Jumbo Mortgages Still Sparse, BofA Admits Foreclosure Mistakes, Economic Preview

Jumbo Mortgages Still Sparse
Thomson Reuters said U.S. mortgage-backed securities (commercial and residential) issuance totaled $91 billion last quarter and $328 billion through the third quarter, up from $207.2 billion in the same period a year earlier, a rise of 58%. Only 5% was non-agency production, which means that 95% of it was Ginnie, Fannie, and Freddie. Bank of America was the top underwriter of U.S. mortgage-backed securities in the first nine months of 2010, clocking in at $68 billion for 21% of the market. Royal Bank of Scotland came in at #2 with a 10% market share, and Barclays was #3. Ginnie Mae issuers securitized $413 billion of government-guaranteed residential loans in fiscal year 2010.

BofA Admits Foreclosure Mistakes
Bank of America publicly admitted that it found some mistakes in foreclosure files. The problems included improper paperwork, lack of signatures, missing files, and in certain cases information about the property and payment history didn’t match. There was an address missing one of five digits, misspellings of borrowers’ names, a transposition of a first and last name and a missing signature on one document “underlying” an affidavit. Some of the defects seem relatively minor, according to the bank, and bank officials said they haven’t uncovered any evidence of wrongful foreclosures.

Fifth Third Earnings Up From Selling Bad Loans
What are scratched & dented loans worth these days? If you’re Fifth Third Bank, the loans are worth a price of 44. The bank released earnings late last week, earning $238 million in the 3rd quarter versus losing $97 million a year ago. The gain included the sale of $228 million in nonperforming residential mortgage loans, roughly half of its troubled mortgage portfolio, for $105 million in the third quarter, or 44% of what the loans were originally worth. Mortgage banking revenue at Fifth Third was $232 million in the third quarter, up 152% from the $92 million earned a year ago on $5.6 billion in mortgage originations, up 21.7% increase from a year ago.

Economic Preview For Week
Will any of this week’s economic news mean less instead of more Fed involvement? Probably not, but today we will have Bernanke talking about housing this morning, some Chicago Fed numbers with Existing Home Sales later on. Tomorrow we’ll have the series of S&P/Case-Shiller Home Price Indexes, Consumer Confidence (are you more confident about the future?), and some manufacturing and additional housing numbers. Wednesday is Durable Goods – usually a volatile number, and Existing Home Sales. Thursday is Jobless Claims, and Friday is the Employment Cost Index, GDP, some ISM numbers, and another Univ. of Michigan Consumer Sentiment Survey. The Treasury will also be selling $35 billion 2’s; $35 billion 5’s; and $29 billion 7’s. This morning, so far, stocks are pointing higher and the 10-yr yield is down to 2.53% with mortgages a shade better depending on investor and coupon.