think will lead to a depression. Today is Housing Starts (expected -3.6% but was down almost 17 %!), Building Permits (expected -4% but down almost 5%), Industrial Production (expected -1.5% but down1.8%), and Capacity Utilization. Later on we will have a flurry of Fed speakers, along with the release of the Fed minutes from the January 28th meeting. After this we find mortgage prices roughly unchanged from yesterday afternoon, and the 10-yr around 2.63%.

Experian Cuts off Consumer Sales
Experian Group (based in Ireland with its US headquarters in Southern California) has stopped selling FICO scores to individual consumers, but will continue to sell them to commercial customers such as lenders. Some borrowers are miffed, since a lender will have access to their Experian FICO score, but they won’t. Experian begs to differ, since they will still offer individual customers its own credit rating scoring system: PLUS and VantageScore.

Mortgage Insurance Credit Score Requirements
RMIC fell into “LTV and FICO line”. They announced that, “The following guideline changes will be effective for all mortgage insurance applications submitted on or after March 9, 2009. The minimum loan representative FICO score for loans with an LTV/CLTV less than or equal to 95% is 680 (higher FICO requirements remain in place for loans with LTV/CLTVs between 95.01% and 97%, declining markets, high balance loans (1-unit > $417,000), and construction/permanent loans); Construction/permanent loans are limited to a maximum 90% LTV/CLTV and require a minimum loan representative FICO score of 720; The maximum Total Debt-to-Income (DTI) ratio is 41%, regardless of AUS recommendation or compensating factors; Second homes and 2-unit properties are ineligible; Interest-only loans are ineligible; and Loan amounts greater than $417,000 are ineligible in Standard Declining Markets.”

In addition, RMIC made changes to their non-retail originated guidelines, which will be effective on the 9th. “Loans in Non-Declining Markets are limited to a maximum 95% LTV/CLTV and require a minimum loan representative FICO score of 700; Loans in Enhanced Declining Markets are limited to a maximum 90% LTV/CLTV and require a minimum loan representative FICO score of 720; Loans in Standard Declining Markets are limited to a maximum 90% LTV/CLTV and require a minimum loan representative FICO score of 740; A-Minus loans are ineligible.”

Moody’s Downgrades MGIC
Moody’s, perhaps trying to make up for serious mortgage-backed bond mis-gradings in the past, cut the ratings of Radian seven notches to “Ba3” from “A2” which is a “junk” rating. Parts of MGIC’s business were also downgraded to junk status, to a rating of “Ba2” from “A1,” and Genworth was downgraded to “Baa2” from “Aa3.” And not wanting to leave them out, AIG-owned United Guaranty Residential Insurance Co. and United Guaranty Mortgage Indemnity were downgraded to “A3” from “Aa3.”

Mortgage Apps Up
The MBAA announced that last week’s mortgage applications were up 46% due to refinancing being up 64%! Purchases were up over 9%, which was a welcome sign that at some point, and some interest rate level, purchases are starting to pick up. Originators who are still locking on a loan-by-loan basis are regularly hitting the daily caps set by large investors for them, whereas it appears that companies that are hedging their locked pipelines using securities or bulk forwards are avoiding this problem.

Daily Humor
My wife asked me if a certain dress made her rump look big.

I told her not as much as the dress she wore yesterday.

And then the fight started…..