How Low Will Rates Go?, Trade Deficit Widens, Jumbo Loans Returning?,

No doubt the folks at Freddie Mac were tired of hearing people ask them about high-cost loan limits, and Thursday they released them. “Today, we are announcing that our base conforming loan limits will be maintained at their current 2009 levels for 2010, with the maximum loan limit for a 1-unit single-family property remaining at $417,000. The temporary high-cost loan limits for properties located in designated high-cost areas will remain unchanged for 2010 as well…the loan limits in designated high-cost areas are the higher of the temporary limits established by the Economic Stimulus Act of 2008 (maximum of $729,750 for 1-unit single-family properties in the contiguous United States) and the permanent limits established by the Housing and Economic Recovery Act of 2008 (maximum of $625,500 for 1-unit single-family properties in the contiguous United States).” If there is any confusion about Freddie’s loan amounts, one can visit this site or this site.

How Low Will Rates Go?
Some investors actually improved pricing yesterday, and mortgage rates even continued to do well versus Treasury yields. Will the rate on a 30-yr mortgage ever equal that of the 30-yr Treasury bond? No, since the Treasury yield is viewed as risk free, and the loan to Bob and Bobbi Borrower has default and early pay-off risk.

Trade Deficit Widens
This morning we found out that the U.S. trade deficit widened in September by an unexpectedly large 18.2%, the most in more than 10 years. Most of the widening was attributed to oil prices (up for the 7th straight month) and imports from China. Both U.S. exports and imports had their best month since December 2008, with imports growing 5.8% and exports rising 2.9% which points to some economic growth here in the US. Moving on to October, U.S. import prices rose for the third straight month, up .7%. After the news we find the 10-yr at 3.46% and mortgage security prices better by about .125.

Fed MBS Purchases
For those who follow the daily and weekly Fed purchases of securities backed by mortgages (not the securities backed by Fannie or Freddie), for the week ending on November 11th, the Federal Reserve’s MBS program was a net buyer of $13.5 billion, $2.5 billion less than last week (Wednesday was a bond market holiday, and there were $45.29 billion of purchases versus the sale of $31.79 billion). The YTD purchases of agency MBS is now at about $1 trillion, which is the same as a thousand billion. (I know – math whiz!)

Toll Brothers Touting Return of Jumbos
Toll Brothers mortgage group, TBI Mortgage, was in the press talking about how a rebound for jumbo mortgage activity may be near. Apparently in August TBI “was in talks with a bank to begin delivering jumbos to them again.” For Toll Brothers 9% of contracts during the fourth quarter would require jumbo loans, and year-to-date that number was 11%. Perhaps soon there will be conversations about securitizing jumbo loans…

Lender Guideline Roundup
Starting Monday, Flagstar, for all rate and term refinance, streamline refinance and VA IRRRL transactions, the new principal and interest payment must be at least 5% lower than the existing payment (including mortgage insurance if applicable). In addition, it is required the borrower be able to recoup the closing costs incurred to obtain the financing within 48 months.

US Bank Home Mortgage told clients that, under the HVCC rules, when conventional loans are uploaded on their appraisal website, a copy is electronically sent to a company that prints and mails it to the borrower it complies with the 3 day limit. And probably saves money, time, and paper. And the borrower can print the appraisal, save it to their computer or access it on the web for up to 30 days after it is delivered.

With the rainy season approaching, SunTrust updated their Hazard and Flood Insurance Guidelines. For example, the “Flood Zone Risk” must “accurately identify flood zone risk in terms of whether the zone is a SHFA. For example, a policy for Zone X is not acceptable if the property is in a SFHA AF zone, but a policy reflecting “AE” instead of “A10” is acceptable.” And for single family dwellings, the coverage amount has been revised to reflect the following calculation for the replacement cost of the improvements: Total Estimate of Cost – New from the cost approach section of the appraisal, OR if “A” is not available, use appraised value minus land value, OR if alternatives A and B are not available, use the insurable value from the hazard policy or insurer. The mortgagee clause must show the Correspondent client’s name and address. Lastly, a purchase money loan inception date must be no later than the date of closing.

Daily Humor
TEACHER: Maria, go to the map and find North America.
MARIA: Here it is.
TEACHER: Correct. Now class, who discovered America?
CLASS: Maria.

TEACHER: John, why are you doing your math multiplication on the floor?
JOHN: You told me to do it without using tables.

TEACHER: Glenn, how do you spell ‘crocodile?’
TEACHER: No, that’s wrong
GLENN: Maybe it is wrong, but you asked me how I spell it.

TEACHER: Donald, what is the chemical formula for water?
TEACHER: What are you talking about?
DONALD: Yesterday you said it’s H to O.

TEACHER: Millie, give me a sentence starting with ‘ I. ‘
TEACHER: No, Millie…… Always say, ‘I am.’
MILLIE: All right… ‘I am the ninth letter of the alphabet.’

TEACHER: George Washington not only chopped down his father’s cherry tree, but also admitted it. Now, Louie, do you know why his father didn’t punish him?
LOUIS: Because George still had the axe in his hand.

TEACHER: Harold, what do you call a person who keeps on talking when people are no longer interested?
HAROLD: A teacher