CitiFinancial To Close 330 Branches, National Flood Insurance Lapse Delays Loan Fundings

Less Mortgage Volume, No Rate Spike Expected
Mortgage traders are still reporting “below normal” trading volumes, whatever that means. Today we have already had the weekly MBA Mortgage Application Survey for the week ending May 28, which showed apps about flat but purchase apps falling for the 4th straight week. We all know that the crisis in Europe will play out for many months, so volatility will be with us for quite some time. Currently it has benefited US rates, with the flight to quality. We still have our debt and budget problems, which are not going away, but Europe is dominating the news. Few expect rates in the next few months to move higher, given overseas problems.

CitiFinancial To Close 330 Branches
Citigroup’s CitiFinancial unit (not the same as CitiMortgage) will shut 330 of its U.S. branches and cut between 500 and 600 jobs in an effort to cut costs at the business and make it more attractive to potential buyers. This represents almost 20% of CitiFinancial’s 1,833 U.S. branches. The company will stop making loans at another 182 branches. Effective July 1, CitiFinancial will no longer operate full-service branches in Connecticut, Nevada and Rhode Island although it will retain loan-servicing centers in those states.

Flood Insurance Lapse Delays Loan Fundings
The National Flood Insurance Program is back on the front burner, since it expired on May 31, and, to the best of my knowledge, starting yesterday the NFIP did not have authority to issue new or renewal policies. This means that most lenders won’t fund loans until the program is reinstated, which is done through a congressional vote. A vote is not expected until the week of June 7, but even that is undetermined because the FEMA notice about this flood insurance lapse says “The hiatus period is expected to end soon.” So borrowers who’s home is in a flood zone may experience delays on any purchase or refinance transaction.

Pending Home Sales & Construction Spending
Yesterday was yet another volatile day in the markets, with both stocks and bonds chopping around a little. For the time being, the 10-yr yield seems pretty happy in the high 3.20% area, and stock prices seem to want to go lower. That will eventually impact the psychology of consumers… Yesterday we had April’s Pending Home Sales, which are still in positive territory due to the tax credit (buyers have until the end of June to close the sale!). By the way, pending sales data will show a quicker turn in the housing market versus existing home sales, since existing sales are not added up until the time of closing, thus incorporating a delay. Construction spending was up (its fastest pace in 10 years, and investment in private construction rising for the first time since October), and the ISM index was down less than expected.

Friday’s Jobs Report Is Big News Of Week
Lots of eyes are on Friday’s unemployment data, with estimates running between a gain in jobs of 500-600k, and the unemployment rate hovering in the high 9% area. Much of that gain in workers is due to census workers (I had a call last week from one, and I was asked to recount my entire day, minute by minute) but May will be the last month in which the Census adds to employment, as temps are released over the coming months. Ahead of a Pending Home Sales number, we find the 10-yr at 3.26% and mortgage prices better by .125-.250.

Daily Humor
A Virginia State trooper pulled a car over on I-64 about 2 miles south of the Virginia/West Virginia State line. When the trooper asked the driver why he was speeding, the driver said he was a magician and juggler and was on his way to Beckley, WV to do a show at the Shrine Circus. He didn’t want to be late.

The trooper told the driver he was fascinated by juggling and said if the driver would do a little juggling for him then he wouldn’t give him a citation.

“But I sent my equipment ahead and don’t have anything to juggle.”

The trooper said he had some flares in the trunk and asked if he could juggle them.

The juggler said he could, so the trooper got 5 flares, lit them, and handed them to him. While the man was juggling, a car pulled in behind the patrol car. A drunken good old boy from West Virginia got out, watched the performance, then went over to the patrol car, opened the rear door and got in.

The trooper observed him and went over to the patrol car, opened the door asking the drunk what he thought he was doing.

The drunk replied, “You might as well take my a– to jail, cause there ain’t no way I can pass that test.”